Nevada |
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46-0820877 |
(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
8669 Research Drive Irvine, 92618 |
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92618 |
(Address of principal executive offices) |
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(Zip Code) |
(949) 528-3100 |
(Registrant’s telephone number, including area code) |
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25371 Commercentre Drive, Suite 200 Lake Forest, CA 92630 |
(Former name, former address and formal fiscal year, if changed since last report) |
Title of each class: |
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Trading Symbol(s) |
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Name of each exchange on which registered: |
Common Stock |
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TBLT |
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The Nasdaq Stock Market LLC |
Series A Warrants |
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TBLTW |
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The Nasdaq Stock Market LLC |
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Accelerated filer |
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Non-accelerated filer |
Smaller reporting company |
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Emerging growth company |
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September 30, | December 31, | |||||||
2022 | 2021 | |||||||
(UNAUDITED) | ||||||||
Assets | ||||||||
Current Assets | ||||||||
Cash | $ | 1,588,440 | $ | 7,472,224 | ||||
Accounts receivable, net | 23,403,628 | 18,179,933 | ||||||
Inventory, net | 40,005,614 | 38,432,012 | ||||||
Prepaid and other current assets | 2,861,504 | 786,036 | ||||||
Total Current Assets | 67,859,186 | 64,870,205 | ||||||
Other Assets | ||||||||
Property and equipment, net | 18,678,836 | 13,341,629 | ||||||
Right-of-use asset | 4,678,336 | - | ||||||
Other assets | 1,683,160 | 742,691 | ||||||
Total Assets | $ | 92,899,518 | $ | 78,954,525 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 29,096,188 | $ | 14,440,506 | ||||
Accrued expenses | 2,745,785 | 1,815,567 | ||||||
Lease liability, current maturities | 952,989 | - | ||||||
Short-term loan payable | 1,390,833 | - | ||||||
Warrant and preferred investment option liabilities | 5,179,342 | 4,801,929 | ||||||
Total Current Liabilities | 39,365,137 | 21,058,002 | ||||||
Lease liability, net of current maturities | 3,723,851 | - | ||||||
Total Liabilities | 43,088,988 | 21,058,002 | ||||||
Commitment and Contingencies (Note 5) | ||||||||
Stockholders’ Equity | ||||||||
Series C Preferred Stock, $0.0001 par value, 4,268 authorized, 0 issued and outstanding at September 30, 2022 and December 31, 2021 | - | - | ||||||
Series D Preferred Stock, $1,000 par value, 5,775 shares authorized. 0 issued, and outstanding at September 30, 2022 and December 31, 2021, respectively | - | - | ||||||
Series E Preferred Stock, $0.0001 par value, 15 authorized, 9 issued and outstanding at September 30, 2022 and December 31, 2021, respectively | - | - | ||||||
Series F Preferred Stock, $0.0001 par value, 2,500 authorized, issued and outstanding at September 30, 2022, 0 authorized, issued and outstanding at December 31, 2021 | - | - | ||||||
Series G Preferred Stock, $0.0001 par value, 2,500 authorized, issued and outstanding at September 30, 2022, 0 authorized, issued and outstanding at December 31, 2021 | - | - | ||||||
Common stock, $0.0001 par value, 200,000,000 shares authorized, 12,326,531 and 861,997 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively | 1,232 | 86 | ||||||
Additional paid-in capital | 171,700,637 | 156,184,327 | ||||||
Accumulated deficit | (121,891,339 | ) | (98,287,890 | ) | ||||
Total Stockholders’ Equity | 49,810,530 | 57,896,523 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 92,899,518 | $ | 78,954,525 |
3 |
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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||||||||||
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2022 |
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2021 |
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2022 |
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2021 |
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Revenues, net of allowances |
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Metal goods |
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$ |
19,226,191 |
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$ |
8,078,180 |
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$ |
34,354,744 |
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$ |
18,130,530 |
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Soft goods |
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8,239,785 |
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9,137,758 |
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27,258,989 |
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27,221,028 |
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Electronic goods |
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2,779,275 |
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- |
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3,739,918 |
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Total revenues, net of allowances |
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30,245,251 |
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17,215,938 |
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65,353,651 |
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45,351,558 |
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Cost of Goods Sold |
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Metal goods |
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14,923,322 |
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6,419,003 |
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28,041,096 |
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13,680,028 |
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Soft goods |
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4,868,601 |
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5,352,312 |
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18,011,023 |
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17,799,148 |
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Electronic goods |
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2,536,171 |
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- |
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3,432,832 |
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Total cost of goods sold |
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22,328,094 |
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11,771,315 |
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49,484,951 |
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31,479,176 |
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Gross profit |
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7,917,157 |
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5,444,623 |
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15,868,700 |
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13,872,382 |
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Operating expenses: |
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Selling, general and administrative expenses |
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14,676,135 |
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15,242,780 |
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45,106,976 |
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33,904,958 |
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Research and development |
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2,781,676 |
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1,610,671 |
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8,050,481 |
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4,558,781 |
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Total operating expenses |
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17,457,811 |
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16,853,451 |
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53,157,457 |
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38,463,739 |
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Income (loss) from operations |
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(9,540,654 |
) |
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(11,408,828 |
) |
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(37,288,757 |
) |
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(24,621,357 |
) |
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Other income (expense) |
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Warrant issuance costs |
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(969,791 |
) |
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(588,221 |
) |
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(1,415,229 |
) |
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(588,221 |
) |
Change in fair value of warrant and preferred investment option liabilities |
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19,065,297 |
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2,902,342 |
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23,111,029 |
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2,902,342 |
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Interest expense |
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(548,422 |
) |
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- |
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(640,603 |
) |
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(263,555 |
) |
Total other income (expense) |
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17,547,084 |
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2,314,121 |
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21,055,197 |
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2,050,566 |
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Net income (loss) |
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8,006,430 |
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(9,094,707 |
) |
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(16,233,560 |
) |
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$ |
(22,570,791 |
) |
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Common stock deemed dividend |
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(7,467,200 |
) |
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- |
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(7,467,200 |
) |
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- |
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Net income (loss) attributable to common stockholders |
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$ |
539,230 |
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$ |
(9,094,707 |
) |
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$ |
(23,700,760 |
) |
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$ |
(22,570,791 |
) |
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Basic net income ( loss ) per share attributed to common stockholders |
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$ |
0.05 |
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$ |
(11.18 |
) |
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$ |
(5.42 |
) |
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$ |
(37.36 |
) |
Basic weighted average common shares outstanding |
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10,872,412 |
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813,734 |
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|
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4,376,175 |
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|
604,128 |
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Diluted net income ( loss ) per share attributed to common stockholders |
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$ |
0.03 |
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$ |
(11.18 |
) |
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$ |
(5.42 |
) |
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$ |
(37.36 |
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Diluted weighted average common shares outstanding |
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19,721,339 |
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813,734 |
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4,376,175 |
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604,128 |
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4 |
Series C Preferred Stock | Series D Preferred Stock | Series E Preferred Stock | Series F Preferred Stock | Series G Preferred Stock | Common Stock | Additional Paid-in | Accumulated | Total Stockholders ’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||||||||||||||||||||||||||
Balance - January 1, 2021 | - | $ | - | - | $ | - | - | $ | - | - | $ | - | - | $ | - | 292,792 | $ | 29 | $ | 80,108,016 | $ | (60,761,992 | ) | $ | 19,346,053 | |||||||||||||||||||||||||||||||||||
Issuance of common stock upon conversion of warrants | - | - | - | - | - | - | - | - | - | - | 36,057 | 4 | 5,408,536 | - | 5,408,540 | |||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for services | - | - | - | - | - | - | - | - | - | - | 1,000 | - | 189,000 | - | 189,000 | |||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock | - | - | - | - | - | - | - | - | - | - | 214,186 | 21 | 39,074,368 | - | 39,074,390 | |||||||||||||||||||||||||||||||||||||||||||||
Stock based compensation expense | - | - | - | - | - | - | - | - | - | - | - | - | 81,537 | - | 81,537 | |||||||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | - | - | - | - | - | - | - | (6,053,659 | ) | (6,053,659 | ) | |||||||||||||||||||||||||||||||||||||||||||
Balance - March 31, 2021 | - | - | - | - | - | - | - | - | - | - | 544,035 | 54 | 124,861,457 | (66,815,651 | ) | 58,045,861 | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon conversion of Series D Preferred Stock | - | - | - | - | - | - | - | - | - | - | - | - | 81,539 | - | 81,539 | |||||||||||||||||||||||||||||||||||||||||||||
Stock based compensation expense | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | - | - | - | - | - | - | - | (7,422,426 | ) | (7,422,426 | ) | |||||||||||||||||||||||||||||||||||||||||||
Balance – June 30, 2021 | - | - | - | - | - | - | - | - | - | - | 544,035 | 54 | 124,942,996 | (74,238,077 | ) | 50,704,974 | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock and warrants | - | - | - | - | - | - | - | — | 317,935 | 32 | 31,154,858 | - | 31,154,890 | |||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon exercise of warrants | - | - | - | - | - | - | - | - | - | - | 27 | - | 4,000 | - | 4,000 | |||||||||||||||||||||||||||||||||||||||||||||
Stock based compensation | - | - | - | - | - | - | - | - | - | - | - | - | 69,371 | - | 69,371 | |||||||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | - | - | - | - | - | - | (9,094,707 | ) | (9,094,707 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Balance – September 30, 2021 | - | - | - | - | - | - | - | - | - | - | 861,997 | 86 | 156,171,225 | (83,332,784 | ) | 72,838,528 | ||||||||||||||||||||||||||||||||||||||||||||
Balance – January 1, 2022 | - | - | - | - | 9 | $ | - | - | - | - | $ | - | 861,997 | 86 | 156,184,327 | (98,287,890 | ) | 57,896,523 | ||||||||||||||||||||||||||||||||||||||||||
Issuance of preferred stock | - | - | - | - | - | - | 2,500 | - | 2,500 | - | - | 1,833,995 | 1,833,995 | |||||||||||||||||||||||||||||||||||||||||||||||
Adoption of lease guidance | - | - | - | - | - | - | - | - | - | - | - | 97,310 | 97,310 | |||||||||||||||||||||||||||||||||||||||||||||||
Stock based compensation expense | - | - | - | - | - | - | - | - | - | - | - | 13,101 | 13,101 | |||||||||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | - | - | - | - | - | (12,103,938 | ) | (12,103,938 | ) | |||||||||||||||||||||||||||||||||||||||||||||
- | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance - March 31,2022 | - | - | - | - | 9 | $ | - | 2,500 | - | 2,500 | $ | - | 861,997 | 86 | 158,031,423 | (110,294,518 | ) | 47,736,991 | ||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock and warrants, net of issuance costs | - | - | - | - | - | - | - | - | - | - | 3,157,895 | 316 | 1,848,756 | - | 1,849,072 | |||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon exercise of warrants | - | - | - | - | - | - | - | - | - | - | 1,549,211 | 155 | 6,358,244 | - | 6,358,399 | |||||||||||||||||||||||||||||||||||||||||||||
Cashless warrants exercised | - | - | - | - | - | - | - | - | - | - | 153,640 | 15 | (15 | ) | - | - | ||||||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock warrants | - | - | - | - | - | - | - | - | - | - | - | - | (2,500,000 | ) | - | (2,500,000 | ) | |||||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | - | - | - | - | - | - | - | (12,136,051 | ) | (12,136,051 | ) | |||||||||||||||||||||||||||||||||||||||||||
Stock based compensation expense | - | - | - | - | - | - | - | - | - | - | - | - | 13,101 | - | 13,101 | |||||||||||||||||||||||||||||||||||||||||||||
- | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance - June 30, 2022 | - | - | - | - | 9 | $ | - | 2500 | 2,500 | $ | - | 5,722,743 | 572 | 163,751,509 | (122,430,569 | ) | 41,321,512 | |||||||||||||||||||||||||||||||||||||||||||
Cashless warrants exercised | - | - | - | - | - | - | - | - | - | - | 1,000,104 | 100 | (100 | ) | - | - | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock and warrants, net of issuance costs | - | - | - | - | - | - | - | - | - | - | 4,000,000 | 400 | (1,293,727 | ) | - | (1,293,327 | ) | |||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon exercise of warrants | - | - | - | - | - | - | - | - | - | - | 1,603,684 | 160 | 9,229,854 | - | 9,230,014 | |||||||||||||||||||||||||||||||||||||||||||||
Net income | - | - | - | - | - | - | - | - | - | - | - | - | - | 539,230 | 539,230 | |||||||||||||||||||||||||||||||||||||||||||||
Stock based compensation | - | - | - | - | - | - | - | - | - | - | - | - | 13,101 | - | 13,101 | |||||||||||||||||||||||||||||||||||||||||||||
Balance - September 30, 2022 | - | - | - | - | 9 | $ | - | 2500 | 2,500 | $ | - | 12,326,531 | 1,232 | 171,700,637 | (121,891,339 | ) | 49,810,530 |
5 |
Nine Months Ended September 30, | ||||||||
2022 | 2021 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (16,233,560 | ) | $ | (22,570,791 | ) | ||
Adjustments to reconcile from net loss to net cash used in operating activities: | ||||||||
Depreciation | 3,103,204 | 1,196,562 | ||||||
Stock-based compensation expense | 39,303 | 232,447 | ||||||
Amortization of capitalized contract costs | - | 213,353 | ||||||
Amortization of right-of-use asset | 451,481 | - | ||||||
Common stock issued for services | - | 189,000 | ||||||
Warrant issuance costs | 1,415,229 | 588,221 | ||||||
Loss on sale of property and equipment | 15,806 | - | ||||||
Change in fair value of warrant and preferred investment option liabilities | (23,111,029 | ) | (2,902,342 | ) | ||||
Changes in operating assets and liabilities | ||||||||
Accounts receivable, net | (5,223,695 | ) | (6,502,967 | ) | ||||
Factor receivables, net | - | 807,648 | ||||||
Inventory | (1,573,602 | ) | (22,402,533 | ) | ||||
Prepaid assets | (2,075,468 | ) | (255,074 | ) | ||||
Other assets | (940,469 | ) | (332,923 | ) | ||||
Accounts payable | 13,263,112 | 5,187,717 | ||||||
Accrued expenses | 1,037,768 | 843,061 | ||||||
Lease liability | (463,217 | ) | - | |||||
Net cash used in operating activities | (30,295,137 | ) | (45,708,621 | ) | ||||
Cash flows from investing activities: | ||||||||
Proceeds from sale of property and equipment | 50,000 | - | ||||||
Purchases of property and equipment | (7,113,646 | ) | (8,059,748 | ) | ||||
Net cash used in investing activities | (7,063,646 | ) | (8,059,748 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from exercise of warrants | 5,978,067 | 5,412,540 | ||||||
Repurchase of common stock warrants | (2,500,000 | ) | - | |||||
Proceeds from issuance of stock, net of costs | 26,606,099 | 77,941,089 | ||||||
Proceeds from short-term loan payable | 1,669,000 | - | ||||||
Repayments of short-term loan payable | (278,167 | ) | - | |||||
Repayments of factor loan payable | - | (590,950 | ) | |||||
Net cash provided by financing activities | 31,474,999 | 82,762,679 | ||||||
Net increase (decrease) in cash | (5,883,784 | ) | 28,994,310 | |||||
Cash, beginning of period | 7,472,224 | 2,194,850 | ||||||
Cash, end of period | $ | 1,588,440 | $ | 31,189,160 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid during the period for: | ||||||||
Interest | $ | - | $ | - | ||||
Income taxes | $ | - | $ | - | ||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||
Purchases of property and equipment in accounts payable | $ | 1,392,570 | $ | - | ||||
Initial value of lease liability | $ | 5,140,057 | $ | - | ||||
Initial fair value of warrants and preferred investment options | $ | 23,488,442 | $ | 7,463,005 | ||||
Derecognition of warrant and preferred investment option liability upon conversion | $ | 9,610,346 | $ | - |
6 |
|
● |
tool belts, tool bags and other personal tool organizer products; |
|
● |
complete line of knee pads for various construction applications; and |
|
● |
job-site tools and material support products consisting of a full line of miter-saws and table saw stands, saw horses/job site tables and roller stands. |
7 |
8 |
9 |
● | Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company could access. |
● | Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. |
● | Level 3 inputs are unobservable inputs for the asset or liability, which is typically based on an entity’s own assumptions, as there is little, if any, related market activity. |
10 |
|
At September 30, 2022 |
|
At December 31, 2021 |
Risk-free interest rate |
4.06%-4.25% |
|
0.81% - 1.19% |
Contractual term |
1.75-4.75 years |
|
4.54 years |
Expected volatility |
88% |
|
88% |
Balance, January 1, 2022 |
|
$ |
4,801,929 |
|
Fair Value of warrant and preferred investment option liability at issuance |
|
|
33,098,789 |
|
Fair Value of warrant and preferred investment option liability upon exercise |
|
|
(9,610,346 |
) |
Change in fair value of warrant and preferred investment option liability |
|
|
(23,111,029 |
) |
Balance, September 30, 2022 |
|
$ |
5,179,343 |
|
Balance, July 1, 2022 |
|
$ |
2,960,853 |
|
Fair Value of warrant and preferred investment option liability at issuance |
|
|
27,466,801 |
|
Fair Value of warrant and preferred investment option liability upon exercise |
|
|
(6,183,014 |
) |
Change in fair value of warrant and preferred investment option liability |
|
|
(19,065,297 |
) |
Balance, September 30, 2022 |
|
$ |
5,179,343 |
|
11 |
12 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Net loss computation of basic and diluted net loss per common share: | ||||||||||||||||
Net income ( loss ) attributable to common stockholders | $ | 539,230 | $ | (9,094,707 | ) | $ | (23,700,760 | ) | $ | (22,570,791 | ) | |||||
Basic and diluted net income ( loss ) per share: | ||||||||||||||||
Basic net income ( loss ) per common share | $ | 0.05 | $ | (11.18 | ) | $ | (5.42 | ) | $ | (37.36 | ) | |||||
Basic weighted average common shares outstanding | 10,872,412 | 813,734 | 4,376,175 | 604,128 | ||||||||||||
Diluted net income (l oss ) per common share | $ | 0.03 | $ | (11.18 | ) | $ | (5.42 | ) | $ | (37.36 | ) | |||||
Diluted weighted average common shares outstanding | 19,721,339 | 813,734 | 4,376,175 | 604,128 |
2022 | 2021 | |||||||
Warrants and preferred investment options | 8,847,473 | 281,929 | ||||||
Options and restricted stock units | 1,354 | 1,354 | ||||||
Total anti-dilutive weighted average shares | 8,848,827 | 283,283 |
13 |
September 30, 2022 | December 31, 2021 | |||||||
Furniture | $ | 2,050,942 | $ | 1,066,219 | ||||
Computers | 1,382,745 | 1,038,154 | ||||||
Production equipment | 155,977 | 245,713 | ||||||
Tooling and molds | 9,527,742 | 6,390,962 | ||||||
Auto | 635,542 | 635,542 | ||||||
Application development | 4,074,919 | 2,398,919 | ||||||
Website design | 1,120,431 | 814,733 | ||||||
Steelbox | 882,000 | 882,000 | ||||||
Leasehold improvements | 4,920,504 | 2,862,079 | ||||||
Less: accumulated depreciation | (6,071,966 | ) | (2,992,692 | ) | ||||
Property and Equipment, net | $ | 18,678,836 | $ | 13,341,629 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Depreciation expense | $ | 1,164,689 | $ | 552,464 | $ | 3,103,204 | $ | 1,196,562 |
14 |
Operating leases | ||||
Right-of-use assets, net | $ | 4,678,336 | ||
Current liabilities | 952,989 | |||
Non-current liabilities | 3,723,851 | |||
Total operating lease liabilities | $ | 4,676,840 | ||
Weighted Average Remaining Lease Term | 4.16 years | |||
Weighted Average Discount Rate | 4 | % |
For the years ending December 31, | Building leases | |||
2022 (remaining) | $ | 322,055 | ||
2023 | 960,276 | |||
2024 | 1,311,858 | |||
2025 | 1,140,177 | |||
2026 | 1,082,177 | |||
Thereafter | 359,916 | |||
Total lease payments | 5,176,459 | |||
Less: imputed interest | (499,619 | ) | ||
Present value of lease liabilities | $ | 4,676,840 |
15 |
16 |
| Not entitled to dividends; |
| Voting rights, as outlined in the Certificate of Designation; |
| In the event of a voluntary or involuntary liquidation, dissolution, or winding up of the Company (collectively with a Deemed Liquidation, a “Liquidation”), the holders of Series E Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders, before any payment shall be made to the holders of Junior Securities (as described in the Certification of Designation) by reason of their ownership thereof, an amount in cash equal to the aggregate Liquidation Value of all Series E Preferred Stock held by such holder, plus all unpaid accrued and accumulated dividends on all such Series E Preferred Stock (whether or not declared). |
17 |
| Entitled to dividends, on an as-if converted basis, equal to and in the same form as dividends actually paid on shares of common stock, when and if actually paid; |
| No voting rights, except for rights outlined in the Certificate of Designation; |
| Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a “Liquidation), the then holders of the Series F Preferred Stock and Series G Preferred Stock shall be entitled to receive out of the assets, whether capital or surplus, of the Company the same amount that a holder of common stock would receive if the Series F Preferred Stock and Series G Preferred Stock were fully converted (disregarding for such purposes any conversion limitations hereunder) to common stock which amounts shall be paid pari passu with all holders of common stock; |
18 |
| The Series F Preferred Stock and Series G Preferred Stock is convertible into common stock at any time after the date of issuance. The conversion rate, subject to adjustment as set forth in the Certificate of Designation, is determined by dividing the stated value of the Series F Preferred Stock and Series G Preferred Stock by $30 (the “Conversion Price”). The Conversion Price can be adjusted as set forth in the Certificate of Designation for stock dividends and stock splits or the occurrence of a fundamental transaction; and |
| The Series F Preferred Stock and Series G Preferred Stock can be converted at the option of the holder at any time and from time to time after the date of issuance. |
19 |
20 |
21 |
22 |
23 |
Percentage of | Percentage of | |||||||||||||||||||||||
revenues for the | revenues for the | Percentage of accounts | ||||||||||||||||||||||
Three Months Ended | Nine Months Ended | receivables as of | ||||||||||||||||||||||
September 30, | September 30, | September 30, | December 31, | |||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Customer 1 | 51 | % | 12 | % | 63 | % | 9 | % | 52 | % | 5 | % | ||||||||||||
Customer 2 | 15 | % | 10 | % | 11 | % | 9 | % | - | % | 33 | % | ||||||||||||
Customer 3 | - | % | 15 | % | - | % | 16 | % | - | % | 6 | % | ||||||||||||
Customer 4 | - | % | 35 | % | - | % | 36 | % | - | % | 8 | % | ||||||||||||
Customer 5 | - | % | - | % | - | % | - | % | - | % | 11 | % |
Percentage of | Percentage of | |||||||||||||||||||||||
purchases for the | purchases for the | Percentage of accounts | ||||||||||||||||||||||
Three Months Ended | Nine Months Ended | payable as of | ||||||||||||||||||||||
September 30, | September 30, | September 30, | December 31, | |||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Supplier 1 | 12 | % | 29 | % | 5 | % | 33 | % | 15 | % | 24 | % | ||||||||||||
Supplier 2 | 1 2 | % | - | % | 6 | % | - | % | - | % | - | % | ||||||||||||
Supplier 3 | 1 1 | % | 4 | % | 4 | % | 14 | % | 9 | % | 3 | % | ||||||||||||
Supplier 4 | - | % | 11 | % | - | % | 11 | % | 5 | % | 9 | % | ||||||||||||
Supplier 5 | - | % | 10 | % | - | % | 5 | % | - | % | 8 | % | ||||||||||||
Supplier 6 | - | % | - | % | - | % | - | % | 1 | % | - | % |
|
|
Percentage of |
|
|
Percentage of |
|
|
|
|
|
|
|
||||||||||||
|
|
revenues for the |
|
|
revenues for the |
|
|
Percentage of accounts |
|
|||||||||||||||
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
receivables as of |
|
|||||||||||||||
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
December 31, |
|
||||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||||
Canada |
|
|
2 |
% |
|
|
3 |
% |
|
|
3 |
% |
|
|
4 |
% |
|
|
- |
% |
|
|
4 |
% |
Europe |
|
|
4 |
% |
|
|
5 |
% |
|
|
5 |
% |
|
|
9 |
% |
|
|
11 |
% |
|
|
11 |
% |
United States of America |
|
|
90 |
% |
|
|
80 |
% |
|
|
87 |
% |
|
|
78 |
% |
|
|
80 |
% |
|
|
82 |
% |
Other |
|
|
4 |
% |
|
|
12 |
% |
|
|
6 |
% |
|
|
9 |
% |
|
|
10 |
% |
|
|
3 |
% |
24 |
|
● |
the impact of the worldwide COVID-19 pandemic and government actions, on our business; |
|
● |
supply chain disruptions; |
|
● |
our limited operating history; |
|
● |
our ability to manufacture, market and sell our products; |
|
● |
our ability to maintain or protect the validity of our U.S. and other patents and other intellectual property; |
|
● |
our ability to launch and penetrate markets; |
|
● |
our ability to retain key executive members; |
|
● |
our ability to internally develop new inventions and intellectual property; |
|
● |
interpretations of current laws and the passages of future laws; |
|
● |
acceptance of our business model by investors; and |
|
|
|
|
● |
other factors (including the risks contained in the section of the Annual Report on Form 10-K filed with the Securities Exchange Commission (“SEC”) on April 18, 2022 entitled “Risk Factors”) relating to our industry, our operations and results of operations. |
25 |
26 |
|
|
In the third quarter of 2022, our total revenues, net of allowances, totaled approximately $ 30.2 million as compared to approximately $ 17.2 million in the same period in 2020. |
|
|
|
|
|
In July 2022, we announced that we entered into an agreement with Ace Hardware USA and International (“Ace”) to sell 35 ToughBuilt products, in which Ace will distribute ToughBuilt’s products utilizing Ace’s 15 regional service centers to reach 5,500 individual Ace stores. |
|
|
|
|
|
In August 2022, we announced that we have started to sell 93 ToughBuilt products on Amazon.It (Italy) and Amazon.de (Germany). |
|
|
|
|
|
In August 2022, we announced our entry into a supply agreement with Elecktro3 S.C.C.L (“Elecktro3”) and NCC Hardware Purchasing and Services Centers, SL (“NCC”), increasing our presence in Spain’s hardware marketplace. Elektro3 has 25 years of experience in the sector and over 22,500 end users and is a leading importer, exporter, and distributor of products for hardware stores, DIY stores, appliances, and gardening. NCC is a super-cooperative and its members operate over 1,000 stores in Spain and is a partnership among four hardware and industrial supply co-operatives in Spain, QF Plus, Conifer, YMAS and Synergas. |
|
|
|
|
|
In August 2022, we announced the launch of our all-new Reload Utility Knife, a groundbreaking new cutting tool made available for purchase through a leading US home improvement retailer servicing over 15,500 storefronts around the world. |
|
|
|
|
|
In September 2022, we announced our entry into the global measuring and marking market segment category with a feature-rich family of tape measures and chalk reels. The global measuring and marking tools market is estimated to be $1.4 billion in 2021 and is projected to reach more than $1.8 billion by 2028 1 . |
|
|
|
|
|
In September 2022, we announced that we entered into an agreement with two major wholesale tool distributors in Switzerland, marking an expansion of European distribution that includes more than 250 retailers. |
|
|
|
|
|
In September 2022, we announced major expansions to our network of storefronts in Great Britain, confirming broad new and expanding agreements with Huws Gray, Selco Builders Warehouse, MKM, City Electrical Factors, and Carpet & Flooring, magnifying our online marketplace presence and representing more than 900 collective retail locations in Great Britain. Huws Gray is the United Kingdom’s largest independent builder’s merchant, supplying materials to professional and DIY end users alike, it operates over 300 storefronts that trade under various brand names, including Huws Gray, Buildbase, The Timber Group, Civils & Lintels, and Frontline. |
|
|
|
|
|
In September 2022, we announced our launch of 21 new SKUs into the global handsaws segment, beginning with a line of seven cutting tools featuring ToughBuilt’s QuickSet™ Double-Edge Pull Saw, the first ever safe-folding pull saw. The new line will be available Q4 2022 for purchase through a leading US home improvement retailer servicing over 15,500 storefronts around the world. |
|
|
In the third quarter of 2022, w e have raised a total of approximately $20 million in gross proceeds in unregistered equity offerings. |
1 |
Market Research Guru via MarketWatch.com. |
27 |
28 |
29 |
|
A commitment to technological innovation achieved through consumer insight, creativity, and speed to market; |
|
A broad selection of products in both brand and private labels; |
|
Prompt response; |
|
Superior customer service; and |
|
Value pricing. |
30 |
|
United States: Lowe’s, Home Depot, Menards, GM products, Fire Safety, Hartville Hardware, ORR, Pooley, Wesco, Buzzi, and Western Pacific Building Materials. |
|
Canada: Princess Auto. |
|
United Kingdom distribution throughout the UK and online selling for Europe. |
|
Australia: Kincrome, and Bunnings. |
|
New Zealand: Kincrome, and Bunnings. |
|
South Korea: Dong Shin Tool PIA Co., Ltd. |
|
Reload Utility Knife, the world’s first patented magazine-fed reloading blade mechanism into the home improvement market; |
|
Imperial ProBlade™ Tape Measure; |
|
Metric ProBlade™ Tape Measure ; and |
|
21 new SKUs into the global handsaws segment, seven of which features the QuickSet™ Double-Edge Pull Saw, an industry-first folding dual-edged ryoba-style pull saw. |
31 |
1. |
National building codes |
2. |
Inspection booking |
3. |
Labor ready |
4. |
Estimating apps & programs |
5. |
Structural engineers |
6. |
Architects |
7. |
Building plans |
8. |
Workers’ comp |
9. |
Equipment insurance |
10. |
Project insurance & bonds |
11. |
Vehicle insurance |
12. |
Liability insurance |
13. |
Umbrella insurance |
14. |
Collection agencies |
15. |
Construction loans |
16. |
Small business loans |
17. |
Job listings |
18. |
Tool exchange |
|
Significantly greater financial resources than we have; |
|
More comprehensive product lines; |
|
Longer-standing relationships with suppliers, manufacturers, and retailers; |
|
Broader distribution capabilities; |
|
Stronger brand recognition and loyalty; and |
|
The ability to invest substantially more in product advertising and sales. |
32 |
33 |
34 |
35 |
36 |
37 |
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Cash flows used in operating activities |
|
$ |
(30,295,137 |
) |
|
$ |
(45,708,621 |
) |
Cash flows used in investing activities |
|
|
(7,063,646 |
) |
|
|
(8,059,748 |
) |
Cash flows from financing activities |
|
|
31,474,999 |
|
|
|
82,762,679 |
|
Net (decrease) increase in cash during period |
|
$ |
(5,883,784 |
) |
|
$ |
28,994,310 |
|
Contractual Obligations |
|
As of September 30, 2022 |
|
|
For the twelve months ended September 30, 2023 |
|
||
Operating lease obligations |
|
$ |
4,676,840 |
|
|
$ |
1,104,336 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Contractual Obligations |
|
$ |
4,676,840 |
|
|
$ |
1,104,336 |
|
38 |
39 |
|
Investing in IT systems to enhance our operational and financial reporting and internal controls. |
|
Enhancing the organizational structure to support financial reporting processes and internal controls. |
|
Providing guidance, education and training to employees relating to our accounting policies and procedures. |
|
Further developing and documenting detailed policies and procedures regarding business processes for significant accounts, critical accounting policies and critical accounting estimates. |
|
Establishing effective general controls over IT systems to ensure that information produced can be relied upon by process level controls is relevant and reliable. |
40 |
Exhibit No.: |
|
Description: |
|
|
|
|
|
|
|||
|
|
||
|
|||
|
|
||
|
|
||
|
|
||
101.INS*** |
|
Inline XBRL Instance Document |
|
|
|
||
101.SCH*** |
|
Inline XBRL Schema Document |
|
|
|
||
101.CAL*** |
|
Inline XBRL Calculation Linkbase Document |
|
|
|
||
101.DEF*** |
|
Inline XBRL Definition Linkbase Document |
|
|
|
||
101.LAB*** |
|
Inline XBRL Label Linkbase Document |
|
|
|
||
101.PRE*** |
|
Inline XBRL Presentation Linkbase Document |
|
|
|
||
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document filed as Exhibit 101) |
|
* |
Filed herewith |
|
** |
Exhibits 32.1 and 32.2 are being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall such exhibits be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise specifically stated in such filing. |
|
*** |
Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, and otherwise are not subject to liability under those sections. |
41 |
|
TOUGHBUILT INDUSTRIES, INC. |
|
|
|
|
Date: November 14, 2022 |
By: |
/s/ Michael Panosian |
|
Name: |
Michael Panosian |
|
Title: |
Chief Executive Officer and Chairman |
|
|
(Principal Executive Officer) |
Date: November 14, 2022 |
By: |
/s/ Martin Galstyan |
|
Name: |
Martin Galstyan |
|
Title: |
Chief Financial Officer |
|
|
(Principal Financial Officer) (Principal Accounting Officer) |
42 |
EXHIBIT 31.1
CERTIFICATION OF PRINCIPAL EXECTUIVE OFFICER
PURSUANT TO RULE 13a-14(a)/15d-14(a), AS ADOPTED
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Michael Panosian, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of ToughBuilt Industries, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 14, 2022
/s/ Michael Panosian | ||
Name: | Michael Panosian | |
Title: | Chief Executive Officer and Chairman | |
(Principal Executive Officer) |
EXHIBIT 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO RULE 13a-14(a)/15d-14(a), AS ADOPTED
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Martin Galstyan, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of ToughBuilt Industries, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 14, 2022
/s/ Martin Galstyan | ||
Name: | Martin Galstyan | |
Title: | Chief Financial Officer | |
(Principal Financial and Accounting Officer) |
EXHIBIT 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Michael Panosian, the Chief Executive Officer of ToughBuilt Industries, Inc. (the “Company”), hereby certify, that, to my knowledge:
1. The Quarterly Report on Form 10-Q for the period ended September 30, 2022 (the “Report”) of the Company fully complies with the requirements of Section 13(a) and 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: November 14, 2022
/s/ Michael Panosian | ||
Name: | Michael Panosian | |
Title: | Chief Executive Officer | |
(Principal Executive Officer) |
EXHIBIT 32.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Martin Galstyan, the Chief Financial Officer of ToughBuilt Industries, Inc. (the “Company”), hereby certify, that, to my knowledge:
1. The Quarterly Report on Form 10-Q for the period ended September 30, 2022 (the “Report”) of the Company fully complies with the requirements of Section 13(a)/15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: November 14, 2022
/s/ Martin Galstyan | ||
Name: | Martin Galstyan | |
Title: | Chief Financial Officer | |
(Principal Financial and Accounting Officer) |