Toughbuilt Industries, Inc [TBLTW] Filings

10-Q 1 tblt-20230630.htm FORM 10-Q Toughbuilt Industries, Inc

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

June 30, 2023

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____to_____

Commission File Number:

001-38739

TOUGHBUILT INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Nevada		46-0820877
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

8669 Research Drive Irvine, CA		92618
(Address of principal executive offices)		(Zip Code)

(949) 528-3100

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and formal fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:	Trading Symbol(s)	Name of each exchange on which registered:
Common Stock	TBLT	The Nasdaq Stock Market LLC
Series A Warrants	TBLTW	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

	Large accelerated filer ¨	Accelerated filer ¨
	Non-accelerated filer x	Smaller reporting company x
		Emerging growth company x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes

As of August

, 2023, the registrant had 33,704,674 shares of common stock, par value $0.0001 per share, outstanding.

TABLE OF CONTENTS

PART I.	FINANCIAL INFORMATION	3

ITEM 1.	FINANCIAL STATEMENTS	3

	CONDENSED CONSOLIDATED BALANCE SHEETS AT JUNE 30, 2023 (UNAUDITED) AND DECEMBER 31, 2022	3

	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2023 AND 2022 (UNAUDITED)	4

	CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2023 AND 2022 (UNAUDITED)	5

	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2023 AND 2022 (UNAUDITED)	6

	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	7

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	26

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	35

ITEM 4.	CONTROLS AND PROCEDURES	35

PART II.	OTHER INFORMATION	36

ITEM 1.	LEGAL PROCEEDINGS	36

ITEM 1A.	RISK FACTORS	36

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	36

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	36

ITEM 4.	MINE SAFETY DISCLOSURES	36

ITEM 5.	OTHER INFORMATION	36

ITEM 6.	EXHIBITS	37

	SIGNATURES	38

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

TOUGHBUILT INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2023			2022
	(UNAUDITED)
Assets
Current Assets
Cash	$	2,206,565		$	2,564,237
Accounts receivable, net		7,820,611			16,810,659
Inventory, net		31,411,395			40,365,286
Prepaid and other current assets		48,164			369,792
Total Current Assets		41,486,735			60,109,974
Other Assets
Property and equipment, net		19,618,726			17,500,383
Right-of-use asset		4,386,414			4,415,859
Other assets		2,059,288			1,890,780
Total Assets	$	67,551,163		$	83,916,996

Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	36,864,439		$	29,671,272
Accrued expenses		3,433,090			3,010,914
Lease liability, current maturities		1,182,351			959,630
Short-term loan payable		1,214,028			973,583
Warrant and preferred investment option liabilities		4,985,387			16,116,273
Total Current Liabilities		47,679,295			50,731,672

Lease liability, net of current maturities		3,383,967			3,477,380
Total Liabilities		51,063,262			54,209,052

Stockholders’ Equity
Series C Preferred Stock, $0.0001 par value, 4,268 authorized, 0 issued and outstanding at June 30, 2023 and December 31, 2022		-			-
Series D Preferred Stock, $1,000 par value, 5,775 shares authorized, 0 issued and outstanding at June 30, 2023 and December 31, 2022		-			-
Series E Preferred Stock, $0.0001 par value, 15 authorized, 9 issued and outstanding at June 30, 2023 and December 31, 2022		-			-
Series F Preferred Stock, $0.0001 par value, 2,500 authorized, i ssued and outstanding at June 30, 2023 and December 31, 2022		-			-
Series G Preferred Stock, $0.0001 par value, 2,500 authorized, issued and outstanding at June 30, 2023 and December 31, 2022		-			-
Common stock, $0.0001 par value, 200,000,000 shares authorized, 25,922,053 and 14,078,997 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively		2,592			1,408
Additional paid-in capital		175,438,894			174,659,589
Accumulated deficit		(158,953,585	)		(144,953,053	)
Total Stockholders’ Equity		16,487,901			29,707,944
Total Liabilities and Stockholders’ Equity	$	67,551,163		$	83,916,996

The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.

TOUGHBUILT INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Revenues, net of allowances
Metal goods	$	8,012,855		$	7,259,924		$	17,280,949		$	15,128,553
Soft goods		9,913,780			10,160,625			18,897,537			19,019,204
Electronic goods		952,934			467,106			2,913,793			960,643
Total revenues, net of allowances		18,879,569			17,887,655			39,092,279			35,108,400

Cost of Goods Sold
Metal goods		5,453,794			5,845,432			12,576,597			13,117,774
Soft goods		6,726,078			6,675,715			14,613,702			13,142,422
Electronic goods		858,724			418,092			2,503,737			896,661
Total cost of goods sold		13,038,596			12,939,239			29,694,036			27,156,857

Gross profit		5,840,973			4,948,416			9,398,243			7,951,543

Operating expenses
Selling, general and administrative expenses		14,967,257			14,496,942			30,046,444			30,430,841
Research and development		2,913,403			2,754,351			6,440,924			5,268,805
Total operating expenses		17,880,660			17,251,293			36,487,368			35,699,646

Loss from operations		(12,039,687	)		(12,302,877	)		(27,089,125	)		(27,748,103	)

Other income (expense)
Warrant issuance costs		(351,768	)		(170,308	)		(351,768	)		(445,438	)
Change in fair value of warrant and preferred investment option liabilities		7,242,510			429,572			14,727,470			4,045,732
Interest expense		(576,425	)		(92,438	)		(1,287,109	)		(92,181	)
Total other income		6,314,317			166,826			13,088,593			3,508,113

Net loss	$	(5,725,370	)	$	(12,136,051	)	$	(14,000,532	)	$	(24,239,990	)

Basic and diluted net income loss per share attributed to common stockholders	$	(0.36	)	$	(9.45	)	$	(0.92	)	$	(22.57	)
Basic and diluted weighted average common shares outstanding		15,790,720			1,284,110			15,258,451			1,074,220

The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.

TOUGHBUILT INDUSTRIES, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022

(UNAUDITED)

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

Amount

Toughbuilt Industries, Inc [TBLTW] Filings
Toughbuilt Industries, Inc [TBLT] Filings
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10-Q	[2020-05-13]
S-1	[2020-04-08]
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S-1	[2019-09-06]
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10-Q	[2019-05-13]
S-1	[2019-04-29]
10-K	[2019-03-29]
10-Q	[2018-12-20]
S-1	[2018-07-09]

Toughbuilt Industries, Inc [TBLTW] Filings

Toughbuilt Industries, Inc [TBLT] Filings