Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
IMPORTANT NOTICE REGARDING THE
AVAILABILITY OF PROXY MATERIALS FOR THE SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON FEBRUARY 15, 2022: THIS PROXY
STATEMENT IS AVAILABLE AT WWW.TOUGHBUILT.COM. ADDITIONALLY, AND IN ACCORDANCE WITH THE RULES OF THE U.S. SECURITIES
AND EXCHANGE COMMISSION (“SEC”), YOU MAY ACCESS THESE MATERIALS ONLINE BY VISITING WWW.PROXYVOTE.COM
OR ON THE SEC’S WEBSITE, WWW.SEC.GOV.
TOUGHBUILT INDUSTRIES, INC.
PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS
TABLE OF CONTENTS
ToughBuilt Industries, Inc.
25371 Commerce Centre Drive, Suite 200
Lake Forest, CA 92630
(949) 528-3100
www.toughbuilt.com
PROXY STATEMENT FOR SPECIAL MEETING OF
STOCKHOLDERS
In this proxy statement, we refer to ToughBuilt
Industries, Inc. as “ToughBuilt Industries,” “ToughBuilt,” the “Company,”
“we” and “us.” This proxy statement relates to the solicitation of proxies by our Board of
Directors for use at the Special Meeting.
Information Concerning the Proxy Materials and the Special
Meeting
This proxy statement, along with the accompanying
notice of special meeting of stockholders, contains information about the special meeting of stockholders (the “Special
Meeting”) of ToughBuilt Industries, Inc., including any adjournments or postponements of the Special Meeting. We are holding
the Special Meeting at 1:00 P.M. (Pacific Time) on Tuesday, February 15, 2022. As a result of the public health and
travel risks and concerns due to COVID-19, the Special Meeting will be a virtual meeting via live webcast on the internet. You
will be able to attend the Special Meeting, vote and submit your questions during the Special Meeting by visiting www.virtualshareholdermeeting.com/TBLT2022SM.
You will not be able to attend the Special Meeting in person.
Your vote is very important. For this reason,
our Board is requesting that you permit your shares of common stock, par value $0.0001 per share (the “Common Stock”),
and your shares of Series E Preferred Stock, par value $0.0001 per share (the “Series E Preferred Stock”),
to be represented at the Special Meeting by the proxies named on the enclosed proxy card. This Proxy Statement contains important
information for you to consider when deciding how to vote on the matters brought before the Special Meeting. Please read it carefully.
Voting materials, which include this Proxy
Statement and the enclosed proxy card, will be first mailed to stockholders on or about January 11, 2022.
Only stockholders of record of our Common Stock
and the one holder of Series E Preferred Stock as of the close of business on December 30, 2021 (the “Record Date”)
will be entitled to notice of, and to vote at, the Special Meeting. As of the Record Date, 129,299,607 shares of Common Stock were
issued and outstanding, and nine (9) shares of Series E Preferred Stock were issued and outstanding and held by one (1)
record holder. Holders of Common Stock are entitled to one (1) vote per share for each share of Common Stock. The holder of
the nine (9) outstanding shares of Series E Preferred Stock will be entitled to an aggregate of 3,602,466 votes. Stockholders may
vote in person or by proxy; however, granting a proxy does not in any way affect a stockholder’s right to attend the Special
Meeting and vote in person. Any stockholder giving a proxy has the right to revoke that proxy by (i) filing a later-dated
proxy or a written notice of revocation with us at our principal office at any time before the original proxy is exercised or (ii)
attending the Special Meeting and voting in person.
The stockholders will consider and vote upon
a proposal to authorize the Board to amend the Company’s articles of incorporation, as amended (the “Articles
of Incorporation”), to effect a reverse stock split of all of the outstanding shares of Common Stock by a ratio in the
range of not less than one-for-six and not more than one-for-twelve (the “Common Stock Reverse Split”).
Michael Panosian and Martin Galstyan are named
as attorneys-in-fact in the proxy. Mr. Panosian is our Chief Executive Officer and Chairman of the Board. Martin Galstyan is our
Chief Financial Officer. Messrs. Panosian and Galstyan will vote all shares represented by properly executed proxies returned in
time to be counted at the Special Meeting, as described below under “Voting Procedures and Vote Required.” Where a
vote has been specified in the proxy with respect to the Common Stock Reverse Split, the shares represented by the proxy
will be voted in accordance with those voting specifications. If no voting instructions are indicated, your shares will be voted
as recommended by our Board on all matters.
Voting Procedures and Vote Required
The presence, in person or by proxy, of at
least a majority of the issued and outstanding shares of Common Stock and Series E Preferred Stock, in the aggregate, entitled
to vote at the Special Meeting is necessary to establish a quorum for the transaction of business. Shares represented by proxies
that contain an abstention and “broker non-vote” shares (described below) are counted as present for purposes
of determining the presence of a quorum for the Special Meeting. As of the Record Date, there were shares of Common Stock and Series
E Preferred Stock having a total of 132,902,037 votes. We will need over 66,451,037 shares (50%) to vote or attend the Special
Meeting to achieve a quorum to proceed with the Special Meeting. In the event the Company is unable to achieve a quorum before
or at the Special Meeting, the Board may adjourn the Special Meeting to a later time. Pursuant to Section 78.320(8) of Nevada Revised
Statutes (NRS), unless otherwise provided in a Nevada corporation’s articles of incorporation or the bylaws, once a share
is represented in person or by proxy for any purpose at a meeting, a share shall be deemed present for purposes of determining
a quorum for the remainder of the meeting and for any adjournment of the meeting unless a new record date is or must be fixed for
the adjourned meeting.
Under NRS Section 78.750(2), the determination
of stockholders of record entitled to notice of or to vote at a meeting of stockholders applies to an adjournment or postponement
of the meeting unless the board of directors fixes a new record date for the adjourned or postponed meeting. The board of directors
must fix a new record date if the meeting is adjourned or postponed to a date more than 60 days later than the meeting date set
for the original meeting.
All properly executed proxies delivered pursuant
to this solicitation and not revoked will be voted at the Special Meeting as specified in such proxies.
Our bylaws (the
“Bylaws”) provide that, on all matters (other than the election of directors and except to the extent
otherwise required by our Articles of Incorporation or applicable Nevada law), the affirmative vote of a majority of the
shares outstanding and entitled to vote on the matter will be required for approval. Accordingly, the affirmative vote of a
majority of the shares of Common Stock and Series E Preferred Stock, in the aggregate, outstanding on the Record Date and
entitled to vote on the matter will be required to approve the Common Stock Reverse Split.
If you hold shares beneficially in street name
and do not provide your broker with voting instructions, your shares may constitute “broker non-votes.” Generally,
broker non-votes occur on a matter when a broker is not permitted to vote on that matter without instructions from the beneficial
owner and instructions are not given. Brokers that have not received voting instructions from their clients cannot vote on their
clients’ behalf on “non-routine” proposals. Broker non-votes are not counted in tabulating the voting result
for any particular proposal and shares that constitute broker non-votes are not considered entitled to vote.
The vote on the Common Stock Reverse Split is considered “routine.” Therefore, brokerage firms have authority to vote customers’ unvoted shares held
by the firms in street name on this proposal. However, if a broker does not exercise this authority, such broker non-votes will
have the same effect as a vote against such proposal.
Abstentions are counted as “shares present”
at the Special Meeting for purposes of determining the presence of a quorum but are not counted in the calculation of the vote.
Votes at the Special Meeting will be tabulated
by one or more inspectors of election appointed by the Chief Executive Officer.
The Company has retained Kingsdale Advisors
to assist with the solicitation of proxies for a project management.
If you have any questions or need any assistance with voting,
please contact Kingsdale Advisors:
Kingsdale Advisors
Strategic Shareholder Advisor and Proxy
Solicitation Agent
745 Fifth Avenue, 5th Floor, New York, NY
10151
North American Toll-Free Phone:
1-888-518-1557
Email: contactus@kingsdaleadvisors.com
Call Collect Outside North America: 416-867-2272
No Dissenters’ Rights
Stockholders will not be entitled to dissenters’
rights with respect to any matter to be considered at the Special Meeting.
Delivery of Documents to Stockholders Sharing an Address
The SEC permits a single copy of the proxy
statement to be sent to any household at which two or more stockholders reside if they appear to be members of the same family.
This procedure, referred to as “householding,” reduces the volume of duplicate information stockholders receive and
reduces mailing and printing expenses. A number of brokerage firms have instituted householding.
As a result, if you hold your shares through
a broker and you reside at an address at which two or more stockholders reside, you will likely be receiving only one copy of the
proxy statement unless any stockholder at that address has given the broker contrary instructions. However, if any such beneficial
stockholder residing at such an address wishes to receive a separate copy of the proxy statement in the future, or if any such
beneficial stockholder that elected to continue to receive separate copies of the proxy statement wishes to receive a single copy
of the proxy statement in the future, that stockholder should contact their broker or send a request to ToughBuilt Industries,
Inc. 25371 Commerce Centre Drive, Suite 200, Lake Forest, CA 92630 Attn: Corporate Secretary; Telephone (949) 528-3100.
SECURITY OWNERSHIP OF DIRECTORS, OFFICERS
AND PRINCIPAL STOCKHOLDERS
The following table presents information regarding
beneficial ownership of our equity interests as of December 30, 2021, the Record Date, by:
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each stockholder or group of stockholders known by us to be the beneficial owner of more than 5%
of any class of our voting securities;
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our Named Executive Officers;
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each of our directors; and
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all of our executive officers and directors as a group.
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Beneficial ownership is determined under the
SEC’s rules and, thus, represents voting or investment power concerning our securities as of the Record Date. In computing
the number and percentage of shares beneficially owned by a person, shares that such person may acquire at or within 60 days of
the Record Date are counted as outstanding, while these shares are not counted as outstanding for computing the percentage ownership
of any other person. Unless otherwise indicated, the principal address of each of the persons below is c/o ToughBuilt Industries,
Inc., 25371 Commercentre Drive, Suite 200, Lake Forest, CA 92630. Unless otherwise indicated below, to our knowledge, the persons
and entities named in the table have sole voting and sole investment power concerning all equity interests beneficially owned,
subject to community property laws where applicable.
Name
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Number of Shares
Beneficially Owned
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Percentage of
Class (1)
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Named Executive Officers and Directors
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Michael Panosian—CEO, President and Chairman of the Board
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466,746
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(2)
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*
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Martin Galstyan—CFO
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3,083
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*
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Joshua Keeler—VP of R&D and Director
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84,793
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(3)
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*
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Zareh Khachatoorian—COO
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16,600
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(4)
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*
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Robert Faught—Director
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—
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—
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Linda Moossaian—Director
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—
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—
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William Placke—Director
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—
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—
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All Officers and Directors as a group (7 persons)
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571,222
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(5)
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*
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5% Stockholders
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None
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(1)
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Percentages based on 129,299,607 shares of common stock issued and outstanding as of the Record Date plus shares of common stock the person has the right to acquire as of the Record Date and within 60 days thereafter.
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(2)
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Includes 21,250 shares of common stock issuable upon the exercise of vested options.
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(3)
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Includes 20,000 shares of common stock issuable upon the exercise of vested options.
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(4)
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Includes11,000 shares of common stock issuable upon the exercise of vested options.
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(5)
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Includes 52,250 shares of common stock issuable upon the exercise of vested options.
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PROPOSAL TO AUTHORIZE THE COMMON STOCK
REVERSE SPLIT
Summary
Our Board has unanimously approved a proposal
to amend the Articles of Incorporation to effect a reverse stock split of all of our outstanding shares of Common Stock by a ratio
in the range of one-for-six to one-for-twelve (the “Common Stock Reverse Split”). If the Common Stock Reverse Split is approved by stockholders, the Board will implement the Common for
the purposes of (i) maintaining the listing of our Common Stock on the Nasdaq Capital Market and (ii) to assure that there
are a sufficient number of authorized shares of Common Stock available for issuance.
As previously disclosed on the Current Report
on Form 8-K filed on May 19, 2021 with the Securities and Exchange Commission, the Company received a written notification from
Listing Qualifications Staff of the Nasdaq Stock Market, LLC notifying the Company that it had failed to maintain a minimum bid
price of at least $1.00 per share for the prior 30 consecutive trading day period from April 7, 2021 to May 18, 2021, based upon
the closing bid price for its common stock as required by Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price
Requirement”). The Company initially had a period of 180 calendar days, or until November 15, 2021, to regain compliance
with the Minimum Bid Price Requirement.
As previously disclosed on the Current Report
on Form 8-K filed with the SEC on November 16, 2021, on November 16, 2021, Nasdaq granted the Company a 180-day extension, or until
May 16, 2022 (the “Extension Period”), to satisfy Nasdaq’s Minimum Bid Price Requirement. In order
to be granted the extension, the Company committed to Nasdaq that it will implement a reverse stock split to ensure long-term compliance
with the Minimum Bid Price Requirement by the end of the Extension Period.
Other than the Minimum Bid Price Requirement,
the Company satisfies the listing initial and continued listing requirements of Nasdaq’s Capital Markets.
If at any time before May 16, 2022, the bid
price of the Company’s Common Stock closes at or above $1.00 per share for a minimum of 10 consecutive business days, Nasdaq
will provide written notification that the Company has achieved compliance with the Minimum Bid Price Requirement. If compliance
with the Minimum Bid Price Requirement cannot be demonstrated by May 16, 2022, Nasdaq will provide written notification that the
Company’s Common Stock will be delisted. At that time, the Company may appeal Nasdaq’s determination to a Hearings
Panel.
The Board has elected to approve this Common
Stock Reverse Split in order to allow the Company to regain compliance with Nasdaq’s Minimum Bid Price Requirement. This
approval will also enable the Company to have a sufficient amount of authorized shares of Common Stock to raise additional financing.
The exact ratio of the Common Stock Reverse Split shall be set at a whole number within the above range as determined by our Board in its sole discretion. Our Board
believes that the availability of alternative reverse stock split ratios will provide it with the flexibility to implement the
Common Stock Reverse Split in a manner designed to maximize the anticipated benefits for the Company and its stockholders.
In determining whether to implement the Common Stock Reverse Split following the receipt of stockholder approval, our Board
may consider, among other things, factors such as:
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the historical trading price and trading volume of our Common Stock;
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the then prevailing trading price and trading volume of our Common Stock and the anticipated impact
of the Common Stock Reverse Split on the trading market for our Common Stock;
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our ability to have our shares of Common Stock remain listed on the Nasdaq Capital Market;
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the number of shares of Common Stock needed to reserve for issuance upon exercise
outstanding warrants and other securities;
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the anticipated impact of the Common Stock Reverse Split on our ability to raise additional
financing; and
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prevailing general market and economic conditions.
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The Common Stock Reverse Split will
become effective upon the filing of an amendment to our Articles of Incorporation with the Secretary of State of the State of
Nevada. The amendment filed thereby will set forth the number of shares of Common Stock to be combined into one share of our
Common Stock, within the range set forth in this proposal. Except for adjustments that may result from the treatment of
fractional shares as described below, each holder of our shares of Common Stock will hold the same percentage of our
outstanding Common Stock immediately following the Common Stock Reverse Split as such stockholder holds immediately prior to
the Common Stock Reverse Split.
The text of the form of amendment to the Articles
of Incorporation, which would be filed with the Secretary of State of the State of Nevada to effect the Common Stock Reverse Split,
is set forth in Appendix A to this Proxy Statement. The text of the amendment accompanying this Proxy Statement is, however,
subject to amendment to reflect the exact ratio for the Common Stock Reverse Split and any changes that may be required by the
office of the Secretary of State of the State of Nevada or that the Board may determine to be necessary or advisable ultimately
to comply with applicable law and to effect the Common Stock Reverse Split.
Our Board believes that approval of the amendment
to the Articles of Incorporation to effect the Common Stock Reverse Split is in the best interests of the Company and our stockholders
and has unanimously recommended that the proposed amendment be presented to our stockholders for approval.
Board Requirement to Implement the Common Stock Reverse Split
If the Common Stock Reverse Split is approved,
the Common Stock Reverse Split must be effected (with an exchange ratio determined by our Board as described above) in order to
meet the Minimum Bid Requirement before the expiration of the Extension Period. No further action on the part of stockholders would
be required to either implement or not implement the Common Stock Reverse Split. If our stockholders approve the Common Stock Reverse
Split, we will communicate to the public, prior to the Effective Date (as defined below), additional details regarding the
Common Stock Reverse Split, including the specific ratio selected by the Board.
Effective Date
If the proposed amendment to the Certificate
of Incorporation to give effect to the Common Stock Reverse Split is approved at the Special Meeting, then the Common Stock Reverse
Split will become effective on the effective date of the certificate of amendment to our Certificate of Incorporation with the
office of the Secretary of State of the State of Nevada, which we would expect to be the date of filing (the “Effective
Date”). Except as explained below with respect to fractional shares, each issued share of Common Stock immediately prior
to the Effective Date will automatically be changed, as of the Effective Date, into a fraction of a share of Common Stock, based
on the exchange ratio within the approved range determined by the Board.
Purposes of the Reverse Stock Split
The primary purpose for the Common Stock Reverse
Split is based on the Board’s belief that the Common Stock Reverse Split will be necessary to maintain the listing of our
Common Stock on the Nasdaq Capital Market. Even if our Common Stock organically increases in price to comply with the Minimum Bid
Price Requirement, the Company has committed to Nasdaq to effect a reverse split to ensure long-standing compliance with this Nasdaq
requirement.
The Board has considered the potential harm
to the Company and its stockholders should Nasdaq delist our Common Stock from the Nasdaq Capital Market. Delisting our Common
Stock could adversely affect the liquidity of our Common Stock because alternatives, such as the OTC Bulletin Board, OTC Markets,
and the Pink Sheets, are generally considered to be less efficient markets. An investor likely would find it less convenient to
sell, or to obtain accurate quotations in seeking to buy our Common Stock on an over-the- counter market. Many investors likely
would not buy or sell our Common Stock due to difficulty in accessing over-the-counter markets, policies preventing them from trading
in securities not listed on a national exchange or other reasons. The Board believes that the Common Stock Reverse Split is the
only effective means for us to maintain compliance with the rules of Nasdaq and to avoid, or at least mitigate, the likely adverse
consequences of our Common Stock being delisted from the Nasdaq Capital Market by producing the immediate effect of increasing
the bid price of our Common Stock. In addition, the Company has committed to Nasdaq to effect the Reverse Stock Split in order
to ensure long-term, continued compliance with the Minimum Bid Price Requirement.
Improve the marketability and liquidity
of the Common Stock. If this proposal is approved by the stockholders at the Special Meeting and the Common Stock Reverse Split
is implemented, we also believe that the increased market price of our Common Stock expected as a result of implementing the Common
Stock Reverse Split will improve the marketability and liquidity of our Common Stock and will encourage interest and trading in
our Common Stock. The Common Stock Reverse Split could allow a broader range of institutions to invest in our Common Stock (namely,
funds that are prohibited from buying stocks whose price is below a certain threshold), potentially increasing the liquidity of
our Common Stock. The Common Stock Reverse Split could also help increase analyst and broker interest in our stock as their policies
can discourage them from following or recommending companies with low stock prices. Because of the trading volatility often associated
with low-priced stocks, many brokerage houses and institutional investors have internal policies and practices that either prohibit
them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their
customers. Some of those policies and practices may function to make the processing of trades in low-priced stocks economically
unattractive to brokers. Additionally, because brokers’ commissions on low-priced stocks generally represent a higher percentage
of the stock price than commissions on higher-priced stocks, the current average price per share of our Common Stock can result
in individual stockholders paying transaction costs representing a higher percentage of their total share value than would be the
case if the share price were substantially higher. It should be noted, however, that the liquidity of our Common Stock may in fact
be adversely affected by the proposed Common Stock Reverse Split given the reduced number of shares of Common Stock that would
be outstanding after the Common Stock Reverse Split.
For the above reasons, we believe that will
help us regain and maintain compliance with the Nasdaq listing requirements and, as a result, could also improve the marketability
and liquidity of our Common Stock, is in the best interests of the Company and our stockholders.
Risks of the Common Stock Reverse Split
We cannot assure you that the proposed Common Stock
Reverse Split will increase our stock price and have the desired effect of maintaining compliance with the rules of Nasdaq.
The Board expects that the Common Stock Reverse
Split will increase the market price of our Common Stock so that we are able to regain and maintain compliance with Nasdaq’s
Minimum Bid Price Requirement. However, the effect of the Common Stock Reverse Split upon the market price of our Common Stock
cannot be predicted with any certainty, and the history of similar reverse stock splits for companies in like circumstances is
varied.
It is possible that the per share price of
our Common Stock after the Common Stock Reverse Split will not rise in proportion to the reduction in the number of shares of our
Common Stock outstanding resulting from the Common Stock Reverse Split, and the market price per post-Common Stock Reverse Split
share may not exceed or remain in excess of the $1.00 minimum bid price for a sustained period of time, and the Common Stock Reverse
Split may not result in a per share price that would attract brokers and investors who do not trade in lower priced stocks. Even
if we effect the Common Stock Reverse Split, the market price of our Common Stock may decrease due to factors unrelated to the
Common Stock Reverse Split. In any case, the market price of our Common Stock may also be based on other factors which may be unrelated
to the number of shares outstanding, including our future performance. If the Common Stock Reverse Split is consummated and the
trading price of the Common Stock declines, the percentage decline as an absolute number and as a percentage of our overall market
capitalization may be greater than would occur in the absence of the Common Stock Reverse Split. Even if the market price per post-Common
Stock Reverse Split share of our Common Stock remains in excess of $1.00 per share, we may be delisted due to a failure to meet
other continued listing requirements, including Nasdaq requirements related to the minimum stockholders’ equity, the minimum
number of shares that must be in the public float, the minimum market value of the public float and the minimum number of round
lot holders.
The Common Stock Reverse Split may decrease the liquidity
of our Common Stock.
The liquidity of our Common Stock may be harmed
by the Common Stock Reverse Split given the reduced number of shares of Common Stock that would be outstanding after the Common
Stock Reverse Split, particularly if the stock price does not increase as a result of the Common Stock Reverse Split. In addition,
investors might consider the increased proportion of unissued authorized shares of Common Stock to issued shares to have an anti-takeover
effect under certain circumstances, because the proportion allows for dilutive issuances which could prevent certain stockholders
from changing the composition of the Board or render tender offers for a combination with another entity more difficult to successfully
complete. The Board does not intend for the Common Stock Reverse Split to have any anti- takeover effects.
Principal Effects of the Common Stock Reverse Split
Common Stock
If the Common Stock Reverse Split is approved
by the stockholders at the Special Meeting and the Common Stock Reverse Split is implemented, and thus amend the Articles of Incorporation,
the Company will file a certificate of amendment to the Articles of Incorporation with the Secretary of State of the State of Nevada.
Except for adjustments that may result from the treatment of fractional shares as described below, each issued share of Common
Stock immediately prior to the Effective Date will automatically be changed, as of the Effective Date, into a fraction of a share
of Common Stock based on the exchange ratio within the approved range determined by the Board. In addition, proportional adjustments
will be made to the maximum number of shares of Common Stock issuable under, and other terms of, (i) our stock plans, and (ii)
the number of shares of Common Stock issuable under, and the exercise price of, our outstanding preferred stock, options and warrants.
Except for adjustments that may result from
the treatment of fractional shares of Common Stock as described below, because the Common Stock Reverse Split would apply to all
issued shares of our Common Stock, the Common Stock Reverse Split would not alter the relative rights and preferences of our existing
stockholders nor affect any stockholder’s proportionate equity interest in the Company. For example, a holder of two percent (2%)
of the voting power of the outstanding shares of our Common Stock, in the aggregate, immediately prior to the effectiveness of
the Common Stock Reverse Split will generally continue to hold two percent (2%) of the voting power of the outstanding shares
of our Common Stock, in the aggregate, immediately after the Common Stock Reverse Split. Moreover, the number of stockholders of
record of the Company’s Common Stock will not be affected by the Common Stock Reverse Split. The amendment to the Articles
of Incorporation itself would not change the number of authorized shares of our Common Stock. The Common Stock Reverse Split will
have the effect of creating additional unreserved shares of our authorized Common Stock. Although at present we have no current
arrangements or understandings providing for the issuance of the additional shares of Common Stock that would be made available
for issuance upon effectiveness of the Common Stock Reverse Split, other than those shares needed to satisfy the exercise of the
Company’s outstanding warrants, preferred stock and options, these additional shares of Common Stock may be used by us for
various purposes in the future without further stockholder approval, including, among other things:
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raising capital to fund our operations and to continue as a going concern;
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establishing strategic relationships with other companies;
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providing equity incentives to our employees, officers or directors; and
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expanding our business or product lines through the acquisition of other businesses or products.
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While the Common Stock Reverse Split
will make additional shares of Common Stock available for the Company to use in connection with the foregoing, the primary purpose
of the Common Stock Reverse Split is to increase our stock price in order to regain and maintain compliance with the Minimum
Bid Price Requirement. In addition, the additional shares of Common Stock available for the Company to use in connection with the
foregoing, will also provide for a sufficient number of authorized shares of Common Stock available for any future issuance of
Common Stock upon the exercise of the Company’s outstanding warrants, which will be considered in determining the ratio of
the Common Stock Reverse Split.
Effect on Employee Plans, Options, Restricted Stock
Awards and Convertible or Exchangeable Securities, including the Company’s Nasdaq-listed Warrants.
Pursuant to the terms of the 2015 Stock Incentive
Plan and the 2018 Stock Incentive Plan (collectively, the “Plans”), the Board or a committee thereof, as
applicable, will adjust the number of shares of Common Stock available for future grant under the Plans, the number of shares of
Common Stock underlying outstanding awards, the exercise price per share of outstanding stock options, and other terms of outstanding
awards issued pursuant to the Plans to equitably reflect the effects of the Common Stock Reverse Split. Based upon the Common Stock
Reverse Split ratio determined by the Board, proportionate adjustments are also generally required to be made to the per share
exercise or conversion prices, as applicable, and the number of shares of Common Stock issuable upon the exercise or conversion,
as applicable, of outstanding options, preferred stock and warrants, including, but not limited to the Company’s warrants that
are listed on the Nasdaq Capital Market under the symbol “TBLTW,” and any other convertible or exchangeable securities that
may entitle the holders thereof to purchase, exchange for, or convert into, shares of Common Stock. This would result in approximately
the same aggregate price being required to be paid under such options, preferred stock, warrants and other then outstanding convertible
or exchangeable securities upon exercise or conversion, as applicable, and approximately the same value of shares of Common Stock
being delivered upon such exercise, exchange or conversion, immediately following the Common Stock Reverse Split as was the case
immediately preceding the Common Stock Reverse Split. The number of shares of Common Stock subject to restricted stock awards and
restricted stock units will be similarly adjusted, subject to our treatment of fractional shares of Common Stock. The number of
shares of Common Stock reserved for issuance pursuant to these securities and our Plans will be adjusted proportionately based
upon the Common Stock Reverse Split ratio determined by the Board, subject to our treatment of fractional shares of Common Stock.
Listing
Our shares of Common Stock currently trade
on the Nasdaq Capital Market under the symbol “TBLT.” The Common Stock Reverse Split will directly affect the
listing of our Common Stock on the Nasdaq Capital Market, and we believe that the Common Stock Reverse Split could potentially
increase our stock price, facilitating compliance with the Minimum Bid Price Requirement. Following the Common Stock Reverse Split,
we intend for our Common Stock to continue to be listed on the Nasdaq Capital Market under the symbol “TBLTD”, subject
to our ability to continue to comply with Nasdaq rules, although our Common Stock would have a new committee on uniform securities
identification procedures (“CUSIP”) number, a number used to identify our Common Stock.
“Public Company” Status
Our Common Stock is currently registered under
Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and we are subject
to the “public company” periodic reporting and other requirements of the Exchange Act. The proposed Common Stock Reverse
Split will not affect our status as a public company or this registration under the Exchange Act. The Common Stock Reverse Split
is not intended as, and will not have the effect of, a “going private transaction” covered by Rule 13e-3 under the
Exchange Act.
Odd Lot Transactions
It is likely that some of our stockholders
will own “odd-lots” of less than 100 shares of Common Stock following the Common Stock Reverse Split. A purchase or
sale of less than 100 shares of Common Stock (an “odd lot” transaction) may result in incrementally higher trading
costs through certain brokers, particularly “full service” brokers, and generally may be more difficult than a “round
lot” sale. Therefore, those stockholders who own less than 100 shares of Common Stock following the Common Stock Reverse
Split may be required to pay somewhat higher transaction costs and may experience some difficulties or delays should they then
determine to sell their shares of Common Stock.
Authorized but Unissued Shares; Potential Anti-Takeover
Effects.
Our Articles of Incorporation presently authorizes
200,000,000 shares of Common Stock and 5,000,000 shares of blank check preferred stock, par value $0.0001 per share. The Common
Stock Reverse Split would not change the number of authorized shares of the Common Stock, although the Common Stock Reverse Split
would decrease the number of issued and outstanding shares of Common Stock. Therefore, because the number of issued and outstanding
shares of Common Stock would decrease, the number of shares of Common Stock remaining available for issuance by us in the future
would increase.
Such additional shares of Common Stock would
be available for issuance from time to time for corporate purposes such as issuances of Common Stock in connection with capital-raising
transactions and acquisitions of companies or other assets, as well as for issuance upon conversion or exercise of securities such
as convertible preferred stock, convertible debt, warrants or options convertible into or exercisable for Common Stock. We believe
that the availability of the additional shares of Common Stock will provide us with the flexibility to meet business needs as they
arise, to take advantage of favorable opportunities and to respond effectively in a changing corporate environment. For example,
we may elect to issue shares of Common Stock to raise equity capital, to make acquisitions through the use of stock, to establish
strategic relationships with other companies, to adopt additional employee benefit plans or reserve additional shares of Common
Stock for issuance under such plans, where the Board determines it advisable to do so, without the necessity of soliciting further
stockholder approval, subject to applicable stockholder vote requirements under Nevada law and Nasdaq rules. If we issue additional
shares of Common Stock for any of these purposes, the aggregate ownership interest of our current stockholders, and the interest
of each such existing stockholder, would be diluted, possibly substantially.
The additional shares of our Common Stock that
would become available for issuance upon an effective Common Stock Reverse Split could also be used by us to oppose a hostile takeover
attempt or delay or prevent a change of control or changes in or removal of our management, including any transaction that may
be favored by a majority of our stockholders or in which our stockholders might otherwise receive a premium for their shares of
Common Stock over then-current market prices or benefit in some other manner. Although the increased proportion of authorized but
unissued shares of Common Stock to issued shares of Common Stock could, under certain circumstances, have an anti-takeover effect,
the Common Stock Reverse Split is not being proposed in order to respond to a hostile takeover attempt or to an attempt to obtain
control of the Company.
Fractional Shares
We will not issue fractional certificates for
post-Common Stock Reverse Split shares of Common Stock in connection with the Common Stock Reverse Split. To the extent any holders
of pre-Common Stock Reverse Split shares of Common Stock are entitled to fractional shares of Common Stock as a result of the Common
Stock Reverse Split, the Company will issue an additional share to all holders of fractional shares of Common Stock.
No Dissenters’ Rights
Under Nevada law, our stockholders would not
be entitled to dissenters’ rights or rights of appraisal in connection with the implementation of the Common Stock Reverse
Split, and we will not independently provide our stockholders with any such rights.
Certain United States Federal Income Tax Consequences
The following is a summary of certain United
States federal income tax consequences of the Common Stock Reverse Split. It does not address any state, local or foreign income
or other tax consequences, which, depending upon the jurisdiction and the status of the stockholder/taxpayer, may vary from the
United States federal income tax consequences. It applies to you only if you held pre- Common Stock Reverse Split shares of Common
Stock as capital assets for United States federal income tax purposes. This discussion does not apply to you if you are a member
of a class of our stockholders subject to special rules, such as (a) a dealer in securities or currencies, (b) a trader
in securities that elects to use a mark-to-market method of accounting for your securities holdings, a bank, (d) a life insurance
company, (e) a tax-exempt organization, (f) a person that owns shares of Common Stock that are a hedge, or that are hedged,
against interest rate risks, (g) a person who owns shares of Common Stock as part of a straddle or conversion transaction
for tax purposes or (h) a person whose functional currency for tax purposes is not the U.S. dollar. The discussion is based
on the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), its legislative history,
existing, temporary and proposed regulations under the Internal Revenue Code, published rulings and court decisions, all as of
the date hereof. These laws, regulations and other guidance are subject to change, possibly on a retroactive basis. We have not
sought and will not seek an opinion of counsel or a ruling from the Internal Revenue Service regarding the United States federal
income tax consequences of the Common Stock Reverse Split.
PLEASE CONSULT YOUR OWN TAX ADVISOR CONCERNING THE CONSEQUENCES
OF THE COMMON STOCK REVERSE SPLIT IN YOUR PARTICULAR CIRCUMSTANCES UNDER THE INTERNAL REVENUE CODE AND THE LAWS OF ANY OTHER TAXING
JURISDICTION.
Tax Consequences to United States Holders
of Common Stock. A United States holder, as used herein, is a stockholder who or that is, for United States federal income
tax purposes: (a) a citizen or individual resident of the United States, (b) a domestic corporation, (c) an estate
whose income is subject to United States federal income tax regardless of its source, or (d) a trust, if a United States court
can exercise primary supervision over the trust’s administration and one or more United States persons are authorized to
control all substantial decisions of the trust. This discussion applies only to United States holders.
Except for adjustments that may result from
the treatment of fractional shares of Common Stock as described above, no gain or loss should be recognized by a stockholder upon
such stockholder’s exchange of pre-Common Stock Reverse Split shares of Common Stock for post-Common Stock Reverse Split
shares of Common Stock pursuant to the Common Stock Reverse Split, and the aggregate adjusted basis of the post-Common Stock Reverse
Split shares of Common Stock received will be the same as the aggregate adjusted basis of the Common Stock exchanged for such new
shares. The stockholder’s holding period for the post-Common Stock Reverse Split shares of Common Stock will include the
period during which the stockholder held the pre- Common Stock Reverse Split shares of Common Stock surrendered.
Accounting Consequences
Following the Effective Date of the Common
Stock Reverse Split, if any, the net income or loss and net book value per share of Common Stock will be increased because
there will be fewer shares of the Common Stock outstanding. We do not anticipate that any other accounting consequences would arise
as a result of the Common Stock Reverse Split.
Exchange of Stock Certificates
As of the Effective Date, each certificate
representing shares of our Common Stock outstanding before the Common Stock Reverse Split will be deemed, for all corporate purposes,
to evidence ownership of the reduced number of shares of our Common Stock resulting from the Common Stock Reverse Split. All shares
of Common Stock underlying options, warrants, preferred stock and other securities exchangeable or exercisable for or convertible
into Common Stock also automatically will be adjusted on the Effective Date.
Our transfer agent, VStock Transfer, LLC, will
act as the exchange agent for purposes of exchanging stock certificates subsequent to the Common Stock Reverse Split. Shortly after
the Effective Date, stockholders of record will receive written instructions requesting them to complete and return a letter of
transmittal and surrender their old stock certificates for new stock certificates reflecting the adjusted number of shares as a
result of the Common Stock Reverse Split. Certificates representing shares of Common Stock issued in connection with the Common
Stock Reverse Split will continue to bear the same restrictive legends, if any, that were borne by the surrendered certificates
representing the shares of Common Stock outstanding prior to the Common Stock Reverse Split. No new certificates will be issued
until such stockholder has surrendered any outstanding certificates, together with the properly completed and executed letter of
transmittal, to the exchange agent. Until surrendered, each certificate representing shares of Common Stock outstanding before
the Common Stock Reverse Split would continue to be valid and would represent the adjusted number of shares of Common Stock, based
on the ratio of the Common Stock Reverse Split.
Any stockholder whose stock certificates are
lost, destroyed or stolen will be entitled to a new certificate or certificates representing post-Common Stock Reverse Split shares
of Common Stock upon compliance with the requirements that we and our transfer agent customarily apply in connection with lost,
destroyed or stolen certificates. Instructions as to lost, destroyed or stolen certificates will be included in the letter of instructions
from the exchange agent.
Upon the Common Stock Reverse Split, we intend
to treat stockholders holding our Common Stock in “street name,” through a bank, broker or other nominee, in the same
manner as registered stockholders whose shares of Common Stock are registered in their names. Banks, brokers and other nominees
will be instructed to effect the Common Stock Reverse Split for their beneficial holders holding our Common Stock in “street
name.” However, such banks, brokers and other nominees may have different procedures than registered stockholders for processing
the Common Stock Reverse Split. If you hold your shares in “street name” with a bank, broker or other nominee, and
if you have any questions in this regard, we encourage you to contact your bank, broker or nominee.
YOU SHOULD NOT DESTROY YOUR STOCK CERTIFICATES AND YOU SHOULD NOT
SEND THEM NOW. YOU SHOULD SEND YOUR STOCK CERTIFICATES ONLY AFTER YOU HAVE RECEIVED INSTRUCTIONS FROM THE EXCHANGE AGENT AND IN
ACCORDANCE WITH THOSE INSTRUCTIONS.
If any certificates for shares of Common Stock
are to be issued in a name other than that in which the certificates for shares of Common Stock surrendered are registered, the
stockholder requesting the reissuance will be required to pay to us any transfer taxes or establish to our satisfaction that such
taxes have been paid or are not payable and, in addition, (a) the transfer must comply with all applicable federal and state
securities laws, and (b) the surrendered certificate must be properly endorsed and otherwise be in proper form for transfer.
Book-Entry
The Company’s registered stockholders
may hold some or all of their shares of Common Stock electronically in book-entry form with our transfer agent. These stockholders
do not have stock certificates evidencing their ownership of Common Stock. They are, however, provided with a statement reflecting
the number of shares of Common Stock registered in their accounts.
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If you hold registered shares of Common Stock in book-entry form, you do not need to take any action
to receive your post- Common Stock Reverse Split shares of Common Stock in registered book-entry form.
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If you are entitled to post-Common Stock Reverse Split shares of Common Stock, a transaction
statement will automatically be sent to your address of record by our transfer agent as soon as practicable after the Effective
Date indicating the number of shares of Common Stock that you hold.
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Interests of Directors and Executive Officers
Our directors and executive officers have no
substantial interests, directly or indirectly, in the matters set forth in this proposal except to the extent of their ownership
of shares of our Common Stock and equity awards granted to them under our equity incentive plans.
Vote Required and Recommendation
Our Bylaws provide that, on all matters (other
than the election of directors and except to the extent otherwise required by our Articles of Incorporation or applicable Nevada
law), the affirmative vote of a majority of the shares outstanding and entitled to vote on the matter will be required for approval.
Accordingly, the affirmative vote of a majority of the shares of Common Stock, Series C Preferred Stock and Series F Preferred
Stock (voting on an as-converted to Common Stock basis), in the aggregate, outstanding on the Record Date and entitled to
vote on the matter will be required to approve the Common Stock Reverse Split.