UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE
14A
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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Filed by the Registrant ☐ Filed by a Party other
than the Registrant
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material under §240.14a-12 |
TOUGHBUILT
INDUSTRIES, INC.
(Name of Registrant as Specified in its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if
other than the Registrant)
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Title of each class of securities to which transaction applies: |
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Aggregate number of securities to which transaction applies: |
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
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Proposed maximum aggregate value of transaction: |
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Total fee paid:
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
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Amount Previously Paid: |
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Form, Schedule or Registration Statement No.: |
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Filing Party: |
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Date Filed: |
PRELIMINARY COPY SUBJECT TO COMPLETION DATED
FEBRUARY 22, 2022
In accordance with Rule 14a-6(d) under Regulation 14A, please be
advised that ToughBuilt Industries, Inc. intends to release definitive copies of this Proxy Statement to security holders on or
about March 4, 2022.
TOUGHBUILT INDUSTRIES, INC.
25371 Commercentre Drive, Suite 200
Lake Forest, CA 92630
(949) 528-3100
www.toughbuilt.com
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
March 4, 2022
Dear Stockholder:
We are pleased to invite you to attend a Special
Meeting of Stockholders (the “Special Meeting), of ToughBuilt Industries, Inc., a Nevada corporation (“ToughBuilt”
or the “Company”), to be held at 1:00 p.m., Pacific Time, on April 1, 2022 for the following purpose:
| 1. | Reverse Stock Split: to approve an amendment
to our Articles of Incorporation, as amended (the “Charter”), to effect a reverse stock split of our outstanding shares
of common stock by a ratio of any whole number between 1-for-100 and 1-for-200, at any time prior to December 31, 2022, the implementation
and timing of which shall be subject to the discretion of our Board of Directors (“Board”). |
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 need the 16-digit control number provided on the proxy card. You will not be able to attend the Special Meeting in
person. We are pleased to utilize the virtual stockholder meeting technology to (i) provide ready access and cost savings
for our stockholders and the Company, and (ii) to promote social distancing pursuant to guidance provided by the U.S. Centers
for Disease Control due to COVID-19. The virtual meeting format allows attendance from any location in the world.
Details regarding admission to the Special
Meeting and the business to be conducted are more fully described in the accompanying Notice of 2022 Special Meeting of Stockholders,
(the “Notice”), and 2022 Special Meeting Proxy Statement (the “Proxy Statement”).
Your vote is important! Whether or not you
plan to virtually attend the Special Meeting, we hope you will vote as soon as possible. Information about voting methods is set
forth in the accompanying Notice and Proxy Statement.
If you have any questions with respect to voting,
please call our Chief Financial Officer, Martin Galstyan, at (949) 528-3100.
Sincerely,
Michael Panosian |
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Chairman of the Board and Chief Executive Officer |
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Important Notice
Regarding the Availability of Proxy Materials
for the Stockholder
Meeting to be Held on April 1, 2022.
Electronic
copies of the Notice of Stockholder Special Meeting, our Proxy Statement and our Annual Report on Form 10-K for the fiscal year
ended December 31, 2022 (the “Annual Report”) are available online at www.proxyvote.com.
THIS
PROXY STATEMENT AND ENCLOSED PROXY CARD ARE
FIRST BEING MAILED TO STOCKHOLDERS ON OR ABOUT March 4, 2022.
PRELIMINARY COPY SUBJECT TO COMPLETION DATED
FEBRUARY 22, 2022
In accordance with Rule 14a-6(d) under Regulation
14A, please be advised that ToughBuilt Industries, Inc. intends to release definitive copies of this Proxy Statement to security
holders on or about March 4, 2022.
NOTICE OF SPECIAL
MEETING OF STOCKHOLDERS
Dear Stockholders:
You are invited to attend ToughBuilt Industries,
Inc.’s Special Meeting. At the Special Meeting, stockholders will vote on the following sole proposal:
| 1. | Reverse Stock Split: to approve an
amendment to our Articles of Incorporation, as amended (the “Charter”), to effect a reverse stock split of our
outstanding shares of common stock by a ratio of any whole number between 1-for-100 and 1-for-200, at any time prior to
December 31, 2022, the implementation and timing of which shall be subject to the discretion of our Board of Directors
(“Board”). |
Stockholders also will transact any other business
that may properly come before the Special Meeting or any adjournment or postponement of the Special Meeting.
MEETING INFORMATION
Meeting Date: |
Friday, April 1, 2022 |
Time: |
1:00 p.m. Pacific Time |
Location: |
Virtually, via the Internet www.virtualshareholdermeeting.com/TBLT2022SM |
Record Date: |
You can vote if you were a stockholder of record on February 15, 2022. |
Your vote matters! Whether or not you plan
to virtually attend the Special Meeting, please ensure that your shares are represented by voting, signing, dating and returning
your proxy in the enclosed envelope, which requires no postage if mailed in the United States.
By Order of the Board of Directors
Martin Galstyan
Chief Financial Officer
March 4, 2022
IMPORTANT NOTICE REGARDING AVAILABILITY
OF PROXY MATERIALS. This Proxy Statement and the proxy card are being mailed to our stockholders on or about March 4,
2022. This Proxy Statement is available to holders of our common stock at www.proxyvote.com.
SUMMARY INFORMATION
To assist you in reviewing this meeting’s
sole proposal, we call your attention to the following proxy summary. This is only a summary; please review this Proxy Statement in
full.
Summary of Stockholder Voting Matters
Sole
Proposal: |
For More
Information See |
Board of Directors
Recommendation |
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1. Reverse Stock Split: to approve an amendment to our Charter to effect a reverse stock split of our outstanding shares of common stock by a ratio of any whole number between 1-for-100 and 1-for-200, at any time prior to December 31, 2022, the implementation and timing of which shall be subject to the discretion of our Board. |
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✓ FOR |
Proxy Statement
This Proxy Statement, with the enclosed proxy
card, is being mailed to stockholders of ToughBuilt Industries, Inc. in connection with the solicitation by our Board of proxies
to be voted at our Special Meeting and at any postponements or adjournments thereof. The Special Meeting will be held on April 1, 2022, at 1:00 p.m., Pacific Time.
You will be able to attend the Special Meeting,
vote and submit your questions during the Special Meeting by www.virtualshareholdermeeting.com/TBLT2022SM. You will
need the 16-digit control number provided on the proxy card. You will not be able to attend the Special Meeting in person.
We are pleased to utilize the virtual stockholder meeting technology to (i) provide ready access and cost savings for
our stockholders and the Company, and (ii) to promote social distancing pursuant to guidance provided by the U.S. Centers
for Disease Control due to COVID-19. The virtual meeting format allows attendance from any location in the world.
This Proxy Statement and the enclosed proxy
card are first being mailed to our stockholders on or about March 4, 2022.
GENERAL INFORMATION
ABOUT THE MEETING
PROXY SOLICITATION
The Company is soliciting your vote on matters
that will be presented at the Special Meeting and at any adjournment or postponement thereof. This Proxy Statement contains information
on these matters to assist you in voting your shares.
This Proxy Statement and the proxy card are
being mailed to our stockholders on or about March 4, 2022. This Proxy Statement is available to holders of our securities
entitled to vote at the meeting at www.proxyvote.com. This Proxy Statement is also available free of charge on www.sec.gov.
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 by telephone at 1-888-518-1557 or email at contactus@kingsdaleadvisors.com. Callers from outside
of North America can call collect by dialing 416-867-2272.
STOCKHOLDERS
ENTITLED TO VOTE
All stockholders of record of our common stock,
our Series E Non-Convertible Preferred Stock (“Series E Preferred Stock”), Series F Convertible Preferred Stock (“Series
F Preferred Stock”), and Series G Convertible Preferred Stock (the “Series G Preferred Stock”) at the close of
business on February 15, 2022 (the “Record Date”), are entitled to receive the Notice and to vote their shares at the
Special Meeting.
As of the Record Date, 129,300,090 shares
of our common stock, nine shares of Series E Preferred Stock, 2,500 shares of our Series F Preferred Stock, and 2,500 shares
of Series F Preferred Stock were outstanding. Each share of common stock is entitled to one vote on the sole proposal. The
Series E Preferred Stock is entitled to an aggregate of 3,602,466 votes on the sole proposal. The Series F Preferred
Stock is entitled to 3,998 votes per share on the sole proposal, or an aggregate of 9,995,000 votes. The Series G Preferred
Stock is entitled to 500,000 votes per share on the sole proposal, or an aggregate of 1,250,000,000 votes; provided, however,
that such votes must be counted by the Company in the same proportion as the aggregate shares of common stock voted on
the sole proposal. Except as set forth in the Certificates of Designation governing the Series F Preferred Stock and Series G
Preferred Stock, the Series F Preferred Stock and Series
G Preferred Stock are not entitled to vote on any other matter.
VOTING METHODS
You may vote at the Special Meeting by delivering
a proxy card in person or you may cast your vote in any of the following ways:
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MAIL |
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INTERNET |
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PHONE |
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ONLINE AT THE MEETING |
Mailing your signed proxy card or voter instruction card. |
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Using the Internet at www.proxyvote.com. |
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Calling toll-free from the United States, U.S. territories and
Canada to 1-800-690-6903. |
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You can vote at the meeting at
www.virtualshareholdermeeting.com/TBLT2022SM.
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HOW YOUR SHARES
WILL BE VOTED
In each case, your shares will be voted
as you instruct. If you return a signed card, but do not provide voting instructions, your shares will be voted FOR the sole
proposal. If you are the record holder of your shares, you may revoke or change your vote any time before the proxy is
exercised. To do so, you must do one of the following:
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Vote over the Internet or by telephone as instructed above. Only your latest Internet or telephone vote is counted. You may not revoke or change your vote over the Internet or by telephone after 11:59 p.m., Eastern Time, on March 27, 2022. |
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Sign a new proxy card and submit it by mail, which must be received no later than March 27, 2022. Only your latest dated proxy card will be counted. |
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Virtually attend the Special Meeting at www.virtualshareholdermeeting.com/TBLT2022SM. Virtually attending the Special Meeting will not by itself revoke a previously granted proxy. |
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Give our Chief Financial Officer written notice before or at the meeting that you want to revoke your proxy. |
Even if you plan to attend the Special Meeting,
please vote as promptly as possible using one of the voting methods above. Make sure you have your proxy/voting instruction card
in hand and follow the instructions. No matter how you decide to vote, your vote must be received before the polls are closed during
the Special Meeting in order to be counted.
If you request printed copies of the proxy
materials by mail, you may also vote by signing and submitting your proxy card and returning it by mail, if you are the stockholder
of record, or by signing the voter instruction form provided by your bank or broker and returning it by mail, if you are the beneficial
owner but not the stockholder of record. This way your shares will be represented whether or not you are able to attend the Special
Meeting.
A complete list of such stockholders will be
available for examination by the stockholders during the Special Meeting via the meeting platform. The Special Meeting may be adjourned
from time to time without notice other than by announcement at the Special Meeting; provided, however, if the adjournment
is for more than sixty (60) days after the date of the Special Meeting, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting is required to be given to each stockholder.
It is important that your shares be represented
regardless of the number of shares you may hold. Whether or not you plan to attend the Special Meeting, please complete, date,
sign and return the enclosed proxy card promptly in the enclosed return envelope. You may also vote electronically via the internet
or by telephone. The prompt return of proxies will ensure a quorum and save the Company the expense of further solicitation. Each
proxy granted may be revoked by the stockholder appointing such proxy at any time before it is voted. If you receive more than
one proxy card because your shares are registered in different names or addresses, each proxy should be signed and returned to
ensure that all of your shares will be voted.
BROKER VOTING
AND VOTES REQUIRED FOR The sole PROPOSAL
If your shares are held in a stock brokerage account or by a bank
or other holder of record, you are considered the “beneficial owner” of shares held in street name. The Notice has
been forwarded to you by your broker, bank or other holder of record who is considered the stockholder of record of those shares.
As the beneficial owner, you may direct your broker, bank or other holder of record on how to vote your shares by using the proxy
card included in the materials made available or by following their instructions for voting on the Internet.
The following table summarizes how abstentions are treated with
respect to our sole proposal:
Proposal |
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Votes Required |
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Treatment of
Abstentions |
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Routine
or Non-
Routine
Matter |
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Treatment of
Broker Non-Votes |
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Proposal 1. Reverse Stock Split: to approve an amendment to the Charter, to effect a reverse stock split of our outstanding shares of common stock by a ratio of any whole number between 1-for-100 and 1-for-200, at any time prior to December 31, 2022, the implementation and timing of which shall be subject to the discretion of our Board. |
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Affirmative vote of the majority of voting power of the outstanding shares of capital stock entitled to vote. |
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Abstentions will be treated as a vote “against” such proposal. |
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Non-routine |
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Broker non-votes will be taken into account in determining whether a quorum is present but not in determining the outcome of the proposal. |
Proposal 1: Reverse Stock Split.
The approval of the amendment to the
Charter to effect a reverse stock split requires the affirmative votes of a majority of the combined voting power of the
outstanding shares of common stock, Series E Preferred Stock, Series F Preferred Stock and Series G Preferred Stock, voting
together as a single class, present in person or represented by proxy and entitled to vote on the proposal.
Shares Entitled to Vote
As of the Record Date, 129,300,090 shares of our common stock, nine
shares of Series E Preferred Stock, 2,500 shares of our Series F Preferred Stock, and 2,500 shares of Series G Preferred Stock
were outstanding. Each share of common stock is entitled to one vote on the sole proposal. The Series E Preferred Stock is entitled
to an aggregate of 3,602,466 votes on the sole proposal. The Series F Preferred Stock is entitled to an aggregate of 9,995,000
votes on the sole proposal. The Series G Preferred Stock is entitled to an aggregate of 1,250,000,000 votes on the sole proposal;
provided, however, that such votes must be counted by the Company in the same proportion as the aggregate shares
of common stock voted on the sole proposal. As an example, if the holders of 50.5% of the outstanding common stock are voted at
the meeting in favor of the sole proposal, the Company can count 50.5% of the votes cast by the holders of Series G Preferred Stock
as votes in favor of the sole proposal.
Except as set forth in the Certificates of Designation governing the Series F Preferred Stock and Series G
Preferred Stock,
the Series F Preferred Stock and Series G Preferred Stock are not entitled to vote on any other matter.
Broker Voting
If your shares are held by your broker, bank
or other holder of record as a nominee or agent (i.e., the shares are held in “street name”), you should follow the
instructions provided by your broker, bank or other holder of record.
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 Reverse Split is considered “non-routine.”
Accordingly, a broker may not vote on this sole proposal without instructions from its customer, and broker “non-votes”
may occur with respect to 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.
GENERAL INFORMATION
ABOUT THE MEETING
Quorum
The presence, in person or by proxy, of at
least a majority of the issued and outstanding shares of common stock, Series E Preferred Stock, Series F Preferred Stock and Series
G 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 129,300,090 shares of common stock outstanding, nine shares of Series E Preferred Stock outstanding having a total of
an aggregate of 3,602,466 votes, 2,500 shares of Series F Preferred Stock outstanding having a total of an aggregate of 9,995,000
votes, and 2,500 shares of Series G Preferred Stock outstanding having a total of an aggregate of 1,250,000,000 votes. We will
need over 696,448,778 (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 Amended and Restated Bylaws (the “Bylaws”)
provide that, on all matters (other than the election of directors and except to the extent otherwise required by our Charter
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 outstanding on the Record Date and entitled
to vote on the matter will be required to approve the Reverse Split.
No Dissenters’ Rights
Stockholders will not be entitled to dissenters’ rights with
respect to any matter to be considered at the Special Meeting.
EXPENSES AND
SOLICITATION
We will bear the costs of printing and mailing
proxies. In addition to soliciting stockholders by mail or through our regular employees, we may request banks, brokers and other
custodians, nominees and fiduciaries to solicit their customers who have shares of our common stock and/or shares of our preferred
stock registered in the name of a nominee and, if so, will reimburse such banks, brokers and other custodians, nominees and fiduciaries
for their reasonable out-of-pocket costs.
Proxies may be solicited by directors, executive
officers and other employees of the Company in person or by telephone or mail only for use at the Special Meeting or any adjournment
thereof. The Company has retained Kingsdale Advisors to assist with the solicitation of proxies for a project management fee of
$12,500, plus reimbursement for out-of-pocket expenses. All solicitation costs will be borne by the Company.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information
regarding the beneficial ownership of common stock as of the Record Date by (a) each person known by us to be the beneficial owner
of more than 5% of the outstanding shares of common stock (including shares of common stock issuable upon conversion of our Series
F Preferred Stock and Series G Preferred Stock), (b) each named executive officer of the Company, (c) each director of the Company,
and (d) all executive officers and directors as a group.
The percentage of common stock outstanding
is based on 129,300,090 shares of our common stock outstanding as of the Record Date. For purposes of the table below, and in accordance
with the rules of the Securities and Exchange Commission (the “SEC”), we deem shares of common stock subject to options
that are currently exercisable or exercisable within sixty days of the Record Date to be outstanding and to be beneficially owned
by the person holding the options for the purpose of computing the percentage ownership of that person, but we do not treat them
as outstanding for the purpose of computing the percentage ownership of any other person. Except as otherwise noted, each of the
persons or entities in this table has sole voting and investing power with respect to all of the shares of common stock beneficially
owned by them, subject to community property laws, where applicable. Except as otherwise noted below, the street address of each
beneficial owner is c/o ToughBuilt Industries, Inc., 25371 Commercentre Drive, Suite 200, Lake Forest, CA 92630.
Name | |
Number of Shares Beneficially Owned | | |
Percentage
of Class (1) | |
Named Executive Officers and Directors | |
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Michael Panosian, Chief Executive Officer, President and Chair of the Board | |
| 445,496 | (2) | |
| * | |
Martin Galstyan, Chief Financial Officer | |
| 3,033 | | |
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Joshua Keeler, Vice President of Research and Development and Director | |
| 79,793 | (3) | |
| * | |
Zareh Khachatoorian, Chief Operations Officer | |
| 14,950 | (4) | |
| * | |
Robert Faught, Director | |
| — | | |
| - | |
Linda Moossaian, Director | |
| — | | |
| - | |
William Placke, Director | |
| — | | |
| - | |
All Officers and Directors as a group (7 persons) | |
| 543,272 | | |
| * | |
5% or More Stockholders | |
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None | |
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*Less than 1%
| (1) | Percentages based on 129,300,090 shares of common stock issued and outstanding as of February 15, 2022 plus shares of common
stock the person has the right to acquire within 60 days thereafter. |
| (2) | Includes 21,250 shares of common stock issuable upon vested options. |
| (3) | Includes 15,000 shares of common stock issuable upon vested options. |
| (4) | Includes 9,350 shares of common stock issuable upon vested options. |
Proposals
Proposal 1. Reverse Stock Split.
To approve to amend the Charter to effect a reverse stock split of our outstanding shares of common stock by a ratio of any whole
number between 1-for-100 and 1-for-200, at any time prior to December 31, 2022, the implementation and timing of which shall be
subject to the discretion of the board
We are seeking stockholder approval to grant
the Board discretionary authority to amend the Charter to effect a reverse stock split of the issued and outstanding shares of
our common stock by a ratio of any whole number between 1-for-100 and 1-for-200, at any time prior to December 31, 2022 (the “Reverse
Split”). A copy of the form of amendment for the Reverse Stock Split is attached to this Proxy Statement as Appendix
A.
The Reverse Split will not change the number
of authorized shares of common stock or preferred stock or the relative voting power of such holders of our outstanding common
stock and preferred stock. The number of authorized but unissued shares of our common stock will materially increase and will be
available for reissuance by the Company. The Reverse Split, if effected, would affect all of our stockholders uniformly.
The Board unanimously approved, and recommended
seeking stockholder approval of the Reverse Split, on February 15, 2022. If this Reverse Split is approved by the stockholders,
the Board will have the authority, in its sole discretion, without further action by the stockholders, to effect the Reverse Split.
The Board’s decision as to whether and when to effect the Reverse Split, if approved by the stockholders, will be based on
a number of factors, including prevailing market conditions, existing and expected trading prices for our common stock, actual
or forecasted results of operations, and the likely effect of such results on the market price of our common stock.
A reverse stock split will also affect our
outstanding stock options, restricted stock units and shares of common stock issued under our 2016 Equity Incentive Plan and 2018
Equity Incentive Plan, as well as our outstanding warrants. Under these plans and securities, the number of shares of common stock
deliverable upon exercise or grant must be appropriately adjusted and appropriate adjustments must be made to the purchase price
per share to reflect the Reverse Split.
The Reverse Split is not being proposed in
response to any effort of which we are aware to accumulate our shares of common stock or obtain control of the Company, nor is
it a plan by management to recommend a series of similar actions to the Board or our stockholders.
There are certain risks associated with a reverse
stock split, and we cannot accurately predict or assure the Reverse Split will produce or maintain the desired results (for more
information on the risks see the section below entitled “Certain Risks Associated with a Reverse Stock Split”).
The Board believes that the benefits to the Company outweigh the risks and recommends that you vote in favor of granting the Board
the discretionary authority to effect the Reverse Split.
Reasons for the Reverse Stock Split
The Board believes that effecting the Reverse
Split would increase the price of our common stock which would, among other things, help us to:
| · | meet certain listing requirements of the Nasdaq Capital Market; |
| · | appeal to a broader range of investors to generate greater interest in the Company; and |
| · | improve perception of our common stock as an investment security. |
In order to procure the vote necessary to effect
the Reverse Split, on February 15, 2022 we closed a preferred stock financing, in which we issued 2,500 shares of Series F Preferred
Stock, with an aggregate stated value of $2,500,000, and 2,500 shares of Series G Preferred Stock, with an aggregate stated value
of $2,500,000. The Series F Preferred Stock became convertible into an aggregate of 12,500,000 shares of common stock and the Series
G Preferred Stock became convertible into an aggregate of 12,500,000 shares of common stock on the date of issuance. The terms
of the Series F Preferred Stock are set forth in a Certificate of Designation governing the Series F Preferred Stock filed with
the Nevada Secretary of State and effective on February 15, 2022. The terms of the Series G Preferred Stock are set forth in a
Certificate of Designation governing the Series G Preferred Stock filed with the Nevada Secretary of State and effective on February
15, 2022.
Except as set forth in the Certificates of Designation governing the Series F Preferred Stock and Series G
Preferred Stock, the shares of Series F Preferred Stock and Series G Preferred Stock
do not have any voting rights except with respect to the sole proposal in this Proxy Statement. With
respect to the Reverse Split, each share of Series F Preferred Stock is entitled to 3,998 votes on such proposal, and each share
of Series G Preferred Stock is entitled to 500,000 votes on such proposal, which is referred to as supermajority voting, provided,
that the votes by holders of Series G Preferred Stock will be counted in the same proportion as the aggregate votes cast by the
holders of common stock who vote on such proposal at the Special Meeting. Except as set forth in the Certificates of Designation governing the Series F Preferred Stock and Series G Preferred Stock, the holders of Series F Preferred Stock and Series G Preferred Stock
are not entitled to vote on any other matter. We had to provide the investors purchasing Series F Preferred Stock and Series G
Preferred Stock these negotiated terms, including the supermajority voting, in order to provide necessary financing to the Company
to fund its operations and to secure investors committed to voting for the Reverse Split. The shares of Series F Preferred Stock
and Series G Preferred Stock are outstanding as of the Record Date for this Special Meeting.
Appeal to a Broader Range of Investors
to Generate Greater Investor Interest in the Company – An increase in our stock price may make our common stock more
attractive to investors. Brokerage firms may be reluctant to recommend lower-priced securities to their clients. Many institutional
investors have policies prohibiting them from holding lower-priced stocks in their portfolios, which reduces the number of potential
purchasers of our common stock. Investment funds may also be reluctant to invest in lower-priced stocks. Investors may also be
dissuaded from purchasing lower-priced stocks because the brokerage commissions, as a percentage of the total transaction, tend
to be higher for such stocks. Moreover, the analysts at many brokerage firms do not monitor the trading activity or otherwise provide
coverage of lower-priced stocks. Giving the Board the ability to effect the Reverse Split, and thereby increase the price of our
common stock, would give the Board the ability to address these issues if it is deemed necessary.
Improve the Perception of Our Common
Stock as an Investment Security – The Board believes that effecting the Reverse Split is one potential means of increasing
the share price of our common stock to improve the perception of our common stock as a viable investment security. Lower-priced
stocks have a perception in the investment community as being risky and speculative, which may negatively impact not only the price
of our common stock, but also our market liquidity.
Certain Risks Associated with the Reverse
Split
Even if a reverse stock split is effected,
some or all of the expected benefits discussed above may not be realized or maintained. The market price of our common stock will
continue to be based, in part, on our performance and other factors unrelated to the number of shares outstanding. The Reverse
Split will reduce the number of outstanding shares of our common stock without reducing the number of shares of available but unissued
common stock, which will also have the effect of increasing the number of shares of common stock available for issuance. The issuance
of additional shares of our common stock may have a dilutive effect on the ownership of existing stockholders. The current economic
environment in which we operate, the debt we carry, along with otherwise volatile equity market conditions, could limit our ability
to raise new equity capital in the future.
Effects of the Reverse Split
If our stockholders approve the proposed Reverse
Split and the Board elects to effect the Reverse Split, our issued and outstanding shares of common stock, for example, would decrease
at a rate of approximately one (1) share of common stock for every hundred (100) shares of common stock currently outstanding in
a 1-for-100 split. The Reverse Split would be effected simultaneously for all of our common stock, and the exchange ratio would
be the same for all shares of common stock. The Reverse Split would affect all of our stockholders uniformly and would not affect
any stockholders’ percentage ownership interests in the Company, except to the extent that it results in a stockholder receiving
cash in lieu of fractional shares. The Reverse Split would not affect the relative voting or other rights that accompany the shares
of our common stock, except to the extent that it results in a stockholder receiving cash in lieu of fractional shares. Common
stock issued pursuant to the Reverse Split would remain fully paid and non-assessable. The Reverse Split would not affect our securities
law reporting and disclosure obligations, and we would continue to be subject to the periodic reporting requirements of the Securities
Exchange Act of 1934, as amended. We have no current plans to take the Company private. Accordingly, the Reverse Split is not related
to a strategy to do so.
In addition to the change in the number of
shares of common stock outstanding, the Reverse Split would have the following effects:
Increase the Per Share Price of our Common
Stock – By effectively condensing a number of pre-split shares into one share of common stock, the per share price
of a post-split share is generally greater than the per share price of a pre-split share. The amount of the initial increase in
per share price and the duration of such increase, however, is uncertain. The Board may utilize the Reverse Split as part of its
plan to maintain the required minimum per share price of the common stock under the Nasdaq listing standards.
Increase in the Number of Shares of Common
Stock Available for Future Issuance – By reducing the number of shares outstanding without reducing the number of
shares of available but unissued common stock, the Reverse Split will increase the number of authorized but unissued shares. The
Board believes the increase is appropriate for use to fund the future operations of the Company. Although the Company does not
have any pending acquisitions for which shares are expected to be used, the Company may also use authorized shares in connection
with the financing of future acquisitions.
The following table contains approximate information
relating to our common stock, based on share information as of the Record Date:
| |
| | |
After the Reverse Split (1) | |
| |
Current | | |
If Minimum 1:100 Ratio is Selected | | |
If Maximum 1:200 Ratio is Selected | |
Authorized common stock | |
| 200,000,000 | | |
| 200,000,000 | | |
| 200,000,000 | |
| |
| | | |
| | | |
| | |
Common Stock issued and outstanding as of the Record Date | |
| 129,300,090 | | |
| 1,293,001 | | |
| 646,500 | |
Reserved for Issuance (2) | |
| 70,599,907 | | |
| 705,999 | | |
| 353,000 | |
Total | |
| 199,899,997 | | |
| 1,999,000 | | |
| 999,500 | |
Available for Issuance | |
| 100,003 | | |
| 198,001,000 | | |
| 199,000,500 |
|
| (1) | Does not take into account that fractional shares resulting from the Reverse Stock Split will be rounded up to the nearest
whole number. |
| (2) | Includes shares of common stock reserved for issuance (i) upon the exercise of currently exercisable warrants and options;
(ii) pursuant to awards granted under the Company’s 2016 Equity Incentive Plan and 2018 Equity Incentive Plan; and (iii)
upon the conversion of Series F Preferred Stock and Series G Preferred Stock. |
Although the Reverse Split would not have any
dilutive effect on our stockholders, the Reverse Split without a reduction in the number of shares authorized for issuance would
reduce the proportion of shares owned by our stockholders relative to the number of shares authorized for issuance, giving the
Board an effective increase in the authorized shares available for issuance, in its discretion. The Board from time to time may
deem it to be in the best interests of the Company to enter into transactions and other ventures that may include the issuance
of shares of our common stock. If the Board authorizes the issuance of additional shares subsequent to the Reverse Split, the dilution
to the ownership interest of our existing stockholders may be greater than would occur had the Reverse Split not been effected.
Require Adjustment to Currently Outstanding
Securities Exercisable or Convertible into Shares of our Common Stock – The Reverse Split would effect a reduction
in the number of shares of common stock issuable upon the exercise or conversion of our outstanding stock options and the exercise
of our outstanding warrants in proportion to the Reverse Split ratio. The exercise price of outstanding options and warrants would
increase, likewise in proportion to the Reverse Split ratio.
Require Adjustment to the Number of Shares
of Common Stock Available for Future Issuance Under our 2016 Equity Incentive Plan – In connection with any reverse
stock split, the Board would also make a corresponding reduction in the number of shares available for future issuance under the
foregoing plan so as to avoid the effect of increasing the number of authorized but unissued shares available for future issuance
under such plans.
Require Adjustment to the Number of Shares
of Common Stock Available for Future Issuance Under our 2018 Equity Incentive Plan – In connection with any reverse
stock split, the Board would also make a corresponding reduction in the number of shares available for future issuance under the
foregoing plan so as to avoid the effect of increasing the number of authorized but unissued shares available for future issuance
under such plans.
In addition, the Reverse Split may result in
some stockholders owning “odd lots” of less than one hundred (100) shares of common stock, which may be more difficult
to sell and may cause those holders to incur greater brokerage commissions and other costs upon sale.
Procedure for Effecting Reverse Stock Split and Exchange of
Stock Certificates
If the Reverse Split is approved by our stockholders,
the Board, in its sole discretion, would determine whether to implement the Reverse Split, taking into consideration the factors
discussed above, and, if implemented, determine the ratio of the Reverse Split.
We would then file a Certificate of Amendment
amending the Charter with the Secretary of the State of Nevada. The form of the Certificate of Amendment is attached to this Proxy
Statement as Appendix A and is considered a part of this Proxy Statement. Upon the filing of the Certificate of Amendment,
without any further action on our part or our stockholders, the issued shares of common stock held by stockholders of record as
of the effective date of the Reverse Split would be converted into a lesser number of shares of common stock calculated in accordance
with the Reverse Split ratio of any whole number between 1-for-100 and 1-for-200, at any time prior to December 31, 2022.
Effect on Beneficial Holders (i.e., Stockholders
Who Hold in “Street Name”)
If the proposed Reverse Split is approved and
effected, we intend to treat common stock held by stockholders in “street name,” through a bank, broker or other nominee,
in the same manner as stockholders whose shares are registered in their own names. Banks, brokers or other nominees will be instructed
to effect the Reverse Split for their customers holding common stock in “street name.” However, these banks, brokers
or other nominees may have different procedures than registered stockholders for processing the Reverse Split. If you hold shares
of common stock with a bank, broker or other nominee and have any questions in this regard, you are encouraged to contact your
bank, broker or other nominee.
Effect on Registered “Book-Entry”
Holders (i.e., Stockholders That are Registered on the Transfer Agent’s Books and Records but do not Hold Certificates)
Some of our registered holders of common stock
may hold some or all of their shares electronically in book-entry form with our transfer agent, Vstock Transfer, LLC. 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 registered in their accounts. If a stockholder holds registered shares in book-entry form with our transfer
agent, no action needs to be taken to receive post-reverse stock split shares or fractional shares, if applicable. If a stockholder
is entitled to post-reverse stock split shares, a transaction statement will automatically be sent to the stockholder’s address
of record indicating the number of shares (including fractional shares) of common stock held following the Reverse Split.
Fractional Shares
No fractional shares will be issued in connection
with the Reverse Split. Stockholders of record who otherwise would be entitled to receive fractional shares will be entitled to
an amount in cash (without interest or deduction) equal to the fraction of one share to which such stockholder would otherwise
be entitled multiplied by the product of: (i) the average of the closing prices of our common stock on the Nasdaq Capital Market
for the five consecutive trading days immediately preceding the effective date of the Reverse Split and (ii) the reverse stock
split factor chosen by the Board. Except for the right to receive the cash payment in lieu of fractional shares, stockholders will
not have any voting, dividend or other rights with respect to the fractional shares they would otherwise be entitled to receive.
Stockholders should be aware that, under the
escheat laws of the various jurisdictions where stockholders may reside, where we are domiciled, and where the funds will be deposited,
sums due for fractional interests that are not timely claimed after the effective date of the Reverse Split may be required to
be paid to the designated agent for each such jurisdiction, unless correspondence has been received by us or the exchange agent
concerning ownership of such funds within the time permitted in such jurisdiction. Thereafter, stockholders otherwise entitled
to receive such funds will have to seek to obtain them directly from the state to which they were paid.
Accounting Matters
The par value of our common stock would remain
unchanged at $0.0001 per share, if the Reverse Split is effected.
The Company’s stockholders’ equity
in its consolidated balance sheet would not change in total. However, the Company’s stated capital (i.e., $0.0001 par value
times the number of shares issued and outstanding), would be proportionately reduced based on the reduction in shares of common
stock outstanding. Additional paid in capital would be increased by an equal amount, which would result in no overall change to
the balance of stockholders’ equity.
Additionally, net income or loss per share
for all periods would increase proportionately as a result of the Reverse Split since there would be a lower number of shares outstanding.
We do not anticipate that any other material accounting consequences would arise as a result of the Reverse Split.
Potential Anti-Takeover Effect
Even though the proposed Reverse Split would
result in an increased proportion of unissued authorized shares to issued shares, which could, under certain circumstances, have
an anti-takeover effect (for example, by permitting issuances that would dilute the stock ownership of a person seeking to effect
a change in the composition of the Board or contemplating a tender offer or other transaction for the combination of us with another
company), the Reverse Split is not being proposed in response to any effort of which we are aware to accumulate shares of our common
stock or obtain control of us, nor is it part of a plan by management to recommend a series of similar amendments to the Board
and our stockholders.
No Appraisal Rights
Our stockholders are not entitled to appraisal
rights with respect to the Reverse Split, and we will not independently provide stockholders with any such right.
Federal Income Tax Consequences of a Reverse
Stock Split
The following discussion is a summary of certain
U.S. federal income tax consequences of the Reverse Split to the Company and to stockholders that hold shares of common stock as
capital assets for U.S. federal income tax purposes. This discussion is based upon provisions of the U.S. Internal Revenue Code
of 1986, as amended (the “Code”), the Treasury regulations promulgated under the Code, and U.S. administrative rulings
and court decisions, all as in effect on the date hereof and all of which are subject to change, possibly with retroactive effect,
and differing interpretations. Changes in these authorities may cause the U.S. federal income tax consequences of the Reverse Split
to vary substantially from the consequences summarized below.
This summary does not address all aspects of
U.S. federal income taxation that may be relevant to stockholders in light of their particular circumstances or to stockholders
who may be subject to special tax treatment under the Code, including, without limitation, dealers in securities, commodities or
foreign currency, persons who are treated as non−U.S. persons for U.S. federal income tax purposes, certain former citizens
or long−term residents of the United States, insurance companies, tax−exempt organizations, banks, financial institutions,
small business investment companies, regulated investment companies, real estate investment trusts, retirement plans, persons that
are partnerships or other pass−through entities for U.S. federal income tax purposes, persons whose functional currency is
not the U.S. dollar, traders that mark−to−market their securities, persons subject to the alternative minimum tax,
persons who hold their shares of common stock as part of a hedge, straddle, conversion or other risk reduction transaction, or
who acquired their shares of common stock pursuant to the exercise of compensatory stock options, the vesting of previously restricted
shares of stock or otherwise as compensation. If a partnership or other entity classified as a partnership for U.S. federal income
tax purposes holds shares of common stock, the tax treatment of a partner thereof will generally depend upon the status of the
partner and upon the activities of the partnership. If you are a partner in a partnership holding shares of the Company’s
common stock, you should consult your tax advisor regarding the tax consequences of the Reverse Split.
The Company has not sought and will not seek
an opinion of counsel or a ruling from the Internal Revenue Service (the “IRS”), regarding the federal income tax consequences
of the Reverse Split. The state and local tax consequences of the Reverse Split may vary as to each stockholder, depending on the
jurisdiction in which such stockholder resides. This discussion should not be considered as tax or investment advice, and the tax
consequences of the Reverse Split may not be the same for all stockholders. Stockholders should consult their own tax advisors
to know their individual federal, state, local and foreign tax consequences.
Tax Consequences to the Company
– We believe that the Reverse Split will constitute a reorganization under Section 368(a)(1)(E) of the Code. Accordingly,
we should not recognize taxable income, gain or loss in connection with the Reverse Split. In addition, we do not expect the Reverse
Split to affect our ability to utilize our net operating loss carryforwards.
Tax Consequences to Stockholders
– Stockholders should not recognize any gain or loss for U.S. federal income tax purposes as a result of the Reverse Split,
except to the extent of any cash received in lieu of a fractional share of common stock (which fractional share will be treated
as received and then exchanged for cash). Each stockholder’s aggregate tax basis in the common stock received in the Reverse
Split, including any fractional share treated as received and then exchanged for cash, should equal the stockholder’s aggregate
tax basis in the common stock exchanged in the Reverse Split. In addition, each stockholder’s holding period for the common
stock it receives in the Reverse Split should include the stockholder’s holding period for the common stock exchanged in
the Reverse Split.
In general, a stockholder who receives cash
in lieu of a fractional share of common stock pursuant to the Reverse Split should be treated for U.S. federal income tax purposes
as having received a fractional share pursuant to the Reverse Split and then as having received cash in exchange for the fractional
share and should generally recognize capital gain or loss equal to the difference between the amount of cash received and the stockholder’s
tax basis allocable to the fractional share. Any capital gain or loss will generally be long term capital gain or loss if the stockholder’s
holding period in the fractional share is greater than one year as of the effective date of the Reverse Split. Special rules may
apply to cause all or a portion of the cash received in lieu of a fractional share to be treated as dividend income with respect
to certain stockholders who own more than a minimal amount of common stock (generally more than 1%) or who exercise some control
over the affairs of the Company. Stockholders should consult their own tax advisors regarding the tax effects to them of receiving
cash in lieu of fractional shares based on their particular circumstances.
Interests of Directors and Executive Officers
Our directors and executive officers have no
substantial interests, directly or indirectly, in the matters set forth herein regarding the proposed Reverse Split except to the
extent of their ownership of shares of our common stock.
Reservation of Right to Abandon Reverse
Stock Split
We reserve the right to abandon the Reverse
Split without further action by our stockholders at any time before the effectiveness of the filing with the Secretary of State
of the State of Nevada of the Certificate of Amendment to the Charter, even if the authority to effect the Reverse Split has been
approved by our stockholders at the Special Meeting. By voting in favor of the Reverse Split, you are expressly also authorizing
the Board to delay, not to proceed with, and abandon, the Reverse Split if it should so decide, in its sole discretion, that such
action is in the best interests of the Company.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR
THE APPROVAL OF AN AMENDMENT TO THE CHARTER TO EFFECT A REVERSE STOCK SPLIT OF OUR OUTSTANDING SHARES OF COMMON STOCK BY A RATIO
OF ANY WHOLE NUMBER BETWEEN 1-FOR-100 AND 1-FOR-200, AT ANY TIME PRIOR TO DECEMBER 31, 2022, THE IMPLEMENTATION AND TIMING OF WHICH
SHALL BE SUBJECT TO THE DISCRETION OF THE BOARD
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OTHER PROPOSED ACTIONS
The Special Meeting is called for the purposes
set forth in the Notice. The Board does not know of any other matters to be considered by the stockholders at the Special Meeting
other than the matters described in the Notice. However, the enclosed proxy confers discretionary authority on the persons named
in the proxy card with respect to matters that may properly come before the Special Meeting and that are not known to the Board
at the date this Proxy Statement was printed. It is the intention of the persons named in the proxy card to vote in accordance
with their best judgment on any such matter.
HOUSEHOLDING OF PROXY MATERIALS
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: Chief Financial Officer; Telephone (949) 528-3100.
STOCKHOLDER
PROPOSALS AND SUBMISSIONS
Our last annual meeting
was held on June 11, 2021 (the “2021 Annual Meeting”). Stockholders may present proper proposals for inclusion in our
proxy statement and for consideration at the 2022 Annual Meeting of Stockholders by submitting their proposals in writing to our
Chief Financial Officer in a timely manner. For a stockholder proposal to be considered for inclusion in our proxy statement for
our 2022 Annual Meeting of Stockholders, our Chief Financial Officer must have received the written proposal at our principal executive
offices no later than December 1, 2021. However, if we hold our 2022 Annual Meeting of Stockholders more than 30 days before or
60 days after the one-year anniversary date of the 2021 Annual Meeting, we will disclose the new deadline by which stockholders’
proposals must be received in our earliest possible Quarterly Report on Form 10-Q or, if impracticable, by any means reasonably
calculated to inform stockholders. In addition, stockholder proposals must otherwise comply with the requirements of Rule 14a-8
of the Exchange Act. Proposals should be addressed to the Chief Financial Officer at our executive offices.
Our bylaws also establish an advance notice
procedure for stockholders who wish to present a proposal before an Annual Meeting of Stockholders but do not intend for the proposal
to be included in our proxy statement. Our bylaws provide that the only business that may be conducted at an Annual Meeting is
business that is:
| · | specified in our proxy materials for such meeting; |
| · | otherwise properly brought before the meeting by or at the direction of our Board; or |
| · | properly brought before the meeting by a stockholder of record entitled to vote at the Annual Meeting
who has delivered timely written notice to our Chief Financial Officer, which notice must contain the information specified in
our bylaws. |
To be timely for our 2022 Annual Meeting of
Stockholders, our Chief Financial Officer must have received the written notice at our principal executive offices by January 14,
2022. However, if the Company’s 2022 Annual Meeting is changed by more than 30 days from the date of the 2021 Annual Meeting,
then the deadline is a reasonable time before the Company begins to print and send its proxy materials, which we deem to be no
later than the:
| · | 90th day before such Annual Meeting; or |
| · | 10th day following the day on which public announcement of the date of such meeting
is first made. |
If a stockholder who has notified us of his,
her or its intention to present a proposal at the 2022 Annual Meeting does not appear to present his, her or its proposal at such
meeting, we are not required to present the proposal for a vote at such meeting.
Stockholder Communications to the Board
Stockholders and other interested parties may
communicate with the Board by writing to the Chief Financial Officer, ToughBuilt Industries, Inc., 25371 Commercentre Drive, Suite
200, Lake Forest, CA 92630. Communications intended for a specific director or directors should be addressed to their attention
to the Chief Financial Officer at the address provided above. Communications received from stockholders are forwarded directly
to Board members as part of the materials mailed in advance of the next scheduled Board meeting following receipt of the communications.
The Board has authorized the Chief Financial Officer, in his discretion, to forward communications on a more expedited basis if
circumstances warrant or to exclude a communication if it is illegal, unduly hostile or threatening, or similarly inappropriate.
Advertisements, solicitations for periodical or other subscriptions, and other similar communications generally will not be forwarded
to the directors.
AVAILABILITY OF MATERIALS
Our 2020 Annual Report, including the financial
statements and financial statement schedules, has been filed with the SEC and provides additional information about us, which is
incorporated by reference herein. It is available on the internet at www.toughbuilt.com and is available in paper form (other
than exhibits thereto) by first class mail or other equally prompt means to beneficial owners of our common stock, without charge,
upon written request to the Chief Financial Officer, ToughBuilt Industries, Inc., 25371 Commercentre Drive, Suite 200, Lake Forest,
CA 92630. In addition, it is available to beneficial and record holders of our common stock at www.proxyvote.com.
APPENDIX
A
PROPOSED
AMENDMENT TO ARTICLES OF INCORPORATION
CERTIFICATE
OF AMENDMENT OF
ARTICLES OF
INCORPORATION OF
TOUGHBUILT INDUSTRIES,
INC.
ToughBuilt Industries,
Inc., a corporation organized and existing under and by virtue of the provisions of the Nevada Revised Statutes (the “Corporation”),
hereby certifies as follows:
1. The
name of the Corporation is ToughBuilt Industries, Inc. (the “Corporation”).
2. Article
3 of the Corporation’s Articles of Incorporation, as amended, is amended and restated in its entirety to read as follows:
“Article
3. The total number of shares of capital stock which the Corporation shall have authority to issue is 205,000,000, which (i) 200,000,000
shall be designated as common stock, par value $0.0001 per share (the “Common Stock”), and (ii) 10,000,000 shares
shall be a class designated as undesignated preferred stock, par value $0.0001 per share. As of the effective date of the filing
of the Certificate of Amendment containing this amendment with the Secretary of State of the State of Nevada, every [____]1
(the “Reverse Split Factor”) outstanding shares of Common Stock shall without further action by the corporation
or the holder thereof be combined into and automatically become one share of Common Stock (the “Reverse Stock Split”).
No fractional shares will be issued in connection with the Reverse Stock Split. A stockholder of record who otherwise would be
entitled to receive fractional shares will be entitled to receive cash (without interest and subject to applicable withholding
taxes) in lieu of such fractional shares in an amount equal to the product obtained by multiplying such fractional share of Common
Stock by the Reverse Split Factor times the average closing price per share of Common Stock on the securities trading market on
which the shares were traded for the five trading days immediately preceding the effective date of this amendment to the Articles
of Incorporation, as amended.”
3. Except
as set forth in this Certificate of Amendment of Articles of Incorporation, the Articles of Incorporation, as amended, remains
in full force and effect.
IN WITNESS WHEREOF, ToughBuilt
Industries, Inc. has caused this Certificate of Amendment of Articles of Incorporation to be signed by Michael Panosian, a duly
authorized officer of the Corporation, on [__________] [__], 2022.
|
By: |
|
|
|
Name: Michael Panosian |
|
|
Title: Chief Executive Officer |
|
| 1 | The Board of Directors will have the discretion to effect the Reverse Split at a ratio of any whole
number between 1-for-100 and 1-for-200. |
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