Item 1.01 Entry into a Material Definitive Agreement
The Certificate of Designation referenced in Section 1.01 of the Current Report
on Form 8-K filed on December 23, 2019 (the "Original 8-K") has been filed with
the Secretary of State of the State of Nevada, and the exchange of Notes for the
shares of Series D Preferred Stock described therein has been consummated.
ITEM 3.01 Notification of Failure to Satisfy a Continued Listing Rule or
Standard - Remediated
As of June 25, 2019, ToughBuilt Industries, Inc. (the "Company") received notice
from the Nasdaq Capital Market (the "Capital Market") that the Company has
failed to maintain a minimum market value of listed securities of at least
$35,000,000 required from May 13, 2019 to June 24, 2019 required for continued
listing as required under Listing Rule 5550(b)(2). Under the Capital Market's
Rules, the Company had until December 23, 2019 to either regain the market value
of listed securities requirement for ten consecutive trading days, or
alternatively evidence compliance with the requirement of at least $2.5 million
in stockholders equity and file a Current Report on Form 8-K which shows: 1. A
disclosure of Staff's deficiency letter and the specific deficiency(ies) cited
(set forth above); 2. A description of the completed transaction or event that
enabled the Company to satisfy the stockholders' equity requirement for
continued listing; 3. An affirmative statement that, as of the date of the
report, the Company believes it has regained compliance with the stockholders'
equity requirement based upon the specific transaction or event referenced in
Step 2; and 4. A disclosure stating that Nasdaq will continue to monitor the
Company's ongoing compliance with the stockholders' equity requirement and, if
at the time of its next periodic report the Company does not evidence
compliance, that it may be subject to delisting.
On June 26, 2019, the Company received notice from the Capital Market that it
has failed to maintain the minimum bid price requirement of $1 from May 14 to
June 25, 2019 required for continued listing as required under Listing Rule
5550(a)(2). Under the Capital Market's Rules, the Company had until December 23,
2019 to either regain compliance for ten consecutive trading days, which would
have necessitated a reverse stock split close to the top of the range previously
approved by shareholders, or the Company could opt to qualify for an additional
180 day extension by meeting the continued listing requirement for market value
of publicly held shares and all other initial listing standards for The Nasdaq
Capital Market, with the exception of the bid price requirement, and will need
to provide written notice of its intention to cure the deficiency during the
second compliance period, by effecting a reverse stock split, if necessary.
The Company has exchanged $5.5 million principal amount of its August 2019 Notes
for Series D Preferred Stock, thus removing a liability of $5,500,000 from its
balance sheet, which amount is now recorded as equity. Additionally, all of the
Company's Series B Warrants have expired as the November 14, 2019 and December
17, 2019 expiration dates have passed, thus the warrant derivative liability as
of September 30, 2019 of $482,489 has accordingly been reversed as well. Thus,
in total, $5,982,489 of liability has been removed from the Company's balance
sheet, and as adjusted the Company's balance sheet would have shown a
stockholders equity as of September 30, 2019 of $6,154,568. As of October 31,
2019, the Company showed stockholders equity on its balance sheet of
approximately $495,000, so as adjusted by the $5,500,000 reduction in Note
liability, the Company's balance sheet would have shown stockholders equity of
$5,995,000, and it believes the stockholders equity as of December 23, 2019 is
approximately $5,700,000.
As of December 23, 2019, the Company believes it has regained compliance with
the stockholders' equity requirement based upon the specific transactions and
events referenced above. Nasdaq will continue to monitor the Company's ongoing
compliance with the stockholders' equity requirement, and if at the time of its
next periodic report the Company does not evidence compliance, it may be subject
to delisting.
As of December 23, 2019, the Company believes it meets all of the Nasdaq initial
listing requirements (except the minimum bid price) and the continued listing
requirement for the market value of publicly held shares as follows:
Stockholders Equity: $5,700,000
Market Value of Unrestricted Publicly Held Shares: $4,000,000 (rounded)
Operating History: In excess of five years
Unrestricted Publicly Held Shares: 24,000,000 (rounded)
Unrestricted Round Lot Shareholders: 800
Market Makers: 14
The Company hereby provides notice of its intention to cure the deficiency
during the second compliance period (which ends June 23, 2020), by effecting a
reverse stock split, if necessary.
Thus, the Company believes it qualifies for the additional 180 day extension as
it has met the continued listing requirement for the market value of publicly
held shares and all other initial listing standards for The Nasdaq Capital
Market, with the exception of the bid price requirement and has provided written
notice of its intention to cure the deficiency during this second compliance
period.
© Edgar Online, source Glimpses
TOUGHBUILT INDUSTRIES, INC. 
