TOUGHBUILT INDUSTRIES, INC : Entry into a Material Definitive Agreement, Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing, Unregistered Sale of Equity Securities (form 8-K)

Item 1.01 Entry into a Material Definitive Agreement

On December 23, 2019, ToughBuilt Industries, Inc. (the "Company") entered into an exchange agreement with 1n institutional investor pursuant to which the investor is exchanging $5.5 million principal amount of its August 19, 2019 Series A Senior Secured Note for 5,775 shares of its Series D Preferred Stock, which was authorized by the Company's Board of Directors on December 21, 2019.

The terms of the Series D Preferred Stock are as follows:

Stated Value $1,000 per share, subject to increase for (a) any capitalized

               dividends and (b) on June 30, 2020 (and each six month anniversary
               thereafter), the Stated Value shall increase by 5%.

Dividends:     The New Preferred Shares shall participate with any dividends paid
               to the holders of Common Stock. In addition, from now until June
               30, 2020, shall accrue dividends at a rate of 8% per annum and
               from June 30, 2020 and thereafter, at 12% per annum, which shall
               capitalize to the stated value of the New Preferred Shares on a
               monthly basis. Upon the occurrence of certain triggering events,
               the New Preferred Shares shall accrue additional dividends at a
               default rate set forth in the definitive documentation.

Conversion     The Investor may elect to convert the New Preferred Shares into
Price:         shares of Common Stock at a conversion price (the "Conversion
               Price") equal to $1.00 per share. The Conversion Price of the New
               Preferred Shares shall be subject to customary adjustments for
               stock splits, dividends, recapitalizations and similar events. The
               New Preferred Shares shall be alternatively convertible at the
               Alternate Conversion Price (as defined in the Existing Notes).

Voting Rights New Preferred Shares vote together on all matters as a class, with

               the approval of a majority of the New Preferred Shares required to
               amend or waive any term or condition of the New Preferred Shares.
               New Preferred Shares shall vote on an as-converted basis with the
               holders of Common Stock on all matters (subject to applicable
               ownership blockers, including not exceeding 19.9% in any event).

Company The Company shall have the right to exchange the New Preferred Exchange Right Shares, at its option back into senior secured convertible notes

               in the form of the Existing Notes, at any time, with such New
               Exchange Notes having an initial outstanding amount equal to the
               stated value, accrued and unpaid dividends and any other amounts
               outstanding with respect to such New Preferred Shares subject to
               such exchange.

Limitations on Notwithstanding anything herein to the contrary, no Preferred Beneficial Stock of any Investor shall be issued or shall be convertible if Ownership: after such conversion such Investor would beneficially own more

               than 4.99% of the shares of Common Stock then outstanding (as
               defined under Section 13(d) of the Securities Act of 1933, as
               amended).

Exchange Cap The New Preferred Shares shall share the Exchange Cap of the

August 19, 2019 Series A Note and Series B Note and, to the extent
               the Existing Notes have been converted into 19.9% of the Common
               Stock, shall not be convertible until such time as stockholder
               approval has been obtained and/or additional shares of Common
               Stock are eligible to be converted thereunder in compliance with
               the rules and regulations of the Principal Market.

The foregoing summary of terms of the Exchange Agreement and the Certificate of Designations of the Series D Preferred Stock do not purport to be complete and are qualified in their entirety by Exhibit 10.1 and 10.2 attached hereto, which are incorporated by reference herein.

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.

As stated in Item 1.01 above, the Company is exchanging $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.

Item 3.02 Unregistered Sale of Equity Securities

See Item 1.01 above.



Item 9.01 Exhibits



10.01   Form of Exchange Agreement
10.02   Form of Certificate of Designation for Series D Preferred Stock

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