Product Launch and Development - In October 2023, the Company launched its StackTech product line with an initial rollout of more than 25 SKUs, featuring the world's first auto-locking stacking tool storage solution [181]. - The Company plans to develop a new line of ToughBuilt mobile devices and accessories, although development is currently suspended due to microchip shortages [190]. - The Company has launched more than 40 new SKUs in the Handheld Screwdrivers segment and over 20 new SKUs in the Handheld Wrenches segment in January 2023 [182]. - The Company is in product line reviews with major retailers, anticipating the addition of up to three major retailers and several distributors in the near term [189]. Sales and Revenue - In January 2023, global Amazon sales reached approximately $15.9 million, representing a 34% increase from $11.9 million in 2022 [182]. - Revenues for Q3 2023 were $20,630,207, a decrease of $9,615,044 or 31.8% compared to Q3 2022 revenues of $30,245,251, primarily due to decreased demand [208]. - For the nine months ended September 30, 2023, revenues were $59,722,486, down $5,631,165 or 8.6% from $65,353,651 in the same period of 2022 [215]. Costs and Expenses - Cost of goods sold for Q3 2023 was $15,717,233, down $6,610,861 or 30% from $22,328,094 in Q3 2022, with COGS as a percentage of revenues increasing to 76.19% from 73.82% [209]. - Operating expenses for Q3 2023 were $12,572,066, a decrease of $2,104,069 or 14% compared to Q3 2022, with SG&A expenses as a percentage of revenues rising to 60.94% from 48.52% [210]. - Research and development costs increased by $134,673 or 4.8% in Q3 2023 to $2,916,349, primarily due to new tool development for the construction industry [211]. - The nine-month cost of goods sold was $45,411,269, a decrease of $4,073,682 or 8% from $49,484,951 in 2022, with COGS as a percentage of revenues at 76% compared to 75.72% in 2022 [216]. Net Income and Loss - The company recorded a net loss of $14,248,574 for Q3 2023, compared to a net income of $8,006,430 in Q3 2022 [213]. - The company reported a net loss of $28,249,105 for the nine months ended September 30, 2023, compared to a net loss of $16,233,560 for the same period in 2022 [220]. Cash Flow and Financing - Cash at September 30, 2023 was $1.8 million, down from $2.6 million at December 31, 2022, with an accumulated deficit of approximately $173.2 million [221]. - The company completed a public offering on June 23, 2023, raising funds through the sale of 6,089,025 common shares at an offering price of $0.41 each [222]. - The company received net proceeds of approximately $3.8 million from the June 2023 Offering after deducting estimated expenses [224]. - The company issued New Warrants to purchase up to 21,239,822 shares at an exercise price of $0.3201, resulting in net proceeds of approximately $2.9 million from the exercise of Series C Preferred Investment Options [225]. - Net cash used in operating activities for the nine months ended September 30, 2023 was $4,109,040, with a net loss of $28,249,105 [230]. - Cash flows from financing activities for the nine months ended September 30, 2023 provided $6,692,360, primarily from stock issuance [233]. - The company recorded a net decrease in cash of $729,932 for the nine months ended September 30, 2023, compared to a decrease of $5,883,784 for the same period in 2022 [234]. - Total contractual obligations as of September 30, 2023 amounted to $4,260,276, with $1,247,062 due in the next twelve months [235]. - The company intends to use cash for working capital and research and development over the next twelve months [226]. - There is substantial doubt about the company's ability to continue as a going concern for the next twelve months due to uncertainty in raising capital [227]. - Net cash used in investing activities for the nine months ended September 30, 2023 was $3,313,252, primarily for the purchase of property and equipment [232]. - The company plans to seek additional capital through debt or equity financing, but there is no assurance of raising needed capital under acceptable terms [227]. Market Expansion - The Company expanded its distribution agreement with Sodimac, covering stores in six South American countries, starting with 15 SKUs in-store and 23 SKUs online [182]. - The Company is actively expanding into markets in Mexico, Latin America, the Middle East, and South Africa [188]. Compliance and Regulatory Issues - The Company received a Nasdaq deficiency notice for failing to maintain a minimum bid price of $1.00 per share for 30 consecutive trading days, with a compliance deadline of January 3, 2024 [194]. - The Company has incurred substantial operating losses since inception and anticipates additional losses until it can commercialize its technology [177]. - The Company holds several patents and trademarks, including ToughBuilt®, Cliptech®, and Fearless®, which are considered valuable intangible assets [191].

Financial Data and Key Metrics Changes - For Q3 2023, the company reported revenue of $20.6 million, a 9% increase compared to the prior quarter, but a 31.8% decrease from $30.2 million in Q3 2022 [6][26] - Gross profit for Q3 2023 decreased by 20% to $4.9 million compared to Q3 2022, with a gross margin decline primarily due to decreased demand in the sector [15] - The net loss for Q3 2023 was $5.9 million, a significant decline from a net profit of $8 million in Q3 2022 [18] - SG&A expenses for Q3 2023 were $12.5 million, a 33% decrease compared to the prior quarter and a 30% decrease year-over-year [24] Business Line Data and Key Metrics Changes - Cost of goods sold for Q3 2023 was $15.7 million, down from $22.3 million in Q3 2022, with COGS as a percentage of revenues increasing to 76% from 74% [17] - Research and development costs for Q3 2023 were $2.9 million, slightly up from $2.8 million in Q3 2022, reflecting ongoing innovation efforts [27] Market Data and Key Metrics Changes - The company noted a decrease in demand for the tool sector, which significantly impacted revenue and gross profit margins [26] Company Strategy and Development Direction - The company plans to expand its product portfolio prudently, selectively adjust prices, and focus on efficiency to drive profitability [10] - The recent launch of the StackTech mobile stacking toolbox system is expected to open new market sectors and contribute to future net sales [16] - Management believes that the existing 22 product lines provide a strong foundation for growth and that significant new design work has been completed [25] Management Comments on Operating Environment and Future Outlook - Management acknowledged the challenging macroeconomic environment affecting the industry and emphasized ongoing efforts to streamline operations and reduce overhead [6][7] - There is optimism regarding capital resources improving as products gain wider market recognition and acceptance [28] - The company is satisfied with its current operating structure and does not plan to add significant headcount in 2023 [29] Other Important Information - As of September 30, 2023, the company's cash position was $1.8 million, with accounts receivable and inventory totaling $10.6 million and $27.5 million, respectively [9] Q&A Session Summary - The conference call concluded without a detailed Q&A session, as indicated by the operator's closing remarks [31]

Financial Data and Key Metrics Changes - Revenues for Q2 2023 increased by approximately 5.5% to $18.9 million compared to $17.9 million in Q2 2022, driven by strong product acceptance and increased sales through Amazon [6][31] - Gross profit for Q2 2023 rose by 18% to $5.8 million, with gross margin improving by 330 basis points year-over-year to 31% due to better product mix and pricing adjustments [28][31] - The net loss for Q2 2023 was $5.9 million, a significant improvement of 49% from a net loss of $12.1 million in Q2 2022, attributed to increased sales, improved gross margins, and cost reduction efforts [33][34] Business Line Data and Key Metrics Changes - Cost of goods sold for Q2 2023 was $13 million, representing 69% of revenues, down from 72% in the same period last year, indicating improved efficiency [10] - Research and development costs increased slightly to $2.9 million in Q2 2023 from $2.8 million in Q2 2022, primarily due to new tool development for the construction industry [11] Market Data and Key Metrics Changes - The company expanded its distribution in the UK through partnerships with Howdens UK and City Electrical Factors, reaching 1,200 retail locations [8] - Distribution in the European Union was also expanded through La Platforme Du Batiment and Prolians, serving over 600,000 professional customers in France and Spain [30] Company Strategy and Development Direction - The company plans to continue expanding its product portfolio, selectively adjust prices, and focus on operational efficiency to create new revenue streams and move closer to profitability [15][36] - Management emphasized the importance of maintaining strong cost controls while seeking to improve gross margins and capital resources as products gain market recognition [34] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging macroeconomic conditions but expressed confidence in the company's growth potential and infrastructure to capitalize on market opportunities [6][36] - The expectation for the remainder of the year includes modest growth, with larger growth anticipated in 2024, supported by strong demand and brand recognition [60] Other Important Information - The company raised $4.5 million in June through a public offering, which is expected to enhance capital resources [34] - As of June 30, 2023, the cash position was $2.2 million, with accounts receivable and inventory totaling $7.8 million and $31.4 million, respectively [12] Q&A Session Summary Question: Can you provide insights on headcount and shipping costs? - The company reduced headcount from 248 to 200, contributing to cost savings and focusing on profitability [43] - Shipping costs have significantly decreased from over $25,000 per container during the pandemic to below normal prices now, enhancing margins [58] Question: How do you see product lines expanding? - The company is launching new product lines, including cutting tools and hand tools, with numerous SKUs, which will generate new revenue streams [45][56] Question: What is the current state of the supply chain and manufacturing locations? - The company is diversifying manufacturing beyond China to countries like Vietnam, Cambodia, and India, adapting to economic conditions and sourcing based on capabilities [49] Question: What are the expectations for growth in the second half of the year? - Management anticipates modest growth this year with expectations for larger growth next year, supported by strong customer demand and brand loyalty [60]

Sales Performance - In January 2023, global Amazon sales reached approximately $15.9 million, marking a 34% increase from $11.9 million in 2022[174]. - Revenues for the three months ended June 30, 2023, increased by $991,914, or 5.55%, to $18,879,569 compared to $17,887,655 for the same period in 2022[192]. - Revenues for the six months ended June 30, 2023, increased by $3,983,879, or 11.35%, to $39,092,279 compared to $35,108,400 in 2022[199]. Product Launches - The company launched over 40 new SKUs in the Handheld Screwdrivers segment in January 2023, including various types of screwdrivers[174]. - The company launched over 20 new SKUs in the Handheld Wrenches segment in January 2023, including adjustable and construction wrenches[174]. - A new line of pliers and clamps, comprising more than 40 SKUs, was launched in February 2023 for major US home improvement retailers[174]. - An expanded distribution agreement with Sodimac will introduce 15 SKUs in-store and 23 SKUs online across multiple South American countries[174]. Financial Performance - Cost of goods sold for the three months ended June 30, 2023, was $13,038,596, representing an increase of $99,357, or 0.77%, from $12,939,239 in 2022, with a cost of goods sold as a percentage of revenues decreasing to 69.06% from 72.34%[193]. - Operating expenses for the three months ended June 30, 2023, were $14,967,257, an increase of $470,315, or 3.24%, compared to $14,496,942 in 2022, with SG&A expenses as a percentage of revenues decreasing to 79.28% from 81.04%[194]. - Research and development costs for the three months ended June 30, 2023, increased by $159,052, or 5.77%, to $2,913,403, primarily due to the development of new tools for the construction industry[196]. - The net loss for the three months ended June 30, 2023, was $5,725,370, an improvement from a net loss of $12,136,051 for the same period in 2022[198]. - Cost of goods sold for the six months ended June 30, 2023, was $29,694,036, an increase of $2,537,179, or 9.34%, with a cost of goods sold as a percentage of revenues decreasing to 75.96% from 77.35%[200]. - SG&A expenses for the six months ended June 30, 2023, decreased by $384,397, or 1.26%, to $30,046,444 compared to $30,430,841 in 2022, with SG&A expenses as a percentage of revenues decreasing to 76.86% from 86.68%[201]. - The company recorded a net loss of $14,000,532 for the six months ended June 30, 2023, compared to a net loss of $24,239,990 for the same period in 2022[205]. Market Expansion - The company is actively expanding into markets in Mexico, Latin America, the Middle East, and South Africa[179]. Industry Competition - The tool equipment and accessories industry is highly competitive, with major competitors including DeWalt, Caterpillar, and Samsung Active[186]. Funding and Losses - The company has incurred substantial operating losses since inception and anticipates additional losses until technology in development is commercialized[171]. - The company plans to fund operations and growth through the sale of debt or equity securities, facing uncertainty in obtaining financing on acceptable terms[171]. - The company completed a public offering on June 23, 2023, raising net proceeds of approximately $3,800,000 after expenses[209].

Financial Data and Key Metrics Changes - Gross profit for Q1 2023 was $3.6 million, an 18% improvement compared to Q1 2022 [4] - Revenues for Q1 2023 were $20.2 million, a 17% increase from $17.2 million in Q1 2022 [15] - Net loss for Q1 2023 was $8.3 million, improved from a net loss of $12.1 million in Q1 2022 [7] - Cost of goods sold increased to $16.7 million in Q1 2023 from $14.2 million in Q1 2022, a 17% increase [6] Business Line Data and Key Metrics Changes - Online sales through Amazon reached $3.8 million in Q1 2023, a 10% improvement from the same period in 2022 [14] - The company introduced over 100 new SKUs, including innovative lines of pliers, wrenches, and screwdrivers [21] Market Data and Key Metrics Changes - The company is servicing over 18,500 storefronts and online portals worldwide, with a catalog of over 550 SKUs [5] - The expansion of the South American distribution agreement with Sodimac included the launch of 15 SKUs in-store and 23 SKUs online [21] Company Strategy and Development Direction - The company plans to continue expanding its product portfolio prudently, raise prices, and cut costs globally [27] - Management anticipates improved capital resources as products gain wider market recognition [25] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to execute on growth, cost savings, and profitability plans [8] - The company expects continued year-over-year growth in retail and online revenue in 2023 due to strong global market demand [22] Other Important Information - Research and development costs increased to $3.5 million in Q1 2023 from $2.5 million in Q1 2022, primarily for new tool development [16] - Selling, general and administrative expenses decreased to $15.1 million in Q1 2023 from $15.9 million in Q1 2022, with SG&A as a percentage of revenues improving from 93% to 78% [24] Q&A Session Summary - The Q&A session was conducted but no specific questions or answers were documented in the provided content [28]

Financial Performance - Global Amazon sales for 2022 reached approximately $15.9 million, representing a 34% increase from $11.9 million in 2021[155] - Revenues for the three months ended March 31, 2023, were $20,212,711, an increase of $2,991,967 or 17.37% compared to $17,220,744 in the same period of 2022[177] - The net loss for the three months ended March 31, 2023, was $8,275,162, an improvement compared to a net loss of $12,103,938 in the same period of 2022[183] - Cash flows from operating activities for the three months ended March 31, 2023, were $782,927, a significant improvement from a net cash outflow of $10,062,099 in 2022[189] - The company had $2.4 million in cash at March 31, 2023, down from $2.6 million at December 31, 2022, and an accumulated deficit of approximately $153.2 million[184] Operating Expenses and Costs - Cost of goods sold for the three months ended March 31, 2023, was $16,655,439, an increase of $2,437,822 or 17.15% compared to $14,217,617 in 2022, with a cost of goods sold as a percentage of revenues of 82.40%[178] - Operating expenses decreased by $843,929 or 5.3% to $15,090,116 for the three months ended March 31, 2023, compared to $15,934,045 in 2022[180] - Research and development costs increased by $1,013,471 or 40.31% to $3,527,521 for the three months ended March 31, 2023, primarily due to the development of new tools for the construction industry[181] Market Expansion and Product Development - The company launched over 40 new SKUs in the Handheld Screwdrivers segment and more than 20 new SKUs in the Handheld Wrenches segment in January 2023[155] - An expanded distribution agreement with Sodimac will introduce 15 SKUs in-store and 23 SKUs online across several South American countries[155] - The company is actively expanding into markets in Mexico, Latin America, the Middle East, and South Africa[163] - The company plans to add up to three major retailers and several distributors within six sectors across fifty-six targeted countries[164] - The company has launched new products including the Reload Utility Knife and various tape measures, enhancing its product offerings[167] Financial Challenges and Future Outlook - The company has incurred substantial operating losses since inception and anticipates additional losses until technology in development is commercialized[153] - Prices of certain commodity products have been volatile, impacting profit margins due to increased costs of raw materials and shipping[175] - The company plans to seek additional capital through debt or equity financing to fund operations and technology development, with substantial doubt about its ability to continue as a going concern for the next twelve months[185] - The company anticipates incurring additional losses until it can obtain marketing approval for its technology currently in development[184] - Total contractual obligations as of March 31, 2023, were $4,203,913, with obligations for the next three months amounting to $3,244,283[194] Intellectual Property - The company holds several patents and trademarks, with new design patents granted for ruggedized mobile devices valid for 15 years[169] Industry Context - The U.S. home improvement industry has shown steady growth, with over 130 million homes requiring regular investment to offset depreciation[160]

Sales Growth - Annual sales growth increased from approximately $1,000,000 in 2013 to approximately $95,000,000 in 2022, reflecting a significant growth trajectory [20] - Online sales through Amazon increased by 41% to approximately $3.4 million in Q1 2022 compared to Q1 2021, and total sales for the first half of 2022 rose by 28% to approximately $7.0 million [26] - Global Amazon sales for 2022 reached approximately $15.9 million, representing a 34% increase from $11.9 million in 2021 [26] - ToughBuilt's online sales for Q3 2022 through Amazon.com were $3.9 million, a 38% rise from Q3 2021, with total sales for the nine-month period increasing by 32% to approximately $10.9 million [26] - Revenues for the fiscal year ended December 31, 2022, were $95,253,767, a 36% increase from $70,026,324 in 2021, driven by strong product acceptance and new customer orders [207] Product Development - The company launched 21 new SKUs in the global handsaws segment, including the QuickSet™ Double-Edge Pull Saw, expected to be available in Q4 2022 [26] - In 2022, the company launched multiple new product lines, including 21 new SKUs in the global handsaws segment and over 40 new SKUs in the handheld screwdrivers segment [54] - ToughBuilt's product strategy includes developing multiple product lines to enhance brand recognition and accelerate sales growth [41] Distribution and Market Expansion - ToughBuilt entered into a distribution agreement with Sodimac, the largest home improvement supplier in South America, expanding its presence in multiple countries [26] - The company expanded its distribution agreement with major retailers in Germany, which accounted for a 35% share of the global hand tools market in 2019 [26] - A comprehensive distribution agreement was reached with Sodimac, the largest home improvement supplier in South America, starting with 15 ToughBuilt SKUs in Peru and Colombia [197] - The company entered into a supply agreement with Elecktro3 S.C.C.L and NCC Hardware Purchasing and Services Centers, SL, enhancing its presence in Spain's hardware market [197] Financial Performance - The company incurred a net loss of approximately $39.3 million for the year ended December 31, 2022, compared to a net loss of $37.5 million for the previous year [68] - The accumulated deficit was approximately $145 million as of December 31, 2022 [66] - Cost of goods sold increased by 37.6% to $70,042,504 in 2022, up from $50,912,513 in 2021, with cost of goods sold as a percentage of revenues rising to 73.5% from 72.7% [208] - Operating expenses rose by 28.7% to $66,189,907 in 2022, compared to $51,434,180 in 2021, with SG&A expenses as a percentage of revenues decreasing to 69.5% from 73.4% [209] - Research and development costs increased by 61.8% to $11,296,948 in 2022, up from $6,980,453 in 2021, primarily due to new tool development and related expenses [210] Risks and Challenges - The company is highly dependent on manufacturers in China, India, and the Philippines for its products [74] - Supply chain disruptions could negatively impact the company's ability to deliver inventory timely, potentially leading to lost sales and increased costs [75] - A significant percentage of production occurs outside the U.S., making the company vulnerable to tariffs and trade restrictions, which could harm financial condition and growth prospects [76] - The COVID-19 pandemic has created significant volatility and uncertainty, potentially impacting financial results and overall demand for services [83] - Rising commodity prices, including fuel and raw materials, could negatively affect profit margins and overall business performance [85] Intellectual Property - The company emphasizes the importance of protecting its intellectual property rights, including trademarks and patents, to maintain brand recognition and customer loyalty [99] - The company currently holds issued patents, patent applications, trademarks, and trade secrets, but faces risks that these may be challenged or misappropriated by third parties [100] - There is uncertainty regarding the issuance of new patents and their ability to provide meaningful protection against infringement [101] Corporate Governance and Compliance - The company has identified material weaknesses in its internal control over financial reporting, which could adversely affect the accuracy and timeliness of financial reporting [127] - The company may face increased costs and administrative burdens due to compliance with public company regulations, which could divert resources from business development [126] - The company is subject to potential litigation that could result in significant financial liabilities, including judgments and legal fees [105] Stock and Financing - The company is authorized to issue up to 200,000,000 shares of common stock, which may lead to dilution of current stockholders' ownership interests [118] - A private placement in July 2022 raised approximately $20 million, issuing 700,000 shares of common stock and pre-funded warrants for 3,300,000 shares [169] - The November 2022 private placement generated approximately $7.5 million, issuing 982,466 shares of common stock and pre-funded warrants for 1,637,445 shares [179] Operational Challenges - The company is monitoring the ongoing impacts of COVID-19, which could disrupt supply chains and labor levels [200] - The company has incurred substantial operating losses and requires additional financing to fund operations and growth, with no assurances of obtaining such financing [195]

Financial Data and Key Metrics Changes - ToughBuilt reported record revenue of $94.9 million for 2022, representing a 36% year-over-year increase compared to 2021 [8] - Fourth quarter revenue reached $29.6 million, a 20% increase compared to the same quarter in the prior year [8][14] - The net loss for the full year of 2022 was $39.7 million, compared to a net loss of $37.5 million in the previous year [20] Business Line Data and Key Metrics Changes - Revenue growth was driven by existing retail partners, new retail customers, and the introduction of new product lines [9] - The company launched over 200 new SKUs, including cutting tools, measuring tools, and landscaping tools [10] Market Data and Key Metrics Changes - ToughBuilt expanded its network to over 17,300 large and mid-sized stores and online portals worldwide [11] - The company successfully negotiated improved shipping rates, reducing logistics costs by approximately 70% [12] Company Strategy and Development Direction - ToughBuilt aims to capitalize on market opportunities and has entered into four major distribution agreements, including one with Sodimac, the largest home improvement supplier in South America [22][23] - The company plans to continue expanding with existing retail partners and adding new international partners [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to execute growth, cost-saving, and profitability plans despite challenging economic conditions [24] - The company anticipates continued year-over-year revenue growth in 2023 due to strong product introduction momentum and brand recognition [12][24] Other Important Information - Cost of goods sold for the full year 2022 was approximately $73.1 million, up from $50.9 million in 2021, primarily due to increased material and labor costs [15][16] - Selling, general, and administrative expenses for 2022 were approximately $58.9 million, compared to $51.4 million in the previous year [17][18] - Research and development costs increased significantly to approximately $15.6 million in 2022, driven by new tool and software development [19] Q&A Session Summary - The company discussed its successful product launches in major retailers in Germany and the UK, highlighting a 35% share of the global hand tools market [25] - Management emphasized the potential for future revenue growth through expanding retail partnerships and introducing new product lines [26]

Financial Data and Key Metrics Changes - Revenue for Q3 2022 was approximately $30.2 million, representing a 76% year-over-year increase compared to Q3 2021 [7][16] - Cost of goods sold increased by 90% to $22.3 million in Q3 2022 from $11.7 million in Q3 2021, primarily due to increased sales and higher material and labor costs [17] - Selling, general and administrative expenses decreased by 3.7% to $14.7 million in Q3 2022 from $15.2 million in Q3 2021, attributed to lower shipping costs [18] - Research and development costs rose to $2.8 million in Q3 2022 from $1.6 million in Q3 2021, reflecting investment in new tool development [19] - The company recorded a net income of $539,000 in Q3 2022, a significant improvement from a net loss of $9 million in Q3 2021 [19] - As of September 30, 2022, cash position was $1.6 million, accounts receivable were $23.4 million, and inventory was $40 million [20] Business Line Data and Key Metrics Changes - The introduction and sale of new soft goods and increased sales through Amazon contributed to revenue growth [16] - The company launched 21 new SKUs in the global handsaws segment and entered the measuring and marking market, valued at $1.4 billion [9][12] Market Data and Key Metrics Changes - ToughBuilt entered into agreements with Ace Hardware to distribute 35 products across 5,500 stores and expanded its presence on Amazon in Italy and Germany [8] - The company expanded its distribution network in Europe, including agreements with over 250 retailers in Switzerland [10] - In Great Britain, ToughBuilt confirmed new agreements with over 900 retail locations [11] Company Strategy and Development Direction - The company is focused on expanding existing relationships with retail partners, adding new partners, and introducing new product categories [23] - ToughBuilt is positioned to capitalize on market opportunities with top retailers globally [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory and ability to maintain its position despite supply chain disruptions [15] - The company anticipates continued revenue growth driven by strong retail partnerships and product introductions [23] Other Important Information - Supply chain disruptions have not had a material adverse effect on operations due to strong inventory levels [14] Q&A Session Summary Question: No questions were raised during the session - The operator noted that there would be no questions and thanked participants for their involvement [24]

Financial Performance - In Q3 2022, total revenues reached approximately $30.2 million, a significant increase from approximately $17.2 million in the same period in 2020, representing a growth of 75%[165] - Revenues for the three months ended September 30, 2022, were $30,245,252, an increase of $13,029,314 or 75.68% compared to $17,215,938 in the same period of 2021[206] - Revenues for the nine months ended September 30, 2022, were $65,353,651, an increase of $20,002,093 or 44.10% compared to $45,351,558 in 2021[213] - The company recorded a net income of $8,006,430 for the three months ended September 30, 2022, compared to a net loss of $9,094,707 for the same period in 2021[212] - Cost of goods sold for the three months ended September 30, 2022, was $22,328,094, an increase of $10,556,779 or 89.68% compared to $11,771,315 in 2021, with a cost of goods sold as a percentage of revenues of 73.82%[207] - Cost of goods sold for the nine months ended September 30, 2022, was $49,484,951, an increase of $18,005,775 or 57.2% compared to $31,479,176 in 2021, with a cost of goods sold as a percentage of revenues at 75.72%[214] - Operating expenses for the three months ended September 30, 2022, were $14,676,135, a decrease of $566,645 or 3.72% compared to $15,242,780 in 2021, with SG&A expenses as a percentage of revenues at 48.52%[209] - Operating expenses for the nine months ended September 30, 2022, were $45,106,976, an increase of $11,202,018 or 33.04% compared to $33,904,958 in 2021[216] - Research and development costs for the three months ended September 30, 2022, were $2,781,676, an increase of $1,171,005 or 72.7% compared to $1,610,671 in 2021, primarily due to new tool development for the construction industry[210] - The company had $1.6 million in cash at September 30, 2022, down from $7.5 million at December 31, 2021, with an accumulated deficit of approximately $121.9 million[220] - Net cash used in operating activities for the nine months ended September 30, 2022, was $30,295,137, compared to $45,708,621 in 2021[229] Market Expansion - The company entered into an agreement with Ace Hardware to distribute 35 ToughBuilt products across 5,500 individual Ace stores[165] - ToughBuilt expanded its European distribution network, including agreements with two major wholesale tool distributors in Switzerland and over 250 retailers[165] - The company announced major expansions in Great Britain, confirming agreements with multiple retailers representing over 900 locations[165] - ToughBuilt is actively expanding its market presence in regions including Western and Central Europe, Eastern Europe, South America, and the Middle East[182] - The company anticipates adding up to three major retailers and several distributors within six sectors across fifty-six targeted countries in the near term[185] Product Development - ToughBuilt launched the Reload Utility Knife, a new cutting tool available through a leading US home improvement retailer with over 15,500 storefronts globally[165] - ToughBuilt launched 21 new SKUs in the global handsaws segment, including the QuickSet™ Double-Edge Pull Saw, available in Q4 2022[165] - The company plans to launch a new line of rugged mobile devices and accessories for the construction industry, with products expected to be ready for market in 2024[186] - In 2021, TOUGHBUILT® introduced several new products, including the world's first patented magazine-fed reloading blade mechanism in the Reload Utility Knife and 21 new SKUs in the global handsaws segment[190] Financial Challenges - ToughBuilt has incurred substantial operating losses since inception and may require additional financing to continue operations[161] - The company has increased product prices in 2021 to offset rising costs from manufacturers and shipping rates due to inflation[203] - The business is seasonal, with production in China affected by the New Year holidays, typically resulting in lost sales in the first calendar quarter[199] - The competitive landscape includes major players like DeWalt, Caterpillar, and Samsung Active, which possess greater financial resources and broader distribution capabilities[195] Contractual Obligations - As of September 30, 2022, total contractual obligations amounted to $4,676,840, with operating lease obligations being $4,676,840[233] - For the twelve months ended September 30, 2023, total contractual obligations are projected to be $1,104,336[233] - The company has no off-balance sheet arrangements reported[234] Company Classification - The company is classified as a smaller reporting company and is electing scaled disclosure reporting obligations[237]