ToughBuilt(US:TBLT)2023-11-20 21:33Product 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].