UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.
WASHINGTON, DC 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

ToughBuilt Industries, Inc.

TOUGHBUILT INDUSTRIES, INC.
(Name of Registrant as Specified In Itsin its Charter)

N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

ToughBuilt Industries, Inc.

25371 Commercentre Drive, Suite 200

Lake Forest, CA 92630

February 14, 2020

To the Shareholders of ToughBuilt Industries, Inc.:

You are cordially invited to attend the 2020 Annual Meeting of Shareholders (the “Annual Meeting”) of ToughBuilt Industries, Inc., a Nevada corporation (the “Company”), to be held at 4:00 PM local time on March 18, 2020, at the Company’s corporate offices at the address listed above to consider and vote upon the following proposals:

THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF THE ABOVE SIX PROPOSALS.

Pursuant to the provisions of the Company’s bylaws, the board of directors of the Company (the “Board”) has fixed the close of business on January 28, 2020 as the record date for determining the shareholders of the Company entitled to notice of, and to vote at, the Annual Meeting or any adjournment thereof. Accordingly, only shareholders of record at the close of business on January 28, 2020 are entitled to notice of, and shall be entitled to vote at, the Annual Meeting or any postponement or adjournment thereof.

Please review in detail the attached notice and proxy statement for a more complete statement of matters to be considered at the Annual Meeting.

Your vote is very important to us regardless of the number of shares you own. Whether or not you are able to attend the Annual Meeting in person, please read the proxy statement and promptly vote your proxy via the internet, by telephone or, if you received a printed form of proxy in the mail, by completing, dating, signing and returning the enclosed proxy in order to assure representation of your shares at the Annual Meeting. Granting a proxy will not limit your right to vote in person if you wish to attend the Annual Meeting and vote in person.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

The 2020 annual meeting of shareholders (the “Annual Meeting”) of ToughBuilt Industries, Inc. (the “Company”) will be held at the Company’s corporate offices at 25371 Commercentre Drive, Suite 200, Lake Forest, CA 92630, on March 18, 2020, beginning at 4:00 PM local time. At the Annual Meeting, the holders of the Company’s outstanding common stock will act on the following matters:

Shareholders of record at the close of business on January 28, 2020 are entitled to notice of and to vote at the 2020 Annual Meeting and any postponements or adjournments thereof.

It is hoped you will be able to attend the 2020 Annual Meeting, but in any event, please vote according to the instructions on the enclosed proxy as promptly as possible. If you are able to be present at the 2019 Annual Meeting, you may revoke your proxy and vote in person.

TABLE OF CONTENTS

TOUGHBUILT INDUSTRIES, INC.

25371 Commercentre Drive, Suite 200

Lake Forest, CA 92630

ANNUAL MEETING OF SHAREHOLDERS(949) 528-3100

To Be Held on March 18, 2020www.toughbuilt.com

PROXY STATEMENT

May 3, 2021

The Board of Directors of ToughBuilt Industries, Inc. (the “Company”) is soliciting proxies from its shareholders to be used at the 2020 Annual Meeting of shareholders (the “Annual Meeting”) to be held at the Company’s offices at 25371 Commercentre Drive, Suite 200, Lake Forest, CA 92630, on March 18, 2020, beginning at 4:00 PM local time. and at any postponements or adjournments thereof. This proxy statement contains information related to the Annual Meeting. This proxy statement and the accompanying form of proxy are first being sent to shareholders on or about February 18, 2020.

ABOUT THE ANNUAL MEETING

Why am I receiving this proxy statement?To Our Stockholders:

You are receiving this proxy statement because you have been identified as a shareholder of the Company as of the record date whichcordially invited to join us for our Board has determined to be January 28, 2020, and thus you are entitled to vote at the Company’s 2020 Annual Meeting. This document serves as a proxy statement used to solicit proxies for the 2020 Annual Meeting. This document and the Appendixes hereto contain important information about the 20202021 Annual Meeting andof Stockholders on June 11, 2021, at 2:00 p.m. PST (or 5:00 p.m. EST). In light of continuing public health concerns regarding the Company and you should read it carefully.

Who is entitled to vote atcoronavirus (COVID-19) outbreak, the 2020 Annual Meeting?

Only shareholders of record as of the close of business on the record dateMeeting will be entitled to vote at the 2020 Annual Meeting. On theheld in a virtual format only. Holders of record date, there were81,460,833 shares of our common stock issued and outstanding andSeries E Non-Convertible Preferred Stock as of April 30, 2021, are entitled to vote. Each common stock shareholder is entitled to onenotice and vote for each shareat the 2021 Annual Meeting of our common stock held by such shareholder on the record date on each of the proposals presented in this proxy statement.Stockholders.

May I vote in person?

If you are a shareholderThe following Notice of the Company and your shares are registered directly in your name with the Company’s transfer agent, VCorp, you are considered, with respect to those shares, the shareholderAnnual Meeting of record,Stockholders and the proxy materialsstatement describe the business to be conducted at the Annual Meeting and proxy card, attached hereto as Appendix B,contain instructions on voting and attending the meeting. We may also report on matters of current interest to our stockholders at that Annual Meeting.

You are being sent directlywelcome to you by the Company. If you are a shareholder of record, you may attend the 2020 Annual Meeting virtually. However, even if you plan to be held on March 18, 2020, andparticipate virtually, please vote your shares promptly and before the meeting to ensure they are represented at the meeting. You may submit your proxy by Internet or telephone, as described in person, rather thanthe following materials, or, if you vote by mail, by completing and signing the proxy card enclosed therein and returning it in the envelope provided. If you decide to participate in the meeting and wish to change your proxy.

If your shares of common stock are heldproxy, you may do so automatically by a bank, broker or other nominee,voting at the meeting, provided you are consideredfollow the beneficial owner of shares held in “street name,” and the proxy materials are being forwardedinstructions on how to you together with a voting instruction card by such bank, broker or other nominee. As the beneficial owner, you are also invitedregister to attend the 2020 Annual Meeting. Since a beneficial owner is not the shareholder of record, you may not vote these shares in person at the 2020 Annual Meeting unless you obtain a proxy from your broker issued in your name giving you the right to vote the shares at the 2020 Annual Meeting.

Photo identification may be required (a valid driver’s license, state identification or passport). If a shareholder’s shares are registered in the name of a broker, trust, bank or other nominee, the shareholder must bring a proxy or a letter from that broker, trust, bank or other nominee or their most recent brokerage account statement that confirms that the shareholder was a beneficial owner of shares of stock of the Company as of the Record Date. Since seating is limited, admission to the meeting will be on a first-come, first-served basis.

Cameras (including cell phones with photographic capabilities), recording devices and other electronic devices will not be permitted at the meeting.

If my Company shares are held in “street name” by my broker, will my broker vote my shares for me?

Generally, if shares are held in street name, the beneficial owner of the shares is entitled to give voting instructions to the broker or nominee holding the shares. If the beneficial owner does not provide voting instructions, the broker or nominee can still vote the shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters, as discussed further below. Your broker will not be able to vote your shares of common stock without specific instructions from you for “non-routine” matters.

If your shares are held by yourin the name of a broker, bank, trust, or other agent as youranother nominee, you will needmay be asked for proof of ownership of these shares to obtain a proxy form fromvirtually participate in the institution that holdsAnnual Meeting.

We thank you for your shares and follow the instructions included on that form regarding how to instruct your broker or other agent to vote your shares.support.

Sincerely,

What are “broker non-votes”?/s/ Michael Panosian

Michael Panosian

Chairperson of the Board, Chief Executive Officer, and President

If you hold shares beneficially in street name and do not provide your broker with voting instructions, your shares may constitute “broker non-votes.” “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. These matters are referred to as “non-routine” matters. Since brokers are permitted to vote on “routine” matters without instructions from the beneficial owner, “broker non-votes” do not occur with respect to “routine” matters.

Proposal 1, to elect six directors, Proposal 2, to approve the Nasdaq Marketplace Rule Proposal, Proposal 4, to amend the 2018 Equity Incentive Plan, Proposal 5, the discretionary “say on pay” vote and Proposal 6 to transact such other business as may be properly brought before the 2019 Annual Meeting and any adjournments thereof are “non-routine matters.”

Proposal 3 to grant the Board of Directors the discretionary authority to effect a reverse stock split (the “Reverse Split Proposal”) of the Company’s common stock is a “routine” matters.

The determination of “routine” and “non-routine” matters is determined by brokers and those firms responsible to tabulate votes cast by beneficial owners of shares held in street name and other nominees. Firms casting such votes have generally been guided by rules of the New York Stock Exchange when determining if proposals are considered “routine” or “non-routine”. When a matter to be voted on is the subject of a contested solicitation, banks, brokers and other nominees do not have discretion to vote your shares with respect to any proposal to be voted on.YOUR VOTE IS IMPORTANT!

How do I cast myYour vote if I am a shareholder of record?

If you are a shareholder with shares registeredis important! As described in your name with the Company’s transfer agent, VSTOCK TRANSFER LLC,electronic proxy materials notice or on the record date, you mayenclosed paper proxy card and voting instructions, please vote in person atby: (1) accessing the 2019 Annual MeetingInternet website, (2) calling the toll-free number, or vote by(3) signing and dating the proxy by fax at 646-536-3179 OR EMAIL: Vote@vstocktransfer.com or internet at www.vstocktransfer.com/proxy orcard as promptly as possible and returning it by mail in the providid envelope. Whether or notif voting and delivering by mail. Even if you plan to attend the 2019 Annual Meeting, pleasewe recommend that you vote as soon as possible to ensureyour shares in advance so that your vote is counted. You may still attend the 2019 Annual Meeting and vote in person evenwill be counted if you have already voted by proxy. For more detailed instructions on howlater decide not to vote using one of these methods, please see the form of proxy card attached to this Schedule 14A and the information below.attend online.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR

THE ANNUAL MEETING TO BE HELD ON JUNE 11, 2021: THE PROXY STATEMENT, PROXY

CARD, AND ANNUAL REPORT ARE AVAILABLE AT WWW.PROXYVOTE.COM.

NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS

We will also transact any other business that may properly come before the meeting or any adjournments thereof. We are not aware of any other business to come before the meeting at this time.

Your vote is important. Whether or not you plan to attend the Annual Meeting, we encourage you to read the proxy statement and to vote as promptly as possible. For specific instructions on how to vote your shares, please refer to the instructions in the section entitled “How to Vote” beginning on page 1 of the attached proxy statement.

This notice, proxy statement, proxy card, and our 2020 Annual Report on Form 10-K are being distributed or made available on or about May 7, 2021.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 11, 2021: THIS PROXY STATEMENT AND TOUGHBUILT’S 2020 ANNUAL REPORT ON FORM 10-K ARE AVAILABLE AT WWW.TOUGHBUILT.COM. ADDITIONALLY, AND IN ACCORDANCE WITH RULES OF THE U.S. SECURITIES AND EXCHANGE COMMISSION (“SEC”), YOU MAY ACCESS THESE MATERIALS ONLINE BY VISITING WWW.PROXYVOTE.COM.

TOUGHBUILT INDUSTRIES, INC.

PROXY STATEMENT FOR 2021 ANNUAL MEETING OF STOCKHOLDERS

TABLE OF CONTENTS

ToughBuilt Industries, Inc.

25371 Commerce Centre Drive, Suite 200

Lake Forest, CA 92630

(949) 528-3100

www.toughbuilt.com

General

The Board of Directors of ToughBuilt Industries, Inc., or the Board, has made these materials available to you over the Internet or has delivered printed versions of these materials to you by mail, in connection with the Board’s solicitation of proxies for use at the 2021 Annual Meeting of Stockholders, or the Annual Meeting. The Annual Meeting is scheduled to be held on Friday, June 11, 2021, at 2:00 p.m. Pacific Standard Time (or 5:00 p.m. Eastern Standard Time) via live webcast through www.virtualshareholdermeeting.com/TBLT2021. You will need the 16- digit control number provided on the Notice of Annual Meeting or your proxy card. This solicitation is for proxies for use at the Annual Meeting or any reconvened meeting after an adjournment or postponement of the Annual Meeting.

How to Vote

Even if you plan to attend the Annual Meeting, please vote as promptly as possible using one of the following voting methods. Make sure you have your proxy/voting instruction card in hand and follow the instructions. You can vote in advance in one of the following three ways – and in each case, votes must be received before the polls are closed during the annual meeting:

VIA THE INTERNET		BY TELEPHONE		BY MAIL
Visit www.proxyvote.com and follow the instructions.		Call 1-800-454-8683 and follow the instructions.		Mark, sign and date proxy card and return it in the provided postage-paid envelope or return it to: Vote Processing, c/o Broadridge 51 Mercedes Way Edgewood, NY 11717

Please follow the instructions for Internet or telephone voting on your Notice to vote your shares without attending the meeting. 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 meeting.

Proxy Summary

This summary highlights information generally contained elsewhere in this proxy statement. This summary does not contain all of the information you should consider, and you should read the entire proxy statement carefully before voting.

Date, Time, and Place of Meeting

MANAGEMENT

DirectorsVoting Matters and Executive OfficersBoard Recommendations

The following proposals will be considered at the Annual Meeting:

Our Board recommends that you vote “FOR” each director nominee in Proposal 1 and “FOR” Proposals 2 and 3.

Other Matters

The management and Board of Directors know of no other matters to be brought before the meeting. If other matters are properly presented to the stockholders for action at the meeting or any adjournments or postponements thereof, it is the intention of the proxy holders named in this proxy to vote in their discretion on all matters on which the shares of common stock represented by such proxy are entitled to vote. The entire cost of this solicitation of proxies will be borne by the Company, including expenses incurred in connection with preparing, assembling and mailing the Notice. The Company may reimburse brokers or persons holding stock in their names positionsor in the names of their nominees for their expenses in sending the proxy materials to beneficial owners who request paper copies. Certain officers, directors, and agesregular employees of the Company will receive no extra compensation for their services and may solicit proxies by mail, telephone, facsimile, email, or personally.

BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

Board of Directors Overview

The current members of our directorsBoard of Directors are listed in the table below.

Board Member			Independent		Director Since		Board Committees
Michael Panosian (1)					2012		—
Joshua Keeler					2019		—
Robert Faught					2018		Nominating and Corporate Governance (Chair), Audit, and Compensation
Frederick D. Furry (2)					2018		Audit (Chair), Compensation, and Nominating and Corporate Governance
Linda Moossaian					2019		Compensation Committee (Chair), Audit, and Nominating and Corporate Governance

Role and executive officers asComposition of the Board

As the date of this proxy statement, our Board of Directors is composed of five (5) members. Upon our Nominating and Corporate Governance Committee’s recommendation, we are nominating Michael Panosian, Joshua Keeler, Robert Faught, and Linda Moossaian for re-election to our Board of Directors. Mr. Frederick Furry served on our Board of Directors for 2020 but was not nominated for re-election at the Annual Meeting. Upon the recommendation of our Nominating and Corporate Governance Committee, we are nominating Mr. William Placke to replace Mr. Frederick B. Furry as follows:a member of the Board. If elected, each director will hold office for a one (1) year term until our Annual Meeting of Stockholders to be held in 2022.

Each director’s term continues until the election and qualification of his or her successor or earlier death, resignation, or removal. Our Board of Directors is responsible for, among other things, overseeing the conduct of our business, reviewing and, where appropriate, approving our long-term strategic, financial and organizational goals and plans, and reviewing the performance of our Chief Executive Officer and other members of senior management.

Board Leadership Structure

Chairperson of the Board

Our Board of Directors serve untilcurrently has no established policy on whether the next annual meetingroles of Chief Executive Officer and until their successors are elected and qualified. Officers are appointed to serve for one year until the meetingChairperson of the Board of Directors followingshould be separated. Our Board of Directors believes that it is most appropriate to make that determination based on the annual meeting of stockholders and until their successors have been elected and qualified.

Michael Panosian, Co-Founder, President, CEO and Director

Company’s circumstances. Mr. Panosian co-foundedservices as our Company in 2012 and has been our CEO, President and director since inception. In 2008, Mr. Panosian co-founded Pandun, Inc., a manufacturer and distributor of tools and tool accessories in Asia, and served as its CEO until 2012. Mr. Panosian has over 16 years of extensive experience in innovation, design direction, product development, brand management, marketing, merchandising, sales, supply chain and commercialization experience in the hardware industry. He has launched several product projects spanning several fields. Mr. Panosian has deep knowledge of doing business in China where he managed a team of over 350 engineers, industrial designers and marketing professionals while stationed in Suzhou with his team for 4 years. Mr. Panosian is a graduate of Northrop University in Aerospace engineering with numerous specializations; he holds numerous patents and trademarks that are shared with some of his colleagues at our Company and other development teams. Mr. Panosian has been deemed to be suitable as a director due to his intimate knowledge of the Company since inception and his business and engineering expertise.

Joshua Keeler, Co-Founder, Vice-President Research & Development and Director

As the Vice-President Research & Development at our Company, Mr. Keeler is responsible for all product development. Mr. Keeler co-founded our Company in 2012 and works directly with Mr. Panosian in bringing innovative ideas to market. Mr. Keeler is a graduate of Art Center College of Design with a BS in Industrial Design. Mr. Keeler has over 12 years of product development experience, working on projects spanning several fields, including: automotive, personal electronics, sporting goods and a wide expanse of tools. From 1999 to 2000 he was co-owner and vice-president of Oracle Industrial Design, Co., a private company specializing in industrial design and product development. From August 2000 to April 2004, Mr. Keeler worked for Positec Power Tool Co., a private company in Suzhou, China, designing and creating a large innovation library of numerous power tool concepts. From August 2005 to April 2008, Mr. Keeler was the chief designer for Harbinger International, Inc. From August 2008 to April 2012, he was chief designer for Pandun Inc, specializing in innovative tools and supporting products. He has lived in China and has extensive experience working directly with manufacturers to get designs into production. Mr. Keeler became a Director at our 2019 Annual Meeting, and is deemed suitable as a director by our board of directors (the “Board”) due to his depth of R&D knowledge in the industry.

Zareh Khachatoorian, Chief Operating Officer and Secretary

Mr. Khachatoorian has over 30 years of experience in the realms of corporate purchasing, product development, merchandising and operations. Prior to joining ToughBuilt in January 2016, Mr. Khachatoorian was the President of Mount Holyoke Inc. in Northridge California, starting in May 2014. Mr. Khachatoorian led Mount Holyoke Inc. in the servicing of its entire import and distribution operations. From August 2008 to April 2014, Mr. Khachatoorian served as the Vice President of Operations at Allied International (“Allied”) in Sylmar, California. At Allied, Mr. Khachatoorian was responsible for the management of overseas and domestic office employees and departments involved in the areas of procurement and purchasing, inventory management, product development, engineering, control and quality assurance, and other related areas. Mr. Khachatoorian holds a Bachelor of Science degree in Industrial Systems Engineering from the University of Southern California. Additionally, Mr. Khachatoorian has been credited as the inventor or co-inventor of more than twenty issued patents, as well as several pending patents with the United States Patent and Trademark Office (USPTO). Mr. Khachatoorian is fluent in Armenian and Farsi.

Jolie Kahn,Acting Chief Financial Officer

Ms. Kahn, age 55, has an extensive background in corporate finance and corporate and securities law. She has been the proprietor of Jolie Kahn, Esq. since 2002. Ms. Kahn has also acted in various corporate finance roles, including extensive involvement of preparation of period filings and financial statements and playing an interal part in public company audits. She also works with companies and hedge funds in complex transactions involving the structuring and negotiation of multi-million dollar debt and equity financings, mergers, and acquisitions. Ms. Kahn has practiced law in the areas of corporate finance, mergers & acquisitions, reverse mergers, and general corporate, banking, and real estate matters. She represents both public and private companies, hedge funds, and other institutional investors in their role as investors in public companies.

Independent Directors

The names, positions and ages of our independent directors (as defined by NASDAQ and SEC rules), all of whom became directors as of November 14, 2018, are as follows:

Robert Faught, Director

As a global senior executive and CEO, Mr. Faught held leadership positions for Fortune 500 companies including Comcast, and Phillips/Lucent. He was the founder and CEO of SmartHome Ventures, a home automation company servicing retail, utility, insurance and telephony distribution channels and their customers. In these leadership roles, he led the development and implementation of the strategic vision throughout the organization, recruited senior talent, led leadership development and oftentimes, oversaw a realignment of senior roles where some executives were outplaced. At Faught Associates, he offers consulting, executive search, leadership development and outplacement to bring an exceptional leadership and performance direction that provides growth and internal development. From January 2014 to January 2016 he was the President and Chief Executive Officer and Chairperson of SmartHome Ventures and has served on its Board since January 2016.our directors. The Board has determinedof Directors believes its current structure is functioning effectively. The Board of Directors does not believe that Mr. Faught is suitable as a director due to his long standing leadership roles with Fortune 500 companies.

Paul Galvin,Director

Paul M. Galvin was appointed as a director and the Chief Executive Officer of SG Blocks, Inc. upon consummation of the reverse merger among CDSI Holdings Inc., CDSI Merger Sub, Inc., SG Blocks, and certain stockholders of SG Blocks on November 4, 2011. Mr. Galvin is a founder of SGBlocks, LLC, the predecessor entity of SGB. He has served as the Chief Executive Officer of SGB and its predecessor entity since 2008. Mr. Galvin has been a managing member of TAG Partners, LLC),introducing an investment partnership formed for the purpose of investing in SGB, since October 2007. Mr. Galvin brings over 20 years of experience developing and managing real estate, including residential condominiums, luxury sales, and market rate and affordable rental projects. Prior to his involvement in real estate, he founded a non-profit organization that focused on public health, housing, and child survival, where he served for over a decade in a leadership position. During that period, Mr. Galvin designed, developed, and managed emergency food and shelter programs through New York City’s Human Resources Administration and other federal and state entities. Mr. Galvin holds a Bachelor of Science in Accounting from LeMoyne College and a Master’s Degree in Social Policy from Fordham University. He was formerly an adjunct professor at Fordham University’s Graduate School of Welfare. Mr. Galvin previously served for 10 years on the Sisters of Charity Healthcare System Advisory Board and six years on the board of directors of SentiCare, Inc. In 2011, the Council of Churches of New York recognized Mr. Galvin with an Outstanding Business Leadership Award. The Company believes he is well suited to sit on its Board due to Mr. Galvin’s pertinent experience, qualifications, attributes, and skills which include his managerial experience and the knowledge and experience he has attained in the real estate industry.

Frederick D. Furry,Director

Mr. Furry is currently the CFO at Luminance Holdco, Inc. and Subsidiaries. Luminance is a private-equity backed designer, custom manufacturer, and distributor of lighting hardware, fixtures, lamps, ceiling fans, lamp parts, and plumbing parts. Headquartered in Los Angeles, California, Luminance has distribution centers located in California, New York, Texas, and Illinois and a wholly-owned foreign enterprise located in Dongguan, China. Prior to Luminance, from 2016 to 2018, Mr. Furry was the CFO at Cunico Corporation, a closely-held, mid-sized manufacturing company based in Long Beach, California. Cunico provides specialty fittings and parts to the US Navy, primarily for nuclear submarines and aircraft carriers. From 2011 to 2015, Mr. Furry was the CFO and COO at Biolase (NASDAQ:BIOL). Biolase is a high-tech, medical device manufacturer of dental lasers located in Irvine, California, that sells its products directly in North America and certain international markets and distributes its products in over 60 international markets. As COO, Mr. Furry initiated the turnaround of failing business and restructured several aspects of the business.

From 1998 to 2010, Mr. Furry was at Windes, a regional public accounting firm based in Southern California, where he served as an Audit Partner and worked with over 25 public and private companies in the middle market with revenues ranging from $20 million to $600 million.

During his 20-year tenure in public accounting, Mr. Furry helped his clients with countless complex technical issues and transactions, including four IPOs, three reverse mergers, well over a dozen M&A transactions, and several leveraged ESOPs.

Mr. Furry has a Master’s of Business Administration degree and a Bachelor’s of Science in Business Administration from the University of California, Riverside and is a Certified Public Accountant (inactive). Mr. Furry’s long experience with public companies and as a financial executive are qualifications which make him an ideal Board memberindependent Chairperson would provide appreciably better direction for the Company.

Linda Moossaian,DirectorBoard Risk Oversight

Linda MoossaianOur Board of Directors as a whole has responsibility for risk oversight. Our Board of Directors exercises this risk oversight responsibility directly and through its committees. The risk oversight responsibility of our Board of Directors and its committees are informed by reports from our management teams to provide visibility to our Board of Directors about the identification, assessment, and management of key risks and our management’s risk mitigation strategies. Our Board of Directors has primary responsibility for evaluating strategic and operational risk, including related to significant transactions. Our Audit Committee has primary responsibility for overseeing our major financial and accounting risk exposures and, among other things, discusses guidelines and policies with respect to assessing and managing risk with management and our independent auditor. Our Compensation Committee has responsibility for evaluating risks arising from our compensation and people policies and practices. Our Nominating and Corporate Governance Committee has responsibility for evaluating risks relating to our corporate governance practices. Our committees and management provide reports to our Board of Directors on these matters.

In its governance role, and particularly in exercising its duty of care and diligence, our Board of Directors is an achievement-oriented financial strategist with an exceptional recordresponsible for ensuring that appropriate risk management policies and procedures are in place to protect the Company’s assets and business. Our Board of successful initiatives in financial planning, profit optimization, joint venture accounting,Directors has broad and treasury management. She hasultimate oversight responsibility for our risk management processes and programs, and executive management is responsible for the day-to-day evaluation and management of risks to the Company. We do not have a strong historypolicy as to whether our Chairperson and Chief Executive Officer’s roles should be separate. Instead, our Board of forging strategic partnerships with senior management, including CEOs and CFOs as well as key stakeholders to drive financial objectives, make strategic decisions, and analyze value-added analytics. Ms. Moossaian has a sophisticated understanding of long-range budget preparation, GAAP accounting, M&A, planning models, financial forecasting & analysis, decision support, accounting procedures, and continuous process improvement. Her advanced critical thinking, analytical, qualitative, and quantitative analysis skills have been developed through positions in corporate andpublic accounting and consulting. She currently is the Director, Audit & Controls-WBTV Financial Administration for Warner Bros. in Burbank, CA, a position she has held since July 2019. Ms. Moossaian has previously acted as Director, Theatrical Production Finance (from July 2009 to April 2018) and Director, Financial Planning & Analysis (from April 2018 to July 2019) for Warner Bros. The ToughBuilt Board has determined that Ms. Moossaian’s expertise in finance is well suited to ToughBuilt’s Board’s support of the Company duringDirectors makes this phase of rapid growth.determination based on what best serves our Company’s needs at any given time.

Corporate GovernanceDirector Independence

The business and affairsUnder the rules of our company are managed under the direction of the Board of Directors.

Term of Office

Directors serve until the next annual meeting and until their successors are elected and qualified. Officers are appointed to serve for one year until the meeting of the Board of Directors following the annual meeting of shareholders and until their successors have been elected and qualified.

Director Independence

We use the definition of “independence” of The NASDAQ Stock Market (“NASDAQ”), where our common stock trades, independent directors must constitute a majority of a listed company’s Board of Directors. Also, the NASDAQ rules require that each member of a listed company’s audit, compensation, and nominating and corporate governance committees be independent, subject to make this determination.specified exceptions. Audit Committee members must also satisfy the independence criteria outlined in Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Under the rules of NASDAQ, Listing Rule 5605(a)(2) provides thata director will only qualify as an “independent director” of a company if such director is a person other thannot an executive officer or employee of oursuch company or, any other individual having a relationship which, in the opinion of thesuch company’s Board of Directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The NASDAQ rules provide that a director cannot

In order to be considered independent if:for purposes of Rule 10A-3, a member of an Audit Committee of a listed company may not, other than in his or her capacity as a member of the Audit Committee, the Board of Directors, or any other board committee, accept, directly or indirectly, any consulting, advisory or other compensatory fees from the listed company or any of its subsidiaries, or be an affiliated person of the listed company or any of its subsidiaries.

Our Board of Directors has undertaken a review of each director’s independence and considered whether any director has a material relationship with us that could compromise the director’s ability to exercise independent judgment in carrying out his or her responsibilities. As a result of this review, our Board of Directors determined that each member of the board, other than Michael Panosian, the Chief Executive Officer of the Company, and Joshua Keeler, our VP of Research and Development, are “independent directors” as defined in NASDAQ Listing Rules and SEC Rule 10A-3 promulgated under the Exchange Act. The board has also determined that board nominee William Placke qualifies as an independent director under listing standards of NASDAQ and the SEC rules and regulation. A majority of our directors are and will continue to be independent, as required under applicable NASDAQ rules. As required under applicable NASDAQ rules, our independent directors have and will continue to meet in regularly scheduled executive sessions at which only independent directors are present.

Under such definition, Messrs. Faught, FurryOur Board of Directors also determined that each member of our Audit Committee, Compensation Committee, and GalvinNominating and Ms. Moossaian are independent directors.Corporate Governance Committee satisfy the independence standards for those committees established by the SEC’s and NASDAQ’s applicable rules and regulations.

In making these determinations, our Board of Directors considered the relationships that each non-employee director has with our Company and all other facts and circumstances our Board of Directors deemed relevant in determining their independence, including each non-employee director’s beneficial ownership of our capital stock.

Family RelationshipsExecutive Sessions of Independent Directors

There are no family relationships among anyIndependent members of our officersBoard of Directors convene executive sessions from time to time as deemed necessary or directors.appropriate. These sessions generally are without the presence of our non-independent directors or members of the Company’s management.

Board Committees

Our Board of Directors has three standing committees: an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee,Committee. As of this proxy statement’s date, the composition and primary responsibilities of each comprised entirelycommittee are described below. Members serve on these committees until their resignation or until otherwise determined by our Board of independent directors and none of which met in 2018. The Directors.

Audit Committee met four times in 2019.

Audit Committee

Our Audit Committee is comprisedcurrently consists of three individuals, eachindependent directors, of whom is an independent director andwhich at least one, the Chairperson of whom, Mr. Furry, is an “audit committeethe Audit Committee, qualifies as a qualified financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K.

Our Audit Committee oversees our corporate accounting, financial reporting practices and Mr. Frederick Furry has served as the auditsChairperson of financial statements. For this purpose, the Audit Committee does haveand financial expert, and Mr. Furry and Ms. Linda Moossaian are members of the Audit Committee. Mr. Furry also qualifies as a charter (which is reviewed annually) and perform several functions.qualified financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. The Audit Committee performs the following:

Compensation Committee

Our Compensation Committee is comprised of three individuals, each of whom is an independent director.

The Compensation Committee reviews or recommends the compensation arrangements for our management and employees and also assistsCommittee’s duties are to recommend our Board of Directors the engagement of the independent registered public accounting firm to audit our consolidated financial statements and review our accounting and auditing principles. The Audit Committee reviews the scope, timing, and fees for the annual audit and the results of audit examinations performed by any internal auditors and independent public accountants, including their recommendations to improve the system of accounting and internal controls. The Audit Committee will at all times be composed exclusively of directors who are, in reviewingthe opinion of our Board of Directors, free from any relationship that would interfere with the exercise of independent judgment as a committee member and approving matterswho possess an understanding of consolidated financial statements and generally accepted accounting principles. Our Audit Committee operates under a written charter, which is available on our website at www.toughbuilt.com.

Upon board nominee William Placke’s election to the Board of Directors at the Annual Meeting, the board will appoint Mr. Placke to serve on the Audit Committee, and Linda Moossaian will be appointed to replace Mr. Furry as such committee’s Chairperson. The board has determined that Ms. Moossaian qualifies as company benefita financial expert as defined under Item 407(d)(5)(ii) of Regulation S-K.

Compensation Committee

Our Compensation Committee establishes our executive compensation policy, determines our executive officers’ salary and insurance plans, including monitoringbonuses, and recommends to the performance thereof.board stock option grants for our executive officers. Ms. Moossaian is the Compensation Committee Chair, and Mr. Furry and Frederick have been serving as Compensation Committee members. Each of our Compensation Committee members is independent under NASDAQ’s independence standards for Compensation Committee members. Our Chief Executive Officer often makes recommendations to the Compensation Committee and the board concerning other executive officers’ compensation. The Compensation Committee has a charter (which is reviewed annually) and performs several functions.

Theseeks input on certain compensation policies from the Chief Executive Officer. Our Compensation Committee has the authoritycontinues to directly engage third-party consultants regarding market compensation for our employees. Our Compensation Committee operates under a written charter, which is available on our website at our expense, any compensation consultants or other advisers as it deems necessary to carry out its responsibilities in determining the amount and form of employee, executive and director compensation.www.toughbuilt.com.

Upon board nominee William Placke’s election to the Board of Directors at the Annual Meeting, the board will appoint Mr. Placke to replace Mr. Furry as a Compensation Committee member.

Nominating and Corporate Governance Committee

Our Nominating and Corporate Governance Committee is comprisedresponsible for matters relating to the corporate governance of three individuals, eachour Company and the nomination of whommembers of the board and committees of the board. Mr. Furry is an independent director.

Thethe Chairperson of the Nominating and Corporate Governance Committee, is charged with the responsibility of reviewing our corporate governance policies and with proposing potential director nominees to the Board of Directors for consideration. This committee has the authority to oversee the hiring of potential executive positions in our company. The Nominating and Corporate Governance Committee has a charter (which will be reviewed annually) and performs several functions.

Director Independence

Our Board of Directors has reviewed the materiality of any relationship that each of our directors has with us, either directly or indirectly. Based on this review, our Board of Directors has determined that Frederick Furry, Paul Galvin, LindaMs. Moossaian and Robert FaughtMr. Furry are “independent directors” as defined in the NASDAQ Listing Rules and Rule 10A-3 promulgated under the Exchange Act. As such, all independent directors other than Ms. Moossaian serve on all three of our standing Board committees, with Frederick Furry as Chair of the Audit Committee, Paul Galvin as Chair of the Compensation Committee and Robert Faught as Chairmembers of the Nominating and Corporate Governance Committee. Each of the members of our Nominating and Corporate Governance Committee is independent under NASDAQ’s independence standards. The Nominating and Corporate Governance Committee operates under a written charter, available on our website at www.toughbuilt.com.

Upon board nominee William Placke’s election to the Board of Directors at the Annual Meeting, the board will appoint Mr. Placke to replace Mr. Furry as a Nominating and Corporate Governance Committee member.

2020 Board Meetings and Committee Meetings

In 2020, our Board of Directors and each committee met four times. In 2020, each of our incumbent directors attended or participated in at least 75% of the aggregate of (i) the total number of meetings of our Board of Directors held during the period for which he or she has been a director and (ii) the total number of meetings held by all committees of our Board of Directors on which he or she served during the time he or she was a member of such committee.

Compensation Committee Interlocks and Insider Participation

The current members of our Compensation Committee are Ms. Linda Moossaian and Messrs. Furry and Faught. None of our Compensation Committee members is or was during 2020, an officer or employee of ours. None of our Compensation Committee members had any relationships requiring disclosure by the Company under Item 404 of Regulation S-K in 2020. None of our executive officers currently serves, or in the past year, has served as a member of the Board of Directors or Compensation Committee of any entity with one or more executive officers serving on our Board of Directors or Compensation Committee.

Board Attendance at Annual Meeting of Stockholders

Our policy is to invite and encourage each member of our Board of Directors to be present at our Annual Meetings of stockholders. All of our directors intend to attend the Annual Meeting.

Communication with Directors

Stockholders and interested parties who wish to communicate with our Board of Directors, non-management members of our Board of Directors as a group, a committee of our Board of Directors or a specific member of our Board of Directors (including our Chairperson or lead independent director, if any) may do so by letters addressed to the attention of our Corporate Secretary at our corporate executive offices. All communications are reviewed by the Corporate Secretary and provided to our Board of Directors as appropriate. The address for these communications is ToughBuilt Industries, Inc., 25371 Commercentre Drive, Suite 200, Lake Forest, CA 92630.

Code of Business Conduct and Ethics

We haveare committed to the highest standards of integrity and ethics in the way we conduct our business. Accordingly, we adopted a written codeCode of business conductBusiness Conduct and ethicsEthics that applies to our directors,Board of Directors, officers, and employees, including our principalChief Executive Officer, Chief Financial Officer, and other executive officer, principaland senior financial officer, principalofficers. Our Code of Business Conduct and Ethics establishes our policies and expectations with respect to a wide range of business conduct, including preparation and maintenance of financial and accounting officerinformation, compliance with laws, and conflicts of interest.

Under our Code of Business Conduct and Ethics, each of our employees, officers and directors is required to report suspected or controller,actual violations to the extent permitted by law. Also, we have adopted separate procedures concerning the receipt and investigation of complaints relating to accounting or persons performing similar functions. audit matters. These procedures have been adopted and are administered by our Audit Committee.

Our Code of Business Conduct and Ethics is available on our website at www.toughbuilt.com.We have posted a current copywill disclose any amendments to the Code of Business Conduct and Ethics on our website, as well as any waivers of the code on our website, www.toughbuilt.com. In addition, we will post on our website all disclosures that are required by law or the listing standards of NASDAQ concerning any amendments to, or waivers from, any provision of the code. The reference to our website address does not constitute incorporation by reference of the information contained at or available through our website, and you should not consider it to be a part of this prospectus.disclosed by the SEC or NASDAQ rules.

Indemnification of Officers and Directors

Chapter 78 of theThe Nevada Revised Statutes (NRS) provides that a Nevada corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he is not liable pursuant to NRS Section 78.138 or acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. NRS Chapter 78 further provides that a corporation similarly may indemnify any such person serving in any such capacity who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees) actually and reasonably incurred in connection with the defense or settlement of such action or suit if he is not liable pursuant to NRS Section 78.138 or acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the court or other court of competent jurisdiction in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court or other court of competent jurisdiction shall deem proper.

Our bylaws provide that we may indemnify our officers, directors, employees, agents, and any other persons to the maximum extent permitted by the NRS.

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the “Securities Act”), may be permitted to directors, officers or persons controlling us pursuantaccording to the foregoingpreceding provisions, we have been informed that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Considerations in Identifying and Evaluating Director Nominees

The Nominating and Corporate Governance Committee is responsible for recommending to the Board of Directors nominees for election to our Board of Directors at each Annual Meeting of Stockholders and identifying one or more candidates to fill any vacancies that may occur on our Board of Directors. New candidates may be identified through recommendations from existing directors or management, consultants, or third-party search firms, discussions with other persons who may know of suitable candidates to serve on our Board of Directors, and stockholder recommendations. Evaluations of prospective candidates typically include a review of the candidate’s background and qualifications by the Nominating and Corporate Governance Committee, interviews with the committee as a whole, one or more members of the committee, or one or more other board members, and discussions within the committee and the board. The Nominating and Corporate Governance Committee then recommends candidates to the board, with the full Board of Directors selecting the candidates to be nominated for election by the stockholders or appointed by the Board of Directors to fill a vacancy.

The Nominating and Corporate Governance Committee will consider director candidates proposed by stockholders and recommendations from other sources. Additional information regarding the process for properly submitting stockholder nominations for nomination candidates to our Board of Directors is outlined in the section titled “Stockholder Proposals for the 2022 Annual Meeting” on page 35 of this proxy statement.

Board Diversity

Our Board of Directors seeks members from diverse professional backgrounds who combine a solid professional reputation and knowledge of our business and industry with a reputation for integrity. Our Board of Directors does not have a formal policy concerning diversity and inclusion but is in the process of establishing a policy on diversity. Diversity of experience, expertise, and viewpoints is one of many factors the Nominating and Corporate Governance Committee considers when recommending director nominees to our Board of Directors. Further, our Board of Directors is committed to actively seeking highly qualified women and individuals from minority groups to include in the pool from which new candidates are selected. Our Board of Directors also seeks members that have experience in positions with a high degree of responsibility or are, or have been, leaders in the companies or institutions with which they are, or were, affiliated, but may seek other members with different backgrounds, based upon the contributions they can make to our Company.

Compensation of Non-Employee Directors

2020 Non-Employee Director Compensation

A summary of compensation accrued or paid to our non-executive directors during the fiscal year ended December 31, 2020 is below. Mr. Panosian, our Chief Executive Officer and President, and Mr. Keeler, our VP of Research & Development, received no compensation for serving as directors and are not included in the table. The compensation Mr. Panosian and Mr. Keeler receive as an employee of the Company is included in the section titled “EXECUTIVE COMPENSATION” on page 20 of this proxy statement.

(1) Mr. Galvin resigned from the Board of Directors on December 4, 2020.

Non-Employee Director Remuneration Policy

Each of our non-employee directors may receive up to 50,000 options to purchase shares of common stock (which we refer to as the “Annual Director Options”) for each fiscal year. The Annual Director Options will be confirmed (together with the exercise price for such options) at the first meeting of our Board of Directors for each fiscal year and shall vest quarterly in arrears. Annual Director Options shall have a ten-year term and shall be issued under our equity plans.

Compensation Committee Review

The Compensation Committee shall, if it deems necessary or prudent in its discretion, reevaluate the cash and equity awards (amount and manner or method of payment) to be made to non-employee directors for such fiscal year. In making this determination, the Compensation Committee shall utilize such market standard metrics as it deems appropriate, including, without limitation, an analysis of cash compensation paid to our peer group’s independent directors.

The Compensation Committee shall also have the power and discretion to determine in the future whether non-employee directors should receive Annual or other grants of options to purchase shares of common stock or other equity incentive awards in such amounts and under such policies as the Compensation Committee may determine utilizing such market standard metrics as it deems appropriate, including, without limitation, an analysis of equity awards granted to independent directors of our peer group.

Participation of Employee Directors; New Directors

Unless separately and specifically approved by the Compensation Committee in its discretion, no employee director of our Company shall be entitled to receive any remuneration for serving as a director (other than expense reimbursement as per prevailing policy). Messrs. Michael Panosian and Joshua Keeler are considered to employee directors because they are also executive officers of the Company.

New directors joining our Board of Directors shall be entitled to a prorated portion (based on months to be served in the fiscal year in which they join) of cash and stock options or other equity incentive awards (if applicable) for the applicable fiscal year at the time they join our Board of Directors.

PROPOSAL 1–ELECTION OF DIRECTORS

Board Structure

Our Board of Directors is currently composed of five (5) members. Directors hold office until the next Annual Meeting of Stockholders or until their earlier death, resignation, or removal, or until their successors are elected and qualified.

Information Regarding our Directors

Our Nominating and Corporate Governance Committee recommended, and our Board of Directors nominated Ms. Linda Moossaian and Messrs. Panosian, Keeler, Faught, and Placke as nominees for election as directors at the 2021 Annual Meeting to hold office for a one-year term until our Annual Meeting of Stockholders to be held in 2022.

The director nominees have consented to be named as nominees in this proxy statement and have agreed to serve as directors if elected. Unless otherwise instructed, the proxy holders will vote the proxies received by them for the five (5) nominees named below. If any director nominee of the Company is unable or declines to serve as a director at the Annual Meeting, the proxies will be voted for any nominee designated by the present Board of Directors to fill the vacancy. The Board of Directors has no reason to believe that any of the nominees will be unavailable for election. The elected directors will hold office until the next Annual Meeting of Stockholders or until their earlier death, resignation, or removal, or until their successors are elected and qualified. There are no arrangements or understandings between any of our directors and any other person under which any director was selected to serve as a director of our Company. There are no family relationships among our directors or officers.

The following sets forth the persons nominated by the Board of Directors for election and certain information concerning those individuals:

Biographies of Director Nominees

Michael Panosian, Co-Founder, President, CEO, and Director

Mr. Panosian co-founded our Company in 2012 and has been our CEO, President, and Director since inception. In 2008, Mr. Panosian co-founded Pandun, Inc., a manufacturer, and distributor of tools and tool accessories in Asia, and served as its CEO until 2012. Mr. Panosian has over 24 years of extensive experience in innovation, design direction, product development, brand management, marketing, merchandising, sales, supply chain, and commercialization experience in the hardware industry. He has launched several product projects spanning several fields. Mr. Panosian has deep knowledge of doing business in China, where he managed a team of over 350 engineers, industrial designers, and marketing professionals while stationed in Suzhou with his team for 4 years. Mr. Panosian is a graduate of Northrop University in Aerospace engineering with numerous specializations; he holds numerous patents and trademarks shared with some of his colleagues at our Company and other development teams.

Mr. Panosian has been deemed to be suitable as a Director due to his intimate knowledge of the Company since inception and his business and engineering expertise.

Joshua Keeler, Co-Founder, Vice President of Research & Development, and Director

As the Vice President of Research & Development at our Company, Mr. Keeler is responsible for all product development since its inception. Mr. Keeler co-founded our Company in 2012 and works directly with Mr. Panosian in bringing innovative ideas to market. Mr. Keeler is a graduate of Art Center College of Design with a Bachelor of Science (BS) in Industrial Design. Mr. Keeler has over 12 years of product development experience, working on projects spanning several fields, including automotive, personal electronics, sporting goods, and a wide expanse of tools. From 1999 to 2000, he was co-owner and Vice President of Oracle Industrial Design, Co., a private company specializing in industrial design and product development. From August 2000 to April 2004, Mr. Keeler worked for Positec Power Tool Co., a private company in Suzhou, China, designing and creating a large innovation library of numerous power tool concepts. From August 2005 to April 2008, Mr. Keeler was the chief designer for Harbinger International, Inc. From August 2008 to April 2012, he was chief designer for Pandun Inc, specializing in innovative tools and supporting products. He has lived in China and has extensive experience working directly with manufacturers to get designs into production.

Mr. Keeler is deemed suitable as a Director by our Board of Directors due to his depth of R&D knowledge and expertise in the industry.

Robert Faught, Director

From 2003-2013, Mr. Faught was the Senior Vice President of Consumer Channels for Comcast. He created an industry-leading organization of retail, digital marketing, and retail “store within a store’s” through a series of acquisitions and innovative solutions selling and marketing cable, broadband, telephone, wireless, and home security a $4.5 billion division. From 2001-2003, Mr. Faught was the President and CEO of Atlanta-based Enrev Power Solutions. In 1998, Mr. Faught was recruited by the Chairperson of Philips Electronics to be the President of the Americas Region. He was brought in to lead a turnaround and assume accountability for North and South America. He increased the distribution and sales of several consumer electronic products, which led to a $3.0 billion joint venture with Lucent Technologies. Before 1998, Mr. Faught worked in Los Angeles for L.A. Cellular and in Atlanta for Bell South Cellular, where he managed consumer sales and marketing. Prior experiences also include leading Atari and Activision in senior sales and marketing roles. At Faught Associates, Mr. Faught offers consulting, executive search, leadership development, and outplacement to bring exceptional leadership and performance direction that provides growth and internal development. From January 2014 to January 2016, he was the President and Chief Executive Officer of SmartHome Ventures and has served on its board since January 2016.

The Board has determined that Mr. Faught is suitable as a Director due to his long-standing leadership roles with Fortune 500 companies.

Linda Moossaian, Director

Linda Moossaian is an achievement-oriented financial strategist with an exceptional record of successful initiatives in financial planning, profit optimization, joint venture accounting, and treasury management. She has a strong history of forging strategic partnerships with senior management, including CEOs and CFOs, and key stakeholders to drive financial objectives, make strategic decisions, and analyze value-added analytics. Ms. Moossaian has a sophisticated understanding of long-range budget preparation, GAAP accounting, M&A, planning models, financial forecasting & analysis, decision support, accounting procedures, and continuous process improvement. Her advanced critical thinking, analytical, qualitative, and quantitative analysis skills have been developed through corporate and public accounting and consulting positions. She currently is the Director, Audit & Controls-WBTV Financial Administration for Warner Bros. in Burbank, CA, a position she has held since July 2019. Ms. Moossaian has previously acted as a Director of the Theatrical Production Finance (from July 2009 to April 2018) and Director of Financial Planning & Analysis (from April 2018 to July 2019) for Warner Bros.

The ToughBuilt Board has determined that Ms. Moossaian’s finance expertise is well suited to the board’s support of the Company during this rapid growth phase.

William Placke, Board Nominee

William “Bill” Placke has been serving as the Head of Strategic Partnerships and Business Development for Ericsson Wireless Office, a publicly listed, global company with more than 100,000 employees operating in over 120 countries, since August 2020. Before being acquired by Ericsson in August 2020, Bill served as the Executive Vice President of Corporate Development and Strategic Alliances for StratusWorX, a Silicon Valley technology company, from June 2016. From June 2016 to June 2017, Bill served as Executive Vice President of Corporate Development at Console Connect, a SaaS and network company in Silicon Valley acquired by PCCW in August 2017. Prior to this, he was the Executive Vice President, General Counsel, and Company Secretary of Digital Globe Services, a London Stock Exchange-listed digital media company from January 2010 to July 2016. Bill has served in executive roles at Charter Communications and in board positions, a member of the Investment Committee, and as Sr. Director of Legal Mergers & Acquisitions at United Pan-Europe Communications/Liberty Global.

Bill began his career as a Corporate, M&A (mergers and acquisitions), and IPO (initial public offering) attorney with the law firm of Roberts, Sheridan & Kotel in New York (now Dickstein, Shapiro) and later as a Cross-Border Mergers and Acquisitions attorney at Clifford Chance, LLP, one of the largest law firms in the world. Bill has served on the Board of Directors of companies in the US, Netherlands, UK, Ireland, and France and has published articles and cited in multiple legal reviews and business reviews on various topics from corporate governance to cross-border mergers and acquisitions and securities issues. Bill earned his law degree (J.D.) from St. John’s University School of law in May 1994, a Diploma in European Union Law from King’s College London in 2000, and his undergraduate degree in Business Administration from the University of Dayton in 1989. He has been licensed to practice law in New York since November 1994 and is a member in good standing with the New York Bar.

ToughBuilt’s Board of Directors has determined that Mr. Placke’s legal expertise and extensive international experience in corporate finance, mergers and acquisitions, and securities offerings would be valuable to the Company’s growth during the Company’s recent rapid growth.

Required Vote

You may vote “FOR,” “AGAINST,” or “ABSTAIN” for each director nominee. Directors are elected by a plurality of the votes properly cast in person or by proxy. If a quorum is present and voting, the five (5) nominees receiving the highest number of affirmative votes will be elected. A “plurality vote” means that the winning candidate only needs to get more votes than a competing candidate. Because our directors are unopposed, he or she only needs one vote to be elected.

Our articles of incorporation do not permit stockholders to cumulate their votes for the election of directors. Shares represented by executed proxies will be voted if authority is not withheld for the five (5) nominees’ election. Abstentions and broker non-votes will not affect the outcome of the election of directors.

Broker non-votes and abstentions will not affect the outcome of the election of directors, although they will be counted for purposes of determining whether there is a quorum. Shares represented by executed proxies will be voted, if authority to do so is not expressly withheld (as indicated on the proxy card), for the election of Ms. Moossaian, and Messrs. Panosian, Keeler, Faught, and Placke to our Board of Directors

Proposal 1–Board Recommendation

Our Board of Directors recommends a vote “FOR” the election Ms. Moossaian and Messrs. Panosian, Keeler, Faught, and Placke to the Board of Directors.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

PROPOSAL NUMBER 2–TO AUTHORIZE THE BOARD OF DIRECTORS, IN ITS DISCRETION, TO AMEND OUR ARTICLES OF INCORPORATION BY DECEMBER 31, 2021 TO EFFECT A REVERSE STOCK SPLIT IN A RATIO OF NOT LESS THAN 1-FOR-2 AND NOT MORE THAN 1-FOR-10, TO BE DETERMINED BY THE BOARD OF DIRECTORS

Background

On April 13, 2021, our Board of Directors unanimously approved and recommended that our stockholders approve a proposal to authorize the Board of Directors, in its discretion, to amend our articles of incorporation, as amended (the “Certificate Amendment”) not later than December 31, 2021, to effect a Reverse Stock Split at a ratio of not less than 1-for-2 and not more than 1-for-10, with the exact ratio to be set within this range by our Board of Directors in its sole discretion but not later than December 31, 2021 (the “Reverse Stock Split”). The final decision of whether to proceed with the Reverse Stock Split and the effective time of the Reverse Stock Split is to be determined by the Board of Directors, at its sole discretion.

If the stockholders approve the Reverse Stock Split, and the Board of Directors decides to implement it, the Reverse Stock Split will become effective as of a date and time to be determined by the Board of Directors that will be specified in the Certificate Amendment (the “Effective Time”). If the Board of Directors does not decide to implement the Reverse Stock Split by December 31, 2021, the authority granted in this proposal to implement the Reverse Stock Split will automatically terminate.

The Reverse Stock Split will be realized simultaneously for all outstanding common stock. The Reverse Stock Split will affect all holders of common stock uniformly, and each stockholder will hold the same percentage of common stock outstanding immediately following the Reverse Stock Split as that stockholder held immediately before the Reverse Stock Split, except for changes that may result from the treatment of fractional shares, as described below. The Reverse Stock Split will not change our common stock’s $0.0001 par value per share and will not reduce the number of authorized shares of common stock. Outstanding shares of common stock resulting from the Reverse Stock Split will remain fully paid and non-assessable.

The text of the proposed Certificate Amendment to effect the Reverse Stock Split is included as Appendix A to this proxy statement. Any final Certificate Amendment will include the Reverse Stock Split ratio fixed by our Board of Directors, within the range approved by our stockholders.

Criteria to Be Used for Decision to Proceed with the Reverse Stock Split

If our stockholders approve the Reverse Stock Split, our Board of Directors will be authorized to proceed with the Reverse Stock Split. The exact ratio of the Reverse Stock Split, within the 1-for-2 to the 1-for-10 range, would be determined by our Board of Directors, in its sole discretion, and publicly announced by us before the Effective Time. In determining whether to proceed with the Reverse Stock Split and setting the appropriate ratio for the Reverse Stock Split, our Board of Directors will consider, among other things, factors such as:

		NASDAQ’s minimum price per share requirements;
		the historical trading prices and trading volume of our common stock;
		the number of shares of our common stock outstanding;
		the then prevailing and expected trading prices and trading volume of our common stock and the anticipated impact of the Reverse Stock Split on the trading market for our common stock;
		the anticipated impact of a particular ratio on our ability to reduce administrative and transactional costs;
		business developments affecting us; and
		prevailing general market and economic conditions.

Reasons for the Reverse Stock Split

If our stockholders approve the Reverse Stock Split, our Board of Directors will be authorized to proceed with the Reverse Stock Split. The Board of Directors believes that the increased market price of the common stock expected as a result of implementing the Reverse Stock Split could improve the marketability and liquidity of our common stock and will encourage interest and trading in our common stock, and, importantly, would enable the common stock to continue to be listed on NASDAQ (if a company trades for 30 consecutive business days below the $1.00 minimum closing bid price requirement, NASDAQ will send a deficiency notice to the company, advising that it has been afforded a “compliance period” of 180 calendar days to regain compliance with the applicable requirements). The Reverse Stock Split could allow a broader range of institutions to invest in our common stock, potentially increasing trading volume and our common stock’s liquidity. The Reverse Stock Split could also help increase analyst and broker interest in our common stock as their policies can discourage them from following or recommending companies with low stock prices.

The Board of Directors (or any authorized committee of the Board of Directors) reserves the right to elect to abandon the Reverse Stock Split, notwithstanding stockholder approval, if it determines, in its sole discretion, that the Reverse Stock Split is no longer in the best interests of the Company.

Procedure for Effecting Reverse Stock Split

If the Company’s stockholders approve the Reverse Stock Split, and if at such time the Board of Directors still believes that a Reverse Stock Split is in the best interests of the Company and its stockholders, the Board of Directors will determine the exact timing of the filing of the Certificate Amendment. We will then file the Certificate Amendment, the form of which is attached hereto as Appendix A, with the Secretary of State of the State of Nevada to effect the Reverse Stock Split. The Certificate of Amendment text is subject to modification to include such changes as required by the Nevada Secretary of State and as the Board of Directors deems necessary and advisable to effect the Reverse Stock Split.

All shares of our common stock issued and outstanding immediately before the Effective Time would automatically be converted into new shares of our common stock based on the Reverse Stock Split ratio by reclassifying and combining all of our outstanding shares of common stock a proportionately smaller number of shares. For example, if the Board of Directors decides to implement a 1-for-10 Reverse Stock Split of common stock, then a stockholder holding 10,000 shares of common stock before the Reverse Stock Split would instead hold 1,000 shares of common stock immediately after the Reverse Stock Split. If the Board of Directors does not decide to implement the Reverse Stock Split by December 31, 2021, the authority granted in this proposal to implement the Reverse Stock Split will terminate.

As soon as practicable after the Effective Time of the Reverse Stock Split, stockholders of record who hold certificated shares at the Effective Time would receive correspondence from our transfer agent asking them to return the outstanding certificates representing pre-split shares of common stock, which would be canceled upon receipt by our transfer agent, and new certificates representing the post-split shares of common stock would be sent to each of our stockholders. We will bear the costs of the issuance of the new stock certificates. Stockholders who hold uncertificated shares, either as direct or beneficial owners, will have their holdings electronically adjusted by the Company’s transfer agent (and, for beneficial owners, by their brokers or banks that hold in “street name” for their benefit, as the case may be) to give effect to the Reverse Stock Split. Stockholders who hold uncertificated shares as direct owners will be sent a statement of holding from the Company’s transfer agent that indicates the number of shares owned in book-entry form.

Following the Effective Time, each certificate representing shares of pre-split common stock will be deemed for all corporate purposes to evidence ownership of post-split common stock.

STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATES AND SHOULD NOT SUBMIT THEIR STOCK CERTIFICATES UNTIL THEY RECEIVE A TRANSMITTAL FORM FROM OUR TRANSFER AGENT.

Principal Effects of the Reverse Stock Split

If the Reverse Stock Split is approved and our Board of Directors elects to effect the Reverse Stock Split, the number of outstanding shares of common stock will be reduced in proportion to the ratio of the Reverse Stock Split chosen by our Board of Directors.

Common Stock

Except for the number of shares issued and outstanding and any adjustment that may occur due to the provisions for the treatment of fractional shares, the rights and preferences of outstanding shares of common stock before and after the Reverse Stock Split would remain the same. Holders of the Company’s common stock would continue to have no pre-emptive rights. Following the Reverse Stock Split, each full share of the Company’s common stock resulting from the Reverse Stock Split would entitle the holder thereof to one vote per share and would otherwise be identical to the shares of our common stock immediately before the Reverse Stock Split. Following the Reverse Stock Split, our common stock will continue to be listed on NASDAQ, under the symbol “TBLT,” although it would receive a new CUSIP number.

Because the number of outstanding shares will be reduced due to the Reverse Stock Split, the number of shares available for issuance will be increased. These shares may be used by us for various purposes in the future without further stockholder approval (subject to NASDAQ listing rules), including, among other things, financings, strategic partnering arrangements, or the acquisitions of assets or businesses. However, we currently have no specific plans, arrangements, or understandings, whether written or oral, concerning the increase in shares available for issuance due to the Reverse Stock Split.

Series E Preferred Stock

The Reverse Stock Split will not affect the Series E Preferred Stock.

Effects of the Reverse Stock Split on our Equity Plan and Outstanding Awards

If the Reverse Stock Split is implemented, the number of shares reserved for awards granted under the 2016 Equity Incentive Plan (“2016 Plan”) and 2018 Equity Incentive Plan (“2018 Plan,” and with the 2016 Plan, the “Plans”) and the outstanding awards and unexercised options exercisable for shares of common stock under Plans will be automatically adjusted to reflect the Reverse Stock Split.

Outstanding Warrants

If the Reverse Stock Split is implemented, the number of shares issuable upon the exercise of outstanding warrants and those warrants’ exercise price will be automatically adjusted to reflect the Reverse Stock Split.

Accounting Matters

As a result of the Reverse Stock Split, the stated capital on the Company’s balance sheet attributable to the common stock, which consists of the $0.0001 par value per share of the common stock multiplied by the aggregate number of shares of common stock issued and outstanding, will be reduced in proportion to the size of the Reverse Stock Split. Correspondingly, the Company’s additional paid-in capital account consists of the difference between the Company’s stated capital and the aggregate amount paid to the Company upon issuance of all currently outstanding shares of the common stock credited with the amount by which the stated capital is reduced.

Fractional Shares

No fractional shares will be issued in connection with the Reverse Stock Split. Instead, the Company will issue one whole share of the post-Reverse Stock Split common stock to any stockholder who would have been entitled to receive a fractional share of common stock due to the Reverse Stock Split. Each holder of common stock will hold the same percentage of the outstanding common stock immediately following the Reverse Stock Split as that stockholder did immediately before the Reverse Stock Split, except for adjustments due to the additional net share fraction that will need to be issued as a result of the treatment of fractional shares.

Risks Associated with the Reverse Stock Split

Before voting on this proposal, you should consider the following risks associated with implementing the Reverse Stock Split.

The Reverse Stock Split may contribute toward an ownership change under Section 382 of the Code.

If the Company were to undergo an ownership change under Section 382 of the Code, the Company’s ability to use its net operating loss carryovers incurred before the ownership change against income arising after the ownership change would be significantly limited. In general, an “ownership change” under Section 382 of the Code occurs concerning the Company if, over a rolling three-year period, the Company’s “5-percent stockholders” increase their aggregate stock ownership by more than 50 percentage points over their lowest stock ownership during the rolling three-year period. Although we do not expect the Reverse Stock Split to result in an ownership change concerning the Company, because we do not know the number of Company stockholders that may become “five percent stockholders” as a result of the Reverse Stock Split, it is uncertain at this time whether the Reverse Stock Split will result in an ownership change or the extent to which the Reverse Stock Split may contribute toward an ownership change over the rolling three-year period following the Reverse Stock Split.

The Reverse Stock Split could significantly devaluate the Company’s market capitalization and the common stock’s trading price.

Although we expect that the Reverse Stock Split will increase the market price of the common stock, we cannot assure you that the Reverse Stock Split, if implemented, will increase the market price of the common stock in proportion to the reduction in the number of shares of the common stock outstanding or result in a permanent increase in the market price. Accordingly, the total market capitalization of the common stock after the Reverse Stock Split may be lower than the total market capitalization before the Reverse Stock Split and, in the future, the market price of the common stock following the Reverse Stock Split may not exceed or remain higher than the market price before the Reverse Stock Split.

The effect the Reverse Stock Split may have upon the common stock market price cannot be predicted with any certainty. The market price of the common stock is dependent on many factors, including our business and financial performance, general market conditions, prospects for future success, and other factors detailed from time to time in the reports we file with the SEC.

The Reverse Stock Split may result in some stockholders owning “odd lots” that may be more difficult to sell or require significant transaction costs per share to sell.

The Reverse Stock Split may result in some stockholders owning “odd lots” of less than 100 shares of common stock on a post-split basis. These odd lots may be more challenging to sell or require significant transaction costs per share to sell than shares in “round lots” of even multiples of 100 shares.

The Reverse Stock Split may not generate additional investor interest.

While the Board of Directors believes that a higher stock price may help generate investor interest, there can be no assurance that the Reverse Stock Split will result in a per-share price that will attract institutional investors or investment funds or that such share price will satisfy the investing guidelines of institutional investors or investment funds. As a result, the trading liquidity of the common stock may not necessarily improve.

The reduced number of issued shares of common stock resulting from a Reverse Stock Split could adversely affect the common stock’s liquidity.

Although the Board of Directors believes that the decrease in the number of shares of common stock outstanding as a consequence of the Reverse Stock Split and the anticipated increase in the market price of common stock could encourage interest in the common stock and possibly promote greater liquidity for our stockholders, such liquidity could also be adversely affected by the reduced number of shares outstanding after the Reverse Stock Split.

Anti-Takeover and Dilutive Effects

The Reverse Stock Split is not to establish any barriers to a Change of Control or acquisition of the Company; rather, shares of common stock that are authorized but unissued provide the Board with the flexibility to effect, among other transactions, public or private financings, mergers, acquisitions, stock dividends, stock splits and the granting of equity incentive awards. However, the Board may use these unissued shares to deter future attempts to gain control of us or make such actions more expensive and less desirable. The Certificate Amendment would give the Board authority to issue additional shares from time to time without delay or further action by the stockholders except as may be required by applicable law or NASDAQ rules. The Certificate Amendment is not being recommended in response to any specific known effort or threat to obtain control of the Company, nor does the Board have any present intent to use the authorized but unissued common stock to impede a takeover attempt. There are no plans or proposals to adopt other provisions or enter into any arrangements that have material anti-takeover effects.

Also, the issuance of additional shares of common stock for any of the corporate purposes listed above could have a dilutive effect on earnings per share and the book or market value of the outstanding common stock, depending on the circumstances, and would likely dilute a stockholder’s percentage voting power in the Company. Holders of common stock are not entitled to preemptive rights or other protections against dilution. The Board intends to take these factors into account before authorizing any new issuance of shares.

No Going Private Transaction

The Board of Directors does not intend for the Reverse Stock Split to be the first step in a “going private transaction” within the meaning of Rule 13e-3 of the Exchange Act. The Company has no plan at the date of this proxy statement to take itself private.

No Appraisal Rights

Under the NRS, our stockholders are not entitled to appraisal rights concerning the Reverse Stock Split, and we will not independently provide our stockholders with any such rights.

Material United States Federal Income Tax Consequences of the Reverse Stock Split

The following discussion summarizes the material U.S. federal income tax consequences of the Reverse Stock Split to us and to U.S. Holders (as defined below) that hold shares of our common stock as capital assets (i.e., for investment) for U.S. federal income tax purposes. This discussion is based upon current U.S. tax law, which is subject to change, possibly with retroactive effect and differing interpretations. Any such change may cause the U.S. federal income tax consequences of the Reverse Stock Split to vary substantially from the consequences summarized below. We have not sought and will not seek any rulings from the Internal Revenue Service (the “IRS”) regarding the matters discussed below, and there can be no assurance the IRS or a court will not take a contrary position to that discussed below regarding the tax consequences of the Reverse Stock Split.

For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our common stock that, for U.S. federal income tax purposes, is or is treated as (i) an individual who is a citizen or resident of the United States; (ii) a corporation (or any other entity or arrangement treated as a corporation) created or organized under the laws of the United States, any state thereof, or the District of Columbia; (iii) an estate, the income of which is subject to U.S. federal income tax regardless of its source; or (iv) a trust if (1) its administration is subject to the primary supervision of a court within the United States and all of its substantial decisions are subject to the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code, or (2) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a United States person.

This summary does not address all aspects of U.S. federal income taxation that may be relevant to U.S. Holders 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 whose functional currency is not the U.S. dollar, traders that mark-to-market their securities or persons who hold their shares of our common stock as part of a hedge, straddle, conversion or other risk reduction transaction. If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) is the beneficial owner of our common stock, the U.S. federal income tax treatment of the partnership (or other entity treated as a partnership) and a partner in the partnership will generally depend on the status of the partner and the activities of such partnership. Accordingly, partnerships (and other entities treated as partnerships for U.S. federal income tax purposes) holding our common stock and the partners in such entities should consult their tax advisors regarding the U.S. federal income tax consequences of the Reverse Stock Split to them.

The state and local tax consequences, alternative minimum tax consequences, non-U.S. tax consequences, and U.S. estate and gift tax consequences of the Reverse Stock Split are not discussed herein and may vary as to each U.S. Holder. Furthermore, the following discussion does not address any tax consequences of transactions effectuated before, after, or at the same time as the Reverse Stock Split, whether or not they are connected with the Reverse Stock Split. This discussion should not be considered as tax or investment advice, and the tax consequences of the Reverse Stock Split may not be the same for all stockholders. U.S. Holders should consult their tax advisors to understand their individual federal, state, local, and foreign tax consequences.

Tax Consequences to the Company

We believe that the Reverse Stock Split should constitute a reorganization under Section 368(a)(1)(E) of the Code. Accordingly, we should not recognize taxable income, gain, or loss connected with the Reverse Stock Split.

Tax Consequences to U.S. Holders

A U.S. Holder should generally not recognize gain or loss due to the Reverse Stock Split for U.S. federal income tax purposes. A U.S. Holder’s aggregate adjusted tax basis in the shares of our common stock received under the Reverse Stock Split should equal the aggregate adjusted tax basis of the shares of our common stock exchanged therefor. The U.S. Holder’s holding period in the shares of our common stock received under the Reverse Stock Split should include the holding period in the shares of our common stock exchanged therefor. U.S. Treasury Regulations provide detailed rules for allocating the tax basis and holding period of shares of common stock surrendered in a recapitalization to shares received in such recapitalization. A U.S. Holder that acquired shares of our common stock on different dates and at different prices should consult their tax advisors regarding allocating the tax basis and holding period from shares of common stock surrendered in the Reverse Stock Split to shares received in the Reverse Stock Split.

Alternative characterizations of the Reverse Stock Split are possible. For example, while the Reverse Stock Split would generally be treated as a tax-free recapitalization under the Code, a U.S. Holder that receives a fractional share resulting from the Reverse Stock Split being rounded up to the nearest whole share may recognize gain for federal income tax purposes equal to the value of the additional fractional share. However, we believe that, in such case, the resulting tax liability may not be material given the low value of such fractional interest. U.S. Holders should consult their tax advisors regarding alternative characterizations of the Reverse Stock Split for U.S. federal income tax purposes.

YOU SHOULD CONSULT YOUR TAX ADVISOR AS TO THE PARTICULAR FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT IN LIGHT OF YOUR SPECIFIC CIRCUMSTANCES.

Reservation of Right to Abandon Reverse Stock Split

The Board of Directors reserves the right not to file the Certificate Amendment and to abandon any Reverse Stock Split without further action by our stockholders at any time before the effectiveness of the filing of the Certificate Amendment with the Nevada Secretary of State, even if our stockholders approve this proposal at the Annual Meeting. By voting in favor of this proposal, you expressly authorize the Board of Directors to delay, not proceed with, or abandon, the proposed Certificate Amendment if it should so decide, in its sole discretion, that such action is in the best interests of our stockholders.

Required Vote

The affirmative “FOR” vote of the holders of two-thirds of the outstanding shares (assuming a quorum is present) is required for the approval of the Certificate Amendment to effect the Reverse Stock Split. Abstentions will act as a vote against the Reverse Stock Split. Unless marked to the contrary, executed proxies received will be voted “FOR” Proposal 2.

Proposal 2–Board Recommendation

Our Board of Directors unanimously recommends that you vote “FOR” providing the board with discretion authority to amend our articles of incorporation to effect the Reverse Stock Split.

PROPOSAL 3–TO AMEND OUR ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED COMMON STOCK FROM 200 MILLION TO 500 MILLION SHARES

General

Our articles of incorporation currently authorize us to issue 200,000,000 shares of common stock, par value $0.0001 per share. Our board has approved and is seeking stockholder approval to amend our articles of incorporation to increase the authorized number of shares of common stock to 500,000,000 shares.

If approved at the Annual Meeting, we intend to file the amendment with the Nevada Secretary of State as soon as practicable.

The amendment will not modify the rights of existing stockholders in any material respect, and the additional authorized shares of common stock would be identical to our currently outstanding common stock. Our stockholders do not currently have any preemptive or similar rights to subscribe for or purchase any additional shares of common stock that may be issued in the future. Therefore, future issuances of common stock may, depending on the circumstances, have a dilutive effect on the earnings per share, voting power, and other interests of the existing stockholders.

The Reverse Stock Split under Proposal 2 will not affect the Company’s authorized number of common stock.

Reasons for the Proposed Increase in Authorized Common Stock

The board believes that it is prudent to increase the authorized number of shares of common stock to maintain a reserve of shares available for immediate issuance to meet business needs, such as a strategic acquisition opportunity or equity offering, promptly as they arise. The Board of Directors believes that maintaining such a reserve will save time and money in responding to future events requiring the issuance of additional shares of common stock, such as strategic acquisitions or future equity offerings. Such increase is consistent with the Company’s registration statement of Form S-3 filed with the SEC on February 2, 2021, and effective February 8, 2021 (the “Registered Offering”).

All authorized but unissued shares of common stock will be available for issuance from time to time for any proper purpose approved by the Board of Directors (including issuances in connection with issuances to raise capital, effect acquisitions, or stock-based employee benefit plans), without a further vote of the stockholders, except as required under applicable law or the NASDAQ Marketplace Rules. There are currently no arrangements, agreements, or understandings for issuing the additional shares of authorized common stock except for issuances in the ordinary course of business and issuance under the Registered Offering. The Board of Directors does not presently intend to seek further stockholder approval of any particular issuance of shares unless such approval is required by law or the NASDAQ Marketplace Rules.

Vote Required

The affirmative vote of the holders of a majority of the shares of common stock outstanding is needed to approve an amendment to our articles of incorporation to increase the number of authorized shares of common stock from 200 million to 500 million.

Proposal 3–Board Recommendation

The board has unanimously determined that the amendment is advisable and in the Company’s best interests and our stockholders and recommends that our stockholders “FOR” the amendment.

EXECUTIVE OFFICERS

Directors and Executive Officers

Our executive officers’ names, ages, positions with us, and other biographical information as of the date of this proxy statement are set forth below. The biographical information for each of Messrs. Michael Panosian and Joshua Keeler is included under Proposal 1 of this proxy statement.

There are no family relationships among any of our directors or executive officers.

Martin Galstyan, Interim Chief Financial Officer

Mr. Galstyan has been servicing as the Chief Financial Officer of the Company since July 2, 2020. Mr. Galstyan joined the Company in 2012 as an account manager and became the controller of the Company in 2014. Mr. Galstyan set up the Enterprise Resource Planning (“ERP”) system for the Company and EDI (Electronic Data Interchange) for the Company’s big-box retailers. Mr. Galstyan has Bachelor’s in Accounting from Woodbury University in California.

Zareh Khachatoorian, Chief Operating Officer and Secretary

Mr. Khachatoorian has over 30 years of experience in corporate purchasing, product development, merchandising, and operations. Before joining ToughBuilt in January 2016, Mr. Khachatoorian was the President of Mount Holyoke Inc. in Northridge, California, starting in May 2014. Mr. Khachatoorian led Mount Holyoke Inc. in the servicing of its entire import and distribution operations. From August 2008 to April 2014, Mr. Khachatoorian served as the Vice President of Operations at Allied International (“Allied”) in Sylmar, California. At Allied, Mr. Khachatoorian was responsible for managing overseas and domestic office employees and departments involved in procurement and purchasing, inventory management, product development, engineering, control and quality assurance, and other related areas. Mr. Khachatoorian holds a BS degree in Industrial Systems Engineering from the University of Southern California. Additionally, Mr. Khachatoorian has been credited as the inventor or co-inventor of more than 20 issued patents and several pending patents with the USPTO. Mr. Khachatoorian is fluent in Armenian and Farsi.

Involvement in Certain Legal Proceedings

To the best of our knowledge, during the past ten (10) years, none of our directors or executive officers were involved in any of the following: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two (2) years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

EXECUTIVE COMPENSATION

The following table summarizes compensation for the years ended December 31, 2020, and 2019 for all individuals serving as the Company’s principal executive officer or acting in a similar capacity during the last completed fiscal year (“PEO”), regardless of our namedcompensation level, two most highly compensated executive officers other than the PEO who were serving as executive officers at the end of December 31, 2019the last completed fiscal year; and 2018.up to two additional individuals for whom disclosure would have been provided under paragraph (m)(2)(ii) of Item 402 of Regulation S-K but for the fact that the individual was not serving as an executive officer of the smaller reporting company at the end of the last completed fiscal year (each a “Named Executive Officer”).

Summary Compensation Table

The following table provides information regarding the compensation of our Named Executive Officers during the years ended December 31, 2020, and 2019:

(1) Vacation Payout and other

Employment Agreements, Separation Agreements and Related AgreementsPotential Payments upon Termination or Change of Control

Except as set forth below, we currently have no other written employment agreements with any of our officers and directors. The following is a description of our current executive employment agreements:

Agreements with Our Named Executive Officers

We have entered into written employment agreements with each of our named executive officers, as described below. Each of our named executive officers has also executed our standard form of confidential information and invention assignment agreement.

Employment Agreement with Michael Panosian

We entered into an employment agreement with Mr. Panosian on January 3, 2017, that governs the terms of his employment with us as President and Chief Executive Officer. Under the terms of this agreement, Mr. Panosian received a “sign-on-bonus’“sign-on-bonus” of $50,000. The agreement’s term of the agreement is for five years, and Mr. Panosian is entitled to an annualAnnual base salary of $350,000 beginning on January 1, 2017, and increasing by 10% each year commencing on January 1, 2018. Mr. Panosian was also granted a stock option to purchase 125,000 shares of the Company’s common stock at an exercise price of $10.00 per share, which, because of the subsequent Reverse Stock Splits, has been adjusted to 6,250 shares for $200 per share. The employment agreement also entitles Mr. Panosian to, among other benefits, the following compensation: (i) eligibility to receive an annualAnnual cash bonus at the sole discretion of the Boardboard and as determined by the Compensation Committee commensurate with the policies and practices applicable to other senior executive officers of the Company; (ii) an opportunity to participate in any stock option, performance share, performance unit or other equity basedequity-based long-term incentive compensation plan commensurate with the terms and conditions applicable to other senior executive officers and (iii) participation in welfare benefit plans, practices, policies, and programs provided by the Company and its affiliated companies (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death, and travel accident insurance plans and programs) to the extent available to our other senior executive officers.

Employment Agreement with JoshJoshua Keeler

We entered into an employment agreement with Mr. Keeler on January 3, 2017, that governs the terms of his employment with us as Vice President of Research & Development. Under the terms of this agreement, Mr. Keeler received a “sign-on-bonus’“sign-on-bonus” of $35,000. The agreement’s term of the agreement is for five years, and Mr. Keeler is entitled to an annualAnnual base salary of $250,000 beginning on January 1, 2017, and increasing by 10% each year commencing on January 1, 2018. The employment Agreementagreement also entitles Mr. Keeler to, among other benefits, the following compensation: (i) eligibility to receive an annualAnnual cash bonus at the sole discretion of the Boardboard and as determined by the Compensation Committee commensurate with the policies and practices applicable to other senior executive officers of the Company; (ii) an opportunity to participate in any stock option, performance share, performance unit or other equity basedequity-based long-term incentive compensation plan commensurate with the terms and conditions applicable to other senior executive officers and (iii) participation in welfare benefit plans, practices, policies, and programs provided by the Company and its affiliated companies (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death, and travel accident insurance plans and programs) to the extent available to our other senior executive officers.

Potential Payments to Messrs. Panosian and Keeler upon Termination or Change in Control

PursuantAccording to the employment agreements, regardless of the manner in whichhow Messrs. Panosian and Mr. Keeler’s service terminates, each executive officer is entitled to receive amounts earned during his term of service, including salary and other benefits. In addition,Also, each of them is eligible to receive certain benefits pursuant tounder his agreement with us described above.

The Company is permitted to terminate the employment of Mr. Panosian and Mr. Keeler for the following reasons: (1) death or disability, (2) Termination for Cause (as defined below), or (3) for no reason.

Each such officer is permitted Termination for Good Reason (as defined below) of such officer’s employment. In addition,Also, each such officer may terminate his or her employment upon written notice to the Company 90 days prior to the effective date of such termination.

In the event of such officer’s death during the employment period or a termination due to such officer’s disability, such officer or his or her beneficiaries or legal representatives shall be provided the sum of (a) an amount equal to two times the officer’s then prevailing base salary and (b) the bonus that would have been payable to such officer subject to any performance conditions and (c) certain other benefits provided for in the employment agreement.

In the event of such officer’s Termination for Cause by the Company or the termination of such officer’s employment as a result of such officer’s resignation other than a Termination for Good Reason, such officer shall be provided certain benefits provided in the employment agreement and payment of all accrued and unpaid compensation and wages, butwages. However, such officer shall have no right to compensation or benefits for any period subsequent toafter the effective date of termination.

Under the employment agreements, “Cause” means: such officer willfully engages in an act or omission which is in bad faith and to the detriment of the Company, engages in gross misconduct, gross negligence, or willful malfeasance, in each case that causes material harm to the Company, breaches this Agreementagreement in any material respect, habitually neglects or materially fails to perform his duties (other than any such failure resulting solely from such officer’s physical or mental disability or incapacity) after a written demand for substantial performance is delivered to such officer which identifies the manner in which the Company believes that such officer has not performed his duties, commits or is convicted of a felony or any crime involving moral turpitude, uses drugs or alcohol in a way that either interferes with the performance of his duties or compromises the integrity or reputation of the Company, or engages in any act of dishonesty involving the Company, disclosure of Company’s confidential information not required by applicable law, commercial bribery, or perpetration of fraud; provided, however, that such officer shall have at least forty-five (45) calendar days to cure, if curable, any of the events which could lead to his termination for Cause.

Under the employment agreements, “Termination for Good Reason” means any of the following that areis undertaken without the officer’s express written consent: (i) the assignment to such officer of principal duties or responsibilities, or the substantial reduction of such officer’s duties and responsibilities, either of which is materially inconsistent with such officer’s position as President and Chief Executive Officer of the Company and Director of design andDesign & Development, respectively; (ii) a material reduction by the Company in such officer’s annualAnnual base salary, except to the extent the salaries of other executive employees of the Company and any other controlled subsidiary of the Company are similarly reduced; (iii) such officer’s principal place of business is, without his consent, relocated by a distance of more than thirty (30) miles from the center of Glendale, California; or (iv) any material breach by the Company of any provision of this Agreement.agreement.

Involuntary Termination other thanOther Than for Cause, Death or Disability or Voluntary Termination for Good Reason

Following a Change of Control.Control. If, within twenty-four (24) months following a Change of Control, the officer’s employment is terminated involuntarily by the Company other than for Cause, death, or Disability or by such officer pursuant to a Voluntary Termination for Good Reason, and such officer executes and does not revoke a general release of claims against the Company and its affiliates in a form acceptable to the Company, then the Company shall provide such officer with, among other benefits, a lump sum payment in the amount equal to four times such officer’s then prevailing base salary in the case of Mr. Panosian and three times such officer’s then prevailing base salary in the case of Mr. Keeler, plus the officer’s target for the annualAnnual short term incentive portion of the corporate bonus program for such year as in effect immediately prior to such termination, in addition to any other earned but unpaid base salary or vacation pay due through the date of such termination, as well as a pro rata portion of the executive’s annualAnnual short term incentive portion of the corporate bonus program for such year (if any) and a pro rata portion of the executive’s long termlong-term incentive portion of the corporate bonus program (if any).

Employment Agreement with Zareh Khachatoorian

We entered into an employment agreement with Mr. Khachatoorian on January 3, 2017, that governs the terms of his employment with us as Chief Operating Officer and Secretary. The agreement’s term of the agreement is for three years, and Mr. Khachatoorian is entitled to an annualAnnual base salary of $180,000 beginning on January 1, 2017, and increasing by 10% each year commencing on January 1, 2018. The employment Agreementagreement also entitles Mr. Khachatoorian to, among other benefits, the following compensation: (i) eligibility to receive an annualAnnual cash bonus at the sole discretion of the Boardboard and as determined by the Compensation Committee commensurate with the policies and practices applicable to other senior executive officers of the Company; (ii) an opportunity to participate in any stock option, performance share, performance unit or other equity based long-term incentive compensation plan commensurate with the terms and conditions applicable to other senior executive officers and (iii) participation in welfare benefit plans, practices, policies and programs provided by the Company and its affiliated companies (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent available to our other senior executive officers.

The Company is permitted to terminate the employment of Mr. Khachatoorian for the following reasons: (1) death or disability, (2) Termination for Cause (as defined above) or (3) for no reason. In the event of Mr. Khachatoorian’s (i) death or disability, or (ii) Termination for Cause by the Company, Mr. Khachatoorian or his beneficiaries or legal representatives shall be entitled to payment for all accrued and unpaid compensation and wages and in addition pay to Mr. Khachatoorian a sum equivalent to one month’s salary, but shall have no right to compensation or benefits for any period subsequent to the effective date of his death or disability.

In the event of the termination of Mr. Khachatoorian’s employment for Good Reason, he shall be provided certain benefits listed in the employment agreement and payment of all accrued and unpaid compensation and wages, but executive shall have no right to compensation or benefits for any period subsequent to the effective date of termination.

Employment Agreement with Manu Ohri (resigned June 2019)

We entered into an employment agreement with Mr. Ohri on January 3, 2017 that governs the terms of his employment with us as Chief Financial Officer of the Company. The term of the agreement is for three years and Mr. Ohri is entitled to an annual base salary of $250,000 beginning on January 1, 2017 and increasing by 10% each year commencing on January 1, 2018. The employment agreement also entitles Mr. Ohri to, among other benefits, the following compensation: (i) eligibility to receive an annual cash bonus at the sole discretion of the Board and as determined by the Compensation Committee commensurate with the policies and practices applicable to other senior executive officers of the Company; (ii) an opportunity to participate in any stock option, performance share, performance unit or other equity basedequity-based long-term incentive compensation plan commensurate with the terms and conditions applicable to other senior executive officers and (iii) participation in welfare benefit plans, practices, policies, and programs provided by the Company and its affiliated companies (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death, and travel accident insurance plans and programs) to the extent available to our other senior executive officers.

The Company is permitted to terminate the employment of Mr. OhriKhachatoorian for the following reasons: (1) death or disability, (2) Termination for Cause (as defined above), or (3) for no reason. In the event of Mr. Ohri’sKhachatoorian’s (i) death or disability, or (ii) Termination for Cause by the Company, Mr. OhriKhachatoorian or his beneficiaries or legal representatives shall be entitled to payment for all accrued and unpaid compensation and wages and in addition pay to Mr. OhriKhachatoorian a sum equivalent to one month’s salary, but shall have no right to compensation or benefits for any period subsequent toafter the effective date of his death or disability.

In the event of the termination of Mr. Ohri’sKhachatoorian’s employment for Good Reason, he shall be provided certain benefits listed in the employment agreement and payment of all accrued and unpaid compensation and wages, but the executive shall have no right to compensation or benefits for any period subsequent toafter the effective date of termination.

Outstanding Equity Awards at December 31, 20192020

2016 Equity Compensation Plan - GrantThe following table presents information concerning outstanding equity awards held by our Named Executive Officers as of optionsDecember 31, 2020:

2019 Equity Compensation Plan - Grant of options

Equity Plan Information

The 2016 Equity Incentive Plan

The 2016 Equity Incentive Plan (the “2016 Plan”) was adopted by the Board of Directors and approved by the stockholders on July 6, 2016. The awards per the 2016 Plan may be granted through July 5, 2026, to the Company’s employees, consultants, directors, and non-employee directors provided such consultants, directors, and non-employee directors render good faith services not in connection with the offer and sale of securities in a capital-raising transaction. The awards (“Awards”) issuable under the 2016 Plan consist of ISOs, nonqualified stock options (NQSOs and together with ISOs, the “Options”), restricted stock awards, stock bonus awards, stock appreciation rights (SARs), restricted stock units (RSUs) and performance awards. The 2016 Plan shall be administered by the Compensation Committee or the Board of Directors.

ISO’s may be granted only to employees. All other Awards may be granted to employees, consultants, directors, and non-employee directors of the Company or any subsidiary of the Company provided such consultants, directors, and non-employee directors render bona fide services not connected with the offer sale of securities in a capital-raising transaction.

2016 StockOptions may be vested and exercisable within the times or upon the conditions as outlined in the Award agreement governing such Option; provided, however, that no Option Planwill be exercisable after the expiration of 10 years from the date the Option is granted; and provided further that no ISO granted to a person who, at the time the ISO is granted, directly or by attribution owns more than 10 percent (10%) of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary of the Company (“Ten Percent Stockholder”) will be exercisable after the expiration of five (5) years from the date the ISO is granted. The Committee or Board also may provide for Options to become exercisable at one time or from time to time, periodically or otherwise, in the number of shares or percentage of shares as the Compensation Committee or Board determines.

On July 16,Under the 2016 ourPlan, the exercise price of an Option will be determined by the Committee or if there is no committee, the Board of Directors, and a majoritywhen the Option granted; provided that: (i) the exercise price of an Option will be not less than 100% of the holdersFair Market Value of our then-outstandingthe shares on the date of grant and (ii) the exercise price of an ISO granted to a Ten Percent Stockholder will not be less than 110% of the Fair Market Value of the shares on the date of grant.

Under the 2016 Plan, the term “Fair Market Value” is defined, as of any date, the value of a share of the Company’s common stock determined as follows: (a) if such common stock is publicly traded and is then listed on a national securities exchange, the closing price on the date of determination on the principal national securities exchange on which the common stock is listed or admitted to trading as officially quoted in the composite tape of transactions on such exchange or such other source as the Committee deems reliable for the applicable date; (b) if such common stock is publicly traded but is neither listed nor admitted to trading on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported in The Wall Street Journal or such other source as the Committee deems reliable; (c) in the case of an Option or SAR grant made on the effective date, the price per share at which shares of ourthe Company’s common stock adopted our 2016 Equity Incentive Plan, which we referare initially offered for sale to as the Plan. There are currently 875,000public by the Company’s underwriters in the IPO of the Company’s common stock pursuant to a registration statement filed with the SEC under the Securities Act; or

If the number of outstanding shares of common stock issuedis changed by a stock dividend, recapitalization, stock split, Reverse Stock Split, subdivision, combination, reclassification or similar change in the capital structure of the Company, without consideration, then (a) the number of shares reserved for issuance and future grant under the Plan.

The purpose of our2016 Plan, is to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons in our development and financial achievements. The Plan is administered by the Compensation Committee of our Board of Directors, or by the full board, which may determine, among other things, the (a) terms and conditions of any option or stock purchase right granted, including(b) the exercise priceprices of and the vesting schedule, (b) persons who are eligiblenumber of shares subject to receive optionsoutstanding Options and stock purchase rights andSARs, (c) the number of shares to be subject to each option and stock purchase right. The typesother outstanding Awards, (d) the maximum number of equity awardsshares that may be issued as ISO’s set forth in the 2016 Plan, (e) the maximum number of shares that may be issued to an individual or to a new employee in any one calendar year set forth in the 2016 Plan and (f) the number of shares that are granted underas Awards to Non-employee directors, shall be proportionately adjusted, subject to any required action by the Plan are: (i) incentive stock optionsboard or the stockholders of the Company and non-incentive stock options; (ii)in compliance with applicable securities laws; provided that fractions of a share appreciation rights; (iii) restricted shares, restricted share units (which are shares granted after certain vesting conditions are met) and unrestricted shares; (iv) deferred share units; and (v) performance awards.will not be issued.

2018 Equity Incentive Plan

Effective July 1, 2018, the Board of Directors adopted the 2018 Equity Incentive Plan (the “2018 Plan”). This 2018 Plan was adopted in addition to the existing 2016 Stock Equity Incentive. The awards per 2018 Plan may be granted through June 30, 2023 to the Company’s employees, consultants, directors and non-employee directors. The maximum number of shares of our common stock that may be issued under the 20182016 Plan is 1,000,000100,000 shares, which amount will be (a) reduced by Awards granted under the 2016 Plan, and (b) increased to the extent that Awards granted under the 2016 Plan are forfeited, expire or are settled for cash (except as otherwise provided in the 2016 Plan). No employee will be eligible to receive more than 12,500 shares of common stock in any calendar year under the 2016 Plan under the grant of Awards.

The initial amount of shares of common stock authorized and reserved for issuance under the 2016 Plan was 12 million. The amount was subsequently reduced to 2 million due to the Company’s one-for-six Reverse Stock Split on October 5, 2016, then to 1 million for the Company’s 1-for-2 Reverse Stock Split on September 3, 2018, and then to 100,000 shares for the Company’s 1-for-10 Reverse Stock Split on April 15, 2020.

Michael Panosian currently holds an ISO exercisable for 6,250 shares of common stock (as adjusted) at $200 per share, and there are 93,750 shares of common stock authorized and reserved for issuance pursuant to Awards granted under the 2016 Plan.

The 2018 Equity Incentive Plan

On July 1, 2018, the Board of Directors and the Company’s stockholders approved and adopted the Company’s 2018 Equity Incentive Plan (the “2018 Plan”). The 2018 Plan supplements and does not replace the existing 2016 Equity Incentive Plan. Awards may be granted under the 2018 Plan through June 30, 2023, to the Company’s employees, officers, consultants, and non-employee directors.

The Awards issuable under the 2018 Plan consist of ISOs and NQSOs, restricted stock awards, stock bonus awards, SARs, restricted stock and RSUs, performance awards, and other share-based awards. The board may delegate all or a portion of the administration of the 2016 Plan to a Committee. The board shall administer the 2018 Plan unless and until the Board delegates administration of the 2018 Plan to a Committee.

The initial amount of common stock shares authorized and reserved for issuance under the 2018 Plan was 2 million. The amount was subsequently reduced to 1 million due to the Company’s 1-for-2 Reverse Stock Split on September 3, 2018. On April 12, 2019, the board and stockholders approved to increase the number of shares to 20 million and then, on February 14, 2020, to 35 million. The amount was later reduced to 3.as a result of the Company’s 1-for 10 Reverse Stock Split on April 15, 2020.

The number of shares of common stock that may be issued under the 2018 Plan will be (a) reduced by Awards granted under the 2018 Plan, and (b) increased to the extent that awardsAwards granted under the 2018 Plan are forfeited, expire, or are settled for cash (except as otherwise provided in the 2018 Plan). NoCurrently, no employee will be eligible to receive more than 200,000350,000 shares of common stock (10% of authorized shares under the 2018 Plan) in any calendar year under the 2018 Plan pursuant tounder the grant of awards. On September 12, 2018,Awards.

If any shares of common stock subject to an Award are forfeited, an Award expires or otherwise terminates without the Board of Directors approved an increase in the numberissuance of shares of common stock, reservedor an Award is settled for futurecash (in whole or in part) or otherwise does not result in the issuance under this Plan from 1,000,000 sharesof all or a portion of the Shares of common stock subject to 2,000,000 shares. On September 14, 2018, 1,000,000such Award (including on payment in shares of common stock underlying awardson the exercise of a Stock Appreciation Right), such shares of common stock shall, to the extent of such forfeiture, expiration, termination, cash settlement or non-issuance, again be available for issuance under the 2018 Plan have beenPlan.

If (i) any Option or other Award granted is exercised through the tendering of shares of common stock (either actually or by attestation) or by the withholding of shares of common stock by the Company, or (ii) withholding tax liabilities arising from such Option or other Award are satisfied by the tendering of shares of common stock (either actually or by attestation) or by the withholding of shares of common stock by the Company, then the shares of common stock so tendered or withheld shall be available for issuance under the Plan.

The following provisions shall apply to Awards in the employeesevent of a Corporate Transaction unless otherwise provided in a written agreement between the Company or any affiliate and officers 25% vesting immediately on the dateholder of the Award or unless otherwise expressly provided by the board at the time of grant and 25% vesting each year thereafter on the anniversary of the grant date.

In connection with the administration of our Plans, our Compensation Committee:an Award:

	●	determines which employeesIn the event of a Corporate Transaction, any surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) may assume or continue any or all Awards outstanding under the 2018 Plan or may substitute similar stock awards for Awards outstanding under the 2018 Plan (including, but not limited to, Awards to acquire the same consideration paid to the stockholders of the Company under the Corporate Transaction), and other persons willany reacquisition or repurchase rights held by the Company in respect of common stock issued according to Awards may be granted awardsassigned by the Company to the successor of the Company (or the successor’s parent company, if any), in connection with such Corporate Transaction. A surviving corporation or acquiring corporation may choose to assume or continue only a portion of a Stock Award or substitute a similar Stock Award for only a portion of a Stock Award. The board shall set the terms of any assumption, continuation, or substitution under our Plans;the provisions of the 2018 Plan.
	●	grantsIn the event of a Corporate Transaction in which the surviving corporation or acquiring corporation (or its parent company) does not assume or continue any or all outstanding Awards or substitute similar stock awards for such outstanding Awards, then with respect to those selectedAwards that have not been assumed, continued or substituted and that are held by participants whose continuous service has not terminated prior to participate;the effective time of the Corporate Transaction (referred to as the “Current Participants”), the vesting of such Awards (and, if applicable, the time at which such stock awards may be exercised) shall (contingent upon the effectiveness of the Corporate Transaction) be accelerated in total to a date prior to the effective time of such Corporate Transaction as the board shall determine (or, if the board shall not determine such a date, to the date that is five days prior to the effective time of the Corporate Transaction), and such Awards shall terminate if not exercised (if applicable) at or prior to the effective time of the Corporate Transaction, and any reacquisition or repurchase rights held by the Company with respect to such Awards shall lapse (contingent upon the effectiveness of the Corporate Transaction). No vested Restricted Stock Unit Award shall terminate pursuant to this Section 11.3(b) without being settled by delivery of shares of common stock, their cash equivalent, any combination thereof, or in any other form of consideration, as determined by the board, prior to the effective time of the Corporate Transaction.

In the event of a Corporate Transaction in which the surviving corporation or acquiring corporation (or its parent company) does not assume or continue any or all outstanding Awards or substitute similar stock awards for such outstanding Awards, then with respect to Awards that have not been assumed, continued or substituted and that are held by persons other than Current Participants, the vesting of such Awards (and, if applicable, the time at which such Award may be exercised) shall not be accelerated and such Awards (other than an Award consisting of vested and outstanding shares of common stock not subject to the Company’s right of repurchase) shall terminate if not exercised (if applicable) prior to the effective time of the Corporate Transaction; provided, however, that any reacquisition or repurchase rights held by the Company with respect to such Awards shall not terminate and may continue to be exercised notwithstanding the Corporate Transaction. No vested Restricted Stock Unit Award shall terminate without being settled by delivery of shares of common stock, their cash equivalent, any combination thereof, or in any other form of consideration, as determined by the board, prior to the effective time of the Corporate Transaction.

Notwithstanding the foregoing, in the event an Award will terminate if not exercised prior to the effective time of a Corporate Transaction, the board may provide, in its sole discretion, that the holder of such Award may not exercise such Award but will receive a payment, in such form as may be determined by the board, equal in value to the excess, if any, of (i) the value of the property the holder of the Award would have received upon the exercise of the Award immediately prior to the effective time of the Corporate Transaction, over (ii) any exercise price payable by such holder in connection with such exercise.

The term “Corporate Transaction” is defined in the 2018 Plan as the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:

		a sale or other disposition of all or substantially all, as determined by the board in its sole discretion, of the consolidated assets of the Company and its Subsidiaries;
	●	determinesa sale or other disposition of at least 90 percent (90%) of the exercise price for options; andoutstanding securities of the Company;
	●	prescribes any limitations, restrictions and conditions upon any awards, including the vesting conditionsconsummation of awards.a merger, consolidation, or similar transaction following which the Company is not the surviving corporation; or
		the consummation of a merger, consolidation, or similar transaction following which the Company is the surviving corporation but the shares of common stock outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise.

Change in Control. An Award may be subject to additional acceleration of vesting and exercisability upon or after a Change in Control (as defined in the 2018 Plan) as may be provided in the agreement for such Award or as may be provided in any other written agreement between the Company or any Affiliate and the Participant. An Award may vest as to all or any portion of the shares subject to the Award (i) immediately upon the occurrence of a Change in Control, whether or not such Award is assumed, continued, or substituted by a surviving or acquiring entity in the Change in Control, or (ii) in the event a Participant’s Continuous Service is terminated, actually or constructively, within a designated period following the occurrence of a Change in Control. In the absence of such provisions, no such acceleration shall occur. Our Compensation Committee will: (i) interpret our Plans; and (ii) make all other determinations and take all other actionactions that may be necessary or advisable to implement and administer our Plans. The Plans provide that in the event of a changeChange of controlControl event, the Compensation Committee or our Board of Directors shall have the discretion to determine whether and to what extent to accelerate the vesting, exercise, or payment of an award.

In addition, our Board of Directors may amend our Plans at any time. However, without shareholderstockholder approval, our PlanPlans may not be amended in a manner that would:

	●	increase the number of shares that may be issued under the Plans;
	●	materially modify the requirements for eligibility for participation in the Plans;
	●	materially increase the benefits to participants provided by the Plans; or
	●	otherwise disqualify the Plans for an exemption under Rule 16b-3 promulgated under the Exchange Act.

Awards previously granted under the Plans may not be impaired or affected by any amendment of the Plans without the consent of the affected grantees.

Directors’ Compensation Plan Information

December 31, 2019Outstanding Equity Awards

Non-Employee Director Remuneration PolicyOther Compensation Matters and Policies

Our Board of Directors has adopted the following non-employee director remuneration policy:Tax and Accounting Considerations

StockInternal Revenue Code Section 162(m) generally limits the amount that we may deduct for compensation paid to our Chief Executive Officer, Chief Financial Officer, and Option Awards

Eachto each of our non-employee directors may receive upthree most highly compensated officers to 50,000 options$1 million per person. Previously, exemptions to purchase sharesthis deductibility limit could be made for various forms of common stock (which we refer to as the Annual Director Options)“performance-based” compensation. The exemption from Section 162(m)’s deduction limit for each fiscal year. The Annual Director Options will be confirmed (together with the exercise price for such options) at the first meeting of our Board of Directors for each fiscal year and shall vest quarterly in arrears. Annual Director Options shall have ten year term and shall be issuedperformance-based compensation was repealed under the 20162017 Tax Cuts and 2018 Plans.

Compensation Committee Review

The Compensation Committee shall, ifJobs Act, effective for taxable years beginning after December 31, 2017. As a result, compensation paid to our “covered employees” under Section 162(m), including our Chief Executive Officer, Chief Financial Officer, and three other highest-paid officers, more than $1 million will not be deductible unless it deems necessaryqualifies for transition relief which grandfathers compensation paid under written binding contracts in effect on November 2, 2017. We expect that equity awards granted or prudentother compensation provided under arrangements entered into or materially modified after November 2, 2017, generally will not be deductible to the extent they result in its discretion, reevaluate and approve in January of each such year (orcompensation to certain executive officers that exceeds $1 million in any event prior to the first board meeting ofone year for any such fiscal year) the cash and equity awards (amount and manner or method of payment) to be made to non-employee directors for such fiscal year. In making this determination,officer. Although the Compensation Committee shall utilize such market standard metrics as it deems appropriate, including, without limitation, an analysis of cashcannot predict how the deductibility limit may impact our compensation paid to independent directors of our peer group.

The Compensation Committee shall also have the power and discretion to determineprogram in the future whether non-employee directors should receive annual or other grants of options to purchase shares of common stock or other equity incentive awards in such amounts and pursuant to such policies asyears, the Compensation Committee may determine utilizing such market standard metrics as it deems appropriate, including, without limitation,intends to maintain an analysis of equity awards grantedapproach to independent directors ofexecutive compensation that follows our peer group.pay-for-performance philosophy.

ParticipationSection 409A of Employee Directors; New Directorsthe Internal Revenue Code imposes significant additional taxes if an executive officer, director, or other service provider receives “deferred compensation” that does not satisfy Section 409A. Although we do not maintain traditional nonqualified deferred compensation plans, Section 409A may apply to specific arrangements we enter into with our executive officers, including our Change of Control severance arrangements. Consequently, to assist in avoiding additional tax under Section 409A, we intend to design any such arrangements to avoid the application of Section 409A.

Related Person Transactions and Section 16(a) Beneficial Ownership Reporting Compliance

Unless separatelyPolicies and specifically approved by the Compensation Committee in its discretion, no employee director of our company shall be entitled to receive any remunerationProcedures for service as a director (other than expense reimbursement as per prevailing policy).

New directors joining our Board of Directors shall be entitled to a prorated portion (based on months to be served in the fiscal year in which they join) of cash and stock options or other equity incentive awards (if applicable) for the applicable fiscal year at the time they join the board.

Director Compensation

Directors Compensation

As of December 31, 2019

Name		Fees Earned or Paid in Cash ($)				Stock Awards ($)				Option Awards ($)				Non-Equity Incentive Plan Compensation ($)				All Other Compensation ($)				Total ($)
Paul Galvin (1)			50,000				-				-				-				-				50,000
Robert Faught (2)			50,000				-				-				-				-				50,000
Frederick Fury (3)			50,000				-				-				-				-				50,000

(1)	Appointed to the board on November 14, 2018 and currently serves as Chairman of the Compensation Committee
(2)	Appointed to the board on November 14, 2018 and currently serves as Chairman of the Nominating and Corporate Governance Committee
(3)	Appointed to the board on November 14, 2018 and currently serves as Chairman of the Audit Committee

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

In computing the number and percentage of shares beneficially owned by a person, shares that may be acquired by such person within 60 days of the date of January 28, 2020 are counted as outstanding, while these shares are not counted as outstanding for computing the percentage ownership of any other person. Unless otherwise indicated, the principal address of each of the persons below is c/o ToughBuilt Industries, Inc., 25371 Commercentre Drive, Suite 200, Lake Forest, CA 92630.

						Options Granted vested
		Common Shares				within 60 days of offering				Series D Preferred Stock				Total				Percentage Beneficially Owned (1)
Directors and Officers:
Michael Panosian			1,825,799				112,500				0				1,938,299				2.38	%
Joshua Keeler			647,925				50,000				0				697,925				*
Zareh Khachatoorian			55,991				27,500				0				83,491				*
Fred Furry			0				0				0				0				0
Paul Galvin			0				0				0				0				0
Linda Moossaian			0				0				0				0				0
Robert Faught			0				0				0				0				0
Jolie Kahn			0				0				0				0				0
All Officer and Directors as a Group (8 persons)			2,681,623				217,500								2,911,980				3.57	%
5% or Greater Beneficial Owners:
Michael Panosian			1,825,799				112,500				0				1,938,299				2.38	%
Sabby Volatility Master Fund (2)			6,000,000				-				-				6,000,000				7.37	%

21

(1) Based on 81,460,833 shares of common stock issued and outstanding on January 28, 2020.

(2) Based upon the Schedule 13G filed on January 28, 2020. As calculated in accordance with Rule 13d-3 of the Securities Exchange Act of 1934, as amended, (i) Sabby Volatility Master Fund, Ltd. beneficially owns 6,000,000 shares of the Issuer’s common stock (common shares), representing approximately 7.37% of the Common Stock, and (ii) Sabby Management, LLC and Hal Mintz each beneficially own 6,000,000 shares of the common shares, representing approximately 7.37% of the common shares. Sabby Management, LLC and Hal Mintz do not directly own any common shares, but each indirectly owns 6,000,000 common shares. Sabby Management,LLC, a Delaware limited liability company, indirectly owns 6,000,000 common shares because it serves as the investment manager of Sabby Volatility Warrant Master Fund, Ltd., a Cayman Islands company. Mr. Mintz indirectly owns 6,000,000 common shares in his capacity as manager of Sabby Management,LLC.

* Less than 1%

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONSRelated Person Transactions

 

We have adopted a written related-personrelated person transactions policy that sets forth our policies and procedures regarding the identification, review, consideration, and oversight of “related-party“related party transactions.” For purposes of our policy only, a “related-party“related party transaction” is a transaction, arrangement, or relationship (or any series of similar transactions, arrangements, or relationships) in which we and any “related party” are participants involving an amount that exceeds $120,000.

 

Transactions involving compensation for services provided to us as an employee or director are not considered related-personrelated person transactions under this policy. A related party is any executive officer, director, or a holder of more than five percent of our common stock, including any of their immediate family members and any entity owned or controlled by such persons.

 

Our Interim Chief Financial Officer, Jolie Kahn,Martin Galstyan, must present information regarding a proposed related-partyrelated party transaction to our Board of Directors. Under the policy, where a transaction has been identified as a related-partyrelated party transaction, Ms. KahnMr. Galstyan must present information regarding the proposed related-partyrelated party transaction to our Nominating and Corporate Governance Committee, once the same is established, for review. The presentation must include a description of, among other things, the material facts, the direct and indirect interests of the related parties, the benefits of the transaction to us, and whether any alternative transactions are available. To identify related-partyrelated party transactions in advance, we rely on information supplied by our executive officers, directors, and certain significant shareholders.stockholders. In considering related-partyrelated party transactions, our Nominating and Corporate Governance Committee will take into account the relevant available facts and circumstances including, but not limited to:

 

	●	whether the transaction was undertaken in the ordinary course of our business;
	●	whether the related party transaction was initiated by us or the related party;party or us;

22

	●	whether the transaction with the related party is proposed to be or was entered into on terms no less favorable to us than terms that could have been reached with an unrelated third party;third-party;
	●	the purpose of, and the potential benefits to us from the related party transaction;
	●	the approximate dollar value of the amount involved in the related party transaction, particularly as it relates to the related party;
	●	the related party’s interest in the related party transaction, and
	●	any other information regarding the related party transaction or the related party that would be material to investors in light of the circumstances of the particular transaction.transaction’s circumstances.

 

The Nominating and Corporate Governance Committee shall then make a recommendation torecommend the Board,board, which will determine whether or not to approve of the related party transaction, and if so, upon what terms and conditions. In the event a director has an interest in the proposed transaction, the director must recuse himself or herself from the deliberations and approval.

 

Other than as disclosed below, during the last two fiscal years, there have been no related party transactions.

On April 26, 2016, September 1, 2016 and October 5, 2016, our former chief financial officer, Manu Ohri loaned our Company an aggregate of $130,000. Pursuant to the terms of the promissory notes, the loans were to be repaid on or before December 31, 2016, with interest at 10% per annum payable monthly. The loans were repaid on October 18, 2016. In May 2017, we executed three unsecured promissory notes with Mr. Ohri totaling $400,000, bearing an interest rate of 10% per annum, due on demand or before June 1, 2018. On June 1, 2018, the maturity date of these promissory notes was extended to September 1, 2018. On August 30, 2018, the maturity date of these promissory notes was further extended to September 30, 2018. On September 30, 2018, the maturity date of these notes was extended to the third business day following the date of consummation of the Company’s initial public offering at which time $200,000 of the principal amount of the notes was paid in cash and the balance was paid in 42,105 unregistered be paid in shares of common stock of the Company at a conversion price equal to the per Unit price of the public offering.

Concurrent with the closing of the IPO on November 14, 2018, the following private transaction was consummated in accordance with the related agreements (see Note 9 of the financial statements), all in transactions exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended: 136,863 unregistered shares of common stock were issued upon conversion of $650,100 of accrued and unpaid salaries to officers and directors at a conversion price of $4.75 per share.

Compensation Committee Interlocks and Insider Participation

None of our executive officers serves as a member of the Board or compensation committee of any other entity that has one or more of its executive officers serving as a member of our Board.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

We have adopted a written related-person transactions policy that sets forth our policies and procedures regarding the identification, review, consideration and oversight of “related-party transactions.” For purposes of our policy only, a “related-party transaction” is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which we and any “related party” are participants involving an amount that exceeds $120,000.

Transactions involving compensation for services provided to us as an employee or director are not considered related-person transactions under this policy. A related party is any executive officer, director or a holder of more than five percent of our common stock, including any of their immediate family members and any entity owned or controlled by such persons.

23

Our Chief Financial Officer, must present information regarding a proposed related-party transaction to our Board of Directors. Under the policy, where a transaction has been identified as a related-party transaction, Mr. Ohri must present information regarding the proposed related-party transaction to our Nominating and Corporate Governance Committee, once the same is established, for review. The presentation must include a description of, among other things, the material facts, the direct and indirect interests of the related parties, the benefits of the transaction to us and whether any alternative transactions are available. To identify related-party transactions in advance, we rely on information supplied by our executive officers, directors and certain significant shareholders. In considering related-party transactions, our Nominating and Corporate Governance Committee will take into account the relevant available facts and circumstances including, but not limited to:

	●	whether the transaction was undertaken in the ordinary course of our business;
	●	whether the related party transaction was initiated by us or the related party;
	●	whether the transaction with the related party is proposed to be, or was, entered into on terms no less favorable to us than terms that could have been reached with an unrelated third party;
	●	the purpose of, and the potential benefits to us from the related party transaction;
	●	the approximate dollar value of the amount involved in the related party transaction, particularly as it relates to the related party;
	●	the related party’s interest in the related party transaction, and
	●	any other information regarding the related party transaction or the related party that would be material to investors in light of the circumstances of the particular transaction.

The Nominating and Corporate Governance Committee shall then make a recommendation to the Board, which will determine whether or not to approve of the related party transaction, and if so, upon what terms and conditions. In the event a director has an interest in the proposed transaction, the director must recuse himself or herself from the deliberations and approval.

Other than as disclosed below, during the last two fiscal years, there have been no related party transactions.

On April 26, 2016, September 1, 2016 and October 5, 2016, Mr. Ohri loaned our Company an aggregate of $130,000. Pursuant to the terms of the promissory notes, the loans were to be repaid on or before December 31, 2016, with interest at 10% per annum payable monthly. The loans were repaid on October 18, 2016. In May 2017, we executed three unsecured promissory notes with Mr. Ohri totaling $400,000, bearing an interest rate of 10% per annum, due on demand or before June 1, 2018. On June 1, 2018, the maturity date of these promissory notes was extended to September 1, 2018. On August 30, 2018, the maturity date of these promissory notes was further extended to September 30, 2018. On September 30, 2018, the maturity date of these notes was extended to the third business day following the date of consummation of the Company’s initial public offering at which time $200,000 of the principal amount of the notes was paid in cash and the balance was paid in 42,105 unregistered be paid in shares of common stock of the Company at a conversion price equal to the per Unit price of the public offering.

Concurrent with the closing of the IPO on November 14, 2018, the following private transaction was consummated in accordance with the related agreements (see Note 9 of the financial statements), all in transactions exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended: 136,863 unregistered shares of common stock were issued upon conversion of $650,100 of accrued and unpaid salaries to officers and directors at a conversion price of $4.75 per share.

24

28 | Page

 

Compensation Committee Interlocks and Insider ParticipationRelated Party Transactions

 

None of our executive officers serves as a member ofThere have been no related party transactions during the Board or compensation committee of any other entity that has one or more of its executive officers serving as a member of our Board.last two fiscal years.

 

SECTIONDelinquent Section 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEReports

 

According to Section 16(a) of the Exchange Act, requires our officers and directors and persons who beneficially own more than 10% of a registered class of our equity securities are required to file reportsinitial statements of beneficial ownership (Form 3) and statements of changes in beneficial ownership (Forms 4 and 5) with the SEC. WeSuch persons are not providing disclosurerequired by the SEC’s rules to furnish us with copies of all such forms they file. The Company prepares these reports for its directors and executive officers who request them based on this point.information obtained from them and the Company’s records. The Company believes that applicable Section 16(a) filing requirements were met during 2020 by its directors and executive officers, except that due to inadvertent administrative errors, a Form 3 for each of Martin Galstyan, Joshua Keeler, Zareh Khachatoorian, and Linda Moossaian, and a Form 4 for Zareh Khachatoorian were filed late.

 

REPORT OF AUDIT COMMITTEESecurity Ownership of Directors, Officers and Principal Stockholders

 

The current members of the Audit Committee are Mr. Galvin, Mr. Faught and Mr. Furry, as Chairman.

The Audit Committee of the Board, which consists entirely of directors who meet the required independence and experience requirements of Rule 10A-3 promulgated under the Securities Exchange Act of 1934, as amended, and the rules of the Nasdaq Stock Market, has furnished the following report:

The Audit Committee assists the Board in overseeing and monitoring the integrity of the Company’s financial reporting process, its compliance with legal and regulatory requirements and the quality of its internal and external audit processes. The role and responsibilities of the Audit Committee are set forth in a written charter adopted by the Board, which is available on our website atwww.toughbuilt.com. The Audit Committee is responsible for the appointment, oversight and compensationtable presents information regarding beneficial ownership of our independent public accountant. The Audit Committee reviews with management and our independent public accountant our annual financial statements on Form 10-K and our quarterly financial statements on Forms 10-Q. In fulfilling its responsibilities for the financial statements for fiscal year 2019, the Audit Committee will take the following actions:equity interests as of April 30, 2021 by:

 

	●	reviewed and discussedeach stockholder or group of stockholders known by us to be the audited financial statements for the fiscal year ended December 31, 2019 with management andbeneficial owner of more than 5% of any class of our independent public accountant;voting securities;
	●	discussed with our independent public accountant the matters required to be discussed in accordance with the rules set forth by the Public Company Accounting Oversight Board (“PCAOB”), relating to the conductNamed Executive Officers;
		each of the audit;our directors; and
	●	received written disclosuresall of our executive officers and the letter from our independent public accountant regarding its independencedirectors as required by applicable requirements of the PCAOB regarding the accountant’s communications with the Audit Committee and the Audit Committee further discussed with the accountant its independence. The Audit Committee also considered the status of pending litigation, taxation matters and other areas of oversight relating to the financial reporting and audit process that the Audit Committee determined appropriate.a group.

 

Based onBeneficial ownership is determined under the Audit Committee’s reviewSEC’s rules and, thus, represents voting or investment power concerning our securities as of the audited financial statementsRecord Date of April 30, 2021. In computing the number and discussions with managementpercentage of shares beneficially owned by a person, shares that such person may acquire within 60 days of April 30, 2021, are counted as outstanding, while these shares are not counted as outstanding for computing the percentage ownership of any other person. Unless otherwise indicated, the principal address of each of the persons below is c/o ToughBuilt Industries, Inc., 25371 Commercentre Drive, Suite 200, Lake Forest, CA 92630. Unless otherwise indicated below, to our knowledge, the persons and our independent public accountant,entities named in the Audit Committee recommendedtable have sole voting and sole investment power concerning all equity interests beneficially owned, subject to the Board that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 for filing with the SEC and will do the same for our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.community property laws where applicable.

 

Name		Number of Shares Beneficially Owned				Percentage of Class (1)
Named Executive Officers and Directors
Michael Panosian—CEO, President and Chair of the Board			203,381	(2)			*
Martin Galstyan—CFO			—				-
Joshua Keeler—VP of R&D and Director			79,793	(3)			*
Zareh Khachatoorian—COO			14,950	(4)			*
Robert Faught—Director			—				-
Frederick D. Furry—Director			—				-
Linda Moossaian—Director			—				-
All Officers and Directors as a group (7 persons)			252,974				*
5% or More Stockholders
None

THE AUDIT COMMITTEE:

Frederick D. Furry (Chair)*Less than 1%

 

The foregoing Audit Committee Report does not constitute soliciting material and shall not be deemed filed or incorporated by reference into any other filing of our company under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except to the extent we specifically incorporate this Audit Committee Report by reference therein.

(1)	Percentages based on 81,624,587 shares of common stock issued and outstanding as of April 30, 2021 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.

 

25

29 | Page

 

PROPOSAL NO. 1QUESTIONS AND ANSWERS

 

THE ELECTION OF DIRECTORSMore Information about Proxies and Voting

 

General

1.	WHAT IS A PROXY?

 

Six directors are to be elected at this Annual Meeting to serve until the 2021 annual meetingA proxy is your legal designation of shareholders or until for each a successor has been elected and qualified. Unless otherwise instructed, the persons named in the accompanying proxy intendanother person to vote the shares represented bystock you own. The person you designate is your “proxy,” and you give the proxy forauthority to vote your shares by submitting the election ofenclosed proxy card or, if available, voting by telephone or over the nominees listed below. Although it is not contemplated that the nominees will decline or be unableInternet. We have designated our Chief Executive Officer, Michael Panosian, and our Chief Financial Officer, Martin Galstyan, to serve as directors, in such event, proxies will be votedfor the Annual Meeting.

2.	HOW DO I RECEIVE PROXY MATERIALS?

We have elected to deliver our proxy materials electronically over the Internet as permitted by the SEC’s rules. As required by those rules, we are distributing a notice of Internet availability of proxy holder for such other personsmaterials to our stockholders of record and beneficial owners as may be designated by the Board, Election of the directors requires a pluralityclose of business on April 30, 2021. On the date of distribution of the votes castnotice, all stockholders and beneficial owners will have the ability to access all of the proxy materials at the URL address included in the notice. Additionally, the Notice of Annual Meeting, proxy statement, and Annual report are available on our website by visiting www.toughbuilt.com. The Company’s website materials are not incorporated by reference into this proxy statement. These proxy materials are also available at no charge upon request. Please refer to the information included in the notice of Internet availability of proxy materials for additional information.

3.	HOW MANY VOTES CAN BE CAST?

Each share of our common stock and Series E Preferred Stock issued and outstanding as of the close of business on April 30, 2021, the Record Date for the Annual Meeting of Stockholders, is entitled to vote on all items being considered at the Annual Meeting. You may vote all shares owned by you as of the Record Date, including (i) shares held directly in your name as the stockholder of record and (ii) shares held for you as the beneficial owner in street name through a broker, bank, or another nominee.

As of the close of business on the Record Date, we had 81,624,587 shares of common stock, and nine shares of Series E Preferred Stock issued and outstanding and entitled to notice of and to vote at the Annual Meeting.

 

The following table sets forth the nomineesFor all matters described in this proxy statement for the Boardwhich a vote is being solicited, each holder of Directors. See “Management”common stock is entitled to one vote for a descriptioneach share of the directorscommon stock held by such holder as of the Record Date.

 

Nominee for Director

Name and Address		Age		Date First Elected or Appointed		Position(s)
Michael Panosian		56		January 1, 2012		President, CEO and Director
Robert Faught		70		November 14, 2018		Director
Frederick D. Furry		50		November 14, 2018		Director
Paul Galvin		55		November 14, 2018		Director
Joshua Keller		40		At the Annual 2019 Meeting		Director and V.P.– Research & Development
Linda Moossaian		53		On December 12, 2019		Director

Vote Required

The affirmative voteholder of a majorityshare of Series E Preferred Stock is entitled to a number of votes cast for this proposal is requiredequal to approve the election of directors until the 2021 annual meeting of shareholders and until their respective successors have been duly elected and qualified, or until such director’s earlier resignation, removal or death.

Independence

The Board believes all directors except Mr. Panosian and Mr. Keeler meet the definition of independence.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL NO. 1.

PROPOSAL NO. 2

NASDAQ MARKETPLACE RULE PROPOSAL

The stockholders1% of the Company are being asked to approve, in accordance with Nasdaq Marketplace Rule 5635(d), the issuance of shares of ToughBuilt Industries, Inc.’s common stock exceeding 19.99% of thetotal number of sharesvotes that the issued and outstanding on August 19, 2019 (the “Exchange Cap”) from the issuance of shares of common stock and all other voting securities of the Company as of any such date of determination, voting together as a single class, has on a fully diluted basis; provided, however, the Series E Preferred Stock shall no more than 3,602,466 votes per share. Notwithstanding the foregoing, the voting power of every holder of the Series E Preferred Stock together with such holder’s affiliates and Attribution Parties, together with any and all securities of the Company owned by such parties, is limited to be issued in conversion4.99% of those certain $11.5 million aggregate principal amount senior secured notes, conversionthe voting power of 5,775the Company’s outstanding capital stock. “Attribution Parties” consists of the following persons and entities: (i) any investment vehicle, including any funds, feeder funds, or managed accounts, currently, or from time to time after the date the shares of Series DE Preferred Stock (issued on December 23, 2019 upon exchangeare issued to the holder, directly or indirectly managed or advised by the holder’s investment manager or any of its affiliates or principals, (ii) any direct or indirect affiliates of the holder or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a group together with the holder or any of the foregoing; and (iv) any other persons whose beneficial ownership of the Corporation’s voting securities would or could be aggregated with the holder’s and the other Attribution Parties for $5,500,000 principal amountpurposes of secured note) into sharesSection 13(d) of ourthe Securities Exchange Act of 1934, as amended.

Each holder of common stock and exercise of 5,750,000 warrants issued by the CompanySeries E Preferred Stock is entitled to an accredited investor on August 19, 2019 (the “Nasdaq Marketplace Rule Proposal” or “Action”). You are being asked to considervote for each director nominee named in Proposal 1 and one vote upon the Nasdaq Marketplace Rule Proposal that would permit us to issue a number of shares of our common stock in excess of the Exchange Cap. The information set forth in this Proposed Action is qualified by the terms of certain securities purchase agreement, dated August 19, 2019, which is included as an exhibit to our Current Report on Form 8-K filed with the SEC on August 19, 2019.for Proposals 2 and 3.

 

26

On August 19, 2019, the Company entered into a Securities Purchase Agreement with an institutional investor pursuant to which it sold $11.5 million aggregate principal amount of promissory notes (at an aggregate original issue discount of 15%) to the investor in a transaction exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. The first note (the “Series A Note”) has a face amount of $6.72 million for which the investor paid $5 million in cash. The second note (the “Series B Note” and with the Series A Note, collectively referred to as the “Notes”) has a principal amount of $4.78 million for which the investor paid $4.78 million in the form of a full recourse promissory note issued by the investor to the Company (the “Investor Note”) secured by $4.78 million in cash or cash equivalents of the investor (i.e :an original issue discount of approximately 15% to the face amount of the Series B Note). No portion of the Series B Note may be converted into shares of our common stock (the “Common Stock”) until the corresponding portion of the Investor Note has been prepaid to the Company in cash, at which point in time such portion of the Series B Note shall be deemed “unrestricted”. The Investor Note is subject to optional prepayment at any time at the option of the investor and mandatory prepayment, at the Company’s option, subject to certain equity conditions, at any time 45 Trading Days after the effectiveness of a resale registration statement (or otherwise the applicability of Rule 144 promulgated under the Securities Act of 1933, as amended). Notwithstanding the foregoing, the Company may not effect a mandatory prepayment if the shares underlying the Series A Note and the portion of the Series B Note that has become unrestricted exceeds 35% of the market capitalization of the Company.

The Notes are senior secured obligations of the Company secured by a lien on all assets of the Company, bear no interest (unless an event default has occurred and is continuing) and mature on December 31, 2020. The Notes will be convertible at $1.00 into a fixed number of shares (the “Conversion Shares”). The Notes are convertible at the Holder’s option, in whole or in part, at any time after closing. The Conversion Price will be subject to adjustment for stock dividends, stock splits, anti-dilution and other customary adjustment events.

The Company shall repay the Principal Amount of the Notes in 12 installments, with the first installment starting on February 1, 2020 (each, an “Installment Date”). Installments 1-3 shall be 1/36th of the Principal Amount, Installments 4-6 shall be 1/18th of the Principal Amount and Installments 7-12 shall be 1/8th of the Principal Amount. The repayment amount shall be payable in cash, or, subject to the satisfaction of equity conditions, at the option of the Company, in registered Common Stock or a combination of cash and registered Common Stock. However, if the 30-day volume weighted average price of the Common Stock (the “VWAP”) of the Company falls below 50% of the market price of one share of the Company’s common stock or the Company fails to satisfy certain other equity conditions, the repayment amount is payable in shares of Common Stock only unless the Investor(s) waive any applicable equity condition. If the Company elects to satisfy all or any portion of an installment in shares of Common Stock, the Company will predeliver such shares of Common Stock to the investor on the 23rd trading day prior to the applicable Installment Date, with a true-up of shares (if necessary) on the Installment Date. Any excess shares of Common Stock shall be applied to subsequent installments.

The shares used to meet a Principal Repayment (“Installment Shares”) would be valued at a conversion price calculated as the lesser of (i) 85% of the arithmetic average of the three lowest daily VWAPs of the 20 trading days prior to the payment date or (ii) 85% of the VWAP of the trading day prior to payment date (“Installment Price”) with a floor of $0.10.

All amortization payments shall be subject to the Investors’ right to (a) defer some or all of any Installment Payment to a subsequent Installment Date; and (b) at any time during an installment period, convert up to four times the installment amount at the Installment Price; provided shares received pursuant to such accelerated conversions shall be subject to a leak-out provision that solely limits sales of such shares received by the investor in such accelerated conversion (and not any other sales) to the greater of (a) $500,000 per trading day or (b) 40% of the volume traded on a given day as reported by Bloomberg LP.

Upon completion of a Change of Control, the Holders may require the Company to purchase any outstanding Notes in cash at 125% of par plus accrued but unpaid interest. The Company shall have the right to redeem any and all amounts of the outstanding Note at 125% of the greater of (a) Principal Amount plus accrued but unpaid interest (if any), or (b) Conversion Value plus accrued but unpaid interest (if any) provided the Company has satisfied certain equity conditions. The Company must give the Investor(s) ninety (90) business days’ prior notice of any such redemption.

Prior to all outstanding amounts under the Note being repaid in full, the Company will not create any new encumbrances on any of its or its subsidiaries’ assets without the prior written consent of the Lender, with a carveout for a working capital facility of which the details are to be determined. The Notes shall also be subject to standard events of default and remedies therefor.

27

30 | Page

 

4.	WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A STOCKHOLDER OF RECORD AND AS A BENEFICIAL OWNER?

In connection

Many of our stockholders hold their shares as a beneficial owner in “street name” through a broker or other nominee rather than directly in their name.

Stockholders of Record

If your shares are registered directly in your name with our transfer agent, VStock Transfer, you are considered the granting“stockholder of record,” and these proxy materials were sent directly to you by us. As the Notes,“stockholder of record,” you have the Company shall issue detachable warrantsright to grant your voting proxy directly to our designated proxies or to vote at the Investor, exercisableAnnual Meeting. You may vote on the Internet or by telephone, or if you have requested paper materials be delivered to you, you may return the proxy card by mail.

Beneficial Owner

If your shares are held in wholean account at a brokerage firm, bank, or other similar organization, you are considered the beneficial owner of shares held in part“street name,” and the Notice of Annual Meeting, proxy statement, and Annual report were forwarded to you by that organization. As the beneficial owner, you have the right to direct your broker, bank, or another nominee on how to vote your shares, and you are also invited to attend the Annual Meeting.

Because a beneficial owner is not the stockholder of record, you may not vote your shares at any time during the five yearsAnnual Meeting unless you obtain a legal proxy from the date of issuance, an in amount equalbroker, bank, trustee, or nominee that holds your shares, giving you the right to 50% ofvote the conversion shares underlying the Notes and have an exercise price of $1.00 per share (the “Warrants”). To the extent the Company has a change of control or a spinoff, the warrants provide for a put for the warrants to the Company at their Black- Scholes Valuation.

Under the terms of this transaction, if the Company were to convert the Notes at the initial conversion price of $1.00 (and as described above, theremeeting. If you are circumstances under which conversion would occura beneficial owner and do not wish to vote at prices less than the initial conversion price) and effectAnnual Meeting, you may vote by following the exercise of the Warrants in full, it would have needed to issue 17,250,000 shares of its common stock (and as the Notes convert at prices atinstructions provided by your broker or less than the initial $0.14 per share conversion price, the number of shares issuable will be considerably higher).

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:another nominee.

 

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 Price:5.	The Investor may elect to convert the New Preferred Shares into 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).WHO IS THE COMPANY’S TRANSFER AGENT AND HOW DO I CONTACT THEM?
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 Exchange Right	The Company shall have the right to exchange the New Preferred 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 Beneficial Ownership:	Notwithstanding anything herein to the contrary, no Preferred Stock of any Investor shall be issued or shall be convertible if 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.

 

NECESSITY OF STOCKHOLDER APPROVALYou may contact VStock Transfer, LLC, our transfer agent, by phone at (212) 828-8436 or in writing at VStock Transfer LLC, 18 Lafayette Place, Woodmere, NY 11598.

6.	HOW DO I ATTEND AND VOTE AT THE ANNUAL MEETING?

The Annual Meeting is scheduled to be held on Friday, June 11, 2021, at 2:00 p.m. Pacific Standard Time (or 5:00 p.m. Eastern Standard Time) via live webcast through www.virtualshareholdermeeting.com/TBLT2021. You will need the 16- digit control number provided on the Notice of Annual Meeting or your proxy card. If you do not comply with the procedures outlined above, you may not be admitted to the virtual Annual Meeting.

 

AsYou are entitled to attend the Annual Meeting only if you were a result of being listed for trading on the Nasdaq Global Market, issuancesstockholder as of the Company’s common stockRecord Date or you hold a valid proxy for the Annual Meeting. If you are subjectnot a stockholder of record but hold shares as a beneficial owner in street name, you should provide proof of beneficial ownership as of the record date, such as your most recent account statement prior to the Nasdaq Stock Market Rules, including Nasdaq Marketplace Rule 5635(d).

Nasdaq Marketplace Rule 5635(d) requires stockholder approval in connectionApril 30, 2021, together with a transaction other than a public offering involving the sale, issuance, or potential issuance by the issuer of common stock (or securities convertible into or exercisable for common stock) equal to 20% or more of the common stock or 20% or morecopy of the voting power outstanding beforeinstruction card provided by your broker, bank, or nominee, or other similar evidence of ownership.

Shares held in your name as the issuance forstockholder of record may be voted by you at the Annual Meeting. Shares held beneficially in street name may be voted by you at the Annual Meeting only if you obtain a pricelegal proxy from the broker, bank, or nominee that is less thanholds your shares, giving you the greater of bookright to vote the shares. Even if you plan to attend the Annual Meeting, we recommend that you also submit your proxy or market value ofvoting instructions as described below so that your vote will be counted if you later decide not to vote at the stock, with market value determined by reference to the closing price immediately before the issuer enters into a binding agreement for the issuance of such securities. Thus, we need approval to issue with respect to the Note conversions, Series D Preferred Stock conversions and Warrant exercises described above.meeting.

 

28

31 | Page

Accordingly, we are requesting in this Proposed Action that our stockholders approve, in accordance with Nasdaq Marketplace Rule 5635(d), the issuance of shares of common stock exceeding 19.99% of the number of shares outstanding on August 19, 2019.

7.	HOW CAN I VOTE WITHOUT ATTENDING THE ANNUAL MEETING?

 

POTENTIAL ADVERSE EFFECTSBy telephone or on the Internet

 

If this proposal is approvedyou are a stockholder of record, you may vote by following the shareholders, a minimum of 17,500,000 shares (based upon the August 19, 2019 original numbers) would have been issuable in conjunction with the conversion of the Notes, conversion of the Series D Preferred Stock and the exercise of the Warrants, so our stockholders will experience substantial dilution of their interests as a result of these conversions and exercises.

EFFECT ON CURRENT STOCKHOLDERS IF THIS PROPOSAL IS NOT APPROVEDtelephone or Internet voting instructions on your proxy card.

 

If our stockholdersyou are a beneficial owner of shares, your broker, bank, or other record holder may make telephone or Internet voting available to you. The availability of telephone and Internet voting for beneficial owners will depend on the voting processes of your broker, bank, or another nominee holder of record. Therefore, we recommend that you follow the voting instructions in the materials you receive.

By mail

Complete, sign and date the proxy card or voting instruction card and return it in the return envelope provided (which is postage prepaid if mailed in the United States). If you are a stockholder of record and return your signed proxy card but do not approve this The Proposed Action, thenindicate your voting preferences, the aggregate numberpersons named in the proxy card will vote the shares represented by your proxy card in favor of our Board’s recommendations.

If you are a stockholder of record and requested paper materials, and the prepaid envelope is missing, please address and mail your completed proxy card to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

If you are a beneficial owner of shares, you should have received a proxy card and voting instructions with these proxy materials from your broker, bank, or another nominee holder of common stock issuable will be limitedrecord. Simply complete and mail the proxy card provided to the Exchange Cap,address provided by your broker, bank, or 5,107,088 shares (of which 5,000,000) have been issued. In addition, we will be required to seek stockholder approvalanother nominee holder of this proposal, at the Company’s expense, every 90 days followingrecord.

You may still participate in the Annual Meeting until we receive stockholder approvaleven if you have already voted by proxy.

8.	IS MY VOTE CONFIDENTIAL?

Proxy instructions, ballots, and voting tabulations that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within the Company or to third parties, except as necessary to meet applicable legal requirements, allow for the tabulation of this proposal. We are not seeking stockholder approval to authorize the offering of common stock or the acquisition, the entry into or the closingvotes and certification of the transaction,vote, or facilitate a successful proxy solicitation.

9.	WHAT CAN I DO IF I CHANGE MY MIND AFTER I VOTE BEFORE THE ANNUAL MEETING?

You may change your vote at any time before the executiontaking of the related transaction documents, as we have already entered into and closed the transaction and executed the related transaction documents, which are binding obligations on us. The failure of our stockholders to approve this The Proposed Action will not negate the existing terms of such transaction documents or any other documents relating to the offering of common stock or the acquisition.

VOTE REQUIRED

Approval of this The Proposed Action (otherwise referred to as the Nasdaq Marketplace Rule Proposal) requires the affirmative vote of the holders of a majority of the shares of common stock casting votes in person or by proxy on this proposal at the Annual Meeting. This proposal is a “non-routine” matter under NYSE Rule 452 on which brokersIf you are the stockholder of record, you may notchange your vote without instruction from beneficial owners. Abstentions and broker non-votes will have no effect on the vote on this proposal.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE NASDAQ MARKETPLACE RULE PROPOSAL.

PROPOSAL NO. 3:

APPROVAL OF GRANT TO THE BOARD OF DIRECTORS THE DISCRETIONARY AUTHORITY TO EFFECT A REVERSE STOCK SPLIT OF THE COMPANY’S COMMON STOCK

We are seeking shareholder approval to grant the Board discretionary authority to amend the Company’s Articles of Incorporation to effect a reverse stock split of the issued and outstanding shares of our Common Stock, par value $0.0001 per share, such split to combine a whole number of outstanding shares of our Common Stock in a range of not less than two (2) shares and not more than thirty (30) shares, into one (1) share of Common Stock at any time prior to December 31, 2022 (the “Reverse Split Proposal”).

The amendments will not change the number of authorized shares of Common Stock, preferred stock, or the relative voting power of our shareholders. Because the number of authorized shares will not be reduced, 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 stock split, if effected, would affect all of our holders of Common Stock uniformly.

29

The Board unanimously approved, and recommended seeking shareholder approval of this Reverse Split Proposal, on January 31, 2020.

Even if the shareholders approve the Reverse Split Proposal, we reserve the right not to effect any reverse stock split if the Board does not deem it to be in the best interests of our shareholders. The Board believes that granting this discretion provides the Board with maximum flexibility to act in the best interests of our shareholders. If this Reverse Split Proposal is approved by the shareholders, the Board will have the authority, in its sole discretion, without further action by the shareholders, to effect a reverse stock split.

The Board’s decision as to whether and when to effect the reverse stock split 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.

The reverse stock 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 our Board or our shareholders.

There are certain risks associated with a reverse stock split, and we cannot accurately predict or assure the reverse stock split will produce or maintain the desired results (See “Certain Risks Associated with a Reverse Stock Split”). However, our Board believes that the benefits to the Company and our shareholders outweigh the risks and recommends that you vote in favor of granting the Board the discretionary authority to effect a reverse stock split.

Reasons for the Reverse Stock Split

The primary purpose for effecting the reverse stock split, should the Board of Directors choose to effect one, would be to increase the per share price of our Common Stock. The Board of Directors believes that, should the appropriate circumstances arise, effecting the reverse stock split would, among other things, help us to:by:

 

	●	Meet certain continued listing requirementsgranting a new proxy bearing a later date (which automatically revokes the earlier proxy) using any of the NASDAQ Stock Market;methods described above (until the polls are closed during the Annual Meeting);
	●	Appealproviding written notice of revocation to a broader range of investors to generate greater investor interest in the Company; andour Corporate Secretary at ToughBuilt Industries, Inc., 25371 Commercentre Drive, Suite 200, Lake Forest, CA 92630, before your shares being voted; or
	●	Improvevirtually attending the perception of our Common Stock as an investment security.Annual Meeting and voting at the meeting. Attendance at the meeting will not cause your previously granted proxy to be revoked unless you specifically so request.

 

ImproveFor shares you hold beneficially in street name, you may change your vote by submitting new voting instructions to your broker, bank, or nominee following the Perceptioninstructions they provided or, if you have obtained a legal proxy from your broker, bank, or nominee giving you the right to vote your shares, by virtually attending the Annual Meeting and voting at the meeting.

10.	WHO IS ENTITLED TO VOTE AT THE ANNUAL MEETING?

Only stockholders of Our Common Stockrecord as an Investment Security -of the close of business on the Record Date, April 30, 2021, who have properly registered for the meeting, are entitled to attend and vote at the Annual Meeting. The names of stockholders of record entitled to vote at the Annual Meeting will be available at the Annual Meeting and ten days prior to the meeting for any proper purpose relating to the meeting, between the hours of 9:00 a.m. and 4:30 p.m. Pacific Standard Time, by contacting our Corporate Secretary at our principal executive offices.

32 | Page

We believe

11.	WHAT ARE THE QUORUM REQUIREMENTS FOR CONDUCTING BUSINESS AT THE ANNUAL MEETING?

A majority of the issued and outstanding shares of common stock must be present or represented by proxy at our Annual Meeting in order for the Annual Meeting to be held and business to be transacted.

Abstentions and “broker non-votes” are counted as present and entitled to vote for purposes of determining a quorum. A “broker non-vote” occurs when a broker, bank, or another holder of record holding shares for a beneficial owner does not vote on a particular proposal because that holder does not have discretionary voting power for that particular item and has not received voting instructions from the overall declinebeneficial owner.

If there is no quorum present in person or by proxy at the priceAnnual Meeting, a majority of digital assets we generate and volatility of digital asset prices in general in the industry in which we operate, is a significant contributing factor invotes present at the decline inAnnual Meeting may adjourn the price of our Common Stock. meeting to another date.

12.	WHAT ARE THE BOARD’S RECOMMENDATIONS FOR VOTING AT THE ANNUAL MEETING?

Our Board of Directors unanimously approvedrecommends that you vote your shares:

“FOR” each of the nominees for director named in this proxy statement.

“FOR” the amendment to our articles of incorporation to authorize the Board of Directors, in its discretion, to amend our articles of incorporation by December 31, 2021, to effect a Reverse Stock Split of our common stock at a ratio of not less than 1-for-2 and not more than 1-for-10, as determined by the Board of Directors.

“FOR” the amendment to our articles of incorporation to increase the authorized common stock from 200 million (200,000,000) to 500 million (500,000,000).

13.

WHAT ARE THE VOTING REQUIREMENTS TO APPROVE EACH OF THE PROPOSALS AT THE ANNUAL MEETING?

Proposal				Board’s Recommendation		Votes Required		Effect of Abstentions and Broker Non-Votes
1		To elect the five (5) directors named in this proxy statement, each for a one-year term expiring in 2022		FOR EACH DIRECTOR NOMINEE		Plurality		Abstentions and broker non-votes have no effect on the proposal
2		To authorize the Board of Directors, in its discretion, to amend our articles of incorporation to effect a Reverse Stock Split		FOR		Majority of votes represented at the meeting and entitled to vote thereon		Abstentions have the effect of a vote against the proposal; broker non-votes will have no effect on the proposal
3		To amend our articles of incorporation to increase the authorized number of common stock from 200 million to 500 million shares		FOR		Majority of votes represented at the meeting and entitled to vote thereon		Abstentions have the effect of a vote against the proposal; broker non-votes will have no effect on the proposal

If you are a beneficial owner, your broker, bank, or another nominee holder of record is permitted to vote your shares on the discretionary authorityproposal to authorize our Board of Directors to amend our articles of incorporation to effect a reverse stock split as one potential means of increasing the share priceReverse Stock Split of our Common Stock to improve the perception of our Common Stockcommon stock at a ratio as a viable investment security including in connection with potential acquisition transactions. 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.

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. Givingdetermined by the Board of Directors the abilityand to effect a reverse stock split, and thereby increase the price of our Common Stock, would giveauthorized common stock from 200,000,000 to 500,000,000 shares, even if the Board the ability to address these issuesrecord holder does not receive voting instructions from you. Accordingly, if you are a beneficial owner, it is deemed necessary.particularly important that you provide your instructions to your broker, bank, or another nominee holder of record.

 

33 | Page

14.	WHAT OTHER MATTERS CAN BE PRESENTED AT THE ANNUAL MEETING?

Other than the business items described in this proxy statement, we are not aware of any other business to be acted upon at the Annual Meeting. If you grant a proxy, the persons named as proxy holders, Michael Panosian and Martin Galstyan, or either of them, will have the discretion to vote your shares on any additional matters properly presented for a vote at the meeting.

If for any reason any of the nominees is not available as a candidate for director at the Annual Meeting, the persons named as proxy holders will vote your proxy for such other candidate or candidates as may be nominated by the Board of Directors.

15.	HOW ARE PROXIES SOLICITED AND WHAT IS THE COST?

We will provide the Notice, proxy statement, the 2020 Annual Report on Form 10-K and a proxy card to stockholders of as of record on April 30, 2021 beginning on or about May 7, 2021, in connection with the solicitation of proxies our Board on our Company’s behalf to be used at our Annual Meeting. We will pay the cost of soliciting proxies. We have retained Kingsdale Advisors for certain advisory and solicitation services at a fee of approximately $11,500. In addition to the mailing of these proxy materials, the solicitation of proxies or votes may be made in person, by telephone, or by electronic communication by our directors, officers, and employees, who will not receive any additional compensation for such solicitation activities. We may also reimburse brokerage firms, banks, and other nominee holders of record for the cost of forwarding proxy materials to beneficial owners.

16.	WHAT IF I ONLY RECEIVED ONE COPY OF THE PROXY MATERIALS, EVEN THOUGH MULTIPLE STOCKHOLDERS RESIDE AT MY ADDRESS?

The SEC previously adopted a rule concerning the delivery of Annual disclosure documents. The rule allows brokers or us holding your shares on your behalf to send a single set of our Annual report and proxy statement to any household at which two or more of our stockholders reside if either the brokers or we believe that the stockholders are members of the same family. This practice referred to as “householding,” benefits both stockholders and us. It reduces the volume of duplicate information and our expenses and lessens the impact on the environment. The rule applies to our Annual reports, proxy statements, and information statements. Once stockholders receive notice from their brokers or us that communications to their addresses will be “householded,” the practice will continue until stockholders are otherwise notified or until they revoke their consent to the practice. Each stockholder will continue to receive a separate proxy card or voting instruction card.

Those stockholders who either (i) do not wish to participate in “householding” and would like to receive their own sets of our Annual disclosure documents in future years or (ii) who share an address with another one of our stockholders and who would like to receive only a single set of our Annual disclosure documents should follow the instructions described below:

		stockholders whose shares are registered in their name should contact our transfer agent, VStock Transfer, LLC, and inform them of their request by calling them at (212) 828-8436 or writing them at VStock Transfer LLC, 18 Lafayette Place, Woodmere, NY 11598.
		stockholders whose shares are held by a broker or other nominee should contact such broker or another nominee directly and inform them of their request. Stockholders should be sure to include their name, the name of their brokerage firm, and their account number.

34 | Page

 

Certain Risks AssociatedBoard Communications, Stockholder Proposals, and Company Documents

17.	HOW DO I COMMUNICATE WITH THE BOARD?

Stockholders who wish to communicate with a Reverse Stock Splitour Board of Directors are welcome to do in writing to our Corporate Secretary at ToughBuilt Industries, Inc., 25371 Commercentre Drive, Suite 200, Lake Forest, CA 92630.

Communications are distributed to our Board of Directors or to any individual directors as appropriate, depending on the facts and circumstances outlined in the communication.

18.	WHO CAN PROVIDE ME WITH ADDITIONAL INFORMATION AND HELP ANSWER MY QUESTIONS?

If you would like additional copies, without charge, of this proxy statement or if you have questions about the proposals being considered at the Annual Meeting, including the procedures for voting your shares, you should contact Michael Panosian, the Company’s Chief Executive Officer in writing or by phone.

Stockholder Proposals for the 2022 Annual Meeting

 

EvenStockholders may present proper proposals for inclusion in our proxy statement and for consideration at the next Annual Meeting of Stockholders by submitting their proposals in writing to our Corporate Secretary 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 Corporate Secretary must receive the written proposal at our principal executive offices no later than December 1, 2021. However, if a reverse stock split is effected, somewe hold our 2022 Annual Meeting of Stockholders more than 30 days before or all60 days after the one-year anniversary date of the expected benefits discussed above may2021 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 Corporate Secretary 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 be realized or maintained. The market price of our Common Stock will continueintend for the proposal to be based,included in part, on our performance and other factors unrelated toproxy statement. Our bylaws provide that the number of shares outstanding.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 of Directors; 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 Corporate Secretary, which notice must contain the information specified in our bylaws.

The reverse stock split will reduce

To be timely for our 2022 Annual Meeting of Stockholders, our Corporate Secretary must receive the numberwritten 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 outstanding shares of our Common Stock without reducing the number of shares of available but unissued Common Stock,2021 Annual Meeting, then the deadline is a reasonable time before the Company begins to print and send its proxy materials, which will also have the effect of increasing the number of authorized but unissued shares. The issuance of additional shares of our Common Stock may have a dilutive effect on the ownership of existing shareholders.we deem to be no later than the:

 

Principal Effects of a Reverse Stock Split

		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 our shareholders approve this Reverse Split Proposal anda stockholder who has notified us of his or her intention to present a proposal at the Board of Directors elects2022 Annual Meeting does not appear to effectpresent his or her proposal at such meeting, we are not required to present the proposal for a reverse stock split, our issued and outstanding shares of Common Stock would decreasevote at a rate of approximately one share of Common Stock for every two (2) shares to ten (10) shares of Common Stock currently outstanding depending on the amount of the reverse stock split. The reverse stock 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 stock split would affect all of our shareholders uniformly and would not affect any shareholder’s percentage ownership interests in the Company, except to the extent that it results in a shareholder receiving cash in lieu of fractional shares. The reverse stock 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 shareholder receiving cash in lieu of fractional shares. Common Stock issued pursuant to the reverse stock split would remain fully paid and non-assessable. The reverse stock 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 (the “Exchange Act”). We have no current plans to take the Company private. Accordingly, a reverse stock split is not related to a strategy to do so.such meeting.

 

In addition to the change in the number of shares of Common Stock outstanding, a reverse stock 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. If appropriate circumstances exist, the Board may utilize the reverse stock split as part of its plan to maintain the required minimum per share price of the Common Stock under the NASDAQ listing standards noted above.

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, a reverse stock split will increase the number of authorized but unissued shares. The Company may also use authorized shares in connection with the financing of future mergers or acquisitions.

The following table contains approximate information relating to our common stock, based on share information as of April 16, 2019 :

		Current				After Reverse Split if 1:2 Ratio is Selected				After Reverse Split if 1:30 Ratio is Selected
Authorized Common Stock			200,000,000				200,000,000				200,000,000
Common Stock issued and outstanding			81,460,833				40,730,416				2,715,361
Common Stock authorized but unissued			118,539,167				159,269,584				197,284,639

31

35 | Page

Although a reverse stock split would not have any dilutive effect on our shareholders, a reverse stock split without a reduction in the number of shares authorized for issuance would reduce the proportion of shares owned by our shareholders relative to the number of shares authorized for issuance, giving our Board an effective increase in the authorized shares available for issuance, in its discretion. Our Board from time to time may deem it to be in the best interests of the Company and our shareholders to enter into transactions and other ventures that may include the issuance of shares of our Common Stock. If our Board authorizes the issuance of additional shares subsequent to the reverse stock split described above, the dilution to the ownership interest of our existing shareholders may be greater than would occur had the reverse stock split not been effected. Many stock issuances not involving equity compensation do not require shareholder approval, and our Board generally seeks approval of our shareholders in connection with a proposed issuance only if required at that time.

 

Required AdjustmentDirector Candidate Recommendations

You may recommend director candidates for consideration by our Nominating and Corporate Governance Committee. Any such recommendations should include the nominee’s name and qualifications for membership on our Board of Directors and should be directed to Currently Outstanding Securities Exercisable or Convertible into Sharesour Corporate Secretary at our executive offices.

Availability of Bylaws

Our bylaws have been publicly filed with the SEC at www.sec.gov. You may also contact our Common Stock - A reverse stock split would effectCorporate Secretary at our principal executive offices for a reduction incopy of the number of shares of Common Stock issuable uponrelevant bylaw provisions regarding the exercise or conversion of our outstanding stock options, warrants, preferred stockrequirements for making stockholder proposals and convertible notes in proportionnominating director candidates.

OTHER MATTERS

Each proxy solicited hereby also confers discretionary authority on the proxies named therein to vote the proxy with respect to the reverse stock split ratio. Additionally, the exercise priceelection of outstanding options, warrants, preferred stock and conversion price of our convertible notes would increase, likewise in proportionany person as a director if a nominee is unable to serve or for good cause will not serve, matters incident to the reverse stock split ratio.conduct of the meeting, and upon such other matters as may properly come before the Meeting. Management is not aware of any business that may properly come before the Meeting other than the matters described above in this proxy statement. However, if any other matters should properly come before the meeting, it is intended that the proxies solicited hereby will be voted with respect to those other matters under the judgment of the persons voting the proxies.

YOUR VOTE IS IMPORTANT! WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT TODAY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.

By Order of the Board of Directors,

By:	/s/ Michael Panosian
Name:	Michael Panosian
Title:	Chief Executive Officer, President, and Chairperson of the Board
Lake Forest, California
May 3, 2021

36 | Page

APPENDIX A

 

Proposed Amendment to ToughBuilt Industries, Inc. Articles of Incorporation

Require AdjustmentsThe text of the proposed amendment to Article 3 of our Articles of Incorporation to effect the Reverse Stock Split of common stock within a range of 1-for-2 to 1-for-10.

Article 3. The Number of Shares of Common Stock Available for Future Issuance under our Incentive Plan -In connection with any reverse split, our Board would also make a corresponding reduction in the number of shares available with respect to shares available for grant granted under our 2018 Equity Incentive Plan so as to avoid the effect of increasing the value of options and shares previously granted.Corporation.

 

In addition, a reverse stock split may result in some shareholders owning “odd lots” of less than 100On [DATE] at [TIME] [a.m./p.m.] (Pacific Standard Time) (the “Effective Time”), each [NUMBER] ([NUMBER]) shares of the corporation’s Common Stock which may be more difficult to sellissued and may cause those holders to incur greater brokerage commissions and other costs upon sale.

Authorized Shares of Common Stock

The Reverse Stock Split Proposal will not change the number of authorized shares of Common Stock but will increase the number of authorized shares available for future issuance for corporate needs such as equity financing, mergersoutstanding or acquisitions, retirement of outstanding indebtedness, stock splits and stock dividends, employee benefit plans, or other corporate purposes as may be deemed by the Board to beheld in the best interests of the Company and its shareholders. The Board believes the increase in available shares for future issuance is appropriate to fund the future operations of the Company. It will also provide the Company with greater flexibility to respond quickly to advantageous business opportunities However, we may from time to time explore opportunities to make acquisitions through the use of stock. As a result, the Company’s current number of authorized shares of Common Stock may enable the Company to better meet its future business needs.

We believe that the current amount of authorized Common Stock will make a sufficient number of shares available, should the Company decide to use its shares for one or more of such previously mentioned purposes or otherwise. The current capital will provide the Board with the ability to issue additional shares of stock without further vote of the shareholders of the Company, except as provided under Nevada corporate law or under the rules of any national securities exchange on which shares of stock of the Company are then listed.

Procedure for Effecting Reverse Stock Split and Exchange of Stock Certificates

If the Reverse Split Proposal is approved by our shareholders, our Board, in its sole discretion, will determine whether such an action is in the best interests of the Company and our shareholders, taking into consideration the factors discussed above. If our Board believes that a reverse stock split is in our best interests and the best interest of our shareholders, our Board will then implement the reverse stock split.

We would then file a certificate of amendment to our Articles of Incorporation with the Secretary of the State of Nevada at such time as our Board of Directors had determined as the appropriate effective time for the reverse stock split to effect the reverse split. The certificate of amendment would add a new provision providing that holders of our Common Stocktreasury (if any) immediately prior to the filing of the amendment will receiveEffective Time shall be automatically reclassified as and combined, without further action, into one (1) validly issued, fully paid and nonassessable share of Common Stock, for each number of shares selected bypar value $0.0001 per share (the “Reverse Stock Split”), subject to the Board. A copy of the proposed 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, and without any further action on the part of the Company or our shareholders, the issued shares of Common Stock held by shareholders of record as of the effective date of the reverse stock split would be converted into a lesser number of shares of Common Stock calculated in accordance with the reverse stock split ratio of not less than one-for-two (1:2) or not more than one-for-ten (1:30), as selected by our Board and set forth in the certificate of amendment.

32

For example, if a shareholder presently holds 100 shares of our Common Stock, he or she would hold 50 shares of Common Stock following a one-for-two reverse stock split, or 10 shares of Common Stock following a one-for-ten reverse stock split, in each case with an additional amount of cash in lieutreatment of fractional sharesshare interests as described below under “-Fractional Shares.” Beginning on the effective date of the split, each certificate representing pre-split shares would be deemed for all corporate purposes to evidence ownership of post-split shares.

As soon as practicable after the effective date of the reverse stock split, shareholders would be notified that the reverse stock split had been effected.

Effect on Beneficial Holders (i.e., Shareholders Who Hold in “Street Name”)

Upon the reverse stock split, we intend to treat Common Stock held by shareholders in “street name,” through a bank, broker or other nominee, in the same manner as shareholders whose shares are registered in their own names. Banks, brokers or other nominees will be instructed to effect the reverse stock split for their customers holding Common Stock in “street name.” However, these banks, brokers or other nominees may have different procedures than registered shareholders for processing the reverse stock 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., Shareholders 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. These shareholders 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 shareholder 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 shareholder is entitled to post-reverse stock split shares, a transaction statement will automatically be sent to the shareholder’s address of record indicating the number of shares (including fractional shares) of Common Stock held following the reverse stock split.

Effect on Certificated Shares

Upon the reverse stock split our transfer agent will act as our exchange agent and assist holders of Common Stock in implementing the exchange of their certificates.

Commencing on the effective date of a reverse stock split, shareholders holding shares in certificated form will be sent a transmittal letter by our transfer agent. The letter of transmittal will contain instructions on how a shareholder should surrender his or her certificates representing Common Stock (“Old Certificates”) to the transfer agent in exchange for certificates representing the appropriate number of whole post-reverse stock split Common Stock, as applicable (“New Certificates”). No New Certificates will be issued to a shareholder until that shareholder has surrendered all Old Certificates, together with a properly completed and executed letter of transmittal, to the transfer agent. No shareholder will be required to pay a transfer or other fee to exchange Old Certificates. The letter of transmittal will contain instructions on how you may obtain New Certificates if your Old Certificates have been lost. If you have lost your certificates, you will have to pay any surety premium and the service fee required by our transfer agent.

Until surrendered, we will deem outstanding Old Certificates held by shareholders to be canceled and only to represent the number of whole shares to which these shareholders are entitled.

Any Old Certificates submitted for exchange, whether because of a sale, transfer or other disposition of shares, will automatically be exchanged for New Certificates.

33

Shareholders should not destroy any stock certificates and should not submit any certificates until requested to do so by the transfer agent. Shortly after the reverse stock split the transfer agent will provide registered shareholders with instructions and a letter of transmittal for converting Old Certificates into New Certificates. Shareholders are encouraged to promptly surrender Old Certificates to the transfer agent (acting as exchange agent in connection with the reverse stock split) in order to avoid having shares become subject to escheat laws.

Fractional Shares

below. No fractional shares will be issued in connection with the reverse stock split. ShareholdersReverse Stock Split. Instead, the corporation will issue one whole share of recordthe post-Reverse Stock Split Common Stock to any stockholder who otherwise would behave been entitled to receive fractional shares will have their shares rounded up to the nearest whole share.

Shareholders should be aware that, under the escheat laws of the various jurisdictions where shareholders 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 stock 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, shareholders 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 a reverse stock split is effected.

The Company’s shareholders’ 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 shareholders’ equity.

Additionally, net income or loss per share for all periods would increase proportionately as a result of a reverse stock 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 a reverse stock split.

A reduction in stated capital will, under Nevada law, create a corresponding increase in paid-in surplus (i.e., the excess of net assets over stated capital), and the Company may make distributions, such as the payment of dividends, up to the amount of its surplus provided that the distribution does not cause it to become insolvent, and subject to the limitations of its debt financing agreements.

Potential Anti-Takeover Effect

Even though a potential reverse stock 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 Proposal 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 our Board and our shareholders.

No Appraisal Rights

Our shareholders are not entitled to appraisal rights with respect to a reverse stock split, and we will not independently provide shareholders with any such right.

34

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 stock split to the Company and to shareholders 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 stock 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 shareholders in light of their particular circumstances or to shareholders 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 stock split.

The Company has not sought and will not seek an opinion of counsel or a ruling from the Internal Revenue Service (“IRS”) regarding the federal income tax consequences of the reverse stock split. The state and local tax consequences of the reverse split may vary as to each shareholder, depending on the jurisdiction in which such shareholder resides. This discussion should not be considered as tax or investment advice, and the tax consequences of the reverse stock split may not be the same for all shareholders. Shareholders 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 stock split will constitute a reorganization under Section 368(a)(1)(E) of the Internal Revenue Code. Accordingly, we should not recognize taxable income, gain or loss in connection with the reverse stock split. In addition, we do not expect the reverse stock split to affect our ability to utilize our net operating loss carryforwards.

Tax Consequences to Shareholders. Shareholders should not recognize any gain or loss for U.S. federal income tax purposes as a result of the reverse stock 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).due to the Reverse Stock Split. Each shareholder’s aggregate tax basis in the Common Stock received in the reverse stock split, including any fractional share treated as received and then exchanged for cash, should equal the shareholder’s aggregate tax basis in the Common Stock exchanged in the reverse stock split. In addition, each shareholder’s holding period for the Common Stock it receives in the reverse stock split should include the shareholder’s holding period for the Common Stock exchanged in the reverse stock split.

In general, a shareholder who receives cash in lieu of a fractional shareholder of Common Stock pursuant towill hold the reverse stock split should be treated for U.S. federal income tax purposes as having received a fractional share pursuant to the reverse stock 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 shareholder’s tax basis allocable to the fractional share. Any capital gain or loss will generally be long term capital gain or loss if the shareholder’s holding period in the fractional share is greater than one year as of the effective date of the reverse stock 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 shareholders 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. Shareholders 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.

35

Interests of Directors and Executive Officers

Our directors and executive officers have no substantial interests, directly or indirectly, in the matters set forth in this Reverse Split Proposal 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 a reverse stock split without further action by our shareholders at any time before the effectiveness of the filing with the Secretary of the State of Nevada of the certificate of amendment to our Articles of Incorporation, even if the authority to effect a reverse stock split has been approved by our shareholders at the 2019 Annual Meeting. By voting in favor of a reverse stock split, you are expressly also authorizing the Board to delay, not to proceed with, and abandon, a reverse stock split if it should so decide, in its sole discretion, that such action is in the best interests of the shareholders.

Voting by Proxyholder

Your proxyholder (one of the persons named on your proxy card) will vote your common stock in accordance with your instructions. Unless you give specific instructions to the contrary, your common stock will be voted for Proposal No. 3, the Reverse Split Proposal.

Required Vote; Recommendation of Board of Directors

The affirmative vote of the holders of a majoritysame percentage of the outstanding shares of the Company’s common stock as of the record date for the 2020 Annual Meeting is required for approval of the amendments of the Company’s articles of incorporation to effect the reverse stock split.

Proposal 3 is considered a “routine” matter. With respect to “routine” matters, a bank, brokerage firm, or other nominee has the authority (but is not required) under the rules governing self-regulatory organizations, or the SRO rules, including NASDAQ, to vote its clients’ shares if the clients do not provide instructions. When a bank, brokerage firm, or other nominee votes its clients’ shares on routine matters without receiving voting instructions, these shares are counted both for establishing a quorum to conduct business at the meeting and in determining the number of shares voted FOR, AGAINST or ABSTAINING with respect to such routine matters.

With respect to “non-routine” matters, a bank, brokerage firm, or other nominee is not permitted under the SRO rules to vote its clients’ shares if the clients do not provide instructions. The bank, brokerage firm, or other nominee will so note on the voting instruction form, and this constitutes a “broker non-vote.” “Broker non-votes” will be counted for purposes of establishing a quorum to conduct business at the meeting, but not for determining the number of shares voted FOR, AGAINST, ABSTAINING or WITHHELD FROM with respect to such non-routine matters.

Because Proposal 3, to approveCommon Stock immediately following the Reverse Stock Split Proposal is considered a “routine” matter, there will be no broker non-votes with respect to this proposal, and brokers, banks or other nominees may vote uninstructed shares on a discretionary basis.

36

Recommendation of the Board of Directors

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL NO. 3 TO GRANT THE BOARD DISCRETIONARY AUTHORITY TO EFFECT A REVERSE STOCK SPLIT.

PROPOSAL NO. 4

APPROVAL OF AMENDMENT TO THE COMPANY’S 2018 EQUITY INCENTIVE PLAN

Effective July 1, 2018, the Board of Directors adopted the 2018 Equity Incentive Plan (the “2018 Plan”). This 2018 Plan was adopted in addition to the existing 2016 Stock Equity Incentive. The awards per 2018 Plan may be granted through June 30, 2023 to the Company’s employees, consultants, directors and non-employee directors. The maximum number of shares of our common stockas that may be issued under the 2018 Plan is 1,000,000 shares, which amount will be (a) reduced by awards granted under the 2018 Plan, and (b) increased to the extent that awards granted under the 2018 Plan are forfeited, expire or are settled for cash (except as otherwise provided in the 2018 Plan). No employee will be eligible to receive more than 200,000 shares of common stock in any calendar year under the 2018 Plan pursuant to the grant of awards. On September 12, 2018, the Board of Directors approved to increase the number of shares of common stock reserved for future issuance under this Plan from 1,000,000 shares to 2,000,000 shares. On September 14, 2018, 1,000,000 shares of common stock underlying awards under the 2018 Plan have been granted to the employees and officers 25% vesting immediately on the date of grant and 25% vesting each year thereafter on the anniversary of the grant date. On April 17, 2019, the Board approved an amendment, which was approved by the shareholders at our 2019 Annual Meeting, to the 2018 Plan that confirms that the 2018 Plan shall for all purposes comply with and be interpreted in accordance with the Tax Cut and Jobs Act passed in 2017, the principal effect of which is elimination of performance-based compensation exception to the deductibility limitations under Section 162(m) of the Internal Revenue Code (the “Code”) and to include any individual who was our then current or former named executive officer as a “covered employee,” such that payments to former employees will be subject to the deduction limitations thereunder and to increase the number of shares authorized for issuance under the Plan to 20,000,000. The Board is recommending and submitting the Amendments to our shareholders for approval. As of the date of this proxy statement, the Board approved an amendment to increase the shares authorized under this Plan to 35,000,000 in order to be able to further reward management and directors (subject to meeting covenants with an existing investor (or obtaining waivers)) in face of the desire to retain and incentify management and directors as the Company has raised further capital.

Reasons for the Proposed Amendment

The Company will utilize the increased equity incentives to retain management, employees and directors and also to ensure that management maintains a reasonable level of equity as the Company grows and utilizes equity to raise capital and perhaps engage in acquisitions of symbiotic businesses should the opportunity arise.

Vote Required

The affirmative vote of the holders of a majority of the shares of the Company’s common stock having voting power present in person or represented by proxy at the 2020 Annual Meeting is required to approve amending the Company’s 2018 Equity Incentive Plan.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” PROPOSAL NO. 4.

PROPOSALPROPOSAL NO. 5

NON-BINDING PROPOSAL TO APPROVE THE COMPENSATION OF OUR

EXECUTIVE OFFICERS

SEC rules adopted pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, enable our shareholders to vote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers as disclosed in this Proxy Statement in accordance with the SEC’s rules.

For the reasons stated below, we are requesting your approval of the following non-binding resolution:

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the compensation tables and narrative discussion is hereby APPROVED.”

The compensation of our named executive officers and our compensation philosophy policies are comprehensively described in the tables (including all footnotes) and narrative disclosure included in this proxy statement.

37

The Board of Directors designs our compensation policies for our named executive officers to create executive compensation arrangements that are linked both to the creation of long-term growth, sustained shareholder value and individual and corporate performance, and are competitive with peer companies of similar size, value and complexity and encourage stock ownership by our senior management. Based on its review of the total compensation of our named executive officers for fiscal year 2019, the Board of Directors believes that the total compensation for each of the named executive officers is reasonable and effectively achieves the designed objectives of driving superior business and financial performance, attracting, retaining and motivating our people, aligning our executives with shareholders’ long-term interests, focusing on the long-term and creating balanced program elements that discourage excessive risk-taking.

Neither the approval nor the disapproval of this resolution will be binding on the Board of Directors or us or will be construed as overruling a decision by the Board of Directors or us. Neither the approval nor the disapproval of this resolution will create or imply any change to our fiduciary duties or create or imply any additional fiduciary duties for the Board of Directors or us. However, the Board of Directors values the opinions that our shareholders express in their votes and will consider the outcome of the vote when making future executive compensation decisions as it deems appropriate.

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE TO APPROVE THE NON-BINDING ADVISORY RESOLUTION APPROVING THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.

PROPOSAL NO. 6 - OTHER MATTERS

The Board knows of no matter to be brought before the Annual Meeting other than the matters identified in this proxy statement. However, if any other matter properly comes before the Annual Meeting or any adjournment of the meeting, it is the intention of the persons named in the proxy solicited by the Board to vote the shares represented by them in accordance with their best judgment.

SHAREHOLDER PROPOSALS FOR THE 2021 MEETING

Our bylaws provide that, for matters to be properly brought before an annual meeting, business must be either (i) specified in the notice of annual meeting (or any supplement or amendment thereto) given by or at the direction of the Board of Directors, (ii) otherwise brought before the annual meeting by or at the direction of the Board of Directors, or (iii) otherwise properly brought before the annual meeting by a shareholder.

Shareholder proposals intended for inclusion in our proxy statement relating to the next annual meeting in 2021 must be received by us no later than January 31, 2021. If the date of next year’s annual meeting is moved by more than 30 days before or after the anniversary date of this year’s Annual Meeting, then the deadline for inclusion of a shareholder proposal in our proxy materials is instead a reasonable time before we begin to print and send our proxy materials for that meeting. Any such proposal must comply with Rule 14a-8 of Regulation 14A of the proxy rules of the SEC.

Notice to us of a shareholder proposal submitted otherwise than pursuant to Rule 14a-8 also will be considered untimely if received at our principal executive offices other than during the time period set forth below and will not be placed on the agenda for the meeting. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a shareholder, the shareholder must have given timely notice thereof in writing to our secretary. To be timely, a shareholder’s notice must be delivered to the secretary at our principal executive offices not later than the close of business on the ninetieth (90th) day nor earlier than the close of business on the one hundred twentieth (120th) day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than thirty (30) days before or more than seventy (70) days after such anniversary date, notice by the shareholder must be so delivered not earlier than the close of business on the one hundred twentieth (120th) day prior to such annual meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made by us.

38

ANNUAL REPORT

Upon written request to Secretary, ToughBuilt Industries, Inc. at25371 Commercentre Drive Suite 200 Lake Forest, CA 92630, we will provide without charge to each person requesting a copy of our 2018 Annual Report, including the financial statements filed therewith. We will furnish a requesting shareholder with any exhibit not contained therein upon specific request. In addition, this Proxy Statement, as well as our 2018 Annual Report, are available on our Internet website atwww.toughbuilt.com, and upon filing in March 2020, our 2019 Annual Report shall also be available at that location.

BY ORDER OF THE BOARD OF DIRECTORS
/s/ Michael Panosian
Michael Panosian
Chairman of the Board of Directors

39

APPENDIX A

Certificate of Amendment
to the
Articles of Incorporation
of ToughBuilt Industries, Inc.

ToughBuilt Industries, Inc., a corporation organized and existing under the laws of the State of Nevada (the “Corporation”) hereby certifies as follows:

l. Section 3 of the Corporation’s Articles shall be amended by adding the following section to the end of Section 3 of the Amended and Restated Articles, that reads as follows, subject to compliance with applicable law:

“Upon the filing and effectiveness (the “Effective Time”) pursuant to the Nevada Revised Statutes of this amendment to the Corporation’s Articles of Incorporation, as amended, [each shares of Common Stock issued and outstandingstockholder did immediately prior to the Effective Time either issued and outstanding or held byReverse Stock Split, except for minor adjustments due to the Corporation as treasury stock shall be combined into one (1) validly issued, fully paid and non-assessableadditional net share of Common Stock without any further action by the Corporation or the holder thereof (the “Reverse Stock Split”); providedfraction that no fractional shares shallwill need to be issued to any holder and that insteadas a result of issuing suchthe treatment of fractional shares, the Corporation shall round shares up to the nearest whole number.shares. Each certificate that immediately prior to the Effective Time represented shares of Common Stock (“Old Certificates”Certificates “), shall thereafter represent that number of shares of Common Stock into which the shares of Common Stock represented by the Old Certificate shall have been combined, subject to the treatment of fractional shares as described above].”

2. The foregoing amendment has been duly adopted in accordance with the provisions of Nevada Revised Statutes 78.385 and 78.390 by the vote of a majority of each class of outstanding stock of the Corporation entitled to vote thereon.

IN WITNESS WHEREOF, I have signed this Certificate this        day of            , 201_.above.

 

37 | Page

A-1

 

 

APPENDIX B

PROXY CARD

 

B-1

 

TOUGHBUILT INDUSTRIES, INC.

Annual Meeting of Shareholders

June 7, 2019

TOUGHBUILT INDUSTRIES, INC.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned, revoking all prior proxies, hereby appoints Michael Panosian, with full power of substitution, as proxy to represent and vote all shares of Common Stock of ToughBuilt Industries, Inc., (the “Company”), which the undersigned will be entitled to vote if personally present at the Annual Meeting of the Shareholders, to be held on March 18, 2020, at 4:00 p.m., local time at the Company’s corporate offices located at 25371 Commercentre Drive, Suite 200, Lake Forest, California 92630, upon matters set forth in the Notice of Annual Meeting and Proxy Statement for the Annual Meeting of Shareholders, a copy of which has been received by the undersigned. Each share of Common Stock is entitled to one vote. The proxies are further authorized to vote, in their discretion, upon such other business as may properly come before the meeting.

When properly executed, this proxy will be voted in the manner directed herein by the undersigned stockholder.

IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED “FOR” EACH OF THE INDIVIDUALS NOMINATED TO BE A DIRECTOR, “FOR” PROPOSALS 2, 3, 4 AND 5, AND IN ACCORDANCE WITH THE JUDGEMENT OF THE PERSONS NAMED AS PROXIES IN THE FORM OF PROXY ON SUCH OTHER BUSINESS OR MATTERS WHICH MAY PROPERLY COME BEFORE THE ANNUAL MEETING.

Please check here if you plan to attend the Annual Meeting of Shareholders on March 18, 2020 at 4:00 p.m. (PDT).    

PLEASE INDICATE YOUR VOTE ON THE REVERSE SIDE

(Continued and to be signed on Reverse Side)

B-2