ToughBuilt Industries, Inc. Announces Reverse Stock Split
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Insights
A reverse stock split is a significant financial maneuver, often undertaken by companies seeking to boost their stock price to maintain compliance with exchange listing requirements or to improve market perceptions. ToughBuilt Industries, Inc.'s decision to implement a 1-for-65 reverse stock split will dramatically reduce the number of shares outstanding from approximately 36.9 million to around 567,927. This action typically aims to raise the price of the stock, making it more attractive to institutional investors and reducing the volatility associated with lower-priced stocks.
For current shareholders, the reverse split will not change their proportional equity in the company but may have psychological impacts. A higher stock price could be perceived as more stable or legitimate, potentially attracting new investors. However, it's important to note that such a split does not fundamentally alter the company's valuation or market capitalization. Investors should also consider the potential for increased bid-ask spreads and reduced liquidity, which can be side effects of reverse stock splits.
Reverse stock splits can have a variety of market implications. In the case of ToughBuilt, the market's reaction will largely depend on investor sentiment regarding the company's future prospects and the reasons behind the split. If the market views this move as a strategic step to stabilize the company's stock and position it for future growth, the reaction could be positive. Conversely, if investors interpret the reverse split as a last-ditch effort to comply with Nasdaq's minimum bid price requirement, the stock could suffer.
Historically, companies performing reverse stock splits have had mixed results in terms of stock performance post-split. It's crucial for investors to analyze ToughBuilt's underlying business fundamentals and growth prospects rather than making decisions based solely on the altered share price. Additionally, the proportional adjustment to equity awards and warrants is a routine aspect of reverse splits, ensuring that the terms of these financial instruments remain fair post-split.
The legal process surrounding a reverse stock split involves amending the company's Certificate of Incorporation, as ToughBuilt has done following stockholder approval. This amendment is a critical step, as it ensures the company adheres to corporate governance standards and shareholder agreements. The new CUSIP number, which acts as a unique identifier for the company's securities post-split, is an essential update for tracking and trading purposes.
For shareholders, the legal implications are minimal, as the split does not affect their percentage ownership in the company. However, the rounding up of fractional shares to whole shares is a slight benefit to those who would otherwise end up with a fraction of a share. This process is a common practice in reverse stock splits to avoid the complexities of dealing with fractional shares. Shareholders should be aware of their rights and the procedures for handling their shares during such corporate actions.
Common Stock Will Begin Trading on a Split-Adjusted Basis of 1-for-65
IRVINE, Calif., Dec. 26, 2023 (GLOBE NEWSWIRE) -- ToughBuilt Industries, Inc. (NASDAQ: TBLT) (“ToughBuilt” or the “Company”), today announced that it intends to effect a reverse stock split of its common stock at a ratio of 1 post-split share for every 65 pre-split shares. The reverse stock split will become effective at 4:30 p.m., New York time, on January 1, 2024. ToughBuilt’s common stock will continue to be traded on the Nasdaq Capital Market under the symbol “TBLT” and will begin trading on a split-adjusted basis when the market opens on January 2, 2024. The new CUSIP number for the common stock following the reverse stock split will be 89157G 86 8.
At the Company’s annual stockholders’ meeting held on December 11, 2023, ToughBuilt’s stockholders granted the Company’s Board of Directors the discretion to effect a reverse stock split of ToughBuilt’s common stock through an amendment to its Amended and Restated Certificate of Incorporation, as amended, at a ratio of not less than 1-for-20 and not more than 1-for-100, such ratio to be determined by the Company’s Board of Directors.
At the effective time of the reverse stock split, every 65 shares of ToughBuilt’s issued and outstanding common stock will be converted automatically into 1 issued and outstanding share of common stock without any change in the
The reverse stock split will affect all stockholders uniformly and will not alter any stockholder’s percentage interest in the Company’s equity, except to the extent that the reverse stock split would result in a stockholder owning a fractional share. Any fractional share of a stockholder resulting from the reverse stock split will be rounded up to the nearest whole number of shares. The reverse stock split will reduce the number of shares of ToughBuilt’s common stock outstanding from 36,915,222 shares to approximately 567,927 shares. Proportional adjustments will be made to the number of shares of ToughBuilt’s common stock issuable upon exercise or conversion of ToughBuilt’s equity awards and warrants, as well as the applicable exercise price. Stockholders whose shares are held in brokerage accounts should direct any questions concerning the reverse stock split to their broker. All stockholders of record may direct questions to the Company’s transfer agent, Vstock Transfer, LLC at (212) 828-8436 or (855) 9VSTOCK (toll free).
ABOUT TOUGHBUILT INDUSTRIES, INC.
ToughBuilt is an advanced product design, manufacturer, and distributor with emphasis on innovative products. Currently focused on tools and other accessories for the professional and do-it-yourself construction industries. We market and distribute various home improvement and construction product lines for both the do-it-yourself and professional markets under the TOUGHBUILT brand name, within the global multibillion dollar per year tool market industry. All our products are designed by our in-house design team. Since launching product sales in 2013, we have experienced significant annual sales growth. Our current product line includes three major categories, with several additional categories in various stages of development, consisting of Soft Goods & Kneepads and Sawhorses & Work Products. Our mission is to provide products to the building and home improvement communities that are innovative, of superior quality derived in part from enlightened creativity for our end users while enhancing performance, improving well-being and building high brand loyalty. Additional information about the Company is available at: https://www.toughbuilt.com/.
FORWARD-LOOKING STATEMENTS
This press release contains “forward-looking statements.” Such statements may be preceded by the words “intends,” “may,” “will,” “plans,” “expects,” “anticipates,” “projects,” “predicts,” “estimates,” “aims,” “believes,” “hopes,” “potential” or similar words. Forward-looking statements are not guarantees of future performance, are based on certain assumptions and are subject to various known and unknown risks and uncertainties, many of which are beyond the Company’s control, and cannot be predicted or quantified and consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, risks and uncertainties associated with (i) the impact of the worldwide COVID-19 pandemic and government actions, on our business, (ii) supply chain disruptions, (iii) inflationary and interest rate concerns and the impact on consumers, (iv) cybersecurity breaches and threats, (v) market acceptance of our existing and new products, (vi) delays in bringing products to key markets; (vii) an inability to secure regulatory approvals for the ability to sell our products in certain markets, (viii) intense competition in our industry from much larger, multinational companies, (ix) product liability claims, (x) product malfunctions, (xi) our limited manufacturing capabilities and reliance on subcontractors for assistance, (xii) our efforts to successfully obtain and maintain intellectual property protection covering our products or defend ourselves from third parties’ infringement claims, (xiii) our reliance on a single supplier for certain product components, (xiv) the fact that we will need to raise additional capital to meet our business requirements in the future and that such capital raising may be costly, dilutive or difficult to obtain and (xv) the fact that we conduct business in multiple foreign jurisdictions, exposing us to tariffs, foreign currency exchange rate fluctuations, logistical and communications challenges, burdens and costs of compliance with foreign laws and political and economic instability in each jurisdiction and (xvi) changes in e-commerce marketplaces. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company’s filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K and our subsequent Quarterly Reports on Form 10-Q. Investors and security holders are urged to read these documents free of charge on the SEC’s web site at http://www.sec.gov. The Company encourages you to consider all of these risks, uncertainties and other factors carefully in evaluating the forward-looking statements contained in this press release. As a result of these matters, changes in fact, assumptions not being realized or other circumstances, the Company's actual results may differ materially from the expected results discussed in the forward-looking statements contained in this press release. The forward-looking statements made in this press release are made only as of the date of this press release, and the Company undertakes no obligation to update them to reflect subsequent events or circumstances.
Investor Relations Contact:
KCSA Strategic Communications
David Hanover
toughbuilt@kcsa.com
FAQ
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