ToughBuilt Industries, Inc. (NASDAQ:OTC:TBLT), a company specializing in cutlery, handtools, and general hardware, has announced the creation and issuance of a new series of preferred stock, according to a recent SEC filing. On Monday, the board of directors approved the issuance of 100 shares of Series I Preferred Stock, with a par value of $0.0001 per share.
The new Series I Preferred Stock, established on August 13, 2024, carries significant voting power, granting its holders 51% of the total votes on all matters, irrespective of the number of shares actually outstanding.
This voting structure ensures that the holders of Series I will have a majority vote when combined with common stockholders and any other voting class or series. This is a material modification to the rights of security holders as the common stock and any other voting shares will share the remaining 49% of votes proportionally.
The Series I Preferred Stock is not convertible into any other class or series of stock and does not have a stated maturity or sinking fund provision. Furthermore, Series I stockholders are not entitled to receive dividends or distributions in the event of liquidation, dissolution, or winding up of the company.
The Certificate of Designation for the Series I Preferred Stock was filed with the Nevada Secretary of State on August 26, 2024, and is included as Exhibit 3.1 in the SEC filing. This move by ToughBuilt Industries comes as a significant change to its capital structure and could potentially impact the control dynamics within the company.
In other recent news, Toughbuilt Industries Inc. has been facing significant changes. The company is set to be delisted from the Nasdaq Capital Market due to non-compliance with Nasdaq's filing requirements, despite regaining compliance with board independence requirements.
To address this, Toughbuilt is working to file its overdue annual and quarterly reports, including the Form 10-K for the fiscal year ended December 31, 2023, and Forms 10-Q for the first and second quarters of 2024.
The company has also seen changes in its board of directors. Monica Pitterle, CPA, has been appointed as a new independent director and chair of the Audit Committee, bringing her extensive experience in financial management from roles at Comcast/Time Warner and Ernst & Young.
Concurrently, Director Linda Moossaian has resigned from her position, leaving a vacancy which the company is actively seeking to fill, prioritizing diversity and expertise.
InvestingPro Insights
As ToughBuilt Industries, Inc. (NASDAQ:TBLT) maneuvers through its capital structure adjustments with the issuance of Series I Preferred Stock, insights from InvestingPro provide a real-time snapshot of the company's financial health and market performance. With a market capitalization of just $2.13 million, ToughBuilt operates under a significant debt burden, as reflected in its negative P/E ratios of -0.02 and adjusted P/E ratio for the last twelve months as of Q3 2023 standing at -0.03. The company's Price / Book multiple is notably low at 0.22, which could signal that the stock is undervalued relative to its book value, yet this must be weighed against other financial metrics.
Revenue over the same period was $89.62 million, but the company experienced a decline in revenue growth by 0.45%. The gross profit margin was recorded at 26.39%, although the operating income margin was deeply negative at -58.75%. These figures suggest that while ToughBuilt is generating gross profit, its operational costs are significantly high, leading to substantial losses. Furthermore, with a one-week price total return of -23.17%, and a one-year price total return of -85.04%, the stock's recent performance has been quite poor, reflecting the company's challenges in the market.
InvestingPro Tips highlight the company's potential difficulties in making interest payments on its debt and its rapid cash burn. Additionally, there are 18 more InvestingPro Tips available that could provide further insights into ToughBuilt's financial position and stock performance. For investors considering the impact of the new Series I Preferred Stock issuance, these tips and metrics could be crucial in assessing the company's future prospects.
InvestingPro also offers a Fair Value estimate of $4.23 for ToughBuilt Industries, which may serve as a reference point for investors gauging the stock's potential for recovery or further decline. While the company's strategic decisions, like the issuance of preferred stock, can influence control dynamics and future direction, these financial metrics and expert tips from InvestingPro offer a grounded perspective on its current standing and outlook.
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