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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

20549

FORM 10-K

x☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For ~~ANNUAL~~the ~~REPORT~~Fiscal ~~UNDER~~Year ~~SECTION~~Ended December 1331, OR2023 ~~15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~For~~☐ TRANSITION ~~the~~REPORT ~~Fiscal~~UNDER ~~Year~~SECTION ~~Ended~~13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

December 31

2022

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ until ______

Commission File Number: 001-38739

TOUGHBUILT INDUSTRIES, INC.

INC

(Exact name of Registrant as specified in its charter)

Nevada		46-0820877
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
8669 Research DriveIrvine, CA		92618
(Address of principal executive offices)		(Zip Code)

8669 Research Drive

Irvine, CA

92618

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code (949) 528-3100

Securities registered under Section 12(b) of the Act:

Title of each class: Trading Symbol(s) Name of each exchange on which registered: Common Stock TBLT ~~The~~OTC ~~Nasdaq~~Expert ~~Stock~~ Market ~~LLC~~ Series A Warrants TBLTW ~~The~~OTC ~~Nasdaq~~Expert ~~Stock~~ Market ~~LLC~~

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ¨☐ No x☒

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ¨☐ No x☒

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x☐ No ¨☒

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit post such files).

Yes x☒ No ¨☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨☐ Accelerated filer ¨☐ Non-accelerated filer x☒ Smaller reporting company x☒ Emerging growth company x☒

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

¨Indicate by check mark whether the Registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

~~Indicate~~If bysecurities ~~check~~are ~~mark~~registered ~~whether~~pursuant ~~the Registrant has filed a report on and attestation~~ to ~~its~~Section 12(b) ~~management’s assessment~~ of the ~~effectiveness~~Act, ofindicate ~~its~~by ~~internal~~check ~~control~~mark ~~over~~whether the financial ~~reporting~~statements ~~under Section 404(b)~~ of the ~~Sarbanes-Oxley~~registrant ~~Act~~included ~~(15~~in ~~U.S.C.~~the ~~7262(b))~~filing byreflect the ~~registered~~correction of ~~public~~an ~~accounting~~error ~~firm~~to ~~that~~previously ~~prepared or~~ issued ~~its~~financial ~~audit report~~statements. ☒

¨Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨☐ No x☒

The aggregate market value of the Registrant’s common stock, held by non-affiliates of the Registrant as of June 30, ~~2022~~2023 (which is the last business day of Registrant’s most recently completed second fiscal quarter) based upon the reported closing price of $219.2344 onper ~~The~~share ~~Nasdaq~~on ~~Capital~~the Over-The-Counter Market on that date, was approximately $317,~~387~~749,~~992~~742.59 Solely for purposes of this calculation, the officers and directors and holders of five percent (5%) of any class of voting securities of the Company are considered affiliates.

31As of December 20, 2024, the Registrant had 1,443,125 shares of common stock, par value $0.0001 per share, issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

TABLE OF CONTENTS

		PAGE
PART I		21
	Item 1. Description of Business	21
	Item 1A. Risk Factors	119
	Item 1B. Unresolved Staff Comments	2624
	Item 2. Properties	26
	Item 3. Legal Proceedings	27
	Item 4. Mine Safety Disclosures	2827
PART II		28
	Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	28
	Item 6. [Reserved]	3129
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3129
	Item 7A. Quantitative and Qualitative Disclosures About Market Risk	4245
	Item 8. Financial Statements and Supplementary Data	F-1
	Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	4346
	Item 9A. Controls and Procedures	4346
	Item 9B. Other Information	4447
	Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	4447
PART III		4548
	Item 10. Directors, Executive Officers, and Corporate Governance	4548
	Item 11. Executive Compensation.	5054
	Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	6871
	Item 13. Certain Relationships and Related Transactions, and Director Independence	6972
	Item 14. Principal Accountant Fees and Services	7073
PART IV		7174
	Item 15. Exhibits and Financial Statement Schedules	7176
	Item 16. Form 10-K Summary	7377
SIGNATURES		7478

In this Annual Report on Form 10-K, unless otherwise stated or as the context otherwise requires, references to “ToughBuilt Industries, Inc.,” “ToughBuilt Industries,” “ToughBuilt,” the “Company,” “we,” “us,” “our” and similar references refer to ToughBuilt Industries, Inc., a Nevada corporation formerly known as Phalanx, Inc. Our logo and other trademarks or service marks of the Company appearing in this Annual Report on Form 10-K are the property of ToughBuilt Industries, Inc. This Annual Report on Form 10-K also contains registered marks, trademarks, and trade names of other companies. All other trademarks, registered marks, and trade names appearing in this Annual Report on Form 10-K are the property of their respective holders.

Cautionary Note Regarding Forward-Looking Statements and Industry Data

This Annual Report on Form 10-K, in particular, Part II Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements represent our expectations, beliefs, intentions, or strategies concerning future events, including, but not limited to, any statements regarding our assumptions about financial performance; the continuation of historical trends; the sufficiency of our cash balances for future liquidity and capital resource needs; the expected impact of changes in accounting policies on our results of operations, financial condition or cash flows; anticipated problems and our plans for future operations; and the economy in general or the future of the industry in which we operate, all of which were subject to various risks and uncertainties.

When used in this Annual Report on Form 10-K and other reports, statements, and information we have filed with the Securities and Exchange Commission (“SEC”), in our press releases, presentations to securities analysts or investors, in oral statements made by or with the approval of an executive officer, the words or phrases “believes,” “may,” “will,” “expects,” “should,” “continue,” “anticipates,” “intends,” “will likely result,” “estimates,” “projects” or similar expressions and variations thereof are intended to identify such forward-looking statements. However, any statements contained in this Annual Report on Form 10-K that are not statements of historical fact may be deemed to be forward-looking statements. These statements are only predictions. All forward-looking statements included in this Annual Report on Form 10-K are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Any or all of our forward-looking statements in this document may turn out to be wrong. Actual events or results may differ materially. Our forward-looking statements can be affected by inaccurate assumptions we might make or by known or unknown risks, uncertainties, and other factors.

This Annual Report on Form 10-K also contains estimates, projections, and other information concerning our industry, ~~our~~ business, and particular markets, including data regarding the estimated size of those markets. Information that is based on estimates, forecasts, projections, market research, or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market, and other data from reports, research surveys, studies, and similar data prepared by market research firms and other third parties, industry, general publications, government data, and similar sources.

1ii

PART I

Item 1. Description of Business.

Overview

WeToughBuilt ~~were~~Industries, Inc. was formed to design, manufacture, and distribute innovative tools and accessories tofor the building industry. We market and distribute various home improvement and construction product lines for both Do-It-Yourself and professional markets under the TOUGHBUILT® brand name, within the global multibillion-dollar per year tool market. All of our products are designed by our in-house design team. Since our initial ~~launch of~~ product sales ~~nine~~launch ten years ago, we have experienced annual sales growth from approximately $1~~,000,000~~ million in 2013, to approximately $~~95,000,000~~76 million in ~~2022~~2023.

Our business is currently based on ~~development~~the development of innovative and state-of-the-art products, primarily in tools and hardware category, with a particular focus on building and construction industry with the ultimate goal of making life easier and more productive for contractors and workers alike. Our three major categories contain a total of 19 product lines, consisting of (i) Soft Goods, which includes kneepads, tool bags, pouches and tool belts, (ii) Metal Goods, which consists of sawhorses, tool stands and workbench and (iii) Utility Products, which includes utility knives, aviation snips, shears, lasers and levels, tape measures and chalk reels, striking tools, garden and landscaping tools and pliers and clamps. We also have several additional categories and product lines in various stages of development.

WeOur ~~design~~three ~~and~~major ~~manage~~categories ~~our~~contain ~~product~~a ~~life~~total ~~cycles~~of 22 ~~through~~product alines, ~~controlled~~consisting ~~and~~of ~~structured~~(i) ~~process.~~Soft WeGoods, ~~involve~~which ~~customers~~includes ~~and~~kneepads, ~~industry~~tool ~~experts~~bags, ~~from~~pouches, ~~our~~and ~~target~~tool ~~markets~~belts; in(ii) ~~the~~Metal ~~definition~~Goods, ~~and~~which ~~refinement~~ consists of ~~our~~sawhorses, ~~product~~tool ~~development.~~stands ~~Product~~and ~~development~~workbench; ~~emphasis~~and is(iii) ~~placed~~Utility onProducts, ~~meeting~~which ~~and~~includes ~~exceeding~~utility ~~industry~~knives, ~~standards~~aviation ~~and~~snips, ~~product~~shears, ~~specifications~~lasers, ~~ease~~and levels. ofWe ~~integration,~~also ~~ease~~have ofseveral ~~use,~~additional ~~cost~~categories ~~reduction,~~and ~~design-for~~product ~~manufacturability,~~lines ~~quality,~~in ~~and~~various ~~reliability~~stages of development.

~~Our~~We ~~mission~~design ~~consists,~~and ofmanage ~~providing~~our ~~products~~product tolife ~~the~~cycles through ~~building~~a controlled and ~~home~~structured ~~improvement~~process. ~~communities~~We ~~that~~involve ~~are~~customers ~~innovative,~~and ofindustry ~~superior~~experts ~~quality~~from ~~derived~~our intarget ~~part~~markets ~~from~~in ~~enlightened~~the ~~creativity~~definition ~~for~~and refinement of our ~~end~~product ~~users~~development. ~~while~~Product ~~enhancing~~development ~~performance~~emphasis is placed on meeting and exceeding industry standards and product specifications, ~~improving~~ease ~~well-being~~of integration, ~~and~~ease ~~building~~of ~~high~~use, ~~brand~~cost ~~loyalty~~reduction, design-for manufacturability, quality, and reliability.

WeOur ~~operate~~mission ~~through~~consists of providing innovative, superior-quality products to the ~~following~~building ~~subsidiaries:~~and ~~(i)~~home ~~ToughBuilt~~improvement ~~Industries~~communities UKderived ~~Limited;~~in ~~(ii)~~part ~~ToughBuilt~~from ~~Mexico;~~enlightened ~~(iii)~~creativity ~~ToughBuilt~~for ~~Armenia~~our end users while enhancing performance, ~~LLC;~~improving well-being, and ~~(iv)~~building ~~ToughBuilt~~high ~~Brazil~~brand loyalty.

We operate through the following subsidiaries: (i) ToughBuilt Industries UK Limited; (ii) ToughBuilt Mexico; (iii) ToughBuilt Armenia, LLC; (iv) ToughBuilt Columbia, and (iv) ToughBuilt Brazil.

Corporate History

We were incorporated in the State of Nevada on April 9, 2012, as Phalanx, Inc. WeOn December 29, 2015, we changed our name to ToughBuilt Industries, Inc. ~~on December 29, 2015.~~ On September 18, 2018, we effected a 1-for-2 reverse stock split of our common stock. We consummated our initial public offering pursuant to a registration statement on Form S-1 (File No: 333-226104) declared effective by the SEC on November 8, 2018, and become an SEC Exchange Act reporting company pursuant to a Form 8-A (File No. 001-38739) on November 8, 2018. On April 25, 2022, we effected a 1-for-150 reverse stock split of our common stock. On January 2, 2024, we effected a 1-for-65 reverse stock split of our common stock. All share amounts and dollar amounts have been adjusted for the reverse stock splits.

~~Business~~Recent Developments

~~The~~To ~~following~~maintain ~~highlights~~its ~~recent~~prior ~~material~~listing ~~developments~~with the Nasdaq, the Company effected a reverse stock split of its outstanding common stock on a one (1) share for sixty-five (65) shares basis, rounding up for fractional shares, and our common stock commenced trading on a post-reverse stock split basis at market open on January 2, 2024. Unless otherwise indicated, the share and per share information in this report reflects our ~~business:~~prior reverse stock splits, including the 1-for-65 stock split. The authorized number and par value of our common stock did not change as a result of the reverse stock split.

●Subsequent In first quarter of 2022, we announced that our online sales through Amazon increased by 41% to approximately $3.4 million for the quarter ended March 31, 2022, compared to approximately $2.4 million for the first quarter of 2021.Events

●On InApril ~~second~~25, ~~quarter of 2022~~2024, we ~~announced~~filed ~~that~~a ~~our~~Form ~~online~~8-K ~~sales~~with ~~through~~the ~~Amazon.com~~SEC, ~~were~~disclosing ~~$3.6~~that we ~~million.~~received ~~This represents~~ a ~~17%~~delinquency ~~increase~~notice from ~~the~~Nasdaq ~~same~~on ~~quarter~~April in19, ~~2021.~~2024, ~~Sales~~informing ~~for~~us ~~the~~that ~~first~~we ~~half~~were ofnot ~~2022~~in ~~increased~~compliance bywith ~~28%~~Nasdaq toListing ~~approximately~~Rule ~~$7.0~~5250(c)(1) due ~~million~~to ~~compared~~our failure to ~~$5.5~~file ~~million~~this ~~for~~Annual ~~the~~Report ~~first~~by ~~half~~the ofprescribed ~~2021~~due date.

●On InMay ~~July~~22, ~~2022~~2024, we ~~announced~~filed a Form 8-K with the SEC, disclosing that we ~~entered~~received ~~into~~ an ~~agreement~~additional delinquency notice in connection with ~~Ace~~our ~~Hardware~~failure ~~USA~~to file our quarterly report on Form 10-Q for the fiscal quarter ended on March 31, 2024, and ~~International~~Nasdaq required us to ~~sell~~submit 35a ~~ToughBuilt~~plan ~~products~~by June 18, 2024 to regain compliance with respect to the late Form 10-K and Form 10-Q.

●On InJune ~~August~~12, ~~2022~~2024, we submitted ~~announced~~our ~~that~~plan to Nasdaq to regain its compliance. If Nasdaq accepts our plan, we ~~started~~will have up to ~~sell~~180 93days ~~ToughBuilt~~from ~~products~~the ondue ~~Amazon~~date of the delinquent Form 10-K, or October 14, 2024 to file our delinquent Form 10-Qs. If Nasdaq does not accept the plan, we could request a hearing. It ~~(Italy)~~is not guaranteed that Nasdaq will accept our plan or grant an exception, and ~~Amazon.de~~compliance ~~(Germany)~~with other listing requirements cannot be guaranteed.

●On In August ~~2022~~7, 2024, we notified ~~announced~~The ~~our~~Nasdaq ~~entry~~Stock ~~into~~Market aLLC ~~supply~~that ~~agreement~~the ~~with~~Company ~~Elecktro3~~was Svoluntarily withdrawing its appeal to the Nasdaq Hearings Panel.~~C.C.L~~ Although the Company was earlier notified by Nasdaq on August 7, 2024, that it had regained compliance with the majority independent board and various board committee requirements, specifically under Nasdaq Listing Rules 5605(~~“Elecktro3”~~b), 5605(c)(2)(A)(i) and ~~NCC~~(ii), ~~Hardware~~5605(d)(2)(A) ~~Purchasing~~ and ~~Services~~5605(e)(1), the ~~Centers~~Company remained subject to delisting based on its continued non-compliance with Nasdaq’s filing requirement, SLas set forth in Nasdaq Listing Rule 5250(~~“NCC”~~c)(1), ~~increasing~~and ~~our~~due ~~presence~~to inconcerns ~~Spain~~raised by the Staff regarding the independence of a former director pursuant to Nasdaq Rule 5101 and IM-5101-1. As a result of the Company’s ~~hardware~~voluntary ~~marketplace~~withdrawal, by separate notice dated August 7, 2024, Nasdaq notified the Company that trading of the Company’s common stock on Nasdaq would be suspended effective with the open of business on Friday, August 9, 2024. On September 20, 2024, Nasdaq filed a Form 25 Notification of Delisting with the Securities and Exchange Commission (the “SEC”).

●The InCompany ~~August~~is ~~2022,~~diligently weworking ~~announced~~on the ~~launch~~preparation and filing of its ~~our~~Form ~~all~~10-~~new~~Qs ~~Reload~~for ~~Utility~~the ~~Knife~~quarters ending March 31, a2024, ~~groundbreaking~~June ~~new~~30, ~~cutting~~2024, ~~tool~~and ~~made~~September ~~available~~30, ~~for~~2024, ~~purchase~~respectively. ~~through~~The aCompany ~~leading~~is UScommitted ~~home~~to ensuring ~~improvement~~that ~~retailer~~this filing is completed in a timely and ~~across~~accurate ~~their~~manner, ~~global~~with ~~strategic~~the ~~network~~goal of ~~ToughBuilt’s~~meeting ~~partners~~all regulatory requirements and ~~buying~~deadlines. The ~~groups,~~efforts ~~servicing~~to ~~over~~finalize ~~15,500~~this ~~storefronts~~filing ~~around~~are ongoing, and the ~~world~~Company is focused on ensuring that all necessary documentation and financial statements are prepared in accordance with applicable accounting standards and regulations. The Company is committed to maintaining transparency and compliance with applicable reporting requirements.

●2023 InBusiness ~~September 2022, we announced our entry into the global measuring and marking market segment category with a feature-rich family of tape measures and chalk reels.~~Developments

●The Infollowing ~~September~~highlights ~~2022,~~material webusiness ~~announced that we entered into an agreement with two major wholesale tool distributors~~ developments in ~~Switzerland,~~our ~~marking~~business anduring ~~expansion~~the offiscal ~~European~~year ~~distribution~~ended ~~that~~December ~~includes more than 250 retailers~~31, ~~nationwide.~~2023:

● In ~~September~~January ~~2022~~2023, we ~~announced~~launched ~~our~~over ~~launch~~40 ~~of 21 new~~ SKUs ~~into~~in the ~~global~~Handheld ~~handsaws~~Screwdrivers segment, ~~beginning~~including ~~with~~ratcheting abit ~~line~~drivers, ofinsulated ~~seven~~screwdrivers, ~~cutting~~precision, ~~tools~~slotted, ~~featuring ToughBuilt’s QuickSet™ Double-Edge Pull Saw~~Phillips, ~~the~~Torx ~~first ever safe-folding pull saw. The new line will be available Q4 2022~~ and ~~beyond~~cabinet ~~for~~screwdrivers, ~~purchase through a leading US home improvement retailer~~ and ~~across~~demolition ~~global strategic network of partners and buying groups, servicing over 15,500 storefronts around the world~~drivers.

● In ~~September~~January ~~2022~~2023, we ~~announced~~expanded ~~major~~our ~~expansions~~distribution toagreement ~~its~~with ~~network~~Sodimac, ofSouth ~~storefronts~~America’s inlargest ~~Great~~home ~~Britain,~~improvement ~~confirming~~and ~~broad~~construction ~~new~~supplier. ~~and~~In ~~expanding~~this ~~agreements~~extended ~~with~~agreement, ~~Huws~~stores ~~Gray~~in Chile, ~~Selco~~Peru, ~~Builders~~Argentina, ~~Warehouse~~Colombia, ~~MKM~~Brazil, ~~City~~and ~~Electrical~~Uruguay ~~Factors,~~will initially begin with selling 15 SKUs in-store and ~~Carpet~~bring &23 ~~Flooring~~SKUs to Sodimac’s online marketplace.

● In ~~October~~January ~~2022~~2023, we ~~announced~~launched ~~the~~more ~~launch~~than of20 ~~an all-~~new ~~line~~SKUs ofin ~~striking~~the ~~tools~~Handheld Wrench segment, including anadjustable ~~innovative~~wrenches, ~~series~~construction ~~of ShockStop™ hammers~~wrenches, ~~marking~~and ~~their~~pipe ~~entry into the global tool-hammer market~~wrenches.

● In ~~October~~February ~~2022~~2023, we ~~announced~~launched ~~that~~our wenew ~~entered~~line ~~into~~of ~~four~~pliers ~~major~~and ~~retailers~~clamps. inThe ~~Germany~~new line, ~~which~~comprised ~~accounted~~of more than 40 SKUs, will be made available for apurchase ~~35%~~through ~~share~~leading U.S. home improvement retailers and across ToughBuilt’s growing strategic networks of ~~the~~North American and global ~~hand~~trade ~~tools~~partners ~~market~~and inbuying ~~2019~~groups, servicing over 18,900 storefronts and online portals worldwide.

● In ~~October~~August ~~2022~~2023, wethe ~~announced~~Company ~~that~~expanded ~~our~~its ~~online~~distribution ~~sales for Q3 2022 through Amazon.com were $3.9 million. This represents a 38% rise from the same quarter~~ in ~~2021. Sales for~~ the ~~9-month~~European ~~period~~Union ~~ending~~with ontwo ~~September~~major ~~30,~~retail ~~2022~~groups, ~~increased~~La byPlatforme ~~32%~~Du toBatiment ~~approximately~~and ~~$10.9 million~~Prolians, ~~compared~~servicing toprofessional ~~$8.3~~customers ~~million~~in ~~for~~France ~~the~~and ~~same period in 2021~~Spain.

3● In August 2023, the Company expanded its product distribution to customers in the United Kingdom through new business with Howdens UK and City Electrical Factors UK (“CEF”), marking entry into a combined network of more than 1,200 retail locations nationwide.

● In October ~~2022~~2023, ~~we announced~~ the ~~launch~~Company oflaunched ~~our~~its ~~all-new~~StackTech™ ~~500~~product ~~ft. Rotary Laser Level Kit. The level comes with an intuitive~~line, ~~first-of-its-kind,~~initially ~~3-piece stacking guide rod that allows for a~~ rolling ~~laser~~out ~~receiver~~more tothan ~~provide~~25 ~~bracket-free attachment and a one-handed interface for fast operation~~SKUs. ItStackTech™ ~~emits~~is aan ~~laser~~intuitive ~~that~~modular ~~displays~~storage atoolbox ~~consistent~~system, ~~accurate~~and ~~signature~~StackTech™ ~~that~~ is ~~detectable~~the upworld’s tofirst ~~500~~auto-~~feet~~locking ofstacking ~~distance~~tool ~~from~~storage ~~its~~solution ~~projection point. The kit also includes an innovative tripod~~ with a14 ~~rapid-use~~unique ~~bullseye level and telescoping legs to promote accurate placement on uneven terrain~~features.

● In October 2022, we announced that we reached a comprehensive distribution agreement with Sodimac, the largest home improvement and construction supplier in South America; beginning with Peru and Colombia with 15 ToughBuilt SKUs.2

●Our In October 2022, we announced that we expanded our distribution of 84 ToughBuilt branded products to be sold in all Sears’ Mexico locations, totaling 96 storefronts nationwide. Sears continues to be a leading supplier to its core consumers in the hardware and home improvement trades in Latin America, and its comprehensive store count and geographical presence across Mexico offer ToughBuilt an opportunity to offer a wide product range to professional end users in the country.Products

●We Increate ~~November~~innovative ~~2022,~~products ~~we announced~~ that wehelp ~~entered~~our ~~into~~customers build afaster, ~~distribution~~build ~~agreement~~stronger, ~~with~~and ~~Lamed~~work ~~LLP~~smarter. ~~(“Lamed”)~~We –accomplish ~~one~~this ofby ~~the~~listening ~~largest~~to ~~suppliers~~what ofour ~~equipment,~~customers ~~tools~~want and ~~building~~need ~~materials~~and inresearching ~~Kazakhstan.~~how professionals ~~Lamed~~work; ~~begins~~then ~~this~~we ~~agreement~~create ~~with~~tools 76that ~~ToughBuilt~~help ~~SKUs~~them ~~and~~save ~~will~~time, ~~stock~~hassle, ~~the~~and ~~entire ToughBuilt product range~~money.

●TOUGHBUILT® Inmanufactures ~~December~~and ~~2022,~~distributes wean array ~~announced~~of ~~that~~high-quality weand ~~are~~rugged ~~strengthening~~tool ~~our~~belts, ~~relationship~~tool ~~with~~bags, ~~European~~ and UKother ~~retailers~~personal ~~Wickes,~~tool ~~Toolstation~~organizer UKproducts. &We ~~Toolstation~~also ~~France.~~manufacture ~~After~~and distribute a ~~successful~~complete ~~launch~~line of ~~ToughBuilt~~knee ~~products,~~pads ~~Wickes,~~for ~~which~~various ~~has~~construction ~~230~~applications ~~locations~~and ~~across~~a ~~the~~variety ~~United~~of ~~Kingdom~~metal goods, ~~will~~including beutility ~~increasing~~knives, ~~the~~aviation ~~number~~snips and ofshears, ~~ToughBuilt~~and ~~SKUs~~digital ~~available~~measures tosuch ~~its~~as ~~customer~~lasers ~~base,~~and ~~from~~levels. 15Our toline 48of ~~SKUs~~job ~~beginning~~site ~~January~~tools ~~2023.~~and ~~Additionally,~~material ~~Toolstation~~support ~~UK,~~products ~~with~~consists ~~over~~of ~~550~~a ~~stores~~full line ~~nationwide,~~of ~~following~~miter ~~consistent~~saw and ~~impressive~~table ~~sales~~saw stands, ~~Toolstation~~sawhorses/job UKsite ~~has~~tables, ~~increased~~roller ~~its~~stands ~~ToughBuilt~~and ~~SKUs~~workbench. toOur 35products ~~total~~are ~~SKUs~~designed and ~~has~~engineered in ~~committed~~the toUnited ~~several~~States ~~national~~and ~~promotions,~~manufactured ~~contributing to a significant uplift~~ in ~~sales~~China, ~~conversions.~~India, ~~Toolstation~~and ~~France~~the ~~has~~Philippines ~~also~~under ~~more~~our ~~than~~supervision ~~doubled its original offering~~ of ~~the~~quality ~~ToughBuilt~~control. ~~range~~We todo ~~from~~not 25need togovernment approval 65for ~~SKUs~~any inof ~~total~~our products.

●Our Insoft-sided ~~December~~tool ~~2022,~~storage weline ~~announced~~is ~~the~~designed ~~launch~~for a wide range of ~~our~~Do-It-Yourself ~~new~~and professional needs. This line of ~~Long~~pouches ~~Handle~~and ~~Garden~~tool and ~~Landscaping~~accessories ~~Tools~~bags is designed to organize our customers’ tools faster and easier. ~~Beginning~~Interchangeable ~~with~~pouches 11clip ~~out~~on ofand ~~about~~off ~~150~~any ~~SKUs~~belt, ~~the~~bag ~~new~~ladder ~~line~~wall, ~~includes~~or ~~many~~vehicle. ~~innovative~~Our ~~improvements~~products let our customers carry what they want so they have it when they want it. ToughBuilt wide-mouth tool carry-all bags come in sizes from 12 inches to 30 inches. They all have steel-reinforced handles and padded shoulder straps, allowing massive loads to be easily carried. Rigid plastic hard-body lining protects everything inside. Double mesh pockets are included inside to provide complete visibility for stored items. They include a lockable zipper for added security and safety and secondary side handles for when it takes more than one to carry the load.

●These Inproducts ~~January~~have ~~2023,~~innovative designs with unique features that provide extra functionality and enhanced user experience. Patented features such as our ~~global~~exclusive ~~Amazon~~“Cliptech” mechanism ~~sales~~incorporated in some of the products in this line are unique in these products for ~~2022~~the ~~through~~industry ~~Amazon.com~~and ~~were~~have ~~approximately~~distinguished ~~$15.9~~the ~~million.~~line from ~~This~~other ~~represents~~similarly situated products; thus, we believe there is an ~~approximate~~increasing ~~34%~~appeal ~~increase~~among ~~from~~the ~~$11.9~~different ~~million~~products inof ~~Amazon~~this ~~sales~~category in the ~~2021~~professional community and among the enthusiasts.

●Soft In January 2023, we launched more than 40 new SKUs into the Handheld Screwdrivers segment, including ratcheting bit drivers, insulated screwdrivers, precision, slotted, Phillips, Torx, and cabinet screwdrivers and demolition drivers.Goods

●The Inflagship ~~January~~of ~~2023,~~the weproduct ~~expanded~~line ~~our~~is ~~distribution~~the ~~agreement~~soft goods ~~with Sodimac~~line, ~~the~~consisting ~~largest~~of ~~home~~over ~~improvement~~100 ~~and~~variations ~~construction~~of ~~supplier~~tool inpouches, ~~South~~tool ~~America.~~rigs, Intool ~~this~~belts ~~extended~~and ~~agreement~~accessories, ~~stores~~tool ~~in Chile~~bags, ~~Peru~~totes, ~~Argentina,~~a ~~Colombia,~~variety ~~Brazil~~of storage solutions, and ~~Uruguay~~office ~~will~~organizers/bags ~~initially~~for ~~begin~~laptop/tablet/cellphones, ~~with~~etc. 15Management ~~SKUs~~believes that the breadth of the line is one of the deepest in~~-store~~ the industry and ~~brings~~has 23specialized ~~SKUs~~designs to ~~Sodimac’s~~suit ~~online~~professionals ~~marketplace~~from all industry sectors, including plumbers, electricians, framers, builders, and more.

●We Inhave ~~January~~a ~~2023~~selection of over ten models of kneepads, wesome ~~launched~~with ~~more~~revolutionary and ~~than~~patented 20design ~~new~~features ~~SKUs~~that ~~into~~allow the ~~Handheld~~users ~~Wrenches~~to ~~segment,~~interchange ~~including~~components ~~adjustable~~to ~~wrenches~~suit particular conditions of use. Management believes these kneepads are among the best-performing kneepads in the industry. Our “all-terrain” knee pad protection with snap shell technology is part of our interchangeable kneepad system, which helps to customize the job site needs. They are made with superior quality using multilevel layered construction, ~~wrenches~~heavy-duty webbing, and ~~pipe~~abrasion-resistant ~~wrenches~~PVC rubber.

●Metal In February 2023, we launched our new line of pliers and clamps. The new line, comprised of more than 40 SKUs, will be made available for purchase through leading US home improvement retailers and across ToughBuilt’s growing strategic networks of North American and global trade partners and buying groups, servicing over 18,900 storefronts and online portals worldwide.Goods

4Sawhorses and Work Support Products

The second major category consists of Sawhorses and Work Support products with unique designs and robust construction targeted for the most discerning users in the industry. The innovative designs and construction of more than 18 products in this category have led to the sawhorses becoming among the best sellers of the category everywhere they are sold. The newest additions in this category include several stands and work support products that are quickly gaining recognition in the industry and are expected to position themselves in the top-tier products in a short time. Our ~~Products~~sawhorse line, miter saw, table saw & roller stands, and workbench are built to very high standards. Our sawhorse/jobsite table is fast to set up, holds 2,400 pounds, has adjustable heights, is made of all-metal construction, and has a compact design. We believe that these lines of products are slowly becoming the standard in the construction industry.

We create innovative products that help our customers build faster, build stronger, and work smarter. We accomplish this by listening to what our customers want and need and researching how professionals work, then we create tools that help them save time, hassle and money.3

TOUGHBUILT® manufactures and distributes an array of high-quality and rugged tool belts, tool bags, and other personal tool organizer products. We also manufacture and distribute a complete line of knee pads for various construction applications, a variety of metal goods, including utility knives, aviation snips and shears and digital measures such as lasers and levels. Our line of job site tools and material support products consists of a full line of miter saw and table saw stands, saw horses/job site tables, roller stands and workbench. All of our products are designed ~~and engineered~~ in-house ~~the~~to achieve ~~United~~features ~~States~~ and ~~manufactured~~benefits infor ~~China, India and~~ the ~~Philippines~~professional ~~under~~construction ~~our~~worker ~~quality~~and ~~control~~the ~~supervision.~~Do-It-Yourself ~~We do not need government approval for any of our products~~person.

~~Our~~Electronic soft-sided tool storage line is designed for a wide range of Do-It-Yourself and professional needs. This line of pouches and tool and accessories bags is designed to organize our customers’ tools faster and easier. Interchangeable pouches clip on and off any belt, bag ladder wall, or vehicle. Our products let our customers carry what they want so they have it when they want it. ToughBuilt’s wide mouth tool carry-all bags come in sizes from 12 inches to 30 inches. They all have steel-reinforced handles and padded shoulder straps which allow for massive loads to be carried with ease. Rigid plastic hard-body lining protects everything inside. Double mesh pockets included inside provide complete visibility for stored items. They include a lockable zipper for added security and safety and secondary side handles for when it takes more than one to carry the load.Goods

~~All~~Digital ofmeasures ~~these products have innovative designs with unique features that provide extra functionality~~ and enhanced user experience. Patented features such as our exclusive “Cliptech” mechanism incorporated in some of the products in this line are unique in these products for the industry and have distinguished the line from other similarly situated products thus we believe, increasing appeal among the other products of this category in the professional community and among the enthusiasts.levels

~~Soft~~TOUGHBUILT’s ~~Goods~~third major product line is digital measures and levels. These digital measures are targeted toward PROs for accurate job site measuring to ensure the job is done right and on time. These digital measures help calculate the amount of construction products needed to finish the job, such as measuring floors, tiles, and paint.

~~The~~Below ~~flagship of the product line~~ is ~~the~~just ~~soft~~a ~~goods~~sample ~~line that consists~~ of ~~over~~our ~~100~~products variations of tool pouches, tool rigs, tool belts and accessories, tool bags, totes, variety of storage solutions, and office organizers/bags for laptop/tablet/cellphones, etc. Management believes that the breadth of the line is one of the deepest in the industry and has specialized designs to suit professionals from all sectors of the industry including plumbers, electricians, framers, builders, and more.offered:

WeTool ~~have~~Belt aSets ~~selection~~Contractor ofPouches ~~over~~Padded 10Belts ~~models~~Laptop ofBags ~~kneepads,~~Bags ~~some~~& ~~with~~Totes ~~revolutionary~~Rolling and patented design features that allow the users to interchange components to suit particular conditions of use. Management believes that these kneepads are among the best performing kneepads in the industry. Our “all terrain” knee pad protection with snapshell technology is part of our interchangeable kneepad system which helps to customize the jobsite needs. They are made with superior quality using multilevel layered construction, heavy-duty webbing, and abrasion-resistant PVC rubber.Bags

~~Metal Goods~~4

~~Sawhorses~~Saw Horses Knee Pads Utility Knives and ~~Work~~Other ~~Support~~Tools ~~Products~~Levelers and Measuring Tools

The second major category consists of Sawhorses and Work Support products with unique designs and robust construction targeted for the most discerning users in the industry. The innovative designs and construction of the more than 18 products in this category have led to the sawhorses becoming among the best sellers of category everywhere they are sold. The newest additions in this category include several stands and work support products that are quickly gaining recognition in the industry and are expected to position themselves in the top tier products in a short time. Our sawhorse line, miter saw, table saw & roller stands and workbench are built to very high standards. Our sawhorse/jobsite table is fast to set up, holds 2,400 pounds, has adjustable heights, is made of all-metal construction, and has a compact design. We believe that these lines of products are slowly becoming the standard in the construction industry.StackTech™

5In October 2023, we launched our StackTech™ product line with an initial rollout of over 25 SKUs. StackTech™ is an intuitive modular storage toolbox system, and StackTech™ is the world’s first auto-locking stacking tool storage solution with 14 unique features.

~~All~~Our ofBusiness ~~our products are designed in house to achieve features and benefits for not only the professional construction worker but also for the Do-It-Yourself person.~~Strategy

~~Electronic~~Our ~~Goods~~product strategy is to develop product lines in a number of categories rather than focus on a single line of goods. We believe that this approach allows for rapid growth and wider brand recognition and may ultimately result in increased sales and profits within an accelerated period. We believe that building brand awareness of our current ToughBuilt lines of products will expand our share of the pertinent markets. Our business strategy includes the following key elements:

~~Digital~~● ~~measures~~A commitment to technological innovation achieved through consumer insight, creativity, and ~~levels~~ speed to market;

~~TOUGHBUILT’s~~● ~~third~~A ~~major~~broad ~~product~~selection ~~line~~of isproducts ~~the digital measure and levels. These digital measures are targeted towards the PROs for accurate job site measuring, to make sure the job is done right and~~ in ~~time.~~both ~~These~~brand ~~digital measures help calculated what amount of construction product is needed to finish the job. Such as measure for floors, tile,~~ and ~~paint.~~private labels;

~~Below~~● isPrompt ~~just a sample of our offered products:~~response;

~~Tool~~● ~~Belt~~Superior ~~Sets~~customer ~~Contractor~~service; ~~Pouches Padded Belts Laptop Bags Bags & Totes Rolling Bags~~and

6● Value pricing.

~~Saw~~We ~~Horses~~will ~~Knee~~continue ~~Pads~~considering ~~Utility~~other ~~Knives~~market ~~and~~opportunities while ~~Other~~focusing ~~Tools~~on ~~Levelers~~our ~~and~~customers’ ~~Measuring~~specific ~~Tools~~requirements to increase sales.

~~Our Business Strategy~~5

Our product strategy is to develop product lines in a number of categories rather than focus on a single line of goods. We believe that this approach allows for rapid growth, wider brand recognition, and may ultimately result in increased sales and profits within an accelerated time period. We believe that building brand awareness of our current ToughBuilt lines of products will expand our share of the pertinent markets. Our business strategy includes the following key elements:Market

●In Aaddition ~~commitment~~to the construction market, our products are marketed to ~~technological~~the ~~innovation~~“Do-It-Yourself” ~~achieved~~and ~~through~~home ~~consumer~~improvement ~~insight,~~marketplace. ~~creativity~~The home improvement industry has fared much better after the Great Recession than the housing market. The U.S. housing stock of more than 130 million homes requires regular investment merely to offset normal depreciation. And many households that might have traded up to more desirable homes during the downturn decided instead to make improvements to their current homes. Meanwhile, federal and ~~speed~~state stimulus programs encouraged homeowners and rental property owners to invest in energy-efficient upgrades that they might otherwise have deferred. Finally, many rental property owners reinvested in their units, responding to a surge in demand from households either facing foreclosure or nervous about buying amid the housing market; uncertainty.

●TOUGHBUILT® Aproducts ~~broad~~are ~~selection~~available ofworldwide in many major retailers, ranging from home improvement and construction products and services stores to major online outlets. Currently, we have placement in ~~both~~Lowes, ~~brand~~Home Depot, Menards, Bunnings (Australia), Princess Auto (Canada), Dong Shin Tool PIA (S. Korea), and ~~private~~others, as ~~labels;~~well as seeking to grow our sales in global markets such as Western and Central Europe, Russia and Eastern Europe, South America and the Middle East.

●Retailers ~~Prompt~~by ~~response;~~region include:

● ~~Superior~~United ~~customer~~States: ~~service;~~Lowe’s, ~~and~~Home Depot, Menards, Harbor Freight, ACE Hardware, Acme, TSC;

● ~~Value~~Canada: ~~pricing.~~Princess Auto;

We● ~~will~~United ~~continue~~Kingdom: toWickes, ~~consider~~TOOL ~~other~~STATION, ~~market~~Huws ~~opportunities~~Gray, ~~while~~Selco ~~focusing~~Builders onWarehouse, ~~our~~MKM, ~~customers’~~City ~~specific~~Electrical ~~requirements~~Factors, toand ~~increase~~Carpet ~~sales.~~& Flooring; ● Europe: Elecktro3 and NCC Hardware; ● South America: Sodimac; ● Mexico: Sears; ● Middle East: Lamed;

~~Market~~● Australia: Kincrome and Bunnings;

In● ~~addition~~New toZealand: ~~the~~Kincrome ~~construction market, our products are marketed to the “Do-It-Yourself”~~ and home improvement market place. The home improvement industry has fared much better in the aftermath of the Great Recession than the housing market. The U.S. housing stock of more than 130 million homes requires regular investment merely to offset normal depreciation. And many households that might have traded up to more desirable homes during the downturn decided instead to make improvements to their current homes. Meanwhile, federal and state stimulus programs encouraged homeowners and rental property owners to invest in energy-efficient upgrades that they might otherwise have deferred. Finally, many rental property owners, responding to a surge in demand from households either facing foreclosure or nervous about buying amid the housing market uncertainty, reinvested in their units.Bunnings;

7● South Korea: Dong Shin Tool PIA Co., Ltd.

~~TOUGHBUILT®~~We ~~products~~ are ~~available~~actively ~~worldwide~~expanding ininto ~~many~~other major retailers ranging from home improvement and construction products and services stores to major online outlets. Currently, we have placement in Lowes, Home Depot, Menards, Bunnings (Australia), Princess Auto (Canada), Dong Shin Tool PIA (S. Korea) and others, as well as seeking to grow our sales in global markets ~~such as Western and Central Europe~~, including ~~Russia and Eastern Europe,~~ South ~~America and the Middle East~~Africa.

~~Retailers~~We byare ~~region~~currently ~~include:~~ in product line reviews and discussions with Home Depot Canada, Do It Best, True Value, and other major retailers both domestically and internationally. A product line review requires the supplier to submit a comprehensive proposal that includes product offerings, prices, competitive market studies, relevant industry trends, and other information. Within the near term, management anticipates adding three major retailers to its customer base, along with several distributors and private retailers within six sectors and fifty-six targeted countries.

●Innovation ~~United~~and ~~States:~~Brand ~~Lowe’s, Home Depot, Menards, Harbor Freight, ACE Hardware, Acme, TSC;~~Strength

●Management ~~Canada:~~believes ~~Princess~~that ~~Auto;~~ToughBuilt’s robust capabilities eclipse those of many competitors. Not every distributor or factory has the ability to quickly identify industry and end-user opportunities and execute quickly to deliver winning product lines consistently. Also, in our view, most distributors and factories do not have a recognizable and reputable brand or the proven ability to reach major retailers globally to position their products and brands. We believe that we are able to take a design from concept to market within a very short period of time.

●Product ~~United Kingdom: Wickes, TOOL STATION, Huws Gray, Selco Builders Warehouse, MKM, City Electrical Factors,~~ and ~~Carpet~~Services ~~& Flooring; ● Europe: Elecktro3 and NCC Hardware; ● South America: Sodimac; ● Mexico: Sears; ● Middle East: Lamed;~~Diversification

●TOUGHBUILT® ~~Australia:~~is ~~Kincrome~~a singular brand with a driven team that is poised to scale into a highly recognized global entity. In the next few years, we aim to grow ToughBuilt with several significant subsidiaries to become the hub/platform for professionals, Do-It-Yourselfers, and ~~Bunnings;~~passionate builders everywhere. Management anticipates future subsidiaries focusing on licensing, gear, mobile, equipment rentals, and maintenance services.

~~● New Zealand: Kincrome, and Bunnings;~~6

●New ~~Russia: VSEInstrumenti.ru; and~~Products

~~● South Korea: Dong Shin Tool PIA Co., Ltd.~~Tools

WeIn ~~are~~2022, ~~actively~~we ~~expanding~~launched ~~into~~the ~~other~~following ~~markets~~product ~~including South Africa.~~lines:

We● ~~are~~Tape ~~currently~~Measures ~~in product line reviews~~ and ~~discussions~~Chalk with Home Depot Canada, Do It Best, True Value, and other major retailers both domestically and internationally. A product line review requires the supplier to submit a comprehensive proposal which includes product offerings, prices, competitive market studies, and relevant industry trends, and other information. Management anticipates, within the near term, adding to its customer base up to three major retailers, along with several distributors and private retailers within six sectors and among fifty-six targeted countries.Reels

~~Innovation~~● ~~and~~Striking ~~Brand Strength~~Tools

~~Management~~● ~~believes~~Long ~~that~~Handle ~~the~~Garden ~~robust capabilities at ToughBuilt eclipse those of many competitors as not every distributor or factory has the ability to quickly identify industry~~ and ~~end-user~~Landscaping opportunities and execute quickly to deliver winning product lines consistently. Also, in our view, most distributors and factories do not have a recognizable and reputable brand or the proven ability to reach major retailers globally to position their products and brands. We believe that we are able to take a design from concept to market within a very short period of time.Tools

~~Product~~● Pliers and ~~Services Diversification~~Clamps

~~TOUGHBUILT®~~In is2022, awe ~~singular~~launched ~~brand with a driven team that is poised to scale into a highly recognized global entity. We aim to grow ToughBuilt with several significant subsidiaries in~~ the ~~next~~following few years to become the hub/platform for professionals, Do-It-Yourselfers, and passionate builders everywhere. Management anticipates that future subsidiaries will focus on licensing, gear, mobile, equipment rentals, and maintenance services.tools:

8● Reload Utility Knife

~~New~~● ~~Products~~21 new SKUs into the global handsaws segment

~~Tools~~● 500 ft. Rotary Laser Level Kit ● 40+ new SKUs into the Handheld Screwdrivers segment ● 20 new SKUs into the Handheld Wrenches segment

In ~~2022~~2023, we launched the following product lines:

● ~~Tape~~Screw ~~Measures~~Drivers ~~and Chalk Reels~~line

● ~~Striking~~Wrench ~~Tools~~line

● ~~Long~~Pliers ~~Handle Garden~~ and ~~Landscaping Tools~~Clamps

● ~~Pliers~~StackTech™ ~~and Clamps~~line

InMobile ~~2022,~~Device ~~we launched the following tools:~~Products

●Since ~~Reload~~2013, ~~Utility~~we ~~Knife~~have been planning, designing, engineering, and sourcing the development of a new line of ToughBuilt mobile devices and accessories for the construction industry and building enthusiasts. However, due to microchip shortages, we have currently suspended this segment and put it on hold and will continue developing it in the near future.

●Sales ~~21 new SKUs into the global handsaws segment~~Strategy

●The ~~500~~devices, ~~ft.~~accessories, ~~Rotary~~and ~~Laser~~bolt-on ~~Level~~digital tools ~~Kit~~will ●be ~~40+~~sold ~~new~~through ~~SKUs~~relevant ~~into~~home ~~the~~improvement ~~Handheld~~big ~~Screwdrivers~~box ~~segment~~stores, ●direct 20marketing ~~new~~to ~~SKUs~~construction ~~into~~companies, ~~the~~direct ~~Handheld~~marketing ~~Wrenches~~of trade/wholesale ~~segment~~outlets and to professional outlets.

~~Mobile Device Products~~Suppliers

~~Since~~We ~~2013,~~use weseveral ~~have~~suppliers ~~been~~to ~~planning,~~produce ~~designing,~~our ~~engineering,~~products. We ~~and~~believe ~~sourcing~~that ~~the~~we ~~development~~could ofretain aother ~~new~~suppliers ~~line~~in ofthe ~~ToughBuilt~~event ~~mobile~~of ~~devices~~a ~~and~~slow-down ~~accessories~~or toloss beof ~~used~~one inor ~~the~~more ~~construction~~of ~~industry~~its ~~and~~current bysuppliers ~~building~~without ~~enthusiasts.~~a material ~~However,~~adverse ~~due~~effect toon ~~microchip~~our ~~shortages~~business operations, wetimeliness ~~have~~of ~~suspended~~delivery, ~~this~~or ~~segment~~quality ~~and~~of ~~will continue development in the near future~~products.

~~Sales~~Intellectual ~~Strategy~~Property

~~The~~We ~~devices~~hold several patents and trademarks of various durations and believe that we hold, ~~accessories~~have applied for, or license all of the patents, trademarks, and ~~bolt-~~other intellectual property rights necessary to conduct our business. We utilize trademarks (licensed and owned) on ~~digital~~nearly ~~tools~~all ~~will~~of beour ~~sold~~products ~~through~~and ~~relevant~~believe ~~home~~having ~~improvement~~distinctive ~~big~~marks ~~box~~that ~~stores~~are readily identifiable is an important factor in creating a market for our goods, ~~direct~~identifying ~~marketing~~our tobrands ~~construction~~and ~~companies~~our Company, ~~direct~~and ~~marketing~~distinguishing our goods from those of ~~trade/wholesale~~others. ~~outlets~~We consider our ToughBuilt®, Cliptech®, and Fearless® trademarks among our most valuable intangible assets. Trademarks registered both in and outside the U.S. are generally valid for ten years, depending on the jurisdiction, and are generally subject to ~~professional~~an ~~outlets~~indefinite number of renewals for a like period on appropriate application.

~~Suppliers~~7

WeIn ~~use~~2019, ~~several~~the ~~suppliers~~United inStates ~~producing~~Patent ~~our~~and ~~products.~~Trademark WeOffice ~~believe~~(USPTO) ~~that~~granted two wenew ~~would~~design bepatents ~~able~~(U.S. toD840,961 ~~retain~~S ~~other~~and ~~suppliers~~US inD841,635 ~~the~~S) ~~event~~that ofcover aToughBuilt’s ~~slow-down~~ruggedized ormobile ~~loss~~devices, ofwhich ~~one~~are orvalid ~~more~~for a period of ~~its~~15 ~~current~~years. ~~suppliers~~We ~~without~~also ahave ~~material~~several ~~adverse~~patents ~~effect~~pending onwith ~~our~~the ~~business~~USPTO ~~operations,~~and ~~timeliness~~anticipate ofthree ~~delivery~~ or ~~quality~~four of ~~products~~them to be granted in the near future.

~~Intellectual~~We ~~Property~~also rely on trade secret protection for confidential and proprietary information relating to our product designs and processes. Copyright protection is also utilized when appropriate.

®Domain names are valuable corporate assets for companies around the world, including ToughBuilt. They often contain a trademark, service mark, or even a corporate name and are often considered intellectual property. Our core strengths are the recognition and value of the ToughBuilt name, trademark, and domain name.

®We have entered into and will continue to enter into confidentiality, non-competition, and proprietary rights assignment agreements with our employees and independent contractors and with our suppliers to protect our intellectual property.

®We have not entered into any royalty agreements concerning our intellectual property.

9Competition

InThe ~~2019,~~tool ~~the~~equipment ~~United States Patent~~ and ~~Trademark~~accessories ~~Office~~industry ~~(USPTO)~~is highly ~~granted~~competitive ~~two new design patents (U~~worldwide.S. ~~D840,961~~We Scompete ~~and~~with ~~US D841,635 S) that cover ToughBuilt’s ruggedized mobile devices, which are valid for~~ a ~~period~~significant number of 15other ~~years.~~tool Weequipment ~~also~~and ~~have~~accessories ~~several~~manufacturers ~~patents~~and ~~pending~~suppliers to ~~with~~ the ~~USPTO~~construction, ~~and~~home ~~anticipate~~improvement, ~~three~~and orDo-It-Yourself ~~four~~industry, many of ~~them~~which tohave ~~be granted in~~ the ~~near future.~~following:

We● ~~also~~Significantly ~~rely~~greater onfinancial ~~trade~~resources ~~secret~~than ~~protection~~we ~~for our confidential and proprietary information relating to our design and processes for our products. Copyright protection is also utilized when appropriate.~~have;

~~Domain~~● ~~names~~More ~~are~~comprehensive aproduct valuable corporate asset for companies around the world, including ToughBuilt. Domain names often contain a trademark or service mark or even a corporate name and are often considered intellectual property. The recognition and value of the ToughBuilt name, trademark, and domain name are our core strengths.lines;

We● ~~have~~Longer-standing ~~entered~~relationships ~~into~~with ~~and will continue to enter into confidentiality~~suppliers, ~~non-competition~~manufacturers, and proprietary rights assignment agreements with our employees and independent contractors. We have entered into and will continue to enter into confidentiality agreements with our suppliers to protect our intellectual property.retailers;

We● ~~have~~Broader ~~not~~distribution ~~entered into any royalty agreements with respect to our intellectual property.~~capabilities;

~~Competition~~● Stronger brand recognition and loyalty; and

● The ~~tool~~ability ~~equipment~~to ~~and~~invest ~~accessories~~substantially ~~industry~~more isin ~~highly~~product ~~competitive~~advertising ~~on a worldwide basis. We compete with a significant number of other tool equipment~~ and ~~accessories manufacturers and suppliers to the construction, home improvement, and Do-It-Yourself industry, many of which have the following:~~sales.

●Our ~~Significantly~~competitors’ greater capabilities in the above areas enable them to better differentiate their products from ours, gain stronger brand loyalty, withstand periodic downturns in the construction and home improvement equipment and product industries, compete effectively based on price and production, and more quickly develop new products. These and other industry-wide downward pressures on gross margins can adversely affect our financial ~~resources~~condition and ~~than~~operating weresults. ~~have;~~Principal competitive factors important to us include price, product features, relative price/performance, product quality and reliability, design innovation, marketing and distribution capability, service and support, and corporate reputation.

~~● More comprehensive product lines;~~Seasonality

●Our ~~Longer-standing~~company’s ~~relationships~~revenues ~~with~~are ~~suppliers,~~not ~~manufacturers~~seasonal. However, ~~and~~we ~~retailers;~~usually experience a spike in sales when introducing new products.

●Human ~~Broader~~Capital ~~distribution capabilities;~~Resources

●As ~~Stronger~~of ~~brand~~December ~~recognition~~31, 2023, we had 165 employees, including our four executive officers and ~~loyalty;~~eight independent contractors and consultants. We engage consultants on an as-needed basis to supplement existing staff. Our employees, consultants, and contractors involved with sensitive and proprietary information have signed non-disclosure agreements. Since the onset of the COVID-19 pandemic, we have taken an integrated approach to helping our employees manage their work and personal responsibilities, with a strong focus on employee well-being, health, and safety.

●Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing, and integrating our existing and new employees, advisors, and consultants. The ~~ability~~principal purposes of our equity and cash incentive plans are to ~~invest~~attract, ~~substantially~~retain, ~~more~~and inreward ~~product~~personnel ~~advertising~~through the granting of stock-based and ~~sales~~cash-based compensation awards to increase stockholder value and the success of our Company by motivating such individuals to perform to the best of their abilities and achieve our objectives.

Our competitors’ greater capabilities in the above areas enable them to better differentiate their products from ours, gain stronger brand loyalty, withstand periodic downturns in the construction and home improvement equipment and product industries, compete effectively on the basis of price and production, and more quickly develop new products. Our financial condition and operating results can be adversely affected by these and other industry-wide downward pressures on gross margins. Principal competitive factors important to us include price, product features, relative price/performance, product quality and reliability, design innovation, marketing and distribution capability, service and support, and corporate reputation.8

~~Seasonality~~Available Information

Our ~~company’s~~website ~~revenues~~address is www.toughbuilt.com. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, any amendments to those reports, and proxy and registration statements filed or furnished with the SEC are ~~not~~available ~~seasonal~~free of charge through our website. ~~However,~~We make these materials available through our website as soon as reasonably practicable after we ~~usually~~electronically ~~experience~~file asuch ~~spike~~materials with or furnish such materials to the SEC. The reports filed with the SEC by our executive officers and directors pursuant to Section 16 under the Exchange Act are also made available, free of charge, on our website as soon as reasonably practicable after copies of those filings are provided to us by those persons. These materials can be accessed through our website’s “Investor Relations” section. The information contained in, ~~sales~~or ~~when~~that wecan ~~introduce~~be ~~new~~accessed ~~products~~through, our website is not part of this Annual Report on Form 10-K.

~~Human~~Item ~~Capital~~1A. ~~Resources~~Risk Factors.

AsOur ofbusiness ~~December~~is ~~31,~~subject ~~2023~~to many risks and uncertainties, wewhich ~~had~~may aaffect ~~total~~our future financial performance. If any of ~~259~~the ~~employees~~events or circumstances described below occur, ~~including~~our business and financial performance could be adversely affected, our ~~four~~actual ~~executive~~results ~~officers~~could differ materially from our expectations, and aour ~~total~~stock price ofcould ~~eight independent~~decline. ~~contractors~~The risks and ~~consultants~~uncertainties discussed below are not the only ones we face. WeThere ~~engage~~may ~~consultants~~be onadditional anrisks ~~as-needed~~and ~~basis~~uncertainties not currently known to ~~supplement~~us ~~existing~~or ~~staff.~~that ~~All~~we ofcurrently do not believe are material that may adversely affect our ~~employees~~business and financial performance. Before making an investment decision, ~~consultants~~you should carefully consider the risks described below and all other information included in this report, including our financial statements and ~~contractors~~related notes. The statements in this report that are ~~involved~~not ~~with~~historical ~~sensitive~~facts are forward-looking statements and~~/or~~ ~~proprietary~~are ~~information~~subject ~~have~~to ~~signed~~risks ~~non-disclosure~~and ~~agreements.~~uncertainties ~~Since~~that ~~the~~could ~~onset~~cause ofactual ~~the~~results ~~COVID~~to differ materially from those set forth in or implied by forward-19looking ~~pandemic,~~statements. weIf ~~have~~any ~~taken~~of anthe ~~integrated~~following ~~approach~~risks toactually ~~helping~~occur, our ~~employees~~business, ~~manage~~financial ~~their~~condition, ~~work~~or ~~and~~results ~~personal~~of operations ~~responsibilities~~could be harmed. In that case, ~~with~~the atrading ~~strong~~price ~~focus~~of onour ~~employee~~common ~~well-being,~~stock ~~health~~could decline, and ~~safety~~investors in our securities may lose all or part of their investment.

Risks Related to Our Company

~~human~~There is substantial doubt about our ability to continue as a going concern.

We have incurred substantial operating losses since our inception. As reflected in the consolidated financial statements, we had an accumulated deficit of approximately $191.4 million at December 31, 2023 a net loss of approximately $46.4 million, and approximately $5.1 million of net cash used in operating activities for the year ended December 31, 2023. The accompanying consolidated financial statements in this Annual Report on Form 10-K have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As such, we believe that we will need additional financing to fund our operations and develop and commercialize our technology. Also, we will seek to obtain additional capital through debt or sale of equity financing or other arrangements to fund operations; however, there can be no assurance that we will be able to raise needed capital under acceptable terms, if at all. The sale of additional equity may dilute existing stockholders, and newly issued shares may contain senior rights and preferences compared to currently outstanding shares of common stock. Issued debt securities may contain covenants and limit our ability to pay dividends or make other distributions to stockholders. If we cannot obtain such additional financing, future operations will need to be scaled back or discontinued. Due to these factors, management believes that there is substantial doubt in our ability to continue as a going concern for the twelve months from the issuance of these consolidated financial statements.

~~resources~~9

~~objectives~~We ~~include,~~will asrequire ~~applicable,~~additional ~~identifying,~~capital ~~recruiting,~~in ~~retaining,~~order to ~~incentivizing~~achieve ~~and~~commercial ~~integrating~~success ~~our existing~~ and, ~~new~~if ~~employees~~necessary, ~~advisors~~to ~~and~~finance ~~consultants.~~future ~~The~~losses ~~principal~~from ~~purposes~~operations ofas ~~our~~we ~~equity~~endeavor ~~and cash incentive plans are~~ to ~~attract~~build revenue, ~~retain~~but ~~and~~we ~~reward~~do ~~personnel~~not ~~through~~have ~~the~~any ~~granting~~commitments ~~of stock-based and cash-based compensation awards, in order~~ to ~~increase~~obtain ~~stockholder~~such ~~value~~capital and ~~the~~we ~~success~~cannot ofassure ~~our~~you ~~Company~~that bywe ~~motivating~~will ~~such~~be ~~individuals~~able to ~~perform~~obtain toadequate capital ~~the~~as ~~best of their abilities~~ and ~~achieve~~when ~~our objectives~~required.

10We may not be able to generate any profit in the foreseeable future. For the year ended December 31, 2023, we reported a net loss of $46.4 million, compared to a net loss of $39.3 million for the year ended December 31, 2022. Accordingly, there is no assurance that we will realize profits in fiscal 2024 or thereafter. If we fail to generate profits from our operations, we will not be able to sustain our business. We may never report profitable operations or generate sufficient revenue to maintain our Company as a going concern. We continue to control our cash expenses as a percentage of expected revenue on an annual basis and thus may use our cash balances in the short term to invest in revenue growth; however, we cannot give assurance that we can increase our cash balances or limit our cash consumption and thus maintain sufficient cash balances for our planned operations. Future business demands may lead to cash utilization at levels greater than recently experienced. We may need to raise additional capital in the future. However, we cannot assure you that we will be able to raise additional capital on acceptable terms or at all. Our inability to generate profits could have an adverse effect on our financial condition, results of operations, and cash flows. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations; Liquidity and Capital Resources.”

~~Available~~We ~~Information~~have limited management and staff and will be dependent upon partnering arrangements.

~~www~~As of December 31, 2023, we have eight (8) independent contractors and consultants.~~toughbuilt~~ Our dependence on third-party consultants and service providers creates a number of risks, including but not limited to, the possibility that such third parties may not be available to us as and when needed, and that we may not be able to properly control the timing and quality of work conducted with respect to our projects.~~com~~ If we experience significant delays in obtaining the services of such third parties or poor performance by such parties, our results of operations and stock price will be materially adversely affected.

~~Item~~The ~~1A.~~loss ~~Risk~~of ~~Factors~~any of our executive officers could adversely affect us.

~~Our~~We ~~business~~currently isonly ~~subject~~have tofour ~~many~~(4) ~~risks~~executive ~~and~~officers. We ~~uncertainties,~~depend ~~which~~on ~~may affect~~ our ~~future~~executive ~~financial~~officers’ ~~performance.~~extensive Ifexperience ~~any~~to ofimplement ~~the~~our ~~events~~acquisition orand ~~circumstances~~growth ~~described~~strategy, ~~below~~specifically, ~~occur~~Michael Panosian, our ~~business~~President and ~~financial~~Chief ~~performance~~Executive ~~could~~Officer, beand ~~adversely~~Joshua ~~affected~~Keeler, our ~~actual~~Vice ~~results~~President ~~could~~of ~~differ~~Research ~~materially~~and ~~from~~Development. ~~our~~The ~~expectations,~~loss ~~and~~of the services ~~price~~of any of our ~~stock~~executive officers could ~~decline.~~negatively ~~The~~impact ~~risks~~our operations and ~~uncertainties~~our ~~discussed~~ability ~~below~~to ~~are~~implement ~~not~~our ~~the~~strategy. ~~only~~Although ~~ones~~ we maintain ~~face.~~a ~~There~~“key ~~may~~man” belife ~~additional~~insurance ~~risks~~policy ~~and~~only ~~uncertainties~~for ~~not~~Michael ~~currently~~Panosian, ~~known to us or that~~ we ~~currently~~ do not ~~believe~~carry ~~are~~any ~~material~~key ~~that~~man ~~may~~life ~~adversely~~insurance ~~affect~~for any of our ~~business~~other ~~and financial performance. You should carefully consider the risks described below~~employees, ~~together~~and ~~with all other information included in this report including~~ our ~~financial~~key ~~statements~~man ~~and~~insurance ~~related~~policy ~~notes,~~for ~~before making an investment decision~~Mr. ~~The~~Panosian ~~statements~~is ~~contained~~for in$2 ~~this~~million ~~report that are not historic facts are forward-looking statements that are subject to risks~~ and ~~uncertainties~~will ~~that~~be ~~could~~insufficient ~~cause actual results~~ to ~~differ~~recover ~~materially~~any losses resulting from ~~those set forth in or implied by forward-looking statements~~Mr. IfPanosian’s ~~any~~death ~~of the following risks actually occurs, our business, financial condition~~ or ~~results~~disability ofwhile ~~operations~~serving ~~could~~as ~~be harmed. In that case, the trading price of~~ our ~~common~~President ~~stock could decline,~~ and ~~investors~~Chief inExecutive ~~our securities may lose all or part of their investment~~Officer.

~~Risks Related to Our Company~~10

~~Going~~We ~~Concern~~may be unable to attract the necessary employees or be able to prevent our current employees from leaving us.

WeTo ~~have~~induce ~~incurred~~valuable ~~substantial~~employees ~~operating~~to ~~losses~~remain ~~since~~with ~~our inception. As reflected~~ us, in ~~the~~addition ~~consolidated~~to ~~financial~~salary ~~statements, we had an accumulated deficit of approximately $145 million at December 31, 2022 a net loss of approximately $39.3 million,~~ and ~~approximately $37.3 million of net~~ cash ~~used in operating activities for the year ended December 31~~incentives, ~~2022.~~we ~~The accompanying consolidated financial statements in this Annual Report on Form 10-K~~ have ~~been~~provided ~~prepared~~restricted onstock ~~a going concern basis, which contemplates the realization of assets~~ and ~~satisfaction~~stock ofoptions ~~liabilities~~that invest ~~the~~over ~~normal course of business~~time. WeThe ~~anticipate~~value ~~incurring~~to ~~additional~~employees of ~~losses~~stock ~~until~~options ~~such time, if ever,~~ that wevest ~~can~~over ~~obtain~~time ~~marketing~~may ~~approval~~be tosignificantly ~~sell,~~affected ~~and~~by ~~then~~movements ~~generate~~in ~~significant sales, of~~ our ~~technology~~stock ~~that~~price ~~is currently in development. As such we believe~~ that ~~additional~~are ~~financing~~beyond ~~will be needed by us to fund~~ our ~~operations~~control and tomay at ~~develop~~any ~~and~~time ~~commercialize~~be ~~our~~insufficient ~~technology. Also, we will seek~~ to ~~obtain~~counteract ~~additional~~more ~~capital~~lucrative ~~through~~offers ~~the~~from ~~sale of debt or equity financings or~~ other ~~arrangements~~companies. toDespite ~~fund~~our ~~operations;~~efforts ~~however, there can be no assurance that we will be able~~ to ~~raise~~retain ~~needed~~valuable ~~capital under acceptable terms~~employees, members ~~if at all. The sale~~ of ~~additional~~our ~~equity~~management may ~~dilute~~terminate ~~existing~~their ~~stockholders~~employment ~~and~~with ~~newly issued shares may contain senior rights and preferences compared to currently outstanding shares of common stock~~us. ~~Issued~~Our ~~debt~~success ~~securities~~also ~~may~~depends ~~contain~~on ~~covenants and limit~~ our ability to ~~pay~~continue ~~dividends or make other distributions~~ to ~~stockholders. If we are unable to obtain such additional financing~~attract, ~~future operations would need to be scaled back or discontinued. Due to these factors~~retain, and ~~management~~motivate ~~believes that there is substantial doubt in our ability to continue as a going concern for twelve months from the issuance of these consolidated financial statements~~employees.

11If the hosts of third-party marketplaces limit our access to such marketplaces, our operations and financial results may be adversely affected.

Third-party marketplaces account for a portion of our revenues. Our sales through online third-party marketplaces represented a combined 15% of total sales for the fourth quarter ended December 31, 2023. We anticipate that sales of our products on third-party marketplaces will ~~require~~continue ~~additional~~to ~~capital~~account infor ~~order~~a portion of our revenues. In the future, the loss of access to ~~achieve~~these ~~commercial~~third-party marketplaces, or any significant cost increases from operating on the marketplaces, could significantly reduce our revenues, and the success of our business depends partly on continued access to these third-party marketplaces. Our relationships with our third-party marketplace providers could deteriorate due to various factors, such as if they become concerned about our ability to deliver quality products on a timely basis or to protect a third party’s intellectual property. In addition, third-party marketplace providers could prohibit our access to these marketplaces if we are not able to meet the applicable required terms of use. Loss of access to a marketplace channel could result in lower sales, and as a result, our business and financial results may suffer.

ifWe ~~necessary~~are highly dependent upon manufacturers in China, India, and Philippines, and an interruption in such relationships or our ability to obtain products from them could adversely affect our business and results of operations.

Our products are manufactured by factories in China, India, and Philippines. Our ability to ~~finance~~acquire ~~future~~products ~~losses~~from our suppliers in amounts and on terms acceptable to us depends on a number of unforeseeable factors and may be beyond our control. For example, financial or operational difficulties that some of our manufacturers may face could result in an increase in the cost of the products we purchase from ~~operations~~them. asIf we ~~endeavor~~do not maintain our relationships with our existing manufacturers or fail to ~~build~~find ~~revenue~~replacement or additional manufacturers in a timely manner and on acceptable commercial terms, we may not be able to continue to offer our products at competitive prices and any failure to deliver those products to our customers in a timely and accurate manner may damage our reputation and brand and could cause us to lose customers and our sales could decline.

~~but~~Disruptions wein doour ~~not~~supply ~~have~~chain ~~any commitments to obtain such capital~~ and weother factors ~~cannot~~affecting ~~assure~~the ~~you~~distribution ~~that~~of weour ~~will~~merchandise becould ~~able~~adversely toimpact ~~obtain~~our ~~adequate capital as and when required~~business.

~~Management’s~~A ~~Discussion~~disruption within our logistics or supply chain network could adversely affect our ability to deliver inventory in a timely manner, which could impair our ability to meet customer demand for products and ~~Analysis~~result in lost sales, increased supply chain costs or damage to our reputation. Such disruptions may result from damage or destruction to our distribution centers, weather-related events, natural disasters, international trade disputes or trade policy changes or restrictions, tariffs or import-related taxes, third-party strikes, lock-outs, work stoppages or slowdowns, shortages of ~~Financial~~supply ~~Condition~~chain labor, ~~and~~shipping ~~Results~~capacity, third-party contract disputes, supply or shipping interruptions or costs, military conflicts, acts of ~~Operations;~~terrorism, public ~~Liquidity~~health issues, including pandemics or quarantines (such as the COVID-19 pandemic) and ~~Capital~~related ~~Resources~~shutdowns, re-openings or other actions by the government, civil unrest or other factors beyond our control. In recent years, U.S. ports, particularly those located on the West Coast, have been impacted by capacity constraints, port congestion and delays, periodic labor disputes, security issues, weather-related events, and natural disasters, which the pandemic has further exacerbated. Disruptions to our supply chain due to any of the above factors could negatively impact our financial performance or condition.

WeIn ~~have~~addition, ~~limited~~a ~~management~~significant percentage of our product production, downstream processing, and ~~staff~~sales occur outside the United States or with vendors, suppliers, or customers located outside the United States. If the United States places tariffs or other restrictions on foreign imports from China, India, the Philippines, or other countries, or any related counter-measures are taken, our business, financial condition, results of operations, and ~~will~~growth prospects may be ~~dependent~~harmed. ~~upon~~Tariffs ~~partnering~~may ~~arrangements~~increase our cost of goods, which could result in lower gross margins on certain of our products. If we raise prices to account for any such increase in costs of goods, the competitiveness of the affected products could potentially be reduced. In either case, increased tariffs on imports from China, India, Philippines, or other countries could materially and adversely affect our business, financial condition and results of operations. Trade restrictions and sanctions implemented by the United States or other countries, including sanctions imposed on Russia by the United States and other countries due to Russia’s recent invasion of Ukraine, could materially and adversely affect our business, financial condition, and results of operations.

We are highly dependent upon manufacturers in China, India, and Philippines, which exposes us to complex regulatory regimes and logistical challenges.

AsWe acquire majority of ~~March~~our ~~31,~~products ~~2023,~~from wemanufacturers and ~~have~~distributors alocated ~~total~~in ~~eight independent~~China, ~~contractors~~India, and ~~consultants~~Philippines. ~~Our~~We ~~dependence~~do onnot ~~third-party~~have ~~consultants~~any ~~and~~long-term ~~service~~contracts ~~providers~~or ~~creates~~exclusive aagreements ~~number~~with ofour foreign ~~risks,~~suppliers ~~including~~that ~~but~~would ~~not~~ensure ~~limited~~our ability to, acquire the ~~possibility~~types ~~that~~and ~~such~~quantities ~~third~~of ~~parties~~products ~~may~~we ~~not~~desire beat ~~available~~acceptable toprices ~~us as~~ and ~~when~~in a ~~needed,~~timely ~~and~~manner or that wewould ~~may~~allow ~~not~~us ~~be able~~ to ~~properly~~rely ~~control~~on ~~the~~customary ~~timing~~indemnification ~~and~~protection ~~quality~~with ofrespect ~~work~~to ~~conducted~~any ~~with~~third-party ~~respect~~claims similar to some of our ~~projects~~U.S. Ifsuppliers. weIn ~~experience~~addition, ~~significant~~because ~~delays~~many inof ~~obtaining~~our ~~the~~suppliers ~~services~~are outside of ~~such~~the ~~third~~United ~~parties~~States, oradditional ~~poor~~factors ~~performance~~could byinterrupt our ~~such~~relationships ~~parties,~~or affect our ~~results~~ability ofto ~~operations~~acquire ~~and~~the ~~stock~~necessary ~~price~~products ~~will~~on beacceptable ~~materially~~terms, ~~adversely affected.~~including:

~~The~~● ~~loss~~political, ofsocial, ~~any~~and economic instability and the risk of ~~our~~war ~~executive~~or ~~officers~~other ~~could~~international ~~adversely~~incidents ~~affect~~in usChina, India or the Philippines;

.● fluctuations in foreign currency exchange rates that may increase our cost of products;

We currently only have four executive officers. We are dependent on the extensive experience of our executive officers to implement our acquisition and growth strategy, specifically, Michael Panosian, our President and Chief Executive Officer, and Joshua Keeler, our Vice President of Research and Development. The loss of the services of any of our executive officers could have a negative impact on our operations and our ability to implement our strategy. Although we maintain a “key man” life insurance policy only for Michael Panosian, we do not carry any key man life insurance for any of our other employees and our key man insurance policy for Mr. Panosian is for $1 million and will be insufficient to recover any losses resulting from Mr. Panosian’s death or disability while serving as our President and Chief Executive Officer.11

We● ~~may~~the beimposition ~~unable~~of toduties, ~~attract~~taxes, ~~the~~tariffs, ~~necessary employees~~ or beother ~~able~~charges toon ~~prevent our current employees from leaving us~~imports;

.● difficulties in complying with import and export laws, regulatory requirements, and restrictions;

To● ~~induce~~natural ~~valuable~~disasters ~~employees~~and topublic ~~remain~~health ~~with us~~emergencies, insuch ~~addition~~as tothe ~~salary~~recent ~~and~~outbreak ~~cash~~of ~~incentives,~~a wenovel ~~have~~strain ~~provided restricted stock and stock options that vest over time. The value to employees~~ of ~~stock~~coronavirus ~~options~~identified ~~that~~first ~~vest over time may be significantly affected by movements~~ in ~~our~~Wuhan, ~~stock~~Hubei ~~price~~Province, ~~that~~China, ~~are beyond our control~~ and ~~may~~having atturned ~~any~~into ~~time~~a beglobal ~~insufficient~~pandemic tothat ~~counteract~~has ~~more~~impacted ~~lucrative~~a ~~offers~~number ~~from other companies. Despite our efforts to retain valuable employees, members~~ of ~~our~~countries ~~management~~from ~~may~~which ~~terminate~~we ~~their~~purchase ~~employment with us. Our success also depends on our ability to continue to attract, retain and motivate employees.~~products;

If● ~~the~~import ~~hosts~~shipping ofdelays ~~third-party~~resulting ~~marketplaces~~from ~~limit~~foreign ~~our~~or ~~access~~domestic tolabor ~~such~~shortages, ~~marketplaces~~slowdowns, or stoppage;

~~our~~● ~~operations~~the ~~and~~failure ~~financial~~of ~~results~~local ~~may~~laws beto ~~adversely~~provide ~~affected~~a sufficient degree of protection against infringement of our intellectual property;

~~Third-party~~● ~~marketplaces~~imposition ~~account for a portion~~ of ~~our~~new ~~revenues.~~legislation ~~Our~~relating sales through online third-party marketplaces represented a combined 16% of total sales for the fourth quarter ended December 31, 2022. We anticipate that sales of our products on third-party marketplaces will continue to ~~account~~import ~~for~~quotas ~~a portion of our revenues. In the future, the loss of access to these third-party marketplaces,~~ or ~~any~~other ~~significant~~restrictions ~~cost~~that ~~increases~~may ~~from~~limit ~~operating on~~ the ~~marketplaces,~~quantity ~~could significantly reduce our revenues, and the success~~ of our ~~business~~product ~~depends~~that ~~partly~~may onbe ~~continued~~imported ~~access~~into tothe ~~these third-party marketplaces~~U.S. ~~Our~~from ~~relationships~~countries ~~with our third-party marketplace providers could deteriorate as a result of a variety of factors, such as if they become concerned about our ability to deliver quality products on a timely basis~~ or toregions ~~protect~~where ~~a third-party’s intellectual property. In addition, third-party marketplace providers could prohibit our access to these marketplaces if~~ we ~~are~~do ~~not able to meet the applicable required terms of use. Loss of access to a marketplace channel could result in lower sales, and as a result, our~~ business ~~and financial results may suffer.~~;

12● financial or political instability in any of the countries in which our product is manufactured;

We● ~~are~~potential ~~highly~~recalls ~~dependent~~or ~~upon~~cancellations ~~manufacturers~~of inorders ~~China~~for any product that does not meet our quality standards;

~~India~~● ~~and~~disruption ~~the~~of ~~Philippines~~imports ~~and~~by anlabor ~~interruption~~disputes ~~in such relationships~~ or ~~our~~strikes ~~ability~~and tolocal ~~obtain products from them could adversely affect our~~ business ~~and results of operations~~practices;

~~Our~~● ~~products~~political ~~are~~or ~~manufactured~~military byconflict ~~factories~~involving ~~located in China, India, and~~ the ~~Philippines~~U.S. ~~Our~~or ~~ability~~any tocountry ~~acquire~~in ~~products~~which ~~from~~ our suppliers ~~in amounts and on terms acceptable to us is dependent on a number of factors which~~ are ~~unforeseeable and may be beyond our control. For example~~located, ~~financial~~which ~~or operational difficulties that some of our manufacturers may face~~ could ~~result~~cause ina andelay ~~increase~~ in the ~~cost~~transportation of ~~the~~our products, wean ~~purchase~~increase ~~from them. If we do not maintain our relationships with our existing manufacturers or fail to find replacement or additional manufacturers~~ in atransportation ~~timely~~costs ~~manner~~ and onadditional ~~acceptable~~risk ~~commercial terms, we may not be able~~ to ~~continue~~product tobeing ~~offer~~damaged ~~our products at competitive prices~~ and ~~any~~delivered ~~failure~~on ~~to deliver those products to our customers in a timely and accurate manner may damage our reputation and brand and could cause us to lose customers and our sales could decline.~~time;

~~Disruptions~~● inheightened ~~our~~terrorism ~~supply~~security ~~chain~~concerns, ~~and~~which ~~other~~could ~~factors~~subject ~~affecting~~imported ~~the~~goods ~~distribution~~to ofadditional, ~~our~~more ~~merchandise~~frequent ~~could~~or ~~adversely~~more ~~impact~~thorough ~~our~~inspections, ~~business~~leading to delays in deliveries or impoundment of goods for extended periods;

● inability of our non-U.S. suppliers to obtain adequate credit or access liquidity to finance their operations; and

A● ~~disruption within~~ our ~~logistics or supply chain network could adversely affect our~~ ability to ~~deliver~~enforce inventory in a timely manner, which could impair our ability to meet customer demand for products and result in lost sales, increased supply chain costs or damage to our reputation. Such disruptions may result from damage or destruction to our distribution centers, weather-related events, natural disasters, international trade disputes or trade policy changes or restrictions, tariffs or import-related taxes, third-party strikes, lock-outs, work stoppages or slowdowns, shortages of supply chain labor, shipping capacity, third-party contract disputes, supply or shipping interruptions or costs, military conflicts, acts of terrorism, public health issues, including pandemics or quarantines (such as the COVID-19 pandemic) and related shut-downs, re-openings or other actions by the government, civil unrest or other factors beyond our control. In recent years, U.S. ports, particularly those located on the West coast, have been impacted by capacity constraints, port congestion and delays, periodic labor disputes, security issues, weather-related events and natural disasters, which have been further exacerbated by the pandemic. Disruptions to our supply chain due to any ofagreements ~~the~~with ~~factors listed above could negatively impact~~ our ~~financial~~foreign ~~performance or financial condition~~suppliers.

InIf ~~addition,~~we awere ~~significant~~unable ~~percentage~~to ofimport ~~the production, downstream processing and sales of our~~ products ~~occurs outside the United States or with vendors, suppliers or customers located outside the United States. If tariffs or other restrictions are placed by the United States on foreign imports~~ from China, India, orand ~~the~~ Philippines or ~~other~~import ~~countries,~~them ~~or any related counter~~cost-~~measures are taken~~effectively, ~~our~~we ~~business, financial condition, results of operations and growth prospects may be harmed. Tariffs may increase our cost of goods, which~~ could ~~result~~suffer inirreparable ~~lower~~harm ~~gross margin on certain of our products. If we raise prices~~ to account for any such increase in costs of goods, the competitiveness of the affected products could potentially be reduced. In either case, increased tariffs on imports from China, India or the Philippines or other countries could materially and adversely affect our business, ~~financial condition~~ and ~~results~~be ofrequired ~~operations. Trade restrictions and sanctions implemented by the United States or other countries, including sanctions imposed on Russia by the United States and other countries due~~ to significantly ~~Russia’s~~curtail ~~recent~~our ~~invasion of Ukraine~~operations, ~~could~~file ~~materially~~for ~~and adversely affect our business~~bankruptcy, ~~financial~~or ~~condition~~cease ~~and results of~~ operations.

WeFrom ~~are~~time ~~highly~~to ~~dependent~~time, ~~upon~~we ~~manufacturers~~may also have to resort to administrative and court proceedings to enforce our legal rights with foreign suppliers. However, it may be more challenging to evaluate the level of legal protection we enjoy in China, India, and Philippines and the corresponding outcome of any administrative or court proceedings than in comparison to our suppliers in the United States.

~~India and the Philippines~~12

~~which~~Increasing ~~exposes~~commodity usprices tosuch ~~complex~~as ~~regulatory~~fuel, plastic, ~~regimes~~ and ~~logistical~~metal ~~challenges~~could negatively impact our profit margins.

WePrices ~~acquire~~of acertain ~~majority~~commodity ofproducts, ~~our~~including raw ~~products~~materials, ~~from~~are ~~manufacturers~~historically volatile and ~~distributors~~are ~~located~~subject to fluctuations arising from changes in ~~China,~~domestic ~~India~~and international supply and demand, ~~the~~labor ~~Philippines.~~costs, Wecompetition, domarket ~~not~~speculation, ~~have~~government ~~any~~regulations, ~~long-term~~trade ~~contracts~~restrictions, orand ~~exclusive~~tariffs. ~~agreements~~Increasing ~~with~~prices ~~our~~in ~~foreign~~the component ~~suppliers~~materials ~~that~~for ~~would~~the ~~ensure~~parts of our ~~ability~~goods tomay ~~acquire~~impact the ~~types~~availability, the quality and ~~quantities~~the price of our products, weas ~~desire~~suppliers atsearch for ~~acceptable~~alternatives ~~prices~~to existing materials and inincrease athe ~~timely~~prices ~~manner~~they orcharge. We cannot ensure that ~~would~~we ~~allow~~can usrecover toall ~~rely~~the onincreased ~~customary~~costs through ~~indemnification~~price ~~protection~~increases, ~~with~~and ~~respect~~our suppliers may not continue to ~~any~~provide ~~third-party~~consistent ~~claims~~quality ~~similar~~products toas ~~some~~they ofmay ~~our~~substitute ~~U.S.~~lower-cost materials ~~suppliers.~~to Inmaintain ~~addition~~pricing levels, ~~because~~all ~~many~~ of which may have a negative impact on our ~~suppliers~~business ~~are~~and ~~outside~~results of ~~the~~operations. ~~United~~Our ~~States,~~cost ~~additional~~base also ~~factors~~reflects ~~could~~significant ~~interrupt~~elements ~~our~~for ~~relationships~~freight, orincluding ~~affect~~fuel. ~~our~~Rapid ~~ability~~and tosignificant ~~acquire~~changes ~~the~~in ~~necessary~~commodity ~~products~~prices onsuch ~~acceptable~~as ~~terms~~fuel, ~~including:~~plastic, and metal may negatively affect our profit margins.

●Our ~~political,~~results ~~social,~~of ~~and~~operations could be negatively impacted by inflationary or deflationary economic ~~instability~~conditions, ~~and~~which ~~the~~could ~~risk~~affect ofour ~~war~~ability orto ~~other~~obtain ~~international~~goods ~~incidents~~from inour ~~Asia,~~suppliers ~~India~~in ora timely ~~the~~and ~~Philippines;~~cost-effective manner.

●Our ~~fluctuations~~profitability may be negatively impacted if we are unable to mitigate any inflationary increases through various customer pricing actions and cost-reduction initiatives. Conversely, in ~~foreign~~the ~~currency~~event ~~exchange~~there ~~rates~~is ~~that~~deflation, we may ~~increase~~experience pressure from our customers to reduce prices, and there can be no assurance that we would be able to reduce our cost base (through negotiations with suppliers or other measures) to offset any such price concessions which could adversely impact results of ~~products;~~operations and cash flows.

13We currently, and may in the future, have assets held at financial institutions that may exceed the insurance coverage offered by the Federal Deposit Insurance Corporation (“FDIC”), the loss of such assets would have a severe negative effect on our operations and liquidity.

●We may maintain our cash assets at certain financial institutions in the ~~imposition~~U.S. in amounts that may be in excess of ~~duties,~~the ~~taxes,~~Federal ~~tariffs~~Deposit Insurance Corporation (“FDIC”) insurance limit of $250,000. In the event of a failure of any financial institutions where we maintain our deposits or other ~~charges~~assets, we may incur a loss to the extent such loss exceeds the FDIC insurance limitation, which could have a material adverse effect on ~~imports;~~our liquidity, financial condition, and our results of operations.

~~● difficulties in complying with import and export laws, regulatory requirements, and restrictions;~~13

●If ~~natural~~we ~~disasters~~are ~~and~~unable ~~public~~to ~~health~~manage ~~emergencies, such as~~ the ~~recent~~challenges associated ~~outbreak~~with ofour ainternational ~~novel~~operations, ~~strain~~the growth of ~~coronavirus~~our ~~identified~~business ~~first~~could inbe ~~Wuhan,~~limited ~~Hubei Province, China~~ and ~~having~~our ~~turned~~business ~~into~~could ~~a global pandemic that has impacted a number of countries from which we purchase product;~~suffer.

●We ~~import~~maintain ~~shipping~~international ~~delays~~business ~~resulting~~operations throughout ~~from~~Europe ~~foreign~~with ora ~~domestic~~majority ~~labor~~being ~~shortages,~~in ~~slow~~the United Kingdom. Our international operations include sales and back-~~downs~~office support services for our European market. We are subject to a number of risks and challenges that specifically relate to our international operations. Our international operations may not be successful if we are unable to meet and overcome these challenges, orwhich ~~stoppage;~~could limit the growth of our business and may have an adverse effect on our business and operating results. These risks and challenges include:

● ~~the~~difficulties ~~failure~~and costs of ~~local~~staffing ~~laws~~and tomanaging ~~provide~~foreign aoperations, ~~sufficient~~including ~~degree~~any ofimpairment ~~protection~~to ~~against~~our ~~infringement~~relationship ofwith ~~our~~employees ~~intellectual~~caused ~~property~~by a reduction in force;

● ~~imposition~~restrictions ofimposed ~~new~~by ~~legislation~~local ~~relating~~labor topractices ~~import~~and ~~quotas~~laws oron ~~other restrictions that may limit the quantity of~~ our ~~product~~business ~~that~~and ~~may be imported into the U.S. from countries or regions where we do business~~operations;

● ~~financial~~exposure orto ~~political~~different ~~instability~~business inpractices ~~any~~and oflegal ~~the countries in which our product is manufactured~~standards;

● ~~potential~~unexpected ~~recalls~~changes orin ~~cancellations~~regulatory ~~of orders for any product that does not meet our quality standards~~requirements;

● ~~disruption~~the imposition of ~~imports~~government bycontrols ~~labor disputes or strikes~~ and ~~local business practices~~restrictions;

● political ~~or military conflict involving the U.S. or any country in which our suppliers are located~~, ~~which~~social ~~could~~and ~~cause~~economic ainstability ~~delay~~and in the ~~transportation~~risk of ~~our products~~war, anterrorist ~~increase~~activities inor ~~transportation~~other ~~costs~~international ~~and additional risk to product being damaged and delivered on time~~incidents;

● ~~heightened~~the ~~terrorism~~failure ~~security concerns, which could subject imported goods to additional, more frequent or more thorough inspections, leading to delays in deliveries or impoundment~~ of ~~goods~~telecommunications ~~for~~and ~~extended~~connectivity ~~periods~~infrastructure;

● ~~inability~~natural ofdisasters ~~our~~and ~~non-U.S.~~public ~~suppliers~~health ~~to obtain adequate credit or access liquidity to finance their operations~~emergencies; ~~and~~

● ~~our~~potentially ~~ability~~adverse totax ~~enforce~~consequences; ~~any agreements with our foreign suppliers.~~and

If● wefluctuations ~~were~~in ~~unable~~foreign tocurrency ~~import~~exchange ~~products~~rates ~~from China, India~~ and ~~the~~relative ~~Philippines~~weakness ~~or were unable to import products from such countries~~ in athe ~~cost-effective~~U.S. ~~manner, we could suffer irreparable harm to our business and be required to significantly curtail our operations, file for bankruptcy or cease operations~~dollar.

~~From~~If ~~time to time,~~ we ~~may~~fail ~~also have~~ to ~~resort~~offer toa ~~administrative~~broad ~~and~~selection ~~court~~of products ~~proceedings~~at tocompetitive ~~enforce~~prices ~~our~~or ~~legal~~maintain ~~rights~~sufficient ~~with~~inventory ~~foreign suppliers. However, it may be more difficult~~ to ~~evaluate~~meet ~~the~~customer ~~level of legal protection we enjoy in China~~demands, ~~India and the Philippines and the corresponding outcome of any administrative or court proceedings than in comparison to~~ our ~~suppliers~~revenue incould ~~the United States~~decline.

~~Our~~In ~~financial~~order ~~condition~~to ~~and~~expand ~~results~~our business, we must successfully offer, on a continuous basis, a broad selection of ~~operations~~products that meet the needs of our customers, including being the first to market with new SKUs. Consumers use our products for ~~fiscal~~a ~~year~~variety ~~2023~~of ~~may~~purposes, including repair, performance, aesthetics, and functionality. In addition, to be ~~adversely~~successful, ~~affected~~our byproduct ~~the~~offerings ~~coronavirus~~must ~~outbreak~~be broad and deep in scope, competitively priced, well-made, innovative and attractive to a wide range of consumers. We cannot predict with certainty that we will successfully offer products that meet all these requirements. If our product offerings fail to satisfy our customers’ requirements or respond to changes in customer preferences or we otherwise fail to maintain sufficient in-stock inventory, our revenue could decline.

As a result of our international operations, we have foreign exchange risk.

AOur ~~significant~~purchases ~~outbreak,~~of ~~epidemic~~products orfrom ~~pandemic~~our ofChina, ~~contagious~~India, and ~~diseases~~the inPhilippines ~~any~~suppliers ~~geographic~~are ~~area~~denominated in ~~which~~U.S. wedollars; ~~operate~~however, ora ~~plan~~change ~~to operate could result~~ in athe ~~health~~foreign ~~crisis~~currency ~~adversely~~exchange ~~affecting~~rates ~~the~~could ~~economies,~~impact ~~financial~~our product ~~markets~~costs ~~and~~over ~~overall~~time. ~~demand~~Our ~~for~~financial ~~our~~reporting ~~services~~currency inis ~~such~~the ~~areas~~U.S. Indollar ~~addition,~~and ~~any~~changes ~~preventative~~in orexchange ~~protective~~rates ~~actions~~due ~~that~~to ~~governments~~functional ~~implement~~currencies of orrespective ~~that~~countries wecould ~~take~~significantly inaffect ~~response~~our toreported aresults ~~health~~and ~~crisis,~~consolidated ~~such~~trends. asFor ~~travel restrictions~~example, ~~quarantines,~~if orthe ~~site~~U.S. ~~closures,~~dollar ~~may~~weakens year-over-year ~~interfere~~relative ~~with~~to ~~the~~currencies ~~ability~~in of our ~~employees~~international locations, ~~suppliers~~our ~~and~~consolidated ~~customers~~gross toprofit ~~perform~~and ~~their~~operating ~~responsibilities.~~expenses ~~Such~~would ~~results~~be ~~could~~higher than ~~have~~if acurrencies ~~material~~had ~~adverse~~remained ~~effect on our business~~constant.

14Our products could be recalled.

The ~~continued~~Consumer ~~global~~Product ~~COVID-19~~Safety ~~pandemic~~Commission ~~has~~or ~~created~~other applicable ~~significant~~regulatory ~~volatility,~~bodies ~~uncertainty~~may ~~and~~require ~~economic~~the ~~disruption. To date~~recall, ~~this pandemic has affected nearly all regions around the world. In the United States~~repair, ~~businesses~~or asreplacement ~~well~~of asour ~~federal,~~products ~~state~~if ~~and~~they ~~local~~are ~~governments~~found ~~implemented~~not ~~significant actions~~ to ~~mitigate~~be ~~this~~in ~~public~~compliance with ~~health~~applicable ~~crisis.~~standards ~~While we cannot predict the duration~~ or ~~scope~~regulations. ofA ~~the~~recall ~~COVID-19~~could ~~pandemic,~~increase itcosts ~~may~~and ~~negatively~~adversely impact our ~~business~~reputation, ~~and~~thereby ~~such~~negatively ~~impact could be material to~~ impacting our financial ~~results~~condition, ~~condition~~results ~~and~~of ~~outlook~~operations, ~~related~~and ~~to:~~cash flows.

● reduction or volatility in demand for our products, which may be caused by, among other things: reduced online traffic and changes in consumer spending behaviors (e.g., consumer confidence in general macroeconomic conditions and a decrease in consumer spending);14

●Regulatory ~~disruption to our operations or the operations of our suppliers, through the effects of business~~ and ~~facilities~~Litigation closures, worker sickness and COVID-19 related inability to work, social, economic, political or labor instability in affected areas, transportation delays, travel restrictions and changes in operating procedures, including for additional cleaning and safety protocols;Risks

●Product ~~impacts~~liability toclaims ~~our third-party marketplaces’ ability to operate or manage increases in their operating costs~~ and other ~~supply~~kinds of ~~chain~~litigation ~~effects~~could ~~that~~affect ~~may~~our ~~have~~business, anreputation, ~~adverse~~financial ~~effect~~condition, onresults ~~our~~of ~~ability~~operations ~~to meet consumer demand~~ and ~~achieve cost targets;~~cash flows.

●The ~~increased~~products ~~volatility~~we design and/or ~~significant~~have ~~disruption~~manufactured can oflead ~~global~~to ~~financial~~product ~~markets~~liability ~~due~~or other legal claims being filed against us. In the past, and may in ~~part~~the future, we have been subject to legal proceedings other than those relating to product liability claims. To the ~~COVID-19~~extent ~~pandemic,~~that ~~which~~plaintiffs ~~could~~are ~~have~~successful in showing that a ~~negative~~defect ~~impact~~in ona product’s design, manufacture or warnings led to personal injury or property damage, or that our ~~ability~~provision of services resulted in similar injury or damage, we may be subject to ~~access~~claims ~~capital~~for ~~markets~~damages. ~~and~~Although ~~other~~we ~~funding~~are ~~sources~~insured for damages above a certain amount, we onbear ~~acceptable~~the ~~terms~~costs orand atexpenses ~~all~~associated with defending claims, including frivolous lawsuits, and ~~impede~~are ~~our~~responsible ~~ability~~for damages below the insurance retention amount. In addition to ~~comply~~claims ~~with~~concerning ~~debt~~individual ~~covenants;~~products, as a manufacturer, we can be subject to costs, potential negative publicity, and lawsuits related to product recalls, which could adversely impact our results and damage our reputation.

●Even ~~The~~defending ~~further~~against ~~spread~~unsuccessful ofclaims ~~COVID-19,~~could cause ~~and~~us ~~the requirements~~ to ~~take~~incur ~~action~~significant toexpenses ~~mitigate~~and ~~the~~divert ~~spread~~management’s ofattention. ~~the~~In ~~pandemic (e.g.~~addition, ~~vaccination~~even ~~requirements~~if ~~that~~the ~~have~~money ~~been~~damages ~~and~~themselves ~~continue~~did not tocause besubstantial ~~taken~~harm into ~~response~~our tobusiness, the ~~pandemic~~damage ~~and~~to ~~enhanced~~our ~~health~~reputation and ~~hygiene~~the ~~requirements~~brands oroffered ~~social~~on ~~distancing~~our orwebsites ~~other~~could ~~measures),~~adversely ~~will impact~~ affect our ~~ability~~future toreputation ~~carry~~and ~~out~~ our ~~business~~brand, ~~as usual~~ and ~~may~~could ~~materially~~result ~~adversely~~in ~~impact~~a ~~global~~decline ~~economic~~in ~~conditions,~~ our ~~business,~~net ~~results~~sales ~~of operations, cash flows~~ and ~~financial condition~~profitability.

~~Risk~~Failure ~~Factors~~to comply with privacy laws and regulations and adequately protect customer data could harm our business, damage our reputation, and result in a loss of customers.

~~The~~Federal ~~increase~~and state regulations may govern the collection, use, sharing, and security of ~~commodity~~data ~~prices~~that ~~such~~we asreceive ~~fuel~~from our customers. Any failure, or perceived failure, by us to comply with our posted privacy policies or with any data-related consent orders, U.S. Federal Trade Commission requirements or other federal, state or international privacy-related laws and regulations could result in proceedings or actions against us by governmental entities or others, which could potentially harm our business. Further, failure or perceived failure to comply with our policies or applicable requirements related to the collection, use or security of personal information or other privacy-related matters could damage our reputation and result in a loss of customers.

~~plastic~~The regulatory framework for data privacy is constantly evolving, and ~~metal~~privacy concerns could ~~negatively~~adversely ~~impact~~affect our ~~profit~~operating ~~margins~~results.

The regulatory framework for privacy issues is evolving and will likely remain uncertain for the foreseeable future. The occurrence of unanticipated events often rapidly drives the adoption of legislation or regulation affecting the use of data and the way we conduct our business; in fact, there are active discussions among U.S. legislators around adopting a new U.S. federal privacy law. Restrictions could be placed upon the collection, management, aggregation and use of information, which could result in a material increase in the cost of collecting and maintaining certain kinds of data. In June 2018, California enacted the California Consumer Privacy Act, which took effect on January 1, 2020, and in November 2020, California voters approved Proposition 24, which amended the California Consumer Privacy Act and added new additional privacy protections that began on January 1, 2023 (the “C.C.P.A.”). The C.C.P.A. gives consumers the right to request disclosure of information collected about them, and whether that information has been sold or shared with others, the right to request deletion of personal information (subject to certain exceptions), the right to opt out of the sale of the consumer’s personal information, the right not to be discriminated against for exercising these rights, the right to correct inaccurate personal information that a business has about them and the right to limit the use and disclosure of sensitive personal information collected about them. We are required to comply with the C.C.P.A. The C.C.P.A. provides for civil penalties for violations and a private right of action for data breaches that are expected to increase data breach litigation. The C.C.P.A. may increase our compliance costs and potential liability. Some observers have noted that the C.C.P.A. could begin a trend toward more stringent privacy legislation in the U.S., which could increase our potential liability and adversely affect our business.

Prices of certain commodity products, including raw materials, are historically volatile and are subject to fluctuations arising from changes in domestic and international supply and demand, labor costs, competition, market speculation, government regulations, trade restrictions and tariffs. Increasing prices in the component materials for the parts of our goods may impact the availability, the quality and the price of our products, as suppliers search for alternatives to existing materials and increase the prices they charge. We cannot ensure that we can recover all the increased costs through price increases, and our suppliers may not continue to provide the consistent quality of product as they may substitute lower cost materials to maintain pricing levels, all of which may have a negative impact on our business and results of operations. Our cost base also reflects significant elements for freight, including fuel. Rapid and significant changes in commodity prices such as fuel, plastic and metal may negatively affect our profit margins.15

~~Our~~If ~~results~~we ofare ~~operations~~unable ~~could~~to beprotect ~~negatively~~our ~~impacted~~intellectual property byrights, ~~inflationary~~our orreputation ~~deflationary~~and ~~economic~~brand ~~conditions which~~ could ~~affect~~be ~~the~~impaired, ~~ability~~and towe ~~obtain~~could ~~goods~~lose ~~from our suppliers in a timely and cost-effective manner~~customers.

~~Our~~We ~~profitability~~regard our trademarks, trade secrets, and similar intellectual property rights as critical to our success. We rely on trademark and copyright law, trade secret protection, and confidentiality and license agreements with employees, customers, partners, and others to protect our proprietary rights. We cannot be sure that we have taken adequate steps to protect our proprietary rights, especially in countries where the laws may not protect our rights as fully as in the United States. In addition, our proprietary rights may be ~~negatively~~infringed ~~impacted~~or ifmisappropriated, and we ~~are~~could ~~unable~~incur significant expenses to ~~mitigate~~preserve ~~any~~them. ~~inflationary~~The ~~increases~~outcome ~~through~~of ~~various~~such ~~customer~~litigation ~~pricing~~can ~~actions~~be uncertain, and the cost ~~reduction~~of ~~initiatives~~prosecuting such litigation may adversely impact our earnings. ~~Conversely~~We have common law trademarks, inas ~~the~~well ~~event~~as ~~there~~pending isfederal ~~deflation~~trademark registrations for several marks and several registered marks. However, weany registrations may ~~experience~~not ~~pressure~~adequately ~~from~~cover our ~~customers~~intellectual toproperty ~~reduce~~or ~~prices~~protect us against infringement by others. Effective trademarks, service marks, copyrights, patents, and ~~there~~trade ~~can~~secrets protection may not be noavailable ~~assurance~~in ~~that~~every country where our products and services are available online. We also currently own or control a number of Internet domain names, including www.toughbuilt.com, and have invested time and money in purchasing domain names and other intellectual property, which may be impaired if we ~~would~~cannot protect such intellectual property. We may be ~~able~~unable to ~~reduce~~protect ~~our~~these ~~cost~~domain ~~base~~names ~~(through~~or ~~negotiations~~acquire ~~with~~or ~~suppliers~~maintain orrelevant domain names in the United States and other ~~measures)~~countries. toIf ~~offset~~we ~~any~~cannot ~~such~~protect ~~price~~our ~~concessions~~trademarks, ~~which~~domain ~~could~~names, ~~adversely~~or ~~impact~~other ~~results~~intellectual ofproperty, ~~operations~~we may experience difficulties achieving and ~~cash~~maintaining ~~flows~~brand recognition and customer loyalty.

WeIf ~~currently,~~we ~~and~~are ~~may~~unable into ~~the~~protect ~~future~~our intellectual property, ~~have~~our ~~assets~~business ~~held at financial institutions that~~ may ~~exceed~~be ~~the~~adversely ~~insurance coverage offered by the Federal Deposit Insurance Corporation (“FDIC”), the loss of such assets would have a severe negative affect on our operations and liquidity~~affected.

We ~~may~~must ~~maintain~~protect ~~our~~the ~~cash~~proprietary ~~assets~~nature atof ~~certain~~the intellectual ~~financial~~property ~~institutions~~used in ~~the~~our Ubusiness.S. inThere ~~amounts~~can be no assurance that ~~may~~trade secrets and other intellectual property will not be challenged, ininvalidated, ~~excess~~misappropriated, ofor ~~the~~circumvented ~~Federal~~by ~~Deposit~~third ~~Insurance~~parties. ~~Corporation~~Our ~~(“FDIC”)~~intellectual ~~insurance~~property ~~limit~~includes ofissued ~~$250~~patents,~~000~~ patent applications, trademarks, trademark applications, and know-how related to business, product, and technology development. InWe plan on taking the ~~event~~necessary ofsteps, aincluding ~~failure~~but ofnot ~~any~~limited ~~financial~~to ~~institutions~~filing ~~where~~additional wepatents ~~maintain~~as ~~our~~appropriate. ~~deposits~~There is no assurance any additional patents will be issued or ~~other~~that ~~assets,~~when wethey ~~may~~are ~~incur~~issued, athey ~~loss~~will toinclude all of the ~~extent~~claims ~~such~~currently ~~loss~~included ~~exceeds~~in the ~~FDIC~~applications. ~~insurance~~Even ~~limitation~~if they do issue, ~~which~~those ~~could~~new ~~have~~patents aand ~~material~~our ~~adverse~~existing ~~effect~~patents ~~upon~~must be protected against possible infringement. Nonetheless, we currently rely on contractual obligations of our ~~liquidity~~employees and contractors to maintain the confidentiality of our products. To compete effectively, we ~~financial~~need ~~condition~~to develop and continue to maintain a proprietary position concerning our ~~results~~technologies, ofand ~~operations~~business. The risks and uncertainties that we face concerning intellectual property rights principally include the following:

15● patent applications that we file may not result in issued patents or may take longer than expected to result in issued patents;

If● we ~~are~~may ~~unable~~be subject to ~~manage~~interference ~~the challenges associated with our international operations~~proceedings;

~~the~~● ~~growth~~other ofcompanies ~~our~~may ~~business~~claim ~~could~~that bepatents ~~limited~~applied ~~and~~for ~~our~~by, ~~business~~assigned, ~~could~~or ~~suffer~~licensed to, us infringe upon their own intellectual property rights;

We● ~~maintain~~we international business operations throughout Europe with a majority being in the United Kingdom. Our international operations include sales and back office support services for our European market. We are subject to a number of risks and challenges that specifically relate to our international operations. Our international operations may ~~not~~ be ~~successful~~subject ~~if we are unable~~ to ~~meet~~opposition ~~and~~proceedings ~~overcome~~in ~~these challenges, which could limit~~ the ~~growth of our business and may have an adverse effect on our business and operating results~~U.S. ~~These risks~~ and ~~challenges~~in ~~include:~~foreign countries;

● ~~difficulties~~any ~~and~~patents ~~costs~~that ofare ~~staffing~~issued ~~and managing foreign operations, including any impairment~~ to ~~our~~us ~~relationship~~may ~~with~~not ~~employees~~provide ~~caused~~meaningful ~~by a reduction in force~~protection;

● ~~restrictions~~we ~~imposed~~may bynot ~~local~~be ~~labor~~able ~~practices~~to ~~and~~develop ~~laws~~additional onproprietary ~~our~~technologies ~~business~~that ~~and~~are ~~operations~~patentable;

● ~~exposure~~other tocompanies ~~different~~may ~~business~~challenge ~~practices~~patents ~~and~~licensed ~~legal~~or ~~standards~~issued to us;

● ~~unexpected~~other ~~changes~~companies inmay ~~regulatory~~independently ~~requirements~~develop similar or alternative technologies, or duplicate our technologies;

● ~~the~~other ~~imposition~~companies ofmay ~~government~~design ~~controls~~around ~~and~~technologies ~~restrictions~~that we have licensed or developed;

● ~~political,~~any ~~social~~patents ~~and~~issued ~~economic~~to ~~instability~~us may expire and competitors may utilize the ~~risk~~technology offound ~~war,~~in ~~terrorist~~such ~~activities~~patents orto ~~other~~commercialize ~~international~~their ~~incidents~~own products; and

● ~~the~~enforcement ~~failure~~ of ~~telecommunications~~patents ~~and~~is ~~connectivity~~complex, ~~infrastructure;~~uncertain, and expensive.

~~● natural disasters and public health emergencies;~~16

●It ~~potentially~~is ~~adverse~~also ~~tax~~possible ~~consequences;~~that others may obtain issued patents that could prevent us from commercializing certain aspects of our products or require us to obtain licenses requiring the payment of significant fees or royalties in order to enable us to conduct our business. If we license patents, our rights will depend on maintaining its obligations to the licensor under the applicable license agreement, and we may be unable to do so. Furthermore, there can be no assurance that the work-for-hire, intellectual property assignment, and confidentiality agreements entered into by our employees and consultants, advisors, and collaborators will provide meaningful protection for our trade secrets, know-how, or other proprietary information in the event of any unauthorized use or disclosure of such trade secrets, know-how or other proprietary information. As all of our products are manufactured in China, India, and the Philippines, we may not have the same strength of intellectual property protection and enforcement in such countries as in North America or Europe. The scope and enforceability of patent claims are not systematically predictable with absolute accuracy. The strength of our patent rights depends, in part, upon the breadth and scope of protection provided by the patent and the validity of our patents, if any.

●We ~~fluctuations~~may innot ~~foreign~~be ~~currency~~able ~~exchange~~to ~~rates~~enforce ~~and~~our ~~relative~~intellectual property ~~weakness~~rights ~~in the U~~worldwide.S. ~~dollar.~~

IfThe welaws ~~fail~~of some foreign countries do not protect intellectual property rights to ~~offer~~the asame ~~broad~~extent ~~selection~~as the laws of ~~products~~the atUnited ~~competitive~~States. ~~prices~~Many orcompanies ~~fail~~have toencountered ~~maintain~~significant ~~sufficient~~problems in ~~inventory~~protecting and defending intellectual property rights in certain foreign jurisdictions. The legal systems of some countries, particularly developing countries, do not favor the enforcement of patents and other intellectual property protection. This could make it difficult for us to ~~meet~~stop ~~customer~~the ~~demands~~infringement of our patents or the misappropriation of our other intellectual property rights.

Proceedings to enforce our ~~revenue~~patent rights in foreign jurisdictions could ~~decline~~result in substantial costs and divert our efforts and attention from other aspects of our business. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate. In addition, changes in the law and legal decisions by courts in the United States and foreign countries may affect our ability to obtain adequate protection for our technology and the enforcement of intellectual property. If we are unable to enforce our intellectual property rights throughout the world adequately, our business, financial condition, and results of operations could be adversely impacted.

InBecause ~~order to expand our business,~~ we ~~must~~are ~~successfully~~involved ~~offer,~~in onlitigation afrom time ~~continuous basis, a broad selection of products that meets the needs of our customers, including by being the first~~ to ~~market~~time ~~with~~and ~~new SKUs. Our products~~ are ~~used~~subject byto ~~consumers~~numerous ~~for~~laws aand ~~variety~~governmental ~~of purposes~~regulations, ~~including~~we ~~repair,~~could ~~performance,~~incur ~~aesthetics~~substantial ~~and functionality. In addition~~judgments, ~~to be successful~~fines, legal ~~our product offerings must be broad and deep in scope~~fees, ~~competitively~~other ~~priced~~costs, ~~well-made, innovative~~ and ~~attractive~~reputational ~~to a wide range of consumers~~harm. We cannot predict with certainty that we will be successful in offering products that meet all of these requirements. If our product offerings fail to satisfy our customers’ requirements or respond to changes in customer preferences or we otherwise fail to maintain sufficient in-stock inventory, our revenue could decline.

AsWe aare ~~result~~sometimes the subject of complaints or litigation from customers, employees, or other third parties for various reasons. The damages sought against us in some of these litigation proceedings could be substantial. Although we maintain liability insurance for some litigation claims, if one or more of the claims were to exceed our ~~international~~insurance coverage limits greatly or if our insurance policies do not cover a claim, this could have a material adverse effect on our business, financial condition, results of operations and cash flows.

weChanges in tax laws or regulations that are applied adversely to us or our customers may have ~~foreign~~a ~~exchange~~material ~~risk~~adverse effect on our business, cash flow, financial condition, or results of operations.

~~Our~~New ~~purchases~~income, ofsales, ~~products~~use, ~~from~~or ~~our~~other ~~China~~tax laws, ~~India~~statutes, rules, ~~and~~regulations, ~~Philippines~~or ~~suppliers~~ordinances ~~are~~could ~~denominated~~be inenacted ~~U.S.~~at ~~dollars;~~any ~~however~~time, awhich ~~change~~could inadversely ~~the~~affect ~~foreign~~our ~~currency~~business ~~exchange~~operations ~~rates~~and financial performance. Further, existing tax laws, statutes, rules, regulations, or ordinances could ~~impact~~be ~~our~~interpreted, ~~product~~changed, ~~costs~~modified, ~~over~~or ~~time~~applied adversely to us. ~~Our~~For ~~financial~~example, ~~reporting~~legislation ~~currency~~enacted isin 2017, informally titled the Tax Cuts and Jobs Act (the “Tax Act”), enacted many significant changes to the U.S. ~~dollar~~tax laws. Future guidance from the Internal Revenue Service and ~~changes~~other intax ~~exchange~~authorities ~~rates~~with ~~significantly~~respect ~~affect~~to the ~~our~~Tax ~~reported~~Act ~~results~~may affect us, and ~~consolidated~~certain ~~trends~~aspects of the Tax Act could be repealed or modified in future legislation. ~~For~~In ~~example~~addition, it is uncertain if ~~the~~and ~~U.S.~~to ~~dollar~~what ~~weakens~~extent ~~year-over-year~~various ~~relative~~states will conform to ~~currencies~~the inTax ~~our~~Act ~~international~~or ~~locations~~any newly enacted federal tax legislation. Changes in corporate tax rates, the realization of net deferred tax assets relating to our ~~consolidated~~operations, ~~gross~~the ~~profit~~taxation of foreign earnings, and ~~operating~~the deductibility of expenses ~~would~~under bethe ~~higher~~Tax ~~than~~Act ifor ~~currencies~~future ~~had~~reform ~~remained~~legislation ~~constant~~could have a material impact on the value of our deferred tax assets, could result in significant one-time charges, and could increase our future U.S. tax expense.

~~Our products could be recalled~~17

Existing or future government regulation could expose us to liabilities and costly changes in our business operations and could reduce customer demand for our products and services.

~~The~~We ~~Consumer~~are ~~Product~~subject ~~Safety~~to ~~Commission~~federal orand ~~other~~state ~~applicable~~consumer ~~regulatory~~protection laws ~~bodies~~and regulations, including laws protecting the privacy of customer nonpublic information and regulations prohibiting unfair and deceptive trade practices, as well as laws and regulations governing businesses in general and the Internet and e-commerce and certain environmental laws. Additional laws and regulations may ~~require~~be adopted with respect to the ~~recall~~Internet, ~~repair~~the oreffect ~~replacement~~of which on e-commerce is uncertain. These laws may cover issues such as user privacy, spyware and the tracking of ~~our~~consumer ~~products~~activities, ifmarketing ~~those~~emails and communications, other advertising and promotional practices, money transfers, pricing, content and quality of products ~~are~~and ~~found~~services, ~~not~~taxation, electronic contracts, and other communications, intellectual property rights, and information security. Furthermore, it is unclear how existing laws governing issues such as property ownership, sales and other taxes, trespass, data mining and collection, and personal privacy apply to the Internet and e-commerce. To the extent we expand into international markets, we will be infaced ~~compliance~~with complying with ~~applicable~~local ~~standards~~laws orand regulations, some of which may be materially different than U.S. Alaws ~~recall~~and ~~could~~regulations. ~~increase~~Any ~~costs~~such foreign law or regulation, any new U.S. law or regulation, or the interpretation or application of existing laws and ~~adversely~~regulations ~~impact~~to the Internet or other online services or our ~~reputation~~business, ~~and~~in ~~thereby~~general, may ~~negatively~~have ~~impact~~a material adverse effect on our business, prospects, financial condition, and results of operations by, among other things, impeding the growth of the Internet, subjecting us to fines, penalties, damages or other liabilities, requiring costly changes in our business operations and ~~cash~~practices, ~~flows~~and reducing customer demand for our products and services. We may not maintain sufficient or any insurance coverage to cover the types of claims or liabilities that could arise due to such regulations.

16Possible new tariffs that the United States government might impose could have a material adverse effect on our results of operations.

~~Regulatory~~Changes in U.S. and ~~Litigation~~foreign ~~Risks~~governments’ trade policies have resulted in and may continue to result in, tariffs on imports into and exports from the U.S., among other restrictions. Throughout from 2018 to 2023, the U.S. imposed tariffs on imports from several countries, including China. If further tariffs are imposed on imports of our products or retaliatory trade measures are taken by China or other countries in response to existing or future tariffs, we could be forced to raise prices on all of our imported products or make changes to our operations, any of which could materially harm our revenue or operating results. Any additional future tariffs or quotas imposed on our products or related materials may impact our sales, gross margin, and profitability if we are unable to pass increased prices onto our customers.

~~Product~~We ~~liability~~operate ~~claims~~in ~~and~~an ~~other~~industry ~~kinds~~with the risk of intellectual property litigation. ~~could~~Claims ~~affect~~of infringement against us may hurt our business.

~~reputation~~Our success depends, in part, upon the non-infringement of intellectual property rights owned by others and being able to resolve claims of intellectual property infringement without major financial expenditures or adverse consequences. Participants that own, or claim to own, intellectual property may aggressively assert their rights. From time to time, we may be subject to legal proceedings and claims relating to the intellectual property rights of others. Future litigation may be necessary to defend us or our clients by determining the scope, enforceability, and validity of third-party proprietary rights or to establish its proprietary rights. Some competitors have substantially greater resources and are able to sustain the costs of complex intellectual property litigation to a greater degree and for extended time periods. In addition, patent-holding companies that focus solely on extracting royalties and settlements by enforcing patent rights may target us. Regardless of whether claims that we are infringing patents or other intellectual property rights have any merit, these claims are time-consuming and costly to evaluate and defend and could:

~~financial~~● ~~condition~~adversely affect relationships with future clients;

~~results~~● ofcause ~~operations~~delays ~~and~~or ~~cash~~stoppages ~~flows~~in providing products;

~~The~~● ~~products~~divert that we design and/or have manufactured can lead to product liability claims or other legal claims being filed against us. We have in the past, and may in the future, be subject to legal proceedings other than those relating to product liability claims. To the extent that plaintiffs are successful in showing that a defect in a productmanagement’s ~~design,~~attention manufacture or warnings led to personal injury or property damage, or that our provision of services resulted in similar injury or damage, we may be subject to claims for damages. Although we are insured for damages above a certain amount, we bear the costs and expenses associated with defending claims, including frivolous lawsuits, and are responsible for damages below the insurance retention amount. In addition to claims concerning individual products, as a manufacturer, we can be subject to costs, potential negative publicity and lawsuits related to product recalls, which could adversely impact our results and damage our reputation.resources;

~~Even~~● ~~defending~~subject ~~against unsuccessful claims could cause~~ us to ~~incur~~ significant ~~expenses~~liabilities; and result in a diversion of management’s attention. In addition, even if the money damages themselves did not cause substantial harm to our business, the damage to our reputation and the brands offered on our websites could adversely affect our future reputation and our brand, and could result in a decline in our net sales and profitability.

~~Failure~~● torequire ~~comply~~us ~~with privacy laws and regulations and failure~~ to ~~adequately~~cease ~~protect~~some ~~customer~~or ~~data~~all ~~could~~of ~~harm~~its ~~our business~~activities.

~~damage~~In ~~our~~addition ~~reputation~~to liability for monetary damages, which may be tripled and ~~result~~may include attorneys’ fees or, in asome ~~loss~~circumstances, damages against clients, we may be prohibited from developing, commercializing, or continuing to provide some or all of ~~customers~~our products unless we obtain licenses from, and pay royalties to, the holders of the patents or other intellectual property rights, which may not be available on commercially favorable terms, or at all.

Federal and state regulations may govern the collection, use, sharing and security of data that we receive from our customers. Any failure, or perceived failure, by us to comply with our posted privacy policies or with any data-related consent orders, U.S. Federal Trade Commission requirements or other federal, state or international privacy-related laws and regulations could result in proceedings or actions against us by governmental entities or others, which could potentially harm our business. Further, failure or perceived failure to comply with our policies or applicable requirements related to the collection, use or security of personal information or other privacy-related matters could damage our reputation and result in a loss of customers.18

~~The~~Geopolitical ~~regulatory~~conditions, ~~framework~~including ~~for~~trade disputes ~~data~~and ~~privacy~~direct isor ~~constantly~~indirect ~~evolving~~acts of war or terrorism, could adversely affect our operations and financial results.

Since we operate globally, our operations could be disrupted by geopolitical conditions, trade disputes, international boycotts and ~~privacy~~sanctions, ~~concerns~~political and social instability, acts of war, terrorist activity, or other similar events. From time to time, we could ~~adversely~~have ~~affect~~a ~~our~~significant ~~operating~~investment in a particular asset type, a large revenue stream associated with a specific customer or industry, or a large number of customers located in a certain geographic region. Decreased demand from a discrete event impacting a specific asset type, customer, industry, or region in which we have a concentrated exposure could negatively impact our results of operations.

~~The~~In ~~regulatory~~February ~~framework~~2022, ~~for~~Russia ~~privacy~~initiated ~~issues~~significant military isaction ~~currently~~against ~~evolving~~Ukraine. ~~and~~In isresponse, ~~likely to remain uncertain for~~ the ~~foreseeable future~~U.S. ~~The~~and ~~occurrence~~certain ofother ~~unanticipated~~countries ~~events~~imposed ~~often~~significant ~~rapidly~~sanctions ~~drives~~and ~~the~~export ~~adoption~~controls against ofRussia, ~~legislation~~Belarus, orand ~~regulation~~certain ~~affecting~~individuals ~~the use of data~~ and ~~the~~entities ~~way~~connected weto ~~conduct~~Russian ~~our~~or ~~business;~~Belarusian inpolitical, ~~fact~~business, ~~there~~and ~~are~~financial ~~active~~organizations, and ~~discussions~~the ~~among~~ U.S. ~~legislators~~and ~~around~~certain ~~adoption~~other ofcountries ~~a new U.S. federal privacy law. Restrictions~~ could beimpose ~~placed~~further ~~upon~~sanctions, ~~the~~trade ~~collection~~restrictions, ~~management, aggregation~~ and ~~use~~other ofretaliatory ~~information,~~actions ~~which~~should ~~could~~the conflict ~~result~~continue inor aworsen. ~~material~~It ~~increase~~is innot ~~the~~possible ~~cost~~to ofpredict ~~collecting~~the ~~and~~broader ~~maintaining~~consequences ~~certain kinds~~ of ~~data. In June 2018, California enacted~~ the ~~California Consumer Privacy Act~~conflict, ~~which~~including ~~took~~related ~~effect~~geopolitical ~~on January 1~~tensions, ~~2020,~~ and ~~in November 2020, California voters approved Proposition 24 which amended~~ the ~~California~~measures ~~Consumer Privacy Act~~ and ~~added~~retaliatory ~~new~~actions ~~additional~~taken ~~privacy~~by ~~protections that began on January 1, 2023 (~~the “CU.CS.~~P.A.”).~~ ~~The~~and ~~C.C.P.A.~~other ~~gives~~countries ~~consumers~~in ~~the~~respect ~~right~~thereof, toas ~~request~~well ~~disclosure~~as ofany ~~information~~counter-measures ~~collected~~or retaliatory ~~about~~actions ~~them,~~by ~~and~~Russia ~~whether that information has been sold~~ or ~~shared~~Belarus ~~with~~in ~~others~~response, ~~the~~including, ~~right~~for ~~to request deletion of personal information (subject to certain exceptions)~~example, ~~the~~potential ~~right~~cyber-attacks toor ~~opt out of~~ the ~~sale~~disruption of ~~the~~energy ~~consumer’s personal information~~exports, is ~~the~~likely ~~right not~~ to because ~~discriminated~~regional ~~against~~instability, ~~for~~geopolitical ~~exercising these rights~~shifts, ~~the~~and ~~right~~could tomaterially ~~correct~~adversely ~~inaccurate~~affect ~~personal~~global ~~information~~trade, ~~that~~currency aexchange ~~business~~rates, regional ~~has~~economies ~~about them~~ and the ~~right~~global toeconomy. ~~limit~~The ~~the~~situation ~~use~~remains uncertain, and ~~disclosure~~while ofit ~~sensitive~~is ~~personal~~difficult ~~information collected about them. We are required~~ to ~~comply~~predict ~~with~~ the ~~C.C.P.A.~~impact ~~The~~of ~~C.C.P.A.~~any ~~provides~~of the ~~for civil penalties for violations~~preceding, asthe ~~well~~conflict asand aactions ~~private~~taken ~~right~~in ofresponse ~~action for data breaches that is expected~~ to ~~increase~~the ~~data~~conflict ~~breach~~could ~~litigation. The C.C.P.A. may~~ increase our ~~compliance~~ costs, ~~and~~disrupt ~~potential~~our ~~liability.~~supply ~~Some~~chain, ~~observers~~reduce our ~~have~~sales ~~noted~~and ~~that~~earnings, ~~the~~impair ~~C.C.P.A.~~our ~~could~~ability ~~mark~~to ~~the~~raise ~~beginning~~additional ofcapital awhen ~~trend~~needed ~~toward~~on ~~more~~acceptable ~~stringent~~terms, ~~privacy~~if ~~legislation~~at ~~in the U.S.~~all, ~~which~~or ~~could~~otherwise ~~increase~~adversely affect our ~~potential~~business, ~~liability~~financial condition, and ~~adversely~~results ~~affect~~of ~~our business~~operations.

17Risks Related to Information Technology

IfThe weCompany’s ~~are~~lack ~~unable~~of formalized cybersecurity measures and protocols exposes it to ~~protect~~significant ~~our~~risks ~~intellectual~~that ~~property~~could ~~rights~~materially and adversely affect its business operations, financial condition, and reputation. In particular:

~~our~~1. ~~reputation~~Increased Vulnerability to Cyber Attacks: Without robust cybersecurity measures in place, the Company is at an elevated risk of falling victim to cyber-attacks, including, but not limited to, malware, ransomware, phishing, and ~~brand~~denial-of-service attacks. Such incidents could bedisrupt ~~impaired~~business operations, cause the loss of critical data, and weallow ~~could~~unauthorized ~~lose~~access ~~customers~~to sensitive information.

~~www~~2.~~toughbuilt~~ Data Breach and Loss of Confidential Information: The absence of comprehensive cybersecurity protocols increases the likelihood of a data breach.~~com~~ A breach could result in the loss or theft of proprietary business information, intellectual property, or personal data of employees, customers, and other stakeholders. This could expose the Company to legal liabilities, regulatory fines, and loss of trust among customers and partners.

If3. weFinancial ~~are~~Impact: ~~unable~~Cybersecurity incidents could impose significant financial burdens on the Company, including costs associated with investigation, remediation, legal fees, and potential settlements or penalties arising from litigation and regulatory actions. Additionally, the Company may incur substantial costs to ~~protect~~implement ~~our~~remedial ~~intellectual~~measures ~~property~~and enhance its cybersecurity infrastructure post-incident.

~~our business may be adversely affected~~19

We4. ~~must~~Regulatory ~~protect~~Compliance ~~the~~Risks: ~~proprietary~~The ~~nature~~Company ofoperates ~~the intellectual property used~~ in ~~our~~an ~~business.~~environment ~~There~~that ~~can~~is beincreasingly noregulated ~~assurance~~regarding ~~that~~data ~~trade~~protection ~~secrets~~ and ~~other intellectual property will not be challenged, invalidated, misappropriated or circumvented by third parties~~cybersecurity. ~~Currently,~~Failure ~~our intellectual property includes issued patents, patent applications, trademarks, trademark applications and know-how related~~ to ~~business,~~establish ~~product~~ and ~~technology~~maintain ~~development.~~adequate Wecybersecurity ~~plan~~measures oncould ~~taking~~result the necessary steps, including but not limited to the filing of additional patents as appropriate. There is no assurance any additional patents will issue or that when they do issue they will include all of the claims currently included in ~~the~~non-compliance ~~applications.~~with ~~Even~~applicable iflaws ~~they do issue, those new patents~~ and ~~our existing patents must be protected against possible infringement. Nonetheless~~regulations, weleading ~~currently rely on contractual obligations of our employees and contractors~~ to ~~maintain~~legal ~~the confidentiality of our products. To compete effectively~~penalties, ~~we need to develop and continue to maintain a proprietary position with respect to our technologies~~sanctions, and ~~business.~~reputational ~~The risks and uncertainties that we face with respect to intellectual property rights principally include the following:~~damage.

●5. ~~patent~~Reputational ~~applications~~Damage: ~~that~~Cybersecurity weincidents ~~file~~can ~~may~~significantly ~~not~~damage ~~result~~the inCompany’s ~~issued~~reputation ~~patents~~and orbrand ~~may~~image. ~~take~~A ~~longer~~loss ~~than~~of ~~expected~~customer toconfidence could result in ~~issued~~decreased ~~patents;~~demand for the Company’s products and services, affecting its market position and long-term profitability.

●6. weOperational ~~may~~Disruptions: beCyber ~~subject~~attacks can disrupt the Company’s operational capabilities, impacting its ability to ~~interference~~deliver ~~proceedings;~~products and services, manage supply chains, and maintain financial reporting systems. Prolonged disruptions could have a material adverse effect on the Company’s operational performance and financial results.

●The ~~other~~Company ~~companies~~acknowledges ~~may~~the ~~claim~~importance ~~that~~of ~~patents~~cybersecurity and ~~applied~~is ~~for~~evaluating byits needs to develop and implement appropriate measures to enhance its cybersecurity posture. However, ~~assigned~~there can be no assurance that these initiatives will sufficiently mitigate the risks associated with cybersecurity threats. The landscape of cybersecurity risks is constantly evolving, orand ~~licensed~~the Company will need to, uscontinuously ~~infringe~~assess ~~upon~~and ~~their~~update ~~own~~its ~~intellectual~~cybersecurity ~~property~~measures ~~rights;~~in response to emerging threats.

●General weRisk ~~may be subject to opposition proceedings in the U.S. and in foreign countries;~~Factors

●An ~~any~~investment ~~patents~~in ~~that~~our ~~are~~securities ~~issued~~is tospeculative, and usthere ~~may~~can ~~not~~be ~~provide~~no ~~meaningful~~assurance ~~protection;~~of a return on such an investment.

●An weinvestment ~~may~~in ~~not~~our securities is speculative, and there can be ~~able~~no assurance that investors will obtain any return on their investment. Investors may be subject to ~~develop~~substantial ~~additional~~risks involved ~~proprietary~~in ~~technologies~~an ~~that~~investment ~~are~~in ~~patentable;~~our securities, including losing their entire investment.

●Certain ~~other~~provisions ~~companies~~of our Articles of Incorporation could allow the concentration of voting power in one individual, which may, ~~challenge~~among ~~patents~~other ~~licensed~~things, delay or ~~issued~~frustrate tothe ~~us;~~removal of incumbent directors or a takeover attempt, even if such events may benefit our stockholders.

●Provisions of our Articles of Incorporation, such as our ability to designate and issue a class of preferred stock without stockholder approval, may delay or frustrate the removal of incumbent directors and may prevent or delay a merger, tender offer, or proxy contest involving our Company that is not approved by our board of directors (“Board”), even if those events may be perceived to be in the best interests of our stockholders. For example, one or more of our affiliates could theoretically be issued a newly authorized and designated class of shares of our preferred stock. Such shares could have significant voting power, which may dilute the voting power of our common stock, among other ~~companies~~terms. Consequently, anyone to whom these shares of preferred stock were issued could have sufficient voting power to significantly influence, if not control, the outcome of all corporate matters submitted to the vote of our common stockholders, subject to the rules promulgated by Nasdaq. Those matters could include the election of directors, changes in the size and composition of the Board, and mergers and other business combinations involving our Company. In addition, through any such person’s control of the Board and voting power, the affiliate may ~~independently~~be ~~develop~~able to ~~similar~~control certain decisions, including decisions regarding the qualification and appointment of officers, dividend policy, access to capital (including borrowing from third-party lenders and the issuance of additional equity securities), and the acquisition or ~~alternative~~disposition of ~~technologies~~assets by our Company. In addition, the concentration of voting power in the hands of an affiliate could have the effect of delaying or ~~duplicate~~preventing a change in control of our ~~technologies;~~Company, even if the change in control would benefit our stockholders and may adversely affect the future market price of our common stock should a trading market therefore develop.

~~● other companies may design around technologies that we have licensed or developed;~~20

●If ~~any~~you ~~patents~~purchase ~~issued~~shares toof usour common stock, you may ~~expire~~experience immediate and ~~competitors~~substantial ~~may~~dilution ~~utilize~~in ~~the~~your ~~technology~~shares’ ~~found~~net intangible ~~such~~book ~~patents~~value. toIn ~~commercialize~~addition, ~~their~~we may ~~own~~issue ~~products;~~shares of common stock under our equity incentive plans and additional equity or convertible debt securities in the future, which may dilute investors further.

●We ~~enforcement~~are currently authorized to issue up to 200,000,000 shares of ~~patents~~common isstock. ~~complex~~In the future, ~~uncertain~~we may issue previously authorized and unissued shares of common stock, which would dilute current stockholders’ ownership interests. Additional shares are subject to issuance through various equity compensation plans or the exercise of currently outstanding equity awards. The potential issuance of additional shares of common stock may create downward pressure on the trading price of our common stock. In the future, we may issue additional shares of common stock or other securities that are convertible into or exercisable for common stock to raise capital or effectuate other business purposes. Purchasers of the shares we sell and ~~expensive~~our existing stockholders will experience significant dilution if we sell shares at prices significantly below the price at which they invested. In addition, to the extent we need to raise additional capital in the future and we issue additional shares of common stock or securities convertible or exchangeable for our common stock, our then existing stockholders may experience dilution, and the new securities may have rights senior to those of our common stock offered in this offering. Any of the above events could significantly harm our business, prospects, financial condition and results of operations, as well as cause the price of our common stock to decline.

18Our stock price has been and may continue to be volatile.

ItThe ismarket ~~also~~price ~~possible that others may obtain issued patents that could prevent us from commercializing certain aspects~~ of our ~~products~~common orstock ~~require~~has usbeen and tomay ~~obtain~~continue ~~licenses requiring the payment of significant fees or royalties in order~~ to ~~enable us to conduct our business. If we license patents, our rights will depend on maintaining its obligations to the licensor under the applicable license agreement, and we may~~ be ~~unable~~subject to domaterial sovolatility. ~~Furthermore,~~Such ~~there~~fluctuations ~~can~~could be no assurance that the work-for-hire, intellectual property assignment and confidentiality agreements entered into by our employees and consultants, advisors and collaborators will provide meaningful protection for our trade secrets, know-how or other proprietary information in ~~the~~response ~~event of any unauthorized use or disclosure of such trade secrets~~to, ~~know-~~among ~~how or~~ other ~~proprietary information. As all of our products are manufactured in China~~things, ~~India and~~ the ~~Philippines,~~factors ~~and we may not have the same strength of intellectual property protection and enforcement~~ described in ~~such~~this ~~countries~~“Risk asFactors” insection ~~North America~~ or ~~Europe.~~other ~~The~~factors, ~~scope~~some ~~and enforceability~~ of ~~patent~~which ~~claims~~ are ~~not~~beyond ~~systematically predictable with absolute accuracy. The strength of~~ our ~~own patent rights depends~~control, insuch ~~part, upon the breadth and scope of protection provided by the patent and the validity of our patents, if any.~~as:

We● ~~may~~the ~~not~~ongoing beimpacts ~~able~~of tothe ~~enforce~~COVID-19 ~~our~~pandemic ~~intellectual~~and ~~property~~the ~~rights~~resulting ~~throughout~~impact ~~the~~on ~~world~~stock market performance;

.● fluctuations in our financial results or outlook or those of companies perceived to be similar to us;

~~The~~● ~~laws~~changes ~~of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States. Many companies have encountered significant problems~~ in ~~protecting and defending intellectual property rights in certain foreign jurisdictions. The legal systems of some countries, particularly developing countries, do not favor~~ the ~~enforcement~~prices of ~~patents~~commodities ~~and~~associated ~~other~~with ~~intellectual property protection. This could make it difficult for us to stop the infringement of~~ our ~~patents or the misappropriation of our other intellectual property rights.~~business;

~~Proceedings~~● tochanges ~~enforce our patent rights~~ in ~~foreign jurisdictions could result in substantial costs and divert~~ our ~~efforts~~capital ~~and attention from other aspects of our business. Accordingly~~structure, ~~our efforts to protect our intellectual property rights in~~ such ~~countries~~as ~~may~~future beissuances inadequate. In addition, changes in the law and legal decisions by courts in the United States and foreign countries may affect our ability to obtain adequate protection for our technology and the enforcement of ~~intellectual~~securities ~~property.~~or ~~If we are unable to adequately enforce our intellectual property rights throughout~~ the ~~world,~~incurrence ~~our business, financial condition, and results~~ of ~~operations could be adversely impacted.~~debt;

~~Because~~● weannouncements ~~are~~by ~~involved~~us inor ~~litigation~~our ~~from~~competitors ~~time~~of tosignificant ~~time~~contracts, ~~and~~acquisitions, ~~are~~or ~~subject~~strategic ~~to numerous laws and governmental regulations~~partnerships;

we● ~~could~~regulatory ~~incur substantial judgments~~developments;

~~fines~~● litigation involving us or our general industry;

~~legal~~● ~~fees~~additions ~~and~~or ~~other~~departures ~~costs~~of askey ~~well~~personnel; ~~as reputational harm~~and

We● ~~are~~changes ~~sometimes the subject of complaints or litigation from customers, employees or other third parties for various reasons. The damages sought against us~~ in ~~some~~general ~~of these litigation proceedings could be substantial. Although we maintain liability insurance for some litigation claims~~economic, ~~if one or more of the claims were to greatly exceed our insurance coverage limits or if our insurance policies do not cover a claim~~industry, ~~this could have a material adverse effect on our business, financial condition, results of operations~~ and ~~cash~~market ~~flows~~conditions.

~~Changes~~In the past, many companies that have experienced volatility and sustained declines in ~~tax~~the ~~laws~~market orprice ~~regulations~~of ~~that~~their ~~are~~stock ~~applied~~have ~~adversely~~become subject to securities class action and derivative action litigation. Securities litigation against us orcould result in substantial costs and divert our ~~customers~~management’s attention from other business concerns, which could materially harm our business. Any insurance we maintain may ~~have~~not aprovide ~~material~~adequate ~~adverse~~coverage ~~effect~~against onpotential losses from such securities litigation, and if claims or losses exceed our liability insurance coverage, our business would be adversely impacted. In addition, insurance coverage may become more expensive, which could harm our financial condition and results of operations.

~~cash~~Other ~~flow~~international and geopolitical events could also have a severe adverse impact on our business. For instance, in February 2022, Russia initiated military action against Ukraine. In October 2023, Israel initiated a military action against and Hamas in Gaza. In response, the United States and certain other countries imposed significant sanctions and trade actions against Russia and could impose further sanctions, trade restrictions, and other retaliatory actions. While we cannot predict the broader consequences, the conflict, and retaliatory and counter-retaliatory actions could materially adversely affect global trade, currency exchange rates, inflation, regional economies, and the global economy, which in turn may increase our costs, disrupt our supply chain, impair our ability to raise or access additional capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition, and results of operations.

~~financial condition or results of operations~~21

~~New~~We ~~income,~~may ~~sales,~~need ~~use~~but ~~or other tax laws, statutes, rules, regulations or ordinances could~~ be ~~enacted~~unable at any time, which could adversely affect our business operations and financial performance. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to ~~us.~~obtain ~~For~~additional funding ~~example,~~on ~~legislation~~satisfactory ~~enacted in 2017~~terms, ~~informally~~which titled the Tax Cuts and Jobs Act (the “Tax Act”) enacted many significant changes to the U.S. tax laws. Future guidance from the Internal Revenue Service and other tax authorities with respect to the Tax Act may affect us, and certain aspects of the Tax Act could bedilute repealed or modified in future legislation. In addition, it is uncertain if and to what extent various states will conform to the Tax Act or any newly enacted federal tax legislation. Changes in corporate tax rates, the realization of net deferred tax assets relating to our ~~operations,~~stockholders ~~the taxation of foreign earnings, and the deductibility of expenses under the Tax Act~~ or ~~future~~impose ~~reform~~burdensome ~~legislation~~financial ~~could~~restrictions ~~have a material impact~~ on ~~the value of~~ our ~~deferred tax assets, could result in significant one-time charges, and could increase our future U~~business.~~S. tax expense.~~

19We have relied upon cash from financing activities, and in the future, we hope to rely on revenues generated from operations to fund our activities’ cash requirements. However, there can be no assurance that we will be able to generate any significant cash from our operating activities in the future. Future financing may not be available on a timely basis, in sufficient amounts, or on terms acceptable to us, if at all. Any debt financing or other financing of securities senior to the common stock will likely include financial and other covenants that will restrict our flexibility. Any failure to comply with these covenants would have a material adverse effect on our business, prospects, financial condition, and results of operations because we could lose our existing funding sources and impair our ability to secure new funding sources.

~~Existing~~Being ora ~~future~~public ~~government~~company ~~regulation~~is ~~could~~expensive ~~expose us to liabilities~~ and administratively ~~costly changes in our business operations and could reduce customer demand for our products and services~~burdensome.

As a public reporting company, we are subject to the information and reporting requirements of the Securities Act, the Exchange Act, and other federal securities laws, rules, and regulations related thereto, including compliance with the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). Complying with these laws and regulations requires the time and attention of our Board and management and increases our expenses. Among other things, we are required to:

We● ~~are~~maintain ~~subject to federal~~ and ~~state~~evaluate ~~consumer~~a ~~protection~~system ~~laws and regulations, including laws protecting the privacy~~ of ~~customer~~internal ~~non-public~~controls ~~information~~over ~~and~~financial ~~regulations~~reporting ~~prohibiting unfair and deceptive trade practices, as well as laws and regulations governing businesses~~ in ~~general~~compliance ~~and the Internet and ecommerce and certain environmental laws. Additional laws and regulations may be adopted~~ with ~~respect to~~ the ~~Internet,~~requirements ~~the effect~~ of ~~which~~Section on404 ~~ecommerce~~of isthe ~~uncertain.~~Sarbanes-Oxley ~~These~~Act ~~laws may cover issues such as user privacy, spyware~~ and the ~~tracking~~related ofrules ~~consumer activities, marketing emails~~ and ~~communications,~~regulations ~~other advertising and promotional practices, money transfers, pricing, content and quality~~ of ~~products~~the ~~and~~SEC ~~services, taxation, electronic contracts~~ and ~~other~~the ~~communications,~~Public ~~intellectual~~Company ~~property~~Accounting ~~rights,~~Oversight ~~and~~Board; ~~information~~● ~~security.~~maintain ~~Furthermore,~~policies itrelating isto ~~not~~disclosure ~~clear~~controls ~~how existing laws such as those governing issues such as property ownership, sales~~ and ~~other~~procedures; ~~taxes,~~● ~~trespass,~~prepare ~~data mining~~ and ~~collection,~~distribute ~~and~~periodic ~~personal~~reports ~~privacy~~in ~~apply~~compliance ~~to the Internet and ecommerce. To the extent we expand into international markets, we will be faced~~ with ~~complying~~our ~~with~~obligations ~~local~~under ~~laws~~federal ~~and~~securities ~~regulations, some of which may be materially different than U.S.~~ laws; ~~and~~● ~~regulations.~~institute ~~Any~~a ~~such~~more ~~foreign~~comprehensive ~~law~~compliance ~~or regulation~~function, ~~any~~including ~~new~~with ~~U.S.~~respect ~~law or regulation, or the interpretation or application of existing laws and regulations~~ to ~~the~~corporate ~~Internet~~governance; ~~or other online services or our business in general, may have a material adverse effect on our business, prospects, financial condition~~ and ~~results~~● ~~of operations by~~involve, ~~among other things, impeding the growth of the Internet, subjecting us~~ to ~~fines,~~a ~~penalties,~~greater ~~damages or other liabilities~~degree, ~~requiring costly changes in~~ our ~~business~~outside ~~operations~~legal ~~and~~counsel ~~practices,~~ and ~~reducing~~accountants ~~customer~~in ~~demand for our products and services. We may not maintain sufficient, or any, insurance coverage to cover~~ the ~~types~~above ~~of claims or liabilities that could arise as a result of such regulation~~activities.

~~Possible~~The ~~new~~costs ~~tariffs~~of ~~that~~preparing ~~might~~and befiling ~~imposed~~annual byand quarterly reports, proxy statements, when required, and other information with the ~~United~~SEC ~~States~~and ~~government~~furnishing ~~could~~audited ~~have~~reports to stockholders is expensive and much greater than that of a privately-held company, and compliance with these rules and regulations may require us to hire additional financial reporting, internal controls, and other finance personnel, and involve a material ~~adverse~~increase ~~effect~~in onregulatory, ~~our~~legal and ~~results~~accounting expenses and the attention of ~~operations~~management. There can be no assurance that we will be able to comply with the applicable regulations in a timely manner, if at all. In addition, being a public company makes it more expensive for us to obtain director and officer liability insurance. In the future, we may be required to accept reduced coverage or incur substantially higher costs to obtain this coverage.

Additionally, the expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. These increased costs will require us to divert a significant amount of money that we could otherwise use to develop our business. If we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions, and other regulatory action, as well as potentially civil litigation.

~~Changes~~We ~~in U.S. and foreign governments’ trade policies~~ have ~~resulted~~identified material weaknesses in, ~~and~~our ~~may~~internal ~~continue~~control toover ~~result~~financial ~~in, tariffs on imports into and exports from the U~~reporting.~~S.,~~ ~~among~~These material ~~other~~weaknesses restrictions. Throughout 2018 and 2019, the U.S. imposed tariffs on imports from several countries, including China. If further tariffs are imposed on imports of our products, or retaliatory trade measures are taken by China or other countries in response to existing or future tariffs, we could becontinue ~~forced~~ to ~~raise~~adversely ~~prices~~affect ~~on all of~~ our ~~imported~~ability ~~products or make changes~~ to report our ~~operations,~~results ~~any~~ of ~~which~~operations ~~could~~and ~~materially~~financial ~~harm~~condition ~~our~~accurately ~~revenue or operating results. Any additional future tariffs or quotas imposed on our products or related materials may impact our sales, gross margin~~ and ~~profitability~~in ifa wetimely ~~are unable to pass increased prices onto our customers~~manner.

WeOur ~~operate~~management inis anresponsible ~~industry~~for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our management is likewise required, every quarter, to evaluate the ~~risk~~effectiveness of ~~intellectual~~our ~~property~~internal ~~litigation~~controls and to disclose any changes and material weaknesses identified through such evaluation in those internal controls. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, so there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

~~Claims of infringement against us may hurt our business~~22

~~Our~~As ~~success~~described ~~depends,~~ in ~~part,~~this ~~upon~~Annual ~~non-infringement~~Report ofon ~~intellectual~~Form ~~property rights owned by others and being able to resolve claims of intellectual property infringement without major financial expenditures or adverse consequences. Participants that own~~10-K, ~~or claim to own, intellectual property may aggressively assert their rights. From time to time,~~ we ~~may~~identified beseveral ~~subject~~material toweaknesses ~~legal~~in ~~proceedings and claims relating to the intellectual property rights of others. Future litigation may be necessary to defend us or~~ our ~~clients~~internal bycontrol ~~determining~~over ~~the~~financial ~~scope, enforceability, and validity of third-party proprietary rights or to establish its proprietary rights~~reporting. ~~Some~~As ~~competitors have substantially greater resources and are able to sustain the costs of complex intellectual property litigation to~~ a ~~greater degree and for longer periods of time. In addition~~result, ~~patent~~our ~~holding~~management ~~companies~~concluded that our ~~focus~~internal ~~solely~~control onover ~~extracting~~financial ~~royalties~~reporting ~~and~~was ~~settlements~~not byeffective ~~enforcing~~as ~~patent rights may target us. Regardless~~ of ~~whether~~December ~~claims that we are infringing patents or other intellectual property rights have any merit~~31, ~~these claims are time consuming and costly to evaluate and defend and could:~~2023.

●Any failure to maintain such internal control could adversely ~~affect~~impact ~~relationships~~on our ability to report our financial position and results from operations on a timely and accurate basis, which could result in a material adverse effect on our business. If our financial statements are not accurate, investors may not have a complete understanding of our operations. Since our financial statements are not filed on time, we are subject to sanctions or investigations by Nasdaq, the SEC, or other regulatory authorities. In addition, we would likely incur additional accounting, legal, and other costs in connection with ~~future~~any ~~clients;~~remediation steps. Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which could negatively affect our stock’s trading price.

●To ~~cause~~respond ~~delays~~to orthese ~~stoppages~~material weaknesses, we have devoted significant efforts and resources committed to the remediation and improvement of our internal control over financial reporting. While we have processes to identify and appropriately apply applicable accounting requirements, we plan to enhance these processes to evaluate our research better and understand the nuances of the complex accounting standards that apply to our financial statements. Our plans at this time include investing in information technology (“IT”) systems to enhance our operational and financial reporting and internal controls, enhancing our organizational structure to support financial reporting processes and internal controls, further developing and documenting detailed policies and procedures regarding business processes for significant accounts, critical accounting policies and critical accounting estimates, establishing effective general controls over IT systems to ensure that information produced can be relied upon by process level controls is relevant and reliable, providing ~~products;~~guidance, education and training to employees relating to our accounting policies and procedures. Additionally, we have hired and plan to continue to hire, as resources permit, qualified accounting personnel to manage our functional controls better and segregate responsibilities. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.

●We ~~divert~~can ~~management’s~~give ~~attention~~no assurance that the measures we have taken and ~~resources;~~plan to take in the future, will remediate the material weakness identified or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls. In addition, even if we successfully strengthen our controls and procedures, in the future, those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements.

●New ~~subject~~laws, usregulations, and standards relating to ~~significant~~corporate ~~liabilities;~~governance and public disclosure may create uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time-consuming.

●These ~~require~~laws, usregulations, and standards are subject to ~~cease~~varying ~~some~~interpretations, orin ~~all~~many cases due to their lack of ~~its~~specificity, and, as a result, may evolve as the courts and other bodies provide new guidance. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing disclosure and governance practice revisions. If our efforts to comply with new laws, regulations, and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be adversely affected.

InAs ~~addition~~a topublic ~~liability~~company ~~for~~subject ~~monetary~~to ~~damages~~these rules and regulations, ~~which~~we may befind ~~tripled~~it ~~and~~more ~~may~~expensive ~~include~~to ~~attorneys’~~obtain ~~fees,~~director ~~or,~~and inofficer ~~some~~liability ~~circumstances~~insurance, ~~damages~~and ~~against clients,~~ we may be ~~prohibited~~required ~~from~~to ~~developing,~~accept ~~commercializing,~~reduced coverage or ~~continuing~~incur tosubstantially ~~provide~~higher ~~some~~costs orto ~~all~~obtain ofcoverage. ~~our~~These ~~products~~factors ~~unless~~could wealso ~~obtain~~make ~~licenses~~it ~~from,~~more ~~and~~difficult ~~pay~~for ~~royalties~~us to, ~~the~~attract ~~holders~~and retain ofqualified ~~the~~members ~~patents~~of orour ~~other intellectual property rights~~Board, ~~which~~particularly ~~may~~to ~~not~~serve beon ~~available~~its onAudit ~~commercially~~Committee ~~favorable~~and ~~terms~~Compensation Committee, orand atqualified ~~all~~executive officers.

20If research analysts do not publish research about our business or if they issue unfavorable commentary or downgrade our common stock, our stock price and trading volume could decline.

~~Geopolitical~~The ~~conditions,~~trading ~~including~~market ~~trade~~for ~~disputes~~our securities may depend partly on the research and ~~direct~~reports that research analysts publish about us and our business. If we do not maintain adequate research coverage, or ~~indirect~~if ~~acts~~any of ~~war~~the analysts who cover us downgrade our stock or ~~terrorism~~publish inaccurate or unfavorable research about our business, the price of our common stock could ~~have~~decline. anIf ~~adverse~~one ~~effect~~or more of our research analysts ceases to cover our company or fails to publish reports on us regularly, demand for our ~~operations~~securities could decrease, which could cause the price of our common stock and ~~financial~~warrants ~~results~~or trading volume to decline.

Since we operate on a global basis, our operations could be disrupted by geopolitical conditions, trade disputes, international boycotts and sanctions, political and social instability, acts of war, terrorist activity or other similar events. From time to time, we could have a large investment in a particular asset type, a large revenue stream associated with a particular customer or industry, or a large number of customers located in a particular geographic region. Decreased demand from a discrete event impacting a specific asset type, customer, industry, or region in which we have a concentrated exposure could negatively impact our results of operations.23

InWe ~~February~~do 2022, Russia initiated significant military action against Ukraine. In response, the U.S. and certain other countries imposed significant sanctions and export controls against Russia, Belarus and certain individuals and entities connected to Russian or Belarusian political, business, and financial organizations, and the U.S. and certain other countries could impose further sanctions, trade restrictions, and other retaliatory actions should the conflict continue or worsen. It is not ~~possible~~intend to ~~predict~~pay ~~the~~dividends ~~broader~~on ~~consequences~~our common ofstock ~~the conflict, including related geopolitical tensions, and the measures and retaliatory actions taken by the U.S. and other countries~~ in ~~respect thereof as well as any counter measures or retaliatory actions by Russia or Belarus in response, including, for example, potential cyberattacks or~~ the ~~disruption~~foreseeable ~~of energy exports~~future, ~~is likely to cause regional instability, geopolitical shifts,~~ and ~~could materially adversely affect global trade~~consequently, ~~currency~~your exchange rates, regional economies and the global economy. The situation remains uncertain, and while it is difficult to predict the impact of any of the foregoing, the conflict and actions taken in response to the conflict could increase our costs, disrupt our supply chain, reduce our sales and earnings, impair our ability to ~~raise~~achieve ~~additional~~a ~~capital~~return ~~when needed~~ on ~~acceptable~~your ~~terms,~~investment ifwill atdepend ~~all,~~on orits ~~otherwise adversely affect our business, financial condition, and results of operations~~appreciation.

~~General~~We ~~Risk~~have ~~Factors~~never declared or paid cash dividends on our common stock and do not anticipate paying any cash dividends to holders of our common stock in the foreseeable future. Consequently, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments. There is no guarantee that shares of our common stock will appreciate in value or even maintain the price at which our stockholders have purchased their shares.

AnAnti-takeover ~~investment~~provisions in our ~~securities~~charter documents isand ~~speculative~~Nevada ~~and~~law ~~there~~could ~~can~~discourage, bedelay noor ~~assurance~~prevent a change of ~~any~~control ~~return~~of onour ~~any~~Company ~~such~~and ~~investment~~may affect the trading price of our common stock.

We are a Nevada corporation, and the anti-takeover provisions of the Nevada Control Shares Acquisition Act may discourage, delay, or prevent a change of control by limiting the voting rights of control shares acquired in a control share acquisition. In addition, our Articles of Incorporation and the A&R Bylaws may discourage, delay, or prevent a change in our management or control over us that stockholders may consider favorable. Among other things, our Articles of Incorporation and A&R Bylaws:

An● ~~investment~~authorize inthe ~~our~~issuance ~~securities~~of is“blank ~~speculative~~check” ~~and~~preferred ~~there~~stock ~~can be no assurance~~ that ~~investors~~our ~~will~~Board ~~obtain~~could ~~any~~issue ~~return~~in onresponse ~~their investment. Investors may be subject~~ to ~~substantial~~a ~~risks~~takeover ~~involved in an investment us, including the risk of losing their entire investment.~~attempt;

~~Certain~~● ~~provisions~~provide ofthat vacancies on our ~~Articles~~Board, ofincluding ~~Incorporation~~newly ~~could~~created ~~allow~~directorships, ~~concentration~~may be filled only by a majority vote of ~~voting~~directors ~~power~~then in ~~one~~office, ~~individual~~except a vacancy occurring because of the removal of a director without cause shall be filled by vote of the stockholders; and

~~which~~● limit who may call special meetings of stockholders.

~~among~~These ~~other~~provisions ~~things~~could delay or prevent a change of control, whether desired by or beneficial to our stockholders.

~~delay~~The orsecurity ~~frustrate~~of our IT systems may be compromised in the ~~removal~~event of ~~incumbent~~system ~~directors~~failures, unauthorized access, cyber-attacks, or a ~~takeover~~deficiency ~~attempt~~in our cybersecurity, and confidential information, including nonpublic personal information that we maintain, could be improperly disclosed.

~~even~~We ifrely ~~such~~extensively ~~events~~on IT and systems, including internet sites, data hosting, physical security, and software applications and platforms. Despite our security measures, our IT systems, some of which are managed by third parties, may be ~~beneficial~~susceptible to damage, disruptions, or shutdowns due to computer viruses, attacks by computer hackers, failures during the process of upgrading or replacing software, power outages, user errors or catastrophic events. A significant breakdown, invasion, corruption, destruction, or interruption of critical IT systems by our ~~stockholders~~employees, others with authorized access to our systems, or unauthorized persons could negatively impact or interrupt operations. Technology, including cloud-based computing, creates opportunities for the unintentional dissemination or intentional destruction of confidential information stored in our or third-party systems. We could also experience a business interruption, theft of confidential information, or reputational damage from malware or other cyber-attacks, which may compromise our systems or lead to data leakage, internally or at our third-party providers.

~~Provisions~~As part of our ~~Articles of Incorporation~~business, ~~such~~we asmaintain ~~our~~large ~~ability to designate and issue a class~~ amounts of ~~preferred~~confidential ~~stock without stockholder approval~~information, ~~may~~including ~~delay~~nonpublic orpersonal ~~frustrate~~information ~~the~~on ~~removal~~customers ~~of incumbent directors~~ and ~~may~~our ~~prevent~~employees. orBreaches ~~delay~~in ~~a merger~~security, ~~tender~~either ~~offer,~~ internally or ~~proxy~~at ~~contest involving~~ our ~~Company~~third-party ~~that is not approved by our Board of Directors (“Board”)~~providers, ~~even~~could ifresult ~~those events may be perceived to be~~ in the ~~best~~loss ~~interests of our stockholders. For example, one~~ or ~~more~~misuse of ~~our~~this ~~affiliates~~information, ~~could theoretically be issued a newly authorized and designated class of shares of our preferred stock. Such shares could have significant voting power~~ which ~~may dilute the voting power of our common stock~~could, ~~among~~in ~~other terms. Consequently~~turn, ~~anyone~~result toin ~~whom~~potential ~~these~~regulatory actions ~~shares~~or oflitigation, ~~preferred~~including ~~stock~~material ~~were~~claims ~~issued~~for ~~could~~damages, ~~have~~interruption ~~sufficient voting power~~ to ~~significantly influence if not control the outcome of all corporate matters submitted to the vote of~~ our ~~common stockholders~~operations, ~~subject~~damage to ~~the~~our ~~rules~~reputation ~~promulgated~~or byotherwise ~~Nasdaq.~~have a ~~Those~~material ~~matters~~adverse ~~could~~effect ~~include~~on ~~the~~our ~~election of directors~~business, ~~changes~~financial ~~in the size and composition of the Board~~condition, and ~~mergers~~operating ~~and other business combinations involving our Company~~results. InAlthough ~~addition,~~we ~~through~~maintain ~~any~~information ~~such~~security ~~person’s control of the Board~~ policies and ~~voting~~systems ~~power,~~designed ~~the affiliate may be able~~ to ~~control~~prevent ~~certain~~unauthorized ~~decisions,~~use ~~including~~or ~~decisions~~disclosure ~~regarding the qualification and appointment~~ of ~~officers,~~confidential ~~dividend policy~~information, ~~access to capital (~~including ~~borrowing~~nonpublic ~~from~~personal ~~third-party lenders and the issuance of additional equity securities)~~information, there ~~and~~can ~~the~~be ~~acquisition~~no orassurance ~~disposition~~that ofsuch ~~assets~~use ~~by our Company. In addition, the concentration of voting power in the hands of an affiliate could have the effect of delaying~~ or ~~preventing~~disclosure awill ~~change~~not ~~in control of our Company, even if the change in control would benefit our stockholders and may adversely affect the future market price of our common stock should a trading market therefor develop~~occur.

21Any such business interruption, theft of confidential information, reputational damage from malware or other cyber-attacks, or violation of personal information laws could have a material adverse effect on our business, financial condition, and results of operations.

IfItem ~~you~~1B. ~~purchase~~Unresolved ~~shares~~Staff ~~of our common stock~~Comments.

~~you may experience immediate and substantial dilution in the net tangible book value of your shares~~None.

~~In addition~~24

weItem ~~may~~1C. ~~issue shares of common stock pursuant to our equity incentive plans and additional equity or convertible debt securities in the future~~Cybersecurity.

~~which~~Cybersecurity ~~may~~Risk ~~result~~Management inand ~~additional dilution to investors~~Strategy

We ~~are~~recognize ~~currently~~the ~~authorized~~importance ~~to issue up to 200,000,000 shares~~ of ~~common stock. We may~~assessing, ~~in the future~~identifying, ~~issue previously authorized~~ and ~~unissued~~managing ~~shares~~material ofrisks ~~common~~associated ~~stock,~~with ~~which~~cybersecurity ~~would result in the dilution of current stockholders’ ownership interests~~threats. ~~Additional~~These ~~shares~~risks ~~are~~include, ~~subject~~among to issuance through various equity compensation plans or through the exercise of currently outstanding equity awards. The potential issuance of additional shares of common stock may create downward pressure on the trading price of our common stock. We also may in the future issue additional shares of common stock or other ~~securities~~things: ~~that~~operational ~~are~~risks, ~~convertible~~intellectual property ~~into or exercisable for common stock in order to raise capital or effectuate other business purposes. Purchasers of the shares we sell~~theft, ~~as well as our existing stockholders~~fraud, ~~will experience significant dilution if we sell shares at prices significantly below the price at which they invested. In addition~~extortion, toharm ~~the extent we need~~ to ~~raise~~employees ~~additional capital in the future and we issue additional shares of common stock~~ or ~~securities convertible or exchangeable for our common stock~~customers, ~~our then existing stockholders may experience dilution~~ and ~~the~~violation ~~new securities may have rights senior to those~~ of ~~our~~data ~~common~~privacy ~~stock~~or ~~offered~~security ~~in this offering~~laws. ~~Any of the above events could significantly harm our business, prospects, financial condition and results of operations and cause the price of our common stock to decline.~~

~~Our~~Identifying ~~stock~~and ~~price~~assessing ~~has~~cybersecurity ~~been~~risk is integrated into our overall risk management systems and processes. Cybersecurity risks related to our business, technical operations, privacy, and ~~may~~compliance ~~continue~~issues are identified and addressed through a multi-faceted approach including third-party assessments, internal IT Audits, IT security, governance, risk, and compliance reviews. To defend, detect, and respond to becybersecurity incidents, ~~volatile~~we, among other things: conduct proactive privacy and cybersecurity reviews of systems and applications, audit applicable data policies, perform penetration testing using external third-party tools and techniques to test security controls, conduct employee training, monitor emerging laws and regulations related to data protection and information security (including our consumer products) and implement appropriate changes.

~~Risk~~We ~~Factors~~have implemented incident response and breach management processes. In the event of an incident, the Cybersecurity team assesses, among other factors, safety impact, supply chain and manufacturing disruption, data and personal information loss, business operations disruption, projected cost, and potential for reputational harm, with support from external technical, legal and law enforcement support, as appropriate.

●Security ~~the~~events ~~ongoing~~and ~~impacts~~data ofincidents ~~the~~are ~~COVID-19~~evaluated, ranked ~~pandemic~~by severity, and ~~resulting~~prioritized ~~impact~~for onresponse ~~stock~~and ~~market~~remediation. ~~performance;~~Incidents are evaluated to determine materiality as well as operational, business, and privacy impact.

●We ~~fluctuations~~occasionally inengage ~~our~~third ~~financial~~parties ~~results~~and orconsultants to ~~outlook,~~assess orour ~~those~~internal ofcybersecurity ~~companies~~programs ~~perceived~~and tocompliance bewith ~~similar~~applicable topractices ~~us;~~and standards.

●Our ~~changes~~risk inmanagement ~~the~~program ~~prices~~also ofassesses ~~commodities~~third-party risks, and we perform third-party risk management to identify and mitigate risks from third parties such as vendors, suppliers, and other business partners associated with our use of third-party service providers. Cybersecurity risks are evaluated when determining the selection and oversight of applicable third-party service providers when handling and/or processing our employee, business;, or customer data. In addition to new vendor onboarding, we perform risk management during third-party cybersecurity compromise incidents to identify and mitigate risks to us from third-party incidents.

●Because ~~changes~~we develop, process, store, and transmit large amounts of data, including confidential, classified, sensitive, proprietary, and business and personal information, failure to prevent or mitigate data loss, theft, misuse, unauthorized access, or other security breaches or vulnerabilities affecting our systems could: expose us or our customers to a risk of loss, disclosure, or misuse of such information; adversely affect our operating results; result in litigation, liability, or regulatory action (including under laws related to privacy, data use, data protection, data security, network security, and consumer protection); deter customers or sellers from using our ~~capital~~products, ~~structure~~and services; and otherwise harm our business and reputation. We use third-party technology and systems for a variety of reasons, including, without limitation, encryption and authentication technology, employee email, content delivery to customers, back-office support, and other functions. Although we have developed systems and processes that are designed to protect our data and prevent such asincidents, ~~future~~including ~~issuances~~systems and processes designed to reduce the impact of ~~securities~~a security breach at a third-party vendor or ~~the~~customer, ~~incurrence~~such ofmeasures ~~debt;~~cannot provide absolute security and may fail to operate as intended or be circumvented.

●Cybersecurity ~~announcements by us or our competitors of significant contracts, acquisitions or strategic partnerships;~~Governance

●Cybersecurity ~~regulatory~~is ~~developments;~~an important part of our risk management processes and an area of focus for our Board and management. Our Audit Committee is responsible for the oversight of risks from cybersecurity threats. Members of the Audit Committee receive updates every quarter from senior management, including leaders from our Information Security, Product Security, Compliance, and Legal teams regarding matters of cybersecurity. This includes existing and new cybersecurity risks, the status of how management is addressing and/or mitigating those risks, cybersecurity and data privacy incidents (if any), and the status of key information security initiatives.

●Our ~~litigation~~cybersecurity risk management and strategy processes are overseen by leaders from our Information Technology, Information Security, Product Security, Compliance, and Legal teams. Such individuals have extensive prior work experience in various roles involving usinformation ortechnology, including security, auditing, compliance, systems, and programming. These individuals are informed about and monitor the prevention, mitigation, detection, and remediation of cybersecurity incidents through their management of, and participation in, the cybersecurity risk management and strategy processes described above, including the operation of our ~~general~~incident ~~industry;~~response plan, and report to the Audit Committee.

●The ~~additions~~Company oracknowledges ~~departures~~the increasing importance of ~~key~~cybersecurity ~~personnel;~~in today’s digital and interconnected world. Cybersecurity threats pose significant risks to the integrity of our systems and data, potentially impacting our business operations, financial condition, and reputation.

~~● changes in general economic, industry and market conditions.~~25

~~Furthermore,~~As ~~stock~~a ~~markets~~smaller ~~have~~reporting ~~experienced~~company, ~~price~~we ~~and~~currently do ~~volume~~not ~~fluctuations~~have ~~that~~formalized ~~have~~cybersecurity ~~affected~~measures, ~~and~~a ~~continue~~dedicated tocybersecurity ~~affect~~team, ~~the~~or ~~market~~specific ~~prices~~protocols ofto ~~equity~~manage ~~securities~~cybersecurity ~~of many companies~~risks. ~~These~~Our approach ~~fluctuations~~to ~~often~~cybersecurity ~~have~~is ~~been~~in ~~unrelated or disproportionate to~~ the ~~operating~~developmental ~~performance of those companies. These broad market fluctuations~~stage, asand ~~well~~we ashave ~~general~~not ~~economic,~~yet ~~political~~conducted ~~and~~comprehensive ~~market~~risk ~~conditions~~assessments, ~~such~~established asan incident ~~recessions,~~response ~~interest rate changes and international currency fluctuations~~plan, ~~may~~or ~~negatively~~engaged ~~affect~~with ~~the~~external ~~market~~cybersecurity ~~price~~consultants offor ~~our~~assessments ~~common~~or ~~stock~~services.

~~Additionally~~Given our current stage of cybersecurity development, we have not experienced any significant cybersecurity incidents to date. However, we recognize that the ~~global~~absence ~~economy~~of ~~and~~a ~~financial~~formalized ~~markets~~cybersecurity framework may beleave ~~adversely~~us ~~affected~~vulnerable byto ~~geopolitical~~cyber-attacks, ~~events~~data breaches, ~~including~~and ~~the~~other ~~current~~cybersecurity orincidents. ~~anticipated~~Such ~~impact~~events could potentially lead to unauthorized access to, or disclosure of, ~~military~~sensitive ~~conflict~~information, ~~and~~disrupt ~~related~~our ~~sanctions~~business ~~imposed~~operations, onresult ~~Russia~~in byregulatory ~~the~~fines ~~United~~or ~~States~~litigation costs, and ~~other~~negatively ~~countries~~impact ~~due~~our toreputation ~~Russia’s~~among ~~recent~~customers ~~invasion~~and ~~of Ukraine~~partners.

InThe ~~the~~Company ~~past,~~is ~~many companies that have experienced volatility and sustained declines~~ in the ~~market~~process ~~price~~ of ~~their~~evaluating ~~stock~~our cybersecurity ~~have~~needs ~~become~~and ~~subject~~developing toappropriate ~~securities~~measures ~~class~~to ~~action~~enhance ~~and~~our ~~derivative~~cybersecurity ~~action litigation~~posture. ~~Securities~~This ~~litigation~~includes ~~against~~considering usthe ~~could~~engagement of ~~result~~external incybersecurity ~~substantial~~experts ~~costs~~to ~~and~~advise ~~divert~~on ~~our~~best ~~management’s~~practices, ~~attention~~conducting ~~from~~vulnerability ~~other business concerns~~assessments, ~~which~~and ~~could~~developing ~~materially~~an ~~harm~~incident ~~our business~~response strategy. ~~Any~~Our ~~insurance~~goal weis ~~maintain~~to ~~may~~establish ~~not~~a ~~provide~~cybersecurity ~~adequate~~framework ~~coverage~~that ~~against~~is ~~potential~~commensurate ~~losses~~with ~~from~~our ~~such~~size, ~~securities litigation~~complexity, and ifthe ~~claims~~nature orof ~~losses exceed~~ our ~~liability insurance coverage~~operations, thereby ~~our~~reducing ~~business would be adversely impacted. In addition, insurance coverage may become more expensive, which would harm~~ our ~~financial~~exposure ~~condition~~to ~~and~~cybersecurity ~~results of operations~~risks.

22Despite our efforts to improve our cybersecurity measures, there can be no assurance that our initiatives will fully mitigate the risks posed by cyber threats. The landscape of cybersecurity risks is constantly evolving, and the Company will continue to assess and update our cybersecurity measures in response to emerging threats.

WeFor ~~may~~a ~~need~~discussion of potential cybersecurity risks affecting the Company, please refer to Item 1A - Risk Factors - Risks Related to IT in this report.

~~but~~Item be2. ~~unable~~Properties.

We lease approximately 15,500 square feet of office space at 8669 Research Drive, Irvine, California 92618 as our principal executive office. This lease commenced on December 1, 2019 and matures on March 31, 2025, with no rent due from December 1, 2019 to ~~obtain~~April ~~additional~~1, ~~funding~~2020. From April 1, 2020, through March 31, 2025, base rent is due on ~~satisfactory~~the ~~terms~~first of each month for $25,200. We paid an initial amount of $68,128, comprising the rent for April 2020, a security deposit, and the amount due for property taxes, insurance, and association fees. The base rent shall be adjusted on the following dates as follows:

which could dilute our stockholders or impose burdensome financial restrictions on our business

From: 12/1/2022-11/30/2023	$	28,347
From:12/1/2023-11/30/2024		29,480
From: 12/1/2024-03/31/2025		29,480

WeThe ~~have~~lease ~~relied~~otherwise ~~upon~~contains ~~cash~~commercial from financing activities and in the future, we hope to rely on revenues generated from operations to fund the cash requirements of our activities. However, there can be no assurance that we will be able to generate any significant cash from our operating activities in the future. Future financing may not be available on a timely basis, in sufficient amounts or on market terms ~~acceptable~~for toevents ~~us, if at all. Any debt financing or other financing~~ of securities senior to the common stock will likely include financial and other covenants that will restrict our flexibility. Any failure to comply with these covenants would have a material adverse effect on our businessdefault, ~~prospects~~termination, ~~financial condition,~~ and ~~results~~the ~~of operations because we could lose our existing sources of funding and impair our ability to secure new sources of funding~~like.

~~Being~~The aCompany ~~public~~entered ~~company~~into two other leases with PCS Properties 2, LLC (“PCS”) for additional space in Irvine, California. The leases commenced on March 1, 2022, and June 1, 2022 and mature on February 28, 2027 and May 31, 2027. Base rent is ~~expensive~~initially $16,250 and ~~administratively~~$48,379, ~~burdensome~~with escalations contained in the lease through February 28, 2027, and May 31, 2027. On May 29, 2024, the Company entered into a settlement agreement and mutual release with PCS terminating our lease agreement for premises at 8687 Research Drive, Irvine, California. This settlement resolves all disputes and allows the Company to avoid the expense and risk of further litigation.

AsThe aCompany ~~public~~entered ~~reporting~~into ~~company,~~a welease ~~are~~agreement ~~subject~~with toAviva ~~the~~Life ~~information~~ and ~~reporting~~Pensions UK ~~requirements~~Limited of(“Aviva”) ~~the~~for ~~Securities~~office ~~Act,~~space ~~the~~on ~~Exchange~~April ~~Act and other federal securities laws~~19, ~~rules~~2022 ~~and~~for ~~regulations~~a ~~related~~five-year ~~thereto,~~term. ~~including~~The ~~compliance~~lease ~~with~~commenced ~~the~~on ~~Sarbanes-Oxley~~April ~~Act~~18, of2023 ~~2002~~and ~~(the~~matures on ~~“Sarbanes-Oxley~~January ~~Act”)~~17, 2027. ~~Complying~~The ~~with~~quarterly ~~these~~base ~~laws~~rent ~~and~~for ~~regulations requires~~ the ~~time~~lease ~~and~~is ~~attention~~$38,759 ofwith ~~our~~no ~~Board~~escalation ~~and~~of ~~management~~rent ~~and~~ increases ~~our expenses~~. ~~Among other things, we are required to:~~

●The ~~maintain~~Company ~~and~~entered ~~evaluate~~into a ~~system~~lease ofagreement ~~internal~~for office ~~controls~~space ~~over~~with ~~financial~~Concord ~~reporting~~Property Development, LLC (“Concord”) in ~~compliance~~North ~~with~~Carolina ~~the~~on ~~requirements~~May of1, ~~Section~~2023 ~~404~~for ofa ~~the~~five ~~Sarbanes-Oxley~~year ~~Act~~term. The Company paid a security deposit of $24,000 and the ~~related~~monthly ~~rules~~base ~~and~~rent ~~regulations~~was $24,246 with an annual escalation of rent increase at 2%. The landlord completed the ~~SEC~~improvements to the office space and the ~~Public~~lease ~~Company~~commenced ~~Accounting~~on ~~Oversight~~December ~~Board;~~1, ●2023. ~~maintain~~On ~~policies~~June ~~relating~~6, to2024, ~~disclosure~~the ~~controls~~Company ~~and~~entered into ~~procedures;~~a ●settlement ~~prepare~~agreement with Concord and ~~distribute~~have ~~periodic~~resolved ~~reports~~all indisputes ~~compliance~~arising ~~with~~from ~~our~~nonpayment ~~obligations~~of ~~under~~rent. ~~federal~~Concord ~~securities~~has ~~laws;~~released ●and ~~institute~~forever discharged athe ~~more~~Company ~~comprehensive~~from ~~compliance~~any ~~function~~claims, ~~including~~demands, ~~with~~damages, ~~respect~~liabilities, or causes of action related to ~~corporate~~the ~~governance;~~lease and ●the ~~involve,~~dispute. toThe agreement aalso ~~greater~~specifies ~~degree,~~that ~~our~~it ~~outside~~is ~~legal~~not ~~counsel~~to ~~and~~be ~~accountants~~considered inan ~~the~~admission ~~above~~of ~~activities~~liability by any party.

The ~~costs~~Company ofentered ~~preparing~~into ~~and~~a ~~filing~~lease ~~annual~~agreement ~~and~~for office ~~quarterly~~space ~~reports,~~in ~~proxy~~Columbia ~~statements,~~on ~~when~~August ~~required~~15, ~~and~~2023 ~~other~~for ~~information with the SEC and furnishing audited reports to stockholders is expensive and much greater than that of~~ a ~~privately-held~~two ~~company,~~year ~~and~~term. ~~compliance~~The ~~with~~Company ~~these~~paid ~~rules and regulations may require us to hire additional financial reporting, internal controls and other finance personnel, and involve~~ a ~~material~~security ~~increase~~deposit intotaling ~~regulatory~~$24,511 ~~legal~~at ~~and accounting expenses and~~ the ~~attention~~ inception of ~~management. There can be no assurance that we will be able to comply with~~ the ~~applicable regulations in a timely manner, if at all~~lease. InThe ~~addition,~~monthly ~~being~~base arent ~~public~~was ~~company makes it more expensive for us to obtain director and officer liability insurance. In the future~~$3,500 wewith ~~may~~no beannual ~~required~~escalation toof ~~accept~~rent ~~reduced coverage or incur substantially higher costs to obtain this coverage~~increases.

~~Additionally,~~As the expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. These increased costs will require us to divert a significant amount of monies that we could otherwise use to develop our business. Ifefforts ~~we are unable to satisfy our obligations as a public company~~increase, we ~~could~~intend ~~be subject~~ to seek ~~delisting~~additional ofleased ~~our common stock~~space, ~~fines,~~which ~~sanctions,~~will ~~and~~include ~~other~~some ~~regulatory~~warehouse ~~action, and potentially civil litigation~~facilities.

~~We have identified material weaknesses~~26

Item ~~in our internal control over financial reporting~~3. ~~These material~~Legal ~~weaknesses~~Proceedings.

From ~~could~~time ~~continue~~ to ~~adversely~~time, ~~affect~~we ~~our~~are ~~ability~~involved in lawsuits, claims, investigations, and proceedings, including pending opposition proceedings involving patents that arise in the ordinary course of business. No matters are pending that we expect to ~~report~~have a material adverse impact on our business, results of operations, ~~and~~ financial condition, ~~accurately~~or ~~and~~cash inflows, aexcept ~~timely~~as ~~manner~~set forth below.

~~Our~~An ~~management~~unfavorable isoutcome ~~responsible~~in ~~for~~any ~~establishing~~specific ~~and~~period could ~~maintaining~~have ~~adequate~~a ~~internal~~material ~~control~~adverse ~~over~~effect ~~financial~~on ~~reporting~~our ~~designed~~results ~~to provide reasonable assurance regarding the reliability~~ of ~~financial~~operations ~~reporting and the preparation of financial statements~~ for ~~external~~that ~~purposes~~period inor ~~accordance~~future ~~with GAAP~~periods. ~~Our~~Other ~~management~~than isas ~~likewise~~described ~~required~~below, onwe are not a ~~quarterly~~party ~~basis,~~ to ~~evaluate the effectiveness of our internal controls and to disclose~~ any ~~changes and~~ material ~~weaknesses~~pending ~~identified through such evaluation in those internal controls. A material weakness is a deficiency,~~ or athreatened ~~combination~~legal of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basisproceedings.

23October 7, 2022 Litigation

AsOn ~~described~~October ~~elsewhere~~7, in2022, ~~this~~a ~~Annual~~shareholder ~~Report~~derivative onaction was ~~Form~~initiated ~~10-K~~by a stockholder (“Plaintiff”) against us, weMichael ~~identified~~Panosian, ~~several~~Joshua ~~material~~Keeler, ~~weaknesses~~Zareh Khachatoorian, Martin Galstyan, et al. (“Defendants”), in ~~our~~Nevada’s ~~internal~~Eighth ~~control~~Judicial ~~over~~District ~~financial~~Court, ~~reporting~~Case No. AsA-22-859580-B. aThe ~~result~~Plaintiff alleged breaches of ~~these~~fiduciary ~~material~~duties ~~weaknesses~~by the Defendants, ~~our~~accusing ~~management~~them ~~concluded~~of ~~that~~failing ~~our~~in ~~internal~~their ~~control~~duties ~~over~~in ~~financial~~relation ~~reporting~~to ~~was~~a ~~not~~registered ~~effective~~direct asoffering of ~~December~~Series F 31and G preferred stock in February 2022, and a 1-for-150 reverse stock split in April 2022. The Plaintiff sought damages exceeding $10,000, attorney fees, an accounting of books and records, equity relief, and reimbursement of legal costs.

~~Any~~The ~~failure~~Company’s toboard ~~maintain~~formed ~~such~~a ~~internal~~special ~~control~~litigation committee ~~could~~(“SLC”) ~~adversely~~on ~~impact~~May ~~our~~13, ~~ability~~2022, to ~~report~~assess ~~our~~the ~~financial~~claims. ~~position~~After review, the SLC, supported by third-party legal counsel, found no misconduct by Defendants and ~~results~~recommended ~~from~~against ~~operations~~pursuing onthe Plaintiff’s claims, a ~~timely~~decision ~~and~~upheld ~~accurate~~by ~~basis~~the board on November 4, ~~which~~2022. ~~could~~A ~~result~~Motion into Dismiss was filed by the SLC on October 12, 2023, and after a ~~material~~hearing ~~adverse~~on ~~effect~~February 14, 2024, the court dismissed the case on ~~our~~March 18, 2024, agreeing that the SLC’s investigation met Nevada’s legal standards and upheld the business judgment rule. IfFollowing ~~our~~Plaintiff’s ~~financial~~appeal ~~statements~~of ~~are~~the ~~not~~District ~~accurate,~~Court’s ~~investors~~Order ~~may~~dismissing ~~not~~the ~~have~~derivative claims to the Nevada Supreme Court, Plaintiff filed a ~~complete~~Motion ~~understanding~~for Reconsideration under Rule 60 of ~~our~~the ~~operations.~~Nevada ~~Likewise,~~Rules ifof ~~our~~Civil ~~financial~~Procedure ~~statements~~based ~~are~~upon ~~not~~the ~~filed~~argument onthat anew ~~timely~~evidence demonstrated ~~basis,~~that weat ~~could~~least beone ~~subject~~member toof ~~sanctions~~the orSLC ~~investigations~~was bynot ~~Nasdaq~~independent. Following full briefing and oral argument on the Plaintiff’s motion, the ~~SEC~~District orCourt ~~other~~issued ~~regulatory~~a ~~authorities~~Minute Order on October 17, 2024, denying the motion. InAs ~~addition~~the Court recognized, wethere ~~would~~can ~~likely~~be ~~incur~~no ~~additional~~question that ~~accounting~~at least two members of the SLC were independent, ~~legal~~which ~~and~~is ~~other~~a ~~costs~~more inthan ~~connection~~sufficient ~~with~~number ~~any~~under ~~remediation~~Nevada ~~steps~~law. ~~Ineffective~~The ~~internal~~District ~~controls~~Court ~~could~~instructed counsel ~~also~~for ~~cause~~the ~~investors~~SLC to ~~lose~~submit ~~confidence~~a informal ~~our~~draft ~~reported~~order ~~financial~~for ~~information,~~the ~~which~~District ~~could~~Court’s ~~have~~review aand ~~negative~~signature. ~~effect~~The onPlaintiff’s appeal of the ~~trading~~dismissal ~~price~~ of ~~our~~the ~~stock~~derivative claims is still pending and remains in the Nevada Supreme Court settlement program.

ToJune ~~respond to these material weaknesses~~22, 2023 Litigation

weOn June 22, 2023, PCS Properties 2, LLC (“Plaintiff”) initiated a lawsuit the Company in the Superior Court of California, County of Orange, alleging breach of a lease agreement dated December 10, 2021, for property at 8687 Research Drive, Irvine, California. The Plaintiff claimed unpaid rent of approximately $124,800 as of May 31, 2023, and sought damages including future rent through the lease’s term ending May 31, 2027, totaling at least $2,374,278, minus avoidable costs. Additional claims included recovery costs for the premises, reletting expenses, attorney fees, leasing commissions, prejudgment interest, and court fees.

~~have~~On ~~devoted~~May 29, 2024, both parties reached a settlement, entering into a Settlement Agreement and ~~plan~~Mutual toRelease, ~~continue~~effectively toresolving ~~devote~~all litigation. Concurrently, ~~effort~~they executed ~~and~~a ~~resources~~Stipulation tofor Entry of Judgment in case of the ~~remediation~~Company’s default on settlement payments, to be held by PCS’s counsel and ~~improvement~~filed ofin ~~our~~court ~~internal~~without ~~control~~further ~~over~~notice ~~financial~~to ~~reporting~~the Company if necessary. ~~While~~Under wethe ~~have~~Agreement, ~~processes~~each party is responsible for its own legal fees and costs. The Company agreed to ~~identify~~pay PCS $361,000 in full settlement, has paid $118,000 in June 2024 and ~~appropriately~~$118,000 ~~apply~~in ~~applicable~~July ~~accounting~~2024, ~~requirements~~and paid the remaining balance of $125,000 weon ~~plan~~October to09, ~~enhance~~2024. ~~these~~Both ~~processes~~parties agreed to ~~better~~a ~~evaluate~~general release ~~our~~of ~~research~~all past and ~~understanding~~present ofclaims related to the ~~nuances~~litigation, with an explicit waiver of ~~the~~California ~~complex~~Civil ~~accounting~~Code ~~standards~~Section ~~that~~1542. ~~apply~~The Agreement tocontains ~~our~~no ~~financial~~admission ~~statements~~of liability by any party. ~~Our~~This ~~plans~~settlement atconcludes ~~this~~all ~~time~~disputes ~~include~~from the litigation, allowing the Company to avoid further litigation costs and risks.

~~investing~~June ~~in information technology (“IT”) systems to enhance our operational and financial reporting and internal controls~~6, ~~enhancing~~2023 our organizational structure to support financial reporting processes and internal controls, further developing and documenting detailed policies and procedures regarding business processes for significant accounts, critical accounting policies and critical accounting estimates, establishing effective general controls over IT systems to ensure that information produced can be relied upon by process level controls is relevant and reliable, providing guidance, education and training to employees relating to our accounting policies and procedures. ALitigation

~~dditionally~~On June 6, we2024, ~~have~~the ~~hired~~Company entered into a Settlement Agreement with Concord Property Development, ~~and~~LLC ~~plan~~(“Landlord”) to ~~continue~~resolve toa ~~hire~~dispute arising from nonpayment of rent under a Commercial Lease Agreement dated October 31, as2022, ~~resources~~for ~~permit~~commercial premises located at 500 South Main Street, ~~qualified~~Suite ~~accounting~~101, ~~personnel~~Mooresville, North Carolina. Under the terms of the Settlement Agreement, the Company agreed to ~~better~~pay ~~manage~~the ~~our~~Landlord ~~functional~~a ~~controls~~total settlement amount of Six Hundred Sixty-Six Thousand Three Hundred Eighty-Eight Dollars $666,388 in four scheduled payments: (i) paid $100,000 on June 30, 2024; (ii) paid $200,000 on July 31, 2024; (iii) paid $183,194 on August 31, 2024; and ~~segregate~~(iv) ~~responsibilities~~paid $183,194 on September 30, 2024 pursuant to the terms of Settlement Agreement. The ~~elements~~Settlement Agreement stipulates that upon the Company’s timely payment of ~~our~~the ~~remediation~~full ~~plan~~settlement ~~can~~amount, the ~~only~~Landlord bewill ~~accomplished~~release ~~over~~and ~~time~~forever discharge the Company from any claims, demands, damages, liabilities, or causes of action related to the lease and wethe ~~can~~dispute. ~~offer~~Additionally, nothe ~~assurance~~Settlement Agreement provides that ~~these~~in ~~initiatives~~the ~~will~~event ~~ultimately~~of ~~have~~the Company’s default on its payment obligations, the ~~intended~~Landlord ~~effects~~is entitled to record a Confession of Judgment against the Company, creditable with any payments made. The Agreement also specifies that it is not to be considered an admission of liability by any party. This settlement concludes all disputes from the litigation, allowing the Company to avoid further litigation costs and risks.

WeItem can give no assurance that the measures we have taken and plan to take in the future will remediate the material weakness identified or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls4. InMine ~~addition,~~Safety even if we are successful in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statementsDisclosures.

~~New~~Not ~~laws~~applicable.

~~regulations~~27

~~and standards relating to corporate governance and public disclosure may create uncertainty for public companies~~PART II

~~These~~Market laws, regulations, and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, may evolve over time as new guidance is provided by the courts and other bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. If our efforts to comply with new laws, regulations, and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be adversely affected.Information

AsOur acommon ~~public~~stock ~~company~~is ~~subject~~currently tolisted ~~these~~on ~~rules~~OTC ~~and~~Expert Market ~~regulations,~~under wethe ~~may~~symbol ~~find it more expensive for us to obtain director and officer liability insurance~~“TBLT,” and wewarrants ~~may~~under bethe ~~required~~symbol ~~to accept reduced coverage or incur substantially higher costs to obtain coverage~~“TBLTW.” ~~These~~Trading ~~factors could also make it more difficult~~ in ~~the~~our ~~future~~common ~~for~~stock ushas tohistorically lacked ~~attract~~consistent ~~and retain qualified members of our Board~~volume, ~~particularly to serve on its Audit Committee~~ and ~~Compensation~~the ~~Committee,~~market ~~and~~price ~~qualified~~has ~~executive~~been ~~officers~~volatile.

24Holders of Common Stock

AsOn anDecember 20, 2024, there were 161 holders of record of our common stock.

~~emerging~~Dividend ~~growth company~~Policy

~~under~~We ~~applicable~~have ~~law~~never paid any cash dividends on our common stock. We anticipate that we will retain funds and future earnings to support operations and finance the growth and development of our business. Therefore, we do not expect to pay cash dividends in the foreseeable future following this offering. Any future determination to pay dividends will be at the discretion of our Board and will depend on our financial condition, results of operations, capital requirements, and other factors that our Board deems relevant. In addition, the terms of any future debt or credit financing may preclude us from paying dividends.

weUnregistered ~~are~~Sales ~~subject~~of toEquity ~~lessened disclosure requirements~~Securities

~~which~~The ~~could~~Company ~~leave~~previously ~~our~~disclosed ~~stockholders~~all ~~without~~prior ~~information~~issuances during orthe ~~rights~~fiscal ~~available~~year toended ~~stockholders~~December of31, ~~more~~2023, ~~mature~~in ~~companies~~its quarterly reports on Form 10-Q or current reports on Form 8-K.

~~For~~Equity asPlan long as we remain an “emerging growth company” as defined in the Jobs Act, we have elected to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to:Information

●EQUITY ~~not~~PLAN ~~being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;~~INFORMATION

● being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements disclosure;

Plan Category:	Number of securities to be issued upon exercise of outstanding options, warrants and rights:		Weighted average exercise price of outstanding options, warrants and rights:		Number of securities remaining available for future issuance:

2018 Equity Incentive Plan:
Equity compensation plans approved by security holders		6	$	380,250.00		-
Equity compensation plans not approved by security holders		-		-		-
Total		6	$	380,250.00		-

2022 Equity Incentive Plan: (1)
Equity compensation plans approved by security holders		20,769	$	116.35		-
Equity compensation plans not approved by security holders		-		-		-
Total		20,769	$	116.35		-

Total		20,776	$	226.13		-

●(1) ~~taking~~The ~~advantage~~2022 ofPlan contains an ~~extension~~“evergreen offormula” ~~time~~pursuant to ~~comply~~which the number of shares of common stock available for issuance under the 2022 Plan will automatically increase on January 1 of each calendar year during the term of the 2022 Plan, beginning with ~~new~~the orcalendar ~~revised~~year ~~financial~~2023, ~~accounting~~by ~~standards;~~a number of shares of common stock so that the total amount of common stock available under the 2022 Plan is equal to 15% of the total number of shares of common stock outstanding on December 31st of the prior calendar year.

~~● reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and~~28

●Item ~~exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved~~6. [Reserved]

WeNot ~~expect to take advantage of these reporting exemptions until we are no longer an “emerging growth company~~applicable.” Because of these lessened regulatory requirements, our stockholders are not provided information or rights available to stockholders of more mature companies. We cannot predict whether investors will find our common stock less attractive if we rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

WeItem ~~are~~7. ~~also~~Management’s aDiscussion ~~“smaller~~and ~~reporting~~Analysis ~~company” as defined in Rule 12b-2~~ of ~~the~~Financial ~~Exchange~~Condition ~~Act~~ and ~~have~~Results ~~elected~~of ~~to follow certain scaled disclosure requirements available to smaller reporting companies.~~Operations

IfProspective ~~research~~investors ~~analysts~~should doread ~~not~~the ~~publish~~following discussion ~~research~~and ~~about~~analysis of our ~~business~~financial orcondition ifand ~~they~~results ~~issue~~of ~~unfavorable~~operations ~~commentary~~together with our financial statements and the related notes and other financial information included in this annual report. Some of the information contained in this discussion and analysis or set ~~downgrade~~forth elsewhere in this annual report, including information concerning our ~~common~~plans ~~stock~~and strategy for our business, includes forward-looking statements involving risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements.” This discussion should be read in conjunction with our audited consolidated financial statements and the notes thereto included elsewhere in this report. We may use certain non-generally accepted accounting principles (GAAP) financial measures in this discussion. An explanation of these non-GAAP financial measures and a reconciliation to the most directly comparable GAAP financial measures are included in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Investors should not consider non-GAAP financial measures in isolation or substitutes for financial information presented in compliance with GAAP.

~~our~~Business ~~stock price and trading volume could decline~~Overview

~~The~~We ~~trading~~were ~~market~~formed ~~for~~to ~~our securities may depend in part on the research and reports that research analysts publish about us and our business. If we do not maintain adequate research coverage~~design, ~~or if any of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business~~manufacture, ~~the~~and ~~price~~distribute innovative oftools ~~our common stock~~ and ~~warrants~~accessories ~~could decline. If one or more of our research analysts ceases~~ to ~~cover our business or fails to publish reports on us regularly, demand for our securities could decrease, which could cause~~ the ~~price~~building ofindustry. ~~our~~The ~~common~~global ~~stock~~tool ~~and~~market ~~warrants~~industry oris ~~trading~~a ~~volume~~multibillion-dollar ~~to decline~~business.

WeOur dobusiness ~~not~~is ~~currently~~based ~~intend~~on tothe ~~pay~~development ~~dividends~~of oninnovative and ~~our~~state-of-the-art ~~common~~products, ~~stock~~primarily in the ~~foreseeable~~tools ~~future~~and hardware category. We particularly focus on the building and construction industry, with the ultimate goal of making life easier and more productive for contractors and workers alike.

Our three major categories contain a total of 22 product lines, consisting of (i) Soft Goods, which include kneepads, tool bags, pouches, and ~~consequently~~tool belts; (ii) Metal Goods, which consists of sawhorses, tool stands, utility knives, aviation snips, shears, tape measures and chalk reels; and (iii) Electronic Goods, which includes lasers and levels. We also have several additional categories and product lines in various stages of development.

~~your~~We ~~ability~~are continuing to ~~achieve~~focus aour ~~return~~efforts on ~~your~~increased marketing ~~investment~~campaigns ~~will~~and ~~depend~~distribution onprograms ~~appreciation~~to instrengthen the ~~price~~demand offor our ~~common~~products ~~stock~~globally. Management anticipates that our capital resources will improve, and our products will gain wider market recognition and acceptance, resulting in increased product sales.

WeAs ~~have~~discussed ~~never~~below, ~~declared~~we orhave ~~paid~~faced ~~cash~~the ~~dividends~~impacts of onCOVID-19 ~~our~~and ~~common~~inflation ~~stock~~ and doexperienced ~~not~~a ~~anticipate~~revenue ~~paying~~decline ~~any~~between ~~cash~~fiscal ~~dividends~~2022 toand ~~holders~~2023 of 19.9%. We have incurred substantial operating losses since our ~~common~~inception ~~stock~~and inanticipate incurring additional losses for the foreseeable future. ~~Consequently~~until such time, ~~investors~~if ~~must~~ever, ~~rely~~that onwe ~~sales~~can commercialize ofour technology currently in development. Our auditors have expressed substantial doubt about our ability to continue as a going concern in their ~~common~~audit ~~stock~~report ~~after~~included ~~price~~in ~~appreciation,~~this ~~which~~Annual ~~may~~Report ~~never~~on ~~occur~~Form 10-K. To fund our operations and grow our business, aswe will be required to fund our capital requirements through the ~~only~~sale ~~way~~of todebt ~~realize~~or ~~any~~equity ~~future~~securities ~~gains~~or onother ~~their~~arrangements ~~investments~~to fund operations. There can isbe no ~~guarantee~~assurances that ~~shares~~we ofwill ~~our~~be ~~common~~able ~~stock~~to obtain additional financing on acceptable terms, if at all. If we cannot obtain such additional financing, future operations will ~~appreciate~~need into ~~value~~be scaled back or ~~even~~discontinued. ~~maintain~~See ~~the~~“Liquidity ~~price~~and atCapital ~~which~~Resources; ~~our~~Going ~~stockholders~~Concern” below and Part I Item 1A. Risk Factors “Going Concern” and “We will require additional capital in order to achieve commercial success and, if necessary, to finance future losses from operations as we endeavor to build revenue, but we do not have ~~purchased~~any ~~their~~commitments ~~shares~~to obtain such capital, and we cannot assure you that we will be able to obtain adequate capital as and when required.”

2529

~~Anti-takeover~~Business ~~provisions in our charter documents and Nevada law could discourage delay or prevent a change of control of our Company and may affect the trading price of our common stock~~Developments

.The following highlights recent material developments in our business:

We● ~~are~~In aJanuary ~~Nevada~~2023, ~~corporation~~we ~~and~~launched ~~the~~over ~~anti-takeover~~40 ~~provisions~~SKUs ofin the ~~Nevada~~Handheld ~~Control~~Screwdrivers ~~Shares~~segment, ~~Acquisition~~including ~~Act~~ratcheting ~~may~~bit ~~discourage~~drivers, ~~delay~~insulated orscrewdrivers, ~~prevent~~precision, ~~a change of control by limiting the voting rights of control shares acquired in a control share acquisition. In addition~~slotted, ~~our Articles of Incorporation and the A&R Bylaws may discourage~~Phillips, ~~delay~~Torx orcabinet ~~prevent a change in our management or control over us that stockholders may consider favorable. Among other things~~screwdrivers, ~~our Articles of Incorporation~~ and ~~A&R~~demolition ~~Bylaws:~~drivers.

● ~~authorize~~In ~~the~~January ~~issuance~~2023, ofwe ~~“blank~~expanded ~~check”~~our ~~preferred~~distribution ~~stock~~agreement ~~that~~with ~~could~~Sodimac, beSouth ~~issued~~America’s bylargest ~~our~~home ~~Board~~improvement and construction supplier. In this extended agreement, stores in ~~response~~Chile, Peru, Argentina, Colombia, Brazil, and Uruguay will initially begin with 15 SKUs in-store and bring 23 SKUs to aSodimac’s ~~takeover~~online ~~attempt;~~marketplace.

● ~~provide~~In ~~that~~January ~~vacancies on our Board~~2023, ~~including~~we ~~newly~~launched ~~created~~more ~~directorships,~~than ~~may~~20 benew ~~filled~~SKUs ~~only by a majority vote of directors then~~ in ~~office, except a vacancy occurring by reason of~~ the ~~removal~~Handheld ofWrench asegment, ~~director~~including ~~without~~adjustable ~~cause~~wrenches, ~~shall~~construction bewrenches, ~~filled~~and bypipe ~~vote of the stockholders; and~~wrenches.

● ~~limit~~In ~~who~~February ~~may~~2023, ~~call~~we ~~special~~launched ~~meetings~~our new line of ~~stockholders~~pliers and clamps. The new line, comprised of more than 40 SKUs, will be made available for purchase through leading U.S. home improvement retailers and across ToughBuilt’s growing strategic networks of North American and global trade partners and buying groups, servicing over 18,900 storefronts and online portals worldwide.

~~These~~● ~~provisions~~In ~~could~~August ~~have~~2023, the ~~effect~~Company ofexpanded ~~delaying~~its ordistribution ~~preventing~~in athe ~~change~~European ofUnion ~~control,~~with ~~whether~~two ormajor ~~not~~retail itgroups, isLa ~~desired~~Platforme ~~by,~~Du orBatiment ~~beneficial~~and toProlians, ~~our~~servicing ~~stockholders~~professional customers in France and Spain.

~~The~~● ~~security~~In ofAugust ~~our~~2023, ~~information~~the ~~technology~~Company ~~systems~~expanded ~~may~~its beproduct ~~compromised~~distribution to customers in the ~~event~~United ofKingdom ~~system~~through ~~failures,~~new ~~unauthorized~~business ~~access,~~with ~~cyberattacks~~Howdens orUK aand ~~deficiency~~City inElectrical ~~our~~Factors ~~cybersecurity~~UK (“CEF”), ~~and~~marking ~~confidential~~entry ~~information,~~into ~~including~~a ~~non-public~~combined ~~personal~~network ~~information~~of ~~that~~more wethan ~~maintain~~1,200 ~~could~~retail belocations ~~improperly disclosed~~nationwide.

We● ~~rely~~In ~~extensively~~October ~~on information technology and systems including internet sites~~2023, data hosting, physical security, and software applications and platforms. Despite our security measures, our information technology systems, some of which are managed by third parties, may be susceptible to damage, disruptions or shutdowns due to computer viruses, attacks by computer hackers, failures during the ~~process~~Company oflaunched ~~upgrading~~its orStackTech ~~replacing~~product ~~software~~line, ~~power~~initially ~~outages,~~rolling ~~user~~out ~~errors~~more orthan ~~catastrophic~~25 ~~events~~SKUs. AStackTech ~~significant~~is ~~breakdown,~~an ~~invasion,~~intuitive ~~corruption,~~modular ~~destruction~~storage ortoolbox ~~interruption of critical information technology systems~~system, byand ~~our~~StackTech™ ~~employees,~~is ~~others with authorized access to our systems or unauthorized persons could negatively impact or interrupt operations. The use of technology, including cloud-based computing, creates opportunities for~~ the ~~unintentional~~world’s ~~dissemination~~first ~~or intentional destruction of confidential information stored in our systems or our third~~auto-~~party~~locking ~~systems.~~stacking Wetool ~~could~~storage ~~also~~solution ~~experience~~with a14 ~~business~~unique interruption, theft of confidential information or reputational damage from malware or other cyberattacks, which may compromise our systems or lead to data leakage, either internally or at our third-party providersfeatures.

AsKey ~~part~~Factors ofAffecting ~~our~~Our business, we maintain large amounts of confidential information, including non-public personal information on customers and our employees. Breaches in security, either internally or at our third-party providers, could result in the loss or misuse of this information, which could, in turn, result in potential regulatory actions or litigation, including material claims for damages, interruption to our operations, damage to our reputation or otherwise have a material adverse effect on our business, financial condition and operating results. Although we maintain information security policies and systems designed to prevent unauthorized use or disclosure of confidential information, including non-public personal information, there can be no assurance that such use or disclosure will not occur.Performance

~~Any~~As ~~such~~a ~~business~~result ~~interruption~~of a number of factors, ~~theft~~our historical results of ~~confidential~~operations ~~information~~may ornot ~~reputational~~be ~~damage~~comparable ~~from~~to ~~malware~~our orresults ~~other~~of ~~cyberattacks~~operations in future periods, orand ~~violation~~our results of ~~personal~~operations ~~information~~may ~~laws,~~not ~~could~~be directly ~~have~~comparable afrom ~~material~~period ~~adverse~~to ~~effect~~period. onBelow ~~our~~is ~~business,~~a ~~financial~~brief ~~condition,~~discussion ~~and~~of the key factors impacting our results of operations.

~~Item 1B. Unresolved Staff Comments.~~Seasonality

~~None~~Our revenues are not seasonal. However, we usually experience a spike in sales when introducing new products.

~~Item 2. Properties.~~Inflation

WePrices ~~currently~~of ~~lease~~certain ~~approximately~~commodity 15products,~~500~~ including ~~square~~raw ~~feet~~materials, ofare ~~office~~historically ~~space~~volatile atand ~~8669~~are ~~Research~~subject ~~Drive~~to fluctuations arising from domestic and international supply and demand changes, ~~Irvine~~labor costs, CAcompetition, ~~92618~~market asspeculation, ~~our~~government ~~principal~~regulations, ~~executive~~trade ~~offices~~restrictions, and tariffs. Increasing ~~This~~prices ~~lease~~in ~~commenced~~the component materials for the parts of our goods may impact on ~~December~~our 1products’ availability, ~~2019~~quality, ~~with~~and price noas ~~rent~~suppliers ~~due~~search ~~from~~for ~~December~~alternatives 1,to ~~2019~~existing tomaterials ~~April~~and 1,increase ~~2020.~~the ~~From~~prices ~~April~~they 1,charge. ~~2020,~~Our ~~through~~suppliers ~~March~~may ~~31,~~also ~~2025,~~fail ~~base~~to provide ~~rent~~consistent ~~will~~quality beproducts ~~due~~as onthey ~~the~~may ~~first~~substitute ofmaterials ~~each~~at ~~month~~lower incosts ~~the~~to ~~amount~~maintain ofpricing ~~$25,200~~levels. WeRapid ~~paid~~and significant anchanges ~~initial~~in ~~amount~~commodity ofprices ~~$68,128~~may ~~compromising~~negatively ~~the~~affect ~~rent~~our ~~for~~profit ~~April~~margins. ~~2020,~~We amay ~~security~~be ~~deposit,~~unable ~~and~~to ~~the~~mitigate ~~amount~~any ~~due~~inflationary increases ~~for~~through ~~property~~various ~~taxes,~~customer ~~insurance,~~pricing actions and ~~association~~cost-reduction ~~fees~~initiatives. ~~The~~To ~~base~~offset ~~rent~~increased ~~shall~~prices becharged ~~adjusted~~by onour manufacturers and shipping rates, we increased the ~~following~~prices ~~dates~~of asour ~~follows:~~products in 2023 and 2024, respectively.

12/1/2022-11/30/2023	$	27,256
12/1/2023-11/30/2024	$	28,347
12/1/2024-11/30/2025	$	29,480

Supply Chain

26We acquire most of our products from manufacturers and distributors in China, India, and the Philippines. We do not have any long-term contracts or exclusive agreements with our foreign suppliers that would ensure our ability to acquire the types and quantities of products we desire at acceptable prices and in a timely manner. We utilize a number of techniques to address potential disruption and other risks relating to our supply chain, including, in certain cases, the use of other qualified suppliers. We reduced our inventory from $40.4 million at December 31, 2022 to $21.3 million at December 31, 2023. Due to our inventory levels in 2023, the supply chain disruptions in 2023 have not had a material adverse effect on our operations. We do not anticipate that any continued supply chain disruptions that will have a material adverse effect on our operations for the fiscal year 2024. See Part I Item 1A. Risk Factors: “Disruptions in our supply chain and other factors affecting the distribution of our merchandise could adversely impact our business.”

~~The lease otherwise contains commercially market terms as to events of default and termination and the like.~~30

InResults ~~addition,~~of the Company entered into two leases for additional space, in Irvine, CA. The leases commenced March 1, 2022 and June 1, 2022. Base rent is initially $16,250 and $48,379 with escalations contained in the lease through February 28, 2027 and May 31, 2027.Operations

InThe ~~addition,~~Fiscal weYear ~~intend~~Ended toDecember ~~seek~~31, ~~additional leased space~~2023, compared ~~which~~to ~~will~~the ~~include~~Fiscal ~~some~~Year ~~warehouse~~Ended ~~facilities~~December 31, ~~as our business efforts increase.~~2022

~~Item 3. Legal Proceedings.~~Revenues

~~From~~Revenues, ~~time~~net toof ~~time~~returns and allowances, wefor ~~are~~the years ~~involved~~ended inDecember ~~lawsuits~~31, ~~claims~~2023, ~~investigations,~~and 2022 were $76.3 million and ~~proceedings~~$95.3 million, ~~including~~respectively, ~~pending~~and ~~opposition~~consisted ~~proceedings~~of ~~involving~~metal ~~patents~~goods, ~~that~~soft ~~arise~~goods, and inelectronic ~~the~~goods ~~ordinary~~sold ~~course~~to ~~of business~~customers. ~~There~~Revenues ~~are~~decreased noin ~~matters~~2023 ~~pending~~over ~~that~~2022 weby ~~expect~~$19.0 tomillion ~~have~~or a19.9%, ~~material~~primarily ~~adverse~~due ~~impact~~to onthe ~~our~~Company ~~business,~~not being ~~results~~able ofto ~~operations,~~fulfill ~~financial~~the ~~condition,~~open ororders ~~cash~~due ~~flows,~~to ~~except~~lack asof ~~set~~inventory ~~forth~~on ~~below~~hand and working capital.

~~The~~Cost ~~occurrence~~ of anGoods unfavorable outcome in any specific period could have a material adverse effect on our results of operations for that period or future periods. Other than as described below, we are not presently a party to any material pending or threatened legal proceedings.Sold

~~Edwin~~Cost ~~Minassian~~of v.goods ~~Michael~~sold ~~Panosian~~for the years ended December 31, 2023, and ~~ToughBuilt~~2022 ~~Industries~~was $59.9 million and $70.0 million, ~~Inc~~respectively. Cost of goods sold decreased in 2023 over 2022 by $10.2 million, or ~~Los~~14.5%, ~~Angeles~~primarily ~~Superior~~due ~~Court~~to ~~Case~~lack Noof fulfilling and shipping the open orders on hand. ~~EC065533~~Cost of goods sold as a percentage of revenues in 2023 increased to 78.5%, as compared to the cost of goods sold as a percentage of revenues in 2022 of 73.5% primarily due to the manufacturing facilities increasing the products prices in 2023 compared to 2022.

OnOperating August 16, 2016, Plaintiff Edwin Minassian filed a complaint against the Company and Michael Panosian in the Superior Court of California, County of Los Angeles, Case No. EC065533. The complaint alleges breach of oral contracts to pay Plaintiff for consulting and finder’s fees, and to hire him as an employee. The complaint further alleged claims of fraud and misrepresentation relating to an alleged payment in exchange for stock in the Company. The complaint seeks unspecified monetary damages, declaratory relief, stock in the Company, and other relief according to proof.Expenses

OnOperating ~~April~~expenses ~~12,~~consist ~~2018, the Court entered judgments~~ of ~~default against the Company and Mr. Panosian in the amounts of $7~~selling,~~080~~ general and ~~$235,542,~~administrative ~~plus awarding Mr. Minassian a 7% ownership interest in the Company (the “Judgments”). Mr. Minassian served notice of entry of the judgments on April 17~~expenses, ~~2018,~~ and ~~the~~research ~~Company~~ and ~~Mr.~~development ~~Panosian received notice of the entry of the default judgments on April 19, 2018~~costs.

~~The~~Selling, ~~Company~~general and ~~Mr.~~administrative ~~Panosian~~expenses ~~satisfied~~(the “SG&A Expenses”) for the ~~Judgments~~years onended ~~September~~December 1431, ~~2018,~~2023 byand ~~payment~~2022 ofwere $~~252,949~~56.0 tomillion ~~Plaintiff~~and ~~Minassian~~$66.2 ~~and~~million, byrespectively. ~~issuing~~SG&A Expenses ~~Plaintiff~~decreased ~~Minassian~~in ~~376,367~~2023 ~~shares~~over of2022 ~~common~~by ~~stock~~$10.1 ofmillion, ~~the~~or ~~Company~~15.3%, Onprimarily ~~October~~due ~~18,~~to ~~2018,~~decrease ~~the~~in ~~Company~~salaries and Mrheadcount, and better management of expenses. ~~Panosian~~SG&A ~~filed~~Expenses ain ~~Notice~~2023 ofas ~~Appeal~~a ~~from~~percentage ~~the~~of ~~Order~~revenues ~~denying~~increased ~~their~~to ~~motion~~73.5 ~~for~~%, ~~relief~~as ~~from~~compared ~~the~~to ~~above-referenced~~69.5% ~~default~~in ~~judgment~~2022.

OnImpairment ~~October~~of 1,property ~~2019,~~and ~~the~~equipment ~~Second~~totaled ~~Appellate~~$5,583,290 ~~District~~or 7.3% of revenues, ~~the~~consisting ~~California~~of ~~Court~~impairment of ~~Appeal~~App ~~issued~~development ~~its~~of ~~opinion~~mobile ~~reversing~~devices ~~the~~of ~~trial~~$4,093,533 ~~court’s~~and ~~order~~website ~~denying~~design ~~ToughBuilt’s~~of ~~motion~~$1,489,757 for ~~relief from~~ the ~~default~~year ~~judgment~~ended December ~~and~~31, ~~directing~~2023, ~~the~~compared ~~trial~~to ~~court~~$0 tofor ~~grant~~the ~~ToughBuilt’s~~year ~~motion~~ended ~~for~~December ~~relief~~31, ~~including~~2022. ~~allowing~~Management ~~ToughBuilt~~performed toan ~~file~~analysis anof ~~Answer~~property and ~~contest~~equipment ~~Plaintiff~~and decided ~~Minassian’s~~to ~~claims~~impair the assets that were deemed non-producing.

~~The~~Research ~~plaintiff~~and ~~was~~development ~~seeking~~costs ~~damages~~(the ~~and~~“R&D”) for ~~stock~~the ~~based~~years onended aDecember ~~breach~~31, of2023, anand ~~alleged~~2022 ~~oral~~were ~~agreement~~$12.0 ~~This~~million ~~case~~and ~~concluded~~$11.3 million, respectively. R&D costs increased in ~~April~~2023 over 2022 by $0.7 ~~The~~million ~~plaintiff~~or ~~was~~6.2% ~~awarded~~primarily ~~$160,000~~due ~~which~~to ~~was~~the ~~offset~~development bycosts aof ~~prior~~new ~~judgment~~tools ~~against~~for the ~~plaintiff~~construction industry.

27Other income (expense)

~~Nevada~~Other income ~~Court~~for ~~Case~~the year ended December 31, 2023, was $10.8 million, consisted of interest expense of $1.7 million, warrant expense of $0.5 million, inducement expense of $6.4 million, and change in fair value of warrant derivative liability of $19.4 million. Other income for the year ended December 31, 2022, was $13.0 million, consisted of interest expense of $1.9 million, warrant expense of $1.9 million, and change in the fair value of warrant derivative liability of $16.8 million.

~~No. A-22-859580-B~~31

OnNet October 7, 2022, one of our stockholders (the “2022 Plaintiff”), filed a shareholder derivative action against us, Michael Panosian, Joshua Keeler, Zareh Khachatoorian, Martin Galstyan, et. al. (collectively, the “2022 Defendants”) in the Eighth Judicial District Court of Nevada, Case No. A-22-859580-B. In the complaint, the 2022 Plaintiff alleged a breach of the applicable 2022 Defendants’ fiduciary duties of loyalty, good faith, and due care owed to us and our shareholders, by negligently, willfully, recklessly and/or intentionally failing to perform their fiduciary duties primarily in connection with our registered direct offering of 2,500 shares of Series F preferred stock and 2,500 shares of Series G preferred stock in February 2022 and subsequent 1-for-150 reverse stock split effected in April 2022. The 2022 Plaintiff claimed that the 2022 Plaintiff has suffered (i) monetary damages in excess of $10,000, and (ii) attorney fees and costs, and is entitled to reimbursement. The 2022 Plaintiff asked for the following relief (i) issuance of a preliminary injunction enjoining us and the Board from continued of their fiduciary duties; (ii) damages incurred by the plaintiff; (iii) for an accounting of our books and records; (iv) equity relief; and (v) reimbursements of attorney and courts fees and other related costs. We believe that the claims put forth by the 2022 Plaintiff are without merit and we intend to vigorously defend ourself and the officers named in the complaint.loss

~~Item~~Due to the factors set forth above, we recorded a net loss of $46.4 million and $39.3 ~~Mine~~million ~~Safety~~for ~~Disclosures~~the years ended December 31, 2023, and 2022, respectively. The increase in net loss is mainly attributable to the $19.0 million reduction in revenues, increase in cost of goods sold as a percentage of revenues, offset by reduction in operating expenses of $3.9 million, and reduction in other income by $2.2 million.

~~Not~~Liquidity ~~applicable.~~and Capital Resources; Going Concern

~~PART~~At IIDecember 31, 2023, we reported approximately $1.2 million cash on hand, $10.2 million in accounts receivable, and $52.2 million in accounts payable and accrued expenses. We reported a working capital deficit of $26.6 million as of December 31, 2023. Our sales decreased by 19.9% for the year ended December 31, 2023, compared to the same period in 2022. We are continuing to focus our efforts on increased marketing campaigns and distribution programs to strengthen the demand for our products globally. Management anticipates that our capital resources will improve, and our products will gain wider market recognition and acceptance, resulting in increased product sales.

~~Item~~We have incurred substantial operating losses since our inception. As reflected in the consolidated financial statements included in this Annual Report on Form 10-K, we had an accumulated deficit of approximately $191.4 million at December 31, 2023, a net loss of approximately $46.4 million, and net cash used in operating activities for the year ended December 31, 2023 was approximately $5.1 million. ~~Market~~The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. We anticipate incurring additional losses until we will be able to effectively market our products and technology currently in development. We will need additional financing to fund our operations and to develop and commercialize our technology. These factors raise substantial doubt about our ability to continue as a going concern. We do not have sufficient capital to fund our operations for the ~~Registrant’s~~next ~~Common~~12 ~~Equity~~months. To date, ~~Related~~we ~~Stockholder~~have funded ~~Matters~~our operations primarily by selling equity securities. As reported on a Form 8-K filed with the SEC on February 16, 2024, we closed a public offering of common stock, pre-funded warrants, and ~~Issuer~~warrants ~~Purchases~~with net proceeds of ~~Equity~~$3.1 ~~Securities~~million after deducting private placement agent fees and commissions and other expenses. We believe that such net proceeds will fund to settle some of our accounts payable.

~~Market~~For the ~~Information~~12 months from issuance of this Annual Report on Form 10-K and the subsequent 12 months, we intend to fund our capital requirements by selling debt or equity securities or other arrangements to fund operations. However, there is no assurance that we will be able to raise the capital needed under acceptable terms. The sale of additional equity may dilute existing stockholders, and newly issued shares may contain senior rights and preferences compared to currently outstanding shares of common stock. Issued debt securities may contain covenants and limit our ability to pay dividends or make other distributions to stockholders. If we are unable to obtain such additional financing, future operations would need to be scaled back or discontinued. Due to the uncertainty in our ability to raise capital, management believes that there is substantial doubt about our ability to continue as a going concern for twelve months from the issuance of these consolidated financial statements.

~~Our~~Cash common stock is currently listed on The Nasdaq Capital Market under the symbol “TBLT,” and warrants under the symbol “TBLTW.” Trading in our common stock has historically lacked consistent volume, and the market price has been volatile.Flows

30Net cash flows used in operating activities for the year ended December 31, 2023 was $5.1 million, attributable to a net loss of $46.4 million, offset by depreciation expense of $5.8 million, allowance for credit losses of $4.5 million, inducement expense of $6.4 million, stock compensation expense of $0.5 million, loss on sale of property and equipment of $0.02 million, impairment of property and equipment of $5.6 million, amortization of right-of-use assets of $1.3 million, amortization of patents of $0.1 million, write-down of patents of $0.2 million, gain on abandonment of a lease of $0.1 million, change in fair value of warrant and preferred investment option liability of $19.4 million, interest paid on short-term loan of $0.1 million; warrant issuance cost of $0.5 million, and net change in operating assets and liabilities of $35.9 million. Net cash flows used in operating activities for the year ended December 31, 2022 was $37.3 million, attributable primarily to a net loss of $39.3 million, offset by depreciation expense of $4.2 million, bad debt expense of $2.9 million, stock-based compensation expense of $0.8 million, amortization of right-of-use asset of $0.7 million, change in fair value of warrant derivatives of $16.8 million, warrant issuance costs of $1.9 million, and net change in operating assets and liabilities of $8.3 million. We offered cash discounts to our customers and factors to accelerate accounts receivable payments. In addition, we negotiated extended payment terms with suppliers, vendors, and related parties to conserve cash.

20Net cash used in investing activities for the year ended December 31, 2023 was $2.6 million due to cash paid for the purchase of other assets of $0.1 million and purchase of property and equipment of $2.5 million. Net cash used in investing activities for the year ended December 31, 2022 was $5.0 million, attributable to net cash paid for purchase of property and equipment of $5.0 million and from the proceeds from the sale of property and equipment.

~~073~~Net cash provided by financing activities for the year ended December 31, 2023 was $6.2 million, primarily attributable to the net cash received from exercise and conversion of warrants of $3.1 million and cash received from sale of common stock and warrants of $3.9 million, cash proceeds of $0.7 million received from loans payable, and cash paid of $1.5 million in repayments on loans payable. Net cash provided by financing activities for the year ended December 31, 2022 was $37.4 million, primarily attributable to the net cash proceeds of $6.0 million from exercise of warrants, repurchase of common stock warrants of $2.5 million, cash proceeds from issuance of common stock of $33.0 million, net proceeds from loan payable of $1.7 million, and repayment of loans payable of $0.7 million.

~~Holders of Common Stock~~32

We recorded a net decrease in cash of $1.4 million for the year ended December 31, 2023.

~~Dividend~~Material ~~Policy~~Cash Requirements from Known Contractual and Other Obligations

WeThe ~~have~~following ~~never~~table ~~paid~~summarizes ~~any cash dividends on~~ our ~~common~~operating ~~stock.~~lease contractual Weobligations ~~anticipate~~for ~~that we will retain funds and future earnings to support operations and to finance~~ the ~~growth~~year ~~and~~ending ~~development~~December ~~of our business. Therefore~~31, we2024 ~~do not expect to pay cash dividends in the foreseeable future following this offering. Any future determination to pay dividends will be at the discretion of our Board~~ and will depend on our financial condition, results of operations, capital requirements, and other factors that our Board deems relevant. In addition, the terms of any future debt or credit financings may preclude us from paying dividends.thereafter:

Unregistered Sales of Equity Securities

For the years ending December 31,

2024	$	1,098,703
2025		791,431
2026		723,188
2027		426,830
2028		262,446
Total lease payments		3,302,598
Less: imputed interest		(402,517	)
Present value of lease liabilities	$	2,900,081

~~Issuance~~The Company had recorded a short-term loan payable to a third party totaling $288,588 as of ~~Warrants~~December 31, 2023. Such loan and accrued interest was paid in full to the third party as of March 28, 2024.

InWe ~~connection~~intend with a registered direct offering of an aggregate of $5,000,000 of Preferred Stock as previously reported on a Current Report on Form 8-K filed with the SEC on February 17, 2022, we also issued in a concurrent private placement unregistered warrants to ~~the~~fund ~~same investors in the registered direct offering to purchase up to an aggregate of 125,000 shares of~~ our ~~common~~contractual ~~stock,~~obligations with atworking ~~an exercise price of $37~~capital.~~65 per share.~~

~~The~~Critical ~~February~~Accounting Warrants will be exercisable on the date that is the later of (a) the consummation of either a stockholder vote on the proposal to authorize the Board to effect a reverse stock split or increase the authorized shares of our common stock; and (b) six months after the date of issuance, and will have a term of 5 years from the initial exercise date. The offering closed on February 15, 2022.Estimates

28Use of Estimates

AsThe ~~compensation~~preparation toof ~~Wainwright,~~consolidated asfinancial ~~the exclusive placement agent~~ statements in ~~connection~~conformity with ~~the~~GAAP ~~offering,~~requires wemanagement ~~paid~~to ~~Wainwright~~make aestimates ~~cash~~and ~~fee~~assumptions ofthat 7%affect of the ~~aggregate~~reported ~~gross~~amounts ~~proceeds~~of ~~raised~~assets inand ~~the~~liabilities and ~~February~~disclosure ~~Direct~~of ~~Offering,~~contingent ~~plus~~assets aand ~~management~~liabilities ~~fee~~at ~~equal~~the todate ~~0.5%~~ of the ~~gross~~consolidated ~~proceeds~~financial ~~raised~~statements inand the ~~offering~~reported ~~and~~amounts ~~reimbursement~~ of ~~certain~~revenues and expenses ~~and~~during ~~legal~~the ~~fees~~reporting period. WeThe ~~also~~Company ~~issued~~regularly evaluates estimates and assumptions related to ~~designees~~recognition of ~~Wainwright~~revenue including ~~warrants~~rebates, toreturns ~~purchase~~and upallowances, tovaluation 10of accounts receivable,~~000~~ ~~shares~~valuation of ~~our~~long-lived ~~common~~assets, ~~stock~~fair value of financial instruments and fair value measurements. The ~~Wainwright~~Company ~~February~~bases ~~Warrants~~its ~~are~~estimates ~~exercisable~~and ~~for~~assumptions ~~$37.50~~on ~~per~~current ~~share~~facts, historical experience and ~~become~~various ~~exercisable~~other factors onthat ~~the~~it ~~date~~believes ~~that~~to isbe reasonable under the ~~later~~circumstances, the results of ~~(a)~~which form the ~~consummation~~basis offor ~~either~~making ajudgments ~~stockholder~~about ~~vote~~the carrying onvalues of assets and liabilities, and the ~~proposal~~accrual toof ~~authorize~~costs ~~our~~and ~~Board~~expenses tothat ~~effect~~are anot ~~reverse~~readily ~~stock~~apparent ~~split~~from orother ~~increase~~sources. ~~the~~The actual ~~authorized~~results ~~shares~~experienced ofby ~~our~~the ~~common~~Company ~~stock;~~may differ materially and ~~(b)~~adversely ~~six~~from ~~months~~the ~~after~~Company’s estimates. To the ~~date~~extent ofthere are ~~issuance,~~material ~~and~~differences ~~will~~between ~~expire~~the onestimates ~~February~~and 15the actual results, ~~2027~~future results of operations will be affected.

WeThe ~~received~~Company’s ~~net~~financial ~~proceeds~~position, results of ~~approximately~~operations ~~$4,205,000~~and ~~from~~cash flows ~~the~~are ~~offering,~~impacted ~~after~~by ~~deducting~~the accounting policies the ~~estimated~~Company ~~offering~~has ~~expenses~~adopted. ~~payable~~In byorder ~~us,~~to ~~including~~get a full understanding of the ~~fees~~Company’s financial ~~payable~~statements, toone ~~Wainwright~~must have a clear understanding of the accounting policies employed.

WeRestatement ~~issued the February Warrants and the Wainwright February Warrants pursuant to the exemption from the registration requirements~~ of ~~the~~Previously ~~Securities~~Filed ~~Act,~~Quarterly Statements ~~available~~– ~~under~~2023 ~~Section~~Form ~~4(a)(2) and/or Rule 506(b) of Regulation D promulgated thereunder due to the fact the issuance did not involve a public offering of securities.~~10-Qs

~~Private~~Management ~~Placement~~determined that our financial statements which were included in Quarterly Reports on Form 10-Q for the quarters ended March 31, 2023, June 30, 2023, and September 30, 2023 as filed with the Securities and Exchange Commission, should no longer be relied upon due to errors relating to the recording and reporting of transactions in operating assts and liabilities accounts on the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations. The errors occurred primarily due to an incorrect interface and mapping of our chart of accounts during the implementation of a new financial reporting application and due to ineffective controls relating to information technology, particularly in reviewing system implementations, user provisioning, user rights, and service organization control reports.. Management identified the errors during the Company’s year end audit of its fiscal year 2023 and restated its quarterly statements (See Part II - Item 9A).

OnAs ~~July~~a ~~27,~~result ~~2022,~~of wethe ~~consummated~~restatement aincluded ~~private~~herein, we ~~placement~~reported ~~pursuant~~net toloss for the ~~terms~~quarter ~~and~~ended ~~conditions~~March of31, ~~the~~2023 ~~Securities~~of ~~Purchase Agreement~~$8,228,431, ~~dated~~which ~~July~~was 25$46,731 ~~2022,~~less bythan ~~and~~the ~~among~~net usloss ~~and~~previously ~~certain~~reported in ~~purchasers~~the ~~named~~March on31, ~~the~~2023 ~~signature~~Original ~~pages~~Form ~~thereto.~~10-Q, Atnet ~~the~~loss ~~closing~~for of the ~~Private~~quarter ~~Placement,~~ended weJune ~~issued (i) 700~~30,~~000~~ ~~shares~~2023 of ~~common stock~~$6,974,485 ~~(ii)~~and ~~pre-funded~~six ~~warrants~~months toended ~~purchase~~June an30, ~~aggregate~~ 2023 of 3$15,~~300~~202,~~000~~916, ~~shares~~which ofwas ~~common stock~~$1,249,115 ~~(iii)~~more ~~Series~~for Athe ~~Preferred~~quarter ~~Investment~~ended ~~Options~~June to30, ~~purchase~~2023, anand ~~aggregate of 4~~$1,~~000~~202,~~000~~384 ~~shares~~for ofthe ~~common~~six ~~stock~~months ~~and~~ended ~~(iv)~~June ~~Series B Preferred Investment Options to purchase an aggregate of 4~~30,~~000,000~~ ~~shares~~2023 ofthan the ~~common~~net ~~stock.~~loss ~~The~~reported ~~purchase~~in ~~price~~the ofpreviously ~~each~~reported ~~Share~~in ~~and~~the ~~associated~~June ~~Series~~30, A2023 ~~Preferred~~Original ~~Investment~~Form ~~Option~~10-Q, and ~~Series~~net Bloss ~~Preferred~~for ~~Investment~~the ~~Option~~quarter ~~was~~ended ~~$5.00~~September 30, ~~and~~2023 ~~the purchase price~~ of ~~each~~$14,516,988 ~~Pre-Funded Warrant~~ and ~~associated~~nine ~~and~~months ~~associated~~ended ~~Series~~September A30, ~~Preferred~~2023 ~~Investment~~of ~~Option~~$29,719,904, ~~and~~which ~~Series B Preferred Investment Option~~ was $~~4.9999.~~268,414 ~~The~~more ~~aggregate~~for ~~gross proceeds to us from~~ the ~~Private~~quarter ~~Placement~~ended ~~were~~September 30, ~~approximately $20 million~~2023, ~~before deducting placement agent fees~~ and ~~other~~$1,470,799 ~~offering~~than ~~expenses.~~the ~~Wainwright~~net ~~acted~~loss asreported in the ~~exclusive~~September ~~placement~~30, ~~agent~~2023 ~~for~~Original ~~the~~Forms ~~Private Placement~~10-Q.

The Pre-Funded Warrants have an exercise price of $0.0001 per share of common stock, are exercisable on or after July 27, 2022, and are exercisable until the Pre-Funded Warrants are exercised in full. The Series A Preferred Investment Options are exercisable at any time on or after July 27, 2022 at an exercise price of $5.00 per share of common stock, subject to certain adjustments, including with respect to stock dividends, splits, subsequent rights offerings, pro rata distributions and a Fundamental Transaction (as defined in the Series A Preferred Investment Options), and terminate on the third anniversary of such date. If, at any time at the time of exercise of the Series A Preferred Investment Options, there is no effective registration statement registering, or the prospectus contained therein is not available for the resale of the shares issuable pursuant to the exercise of Series A Preferred Investment Options, the Series A Preferred Investment Options may be exercised, in whole or in part, by means of a cashless exercise, in which the holder is entitled to receive a number of shares of common stock to be determined by a formula contained in the Preferred Investment Options. No fractional shares or scrip representing fractional shares may be issued upon the exercise of the Preferred Investment Options.33

~~The~~Unaudited ~~Series~~Condensed BConsolidated ~~Preferred~~Balance ~~Investment~~Sheets Options are exercisable at any time on or after July 27, 2022 at an exercise price of $5.00 per share of common stock (the “Series B Preferred Investment Option Shares” and together with the Prefunded Warrant Shares and the Series A Preferred Option Shares, the “Warrant Shares”), subject to certain adjustments, including with respect to stock dividends, splits, subsequent rights offerings, pro rata distributions and a Fundamental Transaction (as ~~defined in the Series B Preferred Investment Options), and terminate on the second anniversary~~ of ~~such~~March ~~date. Other than the exercise period~~31, 2023 ~~the~~- ~~terms of the Series B Preferred Investment Options are identical to the terms of the Series A Preferred Investment Options.~~ Restated

	March 31, 2023
	As Previously Reported			Restatement Impact Increase (Decrease)			As Restated
Current Assets
Cash	$	2,357,204		$	(329,783	)	$	2,027,421
Accounts Receivables, net		12,473,777			1,963,189			14,436,966
Inventory		32,664,029			2,753,362			35,417,391
Prepaid and other current assets		921,178			(41,376	)		879,802
Total Current Assets		48,416,188			4,345,392			52,761,580

Property & equipment		18,556,882			4,115			18,560,997
Right of use assets		4,150,863			-			4,150,863
Other assets		2,786,236			(792,418	)		1,993,818
Total Assets	$	73,910,169		$	3,557,089		$	77,467,258

Current Liabilities
Accounts payable	$	34,975,111		$	(3,118	)	$	34,971,993
Accrued expenses		3,310,663			3,507,398			6,818,061
Lease liability, current maturities		979,143			-			979,143
Short term loan payable		1,241,248			-			1,241,248
Warrant and preferred investment option liability		8,631,313			-			8,631,313
Total Current Liabilities		49,137,478			3,504,280			52,641,758

Lease liability, net of current maturities		3,224,770			-			3,224,770
Total Liabilities		52,362,248			3,504,280			55,866,528

Stockholders’ Equity
Common stock		1,495			(1,472	)		23
Additional paid-in capital		174,774,641			1,472			174,776,113
Accumulated other comprehensive income		-			6,078			6,078
Accumulated deficit		(153,228,215	)		46,731			(153,181,484	)
Total Stockholders’ Equity		21,547,921			52,809			21,600,730
Total Liabilities and Stockholders’ Equity	$	73,910,169		$	3,557,089		$	77,467,258

In connection with the Private Placement, we entered into a Registration Rights Agreement with the Purchasers, dated July 25, 2022 (the “Registration Rights Agreement”). The Registration Rights Agreement provides that we shall file a registration statement covering the resale of all of the Registrable Securities (as defined in the Registration Rights Agreement) with the SEC no later than the 10th calendar day following the date of the Registration Rights Agreement, or August 4, 2022, and have the registration statement declared effective by the SEC as promptly as possible after the filing thereof, but in any event no later than the 45th calendar day following the date of the Registration Rights Agreement, or in the event of a “full review” by the SEC, the 75th day following the date of the Registration Rights Agreement.35

~~Upon~~Unaudited ~~the~~Condensed ~~occurrence~~Statements of ~~any~~Operations Event (as defined in the Registration Rights Agreement), which, among others, prohibits the Purchasers from reselling the Securities for more than ten (10) consecutive calendar days or more than an aggregate of fifteen (15) calendar days during any 12-~~month~~ period, we are obligated to pay to each Purchaser, on each monthly anniversary of each such Event, an amount in cash, as partial liquidated damages and not as a penalty, equal to the product of 2.0% multiplied by the aggregate subscription amount paid by such Purchaser pursuant to the Purchase Agreement.Restated

Subject to certain exceptions, neither we nor any of our security holders (other than the Purchasers in such capacity pursuant thereto) may include our securities in any registration statement other than the Shares and the Warrant Shares. We may not file any other registration statements until all Shares and Warrant Shares are registered pursuant to a registration statement that is declared effective by the SEC, provided that we may file amendments to registration statements filed prior to the date of the Registration Rights Agreement so long as no new securities are registered on any such existing registration statements.

	Three Months Ended March 31, 2023
	As Previously Reported			Restatement Impact Increase (Decrease)			As Restated
Revenues, Net of Allowances
Metal goods	$	8,449,294		$	(1,495,144	)	$	6,954,150
Soft goods		9,807,138			268,008			10,075,146
Electronic goods		1,956,279			(124,041	)		1,832,238
Total Revenues, Net of Allowances		20,212,711			(1,351,177	)		18,861,534

Cost of Goods Sold
Metal goods		6,965,287			(1,160,407	)		5,804,880
Soft goods		7,712,538			641,397			8,353,935
Electronic goods		1,977,614			(73,405	)		1,904,209
Total Cost of Goods Sold		16,655,439			(592,415	)		16,063,024

Gross Profit		3,557,272			(758,762	)		2,798,510

Operating Expenses
Selling, general and administrative		15,090,116			(805,493	)		14,284,623
Research and development		3,527,521			-			3,527,521
Total Operating Expenses		18,617,637			(805,493	)		17,812,144

Income (Loss) from Operations		(15,060,365	)		(46,731	)		(15,013,634	)

Other Income (Expense)
Change in the fair value of warrant and preferred investment option liabilities		7,484,960			-			7,484,960
Interest expense		(699,757	)		-			(699,757	)
Total Other Income (Expense)		6,785,203			-			6,785,203

Net Income (Loss) Before Income Tax Provision		(8,275,162	)		(46,731	)		(8,228,431	)

Income tax		-			-			-

Net Income (Loss)	$	(8,275,162	)	$	(46,731	)	$	(8,228,431	)

Redemption of Series D Preferred Stock deemed dividend		-			-			-
Common Stock deemed dividend		-			-			-
Net Income (Loss) attributable to common stockholders	$	(8,275,162	)	$	(46,731	)	$	(8,228,431	)

Basic and diluted net loss per share attributable to common stockholders	$	(36.54	)	$	(0.21	)	$	(36.33	)
Basic and diluted weighted average common shares outstanding		226,466						226,466

Wainwright served as the exclusive placement agent for the issuance and sale of the securities pursuant to the Purchase Agreement and is entitled to preferred investment options to purchase up to 240,000 shares of common stock. The Placement Agent Preferred Investment Options are in substantially the same form as the Series A Preferred Investment Options, except that the exercise price is $6.25 per share. 36

WeUnaudited ~~issued~~Condensed ~~the~~Consolidated ~~foregoing~~Statements ~~securities pursuant to the exemption from the registration requirements~~ of ~~the~~Cash ~~Securities~~Flows ~~Act,~~- ~~available under Section 4(a)(2) and/or Rule 506(b) of Regulation D promulgated thereunder due to the fact the issuance did not involve a public offering of securities.~~Restated

November 2022 Private Placement

	March 31, 2023
	As Previously Reported			Restatement Impact Increase (Decrease)			As Restated
Net loss	$	(8,275,162	)	$	46,731		$	(8,228,431	)
Adjustments to reconcile from net loss to net cash provided by operating activities:
Depreciation		1,152,353			-			1,152,353
Amortization of right of use assets		264,996			-			264,996
Change in fair value of warrant and preferred investment option liabilities		(7,484,960	)		-			(7,484,960	)
Stock-based compensation expense		115,139			-			115,139
Changes in operating assets and liabilities
Accounts receivable, net		4,336,882			(1,963,189	)		2,373,693
Inventory		7,701,257			(2,753,362	)		4,947,895
Prepaid assets		(551,386	)		41,376			(510,010	)
Other assets		(895,456	)		792,418			(103,038	)
Accounts payable		4,352,612			(3,118	)		4,349,494
Accrued expenses		299,749			3,503,283			3,803,032
Lease liability		(233,097	)		-			(233,097	)
Net cash provided by operating activities		782,927			(335,861	)		447,066

Cash flows from investing activities:
Purchases of property and equipment		(1,257,625	)		-			(1,257,625	)
Net cash used in investing activities		(1,257,625	)					(1,257,625	)

Cash flows from financing activities:
Proceeds from loan payable		412,589			-			412,589
Repayments of loan payable		(144,924	)		-			(144,924	)
Net cash provided by financing activities		267,665			-			267,665

Effect of exchange rate on cash		-			6,078			6,078
Net decrease in cash		(207,033	)		(329,783	)		(536,816	)
Cash, beginning of period		2,564,237			-			2,564,237
Cash, end of period	$	2,357,204		$	(329,783	)	$	2,027,421

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	699,757					$	699,757
Income taxes	$	-					$	-

Supplemental disclosures of non-cash investing and financing activities:
Purchase of property and equipment in accounts payable	$	951,227					$	951,227
Repayment of short-term loan payable in exchange of new short-term loan payable	$	714,411					$	714,411

On November 17, 2022, we consummated a private placement pursuant to the terms and conditions of the Securities Purchase Agreement, dated November 15, 2022, by and among us and certain purchasers named on the signature pages thereto. At the closing of the November 2022 Private Placement, we issued (i) 982,466 shares of common stock, (ii) pre-funded warrants to purchase an aggregate of 1,637,445 shares of common stock and (iii) Series C Preferred Investment Options to purchase 10,619,911 shares of common stock.37

~~The~~Unaudited ~~November~~Condensed ~~2022~~Consolidated ~~Pre-Funded~~Balance ~~Warrants~~Sheets ~~have an exercise price of $0.0001 per share of common stock, and are exercisable on or after the date of issuance until all of the November 2022 Pre~~-~~Funded~~ Warrants are exercised in full. The Series C Preferred Investment Options are exercisable at any time on or after November 17, 2022 at an exercise price of $2.356 per share of common stock, subject to certain adjustments, including with respect to stock dividends, splits, subsequent rights offerings, pro rata distributions and a Fundamental Transaction (as defined in the Series C Preferred Investment Options), and terminate on the third anniversary of such date. If, at any time at the time of exercise of the Series C Preferred Investment Options, there is no effective registration statement registering, or the prospectus contained therein is not available for the resale of the shares issuable pursuant to the exercise of Series C Preferred Investment Options, the Series C Preferred Investment Options may be exercised, in whole or in part, by means of a cashless exercise, in which the holder is entitled to receive a number of shares of common stock to be determined by a formula contained in the Preferred Investment Options. No fractional shares or scrip representing fractional shares may be issued upon the exercise of the Preferred Investment Options.Restated

	June 30, 2023
	As Previously Reported			Restatement Impact Increase (Decrease)			As Restated
Current Assets
Cash	$	2,206,565		$	(361,654	)	$	1,844,911
Accounts Receivables, net		7,820,611			1,913,128			9,733,739
Inventory		31,411,395			5,796,491			37,207,886
Prepaid and other current assets		48,164			343,280			391,444
Total Current Assets		41,486,735			7,691,245			49,177,980

Property & equipment		19,618,726			-			19,618,726
Right of use assets		4,386,414			-			4,386,414
Other assets		2,059,288			2,597			2,061,885
Total Assets	$	67,551,163		$	7,693,842		$	75,245,005

Current Liabilities
Accounts payable	$	36,864,439		$	(771,360	)	$	36,093,079
Accrued expenses		3,433,090			9,620,070			13,053,160
Lease liability, current maturities		1,182,351			-			1,182,351
Short term loan payable		1,214,028			-			1,214,028
Warrant and preferred investment option liability		4,985,387			-			4,985,387
Total Current Liabilities		47,679,295			8,848,710			56,528,005

Lease liability, net of current maturities		3,383,967			-			3,383,967
Total Liabilities		51,063,262			8,848,710			59,911,972

Stockholders’ Equity
Common stock		40			-			40
Additional paid in capital		175,441,446			(185	)		175,441,261
Accumulated other comprehensive income		-			47,702			47,702
Accumulated deficit		(158,953,585	)		(1,202,385	)		(160,155,970	)
Total Stockholders’ Equity		16,487,901			(1,154,868	)		15,333,033
Total Liabilities and Stockholders’ Equity	$	67,551,163		$	7,693,842		$	75,245,005

In connection with the Private Placement, we entered into a Registration Rights Agreement with the Purchasers, dated November 15, 2022 (the “November 2022 Registration Rights Agreement”). The November 2022 Registration Rights Agreement provides that we shall file a registration statement covering the resale of all of the Registrable Securities (as defined in the November 2022 Registration Rights Agreement) with the SEC no later than the 10th calendar day following the date of the November 2022 Registration Rights Agreement, or November 25, 2022, and have the registration statement declared effective by the SEC as promptly as possible after the filing thereof, but in any event no later than the 45th calendar day following the date of the November 2022 Registration Rights Agreement, or in the event of a “full review” by the SEC, the 75th day following the date of the November 2022 Registration Rights Agreement.38

~~Upon~~Unaudited ~~the~~Condensed ~~occurrence~~Consolidated ofStatements any Event (as defined in the November 2022 Registration Rights Agreement), which, among others, prohibits the November 2022 Purchasers from reselling the securities for more than ten (10) consecutive calendar days or more than an aggregate of ~~fifteen~~Operations ~~(15) calendar days during any 12~~-month period, we are obligated to pay to each Purchaser, on each monthly anniversary of each such Event, an amount in cash, as partial liquidated damages and not as a penalty, equal to the product of 2.0% multiplied by the aggregate subscription amount paid by such November 2022 Purchaser pursuant to the November 2022 Purchase Agreement. Restated

Subject to certain exceptions, neither we nor any of our security holders (other than the November 2022 Purchasers in such capacity pursuant thereto) may include our securities in any registration statement other than the November 2022 Shares and the November 2022 Warrant Shares. We may not file any other registration statements until all November 2022 Shares and November 2022 Warrant Shares are registered pursuant to a registration statement that is declared effective by the SEC, provided that we may file amendments to registration statements filed prior to the date of the Registration Rights Agreement so long as no new securities are registered on any such existing registration statements.

	For the Three Months Ended June 30, 2023									For the Six Months Ended June 30, 2023
	As Previously Reported			Restatement Impact Increase (Decrease)			As Restated			As Previously Reported			Restatement Impact Increase (Decrease)			As Restated
Revenues, Net of Allowances
Metal goods	$	8,012,855		$	(619,314	)	$	7,393,541		$	17,280,949		$	(2,933,258	)	$	14,347,691
Soft goods		9,913,780			(1,167,195	)		8,746,585			18,897,537			(75,806	)		18,821,731
Electronic goods		952,934			(116,704	)		836,230			2,913,793			(245,325	)		2,668,468
Total Revenues, Net of Allowances		18,879,569			(1,903,213	)		16,976,356			39,092,279			(3,254,389	)		35,837,890

Cost of Goods Sold
Metal goods		5,453,794			49,214			5,503,008			12,576,597			(1,268,709	)		11,307,888
Soft goods		6,726,078			(893,541	)		5,832,537			14,613,702			(427,230	)		14,186,472
Electronic goods		858,724			(45,314	)		813,410			2,503,737			213,882			2,717,619
Total Cost of Goods Sold		13,038,596			(889,641	)		12,148,955			29,694,036			(1,482,057	)		28,211,979

Gross Profit		5,840,973			(1,013,572	)		4,827,401			9,398,243			(1,772,332	)		7,625,911

Operating Expenses
Selling, general and administrative		14,967,257			384,580			15,351,837			30,046,444			(409,984	)		29.636.460
Research and development		2,913,403			(119,587	)		2,793,816			6,440,924			(119,587	)		6,321,337
Total Operating Expenses		17,880,660			264,993			18,145,653			36,487,368			(529,571	)		35,957,797

Income (Loss) from Operations		(12,039,687	)		1,278,565			(13,318,252	)		(27,089,125	)		1,242,761			(28,331,886	)

Other Income (Expense)
Warrant issuance cost		(351,768	)		-			(351,768	)		(351,768	)		-			(351,768	)
Change in the fair value of warrant and preferred investment option liabilities		7,242,510			-			7,242,510			14,727,470			-			14,727,470
Interest expense		(576,425	)		(29,450	)		(546,975	)		(1,287,109	)		(40,377	)		(1,246,732	)
Total Other Income (Expense)		6,314,317			(29,450	)		6,343,767			13,088,593			(40,377	)		13,128,970

Net Income (Loss) Before Income Tax Provision		(5,725,370	)		1,249,115			(6,974,485	)		(14,000,532	)		1,202,384			(15,202,916	)

Income tax		-			-			-			-			-			-

Net Income (Loss)	$	(5,725,370	)	$	1,249,115		$	(6,974,485	)	$	(14,000,532	)	$	1,202,384		$	(15,202,916	)

Redemption of Series D Preferred Stock deemed dividend		-			-			-			-			-			-
Common Stock deemed dividend		-			-			-			-			-			-
Net Income (Loss) attributable to common stockholders	$	(5,725,370	)	$	1,249,115		$	(6,974,485	)	$	(14,000,532	)	$	1,202,384		$	(15,202,916	)

Basic and diluted net loss per share attributable to common stockholders	$	(23.57	)	$	5.14		$	(28.71	)	$	(59.64	)	$	5.12		$	(64.76	)
Basic and diluted weighted average common shares outstanding		242,934						242,934			234,745						234,745

Wainwright served as the exclusive placement agent for the issuance and sale of the securities pursuant to the November 2022 Purchase Agreement and is entitled to preferred investment options to purchase up to 157,195 shares of common stock. The November 2022 Placement Agent Preferred Investment Options are in substantially the same form as the Series C Preferred Investment Options, except that the exercise price is approximately $3.578365 per share.39

InUnaudited ~~addition,~~Condensed Consolidated ~~upon~~Statements ~~any exercise for cash~~ of ~~any~~Cash ~~preferred~~Flows ~~investment~~- options issued to investors in the offering, we shall pay Wainwright, within five (5) business days of our receipt of the exercise price, a cash fee of seven (7.0%) percent of the aggregate gross exercise price paid in cash with respect thereto and a management fee of 0.5% of the aggregate gross exercise priced paid in cash with respect thereto. Restated

We issued the foregoing securities pursuant to the exemption from the registration requirements of the Securities Act, available under Section 4(a)(2) and/or Rule 506(b) of Regulation D promulgated thereunder due to the fact the issuance did not involve a public offering of securities.

	June 30, 2023
	As Previously Reported			Restatement Impact Increase (Decrease)			As Restated

Cash flows from operating activities:
Net loss	$	(14,000,532	)	$	(1,202,384	)	$	(15,202,916	)
Adjustments to reconcile from net loss to net cash used in operating activities:
Depreciation		2,608,776			-			2,608,776
Provision for credit losses		1,300,000			-			1,300,000
Amortization of right of use of assets		734,405			-			734,405
Warrant issuance cost		351,768			-			351,768
Loss on sale of property and equipment		-			16,652			16,652
Change in fair value of warrant and preferred investment option liabilities		(14,727,470	)		-			(14,727,470	)
Stock-based compensation expense		228,656			-			228,656
Changes in operating assets and liabilities
Accounts receivable, net		7,690,048			(1,913,128	)		5,776,920
Inventory		8,953,891			(5,796,491	)		3,157,400
Prepaid assets		321,628			(343,280	)		(21,652	)
Other assets		(168,508	)		(2,597	)		(171,105	)
Accounts payable		4,715,352			(771,361	)		3,943,991
Accrued expenses		422,177			9,603,417			10,025,594

Lease liability		(575,652	)		-			(575,652	)
Net cash used in operating activities		(2,145,461	)		409,172			(2,554,633	)

Cash flows from investing activities:
Purchases of property and equipment		(2,249,304	)		-			(2,249,304	)
Net cash used in investing activities		(2,249,304	)		-			(2,249,304	)

Cash flows from financing activities:
Proceeds from short term loan payable		412,589			-			412,589
Repayments of short-term loan payable		(172,144	)		-			(172,144	)
Proceeds from issuance of common stock, net of costs		3,796,648			(184	)		3,796,464
Net cash provided by financing activities		4,037,093			(184	)		4,036,909

Effect of exchange rate on cash		-			47,702			47,702

Net decrease in cash		(357,672	)		(361,654	)		(719,326	)
Cash, beginning of period		2,564,237			-			2,564,237
Cash, end of period	$	2,206,565		$	(361,654	)	$	1,844,911

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	1,261,457					$	1,261,457
Income taxes	$	-					$	-

Supplemental disclosure of non-cash investing and financing activities:
Initial fair value of warrants and preferred investment option liability	$	3,596,484					$	3,596,584
Initial value of lease liability	$	704,960					$	704,960
Purchase of property and equipment in accounts payable	$	2,477,816					$	2,477,816
Repayment of short-term loan payable in exchange of new short-term loan payable	$	714,411					$	714,411

~~Equity Plan Information~~40

~~EQUITY~~Unaudited ~~PLAN~~Condensed ~~INFORMATION~~Consolidated Balance Sheets - Restated

Plan Category:	Number ofsecurities to beissued uponexercise ofoutstandingoptions,warrants andrights:			Weightedaverageexercise price ofoutstandingoptions,warrants andrights:			Number ofsecuritiesremainingavailable forfutureissuance:
	September 30, 2023
2016 Equity Incentive Plan:
	As Previously Reported			Restatement Impact Increase (Decrease)			As Restated
Equity compensation plans approved by security holders		0		$	0			100,000
Current Assets
Equity compensation plans not approved by security holders		0			0			0
Cash	$	1,834,305		$	107,659		$	1,941,964
Total		0		$	0			100,000
Accounts Receivables, net		8,992,889			3,194,315			12,187,204
2018 Equity Incentive Plan:
Inventory		28,070,889			4,861,332			32,932,221
Equity compensation plans approved by security holders		1,271		$	6,084			22,667
Prepaid and other current assets		543,343			(123,040	)		420,303
Equity compensation plans not approved by security holders		0		$	0			0
Total Current Assets		39,441,426			8,040,266			47,481,692
Total		1,271			6,084			22,667
Property & equipment		18,904,135			-			18,904,135
2022 Equity Incentive Plan: (1)
Right of use assets		4,021,988			-			4,021,988
Equity compensation plans approved by security holders		1,350,000		$	1.79			0
Other assets		2,165,301			1,482			2,166,783
Equity compensation plans not approved by security holders		0			0			0
Total Assets		64,532,850			8,041,748			72,574,598
Total		1,350,000		$	1.79			0
Current Liabilities
Total		1,351,271		$	5.39			122,667
Accounts payable		41,091,115			5,933,524			47,024,639
Accrued expenses		4,461,713			3,549,633			8,011,346
Lease Liability, current maturities		1,247,062			-			1,247,062
Short term loan payable		707,625			5,606			713,231
Warrant and preferred investment option liability		5,740,899			-			5,740,899
Total Current Liabilities		53,248,414			9,488,763			62,737,177
Lease liability, net of current maturities		3,013,214			-			3,013,214
Total Liabilities		56,261,628			9,488,763			65,750,391
Stockholders’ Equity
Common stock		57						57
Additional paid in capital		181,473,324			-			181,473,324
Accumulated other comprehensive income		-			23,783			23,783
Accumulated deficit		(173,202,159	)		(1,470,798	)		(174,672,957	)
Total Stockholders’ Equity		8,271,222			(1,447,015	)		6,824,207
Total Liabilities and Stockholders’ Equity	$	64,532,850		$	8,041,748		$	72,574,598

(1) The 2022 Plan contains an “evergreen formula” pursuant to which the number of shares of common stock available for issuance under the 2022 Plan will automatically increase on January 1 of each calendar year during the term of the 2022 Plan, beginning with the calendar year 2023, by an amount of shares of common stock so that the total amount of common stock available under the 2022 Plan is equal to 15% of the total number of shares of common stock outstanding on December 31st of the prior calendar year.41

~~Item~~Unaudited 6.Condensed ~~[Reserved]~~Consolidated Statements of Operations - Restated

Not applicable.

	For the Three Months Ended September 30, 2023									For the Nine Months Ended September 30, 2023
	As Previously Reported			Restatement Impact Increase (Decrease)			As Restated			As Previously Reported			Restatement Impact Increase (Decrease)			As Restated
Revenues, Net of Allowances
Metal goods	$	12,754,504		$	(4,288,179	)	$	8,466,325		$	30,475,518		$	(7,661,502	)	$	22,814,016
Soft goods		6,035,706			4,145,891			10,181,597			25,938,923			3,064,405			29,003,328
Electronic goods		1,839,997			(784,742	)		1,055,255			3,308,045			415,678			3,723,723
Total Revenues, Net of Allowances		20,630,207			(927,030	)		19,703,177			59,722,486			(4,181,419	)		55,541,067

Cost of Goods Sold
Metal goods		10,351,690			(4,040,275	)		6,311,415			25,732,707			(8,113,404	)		17,619,303
Soft goods		3,646,862			4,220,740			7,867,602			16,528,326			5,525,748			22,054,074
Electronic goods		1,718,681			(521,874	)		1,196,807			3,150,236			764,190			3,914,426
Total Cost of Goods Sold		15,717,233			(341,409	)		15,375,824			45,411,269			(1,823,466	)		43,587,803

Gross Profit		4,912,974			(585,621	)		4,327,353			14,311,217			(2,357,953	)		11,953,264

Operating Expenses
Selling, general and administrative		12,572,066			2,286,759			14,858,825			42,618,510			1,876,775			44,495,285
Research and development		2,916,349			(2,587,157	)		329,192			9,357,273			(2,706,744	)		6,650,529
Total Operating Expenses		15,488,415			(300,398	)		15,188,017			51,975,783			(829,969	)		51,145,814

Income (Loss) from Operations		(10,575,441	)		285,223			(10,860,664	)		(37,664,566	)		1,527,984			(39,192,550	)

Other Income (Expense)
Warrant issuance cost		(186,450	)		-			(186,450	)		(538,218	)		-			(538,218	)
Change in the fair value of warrant and preferred investment option liabilities		3,033,537			-			3,033,537			17,761,007			-			17,761,007
Inducement expense		(6,373,353	)		-			(6,373,353	)		(6,373,353	)		-			(6,373,353	)
Interest expense		(146,867	)		(16,809	)		(130,058	)		(1,433,975	)		(57,185	)		(1,376,790	)
Total Other Income (Expense)		(3,673,133	)		(16,809	)		(3,656,324	)		9,415,461			(57,185	)		9,472,646

Net Income (Loss) Before Income Tax Provision		(14,248,574	)		268,414			(14,516,988	)		(28,249,105	)		1,470,799			(29,719,904	)

Income tax		-			-			-			-			-			-

Net Income (Loss)	$	(14,248,574	)	$	268,414		$	(14,516,988	)	$	(28,249,105	)	$	1,470,799		$	(29,719,904	)

Redemption of Series D Preferred Stock deemed dividend		-			-			-			-			-			-
Common Stock deemed dividend		-			-			-			-			-			-
Net Income (Loss) attributable to common stockholders	$	(14,248,574	)	$	268,414		$	(14,516,988	)	$	(28,249,105	)	$	1,470,799		$	(29,719,904	)

Basic and diluted net loss per share attributable to common stockholders	$	(29.59	)	$	0.55		$	(30.15	)	$	(88.86	)	$	4.63		$	(93.49	)
Basic and diluted weighted average common shares outstanding		481,508						481,508			317,904						317,904

~~Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~42

~~Prospective~~Unaudited ~~investors~~Condensed ~~should~~Consolidated ~~read~~Statements ~~the following discussion and analysis~~ of ~~our~~Cash ~~financial~~Flows condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this annual report. Some of the information contained in this discussion and analysis or set forth elsewhere in this annual report, including information with respect to our plans and strategy for our business, includes forward-~~looking~~ ~~statements that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements~~Restated

” This discussion should be read in conjunction with our audited consolidated financial statements and the notes thereto included elsewhere in this report. In this discussion, we may use certain non-generally accepted accounting principles (GAAP) financial measures. An explanation of these non-GAAP financial measures and a reconciliation to the most directly comparable GAAP financial measures are included in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Investors should not consider non-GAAP financial measures in isolation or as substitutes for financial information presented in compliance with GAAP.

	For the Nine Months Ended September 30, 2023
	As Previously Reported			Restatement Impact Increase (Decrease)			As Restated
Cash flows from operating activities:
Net loss	$	(28,249,105	)	$	(1,470,799	)	$	(29,719,904	)
Adjustments to reconcile from net loss to net cash used in operating activities:
Depreciation		4,088,358			-			4,088,358
Provision for credit losses		2,943,671			662,687			3,606,358
Loss on sale of property and equipment		-			16,652			16,652
Inducement expense		6,373,353			-			6,373,353
Amortization of right of use assets		1,098,831			-			1,098,831
Change in fair value of warrant and preferred investment option liabilities		(17,761,007	)		-			(17,761,007	)
Warrant issuance cost		538,218			-			538,218
Stock-based compensation expense		328,127			-			328,127
Changes in operating assets and liabilities
Accounts receivable, net		4,874,099			(3,857,002	)		1,017,097
Inventory		12,294,396			(4,861,331	)		7,433,065
Prepaid assets		(173,551	)		123,040			(50,511	)
Other assets		(274,520	)		(1,483	)		(276,003	)
Accounts payable		9,240,985			5,933,524			15,174,509
Accrued expenses		1,450,799			3,532,981			4,983,780
Lease liability		(881,694	)		-			(881,694	)
Net cash used in operating activities		(4,109,040	)		78,270			(4,030,770	)

Cash flows from investing activities:
Purchases of property and equipment		(3,313,252	)		-			(3,313,252	)
Net cash used in investing activities		(3,313,252	)					(3,313,252	)

Cash flows from financing activities:
Proceeds from issuance of stock, net of costs		6,958,318			-			6,958,318
Proceeds from short term loan payable		779,795			-			779,795
Repayments of short-term loan payable		(1,045,753	)		5,606			(1,040,147	)
Net cash provided by financing activities		6,692,360			5,606			6,697,966

Effect of currency fluctuation on cash		-			23,783			23,783

Net (decrease) in cash		(729,932	)		107,659			(622,273	)
Cash, beginning of period		2,564,237			-			2,564,237
Cash, end of period		1,834,305			107,659			1,941,964

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	1,433,976		$	(42,461	)	$	1,391,515
Income taxes	$	-		$	-		$	-

Supplemental disclosure of non-cash investing and financing activities:
Initial fair value of warrant and preferred investment option liability	$	9,916,393		$	-		$	9,916,393
Initial value of lease liability	$	704,960		$	-		$	704,960
Repayment of short-term loan payable in exchange for new short-term loan payable	$	1,601,205		$	(1,254,000	)	$	347,205
Purchase of property and equipment in accounts payable	$	2,178,858		$	-		$	2,178,858

3143

~~Business~~Fractional ~~Overview~~Shares

WeOn ~~were~~January ~~formed~~2, ~~to design~~2024, ~~manufacture~~the Company issued 66,571 ~~and~~shares ~~distribute~~of ~~innovative~~common ~~tools~~stock ~~and~~as ~~accessories~~fractional toshares ~~the~~that ~~building~~resulted ~~industry.~~from ~~The~~the ~~global~~Reverse ~~tool~~Stock ~~market~~Split ~~industry~~that iswas aeffective ~~multibillion-dollar~~January ~~business~~1, 2024.

~~Our~~February ~~business~~2024 isPublic based on development of innovative and state-of-the-art products, primarily in tools and hardware category, with particular focus on building and construction industry with the ultimate goal of making life easier and more productive for the contractors and workers alike.Offering

~~Our~~On ~~three~~February ~~major~~13, ~~categories~~2024, ~~contain~~we completed a ~~total~~public ofoffering (the 19“Offering”) ~~product lines, consisting~~ of (i) ~~Soft Goods~~140,000 ~~which~~shares ~~includes~~(the ~~kneepads,~~“Common ~~tool~~Shares”) ~~bags~~of our common stock, ~~pouches~~par ~~and~~value ~~tool~~$0.0001 ~~belts,~~per share (the “Common Stock”); (ii) ~~Metal Goods~~632,628 ~~which~~prefunded ~~consists~~warrants (the “Prefunded Warrants”) exercisable for an aggregate of ~~sawhorses~~632,628 ~~tool~~shares ~~stands~~of Common Stock (the “Prefunded Warrant Shares”); and (iii) ~~Utility Products~~772,628 ~~which~~Series ~~includes~~F ~~utility~~Warrants ~~knives,~~(the ~~aviation~~“Series F ~~snips,~~Warrants”) ~~shears,~~exercisable ~~lasers~~for ~~and~~an ~~levels~~aggregate of 772,628 ~~tape~~shares ~~measures~~of ~~and~~Common ~~chalk~~Stock ~~reels,~~(the ~~striking~~“Series ~~tools,~~F ~~garden~~Warrant ~~and~~Shares”) ~~landscaping~~issued ~~tools~~pursuant to ~~and~~the ~~pliers~~securities ~~and~~purchase ~~clamps.~~agreement, Wedated ~~also~~February ~~have~~13, ~~several~~2024 ~~additional~~(the ~~categories~~“Securities ~~and~~Purchase ~~product~~Agreement”), ~~lines~~between inthe ~~various~~Company ~~stages~~and certain ofinstitutional ~~development.~~investors (the “Investors”).

WeThe ~~are~~offering ~~continuing~~price toof ~~focus~~each Common ~~our~~Share ~~efforts~~and onaccompanying ~~increased~~Series F ~~marketing~~Warrant ~~campaigns~~was $4.529. The Offering price of each Prefunded Warrant and accompanying Series F Warrant was $4.529. The Common Shares, Prefunded Warrants, Prefunded Warrant Shares, Series F Warrants and ~~distribution~~Series ~~programs~~F Warrant Shares are collectively referred to ~~strengthen~~herein as the ~~demand~~“Securities.” The ~~for~~Series ~~our~~F ~~products~~Warrants ~~globally~~have an exercise price of $4.405 ~~Management~~per ~~anticipates~~share ~~that~~of ~~our~~Common ~~capital~~Stock, ~~resources~~are ~~will~~exercisable ~~improve~~upon issuance and ~~our~~expire ~~products~~five ~~gain~~years from ~~wider~~the ~~market~~date ~~recognition~~of issuance. The exercise price of the Series F Warrants is subject to adjustment for stock splits, reorganizations, recapitalizations and ~~acceptance~~similar ~~resulting~~capital transactions as described in ~~increased~~the ~~product~~Series ~~sales~~F Warrants. The Prefunded Warrants are immediately exercisable and may be exercised at a nominal consideration of $0.0001 per share of Common Stock at any time until all of the Prefunded Warrants are exercised in full.

~~Liquidity~~In consideration for consummating this Offering, we paid the placement agent a cash fee equal to 7% of the aggregate gross proceeds of the Offering, a management fee equal to 0.5% of the gross proceeds of the Offering and ~~Capital~~reimbursed ~~Resources;~~the ~~Going~~placement ~~Concern~~agent for certain expenses and legal fees. We also issued warrants to the designees of the placement agent (the “Placement Agent Warrants”) exercisable for an aggregate of 46,358 shares of Common Stock (the “Placement Agent Warrant Shares”). The Placement Agent Warrants have substantially the same terms as the Series F Warrants, except that the Placement Agent Warrants have an exercise price equal to $5.6625 per share (125% of the $4.53 offering price of the Common Share and accompanying Series F Warrant),and expire on the fifth anniversary from the date of the commencement of sales in the Offering, February 13, 2029.

~~Going~~We ~~Concern~~received net proceeds of approximately $3.1 million from the Offering, after deducting the Offering expenses payable by us, including the placement agent’s commissions and fees.

WeFebruary ~~will~~2024 ~~require~~Warrant ~~additional~~Amendments ~~capital~~– Investors in order to achieve commercial success and, if necessary, to finance future losses from operations as we endeavor to build revenue, but we do not have any commitments to obtain such capital and we cannot assure you that we will be able to obtain adequate capital as and when required.”Warrants

~~Business~~In ~~Developments~~connection with the Offering, on February 13, 2024, we entered into a warrant amendment agreement with an Investor in the Offering pursuant to which the Company agreed to lower the exercise price of the Investor’s warrants (the “Common Warrants”) from $20.80 per share (as adjusted for the 1-for-65 reverse stock split of the Company’s Common Stock on January 2, 2024) to $4.405, the closing price of the Company’s common stock on February 13, 2024, in consideration for a cash payment of an aggregate of $25,529. The Common Warrants are exercisable for an aggregate of 204,230 shares of common stock and were issued to the Investor in connection with a private transaction of the Company on August 14, 2023. The amended exercise price of the investor’s Common Warrants was effective on February 16, 2024.

~~The following highlights recent material developments in our business:~~44

●February In2024 ~~first~~Warrant ~~quarter~~Amendments of- ~~2022,~~Series D we announced that our online sales through Amazon increased by 41% to approximately $3.4 million for the quarter ended March 31, 2022, compared to approximately $2.4 million for the first quarter of 2021.Warrants

● In ~~second~~connection ~~quarter~~with ofthe ~~2022~~Offering, on February 13, 2024, we ~~announced~~entered ~~that~~into ~~our~~a ~~online~~warrant ~~sales~~amendment ~~through~~agreement ~~Amazon.com~~with ~~were~~the ~~$3.6~~Investors, ~~million.~~pursuant ~~This~~to ~~represents~~which athe ~~17%~~Company ~~increase~~agreed ~~from~~to lower the ~~same~~exercise ~~quarter~~price of inthe ~~2021~~Investors’ Series D Warrants from $18.85 ~~Sales~~per share (as adjusted for the ~~first~~1-for-65 ~~half~~reverse stock split of ~~2022~~the ~~increased~~Company’s common bystock ~~28%~~on toJanuary ~~approximately~~2, 2024) to $74.405, ~~million~~the ~~compared~~closing toprice of the Company’s common stock on February 13, 2024, in consideration for a cash payment in aggregate of $59,381.4 The ~~million~~Series D Warrants are exercisable for an aggregate of 75,048 shares of common stock and were issued to the ~~first~~Investors ~~half~~on June 23, 2023. The amended exercise price of ~~2021~~the Series D Warrants was effective on February 16, 2024.

●The Inshares ~~July~~of ~~2022~~common stock underlying the Series D Warrants sold in the private transaction on June 23, we2023 ~~announced~~were ~~that~~registered weon ~~entered~~behalf ~~into~~of anthe ~~agreement~~purchasers ~~with~~thereof ~~Ace~~on ~~Hardware~~a ~~USA~~registration ~~and~~statement on ~~International~~Form toS-1 ~~sell~~(File 35No: ~~ToughBuilt~~333-271181) ~~products~~declared effective by the SEC on June 21, 2023.

●Warrant ~~In August 2022, we announced that we started to sell 93 ToughBuilt products on Amazon.It (Italy) and Amazon.de (Germany).~~Conversion

32On July 31, 2024, the Company received cash consideration of $70,480 and issued 16,000 shares of common stock on conversion of 16,000 warrants at $4.405 per warrant.

●On In August ~~2022~~2, we2024, ~~announced~~the ~~our~~Company ~~entry~~received ~~into~~cash aconsideration of ~~supply~~$88,100 ~~agreement~~and ~~with~~issued ~~Elecktro3~~20,000 ~~S.C.C.L~~shares ~~and~~of ~~NCC~~common ~~Hardware~~stock ~~Purchasing~~on ~~and~~conversion ~~Services~~of ~~Centers~~16,000 ~~SL,~~warrants ~~increasing~~at ~~our~~$4.405 ~~presence~~per ~~in Spain’s hardware marketplace~~warrant.

●Series InI ~~August~~Preferred 2022, we announced the launch of our all-new Reload Utility Knife, a groundbreaking new cutting tool made available for purchase through a leading US home improvement retailer and across their global strategic network of ToughBuilt’s partners and buying groups, servicing over 15,500 storefronts around the world.Stock

●On InAugust ~~September~~13, ~~2022~~2024, wethe ~~announced~~board ~~our~~of ~~entry~~directors ~~into~~of ToughBuilt Industries, Inc., declared the ~~global~~formation ~~measuring~~of and ~~marking~~approved ~~market~~the ~~segment~~issuance ~~category~~of ~~with~~an aggregate of 100 shares of Series I Preferred Stock, par value $0.0001 per share (the “Series I”). On August 26, 2024, we filed a ~~feature-rich~~certificate ~~family~~of designation (the “Certificate of ~~tape~~Designation”) with ~~measures~~the Nevada Secretary of State therein establishing the Series I Preferred Stock and ~~chalk~~describing ~~reels~~the rights, obligations and privileges of the Series I Preferred Stock. Concurrently, we issued the 100 shares of Series I on the same date, in book-entry form to Michael Panosian, our Chief Executive Officer.

●The Series InI ~~September~~consist ~~2022,~~of we100 ~~announced~~shares. ~~that~~Each weshare ~~entered~~of Series I has a par value of $0.0001 per share. The Series I is not convertible into, anor exchangeable ~~agreement~~for, shares of any other class or series of stock or other securities of the Company. The Series I has no stated maturity and is not subject to any sinking fund. The holders of Series I will not be entitled to receive dividends of any kind. Each holder of Series I has full voting rights and powers equal to the voting rights and powers of holders of common stock, and for so long as Series I is issued and outstanding, the holders of the Series I shall vote together as a single class with ~~two~~the ~~major~~holders ~~wholesale~~of ~~tool~~the ~~distributors~~Company’s common instock ~~Switzerland~~and the holders of any other class or series of shares entitled to vote with the common stock, ~~marking~~with anthe ~~expansion~~holders of ~~European~~Series I ~~distribution~~being ~~that~~entitled ~~includes~~to ~~more~~51% ~~than~~of ~~250~~the ~~retailers~~total votes on all such matters regardless of the actual number of shares of the Series I then outstanding, and ~~nationwide~~the holders of common stock and any other shares entitled to vote being entitled to their proportional share of the remaining 49% of the total votes based on their respective voting power. The holders of Series I shall not be entitled to receive any distributions in the event of any liquidation, dissolution or winding up of the Company.

● In September 2022, we announced our launch of 21 new SKUs into the global handsaws segment, beginning with a line of seven cutting tools featuring ToughBuilt’s QuickSet™ Double-Edge Pull Saw, the first ever safe-folding pull sawItem 7A. ~~The~~Quantitative ~~new line will be available Q4 2022~~ and ~~beyond~~Qualitative ~~for~~Disclosures ~~purchase~~About ~~through~~Market ~~a leading US home improvement retailer and across global strategic network of partners and buying groups, servicing over 15,500 storefronts around the world~~Risk.

●We qualify Inas ~~September~~a ~~2022,~~smaller wereporting ~~announced~~company, ~~major~~as ~~expansions~~defined toby ~~its~~SEC ~~network~~Rule ~~of storefronts in Great Britain~~229.10(f)(1), ~~confirming broad new~~ and ~~expanding~~are ~~agreements~~not ~~with~~required ~~Huws~~to ~~Gray,~~provide ~~Selco~~the ~~Builders~~information ~~Warehouse,~~required by ~~MKM,~~this ~~City Electrical Factors, and Carpet & Flooring~~Item.

~~● In October 2022, we announced the launch of an all-new line of striking tools, including an innovative series of ShockStop™ hammers, marking their entry into the global tool-hammer market.~~45

●Item In8. ~~October~~Financial ~~2022,~~Statements weand ~~announced~~Supplementary ~~that we entered into four major retailers in Germany, which accounted for a 35% share of the global hand tools market in 2019~~Data.

●TOUGHBUILT ~~In October 2022~~INDUSTRIES, ~~we announced that our online sales for Q3 2022 through Amazon~~INC.com were $3.9 million. This represents a 38% rise from the same quarter in 2021. Sales for the 9-month period ending on September 30, 2022, increased by 32% to approximately $10.9 million, compared to $8.3 million for the same period in 2021.

●CONSOLIDATED InFINANCIAL October 2022, we announced the launch of our all-new 500 ft. Rotary Laser Level Kit. The level comes with an intuitive, first-of-its-kind, 3-piece stacking guide rod that allows for a rolling laser receiver to provide bracket-free attachment and a one-handed interface for fast operation. It emits a laser that displays a consistent, accurate signature that is detectable up to 500-feet of distance from its projection point. The kit also includes an innovative tripod with a rapid-use bullseye level and telescoping legs to promote accurate placement on uneven terrain.STATEMENTS

●FOR InTHE ~~October~~YEARS 2022, we announced that we reached a comprehensive distribution agreement with Sodimac, the largest home improvement and construction supplier in South America; beginning with Peru and Colombia with 15 ToughBuilt SKUs.ENDED

●DECEMBER ~~In October 2022~~31, we2023 ~~announced~~AND that we expanded our distribution of 84 ToughBuilt branded products to be sold in all Sears’ Mexico locations, totaling 96 storefronts nationwide. Sears continues to be a leading supplier to its core consumers in the hardware and home improvement trades in Latin America, and its comprehensive store count and geographical presence across Mexico offer ToughBuilt an opportunity to offer a wide product range to professional end users in the country.2022

33INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

● In November 2022, we announced that we entered into a distribution agreement with Lamed LLP – one of the largest suppliers of equipment, tools and building materials in Kazakhstan. Lamed begins this agreement with 76 ToughBuilt SKUs and will stock the entire ToughBuilt product range.

Report of Independent Registered Public Accounting Firm PCAOB Number 688	F-2

Consolidated Balance Sheets	F-5

Consolidated Statements of Operations	F-6

Consolidated Statements of Shareholders’ Equity (Deficit)	F-7

Consolidated Statements of Cash Flows	F-8

Notes to Consolidated Financial Statements	F-9

● In December 2022, we announced that we are strengthening our relationship with European and UK retailers Wickes, Toolstation UK & Toolstation France. After a successful launch of ToughBuilt products, Wickes, which has 230 locations across the United Kingdom, will be increasing the number of ToughBuilt SKUs available to its customer base, from 15 to 48 SKUs beginning January 2023. Additionally, Toolstation UK, with over 550 stores nationwide, following consistent and impressive sales, Toolstation UK has increased its ToughBuilt SKUs to 35 total SKUs and has committed to several national promotions, contributing to a significant uplift in sales conversions. Toolstation France has also more than doubled its original offering of the ToughBuilt range to from 25 to 65 SKUs in total.F-1

●REPORT InOF ~~December~~INDEPENDENT ~~2022,~~REGISTERED wePUBLIC ~~announced the launch of our new line of Long Handle Garden and Landscaping Tools. Beginning with 11 out of about 150 SKUs, the new line includes many innovative improvements.~~ACCOUNTING FIRM

●To Inthe ~~January~~Shareholders ~~2023,~~and ~~our~~Board ~~global~~of ~~Amazon~~Directors ~~sales for 2022 through Amazon.com were approximately $15.9 million. This represents an approximate 34% increase from $11.9 million in Amazon sales in 2021.~~of

●ToughBuilt ~~In January 2023~~Industries, we launched more than 40 new SKUs into the Handheld Screwdrivers segment, including ratcheting bit drivers, insulated screwdrivers, precision, slotted, Phillips, Torx, and cabinet screwdrivers and demolition driversInc.

●Opinion Inon ~~January 2023, we expanded our distribution agreement with Sodimac,~~ the ~~largest~~Financial home improvement and construction supplier in South America. In this extended agreement, stores in Chile, Peru, Argentina, Colombia, Brazil, and Uruguay will initially begin with 15 SKUs in-store and brings 23 SKUs to Sodimac’s online marketplace.Statements

●We Inhave ~~January~~audited the accompanying consolidated balance sheets of ToughBuilt Industries, Inc. (the “Company”) as of December 31, 2023 and 2022, wethe ~~launched~~related ~~more~~consolidated ~~than~~statements of 20operations, ~~new~~shareholders’ ~~SKUs~~equity ~~into~~(deficit) and cash flows for each of the ~~Handheld~~two ~~Wrenches~~years ~~segment~~in the period ended December 31, ~~including~~2023, ~~adjustable~~and the ~~wrenches~~related notes (collectively referred to as the “financial statements”). In our opinion, ~~construction~~the ~~wrenches~~financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and ~~pipe~~the ~~wrenches~~results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

●Explanatory InParagraph ~~February~~– ~~2023,~~Going we launched our new line of pliers and clamps. The new line, comprised of more than 40 SKUs, will be made available for purchase through leading US home improvement retailers and across ToughBuilt’s growing strategic networks of North American and global trade partners and buying groups, servicing over 18,900 storefronts and online portals worldwide.Concern

~~Key~~The ~~Factors~~accompanying ~~Affecting~~consolidated ~~our~~financial ~~Performance~~statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company has a significant working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

AsBasis afor result of a number of factors, our historical results of operations may not be comparable to our results of operations in future periods, and our results of operations may not be directly comparable from period to period. Set forth below is a brief discussion of the key factors impacting our results of operations.Opinion

~~Seasonality~~These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

~~Our~~We ~~company’s~~conducted ~~revenues~~our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not ~~seasonal~~required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. ~~However~~As part of our audits, we ~~usually~~are ~~experience~~required ato ~~spike~~obtain inan ~~sales~~understanding of ~~when~~internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we ~~introduce~~express ~~new~~no ~~products~~such opinion.

~~COVID-19~~Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

~~In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID~~F-19) as a pandemic which continues to spread throughout the United States and the world. We are currently monitoring the outbreak of COVID-19 and the related business and travel restrictions and changes to behavior intended to reduce its spread. All of our Chinese facilities were temporarily closed for a period of time but have been reopened. Depending on the progression of the outbreak, including new variants and subvariants of the coronavirus, our ability to obtain necessary supplies and ship finished products to customers may be partly or completely disrupted globally. Also, our ability to maintain appropriate labor levels could be disrupted. If the coronavirus, including variants and subvariants thereof, continues to progress, it could have a material negative impact on our results of operations and cash flow, in addition to the impact on its employees.2

34Critical Audit Matters

The ~~ultimate~~critical ~~extent~~audit ofmatters communicated below are matters arising from the ~~impact~~current period audit of ~~any~~the ~~epidemic,~~financial ~~pandemic,~~statements ~~outbreak,~~that were communicated or ~~other~~required ~~public~~to ~~health~~be ~~crisis~~communicated onto the ~~our~~audit ~~business,~~committee and that: (1) relate to accounts or disclosures that are material to the financial ~~condition~~statements and ~~results~~(2) involved our especially challenging, subjective, or complex judgments. The communication of ~~operations~~critical ~~will~~audit ~~depend~~matters does not alter in any way our opinion on ~~future~~the ~~developments~~financial statements, ~~which~~taken ~~are~~as ~~highly~~a ~~uncertain~~whole, and ~~cannot~~we beare ~~predicted~~not, ~~including:~~by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

●System ~~new~~Conversion information which may emerge concerning the severity of the disease; ● the duration and spread of the outbreak; ● effectiveness of vaccination and booster vaccination campaigns; ● the severity of travel restrictions imposed by geographic areas in which we operate, mandatory or voluntary business closures; ● regulatory actions taken in response to the pandemic; ● other business disruptions that affect our workforce; ● the impact on capital and financial markets; and ● actions taken throughout the world, including in markets in which we operate, to contain the COVID-19 outbreak or treat its impact.

InCritical ~~addition,~~Audit ~~the~~Matter current outbreak of COVID-19 has resulted in a widespread global health crisis and adversely affected global economies and financial markets, and similar public health threats could do so in the future.Description

~~Accordingly~~As of January 1, we2023, ~~cannot~~the ~~predict~~Company migrated its financial reporting system. This migration was significant to our audit because the ~~extent~~process involved transferring substantial amounts of financial data and reconfiguring controls and processes within the new system. The migration required considerable effort to ~~which~~ensure that ~~our~~data ~~business~~was accurately and completely transferred, and that the new system was functioning as intended to maintain the integrity of financial ~~condition~~reporting. Key risks included the accuracy and ~~results~~completeness of ~~operations~~the ~~will~~financial bedata ~~affected.~~post-conversion, and ensuring the accuracy of the opening balances and reconciliation of retained earnings.

~~Risk~~This ~~Factors~~matter was identified as a critical audit matter due to the high level of auditor judgment and complexity involved in assessing the accuracy and appropriateness of the adjustments related to the system conversion.

~~Inflation~~How the Critical Audit Matter was Addressed in the Audit

~~Prices~~Our ofaudit ~~certain~~procedures ~~commodity~~related ~~products, including raw materials, are historically volatile and are subject~~ to fluctuations arising from changes in domestic and international supply and demand, labor costs, competition, market speculation, government regulations, trade restrictions and tariffs. Increasing prices in the ~~component~~system ~~materials for the parts of our goods may impact the availability~~migration, included the ~~quality and the price of our products~~following, asamong suppliers search for alternatives to existing materials and increase the prices they charge. Our suppliers may also fail to provide consistent quality of product as they may substitute lower cost materials to maintain pricing levels. Rapid and significant changes in commodity prices may negatively affect our profit margins we are unable to mitigate any inflationary increases through various customer pricing actions and cost reduction initiatives. To offset increased prices charged by our manufacturers and increased shipping rates, we increased the prices of our products in 2022.others:

~~Supply~~- ~~Chain~~We obtained an understanding of the process and controls implemented by management to ensure accurate data migration pre- and post-conversion. This included reviewing management's approach to data mapping, transfer protocols, and reconciliation procedures.

~~Disruptions~~- inWe ~~our~~tested ~~supply~~the ~~chain~~Company’s ~~and~~reconciliations ~~other~~to ~~factors~~ensure ~~affecting~~the completeness of data transferred post-conversion. This involved comparing information between the ~~distribution~~systems and verifying that the audited financial information as of ~~our~~December ~~merchandise~~31, ~~could~~2022 ~~adversely~~was ~~impact~~accurately ~~our~~reflected ~~business~~in the new system.

35- We assessed the reconfiguration and design of internal controls in the new system. This included evaluating the design and implementation of controls over data integrity, financial reporting processes, and system access and security.

~~Results~~- ofWe ~~Operations~~substantively tested significant financial statement line items to ensure that the financial information generated by new system was not materially misstated. This included among other, sampling populations, performing reconciliations to source documents, re-calculating and reviewing key financial analytics.

~~The~~- ~~Fiscal~~We ~~Year~~obtained ~~Ended~~an ~~December~~understanding ~~31,~~of ~~2022~~the ~~compared~~nature and cause of the errors that led to the ~~Fiscal~~restatements ~~Year~~of ~~Ended~~the ~~December~~Company's 31quarterly financial information as a result of the migration of data. In addition, ~~2021~~we performed a detailed reconciliation and comprehensive review of the adjusted balances post-conversion. This involved additional testing and analysis to ensure the restated balances were accurately reflected and that the errors were appropriately corrected in the reporting periods.

~~Revenues~~By performing these procedures, we were able to address the risks associated with the migration process, ensure the completeness of financial data transfer, and verify that the financial information post-conversion is not materially misstated.

Revenues, net of allowances, for the years ended December 31, 2022 and 2021 were $95,253,767 and $70,026,324, respectively, consisted of metal goods, soft goods and electronic goods sold to customers. Revenues increased in 2022 over 2021 by $25,227,443, or 36%, primarily due to wide acceptance of our products in the tools industry and receipt of recurring sales orders for metal goods and soft goods from our existing customers and new customers, and introduction and sale of new soft goods products and electronic goods to our customers. Amazon was a major factor of the increase.F-3

~~Cost~~Identification of ~~Goods~~a ~~Sold~~Number of Audit Adjustments and Deficiencies in the Company's Internal Control System over Financial Reporting

~~Cost~~Critical ofAudit ~~goods~~Matter sold for the years ended December 31, 2022 and 2021 was $70,042,504 and $50,912,513, respectively. Cost of goods sold increased in 2022 over 2021 by $19,129,991, or 37.6% primarily due to the increase in the cost of steel and plastics polyester needed to manufacture metal goods and soft goods, an increase in labor cost in China, high inflation rates, as well as increased prices in tariffs and shipping rates. Cost of goods sold as a percentage of revenues in 2022 was 73.5%, as compared to cost of goods sold as a percentage of revenues in 2021 of 72.7% Description

~~Operating~~During ~~Expenses~~our audit of the financial statements for the year ended December 31, 2023, we identified numerous significant adjustments that have been reflected in the audited financial statements. These adjustments were a result of material weaknesses identified in the design and effectiveness of the Company’s internal control over financial reporting. The principal considerations for our determination that this is a critical audit matter are the pervasive effects of the material weaknesses on the financial statements and the considerable audit effort and judgment required to address these issues. These weaknesses necessitated extensive auditor judgment and effort to:

~~Operating~~- ~~expenses~~Assess ~~consist of selling, general and administrative expenses, litigation expense, and research and development costs. Selling, general and administrative expenses (~~the ~~“SG&A~~sufficiency ~~Expenses”) for the years ended December 31, 2022~~ and ~~2021~~appropriateness were $66,189,907 and $51,434,180, respectively. SG&A Expenses increased in 2022 over 2021 by $14,755,727, or 28.7%, primarily due to hiring additional employees and engaging additional independent contractors and consultants (e.g., industrial designers, sales, operations and accounting staff, and a human resource team) to grow the Company, of ~~which increased~~ the ~~total~~significant ~~number~~adjustments ~~of employees, independent contractors and consultants to 259 as of December 31, 2022~~recorded. SG&A Expenses in 2022 as a percentage of revenues was 69.5%, as compared 73.4% in 2021. We expect our SG&A Expenses will continue to increase as we plan to bring professional management team and staff on board, expend cash to raise capital for new products development, and acquire a new warehouse/storage facility to expand its operations and maintain finished products inventory on hand.

~~Research~~- Determine the impact of these adjustments on the interim and ~~Development~~annual financial statements previously issued by the Company.

~~Research~~- ~~and~~Evaluate ~~development costs (~~the ~~“R&D”)~~Company's ~~for~~ability ~~the~~to ~~years~~properly ~~ended~~account ~~December~~for ~~31,~~financial ~~2022~~transactions ~~and 2021 were $11,296,948 and $6,980,453, respectively. R&D costs increased~~ in ~~2022~~conformity ~~over~~with ~~2021~~accounting byprinciples ~~$4,316,495~~generally oraccepted ~~61.8% primarily due to the costs incurred~~ in ~~developing new tools, a ruggedized mobile device, software applications to run on~~ the ~~mobile~~United ~~device~~States related to construction industry, and stock-based compensation expense and bonuses to the R&D management team. Since we suspended our ruggedized mobile device segment, we expect R&D costs in relation to that segment to decrease until we decide to continue the development of ~~our ruggedized mobile device segment~~America. ~~We expect other R&D costs, however, to continue to increase as we embark on developing new tools for the construction industry.~~

~~Other~~The ~~income~~audit ~~(expense)~~effort required performing substantial incremental audit procedures as well as assessing the overall impact of these weaknesses on the presentation and disclosure of such adjustments on the financial statements.

~~Other~~How ~~expense for~~ the ~~year~~Critical ~~ended~~Audit ~~December~~Matter ~~31,~~was ~~2022 consisted of warrant and preferred investment option issuance costs~~ Addressed in the ~~amount~~Audit of $1,868,766, interest expense of $1,914,120 and change in fair value of warrant and preferred investment option liabilities in the amount of $16,763,205. Other expense for the year ended December 31, 2021 consisted of warrant issuance costs in the amount of $588,221, interest expense of $297,931 and change in fair value of warrant and preferred investment option liabilities in the amount of $2,661,076.

36Our audit procedures to address this critical audit matter included the following:

~~Net~~- ~~loss~~We evaluated the design and implementation of internal controls over financial reporting, through which material weaknesses were identified in the design and implementation of the control environment which led to the audit adjustments noted. This involved performing walkthroughs and reviewing documentation of the key controls identified within the Company’s multiple business processes. As a result of our evaluation, some deficiencies were noted due to improper design, or lack of implementation.

~~Due~~- toWe ~~factors~~conducted ~~set~~incremental ~~forth~~substantive ~~above,~~testing weon ~~recognized~~all asignificant ~~net~~accounts ~~loss~~identified ofduring ~~$39~~the audit,~~295,273~~ and ~~$37,525,898~~extended ~~for~~procedures ~~the~~to ~~years~~address ~~ended~~any ~~December~~additional ~~31,~~risks ~~2022~~identified ~~and~~subsequent ~~2021,~~to ~~respectively.~~the ~~The~~establishment ~~large~~of ~~net~~our ~~loss~~planned isaudit ~~mainly~~procedures. ~~attributable~~Substantive totesting ~~building~~included ~~our~~sampling ~~team~~populations, performing reconciliations to ~~meet~~source ~~the~~documents, ~~demand~~calculating ~~for~~and ~~current~~reviewing ~~product~~key ~~lines~~financial analytics, and ~~new~~confirming ~~product~~balances ~~lines~~with inthird ~~design~~parties, aswhen ~~well~~appropriate. asAs a ~~high~~result ~~increase~~of inthese ~~cost~~procedures, a number of ~~goods~~significant ~~sold~~adjustments ~~prices,~~were asdiscovered ~~noted~~and ~~above~~reflected in the financial statements. These adjustments also had implications on deficiencies within the Company’s internal controls over financial reporting.

~~Liquidity~~- ~~and~~We ~~Capital~~evaluated ~~Resources;~~the ~~Going~~disclosures ~~Concern~~related to the restatement of previously issued financial statements, that resulted from the deficiencies in the Company's internal controls over financial reporting.

At- ~~December~~We ~~31,~~inquired ~~2022, we had $2,564,237 cash on hand~~ and ~~$16,810,659~~reviewed inwhen ~~accounts~~applicable ~~receivable,~~communication ~~net and~~between ~~$32,682,186~~management ~~in accounts payable~~ and ~~accrued expenses. Although our sales increased by 36% during~~ the ~~year~~audit ~~ended~~committee ~~December~~related ~~31, 2022, compared~~ to the ~~same~~identified ~~period~~material inweaknesses ~~2021,~~and wethe ~~are~~corresponding ~~continuing~~adjustments to ~~focus~~understand ~~our~~the ~~efforts~~oversight ~~on increased marketing campaigns,~~ and ~~distribution~~governance ~~programs~~related to ~~strengthen~~these ~~the demand for our products globally~~issues. ~~Management anticipates that our capital resources will improve and our products gain wider market recognition and acceptance resulting in increased product sales.~~

WeBy ~~have~~performing ~~incurred~~these ~~substantial operating losses since our inception. As reflected in the consolidated financial statements included in this Annual Report on Form 10-K~~procedures, we ~~had~~were anable ~~accumulated~~to address ~~deficit~~the ofidentified ~~approximately~~material ~~$145~~weaknesses ~~million~~and atverify ~~December~~that ~~31,~~the ~~2022,~~necessary aadjustments ~~net~~were ~~loss~~accurately ofreflected ~~approximately $39.3 million, and approximately $37.5 million of net cash used~~ in ~~operating activities for~~ the ~~year ended December 31, 2022. The accompanying consolidated~~ financial statements ~~have been prepared on a going concern basis~~, ensuring ~~which~~that ~~contemplates~~ the ~~realization of assets and satisfaction of liabilities in the normal course of business. The~~ financial statements dowere ~~not~~presented include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. We anticipate incurring additional losses until such timefairly, ~~if ever, that it will be able to effectively market its products and technology currently~~ in development. As such it is likely that additional financing will be needed by us to fund our operations and to develop and commercialize our technology. These factors raise substantial doubt about our ability to continue as a going concern. We do not currently have sufficient capital to fund our operations for the next 12 months. For the 12 months from issuance of this Annual Report on Form 10-K and the subsequent 12 months, we intend to fund our capital requirements through the sale of debt or equity securities or other arrangements to fund operations. However, there can be no assurance that we will be able to raise needed capital under acceptable terms, if at all. ~~The~~material sale of additional equity may dilute existing stockholders and newly issued shares may contain senior rights and preferences compared to currently outstanding shares of common stock. Issued debt securities may contain covenants and limit our ability to pay dividends or make other distributions to stockholders. If we are unable to obtain such additional financingrespects, ~~future operations would need to be scaled back or discontinued. Due to the uncertainty~~ in ~~our~~accordance ~~ability~~with ~~to raise capital, management believes that there is substantial doubt in our ability to continue as a going concern for twelve months from the issuance of these consolidated financial statements~~GAAP.

We/s/ ~~have~~Marcum ~~conducted the following public and private offerings since the beginning of the 2022 fiscal year. The net proceeds of each offering were for working capital purposes:~~llp

~~Registered~~Marcum ~~Direct Offering on Form S-3 (February 2022)~~llp

OnWe ~~February~~have ~~15,~~served ~~2022, we entered into a Securities Purchase Agreement dated~~ as ~~of February 15, 2022, as amended by~~ the ~~Letter~~Company’s ~~Agreement~~auditor since dated as of February 18, 2022, with institutional investors named therein, pursuant to which we issued, in a registered direct offering through a prospectus supplement to the registration statement on Form S-3 (File No2016. 333-252630), which was initially filed on February 2, 2021 and declared effective by the SEC on February 8, 2021, an aggregate of $5,000,000 of preferred stock (split evenly among the Series F Convertible Preferred Stock, par value $0.0001 per share, and Series G Convertible Preferred Stock, par value $0.0001 per share).

~~The~~Costa ~~shares of Preferred Stock have a stated value of $1~~Mesa,~~000~~ per share and are convertible, following the date of the issuance thereof, into an aggregate of 12,500,000 shares of our common stock upon the conversion of Series F and into an aggregate of 12,500,000 shares of our common stock upon the conversion of Series G, at a conversion price of $0.20 per share each. The Preferred Stock and the underlying shares of common stock were offered pursuant to the Form S-3. In a concurrent private placement, we also issued to such investors unregistered warrants to purchase up to an aggregate of 18,750,000 shares of our common stock, at an exercise price of $0.251 per share. The February Warrants will be exercisable on the date that is the later of (i) the consummation of either a stockholder vote on the proposal to authorize the Board to effect the reverse stock split or increase the authorized shares of our common stock; and (ii) six months after the date of issuance, and will have a term of 5 years from the initial exercise date.California

37December 20, 2024

The February Purchase Agreement contained customary representations and warranties and agreements of the Company and the institutional investors named therein and customary indemnification rights and obligations of the parties. The offering closed on February 15, 2022.F-4

AsTOUGHBUILT ~~compensation~~INDUSTRIES, toINC.

CONSOLIDATED ~~Wainwright,~~BALANCE as the exclusive placement agent in connection with the offering, we paid Wainwright a cash fee of 7% of the aggregate gross proceeds raised in the February Direct Offering, plus a management fee equal to 0.5% of the gross proceeds raised in the offering and reimbursement of certain expenses and legal fees. We also issued to designees of Wainwright warrants to purchase up to 1,500,000 shares of common stock. The warrants are exercisable for $0.25 per share and become exercisable on the date that is the later of (i) the consummation of either a stockholder vote on the proposal to authorize the Board to effect a reverse stock split or increase the authorized shares of our common stock; and (ii) six months after the date of issuance, and will expire on February 15, SHEETS

2027.

	December 31, 2023			December 31, 2022
Assets
Current Assets
Cash	$	1,152,540		$	2,564,237
Accounts receivable, net of allowance for credit losses of $487,342 and $13,000 at December 31, 2023 and 2022, respectively		10,239,570			16,810,659
Inventory		21,941,803			40,365,286
Prepaid and other current assets		168,122			369,792
Total Current Assets		33,502,035			60,109,974

Property and equipment, net		13,776,672			17,500,383
Right of use assets		2,833,268			4,415,859
Other assets		1,678,209			1,890,780
Total Assets	$	51,790,184		$	83,916,996
Liabilities and Shareholders’ Equity (Deficit)
Current Liabilities
Accounts payable	$	46,954,346		$	28,571,272
Accrued expenses		5,277,503			3,010,914
Related party payables		1,970,100			1,100,000
Short term lease liability		1,512,503			959,630
Short term loan payable		288,588			973,583
Warrant and preferred investment option liabilities		4,120,593			16,116,273
Total Current Liabilities		60,123,633			50,731,672
Long term lease liability		1,387,578			3,477,380
Total Liabilities		61,511,211			54,209,052

Shareholders’ Equity (Deficit)
Series C Preferred Stock, $0.0001 par value, 4,268 shares authorized, 0 shares issued and outstanding at December 31, 2023 and 2022, respectively		-			-
Series D Preferred Stock, $1,000 par value, 5,775 shares authorized, 0 shares issued, and outstanding at December 31, 2023 and 2022, respectively		-			-
Series E Preferred Stock, $0.0001 par value, 15 shares authorized, 0 shares issued and outstanding at December 31, 2023 and 2022, respectively		-			-
Series F Preferred Stock, $0.0001 par value, 2,500 shares authorized, 2,500 shares issued and outstanding at December 31, 2023 and 2022, respectively		-			-
Series G Preferred Stock, $0.0001 par value, 2,500 shares authorized, 2,500 shares issued and outstanding at December 31, 2023 and 2022, respectively		-			-
Series H Preferred Stock, $0.0001 par value, 50,000 shares authorized, 0 shares issued and outstanding at December 31, 2023 and 2022, respectively		-			-

Common stock, $0.0001 par value, 200,000,000 shares authorized, 567,927 shares and 216,600 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively		57			22
Additional paid-in capital		181,598,810			174,660,975
Accumulated other comprehensive income		82,472			-
Accumulated deficit		(191,402,366	)		(144,953,053	)
Total Shareholders’ Equity (Deficit)		(9,721,027	)		29,707,944
Total Liabilities and Shareholders’ Equity (Deficit)	$	51,790,184		$	83,916,996

WeThe ~~received~~accompanying ~~net~~notes ~~proceeds~~are an integral part of these ~~approximately~~consolidated ~~$4,~~financial statements.

205,000 from the offering, after deducting the estimated offering expenses payable by us, including the fees payable to Wainwright. We intend to use has used and will continue to use the net proceeds from the February Direct Offering for working capital purposes.F-5

WeTOUGHBUILT ~~issued the February Warrants and warrants to Wainwright pursuant to the exemption from the registration requirements of the Securities Act~~INDUSTRIES, ~~available under Section 4(a)(2) and/or Rule 506(b) of Regulation D promulgated thereunder~~INC.

~~Public~~CONSOLIDATED ~~Offering~~STATEMENTS OF OPERATIONS

On June 22, 2022, we completed a public offering of (i) 772,157 units, each Unit consisting of one share of our common stock, par value $0.0001 per share and one warrant to purchase one share of our common stock at a price of $1.90 per Unit; and (ii) 2,385,738 prefunded units, each Prefunded Unit consisting of one prefunded warrant to purchase one share of our common stock and one warrant, at a price of $1.8999 per Prefunded Unit. Subject to certain ownership limitations described in the Warrants, the Warrants have an exercise price of $1.90 per share of our common stock, are exercisable upon issuance and will expire five years from the date of issuance. The exercise price of the Warrants is subject to adjustment for stock splits, reverse splits, and similar capital transactions as described in the Warrants. In connection with the Offering, we issued Warrants to purchase an aggregate of 3,157,895 shares of Common Stock.

	For The Years Ended December 31,
	2023			2022
Revenues, net of allowances
Metal goods	$	35,452,855		$	51,160,571
Soft goods		36,208,401			38,301,113
Electronic goods		4,610,566			5,792,083
Total revenues, net of allowances		76,271,822			95,253,767

Cost of Goods Sold
Metal goods		25,027,277			40,434,106
Soft goods		30,167,401			24,413,884
Electronic goods		4,671,462			5,194,514
Total cost of goods sold		59,866,140			70,042,504

Gross profit		16,405,682			25,211,263

Operating expenses:
Selling, general and administrative		56,044,334			66,189,907
Impairment of property and equipment		5,583,290			-
Research and development		11,996,000			11,296,948
Total operating expenses		73,623,624			77,486,855

Loss from operations		(57,217,942	)		(52,275,592	)

Other income (expense)

Inducement expense		(6,373,353	)		-
Interest expense		(1,701,113	)		(1,914,120	)
Change in fair value of warrant and preferred investment option liability		19,381,313			16,763,205
Warrant issuance cost		(538,218	)		(1,868,766	)
Total other income		10,768,629			12,980,319

Net loss before provision for income tax		(46,449,313	)		(39,295,273	)

Provision for income tax		-			-

Net loss	$	(46,449,313	)	$	(39,295,273	)

Common stock deemed dividend		-			(7,467,200	)
Net loss attributable to common stockholders	$	(46,449,313	)	$	(46,762,473	)

Basic and diluted net loss per share attributed to common stockholders	$	(122.12	)	$	(461.14	)
Weighted average number of shares outstanding - basic and diluted		380,344			101,405

~~Subject~~The toaccompanying ~~certain~~notes ~~ownership limitations described in the Prefunded Warrants, the Prefunded Warrants~~ are ~~immediately~~an ~~exercisable~~integral ~~and~~part ~~may be exercised at a nominal consideration~~ of these ~~$0.0001~~consolidated ~~per~~financial ~~share of our common stock any time until all of the Prefunded Warrants are exercised in full~~statements.

As compensation to Wainwright, as the exclusive placement agent in connection with the Offering, we paid Wainwright a cash fee of 7% of the aggregate gross proceeds raised in the Offering, plus a management fee equal to 0.5% of the gross proceeds raised in the Offering and reimbursement of certain expenses and legal fees. We also issued to designees of Wainwright warrants to purchase up to 189,474 shares of our common stock. The Placement Agent Warrants have substantially the same terms as the Warrants, except that the Placement Agent Warrants have an exercise price equal to $2.375 per share, and expire on the fifth anniversary from the date of the commencement of sales in the Offering. F-6

InTOUGHBUILT ~~connection with the Offering~~INDUSTRIES, ~~we entered into a Securities Purchase Agreement with certain institutional investors on June 17, 2022~~INC.

~~The~~CONSOLIDATED ~~shares~~STATEMENTS ofOF ~~our~~SHAREHOLDERS’ EQUITY common stock and Warrants underlying the Units, the Warrants and Prefunded Warrants underlying the Prefunded Units and the Placement Agent Warrants described above and the underlying shares of our common stock were offered pursuant to the Registration Statement on Form S-1 (~~File No. 333-264930~~DEFICIT)~~, as amended, which was declared effective by the SEC on June 17, 2022.~~

	Series C Preferred Stock				Series D Preferred Stock				Series E Preferred Stock					Series F Preferred Stock				Series G Preferred Stock				Series H Preferred Stock				Common Stock				Additional Paid-in			Other Comprehensive		Accumulated			Total Stockholders’ Equity
	Shares		Amount		Shares		Amount		Shares			Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital			Income (Loss)		Deficit			(Deficit)
Balance – January 1, 2022		-	$	-		-	$	-		9			-		-		-		-		-		-	$	-		13,262		1		156,184,412			-		(98,287,890	)		57,896,523
Issuance of common stock and warrants, net of issuance costs		-		-		-		-		-			-		-		-		-		-		-		-		160,916		16		9,154,406			-		-			9,154,422
Issuance of preferred stock		-		-				-		-			-		2,500				2,500		-		-		-		-		-		1,833,995			-		-			1,833,995
Issuance of common stock upon exercise of warrants		-		-		-		-		-			-		-		-		-		-		-		-		24,672		3		9,230,011			-		-			9,230,014
Cashless warrants exercised		-		-		-		-		-			-		-		-		-		-		-		-		17,750		2		(2	)		-		-			-
Repurchase of common stock warrants		-		-		-		-		(9	)		-		-		-		-		-		-		-		-		-		(2,500,000	)		-		-			(2,500,000	)
Adoption of lease guidance		-		-		-		-		-			-		-		-		-		-		-		-		-		-		-			-		97,310			97,310
Stock based compensation expense		-		-		-		-		-			-		-		-		-		-		-		-		-		-		758,152			-

Filing Compare · Toughbuilt Industries, Inc