Asfiled with the Securities and Exchange Commission onJanuary 17, 2020.

RegistrationNo. 333-

UNITEDSTATES

SECURITIESAND EXCHANGE COMMISSION

Washington,D.C. 20549

FORMS-1

REGISTRATIONSTATEMENT UNDER THE SECURITIES ACT OF 1933

ToughBuiltIndustries, Inc.

(ExactName of Registrant as Specified in its Charter)

25371Commercentre Drive, Suite 200

LakeForest, CA 92630

Telephone:(949) 528-3100

(Address,including zip code, and telephone number,

includingarea code, of principal executive offices)

Mr.Michael Panosian

ChiefExecutive Officer

ToughBuiltIndustries, Inc.

25371Commercentre Drive, Suite 200

LakeForest, CA 92630

Telephone:(949) 528-3100

(Address,including zip code, and telephone number,

includingarea code, of agent for service)

Copiesto:

Approximatedate of proposed sale to public: As soon as practicable on or after the effective date of this registration statement.

Ifany of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 underthe Securities Act of 1933 check the following box. [X]

Ifthis Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, pleasecheck the following box and list the Securities Act registration statement number of the earlier effective registration statementfor the same offering. [  ]

Ifthis Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and listthe Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]

Ifthis Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and listthe Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]

Indicateby check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smallerreporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smallerreporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicateby check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

CALCULATIONOF REGISTRATION FEE

TheRegistrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date untilthe Registrant shall file a further amendment that specifically states that this registration statement shall thereafter becomeeffective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shallbecome effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

Theinformation in this prospectus is not complete and may be changed. We may not sell these securities until the Securities and ExchangeCommission declares our registration statement effective. This prospectus is not an offer to sell these securities and is notsoliciting an offer to buy these securities in any state where the offer or sale is not permitted.

ToughBuiltIndustries, Inc.

Sharesof Common Stock

Warrantsto Purchase up to                 Shares of CommonStock

ToughBuiltIndustries, Inc. is offering           shares of common stock and warrants topurchase up to         shares of our common stock, at a combined offering price of $       per share of common stock and accompanying warrant. Each share of our common stock is being sold together with a warrant to purchaseone share of our common stock. Each warrant will have an exercise price per share of $        ,will be immediately exercisable and will expire on the fifth anniversary of the original issuance date. The shares of our commonstock and warrants are immediately separable and will be issued separately, but will be purchased together in this offering.

Ourcommon stock is listed on The Nasdaq Capital Market under the symbol “TBLT.” On January 15, 2020, the lastreported sale price of our common stock on The Nasdaq Capital Market was $0.3476 per share. There is no established tradingmarket for the warrants and we do not expect a market to develop. In addition, we do not intend to apply for the listing of thewarrants on any national securities exchange or other trading market. Without an active trading market, the liquidity of the warrantswill be limited.

Youshould read this prospectus, together with additional information described under the heading “Where You Can Find MoreInformation,” carefully before you invest in any of our securities.

Investingin our securities involves a high degree of risk. See “Risk Factors” beginning on page 6 of this prospectusfor a discussion of information that should be considered in connection with an investment in our securities.

Neitherthe Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities ordetermined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Wehave granted the underwriter an option for a period of 45 days from the date of this prospectus to purchase up to an additional          shares of common stock and/or warrants to purchase          shares of common stock at the public offering price, less the underwriting discount.

Weanticipate that delivery of the shares and warrants against payment will be made on or about          ,2020.

Book-RunningManager

MaximGroup LLC

Thedate of this prospectus is               , 2020.

TABLEOF CONTENTS

Youshould rely only on information contained in this prospectus or in any free writing prospectus we may authorize to be deliveredor made available to you. Neither the delivery of this prospectus nor the sale of our securities means that the information containedin this prospectus or any free writing prospectus is correct after the date of this prospectus or such free writing prospectus.This prospectus is not an offer to sell or the solicitation of an offer to buy our securities in any circumstances under whichthe offer or solicitation is unlawful or in any state or other jurisdiction where the offer is not permitted. The informationcontained in this prospectus is accurate only as of its date regardless of the time of delivery of this prospectus or of any saleof common stock.

Noperson is authorized in connection with this prospectus to give any information or to make any representations about us, the securitiesoffered hereby or any matter discussed in this prospectus, other than the information and representations contained in this prospectusor in any free writing prospectus we may authorize to be delivered or made available to you. If any other information orrepresentation is given or made, such information or representation may not be relied upon as having been authorized by us.

Forinvestors outside the United States: Neither we nor the underwriter has done anything that would permit this offering or possessionor distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States.You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution ofthis prospectus.

Unlessotherwise indicated, information contained in this prospectus concerning our industry and the markets in which we operate, includingour general expectations and market position, market opportunity and market share, is based on information from our own managementestimates and research, as well as from industry and general publications and research, surveys and studies conducted by thirdparties. Management estimates are derived from publicly available information, our knowledge of our industry and assumptions basedon such information and knowledge, which we believe to be reasonable. Our management’s estimates have not been verifiedby any independent source, and we have not independently verified any third-party information. In addition, assumptions and estimatesof our and our industry’s future performance are necessarily subject to a high degree of uncertainty and risk due to a varietyof factors, including those described in “Risk Factors.” These and other factors could cause our future performanceto differ materially from our assumptions and estimates. See “Cautionary Note Regarding Forward-Looking Statements.”

RISKFACTORS

Aninvestment in our securities involves a high degree of risk. You should carefully consider the risks described below, togetherwith all of the other information included in this prospectus, before making an investment decision. If any of the following risksactually occurs, our business, financial condition or results of operations could suffer. In that case, the trading price of ourshares of common stock could decline and you may lose all or part of your investment. See “Cautionary Note Regarding Forward-LookingStatements” below for a discussion of forward-looking statements and the significance of such statements in the contextof this prospectus.

RisksRelated to Our Company

Wehave a limited operating history on which to judge our business prospects and management.

Ourcompany was incorporated and commenced operations in April 2012. Accordingly, we have only a limited operating history upon whichto base an evaluation of our business and prospects. Operating results for future periods are subject to numerous uncertaintiesand we cannot assure you that we will achieve or sustain profitability. Our prospects must be considered in light of the risksencountered by companies in the early stage of development, particularly companies in new and rapidly evolving markets. Futureoperating results will depend upon many factors, including increasing the number of affiliates, our success in attracting andretaining motivated and qualified personnel, our ability to establish short term credit lines, our ability to develop and marketnew products, control costs, and general economic conditions. We cannot assure you that we will successfully address any of theserisks.

Certainprovisions of our Articles of Incorporation could allow concentration of voting power in one individual, which may, among otherthings, delay or frustrate the removal of incumbent directors or a takeover attempt, even if such events may be beneficial toour shareholders.

Provisionsof our articles of incorporation adopted by our Board of Directors, such as our ability to designate and issue a class of preferredstock, without shareholder 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, even if those events may beperceived to be in the best interests of our shareholders. For example, one or more of our affiliates could theoretically be issueda newly authorized and designated class of shares of our preferred stock. Such shares could have significant voting power, amongother terms. Consequently, anyone to whom these shares were issued could have sufficient voting power to significantly influenceif not control the outcome of all corporate matters submitted to the vote of our common shareholders. Those matters could includethe election of directors, changes in the size and composition of the Board of Directors, and mergers and other business combinationsinvolving our company. In addition, through any such person’s control of the Board of Directors and voting power, the affiliatemay be able to control certain decisions, including decisions regarding the qualification and appointment of officers, dividendpolicy, access to capital (including borrowing from third-party lenders and the issuance of additional equity securities), andthe acquisition or disposition of assets by our company. In addition, the concentration of voting power in the hands of an affiliatecould have the effect of delaying or preventing a change in control of our company, even if the change in control would benefitour shareholders and may adversely affect the future market price of our common stock should a trading market therefor develop.

Wemay need, but be unable, to obtain additional funding on satisfactory terms, which could dilute our shareholders or impose burdensomefinancial restrictions on our business.

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

Wehave recorded a net loss for the years ended December 31, 2018 and 2017 and for the nine months ended September 30, 2019 and2018.

Wemay not be able to generate any profit in the foreseeable future. For the year ended December 31, 2018, we realized a net lossof $27,651,412 compared to a net loss of $5,941,457 for the year ended December 31, 2017. For the nine months ended September30, 2019 and 2018, we realized a net loss of $2,181,707 and $7,137,615, respectively. Accordingly, there is no assurance thatwe will realize profits in fiscal 2019 or thereafter. We believe that our current cash balances coupled with anticipated cashflow from operating activities and the funds raised in this offering will be sufficient to meet our working capital requirementsfor at least one year from the date of the issuance of the financial statements incorporated by reference herein. We continueto control our cash expenses as a percentage of expected revenue on an annual basis and thus may use our cash balances in theshort-term to invest in revenue growth. Management is focused on growing the Company’s existing product offering, as wellas its customer base, to increase its revenues. We cannot give assurance that we can increase our cash balances or limit our cashconsumption and thus maintain sufficient cash balances for our planned operations or future acquisitions. Future business demandsmay lead to cash utilization at levels greater than recently experienced. We may need to raise additional capital in the future.However, we cannot assure that we will be able to raise additional capital on acceptable terms, or at all. Our inability to generateprofits could have an adverse effect on our financial condition, results of operations and cash flows.

Technologychanges rapidly in our business, and if we fail to anticipate new technologies, the quality, timeliness and competitiveness ofour products will suffer.

Rapidtechnology changes in our industry require us to anticipate, sometimes years in advance, which technologies our products musttake advantage of in order to make them competitive in the market at the time they are released. Therefore, we usually start ourproduct development with a range of technical development goals that we hope to be able to achieve. We may not be able to achievethese goals, or our competition may be able to achieve them more quickly than we can. In either case, our products may be technologicallyinferior to competitive products, or less appealing to consumers, or both. If we cannot achieve our technology goals within theoriginal development schedule of our products, then we may delay products until these technology goals can be achieved, whichmay delay or reduce revenue and increase our development expenses. Alternatively, we may increase the resources employed in researchand development in an attempt to accelerate our development of new technologies, either to preserve our product launch scheduleor to keep up with our competition, which would increase our development expenses and adversely affect our operations and financialcondition.

Wemust effectively manage the growth of our operations, or our company will suffer.

Oursignificant increase in the scope and the scale of our mobile product launch, including the hiring of additional personnel, hasresulted in significantly higher operating expenses. As a result, we anticipate that our operating expenses will continue to increase.Expansion of our operations may also cause a significant demand on our management, finances and other resources. Our ability tomanage the anticipated future growth, should it occur, will depend upon a significant expansion of our accounting and other internalmanagement systems and the implementation and subsequent improvement of a variety of systems, procedures and controls. There canbe no assurance that significant problems in these areas will not occur. Any failure to expand these areas and implement and improvesuch systems, procedures and controls in an efficient manner at a pace consistent with our business could have a material adverseeffect on our business, financial condition and results of operations. There can be no assurance that our attempts to expand ourmarketing, sales, manufacturing and customer support efforts will be successful or will result in additional sales or profitabilityin any future period. As a result of the expansion of our operations and the anticipated increase in our operating expenses, aswell as the difficulty in forecasting revenue levels, we expect to continue to experience significant fluctuations in our resultsof operations.

Becausewe have transactions with companies in China, we may have limited legal recourse under Chinese law if disputes arise with thirdparties.

TheChinese government has enacted certain laws and regulations dealing with matters such as corporate organization and governance,foreign investment, mergers and acquisitions, intellectual property, commerce, taxation and trade. However, the experience ofthe Peoples’ Republic of China (the “PRC” or “China”) in implementing, interpreting and enforcingthese laws and regulations is limited, and our ability to enforce commercial claims or to resolve commercial disputes is unpredictable.If any new business ventures in which we may become involved are unsuccessful, or other adverse circumstances arise from thesetransactions, we face the risk that the parties to these ventures may seek ways to terminate the transactions, or, may hinderor prevent us from accessing important information regarding the financial and business operations of any acquired companies.The resolution of these matters may be subject to the exercise of considerable discretion by agencies and other instrumentalitiesof the Chinese government or those acting on its behalf, and forces unrelated to the legal merits of a particular matter or disputemay influence their determination. Any rights we may have to specific performance, or to seek an injunction under Chinese law,in either of these cases, are severely limited, and without a means of recourse by virtue of the Chinese legal system, we maybe unable to prevent these situations from occurring. The occurrence of any such events could have a material adverse effect onour business, financial condition and results of operations.

Relianceon foreign suppliers could adversely affect our business.

Wesource our products from suppliers located in Asia and the United States. Our Asian vendors are located primarily in China, whichsubjects us to various risks within the region including regulatory, political, economic and foreign currency changes. Our abilityto select and retain reliable vendors and suppliers who provide timely deliveries of quality products efficiently will impactour success in meeting customer demand for timely delivery of quality products. Our sourcing operations and our vendors are impactedby labor costs in China. Labor historically has been readily available at low cost relative to labor costs in North America. However,as China is experiencing rapid social, political and economic changes, labor costs have risen in some regions and there can beno assurance that labor will continue to be available to us in China at costs consistent with historical levels or that changesin labor or other laws will not be enacted which would have a material adverse effect on our ability to source our products fromChina. Interruption of supplies from any of our vendors, or the loss of one or more key vendors, could have a negative effecton our business and operating results.

Changesin currency exchange rates might negatively affect the profitability and business prospects of our company and our overseas vendors.In particular, although the Chinese Renminbi has recently depreciated against the U.S. Dollar, if the Chinese Renminbi appreciateswith respect to the U.S. Dollar in the future, we may experience cost increases on such purchases, and this can adversely impactprofitability. Future interventions by China may result in further currency appreciation and increase our product costs over time.We may not be successful at implementing customer pricing or other actions in an effort to mitigate the related effects of theproduct cost increases.

Additionalfactors that could adversely affect our business include increases in transportation costs, new or increased import duties, transportationdelays, work stoppages, capacity constraints and poor quality.

Dueto our significant level of international operations, we are subject to international operational, financial, legal and politicalrisks, especially in China.

Asubstantial part of our operations are expected to be outside of the United States and some of our customers and our suppliershave some or all of their operations in countries other than the United States, more specifically in China. Risks associated withour doing business outside of the United States include:

Anyof these factors could harm our own, our suppliers’ and our customers’ international operations and businesses andimpair our and their ability to continue expanding into international markets and obtaining supply of goods necessary to sellour products.

Changesin tariffs, import or export restrictions, Chinese regulations or other trade barriers may reduce gross margins.

Wemay incur increases in costs due to changes in tariffs, import or export restrictions, other trade barriers, or unexpected changesin regulatory requirements, any of which could reduce our gross margins. For example, the Trump administrationproposed tariffs of as much as $60 billion against Chinese goods in mid-March 2018, which remained partially in effect at theend of 2019. It is difficult to anticipate the impact on our business caused by the proposed tariffs or whether the proposedchanges in tariffs will materialize in the future. Given the relatively fluid regulatory environment in China and the United States,there could be additional tax, tariffs or other regulatory changes in the future. Any such changes could directly and materiallyadversely impact our financial results and general business condition.

Contractdrafting, interpretation and enforcement in China involve significant uncertainty.

Wehave entered into numerous contracts governed by PRC law, many of which are material to our business. As compared with contractsin the United States, contracts governed by PRC law tend to contain less detail and to not be as comprehensive in defining contractingparties’ rights and obligations. As a result, contracts in China are more vulnerable to disputes and legal challenges. Inaddition, contract interpretation and enforcement in China is not as developed as in the United States, and the result of anycontract dispute is subject to significant uncertainties. Therefore, we cannot assure you that we will not be subject to disputesunder our material contracts, and if such disputes arise, we cannot assure you that we will prevail.

Wemay be unable to successfully expand our production capacity, which could result in material delays, quality issues, increasedcosts and loss of business opportunities, which may negatively impact our product margins and profitability.

Partof our future growth strategy is to increase our production capacity to meet increasing demand for our existing goods. Assumingwe obtain sufficient funding to increase our production capacity and determine in the future to construct our own facility, anyprojects that we undertake to increase such capacity may not be manufactured on the anticipated timetable or within budget. Wemay also experience quality control issues as we implement these production upgrades. Any material delay in completing these projects,or any substantial increase in costs or quality issues in connection with these projects, could materially delay our ability tobring our products to market and adversely affect our business, reduce our revenue, income and available cash, all of which couldresult in harming our financial condition.

Werely on highly skilled personnel and the continuing efforts of our executive officers and, if we are unable to retain, motivateor hire qualified personnel, our business may be severely disrupted.

Ourperformance largely depends on the talents, knowledge, skills and know-how and efforts of highly skilled individuals and in particular,the expertise held by our Chief Executive Officer, Michael Panosian. His absence, were it to occur, could materially and adverselyimpact the development and implementation of the projects and businesses. Our future success depends on our continuing abilityto identify, hire, develop, motivate and retain highly skilled personnel for all areas of our organization. Our continued abilityto compete effectively depends on our ability to attract new technology developers and to retain and motivate our existing contractors.If one or more of our executive officers are unable or unwilling to continue in their present positions, we may not be able toreplace them readily, if at all. Therefore, our business may be severely disrupted, and we may incur additional expenses to recruitand retain new officers. In addition, if any of our executives joins a competitor or forms a competing company, we may lose someof our customers.

RisksRelated to Our Business

Wehave limited manufacturing capabilities and we are dependent upon third parties to manufacture our product.

Weare dependent upon our relationships with independent manufacturers to fulfill most of our product needs. While we have severalmanufacturing facilities available to us, we currently are using only one manufacturer for each of our products besides our limitedcapabilities. Accordingly, we are dependent on the uninterrupted and efficient operation of these manufacturers’ facilities.Our ability to market and sell our products requires that our product be manufactured in commercial quantities, without significantdelay and in compliance with applicable federal and state regulatory requirements. In addition, we must be able to have our productsmanufactured at a cost that permits us to charge a price acceptable to the customer while also accommodating any distributioncosts or third-party sales compensation. If our current manufacturers are unable for any reason to fulfill our requirements, orseek to impose unfavorable terms, we will have to seek out other contract manufacturers, which could disrupt our operations andhave a material adverse effect on our results of operation and financial condition. Competitors who perform their own manufacturingmay have an advantage over us with respect to pricing, availability of products, and in other areas through their control of themanufacturing process.

Weface significant competition and continuous technological change, and developments by competitors may render our licensed technologiesobsolete or non-competitive. If we cannot successfully compete with new or existing products, our marketing and sales will sufferand we may not ever be profitable.

Ifwe are able to fund and implement our business plan we will likely compete against fully integrated technology companies and smallercompanies that are collaborating with larger technology companies. In addition, many of these prospective competitors, eitheralone or together with their collaborative partners, operate larger research and development programs than we do, and have substantiallygreater financial resources than we do.

Ifour prospective competitors develop and commercialize technologies faster than we do or develop and commercialize technologiesthat are superior to our technology candidates, our commercial opportunities will be reduced or eliminated. The extent to whichany of our technology candidates achieve market acceptance will depend on competitive factors, many of which are beyond our control.Competition in the technology industry is intense and has been accentuated by the rapid pace of development. Almost all of theseentities have substantially greater research and development capabilities and financial, scientific, manufacturing, marketingand sales resources than we do. These organizations also compete with us to:

Ourcompetitors may succeed in developing and commercializing products earlier than we do. Our competitors may also develop productsor technologies that are superior to those we are developing and render our technology candidates or technologies obsolete ornon-competitive. If we cannot successfully compete with new or existing products and technologies, our marketing and sales willsuffer and we may not ever be profitable.

Ourdevelopment of innovative features for current products is critical to sustaining and growing our sales.

Historically,our ability to provide value-added custom-engineered products that coordinate existing and new technologywith the requirements of efficient space utilization has been a key element of our success. We spend a significant amount of timeand effort to refine, improve and adapt our existing products for new customers and applications. The introduction of new productfeatures requires the coordination of the design, manufacturing and marketing of the new product features with current and potentialcustomers. The ability to coordinate these activities with current and potential customers may be affected by factors beyond ourcontrol. While we will continue to emphasize the introduction of innovative new product features that target customer-specificopportunities, we do not know if any new product features we introduce will achieve the same degree of success that we have achievedwith our existing products. Introduction of new product features typically requires us to increase production volume on a timelybasis while maintaining product quality. Manufacturers often encounter difficulties in increasing production volumes, includingdelays, quality control problems and shortages of qualified personnel or raw materials. As we attempt to introduce new productfeatures in the future, we do not know if we will be able to increase production volume without encountering these or other problems,which might negatively impact our financial condition or results of operations.

Ourproducts may never achieve market acceptance by customers in markets necessary for commercial success and the market opportunitymay be smaller than we estimate.

Therecan be no assurance that the market will continue the acceptance of our products we introduced in recent years or will acceptnew products, such as our mobile device products and our proposed clothing line for the construction industry scheduled for introductionin 2020. There can also be no assurance that the level of sales generated from these new products (including the introductionof products into new geographic markets) relative to our expectations will materialize. Market acceptance of any product candidatedepends on a number of factors including, but not limited to:

Anyfailure by any of our product candidates to achieve market approval or commercial success would adversely affect our businessprospects.

Weare just commencing commercialization of our new mobile device products.

Weare just commencing commercialization of our new mobile device products with apps being introduced in the second quarterfor mobile device products and our ruggedized mobile phones in the fourth quarter of 2020. Even if we are successful indeveloping these new products that reach commercialization, we will not be successful unless these products gain market acceptance.The degree of market acceptance of these products will depend on a number of factors, including:

Evenif we successfully develop one or more of these products, we may not become profitable.

Risksassociated with the disruption of manufacturing operations could adversely affect profitability or competitive position.

Wemanufacture a limited portion of the products we sell. Any prolonged disruption in the operations of our or our manufacturers’existing manufacturing facilities, whether due to technical or labor difficulties, facility consolidation or closure actions,lack of raw material or component availability, destruction of or damage to any facility (as a result of natural disasters, useand storage of hazardous materials or other events), or other reasons, could have a material adverse effect on our business, financialcondition, results of operations and cash flows.

Theinability to continue to introduce new products that respond to customer needs and achieve market acceptance could result in lowerrevenues and reduced profitability.

Salesfrom new products represent a significant portion of our net sales and are expected to continue to represent a significant componentof our future net sales. We may not be able to compete effectively unless we continue to enhance existing products or introducenew products to the marketplace in a timely manner. Product improvements and new product introductions require significant financialand other resources, including significant planning, design, development, and testing at the technological, product and manufacturingprocess levels. Our competitors’ new products may beat our products to market, be more effective with more features, beless expensive than our products, and/or render our products obsolete. Any new products that we develop may not receive marketacceptance or otherwise generate any meaningful net sales or profits for us relative to our expectations based on, among otherthings, existing and anticipated investments in manufacturing capacity and commitments to fund advertising, marketing, promotionalprograms and research and development.

Theglobal tool, equipment, and diagnostics and repair information industries are competitive.

Weface strong competition in all of our market segments. Price competition in our various industries is intense and pricing pressuresfrom competitors and customers are increasing. In general, as a manufacturer and marketer of premium products and services, theexpectations of our customers are high and continue to increase. Any inability to maintain customer satisfaction could diminishour premium image and reputation and could result in a lessening of our ability to command premium pricing. We expect that thelevel of competition will remain high in the future, which could limit our ability to maintain or increase market share or profitability.

Productliability claims and other kinds of litigation could affect our business, reputation, financial condition, results of operationsand cash flows.

Theproducts that we design and/or manufacture, and/or the services we provide, can lead to product liability claims or other legalclaims being filed against us. To the extent that plaintiffs are successful in showing that a defect in a product’s design,manufacture or warnings led to personal injury or property damage, or that our provision of services resulted in similar injuryor damage, we may be subject to claims for damages. Although we are insured for damages above a certain amount, we bear the costsand expenses associated with defending claims, including frivolous lawsuits, and are responsible for damages below the insuranceretention amount. In addition to claims concerning individual products, as a manufacturer, we can be subject to costs, potentialnegative publicity and lawsuits related to product recalls, which could adversely impact our results and damage our reputation.

Wehave in the past, and may in the future, be subject to legal proceedings other than those relating to product liability claims.

Ourproducts could be recalled.

TheConsumer Product Safety Commission or other applicable regulatory bodies may require the recall, repair or replacement of ourproducts if those products are found not to be in compliance with applicable standards or regulations. A recall could increasecosts and adversely impact our reputation, and thereby negatively impact our financial condition, results of operations and cashflows.

Weplan to expand our international operations, which will subject us to risks inherent with operations outside of the United States.

Althoughwe do not have significant foreign operations at this time other than selling our products through retailers, we intend to seekand expand upon opportunities in foreign markets that we anticipate will constitute significant markets for our products. However,even with the cooperation of a commercialization partner, conducting product development in foreign countries involves inherentrisks, including, but not limited to difficulties in staffing, funding and managing foreign operations; unexpected changes inregulatory requirements; export restrictions; tariffs and other trade barriers; difficulties in protecting, acquiring, enforcingand litigating intellectual property rights; fluctuations in currency exchange rates; and potentially adverse tax consequences.If we were to experience any of the difficulties listed above, or any other difficulties, any international development activitiesand our overall financial condition may suffer and cause us to reduce or discontinue our international development efforts.

Purchasersof home improvement goods may not choose to shop online, which could create barriers from our growing our business.

Wesell our products both through brick and mortar stores and online. The online market for home improvement goods in the UnitedStates is less developed than the online market for apparel, consumer electronics and other consumer products and, we believe,only accounts for a small portion of the market as a whole. If the online market for home improvement goods does not gain acceptance,our business may suffer. Our success will depend, in part, on our ability to attract consumers who have historically purchasedhome improvement goods through traditional retailers. Furthermore, we may have to incur significantly higher and more sustainedadvertising and promotional expenditures in order to attract additional online consumers to our sites and convert them into purchasingcustomers. Specific factors that could impact consumers’ willingness to purchase home improvement goods from us include:

Ifthe shopping experience we provide does not appeal to consumers or meet the expectations of existing customers, we may not acquirenew customers at rates consistent with historical periods, and existing customers’ buying patterns and levels may be lessthan historical rates.

Theloss of, or reduced purchases from, any retailers could have a material adverse effect on our operating results.

Wedo not have long-term contracts with any of our retailers and all of our retailers generally purchase from us on a purchase orderbasis. As a result, retailers generally may, with no notice or penalty, cease ordering and selling our products, or materiallyreduce their orders. If certain retailers, individually or in the aggregate, choose to no longer sell our products, to slow theirrate of purchase of our products, to move our products from prime spacing on shelving and other prominent displays or to decreasethe number of products they purchase, our results of operations would be adversely affected.

Wemay be adversely affected by the financial condition of our retailers and distributors.

Someof our retailers and distributors may have experienced financial difficulties in the past. A retailer or distributor experiencingsuch difficulties generally will not purchase and sell as many of our products as it would under normal circumstances and maycancel orders. In addition, a retailer or distributor experiencing financial difficulties generally increases our exposure touncollectible receivables. We extend credit to our retailers and distributors based on our assessment of their financial condition,generally without requiring collateral, and sometimes are not able to obtain information regarding their current financial status.Failure of these retailers or distributors to remain current on their obligations to us could result in losses that exceed thereserves we set aside in anticipation of this risk. Additionally, while we have credit insurance against some of our larger retailers,there is no assurance that such insurance will sufficiently cover any losses. We are also exposed to the risk of our customersdeclaring bankruptcy, exposing us to claims of preferential payment claims. Financial difficulties on the part of our retailersor distributors could have a material adverse effect on our results of operations and financial condition.

Wecould be the subject of breaches in our cybersecurity.

Thecompany’s products, services and systems may be used in critical company, customer or third-party operations, or involvethe storage, processing and transmission of sensitive data, including valuable intellectual property, other proprietary or confidentialdata, regulated data, and personal information of employees, customers and others. Successful breaches, employee malfeasance,or human or technological error could result in, for example, unauthorized access to, disclosure, modification, misuse, loss,or destruction of company, customer, or other third party data or systems; theft of sensitive, regulated, or confidential dataincluding personal information and intellectual property; the loss of access to critical data or systems through ransomware, destructiveattacks or other means; and business delays, service or system disruptions or denials of service.

Wemay need to increase the size of our organization and we may experience difficulties in managing growth.

Weintend to rapidly expand operations to implement our business strategy. We also may acquire other companies or technologies. Anyexpansion or acquisitions are expected to place a significant strain on our managerial, operational, and financial resources.To manage the expected growth of operations, we may need to develop and maintain operational and financial systems and proceduresand controls, which may cause us to incur significant expenses. As we may incur many of these expenses before receiving any significantrevenues from our efforts, it may be more difficult to achieve or maintain profitability.

Aninvestment in our securities is speculative and there can be no assurance of any return on any such investment.

Aninvestment in our securities is speculative and there can be no assurance that investors will obtain any return on their investment.Investors may be subject to substantial risks involved in an investment us, including the risk of losing their entire investment.

RisksRelated to Our Intellectual Property

Ifwe are unable to protect our intellectual property, our business may be adversely affected.

Wemust protect the proprietary nature of the intellectual property used in our business. There can be no assurance that trade secretsand other intellectual property will not be challenged, invalidated, misappropriated or circumvented by third parties. Currently,our intellectual property includes issued patents, patent applications, trademarks, trademark applications and know-how relatedto business, product and technology development. We plan on taking the necessary steps, including but not limited to the filingof additional patents as appropriate. There is no assurance any additional patents will issue or that when they do issue theywill include all of the claims currently included in the applications. Even if they do issue, those new patents and our existingpatents must be protected against possible infringement. Nonetheless, we currently rely on contractual obligations of our employeesand contractors to maintain the confidentiality of our products. To compete effectively, we need to develop and continue to maintaina proprietary position with respect to our technologies, and business. The risks and uncertainties that we face with respect tointellectual property rights principally include the following:

Itis also possible that others may obtain issued patents that could prevent us from commercializing certain aspects of our productsor 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 assignmentand confidentiality agreements entered into by our employees and consultants, advisors and collaborators will provide meaningfulprotection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use or disclosureof such trade secrets, know- how or other proprietary information. As all of our products are manufactured in China, and we maynot have the same strength of intellectual property protection and enforcement in China as in North America or Europe, we areat a greater risk of a third party appropriating our intellectual property. The scope and enforceability of patent claims arenot systematically predictable with absolute accuracy. The strength of our own patent rights depends, in part, upon the breadthand scope of protection provided by the patent and the validity of our patents, if any.

Weoperate in an industry with the risk of intellectual property litigation. Claims of infringement against us may hurt our business.

Oursuccess depends, in part, upon non-infringement of intellectual property rights owned by others and being able to resolve claimsof intellectual property infringement without major financial expenditures or adverse consequences. Participants that own, orclaim to own, intellectual property may aggressively assert their rights. From time to time, we may be subject to legal proceedingsand claims relating to the intellectual property rights of others. Future litigation may be necessary to defend us or our clientsby 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 litigationto a greater degree and for longer periods of time. In addition, patent holding companies that focus solely on extracting royaltiesand settlements by enforcing patent rights may target us. Regardless of whether claims that we are infringing patents or otherintellectual property rights have any merit, these claims are time-consuming and costly to evaluate and defend and could:

Inaddition to liability for monetary damages, which may be tripled and may include attorneys’ fees, or, in some circumstances,damages against clients, we may be prohibited from developing, commercializing, or continuing to provide some or all of our productsunless we obtain licenses from, and pay royalties to, the holders of the patents or other intellectual property rights, whichmay not be available on commercially favorable terms, or at all.

Wehave limited foreign intellectual property rights and may not be able to protect our intellectual property rights throughout theworld.

Wehave limited intellectual property rights outside the United States. Filing, prosecuting and defending patents on devices in allcountries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outsidethe United States can be less extensive than those in the United States. In addition, the laws of some foreign countries do notprotect intellectual property to the same extent as laws in the United States. Consequently, we may not be able to prevent thirdparties from practicing our inventions in all countries outside the United States, or from selling or importing products madeusing our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictionswhere we have not obtained patents to develop their own products and further, may export otherwise infringing products to territorieswhere we have patents, but enforcement is not as strong as that in the United States.

Manycompanies have encountered significant problems in protecting and defending intellectual property in foreign jurisdictions. Thelegal systems of certain countries, particularly China and certain other developing countries, do not favor the enforcement ofpatents, trade secrets and other intellectual property, which could make it difficult for us to stop the infringement of our patentsor marketing of competing products in violation of our proprietary rights generally. To date, we have not sought to enforce anyissued patents in these foreign jurisdictions. Proceedings to enforce our patent rights in foreign jurisdictions could resultin substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk ofbeing invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties toassert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any,may not be commercially meaningful. The requirements for patentability may differ in certain countries, particularly developingcountries. Certain countries in Europe and developing countries, including China and India, have compulsory licensing laws underwhich a patent owner may be compelled to grant licenses to third parties. In those countries, we and our licensors may have limitedremedies if patents are infringed or if we or our licensors are compelled to grant a license to a third party, which could materiallydiminish the value of those patents. This could limit our potential revenue opportunities. Accordingly, our efforts to enforceour intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectualproperty that we develop or license.

Ourpatent position is highly uncertain and involves complex legal and factual questions.

Accordingly,we cannot predict the breadth of claims that may be allowed or enforced under our patents or in third-party patents. For example,we might not have been the first to make the inventions covered by each of our pending patent applications and issued patents;we might not have been the first to file patent applications for these inventions; others may independently develop similar oralternative technologies or duplicate any of our technologies; it is possible that none of our pending patent applications willresult in issued patents; our issued patents may not provide a basis for commercially viable technologies, or may not provideus with any competitive advantages, or may be challenged and invalidated by third parties; and, we may not develop additionalproprietary technologies that are patentable.

Asa result, our owned and licensed patents may not be valid and we may not be able to obtain and enforce patents and to maintaintrade secret protection for the full commercial extent of our technology. The extent to which we are unable to do so could materiallyharm our business.

Wehave applied for and will continue to apply for patents for certain products. Such applications may not result in the issuanceof any patents, and any patents now held or that may be issued may not provide us with adequate protection from competition. Furthermore,it is possible that patents issued or licensed to us may be challenged successfully. In that event, if we have a preferred competitiveposition because of such patents, such preferred position would be lost. If we are unable to secure or to continue to maintaina preferred position, we could become subject to competition from the sale of generic products. Failure to receive, inabilityto protect, or expiration of our patents would adversely affect our business and operations.

Patentsissued or licensed to us may be infringed by the products or processes of others. The cost of enforcing our patent rights againstinfringers, if such enforcement is required, could be significant, and we do not currently have the financial resources to fundsuch litigation. Further, such litigation can go on for years and the time demands could interfere with our normal operations.We may become a party to patent litigation and other proceedings. The cost to us of any patent litigation, even if resolved inour favor, could be substantial. Many of our competitors may be able to sustain the costs of such litigation more effectivelythan we can because of their substantially greater financial resources. Litigation may also absorb significant management time.

Unpatentedtrade secrets, improvements, confidential know-how and continuing technological innovation are important to our scientific andcommercial success. Although we attempt to and will continue to attempt to protect our proprietary information through relianceon trade secret laws and the use of confidentiality agreements with our partners, collaborators, employees and consultants, aswell as through other appropriate means, these measures may not effectively prevent disclosure of our proprietary information,and, in any event, others may develop independently, or obtain access to, the same or similar information.

Ifwe are found to be infringing on patents or trade secrets owned by others, we may be forced to cease or alter our product developmentefforts, obtain a license to continue the development or sale of our products, and/or pay damages.

Ourmanufacturing processes and potential products may violate proprietary rights of patents that have been or may be granted to competitors,or others, or the trade secrets of those persons and entities. As our industry expands and more patents are issued, the risk increasesthat our processes and potential products may give rise to claims that they infringe the patents or trade secrets of others. Theseother persons could bring legal actions against us claiming damages and seeking to enjoin manufacturing and marketing of the affectedproduct or process. If any of these actions are successful, in addition to any potential liability for damages, we could be requiredto obtain a license in order to continue to manufacture or market the affected product or use the affected process. Required licensesmay not be available on acceptable terms, if at all, and the results of litigation are uncertain. If we become involved in litigationor other proceedings, it could consume a substantial portion of our financial resources and the efforts of our personnel.

Werely on confidentiality agreements to protect our trade secrets. If these agreements are breached by our employees or other parties,our trade secrets may become known to our competitors.

Werely on trade secrets that we seek to protect through confidentiality agreements with our employees and other parties. If theseagreements are breached, our competitors may obtain and use our trade secrets to gain a competitive advantage over us. We maynot have any remedies against our competitors and any remedies that may be available to us may not be adequate to protect ourbusiness or compensate us for the damaging disclosure. In addition, we may have to expend resources to protect our interests frompossible infringement by others.

RisksRelated to the Offering of our August 2019 Convertible Notes and Subsequent Exchange into Series D Preferred Stock

Asubstantial number of shares of our common stock may be issued pursuant to the terms of convertible notes we issued in August2019 (the “Convertible Notes”) and Series D Preferred Stock, into which $5.5 million principal amount of our ConvertibleNotes were exchanged, which could cause the price of our common stock to decline.

TheConvertible Notes are convertible into shares of our common stock at an initial conversion price of $1.00 per share, for an aggregateof 11,500,000 shares, or approximately 31% of our outstanding common stock as of January 17, 2020 (without taking into accountthe limitations on the conversion of the Convertible Notes as described elsewhere in this prospectus).

Furthermore,the number of shares of common stock to be issued may be substantially greater if the Convertible Notes and Series D PreferredStock are converted into shares of common stock in accordance with the installment conversion process or the warrants issued inconjunction with the Convertible Notes and Series D Preferred Stock are exercised, each as described elsewhere in this prospectus.In such cases the number of shares issued will be determined based on the then-current market price. We cannot predict the marketprice of our common stock at any future date, and therefore, we are unable to accurately forecast or predict the total amountof shares that ultimately may be issued under the Convertible Notes. The number of shares of common stock to be issued also maybe substantially greater if we voluntarily reduce the conversion price of the Convertible Notes as permitted under Section 7(d)of the Convertible Notes.

TheConvertible Notes and Series D Preferred Stock likely will be converted only at times when it is economically beneficially forthe holder to do so, and we are entitled to pay interest in shares and make installment conversions only at a price per sharethat is at a discount to the then-current market price. In any event, the issuance of these shares will dilute our other equityholders, which could cause the price of our common stock to decline.

Salesof substantial amounts of our common stock by the selling stockholder of the Convertible Notes or the Series D Preferred Stock,or the perception that these sales could occur, could adversely affect the price of our common stock.

Thesale by the selling stockholder of the Convertible Notes or the Series D Preferred Stock of a significant number of shares ofcommon stock could have a material adverse effect on the market price of our common stock. In addition, the perception in thepublic markets that the selling stockholders may sell all or a portion of their shares could also in and of itself have a materialadverse effect on the market price of our common stock. We cannot predict the effect, if any, that market sales of those sharesof common stock or the availability of those shares of common stock for sale will have on the market price of our common stock.On October 15, 2019, our resale registration statement for 17,250,000 shares of our common stock (to be issued upon conversionof the Convertible Notes) on Form S-1 was declared effective.

Therequirement that we repay the Convertible Note and interest thereon and redeem the Series D Preferred Stock in cash under certaincircumstances, and the restrictive covenants contained in the Convertible Note and Series D Preferred Stock, could adversely affectour business plan, liquidity, financial condition, and results of operations.

Wemay be required to repay the Convertible Note and interest thereon and/or redeem the Series D Preferred Stock in cash, if we donot meet certain customary equity conditions (including minimum price and volume thresholds) or in certain other circumstances.For example, we will be required to repay the outstanding principal balance and accrued but unpaid interest and/or redeem theSeries D Preferred Stock, along with a premium, upon the occurrence of a Change of Control (as defined in the Convertible Note).In addition, the Convertible Note and Series D Preferred Stock contain restrictive covenants, including financial covenants. Theseobligations and covenants could have important consequences on our business. In particular, they could:

Thedebt service requirements of any other outstanding indebtedness or preferred stock we incur or issue in the future, as well asthe restrictive covenants contained in the governing documents for any such indebtedness, could intensify these risks.

Inthe event we are required to repay the Convertible Note and/or redeem the Series D Preferred Stock in cash, we may seek to refinancethe remaining balance, by either refinancing with the holder of the Convertible Note and/or Series D Preferred Stock, by raisingsufficient funds through a sale of equity or debt securities or by obtaining a credit facility. No assurances can be given thatwe will be successful in making the required payments under the Convertible Note and/or Series D Preferred Stock, or in refinancingour obligations on favorable terms, or at all. Should we determine to refinance, it could be dilutive to shareholders.

Ifwe are unable to make the required cash payments, there could be a default under the Convertible Note and/or Series D PreferredStock. In such event, or if a default otherwise occurs under the Convertible Note, including as a result of our failure to complywith the financial or other covenants contained therein, the holders of the Convertible Note and/or Series D Preferred Stock couldrequire us to immediately repay 115% of the outstanding principal and interest on the Convertible Note and/or redeem the SeriesD Preferred Stock in cash.

RisksRelated to this Offering and the Ownership of Our Securities

Wehave broad discretion in the use of the net proceeds from this offering and may use the net proceeds in ways with which you disagree.

Ourmanagement will have broad discretion in the application of the net proceeds from this offering and could spend the proceeds inways that do not improve our results of operations or enhance the value of our securities. You will be relying on the judgmentof our management with regard to the use of these net proceeds, and you will not have the opportunity, as part of your investmentdecision, to assess whether the net proceeds are being used appropriately. The failure by our management to apply these fundseffectively could result in financial losses that could have a material adverse effect on our business, financial condition andresults of operations and cause the price of our securities to decline. Pending the application of these funds, we may investthe net proceeds from this offering in a manner that does not produce income or that loses value.

Investorsin this offering will experience immediate and substantial dilution in net tangible book value (deficit).

Youwill incur immediate and substantial dilution as a result of this offering. After giving effect to the sale by us of up to                             shares of common stock and warrants to purchase                    sharesof common stock at a public offering price of $               per share, and after deducting the underwriter’s discounts and commissions and estimated offering expenses payable by us,investors in this offering can expect an immediate dilution of $                     per share.

Wehave also issued options in the past to acquire common stock at prices significantly below the offering price. As of January17, 2020, there were 1,125,000 shares of common stock subject to outstanding options with a weighted-average exerciseprice of $4.72 per share. To the extent that these outstanding options are ultimately exercised, you will incur furtherdilution, and our stock price may decline. To the extent that additional or outstanding options or warrants are granted and/orexercised you will experience further dilution. See “Dilution” for a more complete description of how the valueof your investment in our common stock will be diluted upon the completion of this offering.

Ourshares will be subject to potential delisting if we do not maintain the listing requirements of the NASDAQ Capital Market.

NASDAQhas rules for continued listing, including, without limitation, minimum market capitalization and other requirements. Failureto maintain our listing, or de-listing from NASDAQ, would make it more difficult for shareholders to dispose of our common stockand more difficult to obtain accurate price quotations on our common stock. This could have an adverse effect on the price ofour common stock. Our ability to issue additional securities for financing or other purposes, or otherwise to arrange for anyfinancing we may need in the future, may also be materially and adversely affected if our common stock is not traded on a nationalsecurities exchange. As of the date of this prospectus, we are not in compliance with NASDAQ’s $1.00 per share minimumbid price rule, and the Company has an extended deadline to regain compliance until June 22, 2020.

Therequirements of being a public company may strain our resources, divert management’s attention and affect our results ofoperations.

Asa public company in the United States, we face increased legal, accounting, administrative and other costs and expenses. We aresubject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the Sarbanes-OxleyAct of 2002, or the Sarbanes-Oxley Act. The Exchange Act requires, among other things, that we file annual, quarterly and currentreports with respect to our business and financial condition. The Sarbanes-Oxley Act requires, among other things, that we maintaineffective disclosure controls and procedures and internal control over financial reporting. For example, Section 404 of the Sarbanes-OxleyAct requires that our management report on the effectiveness of our internal controls structure and procedures for financial reporting.Section 404 compliance may divert internal resources and will take a significant amount of time and effort to complete. If wefail to maintain compliance under Section 404, or if in the future management determines that our internal control over financialreporting are not effective as defined under Section 404, we could be subject to sanctions or investigations by NASDAQ, the SEC,or other regulatory authorities. Furthermore, investor perceptions of our company may suffer, and this could cause a decline inthe market price of our common stock. Any failure of our internal control over financial reporting could have a material adverseeffect on our stated results of operations and harm our reputation. If we are unable to implement these changes effectively orefficiently, it could harm our operations, financial reporting or financial results and could result in an adverse opinion oninternal controls from our independent auditors. We may need to hire a number of additional employees with public accounting anddisclosure experience in order to meet our ongoing obligations as a public company, particularly if we become fully subject toSection 404 and its auditor attestation requirements, which will increase costs. We expect these rules and regulations to increaseour legal and financial compliance costs and to make some activities more time consuming and costly, although we are currentlyunable to estimate these costs with any degree of certainty. A number of those requirements will require us to carry out activitieswe have not done previously. Our management team and other personnel will need to devote a substantial amount of time to new complianceinitiatives and to meeting the obligations that are associated with being a public company, which may divert attention from otherbusiness concerns, which could have a material adverse effect on our business, financial condition and results of operations.

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

Newlaws, regulations, and standards relating to corporate governance and public disclosure may create uncertainty for public companies,increasing legal and financial compliance costs and making some activities more time consuming.

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

Asa public company subject to these rules and regulations, we may find it more expensive for us to obtain director and officer liabilityinsurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factorscould also make it more difficult in the future for us to attract and retain qualified members of our Board of Directors, particularlyto serve on its audit committee and compensation committee, and qualified executive officers.

Themarket price of our common stock and warrants may be volatile, and you may not be able to resell your shares and warrants at orabove the initial public offering price.

Themarket price for our common stock and warrants may be volatile and subject to wide fluctuations in response to factors includingthe following:

Inaddition, if we fail to reach an important development, commercialization or sales milestone or result by a publiclyexpected deadline, even if by only a small margin, there could be significant impact on the market price of our common stock.Additionally, as we approach the announcement of anticipated significant information and as we announce such information, we expectthe price of our common stock to be particularly volatile and negative results would have a substantial negative impact on theprice of our common stock and warrants.

Inaddition, in recent years, the stock market in general has experienced extreme price and volume fluctuations. This volatilityhas had a significant effect on the market price of securities issued by many companies, including for reasons unrelated to theiroperating performance. These broad market fluctuations may adversely affect our stock price, notwithstanding our operating results.The market price of our common stock and warrants will fluctuate and there can be no assurances about the levels of the marketprices for our common stock and warrants.

Insome cases, following periods of volatility in the market price of a company’s securities, shareholders have often institutedclass action securities litigation against those companies. Such litigation, if instituted, could result in substantial costsand diversion of management attention and resources, which could significantly harm our business operations and reputation.

Asan “emerging growth company” under applicable law, we will be subject to lessened disclosure requirements, which couldleave our shareholders without information or rights available to shareholders of more mature companies.

Foras long as we remain an “emerging growth company” as defined in the JOBS Act, we have elected to take advantage ofcertain exemptions from various reporting requirements that are applicable to other public companies that are not “emerginggrowth companies” including, but not limited to:

Weexpect to take advantage of these reporting exemptions until we are no longer an “emerging growth company.” Becauseof these lessened regulatory requirements, our shareholders are not provided information or rights available to shareholders ofmore 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 commonstock and our stock price may be more volatile.

Weare also a “smaller reporting company” as defined in Rule 12b-2 of the Exchange Act and have elected to follow certainscaled disclosure requirements available to smaller reporting companies.

Becausewe have elected to use the extended transition period for complying with new or revised accounting standards for an “emerginggrowth company” our financial statements may not be comparable to companies that comply with public company effective dates.

Wehave elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1)of the JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effectivedates for public and private companies until those standards apply to private companies. While we are not currently delaying theimplementation of any relevant accounting standards, in the future we may avail ourselves of this right, and as a result of thiselection, our financial statements may not be comparable to companies that comply with public company effective dates. Becauseour financial statements may not be comparable to companies that comply with public company effective dates, investors may havedifficulty evaluating or comparing our business, performance or prospects in comparison to other public companies, which may havea negative impact on the value and liquidity of our common stock.

FINRAsales practice requirements may limit your ability to buy and sell our common stock, which could depress the price of our shares.

FinancialIndustry Regulatory Authority, Inc. (FINRA) rules require broker-dealers to have reasonable grounds for believing that an investmentis suitable for a customer before recommending that investment to the customer. Prior to recommending speculative low-priced securitiesto their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’sfinancial status, tax status and investment objectives, among other things. Under interpretations of these rules, FINRA believesthat there is a high probability such speculative low-priced securities will not be suitable for at least some customers. Thus,FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which maylimit your ability to buy and sell our shares, have an adverse effect on the market for our shares, and thereby depress our shareprice.

Ourcompliance with complicated U.S. regulations concerning corporate governance and public disclosure is expensive. Moreover, ourability to comply with all applicable laws, rules and regulations is uncertain given our management’s relative inexperiencewith operating U.S. public companies.

Asa publicly reporting company, we are faced with expensive and complicated and evolving disclosure, governance and compliance laws,regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act and the Dodd-FrankAct and the rules of the NASDAQ Stock Market. New or changing laws, regulations and standards are subject to varying interpretationsin many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidanceis provided by regulatory and governing bodies, which could result in continuing uncertainty regarding compliance matters andhigher costs necessitated by ongoing revisions to disclosure and governance practices. As a result, our efforts to comply withevolving laws, regulations and standards of a U.S. public company are likely to continue to result in increased general and administrativeexpenses and a diversion of management time and attention from revenue-generating activities to compliance activities.

Moreover,our executive officers have little experience in operating a U.S. public company, which makes our ability to comply with applicablelaws, rules and regulations uncertain. Our failure to comply with all laws, rules and regulations applicable to U.S. public companiescould subject us or our management to regulatory scrutiny or sanction, which could harm our reputation and stock price.

Ifresearch 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.

Thetrading market for our securities may depend in part on the research and reports that research analysts publish about us and ourbusiness. If we do not maintain adequate research coverage, or if any of the analysts who cover us downgrade our stock or publishinaccurate or unfavorable research about our business, the price of our common stock and warrants could decline. If one or moreof our research analysts ceases to cover our business or fails to publish reports on us regularly, demand for our securities coulddecrease, which could cause the price of our common stock and warrants or trading volume to decline.

SpeculativeNature of Warrants.

Thewarrants offered in this offering do not confer any rights of common stock ownership on their holders, such as voting rights orthe right to receive dividends, but rather merely represent the right to acquire shares of our common stock at a fixed price fora limited period of time. Specifically, commencing on the date of issuance, holders of the warrants may exercise their right toacquire the common stock and pay an exercise price of $                 per share, prior to               years from the date ofissuance, after which date any unexercised warrants will expire and have no further value. Moreover, following this offering,the market value of the warrants is uncertain and there can be no assurance that the market value of the warrants will equal orexceed their public offering price. There can be no assurance that the market price of the common stock will ever equal or exceedthe exercise price of the warrants, and consequently, whether it will ever be profitable for holders of the warrants to exercisethe warrants.

Thereis no public market for our warrants, which could limit your ability to sell our warrants.

Thereis currently no public market for our warrants and we do not expect a market to develop. In addition, we do not plan to have ourwarrants quoted or traded on any market, including the NASDAQ Stock Market. Without an active market, the liquidity of the warrantsmay be limited.

Exerciseor conversion of outstanding warrants and convertible securities will dilute shareholders’ percentage of ownership.

Wehave issued convertible securities, options and warrants to purchase shares of our common stock to our officers, directors, consultantsand other shareholders in public and private transactions. In the future, we may grant additional options, warrants and convertiblesecurities. The exercise or conversion of options, warrants or convertible securities will dilute the percentage ownership ofour shareholders, which may have a negative effect on the trading price of our common stock. The dilutive effect of the exerciseor conversion of these securities may adversely affect our ability to obtain additional capital. The holders of these securitiesmay exercise or convert such options, warrants and convertible securities at a time when we would be able to obtain additionalequity capital on terms more favorable than such securities or when our common stock is trading at a price higher than the exerciseor conversion price of the securities. The exercise or conversion of outstanding warrants, options and convertible securitieswill have a dilutive effect on the securities held by our shareholders.

Wedo not currently intend to pay dividends on our common stock in the foreseeable future, and consequently, your ability to achievea return on your investment will depend on appreciation in the price of our common stock.

Wehave never declared or paid cash dividends on our common stock and do not anticipate paying any cash dividends to holders of ourcommon 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 ofour common stock will appreciate in value or even maintain the price at which our shareholders have purchased their shares.

CAUTIONARYNOTE REGARDING FORWARD-LOOKING STATEMENTS

Thisprospectus contains “forward-looking statements,” which include information relating to future events, future financialperformance, financial projections, strategies, expectations, competitive environment and regulation. Words such as “may”,“should”, “could”, “would”, “predicts”, “potential”, “continue”,“expects”, “anticipates”, “future”, “intends”, “plans”, “believes”,“estimates”, “will”, and similar expressions, as well as statements in future tense, identify forward-lookingstatements. Forward-looking statements should not be read as a guarantee of future performance or results and may not be accurateindications of when such performance or results will be achieved. Forward-looking statements are based on information we havewhen those statements are made or management’s good faith belief as of that time with respect to future events and are subjectto significant risks and uncertainties that could cause actual performance or results to differ materially from those expressedin or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limitedto:

Theforegoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained hereinor risk factors that we are faced with that may cause our actual results to differ from those anticipate in our forward-lookingstatements. Please see “Risk Factors” for additional risks which could adversely impact our business and financialperformance.

Moreover,new risks regularly emerge and it is not possible for our management to predict or articulate all risks we face, nor can we assessthe impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results todiffer from those contained in any forward-looking statements. All forward-looking statements included in this prospectus arebased on information available to us on the date of this prospectus. Except to the extent required by applicable laws or rules,we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information,future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting onour behalf are expressly qualified in their entirety by the cautionary statements contained above and throughout this prospectus.

USEOF PROCEEDS

Weestimate that the net proceeds from the sale of the           shares of common stockand warrants to purchase                   share of common stock will be approximately $                         , or approximately $                    if the underwriter exercises in full its option to purchase additional shares and/or warrants, after deducting the estimated underwritingdiscounts and commissions and estimated offering expenses payable by us. This estimate excludes the proceeds, if any, from theexercise of warrants sold in this offering. If all of the warrants sold in this offering were to be exercised in cash at the exerciseprice of $           per share, we would receive additional net proceeds ofapproximately $               . We cannot predict whenor if these warrants will be exercised. It is possible that these warrants may expire and may never be exercised.

Theexpected use of net proceeds of this offering represents our current intentions based upon our present plan and business conditions.As of the date of this prospectus, we cannot specify with certainty all of the particular uses for the net proceeds to be receivedupon the completion of this offering. The amounts and timing of our actual use of net proceeds will vary depending on numerousfactors. As a result, management will have broad discretion in the application of the net proceeds, and investors will be relyingon our judgment regarding the application of the net proceeds of this offering. We currently estimate that we will use the netproceeds from this offering as follows: (i) $                        to the production of new tool products, (ii) $               to the development of mobile technology including accessories and attachments, (iii) $                to sales and marketing and (iv) $                            for working capital needs.

Theuse of the proceeds represents management’s estimates based upon current business and economic conditions. We reserve theright to use the net proceeds we receive in the offering in any manner we consider to be appropriate. Although our company doesnot contemplate changes in the proposed use of proceeds, to the extent we find that adjustment is required for other uses by reasonof existing business conditions, the use of proceeds may be adjusted. The actual use of the proceeds of this offering could differmaterially from those outlined above as a result of several factors including those set forth under “Risk Factors”and elsewhere in this prospectus.

Pendingthe use of the net proceeds of this offering, we intend to invest the net proceeds in short-term investment-grade, interest-bearingsecurities.

MARKETFOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Asof January 17, 2020, we had approximately 100 shareholders of record of our common stock.

Ourcommon stock is listed on the NASDAQ Capital Market under the symbol “TBLT” and our Series A Warrants arelisted on The NASDAQ Capital Market under the symbol “TBLTW”.

DIVIDENDPOLICY

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

CAPITALIZATION

Thefollowing table sets forth our capitalization as of September 30, 2019:

Youshould read this table together with “Management’s Discussion and Analysis of Financial Condition and Results ofOperations” and our financial statements and the related notes appearing in each of our Annual Report on Form10-K for the fiscal year ended December 31, 2018 and our Quarterly Report on Form 10-Q for the fiscal period ended September30, 2020, each of which is incorporated by reference in this prospectus.

Numbersare expressed in thousands (U.S. dollars) except share and per share data.

Thenumber of shares of common stock that will be outstanding after this offering set forth above is based on 36,460,923 sharesof common stock outstanding as of January 17, 2020, and excludes the following:

DILUTION

Ifyou invest in our common stock in this offering, your ownership interest will be diluted to the extent of the differencebetween the initial public offering price per share of our common stock in this offering and the as adjusted net tangiblebook value (deficit) per share immediately after this offering. We calculate net tangible book value per share by dividingour net tangible book value (deficit), which is tangible assets less total liabilities less debt discounts, by the number ofoutstanding shares of our common stock as of September 30, 2019, assuming no value is attributed to the warrants and suchwarrants are accounted for and classified as equity. Our historical net tangible book value (deficit) as of September 30,2019, was approximately ($0.02 million) or $ (.0002) per share of our common stock.

Aftergiving effect to the sale of           shares of our common stock and accompanyingwarrants at an the public offering price of $          per share of common stockand accompanying warrant, after deducting the underwriting discounts and commissions and estimated offering costs payableby us, our as adjusted net tangible book value (deficit) as of September 30, 2019, would have been approximately $         million, or $          per share of common stock and accompanying warrant. This representsan immediate increase in as adjusted net tangible book value of $          per shareto existing shareholders and an immediate dilution of $          per share to investorspurchasing shares of common stock in this offering at the public offering price, attributing none of the assumed combined publicoffering price to the warrants offered hereby.

Thefollowing table illustrates per share dilution as of September 30, 2019:

Ifthe underwriter exercises in full its option to purchase up to                         additional shares of common stock at the public offering price of $                per share, the as adjusted net tangible book value (deficit) after this offering would be $               pershare, representing an increase in net tangible book value (deficit) of $            per share to existing shareholders and immediate dilution in net tangible book value (deficit) of $            pershare to investors purchasing our common stock in this offering at the assumed public offering price.

MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTSOF OPERATIONS

TheManagement’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2018and nine months ended September 30, 2019 are hereby respectively incorporated by reference in its entirety from our Form 10-Kfiled with the SEC on March 29, 2019 and our Form 10-Q filed with the SEC on November 19, 2019.

FINANCIALSTATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2018 AND DECEMBER 31, 2017 AND THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019

Ouraudited financial statements as of and for the years ended December 31, 2018 and December 31, 2017, respectively, and ourunaudited condensed financial statements as of and for the three and nine months ended September 30, 2019 and September 30,2018, respectively, are hereby respectively incorporated by reference in their entirety from our Form 10-K for the year endedDecember 31, 2018, filed with the SEC on March 29, 2019 and our Form 10-Q for the nine months ended September 30, 2019, filedwith the SEC on November 19, 2019, respectively.

BUSINESS

Overview

Ourcompany was formed on April 9, 2012 as Phalanx, Inc., under the laws of the State of Nevada and changed its name to ToughBuiltIndustries, Inc. on December 29, 2015. We were formed to design, manufacture and distribute innovative tools and accessories tothe building industry. We market and distribute various home improvement and construction product lines for both do-it-yourself(“DIY”) and professional markets under the TOUGHBUILT® brand name, within the global multibillion dollar per yeartool market. All of our products are designed by our in-house design team. Since our initial launch of product sales sevenyears ago, we have experienced significant annual sales growth from approximately $1,000,000 in 2013 to $15,289,400 in 2018.

SinceAugust 2013, pursuant to a Service Agreement, we have been collaborating with Belegal, a Chinese firm, whose team of experts hasprovided ToughBuilt with additional engineering, sourcing services and quality control support for our operations in China. Belegalassists us with supply-chain management (process and operations in China) for our operations in China, among other things, facilitatingthe transmission of our purchase orders to our suppliers in China, conducting “in-process” quality checking and inspection,and shipping end-products manufactured in China to their final destinations. In accordance with the agreement, we pay all of themonthly costs for payroll, overhead and other operation expenses associated with the Belegal’s activities on behalf of ToughBuilt.

Ourbusiness is currently 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 forcontractors and workers alike. Our current product line includes two major categories related to this field, with several additionalcategories in various stages of development, consisting of Soft Goods and Kneepads and Sawhorses and Work Products.

ToughBuiltdesigns and manages its product life cycles through a controlled and structured process. We involve customers and industry expertsfrom our target markets in the definition and refinement of our product development. Product development emphasis is placed onmeeting and exceeding industry standards and product specifications, ease of integration, ease of use, cost reduction, design-formanufacturability, quality and reliability.

Ourmission consists, of providing products to the building and home improvement communities that are innovative, of superior qualityderived in part from enlightened creativity for our end users while enhancing performance, improving well-being and building highbrand loyalty.

RecentBusiness Developments

Thefollowing highlights recent developments in our business over the past five years:

Products

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

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. Our line of job-site toolsand material support products consists of a full line of miter-saw and table saw stands and saw horses/job site tables and rollerstands. All of our products are designed and engineered in the United States and manufactured in China and India under our qualitycontrol supervision. We do not need government approval for any of our products.

Oursoft sided tool storage line is designed for a wide range of do-it-yourself and professional needs. This line of pouches and tooland accessories bags is designed to organize our customers’ tools faster and easier. Interchangeable pouches clip on andoff 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’swide mouth tool carry-all bags come in sizes from 12 inches to 30 inches. They all have steel reinforced handles and padded shoulderstraps which allow for massive loads to be carried with ease. Rigid plastic hard-body lining protects everything inside. Doublemesh pockets included inside provide complete visibility for stored items. They include a lockable zipper for added security andsafety and secondary side handles for when it takes more than one to carry the load.

Allof 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 areunique in these products for the industry and have distinguished the line from other similarly situated products thus we believe,increasing appeal amongst the other products of this category in the professional community and among the enthusiasts.

SoftGoods

Theflagship of the product line is the Soft Goods line that consists of over 100 variations of tool pouches, tool rigs, tool beltsand accessories, tools 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 professionalsfrom all sectors of the industry including plumbers, electricians, framers, builders and more.

Wehave a selection of over 10 models of kneepads, some with revolutionary and patented design features that allow the usersto interchange components to suit particular conditions of use. Management believes that these kneepads are among the best performingkneepads in the industry. Our “all terrain” knee pad protection with snapshell technology is part of our interchangeablekneepad 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.

Sawhorsesand Work Products

Thesecond major category consists of Sawhorses and Work Support products with unique designs and robust construction targeted forthe most discerning users in the industry. The innovative designs and construction of the more than 15 products in this categoryhave led to the sawhorses becoming among the best sellers of category everywhere they are sold. The newest additions in this categoryinclude several stands and work support products that are quickly gaining recognition in the industry and are expected to positionthemselves in the top tier products in a short time. Our sawhorse line, miter saw, table saw & roller stands are built tovery high standards. Our sawhorse/jobsite table is fast to set up, holds 2,400 pounds, has adjustable heights, is made of allmetal construction and has a compact design. We believe that these lines of products are slowly becoming the standard in the constructionindustry.

Allof our products are designed in house to achieve features and benefits for not only the professional construction worker but alsofor the do-it-yourself person.

BusinessStrategy

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

Wewill continue to consider other market opportunities while focusing on our customers’ specific requirements to increasesales.

Market

Accordingto “Statista & Statistic Brain” the annual revenue in the construction industry (based on firm revenue) was $1.731trillion for 2016 in the United States. There was approximately $394.6 billion in home improvement sales in the U.S. in 2018 (https://www.statista.com/statistics/239759/predicted-sales-of-home-improvement-retailers-in-the-us/).The heavy and civil engineering industry is over $260 billion in sales with tools and hardware alone totaling over $60 billionfor that same time period. In 2016, there were approximately 729,000 construction companies in the United States employing morethan 7.3 million employees. In addition to the 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 Recessionthan the housing market. The U.S. housing stock of more than 130 million homes requires regular investment merely to offset normaldepreciation. And many households that might have traded up to more desirable homes during the downturn decided instead to makeimprovements to their current homes. Meanwhile, federal and state stimulus programs encouraged homeowners and rental propertyowners to invest in energy-efficient upgrades that they might otherwise have deferred. Finally, many rental property owners, respondingto a surge in demand from households either facing foreclosure or nervous about buying amid the housing market uncertainty, reinvestedin their units.

Asa result, improvement and repair spending held up well compared to residential construction spending. According to “HomeImprovement – Still Growing in 2019”, on www.hiri.org, “the HIRI/IHS Markit forecast expects 5.5%growth in the home improvement products market in 2019 after a strong 6.2% in 2018.”

Totalhome improvement products sales was expected to increase 5.5% in 2018 to $420 billion in total sales. The ProfessionalMarket was expected to increase 6.0% in 2019 over 2018 and the Consumer Market will see a sales increase of 5.3%.

TOUGHBUILT®products are available worldwide in many major retailers ranging from home improvement and construction products and servicesstores to major online outlets. Currently, we have placement in Home Depot, Menards, Toolbank (UK), Bunning’s (Australia),Princess Auto (Canada), Dong Shin Tool PIA (S. Korea) as well as seeking to grow our sales in global markets such as Western andCentral Europe, Russia and Eastern Europe, South America and the Middle East.

Retailersby region include:

UnitedStates: Home Depot, Menards, GM products, Fire Safety, Hartville Hardware, ORR, Pooley, YOW, Wesco, Buzzi, and Western PacificBuilding Materials.

Canada:Princess Auto

UnitedKingdom: Toolbank (distribution throughout the U.K. and online selling for Europe).

France:Birck

Australia:Bunnings

NewZealand: Bunnings

Russia:VSEInstrumenti.ru

SouthKorea: Dong Shin Tool PIA Co., Ltd.

Weare actively expanding into markets in Mexico and Latin American countries the Middle East and South Africa.

Weare currently in product line reviews and discussions with Lowe’s,Home Depot Canada, Do It Best, True Value and other major retailers both domestically and internationally. A product line reviewrequires the supplier to submit a comprehensive proposal which includes product offerings, prices, competitive market studiesand relevant industry trends and other information. Management anticipates, within the near term, adding to its customer baseup to three major retailers, along with several distributors and private retailers within six sectors and among 56 targeted countries.

Innovationand Brand Strength

Managementbelieves that the robust capabilities at ToughBuilt eclipse those of many competitors as not every distributor or factory hasthe 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 reachmajor retailers globally to position their products and brands. We believe that we are able to take a design from concept to marketwithin a very short period of time.

Productand Services Diversification

TOUGHBUILT®is a singular brand with a driven team that is poised to scale into a highly recognized global entity. We aim to grow ToughBuiltwith several significant subsidiaries in the next few years to become the hub/platform for professionals, DIY’s (Do It Yourselfers)and passionate builders everywhere. Management anticipates that future subsidiaries will focus on licensing, gear, mobile, equipmentrentals and maintenance services.

NewProducts

Tools

In2018, we ordered and launched a new line of gloves and 28 SKUs of tool belt and pouches. We also intend to launchthe following tools in the first half of 2020:

MobileDevice Products

Since2013, we have been planning, designing, engineering and sourcing the development of a new line of ToughBuilt mobile devices andaccessories to be used in the construction industry and by building enthusiasts. We are planning to have our mobiledevice products ready to market by late 2020 at which time we intend to commence marketing and selling our mobile deviceproducts to our current global customer base. We believe that increasing numbers of companies in the construction industry arerequiring their employees to utilize mobile devices not just to communicate with others but to utilize the special apps that willallow the construction workers to do their job better and more efficiently. All of our mobile devices are designed and built inaccordance with IP-68 and to a military standard level of durability and with the cooperation of Foxconn Manufacturing.

Ourruggedized mobile line of products was created to place customized technology and wide varieties of data in the palm of the buildingprofessionals and enthusiasts such as contractors, subcontractors, foreman, general laborers and others. We are designing thedevices, accessories and custom apps to allow the users to plan with confidence, organize faster, find labor and products faster,estimate accurately, purchase wisely, protect themselves, workers and their business, create and track invoicing faster and easier.

Bythe fourth quarter of 2020, we intend to launch our T.55 rugged mobile phones and earbud headphones, as well as a “T-Dock”,attachable battery, tri lens camera and tough shield cover and accessories. In the fourth quarter of 2020, we also intendto launch the following accessories: car charger, QI charger, car mounts and earbud pack, and we will focus on sales in the followingindustries: construction, industrial, military and law enforcement and “.coms”.

Bythe fourth quarter of 2020, we intend to launch applicationsfor our mobile phones relating to the following topics:

Agreementwith Foxconn

OnOctober 18, 2016, we entered into a Project Statement of Work Agreement (“SOW”) with Hon Hai Precision Ind. Co., Ltd.,a corporation organized under the law of Taiwan (referred to as “Foxconn”) to design, manufacture and supply to usa certain rugged mobile telephone (the “Product”). The Company will pay to Foxconn all fees and costs required todevelop the Product. The Product will be developed by Foxconn to our specifications. We will submit to Foxconn written specifications,features and concepts required to be included in the Product. The specifications are subject to review and update by the partiesand upon written approval by the parties such new or revised specifications will become part of the SOW. The SOW also providesdates for completion of deliverables, such as prototypes, “Beta” testing of the Product, sample assembly of the prototypeand commencement of mass production of the Product. We may terminate the SOW at any time, in which case we must pay the costsfor those portions of the development work completed by Foxconn up to the date of termination. The SOW is governed, construedand enforced in accordance with the laws of the State of California.

MobileDevice Market

Basedupon an annual white paper published by the Mobile and Wireless Practice of Venture Development Corporation, we believe that anincreasing number of companies are requiring their employees to transact business in the field and/or other non-traditional officeenvironments. Because of this and other factors, the construction industry is accelerating its acceptance of wireless technology.We further believe that the construction industry, like other industries, will be leveraging mobile and wireless solutions toaddress the need for greater collaboration among a highly mobile and distributed workforce.

Webelieve that mobility is one of the top technology trends that construction companies are focusing on in 2020 and beyond.Mobile technology continues to have a significant impact on business, specifically with regard to business communication as thistechnology enhances the ability for colleagues at different locations to easily communicate, enhances customer experience throughthe improvement of applications and websites available to consumers to do business through their devices “at their fingertips”,and optimizes business operations as there is instant access to business functions at any time and from any location.

Whilethe construction industry has widely adopted solutions such as push to talk (PTT) telephony applications, the use of mobile andwireless data applications has been limited. IT solutions in general and mobile and wireless solutions specifically have beenadopted at varying degrees within organizations and to support the various phases of construction projects. Currently the businessplanning, engineering and procurement operations have more effectively deployed IT solutions while actual construction operationshave fallen behind in IT infrastructure and field automation solutions. The construction and engineering workforce is inherentlymobile. However, construction sites have never effectively leveraged (wireless) communications networks to connect these distributedand often remote workers and their assets. Nevertheless, construction project managers require real time access to a variety ofinformation, including real time tool inventory management, raw materials deliveries, job costing, time stamping and general projectmanagement information. The challenge, however, is the lack of network access on construction sites resulting in an informationbottleneck on the job site. Buoyed by advances in wireless technologies – including coverage, performance, security andcost of ownership – we believe this is becoming an issue of the past for construction operations.

MobileApps

Weintend to include apps on our mobile devices and are developing, with a third party applications developer, apps which will include,among other things, building codes, permitting, estimating and job listings. The purposes of the apps that are being developedaddress:

SalesStrategy

Thedevices, accessories and bolt-on digital tools will be sold through relevant home improvement big box stores, direct marketingto construction companies, direct marketing of trade/wholesale outlets and to professional outlets.

IntellectualProperty

Wehold several patents and trademarks of various durations and believe that we hold, have applied for or license all of the patent,trademark and other intellectual property rights necessary to conduct our business. We utilize trademarks (licensed and owned)on nearly all of our products and believe having distinctive marks that are readily identifiable is an important factor in creatinga market for our goods, in identifying our brands and our company, and in distinguishing our goods from the goods of others. Weconsider our ToughBuilt^®, Cliptech^®, and Fearless^® trademarks to be among ourmost valuable intangible assets. Trademarks registered both in and outside the U.S. are generally valid for ten years, dependingon the jurisdiction, and are generally subject to an indefinite number of renewals for a like period on appropriate application.

In2019, the United States Patent and Trademark Office (USPTO)granted two new design patents (US D840,961 S and US D841,635 S) that cover ToughBuilt’s ruggedized mobile devices, whichare valid for a period of 15 years.

Wealso rely on trade secret protection for our confidential and proprietary information relating to our design and processes forour products. We have entered into and will continue to enter into confidentiality, non-competition and proprietary rights assignmentagreements with our employees and independent contractors. We have entered into and will continue to enter into confidentialityagreements with our suppliers to protect our intellectual property.

Competition

Thetool equipment and accessories industry is highly competitive on a worldwide basis. We compete with a significant number of othertool equipment and accessories manufacturers and suppliers to the construction, home improvement and Do-It-Yourself industry,many of which have the following:

Ourcompetitors’ greater capabilities in the above areas enable them to better differentiate their products from ours, gainstronger 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. These competitors include DeWalt,Caterpillar and Samsung Active.

Themarkets for the Company’s mobile products and services are also highly competitive and the Company is confronted by aggressivecompetition in all areas of its business. These markets are characterized by frequent product introductions and rapid technologicaladvances that have substantially increased the capabilities and use of mobile communication and media devices, personal computersand other digital electronic devices. The Company’s competitors who sell mobile devices and personal computers based onother operating systems have aggressively cut prices and lowered their product margins to gain or maintain market share. The Company’sfinancial condition and operating results can be adversely affected by these and other industry-wide downward pressures on grossmargins. Principal competitive factors important to the Company include price, product features, relative price/performance, productquality and reliability, design innovation, a strong third-party software and peripherals ecosystem, marketing and distributioncapability, service and support and corporate reputation.

TheCompany is focused on expanding its market opportunities related to mobile communication and media devices. These industries arehighly competitive and include several large, well-funded and experienced participants. The Company expects competition in theseindustries to intensify significantly as competitors attempt to imitate some of the features of the Company’s products andapplications within their own products or, alternatively, collaborate with each other to offer solutions that are more competitivethan those they currently offer. These industries are characterized by aggressive pricing practices, frequent product introductions,evolving design approaches and technologies, rapid adoption of technological and product advancements by competitors, and pricesensitivity on the part of consumers and businesses. Competitors include Apple, Samsung and Qualcomm, among others.

LegalProceedings 

OnAugust 16, 2016, Edwin Minassian filed a complaint against the Company and Michael Panosian, our Chief Executive Officer, in theSuperior Court of California, County of Los Angeles. The complaint alleges breach of oral contracts to pay Mr. Minassian for consultingand finder’s fees, and to hire him as an employee. The complaint further alleges, among other things, fraud and misrepresentationrelating to the alleged tender of $100,000 to the Company in exchange for “a 2% stake in ToughBuilt” of which only$20,000 was delivered. The complaint seeks unspecified monetary damages, declaratory relief concerning the plaintiff’s contentionthat he has an unresolved 9% ownership stake in ToughBuilt and other relief according to proof.

OnApril 12, 2018, the Court entered judgments against the Company and Mr. Panosian in the amounts of $7,080 and $235,542, plus awardingMr. Minassian a 7% ownership interest in the Company (the “Judgments”). Mr. Minassian served notice of entry of thejudgments on April 17, 2018 and the Company and Mr. Panosian received notice of the entry of the default judgments on April 19,2018.

OnApril 25, 2018, the Company and Mr. Panosian filed a motion to have the April 12, 2018 default judgment on Plaintiff’s Complaint,the February 13, 2018 defaults, and April 14, 2017 Order for terminating sanctions striking Defendants’ Answer set asideon the basis of their former attorney’s declaration that his negligence resulted in the default judgment, default, and terminatingsanctions being entered against the Company and Mr. Panosian. The motion was denied on August 29, 2018 as a result of a courthearing held on August 3, 2018. On September 13, 2018, the Company and Mr. Panosian satisfied the Judgments by payment of $252,924.69(which includes $10,303.48 post judgment interest) to Mr. Minassian and by transferring to him a number of management-owned sharesreflecting a 7% ownership stake in the Company. On October 18, 2018, the Company and Mr. Panosian filed a Notice of Appeal inthe Superior Court of the State of California, Los Angeles County, with respect to the Order denying their motion for relief fromthe above-referenced judgment.

OnOctober 1, 2019, the Second Appellate District of the California Court of Appeal issued its opinion reversing the trial court’sorder denying the Company’s motion for relief from the default judgment and directing the trial court to grant the Company’smotion for relief, including allowing the Company to file an Answer and contest Minassian’s claims. We expect the appellatecourt to issue a remittitur officially transferring the matter from the appellate court back to the trial court for further proceedingsconsistent with its ruling. Upon return to the trial court, the Company intends to vigorously contest Minassian’s claims.

MANAGEMENT

Directorsand Executive Officers

Thenames, positions and ages of our directors and executive officers as of the date of this proxy statement are as follows:

Directorsserve until the next annual meeting and until their successors are elected and qualified. Officers are appointed to serve forone year until the meeting of the Board of Directors following the annual meeting of stockholders and until their successors havebeen elected and qualified.

MichaelPanosian, Co-Founder, President, CEO and Director

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

JoshuaKeeler, Co-Founder, Vice-President Research & Development and Director

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

ZarehKhachatoorian, Chief Operating Officer and Secretary

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

JolieKahn, Acting Chief Financial Officer

Ms.Kahn, age 54, has an extensive background in corporate finance and corporate and securities law. She has been the proprietor ofJolie Kahn, Esq. since 2002. Ms. Kahn has also acted in various corporate finance roles, including extensive involvement of preparationof period filings and financial statements and playing an interal part in public company audits. She also works with companiesand hedge funds in complex transactions involving the structuring and negotiation of multi-million dollar debt and equity financings,mergers, and acquisitions. Ms. Kahn has practiced law in the areas of corporate finance, mergers & acquisitions, reverse mergers,and general corporate, banking, and real estate matters. She represents both public and private companies, hedge funds, and otherinstitutional investors in their role as investors in public companies.

IndependentDirectors

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

RobertFaught, Director

Asa global senior executive and CEO, Mr. Faught held leadership positions for Fortune 500 companies including Comcast, and Phillips/Lucent.He was the founder and CEO of SmartHome Ventures, a home automation company servicing retail, utility, insurance and telephonydistribution channels and their customers. In these leadership roles, he led the development and implementation of the strategicvision throughout the organization, recruited senior talent, led leadership development and oftentimes, oversaw a realignmentof senior roles where some executives were outplaced. At Faught Associates, he offers consulting, executive search, leadershipdevelopment and outplacement to bring an exceptional leadership and performance direction that provides growth and internal development.From January 2014 to January 2016 he was the President and Chief Executive Officer of SmartHome Ventures and has served on itsBoard since January 2016. The Board has determined that Mr. Faught is suitable as a director due to his long standing leadershiproles with Fortune 500 companies.

PaulGalvin, Director

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

FrederickD. Furry, Director

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

From1998 to 2010, Mr. Furry was at Windes, a regional public accounting firm based in Southern California, where he served as an AuditPartner and worked with over 25 public and private companies in the middle market with revenues ranging from $20 million to $600million.

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

Mr.Furry has a Master’s of Business Administration degree and a Bachelor’s of Science in Business Administration fromthe University of California, Riverside and is a Certified Public Accountant (inactive). Mr. Furry’s long experience withpublic companies and as a financial executive are qualifications which make him an ideal Board member for the Company.

LindaMoossaian, Director

LindaMoossaian is an achievement-oriented financial strategist with an exceptional record of successful initiatives in financial planning,profit optimization, joint venture accounting, and treasury management. She has a strong history of forging strategic partnershipswith senior management, including CEOs and CFOs as well as key stakeholders to drive financial objectives, make strategic decisions,and analyze value-added analytics. Ms. Moossaian has a sophisticated understanding of long-range budget preparation, GAAP accounting,M&A, planning models, financial forecasting & analysis, decision support, accounting procedures, and continuous processimprovement. Her advanced critical thinking, analytical, qualitative, and quantitative analysis skills have been developed throughpositions in corporate andpublic accounting and consulting. She currently is the Director, Audit & Controls-WBTV FinancialAdministration for Warner Bros. in Burbank, CA, a position she has held since July 2019. Ms. Moossaian has previously acted asDirector, Theatrical Production Finance (from July 2009 to April 2018) and Director, Financial Planning & Analysis (from April2018 to July 2019) for Warner Bros. The ToughBuilt Board has determined that Ms. Moossaian’s expertise in finance is wellsuited to ToughBuilt’s Board’s support of the Company during this phase of rapid growth.

CorporateGovernance

Thebusiness and affairs of our company are managed under the direction of the Board of Directors.

Termof Office

Directorsserve until the next annual meeting and until their successors are elected and qualified. Officers are appointed to serve forone year until the meeting of the Board of Directors following the annual meeting of shareholders and until their successors havebeen elected and qualified.

DirectorIndependence

Weuse the definition of “independence” of The NASDAQ Stock Market to make this determination. NASDAQ Listing Rule 5605(a)(2)provides that an “independent director” is a person other than an officer or employee of our company or any otherindividual having a relationship which, in the opinion of the Board of Directors, would interfere with the exercise of independentjudgment in carrying out the responsibilities of a director. The NASDAQ rules provide that a director cannot be considered independentif:

Undersuch definition, Messrs. Faught, Furry and Galvin and Ms. Moossaian are independent directors.

FamilyRelationships

Thereare no family relationships among any of our officers or directors.

BoardCommittees

OurBoard of Directors has an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee, eachcomprised entirely of independent directors and none of which met in 2018. The Audit Committee met four times in 2019.

AuditCommittee

OurAudit Committee is comprised of three individuals, each of whom is an independent director and at least one of whom, Mr. Furry,is an “audit committee financial expert,” as defined in Item 407(d)(5)(ii) of Regulation S-K.

OurAudit Committee oversees our corporate accounting, financial reporting practices and the audits of financial statements. For thispurpose, the Audit Committee does have a charter (which is reviewed annually) and perform several functions. The Audit Committeeperforms the following:

CompensationCommittee

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

TheCompensation Committee reviews or recommends the compensation arrangements for our management and employees and also assists ourBoard of Directors in reviewing and approving matters such as company benefit and insurance plans, including monitoring the performancethereof. The Compensation Committee has a charter (which is reviewed annually) and performs several functions.

TheCompensation Committee has the authority to directly engage, at our expense, any compensation consultants or other advisers asit deems necessary to carry out its responsibilities in determining the amount and form of employee, executive and director compensation.

Nominatingand Corporate Governance Committee

OurNominating and Corporate Governance Committee is comprised of three individuals, each of whom is an independent director.

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

DirectorIndependence

OurBoard of Directors has reviewed the materiality of any relationship that each of our directors has with us, either directly orindirectly. Based on this review, our Board of Directors has determined that Frederick Furry, Paul Galvin, Linda Moossaianand Robert Faught are “independent directors” as defined in the NASDAQ Listing Rules and Rule 10A-3 promulgatedunder the Exchange Act. As such, all independent directors other than Ms. Moossaian serve on all three of our standingBoard committees, with Frederick Furry as Chair of the Audit Committee, Paul Galvin as Chair of the Compensation Committee andRobert Faught as Chair of the Nominating and Corporate Governance Committee.

Codeof Ethics

Wehave adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including ourprincipal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similarfunctions. We have posted a current copy of the code on our website, www.toughbuilt.com. In addition, we will post on our websiteall disclosures that are required by law or the listing standards of NASDAQ concerning any amendments to, or waivers from, anyprovision of the code. The reference to our website address does not constitute incorporation by reference of the informationcontained at or available through our website, and you should not consider it to be a part of this prospectus.

Indemnificationof Officers and Directors

Chapter78 of the Nevada Revised Statutes (NRS) provides that a corporation may indemnify any person who was or is a party or is threatenedto be made a party to any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrativeor investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director,officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer,employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action,suit or proceeding if he is not liable pursuant to NRS Section 78.138 or acted in good faith and in a manner he reasonably believedto be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, hadno reasonable cause to believe his conduct was unlawful. NRS Chapter 78 further provides that a corporation similarly may indemnifyany such person serving in any such capacity who was or is a party or is threatened to be made a party to any threatened, pendingor completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact thathe is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporationas a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, againstexpenses (including attorneys’ fees) actually and reasonably incurred in connection with the defense or settlement of suchaction or suit if he is not liable pursuant to NRS Section 78.138 or acted in good faith and in a manner he reasonably believedto be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect ofany claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only tothe extent that the court or other court of competent jurisdiction in which such action or suit was brought shall determine uponapplication that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairlyand reasonably entitled to indemnity for such expenses which the court or other court of competent jurisdiction shall deem proper.

Ourbylaws provide that we may indemnify our officers, directors, employees, agents and any other persons to the maximum extent permittedby the NRS.

Insofaras indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controllingus pursuant to the foregoing provisions, we have been informed that in the opinion of the Commission such indemnification is againstpublic policy as expressed in the Securities Act and is therefore unenforceable.

EXECUTIVECOMPENSATION

Thefollowing table summarizes compensation of our named executive officers, as of December 31, 2019 and 2018.

SummaryCompensation Table

(1) Vacation Payout

(2) Payment of $7,500 per month for CFO Services

Employmentand Related Agreements

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

Agreementswith Our Named Executive Officers

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

EmploymentAgreement with Michael Panosian

Weentered into an employment agreement with Mr. Panosian on January 3, 2017 that governs the terms of his employment with us asPresident and Chief Executive Officer. Under the terms of this agreement, Mr. Panosian received a “sign-on-bonus’of $50,000. The term of the agreement is for five years and Mr. Panosian is entitled to an annual base salary of $350,000 beginningon January 1, 2017 and increasing by 10% each year commencing on January 1, 2018. Mr. Panosian was also granted a stock optionto purchase 125,000 shares of the Company’s common stock at an exercise price of $10.00 per share. The employment agreementalso entitles Mr. Panosian to, among other benefits, the following compensation: (i) eligibility to receive an annual cash bonusat the sole discretion of the Board and as determined by the Compensation Committee commensurate with the policies and practicesapplicable to other senior executive officers of the Company; (ii) an opportunity to participate in any stock option, performanceshare, performance unit or other equity based long-term incentive compensation plan commensurate with the terms and conditionsapplicable to other senior executive officers and (iii) participation in welfare benefit plans, practices, policies and programsprovided by the Company and its affiliated companies (including, without limitation, medical, prescription, dental, disability,employee life, group life, accidental death and travel accident insurance plans and programs) to the extent available to our othersenior executive officers.

EmploymentAgreement with Josh Keeler

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

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

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

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

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

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

Inthe event of such officer’s Termination for Cause by the Company or the termination of such officer’s employment asa result of such officer’s resignation other than a Termination for Good Reason, such officer shall be provided certainbenefits provided in the employment agreement and payment of all accrued and unpaid compensation and wages, but such officer shallhave no right to compensation or benefits for any period subsequent to the effective date of termination.

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

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

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

EmploymentAgreement with Zareh Khachatoorian

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

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

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

EmploymentAgreement with Manu Ohri (resigned June 2019)

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

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

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

OutstandingEquity Awards at December 31, 2019

2016Equity Compensation Plan - Grant of options

2019Equity Compensation Plan - Grant of options