TRNF Taronis Fuels Inc (CE)

This Consent Solicitation Statement (the “Consent Statement”) and the accompanying WHITE consent card are being furnished to you as a shareholder of Taronis Fuels, Inc., a Delaware corporation (“Taronis” or the “Company”), by Thomas Wetherald and Tobias Welo (together, the “Concerned Shareholders”, “we”, “our” or “us”) and the other members of the Group (as hereinafter defined) named herein, in connection with our solicitation of written consents to elect directors to the Board of Directors of the Company (the “Board”) in lieu of an annual meeting of stockholders. As significant shareholders of the Company, with aggregate ownership of 1,113,332 shares of the Company’s Common Stock, par value $0.000001 per share (the “Common Stock”), constituting approximately 17.9% of the outstanding shares, the Concerned Shareholders and other members of the Group believe that the Board must be immediately reconstituted to ensure that the best interests of shareholders, the owners of Taronis, are appropriately represented in the boardroom.

A solicitation of written consents is a process that allows a company’s shareholders to act by submitting written consents to any proposed shareholder action in lieu of voting in person or by proxy at a meeting of shareholders. We are soliciting written consents from the holders of shares of the Common Stock to take the following actions (each, as more fully described in this Consent Statement, a “Proposal” and together, the “Proposals”), in the following order, without a shareholders’ meeting, as authorized by Delaware law:

Proposal 1 – Repeal any provision of the Amended and Restated Bylaws of the Company (the “Bylaws”) in effect at the time this Proposal becomes effective, including any amendments thereto, which was not included in the Bylaws that were in effect as of December 13, 2019 and were filed with the Securities and Exchange Commission (the “SEC”) as Exhibit 3.2 to the Company’s amended Form 10 on December 13, 2019 (the “Bylaw Restoration Proposal”) to restore the Bylaws to their current form if the Board attempts to amend them in any manner prior to the completion of this consent solicitation;

Proposal 2 – Amend Article IV, Section 18 of the Bylaws, as set forth on Schedule III to this Consent Statement, to declassify the Board so that all directors are elected on an annual basis (the “Declassification Proposal”);

Proposal 3 – Amend Article IV, Section 21 of the Bylaws, as set forth on Schedule IV to this Consent Statement, to reduce the supermajority shareholder vote required to remove any individual director or directors from the Board from three-fourths of the then-outstanding shares of capital stock of the Company entitled to vote generally at an election of directors to a majority of the then-outstanding shares of capital stock of the Company entitled to vote generally at an election of directors (the “Removal by Majority Vote Proposal”);

Proposal 4 – Remove, without cause, all five members of the Board: Scott Mahoney, Robert Dingess, Kevin Pollack, William Staunton, and Peter Molloy and, in addition, any person (other than those elected by this consent solicitation) nominated, elected or appointed to the Board to fill any vacancy on the Board or any newly-created directorships on or after December 20, 2020 and prior to the time that any of the actions proposed to be taken by this consent solicitation become effective (the “Removal Proposal”); and

Proposal 5 – Elect by consent in lieu of an annual meeting the five nominees, Thomas Wetherald, Tobias Welo, Sergey Vasnetsov, Mary Pat Thompson and Andrew McCormick (each a “Nominee” and collectively, the “Nominees”), to serve as directors of the Company until the Company’s 2022 annual meeting of shareholders and until their successors are duly elected and qualified (or, if any such Nominee is unable or unwilling to serve as a director of the Company, or if the Board increases the number of directorships to be greater than five, any other person designated as a nominee by the remaining Nominee(s)) (the “Election Proposal”).

This Consent Statement and the enclosed WHITE consent card are first being sent or given to the shareholders of Taronis on or about March 5, 2021.

We are soliciting your consent in favor of the adoption of the Declassification Proposal, the Removal by Majority Vote Proposal, the Removal Proposal, and the Election Proposal because we believe Taronis shareholders will be best served by directors who are committed to safeguarding and promoting the best interests of all Taronis shareholders. In addition, we are also soliciting your consent in favor of the adoption of the Bylaw Restoration Proposal to ensure that the incumbent Board does not limit the effect of your consent to the removal of the incumbent members of the Board and the election of the Nominees through changes to the Bylaws not filed with the SEC on or before December 13, 2019, the last date that amendments to the Bylaws were filed with the SEC. We are not currently aware of any specific bylaw provisions that would be repealed by the adoption of the Bylaw Restoration Proposal.

The effectiveness of each of the Bylaw Restoration Proposal, the Declassification Proposal, the Removal by Majority Vote Proposal, and the Removal Proposal requires the affirmative consent of the holders of a majority of the outstanding voting securities as of the close of business on the Record Date (as defined below). Under the Bylaws, directors are elected by a plurality of the votes cast, which means that the individuals receiving the highest number of consents in favor of their election are elected up to the number of directorships to be filled; however, the election of directors by written consent requires the affirmative consent of the holders of a majority of the outstanding voting securities as of the close of business on the Record Date. Each Proposal will be effective without further action when we deliver to Taronis consents signed by holders of the requisite number of shares. Proposal 1 (Bylaw Restoration Proposal), Proposal 2 (Declassification Proposal), Proposal 3 (Removal by Majority Vote Proposal) and Proposal 4 (Removal Proposal) are not subject to, or conditioned upon, the effectiveness of the other Proposals. Proposal 5 (Election Proposal) is conditioned upon the approval the Proposal 4 (Removal Proposal) for each incumbent director. Pursuant to Section 211(b) of the Delaware General Corporation Law (“DGCL”), shareholders may only elect directors by written consent in lieu of an annual meeting if all of the directorships to which directors could be elected at an annual meeting held at the effective time of such action are vacant and are filled by such action. Accordingly, if the Removal Proposal is not approved for all incumbent directors, none of the Nominees can be elected pursuant to the Election Proposal. In addition, unless all of the Nominees are elected pursuant to the Election Proposal, none of the Nominees can be elected pursuant to the Election Proposal.

We believe that Article IV, Section 18 of the Bylaws, which purports to establish a classified board of directors, and Article IV, Section 21 of the Bylaws, which purports to require at least three-fourths of the then-outstanding shares of capital stock of the Company entitled to vote generally at an election of directors to remove directors, are invalid under Delaware law because they conflict with the Company’s Amended and Restated Certificate of Incorporation. See “Proposal 2 – The Declassification Proposal” and “Proposal 3 – Removal by Majority Vote Proposal” for additional information about the invalidity of these Bylaw provisions. As a consequence, we believe that the approval of Proposal 2 (Declassification Proposal) and Proposal 3 (Removal by Majority Vote Proposal) will result in amendments to the Bylaws but will not change the current governance of the Company, which we believe provides for annual elections of each director and permits a majority of the shareholders of the Company to remove any director or the entire Board with or without cause.

In order for the Proposals to be adopted, unrevoked written consents, properly signed and dated by the holders of a majority of the outstanding shares of Common Stock as of the Record Date (as defined below), must be delivered to the Company within 60 calendar days of the Record Date, because, as noted below and pursuant to Section 213 of the DGCL, the first consent was delivered to the Company on such date. Each share of Common Stock outstanding on the Record Date entitles the holder to one consent per share. None of the Proposals will be effective unless the delivery of the written consents complies with Section 228 of the DGCL.

For purposes of this Consent Statement, pursuant to Section 213 of the DGCL, the “Record Date” is the close of business on February 12, 2021 as a result of Mr. Wetherald’s delivery of his signed and dated consent to the Company on that date. However, the Company has set a record date of March 4, 2021, and there is a dispute between Mr. Wetherald and the Company regarding the record date. See “Consent Procedures – Record Date” below on page 21 for additional information. The Company has not yet disclosed the number of shares of Common Stock outstanding as of February 12, 2021 or March 4, 2021. For the Proposals to be effective, properly completed and unrevoked written consents must be delivered to Taronis within 60 days of the first date on which a written consent is so delivered to Taronis. Mr. Wetherald delivered a written consent to Taronis on February 12, 2021. Consequently,

the Concerned Shareholders will need to deliver properly completed and unrevoked written consents to Proposals 1 through 5 from the holders of a majority of the outstanding voting securities of Taronis as of the close of business on the Record Date by no later than April 13, 2021. We intend to set April 9, 2021 as the goal for the submission of written consents.

The Concerned Shareholders reserve the right to submit consents to Taronis at any time within 60 days of the earliest dated written consent delivered to Taronis. See “Consent Procedures” for additional information regarding such procedures.

As of February 12, 2021, the Group (as hereinafter defined) owned an aggregate of 1,113,332 shares of Common Stock, representing approximately 17.9% of the outstanding shares of Common Stock. Each member of the Group intends to consent in favor of the Proposals with respect to all of such shares of Common Stock.

The mailing address of the principal executive offices of Taronis is 24980 N. 83rd Avenue, Suite 100, Peoria, AZ 85383.

The failure to sign and return a consent will have the same effect as voting against the Proposals. Please note that in addition to signing the enclosed WHITE consent card, you must also date it to ensure its validity.

THIS CONSENT SOLICITATION IS BEING MADE BY THE CONCERNED SHAREHOLDERS AND OTHER PARTICIPANTS NAMED HEREIN AND NOT BY OR ON BEHALF OF THE COMPANY. THE CONCERNED SHAREHOLDERS URGE YOU TO SIGN, DATE AND RETURN THE WHITE CONSENT CARD IN FAVOR OF THE PROPOSALS DESCRIBED HEREIN.

If your shares of Common Stock are registered in your own name, please submit your consent to us today by signing, dating and returning the enclosed WHITE consent card in the postage-paid envelope provided.

If you hold your shares in “street” name with a bank, broker firm, dealer, trust company or other nominee, only they can exercise your right to consent with respect to your shares of Common Stock and only upon receipt of your specific instructions. Accordingly, it is critical that you promptly give instructions to consent to the Proposals to your bank, broker firm, dealer, trust company or other nominee. Please follow the instructions to consent provided on the enclosed WHITE consent card. If your bank, broker firm, dealer, trust company or other nominee provides for consent instructions to be delivered to them by telephone or Internet, instructions will be included on the enclosed WHITE consent card. Most brokerage firms do NOT allow consent instructions to be given by telephone or Internet, so it will be important you return your WHITE consent card in the pre-paid return envelope provided. The Concerned Shareholders urge you to confirm in writing your instructions to the person responsible for your account and provide a copy of those instructions to the Concerned Shareholders, c/o Saratoga Proxy Consulting, LLC (“Saratoga”) so that we will be aware of all instructions given and can attempt to ensure that such instructions are followed.

Execution and delivery of a consent by a holder of shares of Common Stock will be presumed to be a consent with respect to all shares held by such holder unless the consent specifies otherwise.

Only holders of voting securities of the Company as of the close of business on the Record Date will be entitled to consent to the Proposals. If you are a shareholder as of the close of business on the Record Date, you will retain your right to consent even if you sell your shares of Common Stock after the Record Date.

IF YOU TAKE NO ACTION, YOU WILL IN EFFECT BE REJECTING THE PROPOSALS. ABSTENTIONS, FAILURES TO CONSENT AND BROKER NON-VOTES WILL HAVE THE SAME EFFECT AS WITHHOLDING CONSENT.

Below is a chronological list of interactions and events leading up to this solicitation.

Mr. Wetherald and Mr. Welo were introduced to Scott Mahoney, CEO of Taronis, by an investment bank over the course of a series of phone calls in August 2020 and September 2020. Following such conversations as well as consultations with representatives of the investment bank, Mr. Wetherald and Mr. Welo elected to invest in Taronis in a private placement that closed on October 14, 2020. Along with Mr. Wetherald and Mr. Welo, other investors purchased Common Stock in the private placement, for aggregate gross proceeds of $10.85 million to the Company. Mr. Wetherald purchased 533,333 shares of Common Stock (40,000,000 shares before the 1-for-75 reverse split effected in December 2020) for $4.0 million, and Mr. Welo purchased 133,333 shares of Common Stock (10,000,000 shares before the 1-for-75 reverse split effected in December 2020) for $1.0 million. The proposed use of proceeds from the offering was the repayment of a convertible note. Mr. Mahoney represented to the investors that he believed repaying the convertible note was the best use of the capital raised.

Pursuant to the common stock purchase agreement dated October 14, 2020, relating to the private placement, the Company agreed that it would, among other things, (i) direct the Nominating and Corporate Governance Committee of the Company’s Board of Directors to add an additional seat to and to nominate Mr. Welo for appointment to the Board, which nomination of the Board would be presented to the Company’s shareholders for approval at its next annual meeting of shareholders, and (ii) expand the Company’s executive team to include a chief operating officer and such other offices or roles as are needed to foster the Company’s growth. On November 5, 2020, the Company appointed Mary Pat Thompson to serve as its Chief Financial Officer and Treasurer, replacing Tyler Wilson in those roles. Mr. Wilson remained a Vice President, General Counsel and Secretary of Taronis. In addition, effective December 1, 2020, the Board elected Mr. Welo and Ms. Thompson to serve as additional directors.

Shortly after joining Taronis, Ms. Thompson concluded that the Company needed substantial additional capital in the near-term, as Taronis still had significant liabilities and capital needs following the October 14, 2020 private placement, including without limitation unfunded 401(k) commitments, required payments related to new corporate headquarters, payments related to prior acquisitions, significant cash needed to bring vendors current, and cash to restock inadequate inventory.

After discussions with Mr. Mahoney regarding the financial needs of Taronis, Mr. Wetherald, Mr. Welo and Ms. Thompson participated in a second private placement pursuant to a common stock purchase agreement dated November 18, 2020. Along with Mr. Wetherald, Mr. Welo and Ms. Thompson, several other investors purchased Common Stock in the second private placement, for aggregate gross proceeds of $12.4 million to the Company. Mr. Wetherald purchased 400,000 shares of Common Stock (30,000,000 shares before the 1-for-75 reverse split effected in December 2020) for $3.0 million, a trust for the benefit of Mr. Welo’s children purchased 33,333 shares of Common Stock (2,500,000 shares before the 1-for-75 reverse split effected in December 2020) for $250,000, and Ms. Thompson purchased 13,333 shares of Common Stock (1,000,000 shares before the 1-for-75 reverse split effected in December 2020) for $100,000.

Mr. Mahoney represented to Mr. Wetherald that the proceeds from the second private placement would provide sufficient capital to fully fund the 401(k) commitments, pay off certain notes, bring vendor terms back to acceptable ranges, and restock inventory, and the amount raised would be sufficient to fund operations for at least six months. However, soon after the closing, Mr. Mahoney shifted a material portion of the cash to an opportunity in Turkey, paid out critical cash necessary to fund operations to satisfy certain obligations related to prior acquisitions and made plans to shift significant funds to a savings instrument at its primary lender in an attempt to procure a term loan from that lender, thereby depriving Taronis of near-term liquidity.

In addition, in December 2020, Mr. Wetherald and Mr. Welo attempted to discern and analyze the unit economics on each individual branch, and following discussions with Mr. Mahoney, Mr. Wetherald and Mr. Welo concluded that Mr. Mahoney did not have a firm grasp on the Company’s domestic industrial gas business or underlying cash needs. In fact, Mr. Wetherald and Mr. Welo concluded that Mr. Mahoney had not adequately modeled or detailed the underlying profitability of the Company’s branches or performed a detailed financial deal case for businesses acquired over his tenure, steps that they considered crucial for the profitable growth of the business.

Also in December 2020, Ms. Thompson became increasingly concerned about what she perceived to be a pattern of aggressive accounting practices beginning as far back as the spin-off of Taronis Fuels from Taronis Technologies, Inc., including (i) a significant transaction between the former parent and the Company, and (ii) the accounting treatment of a non-cash transaction in Turkey. When Ms. Thompson attempted on multiple occasions to discuss these

practices with Robert Dingess, the Chairman of the Board and Chairman of the Audit Committee. Mr. Dingess repeatedly refused to speak with her about these concerns.

During the week of December 14, 2020, Ms. Thompson discovered what she believed to be fraudulent accounting practices at Taronis. Following these discoveries, Ms. Thompson determined to alert the other directors immediately. She initially informed Mr. Welo, whom she perceived to be more independent of Mr. Mahoney compared to the other directors. Ms. Thompson also informed Mr. Wetherald of the allegations. By notice to the other directors on December 17, 2020, Ms. Thompson and Mr. Welo called a special meeting of the Board to be held on December 18, 2020 at 6 pm ET. Mr. Welo spoke with several of the Company’s other independent directors in advance of the special meeting, with counsel retained by Mr. Wetherald joining some of the calls, to review the allegations.

Before the special meeting of the Board on December 18, 2020, Mr. Mahoney suspended Ms. Thompson indefinitely as Chief Financial Officer and Treasurer. In addition, Robert Dingess sent a letter to Mr. Welo threatening an investigation into alleged breaches of duties of confidentiality and loyalty by Mr. Welo.

The special meeting of the Board of Directors was held at 6 pm ET on December 18, 2020. Instead of providing a hearing on the allegations of fraud and taking the precautionary step of suspending Mr. Mahoney until a full investigation was completed to prevent further potential damages to Taronis, Robert Dingess, with the supporting votes of Scott Mahoney, Kevin Pollack, William Staunton, and Peter Molloy, condoned Mr. Mahoney’s indefinite suspension of Ms. Thompson as Chief Financial Officer and Treasurer. Mr. Welo and Ms. Thompson were then greatly surprised by Robert Dingess, with the supporting votes of Scott Mahoney, Kevin Pollack, William Staunton, and Peter Molloy, naming Mr. Mahoney as the interim CFO to complement his ongoing position of CEO. In protest to this response by Robert Dingess, Scott Mahoney, Kevin Pollack, William Staunton, and Peter Molloy, both Mr. Welo and Ms. Thompson resigned from the Taronis Fuels Board of Directors on December 20, 2020.

On February 12, 2021, the Concerned Shareholders filed a preliminary consent statement with the Securities and Exchange Commission.

Also on February 12, 2021, Mr. Wetherald delivered a signed and dated consent to the Company, and Mr. Wetherald also delivered to the Secretary of Taronis written notice of the Proposals and a request for the Board to fix a record date for determining shareholders entitled to give their written consent to the Proposals on or before February 22, 2021. However, after delivering the request for the Board to fix a record date, the Concerned Shareholders determined that the delivery by Mr. Wetherald of his written consent established February 12, 2021 as the record date pursuant to Section 213 of the DGCL absent any provision in the Company’s certificate of incorporation or bylaws that would permit the Board to set a different record date.

On February 16, 2021, the Concerned Shareholders filed a Schedule 13D with the Securities and Exchange Commission.

Also on February 16, 2021, the Concerned Shareholders issued a press release regarding the preliminary consent statement.

Also on February 16, 2021, Mr. Wetherald sent a letter to the Company demanding a copy of a list of shareholders and other related records of the Company under Section 220 of the Delaware General Corporation Law. On February 23, 2021, counsel for the Company responded to Mr. Wetherald’s demand letter, asking for clarification regarding the demands therein and requiring Mr. Wetherald to enter into a confidentiality agreement as a condition to delivery of the requested records. On March 1, 2021, counsel for Mr. Wetherald responded to the requests for clarification and provided a form of confidentiality agreement to counsel for the Company. On March 3, 2021, counsels for Mr. Wetherald and the Company held a telephone conference to discuss the Company’s response to the demand letter, among other things. On March 4, 2021, counsel for the Company responded to the March 1 letter and provided a revised form of confidentiality agreement. Also, in the March 4, 2021 letter, counsel for the Company indicated that it would take the Company seven to ten business days to obtain the requested records. Counsel for Mr. Wetherald and counsel for the Company held a telephone conference on the evening of March 4, 2021, during which counsel for Mr. Wetherald indicated seven to ten business days was an unreasonably long response period, and counsel for the Company indicated that the Company would provide the materials once available, and that he would confer with the Company regarding whether the Company had made requests for the records.

On February 23, 2021, the Company issued a press release that disclosed, among other things, that the Board had established March 4, 2021 as the record date for the consent solicitation.

On February 25, 2021, the Group filed a revised preliminary consent statement with the Securities and Exchange Commission. Also on February 25, 2021, Mr. Wetherald, Mr. Welo and Ms. Thompson filed an amended Schedule 13D with the Securities and Exchange Commission.

On February 26, 2021, the Company filed a preliminary revocation statement with the Securities and Exchange Commission.

On March 2, 2021, counsel for Mr. Wetherald sent a letter to the Taronis Board of Directors regarding the record date for the consent solicitation and asking the Company to disclose recent unregistered sales of shares of Common Stock.

On March 3, 2021, counsel for Mr. Wetherald and counsel for the Company discussed the absence of disclosure of the Company’s share issuances in February 2021 and the record date for the consent solicitation.

Also on March 3, 2021, the Company disclosed the issuances of 587,334 shares of Common Stock in a private placement that closed March 3, 2021 and 410,000 shares for various other reasons on February 25, 2021 and February 26, 2021. The Company also disclosed the adoption of a shareholders rights plan.

On March 4, 2021, the Group filed a revised preliminary consent statement with the Securities and Exchange Commission.

Also on March 4, 2021, the Company disclosed its reduction of the exercise price of outstanding warrants to purchase 394,068 shares of Common Stock from $6.75 per share to $3.00 per share, the exercise of those amended warrants, and the issuance of additional warrants to purchase 394,068 shares of Common Stock at $3.00 per share. The form of exercise price reset agreement requires the exercising warrant holders to hold the resulting shares of Common Stock through the earlier of May 31, 2021 or the failure of this consent solicitation.

On March 5, 2021, Mr. Wetherald filed a lawsuit in the Delaware Court of Chancery seeking, among other relief:

On March 5, 2021, the Group filed this definitive consent statement with the Securities and Exchange Commission.

The following are some of the questions you, as a shareholder, may have and answers to those questions. The following is not meant to be a substitute for the information contained in the remainder of this Consent Statement, and the information contained below is qualified by the more detailed descriptions and explanations contained elsewhere in this Consent Statement. We urge you to carefully read this entire Consent Statement prior to making any decision on whether to grant any consent hereunder.

The Concerned Shareholders and other members of the Group (as hereinafter defined) are making this solicitation.

We are asking you to consent to five corporate actions: (1) the Bylaw Restoration Proposal, (2) the Declassification Proposal, (3) the Removal by Majority Vote Proposal, (4) the Removal Proposal and (5) the Election Proposal. Each of these Proposals is more fully described below.

The Concerned Shareholders are asking you to consent to the Proposals in order to reconstitute the Board through the removal of all five of Taronis’ current directors and any appointees to the Board prior to the effectiveness of the Proposals and the election of our five Nominees.

We have determined it is in the best interest of all shareholders to launch a consent solicitation to reconstitute the Board in as quick a manner as possible to prevent any further harm to the Company and its shareholders. We believe significant changes to the composition of the Board are necessary to ensure that management is held accountable for the significant financial mismanagement and share price underperformance at Taronis, and to provide critical oversight of the Company’s strategy and management. We believe this consent solicitation is the best option we have available as shareholders to reject the status quo and realize long-term shareholder value. Our highly-qualified Nominees are fully committed to improving the Company’s performance, corporate governance practices and increasing value for the benefit of all shareholders. We believe that removing the current directors and replacing them with our Nominees will give shareholders the best chance of turning around the Company’s underperformance and addressing its troubling corporate governance practices. In our view, Taronis shareholders can no longer afford to trust that the current Board will look after their best interests.

We are asking you to elect each of Thomas Wetherald, Tobias Welo, Sergey Vasnetsov, Mary Pat Thompson and Andrew McCormick as a director of Taronis. Collectively, these Nominees have demonstrated skills and experience in operations, finance, corporate governance and transactions across a variety of sectors and directly relevant experience to a renewable fuel and power generation company such as Taronis. The business experience of our highly qualified Nominees is set forth in this Consent Statement under the section entitled “The Nominees,” which we urge you to read.

Shareholders of voting securities at the close of business on the Record Date have the right to consent to the Proposals. For purposes of this Consent Statement, pursuant to Section 213 of the DGCL, the Concerned Shareholders believe the “Record Date” is the close of business on February 12, 2021 as a result of Mr. Wetherald’s delivery of his signed and dated consent to the Company on that date. However, the Company has set a record date of March 4, 2021, and there is a dispute between Mr. Wetherald and the Company regarding the record date. See “Consent Procedures—Record Date” below on page 21 for additional information. Each share of Common Stock outstanding on the Record Date entitles the holder to one consent per share. The Company has not yet disclosed the number of shares of Common Stock outstanding as of February 12, 2021 or March 4, 2021.

We urge you to submit your consent as soon as possible. In order for our Proposals to be adopted, the Company must receive written unrevoked consents signed by a sufficient number of shareholders to adopt the Proposals within 60 calendar days of the date of the earliest dated consent delivered to the Company. Mr. Wetherald delivered a written

consent to the Company on February 12, 2021. Consequently, the Concerned Shareholders will need to deliver properly completed and unrevoked written consents to Proposals 1 through 5 from the holders of a majority of the outstanding voting securities of Taronis as of the close of business on the Record Date by no later than April 13, 2021. Nevertheless, we intend to set April 9, 2021 as the goal for submission of written consents.

WE URGE YOU TO ACT AS SOON AS POSSIBLE TO ENSURE THAT YOUR CONSENT WILL COUNT.

Proposals 1 through 4 will be adopted and become effective when properly completed, unrevoked consents are signed by the holders of a majority of the outstanding voting securities as of the close of business on the Record Date, provided that such consents are delivered to the Company within 60 calendar days of the date of the earliest dated consent delivered to the Company. For Proposal 5 (the Election Proposal), directors are elected by a plurality of the votes cast under the Company’s Bylaws, which means that the individuals receiving the highest number of consents in favor of their election are elected up to the number of directorships to be filled; however, the election of directors by written consent requires the affirmative consent of the holders of a majority of the outstanding voting securities as of the close of business on the Record Date, provided that such consents are delivered to the Company within 60 calendar days of the date of the earliest dated consent delivered to the Company.

The Company has not yet disclosed the number of shares of Common Stock outstanding as of the Record Date, each of which is entitled to one consent on each Proposal.

If your shares of Common Stock are registered in your own name, please submit your consent to us by signing, dating and returning the enclosed WHITE consent card in the postage-paid envelope provided.

If you hold your shares in “street” name with a bank, broker firm, dealer, trust company or other nominee, only they can exercise your right to consent with respect to your shares of Common Stock and only upon receipt of your specific instructions. Accordingly, it is critical that you promptly give instructions to consent to the Proposals to your bank, broker firm, dealer, trust company or other nominee. Please follow the instructions to consent provided on the enclosed WHITE consent card. If your bank, broker firm, dealer, trust company or other nominee provides for consent instructions to be delivered to them by telephone or Internet, instructions will be included on the enclosed WHITE consent card. Most brokerage firms do NOT allow consent instructions to be given by telephone or Internet, so it will be important you return your WHITE consent card in the pre-paid return envelope provided. We urge you to confirm in writing your instructions to the person responsible for your account and provide a copy of those instructions to the Concerned Shareholders, c/o Saratoga so that we will be aware of all instructions given and can attempt to ensure that such instructions are followed.

Please call our solicitor Saratoga toll-free at: (888) 368-0379 (Shareholders). Banks and brokers call collect at: (212) 257-1311.

We are significant shareholders of Taronis who firmly believe that the Company has the potential to be a leader in the renewable fuel and power generation space. Unfortunately, however, Taronis shareholders have suffered deep and sustained diminution in share value despite this potential, in our view, because of management’s chronic misallocation of capital, which we believe has been enabled by a complicit Board of Directors.

We believe shareholders have been systemically disregarded and deprioritized, evidenced by the Company’s negative total shareholder returns and dramatic stock underperformance. Proceeds from the third quarter 2020 private placements were utilized to finance unnecessary new corporate headquarters and furniture, pursue international expansion opportunities that we believe have little chance of success, as well as pay management and directors excessive cash compensation. We believe the proceeds should have been used to invest accretively in the Company’s best-performing industrial gas branches that appear starved of inventory and necessary infrastructure.

Taronis Fuels’ share price is down nearly 75% over the past year. It is important to note that Mr. Mahoney and a majority of the members of the current Taronis Fuels Board of Directors also presided over significant value destruction at Taronis Technologies prior to the spin-off of Taronis Fuels. During the twenty months between the time of Mr. Mahoney’s appointment as CEO of Taronis Technologies in November 2018 through July 2020, when Taronis Technologies was delisted and went dark, Taronis Technologies shares lost 99.7% of their value. Four of the five incumbent Taronis Fuels directors — Chairman Robert Dingess, CEO Scott Mahoney, William Staunton, and Kevin Pollack — served on the Board of Directors at Taronis Technologies. From April 2013, when Robert Dingess and William Staunton joined Kevin Pollack on Taronis Technologies’ Board, through July 2020, when Taronis Technologies was delisted, the stock price dropped 99.9996%, from $20,700 per share (adjusted for four reverse stock splits ultimately consolidating 15,000 shares into one share) to $0.08 per share.

While Taronis Technologies was failing, Taronis Technologies paid $136,250 in cash to Robert Dingess, $99,750 in cash to William Staunton and $115,625 in cash to Kevin Pollack for board fees. None of these directors were compensated with equity compensation in 2018. As part of the spin-off of Taronis Fuels from Taronis Technologies, Messrs. Dingess, Staunton and Pollack adopted a rich compensation policy for themselves, providing cash compensation of $190,208 to Mr. Dingess, $148,458 to Mr. Staunton, and $163,958 to Mr. Pollack in 2019. This trend continued in 2020, with Taronis Fuels paying $128,523 in cash to Robert Dingess, $127,846 in cash to William Staunton, $132,303 in cash to Kevin Pollack, and $101,466 in cash to new director Peter Molloy. None of these directors were compensated with equity compensation in 2020. In our view, this represents egregious compensation for a micro-cap company that has been going in the wrong direction, is continually facing liquidity issues and has been unable to fully stock its own shelves with inventory. We also believe the excessive compensation has left the Board complicit and unwilling to challenge management.

The Board has also richly rewarded management during this period, paying $500,000 in salary to Scott Mahoney in 2020, plus an additional $369,000 in stock awards, $225,000 under the Company’s executive bonus plan, and $48,077 for accrued earned paid time off, for a total of $1,142,077 in 2020. Tyler Wilson received $275,000 in salary in 2020, plus $275,000 under the Company’s executive bonus plan (half paid in shares in January 2021) and $37,019 for accrued earned paid time off. Further, Scott Mahoney and Tyler Wilson are entitled to bonuses of up to 300% of their annual base salaries. We believe that the Board must be reconstituted immediately to end this outflow of precious capital to a management team that has failed to create value for the Company’s shareholders.

Peter Molloy joined the Taronis Fuels Board on August 15, 2019. While Mr. Molloy was not a director of Taronis Technologies, Mr. Molloy is a co-founder and executive director of Tarus Therapeutics, Inc., in which Taronis Technologies made a substantial investment. Based on the latest publicly available information, we believe that Taronis Technologies remains a substantial shareholder of Tarus Therapeutics and Mr. Mahoney remains the CEO of Taronis Technologies. We believe this relationship impairs Mr. Molloy’s independence from management.

We believe Taronis Fuels’ incumbent independent directors are plagued with numerous shortcomings, including:

In addition to performance issues, we are concerned about governance of the Company. Many of the incumbent directors have served with each other for years. Kevin Pollack joined the Taronis Technologies Board in June 2012, followed by Robert Dingess and William Staunton in April 2013. The Company has never held an annual meeting of shareholders in the 14 months following the completion of its spin-off from Taronis Technologies in December 2019. We are soliciting consents in lieu of an annual meeting of shareholders to elect directors in part because the Board has not provided another avenue towards electing new directors. The incumbent Board has also approved governance practices, such as a classified board of directors and super-majority requirements to remove directors, that we believe constitute poor governance practices.

As a result of the continuing mismanagement of the Company, we believe we are left with no choice but to seek the removal of existing Board members and the election of our five Nominees, who possess the requisite skills and experience to drive the Company forward and bring much-needed and long overdue shareholder representation in the boardroom.

We believe Taronis needs a Board that represents the shareholders, holds management accountable and helps guide the Company towards a path to success. We believe a reconstituted Board will put Taronis on the correct development trajectory, pursue financing that serves the best interest of shareholders, establish and adhere to financial, accounting and corporate governance best practices and assure shareholders that the Board is operating with their best interests in mind. The shareholders of Taronis deserve a well-functioning Board that maintains a vested interest in the success of the Company. Our Nominees possess the requisite skills and expertise to help the Company fully realize its potential value as a leader in renewable energy and power generation.