UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
SCHEDULE
14A
Consent
Revocation Statement Pursuant To Section 14(a) of the Securities Exchange Act of 1934
Filed
by the Registrant [X]
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Filed
by a Party other than the Registrant [ ]
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Check
the appropriate box:
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[ ]
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Preliminary
Consent Revocation Statement
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[ ]
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Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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[ ]
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Definitive
Consent Revocation Statement
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[X]
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Definitive
Additional Materials
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[ ]
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Soliciting
Material under §240.14a-12
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TARONIS
FUELS, INC.
(Name
of Registrant as Specified in its Charter)
(Name
of Person(s) Filing Consent Revocation Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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[X]
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No
fee required.
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[ ]
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title
of each class of securities to which transaction applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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Fee
paid previously with preliminary materials.
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[ ]
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Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date
of its filing.
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(1)
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Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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On
March 10, 2021, Taronis Fuels, Inc. issued the following press release:
TARONIS
FUELS FILES DEFINITIVE CONSENT REVOCATION MATERIALS
AND SENDS LETTER TO SHAREHOLDERS
Notes
that Activist Group Is Trying to Take Over Taronis Without Paying for It
The
Company Continues to Take Steps to Improve Cashflow and Create Shareholder Value
Taronis
Board Urges Shareholders to Sign GREEN Consent Revocation Card and NOT Return any WHITE Consent
Solicitation Cards Received from
the Activist Group
Peoria,
AZ, March 10, 2021 – Taronis Fuels, Inc. (“Taronis” or “the Company”) (OTCQB:TRNF), a global
producer of renewable and socially responsible fuel products, today announced that it has filed a definitive consent revocation
statement with the U.S. Securities and Exchange Commission and sent a letter to Taronis shareholders. The letter outlines Taronis’s
response to the consent solicitation initiated by Thomas Wetherald and Tobias Welo (“Wetherald/Welo”) who are seeking
to remove, without cause, all five members of the Company’s Board of Directors. Wetherald and Welo have been joined by Mary
Pat Thompson, Sergey Vesnetsov and Andrew McCormick, who, together with Wetherald and Welo, comprise the “Activist Group”.
The
Board of Directors of Taronis Fuels urges shareholders to sign and return Taronis’s GREEN Consent Revocation
Card and disregard any white consent cards received from Wetherald/Welo or the Activist Group.
The
letter sent to shareholders highlights the following points:
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The
Activist Group is seeking to remove the entire Board of Directors of Taronis in an attempted
no-premium takeover. They are trying to take over the Company – by gaining control
of your Board – without paying for it.
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●
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The
Activist Group has not put forth any detailed plan for Taronis, and its proposed nominees
do not have any apparent experience in the Company’s industry, business, or technology.
If successful, the Activist Group would potentially stall any progress made or even reverse
it.
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The
Activist Group has a disturbing track record of disruptive, self-serving actions.
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Ms.
Thompson’s short tenure as CFO, and her abrupt resignation that precipitated the
departure of other finance executives she had hired, disrupted the Company’s business
and fundraising efforts at a critical time in the Company’s development.
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The
Company has made significant progress toward improving cash flow and creating shareholder
value, including reducing operating expenses, attracting several critical new hires in
staffing across multiple retail markets, and executing on the Board and management’s
plan to expand its whole industrial gas operations into California and Arizona.
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Taronis
expects to be cash flow positive in the second quarter.
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The
Taronis Board is committed to serving the interests of ALL shareholders and to considering
all avenues to deliver enhanced shareholder value.
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The
full text of the letter is as follows:
March
9, 2021
Dear
Taronis Shareholders,
On
behalf of the Board of Directors (the “Board”), we are writing you to ask for your support in this contest over the
future direction of Taronis Fuels, Inc. (“Taronis” or the “Company”). Despite the significant progress
your Board has made toward improving cash flow and creating shareholder value from the Company’s sustainable gas technology
and products, a group of shareholders is attempting to take control of Taronis. We urge you to support the Board of Taronis Fuels
in this contest for control of the Company by voting the GREEN Consent Revocation Card.
On
February 12, 2021, two shareholders, Thomas Wetherald and Tobias Welo (together, “Wetherald and Welo”), commenced
a process seeking to remove without cause all five members of your Board of the Company and replace them with five of their own
nominees. Wetherald and Welo have been joined by Mary Pat Thompson, Sergey Vasnetsov and Andrew McCormick (together with Wetherald
and Welo, the “Activist Group”). The Activist Group is trying to take over the Company without paying for it, in other
words, without paying a control premium. The Activist Group has also sought your consent to certain amendments to the Company’s
Amended and Restated Bylaws (the “Bylaws”) which, if approved, would facilitate the removal of all five members of
your Board. The Board believes you should oppose these efforts by the Activist Group by voting the GREEN Consent Revocation
Card.
If
the Activist Group’s proposals are approved by you, their handpicked candidates will take ALL of the seats of your five-member
Board and gain control of the Company – without paying a premium.
Your
Board believes that THE ACTIVIST GROUP’S proposals are not in the best
interests of the Company’s shareholders
The
Activist Group has not put forth any detailed plan for Taronis and its proposed Board nominees do not have any apparent
experience in the Company’s industry, business, or technology.
In
addition, as the Company has previously disclosed, conduct by Tobias Welo and Mary Pat Thompson, two of the five Board nominees
proposed by the Activist Group (and two members of the Activist Group), prompted an investigation by a special committee of independent
members of the Board into allegations of wrongdoing, including breach of their fiduciary duties to you and to the Company when
they previously served on the Board from November 2020 to December 2020, and when Ms. Thompson previously served as the Company’s
Chief Financial Officer. The special committee engaged independent outside counsel to conduct an investigation and review evidence
of possible fiduciary duty breaches by these nominees, which investigation concluded on January 26, 2021. Ms. Thompson’s
short tenure as CFO – and her abrupt resignation that precipitated the departure of other finance executives she hired –
disrupted the Company’s business and fundraising efforts at a critical time in the Company’s development. In addition,
the investigation into possible breaches of fiduciary duties by Ms. Thompson and Mr. Welo caused the Company, the Board, management,
and Company employees to unnecessarily expend significant time and financial resources.
On
one occasion, Mr. Welo threatened independent members of the Board, stating that if they did not vote in favor of a motion by
Welo to remove senior management, he and Ms. Thompson would make a “noisy” and “loud” exit from the Board
– a threat on which they made good. Their disruptive resignations in December 2020 required the Company to file resignation
letters with the SEC containing allegations of fraudulent accounting by senior management, causing a significant decline in the
Company’s share price and destruction of shareholder value. The Activist Group’s self-serving description of events
neglects to disclose the Board’s response to Ms. Thompson and Mr. Welo’s allegations. The Board immediately commenced
an independent investigation of those allegations, assisted by independent outside counsel and an independent registered public
accounting firm.
The
Activist Group initiated its consent solicitation seeking to replace your entire Board without any attempt to communicate with
your Board or the Company following the resignations of Mr. Welo and Ms. Thompson. Despite the Activist Group’s less than
constructive behavior, your Board sought to open discussions in the interest of finding a less costly resolution, only to be told
that the Activist Group would not agree to any solution not involving the replacement of all five members of the Board.
The
negative impact of Ms. Thompson and Mr. Welo’s mere six weeks of service on the Board, and the recklessness with which the
Activist Group is seeking nothing short of replacing your entire Board without first attempting to communicate concerns and find
a less costly solution, is clear. If elected, the nominees put forth by the Activist Group would have full control of the Board,
and, although they would be subject to their fiduciary duties under Delaware law, they would be in a position to advance their
specific interests, which may not be aligned with the interests of all of our shareholders.
YOUR
BOARD SERVES THE INTERESTS OF ALL SHAREHOLDERS
Your
Board, which consists of four highly-qualified and independent directors along with CEO Scott Mahoney, has sought to engage in
a constructive dialogue with the Activist Group to avoid an expensive and disruptive proxy contest, and has made clear its interest
in reaching a mutually agreeable settlement. However, as of the time of this filing, the only response from the Activist Group
to your Board’s outreach has been that they would not accept a solution that did not include replacement of all five members
of your Board to gain control over the Company, notwithstanding the consequences to shareholder value.
We
believe that your interests will be served best if your current Board and management continue to pursue the Company’s growth
strategy and business plan to preserve shareholder value. Several of the Company’s key employees, including its Chief Technology
Officer, MagneGas business development specialists, and regional sales executives, have expressed their unwillingness to remain
with the Company in the event the Activist Group’s proposals are successful. The Company believes that the loss of any of
these key employees could materially and adversely impact our ability to generate revenues and execute our business strategy.
Without these key employees, who believe in the Company’s current growth strategy and business plan, we believe the Company
would have limited institutional knowledge and resources which would harm its future operational success and potential.
Further,
we believe based on the prior actions and statements made by certain of the Activist Group nominees that they intend to materially
alter the Company’s strategic direction, including curtailing investment in our proprietary technology, MagneGas (which
we believe is a market differentiator for the Company and a critical wedge product with the potential to drive revenue growth
and market share gains through our network of retail stores and regional distributors), and shrinking the Company’s sales
network and infrastructure. For example, during a December 16, 2020 meeting with a potential strategic consultant introduced by
Mr. Welo, Mr. Welo and Ms. Thompson were highly supportive of the consultant’s proposals to deemphasize investment in our
proprietary technology and for the potential closure of a number of our retail locations. Additionally, shortly after her appointment
as Chief Financial Officer, it became clear, based on Ms. Thompson’s accounting-related inquiries and discussions with management
and the accounting and finance staff, that she intended to effect workforce reductions that would have included termination of
key MagneGas production personnel and salary cuts for virtually all employees with the technical capabilities for our intellectual
property, including our MagneGas product. During earlier discussions regarding Company strategy in November 2020, Mr. Wetherald
presented to Company representatives a plan that promoted acquisitions and a reduction of the Company’s sales network and
infrastructure through store closings.
We
urge you to defend against the Activist Group seizing control of the company and disrupting its positive momentum.
the
Company has made significant progress TOWARD IMPROVING CASH FLOW AND
creatING shareholder value
Under
the guidance of your current Board, the Company has implemented the following actions to pursue its growth strategy and business
plan to create shareholder value:
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First,
the Company has aggressively reduced its operating expenses. Over the past seven weeks, the Company has reduced its annual
payroll and benefits expenses by approximately $8 million, or 40%. The Company also completed several critical capital expenditure
upgrades that should yield an additional $1 million in annual savings.
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Second,
the Company has successfully attracted several critical new hires in staffing across multiple retail markets, which is
expected to have a significant impact on projected revenue growth in 2021.
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Third,
the Company is executing on its plan to expand its whole industrial gas operations into California and Arizona. Retail
sales are expected to increase by more than 20% in 2021, and whole sales revenues are expected to increase by almost 50%.
Whole sales are already on a pace to increase by in excess of 20% based on accomplishments already completed in the first
two months of 2021.
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All
of these changes are projected to make the Company cash flow positive in the second quarter, and your Board remains committed
to considering all avenues to deliver enhanced shareholder value.
SUBMIT
THE GREEN CONSENT REVOCATION CARD TODAY
For
the foregoing reasons, we strongly urge you to support your Board and reject the Activist Group’s efforts to deliver control
of the Company to a new board of directors consisting of their handpicked director candidates.
This
Consent Revocation Statement contains important information as to why and how you should submit the accompanying GREEN
Consent Revocation Card to revoke any white consent card that you may have previously returned to the Activist Group. We urge
you to read this Consent Revocation Statement carefully.
Your
experienced and qualified Board and management team continue to be focused on delivering value to our shareholders. You
can defend against the Activist Group’s efforts to take control of the Company through the following steps:
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1.
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Do
not sign the Activist Group’s white consent card and do not return the white consent card in the
postage-paid envelope;
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2.
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If
you have signed the Activist Group’s white consent card, revoke that consent by signing, dating and returning the enclosed
GREEN Consent Revocation Card immediately in the pre-paid envelope provided; and
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3.
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Even
if you have not signed the Activist Group’s white consent card, you can show your support for your Board and fellow
shareholders by signing, dating and returning the enclosed GREEN Consent Revocation Card in the pre-paid envelope provided.
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Regardless
of the number of shares of common stock of Taronis that you own, your revocation of consent is critically important. Please act
today to help protect the interests of ALL shareholders. We greatly appreciate your cooperation and participation.
If
you have any questions regarding this Consent Revocation Statement or about submitting your GREEN Consent Revocation Card,
or otherwise require assistance, please contact:
MacKenzie
Partners, Inc.
1407
Broadway, 27th Floor
New
York, New York 10018
(212)
929-5500 or (800) 322-2885
Email:
TRNF@mackenziepartners.com
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Sincerely,
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The
Board of Directors
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Taronis
Fuels, Inc.
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Important
Additional Information and Where to Find It
In
connection with the consent solicitation initiated by Wetherald/Welo and the Activist Group, the Company has filed a definitive
consent revocation statement and accompanying GREEN consent revocation card and other relevant documents with the Securities and
Exchange Commission (the “SEC”), which will also be mailed to Taronis’s shareholders. STOCKHOLDERS ARE STRONGLY
ENCOURAGED TO READ THE COMPANY’S DEFINITIVE CONSENT REVOCATION STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO),
ACCOMPANYING CONSENT REVOCATION CARD AND ALL OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME
AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION. Stockholders may obtain a free copy of the consent revocation statement,
any amendments or supplements to the consent revocation statement and other documents that the Company files with the SEC at the
SEC’s website at www.sec.gov or the Company’s website at http://www.taronisfuels.com/investors/overview/ as soon as
reasonably practicable after such materials are electronically filed with, or furnished to, the SEC.
Certain
Information Regarding Participants to the Solicitation
The
Company, its directors and certain of its executive officers may be deemed participants in the solicitation of consent revocations
from the Company’s stockholders. Information regarding the participants of Taronis in the solicitation of consent revocations
and a description of their direct and indirect interests, by security holdings or otherwise, is contained in Taronis’s definitive
consent revocation statement filed with the SEC on March 10, 2021. Other information about the directors and executive officers
of Taronis is set forth in the Company’s Annual Report on Form 10-K filed with SEC on May 22, 2020. These documents can
be found on the SEC’s website at www.sec.gov or the Company’s website at http://www.taronisfuels.com/investors/sec-overview/all-sec-filings/.
Forward-Looking
Statements
This
press release contains forward-looking information about TRNF within the meaning of the Private Securities Litigation Reform Act
of 1995 and other federal securities laws. Any statements contained herein which do not describe historical facts, including,
among others, the belief that any corporate action taken must be for the benefit of all Company shareholders and must be rooted
in a strong understanding of the industrial gas and welding supply industry, TRNF’s business and its important milestones
ahead, beliefs about TRNF’s strategy and long-term value creation, beliefs about TRNF’s strategic plan and implementation
thereof, beliefs about TRNF’s financial profile and its Board and expectations as to and beliefs about the consent solicitation
are forward-looking statements which involve risks and uncertainties that could cause actual results to differ materially from
those discussed in such forward-looking statements.
Such
risks and uncertainties include, among others, the impact and results of the consent solicitation and other activism activities
by Wetherald/Welo, the Activist Group and/or other activist investors; as well as those risks identified in TRNF’s filings
with the SEC, including its Annual Report on Form 10-K for the year ended December 31, 2019, its Quarterly Reports on Form 10-Q
for the quarters ended March 31, 2019 and June 30, 2019 and subsequent filings with the SEC which are available at the SEC’s
website at www.sec.gov. Any such risks and uncertainties could materially and adversely affect TRNF’s results of operations,
its profitability and its cash flows, which would, in turn, have a significant and adverse impact on TRNF’s stock price.
TRNF cautions you not to place undue reliance on any forward-looking statements, which speak only as of the date they are made.
TRNF disclaims any obligation to publicly update or revise any such statements to reflect any change in expectations or in events,
conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will
differ from those set forth in the forward-looking statements.
About
TRNF
Taronis
Fuels, Inc. is a global producer of renewable and socially responsible fuel products. Our goal is to deliver environmentally sustainable,
technology driven alternatives to traditional fossil fuel and carbon-based economy products. We believe our products offer a vastly
cleaner solution to legacy acetylene and propane alternatives.
Taronis
is also dedicated to providing fundamentally safer solutions to meet the industrial, commercial and residential needs of tomorrow’s
global economy. Our products have been rigorously tested and independently validated by global gas authorities as vastly safer
than acetylene, the most dangerous industrial gas in use today.
Lastly,
we strive to deliver products that offer significant function superiority at a reduced cost to the end consumer. Through these
efforts, we support 9 of the 17 United Nations Sustainable Development Goals. For more information, please visit our website at
www.taronisfuels.com.
Taronis
Fuels Contacts:
Investors:
Taronis Fuels
ir@taronisfuels.com
or
MacKenzie
Partners, Inc.
Bob
Marese/Larry Schimmel
212-929-5500
Proxy@mackenziepartners.com
Media:
Reevemark
Paul
Caminiti/Pam Greene
(212)
433-4600
Taronis@reevemark.com
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