AND EXCHANGE COMMISSION
TO SECTION 13 OR 15(d) OF THE
EXCHANGE ACT OF 1934
of Report (Date of earliest event reported): June 3,
name of registrant as specified in its charter)
or other jurisdiction
N. 83rd Avenue, Suite 100
of principal executive offices) (Zip Code)
telephone number, including area code:
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2.
communications pursuant to Rule 425 under the Securities Act (17
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
registered pursuant to Section 12(b) of the Act:
of each class
of each exchange on which registered
by check mark whether the registrant is an emerging growth company
as defined in Rule 405 of the Securities Act of 1933 (§230.405 of
this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934
(§240.12b-2 of this chapter).
growth company [X]
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act.
1.01 Entry into a Material Definitive Agreement.
June 4, 2021, Taronis Fuels, Inc., a Delaware corporation (the
“Company”), entered into common stock purchase agreements (the
“Purchase Agreements”) with certain institutional and accredited
investors relating to the sale of 5,498,668 shares of the Company’s
common stock for gross proceeds to the Company of approximately
$16.5 million (the “Private Placement”). The Private Placement
closed on June 4, 2021. The Private Placement was completed at a
fixed price of $3.00 per share of common stock, with no warrants
issued to investors. The Company entered into customary
registration rights agreements with the investors at the closing
(the “Registration Rights Agreements”).
deducting the placement agent cash fees and the Company’s estimated
offering expenses, the Company estimates the net proceeds from the
Private Placement will be approximately $15.7 million. The Company
intends to use the net proceeds from the Private Placement for
working capital and general corporate purposes, including reducing
debt obligations and pursuing several important growth
directors, executive officers and other employees of the Company
participated in the Private Placement, purchasing approximately
$1.3 million of common stock in the aggregate. The participation of
these directors, executive officers and other employees in the
Private Placement was disclosed to, and approved by, the Company’s
Board of Directors (the “Board”).
foregoing descriptions of the Purchase Agreements and Registration
Rights Agreements are not complete and are qualified in their
entirety by the full text of the forms of Purchase Agreement and
Registration Rights Agreement, copies of which are attached to this
Current Report on Form 8-K as Exhibits 10.1 and 10.2, respectively,
and incorporated by reference herein.
3.02 Unregistered Sales of Equity Securities.
disclosure set forth under Item 1.01 is incorporated by reference
into this Item 3.02.
June 4, 2021, the Company issued 5,498,668 shares of common stock
upon the closing of the Private Placement. In addition, the Company
issued (i) 206,200 shares of common stock to Kingswood Capital
Markets, division of Benchmark Investments, Inc. (“Kingswood”), as
consideration for Kingswood acting as placement agent in connection
with the Private Placement, and (ii) 1,416,668 shares of common
stock upon the automatic conversion of $4.25 million of senior
convertible promissory notes, which notes were described in the
Company’s Current Report on Form 8-K filed with the Securities and
Exchange Commission (the “SEC”) on May 4, 2021. All such shares of
common stock were issued pursuant to the exemption from the
registration requirements of the Securities Act of 1933, as amended
(the “Securities Act”), for transactions by an issuer not involving
any public offering under Section 4(a)(2) of the Securities Act
and/or Regulation D promulgated thereunder.
5.02 Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
June 3, 2021, the Company appointed Kevin Foti as the Company’s
President and Chief Executive Officer, effective June 14, 2021, and
as a member of the Board, effective immediately following the
closing of the Private Placement on June 4, 2021. Tobias Welo, who
has served as the Company’s interim President and Chief Executive
Officer since April 10, 2021, will step down from his duties as
interim President and Chief Executive Officer on June 14, 2021 and
continue as Chairman of the Board.
Foti, 61, has over 30 years of experience in the industrial gas
business with Praxair, Inc. / Linde PLC, where he most recently
served as President of the U.S. industrial gas merchant and on-site
business from September 2015 through December 2019. Prior to that
role, Mr. Foti was President of NuCO2 for two years, which Praxair
acquired in 2013. Mr. Foti has previously served in roles spanning
sales engineer, customer service manager, operations manager, and
connection with Mr. Foti’s appointment as President and Chief
Executive Officer, he entered into an employment agreement (the
“Foti Employment Agreement”) with the Company on June 3, 2021,
which becomes effective June 14, 2021. The Foti Employment
Agreement provides for, among other things, an annual base salary
of $325,000, participation in the Company’s annual performance
incentive programs, eligibility for equity awards under the
Company’s equity incentive plans, and participation in the
Company’s benefit plans. In connection with Mr. Foti’s appointment
as President and Chief Executive Officer, the Board approved a
pro-rated equity grant for fiscal 2021 valued at $212,215 and an
initial on-boarding grant valued at $650,000, in each case split
evenly between stock options and restricted stock units. The stock
option awards have a three-year vesting schedule and a ten-year
term, while the restricted stock units vest over three
Foti Employment Agreement also provides that upon a termination by
the Company other than for “cause” or if Mr. Foti resigns for “good
reason,” the Company will pay Mr. Foti an amount equal to 12 months
of base salary, or 18 months of base salary if the termination is
in connection with a “change of control,” plus in each case
continued medical coverage for up to 12 months.
foregoing description of the Foti Employment Agreement is not
complete and is qualified in its entirety by the full text of the
Foti Employment Agreement, a copy of which is attached to this
Current Report on Form 8-K as Exhibit 10.3 and incorporated by
June 3, 2021, the Board also appointed Wilbur Ross as a director,
effective immediately following the closing of the Private
Placement on June 4, 2021.
Ross was sworn in by Vice President Mike Pence as the 39th
Secretary of Commerce on February 28, 2017. Secretary Ross was the
principal voice of business in the Trump Administration, ensuring
that U.S. entrepreneurs and businesses have the tools they need to
create jobs and economic opportunity. Secretary Ross is the former
Chairman and Chief Strategy Officer of WL Ross & Co. LLC and
has over 55 years of investment banking and private equity
are no family relationships between either of Mr. Foti or Mr. Ross
and any of the Company’s directors or executive officers. There
have been no related party transactions involving Mr. Foti or Mr.
Ross (or any of their respective immediate family members) required
to be disclosed pursuant to Item 404(a) of Regulation S-K, other
than Mr. Ross’s purchase of 1,333,334 shares of common stock in the
Private Placement for an aggregate purchase price of $4.0 million.
Each of Mr. Foti and Mr. Ross has entered into the Company’s
standard form of indemnification agreement. The Board has not yet
made a determination as to the committees of the Board on which Mr.
Foti or Mr. Ross may serve.
June 3, 2021, Thomas Wetherald and Peter Molloy each notified the
Company of his resignation from the Board, effective December 31,
2021. Neither Mr. Wetherald’s resignation nor Mr. Molloy’s
resignation was the result of any disagreement regarding any matter
relating to the Company’s operations, policies, or
7.01 Regulation FD Disclosure.
June 4, 2021, the Company issued a press release announcing the
Private Placement, the appointment of Mr. Foti as President and
Chief Executive Officer of the Company, and the appointments of Mr.
Foti and Mr. Ross to the Board. A copy of the press release is
being furnished as Exhibit 99.1 hereto and is incorporated into
this Item 7.01 by reference.
Company provided the supplemental disclosure below in a
confidential private placement memorandum used in connection with
the Private Placement. The supplemental disclosure should be read
in conjunction with the Company’s filings with the SEC.
and Internal Investigation
joining the Company as Chief Financial Officer in November 2020,
Mary Pat Thompson discovered what she believed to be fraudulent
accounting practices at the Company relating to the underreporting
of cost of goods sold, and the overreporting of gross income, in
the second and third quarters of fiscal 2020 (the “Allegations”).
The incumbent Board at the time thereafter retained a law firm to
investigate the Allegations. In February 2021, the law firm
communicated its preliminary findings to the Audit Committee of the
Board, finding a credible basis for each of the Allegations and
recommending further investigation. As previously disclosed, on
April 10, 2021, the newly reconstituted Board commenced an
investigation of the Company’s previously issued accounting results
(including the Allegations) and internal controls, to be overseen
by the Company’s newly reconstituted Audit Committee. Also on April
10, 2021, the Board authorized the retention of forensic
accountants and external counsel to assist in the investigation of
the Company’s previously issued financial statements. The
investigation is in its early stages and the Company cannot predict
its duration or outcome.
Investigation and Subpoenas
August 28, 2020, the SEC ordered an investigation into potential
violations of Section 17(a) of the Securities Act and Sections
13(a) and 10(b) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), and the rules promulgated thereunder, by
BBHC, Inc. (f/k/a Taronis Technologies, Inc.) (“Taronis
Technologies”) and its officers, directors and employees. The
investigation concerns, among other things, potential false
statements made by Taronis Technologies relating to increases in
revenue, acquisitions, ownerships of patents, material developments
in operations, and partnerships with various municipalities and
corporations. On December 14, 2020, the SEC issued a subpoena to
Taronis Technologies in connection with the investigation, and on
January 11, 2021 and February 12, 2021, the SEC issued subpoenas to
the Company. While the documents requested in the January 11, 2021
subpoena largely mirrored the requests made to Taronis
Technologies, the February 12, 2021 subpoena requested documents
relating to the Allegations, among other documents.
Company intends to cooperate fully with the SEC in its
investigation. There can be no assurance regarding the outcome of
the SEC investigation, including potential civil penalties against
information furnished pursuant to this Item 7.01, including Exhibit
99.1 furnished herewith, shall not be deemed “filed” for purposes
of Section 18 of the Exchange Act, nor shall it be deemed
incorporated by reference in any filing under the Securities Act or
the Exchange Act, except as shall be expressly set forth by
specific reference in any such filing.
report contains statements which constitute “forward-looking
statements” within the meaning of the federal securities laws.
Forward-looking statements, which are based on certain assumptions
and reflect the Company’s plans, estimates and beliefs, can
generally be identified by the use of forward-looking terms such as
“believes,” “expects,” “may,” “will,” “should,” “could,” “seek,”
“intends,” “plans,” “estimates,” “anticipates,” “projects,”
“would,” or other comparable terms. These forward-looking
statements include, but are not limited to, statements concerning
the timing and outcome of the internal investigation, the outcome
of any regulatory investigations (including by the SEC), and any
other statements other than statements of historical fact. Actual
results could differ materially from those discussed in any
forward-looking statements. Factors that could cause or contribute
to these differences include those discussed in the Company’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, 2020, June 30, 2020 and
September 30, 2020 and subsequent filings with the SEC, and
presently unknown risks or uncertainties that may arise in the
future. The Company qualifies all of the information presented in
this report, and particularly the forward-looking statements, by
these cautionary statements. The Company cautions readers not to
place undue reliance upon any such forward-looking statements. The
Company disclaims any obligation, except as specifically required
by law, 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.
9.01 Financial Statements and Exhibits.
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
June 9, 2021
Mary Pat Thompson
Financial Officer and Treasurer
Taronis Fuels (PK) (USOTC:TRNF)
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