Item
7.01 Regulation FD Disclosure.
On
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.
The
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.
Allegations
and Internal Investigation
After
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.
SEC
Investigation and Subpoenas
On
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.
The
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 the Company.
The
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.
Forward-Looking
Statements
This
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.