SEC Comment Letter for Taronis Fuels, Inc. (CIK 0001778805) — Mar 9, 2021
Taronis Fuels, Inc. (CIK 0001778805)
Date: March 9, 2021 · CIK: 0001778805 · Accession: 0000000000-21-002820
AI Filing Summary & Sentiment
File numbers found in text: 000-56101
Letter
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 DIVISION OF CORPORATION FINANCE March 5 , 2021 Tobias L. Knapp, Esq. O’Melveny & Myers LLP Times Square To wer Seven Times Square New York, NY 10036
Re: Taronis Fuels , Inc . PREC 14A filed by Taronis Fuels, Inc. Filed February 26, 2021 File No. 000-56101
Dear Mr. Knapp :
We have reviewed the above -captioned filing, and have the following comments. Some of our comments may ask for additional information so we may be tter understand the disclosure.
Please respond to this letter by amending the filing and/or by providing the requested information. If you do not believe our comments apply to your facts and circumstances and/or do not believe an amendment is appropriate, please tel l us why in a written respon se.
After reviewing any amendment to the filing and any information provided in response to these comments, we may have additional comments. Capitalized terms used but not defined herein have the same meaning ascribed to them in the filing.
General
1. It has come to our attenti on that the Company appears to have issued over two million share s during the month of February . A Form 8 -K filed by the Company on March 3 disclo ses the issuance, altogether, of 410,000 shares during the month of February. A Form 8 -K filed by the Company on March 4 disclo ses the issuance of an additional 394,068 shares , though it is unclear whether such shares were issued in late February or early March. Please advise us as to whet her all share issuances during February requiring disclosure pursuant t o Item 3.02 of Form 8 -K have been disclosed.
2. Please clearly disclose that fixing a proper record date for the consent solicitation is a matter of dispute between the parties . As it appears that Mr. Wetherald may have a legitimate legal argument that February 12 is the record date for the consent solicitation, please revise conclusory statements such as “[Mr. Wetherald ’s consent statement] express[ed] incorrectly that an earlier record date with respect to the consent solicitation had been established ” (emphasis added).
Tobias L. Knapp , Esq. March 5 , 2021 Page 2
3. We note t hat the Company has yet to hold its first annual meeting, and it does not appear that any annual meeting has been scheduled for 2 021. In light of this, please explain how shareholders should interpret the shareholder proposal deadlines set out on page 34 . Please also refrain from using the phrase “duly elected ” when characterizing your current directors .
4. We note , in various parts of the filing , disclosure regarding the investigation into possible breaches of fiduciary duties by Ms. Thompson and Mr. Welo . Please disclose what the investiga tion has revealed to this point and when the Company intends to conc lude the investigation .
5. We note the filing contains multiple characterizations of the fraudulent accounting allegations raised by Ms. Thompson and Mr. Welo as being “unsubstantiated. ” Please provide support for such characteriz ation, or remove it.
6. Please provide the consent revocation card in preliminary form.
Reasons to Reject the Activist Consent Proposals , page 3
7. We note the following disclosure on page 3: “The Company has reason to believe that the Nominees will materially alter the Com pany’s strategic direction to deemphasize investments in and growth of the Company’s proprietary technology, MagneGas, which the Board believes is a market differentiator. ” The same statement appears on page iii. Please provide support for this statement.
Background of the Consent Solicitation , page 6
8. We note the following disclosure on page 6: “In connection with Mr. Wetherald’s investment he required the Company to agree to certain additional covenants, including the request to remove the “staggered board” structure. ” With a view toward revised disclosure, please explain the meaning of this st atement in light of the fact that Mr. Wetherald ’s consent solicitation effort , which the Company opposes, includes an attempt to remove the staggered board stru cture.
9. Conflicting disclosure appears on page 9 with respect to the Schedule 13D amendment filed by Wetherald, Welo and Thomson. Please revise to remove th e discrepancies.
10. Please disclose the fact that Mr. Mahoney was appointed as interim CFO at the December 18 board meeting.
The Consent Procedure , page 12
11. We note the following disclosure on page 12: “Under Section 228 of the Delaware General Corporation Law, the Activist Consent Proposals will become effective if valid, unrevoked consents signed by the holders of a majority of the shares of Common Stock outstanding as of the Record Date, as certified by the independent inspector of election, are delivered to the
Tobias L. Knapp , Esq. March 5 , 2021 Page 3
Company in the manner required by Delaware law within 60 days of the earliest dated consent delivered to the Company . Wetherald and Welo delivered to the Company a signed written consent on February 12, 2021. The Board has set the Record Date at March 4, 2021, which means that valid, unrevoked consents signed by the holders of a majority o f the shares of Common Stock outstanding as of the Record Date must be delivered no later than May 3, 2021, which is the date that is 60 days following the Record Date ” (emphasis added). The foregoing description appears to be inconsistent. Please revise or advise.
Our Board of Directors and Governance Matters , page 15
12. We note the following statement on page 20: “A copy of the Whistleblower Policy will be posted on our website at a future time .” Please provide more specific disclosure regarding the timing of such posting.
Executive Compensation , page 25
13. Please fix the formatting in the chart on page 25 so that it clearly discloses Mary Pat Thomson ’s compensation for 2020. Also, with respect to her total compensation , please indicate , by way of a footnote or otherwise, that the vast majority of such amount consisted of her st ock award compensation , which was cancelled , as footnote 12 reveals.
We remind you that the filing person s are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the staff.
You may contact me at (202) 551 -8094 with any questions.
Sincerely,
/s/ David M. Plattner
Show Raw Text
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIVISION OF
CORPORATION FINANCE
March 5 , 2021
Tobias L. Knapp, Esq.
O’Melveny & Myers LLP
Times Square To wer
Seven Times Square
New York, NY 10036
Re: Taronis Fuels , Inc .
PREC 14A filed by Taronis Fuels, Inc.
Filed February 26, 2021
File No. 000-56101
Dear Mr. Knapp :
We have reviewed the above -captioned filing, and have the following comments. Some
of our comments may ask for additional information so we may be tter understand the disclosure.
Please respond to this letter by amending the filing and/or by providing the requested
information. If you do not believe our comments apply to your facts and circumstances and/or
do not believe an amendment is appropriate, please tel l us why in a written respon se.
After reviewing any amendment to the filing and any information provided in response to
these comments, we may have additional comments. Capitalized terms used but not defined
herein have the same meaning ascribed to them in the filing.
General
1. It has come to our attenti on that the Company appears to have issued over two million share s
during the month of February . A Form 8 -K filed by the Company on March 3 disclo ses the
issuance, altogether, of 410,000 shares during the month of February. A Form 8 -K filed by
the Company on March 4 disclo ses the issuance of an additional 394,068 shares , though it is
unclear whether such shares were issued in late February or early March. Please advise us as
to whet her all share issuances during February requiring disclosure pursuant t o Item 3.02 of
Form 8 -K have been disclosed.
2. Please clearly disclose that fixing a proper record date for the consent solicitation is a matter
of dispute between the parties . As it appears that Mr. Wetherald may have a legitimate legal
argument that February 12 is the record date for the consent solicitation, please revise
conclusory statements such as “[Mr. Wetherald ’s consent statement] express[ed] incorrectly
that an earlier record date with respect to the consent solicitation had been established ”
(emphasis added).
Tobias L. Knapp , Esq.
March 5 , 2021
Page 2
3. We note t hat the Company has yet to hold its first annual meeting, and it does not appear that
any annual meeting has been scheduled for 2 021. In light of this, please explain how
shareholders should interpret the shareholder proposal deadlines set out on page 34 . Please
also refrain from using the phrase “duly elected ” when characterizing your current directors .
4. We note , in various parts of the filing , disclosure regarding the investigation into possible
breaches of fiduciary duties by Ms. Thompson and Mr. Welo . Please disclose what the
investiga tion has revealed to this point and when the Company intends to conc lude the
investigation .
5. We note the filing contains multiple characterizations of the fraudulent accounting
allegations raised by Ms. Thompson and Mr. Welo as being “unsubstantiated. ” Please
provide support for such characteriz ation, or remove it.
6. Please provide the consent revocation card in preliminary form.
Reasons to Reject the Activist Consent Proposals , page 3
7. We note the following disclosure on page 3: “The Company has reason to believe that the
Nominees will materially alter the Com pany’s strategic direction to deemphasize investments
in and growth of the Company’s proprietary technology, MagneGas, which the Board
believes is a market differentiator. ” The same statement appears on page iii. Please provide
support for this statement.
Background of the Consent Solicitation , page 6
8. We note the following disclosure on page 6: “In connection with Mr. Wetherald’s
investment he required the Company to agree to certain additional covenants, including the
request to remove the “staggered board” structure. ” With a view toward revised disclosure,
please explain the meaning of this st atement in light of the fact that Mr. Wetherald ’s consent
solicitation effort , which the Company opposes, includes an attempt to remove the staggered
board stru cture.
9. Conflicting disclosure appears on page 9 with respect to the Schedule 13D amendment filed
by Wetherald, Welo and Thomson. Please revise to remove th e discrepancies.
10. Please disclose the fact that Mr. Mahoney was appointed as interim CFO at the December 18
board meeting.
The Consent Procedure , page 12
11. We note the following disclosure on page 12: “Under Section 228 of the Delaware General
Corporation Law, the Activist Consent Proposals will become effective if valid, unrevoked
consents signed by the holders of a majority of the shares of Common Stock outstanding as
of the Record Date, as certified by the independent inspector of election, are delivered to the
Tobias L. Knapp , Esq.
March 5 , 2021
Page 3
Company in the manner required by Delaware law within 60 days of the earliest dated
consent delivered to the Company . Wetherald and Welo delivered to the Company a signed
written consent on February 12, 2021. The Board has set the Record Date at March 4, 2021,
which means that valid, unrevoked consents signed by the holders of a majority o f the shares
of Common Stock outstanding as of the Record Date must be delivered no later than May 3,
2021, which is the date that is 60 days following the Record Date ” (emphasis added). The
foregoing description appears to be inconsistent. Please revise or advise.
Our Board of Directors and Governance Matters , page 15
12. We note the following statement on page 20: “A copy of the Whistleblower Policy will be
posted on our website at a future time .” Please provide more specific disclosure regarding
the timing of such posting.
Executive Compensation , page 25
13. Please fix the formatting in the chart on page 25 so that it clearly discloses Mary Pat
Thomson ’s compensation for 2020. Also, with respect to her total compensation , please
indicate , by way of a footnote or otherwise, that the vast majority of such amount consisted
of her st ock award compensation , which was cancelled , as footnote 12 reveals.
We remind you that the filing person s are responsible for the accuracy and adequacy of
their disclosures, notwithstanding any review, comments, action or absence of action by the staff.
You may contact me at (202) 551 -8094 with any questions.
Sincerely,
/s/ David M. Plattner
David M. Plattner
Special Counsel
Office of Mergers and Acquisitions