SecProbe.io

CORRESP
1
filename1.htm

    O’Melveny
    & Myers LLP
    T:
    +1 212 326 2000

    Times
    Square Tower
    F:
    +1 212 326 2061

    Seven
    Times Square
    omm.com

    New
    York, NY 10036

    Tobias
    L. Knapp

    D:
    +1 212-408-2440

    tknapp@omm.com

Via
EDGAR and E-MAIL

March
8, 2021

David
Plattner, Special Counsel

Office
of Mergers & Acquisitions

Division
of Corporation Finance

U.S.
Securities and Exchange Commission

100
F Street, N.E.

Washington,
D.C. 20549

    Re:
    Taronis
    Fuels, Inc.

    PREC14A
    filed on February 26, 2021

    File
    No. 000-56101

Dear
Mr. Plattner:

On
behalf of Taronis Fuels, Inc., a Delaware corporation (“Taronis” or the “Company”),
this letter sets forth the Company’s response to the comments of the staff (the “Staff”) of the
Division of Corporation Finance of the U.S. Securities and Exchange Commission (the “Commission”) in
your letter dated March 5, 2021 regarding Taronis’s preliminary consent revocation statement filed with the Commission on
February 26, 2021 (the “Consent Revocation Statement”). The Company has also revised the Consent Revocation
Statement (as revised, the “Revised Consent Revocation Statement”) in response to the Staff’s
comments and is filing concurrently with this letter the Revised Consent Revocation Statement, which reflects the revisions set
forth below. We have enclosed with this letter a courtesy copy of the Revised Consent Revocation
Statement, together with a blacklined copy which compares the Revised Consent Revocation Statement to the Consent Revocation Statement.

For
the Staff’s convenience, the Company has reproduced the Staff’s comments in italics followed by the Company’s
response. Page references correspond to pages in the Revised Consent Revocation Statement.

Century
City • Los Angeles • Newport Beach • New York • San Francisco • Silicon Valley • Washington, DC

Beijing
• Brussels • Hong Kong • London • Seoul • Shanghai • Singapore • Tokyo

David
Plattner

March
8, 2021

General

    1.
    It
    has come to our attention that the Company appears to have issued over two million shares during the month of February. A
    Form 8-K filed by the Company on March 3 discloses the issuance, altogether, of 410,000 shares during the month of February.
    A Form 8-K filed by the Company on March 4 discloses 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 whether all share issuances during February
    requiring disclosure pursuant to Item 3.02 of Form 8-K have been disclosed.

The
Company acknowledges the Staff’s comment and advises the Staff that all share issuances during February requiring disclosure
pursuant to Item 3.02 of Form 8-K have been disclosed. As noted in the Staff’s comment, the Company’s Form 8-K filed
on March 3, 2021 disclosed 410,000 shares issued in private placements during February. The 394,068 shares issued to holders of
certain outstanding warrants that were exercised on or around the same time as the shares disclosed in the Form 8-K filed by the
Company on March 3, 2021 were registered under the Securities Act of 1933, as amended (the “Securities Act”)
pursuant to the Registration Statement on Form S-1 (File No. 333-248517) filed by the Company with the Commission on September
1, 2020 and declared effective on September 9, 2020 (the “Registration Statement”) and the prospectus
included in the Registration Statement, as supplemented by the prospectus supplement filed pursuant to Rule 424(b)(3) of the Securities
Act on September 10, 2020. The Company also issued shares to Company employees (other than executive officers) that were not required
to be disclosed pursuant to Item 3.02 of Form 8-K because they were issued pursuant to the Company’s Registration Statement
on Form S-8 (File No. 333-239026) filed by the Company with the Commission on June 9, 2020, as a one-time non-executive employee
retention grant.

    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).

The
Company acknowledges the Staff’s comment and advises the Staff that the Company has revised the disclosure in the section
entitled “Background of the Consent Solicitation,” and elsewhere in the Revised Consent Revocation Statement similar
statements are made, to indicate that there is a dispute between the Company and Mr. Wetherald as to the record date applicable
to the consent solicitation.

    3.
    We
    note that the Company has yet to hold its first annual meeting, and it does not appear that any annual meeting has been scheduled
    for 2021. 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.

      2

David
Plattner

March
8, 2021

The
Company acknowledges the Staff’s comment and advises the Staff that (a) the Company has removed references to its current
directors being “duly elected” in the Revised Consent Revocation Statement and (b) the Company has revised its description
of the shareholder proposal deadline in order to be consistent with SEC Rule 14a-8. The revised disclosure reads as follows:

Pursuant
to SEC Rule 14a-8, in order for a shareholder proposal to be considered for inclusion in our proxy statement for the 2022 annual
meeting of shareholders, the written proposal must comply with SEC regulations regarding the inclusion of shareholder proposals
in company-sponsored proxy materials and must be received at our principal executive offices at 24980 N. 83rd
Avenue, Suite 100, Peoria, AZ 85383, Attention: Corporate Secretary, on or before the date which is 120 days prior to the first
anniversary of the date the proxy statement was first released to shareholders in connection with the previous year’s Annual
Meeting. However, if the date of the annual meeting changes by more than 30 days from the one-year anniversary of the date
of the prior year’s annual meeting, then such proposals must be received a reasonable time before the Company begins to
print and send its proxy materials for such annual meeting. The Company has not yet held an annual meeting. As a result, under
SEC Rule 14a-8, the Company will accept shareholder proposals to be considered for inclusion in our proxy statement for the 2022
annual meeting of shareholder if such proposal is received by us a reasonable time before we begin to print and send proxy materials
for such meeting. The proposal must comply with SEC regulations regarding the inclusion of shareholder proposals
in company sponsored proxy materials. If we receive notice after that date of a shareholder’s intent to present
a proposal at an annual meeting, we will have the right to exercise discretionary voting authority with respect to such proposal,
if presented at the meeting, without including information regarding such proposal in our proxy materials. However,
if the date of the annual meeting changes by more than 30 days from the one-year anniversary of the date of the prior year’s
annual meeting, then such proposals must be received a reasonable time before the Company begins to print and send its proxy materials
for such annual meeting.

[.
. .]

In
accordance with our Bylaws, in order for a shareholder proposal, including a director nomination, not included in our Proxy Statement
to be properly brought before an annual meeting of shareholders, a shareholder’s notice of the matter the shareholder wishes
to present must comply with the requirements set forth in our Bylaws, and specifically, must be delivered to our principal executive
offices at 24980 N. 83rd Avenue, Suite 100, Peoria, AZ 85383, Attention: Corporate Secretary, not less than 90 nor
more than 120 days prior to the first anniversary of the date of the prior year’s annual meeting of shareholders. If the
date of the annual meeting of shareholders is advanced by more than 30 days or delayed by more than 30 days from the first anniversary
of the date of the prior year’s annual meeting, any such notice must be received not less than 90 nor more than 120 days
prior to the first anniversary of the date of the prior year’s annual meeting of shareholders or no later than the 10th
day following the day on which public announcement of the date of such meeting is first made by us. The Company has not
yet held an annual meeting, and our Bylaws do not explicitly set a deadline for receipt of shareholder proposals to be brought
before an annual meeting when no prior annual meeting has been held. Consistent with SEC Rule 14a-8, the Company will allow shareholder
proposals not included in our Proxy Statement to be brought before an annual meeting if delivered to our principal executive offices
at the address set forth above no later than a reasonable time before we begin to print and send such Proxy Statement.

      3

David
Plattner

March
8, 2021

    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 investigation has revealed to this point and when the Company intends
    to conclude the investigation.

The
Company acknowledges the Staff’s comment and advises the Staff that the Company has revised this disclosure throughout the
filing to make clear that the investigation by the Nominating and Corporate Governance Committee of the Board of Directors into
possible breaches of fiduciary duties by Ms. Thompson and Mr. Welo concluded on January 26, 2021. The Company respectfully advises
the Staff that is has not disclosed in the Revised Consent Revocation Statement any details regarding the substance of the investigation,
including its findings and conclusions, to protect the attorney-client privilege and work-product immunity afforded such information.

    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 characterization, or remove it.

The
Company acknowledges the Staff’s comment and advises the Staff that, although the Company possesses materials that it believes
would support the above-referenced statement, the Company has deleted the references in the Revised Consent Revocation Statement
to such allegations being “unsubstantiated” in the interest of expediting the resolution of the Staff’s comments
while not jeopardizing the attorney-client privilege and work-product immunity protecting such supporting materials and statements
from disclosure.

    6.
    Please
    provide the consent revocation card in preliminary form.

The
Company acknowledges the Staff’s comment and advises the Staff that the Company has included the consent revocation card
in preliminary form in the Revised Consent Revocation Statement.

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 Company’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.

      4

David
Plattner

March
8, 2021

The Company acknowledges the Staff’s
comment and advises the Staff that the Company has revised each occurrence of this disclosure.  The Company’s belief
that certain of the Nominees intend to materially alter the Company’s strategic direction is supported by prior actions
and statements of the Nominees that are included in the revised disclosure.  Those actions and statements include the support
expressed by Mr. Welo and Ms. Thompson for the views of the strategic consultant introduced by Mr. Welo at the December 16, 2020
meeting described in the revised disclosure, certain actions taken by Ms. Thompson in her role as Chief Financial Officer that
are also described in the revised disclosure, and statements by Mr. Wetherald regarding his outline for Company strategy during
the November 2020 meeting that has been added to the “Background of the Consent Solicitation” section in the Revised
Consent Revocation Statement.

Based
on the support described above, the disclosure referenced in the Staff’s comment has been revised to read as follows:

The
Company has reason to believe that the Nominees willFurther, the Company believes, 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 directionto deemphasize investments in and growth of the Company’s, including curtailing
investment in our proprietary technology, MagneGas, (which the BoardCompany
believes is a market differentiator and a critical wedge product with the potential to drive revenue growth and
market share gains through Taronis’s 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
Taronis’s proprietary technology and for the potential closure of a number of its retail locations. Additionally, shortly
after her appointment as Chief Financial Officer, Ms. Thompson took actions to effect workforce reductions that included termination
of the Chief Technology Officer and head of production and that decreased salary for virtually all employees with the technical
capabilities for the Company’s intellectual property, including its 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.

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 statement in light of the fact that Mr. Wetherald’s
    consent solicitation effort, which the Company opposes, includes an attempt to remove the staggered board structure.

The
Company acknowledges the Staff’s comment and advises the Staff that the Company has deleted the disclosure in the Revised
Consent Revocation Statement.

      5

David
Plattner

March
8, 2021

    9.
    Conflicting
    disclosure appears on page 9 with respect to the Schedule 13D amendment filed by Wetherald, Welo and Thomson. Please revise
    to remove the discrepancies.

The
Company acknowledges the Staff’s comment and advises the Staff that the Company has revised the disclosure to clarify the
discrepancies between the references and descriptions of the amendment to Schedule 13D. The revised disclosure reads as follows:

“On
February 16, 2021, Wetherald and Welo filed a Schedule 13D with the SEC, reporting that as of February 8 the
close of business on February 11, 2021, Wetherald and Welo, collectively, beneficially own