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☐	Definitive Consent Statement
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TARONIS FUELS, INC.

(Name of Registrant as Specified in Its Charter)

THOMAS WETHERALD TOBIAS WELO MARY PAT THOMPSON SERGEY VASNETSOV ANDREW MCCORMICK

(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant)

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The Concerned Shareholders Launch A Consent Solicitation To Reconstitute The Board Of Directors Of Taronis Fuels This Letter Details Years Of Mismanagement At Taronis Fuels From A Board Unwilling To Hold Management Accountable While Being All Too Willing To Dilute Shareholders The Board Issues 3.4 Million Shares, Or More Than 51% Of The Outstanding Shares, In The Last Few Weeks To Entrench Itself And Avoid Shareholder Accountability While The SEC Investigates The Company, The Board Has Refused To Provide Any Public Updates Or Prevent Additional Harm To Shareholders The Concerned Shareholders Urge Taronis Shareholders To Provide Their Consents On The WHITE Consent Card To Reconstitute The Board With Five Highly-Qualified And Independent Director Candidates They Have A Simple Plan To Improve The Company's Organic Growth And Profitability

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An incumbent Board that completely failed in its response to credible allegations of accounting fraud by management,

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An incumbent Board that refuses to hold management accountable for misallocating capital, and

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An incumbent Board that richly rewards itself and management while continually diluting shareholders.

		1-Year TSR
	Taronis Fuels	-64%
	S&P 500	+28%
	Russell 3000	+33%
	Industrial Gas Companies	+16%

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The same Board of Directors drove Taronis Technologies to become nearly worthless. Four of the five incumbent directors — Chairman Bob Dingess, CEO Scott Mahoney, William Staunton, and Kevin Pollack — served on the Board of Directors at Taronis Technologies. From April 2013, when Bob Dingess and William Staunton joined Taronis Technologies’ Board, through July 1, 2020, when Taronis Technologies was delisted, the stock price dropped an amazing 99.9996%, from $20,700 per share (adjusted for four reverse stock splits ultimately compressing 15,000 shares into one share) to $0.08 per share.

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Shareholders have suffered sustained losses. As was the case at Taronis Technologies, repeated dilution has destroyed per share value for common equity shareholders, as Taronis Fuels has increased outstanding shares from 1.86 million to 6.23 million between December 31, 2019 and December 4, 2020, or 237%. This expansive dilution is before the additional 3.38 million shares issued in the last few weeks, bringing the outstanding shares to 9.95 million as of March 4, 2021. We believe that unless replaced, the incumbent Board will repeat its mistakes from Taronis Technologies and destroy what value remains at Taronis Fuels.

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The only director who was not a hold-over from Taronis Technologies, Peter Molloy, received significant investments from Taronis Technologies, a conflict of interest never disclosed by Taronis Fuels which we believe impairs Peter Molloy’s independence.

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The excessive and highly inappropriate compensation has left the incumbent Board complicit and unwilling to challenge or stand up to management. We believe that the incumbent Board of Directors is far more focused on entrenchment and self-enrichment than accountability.

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According to the reports filed by the incumbent Board with the SEC, the incumbent independent directors hold only 192,399 shares in Taronis Fuels. Mr. Wetherald’s five-member slate has a significantly larger ownership position than all four of the incumbent independent directors combined and will request to take mostly equity as compensation for their services. Furthermore, Mr. Wetherald, who himself owns significantly more stock than the entire current Taronis Board combined, has pledged to never take a single dollar, share, option or warrant in salary or compensation from Taronis Fuels to ensure his interests are 100% aligned with all shareholders. We question how shareholders can trust the incumbent Board to correct years of underperformance when it is so misaligned with shareholders and maintains such meager equity ownership, or skin in the game.

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The Board approved the issuance of 3.38 million shares between February 12, 2021, the day Mr. Wetherald commenced the consent solicitation, and March 4, 2021, increasing the number of outstanding shares by over 51%. We believe these issuances, many for little or no value to the Company, were clearly intended to entrench the incumbent Board. The incumbent directors massively diluted all Taronis shareholders to save their positions and prevent accountability to shareholders.

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Both unsurprising and sad, Taronis did not disclose these issuances until after the Concerned Shareholders informed the SEC and threatened to immediately disclose this information to shareholders.

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The Concerned Shareholders have filed a lawsuit in Delaware to stop the Board from benefiting from these issuances. However, the Concerned Shareholders believe the incumbent directors must be removed as soon as possible to prevent future harm to Taronis Fuels and its shareholders.

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NO INDUSTRY EXPERIENCE. None of the independent directors has experience in the industrial, chemical, or industrial gas industries. Unfortunately, the lack of industry experience on the Board has limited the growth and potential success of its key technology, MagneGas. Taronis Fuels has clearly failed to grow market share of its MagneGas technology and has neither successfully grown its revenues with internal clients nor partnered with other players to monetize this highly differentiated technology. We feel the evidence of this failure lies in the fact that despite all the hype, MagneGas represents a tiny percentage of Company sales. We believe the MagneGas technology does have significant future but requires stronger industry knowledge and commitment to invest to achieve its potential.

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INACTION. Discussions with the independent directors suggested a lack of understanding of current liquidity issues, retail store economics, acquisition strategy and acceptable levels of related due diligence. We believe that Taronis Fuels’ current Board members have shown no willingness or ability to understand, address or solve any of these important issues. The Board has overseen multiple acquisitions funded by debt or equity offerings that have diluted existing shareholders significantly. These acquisitions were completed with minimal due-diligence or Board oversight. As a result, many acquired retail branches in the last several years have not performed as expected and will need to be closed or repositioned.

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Taronis Fuels’ filings report that all of the Company’s eligible named executive officers received massive base compensation raises from 2019 to 2020. Specifically, Mr. Mahoney was rewarded with a 100% raise in his base salary from $250,000 to $500,000. Current general counsel and former CFO, Tyler Wilson also received a salary increase of 100% to $275,000. This compensation was not reduced when Mr. Wilson was removed from his CFO role without any additional duties assigned. In addition, both individuals have a bonus plan which includes a target bonus of 100% with a potential to earn up to 300%; the metrics to these bonus plans are not disclosed. All of this occurred despite the substantial decline in the Company’s share price.

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Taronis Fuels’ recent revocation statement filing also highlighted an exorbitant “golden parachute” that the Board has approved for both CEO Mahoney and General Counsel Tyler Wilson. These plans would pay both individual three years of salary plus the maximum bonus which is 3x their salary. This equates to a change of control payout of $9.3M. We find this structure to be outrageous and unjustified. It should be noted that given our strong belief in accounting fraud that this amount would not be owed by the Company if Mr. Mahoney and Mr. Wilson are found to have committed accounting fraud and are terminated for cause.

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Mr. Mahoney and Mr. Wilson’s long-term equity incentive plan that has been approved by the incumbent Board shows a complete disregard for other shareholders who have been constantly diluted by assigning them a “full ratchet”. This full ratchet would allow Mr. Mahoney to dilute the Company to achieve personal gain of between 1-5% of the outstanding shares. Similarly, Mr. Wilson would receive between 0.5% and 2.5% of the Company. In other words, the Board has allowed management to issue unlimited stock, while Mr. Mahoney and Mr. Wilson are awarded stock if certain goals are achieved regardless of the dilution  required to hit these targets. These incentive targets should all immediately be switched to per share metrics. This demonstrates a complete misalignment with common shareholders and encourages poor ROIC capital allocation decisions.

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This public guidance to investors has consistently been materially wrong or misleading since the spin from Taronis Technologies, starting with the January 2020 shareholder town hall that guided to 2020 revenues of $50 million versus their most recent guidance in January 2021 after the year end of only $30.7 million.

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The continued promises around Turkey, Amsterdam and other international prospects has led investors to expect $30 million in Turkey revenues versus the recognized $3 million which was non-cash.

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Similarly, management supported by the rubber stamp of the Board highlights “strong US retail store growth” despite what we believe was potentially NEGATIVE retail organic growth in 2020.

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The revenue shortfalls are equally matched by poor cost management in their disappointment. The Board supported massive expansion of both payroll and benefits as well as general and administrative expenses.

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However, despite a massive revenue guidance miss, potentially negative organic growth and complete lack of expense control that led to large cash outflows, the Board saw it proper to pay CEO Mahoney and General Counsel Wilson 100% of their bonus opportunity. What sort of corporate governance would enable this egregious payout?

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It also highlights the poor structure of their compensation which does not reward based on key shareholder metrics, specifically, Total Shareholder Return (TSR), Return on Capital, or any per share metrics. Instead, the Board has authorized compensation based on absolute revenues and EBITDA which incentivizes acquisitions at any price, including excessive indebtedness, equity dilution and poor strategic fit.

1.

Our first goal will be to productively work with current lender Tech Bank to maintain current debt financing. However, we have also had preliminary discussions with alternative lenders in the unlikely case of needing to replace Tech Bank.

2.

We believe that there will be a limited amount of capital required as a result of a change in control. As mentioned above, the $10.5 million golden parachute payments for CEO Mahoney, General Counsel Wilson, and CFO Fred will not be paid if fired for cause.

3.

One of our first actions as a Board will be to address the employees. We look forward to building strong relationships with the employees and hope that they feel the same way. We expect that our focus of heavily investing in the US branch network should be well received by the three regional Vice Presidents who specifically cited to us their chronic lack of inventory as impacting growth and customer relations.

1.

Immediately begin recruiting for a permanent CEO with strong operational experience in the industrial and chemical sectors, ideally with specific experience in industrial gasses. We believe a true operator with directly relevant experience is necessary to lead Taronis going forward and maximize its long-term growth opportunity.

2.

Establish expense reduction targets and cost control culture by targeting the bloated selling, general and administrative expense line which has increased over 200% since 2019. This will include a detailed review of executive and board compensation, a detailed review of bonus targets to ensure alignment with shareholders, and assessment of all non-revenue generating expenses. We will also assess options to reduce headquarters expense.

3.

Conduct a thorough store by store portfolio review and return analysis of MagneGas Welding Supply Retail Stores. Conversations with both existing Board members and executives made it clear that accurate individual retail store data does not exist. It is imperative to quickly construct a plan to address cash flow negative stores, improperly staffed stores, and any real estate opportunities. This will require systems implementation and training. Since store level performance metrics were not part of any monthly or quarterly business review this also implies that store and regional managers are not compensated based on store performance. We will also quickly develop best practices to tie compensation to key metrics, including store level profitability.

4.

Identify the path to enhancing the deployment of MagneGas in the marketplace. Despite the data shared on MagneGas’ cost effectiveness, favorable safety profile and renewable benefits, market penetration has been very limited. We will focus on the required changes to improve its market presence and the cost to achieve such success. This will include an examination of partnership or licensing opportunities.

5.

Properly capitalize the Company after determining cash flow and capital expenditure needs in conjunction with the cost review analysis. Establishing proper access to short and long-term debt markets will enable adequate working capital and proper inventory levels. Future equity financings, if necessary, will be pursued prudently with the aim of minimizing dilution to common shareholders.

6.

Perform an analytical review of the international opportunity, specifically focusing on Turkey and Amsterdam. Despite management promises around contracts in Turkey, our understanding is that no cash flow has ever been received from Turkey. We will determine if the international operations should be expeditiously closed to reinvest in the core US retail, US wholesale business, and MagneGas Technology. We believe the Company is spreading its resources too thin given its current size and balance sheet strength. After filing our preliminary consent solicitation on February 12, 2021, Taronis Fuels issued an updated investor deck that removed all mention of Turkey and Amsterdam, which were prominently highlighted in a November non-deal road show, December press release and January shareholder town hall. It appears that our initial skeptical assessment was correct.

7.

Create an acquisition framework to both review past deals and evaluate future opportunities. As we likely shift our focus from international to domestic acquisitions it will be important to achieve density in our selected markets. We believe Taronis Fuels’ strategy to more than double the states it serves in several years is foolhardy. Acquisitions should be focused on current markets or adjacent geographies. As part of our research on the Company, we have learned that due diligence and financial modeling was very limited in the Company’s past acquisitions. We will need to establish a robust acquisition process to avoid underperforming deals. Capital is valuable and we must use it wisely to avoid future equity dilution similar to what current shareholders have experienced during the current Board and management’s tenure.

8.

We would conduct a thorough independent investigation with a forensic account. This is a necessary first step to restating any required financial statements and achieving our goal of an unqualified audit opinion. The unqualified audit opinion will be pursued in parallel with efforts to establish the proper capital structure to eliminate the going concern qualification.

9.	After the completion of the strategic objectives outlined above, we believe that Taronis Fuels will be in a position to successfully uplist the firm to the NYSE. This is an important objective which cannot be realistically achieved until the items above are completed.