Filed
Pursuant to Rule 424(b)(5)
Registration
No. 333-230854
PROSPECTUS
SUPPLEMENT
(To
Prospectus dated April 12, 2019)
TARONIS
TECHNOLOGIES, INC.
2,000
Shares of Series H-1 Preferred Stock
2,000,000
Warrants to Purchase Shares of Common Stock
2,000,000
Shares of Common Stock issuable upon the exercise of Warrants to Purchase Shares of Common Stock
We are offering, pursuant to this prospectus
supplement and the accompanying base prospectus, up to (i) 2,000 shares of Series H-1 Preferred Stock (“Series H-1 Preferred
Stock”), and (ii) 2,000,000 Warrants to Purchase Shares of Common Stock (“Common Stock Warrants”). The Series
H-1 Preferred Stock, and Common Stock Warrants will be issued separately but will be purchased together in the offering. This
prospectus supplement also relates to the offering of up to 2,000,000 shares of common stock, par value $0.001 per share
(“Common Stock”) upon the exercise, if any, of the Common Stock Warrants issued in this offering.
The
Common Stock Warrants may be exercised to purchase one share of Common Stock at an exercise price of $1.00 per share and will
be exercisable 6 months after the date of issuance and will terminate on the 5-year anniversary of the initial date of exercisability
of the Common Stock Warrants.
The
Series H-1 Preferred Stock is not convertible into Common Stock.
Our
common stock is listed on the NASDAQ Capital Market under the symbol “TRNX.” On December 12, 2019, the last reported
sale price of our Common Stock on the NASDAQ Capital Market was $1.11 per share. The Series H-1 Preferred Stock and the
Common Stock Warrants will not be listed on any national securities exchange. There is no established public trading market for
the Series H-1 Preferred Stock or the Common Stock Warrants, and we do not expect a market to develop.
The shares of Series H-1 Preferred Stock
are being offered directly to investors without a placement agent or underwriter. We are not paying underwriting discounts or
placement agent commissions in connection with the offering. The proceeds to us before expenses will be $1,700,000. We estimate
the total expenses of this offering will be approximately $50,000. This offering is expected to close on or about December
13, 2019, subject to customary closing conditions, without further notice to you.
Investing
in our securities involves a high degree of risk. Please read “Risk Factors” beginning on page S-4 of this prospectus
supplement and in the documents incorporated by reference into this prospectus supplement.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or
determined if this prospectus supplement or the accompanying prospectus are truthful or complete. Any representation to the contrary
is a criminal offense.
Prospectus
Supplement dated December 13, 2019.
TABLE
OF CONTENTS
You
should rely only on the information contained in or incorporated by reference in this prospectus supplement, the accompanying
prospectus and in any free writing prospectus that we have authorized for use in connection with this offering. We have not authorized
anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should
not rely on it. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted.
You should assume that the information in this prospectus supplement, the accompanying prospectus, the documents incorporated
by reference in this prospectus supplement and the accompanying prospectus, and in any free writing prospectus that we have authorized
for use in connection with this offering, is accurate only as of the date of those respective documents. Our business, financial
condition, results of operations and prospects may have changed since those dates. You should read this prospectus supplement,
the accompanying prospectus, the documents incorporated by reference in this prospectus supplement and the accompanying prospectus,
and any free writing prospectus that we have authorized for use in connection with this offering, in their entirety before making
an investment decision. You should also read and consider the information in the documents to which we have referred you in the
sections of this prospectus supplement entitled “Information Incorporated by Reference” and “Where You Can Find
More Information.”
ABOUT
THIS PROSPECTUS SUPPLEMENT
This
prospectus supplement and the accompanying prospectus form part of a registration statement on Form S-3 that we filed with the
Securities and Exchange Commission, or SEC, using a “shelf” registration process. This document contains two parts.
The first part consists of this prospectus supplement, which provides you with specific information about this offering. The second
part, the accompanying prospectus, provides more general information, some of which may not apply to this offering. Generally,
when we refer only to the “prospectus,” we are referring to both parts combined. This prospectus supplement may add,
update or change information contained in the accompanying prospectus. To the extent that any statement we make in this prospectus
supplement is inconsistent with statements made in the accompanying prospectus or any documents incorporated by reference herein
or therein, the statements made in this prospectus supplement will be deemed to modify or supersede those made in the accompanying
prospectus and such documents incorporated by reference herein and therein.
Unless
the context otherwise requires, all references to the terms “we,” “us,” “our,” and the “company”
throughout this prospectus supplement mean Taronis Technologies, Inc. and its subsidiaries.
All
references in this prospectus supplement to our financial statements include, unless the context indicates otherwise, the related
notes.
The
industry and market data and other statistical information contained in the documents we incorporate by reference are based on
management’s own estimates, independent publications, government publications, reports by market research firms or other
published independent sources, and, in each case, are believed by management to be reasonable estimates. Although we believe these
sources are reliable, we have not independently verified the information.
The
information contained in this prospectus supplement or the accompanying prospectus is accurate only as of the date of this prospectus
supplement or the accompanying prospectus, regardless of the time of delivery of this prospectus supplement, the accompanying
prospectus or of any sale of the securities. We further note that the representations, warranties and covenants made by us in
any agreement that is filed as an exhibit to any document that is incorporated by reference in this prospectus supplement or the
accompanying prospectus were made solely for the benefit of the parties to such agreement, including, in some cases, for the purpose
of allocating risk among the parties to such agreements, and should not be deemed to be a representation, warranty or covenant
to you. Moreover, such representations, warranties and covenants should not be relied on as accurately representing the current
state of our affairs.
PROSPECTUS
SUPPLEMENT SUMMARY
The
following summary of our business highlights some of the information contained elsewhere in or incorporated by reference into
this prospectus supplement. Because this is only a summary, however, it does not contain all of the information that may be important
to you. You should carefully read this prospectus supplement and the accompanying prospectus, including the documents incorporated
by reference, which are described under “Information Incorporated by Reference” and “Where You Can Find More
Information” in this prospectus supplement. You should also carefully consider the matters discussed in the section entitled
“Risk Factors” in this prospectus supplement, in the accompanying prospectus and in other periodic reports incorporated
herein by reference.
Our
Company
Overview
We
are a technology-based company that is focused on addressing the global constraints on natural resources, particularly water.
Our core technology application – water decontamination/sterilization – is derived from our patented and proprietary
Venturi® Plasma Arc System (“Venturi System”). The Venturi System works by generating a combination of electric
current, heat, ultraviolet light and ozone, that affects the feedstock run through the system to create a chosen outcome. We use
our Venturi System to sterilize bio-contaminants in waste and decontaminate water. We also own a controlling interest in a water
conservation technology company called the WATER PILOT®.
Sterilization
The
Venturi® System may be used process any number of liquified waste streams. In most cases we pass the selected waste stream
through the system a limited number of times to achieve the maximum sterilization/decontamination effect on the waste stream.
Our proprietary combination of electric current, heat, ultraviolet light and ozone has shown an ability to eliminate up to 99.9%
of EPA and USDA regulated pathogens such as e-coli and fecal coliform. We also believe our technology has the capability to eliminate
cyanobacteria commonly referred to as “blue-green algae” and are currently conducting tests to verify that capability.
The
Venturi® System forces a high-volume flow of liquid waste through a submerged plasma arc existing between carbon electrodes,
a process which sterilizes the bio-contaminants within the waste without requiring any chemical disinfecting agents. The Venturi
System also releases a clean burning fuel as a byproduct of the decontamination and sterilization process, which can be used to
offset some energy consumption. Because our Venturi® Systems are available in various sizes from 50kW to 500kW, they are applicable
to a broad array of end-users, including: (i) producers of contaminated waste streams (commercial manufacturers, farming operations,
chemical producers, etc.) who either desire to or are mandated by law to treat agricultural, pharmaceutical, industrial or manufacturing
waste streams prior to release into the ecosystem and (ii) local, state or federal governments, desirous of decontaminating water
sources or reclaiming waste water that is otherwise unusable.
The
WATER PILOT®
The
Company also owns a controlling interest in Water Pilot, LLC. The WATER PILOT® System immediately reduces water consumption
and provides its end users with live remote consumption monitoring for long term leak protection and water asset management. An
integral, client-based alarm and notification system that reports to any mobile device. Water Pilot may be appropriate for a wide
range of businesses or properties with a water meter. The Company currently sells the Water Pilot directly and through a network
of commissioned sales agents across the United States.
Our
Strategy
We
strive to be a leading clean technology company. We seek to accomplish this goal through commercialization of our existing proprietary
products, acquisition of similarly aligned businesses and through research and development to improve upon our products and discover
new products or applications.
To
further the commercialization of our Venturi® Systems for decontamination and sterilization, we have applied for and have
been awarded two grants from the United States Department of Agriculture and have successfully completed a number of pilot studies
and plan to open a commercial sterilization and decontamination facility in the United States within the next year. We also have
acquired a controlling interest in the Water Pilot, LLC, which is a water conservation technology company.
Our
research and development activities are focused on:
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the
potential ability to use the Venturi® System for the processing of agricultural waste and for the elimination of cyanobacteria,
commonly referred to as “blue-green algae”;
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proving
and scaling the utility our Venturi® System on a large-scale industrial basis;
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improvement
upon existing intellectual property related to the WATER PILOT®.
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Our
Distribution & Sales Network
Our
Venturi® Systems are distributed directly by the Company and marketed and/or sold via a network of international brokers.
The WATER PILOT® is sold directly by the Company and through a network of commissioned sales agents across the United States.
Competitive
Business Conditions
The
competitive landscape in which the Venturi® System may be utilized for wastewater decontamination and sterilization is relatively
undeveloped and we are not aware of any direct competitors at this time.
We
are unaware of direct competition related to the WATER PILOT® at this time, although there are a number of other water conservation
technologies in the marketplace today.
Reverse
Split
On
January 30, 2019, the Company effected a 20 for 1 reverse split of its issued and outstanding common stock. Thereafter, on August
22, 2019, the Company effected a 5 for 1 reverse split of its issued and outstanding common stock in order to regain compliance
with the Nasdaq Capital Markets minimum bid price rule. All share information in this registration statement on Form S-3 is retroactively
reflected for the August 22, 2019 reverse split.
Spin-Off
of Taronis Fuels, Inc.
On December 5, 2019, the Company
distributed five (5) shares of its wholly owned subsidiary Taronis Fuels, Inc. for every one (1) share of the Company owned by
holders of record on November 29, 2019 and retained through the distribution date. Taronis Fuels, Inc. is now a separate company
and the Company has not retained any historical operations related to the Venturi® System for the production of MagneGas or
any other industrial welding supply and gas distribution operations.
Corporate
Information
Taronis
Technologies, Inc. was organized as 4307 INC. under the laws of the State of Delaware on December 9, 2005. Our corporate headquarters
are located at 11885 44th Street North, Clearwater, Florida 33762 and our telephone number is (727) 934-3448.
Reports
to Security Holders
We
file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, registration statements and other
items pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) with the Securities and Exchange
Commission (“SEC”). The SEC maintains an internet site (www.sec.gov) that contains reports, proxy and information
statements regarding issuers that file electronically with the SEC.
Reports
to Security Holders
We
file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, registration statements and other
items pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) with the Securities and Exchange
Commission (“SEC”). The SEC maintains an internet site (www.sec.gov) that contains reports, proxy and information
statements regarding issuers that file electronically with the SEC.
The
Offering
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Securities
offered by the Company:
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(i)
2,000 shares of Series H-1 Preferred Stock, and (ii) 2,000,000 Common Stock Warrants.
The Series H-1 Preferred Stock, and Common Stock Warrants will be issued separately but
will be purchased together in the offering.
This prospectus supplement also relates to the offering
of up to 2,000,000 shares of Common Stock upon the exercise, if any, of the Common Stock Warrants issued in this offering.
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The
Common Stock Warrants may be exercised to purchase one share of Common Stock at an exercise
price of $1.00 per share and will be exercisable 6 months after the date of issuance
and will terminate on the 5-year anniversary of the date of initial exercisability of
the Common Stock Warrants.
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The Series H-1 Preferred Stock is not convertible into Common Stock.
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Common
Stock to be outstanding after this offering:
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28,832,477
shares of Common
Stock*
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Use
of proceeds:
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Working
capital and general corporate expenses. See “Use of Proceeds” on page S-7 of this prospectus supplement.
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Nasdaq
Capital Market (“Nasdaq”) Symbol:
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TRNX
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Risk
factors:
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This
investment involves a high degree of risk. See the information contained in or incorporated by reference under “Risk
Factors” beginning on page S-4 of this prospectus supplement and in the documents incorporated by reference into this
prospectus supplement.
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*The
number of shares of our Common Stock outstanding has been adjusted for the 5:1 reverse split that was effected on August 22, 2019
and is based on 28,832,477 shares of our common stock outstanding as of December 12, 2019 and excludes the following (in each
case, as of December 12, 2019):
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2,311 shares of Common Stock issuable upon the exercise of options;
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1,945 shares of Common Stock that are issuable upon the exercise of common stock warrants issued in a private placement in June 2017 (the “June 2017 Private Placement”);
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278 shares of Common Stock that are issuable upon the exercise of placement agent warrants issued in the June 2017 Private Placement;
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218,000 shares of Common Stock that are issuable upon the exercise of common stock warrants granted in the October 2018 Registered Direct Offering and Private Placement;
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94,650 shares of Common Stock that are issuable upon the exercise of common stock warrants granted in a February 2019 Confidentially Marketed Public Offering;
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3,111,111 shares of Common Stock issuable upon exercise of the Common Stock Warrants issued in connection with the issuance of the Series G Convertible Preferred Stock at an exercise price of $1.91 per share;
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1,555,556 shares of Common Stock issuable upon conversion of the Series G Convertible Preferred Stock; and
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2,000,000 shares of Common Stock issuable upon exercise of the Common Stock Warrants issued in connection with this offering at an exercise price of $1.00 per share.
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Unless
otherwise indicated, all information in this prospectus assumes no exercise of the outstanding options and warrants and no exercise
of the Common Stock Warrants.
RISK
FACTORS
An
investment in our securities involves a high degree of risk. You should carefully consider and evaluate all of the information
included and incorporated by reference in this prospectus, as well as the other risk factors incorporated herein by reference
from “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2018, and as further
updated by our subsequent Exchange Act filings we file with the SEC after the filing of the registration statement of which this
prospectus is a part and that are, in each case, incorporated by reference herein. Any of these risks could materially and adversely
affect our business, results of operations and financial condition, which in turn could materially and adversely affect the price
of our common stock and the value of your investment in our securities.
Risks
Relating to Our Business
Our
business strategy includes growth, and our financial condition and results of operations could be negatively affected if we fail
to grow or fail to manage our growth effectively.
Over
the course of our business development as a technology company, we have established a retail and wholesale platform and network
of brokers to sell our products. Our business strategy includes continued expansion of this our sales network by way of acquisitions
and organic growth. Our ability to successfully grow will depend on a variety of factors, including the ability of our executive
officers to execute our business strategy. Growth opportunities may not be available or we may not be able to manage our growth
successfully. If we do not manage our growth effectively, our financial condition and operating results could be negatively affected.
Furthermore, there are considerable costs involved in acquiring companies and expanding retail capacity, and generally a period
of time is required to generate the necessary revenues to offset these costs, especially in areas in which we do not have an established
presence. Accordingly, any such business expansion can be expected to negatively impact our earnings until certain economies of
scale are reached.
Pending
and future litigation and government investigations may have a material adverse impact on our financial condition and results
of operations.
From
time to time the Company may be a party to litigation matters or regulatory investigations involving claims against the Company
or its wholly-owned subsidiaries. The Company is subject to an increased risk of litigation and regulatory investigation due to
the Company’s operation in a highly regulated industry.
In
addition, we may be a party to litigation matters involving our business, which operates within a highly regulated industry. On
September 4, 2018, we received notice that a law firm representing the estate of an individual who sustained life-ending injuries
while working for an end user of our products had made a claim to our insurance carrier. The matter is under investigation by
the U.S. Department of Transportation and the Occupational Health and Safety Administration. The Company is still investigating
the cause of the accident and there have been no conclusive findings as of this time. It is unknown whether the final cause of
the accident will be determined and whether those findings will negatively impact Company operations or sales. The Company continues
to be fully operational and transparent with all regulatory agencies.
On
April 15, 2019, an alleged shareholder filed a purported class action in the United States District Court for the Middle District
of Florida against the Company and certain of its officers and directors, captioned Hatten v. Taronis Technologies, Inc., et al.,
Case No. 8:19-cv-00889 (M.D. Fla.). The complaint purports to be brought on behalf of a class consisting of all persons (other
than defendants) who purchased or otherwise acquired securities of the Company between January 28, 2019 and February 12, 2019
and alleges that the Company and the individual defendants violated federal securities laws, including Sections 10(b) and/or 20(a)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder, by
making alleged false and/or misleading statements and failing to disclose certain information regarding the Company’s business
with the City of San Diego.
On
June 21, 2019, the United States District Court for the Middle District of Florida granted the parties’ joint motion to
transfer the case to the United States District Court for the District of Arizona. On July 10, 2019, the Court appointed a Lead
Plaintiff. The case is now captioned Zhu, et al. v. Taronis Technologies, Inc., et al., No. CV-19-04529-PHX-GMS (D. Ariz.). On
August 2, 2019, the Court established a schedule for the filing of an operative amended complaint and a response thereto.
On
August 30, 2019, Lead Plaintiff filed an amended complaint that alleges the same claims and class period as the initial complaint.
Defendants’ motion to dismiss the amended complaint is due on October 14, 2019.
On
June 25, 2019, a shareholder derivative complaint was filed against certain of the Company’s directors and officers in the
United States District Court for the District of Arizona. The case is captioned Falcone v. Dingess, et al., No. CV-19-04547-PHX-DJH
(D. Ariz.). The complaint alleges, among other things, that the defendants violated federal securities laws, including Section
10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, by making alleged false and/or misleading statements and failing
to disclose certain information regarding the Company’s business with the City of San Diego. The complaint further alleges
breaches of fiduciary duties, waste of corporate assets, and gross mismanagement. The factual allegations upon which these claims
are based are similar to the factual allegations made in the Securities Class Action Litigation, described above. The complaint
seeks, among other things, unspecified damages for the Company from the individual defendants, the payment of costs and attorneys’
fees, and that the Company be directed to reform certain governance and internal procedures.
On
September 20, 2019, a shareholder derivative complaint was filed against certain of the Company’s directors and officers
in the United States District Court for the District of Arizona. The case is captioned Manley v. Mahoney, et al., No. 2:19-cv-05233-DLR
(D. Ariz.). The complaint alleges breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and waste
of corporate assets. The factual allegations upon which these claims are based are similar to the factual allegations made in
the Securities Class Action Litigation, described above. The complaint seeks, among other things, unspecified damages for the
Company from the individual defendants, the payment of costs and attorneys’ fees, and that the Company be directed to reform
certain governance and internal procedures.
On
September 30, 2019, a shareholder derivative complaint was filed against certain of the Company’s directors and officers
in the United States District Court for the District of Delaware. The case is captioned Campos v. Dingess, et al., No. 1:19-cv-01831-CFC
(D. Del.). The complaint alleges, among other things, that the defendants violated federal securities laws, including Section
10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, by making alleged false and/or misleading statements and failing
to disclose certain information regarding the Company’s business with the City of San Diego. The complaint also alleges
that the defendants violated Section 14(a) of the Exchange Act by issuing materially misleading statements concerning the Company’s
corporate governance, oversight and internal controls in a certain 2019 Proxy Statement. The complaint further alleges breaches
of fiduciary duties and unjust enrichment. The factual allegation upon which these claims are based are similar to the factual
allegations made in the other securities class action litigation, described above, and area also based on allegations that the
Company made false and misleading statements concerning corporate governance, oversight, and internal controls in a certain 2019
Proxy Statement. The complaint seeks, among other things, unspecified damages for the Company from the individual defendants
and the payment of costs and attorneys’ fees. On October 29, 2019, the Court entered an order staying this action through
the motion to dismiss in the securities class action litigation described above.
For
more information regarding pending litigation or potential legal proceedings, please see the Sections captioned “Item
3. Legal Proceedings” contained in our Annual Report on Form 10-K for the year ended December 31, 2018, “Item
1. Legal Proceedings” contained in our Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission
subsequent to the Form 10-K, and our Current Report on Form 8-K filed with the SEC on December 13, 2018.
Risks
Related to Our Intellectual Property
Several
patents in our patent portfolio have imperfect chains of title, which could result in ownership challenges by third parties. The
cost to defend against such ownership challenges or the loss of such patents could have a material adverse effect on our business,
operation or financial results.
Our
patents, U.S. Patent No’s. 6,183,604, 6,663,752, and 6,673,322, have defects in their original patent
assignments. We have filed several nunc pro tunc assignments to correct the assignment defects for each of these patents
(the “Corrective Assignments”). The Corrective Assignments are intended to correct the defects in earlier defective
patent assignments such that each patent is valid and enforceable by us. The Corrective Assignments do not replace the assignments
previously recorded at the U.S. Patent and Trademark Office. Instead, the Corrective Assignments are intended to repair the defects
in the prior patent assignments. Notwithstanding the recordation of the Corrective Assignments, the ownership of each patent may
be subject to ownership challenges and the costs to defend against such ownership challenges or the loss of such patents could
have a material adverse effect on our business, operations or financial results.
Cautionary
Note Regarding Forward-Looking Statements
This
prospectus supplement (including any documents incorporated by reference herein) contains statements with respect to us which
constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act, and Section 21E of
the Securities Exchange Act of 1934, as amended, and are intended to be covered by the “safe harbor” created by those
sections. Forward-looking statements, which are based on certain assumptions and reflect our 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” or other comparable terms. These forward-looking statements include, but are
not limited to, statements concerning future events, our future financial performance, business strategy and plans and objectives
of management for future operations. Our actual results could differ materially from those discussed in the forward-looking statements.
Factors that could cause or contribute to these differences include those discussed in “Risk Factors” in this prospectus
supplement and the documents incorporated by reference herein.
We
caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are
made. We disclaim any obligation, except as specifically required by law and the rules of the Securities and Exchange Commission,
to publicly update or revise any such statements to reflect any change in company 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.
You
should read this prospectus supplement, the accompanying prospectus, and the documents that we incorporate by reference herein
and therein and have filed as exhibits to the registration statement of which this prospectus supplement is part, completely and
with the understanding that our actual future results may be materially different from what we expect. You should assume that
the information appearing in this prospectus supplement is accurate as of the date on the cover of this prospectus supplement
only. Our business, financial condition, results of operations and prospects may change. We may not update these forward-looking
statements, even though our situation may change in the future, unless we have obligations under the federal securities laws to
update and disclose material developments related to previously disclosed information. We qualify all of the information presented
in this prospectus supplement, and particularly our forward-looking statements, by these cautionary statements.
USE
OF PROCEEDS
We
estimate that the net proceeds of this offering, after deducting investor discounts and our estimated offering expenses,
and excluding the proceeds, if any, from the cash exercise of the Common Stock Warrants issued in this offering, will be $1.7
million if we sell the maximum number of securities. Upon the cash exercise of the Common Stock Warrants, we will receive the
exercise price of the warrants which is $1.00 per share, for an aggregate of $2,000,000. There is no assurance any Common Stock
Warrants will be exercised for cash.
We plan to use the net proceeds
for general corporate purposes. General corporate purposes may include providing working capital, funding capital expenditures,
or paying for acquisitions. We currently do not have any arrangements or agreements for any acquisitions. We cannot precisely
estimate the allocation of the proceeds from any exercise of the warrants for cash. Accordingly, in the event the warrants are
exercised for cash, our management will have broad discretion in the application of the proceeds of such exercises. Pending the
use of proceeds, we may invest the proceeds of any warrant for cash exercise in certificates of deposit or direct or guaranteed
obligations of the U.S. government. There is no assurance that the warrants will ever be exercised for cash.
DESCRIPTION
OF SECURITIES WE ARE OFFERING
Pursuant
to this prospectus supplement and the accompanying prospectus, we are offering up to (i) 2,000 shares of Series H-1 Preferred
Stock, and (ii) 2,000,000 Common Stock Warrants. The securities are being sold directly to one or more institutional investors
pursuant to a securities purchase agreement dated December 12, 2019. The Series H-1 Preferred Stock, and Common Stock Warrants
will be issued separately but will be purchased together in the offering. This prospectus supplement also relates to the offering
of up to 2,000,000 shares of our common stock, par value $0.001 per share, upon the exercise, if any, of the Common Stock Warrants
issued in this offering.
As of December 12, 2019, our
authorized capital stock consisted of 190,000,000 shares of Common Stock, of which 28,832,477 shares were issued and outstanding,
and 10,000,000 shares of Preferred Stock, par value $0.001 per share, of which 3,500 shares of Series G Convertible Preferred
Stock are issued and outstanding. In addition, as of December 12, 2019, there were issued and outstanding options to purchase
2,311 shares of Common Stock and warrants to purchase 3,425,984 shares of Common Stock. The authorized and unissued shares of
Common Stock and Preferred Stock are available for issuance without further action by our stockholders, unless such action is
required by applicable law or the rules of any stock exchange on which our securities may be listed.
Common
Stock
Holders
of our Common Stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Our Common Stock does
not have cumulative voting rights. Holders of our Common Stock representing a majority of the voting power of our capital stock
issued and outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting
of our stockholders. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental
corporate changes such as liquidation, merger or an amendment to our certificate of incorporation. Although there are no provisions
in our charter or by-laws that may delay, defer or prevent a change in control, the board of directors is authorized, without
stockholder approval, to issue shares of Preferred Stock that may contain rights or restrictions that could have this effect.
Holders of Common Stock are entitled to share in all dividends that the board of directors, in its discretion, declares from legally
available funds. In the event of liquidation, dissolution or winding up, each outstanding share entitles its holder to participate
pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference
over the common stock. Holders of our Common Stock have no pre-emptive rights, no conversion rights and there are no redemption
provisions applicable to our Common Stock.
All
of our outstanding shares of Common Stock are, and the shares of Common Stock to be issued in this offering will be, fully paid
and nonassessable.
Series
H-1 Preferred Stock
The
terms of the Series H-1 Preferred Stock are contained in the Certificate of Designations, Preferences and Rights of the Series
H-1 Preferred Stock of Taronis Technologies, Inc., or the Series H-1 Certificate of Designations, that we filed with the Secretary
of State of the State of Delaware on December 13, 2019. The following description is a summary of the material provisions
of the Series H-1 Preferred Stock and the Series H-1 Certificate of Designations. It does not purport to be complete and is qualified
in all respects by the terms of the Series H-1 Certificate of Designations. We urge you to read the Series H-1 Certificate of
Designations because it, and not this description, defines the rights of holders of Series H-1 Preferred Stock. We have included
the Series H-1 Certificate of Designations in our Current Report on Form 8-K filed with the Commission on December 13,
2019, which is incorporated by reference into this prospectus.
Rank
The
Series H-1 Preferred Shares shall rank prior and superior to all of the Common Stock and any other capital stock of the Company,
except the Company’s Series G Convertible Preferred Stock, par value $0.001 per share (the “Series G Preferred Shares”),
with respect to the preferences as to dividends, distributions and payments upon a Liquidation Event (such stock being referred
to hereinafter collectively as “Junior Stock”). The rights of the shares of Common Stock and other capital stock of
the Company, except for the Series G Preferred Shares, shall be of junior rank to and subject to the preferences and relative
rights of the Series H-1 Preferred Shares. The Series G Preferred Shares shall rank equal to the Series H-1 Preferred Shares with
respect to the preferences as to dividends, distributions and payments upon a Liquidation Event (the Series G Preferred Shares
and such other stock, if any, ranking equal to the Series H-1 Preferred Shares as to dividends, distributions and payments upon
a Liquidation Event.
In
addition, upon the occurrence certain triggering events as described below, a holder of Series H-1 Preferred Stock has the option
to redeem a portion of the Series H-1` Preferred Stock Company in cash by wire transfer of immediately available funds at a price
equal to 118% of the Redemption Amount being redeemed.
The
“Maturity Date” for the Series H-1 Preferred Stock shall be the earlier to occur of (i) the date that the Company
obtains the approval of its stockholders to issue all shares of Common Stock issuable (A) pursuant to the terms of the Certificate
of Designations, Preferences and Rights (the “Series H CoD”) of the Company’s Series H Preferred Stock, par
value $0.001 per share (the “Series H Preferred Shares”) and (B) upon exercise of the warrants to purchase Common
Stock to be issued in connection with the Series H Preferred Shares , in each case, without giving effect to any limitation on
the issuance of shares of Common Stock pursuant to the terms of the Series H CoD or upon exercise of such warrants to purchase
Common Stock set forth therein, in accordance with the rules and regulations of the Principal Market and (ii) January 31, 2020,
as may be extended pursuant to the terms of the Certificate of Designations, Preferences and Rights of the Series H-1 Preferred
Stock.
Dividends
Holders
of the Series H-1 Preferred Stock will be entitled to receive dividends, if and when declared by our Board of Directors, from
time to time, in its sole discretion and in accordance with the requirements of Delaware General Corporation Law. Upon the occurrence
of certain triggering events, the holders will be entitled to receive dividends at a rate of eighteen percent (18.0%) per annum.
Conversion
The
shares of Series H-1 Preferred Stock are not convertible into common stock.
Triggering
Events
The
Series H-1 Certificate of Designations provide for certain triggering events which include, but are not limited to:
(i)
(A) the suspension of the Common Stock from trading on an Eligible Market for a period of two (2) consecutive Trading Days or
for more than an aggregate of ten (10) Trading Days in any 365-day period or (B) the failure of the Common Stock to be listed
on an Eligible Market;
(ii)
the Company’s failure to pay to such Holder any amount of Stated Value, dividends, Late Charges, Redemption Price or other
amounts when and as due under this Certificate of Designations or any other Transaction Document, except, in the case of a failure
to pay dividends and/or Late Charges when and as due, in which case only if such failure continues for a period of at least an
aggregate of two (2) Business Days;
(iii)
the occurrence of any default (after lapse of any applicable cure periods) under, redemption of or acceleration prior to maturity
of at least an aggregate of $100,000 of Indebtedness of the Company or any of its Subsidiaries;
(iv)
the Company or any of its Subsidiaries, pursuant to or within the meaning of Title 11, U.S. Code, or any similar federal, foreign
or state law for the relief of debtors (collectively, “Bankruptcy Law”), (A) commences a voluntary case, (B) consents
to the entry of an order for relief against it in an involuntary case, (C) consents to the appointment of a receiver, trustee,
assignee, liquidator or similar official (a “Custodian”), (D) makes a general assignment for the benefit of its creditors
or (E) admits in writing that it is generally unable to pay its debts as they become due;
(v)
a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (A) is for relief against the Company
or any of its Subsidiaries in an involuntary case, (B) appoints a Custodian of the Company or any of its Subsidiaries or (C) orders
the liquidation of the Company or any of its Subsidiaries;
(vi)
a final judgment or judgments for the payment of money aggregating in excess of $100,000 are rendered against the Company or any
of its Subsidiaries and which judgments are not, within sixty (60) days after the entry thereof, bonded, discharged or stayed
pending appeal, or are not discharged within sixty (60) days after the expiration of such stay; provided, however, that any judgment
which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $100,000 amount
set forth above so long as the Company provides the Holders a written statement from such insurer or indemnity provider (which
written statement shall be reasonably satisfactory to the Holders) to the effect that such judgment is covered by insurance or
an indemnity and the Company or such Subsidiary (as the case may be) will receive the proceeds of such insurance or indemnity
within thirty (30) days of the issuance of such judgment;
(vii)
other than as specifically set forth in another clause of this Section 5(a), the Company or any of its Subsidiaries breaches any
representation, warranty, covenant or other term or condition of any Transaction Document, except, in the case of a breach of
a covenant or other term or condition of any Transaction Document which is curable, only if such breach remains uncured for a
period of five (5) consecutive Business Days;
(viii)
any breach or failure in any respect to comply with either Sections 11 or 12 of this Certificate of Designations;
(ix)
any material damage to, or loss, theft or destruction of, any material amount of property of the Company, whether or not insured,
or any strike, lockout, labor dispute, embargo, condemnation, act of God or public enemy, or other casualty which causes, for
more than fifteen (15) consecutive days, the cessation or substantial curtailment of revenue producing activities at any facility
of the Company or any Subsidiary, if any such event or circumstance would reasonably be expected to have a Material Adverse Effect;
(x)
a false or inaccurate certification (including a false or inaccurate deemed certification) as to whether any Triggering Event
has occurred; or
(xi)
any Material Adverse Effect occurs.
Voting
Rights
Each
Holder of Series H-1 Preferred Stock shall vote on all matters submitted to a class vote of the Holders. Except as set forth in
this Section 10 of the Series H-1 Certificate of Designations and as required by applicable law, the Series H-1 Preferred Shares
shall not have any voting rights.
Exchange
Listing
There
is no established public trading market for the Series H-1 Preferred Stock, and we do not expect a market to develop. In addition,
we do not intend to apply for listing of the Series H-1 Preferred Stock on any securities exchange or recognized trading system.
Common
Stock Warrants
The
following description is a summary of the material provisions of the Common Stock Warrants does not purport to be complete and
is qualified in all respects by the form of warrant. We have included the form of Common Stock Warrant in our Current Report on
Form 8-K filed with the Commission on December 13, 2019, which is incorporated by reference into this prospectus.
Pursuant
to the terms of the securities purchase agreement, the Company is offering Common Stock Warrants to purchase up to 2,000,000 shares
of Common Stock. The Common Stock Warrants will be exercisable beginning on the Initial Exercisability Date, in whole or in part,
which is at any time or times on or after the six (6) month anniversary of the Issuance Date, at an exercise price of $1.00 per
share (the “Exercise Price”). The Common Stock Warrants will be exercisable for 60 months following the Initial Exercisability
Date.
If
on or after the Initial Exercisability Date, a registration statement under the 1933 Act registering the issuance of the Unavailable
Warrant Shares is not available for the issuance of such Unavailable Warrant Shares, the Investors may exercise the Warrants by
means of a “cashless exercise”. Subject to limited exceptions, a holder of Warrants will not have the right to exercise
any portion of its Warrants if such holder, together with its affiliates, would beneficially own in excess of 4.99% (or, at the
election of the holder, 9.99%) of the number of shares of Common Stock outstanding immediately after giving effect to such exercise
(the “Beneficial Ownership Limitation”); provided, however, that each holder may increase or decrease the Beneficial
Ownership Limitation by giving notice to the Company; provided, however, that any increase of the Beneficial Ownership Limitation
will only take effect upon 61 days’ prior notice to the Company, but not to any percentage in excess of 9.99%.
The
Exercise Price and number of shares of Common Stock issuable upon the exercise of the Common Stock Warrants will be subject to
adjustment in the event of any stock dividends, forward or reverse stock split, recapitalization, reorganization or similar transaction.
CAPITALIZATION
The
following table sets forth our consolidated capitalization as of September 30, 2019 and our capitalization as of September
30 on a pro forma basis, based on a public offering price of $1,000 per share of Series H-1 Preferred Stock and related
Common Stock Warrants, but excluding the exercise of Common Stock Warrants, offering expenses and investor discounts. You
should read the following table in conjunction with “Use of Proceeds” in this prospectus supplement and our consolidated
financial statements and the notes thereto incorporated by reference in this prospectus supplement and the accompanying prospectus.
|
|
|
As
of
September
30, 2019
(unaudited)
|
|
|
Pro
Forma
(assuming
$2,000,000 in issuance of Securities
sold
in the Offering)
|
|
|
(Dollar amounts in thousands)
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
536
|
|
|
$
|
2,536
|
|
|
Long term debt
|
|
|
|
|
|
|
|
|
|
Note payable
|
|
$
|
1,477
|
|
|
$
|
1,477
|
|
|
Capital leases, net of current
|
|
$
|
97
|
|
|
$
|
97
|
|
|
Operating leases, net of current
|
|
$
|
2,944
|
|
|
$
|
2,944
|
|
|
Senior convertible debenture, net of debt discount
|
|
$
|
457
|
|
|
$
|
457
|
|
|
Total Liabilities
|
|
$
|
11,488
|
|
|
$
|
11,488
|
|
|
Stockholders’ equity
|
|
|
|
|
|
|
|
|
|
Common stock: $0.001 par; 190,000,000 shares authorized; 18,229,459 shares issued and outstanding
at September 30, 2019
|
|
$
|
18
|
|
|
$
|
18
|
|
|
Preferred stock: $0.001 par; 10,000,000 shares authorized; no shares issued and outstanding
at September 30, 2019
|
|
|
0
|
|
|
|
0
|
|
|
Additional paid-in-capital
|
|
$
|
135,676
|
|
|
$
|
137,676
|
|
|
Accumulated deficit
|
|
$
|
(99,421
|
)
|
|
$
|
(99,421
|
)
|
|
Total stockholders’ equity
|
|
$
|
36,273
|
|
|
$
|
38,273
|
|
|
Total Capitalization
|
|
$
|
41,248
|
|
|
$
|
43,248
|
|
DILUTION
The
following section has been adjusted for the Company’s 1:5 reverse split completed on August 22, 2019.
If
you purchase our securities in this offering, your interest will be diluted to the extent of the difference between the price
per share of Common Stock and accompanying Warrant you pay in this offering and the net tangible book value per share of our Common
Stock immediately after this offering. Our net tangible book value of our Common Stock as of September 30, 2019 was approximately
$28,899,000, or approximately $1.58 per share of Common Stock based on 18,229,459 shares outstanding at that time. “Net
tangible book value” is total assets minus the sum of liabilities and intangible assets. “Net tangible book value
per share” is net tangible book value divided by the total number of shares outstanding.
After
giving effect to the sale of 2,000 Series H-1 Preferred Stock shares and Common Stock Warrants to purchase up to 2,000,000 shares
of our Common Stock in the aggregate amount of $2,000,000 in this offering at a public offering price of $1,000 per share of Series
H-1 Preferred Stock and Common Stock Warrants (and excluding shares of Common Stock issuable and any proceeds receivable upon
exercise of the Common Stock Warrants or any resulting accounting associated with the Common Stock Warrant), and after deducting
estimated offering expenses payable by us and investor discounts, our net tangible book value as of September 30, 2019 would have
been approximately $30,899,000, or approximately $1.69 per share of Common Stock based on 18,229,459 shares of Common Stock outstanding
at that time. This represents an immediate increase in net tangible book value of $0.11 per share to our existing stockholders
and an immediate dilution of approximately $998.30 per share to new investors participating in this offering, as illustrated by
the following table:
|
Offering price per Unit
of Series H-1 Preferred and Common Stock Warrant
|
|
|
|
|
|
$
|
1,000
|
|
|
Net tangible book value per share as of September 30, 2019
|
|
$
|
1.58
|
|
|
|
|
|
|
Increase in as-adjusted
net tangible book value per share after this offering
|
|
$
|
0.11
|
|
|
|
|
|
|
As-adjusted net
tangible book value per share after this offering
|
|
|
|
|
|
$
|
1.69
|
|
|
Dilution in as-adjusted
net tangible book value per share to new investors
|
|
|
|
|
|
$
|
998.30
|
|
Assuming
the Common Stock Warrants are immediately exercised, this would result in a net tangible book value per share after giving effect
to this offering and Warrant exercises of $2,000,000, which represents a dilution per share of Common Stock to new investors of
$998.20 and an increase in net tangible book value per share to existing shareholders of approximately $0.22.
The
discussion of dilution, and the table quantifying it, assume the sale of all shares and accompanying Common Stock Warrants covered
by this prospectus supplement and no exercise of any of the Common Stock Warrants offered hereby or any outstanding options or
warrants or other potentially dilutive securities. The exercise of potentially dilutive securities having an exercise price less
than the offering price would increase the dilutive effect to new investors.
In
particular, the table above excludes the following securities as of September 30, 2019:
|
|
●
|
2,311
shares of Common Stock issuable upon the exercise of options;
|
|
|
|
|
|
|
●
|
1,945
shares of Common Stock that are issuable upon the exercise of common stock warrants issued in a private placement in June
2017 (the “June 2017 Private Placement”);
|
|
|
|
|
|
|
●
|
278
shares of Common Stock that are issuable upon the exercise of placement agent warrants issued in the June 2017 Private Placement;
|
|
|
|
|
|
|
●
|
218,000
shares of Common Stock that are issuable upon the exercise of common stock warrants granted in the October 2018 Registered
Direct Offering and Private Placement;
|
|
|
|
|
|
|
●
|
94,650
shares of Common Stock that are issuable upon the exercise of common stock warrants granted in a February 2019 Confidentially
Marketed Public Offering;
|
To
the extent that any of these options or warrants are exercised, new options are issued under our equity incentive plans and subsequently
exercised or we issue additional shares of Common Stock in the future, there will be further dilution to new investors participating
in this offering.
PLAN
OF DISTRIBUTION
There
is no requirement that any minimum number of securities or dollar amount of units be sold in this offering and there can be no
assurance that we will sell all or any of the securities being offered.
We
currently anticipate that closing of this offering will take place on or about December 13, 2019. On the scheduled closing
date, the following will occur:
|
|
●
|
we
will receive funds in the amount of the aggregate purchase price; and
|
|
|
●
|
we
will deliver the securities to the investors.
|
The
transfer agent and registrar for our common stock is Corporate Stock Transfer, Inc. The transfer agent’s address is 3200
Cherry Creek South Drive, Suite 430, Denver, CO 80209, and its telephone number is (303) 282-4800.
Our
common stock is listed on The Nasdaq Capital Market under the symbol “TRNX.”
LEGAL
MATTERS
The
validity of the securities offered hereby will be passed upon for us by Tyler B. Wilson, Esq., our General Counsel.
EXPERTS
The
consolidated financial statements of the Company as of December 31, 2018 and for the year ended December 31, 2017 incorporated
in this prospectus supplement by reference to our Annual Report on Form 10-K for the year ended December 31, 2018, have been so
incorporated in reliance on the report (which contains an explanatory paragraph relating to our ability to continue as a going
concern as described in the notes to the consolidated financial statements) of Marcum LLP, an independent registered public accounting
firm, given on the authority of said firm as experts in auditing and accounting.
Where
You Can Find More Information
This
prospectus supplement is part of a universal shelf registration statement on Form S-3 that we filed with the SEC under the Securities
Act of 1933, as amended, and does not contain all the information set forth in the registration statement. Whenever a reference
is made in this prospectus supplement to any of our contracts, agreements or other documents, the reference may not be complete,
and you should refer to the exhibits that are a part of the registration statement of which this prospectus supplement is a part,
or the exhibits to the reports or other documents incorporated by reference in this prospectus supplement for a copy of such contract,
agreement or other document.
Because
we are subject to the information and reporting requirements of the Securities Exchange Act of 1934, as amended, we file annual,
quarterly and special reports, and other information with the SEC. Our SEC filings are available to the public over the Internet
at the SEC’s website at http://www.sec.gov.
The
website addresses referenced herein are not intended to function as hyperlinks, and the information contained in our website and
in the SEC’s website is not incorporated by reference into this prospectus supplement and should not be considered to be
part of this prospectus supplement.
INFORMATION
INCORPORATED BY REFERENCE
The
SEC allows us to incorporate by reference into this prospectus supplement the information contained in other documents we file
with the SEC, which means that we can disclose important information to you by referring you to those documents. Any statement
contained in any document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded,
for purposes of this prospectus supplement, to the extent that a statement contained in or omitted from this prospectus supplement,
or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein, modifies or supersedes
such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute
a part of this prospectus supplement. This prospectus supplement incorporates by reference our documents listed below and any
future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until all of the securities are
sold:
|
|
●
|
Our
Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on April 12, 2019.
|
|
|
|
|
|
|
●
|
Our
Quarterly Report on Form 10-Q for the quarters ended March 31, 2019 and June 30, 2019 and September 30, 2019, filed with the
SEC on May 20, 2019 and August 19, 2019 and November 19, 2019, respectively.
|
|
|
|
|
|
|
●
|
Our
Current Reports on Form 8-K and Form 8-K/A, filed with the SEC on January 11, 2019 (two
on this date), January 15, 2019, January 18, 2019, January 24, 2019, January 28, 2019,
January 31, 2019, February 4, 2019, February 5, 2019, February 7, 2019, February 8, 2019,
February 12, 2019, February 13, 2019, February 19, 2019 (two on this date), February
28, 2019, March 8, 2019, May 3, 2019, May 13, 2019, June 3, 2019, June 6, 2019, June
19, 2019, July 12, 2019, July 17, 2019, July 25, 2019, August 20, 2019, August 21, 2019,
September 4, 2019, September 23, 2019, October 15, 2019, November 14, November 15, 2019,
November 29, 2019, December 2, 2019, December 6, 2019, December 10, 2019 and December
13, 2019.
|
|
|
|
|
|
|
●
|
Our
Definitive Proxy Statement on Schedule 14A filed on July 29, 2019, but only to the extent that such information was incorporated
by reference into our Annual Report on Form 10-K for the year ended December 31, 2018.
|
|
|
|
|
|
|
●
|
The
description of our common stock contained in our registration statement on Form 8-A filed with the SEC on August 14, 2012,
under Section 12(b) of the Exchange Act, including any amendments or reports filed for the purpose of updating such description.
|
Notwithstanding
the foregoing, we are not incorporating any document or portion thereof or information deemed to have been furnished and not filed
in accordance with SEC rules.
You
may request a free copy of the above-mentioned filings or any subsequent filings we incorporate by reference to this prospectus
supplement by writing or telephoning us at the following address: Taronis Technologies, Inc., 16165 N. 83rd Ave., Ste 200, Peoria,
Arizona 85382, (866) 370-3835.
PROSPECTUS
$100,000,000
Common
Stock, Preferred Stock,
Warrants,
Rights, Units
We
may offer and sell up to $100,000,000 in the aggregate of the securities identified above from time to time in one or more offerings.
This prospectus provides you with a general description of the securities.
Each
time we offer and sell securities, we will provide a supplement to this prospectus that contains specific information about the
offering and the amounts, prices and terms of the securities. The supplement may also add, update or change information contained
in this prospectus with respect to that offering. You should carefully read this prospectus and the applicable prospectus supplement
before you invest in any of our securities.
We
may offer and sell the securities described in this prospectus and any prospectus supplement to or through one or more underwriters,
dealers and agents, or directly to purchasers, or through a combination of these methods. If any underwriters, dealers or agents
are involved in the sale of any of the securities, their names and any applicable purchase price, fee, commission or discount
arrangement between or among them will be set forth, or will be calculable from the information set forth, in the applicable prospectus
supplement. See the sections of this prospectus entitled “About this Prospectus” and “Plan of Distribution”
for more information. No securities may be sold without delivery of this prospectus and the applicable prospectus supplement describing
the method and terms of the offering of such securities.
Our
common stock is listed on the NASDAQ Capital Market under the symbol “TRNX.” On April 12, 2019, the last reported
sale price of our common stock on the NASDAQ Capital Market was $0.99 per share.
As
of April 12, 2019, the aggregate market value of our outstanding common stock held by non-affiliates was $24,044316.10 million
based on 24,287,188 shares outstanding, of which 21,856,158 shares are held by non-affiliates, and a per share price of $0.99,
based on the last reported sale price of our common shares on the NASDAQ Capital Market on April 12, 2019. During the twelve-calendar
month period ending on and including the date of this prospectus, we did not sell any securities pursuant to General Instruction
I.B.6. of Form S-3.
Investing
in our securities involves risks. See the “risk factors” on page 6 of this prospectus and any similar section
contained in the applicable prospectus supplement concerning factors you should consider before investing in our
securities.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or
determined if this prospectus supplement or the accompanying prospectus are truthful or complete. Any representation to the contrary
is a criminal offense.
The
date of this prospectus is April [ ], 2019.
TABLE
OF CONTENTS
You
should rely only on the information contained in or incorporated by reference in this prospectus, any prospectus supplement and
in any free writing prospectus that we have authorized for use in connection with an offering. We have not authorized anyone to
provide you with additional or different information. If anyone provides you with different or inconsistent information, you should
not rely on it. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted.
You should assume that the information in this prospectus, any accompanying prospectus supplement, the documents incorporated
by reference in this prospectus any accompanying prospectus supplement, and any free writing prospectus that we have authorized
for use in connection with an offering, is accurate only as of the date of those respective documents. Our business, financial
condition, results of operations and prospects may have changed since those dates. You should read this prospectus, any accompanying
prospectus supplement, the documents incorporated by reference in this prospectus and any accompanying prospectus supplement,
and any free writing prospectus that we have authorized for use in connection with an offering, in their entirety before making
an investment decision. You should also read and consider the information in the documents to which we have referred you in the
sections of this prospectus entitled “Information Incorporated by Reference” and “Where You Can Find More Information.”
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement that we filed with the SEC, using a “shelf” registration process. By
using a shelf registration statement, we may sell securities from time to time and in one or more offerings up to a total dollar
amount of $100,000,000 as described in this prospectus. Each time that we offer and sell securities, we will provide a prospectus
supplement to this prospectus that contains specific information about the securities being offered and sold and the specific
terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus with
respect to that offering. If there is any inconsistency between the information in this prospectus and the applicable prospectus
supplement, you should rely on the prospectus supplement.
Unless
the context otherwise requires, all references to the terms “we,” “us,” “our,” and the “company”
throughout this prospectus supplement mean Taronis Technologies, Inc. and its subsidiaries.
All
references in this prospectus to our financial statements include, unless the context indicates otherwise, the related notes.
The
industry and market data and other statistical information contained in the documents we incorporate by reference are based on
management’s own estimates, independent publications, government publications, reports by market research firms or other
published independent sources, and, in each case, are believed by management to be reasonable estimates. Although we believe these
sources are reliable, we have not independently verified the information.
The
information contained in this prospectus or any accompanying prospectus supplement is accurate only as of the date of this prospectus
or the accompanying prospectus supplement, respectively regardless of the time of delivery of this prospectus or the accompanying
prospectus supplement or of any sale of the securities. We further note that the representations, warranties and covenants made
by us in any agreement that is filed as an exhibit to any document that is incorporated by reference in this prospectus or the
accompanying prospectus supplement were made solely for the benefit of the parties to such agreement, including, in some cases,
for the purpose of allocating risk among the parties to such agreements, and should not be deemed to be a representation, warranty
or covenant to you. Moreover, such representations, warranties and covenants should not be relied on as accurately representing
the current state of our affairs.
OUR
COMPANY
Overview
We
are a technology-based company that is focused on addressing the global constraints on natural resources, including fuel and water.
Our two core technology applications – renewable fuel gasification and water decontamination/sterilization - are derived
from our patented and proprietary Plasma Arc Flow System. The Plasma Arc Flow System works by generating a combination of electric
current, heat, ultraviolet light and ozone, that affects the feedstock run through the system to create a chosen outcome, depending
on whether the system is in “gasification mode” or “sterilization mode”.
Gasification
Mode
When
the Plasma Arc Flow System is in “gasification mode” and the appropriate feedstock is passed through the system in
a closed loop with constant recirculation (to achieve the maximum possible gasification rates), it creates a renewable, hydrogen-based
synthetic fuel we call “MagneGas”. We sell MagneGas as a metal cutting fuel as an alternative product to acetylene,
which is the mostly commonly used metal fuel globally, but also happens to be a non-renewable fossil fuel-based metal cutting
fuel. Alternatively, MagneGas is a cleaner, renewable fuel alternative that creates a flame up to 85% hotter than acetylene and
cuts metal up to 38% faster than acetylene, while maintaining a comparable price.
Sterilization
Mode
When
the Plasma Arc Flow System is in “sterilization mode” the system may process any number of liquified waste streams.
In most cases we pass the selected waste stream through the system a limited number of times to achieve the maximum sterilization/decontamination
effect on the waste stream. Sterilization mode also produces modest amounts of gas as a byproduct. Our proprietary combination
of electric current, heat, ultraviolet light and ozone has shown an ability to eliminate up to 99.9% of EPA and USDA regulated
pathogens such as e-coli and fecal coliform. We also believe our technology also has the capability to eliminate cyanobacteria
commonly referred to as “blue-green algae” and are currently conducting tests to verify that capability.
During
2017 and 2018, as part of our retail growth strategy, we acquired a number of businesses with large customer bases through which
we now offer our proprietary MagneGas product in addition to other gases and welding supplies. The majority of our retail locations
are in Texas and California, which we believe are the two top markets for consumption of metal cutting fuels and related supplies.
We also have locations in Florida and Louisiana. We also market, for sale and licensure, our proprietary plasma arc technology
for gasification and the processing of liquid waste and have developed a global network of brokers to sell the Plasma Arc Flow
System.
Core
Technology
|
Submerged
Plasma Arc Flow System Overview
|
|
|
●
|
Our
patented system enables fluid to efficiently pass through a submerged plasma arc.
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●
|
To
create synthetic fuel, the fluid must contain hydrogen and oxygen – carbon supply can be facilitated by the electrodes.
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●
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As
the fluid passes through the arc, hydrogen, carbon and oxygen molecules are liberated and gasified.
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●
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A
wide range of feedstocks can produce different gases, with differing flame and heating properties
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●
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Typically,
our fuels are 40-60% ionized hydrogen and 30-40% other synthetic hydrocarbon and carbon compounds.
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●
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To
decontaminate or sterilize waste streams, such as contaminated water or biomass waste, the “feed stock” must be
in liquid form.
|
Our
Products
We
have two proprietary products that we market and sell, which are derived from our core technology. The first is our clean, renewable
alternative cutting fuel called “MagneGas”, which is sold at our various locations to retail end users as an alternative
product to acetylene. The second is our Plasma Arc Flow System, which is marketed for sale and licensure to commercial operators
who desire to utilize our technology for gas production (under strict license) or water decontamination and sterilization.
MagneGas
Cutting Fuel
We
currently produce MagneGas, which is comprised primarily of hydrogen and created through a patented protected process. The fuel
can be used as an alternative to acetylene and other natural gas derived fuels for metal cutting and other commercial uses. After
production, the fuel is stored in hydrogen cylinders which are then sold to market on a rotating basis. Independent analyses performed
by the City College of New York and Edison Welding Institute have verified that MagneGas cuts metal at a significantly higher
temperature and faster than acetylene, which is the most commonly used fuel in metal cutting. The use of MagneGas is nearly identical
to acetylene (it merely requires a different welding tip and a regulator) making it easy for end-users to adopt our product with
limited training.
Over
the last several years we have acquired and maintain a retail distribution network, which allows us to sell and transport MagneGas
to customers in various metalworking industries. Since 2017, we have doubled the range we are able to distribute MagneGas and
are now able to more efficiently address markets within a 500-mile radius of our production hubs in Florida and Texas. Within
the next two years we plan to create two production hubs in California to serve the western United States. Finally, we have and
intend to continue to acquire complementary gas and welding supply distribution businesses in order to expand the distribution
and use of MagneGas, other industrial gases and related equipment. We have sold to over 30,000 customers in the public and private
sectors.
Plasma
Arc Flow System
We
use our Plasma Arc Flow System to make MagneGas, but it has the ability to gasify many forms of liquids and liquid waste such
as used vegetable, soybean or motor oils, certain types of liquified biomass, ethylene glycol and can be used to sterilize bio-contaminants
in waste and decontaminate water.
The
Plasma Arc Flow System forces a high-volume flow of liquid waste through a submerged plasma arc existing between carbon electrodes,
a process which sterilizes the bio-contaminants within the waste without requiring any chemical disinfecting agents. The Plasma
Arc Flow System also releases a clean burning fuel as a byproduct of the decontamination and sterilization process, which can
be used to offset some energy consumption. Because our Plasma Arc Flow Systems are available in various sizes from 50kW to 500kW,
they are applicable to a broad array of end-users, including: (i) large consumers of cutting fuels (construction companies, shipbuilders,
heavy industry) who desire a safer, renewable, and efficient alternative to acetylene, propane (ii) producers of contaminated
waste streams (commercial manufacturers, farming operations, chemical producers, etc.) who either desire to or are mandated by
law to treat agricultural, pharmaceutical, industrial or manufacturing waste streams prior to release into the ecosystem and (iii)
local, state or federal governments, desirous of decontaminating water sources or reclaiming waste water that is otherwise unusable.
Corporate
Information
Taronis
Technologies, Inc. was organized as 4307 INC. under the laws of the State of Delaware on December 9, 2005. Our corporate headquarters
are located at 11885 44th Street North, Clearwater, Florida 33762 and our telephone number is (727) 934-3448.
Reports
to Security Holders
We
file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, registration statements and other
items pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) with the Securities and Exchange
Commission (“SEC”). The SEC maintains an internet site (www.sec.gov) that contains reports, proxy and information
statements regarding issuers that file electronically with the SEC.
RISK
FACTORS
An
investment in our securities involves a high degree of risk. Before deciding whether to invest in our securities, you should carefully
consider the risks discussed under the Section captioned “Risk Factors” contained in our most recent Annual Report
on Form 10-K and in our most recent Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission subsequent
to the Form 10-K, and in other documents that we subsequently file with the Securities and Exchange Commission, all of which are
incorporated by reference in this prospectus and the accompanying prospectus supplement(s) in their entirety, together with other
information in this prospectus, the accompanying prospectus supplement(s), the information and documents incorporated by reference
herein and therein, and in any free writing prospectus that we have authorized for use in connection with this offering. If any
of these risks actually occurs, our business, financial condition, results of operations or cash flow could be seriously harmed.
This could cause the trading price of our Common Stock to decline, resulting in a loss of all or part of your investment.
Cautionary
Note Regarding Forward-Looking Statements
This
prospectus (including any documents incorporated by reference herein) contains statements with respect to us which constitute
“forward-looking statements” within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities
Exchange Act of 1934, as amended, and are intended to be covered by the “safe harbor” created by those sections. Forward-looking
statements, which are based on certain assumptions and reflect our 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” or other comparable terms. These forward-looking statements include, but are not limited to, statements
concerning future events, our future financial performance, business strategy and plans and objectives of management for future
operations. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could
cause or contribute to these differences include those discussed in “Risk Factors” in this prospectus supplement and
the documents incorporated by reference herein.
We
caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are
made. We disclaim any obligation, except as specifically required by law and the rules of the SEC, to publicly update or revise
any such statements to reflect any change in company 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.
You
should read this prospectus, the accompanying prospectus supplement(s), and the documents that we incorporate by reference herein
and therein and have filed as exhibits to the registration statement of which this prospectus is part, completely and with the
understanding that our actual future results may be materially different from what we expect. You should assume that the information
appearing in this prospectus is accurate as of the date on the cover of this prospectus only. Our business, financial condition,
results of operations and prospects may change. We may not update these forward-looking statements, even though our situation
may change in the future, unless we have obligations under the federal securities laws to update and disclose material developments
related to previously disclosed information. We qualify all of the information presented in this prospectus, and particularly
our forward-looking statements, by these cautionary statements.
USE
OF PROCEEDS
Unless
otherwise indicated in a prospectus supplement accompanying this prospectus, we intend to use the net proceeds from this offering
to continue our acquisition strategy and for working capital and general corporate purposes. Such purposes may include research
and development expenditures and capital expenditures. As of the date of this prospectus, we cannot specify with certainty all
of the particular uses of the proceeds from this offering. We will set forth in the applicable prospectus supplement our intended
use for the net proceeds received from the sale of the related securities. Accordingly, we will retain broad discretion over the
use of such proceeds. Pending use of the net proceeds, we may invest the net proceeds in interest-bearing, investment-grade securities.
DESCRIPTION
OF SECURITIES WE ARE OFFERING
General
Our
amended certificate of incorporation authorizes 190,000,000 shares of common stock, $0.001 par value per share, and 10,000,000
shares of preferred stock, $0.001 par value per share. As of April 12, 2019, there were 24,287,188 shares of our common stock
outstanding and no shares of preferred stock outstanding.
Common
Stock
Holders
of our Common Stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Our Common Stock does
not have cumulative voting rights. Holders of our Common Stock representing a majority of the voting power of our capital stock
issued and outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting
of our stockholders. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental
corporate changes such as liquidation, merger or an amendment to our certificate of incorporation. Although there are no provisions
in our charter or by-laws that may delay, defer or prevent a change in control, the board of directors is authorized, without
stockholder approval, to issue shares of preferred stock that may contain rights or restrictions that could have this effect.
Holders of Common Stock are entitled to share in all dividends that the board of directors, in its discretion, declares from legally
available funds. In the event of liquidation, dissolution or winding up, each outstanding share entitles its holder to participate
pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference
over the common stock. Holders of our Common Stock have no pre-emptive rights, no conversion rights and there are no redemption
provisions applicable to our Common Stock.
All
of our outstanding shares of Common Stock are, and the shares of Common Stock to be issued in this offering will be, fully paid
and nonassessable.
Preferred
Stock
Our
certificate of incorporation provides that we are authorized to issue up to 10,000,000 shares of preferred stock with a par value
of $0.001 per share. Our board of directors has the authority, without further action by the stockholders, to issue from time
to time the preferred stock in one or more series for such consideration and with such relative rights, privileges, preferences
and restrictions that the board may determine. The preferences, powers, rights and restrictions of different series of preferred
stock may differ with respect to dividend rates, amounts payable on liquidation, voting rights, conversion rights, redemption
provisions, sinking fund provisions and purchase funds and other matters. Each series of preferred stock is to be issued under
our certificate of incorporation and a certificate of designation to be approved by the board of directors of the Company or a
committee thereof and filed with the Secretary of State of the State of Delaware in accordance with the General Corporation Law
of the State of Delaware, including statutory and reported decisional law thereunder. The issuance of preferred stock could adversely
affect the voting power or other rights of the holders of common stock.
Election
of Directors
The
holders of shares of common stock, shall appoint the members of our board of directors. Each share of common stock is entitled
to one vote.
Options
and Warrants
Options
Options
outstanding as of December 31, 2018 and 2017 consisted of the following:
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Options
Outstanding
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|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Average
Remaining
Life
in Years
|
|
|
Intrinsic
Value
|
|
|
December 31, 2016
|
|
|
1,625
|
|
|
|
1,870.80
|
|
|
|
1.23
|
|
|
|
272
|
|
|
Granted
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expired
|
|
|
(858
|
)
|
|
|
694.60
|
|
|
|
|
|
|
|
|
|
|
December 31, 2017
|
|
|
767
|
|
|
|
3,186.80
|
|
|
|
1.58
|
|
|
|
-
|
|
|
Granted
|
|
|
11,250
|
|
|
|
18.57
|
|
|
|
10.00
|
|
|
|
-
|
|
|
Exercised
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expired
|
|
|
(464
|
)
|
|
|
3,393.23
|
|
|
|
-
|
|
|
|
-
|
|
|
December 31, 2018
|
|
|
11,553
|
|
|
|
93.89
|
|
|
|
8.84
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2018
|
|
|
9,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of December 31, 2018, the fair value of non-vested options totaled $46,700 which will be amortized to expense until December 31,
2019.
The
fair value of each employee option grant is estimated on the date of the grant using the Black-Scholes option-pricing model. Key
weighted-average assumptions used to apply this pricing model during the year ended 2018 were as follows:
|
Risk free interest rate
|
|
|
2.84
|
%
|
|
Expected term
|
|
|
10
years
|
|
|
Volatility
|
|
|
183
|
%
|
|
Dividends
|
|
$
|
0
|
|
On
July 12, 2017, the Board of Directors submitted the following actions to the Majority Stockholder for ratification and approval
by consent in lieu of meeting, and the Majority Stockholder has ratified and approved the following actions: approving the Company’s
Amended and Restated 2014 Equity Incentive Award Plan (the “New Plan”), for the principal purpose of increasing the
number of shares that may be issued or transferred pursuant to awards under the New Plan. As of December 31, 2018, and 2017, there
are 11,553 and 767 shares to be issued upon exercise of outstanding options and 3,827,083 shares remaining available for future
issuance under equity compensation plans.
Common
Stock Warrants
Warrants
outstanding as of December 31, 2018 and 2017 consisted of the following:
|
|
|
Warrants
Outstanding
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Average
Remaining
Life
in Years
|
|
|
December
31, 2016
|
|
|
7,664
|
|
|
|
2,730.00
|
|
|
|
5.80
|
|
|
Granted
|
|
|
11,111
|
|
|
|
9,112.60
|
|
|
|
5.00
|
|
|
Exercised
|
|
|
(265
|
)
|
|
|
300.00
|
|
|
|
|
|
|
Forfeited/Exchanged
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
Expired
|
|
|
(7,400
|
)
|
|
|
2,730.00
|
|
|
|
|
|
|
December
31, 2017
|
|
|
11,111
|
|
|
|
9,112.60
|
|
|
|
4.45
|
|
|
Granted
|
|
|
2,329,167
|
|
|
|
6.60
|
|
|
|
2.17
|
|
|
Exercised
|
|
|
(3,750
|
)
|
|
|
0.20
|
|
|
|
|
|
|
Expired
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
December
31, 2018
|
|
|
2,336,528
|
|
|
|
49.92
|
|
|
|
1.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable
at December 31, 2018
|
|
|
2,336,528
|
|
|
|
|
|
|
|
|
|
During
the year ended December 31, 2018 and 2017 the Company exercised 3,750 and 265 shares of warrants with cash proceeds of $750 and
$7,937.
At
December 31, 2018 and 2017, the total intrinsic value of warrants outstanding and exercisable was $0 and $0, respectively.
In
connection with the October SPA, the Company agreed to grant the investors one common stock purchase warrant for every share of
common stock purchased under the October SPA at an exercise price of $7.31 per share. 1,090,000 common stock warrants were issued,
expiring on April 14, 2022. The exercise price was subsequently adjusted to $4.64.
In
connection with the August SPA, the Company agreed to grant the investor(s) one common stock purchase warrant for every share
of common stock purchased under the SPA at an exercise price of $6.00 per share. 1,235,417 common stock warrants were issued,
expiring on August 31, 2019.
During
the first quarter of 2018, the Company issued 3,750 shares of common stock for the exercise of warrants with cash proceeds of
$750. The fair value of the common stock warrants was $316,501, of which $302,589 was recognized as stock-based compensation for
the year ended December 31, 2018.
Maxim
Group, LLC (“Maxim”) acted as the exclusive placement agent for the Series C preferred stock transaction. The Company
agreed to pay Maxim a cash fee payable upon each closing equal to 6.0% of the gross proceeds ($4,050 in cash fees and a legal
expense reimbursement of $5,000) received by the Company at each Closing (the “Placement Fee”). Such fees were recognized
as stock issuance costs. Additionally, the Company granted to Maxim (or its designated affiliates) warrants to purchase up to
11,111 shares common stock (the “Placement Agent Warrants”). The Placement Agent Warrants expire five (5) years after
the Closing. The Placement Agent Warrants are exercisable at a price per share equal to $990, are not be redeemable and are exercisable
for 5 years. The Placement Agent Warrants may be exercised in whole or in part and provide for a “cashless” exercise,
except in the event the shares of common stock issuable upon exercise of the Placement Agent Warrants are registered for resale,
in which case they provide for a “cash” exercise only. The Placement Agent Warrants were recorded at fair value as
stock issuance costs. Although the Placement Agent Warrants contain certain change in control provisions that are potentially
settleable in cash, such settlement is at the Company’s discretion.
Dividends
Since
inception we have not paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the
foreseeable future on our common stock. Although we intend to retain our earnings, if any, to finance the exploration and growth
of our business, our board of directors will have the discretion to declare and pay dividends in the future. Payment of dividends
in the future will depend upon our earnings, capital requirements, and other factors, which our board of directors may deem relevant.
Anti-Takeover
Effects of Provisions of the Delaware General Corporation Law and our Certificate of Incorporation and Bylaws
Provisions
of the Delaware General Corporation Law (the “DGCL”) and our certificate of incorporation and bylaws could make it
more difficult to acquire us by means of a tender offer, a proxy contest or otherwise, or to remove incumbent officers and directors.
These provisions, summarized below, are expected to discourage certain types of coercive takeover practices and takeover bids
that our board of directors may consider inadequate and to encourage persons seeking to acquire control of us to first negotiate
with our board of directors. We believe that the benefits of increased protection of our ability to negotiate with the proponent
of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging takeover or acquisition
proposals because, among other things, negotiation of these proposals could result in improved terms for our stockholders.
Delaware
Anti-Takeover Statute. We are subject to Section 203 of the DGCL. Subject to certain exceptions, Section 203 prohibits a publicly
held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for
three years following the date the person became an interested stockholder, unless the interested stockholder attained such status
with the approval of our board of directors or unless the business combination is approved in a prescribed manner.
Section
203 of the DGCL generally defines a “business combination” to include, among other things, any merger or consolidation
involving us and the interested stockholder and the sale of more than 10% of our assets.
In
general, an “interested stockholder” is any entity or person beneficially owning 15% or more of our voting stock or
any entity or person associated or affiliated with or controlling or controlled by such entity or person. The restrictions contained
in Section 203 are not applicable to any of our existing stockholders that owned 15% or more of our outstanding voting stock upon
the closing of our initial public offering.
Amendments
to Our Certificate of Incorporation. Under the DGCL, the affirmative vote of a majority of the outstanding shares entitled
to vote thereon and a majority of the outstanding stock of each class entitled to vote thereon is required to amend a corporation’s
certificate of incorporation. Under the DGCL, the holders of the outstanding shares of a class of our capital stock shall be entitled
to vote as a class upon a proposed amendment, whether or not entitled to vote thereon by the certificate of incorporation, if
the amendment would:
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|
●
|
increase
or decrease the aggregate number of authorized shares of such class;
|
|
|
●
|
increase
or decrease the par value of the shares of such class; or
|
|
|
●
|
alter
or change the powers, preferences or special rights of the shares of such class so as to affect them adversely.
|
If
any proposed amendment would alter or change the powers, preferences or special rights of one or more series of any class of our
capital stock so as to affect them adversely, but shall not so affect the entire class, then only the shares of the series so
affected by the amendment shall be considered a separate class for the purposes of this provision.
Vacancies
in the board of directors. Our bylaws provide that, subject to limitations, any vacancy occurring in our board of directors
for any reason may be filled by a majority of the remaining members of our board of directors then in office, even if such majority
is less than a quorum. Each director so elected shall hold office until the expiration of the term of the other directors. Each
such directors shall hold office until his or her successor is elected and qualified, or until the earlier of his or her death,
resignation or removal.
Special
Meetings of Stockholders. Under our bylaws, special meetings of stockholders may be called at any time by our President whenever
so directed in writing by a majority of the entire board of directors. Special meetings can also be called whenever one-third
of the number of shares of our capital stock entitled to vote at such meeting shall, in writing, request one. Under the DGCL,
written notice of any special meeting must be given not less than 10 nor more than 60 days before the date of the special meeting
to each stockholder entitled to vote at such meeting.
No
Cumulative Voting. The DGCL provides that stockholders are denied the right to cumulate votes in the election of directors
unless our certificate of incorporation provides otherwise. Our amended and restated certificate of incorporation does not provide
for cumulative voting.
The
NASDAQ Capital Market Listing
Our
common stock is listed on the NASDAQ Capital Market under the symbol “TRNX.”
Transfer
Agent and Registrar
The
transfer agent and registrar for our common stock is Corporate Stock Transfer, Inc. The transfer agent’s address is 3200
Cherry Creek South Drive, Suite 430, Denver, CO 80209, and its telephone number is (303) 282-4800.
DESCRIPTION
OF WARRANTS
General
We
may issue warrants to purchase shares of our common stock and preferred stock in one or more series together with other securities
or separately, as described in the applicable prospectus supplement. Below is a description of certain general terms and provisions
of the warrants that we may offer. Particular terms of the warrants will be described in the warrant agreements to be entered
into by the Company, a warrant agent to be named by the Company, and the holders from time to time of the warrants and the prospectus
supplement relating to the warrants. Copies of the form agreement for each warrant and the warrant certificate, if any, reflecting
the provisions to be included in such agreements that will be entered into with respect to a particular offering of each type
of warrant, will be filed with the SEC and incorporated by reference as exhibits to the registration statement of which this prospectus
is a part. You should read the applicable warrant agreement for additional information before you purchase any of our warrants.
The
prospectus supplement relating to any warrants we offer will describe the specific terms relating to the offering. These terms
may include some or all of the following:
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|
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the
specific designation and aggregate number of, and the price at which we will issue, the warrants;
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the
currency or currency units in which the offering price, if any, and the exercise price are payable;
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the
designation, amount and terms of the securities purchasable upon exercise of the warrants;
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if
applicable, the exercise price for shares of our common stock and the number of shares of common stock to be received upon
exercise of the warrants;
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if
applicable, the exercise price for shares of our preferred stock, the number of shares of preferred stock to be received upon
exercise, and a description of that series of our preferred stock;
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the
date on which the right to exercise the warrants will begin and the date on which that right will expire or, if you may not
continuously exercise the warrants throughout that period, the specific date or dates on which you may exercise the warrants;
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whether
the warrants will be issued in fully registered form or bearer form, in definitive or global form or in any combination of
these forms, although, in any case, the form of a warrant included in a unit will correspond to the form of the unit and of
any security included in that unit;
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any
applicable material U.S. federal income tax consequences;
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the
identity of the warrant agent for the warrants and of any other depositaries, execution or paying agents, transfer agents,
registrars or other agents;
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the
proposed listing, if any, of the warrants or any securities purchasable upon exercise of the warrants on any securities exchange;
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if
applicable, the date from and after which the warrants and the common stock and preferred stock will be separately transferable;
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if
applicable, the minimum or maximum amount of the warrants that may be exercised at any one time;
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the
procedures and conditions relating to the exercise of the warrants;
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information
with respect to book-entry procedures, if any;
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the
triggering event and the terms upon which the exercise price and the number of underlying securities that the warrants are
exercisable into may be adjusted;
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the
anti-dilution provisions of the warrants, if any;
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any
redemption or call provisions;
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whether
the warrants may be sold separately or with other securities as parts of units; and
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any
additional terms of the warrants, including terms, procedures and limitations relating to the exchange and exercise of the
warrants.
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Until
the warrants are exercised, holders of the warrants will not have any rights of holders of the underlying securities.
DESCRIPTION
OF RIGHTS
We
may issue rights to our stockholders to purchase shares of our common stock or preferred stock described in this prospectus. We
may offer rights separately or together with one or more additional rights, preferred stock, common stock, warrants or any combination
of those securities in the form of units, as described in the applicable prospectus supplement. Each series of rights will be
issued under a separate rights agreement to be entered into between us and a bank or trust company, as rights agent. The rights
agent for any rights we offer will be set forth in the applicable prospectus supplement. The rights agent will act solely as our
agent in connection with the certificates relating to the rights of the series of certificates and will not assume any obligation
or relationship of agency or trust for or with any holders of rights certificates or beneficial owners of rights. The following
description sets forth certain general terms and provisions of the rights to which any prospectus supplement may relate. The particular
terms of the rights to which any prospectus supplement may relate and the extent, if any, to which the general provisions may
apply to the rights so offered will be described in the applicable prospectus supplement. To the extent that any particular terms
of the rights, rights agreement or rights certificates described in a prospectus supplement differ from any of the terms described
below, then the terms described below will be deemed to have been superseded by that prospectus supplement. We encourage you to
read the applicable rights agreement and rights certificate for additional information before you decide whether to purchase any
of our rights.
The
prospectus supplement relating to any rights that we offer will include specific terms relating to the offering, including, among
other matters:
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the
date of determining the stockholders entitled to the rights distribution;
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the
aggregate number of shares of common stock, preferred stock or other securities purchasable upon exercise of the rights;
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the
exercise price;
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the
aggregate number of rights issued;
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whether
the rights are transferrable and the date, if any, on and after which the rights may be separately transferred;
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the
date on which the right to exercise the rights will commence, and the date on which the right to exercise the rights will
expire;
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the
method by which holders of rights will be entitled to exercise;
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the
conditions to the completion of the offering;
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the
withdrawal, termination and cancellation rights;
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whether
there are any backstop or standby purchaser or purchasers and the terms of their commitment;
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whether
stockholders are entitled to oversubscription right;
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any
U.S. federal income tax considerations; and
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any
other terms of the rights, including terms, procedures and limitations relating to the distribution, exchange and exercise
of the rights.
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If
less than all of the rights issued in any rights offering are exercised, we may offer any unsubscribed securities directly to
persons other than stockholders, to or through agents, underwriters or dealers or through a combination of such methods, including
pursuant to standby arrangements, as described in the applicable prospectus supplement. In connection with any rights offering,
we may enter into a standby underwriting or other arrangement with one or more underwriters or other persons pursuant to which
such underwriters or other persons would purchase any offered securities remaining unsubscribed for after such rights offering.
DESCRIPTION
OF UNITS
We
may, from time to time, issue units comprised of one or more of the other securities described in this prospectus in any combination.
A prospectus supplement will describe the specific terms of the units offered under that prospectus supplement, and any special
considerations, including tax considerations, applicable to investing in those units. You must look at the applicable prospectus
supplement and any applicable unit agreement for a full understanding of the specific terms of any units. We will incorporate
by reference into the registration statement of which this prospectus is a part the form of unit agreement, including a form of
unit certificate, if any, that describes the terms of the series of units we are offering before the issuance of the related series
of units. While the terms we have summarized below will generally apply to any future units that we may offer under this prospectus,
we will describe the particular terms of any series of units that we may offer in more detail in the applicable prospectus supplement
and incorporated documents. The terms of any units offered under a prospectus supplement may differ from the terms described below.
General
We
may issue units consisting of common stock, preferred stock, rights, warrants or any combination thereof. Each unit will be issued
so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder of a unit will have
the rights and obligations of a holder of each included security. The unit agreement to be entered into by the Company and the
unit agent named therein under which a unit is issued may provide that the securities included in the unit may not be held or
transferred separately, at any time, or at any time before a specified date.
We
will describe in the applicable prospectus supplement and any incorporated documents the terms of the series of units, including
the following:
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the
designation and terms of the units and of the securities comprising the units, including whether and under what circumstances
those securities may be held or transferred separately;
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any
provisions of the governing unit agreement that differ from those described below; and
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any
provisions for the issuance, payment, settlement, transfer, or exchange of the units or of the securities comprising the units.
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The
provisions described in this section, as well as those described under “Description of Securities We Are Offering –
Common Stock,” “Description of Securities We Are Offering – Preferred Stock,” “Description of Rights,”
and “Description of Warrants” will apply to each unit and to any common stock, preferred stock, warrant or right included
in each unit, respectively.
Issuance
in Series
We
may issue units in such amounts and in such numerous distinct series as we determine.
Enforceability
of Rights by Holders of Units
Each
unit agent will act solely as our agent under the applicable unit agreement and will not assume any obligation or relationship
of agency or trust with any holder of any unit. A single bank or trust company may act as unit agent for more than one series
of units. A unit agent will have no duty or responsibility in case of any default by us under the applicable unit agreement or
unit, including any duty or responsibility to initiate any proceedings at law or otherwise, or to make any demand upon us. Any
holder of a unit, without the consent of the related unit agent or the holder of any other unit, may enforce by appropriate legal
action its rights as holder under any security included in the unit.
Title
We,
the unit agent, and any of their agents may treat the registered holder of any unit certificate as an absolute owner of the units
evidenced by that certificate for any purposes and as the person entitled to exercise the rights attaching to the units so requested,
despite any notice to the contrary.
PLAN
OF DISTRIBUTION
We
may sell the securities described in this prospectus from time to time pursuant to underwritten public offerings, negotiated transactions,
block trades or a combination of these methods. We may sell the securities separately or together:
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directly
to investors, including through a specific bidding, auction, or other process;
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to
investors through agents;
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directly
to agents;
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to
or through brokers or dealers;
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to
the public through underwriting syndicates led by one or more managing underwriters;
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in
privately negotiated transactions;
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directly
to agents;
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to
one or more underwriters acting alone for resale to investors or to the public;
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in
a registered direct offering; or
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through
a combination of any such methods of sale.
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Our
common stock or preferred stock may be issued upon conversion of convertible preferred. Securities may also be issued upon exercise
of warrants or rights and division of units and we reserve the right to sell securities directly to investors on their own behalf
in those jurisdictions where they are authorized to do so.
If
we sell securities to a dealer acting as principal, the dealer may resell such securities at varying prices to be determined by
such dealer in its discretion at the time of resale without consulting with us and such resale prices may not be disclosed in
the applicable prospectus supplement.
Any
underwritten offering may be on a best efforts or a firm commitment basis. We may also offer securities through subscription rights
distributed to our stockholders on a pro rata basis, which may or may not be transferable. In any distribution of subscription
rights to stockholders, if all of the underlying securities are not subscribed for, we may then sell the unsubscribed securities
directly to third parties or may engage the services of one or more underwriters, dealers or agents, including standby underwriters,
to sell the unsubscribed securities to third parties.
We
may distribute the securities from time to time in one or more transactions:
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at
a fixed price or prices, which may be changed;
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at
market prices prevailing at the time of sale;
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at
prices related to such prevailing market prices;
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at
varying prices determined at the time of sale; or
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at
negotiated prices.
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Any
of the prices may represent a discount from the then prevailing market prices.
We
may determine the price or other terms of the securities offered under this prospectus by use of an electronic auction. We will
describe in the applicable prospectus supplement how any auction will be conducted to determine the price or any other terms of
the securities, how potential investors may participate in the auction and, where applicable, the nature of the underwriters’
obligations with respect to the auction.
We
may solicit directly offers to purchase the securities being offered by this prospectus. We may also designate agents to solicit
offers to purchase the securities from time to time. We will name in a prospectus supplement any agent involved in the offer or
sale of the securities.
If
we utilize an underwriter in the sale of the securities being offered by this prospectus, we will execute an underwriting agreement
with the underwriter at the time of sale and we will provide the name of any underwriter in the prospectus supplement that the
underwriter will use to make resales of the securities to the public. Any underwritten offering may be on a best efforts or firm
commitment basis. In connection with the sale of the securities, we or the purchasers of the securities for whom the underwriter
may act as agent may compensate the underwriter in the form of underwriting discounts or commissions. The underwriter may sell
the securities to or through dealers, and the underwriter may compensate those dealers in the form of discounts, concessions or
commissions.
We,
our underwriters, dealers or agents may facilitate the marketing of an offering online directly or through one of their affiliates.
In those cases, prospective investors may view offering terms and a prospectus online and, depending upon the particular underwriter,
dealer or agent, place orders online or through their financial advisors.
We
will provide in the applicable prospectus supplement (i) the identity of any underwriter, dealer or agent, (ii) any compensation
we will pay to underwriters, dealers or agents in connection with the offering of the securities, (iii) any discounts, concessions
or commissions allowed by underwriters to participating dealers, (iv) the amounts underwritten; and (v) the nature of the underwriter’s
or underwriters’ obligation to take the securities. Underwriters, dealers and agents participating in the distribution of
the securities may be deemed to be underwriters within the meaning of the Securities Act, and any discounts and commissions received
by them and any profit realized by them on resale of the securities may be deemed to be underwriting discounts and commissions.
We may enter into agreements to indemnify underwriters, dealers and agents against civil liabilities, including liabilities under
the Securities Act, or to contribute to payments they may be required to make in respect thereof.
Unless
otherwise specified in the related prospectus supplement, each series of securities will be a new issue with no established trading
market, other than shares of common stock, which are listed on the NASDAQ Capital Market, subject to official notice of issue.
Any common stock sold pursuant to a prospectus supplement will be eligible for listing and trading on the NASDAQ Capital Market.
We may elect to list any series of preferred stock, warrants, rights, debt securities, or units on an exchange, but we are not
obligated to do so. It is possible that one or more underwriters may make a market in the securities, but such underwriters will
not be obligated to do so and may discontinue any market making at any time without notice. No assurance can be given as to the
liquidity of, or the trading market for, any offered securities.
To
facilitate the offering of securities, certain persons participating in the offering may engage in transactions that stabilize,
maintain or otherwise affect the price of the securities. This may include over-allotments or short sales of the securities, which
involve the sale by persons participating in the offering of more securities than we sold to them. In these circumstances, these
persons would cover such over-allotments or short positions by making purchases in the open market or by exercising their over-allotment
option. In addition, these persons may stabilize or maintain the price of the securities by bidding for or purchasing the securities
in the open market or by imposing penalty bids, whereby selling concessions allowed to dealers participating in the offering may
be reclaimed if the securities sold by them are repurchased in connection with stabilization transactions. The effect of these
transactions may be to stabilize or maintain the market price of the securities at a level above that which might otherwise prevail
in the open market. These transactions may be discontinued at any time.
We
do not make any representation or prediction as to the direction or magnitude of any effect that the transactions described above
might have on the price of the securities. In addition, we do not make any representation that underwriters will engage in such
transactions or that such transactions, once commenced, will not be discontinued without notice.
We
may authorize underwriters, dealers or agents to solicit offers by certain purchasers to purchase the securities at the public
offering price set forth in the prospectus supplement pursuant to delayed delivery contracts providing for payment and delivery
on a specified date in the future. The contracts will be subject only to those conditions set forth in the prospectus supplement,
and the prospectus supplement will set forth any commissions we pay for solicitation of these contracts.
We
may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to third parties
in privately negotiated transactions. If the applicable prospectus supplement indicates, in connection with those derivatives,
the parties may sell securities covered by this prospectus and the applicable prospectus supplement, including short sale transactions.
If so, the third party may use securities pledged by us or borrowed from us or others to settle those sales or to close out any
related open borrowings of stock, and may use securities received from us in settlement of those derivatives to close out any
related open borrowings of stock. If the third party is or may be deemed to be an underwriter under the Securities Act, it will
be identified in the applicable prospectus supplement. In addition, we may otherwise loan or pledge securities to a financial
institution or other third party that in turn may sell the securities short using this prospectus. Such financial institution
or other third party may transfer its economic short position to investors in our securities or in connection with a concurrent
offering of other securities.
To
comply with applicable state securities laws, the securities offered by this prospectus will be sold, if necessary, in such jurisdictions
only through registered or licensed brokers or dealers. In addition, securities may not be sold in some states unless they have
been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement
is available and is complied with.
The
underwriters, dealers and agents may engage in transactions with us, or perform services for us, in the ordinary course of business.
LEGAL
MATTERS
Covington
and Burling LLP and/or our General Counsel will pass upon certain legal matters relating to the issuance and sale of the securities
offered hereby on behalf of Taronis Technologies. Additional legal matters may be passed upon for us or any underwriters, dealers
or agents, by counsel that we will name in the applicable prospectus supplement.
EXPERTS
Marcum
LLP, independent registered public accounting firm, has audited our financial statements included in our Annual Report on Form
10-K for the year ended December 31, 2018, as set forth in their report (which contains an explanatory paragraph relating to our
ability to continue as a going concern as described in the notes to the consolidated financial statements) which is incorporated
by reference in this prospectus and elsewhere in the registration statement. Our financial statements are incorporated by reference
in reliance on Marcum LLP’s report, given on their authority as experts in accounting and auditing.
Where
You Can Find More Information
This
prospectus supplement is part of a registration statement on that we filed with the SEC under the Securities Act of 1933, as amended,
and does not contain all the information set forth in the registration statement. Whenever a reference is made in this prospectus
supplement to any of our contracts, agreements or other documents, the reference may not be complete, and you should refer to
the exhibits that are a part of the registration statement of which this prospectus supplement is a part, or the exhibits to the
reports or other documents incorporated by reference in this prospectus supplement for a copy of such contract, agreement or other
document.
Because
we are subject to the information and reporting requirements of the Securities Exchange Act of 1934, as amended, we file annual,
quarterly and special reports, and other information with the SEC. Our SEC filings are available to the public over the Internet
at the SEC’s website at http://www.sec.gov.
The
website addresses referenced herein are not intended to function as hyperlinks, and the information contained in our website and
in the SEC’s website is not incorporated by reference into this prospectus supplement and should not be considered to be
part of this prospectus supplement.
INFORMATION
INCORPORATED BY REFERENCE
The
SEC allows us to incorporate by reference into this prospectus supplement the information contained in other documents we file
with the SEC, which means that we can disclose important information to you by referring you to those documents. Any statement
contained in any document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded,
for purposes of this prospectus supplement, to the extent that a statement contained in or omitted from this prospectus supplement,
or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein, modifies or supersedes
such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute
a part of this prospectus supplement. This prospectus supplement incorporates by reference our documents listed below and any
future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until all of the securities are
sold:
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Our
Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on April 12, 2019.
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Our
Current Reports on Form 8-K and Form 8-K/A, filed with the SEC on January 11, 2019 (two on this date), January 15, 2019, January
18, 2019, January 24, 2019, January 28, 2019, January 31, 2019, February 4, 2019, February 5, 2019, February 7, 2019, February
8, 2019, February 11, 2019, February 13, 2019, February 19, 2019 (two on this date), February 28, 2019 and March 8, 2019.
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The
description of our common stock contained in our registration statement on Form 8-A filed with the SEC on August 14, 2012,
under Section 12(b) of the Exchange Act, including any amendments or reports filed for the purpose of updating such description.
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Notwithstanding
the foregoing, we are not incorporating any document or portion thereof or information deemed to have been furnished and not filed
in accordance with SEC rules.
You
may request a free copy of the above-mentioned filings or any subsequent filings we incorporate by reference to this prospectus
supplement by writing or telephoning us at the following address: Taronis Technologies, Inc., 11885 44th Street North, Clearwater,
FL 33762, (727) 934-3448.
TARONIS
TECHNOLOGIES, INC.
2,000
Shares of Series H-1 Preferred Stock
2,000,000 Warrants to Purchase Shares of Common Stock
2,000,000
Shares of Common Stock issuable upon the exercise of Warrants to Purchase Shares of Common Stock
PROSPECTUS
SUPPLEMENT
December
13, 2019
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