UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 30, 2020
TARONIS FUELS, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 000-56101 | 32-0547454 | ||
|
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employee Identification No.) |
24980 N. 83rd Avenue, Suite 100
Peoria, AZ 85383
(Address of principal executive offices) (Zip Code)
(866) 370-3835
Registrant’s telephone number, including area code:
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None | N/A | N/A |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company [X]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 1.01 Entry into a Material Definitive Agreement.
On November 30, 2020, Taronis Fuels, Inc., a Delaware corporation (the “Company”), entered into an Amendment to Purchase Agreement (the “Amendment”) with BBHC, Inc. (“BBHC”). The Amendment amended the Purchase Agreement between the Company and BBHC entered into on August 17, 2020 (the “Purchase Agreement”), pursuant to which the Company acquired the entire intellectual property portfolio of BBHC (the “Intellectual Property”). The Amendment shortened the period during which the Company is required to make ongoing payments to BBHC, which payments shall be equal to seven percent (7%) of all gross cash receipts received by the Company that are derived from the purchased Intellectual Property, from a period beginning on August 17, 2020 and ending on August 17, 2025 to a period beginning on December 1, 2020 and ending on December 31, 2021.
As additional consideration, the Company agreed to transfer to BBHC certain prepaid assets equal to approximately $1.1 million. In addition, the Company agreed to forgive approximately $2.2 million in financial obligations owed from BBHC to the Company arising from the Company’s spin off from BBHC in December 2019, unless BBHC sells its ownership interest in Tarus Therapeutics, Inc. (“Tarus”). In the event BBHC sells its ownership interest in Tarus, BBHC agreed to repay the approximately $2.2 million in financial obligations owed to the Company. The Company also agreed to provide additional consideration to BBHC under the Amendment in the form of 1 million shares of the Company’s restricted common stock, par value $0.000001 per share, which was valued as of the fair market value on November 30, 2020 as reported on the OTCQB.
Other than as provided for the in the Amendment, the remaining terms of the Purchase Agreement will continue in full force and effect.
The foregoing description of the terms of the Amendment, and the transactions contemplated thereby, does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment, a copy of which is filed hereto as Exhibit 10.1 and incorporated by reference into this Item 1.01.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |
| 10.1 | Amendment to Purchase Agreement, dated as of November 30, 2020, between Taronis Fuels, Inc. and BBHC, Inc. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: December 2, 2020 | TARONIS FUELS, INC. | |
| By: | /s/ Scott Mahoney | |
| Name: | Scott Mahoney | |
| Title: | Chief Executive Officer | |
Exhibit 10.1
AMENDMENT TO PURCHASE AGREEMENT
THIS AMENDMENT TO PURCHASE AGREEMENT (“Amendment”) is made as of November 30, 2020 (“Effective Date”) by and between TARONIS FUELS, INC., a Delaware corporation (“Buyer”) and BBHC, INC., a Delaware corporation (“Seller”).
RECITALS
WHEREAS, on August 19, 2020, the Buyer and Seller entered into a Purchase Agreement for the purchase of the intellectual property sold by the Seller (“Purchase Agreement”);
WHEREAS, as a result of the Buyer’s spin-off from the Seller, the parties have determined that there are certain financial obligations owed by the Seller to the Buyer which were not accounted for in determining the fair consideration paid under the Purchase Agreement, such that the parties desire to amend certain of the terms of the Purchase Agreement.
WHEREAS, in consideration of the Seller agreeing to enter into this Amendment, the Buyer shall issue the Seller 1,000,000 shares of restricted common stock and shall include all shares of common stock presently owned (including the to be issued shares) on the Buyer’s pending resale registration statement.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:
1. Incorporated by Reference. The aforementioned recitals are incorporated by reference herein.
2. Capitalized Terms. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Purchase Agreement.
3. Amendments to Purchase Agreement.
(a) Section 1.02(c) shall be amended and restated in its entirety as follows:
“For a period of time to last from December 1, 2020 to December 31, 2021 (“Payment Period”), the Buyer will make ongoing Contingent Payments (as defined herein) equal to Seven Percent (7%) of all gross cash receipts received by the Buyer which are derived from the purchased Company Intellectual Property and/or Transferred Intellectual Property (“Contingent Payments”). For the sake of clarity, the Seller will be entitled to any Contingent Payments stemming from any gross cash receipts derived by, received by or otherwise due, earned or owing to the Buyer prior December 1, 2020 and prior to the date of this Agreement.”
(b) Section 1.02(d) shall be added to the Purchase Agreement as follows:
“The Seller, as additional consideration under the Purchase Agreement, shall transfer and the Seller shall accept, the Seller’s prepaid commission balance in the amount of $1,130,020.73 to the Seller.”
(c) Section 1.02(e) shall be added to the Purchase Agreement as follows:
“The Seller owes to the Buyer financial obligations in the amount of $2,198,331.02 stemming from the Buyer’s spin off from the Seller. The Buyer has agreed to forgive the aforementioned financial obligations and any further obligations stemming from the spin-off arising after the date of this Agreement through to December 31, 2020 as additional consideration under this Agreement.” Notwithstanding the foregoing, the Seller agrees that in the event the Seller liquidates its ownership stake in Tarus Therapeutics, Inc. owned through its subsidiary Exortus Corp., it will repay the aforementioned financial obligations forgiven by the Buyer.”
4. Ratification. Except as expressly amended hereby all of the terms, provisions and conditions of the Purchase Agreement are hereby ratified and confirmed in all respects by each party hereto and, except as expressly amended hereby, are, and hereafter shall continue, in full force and effect.
5. Entire Agreement. This Amendment and the Original Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede all prior and contemporaneous agreements and understandings, both written and oral, between the parties with respect thereto.
6. Amendments. No amendment, supplement, modification or waiver of this Amendment shall be binding unless executed in writing by all parties hereto.
7. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one contract. Each party hereto shall be entitled to rely on a facsimile or “PDF” signature of any other party hereunder as if it were an original.
8. Governing Law. This Amendment shall be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to any of the conflicts of law principles which would result in the application of the substantive law of another jurisdiction.
9. Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written.
| TARONIS FUELS, INC.: | ||
| By: | /s/ Scott Mahoney | |
| Name: | Scott Mahoney | |
| Title: | Authorized Signatory | |
| BBHC, INC.: | ||
| By: | /s/ Tyler B. Wilson | |
| Name: | Tyler B. Wilson | |
| Title: | Authorized Signatory | |