☑ | Annual report pursuant to section 13 or 15(d) of the securities exchange act of 1934 |
☐ | Transition report pursuant to section 13 or 15(d) of the securities exchange act of 1934 |
Nevada
|
20-0019425
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
321 South 1250 West, Suite 1
Lindon, Utah 84042
(Address of principal executive offices)
Telephone Number – Area Code
(801) 796-5127
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Title of each class
|
Name of each exchange on which registered
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Common Stock, $0.001 par value
|
NASDAQ
|
Large accelerated Filer
☐
|
Accelerated Filer
☐
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Non-accelerated Filer
☐
(Do not check if a smaller reporting company)
|
Smaller Reporting Company
☑
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Table of Contents
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Page
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Item 1.
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Business
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5
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Item 1A.
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Risk Factors
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13
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Item 1B.
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Unresolved Staff Comments
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28
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Item 2.
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Properties
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28
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Item 3.
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Legal Proceedings
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29
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Item 4.
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Mine Safety Disclosures
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29
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PART II
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|
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Item 5.
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Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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29
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Item 6.
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Selected Financial Data
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30
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Item 7.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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30
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Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk
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34
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Item 8.
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Financial Statements and Supplementary Data
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34
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Item 9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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34
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Item 9A.
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Controls and Procedures
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34
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Item 9B.
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Other Information
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37
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PART III
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Item 10.
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Directors, Executive Officers and Corporate Governance
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37
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Item 11.
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Executive Compensation
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37
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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37
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence
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37
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Item 14.
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Principal Accounting Fees and Services
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37
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PART IV
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|
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Item 15.
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Exhibits and Financial Statement Schedules
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37
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Signatures
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40
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·
|
provide a safe, efficient and code-compliant method to ignite, monitor, and/or manage burner flames in the industry; and
|
·
|
ensure the system could be easily controlled by oilfield operators.
|
|
For the Years Ending
March 31,
|
|||||||
Customer
|
2016
|
2015
|
||||||
Chesapeake Energy
|
9%
|
|
11%
|
|
·
|
inline pilot technologies to increase efficiency and reliability of pilot light performance in a variety of climates;
|
·
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software technology within a modular burner management system; and
|
·
|
certain valve-related technologies.
|
·
|
B149.3-10, which has evolved in recent years and is effective for Alberta, governs the safety precautions that must be met concerning the ignition of the pilot and the main burner in Canada. It allows a programmable control to be used, if the controller complies with certain certification requirements promulgated by the CSA.
|
·
|
Regulation 7, which was passed during fiscal year 2014 by the Colorado Department of Public Health and Environment, requires that combustion devices installed after May 1, 2014, be equipped with an auto-igniter and all existing combustion devices to be equipped with an auto-igniter by May 1, 2016.
|
·
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R307-503-3 (b) & (c), which was passed during fiscal year 2014 by the Utah Department of Air Quality, mandated that all new open and enclosed burners must have an auto-igniter beginning January 1, 2015. The rule requires the two largest oil- and gas-producing counties in the state to retrofit all existing enclosed burners with auto-igniters by December 1, 2015, and all other counties to comply by April 1, 2017.
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·
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Order 25417, which was passed by North Dakota's Industrial Council, is a new rule effective April 1, 2015, requiring producers to condition crude oil before transportation and prove oil temperature is above 110 degrees Fahrenheit, to burn off toxic gases from the oil.
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·
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the level of oil and gas production;
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·
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the demand for oil and gas related products;
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·
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domestic and worldwide economic conditions;
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·
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political instability in the Middle East and other oil producing regions;
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·
|
the actions of the Organization of Petroleum Exporting Countries;
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·
|
the price of foreign imports of oil and gas, including liquefied natural gas;
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·
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natural disasters or weather conditions, such as hurricanes;
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·
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technological advances affecting energy consumption;
|
·
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the level of oil and gas inventories;
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·
|
the cost of producing oil and gas;
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·
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the price and availability of alternative fuels;
|
·
|
merger and divestiture activity among oil and gas producers; and
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·
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governmental regulations.
|
·
|
foreign currency exchange risks resulting from changes in foreign currency exchange rates and the execution of controls in this area;
|
·
|
limitations on our ability to reinvest earnings from operations in one country to fund our operations in other countries.
|
·
|
the business culture of the acquired business may not match well with our culture;
|
·
|
we may fail to retain, motivate and integrate key management and other employees of the acquired business;
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·
|
we may experience problems in retaining customers and integrating customer bases; and
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·
|
we may experience complexities associated with managing the combined businesses and consolidating multiple physical locations.
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·
|
multiple, conflicting, and changing laws and regulations, export and import restrictions, and employment laws;
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·
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regulatory requirements, and other government approvals, permits, and licenses;
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·
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potentially adverse tax consequences;
|
·
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political and economic instability, including wars and acts of terrorism, political unrest, boycotts, curtailments of trade and sanctions, and other business restrictions;
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·
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expropriation, confiscation or nationalization of assets;
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·
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renegotiation or nullification of existing contracts;
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·
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difficulties and costs in recruiting and retaining individuals skilled in international business operations;
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·
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foreign exchange restrictions;
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·
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foreign currency fluctuations;
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·
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foreign taxation;
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·
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the inability to repatriate earnings or capital;
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·
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changing foreign and domestic monetary policies;
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·
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cultural and communication challenges;
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·
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industry-process changes in heating and flow of oil;
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·
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regional economic downturns; and
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·
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foreign governmental regulations favoring or requiring the awarding of contracts to local contractors or requiring foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction that may harm our ability to compete.
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·
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design and commercially produce products that meet the needs of our customers;
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·
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attract and retain talented research-and-development management and personnel;
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·
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successfully market new products; and
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·
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protect our proprietary designs from our competitors.
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·
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our ability to market our products and services to new customers;
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·
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our ability to provide large-scale support and training materials for a growing customer base;
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·
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our ability to hire, train and assimilate new employees;
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·
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the adequacy of our financial resources; and
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·
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our ability to correctly identify and exploit new geographical markets and to successfully compete in those markets.
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·
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the underlying price of the commodities in the oil and gas industry;
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·
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announcements of capital budget changes by a major customer;
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·
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the introduction of new products by our competitors;
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·
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announcements of technology advances by us or our competitors;
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·
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current events affecting the political and economic environment in the United States or Canada;
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·
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conditions or industry trends, including demand for our products, services and technological advances;
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·
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changes to financial estimates by us or by any securities analysts who might cover our stock;
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·
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additions or departures of our key personnel;
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·
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government regulation of our industry;
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·
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seasonal, economic, or financial conditions;
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·
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our quarterly operating and financial results; or
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·
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litigation or public concern about the safety of our products.
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·
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the composition of our Board, which has the authority to direct our business, appoint and remove our officers, and declare dividends;
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·
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approving or rejecting a merger, consolidation or other business combination;
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·
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raising future capital; and
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·
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amending our articles of incorporation and bylaws.
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For the Year Ending March 31, 2016
|
High
|
Low
|
||||||
Fourth Quarter
|
$
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1.15
|
$
|
0.65
|
||||
Third Quarter
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$
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1.43
|
$
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0.89
|
||||
Second Quarter
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$
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1.17
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$
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0.76
|
||||
First Quarter
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$
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1.83
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$
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1.03
|
||||
|
||||||||
For the Year Ending March 31, 2015
|
||||||||
Fourth Quarter
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$
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2.94
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$
|
1.21
|
||||
Third Quarter
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$
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4.23
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$
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0.76
|
||||
Second Quarter
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$
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5.39
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$
|
3.00
|
||||
First Quarter
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$
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5.89
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$
|
2.99
|
|
For the Years Ending
March 31,
|
|||||||
|
2016
|
2015
|
||||||
Net cash provided by operating activities
|
$
|
7,332,933
|
$
|
685,080
|
||||
Net Cash Provided by (Used in) Investing Activities
|
96,176
|
(6,910,078
|
)
|
|||||
Net Cash Provided by (Used in) Financing Activities
|
(39,342
|
)
|
16,752,649
|
|||||
Effect of exchange rate changes on cash
|
(241,968
|
)
|
(839,529
|
)
|
||||
NET CHANGE IN CASH
|
$
|
7,147,799
|
$
|
9,688,122
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·
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Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the entity;
|
·
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the entity are being made in accordance with authorizations of management and directors of the entity; and
|
·
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the entity's assets that could have a material effect on its consolidated financial statements.
|
·
|
Hired third parties to provide advice on COSO framework and risk control matrices;
|
·
|
Implemented company-wide trainings over internal controls in relation with new accounting standard operating procedures including the requirement of supplying supporting evidence, proving the level of precision with which a control is performed, etc.;
|
·
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Required evidence of review in nearly all controls; and
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·
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Reviewed and updated each employee's access within the enterprise resource management system.
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(a) | The following documents are filed as part of this report: |
The following financial statements of the registrant are included in response to Item 8 of this annual report:
|
|
Report of Sadler, Gibb & Associates, LLC, Independent Registered Public Accounting Firm.
|
|
Consolidated Balance Sheets at March 31, 2016 and 2015.
|
|
Consolidated Statements of Income and Other Comprehensive Income (Loss)
for the years ended March 31,
2016 and 2015
.
|
|
Consolidated Statements of Stockholders' Equity for the years ended March 31, 2016 and 2015.
|
|
Consolidated Statements of Cash Flows for the years
ended March
31, 2016 and 2015
.
|
|
Notes to Consolidated Financial Statements.
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Exhibit No.
|
Exhibit Description
|
3.1
|
Articles of Incorporation
(2)
|
3.2
|
Articles of Amendment to the Articles of Incorporation
(3)
|
3.3
|
Amended and Restated Bylaws
(1)
|
10.1
|
Securities Purchase Agreement, dated November 12, 2013 between the Registrant and the persons listed therein as purchasers
(10)
|
10.2
|
Registration Rights Agreement, dated November 18, 2013 between the Registrant and the persons listed in the Securities Purchase Agreement as purchasers
(11)
|
10.3
|
Employment Agreement of Brenton W. Hatch dated June 28, 2013
(17)+
|
10.4
|
Employment Agreement of Harold Albert, dated June 28, 2013
(18)+
|
10.5
|
Employment Agreement of Andrew Limpert, dated June 28, 2013
(19)+
|
10.18
|
Employment Agreement of Ryan Oviatt, dated September 4, 2015
(20)+
|
10.6
|
Form of Indemnification Agreement between the Registrant and its Directors
(13)
|
10.7
|
2003 Stock Incentive Plan
(14)
|
10.8
|
Profire Energy, Inc. 2010 Equity Incentive Plan
(15)
|
10.10
|
Lease Agreement, dated May 16, 2014, between the Registrant and Paul Hall
(8)
|
10.11
|
Lease Agreement, dated April 23, 2014, between the Registrant and Dennis Caka
(9)
|
10.12
|
Consulting Agreement, dated March 24, 2014, between the Registrant on the one hand and Terra Industrial Corporation and Alan Johnson on the other
(12)
|
10.13
|
Profire Energy, Inc. 2015 Equity Incentive Plan
(16)
|
10.14
|
Form of Equity Grant Agreement, Nonqualified Stock Option*
|
10.15
|
Form of Equity Grant Agreement, Restricted Stock*
|
10.16
|
Form of Equity Grant Agreement, Restricted Stock Units*
|
10.17
|
Profire Energy, Inc. 2010 Equity Incentive Plan
Amendment*
|
14.1
|
Code of Ethics
(4)
|
21.1
|
Subsidiaries
*
|
23.1
|
Consent of Sadler, Gibb & Associates, LLC, independent registered public accounting firm*
|
31.1
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)*
|
31.2
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)*
|
32.1
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350*
|
32.2
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350*
|
101 INS
|
XBRL Instance Document**
|
101 SCH
|
XBRL Schema Document**
|
101 CAL
|
XBRL Calculation Linkbase Document**
|
101 DEF
|
XBRL Definition Linkbase Document**
|
101 LAB
|
XBRL Labels Linkbase Document**
|
101 PRE
|
XBRL Presentation Linkbase Document**
|
PROFIRE ENERGY, INC.
|
||
Date: June 13, 2016
|
By:
|
/s/ Brenton W. Hatch
|
Brenton W. Hatch
|
||
Chief Executive Officer
|
||
(Duly Authorized Representative)
|
Signatures
|
Title
|
Date
|
||
/s/
Brenton W. Hatch
|
Chief Executive Officer and
|
June 13, 2016
|
||
Brenton W. Hatch
|
Chairman of the Board of Directors (Principal Executive Officer)
|
|||
/s/ Ryan Oviatt
|
Chief Financial Officer
|
June 13, 2016
|
||
Ryan Oviatt
|
(Principal Financial Officer and Accounting Officer)
|
|||
/s/ Harold Albert
|
Chief Operating Officer and Director
|
June 13, 2016
|
||
Harold Albert
|
||||
Director
|
June 13, 2016
|
|||
Arlen B. Crouch
|
||||
/s/ Stephen E. Pirnat
|
Director
|
June 13, 2016
|
||
Stephen E. Pirnat
|
||||
/s/ Daren J. Shaw
|
Director
|
June 13, 2016
|
||
Daren J. Shaw
|
||||
/s/ Ronald R. Spoehel
|
Director
|
June 13, 2016
|
||
Ronald R. Spoehel
|
Page
|
|
Report of Sadler, Gibb & Associates, LLC, Independent Registered Public Accounting Firm
|
43
|
Consolidated Balance Sheets – March 31, 2016 and 2015
|
44
|
Consolidated Statements of Income and Other Comprehensive Income (Loss) for the years ended March 31, 2016 and 2015
|
45
|
Consolidated Statement of Stockholders' Equity from March 31, 2015 through March 31, 2016
|
46
|
Consolidated Statements of Cash Flows for the years ended March 31, 2016 and 2015
|
47
|
Notes to Consolidated Financial Statements
|
48
|
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Profire Energy, Inc.’s internal control over financial reporting as of March 31, 2015, based on the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated June 15, 2015, expressed an adverse opinion thereon.
PROFIRE ENERGY, INC. AND SUBSIDIARIES
|
||||||||
Consolidated Balance Sheets
|
||||||||
|
|
|
||||||
|
For the Years Ending March 31,
|
|||||||
ASSETS
|
2016
|
2015
|
||||||
|
|
|
||||||
CURRENT ASSETS
|
|
|
||||||
Cash and cash equivalents
|
$
|
21,292,595
|
$
|
14,144,796
|
||||
Accounts receivable, net
|
4,132,137
|
9,462,378
|
||||||
Inventories
|
11,046,682
|
11,766,535
|
||||||
Income tax receivable
|
268,326
|
—
|
||||||
Prepaid expenses & other current assets
|
315,757
|
112,741
|
||||||
|
||||||||
Total Current Assets
|
37,055,497
|
35,486,450
|
||||||
|
||||||||
LONG-TERM ASSETS
|
||||||||
Deferred tax asset
|
452,431
|
501,921
|
||||||
|
||||||||
PROPERTY AND EQUIPMENT, net
|
8,232,911
|
9,275,965
|
||||||
|
||||||||
OTHER ASSETS
|
||||||||
Goodwill
|
997,701
|
997,701
|
||||||
Intangible assets, net of accumulated amortization
|
529,300
|
594,019
|
||||||
|
||||||||
Total Other Assets
|
1,527,001
|
1,591,720
|
||||||
|
||||||||
TOTAL ASSETS
|
$
|
47,267,840
|
$
|
46,856,056
|
||||
|
||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
|
||||||||
CURRENT LIABILITIES
|
||||||||
Accounts payable
|
$
|
893,822
|
$
|
1,040,530
|
||||
Accrued liabilities
|
620,783
|
332,229
|
||||||
Income taxes payable
|
335,375
|
347,486
|
||||||
|
||||||||
Total Current Liabilities
|
1,849,980
|
1,720,245
|
||||||
|
||||||||
LONG-TERM LIABILITIES
|
||||||||
Deferred income tax liability
|
632,732
|
631,353
|
||||||
|
||||||||
TOTAL LIABILITIES
|
2,482,712
|
2,351,598
|
||||||
|
||||||||
STOCKHOLDERS' EQUITY
|
||||||||
Preferred shares: $0.001 par value, 10,000,000 shares authorized: no shares issued and outstanding
|
-
|
-
|
||||||
Common shares: $0.001 par value, 100,000,000 shares authorized: 53,256,296 and 53,199,136 shares issued and outstanding, respectively
|
53,256
|
53,199
|
||||||
Additional paid-in capital
|
26,164,622
|
25,525,052
|
||||||
Accumulated other comprehensive loss
|
(2,282,682
|
)
|
(1,888,981
|
)
|
||||
Retained earnings
|
20,849,932
|
20,815,188
|
||||||
|
||||||||
Total Stockholders' Equity
|
44,785,128
|
44,504,458
|
||||||
|
||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
47,267,840
|
$
|
46,856,056
|
PROFIRE ENERGY, INC. AND SUBSIDIARIES
|
||||||||
Consolidated Statements of Income and Other Comprehensive Income
|
||||||||
|
|
|
||||||
|
For the Years Ending
March 31,
|
|||||||
|
2016
|
2015
|
||||||
REVENUES
|
|
|
||||||
Sales of goods, net
|
$
|
23,992,324
|
$
|
47,768,556
|
||||
Sales of services, net
|
3,080,122
|
3,410,836
|
||||||
Total Revenues
|
27,072,446
|
51,179,392
|
||||||
|
||||||||
COST OF SALES
|
||||||||
Cost of goods sold-product
|
11,027,114
|
21,240,363
|
||||||
Cost of goods sold-services
|
2,405,012
|
2,716,272
|
||||||
Total Cost of Goods Sold
|
13,432,126
|
23,956,635
|
||||||
|
||||||||
GROSS PROFIT
|
13,640,320
|
27,222,757
|
||||||
|
||||||||
OPERATING EXPENSES
|
||||||||
General and administrative expenses
|
12,264,442
|
16,296,156
|
||||||
Research and development
|
899,013
|
1,832,671
|
||||||
Depreciation and amortization expense
|
516,786
|
558,231
|
||||||
|
||||||||
Total Operating Expenses
|
13,680,241
|
18,687,058
|
||||||
|
||||||||
INCOME FROM OPERATIONS
|
(39,921
|
)
|
8,535,699
|
|||||
|
||||||||
OTHER INCOME (EXPENSE)
|
||||||||
Gain on sale of fixed assets
|
20,278
|
8,014
|
||||||
Other (expense) income
|
144,937
|
21,865
|
||||||
Interest income
|
37,278
|
26,010
|
||||||
|
||||||||
Total Other Income (Expense)
|
202,493
|
55,889
|
||||||
|
||||||||
NET INCOME BEFORE INCOME TAXES
|
162,572
|
8,591,588
|
||||||
|
||||||||
INCOME TAX EXPENSE
|
127,828
|
2,843,905
|
||||||
|
||||||||
NET INCOME
|
$
|
34,744
|
$
|
5,747,683
|
||||
|
||||||||
FOREIGN CURRENCY TRANSLATION GAIN (LOSS)
|
$
|
(393,701
|
)
|
$
|
(1,657,930
|
)
|
||
|
||||||||
TOTAL COMPREHENSIVE INCOME (LOSS)
|
$
|
(358,957
|
)
|
$
|
4,089,753
|
|||
|
||||||||
BASIC EARNINGS PER SHARE
|
$
|
0.00
|
$
|
0.11
|
||||
|
||||||||
FULLY DILUTED EARNINGS PER SHARE
|
$
|
0.00
|
$
|
0.11
|
||||
|
||||||||
BASIC WEIGHTED AVG NUMBER OF SHARES OUTSTANDING
|
53,243,151
|
51,609,760
|
||||||
|
||||||||
FULLY DILUTED WEIGHTED AVG NUMBER OF SHARES OUTSTANDING
|
53,558,942
|
51,680,775
|
|
|
|
Additional
|
Other
|
|
Total
|
||||||||||||||||||
|
Common Stock
|
Paid-In
|
Comprehensive
|
Retained
|
Stockholders'
|
|||||||||||||||||||
|
Shares
|
Amount
|
Capital
|
Loss
|
Earnings
|
Equity
|
||||||||||||||||||
|
|
|
|
|
|
|
||||||||||||||||||
Balance, March 31, 2014
|
47,836,543
|
$
|
47,836
|
$
|
6,496,980
|
$
|
(231,051
|
)
|
$
|
15,067,505
|
21,381,270
|
|||||||||||||
|
||||||||||||||||||||||||
Stock issued in exercise of stock options
|
596,635
|
597
|
327,365
|
-
|
-
|
327,962
|
||||||||||||||||||
|
||||||||||||||||||||||||
Stock issuance, less offering costs of $1,529,057
|
4,500,000
|
4,500
|
16,420,188
|
-
|
-
|
16,424,688
|
||||||||||||||||||
|
||||||||||||||||||||||||
Stock issued for asset acquisition
|
265,958
|
266
|
999,734
|
-
|
-
|
1,000,000
|
||||||||||||||||||
|
||||||||||||||||||||||||
Fair value of options vested
|
-
|
-
|
1,280,785
|
-
|
-
|
1,280,785
|
||||||||||||||||||
|
||||||||||||||||||||||||
Foreign currency translation
|
-
|
-
|
-
|
(1,657,930
|
)
|
-
|
(1,657,930
|
)
|
||||||||||||||||
|
||||||||||||||||||||||||
Net income for the year ended March 31, 2015
|
-
|
-
|
-
|
-
|
5,747,683
|
5,747,683
|
||||||||||||||||||
|
||||||||||||||||||||||||
Balance, March 31, 2015
|
53,199,136
|
$
|
53,199
|
$
|
25,525,052
|
$
|
(1,888,981
|
)
|
$
|
20,815,188
|
44,504,458
|
|||||||||||||
|
||||||||||||||||||||||||
Fair value of options vested
|
-
|
-
|
565,646
|
-
|
-
|
565,646
|
||||||||||||||||||
|
||||||||||||||||||||||||
Stock issued in exercise of stock options
|
57,160
|
57
|
73,924
|
-
|
-
|
73,981
|
||||||||||||||||||
|
||||||||||||||||||||||||
Foreign currency translation
|
-
|
-
|
-
|
(393,701
|
)
|
-
|
(393,701
|
)
|
||||||||||||||||
|
||||||||||||||||||||||||
Net income for the year ended March 31, 2016
|
-
|
-
|
-
|
-
|
34,744
|
34,744
|
||||||||||||||||||
|
||||||||||||||||||||||||
Balance, March 31, 2016
|
53,256,296
|
$
|
53,256
|
$
|
26,164,622
|
$
|
(2,282,682
|
)
|
$
|
20,849,932
|
44,785,128
|
|
For the Years Ending
March 31,
|
|||||||
|
2016
|
2015
|
||||||
Net income applicable to common shareholders
|
$
|
34,744
|
$
|
5,747,683
|
||||
Weighted average shares outstanding
|
53,243,151
|
51,609,760
|
||||||
Weighted average fully diluted shares outstanding
|
53,558,942
|
51,680,775
|
||||||
Basic earnings per share
|
$
|
0.00
|
$
|
0.11
|
||||
Fully diluted earnings per share
|
$
|
0.00
|
$
|
0.11
|
|
For the Years Ending
March 31,
|
|||||||
|
2016
|
2015
|
||||||
Raw materials
|
$
|
967,823
|
$
|
—
|
||||
Finished goods
|
10,316,857
|
11,951,108
|
||||||
Work in process
|
—
|
—
|
||||||
Subtotal
|
11,284,680
|
11,951,108
|
||||||
Reserve for Obsolence
|
(237,998
|
)
|
(184,573
|
)
|
||||
Total
|
$
|
11,046,682
|
$
|
11,766,535
|
|
Estimated useful life
|
|
Assets
|
Current
|
Prior
|
Furniture and fixtures
|
7 Years
|
5 Years
|
Machinery and equipment
|
7 Years
|
5 Years
|
Buildings
|
30 Years
|
25 Years
|
Vehicles
|
5 Years
|
3 Years
|
Computers
|
3 Years
|
3 Years
|
Software
|
2 Years
|
N/A
|
|
For the Years Ending
March 31,
|
|||||||
|
2016
|
2015
|
||||||
Office furniture and equipment
|
$
|
968,135
|
$
|
937,274
|
||||
Service and shop equipment
|
577,240
|
573,233
|
||||||
Vehicles
|
2,715,920
|
3,040,439
|
||||||
Land and buildings
|
6,733,415
|
6,746,597
|
||||||
Total property and equipment
|
10,994,710
|
11,297,543
|
||||||
Accumulated depreciation
|
(2,761,799
|
)
|
(2,021,578
|
)
|
||||
Net property and equipment
|
$
|
8,232,911
|
$
|
9,275,965
|
|
For the Years Ending
March 31,
|
|||||||
|
2016
|
2015
|
||||||
Cost of Goods Sold
|
$
|
474,539
|
$
|
582,088
|
||||
General and administrative
|
516,786
|
558,231
|
||||||
Total
|
$
|
991,325
|
$
|
1,140,319
|
Consideration paid:
|
|
|||
Cash paid
|
$
|
750,000
|
||
Common stock issued
|
1,000,000
|
|||
Total purchase price
|
1,750,000
|
|||
|
||||
Consideration received:
|
||||
Inventory
|
$
|
54,577
|
||
Intangible assets
|
||||
Tundra Distribution Agreement
|
46,722
|
|||
Patent
|
650,000
|
|||
Other Intellectual Property
|
1,000
|
|||
Total Intangible Assets
|
697,722
|
|||
|
||||
$
|
752,299
|
|||
|
||||
Goodwill was recognized as a result of the acquisition as follows:
|
||||
Total consideration paid
|
$
|
1,750,000
|
||
Total consideration received
|
(752,299
|
)
|
||
|
$
|
997,701
|
Tundra Distribution Agreement
|
9 months
|
Patent
|
20 years
|
Other Intellectual Property
|
20 years
|
|
For the Years Ending
March 31,
|
|||||||
|
2016
|
2015
|
||||||
|
|
|
||||||
Distribution agreements
|
$
|
40,702
|
$
|
41,638
|
||||
Less: Accumulated amortization
|
(40,702
|
)
|
(27,757
|
)
|
||||
Distribution agreements, net
|
—
|
13,881
|
||||||
Patents, trademarks, copyrights, and domain names
|
567,109
|
580,138
|
||||||
Less: Accumulated amortization
|
(37,809
|
)
|
—
|
|||||
Total definite-lived intangible assets, net
|
$
|
529,300
|
$
|
594,019
|
|
For the Years Ending March 31,
|
|||||||
|
2016
|
2015
|
||||||
|
|
|
||||||
Goodwill
|
$
|
997,701
|
$
|
997,701
|
For the Years Ending March 31,
|
||||
Year
|
Amount
|
|||
2017
|
$
|
28,103
|
||
2018
|
28,103
|
|||
2019
|
28,103
|
|||
2020
|
28,103
|
|||
2021
|
28,103
|
|
For the Years Ending
March 31,
|
|||||||
|
2016
|
2015
|
||||||
|
|
|
||||||
United States statutory income tax rate
|
35.0
|
%
|
35.0
|
%
|
||||
Decrease in rate on income subject to Canadian income tax rates
|
—
|
-1.5
|
%
|
|||||
Decrease in rate resulting from non-deductible
|
||||||||
expenses and deductible adjustments
|
43.6
|
%
|
-0.4
|
%
|
||||
|
43.6
|
%
|
-1.9
|
%
|
||||
Effective income tax rate
|
78.6
|
%
|
33.1
|
%
|
|
For the Years Ending March 31,
|
|||||||
Components of Income Tax Expense
|
2016
|
2015
|
||||||
Federal U.S. Income Taxes
|
|
|
||||||
-Current
|
$
|
363,768
|
$
|
1,187,957
|
||||
-Deferred
|
(89,337
|
)
|
442,095
|
|||||
Foreign (Canadian and Provincial) Income Taxes
|
(240,372
|
)
|
998,280
|
|||||
State Income Taxes
|
||||||||
-Current
|
93,768
|
215,572
|
||||||
Total Income Tax Expense
|
$
|
127,828
|
$
|
2,843,905
|
|
For the Years Ending
March 31,
|
|||||||
Sales
|
2016
|
2015
|
||||||
|
|
|
||||||
Canada
|
$
|
6,010,042
|
$
|
14,769,787
|
||||
United States
|
21,062,404
|
36,409,605
|
||||||
Total
|
$
|
27,072,446
|
$
|
51,179,392
|
|
For the Years Ending
March 31,
|
|||||||
Long-lived assets
|
2016
|
2015
|
||||||
|
|
|
||||||
Canada
|
$
|
1,067,346
|
$
|
1,231,434
|
||||
United States
|
7,165,565
|
8,044,531
|
||||||
Total
|
$
|
8,232,911
|
$
|
9,275,965
|
|
|
Wtd. Avg.
|
||||||
|
Options
|
Exercise Price
|
||||||
Outstanding, March 31, 2014
|
3,074,850
|
1.47
|
||||||
Granted
|
133,900
|
4.03
|
||||||
Exercised
|
(596,635
|
)
|
0.55
|
|||||
Forfeited/Expired
|
(498,615
|
)
|
1.39
|
|||||
Outstanding, March 31, 2015
|
2,113,500
|
1.90
|
||||||
|
||||||||
Exercisable, March 31, 2015
|
907,000
|
2.27
|
||||||
|
||||||||
|
Wtd. Avg.
|
|||||||
|
Options
|
Exercise Price
|
||||||
Outstanding, March 31, 2015
|
2,113,500
|
1.90
|
||||||
Granted
|
-
|
-
|
||||||
Exercised
|
-
|
-
|
||||||
Forfeited/Expired
|
(552,300
|
)
|
1.54
|
|||||
Outstanding, March 31, 2016
|
1,561,200
|
2.02
|
||||||
|
||||||||
Exercisable, March 31, 2016
|
1,050,800
|
2.12
|
Total Outstanding and Exercisable
For the Year Ending March 31, 2015
|
||||||||||||||||||
|
Outstanding Options
|
Avg. Remaining
|
Exercisable
|
Wtd. Avg.
|
||||||||||||||
Strike Price
|
(1 share/option)
|
Life (Yrs)
|
Shares
|
Exercise Price
|
||||||||||||||
$
|
0.30
|
110,000
|
1.88
|
40,000
|
0.30
|
|||||||||||||
$
|
1.37
|
1,118,000
|
4.08
|
284,000
|
1.37
|
|||||||||||||
$
|
1.75
|
475,000
|
2.93
|
283,000
|
1.75
|
|||||||||||||
$
|
3.85
|
200,000
|
4.61
|
200,000
|
3.85
|
|||||||||||||
$
|
3.95
|
100,000
|
4.86
|
100,000
|
3.95
|
|||||||||||||
$
|
4.03
|
110,500
|
5.09
|
-
|
4.03
|
|||||||||||||
2,113,500
|
4.02
|
907,000
|
2.27
|
Total Outstanding and Exercisable
For the Year Ending March 31, 2016
|
||||||||||||||||||
|
Outstanding Options
|
Avg. Remaining
|
Exercisable
|
Wtd. Avg.
|
||||||||||||||
Strike Price
|
(1 share/option)
|
Life (Yrs)
|
Shares
|
Exercise Price
|
||||||||||||||
$
|
0.30
|
110,000
|
0.88
|
110,000
|
0.30
|
|||||||||||||
$
|
1.37
|
711,500
|
3.13
|
345,500
|
1.37
|
|||||||||||||
$
|
1.75
|
346,500
|
1.93
|
276,500
|
1.75
|
|||||||||||||
$
|
3.85
|
200,000
|
3.61
|
200,000
|
3.85
|
|||||||||||||
$
|
3.95
|
100,000
|
3.86
|
100,000
|
3.95
|
|||||||||||||
$
|
4.03
|
93,200
|
4.09
|
18,800
|
4.03
|
|||||||||||||
1,561,200
|
2.92
|
1,050,800
|
2.12
|
Wtd. Avg.
|
||||||||
Grant Date
|
||||||||
Non-vested options
|
Options
|
Fair Value
|
||||||
Non-vested at March 31, 2015
|
1,206,500
|
1.58
|
||||||
Stock options issued during the year
|
-
|
-
|
||||||
Stock options canceled
|
(552,300
|
)
|
1.54
|
|||||
Vested during the year ended March 31, 2016
|
(370,600
|
)
|
1.40
|
|||||
Cancellation of previously vested stock options
|
226,800
|
1.54
|
||||||
Non-vested at March 31, 2016
|
510,400
|
1.81
|
|
|
Wtd. Avg.
|
||||||
|
Restricted
|
Grant Date
|
||||||
Non-vested restricted stock
|
Stock
|
Fair Value
|
||||||
Non-vested at March 31, 2015
|
171,666
|
4.03
|
||||||
Restricted stock issued during the year
|
-
|
-
|
||||||
Restricted Stock canceled
|
(40,000
|
)
|
4.03
|
|||||
Vested during the year ended March 31, 2016
|
(34,332
|
)
|
4.03
|
|||||
Non-vested at March 31, 2016
|
97,334
|
4.03
|
|
|
Wtd. Avg.
|
||||||
|
Restricted
|
Grant Date
|
||||||
Non-vested restricted stock units
|
Stock Units
|
Fair Value
|
||||||
Non-vested at March 31, 2015
|
106,907
|
3.94
|
||||||
Restricted stock units issued during the year
|
528,334
|
1.05
|
||||||
Restricted stock units canceled
|
(76,999
|
)
|
1.68
|
|||||
Vested, not settled during the period ended March 31, 2016
|
(199,908
|
)
|
1.68
|
|||||
Vested & settled during the year ended March 31, 2016
|
(53,001
|
)
|
1.62
|
|||||
Non-vested at March 31, 2016
|
305,333
|
1.38
|
Years Ending March 31,
|
Operating Leases
|
|||
|
|
|||
2017
|
$
|
35,724
|
||
2018
|
–
|
|||
Thereafter
|
–
|
|||
|
$
|
35,724
|
|
For the Quarters Ending
|
|||||||||||||||
2016
|
Jun 30
|
Sep 30
|
Dec 31
|
Mar 31
|
||||||||||||
Net sales
|
$
|
6,877,243
|
$
|
8,097,294
|
$
|
7,554,255
|
$
|
4,543,654
|
||||||||
Gross profit
|
3,313,519
|
$
|
4,028,403
|
$
|
3,998,502
|
$
|
2,299,895
|
|||||||||
Income (loss) from operations
|
(539,374
|
)
|
$
|
675,396
|
$
|
490,322
|
$
|
(666,265
|
)
|
|||||||
Income tax expense (benefit)
|
(149,525
|
)
|
$
|
254,781
|
$
|
194,227
|
$
|
(171,654
|
)
|
|||||||
Net income (loss)
|
(459,079
|
)
|
$
|
779,195
|
$
|
479,243
|
$
|
(764,617
|
)
|
|||||||
Basic earnings per common share
|
$
|
(0.01
|
)
|
$
|
0.01
|
$
|
0.01
|
$
|
(0.01
|
)
|
||||||
Diluted earnings per common share
|
$
|
(0.01
|
)
|
$
|
0.01
|
$
|
0.01
|
$
|
(0.01
|
)
|
|
For the Quarters Ending
|
|||||||||||||||
2015
|
Jun 30
|
Sep 30
|
Dec 31
|
Mar 31
|
||||||||||||
Net sales
|
$
|
13,144,834
|
$
|
15,720,932
|
$
|
12,516,699
|
$
|
9,796,927
|
||||||||
Gross profit
|
7,437,100
|
8,549,443
|
6,542,595
|
469,362
|
||||||||||||
Income from operations
|
336,639
|
3,253,591
|
1,806,117
|
109,602
|
||||||||||||
Income tax expense (benefit)
|
1,149,042
|
1,182,676
|
(110,426
|
)
|
622,612
|
|||||||||||
Net income (loss)
|
2,220,706
|
2,078,201
|
191,715
|
(468,373
|
)
|
|||||||||||
Basic earnings per common share
|
$
|
0.05
|
$
|
0.04
|
$
|
0.04
|
$
|
(0.01
|
)
|
|||||||
Diluted earnings per common share
|
$
|
0.05
|
$
|
0.04
|
$
|
0.04
|
$
|
(0.01
|
)
|
Name of Participant:
|
||||
Total Number of Shares Granted:
|
||||
Type of Option:
|
Non-Incentive Stock Option
|
|||
Exercise Price Per Share:
|
$
|
|||
Date of Grant:
|
||||
Date Exercisable:
|
[Note: insert vesting schedule here]
_
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Expiration Date:
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PARTICIPANT:
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PROFIRE ENERGY, INC.
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By:
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Title:
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Print Name
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(i)
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Participant will immediately forfeit any then unexercised portion of any Option included in this grant;
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(ii)
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Participant shall immediately return to the Company any Shares issued upon exercise of any Option included in this grant, and any Shares in this grant that are still under Participant's control; and
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(iii)
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Participant shall promptly pay to the Company an amount equal to the fair market value of all Shares included in this grant that are no longer under Participant's control (as measured on the exercise date of any such Option);
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(iv)
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In addition to the Company's rights set forth above, Participant agrees that this Agreement shall be subject to recovery by the Company in accordance with and to the maximum extent required under the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act.
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On each of
the following dates |
Number of Shares
Vested |
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PROFIRE ENERGY, INC.
By:
Name:
Title:
PARTICIPANT:
Print Name:
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On each of
the following dates |
Number of Units
Vested
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PROFIRE ENERGY, INC.
By:
Name:
Title:
PARTICIPANT:
Print Name:
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I. | Section 3. | Exercise Procedure Withholding |
II. | Holder shall exercise the Option, or any portion thereof, by notifying the Company of the number of shares that he or she desires to purchase by delivering a completed Notice of Stock Option Exercise, a copy of which is attached hereto as Exhibit B. Such notice must be accompanied by payment in full of the exercise price for all shares to be purchased by (i) cash, check (bank check, certified check or personal check) or money order payable to the order of the Company, (ii) delivery of unencumbered shares previously acquired by Holder having a Fair Market Value on the date of exercise that is equal to the exercise price, (iii) withholding of shares that would otherwise be issued upon such exercise having a Fair Market Value on the date of exercise equal to the aggregate exercise price for the shares for which the Option is being exercised or (iv) a cashless (broker-assisted) exercise that complies with all applicable laws. |
III. |
IV. | The Option shall terminate and may no longer be exercised if Holder's Service terminates, except that: |
% Ownership
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U.S. Subsidiaries
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Non-U.S. Subsidiaries
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Profire Combustion, Inc., an Alberta, Canada corporation
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100%
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-
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-
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1. | I have reviewed this annual report on Form 10-K of Profire Energy, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c) |
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
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d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date:
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June 13, 2016
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By:
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/s/ Brenton W. Hatch
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Brenton W. Hatch
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Chief Executive Officer
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(Principal Executive Officer)
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1. | I have reviewed this annual report on Form 10-K of Profire Energy, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of registrant as of, and for, the periods presented in this report; |
4. |
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c) |
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
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d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date:
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June 13, 2016
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By:
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/s/ Ryan Oviatt
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Ryan Oviatt
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Chief Financial Officer
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(Principal Financial Officer)
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(1) | the Report fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date:
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June 13, 2016
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By:
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/s/ Brenton W. Hatch
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Brenton W. Hatch
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Chief Executive Officer
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(1) | the Report fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date:
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June 13, 2016
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By:
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/s/ Ryan Oviatt
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Ryan Oviatt
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Chief Financial Officer
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