☐ |
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.)
|
Common Stock, $0.001 par value
|
NASDAQ
|
(Title of each class)
|
(Name of each exchange on which registered)
|
Large accelerated Filer
☐
|
Accelerated Filer
☐
|
Non-accelerated Filer
☐
(Do not check if a smaller reporting company)
|
Smaller Reporting Company
☑
|
Explanatory Note
|
3
|
Cautionary Note Regarding Forward-Looking Statements
|
3
|
PART I
|
|
Item 1. Business
|
4
|
Item 1A. Risk Factors
|
10
|
Item 1B. Unresolved Staff Comments
|
24
|
Item 2. Properties
|
24
|
Item 3. Legal Proceedings
|
24
|
Item 4. Mine Safety Disclosures
|
24
|
PART II
|
|
Item 5. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
|
24
|
Item 6. Selected Financial Data
|
26
|
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
|
26
|
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
|
29
|
Item 8. Financial Statements and Supplementary Data
|
30
|
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
54
|
Item 9A. Controls and Procedures
|
54
|
Item 9B. Other Information
|
56
|
PART III
|
|
Item 10. Directors, Executive Officers, and Corporate Governance
|
57
|
Item 11. Executive Compensation
|
57
|
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
57
|
Item 13. Certain Relationships and Related Transactions and Director Independence
|
57
|
Item 14. Principal Accounting Fees and Services
|
57
|
PART IV
|
|
Item 15. Exhibits, Financial Statement Schedules
|
58
|
Signatures
|
60
|
Customer
|
Transition
Period
|
Year Ended
March 31,
2016
|
||||||
Chesapeake Energy
|
11
|
%
|
9
|
%
|
·
|
inline pilot technologies to increase efficiency and reliability of pilot-light performance in a variety of climates;
|
·
|
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 requires 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, required 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.
|
·
|
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 required 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.
|
·
|
Order 25417, which was passed by North Dakota's Industrial Council, is a new rule effective April 1, 2015, requires producers to condition crude oil before transportation and prove oil temperature is above 110 degrees Fahrenheit, to burn off toxic gases from the oil.
|
Name
|
Age
|
Positions Held
|
Brenton W. Hatch
|
66
|
Chief Executive Officer (2008 to present)
|
Harold Albert
|
54
|
Chief Technology Officer (2016 to March 1, 2017) Previous titles with Profire: Chief Operating Officer (2008 to 2016)
|
Ryan Oviatt
|
42
|
Chief Financial Officer (2015 to present)
|
·
|
the level of oil and gas production;
|
·
|
the demand for oil and gas related products;
|
·
|
domestic and worldwide economic conditions;
|
·
|
political instability in the Middle East and other oil producing regions;
|
·
|
the actions of the Organization of Petroleum Exporting Countries;
|
·
|
the price of foreign imports of oil and gas, including liquefied natural gas;
|
·
|
natural disasters or weather conditions, such as hurricanes;
|
·
|
technological advances affecting energy consumption;
|
·
|
the level of oil and gas inventories;
|
·
|
the cost of producing oil and gas;
|
·
|
the price and availability of alternative fuels;
|
·
|
merger and divestiture activity among oil and gas producers; and
|
·
|
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;
|
·
|
we may experience problems in retaining customers and integrating customer bases; and
|
·
|
we may experience complexities associated with managing the combined businesses and
|
·
|
consolidating multiple physical locations.
|
·
|
multiple, conflicting, and changing laws and regulations, export and import restrictions, and employment laws;
|
·
|
regulatory requirements, and other government approvals, permits, and licenses;
|
·
|
potentially adverse tax consequences;
|
·
|
political and economic instability, including wars and acts of terrorism, political unrest, boycotts, curtailments of trade and sanctions, and other business restrictions;
|
·
|
expropriation, confiscation or nationalization of assets;
|
·
|
renegotiation or nullification of existing contracts;
|
·
|
difficulties and costs in recruiting and retaining individuals skilled in international business operations;
|
·
|
foreign exchange restrictions;
|
·
|
foreign currency fluctuations;
|
·
|
foreign taxation;
|
·
|
the inability to repatriate earnings or capital;
|
·
|
changing foreign and domestic monetary policies;
|
·
|
cultural and communication challenges;
|
·
|
industry-process changes in heating and flow of oil;
|
·
|
regional economic downturns; and
|
·
|
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.
|
·
|
design and commercially produce products that meet the needs of our customers;
|
·
|
attract and retain talented research-and-development management and personnel;
|
·
|
successfully market new products; and
|
·
|
protect our proprietary designs from our competitors.
|
·
|
our ability to market our products and services to new customers;
|
·
|
our ability to provide large-scale support and training materials for a growing customer base;
|
·
|
our ability to hire, train and assimilate new employees;
|
·
|
the adequacy of our financial resources; and
|
·
|
our ability to correctly identify and exploit new geographical markets and to successfully compete in those markets.
|
·
|
the underlying price of the commodities in the oil and gas industry;
|
·
|
announcements of capital budget changes by a major customer;
|
·
|
the introduction of new products by our competitors;
|
·
|
announcements of technology advances by us or our competitors;
|
·
|
current events affecting the political and economic environment in the United States or Canada;
|
·
|
conditions or industry trends, including demand for our products, services and technological advances;
|
·
|
changes to financial estimates by us or by any securities analysts who might cover our stock;
|
·
|
additions or departures of our key personnel;
|
·
|
government regulation of our industry;
|
·
|
seasonal, economic, or financial conditions;
|
·
|
our quarterly operating and financial results; or
|
·
|
litigation or public concern about the safety of our products.
|
·
|
the composition of our Board, which has the authority to direct our business, appoint and remove our officers, and declare dividends;
|
·
|
approving or rejecting a merger, consolidation or other business combination;
|
·
|
raising future capital; and
|
·
|
amending our articles of incorporation and bylaws.
|
Quarter Ended
|
High
|
Low
|
||||||
June 30, 2015
|
$
|
1.65
|
$
|
1.06
|
||||
September 30, 2015
|
$
|
1.17
|
$
|
0.83
|
||||
December 31, 2015
|
$
|
1.37
|
$
|
0.90
|
||||
March 31, 2016
|
$
|
1.12
|
$
|
0.70
|
||||
June 30, 2016
|
$
|
1.11
|
$
|
0.86
|
||||
September 30, 2016
|
$
|
1.32
|
$
|
1.11
|
||||
December 31, 2016
|
$
|
1.43
|
$
|
1.27
|
Plan category
|
Number of
securities to
be issued upon exercise of outstanding
options,
warrants
and rights
|
Weighted-average exercise
price of
outstanding
options,
warrants
and rights
|
Number of
securities
remaining available for future
issuance under
equity
compensation
plans (excluding securities
reflected in
column (a))
|
|||||||||
(a)
|
(b)
|
(c)
|
||||||||||
Equity compensation plans approved by security holders
|
2,165,000
|
$
|
1.60
|
3,065,689
|
||||||||
Equity compensation plans not approved by security holders
|
0
|
0
|
0
|
|||||||||
Total
|
2,165,000
|
$
|
1.60
|
3,065,689
|
Period
|
(a) Total
Number of
Shares
Purchased
|
(b) Weighted
Average Price
Paid Per
Share
|
(c) Total Number
of Shares
Purchased as
Part of
Publicly
Announced
Plans
|
(d) Maximum
Dollar Value of Shares that
May Yet Be
Purchased
Under the
Plans
|
||||||||||||
Oct 1-31, 2016
|
18,995
|
$
|
1.23
|
18,995
|
$
|
1,714,999
|
||||||||||
Nov 1-30, 2016
|
41,912
|
$
|
1.19
|
41,912
|
$
|
1,665,312
|
||||||||||
Dec 1-31, 2016
|
200,100
|
$
|
1.24
|
200,100
|
$
|
1,417,193
|
||||||||||
Total
|
261,007
|
261,007
|
|
For the
Nine-Months
Ended
December 31,
2016
|
% of Revenue
|
(Unaudited)
For the
Nine-Months
Ended
December 31,
2015
|
% of Revenue
|
$ Change
|
% Change
|
||||||||||||||||||
Total Revenues
|
15,987,186
|
100
|
%
|
22,528,792
|
100
|
%
|
$
|
(6,541,606
|
)
|
-29
|
%
|
|||||||||||||
Total Cost of Goods Sold
|
7,887,148
|
49
|
%
|
11,188,833
|
50
|
%
|
$
|
(3,301,685
|
)
|
-30
|
%
|
|||||||||||||
GROSS PROFIT
|
8,100,038
|
51
|
%
|
11,339,959
|
50
|
%
|
$
|
(3,239,921
|
)
|
-29
|
%
|
|
For the
Nine-Months
Ended
December 31, 2016
|
% of Revenue
|
(Unaudited)
For the
Nine-Months
Ended
December 31,
2015
|
% of Revenue
|
$ Change
|
% Change
|
||||||||||||||||||
General and administrative expenses
|
7,198,081
|
45
|
%
|
9,391,514
|
42
|
%
|
$
|
(2,193,433
|
)
|
-23
|
%
|
|||||||||||||
Research and development
|
757,880
|
5
|
%
|
948,508
|
4
|
%
|
$
|
(190,628
|
)
|
-20
|
%
|
|||||||||||||
Depreciation and amortization expense
|
482,311
|
3
|
%
|
374,247
|
2
|
%
|
$
|
108,064
|
29
|
%
|
|
As of
December 31,
2016
|
As of
March 31,
2016
|
$ Change
|
% Change
|
||||||||||||
Cash and cash equivalents
|
9,316,036
|
21,292,595
|
$
|
(11,976,559
|
)
|
-56
|
%
|
|||||||||
Short term investments
|
2,965,536
|
-
|
$
|
2,965,536
|
100
|
%
|
||||||||||
Investments - other
|
2,250,000
|
-
|
$
|
2,250,000
|
100
|
%
|
||||||||||
Long Term Investments
|
5,504,997
|
-
|
$
|
5,504,997
|
100
|
%
|
||||||||||
Total
|
20,036,569
|
21,292,595
|
(1,256,026
|
)
|
-6
|
%
|
|
For the
Nine-Months
Ended
December 31,
2016
|
(Unaudited)
For the
Nine-Months
Ended
December 31,
2015
|
$ Change
|
% Change
|
||||||||||||
Net cash provided by operating activities
|
$
|
2,383,713
|
$
|
5,779,611
|
$
|
(3,395,898
|
)
|
-59
|
%
|
|||||||
Net cash provided by (used in) investing activities
|
$
|
(10,687,142
|
)
|
$
|
54,059
|
$
|
(10,741,201
|
)
|
-19869
|
%
|
||||||
Net cash used in financing activities
|
$
|
(3,597,805
|
)
|
$
|
(39,243
|
)
|
$
|
(3,558,562
|
)
|
9068
|
%
|
|||||
Effect of exchange rate on cash
|
$
|
(75,325
|
)
|
$
|
(657,722
|
)
|
$
|
582,397
|
-89
|
%
|
||||||
Net increase (decrease) in cash
|
$
|
(11,976,559
|
)
|
$
|
5,136,705
|
$
|
(17,113,264
|
)
|
-333
|
%
|
Consolidated Statements of Operations and Other Comprehensive Income (Loss)
|
||||||||
|
||||||||
|
For the
Nine-Months
Ended
December 31,
2016
|
For the
Year Ended
March 31,
2016
|
||||||
|
||||||||
REVENUES
|
||||||||
Sales of goods, net
|
$
|
14,336,618
|
$
|
23,992,324
|
||||
Sales of services, net
|
1,650,568
|
3,080,122
|
||||||
Total Revenues
|
15,987,186
|
27,072,446
|
||||||
|
||||||||
COST OF SALES
|
||||||||
Cost of goods sold-product
|
6,732,822
|
11,027,114
|
||||||
Cost of goods sold-services
|
1,154,326
|
2,405,012
|
||||||
Total Cost of Goods Sold
|
7,887,148
|
13,432,126
|
||||||
|
||||||||
GROSS PROFIT
|
8,100,038
|
13,640,320
|
||||||
|
||||||||
OPERATING EXPENSES
|
||||||||
General and administrative expenses
|
7,198,081
|
12,264,442
|
||||||
Research and development
|
757,880
|
899,013
|
||||||
Depreciation and amortization expense
|
482,311
|
516,786
|
||||||
|
||||||||
Total Operating Expenses
|
8,438,272
|
13,680,241
|
||||||
|
||||||||
LOSS FROM OPERATIONS
|
(338,234
|
)
|
(39,921
|
)
|
||||
|
||||||||
OTHER INCOME (EXPENSE)
|
||||||||
Gain (Loss) on sale of fixed assets
|
(2,680
|
)
|
20,278
|
|||||
Other income
|
102,206
|
144,937
|
||||||
Interest income
|
90,028
|
37,278
|
||||||
|
||||||||
Total Other Income
|
189,554
|
202,493
|
||||||
|
||||||||
NET INCOME (LOSS) BEFORE INCOME TAXES
|
(148,680
|
)
|
162,572
|
|||||
|
||||||||
INCOME TAX EXPENSE (BENEFIT)
|
(226,733
|
)
|
127,828
|
|||||
|
||||||||
NET INCOME
|
$
|
78,053
|
$
|
34,744
|
||||
|
||||||||
OTHER COMPREHENSIVE LOSS
|
||||||||
Foreign Currency Translation Loss
|
$
|
(415,698
|
)
|
$
|
(393,701
|
)
|
||
Unrealized Losses on Investments
|
(112,363
|
)
|
-
|
|||||
|
||||||||
Total Other Comprehensive Loss
|
(528,061
|
)
|
(393,701
|
)
|
||||
|
||||||||
TOTAL COMPREHENSIVE LOSS
|
$
|
(450,008
|
)
|
$
|
(358,957
|
)
|
||
|
||||||||
BASIC EARNINGS PER SHARE
|
$
|
0.00
|
$
|
0.00
|
||||
|
||||||||
FULLY DILUTED EARNINGS PER SHARE
|
$
|
0.00
|
$
|
0.00
|
||||
|
||||||||
BASIC WEIGHTED AVG NUMBER OF SHARES OUTSTANDING
|
52,857,299
|
53,243,151
|
||||||
|
||||||||
FULLY DILUTED WEIGHTED AVG NUMBER OF SHARES OUTSTANDING
|
53,483,110
|
53,558,942
|
PROFIRE ENERGY, INC. AND SUBSIDIARY
|
||||||||||||||||||||||||||||
Consolidated Statements of Stockholders' Equity
|
||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
|
Additional
|
Other
|
Total
|
|||||||||||||||||||||||||
|
Common Stock
|
Paid-In
|
Comprehensive
|
Treasury
|
Retained
|
Stockholders'
|
||||||||||||||||||||||
|
Shares
|
Amount
|
Capital
|
Income
|
Stock
|
Earnings
|
Equity
|
|||||||||||||||||||||
|
||||||||||||||||||||||||||||
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 December 31, 2015
|
-
|
-
|
-
|
-
|
-
|
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
|
||||||||||||||||||||
|
||||||||||||||||||||||||||||
Fair value of options vested
|
242,801
|
242,801
|
||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Stock issued in exercise of stock options
|
86,808
|
87
|
112,913
|
113,000
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Stock issued in settlement of RSUs
|
239,146
|
239
|
279,962
|
280,201
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Treasury stock repurchased
|
(2,876,317
|
)
|
(3,582,805
|
)
|
(3,582,805
|
)
|
||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Foreign currency translation
|
(415,698
|
)
|
(415,698
|
)
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Unrealized Losses on Investments
|
(112,363
|
)
|
(112,363
|
)
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Net income for the nine-months ended December 31, 2016
|
78,053
|
78,053
|
||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Balance, December 31, 2016
|
50,705,933
|
$
|
53,582
|
$
|
26,800,298
|
$
|
(2,810,743
|
)
|
$
|
(3,582,805
|
)
|
$
|
20,927,985
|
$
|
41,388,317
|
|
As of
|
Est. Useful Life
|
|||||||
|
December 31,
2016
|
March 31,
2016
|
|
||||||
Furniture and fixtures
|
$
|
450,197
|
$
|
454,661
|
7 Years
|
||||
Computers
|
297,038
|
299,095
|
3 Years
|
||||||
Software
|
214,378
|
214,378
|
2 Years
|
||||||
Machinery and equipment
|
557,666
|
577,240
|
7 Years
|
||||||
Vehicles
|
2,671,714
|
2,715,921
|
5 Years
|
||||||
Land and buildings
|
6,699,540
|
6,733,415
|
30 Years
|
||||||
Total property and equipment
|
10,890,533
|
10,994,710
|
|
||||||
Accumulated depreciation
|
(3,431,810
|
)
|
(2,761,799
|
)
|
|
||||
Net property and equipment
|
$
|
7,458,723
|
$
|
8,232,911
|
|
|
For the
Nine-Months
Ended
December 31,
2016
|
For the
Year Ended
March 31,
2016
|
||||||
Cost of goods sold - product
|
188,579
|
252,513
|
||||||
Cost of goods sold - service
|
85,892
|
220,185
|
||||||
Operating expenses
|
461,357
|
464,595
|
||||||
Amortization expense
|
20,954
|
52,191
|
||||||
Total depreciation & amortization expense
|
756,782
|
989,484
|
|
For the
Nine-Month
Period Ended December 31,
2016
|
For the
Year Ended
March 31,
2016
|
||||||
Research and Development
|
$
|
757,880
|
$
|
899,013
|
Level 1:
|
Quoted market prices in active markets for identical assets or liabilities.
|
Level 2:
|
Observable market-based inputs or inputs that are corroborated by market data.
|
Level 3:
|
Unobservable inputs that are not corroborated by market data.
|
December 31, 2016
|
||||||||||||||||||||||||
Adjusted
Cost
|
Pre-Tax
Unrealized Gains (Losses)
|
Fair Value
|
Cash
and Cash
Equivalents
|
Short Term
|
Long Term
|
|||||||||||||||||||
Level 1
|
||||||||||||||||||||||||
Money Market Funds
|
$
|
1,053,844
|
$
|
-
|
$
|
1,053,844
|
$
|
1,053,844
|
$
|
-
|
$
|
-
|
||||||||||||
Mutual Funds
|
1,473,536
|
(90,495
|
)
|
1,383,041
|
-
|
-
|
1,383,041
|
|||||||||||||||||
Subtotal
|
2,527,380
|
(90,495
|
)
|
2,436,885
|
1,053,844
|
-
|
1,383,041
|
|||||||||||||||||
Level 2
|
||||||||||||||||||||||||
Certificates of Deposit
|
$
|
2,250,000
|
$
|
-
|
$
|
2,250,000
|
$
|
-
|
$
|
2,250,000
|
$
|
-
|
||||||||||||
Corporate Bonds
|
2,246,956
|
(29,419
|
)
|
2,217,537
|
-
|
400,053
|
1,817,484
|
|||||||||||||||||
Municipal Bonds
|
4,929,249
|
(59,294
|
)
|
4,869,955
|
-
|
2,565,483
|
2,304,472
|
|||||||||||||||||
Subtotal
|
9,426,205
|
(88,713
|
)
|
9,337,492
|
-
|
5,215,536
|
4,121,956
|
|||||||||||||||||
Total
|
$
|
11,953,585
|
$
|
(179,208
|
)
|
$
|
11,774,377
|
$
|
1,053,844
|
$
|
5,215,536
|
$
|
5,504,997
|
|
March 31, 2016
|
|||||||||||||||||||||||
|
Adjusted Cost
|
Pre-Tax
Unrealized Gains (Losses)
|
Fair Value
|
Cash
and Cash
Equivalents
|
Short Term
|
Long Term
|
||||||||||||||||||
|
||||||||||||||||||||||||
Money Market Funds
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||||
Mutual Funds
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Subtotal
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
|
||||||||||||||||||||||||
Certificates of Deposit
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||||
Corporate Bonds
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Municipal Bonds
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Subtotal
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
|
||||||||||||||||||||||||
Total
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
For the
Nine Months
Ended
December 31,
2016
|
For the
Year Ended
March 31,
2016
|
|||||||
Unrealized Holding Gains (Losses)
|
$
|
(112,363
|
)
|
$
|
-
|
Maturity
|
Fair Value
|
|||
Less Than One Year
|
2,965,537
|
|||
1-2 years
|
309,009
|
|||
2-5 years
|
3,260,113
|
|||
5-10 years
|
252,833
|
|||
Over 10 years
|
300,000
|
|||
|
7,087,492
|
|
For the
Nine-Month
Period
Ended
December 31,
2016
|
For the
Year Ended
March 31,
2016
|
||||||
|
||||||||
Revenues
|
||||||||
Canada
|
$
|
3,962,774
|
$
|
6,010,042
|
||||
United States
|
12,024,412
|
21,062,404
|
||||||
Total Consolidated
|
$
|
15,987,186
|
$
|
27,072,446
|
|
For the
nine-month
period
ended
December 31,
2016
|
For the
year ended
March 31,
2016
|
||||||
|
||||||||
Profit (Loss)
|
||||||||
Canada
|
$
|
(356,623
|
)
|
$
|
(70,730
|
)
|
||
United States
|
434,676
|
105,474
|
||||||
Total Consolidated
|
$
|
78,053
|
$
|
34,744
|
|
As of
|
|||||||
Long-lived assets
|
December 31,
2016
|
March 31,
2016
|
||||||
|
||||||||
Canada
|
$
|
982,124
|
$
|
1,067,346
|
||||
United States
|
6,476,599
|
7,165,565
|
||||||
Total Consolidated
|
$
|
7,458,723
|
$
|
8,232,911
|
Total Outstanding and Exercisable March 31, 2016 | |||||||||||||||||||
Outstanding
Options
(1 share/option)
|
Average
Remaining Life
(Yrs)
|
Exercisable
Shares
|
Weighted
Average
Exercise
Price
|
||||||||||||||||
Strike 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
|
907,000
|
|
Options
|
Wtd.
Avg.
Fair
Value
|
||||||
Outstanding, March 31, 2016
|
1,561,200
|
2.12
|
||||||
Granted
|
848,000
|
0.49
|
||||||
Exercised
|
(110,000
|
)
|
0.34
|
|||||
Forfeited/Expired
|
(134,200
|
)
|
1.73
|
|||||
Outstanding, December 31, 2016
|
2,165,000
|
1.60
|
||||||
|
||||||||
Exercisable, December 31, 2016
|
1,003,000
|
1.92
|
|
Restricted
Stock
Units
|
Conversion
Ratio
|
|||
Outstanding, March 31, 2016
|
485,192
|
1:1
|
|||
Granted
|
223,266
|
1:1
|
|||
Exercised
|
(184,197
|
)
|
1:1
|
||
Forfeited/Expired
|
(8,400
|
)
|
1:1
|
||
Outstanding, December 31, 2016
|
515,861
|
1:1
|
|||
|
|
||||
Convertible, December 31, 2016
|
324,328
|
1:1
|
Non-vested restricted stock
|
Restricted
Stock
|
Wtd. Avg.
Grant Date Fair Value |
||||||
Non-vested at March 31, 2016
|
97,334
|
4.03
|
||||||
Restricted stock granted during the period
|
-
|
-
|
||||||
Restricted Stock canceled
|
-
|
-
|
||||||
Vested, not settled during the period
|
-
|
-
|
||||||
Vested & settled during the period
|
(24,332
|
)
|
4.03
|
|||||
Non-vested at December 31, 2016
|
73,002
|
4.03
|
|
As of
|
|||||||
|
December 31,
2016
|
March 31,
2016
|
||||||
Raw materials
|
$
|
940,527
|
$
|
967,823
|
||||
Finished goods
|
7,112,098
|
10,316,857
|
||||||
Work in process
|
-
|
-
|
||||||
Subtotal
|
8,052,625
|
11,284,680
|
||||||
Reserve for Obsolescence
|
(213,122
|
)
|
(237,998
|
)
|
||||
Total
|
$
|
7,839,503
|
$
|
11,046,682
|
|
For the Nine-Months Ended
December 31, 2016 |
For the year ended
March 31, 2016 |
||||||||||||||||||||||
|
Income
(Numerator) |
Shares
(Denominator) |
Per-Share Amount
|
Income
(Numerator) |
Shares
(Denominator) |
Per-Share Amount
|
||||||||||||||||||
Basic EPS
|
||||||||||||||||||||||||
Net income available to common stockholders
|
$
|
78,053
|
52,857,299
|
$
|
0.00
|
$
|
34,744
|
53,243,151
|
$
|
0.00
|
||||||||||||||
|
||||||||||||||||||||||||
Effect of Dilutive Securities
|
||||||||||||||||||||||||
Stock options and RSUs
|
-
|
625,811
|
-
|
315,791
|
||||||||||||||||||||
|
||||||||||||||||||||||||
Diluted EPS
|
||||||||||||||||||||||||
Net income available to common stockholders + assumed conversions
|
$
|
78,053
|
53,483,110
|
$
|
0.00
|
$
|
34,744
|
53,558,942
|
$
|
0.00
|
Definite-lived intangible assets
|
||||||||
|
As of
|
|||||||
|
December 31,
2016
|
March 31,
2016
|
||||||
Distribution agreements
|
$
|
39,264
|
$
|
40,702
|
||||
Less: Accumulated amortization
|
$
|
(39,264
|
)
|
(40,702
|
)
|
|||
Distribution agreements, net
|
—
|
—
|
||||||
|
||||||||
Patents, trademarks, copyrights, and domain names
|
$
|
547,071
|
567,109
|
|||||
Less: Accumulated amortization
|
$
|
(56,989
|
)
|
(37,809
|
)
|
|||
Patents, trademarks, copyrights, and domain names, net
|
490,082
|
529,300
|
||||||
|
||||||||
Total definite-lived intangible assets, net
|
$
|
490,082
|
$
|
529,300
|
For the Years Ending December 31,
|
||||
Year
|
Amount
|
|||
2017
|
$
|
28,103
|
||
2018
|
28,103
|
|||
2019
|
28,103
|
|||
2020
|
28,103
|
|||
2021
|
28,103
|
|
As of
|
|||||||
|
December 31,
2016
|
March 31,
2016
|
||||||
Goodwill
|
$
|
997,701
|
$
|
997,701
|
|
For the Quarters Ending
|
|||||||||||
Transition Period
|
Jun 30,
2016
|
Sep 30,
2016
|
Dec 31,
2016
|
|||||||||
Total revenues
|
$
|
3,974,043
|
$
|
4,990,813
|
$
|
7,022,330
|
||||||
Gross profit
|
1,914,250
|
2,624,659
|
3,561,129
|
|||||||||
Income (loss) from operations
|
(881,278
|
)
|
(127,369
|
)
|
670,413
|
|||||||
Income tax expense (benefit)
|
(245,877
|
)
|
(99,701
|
)
|
118,845
|
|||||||
Net income (loss)
|
(605,295
|
)
|
74,452
|
608,896
|
||||||||
Basic earnings per common share
|
$
|
(0.01
|
)
|
$
|
0.00
|
0.01
|
||||||
Diluted earnings per common share
|
$
|
(0.01
|
)
|
$
|
0.00
|
0.01
|
|
For the Quarters Ending
|
|||||||||||||||
Fiscal Year 2016
|
Jun 30,
2015
|
Sep 30,
2015
|
Dec 31,
2015
|
Mar 31,
2016
|
||||||||||||
Total revenues
|
$
|
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
|
)
|
|
Nine-Months
Ended
December 31,
2016
|
Year Ended
March 31,
2016
|
||||||
Current
|
||||||||
Federal
|
$
|
(31,983
|
)
|
$
|
363,768
|
|||
State
|
(1,683
|
)
|
93,768
|
|||||
Foreign
|
21,303
|
(240,372
|
)
|
|||||
Total Current
|
(12,363
|
)
|
217,164
|
|||||
Deferred
|
||||||||
Federal
|
(203,652
|
)
|
(89,337
|
)
|
||||
State
|
(10,718
|
)
|
-
|
|||||
Total Deferred
|
(214,370
|
)
|
(89,337
|
)
|
||||
Total Provision (Benefit) for Income Taxes
|
$
|
(226,733
|
)
|
$
|
127,827
|
|
Nine-Months
Ended
December 31,
2016
|
Year Ended
March 31,
2016
|
||||||
Statutory Tax Rate
|
37.3
|
%
|
35.0
|
%
|
||||
Meals & Entertainment
|
-5.2
|
%
|
10.8
|
%
|
||||
Gain/loss on Sale of PPE
|
-5.9
|
%
|
31.1
|
%
|
||||
Goodwill
|
22.0
|
%
|
0.0
|
%
|
||||
Tax Exempt Interest
|
20.7
|
%
|
0.0
|
%
|
||||
Ending Balance True Up
|
28.0
|
%
|
0.0
|
%
|
||||
Tax Overpayment
|
38.3
|
%
|
0.0
|
%
|
||||
Other
|
17.3
|
%
|
1.7
|
%
|
||||
Effective Tax Rate
|
152.5
|
%
|
78.6
|
%
|
|
As of
December 31,
2016
|
As of
March 31,
2016
|
||||||
Stock Compensation
|
$
|
277,296
|
$
|
366,547
|
||||
Bad Debt
|
46,790
|
52,215
|
||||||
Inventory reserve
|
53,121
|
33,669
|
||||||
Unrealized loss on investments
|
66,844
|
-
|
||||||
Deferred tax asset
|
$
|
444,051
|
$
|
452,431
|
||||
|
||||||||
Depreciation
|
$
|
367,490
|
$
|
596,691
|
||||
Amortization
|
15,621
|
-
|
||||||
Goodwill
|
-
|
36,041
|
||||||
Deferred tax liability
|
$
|
383,111
|
$
|
632,732
|
||||
|
||||||||
Net Deferred Tax Asset (Liability)
|
$
|
60,940
|
$
|
(180,301
|
)
|
|
For the
Nine-Months
Ended
December 31,
2016
|
(Unaudited)
For the
Nine-Months
Ended
December 31,
2015
|
||||||
Total Revenues
|
$
|
15,987,186
|
$
|
22,528,792
|
||||
Total Cost of Goods Sold
|
7,887,148
|
11,188,833
|
||||||
GROSS PROFIT
|
8,100,038
|
11,339,959
|
||||||
General and administrative expenses
|
7,198,081
|
9,391,514
|
||||||
Research and development
|
757,880
|
948,508
|
||||||
Depreciation and amortization expense
|
482,311
|
374,247
|
||||||
INCOME (LOSS) FROM OPERATIONS
|
(338,234
|
)
|
625,690
|
|||||
Total Other Income (Expense)
|
189,554
|
472,499
|
||||||
NET INCOME BEFORE INCOME TAXES
|
(148,680
|
)
|
1,098,189
|
|||||
INCOME TAX EXPENSE (BENEFIT)
|
(226,733
|
)
|
299,295
|
|||||
NET INCOME (LOSS)
|
$
|
78,053
|
$
|
798,895
|
||||
Foreign Currency Translation Gain (loss)
|
(415,698
|
)
|
(1,233,891
|
)
|
||||
Unrealized Gains (Losses) on Investments
|
(112,363
|
)
|
-
|
|||||
TOTAL COMPREHENSIVE INCOME (LOSS)
|
$
|
(450,008
|
)
|
$
|
(434,997
|
)
|
||
BASIC EARNINGS PER SHARE
|
$
|
0.00
|
$
|
0.02
|
||||
FULLY DILUTED EARNINGS PER SHARE
|
$
|
0.00
|
$
|
0.01
|
||||
BASIC WEIGHTED AVG SHARES OUTSTANDING
|
52,857,299
|
53,239,087
|
||||||
FULLY DILUTED WEIGHTED AVG SHARES OUTSTANDING
|
53,483,110
|
53,506,778
|
||||||
|
||||||||
Net cash provided by operating activities
|
2,383,713
|
$
|
5,779,611
|
|||||
Net cash provided by (used in) investing activities
|
(10,687,142
|
)
|
54,059
|
|||||
Net cash used in financing activities
|
(3,597,805
|
)
|
(39,243
|
)
|
||||
Effect of exchange rate on cash
|
(75,325
|
)
|
(657,722
|
)
|
||||
Net increase (decrease) in cash
|
(11,976,559
|
)
|
$
|
5,136,705
|
Years ending December 31,
|
Operating
Leases
|
|||
2017
|
29,671
|
|||
2018
|
11,781
|
|||
Thereafter
|
-
|
·
|
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
|
·
|
Revenue recognition (e.g., consistent requirements for documentation in every office where accounting functions are performed)
|
·
|
Sufficient documentation of review- and analytical-processes (e.g., significant judgements and estimates)
|
·
|
Structuring of duties, controls, and permission within financial systems (e.g., warehouse managers have the ability to create sales orders)
|
·
|
Asset management and maintenance functions (e.g., documented and regular physical confirmation of asset existence)
|
·
|
Segregation of duties (e.g., employees in our smaller offices have the ability in the enterprise resource planning system to make transactions throughout the entirety of an accounting cycle)
|
·
|
Cash disbursements (e.g., sufficiently documented approval for disbursements)
|
·
|
Hired third party consultants to provide advice on COSO framework and risk control matrices;
|
·
|
Implemented Company-wide trainings over internal controls, including the requirement to supply supporting evidence for each transaction;
|
·
|
Required evidence of review in nearly all controls;
|
·
|
Reviewed and updated each employee's access within the enterprise resource management system
|
·
|
Required purchase orders agree to sales order within a certain threshold
|
·
|
Required a written and verbal confirmation for wire transfers
|
·
|
Revised the processes over financial reporting, including preparation of the cash flow statement and tax provision
|
·
|
Implemented new controls over equity awards to ensure compliance with laws, regulations, and Plan limitations
|
Exhibit 3.1 | Articles of Incorporation (1) | |
Exhibit 3.2 | Articles of Amendment to the Articles of Incorporation (2) | |
Exhibit 3.3 | Amended and Restated Bylaws (3) | |
Exhibit 10.1
|
Stock Redemption Agreement dated November 15, 2016 between the Registrant and Harold Albert*
|
|
Exhibit 10.2
|
Employment Agreement of Brenton W. Hatch dated June 28, 2013
(16)+
|
|
Exhibit 10.3
|
Employment Agreement of Harold Albert dated June 28, 2013
(17)+
|
|
Exhibit 10.4
|
Employment Agreement of Ryan Oviatt dated September 4, 2015
(18)+
|
|
Exhibit 10.5
|
Form of Indemnification Agreement between the Registrant and its Directors
(4)
|
|
Exhibit 10.6
|
2003 Stock Incentive Plan
(5)
|
|
Exhibit 10.7
|
Profire Energy, Inc. 2010 Equity Incentive Plan
(6)
|
|
Exhibit 10.8
|
Profire Energy, Inc. 2010 Equity Incentive Plan Amendment
(7)
|
|
Exhibit 10.9
|
Profire Energy, Inc. 2014 Equity Incentive Plan*
|
|
Exhibit 10.10
|
Form of Equity Grant Agreement, Nonqualified Stock Option
(8)
|
|
Exhibit 10.11
|
Form of Equity Grant Agreement, Restricted Stock
(9)
|
|
Exhibit 10.12
|
Form of Equity grant Agreement, Restricted Stock Units
(10)
|
|
Exhibit 10.13
|
Securities Purchase Agreement, dated November 12, 2013 between the Registrant and the persons listed therein as purchasers
(13)
|
|
Exhibit 10.14
|
Registration Rights Agreement, dated November 18, 2013 between the Registrant and the persons listed in the Securities Purchase Agreement as purchasers
(14)
|
|
Exhibit 10.15
|
Retirement and Release Agreement with Harold Albert dated February 23, 2017
(15)
|
|
Exhibit 14.1
|
Code of Ethics
(11)
|
|
Exhibit 23.1
|
Consent of Sadler, Gibb & Associates, LLC, independent registered public accounting firm*
|
|
Exhibit 10.13
|
Consulting Agreement, dated March 24, 2014, between the Registrant on the one hand and Terra Industrial Corporation and Alan Johnson on the other
(12)
|
|
Exhibit 31.1
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)*
|
|
Exhibit 31.2
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)*
|
|
Exhibit 32.1
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350*
|
|
Exhibit 32.2
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 *
|
|
Exhibit 101.INS
|
XBRL Instance Document**
|
|
Exhibit 101.SCH
|
XBRL Taxonomy Extension Schema Document**
|
|
Exhibit 101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document**
|
|
Exhibit 101.DEF
|
XBRL Taxonomy Definition Linkbase Document**
|
|
Exhibit 101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document**
|
|
Exhibit 101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document**
|
(1)
|
Incorporated by reference to the Registration Statement of the Registrant on Form SB-@ filed with the Commission on September 24, 2004.
|
(2)
|
Incorporated by reference to Registrant's quarterly Report on Form 10-Q filed with the commission on February 13, 2009.
|
(3)
|
Incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the Commission on December 23, 2013.
|
(4)
|
Incorporated by reference to Exhibit 10.7 to the Registrant's Form S-1 filed on December 24, 2013 (File No. 333-193086).
|
(5)
|
Incorporated by reference to Exhibit 4.01 to the Registrant's Form SB-2 filed on September 24, 2004 (File No. 000-52376).
|
(6)
|
Incorporated by reference to the Registrant's Revised Definitive Proxy Statement on Schedule 14A filed with the Commission on November 10, 2009 (File No. 000-52376).
|
(7)
|
Incorporated by reference to Appendix B to the Registrant's Revised Definitive Proxy Statement on Schedule 14A filed with the Commission on August 21, 2014.
|
(8)
|
Incorporated by reference to Exhibit 10.14 to the Registrant's Annual Report on Form 10-K filed with the Commission on June 13, 2016.
|
(9)
|
Incorporated by reference to Exhibit 10.15 to the Registrant's Annual Report on Form 10-K filed with the Commission on June 13, 2016.
|
(10)
|
Incorporated by reference to Exhibit 10.16 to the Registrant's Annual Report on Form 10-K filed with the Commission on June 13, 2016.
|
(11)
|
Incorporated by reference to Exhibit 14.1 to the Registrant's Form 8-K filed with the Commission on February 12, 2015 (File No. 000-52376).
|
(12)
|
Incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K filed on March 25, 2015 (File No. 000-52376)
|
(13)
|
Incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed November 18, 2013 (File No. 000-52376).
|
(14)
|
Incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed November 18, 2013 (File No. 000-52376).
|
(15)
|
Incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed February 27, 2017 (File No. 001-36378).
|
(16)
|
Incorporated by reference to Exhibit 10.1 to the Registrant's Annual Report on Form 10-K for the fiscal year ended March 31, 2013 (File No. 000-52376)
|
(17)
|
Incorporated by reference to Exhibit 10.1 to the Registrant's Annual Report on Form 10-K for the fiscal year ended March 31, 2013 (File No. 000-52376)
|
(18)
|
Incorporated by reference to Exhibit 10.3 to the Registrant's Form 8-K filed on September 8, 2015 (File No. 001-36378)
|
Signatures
|
Title
|
Date
|
||
/s/ Brenton W. Hatch
|
Chief Executive Officer
|
March 9, 2017
|
||
Brenton W. Hatch
|
||||
/s/ Ryan Oviatt
|
Chief Financial Officer
|
March 9, 2017
|
||
Ryan Oviatt
|
||||
/s/ Harold Albert
|
Director
|
March 9, 2017
|
||
Harold Albert
|
||||
/s/ Arlen B. Crouch
|
Director
|
March 9, 2017
|
||
Arlen B. Crouch
|
||||
/s/ Daren J. Shaw
|
Director
|
March 9, 2017
|
||
Daren J. Shaw
|
||||
/s/ Ronald R. Spoehel
|
Director
|
March 9, 2017
|
||
Ronald R. Spoehel
|
·
|
economic value added (EVA);
|
·
|
sales or revenue;
|
·
|
costs or expenses;
|
·
|
net profit after tax;
|
·
|
gross profit;
|
·
|
income (including without limitation operating income, pre-tax income and income attributable to the Company);
|
·
|
cash flow (including without limitation free cash flow and cash flow from operating, investing or financing activities or any combination thereof);
|
·
|
earnings (including without limitation earnings before or after taxes, earnings before interest and taxes (EBIT), earnings before interest, taxes, depreciation and amortization (EBITDA) and earnings (whether before or after taxes), EBIT or EBITDA as a percentage of net sales;
|
·
|
earnings per share (EPS) (basic or diluted);
|
·
|
earnings per share from continuing operations;
|
·
|
returns (including one or more of return on actual or pro forma assets, net assets, equity, investment, revenue, sales, capital and net capital employed, total stockholder return (TSR) and total business return (TBR));
|
·
|
margins (including one or more of gross, operating and net income margin);
|
·
|
ratios (including one or more of price-to-earnings, debt-to-assets, debt-to-net assets and ratios regarding liquidity, solvency, fiscal capacity, productivity or risk);
|
·
|
budget comparisons;
|
·
|
unit volume;
|
·
|
stock price;
|
·
|
stockholders' equity;
|
·
|
net working capital;
|
·
|
value creation;
|
·
|
market share;
|
·
|
market capitalization;
|
·
|
debt levels and debt reduction;
|
·
|
capital expenditures
|
·
|
workforce satisfaction and diversity goals;
|
·
|
employee retention;
|
·
|
production metrics;
|
·
|
user satisfaction;
|
·
|
billings;
|
·
|
bookings;
|
·
|
development;
|
·
|
implementation or completion of key projects;
|
·
|
strategic plan development and implementation.
|
(i)
|
Section 162(m) Limitation for Options, SARs and Performance Awards Denominated in Shares
. No Eligible Person may be granted any Options, Stock Appreciation Rights or Performance Awards denominated in Shares, for more than 250,000 Shares (subject to adjustment as provided for in Section 4(c) of the Plan), in the aggregate in any calendar year.
|
(ii)
|
Section 162(m) Limitation for Performance Awards Denominated in Cash
. The maximum amount payable pursuant to all Performance Awards denominated in cash to any Participant in the aggregate in any taxable year shall be $1,000,000 in value, whether payable in cash, Shares or other property. This limitation contained in this Section 4(d)(ii) does not apply to any Award or Awards subject to the limitation contained in Section 4(d)(i). The limitation contained in this Section 4(d)(ii) shall apply only with respect to any Award or Awards granted under this Plan, and limitations on awards granted under any other stockholder-approved incentive plan maintained by the Company will be governed solely by the terms of such other plan.
|
(iii)
|
Limit on Awards to Non-Employee Directors
. Directors who are not also employees of the Company or an Affiliate may not be granted Awards in in any calendar year of more than 100,000 Shares, subject to adjustment as provided in Section 4(c) of the Plan. The foregoing limit shall not apply to any Award made pursuant to any election by the Director to receive an Award in lieu of all or a portion of annual and committee retainers and annual meeting fees.
|
(i)
|
Exercise Price
. The purchase price per Share purchasable under an Option shall be determined by the Committee and shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such Option;
provided, however,
that the Committee may designate a purchase price below Fair Market Value on the date of grant if the Option is granted in substitution for a stock option previously granted by an entity that is acquired by or merged with the Company or an Affiliate.
|
(ii)
|
Option Term
. The term of each Option shall be fixed by the Committee at the time but shall not be longer than 10 years from the date of grant. Notwithstanding the foregoing, the Committee may provide in the terms of an Option (either at grant or by subsequent modification) that, to the extent consistent with Section 409A, in the event that on the last business day of the term of an Option (other than an Incentive Stock Option) (i) the exercise of the Option is prohibited by applicable law or (ii) Shares may not be purchased or sold by certain employees or directors of the Company due to the "black-out period" of a Company policy or a "lock-up" agreement undertaken in connection with an issuance of securities by the Company, the term of the Option shall be extended for a period of not more than thirty (30) days following the end of the legal prohibition, black-out period or lock-up agreement.
|
(iii)
|
Time and Method of Exercise
. The Committee shall determine the time or times at which an Option may be exercised in whole or in part and the method or methods by which, and the form or forms, including, but not limited to, cash, Shares (actually or by attestation), other securities, other Awards or other property, or any combination thereof, having a Fair Market Value on the exercise date equal to the applicable exercise price, in which, payment of the exercise price with respect thereto may be made or deemed to have been made.
|
(A)
|
Promissory Notes
. Notwithstanding the foregoing, the Committee may not accept a promissory note as consideration.
|
(B)
|
Net Exercises
. The Committee may, in its discretion, permit an Option to be exercised by delivering to the Participant a number of Shares having an aggregate Fair Market Value (determined as of the date of exercise) equal to the excess, if positive, of the Fair Market Value of the Shares underlying the Option being exercised on the date of exercise, over the exercise price of the Option for such Shares.
|
(iv)
|
Incentive Stock Options
. Notwithstanding anything in the Plan to the contrary, the following additional provisions shall apply to the grant of stock options which are intended to qualify as Incentive Stock Options:
|
(A)
|
The aggregate number of Shares that may be issued under all Incentive Stock Options under the Plan shall be 4,000,000.
|
(B)
|
The Committee will not grant Incentive Stock Options in which the aggregate Fair Market Value (determined as of the time the Option is granted) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by any Participant during any calendar year (under this Plan and all other plans of the Company and its Affiliates) shall exceed $100,000.
|
(C)
|
All Incentive Stock Options must be granted within ten years from the earlier of the date on which this Plan was adopted by the Board or the date this Plan was approved by the stockholders of the Company.
|
(D)
|
Unless sooner exercised, all Incentive Stock Options shall expire and no longer be exercisable no later than 10 years after the date of grant;
provided
,
however
, that in the case of a grant of an Incentive Stock Option to a Participant who, at the time such Option is granted, owns (within the meaning of Section 422 of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its Affiliates, such Incentive Stock Option shall expire and no longer be exercisable no later than five years from the date of grant.
|
(E)
|
The purchase price per Share for an Incentive Stock Option shall be not less than 100% of the Fair Market Value of a Share on the date of grant of the Incentive Stock Option;
provided
,
however
, that, in the case of the grant of an Incentive Stock Option to a Participant who, at the time such Option is granted, owns (within the meaning of Section 422 of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its Affiliates, the purchase price per Share purchasable under an Incentive Stock Option shall be not less than 110% of the Fair Market Value of a Share on the date of grant of the Incentive Stock Option.
|
(F)
|
Any Incentive Stock Option authorized under the Plan shall contain such other provisions as the Committee shall deem advisable, but shall in all events be consistent with and contain all provisions required in order to qualify the Option as an Incentive Stock Option.
|
(v)
|
Automatic Exercise of Options
. Notwithstanding the foregoing, unless otherwise set forth in an Award Agreement, if on the last day of the term of an Option the Fair Market Value of one Share exceeds the option exercise price per Option and the Option is exercisable but has not been exercised, the Option shall be deemed to have been exercised to the extent it was exercisable on such day with payment made by withholding Shares otherwise issuable in connection with the exercise of the Option. In such event, the Company shall deliver the number of Shares for which the Option was deemed exercised, less the number of Shares required to be withheld for the payment of the total purchase price and required withholding taxes; provided, however, any fractional Share shall be settled in cash.
|
(i)
|
Restrictions
. Shares of Restricted Stock and Restricted Stock Units shall be subject to such restrictions as the Committee may impose (including, without limitation, any limitation on the right to vote a Share of Restricted Stock or the right to receive any dividend or other right or property with respect thereto), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise as the Committee may deem appropriate. Notwithstanding the foregoing, rights to dividend or Dividend Equivalent payments shall be subject to the limitations described in Section 6(e).
|
(ii)
|
Issuance and Delivery of Shares
. Any Restricted Stock granted under the Plan shall be issued at the time such Awards are granted and may be evidenced in such manner as the Committee may deem appropriate, including book-entry registration or issuance of a stock certificate or certificates, which certificate or certificates shall be held by the Company or held in nominee name by the stock transfer agent or brokerage service selected by the Company to provide such services for the Plan. Such certificate or certificates shall be registered in the name of the Participant and shall bear an appropriate legend referring to the restrictions applicable to such Restricted Stock. Shares representing Restricted Stock that are no longer subject to restrictions shall be delivered (including by updating the book-entry registration) to the Participant promptly after the applicable restrictions lapse or are waived. In the case of Restricted Stock Units, no Shares shall be issued at the time such Awards are granted. Upon the lapse or waiver of restrictions and the restricted period relating to Restricted Stock Units evidencing the right to receive Shares, such Shares shall be issued and delivered to the holder of the Restricted Stock Units.
|
(iii)
|
Forfeiture
. Except as otherwise determined by the Committee, upon a Participant's termination of employment or resignation or removal as a Director (in either case, as determined under criteria established by the Committee) during the applicable restriction period, all Shares of Restricted Stock and all Restricted Stock Units held by such Participant at such time shall be forfeited and reacquired by the Company;
provided
,
however
, that the Committee may waive in whole or in part any or all remaining restrictions with respect to Shares of Restricted Stock or Restricted Stock Units.
|
(i)
|
Timing of Designations; Duration of Performance Periods
. For each Performance Award, the Committee shall, not later than 90 days after the beginning of each performance period, (i) designate all Participants for such performance period and (ii) establish the objective performance factors for each Participant for that performance period on the basis of one or more of the Performance Goals, the outcome of which is substantially uncertain at the time the Committee actually establishes the Performance Goal. The Committee shall have sole discretion to determine the applicable performance period, provided that in the case of a performance period less than 12 months, in no event shall a performance goal be considered to be pre-established if it is established after 25 percent of the performance period (as scheduled in good faith at the time the Performance Goal is established) has elapsed. To the extent required under Section 162(m), the terms of the objective performance factors must preclude discretion to increase an amount paid in connection with an Award, but may permit discretion to reduce such amount.
|
(ii)
|
Certification
. Following the close of each performance period and prior to payment of any amount to a Participant with respect to a Performance Award, the Committee shall certify in writing as to the attainment of all factors (including the performance factors for a Participant) upon which any payments to a Participant for that performance period are to be based.
|
(i)
|
Consideration for Awards
. Awards may be granted for no cash consideration or for any cash or other consideration as may be determined by the Committee or required by applicable law.
|
(ii)
|
Awards May Be Granted Separately or Together
. Awards may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with or in substitution for any other Award or any award granted under any other plan of the Company or any Affiliate. Awards granted in addition to or in tandem with other Awards or in addition to or in tandem with awards granted under any other plan of the Company or any Affiliate may be granted either at the same time as or at a different time from the grant of such other Awards or awards.
|
(iii)
|
Forms of Payment under Awards
. Subject to the terms of the Plan and of any applicable Award Agreement, payments or transfers to be made by the Company or an Affiliate upon the grant, exercise or payment of an Award may be made in such form or forms as the Committee shall determine (including, without limitation, cash, Shares, other securities (but excluding promissory notes), other Awards or other property or any combination thereof), and may be made in a single payment or transfer, in installments or on a deferred basis, in each case in accordance with rules and procedures established by the Committee. Such rules and procedures may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of Dividend Equivalents with respect to installment or deferred payments.
|
(iv)
|
Limits on Transfer of Awards
. Except as otherwise provided by the Committee in its discretion and subject to such additional terms and conditions as it determines, no Award (other than fully vested and unrestricted Shares issued pursuant to any Award) and no right under any such Award shall be transferable by a Participant other than by will or by the laws of descent and distribution, and no Award (other than fully vested and unrestricted Shares issued pursuant to any Award) or right under any such Award may be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance thereof shall be void and unenforceable against the Company or any Affiliate. If the Committee does permit the transfer of an Award other than a fully vested and unrestricted Share, such transfer shall be for no value and in accordance with the rules of Form S-8. The Committee may establish procedures as it deems appropriate for a Participant to designate a person or persons, as beneficiary or beneficiaries, to exercise the rights of the Participant and receive any property distributable with respect to any Award in the event of the Participant's death.
|
(v)
|
Restrictions; Securities Exchange Listing
. All Shares or other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such restrictions as the Committee may deem advisable under the Plan, applicable federal or state securities laws and regulatory requirements, and the Committee may cause appropriate entries to be made with respect to, or legends to be placed on the certificates for, such Shares or other securities to reflect such restrictions. The Company shall not be required to deliver any Shares or other securities covered by an Award unless and until the requirements of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.
|
(vi)
|
Prohibition on Option and Stock Appreciation Right Repricing
. Except as provided in Section 4(c) hereof, the Committee may not, without prior approval of the Company's shareholders, seek to effect any re-pricing of any previously granted, "underwater" Option or Stock Appreciation Right by: (i) amending or modifying the terms of the Option or Stock Appreciation Right to lower the exercise price; (ii) canceling the underwater Option or Stock Appreciation Right and granting either (A) replacement Options or Stock Appreciation Rights having a lower exercise price; or (B) Restricted Stock, Restricted Stock Units, Performance Award or Other Stock-Based Award in exchange; or (iii) cancelling or repurchasing the underwater Option or Stock Appreciation Right for cash or other securities. An Option or Stock Appreciation Right will be deemed to be "underwater" at any time when the Fair Market Value of the Shares covered by such Award is less than the exercise price of the Award.
|
(vii)
|
Section 409A Provisions
. Notwithstanding anything in the Plan or any Award Agreement to the contrary, to the extent that any amount or benefit that constitutes "deferred compensation" to a Participant under Section 409A and applicable guidance thereunder is otherwise payable or distributable to a Participant under the Plan or any Award Agreement solely by reason of the occurrence of a change in control or due to the Participant's disability or "separation from service" (as such term is defined under Section 409A), such amount or benefit will not be payable or distributable to the Participant by reason of such circumstance unless the Committee determines in good faith that (i) the circumstances giving rise to such change in control, disability or separation from service meet the definition of a change in ownership or effective control, disability, or separation from service, as the case may be, in Section 409A(a)(2)(A) of the Code and applicable proposed or final regulations, or (ii) the payment or distribution of such amount or benefit would be exempt from the application of Section 409A by reason of the short-term deferral exemption or otherwise. Any payment or distribution that otherwise would be made to a Participant who is a Specified Employee (as determined by the Committee in good faith) on account of separation from service may not be made before the date which is six months after the date of the Specified Employee's separation from service (or if earlier, upon the Specified Employee's death) unless the payment or distribution is exempt from the application of Section 409A by reason of the short-term deferral exemption or otherwise.
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(viii)
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Acceleration of Vesting or Exercisability
. No Award Agreement shall accelerate the exercisability of any Award or the lapse of restrictions relating to any Award in connection with a change-in-control event unless such acceleration occurs upon the consummation of (or effective immediately prior to the consummation of, provided that the consummation subsequently occurs) such change-in-control event.
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(i)
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amend the eligibility for, and limitations or conditions imposed upon, participation in the Plan;
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(ii)
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amend any terms relating to the granting or exercise of Awards, including but not limited to terms relating to the amount and payment of the exercise price, or the vesting, expiry, assignment or adjustment of Awards, or otherwise waive any conditions of or rights of the Company under any outstanding Award, prospectively or retroactively;
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(iii)
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make changes that are necessary or desirable to comply with applicable laws, rules, regulations and policies of any applicable governmental entity or stock exchange (including amendments to Awards necessary or desirable to avoid any adverse tax results under Section 409A, and no action taken to comply with Section 409A shall be deemed to impair or otherwise adversely alter or impair the rights of any holder of an Award or beneficiary thereof); or
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(iv)
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amend any terms relating to the administration of the Plan, including the terms of any administrative guidelines or other rules related to the Plan.
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(i)
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require stockholder approval under the rules or regulations of the Securities and Exchange Commission, the NASDAQ Stock Market or any other securities exchange that are applicable to the Company;
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(ii)
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increase the number of shares authorized under the Plan as specified in Section 4(a) of the Plan;
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(iii)
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increase the number of shares or value subject to the limitations contained in Section 4(d) of the Plan or otherwise cause Section 162(m) to become unavailable with respect to the Plan;
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(iv)
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permit repricing of Options or Stock Appreciation Rights, which is currently prohibited bySection 6(f)(vi) of the Plan;
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(v)
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permit the award of Options or Stock Appreciation Rights at a price less than 100% of the Fair Market Value of a Share on the date of grant of such Option or Stock Appreciation Right, contrary to the provisions of Section 6(a)(i) and Section 6(b) of the Plan; or
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(vi)
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increase the maximum term permitted for Options and Stock Appreciation Rights as specified in Section 6(a)(ii) and Section 6(b).
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(i)
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either (A) termination of any Award, whether or not vested, in exchange for an amount of cash and/or other property, if any, equal to the gain that would have been attained upon the exercise of the Award or realization of the Participant's rights or (B) the replacement of the Award with other rights or property of comparable value selected by the Committee or the Board, in its sole discretion;
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(ii)
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that the Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices;
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(iii)
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that, subject to Section 6(f)(viii), the Award shall be exercisable or payable or fully vested with respect to all Shares covered thereby, notwithstanding anything to the contrary in the applicable Award Agreement; or
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(iv)
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that the Award cannot vest, be exercised or become payable after a date certain in the future, which may be the effective date of the event.
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I, Brenton W. Hatch, certify that:
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1.
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I have reviewed this quarterly report on Form 10-KT of Profire Energy, Inc.;
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2.
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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;
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||
3.
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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 the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officers 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:
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||
a)
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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;
|
||
b)
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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;
|
||
c)
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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)
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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
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||
5.
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The registrant's other certifying officer 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
|
||
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.
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Date:
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March 9, 2017
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By:
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/s/ Brenton W. Hatch
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Brenton W. Hatch
|
|||
Chief Executive Officer
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I, Ryan W. Oviatt, certify that:
|
|||
1.
|
I have reviewed this quarterly report on Form 10-KT 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 the registrant as of, and for, the periods presented in this report;
|
||
4.
|
The registrant's other certifying officers 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;
|
||
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;
|
||
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
|
||
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 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
|
||
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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March 9, 2017
|
By:
|
/s/ Ryan W. Oviatt
|
Ryan W. Oviatt
|
|||
Chief 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
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(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
March 9, 2017
|
By:
|
/s/ Brenton W. Hatch
|
Brenton W. Hatch
|
|||
Chief Executive Officer
|
(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
March 9, 2017
|
By:
|
/s/ Ryan W. Oviatt
|
Ryan W. Oviatt
|
|||
Chief Financial Officer
|