UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	~~June 30, 2020~~March 31, 2021
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Transition Period From ________ to _________

Commission File Number 001-36378

PROFIRE ENERGY, INC.

(Exact name of registrant as specified in its charter)


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)			(Zip Code)

(801) 796-5127

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐			Accelerated Filer ☐
Non-accelerated filer ☒			Smaller reporting company ☒
			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common, $0.001 Par Value

PFIE

NASDAQ

As of ~~August~~May 3, ~~2020,~~2021, the registrant had ~~51,325,493~~51,434,074 shares of common stock issued and ~~47,913,115~~48,021,696 shares of common stock outstanding, par value $0.001.

PROFIRE ENERGY, INC.

FORM 10-Q

TABLE OF CONTENTS


			Page

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

	Condensed Consolidated Balance Sheets	4

	Condensed Consolidated Statements of Operations and Comprehensive ~~Income (Loss)~~Loss (Unaudited)	5

	Condensed Consolidated Statements of Stockholders' Equity (Unaudited)	6

	Condensed Consolidated Statements of Cash Flows (Unaudited)	87

	Notes to the Condensed Consolidated Financial Statements (Unaudited)	98

Item 2. Management's Discussion and Analysis of Financial Condition And Results of Operations			1914

Item 3. Quantitative and Qualitative Disclosure about Market Risk			2317

Item 4. Controls and Procedures			2317

PART II — OTHER INFORMATION

Item 1. Legal Proceedings			2418

Item 1A. Risk Factors			2418

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			2618

Item 3. Defaults Upon Senior Securities			2618

Item 4. Mine Safety Disclosures			2618

Item 5. Other Information			2618

Item 6. Exhibits			2720

Signatures			2821

PART I. FINANCIAL INFORMATION

Item 1 Financial Information


PROFIRE ENERGY, INC. AND SUBSIDIARIES	PROFIRE ENERGY, INC. AND SUBSIDIARIES									PROFIRE ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets	Condensed Consolidated Balance Sheets									Condensed Consolidated Balance Sheets
		As of							As of
		June 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
ASSETS	ASSETS	(Unaudited)				ASSETS	(Unaudited)
CURRENT ASSETS	CURRENT ASSETS					CURRENT ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	8,022,237	$	7,358,856	Cash and cash equivalents	$	10,475,429	$	9,148,312
Short-term investments	Short-term investments	2,290,667		1,222,053		Short-term investments	2,293,992		2,388,601
Short-term investments - other		1,600,000		2,600,000

Accounts receivable, net	Accounts receivable, net	2,439,296		5,597,701		Accounts receivable, net	2,772,162		3,719,508
Inventories, net (note 3)	Inventories, net (note 3)	8,996,223		9,571,807		Inventories, net (note 3)	8,104,532		8,414,772
Prepaid expenses and other current assets (note 4)	Prepaid expenses and other current assets (note 4)	2,144,150		1,672,422		Prepaid expenses and other current assets (note 4)	823,901		1,678,428
Income tax receivable	Income tax receivable	—		77,385		Income tax receivable	580,751		486,154
Total Current Assets	Total Current Assets	25,492,573		28,100,224		Total Current Assets	25,050,767		25,835,775
LONG-TERM ASSETS	LONG-TERM ASSETS					LONG-TERM ASSETS

Long-term investments	Long-term investments	6,192,261		7,399,963		Long-term investments	6,589,247		6,064,294

Financing right-of-use asset	Financing right-of-use asset	72,914		107,991		Financing right-of-use asset	38,969		50,094
Property and equipment, net	Property and equipment, net	11,571,961		12,071,019		Property and equipment, net	11,926,464		12,021,811
Intangible assets, net	Intangible assets, net	1,883,236		1,989,782		Intangible assets, net	1,716,187		1,771,870
Goodwill	Goodwill	2,579,381		2,579,381		Goodwill	2,579,381		2,579,381
Total Long-Term Assets	Total Long-Term Assets	22,299,753		24,148,136		Total Long-Term Assets	22,850,248		22,487,450
TOTAL ASSETS	TOTAL ASSETS	$	47,792,326	$	52,248,360	TOTAL ASSETS	$	47,901,015	$	48,323,225

LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES	CURRENT LIABILITIES					CURRENT LIABILITIES
Accounts payable	Accounts payable	$	685,617	$	2,633,520	Accounts payable	$	975,755	$	1,178,979
Accrued liabilities (note 5)	Accrued liabilities (note 5)	1,122,242		2,089,391		Accrued liabilities (note 5)	1,361,404		1,196,870
Current financing lease liability (note 6)	Current financing lease liability (note 6)	45,411		59,376		Current financing lease liability (note 6)	36,408		39,451
Income taxes payable		99,481		403,092

Total Current Liabilities	Total Current Liabilities	1,952,751		5,185,379		Total Current Liabilities	2,373,567		2,415,300
LONG-TERM LIABILITIES	LONG-TERM LIABILITIES					LONG-TERM LIABILITIES
Net deferred income tax liability	Net deferred income tax liability	543,441		439,275		Net deferred income tax liability	522,163		522,870
Long-term financing lease liability (note 6)	Long-term financing lease liability (note 6)	30,238		52,120		Long-term financing lease liability (note 6)	4,353		12,669
TOTAL LIABILITIES	TOTAL LIABILITIES	2,526,430		5,676,774		TOTAL LIABILITIES	2,900,083		2,950,839

STOCKHOLDERS' EQUITY (note 7)	STOCKHOLDERS' EQUITY (note 7)					STOCKHOLDERS' EQUITY (note 7)
Preferred stock: $0.001 par value, 10,000,000 shares authorized: 0 shares issued or outstanding	Preferred stock: $0.001 par value, 10,000,000 shares authorized: 0 shares issued or outstanding	—		—		Preferred stock: $0.001 par value, 10,000,000 shares authorized: 0 shares issued or outstanding	0		0
Common stock: $0.001 par value, 100,000,000 shares authorized: 51,325,493 issued and 47,913,115 outstanding at June 30, 2020, and 50,824,355 issued and 47,411,977 outstanding at December 31, 2019		51,325		50,824
Common stock: $0.001 par value, 100,000,000 shares authorized: 51,434,074 issued and 48,021,696 outstanding at March 31, 2021, and 51,384,961 issued and 47,972,583 outstanding at December 31, 2020						Common stock: $0.001 par value, 100,000,000 shares authorized: 51,434,074 issued and 48,021,696 outstanding at March 31, 2021, and 51,384,961 issued and 47,972,583 outstanding at December 31, 2020	51,434		51,385
Treasury stock, at cost	Treasury stock, at cost	(5,353,019)		(5,353,019)		Treasury stock, at cost	(5,353,019)		(5,353,019)
Additional paid-in capital	Additional paid-in capital	30,106,383		29,584,172		Additional paid-in capital	30,391,837		30,293,472
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(3,070,095)		(2,415,460)		Accumulated other comprehensive loss	(2,017,292)		(2,148,924)
Retained earnings	Retained earnings	23,531,302		24,705,069		Retained earnings	21,927,972		22,529,472
TOTAL STOCKHOLDERS' EQUITY	TOTAL STOCKHOLDERS' EQUITY	45,265,896		46,571,586		TOTAL STOCKHOLDERS' EQUITY	45,000,932		45,372,386
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	47,792,326	$	52,248,360	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	47,901,015	$	48,323,225

The accompanying notes are an integral part of these condensed consolidated financial statements.


PROFIRE ENERGY, INC. AND SUBSIDIARIES	PROFIRE ENERGY, INC. AND SUBSIDIARIES													PROFIRE ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
Condensed Consolidated Statements of Operations and Comprehensive Loss										Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)	(Unaudited)													(Unaudited)
		For the Three Months Ended June 30,						For the Six Months Ended June 30,					For the Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
REVENUES (note 9)
REVENUES (note 8)										REVENUES (note 8)
Sales of goods, net	Sales of goods, net	$	3,999,139	$	9,559,255	$	10,860,097	$	19,757,890	Sales of goods, net	$	4,657,535	$	6,860,958
Sales of services, net	Sales of services, net	360,340		564,776		946,524		1,199,199		Sales of services, net	434,814		586,184
Total Revenues	Total Revenues	4,359,479		10,124,031		11,806,621		20,957,089		Total Revenues	5,092,349		7,447,142

COST OF SALES	COST OF SALES									COST OF SALES
Cost of goods sold-product	Cost of goods sold-product	1,944,389		4,568,666		5,778,071		9,139,654		Cost of goods sold-product	2,537,634		3,833,682
Cost of goods sold-services	Cost of goods sold-services	328,225		368,327		777,009		865,525		Cost of goods sold-services	380,028		448,784
Total Cost of Goods Sold	Total Cost of Goods Sold	2,272,614		4,936,993		6,555,080		10,005,179		Total Cost of Goods Sold	2,917,662		4,282,466

GROSS PROFIT	GROSS PROFIT	2,086,865		5,187,038		5,251,541		10,951,910		GROSS PROFIT	2,174,687		3,164,676

OPERATING EXPENSES	OPERATING EXPENSES									OPERATING EXPENSES
General and administrative expenses	General and administrative expenses	2,753,773		3,566,698		6,026,311		6,728,228		General and administrative expenses	2,554,536		3,272,538
Research and development	Research and development	229,548		512,871		639,274		861,929		Research and development	256,891		409,726
Depreciation and amortization expense	Depreciation and amortization expense	180,997		110,910		328,469		227,133		Depreciation and amortization expense	167,485		147,472
Total Operating Expenses	Total Operating Expenses	3,164,318		4,190,479		6,994,054		7,817,290		Total Operating Expenses	2,978,912		3,829,736

INCOME (LOSS) FROM OPERATIONS		(1,077,453)		996,559		(1,742,513)		3,134,620
LOSS FROM OPERATIONS										LOSS FROM OPERATIONS	(804,225)		(665,060)

OTHER INCOME (EXPENSE)	OTHER INCOME (EXPENSE)									OTHER INCOME (EXPENSE)
Gain on sale of fixed assets	Gain on sale of fixed assets	157,455		21,410		157,455		38,340		Gain on sale of fixed assets	73,901		0
Other expense		(1,665)		(413)		(1,318)		(964)
Other income (expense)										Other income (expense)	(97)		347
Interest income	Interest income	77,532		85,887		151,925		177,590		Interest income	21,062		74,393
Total Other Income	Total Other Income	233,322		106,884		308,062		214,966		Total Other Income	94,866		74,740

INCOME (LOSS) BEFORE INCOME TAXES		(844,131)		1,103,443		(1,434,451)		3,349,586
LOSS BEFORE INCOME TAXES										LOSS BEFORE INCOME TAXES	(709,359)		(590,320)

INCOME TAX BENEFIT (EXPENSE)		35,628		(117,939)		260,684		(695,464)
INCOME TAX BENEFIT										INCOME TAX BENEFIT	107,859		225,056

NET INCOME (LOSS)		$	(808,503)	$	985,504	$	(1,173,767)	$	2,654,122
NET LOSS										NET LOSS	$	(601,500)	$	(365,264)

OTHER COMPREHENSIVE INCOME (LOSS)	OTHER COMPREHENSIVE INCOME (LOSS)									OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation gain (loss)	Foreign currency translation gain (loss)	$	375,267	$	102,435	$	(570,156)	$	251,850	Foreign currency translation gain (loss)	$	139,606	$	(945,423)
Unrealized gains (losses) on investments		72,875		49,495		(84,479)		118,247
Unrealized losses on investments										Unrealized losses on investments	(7,974)		(157,354)
Total Other Comprehensive Income (Loss)	Total Other Comprehensive Income (Loss)	448,142		151,930		(654,635)		370,097		Total Other Comprehensive Income (Loss)	131,632		(1,102,777)

COMPREHENSIVE INCOME (LOSS)		$	(360,361)	$	1,137,434	$	(1,828,402)	$	3,024,219
COMPREHENSIVE LOSS										COMPREHENSIVE LOSS	$	(469,868)	$	(1,468,041)

BASIC EARNINGS (LOSS) PER SHARE (note 10)		$	(0.02)	$	0.02	$	(0.02)	$	0.06
FULLY DILUTED EARNINGS (LOSS) PER SHARE (note 10)		$	(0.02)	$	0.02	$	(0.02)	$	0.06
BASIC LOSS PER SHARE (note 9)										BASIC LOSS PER SHARE (note 9)	$	(0.01)	$	(0.01)
FULLY DILUTED LOSS PER SHARE (note 9)										FULLY DILUTED LOSS PER SHARE (note 9)	$	(0.01)	$	(0.01)

BASIC WEIGHTED AVG NUMBER OF SHARES OUTSTANDING	BASIC WEIGHTED AVG NUMBER OF SHARES OUTSTANDING	47,723,208		47,348,137		47,607,825		47,392,534		BASIC WEIGHTED AVG NUMBER OF SHARES OUTSTANDING	47,990,101		47,492,441
FULLY DILUTED WEIGHTED AVG NUMBER OF SHARES OUTSTANDING	FULLY DILUTED WEIGHTED AVG NUMBER OF SHARES OUTSTANDING	47,723,208		48,124,208		47,607,825		48,192,849		FULLY DILUTED WEIGHTED AVG NUMBER OF SHARES OUTSTANDING	47,990,101		47,492,441

The accompanying notes are an integral part of these condensed consolidated financial statements.


PROFIRE ENERGY, INC. AND SUBSIDIARIES	PROFIRE ENERGY, INC. AND SUBSIDIARIES																																	PROFIRE ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders' Equity	Condensed Consolidated Statements of Stockholders' Equity																																	Condensed Consolidated Statements of Stockholders' Equity
(Unaudited)	(Unaudited)																																	(Unaudited)
		Common Stock					Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Retained Earnings			Total Stockholders' Equity		Common Stock					Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Treasury Stock				Retained Earnings				Total Stockholders' Equity
		Shares	Amount																			Shares			Amount			Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)				Treasury Stock			Retained Earnings	Total Stockholders' Equity
Balance, December 31, 2019		47,411,977	$	50,824	$	29,584,172	$	(2,415,460)	$	(5,353,019)	$	24,705,069	$	46,571,586
Balance, December 31, 2020															Balance, December 31, 2020		47,972,583	$	51,385	$	30,293,472		$	(2,148,924)		$	(5,353,019)				$	22,529,472			$	45,372,386
Stock based compensation	Stock based compensation				66,348								66,348		Stock based compensation		—	—		125,043			—			—			—				125,043
Stock issued in exercise of stock options		2,000	2		2,018								2,020
Stock issued in settlement of RSUs and accrued bonuses		271,684	272		419,101								419,373

Stock issued in settlement of RSUs															Stock issued in settlement of RSUs		49,113	49		(49)			—			—			—				0
Tax withholdings paid related to stock based compensation	Tax withholdings paid related to stock based compensation				(148,879)								(148,879)		Tax withholdings paid related to stock based compensation		—	—		(26,629)			—			—			—				(26,629)

Foreign currency translation	Foreign currency translation						(945,423)						(945,423)		Foreign currency translation		—	—		—			139,606			—			—				139,606
Unrealized losses on investments	Unrealized losses on investments						(157,354)						(157,354)		Unrealized losses on investments		—	—		—			(7,974)			—			—				(7,974)
Net loss	Net loss										(365,264)		(365,264)		Net loss		—	—		—			—			—			(601,500)				(601,500)
Balance, March 31, 2020		47,685,661	$	51,098	$	29,922,760	$	(3,518,237)	$	(5,353,019)	$	24,339,805	$	45,442,407
Stock based compensation					$	183,850							$	183,850

Stock issued in settlement of RSUs		227,454	$	227	$	(227)							$	—

Foreign currency translation							$	375,267					$	375,267
Unrealized gains on investments							$	72,875					$	72,875
Net loss											$	(808,503)	$	(808,503)
Balance, June 30, 2020		47,913,115	$	51,325	$	30,106,383	$	(3,070,095)	$	(5,353,019)	$	23,531,302	$	45,265,896
Balance, March 31, 2021															Balance, March 31, 2021		48,021,696	$	51,434	$	30,391,837		$	(2,017,292)		$	(5,353,019)		$	21,927,972			$	45,000,932





	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Retained Earnings		Total Stockholders' Equity
	Shares	Amount
Balance, December 31, 2019	47,411,977	$	50,824	$	29,584,172	$	(2,415,460)	$	(5,353,019)	$	24,705,069	$	46,571,586
Stock based compensation	—	—		66,348		—		—		—		66,348
Stock issued in exercise of stock options	2,000	2		2,018		—		—		—		2,020
Stock issued in settlement of RSUs and accrued bonuses	271,684	272		419,101		—		—		—		419,373
Tax withholdings paid related to stock based compensation	—	—		(148,879)		—		—		—		(148,879)

Foreign currency translation	—	—		—		(945,423)		—		—		(945,423)
Unrealized losses on investments	—	—		—		(157,354)		—		—		(157,354)
Net loss	—	—		—		—		—		(365,264)		(365,264)
Balance, March 31, 2020	47,685,661	$	51,098	$	29,922,760	$	(3,518,237)	$	(5,353,019)	$	24,339,805	$	45,442,407

The accompanying notes are an integral part of these condensed consolidated financial statements.

Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Treasury Stock Retained Earnings Total Stockholders' Equity
Shares Amount
Balance, December 31, 2018 47,932,305 $ 49,708 $ 28,027,742 $ (2,895,683) $ (2,609,485) $ 22,683,577 $ 45,255,859
Stock based compensation 66,714 66,714
Stock issued in exercise of stock options 2,483 2 (2) —
Stock issued in settlement of RSUs and accrued bonuses 148,723 149 379,712 379,861
Tax withholdings paid related to stock based compensation (143,022) (143,022)
Treasury stock repurchased (775,287) (1,333,578) (1,333,578)
Foreign currency translation 149,415 149,415
Unrealized gains on investments 68,752 68,752
Net income 1,668,618 1,668,618
Balance, March 31, 2019 47,308,224 $ 49,859 $ 28,331,144 $ (2,677,516) $ (3,943,063) $ 24,352,195 $ 46,112,619
Stock based compensation $ 297,127 $ 297,127
Stock issued in exercise of stock options 9,174 $ 9 $ 6,841 $ 6,850
Stock issued in settlement of RSUs 148,794 $ 149 $ (149) $ —
Tax withholdings paid related to stock based compensation $ (41,411) $ (41,411)
Foreign currency translation $ 102,435 $ 102,435
Unrealized gains on investments $ 49,495 $ 49,495
Net income $ 985,504 $ 985,504
Balance, June 30, 2019 47,466,192 $ 50,017 $ 28,593,552 $ (2,525,586) $ (3,943,063) $ 25,337,699 $ 47,512,619


PROFIRE ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
	For the Three Months Ended March 31,
	2021		2020
OPERATING ACTIVITIES
Net loss	$	(601,500)	$	(365,264)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization expense	293,615		259,801
(Gain) Loss on sale of fixed assets	(73,901)		0
Bad debt expense	(3,084)		133,803
Stock awards issued for services	125,043		66,348
Changes in operating assets and liabilities:
Accounts receivable	974,602		1,314,939
Income taxes receivable/payable	(94,597)		107,561
Inventories	342,980		537,668
Prepaid expenses and other current assets	906,459		168,546
Deferred tax asset/liability	(707)		(114,564)
Accounts payable and accrued liabilities	(48,245)		(1,837,760)
Net Cash Provided by Operating Activities	1,820,665		271,078

INVESTING ACTIVITIES
Proceeds from sale of property and equipment	27,784		0
Sale (purchase) of investments	(438,830)		387,326
Purchase of property and equipment	(57,825)		(525,384)

Net Cash Used in Investing Activities	(468,871)		(138,058)

FINANCING ACTIVITIES
Value of equity awards surrendered by employees for tax liability	(26,629)		(148,879)
Cash received in exercise of stock options	0		2,020

Principal paid towards lease liability	(11,227)		(19,089)
Net Cash Used in Financing Activities	(37,856)		(165,948)

Effect of exchange rate changes on cash	13,179		(95,598)

NET CHANGE IN CASH	1,327,117		(128,526)
CASH AT BEGINNING OF PERIOD	9,148,312		7,358,856
CASH AT END OF PERIOD	$	10,475,429	$	7,230,330

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

CASH PAID FOR:
Interest	$	1,936	$	872
Income taxes	$	0	$	0
NON-CASH FINANCING AND INVESTING ACTIVITIES
Common stock issued in settlement of accrued bonuses	$	0	$	419,373

The accompanying notes are an integral part of these condensed consolidated financial statements.

PROFIRE ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the Six Months Ended June 30,
2020 2019
OPERATING ACTIVITIES
Net income (loss) $ (1,173,767) $ 2,654,122
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization expense 566,791 483,063
Gain on sale of fixed assets (153,973) (38,340)
Bad debt expense 236,005 229,792
Stock awards issued for services 250,198 363,841
Changes in operating assets and liabilities:
Accounts receivable 3,248,693 983,865
Income taxes receivable/payable (1,761) (1,261,267)
Inventories 445,634 1,831,865
Prepaid expenses 168,718 (35,637)
Deferred tax asset/liability 104,166 205,314
Accounts payable and accrued liabilities (2,843,685) (115,813)
Net Cash Provided by Operating Activities 847,019 5,300,805
INVESTING ACTIVITIES
Proceeds from sale of equipment — 39,810
Sale of investments 1,057,404 1,109,297
Purchase of fixed assets (994,410) (1,429,735)
Payments for acquisitions, net of cash acquired — (2,088,814)
Net Cash Provided by (Used in) Investing Activities 62,994 (2,369,442)
FINANCING ACTIVITIES
Value of equity awards surrendered by employees for tax liability (148,879) (184,433)
Cash received in exercise of stock options 2,020 6,850
Purchase of treasury stock — (1,333,578)
Principal paid towards lease liability (34,267) (32,185)
Net Cash Used in Financing Activities (181,126) (1,543,346)
Effect of exchange rate changes on cash (65,506) (2,171)
NET INCREASE IN CASH 663,381 1,385,846
CASH AT BEGINNING OF PERIOD 7,358,856 10,101,932
CASH AT END OF PERIOD $ 8,022,237 $ 11,487,778
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID FOR:
Interest $ 4,247 $ 2,832
Income taxes $ — $ 1,793,281
NON-CASH FINANCING AND INVESTING ACTIVITIES
Common stock issued in settlement of accrued bonuses $ 419,373 $ 379,861

~~The accompanying notes are an integral part of these condensed consolidated financial statements.~~

PROFIRE ENERGY, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~

NOTE 1 - CONDENSED FINANCIAL STATEMENTS

Except where the context otherwise requires, all references herein to the "Company," "Profire," "we," "us," "our," or similar words and phrases are to Profire Energy, Inc. and its wholly owned ~~subsidiary,~~subsidiaries, taken together.

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, stockholders' equity, and cash flows at ~~June 30, 2020~~March 31, 2021 and for all periods presented herein have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP") have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the Company's audited financial statements contained in its annual report on Form 10-K for the year ended December 31, ~~2019~~2020 ("Form 10-K"). The results of operations for the three ~~and six~~ month periods ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ are not necessarily indicative of the operating results for the full years.

NOTE 2 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Line of Business

This Organization and Summary of Significant Accounting Policies of the Company is presented to assist in understanding the Company's condensed consolidated financial statements. The Company's accounting policies conform to "US GAAP."

The Company provides burner-management products, solutions and services for the oil and gas industry primarily in the US and Canadian markets.

Significant Accounting Policies

There have been no changes to the significant accounting policies of the Company from the information provided in Note 1 of the ~~Notes~~notes to the ~~Consolidated Financial Statements~~consolidated financial statements in the Company's most recent Form 10-K.

Recent Accounting Pronouncements

The Company has evaluated all recent accounting pronouncements and determined that the adoption of pronouncements applicable to the Company has not had or is not expected to have a material impact on the Company's financial position, results of operations or cash flows.

~~Reclassification~~

Certain balances in previously issued consolidated financial statements have been reclassified to be consistent with the current period presentation within the Condensed Consolidated Statements of Cash Flows. The reclassification had no impact on financial position, net income (loss), or stockholders' equity.

~~The accompanying notes are an integral part of these condensed consolidated financial statements.~~

~~PROFIRE ENERGY, INC. AND SUBSIDIARIES~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~For the three and six months ended June 30, 2020 and 2019~~

NOTE 3 – INVENTORIES

Inventories consisted of the following at each balance sheet date:


		As of							As of
		June 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
Raw materials	Raw materials	$	209,393	$	—	Raw materials	$	362,324	$	328,772
Finished goods	Finished goods	9,786,297		10,517,858		Finished goods	8,854,546		9,229,298
Work in process	Work in process	—		—		Work in process	0		0
Subtotal	Subtotal	9,995,690		10,517,858		Subtotal	9,216,870		9,558,070
Reserve for obsolescence	Reserve for obsolescence	(999,467)		(946,051)		Reserve for obsolescence	(1,112,338)		(1,143,298)
Total	Total	$	8,996,223	$	9,571,807	Total	$	8,104,532	$	8,414,772

The accompanying notes are an integral part of these condensed consolidated financial statements.

PROFIRE ENERGY, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the three months ended March 31, 2021 and 2020

NOTE 4 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consisted of the following at each balance sheet date:


		As of							As of
		June 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
Prepaid Inventory		784,373		1,291,577
Assets classified as held for sale	Assets classified as held for sale	774,832		—		Assets classified as held for sale	$	0	$	623,805
Vehicle trade-in credits		174,630		—
Prepaid inventory						Prepaid inventory	449,358		542,313
Prepaid insurance	Prepaid insurance	107,367		133,611		Prepaid insurance	148,396		217,465
Interest receivables	Interest receivables	93,027		80,609		Interest receivables	66,097		65,984
Vehicle trade-in credits						Vehicle trade-in credits	6,896		55,733
Other	Other	209,921		166,625		Other	153,154		173,128
Total	Total	$	2,144,150	$	1,672,422	Total	$	823,901	$	1,678,428

In the first quarter of 2020, we completed the construction of a new office building and research and development facility in Acheson, Canada. As a result, during the second quarter of 2020 we started the process of selling our old office building in Spruce Grove, Canada. In the table above, the assets classified as ~~held~~"held for ~~sale as~~sale" consisted of ~~June 30, 2020, consist~~an office building located in Spruce Grove, Alberta, Canada. During the three months ended March 31, 2021, we sold the remaining 3 bays that were part of ~~this old~~the office building, which ~~we intend to sell within~~resulted in a ~~one year~~gain of $42,378 CAD that was recorded during the period. ~~The amount shown above is recorded at cost, less accumulated depreciation.~~

NOTE 5 – ACCRUED LIABILITIES

Accrued liabilities consisted of the following at each balance sheet date:


		As of							As of
		June 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
Employee-related payables	Employee-related payables	$	657,501	$	1,657,826	Employee-related payables	$	1,007,405	$	789,573
Inventory-related payables	Inventory-related payables	208,128		—		Inventory-related payables	160,972		158,519
Warranty liabilities	Warranty liabilities	115,731		166,301		Warranty liabilities	43,352		71,852
Acquisition liabilities		20,225		162,907
Other	Other	120,657		102,357		Other	149,675		176,926
Total	Total	$	1,122,242	$	2,089,391	Total	$	1,361,404	$	1,196,870

NOTE 6 – LEASES

We have leases for office equipment and office space. The leases for office equipment are classified as financing leases and the typical term is 36 months. We have the option to extend most office equipment leases, but we do not intend to do so. Accordingly, no extensions have been recognized in the right-of-use asset or lease liability. The office equipment lease payments are not variable and the lease agreements do not include any non-lease components, residual value guarantees, or

~~PROFIRE ENERGY, INC. AND SUBSIDIARIES~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~For the three and six months ended June 30, 2020 and 2019~~

restrictions. There are no interest rates implicit in the office equipment lease agreements, so we have used our incremental borrowing rate to determine the discount rate to be applied to our financing ~~leases.~~leases for purposes of determining our lease liabilities. The weighted average discount rate applied to our financing leases is 4.50% and the weighted average remaining lease term is ~~20.5~~12.8 months.

The following table shows the components of financing lease cost:


							For the Three Months Ended March 31,
Financing Lease Cost	Financing Lease Cost	For the Three Months Ended June 30, 2020		For the Six Months Ended June 30, 2020		Financing Lease Cost	2021		2020
Amortization of right-of-use assets	Amortization of right-of-use assets	$	15,121	$	33,497	Amortization of right-of-use assets	$	10,992	$	18,376
Interest on lease liabilities	Interest on lease liabilities	3,375		4,247		Interest on lease liabilities	1,936		872
Total financing lease cost	Total financing lease cost	$	18,496	$	37,744	Total financing lease cost	$	12,928	$	19,248

PROFIRE ENERGY, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the three months ended March 31, 2021 and 2020

The following table reconciles future minimum lease payments to the discounted finance lease liability:


Years ending December 31,	Years ending December 31,	Amount		Years ending December 31,	Amount
2020 - remaining		$	25,013
2021		40,921
2021 - remaining				2021 - remaining	$	29,019
2022	2022	12,803		2022	12,803
2023	2023	—		2023	0
2024	2024	—		2024	0
2025				2025	0
Thereafter	Thereafter	—		Thereafter	0
Total future minimum lease payments	Total future minimum lease payments	$	78,737	Total future minimum lease payments	$	41,822
Less: Amount representing interest	Less: Amount representing interest	3,088		Less: Amount representing interest	1,061
Present value of future payments	Present value of future payments	$	75,649	Present value of future payments	$	40,761
Current portion	Current portion	$	45,411	Current portion	$	36,408
Long-term portion	Long-term portion	$	30,238	Long-term portion	$	4,353

Because our office space leases are substantially all considered to be short-term, we have elected not to recognize them on our balance sheet under the short-term recognition exemption. During the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and March 31, 2020, we recognized ~~$19,059~~$16,262 and ~~$38,531,~~$19,472, respectively, in short-term lease costs associated with office space leases.

NOTE 7 – STOCKHOLDERS' EQUITY

As of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company held 3,412,378 shares of its common stock in treasury at a total cost of $5,353,019, respectively.

As of ~~June 30, 2020 ,~~March 31, 2021, the Company had ~~279,447~~222,472 restricted stock units, ~~252,701~~182,278 performance based restricted stock units, and ~~115,200~~934,700 stock options outstanding with ~~$365,717~~$428,931 in remaining compensation expense to be recognized over the next ~~2.01~~2.0 years.

2020 EIP and LTIP

Due to ~~market~~economic uncertainties including those caused by the COVID-19 pandemic, the Board of Directors of the Company, ~~(the "Board") and~~with the support of the Company's executives, ~~have~~ elected not to ~~not~~ adopt an executive incentive plan ("2020 EIP") or long-term incentive plan ("2020 LTIP") for 2020. The Board and executives ~~believe~~believed this iswas an appropriate short-term measure that ~~will help to~~helped align the Company's cost structure with the ~~current~~ extraordinary ~~market conditions.~~conditions affecting the industry in which we operate.

~~2019 EIP~~2021 RSUs

~~PROFIRE ENERGY, INC. AND SUBSIDIARIES~~

~~Notes to~~On February 18, 2021, the ~~Condensed Consolidated Financial Statements~~

~~For the three and six months ended June 30, 2020 and 2019~~

On April 22, 2019, the Board approved the 2019 Executive Incentive Plan (the “2019 EIP”) for Brenton W. Hatch, the Company’s then President and Chief Executive Officer, Ryan W. Oviatt, the Company’s Chief Financial Officer, Cameron M. Tidball, the Company’s Chief Business Development Officer, Jay G. Fugal, the Company’s Vice President of Operations, and Patrick D. Fisher, the Company’s Vice President of Product Development. The 2019 EIP provided for the potential award of bonuses to the participants based on the Company’s financial performance in fiscal year 2019. ~~On March 4, 2020, the Company's~~ Board of Directors, upon the recommendation of the Compensation Committee of the Board (the "Compensation Committee"), approved a ~~one-time executive bonus in the amount~~restricted stock award of ~~$828,787 for meeting targets pursuant to the 2019 EIP. Half of the bonus was paid in cash and half of the bonus was settled by issuing 343,748~~18,852 shares of common stock ~~under~~to each of Cameron M. Tidball and Ryan W. Oviatt. Messrs. Tidball and Oviatt entered into Restricted Stock Award Agreements, the forms of which were approved pursuant to the Company's 2014 Equity Incentive ~~Plan, as amended (the "2014 Plan")~~Plan. These restricted stock awards, which ~~was fully~~ vested ~~on the date of grant.~~

~~Participants~~immediately, were ~~eligible to receive bonuses based upon reaching or exceeding performance goals established~~settled by the ~~Board or its Compensation Committee for fiscal 2019. The performance goals in the 2019 EIP were based on the Company’s~~issuance of a total ~~revenue, net income, free cash flow, and product development milestones. Each~~ of ~~these performance goals were weighted 25% in calculating bonus amounts.~~

~~2019 LTIP~~

On April 22, 2019 the Board also adopted the 2019 Long-Term Incentive plan (the "2019 LTIP") for certain of the Company's executive officers. The 2019 LTIP consists of total awards of up to 66,213 restricted stock units (“RSUs”) to Mr. Oviatt, up to 51,646 RSUs to Mr. Tidball, up to 35,313 RSUs to Mr. Fugal, and up to 24,862 RSUs to Mr. Fisher pursuant to two separate Restricted Stock Unit Award Agreements that were entered into between the Company and each participant under the 2014 Plan. One agreement covers 33% of each award recipient’s RSU's that are subject to time-based vesting, and the other agreement covers the remaining 67% of such award recipient’s RSU's that may vest based on performance metrics. Upon vesting, the award agreements entitle the award recipients to receive one share of the Company’s common stock for each vested RSU. The vesting period of the 2019 LTIP began on January 1, 2019 and terminates on December 31, 2021.

~~2017 LTIP~~

~~On March 4, 2020, the Board approved a one-time executive bonus that was settled by issuing 16,689~~27,334 shares of common stock, ~~for meeting targets pursuant to the previously announced "2017 Long-Term Incentive Plan", which shares were issued under the 2014 Plan. These shares were fully vested as~~net of ~~March 4, 2020.~~tax withholding and resulted in $45,999 of compensation expense.

2020 RSUs

On June 17, 2020, pursuant to the annual renewal of ~~Director~~director compensation, the Board approved a grant of 270,966 RSUs to ~~Independent Directors.~~the independent directors of the Board. Half of the RSUs vested immediately on the date of grant and the remaining 50% of the RSUs will vest on the first anniversary of the grant date or at the Company's next ~~Annual Meeting~~annual meeting of ~~Stockholders,~~stockholders, whichever is earlier. The awards will result in total compensation expense of $252,000 to be recognized over the vesting period.

~~2019 RSUs~~

PROFIRE ENERGY, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

OnFor the three months ended March ~~14, 2019,~~31, 2021 and 2020

Mr. Arlen B. Crouch resigned from his position as a member of the Board, effective August 3, 2020. Mr. Crouch’s resignation did not result from any disagreements with management or the Board. On the effective date of Mr. Crouch's resignation, all of his unvested RSUs were forfeited. The related compensation expense associated with Mr. Crouch's unvested RSUs will be recaptured. On July 30, 2020, the Board appointed Colleen Larkin Bell to serve as a director to fill the vacancy resulting from Mr. Crouch’s resignation, effective August 3, 2020. Ms. Bell was also appointed as Chair of the Nominating Committee and as a member of the Audit and Compensation Committees. As part of her compensation for her service as a director and committee member, on August 21, 2020, the board approved a grant of ~~85,000 RSUs to various employees. The awards vest annually over five years and will result in a total compensation expense of $149,600 to be recognized over the vesting period.~~

~~On June 12, 2019, pursuant to the annual renewal of Director compensation, the Board approved a grant of 183,942 RSUs to Independent Directors.~~92,934 RSUs. Half of the RSUs vested immediately on the date of the grant and the remaining 50% of the RSUs ~~vested~~will vest on the first anniversary of the grant date. The awards ~~have resulted~~will result in total compensation expense of ~~$252,000~~$72,953 to be recognized over the vesting period.

2020 Stock Options

On March 17, 2020, (the ~~"Grant~~"March Grant Date"), the Board approved a grant of options to purchase 115,200 shares of the Company's common stock at a strike price of $0.81 to various employees (the ~~"Options"~~"March 2020 Options"). The March 2020 Options terminate four years from the March Grant Date and ~~the Options shall become~~became exercisable as to ~~1/3~~one-third of the shares of common stock covered thereby on each anniversary of the March Grant Date for the next three ~~years.~~years following the March Grant Date. The March 2020 Options resulted in a total compensation expense of $40,280.

On July 2, 2020 (the "July Grant Date"), upon the recommendation of the Compensation Committee, the Board approved the grant of a non-qualified stock option to purchase 100,000 shares of the Company’s common stock to each of Mr. Oviatt and Mr. Tidball under the Company’s 2014 Equity Incentive Plan and pursuant to the standard form of Notice of Stock Option Grant and Stock Option Agreement under the plan (the “July 2020 Options”). The exercise price of the July 2020 Options is equal to the closing bid price of the Company's common stock on July 2, 2020 or $0.8439 per share. The July 2020 Options vest equally over a period of three years from the July Grant Date. Vesting occurs on the anniversary date of the July Grant Date, with one-third of the total shares vesting on each of the first three anniversaries of the July Grant Date. Vesting is contingent upon the executive’s continued employment with the Company on each applicable vesting date. The July 2020 Options expire on July 2, 2024. The July 2020 Options will result in a total compensation expense of ~~$40,280~~$79,431 to be recognized over the vesting period.

~~PROFIRE ENERGY, INC. AND SUBSIDIARIES~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~For the three and six months ended June 30, 2020 and 2019~~

~~NOTE 8 – ACQUISITIONS~~

~~Millstream Energy Products~~

On June 18, 2019, our wholly-owned subsidiary, Profire Combustion, Inc., acquired substantially all the assets from Millstream Energy Products, LTD., a Canadian corporation ("MEP"). MEP is a privately-held Canadian company that developed a line of high-performance burners, economy burners, flame arrestor housings, secondary air control plates, and other related combustion components. MEP’s full line of products became available for sale by Profire’s existing sales team immediately after closing of the transaction. These products complement our burner-management system (BMS) product offerings and should enable us to supply a larger portion of the total BMS package sale to our customers.

~~The acquisition was accounted for as a business combination in accordance with ASC 805,~~ ~~Business Combinations~~. The purchase price of $2,219,782 was funded through existing cash. Of this cash purchase amount $140,257 was held back for 6 months pending satisfaction of seller obligations under the purchase agreement and was settled with the seller on February 20, 2020. The seller is also entitled to receive a 4.5% royalty on proprietary MEP product revenue generated during the next five years.

Profire hired a valuation firm to perform the purchase price allocation based on net assets received and the price paid. Based on the fair value of net assets at the time of purchase, the Company recorded intangible assets in the amount of $990,000 and goodwill of $17,681. Intangible assets include customer relationships, the trade name and developed technology.


~~The purchase price calculation is a follows:~~
~~Cash~~	$	~~2,079,525~~
~~Liabilities~~	~~140,257~~
	$	~~2,219,782~~

~~The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of purchase:~~
~~Accounts receivable~~	$	~~207,145~~
~~Inventory~~	~~1,119,143~~
~~Intangible assets~~	~~990,000~~
~~Goodwill~~	~~17,681~~
~~Accounts payable~~	~~(114,187)~~
	$	~~2,219,782~~

Transaction and related costs directly related to the acquisition of MEP, consisting primarily of professional fees and integration expenses, have amounted to approximately $136,811, were expensed as incurred and are included in general and administrative expenses.

~~Midflow Services~~

On August ~~5, 2019, we acquired all~~21, 2020 (the "August Grant Date"), the Board approved a grant of ~~the outstanding membership interests of Midflow Services, LLC ("Midflow"). Midflow is based in Millersburg, Ohio. Midflow provides packaged combustion solutions and services~~options to ~~the upstream and midstream oil and gas industry.~~

~~The acquisition was accounted for as a business combination in accordance with ASC 805,~~ ~~Business Combinations. The~~ purchase ~~price of $3,439,371 was funded through a combination of existing cash and~~630,000 shares of the Company's common ~~stock.~~stock at a strike price of $0.785 to various employees (the "August 2020 Options"). The ~~cash portion~~August 2020 Options terminate four years from the August Grant Date and become exercisable as to one-third of the ~~purchase price includes $500,000 placed in an escrow account for 12 months pending satisfaction~~shares of ~~certain obligations under the purchase agreement.~~

~~Profire hired a valuation firm to perform the purchase price allocation based~~common stock covered thereby on ~~the net assets received and the price paid. Based on the fair value~~each anniversary of the ~~net assets at~~August Grant Date for the ~~time~~next three years following the August Grant Date. The August 2020 Options will result in a total compensation expense of ~~purchase,~~$233,111 to be recognized over the ~~Company recorded intangible assets in the amount of $1,110,000 and goodwill of $1,564,000. Intangible assets include customer relationships, the trade name and developed technology.~~

~~PROFIRE ENERGY, INC. AND SUBSIDIARIES~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~For the three and six months ended June 30, 2020 and 2019~~


~~The purchase price calculation is as follows:~~
~~Cash~~	$	~~2,419,371~~
~~Stock~~	~~1,020,000~~
	$	~~3,439,371~~

~~The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of purchase:~~
~~Cash~~	$	~~172,850~~
~~Accounts receivable~~	~~324,989~~
~~Inventory~~	~~269,746~~
~~Prepaid expenses~~	~~13,180~~
~~Property and equipment~~	~~126,000~~
~~Intangible assets~~	~~1,110,000~~
~~Goodwill~~	~~1,564,000~~
~~Accounts payable~~	~~(134,956)~~
~~Accrual liabilities~~	~~(6,438)~~
	$	~~3,439,371~~

Transaction costs directly related to the acquisition of Midflow, consisting primarily of professional fees and integration expenses, amounted to approximately $44,087. All of these costs were expensed as incurred and are included in general and administrative expenses.

vesting period.

NOTE 98 – REVENUE

Performance Obligations

Our performance obligations include providing product and servicing our product. We recognize product revenue performance obligations in most cases when the product is delivered to the customer. Occasionally, if we are shipping the product on a customer’s account, we recognize revenue when the product has been shipped. At that point in time, the control of the product is transferred to the customer. When we perform service work, we apply the practical expedient that allows us to recognize service revenue when we have the right to invoice the customer for the work completed. We do not engage in transactions acting as an agent. The time needed to complete our performance obligations varies based on the size of the project; however, we typically satisfy our performance obligations within a few months of entering into the applicable sales contract or service contract.

Our customers have the right to return certain unused and unopened products within 90 days for ~~an appropriate~~a restocking fee. We provide a warranty on some of our products ranging from 90 days to 2 years, depending on the product. See note 5 for the amount accrued for expected returns and warranty claims as of ~~June 30, 2020.~~March 31, 2021.

Contract Balances

We have elected to use the practical expedient in ASC 340-40-25-4 (regarding recognition of the incremental costs of obtaining a contract) for costs related to contracts that are estimated to be completed within one year. All of our current sales contracts and service contracts are expected to be completed within one year, and as a result, we have not recognized a contract asset account. If we had chosen not to use this practical expedient, we would not expect a material difference in the

PROFIRE ENERGY, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the three months ended March 31, 2021 and 2020

contract balances. We also did not have any material contract liabilities because we typically do not receive payments in advance of recognizing revenue.

~~PROFIRE ENERGY, INC. AND SUBSIDIARIES~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~For the three and six months ended June 30, 2020 and 2019~~

Disaggregation of Revenue

All revenue recognized in the income statement is considered to be revenue from contracts with customers. The table below shows revenue by category:


		For the Three Months Ended June 30,						For the Six Months Ended June 30,					For the Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
Electronics	Electronics	$	1,644,668	$	4,139,283	$	4,301,755	$	8,785,880	Electronics	$	1,851,799	$	2,657,087
Manufactured	Manufactured	142,234		492,969		543,092		923,562		Manufactured	236,810		400,858
Re-Sell	Re-Sell	2,212,237		4,927,003		6,015,250		10,048,448		Re-Sell	2,568,926		3,803,013
Service	Service	360,340		564,776		946,524		1,199,199		Service	434,814		586,184
Total Revenue	Total Revenue	$	4,359,479	$	10,124,031	$	11,806,621	$	20,957,089	Total Revenue	$	5,092,349	$	7,447,142

NOTE 109 – BASIC AND DILUTED EARNINGS PER SHARE

The following table is a reconciliation of the numerator and denominators used in the earnings per share calculation:


		For the Three Months Ended June 30,																			For the Three Months Ended March 31,
		2020								2019										2021			2020
		Income (Numerator)		Weighted Average Shares (Denominator)	Per-Share Amount		Income (Numerator)		Weighted Average Shares (Denominator)	Per-Share Amount			Income (loss) (Numerator)		Weighted Average Shares (Denominator)	Per-Share Amount		Income (Numerator)		Weighted Average Shares (Denominator)	Per-Share Amount
Basic EPS	Basic EPS											Basic EPS
Net income (loss) available to common stockholders	Net income (loss) available to common stockholders	$	(808,503)	47,723,208	$	(0.02)	$	985,504	47,348,137	$	0.02	Net income (loss) available to common stockholders	$	(601,500)	47,990,101	$	(0.01)	$	(365,264)	47,492,441	$	(0.01)

Effect of Dilutive Securities	Effect of Dilutive Securities											Effect of Dilutive Securities
Stock options & RSUs	Stock options & RSUs	—		—			—		776,071			Stock options & RSUs	0		0			0		0

Diluted EPS	Diluted EPS											Diluted EPS
Net income available to common stockholders + assumed conversions		$	(808,503)	47,723,208	$	(0.02)	$	985,504	48,124,208	$	0.02
Net income (loss) available to common stockholders + assumed conversions												Net income (loss) available to common stockholders + assumed conversions	$	(601,500)	47,990,101	$	(0.01)	$	(365,264)	47,492,441	$	(0.01)

Stock options and RSUs to purchase ~~534,924~~1,339,450 shares of common stock at a weighted average price of ~~$0.83~~$1.15 per share were outstanding during the three months ended ~~June 30, 2020,~~March 31, 2021, but were not included in the computation of diluted EPS because the impact of these shares would be antidilutive. These ~~stock options and~~ RSUs, which expire between ~~March~~April 2021 and ~~March~~August 2024, were still outstanding at ~~June 30, 2020.~~

March 31, 2021.

Stock options and RSUs to purchase ~~244,600~~784,769 shares of common stock at a weighted average price of ~~$3.88~~$1.28 per share were outstanding during the three months ended ~~June 30, 2019,~~March 31, 2020, but were not included in the computation of diluted EPS because the impact of these shares would be antidilutive. These options, which expired between ~~November 2019~~May 2020 and ~~May 2020,~~March 2024, were still outstanding at ~~June 30, 2019.~~March 31, 2020.

1512

PROFIRE ENERGY, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the three ~~and six~~ months ended ~~June 30, 2020 and 2019~~

For the Six Months Ended June 30,
2020 2019
Income (Numerator) Weighted Average Shares (Denominator) Per-Share
Amount Income (Numerator) Weighted Average Shares (Denominator) Per-Share
Amount
Basic EPS
Net income available to common stockholders $ (1,173,767) 47,607,825 $ (0.02) $ 2,654,122 47,392,534 $ 0.06
Effect of Dilutive Securities
Stock options & RSUs — — — 800,315
Diluted EPS
Net income available to common stockholders + assumed conversions $ (1,173,767) 47,607,825 $ (0.02) $ 2,654,122 48,192,849 $ 0.06

Stock options and RSUs to purchase 555,866 shares of common stock at a weighted average price of $0.98 per share were outstanding during the six months ended June 30, 2020, but were not included in the computation of diluted EPS because the impact of these shares would be antidilutive. These stock options and RSUs, which expire between March 31, 2021 and ~~March 2024, were still outstanding at June 30, 2020.~~2020

Stock options to purchase 244,600 shares of common stock at a weighted average price of $3.88 per share were outstanding during the six months ended June 30, 2019, but were not included in the computation of diluted EPS because the impact of these shares would be antidilutive. These options, which expired between November 2019 and May 2020, were still outstanding at June 30, 2019.

NOTE 1110 – SEGMENT INFORMATION

The Company operates in the United States and Canada. Segment information for these geographic areas is as follows:


		For the Three Months Ended June 30,						For the Six Months Ended June 30,					For the Three Months Ended March 31,
Sales	Sales	2020		2019		2020		2019		Sales	2021		2020
Canada	Canada	$	585,695	$	1,056,781	$	1,609,417	$	1,992,419	Canada	$	828,445	$	1,023,722
United States	United States	3,773,784		9,067,250		10,197,204		18,964,670		United States	4,263,904		6,423,420
Total Consolidated	Total Consolidated	$	4,359,479	$	10,124,031	$	11,806,621	$	20,957,089	Total Consolidated	$	5,092,349	$	7,447,142

		For the Three Months Ended June 30,						For the Six Months Ended June 30,					For the Three Months Ended March 31,
Profit (Loss)	Profit (Loss)	2020		2019		2020		2019		Profit (Loss)	2021		2020
Canada	Canada	$	(264,163)	$	(547,202)	$	(586,232)	$	(929,242)	Canada	$	(320,762)	$	(322,069)
United States	United States	(544,340)		1,532,706		(587,535)		3,583,364		United States	(280,738)		(43,195)
Total Consolidated	Total Consolidated	$	(808,503)	$	985,504	$	(1,173,767)	$	2,654,122	Total Consolidated	$	(601,500)	$	(365,264)

						As of							As of
Long-Lived Assets	Long-Lived Assets					June 30, 2020		December 31, 2019		Long-Lived Assets	March 31, 2021		December 31, 2020
Canada	Canada					$	5,640,323	$	6,068,061	Canada	$	6,053,391	$	6,049,790
United States	United States					16,659,430		18,080,075		United States	5,912,042		6,022,115
Total Consolidated	Total Consolidated					$	22,299,753	$	24,148,136	Total Consolidated	$	11,965,433	$	12,071,905

~~PROFIRE ENERGY, INC. AND SUBSIDIARIES~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~For the three and six months ended June 30, 2020 and 2019~~

NOTE 1211 – SUBSEQUENT EVENTS

On July 2, 2020, the Board of Directors of Profire Energy, Inc. (the “Company”) approved certain changes to the executive management team of the Company. Pursuant to these changes, Brenton W. Hatch is transitioning from Chief Executive Officer and President of the Company to Executive Chairman. Ryan W. Oviatt has been promoted to Co-Chief Executive Officer, Co-President, and Chief Financial Officer of the Company. Cameron M. Tidball has also been promoted to Co-Chief Executive Officer and Co-President of the Company. In connection with these appointments,April 30, 2021 the Company entered into ~~amended~~amendments to employment agreements with each of Mr. Brenton W. Hatch, ~~Mr. Oviatt and Mr. Tidball, as more fully described below.~~

~~On July 2, 2020,~~ the ~~Company and~~Company's Executive Chairman; Mr. Hatch entered into a Second Amended and Restated Employment Agreement (“Hatch Agreement”) as approved by the Company’s Board of Directors (the “Board”) and recommended by its Compensation Committee (the “Committee”). Pursuant to the Hatch Agreement, Mr. Hatch has transitioned from his prior role as Chief Executive Officer and President of the Company to serve as Executive Chairman through June 30, 2021. As the Company’s Executive Chairman, in addition to other executive-level duties determined by the Board, Mr. Hatch will continue to serve as Chairman of the Board. Also pursuant to the Hatch Agreement, beginning July 1, 2021, Mr. Hatch will transition from the role of Executive Chairman to Special Advisor for the executive officers of the Company. Mr. Hatch will serve as a Special Advisor through June 30, 2022 (“Special Advisor Term”). During this Special Advisor Term, Mr. Hatch will continue to serve as Chairman of the Board and will advise the Company executives on items including, but not limited to, major projects, investor relations, and management succession planning.

In connection with Mr. Hatch’s appointment as Executive Chairman, Mr. Hatch will be paid an annual rate of base salary in periodic installments consistent with the Company’s payroll practices as in effect from time to time. For the period from July 2, 2020 through December 31, 2020 Mr. Hatch will be paid a salary based on an annualized base salary of $350,000. For the period from January 1, 2021 through June 30, 2021, Mr. Hatch will be paid a salary based on an annualized base salary of $400,000. For the 2021 calendar year, Mr. Hatch is eligible to receive an annual bonus pursuant to an Annual Incentive Plan adopted by the Board’s Compensation Committee. Mr. Hatch’s annual bonus will be at a lower level than the then serving Chief Executive Officer (or Co-Chief Executive Officers). Given that Mr. Hatch will serve as Executive Chairman for a maximum of 50% of the calendar year 2021, his final annual bonus amount will be 50% of the amount it otherwise would be if he had served as Executive Chairman for the full 2021 calendar year.

During the Special Advisor Term, Mr. Hatch will be paid a salary based on an annualized base salary of $400,000, the sum of $150,000 for serving as Chairman of the Board and $250,000 for advisory services.

~~Also, on July 2, 2020, the Company entered into a Second Amended and Restated Employment Agreement with~~ Ryan W. Oviatt, ~~(the “Oviatt Agreement”)~~the Company's Co-CEO, CFO, and ~~an Amended and Restated Employment Agreement with~~Co-President; Mr. Cameron M. Tidball, ~~(the “Tidball Agreement”~~the Company's Co-CEO and ~~together with~~Co-President; Mr. Jay G. Fugal, the ~~Oviatt Agreement,~~Company's VP of Operations; and Mr. Patrick D. Fisher the ~~“CEO Agreements”) as recommended by the Committee and approved by the Company’s Board.~~

~~Pursuant~~Company's VP of Product Development. The amendments to the ~~Oviatt Agreement, effective July 2, 2020, Mr. Oviatt commenced serving as~~employment agreements and the ~~Company’s Co-Chief Executive Officer, Co-President, and Chief Financial Officer~~Company's financial obligation related thereto are described in Item 5 of ~~the Company. Mr. Oviatt’s duties will include being responsible for the strategic direction and day-to-day operations~~Part II on Page 18 of ~~the Company as well as the day-to-day management of the Company’s finances and financial and accounting records and statements. Mr. Oviatt will continue to serve as a member of the Board.~~

Pursuant to the Tidball Agreement, effective July 2, 2020, Mr. Tidball commenced serving as the Company’s Co-Chief Executive Officer and Co- President. Mr. Tidball’s duties will include being responsible for the strategic direction and day-to-day operations of the Company and management of sales and marketing efforts, development of products and technologies, and expansion of markets and industries.

The CEO Agreements provide that each Mr. Oviatt and Mr. Tidball will receive a salary based on an annualized base salary of $275,000 USD for the period of July 2, 2020 through December 31, 2020. On January 1, 2021, the annualized base salary of Messrs. Oviatt and Tidball will increase to $300,000. The CEO Agreements state that the executives will be eligible for annual bonuses through the Company’s then-current Annual Incentive Plan as adopted by the Compensation Committee of the Board. The executives will also be eligible to participate in the Company’s then-current Long-Term Incentive Plan as determined by the Board or the Compensation Committee. The Term of the CEO Agreements is from July 1, 2020 through June 30, 2021 and unless terminated in accordance with the terms of the CEO Agreements, they will renew for successive periods of one year.this report.

~~PROFIRE ENERGY, INC. AND SUBSIDIARIES~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~For the three and six months ended June 30, 2020 and 2019~~

In addition to the salary compensation above, on July 2, 2020 (the “Grant Date”), upon the recommendation of the Committee, the Board approved granting a non-qualified stock option to purchase 100,000 shares of the Company’s common stock to each of Mr. Oviatt and Mr. Tidball under to the Company’s 2014 Plan and pursuant to the standard form of Notice of Stock Option Grant and Stock Option Agreement under the plan (the “Options”). The exercise price of the Options is the closing bid price on July 2, 2020 or $0.8439 per share. The Options shall vest equally over a period of three years from the Grant Date. Vesting shall occur on the anniversary date of the Grant Date, with one-third of the total shares vesting on the first three anniversaries of the Grant Date. Vesting is contingent upon the executive’s continued employment with the Company on each applicable vesting date. The Options expire on July 2, 2024.

On July 30, 2020 Mr. Arlen B. Crouch notified the Chairman of the Board of the Directors (the “Board”) of Profire Energy, Inc. (the “Company”) of his decision to resign, effective August 3, 2020, from his position as a member of the Board. Mr. Crouch’s resignation did not result from any disagreements with Management or the Board.

~~On July 30, 2020, the Board appointed Colleen L. Bell to serve as a director to fill the vacancy resulting from Mr. Crouch’s resignation, effective August 3, 2020.~~

Ms. Bell will serve as Chair of the Nominating Committee and will serve on the Audit and Compensation Committees. As compensation for her service on the Board and Committee Assignments, it is anticipated that Ms. Bell will receive the Company’s standard compensation for non-employee directors. There are no understandings or arrangements between Ms. Bell and any other person pursuant to which she was selected as a director. The Board considered the independence of Ms. Bell under the Nasdaq listing standards and concluded that she is independent under the applicable Nasdaq standards.

~~In accordance with ASC 855 "Subsequent Events," Company Management reviewed all material events through the date this report was issued and there were no other subsequent events to report.~~

1813

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

This discussion summarizes the significant factors affecting our consolidated operating results, financial condition, liquidity, and capital resources during the ~~three and six-month~~three-month periods ended ~~June 30, 2020~~March 31, 2021 and ~~2019.~~2020. This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the ~~Financial Statements~~financial statements and ~~Notes~~notes to the ~~Financial Statements~~financial statements contained in this quarterly report on Form 10-Q and our annual report on Form 10-K for the year ended December 31, ~~2019.~~2020.

Forward-Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are based on management's beliefs and assumptions and on information currently available to management. For this purpose, any statement contained in this report that is not a statement of historical fact may be deemed to be forward-looking, including, but not limited to, statements relating to our future actions, intentions, plans, strategies, objectives, results of operations, cash flows and the adequacy of or need to seek additional capital resources and liquidity. Words such as "may," "should," "expect," "project," "plan," "anticipate," "believe," "estimate," "intend," "budget," "forecast," "predict," "potential," "continue," "should," "could," "will," or comparable terminology or the negative of such terms are intended to identify forward-looking statements; however, the absence of these words does not necessarily mean that a statement is not forward-looking. Forward-looking statements by their nature involve known and unknown risks and uncertainties and other factors that may cause actual results and outcomes to differ materially depending on a variety of factors, many of which are not within our control. Such factors include, but are not limited to, economic conditions generally and in the oil and gas industry in which we and our customers participate; competition within our industry; legislative requirements or changes which could render our products or services less competitive or obsolete; our failure to successfully develop new products and/or services or to anticipate current or prospective customers' needs; price increases; limits to employee capabilities; delays, reductions, or cancellations of contracts we have previously entered into; sufficiency of working capital, capital resources and liquidity and other factors detailed herein and in our other filings with the United States Securities and Exchange Commission (the "SEC" or "Commission"). Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. The foregoing factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this report. For a more detailed discussion of the principal factors that could cause actual results to be materially different, you should read our risk factors in Item 1A. Risk Factors, included elsewhere in this report.

Forward-looking statements are based on current industry, financial and economic information which we have assessed but which by its nature is dynamic and subject to rapid and possibly abrupt changes. Due to risks and uncertainties associated with our business, our actual results could differ materially from those stated or implied by such forward-looking statements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of these forward-looking statements and we hereby qualify all of our forward-looking statements by these cautionary statements.

Forward-looking statements in this report are based only on information currently available to us and speak only as of the date on which they are made. We undertake no obligation to amend this report or revise publicly these forward-looking statements (other than as required by law) to reflect subsequent events or circumstances, whether as the result of new information, future events or otherwise.

The following discussion should be read in conjunction with our financial statements and the related notes contained elsewhere in this report and in our other filings with the Commission.

Overview

We are ~~an oilfield~~a technology company providing ~~products~~solutions that enhance the efficiency, safety, and ~~compliance~~reliability of industrial combustion appliances while mitigating potential environmental impacts related to the operation of these devices. Our legacy business is primarily focused in the upstream, midstream, and downstream transmission segments of the oil and gas ~~industry.~~industry; however, we have commenced identifying applications in other industries where we believe our solutions will be applicable as we expand our addressable market over time. We specialize in the engineering and design of burner and combustion management systems and solutions used on a variety of ~~oilfield natural-draft fire-tube~~natural and ~~forced-air~~forced draft applications. We sell our products and services primarily throughout North America. Our experienced team of ~~industry~~sales and service professionals ~~also provides supporting services~~are strategically positioned across the United States and Canada providing support and service for our products.

1914

Profire Energy, Inc. was established on October 9, 2008, upon the closing of an Acquisition Agreement between The Flooring Zone, Inc. and Profire Combustion, Inc. and the shareholders of Profire Combustion, Inc. (the "Subsidiary"). Following the closing of the transactions, The Flooring Zone, Inc. was renamed Profire Energy, Inc. (the "Parent"). As a result of the transaction, the Subsidiary became a wholly-owned subsidiary of the Parent and the shareholders of the Subsidiary became the controlling shareholders of the Company. The Parent was incorporated on May 5, 2003 in the State of Nevada. The Subsidiary was incorporated on March 6, 2002 in the Province of Alberta, Canada.

Principal Products and Services

Across the energy industry, there are numerous demands for heat generation and control. Applications such as combustors, enclosed flares, gas production units, treaters, glycol and amine reboilers, indirect line-heaters, heated tanks, and process heaters require heat as part of their production and or processing functions. This heat is generated through the process of combustion, which must be controlled, managed, and supervised. Combustion and the resulting generation of heat are integral to the process of separating, treating, storing, incinerating, and transporting oil and gas. Factors such as ~~petroleum's~~ specific gravity, the presence of hydrates, temperature and hydrogen sulfide content contribute to the need for heat generation in oil and gas production and processing applications. Our burner-management systems ignite, monitor, and manage ~~pilots~~pilot and ~~burners~~burner systems that are utilized in this process. Our technology affords remote operation, reducing the need for employee interaction with the appliance's burner for purposes such as ~~for the purposes of~~ re-ignition or temperature monitoring. In addition, our burner-management systems can help reduce ~~gas~~ emissions by ~~quickly~~efficiently reigniting a failed flame, ~~and~~thereby improving ~~application~~ efficiencies and up-time. Our extensive service and combustion experience provide customers with solutions that are consistent with industry trends and regulatory requirements to mitigate environmental impacts and reduce emissions through increased efficiency.

Oil and gas ~~producers~~companies, including upstream, midstream, downstream, pipeline, and gathering operators, utilize burner-management systems to achieve increased safety, greater operational efficiencies, and improved compliance with ~~changing~~ industry regulations. Without a burner-management system, ana field employee must discover and reignite an extinguished burner flame, then restart the application manually. Therefore, without a proper burner-management ~~systems,~~system, all application monitoring ~~is done~~must be accomplished in-person, directly on-site. ~~Such~~This requirement for on-site monitoring, in an environment with limited field personnel, can result in the potential interruption of production for ~~longer~~long periods of time ~~risk of~~and increased risks associated with reigniting a flame, which can lead to ~~burns and~~site hazards, including explosions and the possibility of ~~raw~~venting gas ~~being vented~~ into the ~~atmosphere when the flame fails.~~atmosphere. In addition, without a ~~burner-management~~burner -management system, burners often ~~run~~operate for longer ~~incurring significant~~durations, frequently with lower efficiency, resulting in increased equipment fatigue and greater expense related to fuel costs. We believe there is a growing trend in the oil and gas industry toward enhanced control, process automation, and data logging, largely for improved efficiency and operational cost savings, and partly for potential regulatory-satisfaction purposes. Our burner-management systems are designed to be always on standby to make sure the burner flame is lit and managed properly, which can reduce how often a burner is running and may reduce fuel costs.consumption. We continue to assess ~~compliance-interest in the industry, and we~~regulatory requirements on behalf of our customers. We believe that ~~enhanced~~ burner-management ~~products~~systems and services ~~can help our~~offer solutions for customers ~~be compliant with such regulatory requirements,~~to meet compliance standards where applicable. In addition to ~~selling products,~~product sales, we ~~train and~~ dispatch specialized service technicians to ~~service burner flame installations~~provide maintenance and installation support throughout the United States and Canada.

We initially developed our first burner-management ~~system~~controller in 2005. Since ~~then, we~~that time, our systems have ~~released several iterations of our initial~~become widely adopted throughout the United States and Western Canada. Profire burner-management ~~system, increasing features~~systems have been designed to comply with widely accepted safety and ~~capabilities, while maintaining compliance with~~industrial codes and standards in North ~~American standards,~~America, including those proscribed and certified by the Canadian Standards Association (CSA), Underwriters Laboratories (UL), and Safety Integrity Level (SIL) standards.

Our ~~burner-management~~ systems and solutions have ~~become~~been widely ~~used throughout the United States~~adopted by exploration and ~~Western Canada. We have sold our burner-management systems to many large energy~~production companies ~~including Anadarko,~~(E&P), midstream operators, pipeline operators, as well as downstream transmission and utility providers. Our customers include, EQT, Antero, Chevron, Concho Resources, ~~ConocoPhillips,~~ Devon ~~Encana,~~Energy, XTO, CNRL, ~~Shell, OXY,~~Cenovus, Hess, Pioneer Natural Resources, Williams, Dominion, ATCO, and others. Our systems have also been sold orand installed in other parts of the world including many countries in ~~Europe,~~ South America, Europe, Africa, the Middle East, and Asia. ~~We are~~Though firmly established ~~in the~~and primarily focused on North American oil and gas markets, ~~which is our primary focus currently, but~~ we ~~are working~~continue to ~~expand further into other~~invest in expansion efforts in international ~~markets.~~markets and the broader combustion industries.

~~Product Extensions:~~Environmental, Social and Governance Focus

~~The PF3100~~As guiding principles and core to our strategy, our products and solutions are developed with a focus on safety, environmental impacts, reliability and efficiency. Protecting human life, protecting the environment, and protecting our customers’ investments are key guiding principles. Our products play a key role in supporting our customers’ existing and future initiatives regarding improving workplace safety and environmental impacts.

Our burner-management technology is ~~an advanced~~designed to monitor, operate, and manage a wide array of complex industrial heat-applications. Providing our customers with safety-approved and certified technology, purposefully designed and built to meet regulatory requirements and process needs, is a critical component of our customers’ safety protocols and initiatives.

Proper burner and combustion management ~~system which is designed to operate, monitor,~~ control, coupled with peripheral solutions, increase site and ~~manage~~location safety while reducing emissions. Profire technology and solutions are integrated into a ~~wide~~ variety of ~~complex, heated appliances. Throughout~~applications to significantly reduce the ~~industry, Programmable Logic Controllers, or PLCs, are used to operate~~release of methane and manage custom-built oilfield applications. While PLC's perform these intended functions, they can be expensive, difficult to install and maintain. The PF3100 can help oilfield producers meet deadlines and improve profitability through an off-the-shelf solution with dynamic customization. We are sellingvolatile organic compounds into the ~~PF3100 for initial use in the oil and gas industry's natural-draft and forced-draft applications.~~environment.

2015

~~We recognized~~Profire burner-management controls and complementary solutions provide users with the ~~area of~~ability to monitor field equipment remotely. This reduces truck rolls and the need for field personnel to travel to and manually inspect burner ~~management most~~malfunctions in ~~need of innovation was the user experience. The PF2200 is designed to optimize installation, commissioning, troubleshooting~~remote sites and ~~daily operation. This focus on the user will optimize the time required on-site for both installation~~locations. Our automated solutions help our customers improve safety, reduce emissions, and operator training. With the user focused design being combined with an expanded feature set, the PF2200 becomes a very powerful tool to reduce downtime and lessen the burden on producers in a wide variety of applications, ranging from dual-burner to forced draft, to a variety of waste-gas destruction applications.decrease operating costs.

~~We frequently assess market needs by participating in industry conferences and soliciting feedback from existing and potential customers, allowing us to provide quality solutions to~~Operator safety is at the ~~oil and gas producing companies we serve. Upon identifying a potential market need, we begin researching the market and developing products that are likely to have feasibility for future sale.~~

~~Additional Complementary Products~~

~~In addition to our burner- and combustion-management~~heart of burner-management solution technology. The use of these systems ~~we also supply complementary products that provide~~helps our customers ~~with a complete solution. These products include safety~~increase the likelihood that their employees return home safe each day. Adding greater physical distance between humans and ~~monitoring devices such~~the combustion process, as ~~shut-down and temperature valves, pressure transmitters and switches, burners, pilots,~~well as ensuring gas supplies are properly shutoff when no flame ~~arrestor housings and other combustion related equipment. We continue to invest in~~is present, are two of the ~~development~~critical elements of ~~innovative, complementary products which we anticipate will~~how our burner-management solutions help ~~bolster continued long-term growth.~~protect human life.

Results of Operations

Comparison quarter over quarter

The table below presents certain financial data comparing the most recent quarter to prior quarters:


		For the three months ended																												For the three months ended
		June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019				March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020
Total Revenues	Total Revenues	$	4,359,479		$	7,447,142		$	8,118,463		$	9,905,761		$	10,124,031		Total Revenues	$	5,092,349		$	5,651,883		$	4,000,106		$	4,359,479		$	7,447,142
Gross Profit Percentage	Gross Profit Percentage	47.9		%	42.5		%	42.0		%	52.2		%	51.2		%	Gross Profit Percentage	42.7		%	48.7		%	38.0		%	47.9		%	42.5		%
Operating Expenses	Operating Expenses	$	3,164,318		$	3,829,736		$	4,518,825		$	4,027,844		$	4,190,479		Operating Expenses	$	2,978,912		$	2,762,437		$	2,849,921		$	3,164,318		$	3,829,736
Net Income (Loss)	Net Income (Loss)	$	(808,503)		$	(365,264)		$	(1,554,378)		$	921,748		$	985,504		Net Income (Loss)	$	(601,500)		$	55,918		$	(1,057,748)		$	(808,504)		$	(365,264)
Operating Cash Flow	Operating Cash Flow	$	575,941		$	271,078		$	311,093		$	2,094,454		$	2,699,154		Operating Cash Flow	$	1,820,665		$	141,723		$	(724,342)		$	575,941		$	271,078

Revenues for the quarter ended ~~June 30, 2020~~March 31, 2021 decreased by ~~57%~~32% or ~~$5,764,552~~$2,354,793 compared to the quarter ended ~~June 30, 2019,~~March 31, 2020, which was mostly driven by macro industry changes and the ongoing effects of the COVID-19 pandemic over ~~that same period.~~the past year. The average oil price during the three months ended ~~June 30, 2020~~March 31, 2021 was ~~only $27.96~~$58.09 per barrel compared to ~~$59.88~~$45.34 per barrel for the same period of last year, representing ~~a decrease~~an increase of ~~53.3%~~28.1%. ~~The second~~However, the first quarter of ~~2020~~2021 weekly average rig count for North America was ~~401~~522 compared to ~~1,046~~958 in the same period of last year, which represents a decrease of ~~62%~~46%. ~~The~~Although oil prices have recovered somewhat from the historic fall in ~~oil prices~~2020 which ~~accelerated toward the end of March 2020, continued into the second quarter of 2020 due to~~was caused by a flood of supply from Russia and Saudi Arabia and a dramatic drop in global demand due to the COVID-19 ~~pandemic. On April 20, 2020, short-term futures contracts for oil reflected negative oil prices for~~pandemic, the operating environment in the first ~~time in history. Although oil prices are expected~~quarter of 2021 continued to ~~recover in~~be characterized by uncertainty surrounding economic recovery from the ~~months ahead due~~COVID-19 pandemic and geopolitical factors. This uncertainty continued to ~~changes~~create strain in oil supply and demand ~~dynamics as the economy recovers from the COVID-19 pandemic, it is uncertain when oil prices will return to levels consistent with the second quarter of 2019.~~dynamics. As a result of these extraordinary macro pressures and uncertainties, exploration and production companies have ~~pulled back even further on capital expenditure budgets or cancelled planned spending all together.~~remained cautious and are not currently investing in new production like they were prior to the pandemic. Until our customers return to more normal capital expenditure levels, our business is likely to continue to be adversely affected.

Our gross profit margin for the first quarter of 2021 was ~~down~~up slightly from the same quarter of last year ~~and is~~but was below our normally expected ~~range for a completed quarter.~~range. The gross margin percentage normally fluctuates each quarter due to changes in product mix and product related reserves, which ~~have~~ contributed to the change in gross profit margin for the ~~current period. However~~first quarter of 2021. In addition, the significant decrease in revenue ~~has~~for the first quarter of 2021 compared to the same quarter last year also caused the fixed cost portion of cost of goods and services to push the product margin lower than historic levels. ~~However,~~Although we took actions ~~taking~~ during ~~the second quarter~~2020 to reduce costs and adjust the cost structure of the ~~company have helped~~Company to ~~raise~~reduce the fixed cost burden on gross margin, ~~percentage from the lows of the previous two quarters. In the current economic environment, we~~our fixed costs will continue to ~~evaluate the Company's cost structure in an effort to improve~~impact our gross profit ~~margins in future periods.~~margin until revenues recover.

Operating expenses decreased ~~$1,026,161~~$850,824 from the same quarter of last year, which reflected a focus on cost control measures as we navigate the uncertainty caused by the COVID-19 pandemic and the resulting oil market supply and demand imbalance. We ~~have been focused on reducing~~expect that our operating expenses, particularly labor ~~costs,~~and travel costs, will increase to levels more consistent with pre-pandemic amounts in 2021 as economies recover from the pandemic and ~~other non-essential expenditures in this current environment.~~demand for oil and gas increases.

Due to the significantly lower revenues discussed above, we reported a net loss of ~~$808,503~~$601,500 for the quarter ended ~~June 30, 2020~~March 31, 2021 compared to net ~~income~~loss of ~~$985,504~~$365,264 for the same quarter in ~~2019.~~2020.

Operating cash flows ~~decreased~~increased significantly during the ~~second~~first quarter of 2021 compared to the first quarter of 2020, ~~compared~~due primarily to a focus on customer collection efforts and the second quarter of 2019, due to the 57% drop in revenue, but still remained positive for the quarter. This decrease is primarily due to extraordinary industry and global economic crisis conditions that have persisted throughout the second quarter of 2020.

~~Comparison~~sale of the ~~six months ended June 30, 2020 and 2019~~

~~The table below presents certain financial data comparing the six months ended June 30, 2020 to the same period ended June 30, 2019:~~

For the Six Months Ended June 30,
2020 2019 $ Change % Change
Total Revenues $ 11,806,621 $ 20,957,089 $ (9,150,468) (43.7) %
Gross Profit Percentage 44.5 % 52.3 % (7.8) %
Operating Expenses $ 6,994,054 $ 7,817,290 $ (823,236) (10.5) %
Net Income (Loss) $ (1,173,767) $ 2,654,122 $ (3,827,889) (144.2) %
Operating Cash Flow $ 847,019 $ 5,300,805 $ (4,453,786) (84.0) %

~~Revenues~~remaining bays from our old office building in Canada, which took place during the six-month period ended June 30, 2020 compared to the same period last year declined 43.7% which is largely due to a 36.3% drop in the average oil price over the same time frame resulting from the global coronavirus pandemic and the corresponding reduction in spending by our customers. Operating expenses declined 10.5% year over-year due to our focus on cost control measures in 2020. As a result of revenue and operating cost changes, we reported a net loss of $1,173,767 for the six months ended June 30, 2020, compared to net income of $2,654,122 for the same period in 2019. Our gross profit percentage declined by 7.8% during the six months ended June 30, 2020, compared to the same period in 2019, primarily due to changes in product mix, direct labor cost increases, inventory adjustments and the fixed cost structure within cost of goods and services.

~~Liquidity and Capital Resources~~period.

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~~Working capital at June 30, 2020 was $23,539,822, compared~~The global COVID-19 pandemic continued to ~~$22,914,845 at December 31, 2019.~~impact our business during the first quarter of 2021 and will likely continue to impact our business in future quarters. However, we remain optimistic that our results of operations will improve as vaccine distribution increases, which we anticipate will result in improved economic conditions and improved demand for oil and gas.

~~We acquired land for a new office building~~Liquidity and ~~research and development facility in Canada in June 2018 and completed construction of the facility in~~Capital Resources

Working capital at March ~~2020. Excluding the cost of the land, the total cost of the building~~31, 2021 was ~~approximately $4,500,000 USD. As of June 30, 2020, only minimal costs remain related~~$22,677,200, compared to ~~final landscaping and an ancillary storage shed.~~$23,420,475 at December 31, 2020.

Our liquidity position is impacted by operating, investing and financing activities. During the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, we generated ~~$847,019~~$1,820,665 of positive cash flow from operating activities, primarily due to cash received from customer sales and from the sale of remaining bays from our old office building in Canada, partially offset by ~~cash outflows for~~the impact of changes in income tax, accounts payable and accrued ~~liabilities.~~liabilities accounts. Operating activity trends consist of cash inflows and outflows related to changes in operating assets and liabilities. During the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, we ~~generated $62,994~~used $468,871 of ~~positive~~ cash ~~flow from~~in investing activities, primarily due to new investment ~~sales, partially offset by costs incurred for construction of the new office building in Canada.~~purchases. Investing activity trends consist of changes in the mix of our investment portfolio, purchases or sales of fixed assets, and acquisition activities. During the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, we used ~~$181,126~~$37,856 of cash in financing activities, primarily related to equity awards issued to management. Financing activity trends consist of transactions related to equity awards and purchases or sales of treasury stock. The global COVID-19 pandemic has impacted our business in 2020 and as a result, we have focused on cost control measures as we navigate the uncertainty caused by the pandemic and the resulting oil market supply and demand imbalance. We have been focused on decreasing operating, investing and financing costs. We have reduced labor costs, travel and other non-essential expenditures in this current environment. We have also completed construction of the new office building in Canada, and as a result we expect fewer costs related to investing activities in the near future. Thus far in 2020, we havedid not ~~purchased~~purchase any treasury stock ~~in order to reduce costs related to financing activities.~~during the first quarter of 2021. The extent to which the global COVID-19 pandemic will continue to affect our liquidity position will depend on future developments, which are highly uncertain and cannot be predicted with confidence. As of ~~June 30, 2020,~~March 31, 2021, we ~~hold $18,105,165~~held $19,358,668 of cash and investments that form our core excess liquidity which could be utilized, if required, due to the issues described above. See also Item 1A. Risk Factors for further discussion on the impact of COVID-19 on our business.

Off-Balance Sheet Arrangements

We have not engaged in any off-balance sheet arrangements, nor do we plan to engage in any in the foreseeable future.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

This section is not required.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of the Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Exchange Act, as of the end of the period covered by this ~~Report.~~quarterly report on Form 10-Q. Our disclosure controls and procedures are designed to ensure that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based on the evaluation performed, our management, including the Principal Executive Officer and Principal Financial Officer, concluded that the disclosure controls and procedures were effective as of ~~June 30, 2020.~~March 31, 2021.

Changes in Internal Control over Financial Reporting

Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated the changes in our internal control over financial reporting that occurred during the quarterly period covered by this ~~Quarterly Report~~quarterly report on Form 10-Q. Based on that evaluation, management concluded that no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the quarter ended ~~June 30, 2020~~March 31, 2021 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

To the best of our knowledge, there are no legal proceedings pending or threatened against us that may have a material impact on us and there are no actions pending or threatened against any of our directors or officers that are adverse to us.

Item 1A. Risk Factors

In addition to the other information set forth in this quarterly report on Form 10-Q, you should carefully consider the risks discussed in our ~~Annual Report~~annual report on Form 10-K for the year ended December 31, ~~2019,~~2020, which risks could materially affect our business, financial condition or future results. These risks are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also have a material, adverse effect on our business, financial condition or future results. ~~Except as described below, there have been no material changes to the risk factors disclosed in our most recent Form 10-K.~~

The global COVID-19 pandemic has and will likely continue to adversely affect us, and it could have a material adverse effect on our business, financial condition, liquidity, results of operations and prospects.

Since the beginning of 2020, the COVID-19 pandemic has spread across the globe and disrupted economies around the world, including the oil and gas industry in which we operate. The rapid spread of the virus has led to the implementation of various responses, including federal, state and local government-imposed quarantines, shelter-in-place mandates, sweeping restrictions on travel, and other public health and safety measures, nearly all of which have materially reduced global demand for crude oil. The extent to which the global COVID-19 pandemic will continue to affect our business, financial condition, liquidity, results of operations, prospects, and the demand for our products will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration or any recurrence of the outbreak and responsive measures, additional or modified government actions, new information which may emerge concerning the severity of the global COVID-19 pandemic and the effectiveness of actions taken to contain the coronavirus or treat its impact now or in the future, among others.

~~Some impacts of the global COVID-19 pandemic that could have an adverse effect on our business, financial condition, liquidity and results of operations, include:~~

•~~significantly reduced prices for oil production, resulting from a world-wide decrease in demand and a resulting oversupply of existing production;~~

•further decreases in the demand for oil production, resulting from significantly decreased levels of global, regional and local travel as a result of federal, state and local government-imposed quarantines, including shelter-in-place mandates, enacted to slow the spread of the virus;

•~~increased likelihood that our customers will reduce capital expenditures due to reduced oil prices, decreases in demand for oil production and other factors that could curtail production;~~

•~~increased potential that our customers may seek to invoke force majeure provisions as a result of significantly adverse market conditions to avoid the performance of contractual obligations;~~

•increased costs and staffing requirements related to facility modifications, social distancing measures or other best practices implemented in connection with federal, state or local government, and voluntarily imposed quarantines or other regulations or guidelines concerning physical gatherings; and

•~~increased legal and operational costs related to compliance with significant changes in federal, state, and local laws and regulations.~~

To the extent the global COVID-19 pandemic continues to adversely affect the global economy, and/or adversely affects our business, financial condition, liquidity, results of operations and prospects it may also have the effect of increasing the likelihood and/or magnitude of other risks described in Risk Factors in Part I, Item 1A of our 2019 Form 10-K and in this Form 10-Q.

The ability or willingness of the Organization of the Petroleum Exporting Countries (“OPEC”), Russia and other oil exporting nations to set, maintain and enforce production levels has a significant impact on oil and gas commodity prices, which could have a material adverse effect on our business, financial condition, liquidity and results of operations.

OPEC is an intergovernmental organization that seeks to manage the price and supply of oil on the global energy market. Actions taken by OPEC member countries, including those taken along with other oil exporting nations, have a significant impact on global oil supply and pricing. In March 2020, members of OPEC and ten other oil producing countries (“OPEC+”) met to discuss how to respond to the potential market effects of the global COVID-19 pandemic. The meeting ended on March 6, 2020, as Saudi Arabia failed to convince Russia to reduce production to offset falling demand due to slowing economic activity resulting from the global COVID-19 pandemic. In response to Russia’s refusal to accept the production cut, Saudi Arabia announced an immediate reduction in its export prices and Russia announced that all previously agreed oil production cuts would expire on April 1, 2020. These actions flooded the global market with an oversupply of crude oil, and led to an immediate and steep decrease in global oil prices. In early April 2020, in response to significantly depressed global oil prices, 23 countries, led by Saudi Arabia, Russia and the United States, committed to implement reductions in world oil production. In June 2020, the first phase of production cuts that were put in place in April, were extended through July 31, 2020.

There can be no assurance that the production cuts will stabilize oil prices or that they will be maintained, and recent indications suggest that oil prices will be largely unaffected. The global COVID-19 pandemic has destroyed global oil demand to an unprecedented degree, and despite the concerted action to reduce global production, the relative magnitude of the production cuts as compared to the degree of demand destruction may be wholly insufficient to mitigate or even impact the over-supplied oil market. Further, there is a lack of transparency regarding production volumes among oil-producing nations, and there are limited enforcement mechanisms for real or perceived violations of the production cuts. In connection with past production cuts, OPEC has at times failed to enforce its own production limits on violating members, with no official mechanism for punishing member countries that do not comply. There can be no assurance that OPEC and non-OPEC member countries will abide by the quotas or that OPEC will enforce the quotas. Additionally, certain other countries with free-market economies that agreed to reduce production, are unable to impose mandatory production cuts on non-OPEC oil producers operating in their countries, but instead expect to realize a decrease in production through market forces, as companies tend to cut production voluntarily when prices drop. For such countries, there can be no assurance that oil producers will react in the desired manner or that the market will behave as expected. Uncertainty regarding the effectiveness and enforcement of the production cuts is likely to lead to increased volatility in the supply and demand of oil and the price of oil, all of which could have a material adverse effect on our business, financial condition, liquidity and results of operations.

~~We may not be able to maintain compliance with The Nasdaq Capital Market's continued listing requirements.~~

Our common stock is listed on the Nasdaq Capital Market. There are a number of continued listing requirements that we must satisfy in order to maintain our listing on the Nasdaq Capital Market. If we fail to maintain compliance with all applicable continued listing requirements for the Nasdaq Capital Market and Nasdaq determines to delist our common stock, the delisting could adversely affect the market liquidity of our common stock, our ability to obtain financing to repay any future debt we could incur and fund our operations.

On April 24, 2020, we received a deficiency letter from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market notifying us that, for the last 30 consecutive business days, the bid price for our common stock had closed below the minimum $1.00 per share requirement for continued inclusion on the NasdaqCapital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”). In accordance with Nasdaq Listing Rule 5810(c)(3)(A) (the “Compliance Period Rule”), we have an initial period of 180 calendar days to regain compliance. However, given the extraordinary market conditions in the financial markets, Nasdaq tolled the compliance period for the bid price requirement through June 30, 2020. The compliance period reseumed on July 1, 2020 and we will have 180 calendar days, or until December 28, 2020 (the “Compliance Date”), to regain compliance with the Minimum Bid Price Requirement. If, at any time before the Compliance Date, the bid price for our common stock closes at $1.00 or more for a minimum of 10 consecutive business days as required under the Compliance Period Rule, the Staff will provide us with written notification of compliance with the Bid Price Rule, unless the Staff exercises its discretion to extend this 10 day period pursuant to Nasdaq Listing Rule 5810(c)(3)(G).

The Notice also provides that, if we do not regain compliance with the Minimum Bid Price Requirement by December 28, 2020, we may be eligible for additional time to regain compliance. To qualify for additional time, we will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the Minimum Bid Price Requirement, and provide written notice of our intention to

cure the minimum bid price deficiency during the second compliance period, by effecting a reverse split, if necessary. If we meet these requirements, we will be granted an additional compliance period of 180 calendar days to regain compliance with the Minimum Bid Price Requirement. If the Nasdaq staff determines that we will not be able to cure the deficiency, or if we are otherwise not eligible for such additional compliance period, Nasdaq will provide notice that our Common Stock will be subject to delisting.

As of the date of this report, we have not made any determination with respect to any action or response regarding our noncompliance with the Minimum Bid Price Requirement. We intend to consider available options to regain compliance with the Minimum Bid Price Requirement and continued listing on the Nasdaq Capital Market. If our common stock were to be delisted from the Nasdaq Capital Market, trading of our common stock most likely would be conducted in the over-the-counter market on an electronic bulletin board established for unlisted securities such as the OTC Bulletin Board. Such trading would likely reduce the market liquidity of our common stock. As a result, an investor would find it more difficult to dispose of, or obtain accurate quotations for the price of, our common stock. If our common stock is delisted from the Nasdaq Capital Market and the trading price remains below $5.00 per share, trading in our common stock might also become subject to the requirements of certain rules promulgated under the Exchange Act, which require additional disclosure by broker-dealers in connection with any trade involving a stock defined as a "penny stock" (generally, any equity security not listed on a national securities exchange that has a market price of less than $5.00 per share, subject to certain exceptions). Many brokerage firms are reluctant to recommend low-priced stocks to their clients. Moreover, various regulations and policies restrict the ability of stockholders to borrow against or "margin" low-priced stocks, and declines in the stock price below certain levels may trigger unexpected margin calls. Additionally, because brokers' commissions on low-priced stocks generally represent a higher percentage of the stock price than commissions on higher priced stocks, the current price of the common stock can result in an individual stockholder paying transaction costs that represent a higher percentage of total share value than would be the case if our share price were higher. This factor may also limit the willingness of institutions to purchase our common stock. Finally, the additional burdens imposed upon broker-dealers by these requirements could discourage broker-dealers from facilitating trades in our common stock, which could severely limit the market liquidity of the stock and the ability of investors to trade our common stock. As a result, the ability of our stockholders to resell their shares of common stock, and the price at which they could sell their shares, could be adversely affected. The delisting of our stock from the Nasdaq Capital Market would also make it more difficult for us to raise additional capital.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

This item is not applicable

Item 3. Defaults Upon Senior Securities

This item is not applicable.

Item 4. Mine Safety Disclosures

This item is not applicable.

Item 5. Other Information

~~This item is not applicable.~~On April 30, 2021, the Board authorized amendments to the Company's employment agreements with Mr. Brenton W. Hatch, the Company's Executive Chairman, Mr. Ryan W. Oviatt the Company's Co-Chief Executive Officer, Co-President, and Chief Financial Officer of the Company, Mr. Cameron M. Tidball, the Company's Co-Chief Executive Officer and Co-President of the Company, Mr. Jay G. Fugal, the Company's VP of Operations and Mr. Patrick D. Fisher, the Company's VP of Product Development. Each of the amendments was recommended by the Compensation Committee. The amendments to the employment agreements are further described below.

The Company and Mr. Hatch entered into a First Amendment to Second Amended and Restated Employment Agreement (“Hatch Agreement Amendment”) as approved by the Company’s Board of Directors (the “Board”) and recommended by its Compensation Committee (the “Committee”). Pursuant to the Hatch Agreement, Mr. Hatch will be paid an annual rate of base salary in periodic installments consistent with the Company’s payroll practices as in effect from time to time. For the period from July 2, 2020 through December 31, 2020 Mr. Hatch was paid a salary based on an annualized base salary of $350,000;however, in connection with the Company’s response to the COVID-19 pandemic, with Mr. Hatch’s consent, from September 1, 2020 until December 31, 2020, Mr. Hatch was paid a salary based on a reduced annualized base salary of $322,000 US. For the period from January 1, 2021 through June 30, 2021, Mr. Hatch will be paid a salary based on an annualized base salary of $400,000. For the period from July 1, 2021 through June 30, 2022, Mr. Hatch will be paid a salary based on an annualized base salary of $400,000, which shall be apportioned as $150,000 for serving as Executive Chairman and $250,000 for advisory services.

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The Company and Mr. Oviatt entered into a First Amendment to Second Amended and Restated Employment Agreement (the “Oviatt Agreement Amendment”). Pursuant to the Oviatt Agreement Amendment, Mr. Oviatt will be paid an annual rate of base salary in periodic installments consistent with the Company’s payroll practices as in effect from time to time. For the period from July 2, 2020 to August 31, 2020, Mr. Oviatt was paid a salary based on an annualized base salary of $275,000 US. In connection with the Company’s response to the COVID-19 pandemic, and with Mr. Oviatt’s consent, effective September 1, 2020, Mr. Oviatt was paid a salary based on a reduced annualized base salary of $253,000 US and his base salary shall remain at such amount until July 1, 2021, at which time Mr. Oviatt’s base salary shall increase to $300,000 US, provided the Compensation Committee may cause such increase to occur sooner in its discretion. Generally, Mr. Oviatt’s base salary shall be reviewed at least annually by the Compensation Committee. The Compensation Committee may, but shall not be required to, increase Mr. Oviatt’s base salary at any time during the employment term. Mr. Oviatt’s base salary shall be adjusted to $330,000 US on January 1, 2022. Additionally, in connection with the Company's response to the COVID-19 Pandemic, and with Mr. Oviatt’s consent, the Compensation Committee did not implement any annual incentive plan or similar bonus program or any long-term incentive plan for the Company's 2020 fiscal year and no bonus was awarded to Mr. Oviatt for the 2020 fiscal year.

The Company and Mr. Tidball entered into a First Amendment to Amended and Restated Employment Agreement ("Tidball Agreement Amendment"). Pursuant to the Tidball Agreement Amendment, Mr. Tidball will be paid an annual rate of base salary in periodic installments consistent with the Company’s payroll practices as in effect from time to time. For the period from July 2, 2020 to August 31, 2020, Mr. Tidball was paid a salary based on an annualized base salary of $275,000 US. In connection with the Company’s response to the COVID-19 pandemic, and with Mr. Tidball’s consent, effective September 1, 2020, Mr. Tidball was paid a salary based on a reduced annualized base salary of $253,000 US and his base salary shall remain at such amount until July 1, 2021, at which time Mr. Tidball’s base salary shall increase to $300,000 US, provided the Compensation Committee may cause such increase to occur sooner in its discretion. Generally, Mr. Tidball’s base salary shall be reviewed at least annually by the Compensation Committee. The Compensation Committee may, but shall not be required to, increase Mr. Tidball’s base salary at any time during the employment term. Mr. Tidball’s base salary shall be adjusted to $330,000 US on January 1, 2022. Additionally, in connection with the Company's response to the COVID-19 Pandemic, and with Mr. Tidball’s consent, the Compensation Committee did not implement any annual incentive plan or similar bonus program or any long-term incentive plan for the Company's 2020 fiscal year and no bonus was awarded to Mr. Tidball for the 2020 fiscal year.

The Company and Mr. Fugal entered into a First Amendment to Employment Agreement (“Fugal Agreement Amendment”). Pursuant to the Fugal Agreement Amendment, Mr. Fugal will be paid an annual rate of base salary in periodic installments consistent with the Company’s payroll practices as in effect from time to time. In connection with the Company's response to the COVID-19 pandemic, and with Mr. Fugal’s consent, effective September 1, 2020 Mr. Fugal was paid a salary based on a reduced annualized base salary of $151,616 US and his base salary shall remain at such amount until July 1, 2021 at which time Mr. Fugal’s base salary shall increase to $164,800 US, provided the Compensation Committee may cause such increase to occur sooner in its discretion. Generally, the Compensation Committee shall review Mr. Fugal’s base salary annually and may, but shall not be required to, increase Mr. Fugal’s base salary at any time during the employment term. Additionally, in connection with the Company's response to the COVID-19 Pandemic, and with Mr. Fugal’s consent, the Compensation Committee did not implement any annual incentive plan or similar bonus program or any long-term incentive plan for the Company's 2020 fiscal year and no bonus was awarded to Mr. Fugal for the 2020 fiscal year.

The Company and Mr. Fisher entered into a First Amendment to Employment Agreement (“Fisher Agreement Amendment”). Pursuant to the Fisher Agreement Amendment, Mr. Fisher will be paid an annual rate of base salary in periodic installments consistent with the Company’s payroll practices as in effect from time to time. In connection with the Company's response to the COVID-19 pandemic, and with Mr. Fisher’s consent, effective September 1, 2020 Mr. Fisher was paid a salary based on a reduced annualized base salary of $142,600 CAD and his base salary shall remain at such amount until July 1, 2021 at which time Mr. Fisher’s base salary shall increase to $155,000 CAD, provided the Compensation Committee may cause such increase to occur sooner in its discretion. Generally, the Compensation Committee shall review Mr. Fisher’s base salary annually and may, but shall not be required to, increase Mr. Fisher’s base salary at any time during the employment term. Additionally, in connection with the Company's response to the COVID-19 Pandemic, and with Mr. Fisher’s consent, the Compensation Committee did not implement any annual incentive plan or similar bonus program or any long-term incentive plan for the Company's 2020 fiscal year and no bonus was awarded to Mr. Fisher for the 2020 fiscal year.

Item 6. Exhibits

Exhibits. The following exhibits are included as part of this report:


Exhibit 10.1*			Restricted Stock Award Agreement between Profire Energy and Ryan Oviatt dated February 18, 2021

Exhibit 10.2*			Restricted Stock Award Agreement between Profire Energy and Cameron Tidball dated February 18, 2021

Exhibit 10.3*			First Amendment to Second Amended and Restated Employment Agreement between Profire Energy and Brenton W. Hatch dated April 30, 2021

Exhibit 10.4*			First Amendment to Second Amended and Restated Employment Agreement between Profire Energy and Ryan Oviatt dated April 30, 2021

Exhibit 10.5*			First Amendment to Amended and Restated Employment Agreement between Profire Energy and Cameron Tidball dated April 30, 2021

Exhibit 10.6*			First Amendment to Employment Agreement between Profire Energy and Jay G. Fugal dated April 30, 2021

Exhibit 10.7*			First Amendment to Employment Agreement between Profire Energy and Patrick D. Fisher dated April 30, 2021

Exhibit 31.1*			Certification of Co-Principal Executive Officer Pursuant to Rule 13a-14(a) Ryan W. Oviatt

Exhibit ~~31.~~2 31.2			Certification of Co-Principal Executive Officer Pursuant to Rule 13a-14(a) Cameron M. Tidball

Exhibit ~~31.~~3 31.3			Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)

Exhibit 32.1*			Certification of Principal Executive Officers pursuant to 18 U.S.C. Section 1350

Exhibit 32.2*			Certification of Ryan W. Oviatt, Principal 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

* Filed herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


			PROFIRE ENERGY, INC.

Date:	~~August~~May 5, ~~2020~~2021	By:	/s/ Ryan W. Oviatt
			Ryan W. Oviatt
			Co-Chief Executive Officer and Chief Financial Officer


Date:	~~August~~May 5, ~~2020~~2021	By:	/s/ Cameron M. Tidball
			Cameron M. Tidball
			Co-Chief Executive Officer

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