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 endedJune 30, 20202021
☐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)

Nevada20-0019425
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
321 South 1250 West, Suite 1
Lindon, Utah84042
(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 classTrading Symbol(s)Name of each exchange on which registered
Common, $0.001 Par ValuePFIENASDAQ



As of August 3, 2020,2, 2021, the registrant had 51,325,49351,651,386 shares of common stock issued and 47,913,11548,239,008 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
43
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)Loss (Unaudited)
54
Condensed Consolidated Statements of Stockholders' Equity (Unaudited)
65
Condensed Consolidated Statements of Cash Flows (Unaudited)
86
Notes to the Condensed Consolidated Financial Statements (Unaudited)
97
Item 2.  Management's Discussion and Analysis of Financial Condition And Results of Operations
1915
Item 3.  Quantitative and Qualitative Disclosure about Market Risk
2318
Item 4.  Controls and Procedures
2319
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
2420
Item 1A.  Risk Factors
2420
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
2620
Item 3. Defaults Upon Senior Securities
2620
Item 4. Mine Safety Disclosures
2620
Item 5. Other Information
2620
Item 6.  Exhibits
2721
Signatures
2823



PART I. FINANCIAL INFORMATION
Item 1 Financial Information
PROFIRE ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
As of
June 30, 2021December 31, 2020
ASSETS(Unaudited)
CURRENT ASSETS
Cash and cash equivalents$9,921,375 $9,148,312 
Short-term investments2,087,332 2,388,601 
Accounts receivable, net3,787,084 3,719,508 
Inventories, net (note 3)7,911,996 8,414,772 
Prepaid expenses and other current assets (note 4)773,146 1,678,428 
Income tax receivable785,590 486,154 
Total Current Assets25,266,523 25,835,775 
LONG-TERM ASSETS
Long-term investments7,132,675 6,064,294 
Financing right-of-use asset28,758 50,094 
Property and equipment, net11,721,692 12,021,811 
Intangible assets, net1,660,504 1,771,870 
Goodwill2,579,381 2,579,381 
Total Long-Term Assets23,123,010 22,487,450 
TOTAL ASSETS$48,389,533 $48,323,225 
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable$1,257,437 $1,178,979 
Accrued liabilities (note 5)1,486,578 1,196,870 
Current financing lease liability (note 6)30,238 39,451 
Total Current Liabilities2,774,253 2,415,300 
LONG-TERM LIABILITIES
Net deferred income tax liability601,616 522,870 
Long-term financing lease liability (note 6)0 12,669 
TOTAL LIABILITIES3,375,869 2,950,839 
STOCKHOLDERS' EQUITY (note 7)
Preferred stock: $0.001 par value, 10,000,000 shares authorized: 0 shares issued or outstanding0 0 
Common stock: $0.001 par value, 100,000,000 shares authorized: 51,651,386 issued and 48,239,008 outstanding at June 30, 2021, and 51,384,961 issued and 47,972,583 outstanding at December 31, 202051,651 51,385 
Treasury stock, at cost(5,353,019)(5,353,019)
Additional paid-in capital30,582,504 30,293,472 
Accumulated other comprehensive loss(1,798,278)(2,148,924)
Retained earnings21,530,806 22,529,472 
TOTAL STOCKHOLDERS' EQUITY45,013,664 45,372,386 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$48,389,533 $48,323,225 

PROFIRE ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
As of
June 30, 2020December 31, 2019
ASSETS(Unaudited)
CURRENT ASSETS
Cash and cash equivalents$8,022,237  $7,358,856  
Short-term investments2,290,667  1,222,053  
Short-term investments - other1,600,000  2,600,000  
Accounts receivable, net2,439,296  5,597,701  
Inventories, net (note 3)8,996,223  9,571,807  
Prepaid expenses and other current assets (note 4)2,144,150  1,672,422  
Income tax receivable—  77,385  
Total Current Assets25,492,573  28,100,224  
LONG-TERM ASSETS
Long-term investments6,192,261  7,399,963  
Financing right-of-use asset72,914  107,991  
Property and equipment, net11,571,961  12,071,019  
Intangible assets, net1,883,236  1,989,782  
Goodwill2,579,381  2,579,381  
Total Long-Term Assets22,299,753  24,148,136  
TOTAL ASSETS$47,792,326  $52,248,360  
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable$685,617  $2,633,520  
Accrued liabilities (note 5)1,122,242  2,089,391  
Current financing lease liability (note 6)45,411  59,376  
Income taxes payable99,481  403,092  
Total Current Liabilities1,952,751  5,185,379  
LONG-TERM LIABILITIES
Net deferred income tax liability543,441  439,275  
Long-term financing lease liability (note 6)30,238  52,120  
TOTAL LIABILITIES2,526,430  5,676,774  
STOCKHOLDERS' EQUITY (note 7)
Preferred stock: $0.001 par value, 10,000,000 shares authorized: 0 shares issued or outstanding—  —  
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, 201951,325  50,824  
Treasury stock, at cost(5,353,019) (5,353,019) 
Additional paid-in capital30,106,383  29,584,172  
Accumulated other comprehensive loss(3,070,095) (2,415,460) 
Retained earnings23,531,302  24,705,069  
TOTAL STOCKHOLDERS' EQUITY45,265,896  46,571,586  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$47,792,326  $52,248,360  
The accompanying notes are an integral part of these condensed consolidated financial statements.
3

PROFIRE ENERGY, INC. AND SUBSIDIARIES     
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)     
For the Three Months Ended June 30,For the Six Months Ended June 30,
2021202020212020
REVENUES (note 8)
Sales of goods, net$5,374,539 $3,999,139 $10,032,074 $10,860,097 
Sales of services, net659,744 360,340 1,094,558 946,524 
Total Revenues6,034,283 4,359,479 11,126,632 11,806,621 
COST OF SALES
Cost of goods sold-product2,910,879 1,944,389 5,448,513 5,778,071 
Cost of goods sold-services465,672 328,225 845,700 777,009 
Total Cost of Goods Sold3,376,551 2,272,614 6,294,213 6,555,080 
GROSS PROFIT2,657,732 2,086,865 4,832,419 5,251,541 
OPERATING EXPENSES
General and administrative expenses2,783,872 2,753,773 5,338,408 6,026,311 
Research and development301,445 229,548 558,336 639,274 
Depreciation and amortization expense166,852 180,997 334,337 328,469 
Total Operating Expenses3,252,169 3,164,318 6,231,081 6,994,054 
LOSS FROM OPERATIONS(594,437)(1,077,453)(1,398,662)(1,742,513)
OTHER INCOME (EXPENSE)
Gain on sale of fixed assets38,492 157,455 112,393 157,455 
Other income (expense)4,836 (1,665)4,739 (1,318)
Interest income28,569 77,532 49,631 151,925 
Total Other Income71,897 233,322 166,763 308,062 
LOSS BEFORE INCOME TAXES(522,540)(844,131)(1,231,899)(1,434,451)
INCOME TAX BENEFIT125,374 35,628 233,233 260,684 
NET LOSS$(397,166)$(808,503)$(998,666)$(1,173,767)
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation gain (loss)$163,485 $375,267 $303,091 $(570,156)
Unrealized gains (losses) on investments55,529 72,875 47,555 (84,479)
Total Other Comprehensive Income (Loss)219,014 448,142 350,646 (654,635)
COMPREHENSIVE LOSS$(178,152)$(360,361)$(648,020)$(1,828,402)
BASIC LOSS PER SHARE (note 9)$(0.01)$(0.02)$(0.02)$(0.02)
FULLY DILUTED LOSS PER SHARE (note 9)$(0.01)$(0.02)$(0.02)$(0.02)
BASIC WEIGHTED AVG NUMBER OF SHARES OUTSTANDING48,054,136 47,723,208 48,022,295 47,607,825 
FULLY DILUTED WEIGHTED AVG NUMBER OF SHARES OUTSTANDING48,054,136 47,723,208 48,022,295 47,607,825 

The accompanying notes are an integral part of these condensed consolidated financial statements.
4

PROFIRE ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders' Equity
(Unaudited)
Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Treasury StockRetained EarningsTotal Stockholders' Equity
SharesAmount
Balance, December 31, 202047,972,583 $51,385 $30,293,472 $(2,148,924)$(5,353,019)$22,529,472 $45,372,386 
Stock based compensation— — 125,043— — — 125,043
Stock issued in settlement of RSUs49,113 49 (49)— — — 0 
Tax withholdings paid related to stock based compensation— — (26,629)— — — (26,629)
Foreign currency translation— — — 139,606 — — 139,606 
Unrealized losses on investments— — — (7,974)— — (7,974)
Net loss— — — — — (601,500)(601,500)
Balance, March 31, 202148,021,696 $51,434 $30,391,837 $(2,017,292)$(5,353,019)$21,927,972 $45,000,932 
Stock based compensation— $— $207,084 $— $— $— 207,084 
Stock issued in settlement of RSUs217,312 217 (217)— — — 0 
Tax withholdings paid related to stock based compensation— — (16,200)— — — (16,200)
Foreign currency translation— — — 163,485 — — 163,485 
Unrealized gains on investments— — — 55,529 — — 55,529 
Net loss— — — — — (397,166)(397,166)
Balance, June 30, 202148,239,008 $51,651 $30,582,504 $(1,798,278)$(5,353,019)$21,530,806 $45,013,664 

PROFIRE ENERGY, INC. AND SUBSIDIARIES     
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)     
(Unaudited)     
For the Three Months Ended June 30,For the Six Months Ended June 30,
2020201920202019
REVENUES (note 9)
Sales of goods, net$3,999,139  $9,559,255  $10,860,097  $19,757,890  
Sales of services, net360,340  564,776  946,524  1,199,199  
Total Revenues4,359,479  10,124,031  11,806,621  20,957,089  
COST OF SALES
Cost of goods sold-product1,944,389  4,568,666  5,778,071  9,139,654  
Cost of goods sold-services328,225  368,327  777,009  865,525  
Total Cost of Goods Sold2,272,614  4,936,993  6,555,080  10,005,179  
GROSS PROFIT2,086,865  5,187,038  5,251,541  10,951,910  
OPERATING EXPENSES
General and administrative expenses2,753,773  3,566,698  6,026,311  6,728,228  
Research and development229,548  512,871  639,274  861,929  
Depreciation and amortization expense180,997  110,910  328,469  227,133  
Total Operating Expenses3,164,318  4,190,479  6,994,054  7,817,290  
INCOME (LOSS) FROM OPERATIONS(1,077,453) 996,559  (1,742,513) 3,134,620  
OTHER INCOME (EXPENSE)
Gain on sale of fixed assets157,455  21,410  157,455  38,340  
Other expense(1,665) (413) (1,318) (964) 
Interest income77,532  85,887  151,925  177,590  
Total Other Income233,322  106,884  308,062  214,966  
INCOME (LOSS) BEFORE INCOME TAXES(844,131) 1,103,443  (1,434,451) 3,349,586  
INCOME TAX BENEFIT (EXPENSE)35,628  (117,939) 260,684  (695,464) 
NET INCOME (LOSS)$(808,503) $985,504  $(1,173,767) $2,654,122  
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation gain (loss)$375,267  $102,435  $(570,156) $251,850  
Unrealized gains (losses) on investments72,875  49,495  (84,479) 118,247  
Total Other Comprehensive Income (Loss)448,142  151,930  (654,635) 370,097  
COMPREHENSIVE INCOME (LOSS)$(360,361) $1,137,434  $(1,828,402) $3,024,219  
BASIC EARNINGS (LOSS) PER SHARE (note 10)$(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 WEIGHTED AVG NUMBER OF SHARES OUTSTANDING47,723,208  47,348,137  47,607,825  47,392,534  
FULLY DILUTED WEIGHTED AVG NUMBER OF SHARES OUTSTANDING47,723,208  48,124,208  47,607,825  48,192,849  
Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Treasury StockRetained EarningsTotal Stockholders' Equity
SharesAmount
Balance, December 31, 201947,411,977 $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 options2,000 2 2,018 — — — 2,020 
Stock issued in settlement of RSUs and accrued bonuses271,684 272 419,101 — — — 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, 202047,685,661 $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 RSUs227,454 227 (227)— — — 0 
Foreign currency translation— — — 375,267 — — 375,267 
Unrealized gains on investments— — — 72,875 — — 72,875 
Net loss— — — — — (808,503)(808,503)
Balance, June 30, 202047,913,115 $51,325 $30,106,383 $(3,070,095)$(5,353,019)$23,531,302 $45,265,896 

The accompanying notes are an integral part of these condensed consolidated financial statements.
5


PROFIRE ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders' Equity
(Unaudited)
Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Treasury StockRetained EarningsTotal Stockholders' Equity
SharesAmount
Balance, December 31, 201947,411,977  $50,824  $29,584,172  $(2,415,460) $(5,353,019) $24,705,069  $46,571,586  
Stock based compensation66,34866,348
Stock issued in exercise of stock options2,000  2  2,018  2,020  
Stock issued in settlement of RSUs and accrued bonuses271,684  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, 202047,685,661  $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 RSUs227,454  $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, 202047,913,115  $51,325  $30,106,383  $(3,070,095) $(5,353,019) $23,531,302  $45,265,896  


PROFIRE ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the Six Months Ended June 30,
20212020
OPERATING ACTIVITIES
Net loss$(998,666)$(1,173,767)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization expense683,597 566,791 
Gain on sale of fixed assets(112,393)(153,973)
Bad debt expense(32,463)236,005 
Stock awards issued for services332,127 250,198 
Changes in operating assets and liabilities:
Accounts receivable(7,313)3,248,693 
Income taxes receivable/payable(299,436)(1,761)
Inventories577,341 445,634 
Prepaid expenses and other current assets988,464 168,718 
Deferred tax asset/liability78,746 104,166 
Accounts payable and accrued liabilities345,818 (2,843,685)
Net Cash Provided by Operating Activities1,555,822 847,019 
INVESTING ACTIVITIES
Proceeds from sale of property and equipment69,484 0 
Sale (purchase) of investments(719,817)1,057,404 
Purchase of property and equipment(93,049)(994,410)
Net Cash Provided by (Used in) Investing Activities(743,382)62,994 
FINANCING ACTIVITIES
Value of equity awards surrendered by employees for tax liability(42,829)(148,879)
Cash received in exercise of stock options0 2,020 
Principal paid towards lease liability(21,749)(34,267)
Net Cash Used in Financing Activities(64,578)(181,126)
Effect of exchange rate changes on cash25,201 (65,506)
NET INCREASE IN CASH773,063 663,381 
CASH AT BEGINNING OF PERIOD9,148,312 7,358,856 
CASH AT END OF PERIOD$9,921,375 $8,022,237 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID FOR:
Interest$2,353 $4,247 
Income taxes$17,150 $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.
6

Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Treasury StockRetained EarningsTotal Stockholders' Equity
SharesAmount
Balance, December 31, 201847,932,305  $49,708  $28,027,742  $(2,895,683) $(2,609,485) $22,683,577  $45,255,859  
Stock based compensation66,71466,714
Stock issued in exercise of stock options2,483  2  (2) —  
Stock issued in settlement of RSUs and accrued bonuses148,723  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 translation149,415  149,415  
Unrealized gains on investments68,752  68,752  
Net income1,668,618  1,668,618  
Balance, March 31, 201947,308,224  $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 options9,174  $9  $6,841  $6,850  
Stock issued in settlement of RSUs148,794  $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, 201947,466,192  $50,017  $28,593,552  $(2,525,586) $(3,943,063) $25,337,699  $47,512,619  

The accompanying notes are an integral part of these condensed consolidated financial statements.
7


PROFIRE ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the Six Months Ended June 30,
20202019
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 expense566,791  483,063  
Gain on sale of fixed assets(153,973) (38,340) 
Bad debt expense236,005  229,792  
Stock awards issued for services250,198  363,841  
Changes in operating assets and liabilities:
Accounts receivable3,248,693  983,865  
Income taxes receivable/payable(1,761) (1,261,267) 
Inventories445,634  1,831,865  
Prepaid expenses168,718  (35,637) 
Deferred tax asset/liability104,166  205,314  
Accounts payable and accrued liabilities(2,843,685) (115,813) 
Net Cash Provided by Operating Activities847,019  5,300,805  
INVESTING ACTIVITIES
Proceeds from sale of equipment—  39,810  
Sale of investments1,057,404  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 Activities62,994  (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 options2,020  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 CASH663,381  1,385,846  
CASH AT BEGINNING OF PERIOD7,358,856  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.
8
PROFIRE ENERGY, INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements (Unaudited)
For the three and six months ended June 30, 20202021 and 20192020


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, 20202021 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, 20192020 ("Form 10-K").  The results of operations for the three and six month periods ended June 30, 20202021 and 20192020 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 Notesnotes to the Consolidated Financial Statementsconsolidated 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
NOTE 3 – INVENTORIES

Certain balances in previously issued consolidated financial statements have been reclassified to be consistent withInventories consisted of 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.following at each balance sheet date:
As of
June 30, 2021December 31, 2020
Raw materials$356,899 $328,772 
Finished goods8,578,380 9,229,298 
Work in process0 0 
Subtotal8,935,279 9,558,070 
Reserve for obsolescence(1,023,283)(1,143,298)
Total$7,911,996 $8,414,772 

The accompanying notes are an integral part of these condensed consolidated financial statements.
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PROFIRE ENERGY, INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
For the three and six months ended June 30, 20202021 and 20192020
NOTE 3 – INVENTORIES

Inventories consisted of the following at each balance sheet date:

As of
June 30, 2020December 31, 2019
Raw materials$209,393  $—  
Finished goods9,786,297  10,517,858  
Work in process—  —  
Subtotal9,995,690  10,517,858  
Reserve for obsolescence(999,467) (946,051) 
Total$8,996,223  $9,571,807  

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
 June 30, 2020December 31, 2019
Prepaid Inventory784,373  1,291,577  
Assets classified as held for sale774,832  —  
Vehicle trade-in credits174,630  —  
Prepaid insurance107,367  133,611  
Interest receivables93,027  80,609  
Other209,921  166,625  
Total$2,144,150  $1,672,422  
 As of
 June 30, 2021December 31, 2020
Assets classified as held for sale$0 $623,805 
Prepaid inventory445,683 542,313 
Prepaid insurance148,396 217,465 
Interest receivables64,604 65,984 
Vehicle trade-in credits6,993 55,733 
Other107,470 173,128 
Total$773,146 $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 assale" consisted of an office building located in Spruce Grove, Alberta, Canada. During the six months ended June 30, 2020, consist2021, we sold the remaining 3 bays that were part of this oldthe office building, which we intend to sell withinresulted in a one yeargain 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
 June 30, 2020December 31, 2019
Employee-related payables$657,501  $1,657,826  
Inventory-related payables208,128  —  
Warranty liabilities115,731  166,301  
Acquisition liabilities20,225  162,907  
Other120,657  102,357  
Total$1,122,242  $2,089,391  
 As of
 June 30, 2021December 31, 2020
Employee-related payables$1,160,053 $789,573 
Inventory-related payables154,215 158,519 
Warranty liabilities40,608 71,852 
Other131,702 176,926 
Total$1,486,578 $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
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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 20.510.3 months.

The following table shows the components of financing lease cost:
For the Three Months Ended June 30,For the Six Months Ended June 30,
Financing Lease Cost2021202020212020
Amortization of right-of-use assets$10,211 $15,121 $21,203 $33,497 
Interest on lease liabilities417 3,375 2,353 4,247 
Total financing lease cost$10,628 $18,496 $23,556 $37,744 

Financing Lease CostFor the Three Months Ended June 30, 2020For the Six Months Ended June 30, 2020
Amortization of right-of-use assets$15,121  $33,497  
Interest on lease liabilities3,375  4,247  
Total financing lease cost$18,496  $37,744  
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PROFIRE ENERGY, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements
For the three and six months ended June 30, 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,AmountYears ending December 31,Amount
2020 - remaining$25,013  
202140,921  
2021 - remaining2021 - remaining$18,079 
2022202212,803  202212,803 
20232023—  20230 
20242024—  20240 
202520250 
ThereafterThereafter—  Thereafter0 
Total future minimum lease paymentsTotal future minimum lease payments$78,737  Total future minimum lease payments$30,882 
Less: Amount representing interestLess: Amount representing interest3,088  Less: Amount representing interest644 
Present value of future paymentsPresent value of future payments$75,649  Present value of future payments$30,238 
Current portionCurrent portion$45,411  Current portion$30,238 
Long-term portionLong-term portion$30,238  Long-term portion$0 

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, 2020,2021, we recognized $19,059$19,000 and $38,531,$35,263, respectively, in short-term lease costs associated with office space leases.

NOTE 7 – STOCKHOLDERS' EQUITY

As of June 30, 20202021, 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 ,2021, the Company had 279,447361,409 restricted stock units, 252,701480,667 performance based restricted stock units, and 115,200934,700 stock options outstanding with $365,717$846,876 in remaining compensation expense to be recognized over the next 2.011.9 years.

20202021 EIP and LTIP

Due to market uncertainties including those caused byOn May 28, 2021, the COVID-19 pandemic,Compensation Committee (the "Compensation Committee") of the Board of Directors of the Company (the "Board"“Board”) approved the 2021 Executive Incentive Plan (the “2021 EIP”) for Brenton W. Hatch, the Company’s Executive Chairman, Ryan W. Oviatt, the Company’s Co-CEO, Co-President, and CFO, Cameron M. Tidball, the Company’s Co-CEO and Co-President, Jay G. Fugal, the Company’s Vice President of Operations, and Patrick D. Fisher, the Company’s Vice President of Product Development. The 2021 EIP provides for the potential award of incentive compensation to the participants based on the Company’s financial performance in fiscal 2021. If earned, the incentive compensation will be payable in cash and stock, and the Company's executives have electedstock portion of the incentive compensation is intended to not adoptconstitute an executive incentive plan ("EIP") or long-term incentive plan ("LTIP") for 2020. The Board and executives believe this is an appropriate short-term measure that will help to alignaward under the Company's cost structure with the current extraordinary market conditions.Company’s 2014 Equity Incentive Plan, as amended (the “Plan”).

2019Under the terms of the 2021 EIP, each participating executive officer has been assigned a target incentive compensation amount for fiscal 2021. The target incentive compensation amount for Mr. Hatch is $200,000, the target incentive compensation amount for Mr. Oviatt is $150,000, the target incentive compensation amount for Mr. Tidball is $150,000, the target incentive compensation for Mr. Fugal is $54,000, and the target incentive compensation for Mr. Fisher is $51,000 CAD. Under no circumstance can the participants receive more than two times the assigned target incentive compensation.

Participants will be eligible to receive incentive compensation based upon reaching or exceeding performance goals established by the Compensation Committee for fiscal 2021. The performance goals in the 2021 EIP are based on the Company’s total revenue, EBITDA, and a non-financial milestone relating to revenue source diversification. Each of these performance goals will be weighted one third in calculating incentive compensation amounts.

The incentive compensation amounts earned under the 2021 EIP, if any, will be paid 50% in cash and 50% in shares of restricted stock under the Plan. In no event shall the total award exceed 200% of the target incentive compensation amount for each participant, or exceed any limitations otherwise set forth in the Plan. The actual incentive compensation amounts, if
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PROFIRE ENERGY, INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
For the three and six months ended June 30, 20202021 and 20192020
any, will be determined by the Compensation Committee upon the completion of fiscal 2021 and paid by March 15, 2022, subject to all applicable tax withholding.
On April 22, 2019,
In addition to the 2021 EIP, the Board also approved as a long-term incentive plan the 2019 Executive Incentive Plan (the “2019 EIP”) for Brenton W. Hatch, the Company’s then Presidentgrants of a restricted stock unit awards to Messrs. Oviatt, Tidball, Fugal, 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 approved a one-time executive bonus in the amount 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 shares of common stock under the Company's 2014 Equity Incentive Plan as amended (the "2014 Plan"“2021 LTIP”) which was fully vested on the date of grant.

Participants were eligible to receive bonuses based upon reaching or exceeding performance goals established by the Board or its Compensation Committee for fiscal 2019.. The performance goals in the 2019 EIP were based on the Company’s 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 20192021 LTIP consists of total awards of up to 66,213204,543 restricted stock units (“RSUs”Units”) to Mr. Oviatt, up to 51,646 RSUs204,543 Units to Mr. Tidball, up to 35,313 RSUs85,908 Units to Mr. Fugal, and up to 24,862 RSUs47,973 Units to Mr. Fisher, pursuant to two separate Restrictedrestricted stock unit award agreements (collectively, the “Restricted Stock Unit Award Agreements that were entered intoAgreements”) between the Company and each participant under the 2014 Plan.participant. One agreement covers 33% of each award recipient’s RSU'sUnits that are subject to time-based vesting, and the other agreement covers the remaining 67% of such award recipient’s RSU'sUnits 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.Unit. The vesting period of the 20192021 LTIP began on January 1, 20192021, and terminates on December 31, 2021.2023 (the “Performance Vesting Date”).

2017The Units subject to time-based vesting, including 68,181 Units to Mr. Oviatt, 68,181 Units for Mr. Tidball, 28,636 Units to Mr. Fugal, and 15,991 Units to Mr. Fisher, will vest in three equal annual installments beginning December 31, 2021 and ending on December 31, 2023 if the award recipients’ employment continues with the Company through such dates.

The performance-vesting Units, including up to 136,362 Units for Mr. Oviatt, 136,362 Units for Mr. Tidball, 57,272 Units for Mr. Fugal, and 31,982 Units to Mr. Fisher, are eligible to vest over a three-year performance period beginning January 1, 2021 (the “Performance Period”) based upon the following Company performance metrics:

Performance MetricWeightTargetAbove TargetOutstanding
Total Shareholder Return
1/3135%194%253%
Relative Total Shareholder Return1/3Third QuartileSecond QuartileFirst Quartile
EBITDA as a Percentage of Total Revenue1/310%15%20%

One-third of such performance-vesting Units, consisting of 45,454 Units for Mr. Oviatt, 45,454 Units for Mr. Tidball, 19,091 Units for Mr. Fugal, and 10,661 Units for Mr. Fisher, are eligible to vest for each of the 3 performance metrics identified in the table above. The number of Units that will vest for each performance metric on the Performance Vesting Date shall be determined as follows:
•if the “Target” level for such performance metric is not achieved, 0ne of the Units relating to such performance metric will vest;
•if the “Target” level (but no higher level) for such performance metric is achieved, 50% of the Units relating to such performance metric will vest;
•if the “Above Target” level (but no higher level) for such performance metric is achieved, 75% of the Units relating to such performance metric will vest; and
•if the “Outstanding” level for such performance metric is achieved, 100% of the Units relating to such performance metric will vest.

The foregoing summary of the 2021 EIP, the 2021 LTIP and the Restricted Stock Unit Award Agreements is qualified in its entirety by the text of the 2021 EIP and each of the Restricted Stock Unit Award Agreements, which the Company has filed as an exhibits to this report.

2020 EIP and LTIP

On March 4, 2020,Due to economic uncertainties including those caused by the COVID-19 pandemic, the Board, approved a one-timewith the support of the Company's executives, elected not to adopt an executive bonusincentive plan ("2020 EIP") or long-term incentive plan ("2020 LTIP") for 2020. The Board and executives believed this was an appropriate short-term measure that was settled by issuing 16,689 shares of common stock for meeting targets pursuant tohelped align the previously announced "2017 Long-Term Incentive Plan",Company's cost structure with the extraordinary conditions that affected the industry in which shares were issued under the 2014 Plan. These shares were fully vested as of March 4, 2020.we operate.

20202021 RSUs

On February 18, 2021, the Board, upon the recommendation of the Compensation Committee, approved a restricted stock award of 18,852 shares of common stock to each of Cameron M. Tidball and Ryan W. Oviatt. Messrs. Tidball and Oviatt entered into Restricted Stock Unit Award Agreements, the forms of which were approved pursuant to the Plan. These
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PROFIRE ENERGY, INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
For the three and six months ended June 17,30, 2021 and 2020
restricted stock awards, which vested immediately, were settled by the issuance of a total of 27,334 shares of common stock, net of tax withholding and resulted in $45,999 of compensation expense.

On June 16, 2021, pursuant to the annual renewal of Directordirector compensation, the Board approved a grant of 270,966189,471 RSUs to Independent Directors.the Company's independent directors. 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 Meetingannual meeting of Stockholders,stockholders, whichever is earlier. The awards will result in total compensation expense of approximately $216,000 to be recognized over the vesting period.

2020 RSUs

On June 17, 2020, pursuant to the annual renewal of director compensation, the Board approved a grant of 270,966 RSUs to the Company's independent directors. 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 of stockholders, whichever is earlier. The awards will result in total compensation expense of $252,000 to be recognized over the vesting period.

2019 RSUs

On March 14, 2019,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 vestedwill vest on the first anniversary of the grant date. The awards have resultedwill 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 exercisable as to 1/3one-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 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.

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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 
Liabilities140,257 
$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 
Inventory1,119,143 
Intangible assets990,000
Goodwill17,681 
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 all21, 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 servicesoptions 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 and630,000 shares of the Company's common stock.stock at a strike price of $0.785 to various employees (the "August 2020 Options"). The cash portionAugust 2020 Options terminate four years from the August Grant Date and become exercisable as to one-third of the purchase price includes $500,000 placedshares of common stock covered thereby on each anniversary of the August Grant Date for the next three years following the August Grant Date. The August 2020 Options will result in an escrow account for 12 months pending satisfactiona total compensation expense of certain obligations under$233,111 to be recognized over the purchase agreement.vesting period.

Profire hired a valuation firm to perform the purchase price allocation based on the net assets received and the price paid. Based on the fair value of the net assets at the time of purchase, 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.
NOTE 8 – REVENUE

Performance Obligations
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PROFIRE ENERGY, INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
For the three and six months ended June 30, 20202021 and 20192020

The purchase price calculation is as follows:
Cash$2,419,371 
Stock1,020,000 
$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 receivable324,989 
Inventory269,746 
Prepaid expenses13,180 
Property and equipment126,000 
Intangible assets1,110,000 
Goodwill1,564,000 
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.

NOTE 9 – 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 appropriatea restocking fee. We provide a warranty on some of our products ranging from 90 days to 2 years, depending on the product. See Nnote ote 5 for the amount accrued for expected returns and warranty claims as of June 30, 2020.2021.

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

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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 June 30,For the Six Months Ended June 30,
20202019202020192021202020212020
ElectronicsElectronics$1,644,668  $4,139,283  $4,301,755  $8,785,880  Electronics$2,016,876 $1,644,668 $3,868,675 $4,301,755 
ManufacturedManufactured142,234  492,969  543,092  923,562  Manufactured324,830 142,234 561,640 543,092 
Re-SellRe-Sell2,212,237  4,927,003  6,015,250  10,048,448  Re-Sell3,032,833 2,212,237 5,601,759 6,015,250 
ServiceService360,340  564,776  946,524  1,199,199  Service659,744 360,340 1,094,558 946,524 
Total RevenueTotal Revenue$4,359,479  $10,124,031  $11,806,621  $20,957,089  Total Revenue$6,034,283 $4,359,479 $11,126,632 $11,806,621 

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,
20212020
Loss (Numerator)Weighted Average Shares (Denominator)Per-Share
Amount		Loss (Numerator)Weighted Average Shares (Denominator)Per-Share
Amount
Basic EPS
Net loss available to common stockholders$(397,166)48,054,136 $(0.01)$(808,503)47,723,208 $(0.02)
Effect of Dilutive Securities
Stock options & RSUs0 0 0 0 
Diluted EPS
Net loss available to common stockholders + assumed conversions$(397,166)48,054,136 $(0.01)$(808,503)47,723,208 $(0.02)

For the Three Months Ended June 30,
20202019
Income (Numerator)Weighted Average Shares (Denominator)Per-Share
Amount		Income (Numerator)Weighted Average Shares (Denominator)Per-Share
Amount
Basic EPS
Net income (loss) available to common stockholders$(808,503) 47,723,208  $(0.02) $985,504  47,348,137  $0.02  
Effect of Dilutive Securities
Stock options & RSUs—  —  —  776,071  
Diluted EPS
Net income available to common stockholders + assumed conversions$(808,503) 47,723,208  $(0.02) $985,504  48,124,208  $0.02  
Stock options and RSUs to purchase 1,776,776 shares of common stock at a weighted average price of $1.15 per share were outstanding during the three months ended June 30, 2021, but were not included in the computation of diluted EPS because
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PROFIRE ENERGY, INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
For the three and six months ended June 30, 2021 and 2020
the impact of these shares would be antidilutive. These RSUs, which expire between December 2022 and December 2024, were still outstanding at June 30, 2021.

Stock options and RSUs to purchase 534,924 shares of common stock at a weighted average price of $0.83 per share were outstanding during the three 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 2021 and March 2024, were still outstanding at June 30, 2020.


For the Six Months Ended June 30,
20212020
Income (loss) (Numerator)Weighted Average Shares (Denominator)Per-Share
Amount		Income (Numerator)Weighted Average Shares (Denominator)Per-Share
Amount
Basic EPS
Net income (loss) available to common stockholders$(998,666)48,022,295 $(0.02)$(1,173,767)47,607,825 $(0.02)
Effect of Dilutive Securities
Stock options & RSUs0 0 0 0 
Diluted EPS
Net income (loss) available to common stockholders + assumed conversions$(998,666)48,022,295 $(0.02)$(1,173,767)47,607,825 $(0.02)

Stock options and RSUs to purchase 244,6001,776,776 shares of common stock at a weighted average price of $3.88$1.15 per share were outstanding during the threesix months ended June 30, 2019,2021, but were not included in the computation of diluted EPS because the impact of these shares would be antidilutive. These options,RSUs, which expiredexpire between November 2019December 2022 and May 2020,December 2024, were still outstanding at June 30, 2019.


15
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,
20202019
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  
2021.

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 2021 and March 2024, were still outstanding at June 30, 2020.


13
Stock options
PROFIRE ENERGY, INC. AND SUBSIDIARIES
Notes to purchase 244,600 shares of common stock at a weighted average price of $3.88 per share were outstanding during the Condensed Consolidated Financial Statements
For the three and 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 20192021 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 June 30,For the Six Months Ended June 30,
SalesSales2020201920202019Sales2021202020212020
CanadaCanada$585,695  $1,056,781  $1,609,417  $1,992,419  Canada$1,035,377 $585,695 $1,863,822 $1,609,417 
United StatesUnited States3,773,7849,067,25010,197,20418,964,670United States4,998,9063,773,7849,262,810 10,197,204 
Total ConsolidatedTotal Consolidated$4,359,479  $10,124,031  $11,806,621  $20,957,089  Total Consolidated$6,034,283 $4,359,479 $11,126,632 $11,806,621 
For the Three Months Ended June 30,For the Six Months Ended June 30,For the Three Months Ended June 30,For the Six Months Ended June 30,
Profit (Loss)Profit (Loss)2020201920202019Profit (Loss)2021202020212020
CanadaCanada$(264,163) $(547,202) $(586,232) $(929,242) Canada$(556,713)$(264,163)$(877,475)$(586,232)
United StatesUnited States(544,340)1,532,706(587,535)3,583,364United States159,547(544,340)(121,191)(587,535)
Total ConsolidatedTotal Consolidated$(808,503) $985,504  $(1,173,767) $2,654,122  Total Consolidated$(397,166)$(808,503)$(998,666)$(1,173,767)
As ofAs of
Long-Lived AssetsLong-Lived AssetsJune 30, 2020December 31, 2019Long-Lived AssetsJune 30, 2021December 31, 2020
CanadaCanada$5,640,323  $6,068,061  Canada$5,971,607 $6,049,790 
United StatesUnited States16,659,430  18,080,075  United States5,778,843 6,022,115 
Total ConsolidatedTotal Consolidated$22,299,753  $24,148,136  Total Consolidated$11,750,450 $12,071,905 
 
16
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, the Company entered into amended employment agreements with Mr. Hatch, Mr. Oviatt and Mr. Tidball, as more fully described below.

On July 2, 2020, the Company and 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”) and an Amended and Restated Employment Agreement with Cameron M. Tidball (the “Tidball Agreement” and, together with the Oviatt Agreement, the “CEO Agreements”) as recommended by the Committee and approved by the Company’s Board.

Pursuant to the Oviatt Agreement, effective July 2, 2020, Mr. Oviatt commenced serving as the Company’s Co-Chief Executive Officer, Co-President, and Chief Financial Officer of the Company. Mr. Oviatt’s duties will include being responsible for the strategic direction and day-to-day operations 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.
17
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 Managementmanagement reviewed all material events through the date this report was issued and there were no other subsequent events to report.


1814

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 periods ended June 30, 20202021 and 2019.2020. This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Financial Statementsfinancial statements and Notesnotes to the Financial Statementsfinancial 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 oilfielda technology company providing productssolutions that enhance the efficiency, safety, and compliancereliability 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-tubenatural and forced-airforced draft applications. We sell our products and services primarily throughout North America. Our experienced team of industrysales and service professionals also provides supporting servicesare strategically positioned across the United States and Canada providing support and service for our products.

1915

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 pilotspilot and burnersburner 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 quicklyefficiently reigniting a failed flame, andthereby 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 producerscompanies, 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 donemust be accomplished in-person, directly on-site. SuchThis requirement for on-site monitoring, in an environment with limited field personnel, can result in the potential interruption of production for longerlong periods of time risk ofand increased risks associated with reigniting a flame, which can lead to burns andsite hazards, including explosions and the possibility of rawventing gas being vented into the atmosphere when the flame fails.atmosphere. In addition, without a burner-managementburner -management system, burners often runoperate for longer incurring significantdurations, 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 weregulatory requirements on behalf of our customers. We believe that enhanced burner-management productssystems and services can help ouroffer 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 installationsprovide maintenance and installation support throughout the United States and Canada.

We initially developed our first burner-management systemcontroller in 2005. Since then, wethat time, our systems have released several iterations of our initialbecome widely adopted throughout the United States and Western Canada. Profire burner-management system, increasing featuressystems have been designed to comply with widely accepted safety and capabilities, while maintaining compliance withindustrial 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 becomebeen widely used throughout the United Statesadopted by exploration and Western Canada. We have sold our burner-management systems to many large energyproduction companies including Anadarko,(E&P), midstream operators, pipeline operators, as well as downstream transmission and utility providers. Our customers include, Antero, ATCO, Cenovus, Chevron, CNRL, Concho Resources, ConocoPhillips, Devon Encana,Energy, Dominion Energy, EQT, Hess, Pioneer Natural Resources, Williams, XTO, CNRL, Shell, OXY, 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 areThough firmly established in theand primarily focused on North American oil and gas markets, which is our primary focus currently, but we are workingcontinue to expand further into otherinvest in expansion efforts in international markets.markets and the broader combustion industries.

Product Extensions:Environmental, Social and Governance Focus

The PF3100As 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 advanceddesigned to monitor, operate, and manage a wide array of complex industrial heat-applications. Our safety-approved and certified technology, which is 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 managelocation safety while reducing emissions. Profire technology and solutions are integrated into a wide variety of complex, heated appliances. Throughoutapplications to significantly reduce the industry, Programmable Logic Controllers, or PLCs, are used to operaterelease 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.

2016

We recognizedProfire burner-management controls and complementary solutions provide users with the area ofability to monitor field equipment remotely. This reduces truck rolls and the need for field personnel to travel to and manually inspect burner management mostmalfunctions in need of innovation was the user experience. The PF2200 is designed to optimize installation, commissioning, troubleshootingremote sites and daily operation. This focus on the user will optimize the time required on-site for both installationlocations. 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 toOperator 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 toheart of our burner- and combustion-managementburner-management solution technology. The use of these systems we also supply complementary products that providehelps our customers with a complete solution. These products include safetyincrease the likelihood that their employees perform their job safely and monitoring devices suchreturn home each day. Adding greater physical distance between humans and 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 inis present, are two of the developmentcritical elements of innovative, complementary products which we anticipate willhow 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
June 30, 2020March 31, 2020December 31, 2019September 30, 2019June 30, 2019
Total Revenues$4,359,479  $7,447,142  $8,118,463  $9,905,761  $10,124,031  
Gross Profit Percentage47.9 %42.5 %42.0 %52.2 %51.2 %
Operating Expenses$3,164,318  $3,829,736  $4,518,825  $4,027,844  $4,190,479  
Net Income (Loss)$(808,503) $(365,264) $(1,554,378) $921,748  $985,504  
Operating Cash Flow$575,941  $271,078  $311,093  $2,094,454  $2,699,154  
For the three months ended
June 30, 2021March 31, 2021December 31, 2020September 30, 2020June 30, 2020
Total Revenues$6,034,283 $5,092,349 $5,651,883 $4,000,106 $4,359,479 
Gross Profit Percentage44.0 %42.7 %48.8 %38.0 %47.9 %
Operating Expenses$3,252,169 $2,978,912 $2,762,437 $2,849,921 $3,164,318 
Net Income (Loss)$(397,166)$(601,500)$55,918 $(1,057,748)$(808,503)
Operating Cash Flow$(264,843)$1,820,665 $141,723 $(724,342)$575,941 

Revenues for the quarter ended June 30, 2020 decreased2021, increased by 57%38% or $5,764,552$1,674,804 compared to the quarter ended June 30, 2019,2020, which was mostly driven by improved customer demand associated with modest recoveries from the macro industry changes over that same period.challenges and the effects of the COVID-19 pandemic. The average oil price during the three months ended June 30, 20202021, was only $27.96$66.19 per barrel compared to $59.88$27.96 per barrel for the same period of last year, representing a decreasean increase of 53.3%137%. TheAdditionally, the second quarter of 20202021 weekly average rig count for North America was 401508 compared to 1,046401 in the same period of last year, which represents a decreasean increase of 62%27%. The historic fall inAlthough oil prices which accelerated towardhave recovered from the end of March 2020, continued into the second quarterhistoric lows of 2020, due towhich 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 forpandemic, the first time in history. Although oil prices are expected to recoveroperating environment in the months ahead duesecond quarter of 2021 continued to changesbe characterized by uncertainty surrounding economic recovery from the COVID-19 pandemic and geopolitical factors. This uncertainty continued to 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 have not invested in new production like they were prior to the pandemic. Until our customers return to more normalhigher capital expenditure levels, our business is likely to continue to be adversely affected.

Our gross profit margin for the second quarter of 2021 was down 3.9% from the same quarter of last year and iswas 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 the current period. However the significant decrease in revenue has also caused the fixed cost portion of cost of goods and services to push the productgross profit margin lower than historic levels. However, actions taking duringfor the second quarter of 2021. During the second quarter of 2021, a larger portion of our revenue was generated from service work which also contributed to reducethe decrease in profit margin compared to the same quarter last year. Fixed costs and adjust the cost structure of the company have helped to raise the gross margin percentage from the lows of the previous two quarters. In the current economic environment, wewill continue to evaluate the Company's cost structure in an effort to improveimpact our gross profit margins in future periods.margin until revenues recover.

21

Operating expenses decreased $1,026,161increased $87,851 from the same quarter of last year, which reflected a focus on cost control measuresstrategic investments in business development and our employees as we navigateseek to recover from the uncertainty caused by the COVID-19 pandemic and the resulting oil market supply and demand imbalance. We have been focused on reducingexpect that our operating expenses, particularly labor costs,and travel costs, will further increase in the second half of 2021 as we position ourselves to respond to the anticipated economic recovery from the pandemic and other non-essential expenditures in this current environment.increased demand for oil and gas production.

Due to the lower revenuesfactors discussed above, we reported a net loss of $808,503$397,166 for the quarter ended June 30, 20202021, compared to a net incomeloss of $985,504$808,503 for the same quarter in 2019.2020.

Operating cash flows decreased significantly during the second quarter of 20202021 compared to the second quarter of 2019,2020, due primarily to the 57% dropchanges in revenue, but still remained positive for the quarter. This decrease is primarily duecustomer accounts receivable balances, as well as accounts payable and inventory accounts.
17


The global COVID-19 pandemic continued to extraordinary industry and global economic crisis conditions that have persisted throughoutimpact our business during the second quarter of 2020.2021 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.

Comparison of the six months ended June 30, 20202021 and 20192020

The table below presents certain financial data comparing the six months ended June 30, 20202021 to the same period ended June 30, 2019:
For the Six Months Ended June 30,
20202019$ Change% Change
Total Revenues$11,806,621  $20,957,089  $(9,150,468) (43.7)%
Gross Profit Percentage44.5 %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  $(4,453,786) (84.0)%
2020:
For the Six Months Ended June 30,
20212020$ Change% Change
Total Revenues$11,126,632 $11,806,621 $(679,989)(5.8)%
Gross Profit Percentage43.4 %44.5 %(1.1)%
Operating Expenses$6,231,081 $6,994,054 $(762,973)(10.9)%
Net Loss$(998,666)$(1,173,767)$175,101 (14.9)%
Operating Cash Flow$1,555,822 $847,019 $708,803 83.7 %

Revenues during the six-month period ended June 30, 20202021, decreased 5.8% compared to the same period of last year declined 43.7% which isyear. The decrease in revenue was largely due to a 36.3% drop in the average oil price over the same time frame resultingcontinued uncertainties surrounding economic recovery from the global coronavirusCOVID-19 pandemic and the corresponding reduction in spending by our customers.geopolitical factors. Operating expenses declined 10.5% year over-yeardecreased 10.9% year-over-year due to our focus on cost control measures in 2020. The decrease in operating expenses helped offset the decrease in revenues. As a result, of revenue and operating cost changes, we reported a net loss of $998,666 for the six months ended June 30, 2021, compared to 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 2019.2020. Our gross profit percentage declineddecreased slightly by 7.8%1.1% during the six months ended June 30, 2020,2021, compared to the same period in 2019,2020, primarily due to changes in product mix, direct labor cost increases,costs, inventory adjustments and the fixed cost structure within cost of goods and services.

Liquidity and Capital Resources
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Working capital at June 30, 20202021 was $23,539,822,$22,492,270, compared to $22,914,845$23,420,475 at December 31, 2019.

We acquired land for a new office building and research and development facility in Canada in June 2018 and completed construction of the facility in March 2020. Excluding the cost of the land, the total cost of the building was approximately $4,500,000 USD. As of June 30, 2020, only minimal costs remain related to final landscaping and an ancillary storage shed.

Our liquidity position is impacted by operating, investing and financing activities. During the six months ended June 30, 2020,2021, we generated $847,019$1,555,822 of positive cash flow from operating activities, primarily due to cash received from customer sales,sale of the remaining bays from our old office building in Canada and from changes in inventory levels, partially offset by cash outflows for accounts payable and accrued liabilities.the impact of changes in income tax accounts. Operating activity trends consist of cash inflows and outflows related to changes in operating assets and liabilities. During the six months ended June 30, 2020,2021, we generated $62,994used $743,382 of positive cash flow fromin investing activities, primarily due to the reinvestment of cash from financial investment sales, partially offset by costs incurred for construction of the new office buildingmaturities in Canada.our bond and CD portfolio. Investing activity trends consist of changes in the mix of our investment portfolio, purchases or sales of fixed assets, and acquisition activities. We do not anticipate any material capital expenditures over the next 12 months. During the six months ended June 30, 2020,2021, we used $181,126$64,578 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 purchasedpurchase any treasury stock in order to reduce costs related to financing activities.during the first half 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, 2020,2021, we hold $18,105,165held $19,141,382 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.

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Item 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of the Principal Executive OfficerOfficers 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 OfficerOfficers 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 OfficerOfficers and Principal Financial Officer, concluded that the disclosure controls and procedures were effective as of June 30, 2020.2021.

Changes in Internal Control over Financial Reporting

Our management, with the participation of our Principal Executive OfficerOfficers and Principal Financial Officer, evaluated the changes in our internal control over financial reporting that occurred during the quarterly period covered by this Quarterly Reportquarterly 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, 20202021, 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 Reportannual 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.

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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
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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.

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Item 6.  Exhibits

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

First Amendment to Second Amended and Restated Employment Agreement between Profire Energy and Brenton W. Hatch dated April 30, 2021(1)
First Amendment to Second Amended and Restated Employment Agreement between Profire Energy and Ryan Oviatt dated April 30, 2021(2)
First Amendment to Amended and Restated Employment Agreement between Profire Energy and Cameron Tidball dated April 30, 2021(3)
First Amendment to Employment Agreement between Profire Energy and Jay G. Fugal dated April 30, 2021(4)
First Amendment to Employment Agreement between Profire Energy and Patrick D. Fisher dated April 30, 2021(5)
Profire Energy, Inc. 2021 Executive Incentive Plan
Restricted Stock Unit Award Agreement (Performance Vesting) between Profire Energy and Ryan Oviatt dated June 4, 2021.
Restricted Stock Unit Award Agreement (Time Vesting) between Profire Energy and Ryan Oviatt dated June 4, 2021.
Restricted Stock Unit Award Agreement (Performance Vesting) between Profire Energy and Cameron Tidball dated June 4, 2021.
Restricted Stock Unit Award Agreement (Time Vesting) between Profire Energy and Cameron Tidball dated June 4, 2021.
Restricted Stock Unit Award Agreement (Performance Vesting) between Profire Energy and Jay G. Fugal dated June 4, 2021.
Restricted Stock Unit Award Agreement (Time Vesting) between Profire Energy and Jay G. Fugal dated June 4, 2021.
Restricted Stock Unit Award Agreement (Performance Vesting) between Profire Energy and Patrick D. Fisher dated June 4, 2021.
Restricted Stock Unit Award Agreement (Time Vesting) between Profire Energy and Patrick D. Fisher dated June 4, 2021.
Certification of Co-Principal Executive Officer Pursuant to Rule 13a-14(a) Ryan W. Oviatt
Certification of Co-Principal Executive Officer Pursuant to Rule 13a-14(a) Cameron M. Tidball
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Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)
Certification of Principal Executive Officers pursuant to 18 U.S.C. Section 1350
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
(1)     Incorporated by reference to Exhibit 10.3 to the Registration Quarterly Report on Form 10-Q filed on May 5, 2021.
(2)    Incorporated by reference to Exhibit 10.4 to the Registration Quarterly Report on Form 10-Q filed on May 5, 2021.
(3)     Incorporated by reference to Exhibit 10.5 to the Registration Quarterly Report on Form 10-Q filed on May 5, 2021.
(4)    Incorporated by reference to Exhibit 10.6 to the Registration Quarterly Report on Form 10-Q filed on May 5, 2021.
(5)    Incorporated by reference to Exhibit 10.7 to the Registration Quarterly Report on Form 10-Q filed on May 5, 2021.
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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 5, 20204, 2021By:/s/ Ryan W. Oviatt
Ryan W. Oviatt
Co-Chief Executive Officer and Chief Financial Officer

Date:August 5, 20204, 2021By:/s/ Cameron M. Tidball
Cameron M. Tidball
Co-Chief Executive Officer

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