Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 07, 2018 | |
Document and Entity Information: | ||
Entity Registrant Name | Profire Energy Inc | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Trading Symbol | pfie | |
Amendment Flag | false | |
Entity Central Index Key | 1,289,636 | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 47,551,787 | |
Entity Filer Category | Smaller Reporting Company | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 12,196,578 | $ 11,445,799 |
Short-term investments | 300,345 | 300,817 |
Short-term investments - other | 4,165,493 | 4,009,810 |
Accounts receivable, net | 8,717,607 | 8,069,255 |
Inventories, net | 7,265,623 | 6,446,083 |
Prepaid expenses & other current assets | 357,532 | 437,304 |
Total Current Assets | 33,003,178 | 30,709,068 |
LONG-TERM ASSETS | ||
Net deferred tax asset | 184,223 | 72,817 |
Long-term investments | 8,435,512 | 8,517,182 |
Long-term investments - other | 400,000 | 0 |
Property and equipment, net | 7,118,971 | 7,197,499 |
Goodwill | 997,701 | 997,701 |
Intangible assets, net | 475,133 | 494,792 |
Total Long-Term Assets | 17,611,540 | 17,279,991 |
TOTAL ASSETS | 50,614,718 | 47,989,059 |
CURRENT LIABILITIES | ||
Accounts payable | 1,727,194 | 1,780,977 |
Accrued vacation | 230,399 | 196,646 |
Accrued liabilities | 927,116 | 1,044,284 |
Income taxes payable | 1,512,844 | 919,728 |
Total Current Liabilities | 4,397,553 | 3,941,635 |
TOTAL LIABILITIES | 4,397,553 | 3,941,635 |
STOCKHOLDERS' EQUITY | ||
Preferred shares: $0.001 par value, 10,000,000 shares authorized: no shares issued or outstanding | 0 | 0 |
Common shares: $0.001 par value, 100,000,000 shares authorized: 54,131,158 issued and 48,806,416 outstanding at March 31, 2018 and 53,931,167 issued and 48,606,425 outstanding at December 31, 2017 | 54,131 | 53,931 |
Treasury stock, at cost | (6,890,349) | (6,890,349) |
Additional paid-in capital | 28,101,146 | 27,535,469 |
Accumulated other comprehensive loss | (2,472,826) | (2,200,462) |
Retained earnings | 27,425,063 | 25,548,835 |
TOTAL STOCKHOLDERS' EQUITY | 46,217,165 | 44,047,424 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 50,614,718 | $ 47,989,059 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Stock Transactions, Parenthetical Disclosures [Abstract] | ||
Preferred stock, par value (dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (shares) | 0 | 0 |
Preferred stock, shares outstanding (shares) | 0 | 0 |
Common stock, par value (dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (shares) | 54,131,158 | 53,931,167 |
Common stock, shares outstanding (shares) | 48,806,416 | 48,606,425 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Other Comprehensive Income (Loss) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
REVENUES | ||
Sales of goods, net | $ 11,454,615 | $ 7,292,228 |
Sales of services, net | 715,103 | 532,267 |
Total Revenues | 12,169,718 | 7,824,495 |
COST OF SALES | ||
Cost of goods sold-product | 5,557,710 | 3,055,300 |
Cost of goods sold-services | 481,867 | 402,022 |
Total Cost of Goods Sold | 6,039,577 | 3,457,322 |
GROSS PROFIT | 6,130,141 | 4,367,173 |
OPERATING EXPENSES | ||
General and administrative expenses | 3,341,903 | 2,948,089 |
Research and development | 403,220 | 198,966 |
Depreciation and amortization expense | 128,717 | 149,076 |
Total Operating Expenses | 3,873,840 | 3,296,131 |
INCOME FROM OPERATIONS | 2,256,301 | 1,071,042 |
OTHER INCOME (EXPENSE) | ||
Gain on sale of fixed assets | 64,831 | 2,101 |
Other expense | (1,792) | (5,414) |
Interest income | 50,708 | 31,278 |
Total Other Income | 113,747 | 27,965 |
INCOME BEFORE INCOME TAXES | 2,370,048 | 1,099,007 |
INCOME TAX EXPENSE | 493,820 | 498,936 |
NET INCOME | 1,876,228 | 600,071 |
OTHER COMPREHENSIVE INCOME (LOSS) | ||
Foreign currency translation gain (loss) | (239,129) | 75,113 |
Unrealized gains (losses) on investments | (33,235) | 36,288 |
Total Other Comprehensive Income (Loss) | (272,364) | 111,401 |
NET COMPREHENSIVE INCOME | $ 1,603,864 | $ 711,472 |
BASIC EARNINGS (LOSS) PER SHARE (dollars per share) | $ 0.04 | $ 0.01 |
FULLY DILUTED EARNINGS (LOSS) PER SHARE (dollars per share) | $ 0.04 | $ 0.01 |
BASIC WEIGHTED AVG NUMBER OF SHARES OUTSTANDING (shares) | 48,670,305 | 50,632,275 |
FULLY DILUTED WEIGHTED AVG NUMBER OF SHARES OUTSTANDING (shares) | 49,744,101 | 51,287,405 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
OPERATING ACTIVITIES | ||
Net income | $ 1,876,228 | $ 600,071 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 220,245 | 237,116 |
Gain on sale of fixed assets | (64,731) | (2,101) |
Bad debt expense | 63,566 | 45,313 |
Stock awards issued for services | 581,619 | 181,318 |
Changes in operating assets and liabilities: | ||
Changes in accounts receivable | (746,179) | 249,844 |
Changes in income taxes receivable/payable | 591,277 | 568,065 |
Changes in inventories | (863,148) | (399,410) |
Changes in prepaid expenses | 104,008 | 33,698 |
Changes in deferred tax asset/liability | (111,406) | (49,520) |
Changes in accounts payable and accrued liabilities | (198,540) | 500,552 |
Net Cash Provided by Operating Activities | 1,452,939 | 1,964,946 |
INVESTING ACTIVITIES | ||
Proceeds from sale of equipment | 139,763 | 30,451 |
Purchase of investments | (484,142) | (500,408) |
Purchase of fixed assets | (234,778) | (52,720) |
Net Cash Used in Investing Activities | (579,157) | (522,677) |
FINANCING ACTIVITIES | ||
Value of equity awards surrendered by employees for tax liability | (83,600) | 0 |
Cash received in exercise of stock options | 74,241 | 0 |
Purchase of Treasury stock | 0 | (318,904) |
Net Cash Used in Financing Activities | (9,359) | (318,904) |
Effect of exchange rate changes on cash | (113,644) | 20,158 |
NET INCREASE IN CASH | 750,779 | 1,143,523 |
CASH AT BEGINNING OF PERIOD | 11,445,799 | 7,669,644 |
CASH AT END OF PERIOD | 12,196,578 | 8,813,167 |
CASH PAID FOR: | ||
Interest | 0 | 0 |
Income taxes | $ 0 | $ 78 |
CONDENSED FINANCIAL STATEMENTS
CONDENSED FINANCIAL STATEMENTS | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
CONDENSED FINANCIAL STATEMENTS | CONDENSED FINANCIAL STATEMENTS Except where the context otherwise requires, all references herein to the "Company," "we," "us," "our," or similar words and phrases are to Profire Energy, Inc. and its wholly owned subsidiary, 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, and cash flows at March 31, 2018 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, 2017 ("Form 10-K"). The results of operations for the periods ended March 31, 2018 and 2017 are not necessarily indicative of the operating results for the full years. |
ORGANIZATION AND SUMMARY OF SIG
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 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 consolidated financial statements. The Company's accounting policies conform to US GAAP. Profire Energy, Inc. was established on October 9, 2008 upon the closing of transactions contemplated by an Acquisition Agreement among The Flooring Zone, Inc., Profire Combustion, Inc. (the "Subsidiary") and the shareholders of the Subsidiary. Following the closing of the transactions, The Flooring Zone, Inc. was renamed Profire Energy, Inc. (the "Parent"). Pursuant to the terms and conditions of the Acquisition Agreement, 35,000,000 shares of restricted common stock of the Parent were issued to the three shareholders of the Subsidiary in exchange for all of the issued and outstanding shares of the Subsidiary. 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 Parent. 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. The Company provides burner and chemical management products and services for the oil and gas industry primarily in the Canadian and US markets. Significant Accounting Policies There have been no changes to the significant accounting policies of the Company from the information provided in Note 1 of the Notes to the Consolidated Financial Statements in the Company's most recent Form 10-K, except as discussed below. Revenue Recognition In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2014-09 (Topic 606) "Revenue from Contracts with Customers," which supersedes the revenue recognition requirements in Topic 605 “Revenue Recognition” (Topic 605). Topic 606 requires entities to recognize revenue when control of the promised goods or services is transferred to customers. The amount of revenue recognized must reflect the consideration the entity expects to be entitled to receive in exchange for those goods or services. We adopted Topic 606 as of January 1, 2018 using the modified retrospective transition method. See Note 6 for further details. Recent Accounting Pronouncements The Company has evaluated all recent accounting pronouncements and determined that the adoption of pronouncements applicable to the Company has not had or is not expected to have a material impact on the Company's financial position, results of operations or cash flows. Reclassification Certain balances in previously issued consolidated financial statements have been reclassified to be consistent with the current period presentation. The reclassification had no impact on financial position, net income, or stockholders' equity. |
INVENTORY
INVENTORY | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
INVENTORY | INVENTORY Inventories consisted of the following at each balance sheet date: As of March 31, 2018 December 31, 2017 Raw materials $ 183,617 $ 225,735 Finished goods 7,393,606 6,417,494 Work in process — — Subtotal 7,577,223 6,643,229 Reserve for Obsolescence (311,600 ) (197,146 ) Total $ 7,265,623 $ 6,446,083 |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2018 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS' EQUITY As of March 31, 2018 , and December 31, 2017 , the Company held 5,324,742 shares of its common stock in treasury at a total cost of $ 6,890,349 . All purchases of treasury stock have been made at market rates. On March 2, 2018 , the Compensation Committee (the "Committee") of the Company's Board of Directors approved the "2018 Executive Incentive Plan," ("EIP") for Brenton Hatch, the Company's President and Chief Executive Officer, and Ryan Oviatt, the Company's Chief Financial Officer. The EIP provides for the potential award of bonuses to participants based on the Company's financial performance in fiscal year 2018 . Under the terms of the EIP, each participating executive officer has been assigned a target bonus amount for fiscal year 2018 . The target bonus amount for Mr. Hatch is $ 400,000 and the target bonus for Mr. Oviatt is $ 87,500 . Under no circumstance can the participants receive more than two times the assigned target bonus. The bonus amounts, if any, will be paid 50% in cash and 50% in shares of restricted stock based on the volume weighted average price per share over the five trading days prior to the date of the final determination of the bonus amount. The stock portion of the bonuses is intended to constitute an award under the Company's 2014 Equity Incentive Plan. Performance metrics for the awards include revenues, net income, and free cash flow. On March 29, 2018 , the EIP was amended to add Cameron Tidball, the Company's Chief Business Development Officer, with a target bonus of $ 81,900 and Jay Fugal, the Company's Vice President of Operations, with a target bonus of $ 40,000 under the same terms. The maximum compensation expense that could be incurred for this award is $ 1,218,800 and this award will be accounted for as a liability until it is settled. As of March 31, 2018 , the amount of expense expected to be incurred is $ 662,985 . On March 2, 2018 , the Committee approved as a long-term incentive plan (the "LTIP") the grant of a restricted stock unit award to Mr. Oviatt, pursuant to the Company's 2014 Equity Incentive Plan. The agreement is similar to the Long-Term Incentive Plan that was approved in 2017 and provides for the award of up to 70,423 restricted stock units ("Units") under the Company's 2014 Equity Incentive Plan. Subject to performance vesting requirements, each Unit entitles Mr. Oviatt to receive one share of the Company's common stock. The performance period of the LTIP begins on January 1, 2018 and terminates on December 31, 2020 . Performance metrics include three-year average revenue growth rate, operating income as a percentage of revenue, and return on invested capital. On March 30, 2018 , the LTIP was amended to additionally grant Mr. Tidball up to 34,285 shares and Mr. Fugal up to 29,304 shares under the same terms. The maximum compensation expense that could be incurred for this award is $ 317,876 . As of March 31, 2018 , the amount of expense expected to be incurred is $ 151,089 . On March 6, 2018 , our Board of Directors approved a grant of 91,000 restricted stock units ("RSUs") to various employees. The awards vest annually over five years and will result in total compensation expense of $ 193,830 to be recognized over the vesting period. On the same day, the Board of Directors also approved a one-time executive bonus of $ 511,000 to Mr. Hatch and $ 121,500 to Mr. Oviatt for a combined total value of $ 632,500 . The bonuses were paid 50% in cash and 50% in restricted stock. The stock portion of the bonus payment was paid by granting awards of shares of restricted stock under the Company's 2014 Equity Incentive Plan, which was fully vested on the date of grant. The number of shares awarded was 119,953 for Mr. Hatch and 28,521 for Mr. Oviatt. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | 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 March 31, Sales 2018 2017 Canada $ 1,298,832 $ 1,083,898 United States 10,870,886 6,740,597 Total Consolidated $ 12,169,718 $ 7,824,495 For the Three Months Ended March 31, Profit (Loss) 2018 2017 Canada $ (434,667 ) $ (582,046 ) United States 2,310,895 1,182,117 Total Consolidated $ 1,876,228 $ 600,071 As of Long-lived assets March 31, 2018 December 31, 2017 Canada $ 1,444,598 $ 1,508,943 United States 16,166,942 15,771,048 Total Consolidated $ 17,611,540 $ 17,279,991 |
REVENUE
REVENUE | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE On January 1, 2018 , we adopted Topic 606. We elected to use the modified retrospective approach for contracts that were not completed as of January 1, 2018 . Results for reporting periods beginning after January 1, 2018 are presented in accordance with Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting method under Topic 605. As a result of applying the new standard, there were no changes to any financial statement line item. Performance Obligations Our performance obligations include delivery of product, installation of product, and servicing of product. We recognize product revenue performance obligations when the product is delivered to the customer. Upon delivery and at that point in time, the control of the product is transferred to the customer. When product is installed or serviced, we recognize service revenue when the work has been completed and we are entitled to bill the customer for the hours worked. We do not engage in transactions acting as an agent. We usually satisfy our performance obligations within a few months of entering into the contract. Depending on the size of the project, the performance obligations could be satisfied sooner or later. Our customers have the right to return certain unused and unopened products within 90 days and incur an appropriate restocking fee. We provide a warranty on some of our products ranging from 90 days to two years , depending on the product. The amount accrued for expected returns and warranty claims was immaterial as of March 31, 2018 . Contract Balances All of the current contracts are expected to be completed within one year . We have elected to use the practical expedient in 340-40-25-4 (regarding the incremental costs of obtaining a contact) for costs related to contracts that are estimated to be complete 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 contract liabilities because we have not received any payments in advance of recognizing revenue. Significant Judgments For most revenue contracts, we invoice the customer when the performance obligation is satisfied and payment is due 30 days later. Occasionally, other terms such as progress billings or longer terms are agreed to on a case-by-case basis. We do not have significant financing components, non-cash consideration, or variable consideration. We estimate the transaction price between performance obligations based on stand-alone product prices. As of March 31, 2018 , we had $ 3,665,646 allocated to performance obligations that were unsatisfied and we expect those obligations to be satisfied within one year . 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: Category Three Months Ended March 31, 2018 Electronics $ 4,807,030 Manufactured 954,779 Re-Sell 5,692,806 Other 715,103 $ 12,169,718 |
BASIC AND DILUTED EARNINGS PER
BASIC AND DILUTED EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
BASIC AND DILUTED EARNINGS PER SHARE | 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 March 31, 2018 2017 Income (Numerator) Weighted Average Shares (Denominator) Per-Share Income (Numerator) Weighted Average Shares (Denominator) Per-Share Basic EPS Net income available to common stockholders 1,876,228 48,670,305 $ 0.04 600,071 50,632,275 $ 0.01 Effect of Dilutive Securities Stock options & RSUs — 1,073,796 — 655,130 Diluted EPS Net income available to common stockholders + assumed conversions 1,876,228 49,744,101 $ 0.04 600,071 51,287,405 $ 0.01 Options to purchase 266,000 and 1,199,000 shares of common stock at a weighted average price of $ 3.89 and $ 2.03 per share were outstanding during the three months ended March 31, 2018 and 2017 , respectively, but were not included in the computation of diluted EPS because the impact of these shares would be antidilutive. These options, which expire between November 2019 and May 2020 , were still outstanding at March 31, 2018 . |
CONTINGENCIES
CONTINGENCIES | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | CONTINGENCIES As discussed in our most recent 10-K, during Q1 2018 we became aware of a mechanical issue affecting one of the actuators we manufacture and sell. The actuator is an ancillary product sold separately from our burner-management systems (BMS) and chemical-management systems (CMS). We do not believe the mechanical issue presents any significant safety concerns for customers. At the time we filed our 10-K, we did not have enough information to effectively estimate the warranty costs we expected to incur, so we disclosed a wide possible range. Since filing the 10-K, we have been able to collect additional data regarding solutions to the problem and we currently estimate the warranty costs related to this product will be approximately $ 65,000 . This amount has been accrued and is included in accrued liabilities on the balance sheet. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS In accordance with ASC 855 "Subsequent Events," Company Management reviewed all material events through May 9, 2018 , and the following subsequent events occurred: On May 7, 2018 , Profire Energy, Inc. (the “Company”) entered into Stock Redemption Agreements (the “Agreement”) with Hatch Family Holdings Company, LLC, which is wholly owned by Brenton W. Hatch, the Company’s Chairman and Chief Executive Officer and Harold Albert, the Company’s co-founder and member of the Board of Directors. Pursuant to the Agreement, the Company repurchased 638,977 shares (“Redemption Shares") of its Common Stock from each of Messrs. Hatch and Albert, for an aggregate cash purchase price of $ 3,999,996.02 , which amount represents the number of Redemption Shares multiplied by the 30-day average of the closing price for the Profire Common Stock as reported by the Nasdaq Capital Market for the 30 trading days immediately preceding May 2, 2018 . Mr. Hatch entered into this agreement to sell approximately 5% of his shares of the Company in order to diversify his holdings and to take advantage of estate planning opportunities. After the sale of these shares Mr. Hatch still owns 11,930,976 shares representing approximately 25% of the Company’s total shares outstanding and continues to be the largest shareholder of the Company. Mr. Albert decided to enter into this agreement to sell just under 6% of his shares of the Company to diversify his investment portfolio as part of his previously communicated retirement from day-to-day operations of the Company. After the sale of these shares Mr. Albert still owns 10,453,448 shares representing approximately 22% of the Company’s total shares outstanding. |
ORGANIZATION AND SUMMARY OF S15
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Revenue Recognition | Revenue Recognition In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2014-09 (Topic 606) "Revenue from Contracts with Customers," which supersedes the revenue recognition requirements in Topic 605 “Revenue Recognition” (Topic 605). Topic 606 requires entities to recognize revenue when control of the promised goods or services is transferred to customers. The amount of revenue recognized must reflect the consideration the entity expects to be entitled to receive in exchange for those goods or services. We adopted Topic 606 as of January 1, 2018 using the modified retrospective transition method. Performance Obligations Our performance obligations include delivery of product, installation of product, and servicing of product. We recognize product revenue performance obligations when the product is delivered to the customer. Upon delivery and at that point in time, the control of the product is transferred to the customer. When product is installed or serviced, we recognize service revenue when the work has been completed and we are entitled to bill the customer for the hours worked. We do not engage in transactions acting as an agent. We usually satisfy our performance obligations within a few months of entering into the contract. Depending on the size of the project, the performance obligations could be satisfied sooner or later. Our customers have the right to return certain unused and unopened products within 90 days and incur an appropriate restocking fee. We provide a warranty on some of our products ranging from 90 days to two years , depending on the product. The amount accrued for expected returns and warranty claims was immaterial as of March 31, 2018 . Contract Balances All of the current contracts are expected to be completed within one year . We have elected to use the practical expedient in 340-40-25-4 (regarding the incremental costs of obtaining a contact) for costs related to contracts that are estimated to be complete 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 contract liabilities because we have not received any payments in advance of recognizing revenue. Significant Judgments For most revenue contracts, we invoice the customer when the performance obligation is satisfied and payment is due 30 days later. Occasionally, other terms such as progress billings or longer terms are agreed to on a case-by-case basis. We do not have significant financing components, non-cash consideration, or variable consideration. We estimate the transaction price between performance obligations based on stand-alone product prices. |
Recent Accounting Pronouncements | 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 | Reclassification Certain balances in previously issued consolidated financial statements have been reclassified to be consistent with the current period presentation. The reclassification had no impact on financial position, net income, or stockholders' equity. |
INVENTORY (Tables)
INVENTORY (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventories consisted of the following at each balance sheet date: As of March 31, 2018 December 31, 2017 Raw materials $ 183,617 $ 225,735 Finished goods 7,393,606 6,417,494 Work in process — — Subtotal 7,577,223 6,643,229 Reserve for Obsolescence (311,600 ) (197,146 ) Total $ 7,265,623 $ 6,446,083 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Segment Information for Geographic Areas | Segment information for these geographic areas is as follows: For the Three Months Ended March 31, Sales 2018 2017 Canada $ 1,298,832 $ 1,083,898 United States 10,870,886 6,740,597 Total Consolidated $ 12,169,718 $ 7,824,495 For the Three Months Ended March 31, Profit (Loss) 2018 2017 Canada $ (434,667 ) $ (582,046 ) United States 2,310,895 1,182,117 Total Consolidated $ 1,876,228 $ 600,071 As of Long-lived assets March 31, 2018 December 31, 2017 Canada $ 1,444,598 $ 1,508,943 United States 16,166,942 15,771,048 Total Consolidated $ 17,611,540 $ 17,279,991 |
REVENUE (Tables)
REVENUE (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue by Product Line | The table below shows revenue by category: Category Three Months Ended March 31, 2018 Electronics $ 4,807,030 Manufactured 954,779 Re-Sell 5,692,806 Other 715,103 $ 12,169,718 |
BASIC AND DILUTED EARNINGS PE19
BASIC AND DILUTED EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table is a reconciliation of the numerator and denominators used in the earnings per share calculation: For the Three Months Ended March 31, 2018 2017 Income (Numerator) Weighted Average Shares (Denominator) Per-Share Income (Numerator) Weighted Average Shares (Denominator) Per-Share Basic EPS Net income available to common stockholders 1,876,228 48,670,305 $ 0.04 600,071 50,632,275 $ 0.01 Effect of Dilutive Securities Stock options & RSUs — 1,073,796 — 655,130 Diluted EPS Net income available to common stockholders + assumed conversions 1,876,228 49,744,101 $ 0.04 600,071 51,287,405 $ 0.01 |
ORGANIZATION AND SUMMARY OF S20
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | Oct. 09, 2008shareholdershares |
Accounting Policies [Abstract] | |
Restricted common stock issued (shares) | shares | 35,000,000 |
Restricted common stock of Parent issued to shareholders (shareholders) | shareholder | 3 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 183,617 | $ 225,735 |
Finished goods | 7,393,606 | 6,417,494 |
Work in process | 0 | 0 |
Subtotal | 7,577,223 | 6,643,229 |
Reserve for Obsolescence | (311,600) | (197,146) |
Total | $ 7,265,623 | $ 6,446,083 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) | Mar. 06, 2018USD ($)shares | Mar. 02, 2018USD ($)shares | Mar. 31, 2018USD ($)shares | Mar. 30, 2018shares | Mar. 29, 2018USD ($) | Dec. 31, 2017USD ($)shares |
Stockholders' Equity Note [Abstract] | ||||||
Treasury stock (in shares) | shares | 5,324,742 | 5,324,742 | ||||
Treasury stock, at cost | $ 6,890,349 | $ 6,890,349 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Percentage of bonus paid in cash | 0.5 | 0.5 | ||||
Percentage of bonus paid In restricted stock | 0.5 | 0.5 | ||||
Number of trading days required to determine bonus paid in restricted stock | 5 days | |||||
One-time executive bonus approved and paid | $ 632,500 | |||||
Certain Executive Officers and Vice President | Target bonus | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Executive compensation, maximum compensation expense | $ 1,218,800 | 662,985 | ||||
Chief Executive Officer | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Target bonus | 400,000 | |||||
One-time executive bonus approved and paid | $ 511,000 | |||||
Chief Executive Officer | Restricted Stock Units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares granted | shares | 119,953 | |||||
Chief Financial Officer | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Target bonus | $ 87,500 | |||||
Number of restricted stock units authorized (up to) (shares) | shares | 70,423 | |||||
One-time executive bonus approved and paid | $ 121,500 | |||||
Chief Financial Officer | Restricted Stock Units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares granted | shares | 28,521 | |||||
Chief Business Development Officer | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Target bonus | $ 81,900 | |||||
Number of restricted stock units authorized (up to) (shares) | shares | 34,285 | |||||
Vice President of Operations | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Target bonus | $ 40,000 | |||||
Number of restricted stock units authorized (up to) (shares) | shares | 29,304 | |||||
Employees | Restricted Stock Units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares granted | shares | 91,000 | |||||
Annual vesting period | 5 years | |||||
Compensation expense | $ 193,830 | |||||
LTIP | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Executive compensation, maximum compensation expense | $ 317,876 | $ 151,089 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Segment Reporting Information [Line Items] | |||
Sales | $ 12,169,718 | $ 7,824,495 | |
Profit (Loss) | 1,876,228 | 600,071 | |
Long-lived assets | 17,611,540 | $ 17,279,991 | |
Canada | |||
Segment Reporting Information [Line Items] | |||
Sales | 1,298,832 | 1,083,898 | |
Profit (Loss) | (434,667) | (582,046) | |
Long-lived assets | 1,444,598 | 1,508,943 | |
United States | |||
Segment Reporting Information [Line Items] | |||
Sales | 10,870,886 | 6,740,597 | |
Profit (Loss) | 2,310,895 | $ 1,182,117 | |
Long-lived assets | $ 16,166,942 | $ 15,771,048 |
REVENUE - Narrative (Details)
REVENUE - Narrative (Details) | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Product Warranty Liability [Line Items] | |
Period of time that customers have right to return certain unused and unopened products | 90 days |
Period when contracts are expected to be completed | 1 year |
Performance obligations that were unsatisfied | $ 3,665,646 |
Minimum | |
Product Warranty Liability [Line Items] | |
Warranty provided on some products | 90 days |
Maximum | |
Product Warranty Liability [Line Items] | |
Warranty provided on some products | 2 years |
REVENUE - Disaggregation of Rev
REVENUE - Disaggregation of Revenue (Details) | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Disaggregation of Revenue [Line Items] | |
Revenue recognized in the income statement by product line | $ 12,169,718 |
Electronics | |
Disaggregation of Revenue [Line Items] | |
Revenue recognized in the income statement by product line | 4,807,030 |
Manufactured | |
Disaggregation of Revenue [Line Items] | |
Revenue recognized in the income statement by product line | 954,779 |
Re-Sell | |
Disaggregation of Revenue [Line Items] | |
Revenue recognized in the income statement by product line | 5,692,806 |
Other | |
Disaggregation of Revenue [Line Items] | |
Revenue recognized in the income statement by product line | $ 715,103 |
BASIC AND DILUTED EARNINGS PE26
BASIC AND DILUTED EARNINGS PER SHARE (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income (Numerator) | ||
Net income available to common stockholders | $ 1,876,228 | $ 600,071 |
Stock options & RSUs | 0 | 0 |
Net income available to common stockholders assumed conversions | $ 1,876,228 | $ 600,071 |
Weighted Average Shares (Denominator) | ||
Weighted average basic shares outstanding (shares) | 48,670,305 | 50,632,275 |
Effect of Dilutive Securities, Stock options & RSUs (shares) | 1,073,796 | 655,130 |
Weighted average diluted shares outstanding (shares) | 49,744,101 | 51,287,405 |
Per-Share Amount | ||
Basic earnings per share (dollars per share) | $ 0.04 | $ 0.01 |
Diluted earnings per share (dollars per share) | $ 0.04 | $ 0.01 |
Antidilutive securities excluded from computation of earnings per share (shares) | 266,000 | 1,199,000 |
Weighted average price of options (dollars per share) | $ 3.89 | $ 2.03 |
CONTINGENCIES (Details)
CONTINGENCIES (Details) $ in Thousands | Mar. 31, 2018USD ($) |
Ancillary product, actuator | |
Loss Contingencies [Line Items] | |
Estimated warranty costs accrued | $ 65 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | May 07, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Subsequent Event [Line Items] | |||
Common stock, shares outstanding (shares) | 48,806,416 | 48,606,425 | |
Subsequent Event | |||
Subsequent Event [Line Items] | |||
Shares repurchased during period (shares) | 638,977 | ||
Value of stock repurchased during period | $ 3,999,996.02 | ||
Chief Executive Officer | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Percentage ownership of stock redeemed | 5.00% | ||
Common stock, shares outstanding (shares) | 11,930,976 | ||
Common stock ownership, percentage | 25.00% | ||
Director | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Percentage ownership of stock redeemed | 6.00% | ||
Common stock, shares outstanding (shares) | 10,453,448 | ||
Common stock ownership, percentage | 22.00% |