UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q


~~[X]~~☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	~~Three Months Ended March 31,~~For the quarterly period ended	September 30, 2019
~~[ ]~~☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Transition Period From ________ to _________

Commission File Number 001-36378

PROFIRE ENERGY, INC.

(Exact name of registrant as specified in its charter)


Nevada			20-0019425
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
321 South 1250 West, Suite 1
Lindon, Utah			84042
(Address of principal executive offices)			(Zip Code)

(801) 796-5127

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ~~[X]~~☒ 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 ~~[X]~~☒ 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 [ X ]~~Filer ☒
Non-accelerated filer ~~[ ]~~☐			Smaller reporting company ~~[ X ]~~☒
			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 ~~[X]~~☒

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common, $0.001 Par Value

PFIE

NASDAQ

As of ~~May 6,~~November 5, 2019, the registrant had ~~49,877,561~~50,807,831 shares of common stock issued and ~~47,326,774~~47,395,453 shares of common stock outstanding, par value $0.001.

PROFIRE ENERGY, INC.

FORM 10-Q

TABLE OF CONTENTS


			Page

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

	Condensed Consolidated Balance Sheets	4

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

	Condensed Consolidated Statements of Cash Flows (Unaudited)	6

	Condensed Consolidated Statements of Stockholders' Equity (Unaudited)	7

	Notes to Condensed Consolidated Financial Statements (Unaudited)	69

Item 2. Management's Discussion and Analysis of Financial Condition And Results of Operations			1316

Item 3. Quantitative and Qualitative Disclosure about Market Risk			1620

Item 4. Controls and Procedures			1620

PART II — OTHER INFORMATION

Item 1. Legal Proceedings			1821

Item 1A. Risk Factors			1821

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			1821

Item 3. Defaults Upon Senior Securities			1821

Item 4. Mine Safety Disclosures			1821

Item 5. Other Information			1821

Item 6. Exhibits			1922

Signatures			2023

PART I. FINANCIAL INFORMATION

Item 1 Financial Information


PROFIRE ENERGY, INC. AND SUBSIDIARIES	PROFIRE ENERGY, INC. AND SUBSIDIARIES									PROFIRE ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets	Condensed Consolidated Balance Sheets									Condensed Consolidated Balance Sheets
		As of							As of
		March 31, 2019		December 31, 2018			September 30, 2019		December 31, 2018
		(Unaudited)					(Unaudited)
CURRENT ASSETS	CURRENT ASSETS					CURRENT ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	11,456,878	$	10,101,932	Cash and cash equivalents	$	9,944,128	$	10,101,932
Short-term investments	Short-term investments	806,941		961,256		Short-term investments	864,629		961,256
Short-term investments - other	Short-term investments - other	3,063,843		3,596,484		Short-term investments - other	2,000,000		3,596,484
Accounts receivable, net	Accounts receivable, net	6,444,792		6,885,296		Accounts receivable, net	6,568,599		6,885,296
Inventories, net		9,062,616		9,659,571
Inventories, net (note 3)						Inventories, net (note 3)	9,782,643		9,659,571
Prepaid expenses & other current assets	Prepaid expenses & other current assets	719,296		473,726		Prepaid expenses & other current assets	1,076,138		473,726
Income tax receivable	Income tax receivable	284,805		173,124		Income tax receivable	524,695		173,124
Total Current Assets	Total Current Assets	31,839,171		31,851,389		Total Current Assets	30,760,832		31,851,389
LONG-TERM ASSETS	LONG-TERM ASSETS					LONG-TERM ASSETS
Net deferred tax asset	Net deferred tax asset	—		85,092		Net deferred tax asset	—		85,092
Long-term investments	Long-term investments	8,099,852		7,978,380		Long-term investments	7,319,099		7,978,380

Financing right-of-use asset	Financing right-of-use asset	116,128		—		Financing right-of-use asset	128,738		—
Property and equipment, net	Property and equipment, net	8,276,796		8,020,462		Property and equipment, net	10,896,855		8,020,462
Intangible assets, net						Intangible assets, net	3,934,727		429,956
Goodwill	Goodwill	997,701		997,701		Goodwill	1,120,381		997,701
Intangible assets, net		430,776		429,956
Total Long-Term Assets	Total Long-Term Assets	17,921,253		17,511,591		Total Long-Term Assets	23,399,800		17,511,591
TOTAL ASSETS	TOTAL ASSETS	$	49,760,424	$	49,362,980	TOTAL ASSETS	$	54,160,632	$	49,362,980

CURRENT LIABILITIES	CURRENT LIABILITIES					CURRENT LIABILITIES
Accounts payable	Accounts payable	1,067,595		1,177,985		Accounts payable	$	2,181,592	$	1,177,985
Accrued vacation	Accrued vacation	373,995		311,435		Accrued vacation	446,451		311,435
Accrued liabilities	Accrued liabilities	1,003,913		1,445,510		Accrued liabilities	2,209,303		1,445,510
Current financing lease liability		65,098		—
Current financing lease liability (note 8)						Current financing lease liability (note 8)	67,984		—
Income taxes payable	Income taxes payable	1,046,858		1,172,191		Income taxes payable	627,010		1,172,191
Total Current Liabilities	Total Current Liabilities	3,557,459		4,107,121		Total Current Liabilities	5,532,340		4,107,121
LONG-TERM LIABILITIES	LONG-TERM LIABILITIES					LONG-TERM LIABILITIES
Net deferred income tax liability	Net deferred income tax liability	38,672		—		Net deferred income tax liability	134,046		—
Long-term financing lease liability	Long-term financing lease liability	51,674		—		Long-term financing lease liability	63,951		—
TOTAL LIABILITIES	TOTAL LIABILITIES	3,647,805		4,107,121		TOTAL LIABILITIES	5,730,337		4,107,121

STOCKHOLDERS' EQUITY
Preferred shares: $0.001 par value, 10,000,000 shares authorized: no shares issued or outstanding		—		—
Common shares: $0.001 par value, 100,000,000 shares authorized: 49,859,011 issued and 47,308,224 outstanding at March 31, 2019, and 49,707,805 issued and 47,932,305 outstanding at December 31, 2018		49,859		49,708
STOCKHOLDERS' EQUITY (note 4)						STOCKHOLDERS' EQUITY (note 4)
Preferred stock: $0.001 par value, 10,000,000 shares authorized: no shares issued or outstanding						Preferred stock: $0.001 par value, 10,000,000 shares authorized: no shares issued or outstanding	—		—
Common stock: $0.001 par value, 100,000,000 shares authorized: 50,761,491 issued and 47,618,604 outstanding at September 30, 2019, and 49,707,805 issued and 47,932,305 outstanding at December 31, 2018						Common stock: $0.001 par value, 100,000,000 shares authorized: 50,761,491 issued and 47,618,604 outstanding at September 30, 2019, and 49,707,805 issued and 47,932,305 outstanding at December 31, 2018	50,762		49,708
Treasury stock, at cost	Treasury stock, at cost	(3,943,063)		(2,609,485)		Treasury stock, at cost	(4,859,230)		(2,609,485)
Additional paid-in capital	Additional paid-in capital	28,331,144		28,027,742		Additional paid-in capital	29,608,685		28,027,742
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(2,677,516)		(2,895,683)		Accumulated other comprehensive loss	(2,629,369)		(2,895,683)
Retained earnings	Retained earnings	24,352,195		22,683,577		Retained earnings	26,259,447		22,683,577
TOTAL STOCKHOLDERS' EQUITY	TOTAL STOCKHOLDERS' EQUITY	46,112,619		45,255,859		TOTAL STOCKHOLDERS' EQUITY	48,430,295		45,255,859
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	49,760,424	$	49,362,980	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	54,160,632	$	49,362,980

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


PROFIRE ENERGY, INC. AND SUBSIDIARIES	PROFIRE ENERGY, INC. AND SUBSIDIARIES									PROFIRE ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Comprehensive Income	Condensed Consolidated Statements of Operations and Comprehensive Income									Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)	(Unaudited)									(Unaudited)
		For the Three Months Ended March 31,							For the Three Months Ended September 30,						For the Nine Months Ended September 30,
		2019		2018			2019		2018		2019		2018
REVENUES
REVENUES (note 6)						REVENUES (note 6)
Sales of goods, net	Sales of goods, net	$	10,198,635	$	11,454,615	Sales of goods, net	$	9,251,947	$	10,830,592	$	29,009,837	$	33,009,616
Sales of services, net	Sales of services, net	634,423		715,103		Sales of services, net	653,814		669,310		1,853,013		1,999,764
Total Revenues	Total Revenues	10,833,058		12,169,718		Total Revenues	9,905,761		11,499,902		30,862,850		35,009,380

COST OF SALES	COST OF SALES					COST OF SALES
Cost of goods sold-product	Cost of goods sold-product	4,570,988		5,557,710		Cost of goods sold-product	4,326,335		4,917,449		13,465,989		15,434,698
Cost of goods sold-services	Cost of goods sold-services	497,198		481,867		Cost of goods sold-services	410,130		484,327		1,275,655		1,437,749
Total Cost of Goods Sold	Total Cost of Goods Sold	5,068,186		6,039,577		Total Cost of Goods Sold	4,736,465		5,401,776		14,741,644		16,872,447

GROSS PROFIT	GROSS PROFIT	5,764,872		6,130,141		GROSS PROFIT	5,169,296		6,098,126		16,121,206		18,136,933

OPERATING EXPENSES	OPERATING EXPENSES					OPERATING EXPENSES
General and administrative expenses	General and administrative expenses	3,161,530		3,341,903		General and administrative expenses	3,256,023		3,180,725		9,984,251		9,887,451
Research and development	Research and development	349,058		403,220		Research and development	641,716		377,676		1,503,645		1,097,897
Depreciation and amortization expense	Depreciation and amortization expense	116,223		128,717		Depreciation and amortization expense	130,105		143,327		357,238		401,114
Total Operating Expenses	Total Operating Expenses	3,626,811		3,873,840		Total Operating Expenses	4,027,844		3,701,728		11,845,134		11,386,462

INCOME FROM OPERATIONS	INCOME FROM OPERATIONS	2,138,061		2,256,301		INCOME FROM OPERATIONS	1,141,452		2,396,398		4,276,072		6,750,471

OTHER INCOME (EXPENSE)	OTHER INCOME (EXPENSE)					OTHER INCOME (EXPENSE)
Gain on sale of fixed assets	Gain on sale of fixed assets	16,930		64,831		Gain on sale of fixed assets	34,826		43,904		73,166		129,989
Other expense	Other expense	(551)		(1,792)		Other expense	(2,065)		(1,506)		(3,029)		(7,462)
Interest income	Interest income	91,703		50,708		Interest income	38,478		85,167		216,068		310,646
Total Other Income	Total Other Income	108,082		113,747		Total Other Income	71,239		127,565		286,205		433,173

INCOME BEFORE INCOME TAXES	INCOME BEFORE INCOME TAXES	2,246,143		2,370,048		INCOME BEFORE INCOME TAXES	1,212,691		2,523,963		4,562,277		7,183,644

INCOME TAX EXPENSE	INCOME TAX EXPENSE	577,525		493,820		INCOME TAX EXPENSE	290,943		864,874		986,407		1,934,057

NET INCOME	NET INCOME	$	1,668,618	$	1,876,228	NET INCOME	$	921,748	$	1,659,089	$	3,575,870	$	5,249,587

OTHER COMPREHENSIVE INCOME (LOSS)	OTHER COMPREHENSIVE INCOME (LOSS)					OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation gain (loss)	Foreign currency translation gain (loss)	$	149,415	$	(239,129)	Foreign currency translation gain (loss)	$	(91,397)	$	170,641	$	160,453	$	(223,431)
Unrealized gains (losses) on investments	Unrealized gains (losses) on investments	68,752		(33,235)		Unrealized gains (losses) on investments	(12,386)		(11,963)		105,861		(35,972)
Total Other Comprehensive Income (Loss)	Total Other Comprehensive Income (Loss)	218,167		(272,364)		Total Other Comprehensive Income (Loss)	(103,783)		158,678		266,314		(259,403)

COMPREHENSIVE INCOME	COMPREHENSIVE INCOME	$	1,886,785	$	1,603,864	COMPREHENSIVE INCOME	$	817,965	$	1,817,767	$	3,842,184	$	4,990,184

BASIC EARNINGS PER SHARE		$	0.04	$	0.04
BASIC EARNINGS PER SHARE (note 7)						BASIC EARNINGS PER SHARE (note 7)	$	0.02	$	0.03	$	0.08	$	0.11
FULLY DILUTED EARNINGS PER SHARE	FULLY DILUTED EARNINGS PER SHARE	$	0.03	$	0.04	FULLY DILUTED EARNINGS PER SHARE	$	0.02	$	0.03	$	0.07	$	0.11

BASIC WEIGHTED AVG NUMBER OF SHARES OUTSTANDING	BASIC WEIGHTED AVG NUMBER OF SHARES OUTSTANDING	47,437,424		48,670,305		BASIC WEIGHTED AVG NUMBER OF SHARES OUTSTANDING	47,739,192		48,082,506		47,509,357		48,337,517
FULLY DILUTED WEIGHTED AVG NUMBER OF SHARES OUTSTANDING	FULLY DILUTED WEIGHTED AVG NUMBER OF SHARES OUTSTANDING	48,084,390		49,744,101		FULLY DILUTED WEIGHTED AVG NUMBER OF SHARES OUTSTANDING	48,469,246		48,852,167		48,259,900		49,107,178

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

PROFIRE ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the Three Months Ended March 31,
2019 2018
OPERATING ACTIVITIES
Net income $ 1,668,618 $ 1,876,228
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense 249,889 220,245
Gain on sale of fixed assets (16,930) (64,731)
Bad debt expense 177,906 63,566
Stock awards issued for services 445,984 581,619
Changes in operating assets and liabilities:
Changes in accounts receivable 275,440 (746,179)
Changes in income taxes receivable/payable (234,042) 591,277
Changes in inventories 656,988 (863,148)
Changes in prepaid expenses (239,395) 104,008
Changes in deferred tax asset/liability 123,764 (111,406)
Changes in accounts payable and accrued liabilities (499,721) (198,540)
Net Cash Provided by Operating Activities 2,608,501 1,452,939
INVESTING ACTIVITIES
Proceeds from sale of equipment 18,400 139,763
Sale (Purchase) of investments 647,739 (484,142)
Purchase of fixed assets (443,883) (234,778)
Net Cash Provided by (Used in) Investing Activities 222,256 (579,157)
FINANCING ACTIVITIES
Value of equity awards surrendered by employees for tax liability (143,022) (83,600)
Cash received in exercise of stock options — 74,241
Purchase of Treasury stock (1,333,579) —
Principal paid towards lease liability (15,717) —
Net Cash Used in Financing Activities (1,492,318) (9,359)
Effect of exchange rate changes on cash 16,507 (113,644)
NET INCREASE IN CASH 1,354,946 750,779
CASH AT BEGINNING OF PERIOD 10,101,932 11,445,799
CASH AT END OF PERIOD $ 11,456,878 $ 12,196,578
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID FOR:
Interest $ 1,411 $ —
Income taxes $ 711,524 $ —

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


PROFIRE ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
	For the Nine Months Ended September 30,
	2019		2018
OPERATING ACTIVITIES
Net income	$	3,575,870	$	5,249,587
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	732,396		667,085
Gain on sale of fixed assets	(73,166)		(120,825)
Bad debt expense	255,943		134,901
Stock awards issued for services	358,270		916,795
Changes in operating assets and liabilities:
Changes in accounts receivable	1,244,104		(184,951)
Changes in income taxes receivable/payable	(890,523)		(432,575)
Changes in inventories	1,711,446		(3,863,287)
Changes in prepaid expenses	(586,576)		(172,497)
Changes in deferred tax asset/liability	219,138		22,564
Changes in accounts payable and accrued liabilities	855,207		1,506,396
Net Cash Provided by Operating Activities	7,402,109		3,723,193

INVESTING ACTIVITIES
Proceeds from sale of equipment	75,310		219,269
Sale (purchase) of investments	2,476,227		(876,463)
Purchase of fixed assets	(3,309,191)		(1,271,997)
Payments for acquisitions	(4,322,722)		—
Net Cash Used in Investing Activities	(5,080,376)		(1,929,191)

FINANCING ACTIVITIES
Value of equity awards surrendered by employees for tax liability	(185,004)		(737,024)
Cash received in exercise of stock options	8,870		174,002
Purchase of treasury stock	(2,249,745)		(4,000,000)
Principal paid towards lease liability	(53,190)		—
Net Cash Used in Financing Activities	(2,479,069)		(4,563,022)

Effect of exchange rate changes on cash	(468)		(38,941)

NET DECREASE IN CASH	(157,804)		(2,807,961)
CASH AT BEGINNING OF PERIOD	10,101,932		11,445,799
CASH AT END OF PERIOD	$	9,944,128	$	8,637,838

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

CASH PAID FOR:
Interest	$	4,469	$	—
Income taxes	$	1,793,281	$	2,164,149
NON-CASH FINANCING AND INVESTING ACTIVITIES:
Issuance of common stock - Midflow acquisition	$	1,020,000	$	—

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


PROFIRE ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders' Equity
(Unaudited)
	Common Stock						Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Retained Earnings		Total Stockholders' Equity
	Shares		Amount
Balance, December 31, 2018	47,932,305		$	49,708	$	28,027,742	$	(2,895,683)	$	(2,609,485)	$	22,683,577	$	45,255,859
Stock based compensation					66,714								66,714
Stock issued in exercise of stock options	2,483		2		(2)								—
Stock issued in settlement of RSUs	148,723		149		379,712								379,861
Tax withholdings paid related to stock based compensation					(143,022)								(143,022)
Treasury stock repurchased	(775,287)								(1,333,578)				(1,333,578)
Foreign currency translation							149,415						149,415
Unrealized gains on investments							68,752						68,752
Net income											1,668,618		1,668,618
Balance, March 31, 2019	47,308,224		$	49,859	$	28,331,144	$	(2,677,516)	$	(3,943,063)	$	24,352,195	$	46,112,619
Stock based compensation					297,127								297,127
Stock issued in exercise of stock options	9,174		9		6,841								6,850
Stock issued in settlement of RSUs	148,794		149		(149)								—
Tax withholdings paid related to stock based compensation					(41,411)								(41,411)
Foreign currency translation							102,435						102,435
Unrealized gains on investments							49,495						49,495
Net income											985,504		985,504
Balance, June 30, 2019	47,466,192		$	50,017	$	28,593,552	$	(2,525,586)	$	(3,943,063)	$	25,337,699	$	47,512,619
Stock based compensation					(5,571)								(5,571)
Stock issued in exercise of stock options	4,836		5		2,015								2,020
Stock issued in settlement of RSUs	546		1		(1)								—
Stock issued in acquisition (note 9)	739,130		739		1,019,261								1,020,000
Tax withholdings paid related to stock based compensation					(571)								(571)
Treasury stock repurchased	(592,100)								(916,167)				(916,167)
Foreign currency translation							(91,397)						(91,397)
Unrealized losses on investments							(12,386)						(12,386)
Net income											921,748		921,748
Balance, September 30, 2019	$	47,618,604	$	50,762	$	29,608,685	$	(2,629,369)	$	(4,859,230)	$	26,259,447	$	48,430,295

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


PROFIRE ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders' Equity (Continued)
(Unaudited)
	Common Stock						Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Retained Earnings		Total Stockholders' Equity
	Shares		Amount
Balance, December 31, 2017	48,606,425		$	53,931	$	27,535,469	$	(2,200,462)	$	(6,890,349)	$	25,548,835	$	44,047,424
Stock based compensation					575,235								575,235
Stock issued in exercise of stock options	81,213		81		74,161								74,242
Stock issued in settlement of RSUs	118,778		119		(119)								—
Tax withholdings related to stock based compensation					(83,600)								(83,600)
Foreign currency translation							(239,129)						(239,129)
Unrealized losses on investments							(33,235)						(33,235)
Net income											1,876,228		1,876,228
Balance, March 31, 2018	48,806,416		$	54,131	$	28,101,146	$	(2,472,826)	$	(6,890,349)	$	27,425,063	$	46,217,165
Stock based compensation					281,012								281,012
Stock issued in exercise of stock options	410,421		410		99,350								99,760
Stock issued in settlement of RSUs	143,540		144		(144)								—
Tax withholdings related to stock based compensation					(652,560)								(652,560)
Treasury stock repurchased	(1,277,954)								(4,000,000)				(4,000,000)
Foreign currency translation							(154,943)						(154,943)
Unrealized gains on investments							9,226						9,226
Net income											1,714,270		1,714,270
Balance, June 30, 2018	$	48,082,423	$	54,685	$	27,828,804	$	(2,618,543)	$	(10,890,349)	$	29,139,333	$	43,513,930
Stock based compensation					62,232								62,232
Stock issued in settlement of RSUs	640		1		(1)								—
Tax withholdings related to stock based compensation					(864)								(864)
Foreign currency translation							170,641						170,641
Unrealized losses on investments							(11,963)						(11,963)
Net income											1,659,089		1,659,089
Balance, September 30, 2018	$	48,083,063	$	54,686	$	27,890,171	$	(2,459,865)	$	(10,890,349)	$	30,798,422	$	45,393,065

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

PROFIRE ENERGY, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the three and nine months ended ~~March 31,~~September 30, 2019, and as of December 31, 2018

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, taken together.

The accompanying financial statements have been prepared by the Company without audit. In the opinion of ~~management,~~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,~~September 30, 2019 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, 2018 ("Form 10-K"). The results of operations for the three and nine month periods ended ~~March 31,~~September 30, 2019 and 2018 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 ~~Profire Energy, Inc. and its subsidiary (the "Company")~~the Company is presented to assist in understanding the Company's condensed consolidated financial statements. The Company's accounting policies conform to accounting principles generally accepted in the United States of America ("US GAAP").

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

Significant Accounting Policies

There have been no changes to the significant accounting policies of the Company from the information provided in Note 1 of the Notes to the Consolidated Financial Statements in the Company's most recent Form 10-K, except as discussed below.

Leases

In February of 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2016-02 - Leases (Topic 842), which significantly amends the way companies are required to account for leases. Under the updated leasing guidance, some leases that did not have to be reported previously are now required to be presented as an asset and liability on the balance sheet. In addition, for certain leases, what was previously classified as an operating expense must now be allocated between amortization expense and interest expense. The Company adopted this update as of January 1, 2019 using the modified retrospective transition method. Prior periods have not been restated. Upon implementation, the Company recognized an initial right-of-use asset of $132,488 and lease liability of $132,488. Due to the ~~simplistic~~simple nature of the Company's leases, no change to retained earnings was required. See Note 8 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.

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

PROFIRE ENERGY, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the three and nine months ended ~~March 31,~~September 30, 2019, and as of December 31, 2018

NOTE 3 – INVENTORY

Inventories consisted of the following at each balance sheet date:


		As of							As of
		March 31, 2019		December 31, 2018			September 30, 2019		December 31, 2018
Raw materials	Raw materials	$	436,494	$	76,319	Raw materials	$	457,549	$	76,319
Finished goods	Finished goods	9,484,787		10,474,522		Finished goods	10,168,955		10,474,522
Work in process	Work in process	—		—		Work in process	—		—
Subtotal	Subtotal	9,921,281		10,550,841		Subtotal	10,626,504		10,550,841
Reserve for obsolescence	Reserve for obsolescence	(858,665)		(891,270)		Reserve for obsolescence	(843,861)		(891,270)
Total	Total	$	9,062,616	$	9,659,571	Total	$	9,782,643	$	9,659,571

NOTE 4 – STOCKHOLDERS' EQUITY

As of ~~March 31,~~September 30, 2019, and December 31, 2018, the Company held ~~2,550,787~~3,142,887 and 1,775,500 shares of its common stock in treasury at a total cost of ~~$3,943,063~~$4,859,230 and $2,609,485, respectively.

~~A reconciliation~~On April 22, 2019, the Board of Directors (the “Board”) of the ~~changes~~Company approved the 2019 Executive Incentive Plan (the “EIP”) for Brenton W. Hatch, the Company’s President and Chief Executive Officer, Ryan W. Oviatt, the Company’s Chief Financial Officer, Cameron M. Tidball, the Company’s Chief Business Development Officer, Jay G. Fugal, the Company’s Vice President of Operations, and Patrick D. Fisher, the Company’s Vice President of Product development. The EIP provides for the potential award of bonuses to the participants based on the Company’s financial performance in ~~stockholders' equity during~~fiscal year 2019. If earned, the ~~three months ended March 31, 2019,~~bonuses will be payable in cash and ~~2018,~~stock, and the stock portion of the bonuses is ~~shown below:~~intended to constitute an award under the Company’s 2014 Equity Incentive Plan, as amended (the “Plan”). In addition to the EIP, the Board also approved as a long-term incentive the grants of restricted stock unit awards to Messrs. Oviatt, Tidball, Fugal, and Fisher pursuant to the Plan (the “2019 LTIP”).

Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Treasury Stock Retained Earnings Total Stockholders' Equity
Shares Amount
Balance, December 31, 2017 48,606,425 $ 53,931 $ 27,535,469 $ (2,200,462) $ (6,890,349) $ 25,548,835 $ 44,047,424
Stock based compensation 390,585 390,585
Stock issued in exercise of stock options 81,229 81 258,811 258,892
Stock issued in settlement of RSUs 118,762 119 (119) —
Tax withholdings related to stock based compensation (83,600) (83,600)
Treasury stock repurchased — —
Foreign currency translation (239,129) (239,129)
Unrealized losses on investments (33,235) (33,235)
Net income 1,876,228 1,876,228
Balance, March 31, 2018 48,806,416 $ 54,131 $ 28,101,146 $ (2,472,826) $ (6,890,349) $ 27,425,063 $ 46,217,165
Under the terms of the EIP, each participating executive officer has been assigned a target bonus amount for fiscal 2019. The target bonus amount for Mr. Hatch is $412,000, the target bonus amount for Mr. Oviatt is $90,125, the target bonus amount for Mr. Tidball is $84,357, the target bonus for Mr. Fugal is $41,200, and the target bonus for Mr. Fisher is $38,750 CAD. Under no circumstance can the participants receive more than two times the target bonus amount assigned to such participant.

Participants will be 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 EIP are based on the Company’s total revenue, net income, free cash flow, and product development milestones. Each of these performance goals will be weighted 25% in calculating bonus amounts.

The bonus amounts earned under the 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 bonus amount for each participant, or exceed any limitations otherwise set forth in the Plan. The actual bonus amounts, if any, will be determined by the Compensation Committee of the Board upon the completion of fiscal 2019 and paid by March 15, 2020, subject to all applicable tax withholding.

2019 LTIP

The 2019 LTIP consists of total awards of up to 66,213 restricted stock units (“Units”) to Mr. Oviatt, up to 51,646 Units to Mr. Tidball, up to 35,313 Units to Mr. Fugal, and up to 24,862 Units to Mr. Fisher pursuant to two separate Restricted Stock Unit Award Agreements to be entered between the Company and each participant. One agreement covers 33% of each award recipient’s Units that are subject to time-based vesting, and the other agreement covers the remaining 67% of such award recipient’s Units 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 Unit. The vesting period of the 2019 LTIP began on January 1, 2019 and terminates on December 31, 2021.

PROFIRE ENERGY, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the three and nine months ended ~~March 31,~~September 30, 2019, and as of December 31, 2018

On March 14, 2019, the Board approved a grant of 85,000 restricted stock units ("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, the Board approved a grant of 183,942 RSUs to Independent Directors. Half of the RSUs vest 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.

NOTE 5 – 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,							For the Three Months Ended September 30,						For the Nine Months Ended September 30,
Sales	Sales	2019		2018		Sales	2019		2018		2019		2018
Canada	Canada	$	935,638	$	1,298,832	Canada	$	1,890,592	$	1,803,957	$	3,883,010	$	4,374,844
United States	United States	9,897,420		10,870,886		United States	8,015,169		9,695,945		26,979,840		30,634,536
Total Consolidated	Total Consolidated	$	10,833,058	$	12,169,718	Total Consolidated	$	9,905,761	$	11,499,902	$	30,862,850	$	35,009,380

		For the Three Months Ended March 31,							For the Three Months Ended September 30,						For the Nine Months Ended September 30,
Profit (Loss)	Profit (Loss)	2019		2018		Profit (Loss)	2019		2018		2019		2018
Canada	Canada	$	(382,040)	$	(434,667)	Canada	$	(242,182)	$	24,224	$	(1,171,424)	$	(676,268)
United States	United States	2,050,658		2,310,895		United States	1,163,930		1,634,865		4,747,294		5,925,855
Total Consolidated	Total Consolidated	$	1,668,618	$	1,876,228	Total Consolidated	$	921,748	$	1,659,089	$	3,575,870	$	5,249,587

		As of											As of
Long-Lived Assets	Long-Lived Assets	March 31, 2019		December 31, 2018		Long-Lived Assets					September 30, 2019		December 31, 2018
Canada	Canada	$	2,410,736	$	2,079,173	Canada					$	5,281,869	$	2,509,129
United States	United States	5,866,060		5,941,289		United States					18,117,931		15,002,462
Total Consolidated	Total Consolidated	$	8,276,796	$	8,020,462	Total Consolidated					$	23,399,800	$	17,511,591

NOTE 6 – 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.

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 ~~contact)~~contract) for costs related to contracts that are estimated to be completed within one year. All of ~~the~~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.

PROFIRE ENERGY, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the three and nine months ended September 30, 2019, and as of December 31, 2018

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 March 31,							For the Three Months Ended September 30,						For the Nine Months Ended September 30,
		2019		2018			2019		2018		2019		2018
Electronics	Electronics	$	4,646,597	$	4,807,030	Electronics	$	3,880,542	$	4,988,293	$	12,632,170	$	14,208,867
Manufactured	Manufactured	430,593		954,779		Manufactured	519,990		599,951		1,456,789		2,369,461
Re-Sell	Re-Sell	5,121,445		5,692,806		Re-Sell	4,851,415		5,242,348		14,920,878		16,431,288
Service	Service	634,423		715,103		Service	653,814		669,310		1,853,013		1,999,764
Total Revenue	Total Revenue	$	10,833,058	$	12,169,718	Total Revenue	$	9,905,761	$	11,499,902	$	30,862,850	$	35,009,380

~~PROFIRE ENERGY, INC. AND SUBSIDIARIES~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~For the three months ended March 31, 2019, and December 31, 2018~~

NOTE 7 – 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,																	For the Three Months Ended September 30,
		2019						2018										2019			2018
		Income (Numerator)	Weighted Average Shares (Denominator)	Per-Share Amount		Income (Numerator)	Weighted Average Shares (Denominator)	Per-Share Amount			Income (Numerator)		Weighted Average Shares (Denominator)	Per-Share Amount		Income (Numerator)		Weighted Average Shares (Denominator)	Per-Share Amount
Basic EPS	Basic EPS									Basic EPS
Net income available to common stockholders	Net income available to common stockholders	1,668,618	47,437,424	$	0.04	1,876,228	48,670,305	$	0.04	Net income available to common stockholders	$	921,748	47,739,192	$	0.02	$	1,659,089	48,082,506	$	0.03

Effect of Dilutive Securities	Effect of Dilutive Securities									Effect of Dilutive Securities
Stock options & RSUs	Stock options & RSUs	—	646,966			—	1,073,796			Stock options & RSUs	—		730,054			—		769,661

Diluted EPS	Diluted EPS									Diluted EPS
Net income available to common stockholders + assumed conversions	Net income available to common stockholders + assumed conversions	1,668,618	48,084,390	$	0.03	1,876,228	49,744,101	$	0.04	Net income available to common stockholders + assumed conversions	$	921,748	48,469,246	$	0.02	$	1,659,089	48,852,167	$	0.03

Options to purchase ~~245,600~~244,600 and ~~266,000~~251,600 shares of common stock at a weighted average price of $3.88 and $3.89 per share were outstanding during the three months ended ~~March~~September 30, 2019, and 2018, 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 September 30, 2019.


	For the Nine Months Ended September 30,
	2019								2018
	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	$	3,575,870	47,509,357	$	0.08	$	5,249,587	48,337,517	$	0.11

Effect of Dilutive Securities
Stock options & RSUs	—		750,543			—		769,661

Diluted EPS
Net income available to common stockholders + assumed conversions	$	3,575,870	48,259,900	$	0.07	$	5,249,587	49,107,178	$	0.11

PROFIRE ENERGY, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the three and nine months ended September 30, 2019, and as of December 31, 2018

Options to purchase 244,600 and 251,600 shares of common stock at a weighted average price of $3.88 and $3.89 per share were outstanding during the nine months ended September 30, 2019 and 2018, 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,~~September 30, 2019.

NOTE 8 – 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 restrictions. There are no interest rates implicit in the office equipment lease agreements, so we have used our incremental borrowing rate asto determine the discount ~~rate. Our~~rate to be applied to our financing leases. The weighted average discount rate applied to our financing leases is 4.50% and the weighted average remaining lease term is 2625.3 months.

The following table shows the components of financing lease cost:

~~Financing Lease Cost~~

~~For the Three Months Ended March 31, 2019~~

~~Amortization of right-of-use assets~~

~~16,360~~

~~Interest on lease liabilities~~

~~1,411~~

~~Total financing lease cost~~

~~17,771~~


Financing Lease Cost	For the Three Months Ended September 30, 2019		For the Nine Months Ended September 30, 2019
Amortization of right-of-use assets	$	20,746	$	56,387
Interest on lease liabilities	1,627		4,459
Total financing lease cost	$	22,373	$	60,846

~~PROFIRE ENERGY, INC. AND SUBSIDIARIES~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~For the three months ended March 31, 2019, and December 31, 2018~~

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


Years ending December 31,	Years ending December 31,	Amount		Years ending December 31,	Amount
2019		$	51,449
2019 - remaining				2019 - remaining	$	21,847
2020	2020	44,204		2020	62,995
2021	2021	22,131		2021	40,921
2022	2022	4,973		2022	12,803
2023	2023	—		2023	—
Thereafter	Thereafter	—		Thereafter	—
Total future minimum lease payments	Total future minimum lease payments	$	122,757	Total future minimum lease payments	$	138,566
Less: Amount representing interest	Less: Amount representing interest	5,985		Less: Amount representing interest	6,631
Present value of future payments	Present value of future payments	$	116,772	Present value of future payments	$	131,935
Current portion	Current portion	65,098		Current portion	$	67,984
Long-term portion	Long-term portion	51,674		Long-term portion	$	63,951

Because our office space leases are short-term, we have elected not to recognize them on our balance sheet under the short-term recognition exemption. During the three and nine months ended ~~March 31,~~September 30, 2019, we recognized ~~$8,906~~$18,779 and $41,097, respectively in short-term lease costs associated with office space leases.

NOTE 9 – 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 develops 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

PROFIRE ENERGY, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the three and nine months ended September 30, 2019, and as of December 31, 2018

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 accounting process has not been completed primarily because the valuation of acquired assets has not been finalized. We expect to complete the purchase accounting as soon as practicable but no later than one year from the acquisition date. We do not believe there will be material adjustments. The purchase price of $2,325,846 USD was funded through existing cash. Of this cash purchase amount $246,322 USD has been held back for 6 months pending satisfaction of seller obligations under the purchase agreement. MEP will also receive a 4.5% royalty on proprietary MEP product revenue generated during the next five years. Based on the estimated fair value at the time of purchase, the Company recorded an estimate of intangible assets in the amount of $885,000 USD and estimated goodwill of $122,680 USD pending completion of the final valuation analysis.


The purchase price calculation is a follows:
Cash	$	2,079,524
Liabilities	246,322
	$	2,325,846

The following table summarizes the preliminary estimated fair value of the assets acquired and liabilities assumed at the date of purchase:
Accounts receivable	$	308,431
Inventory	1,123,922
Intangibles assets	885,000
Goodwill	122,680
Accounts payable	(114,187)
	$	2,325,846

Transaction and related costs directly related to the acquisition of MEP, consisting primarily of professional fees and integration expenses, have amounted to approximately $66,430, were expensed as incurred and are included in general and administrative expenses.

Midflow Services

On August 5, 2019, we acquired all of the outstanding membership interests of Midflow Services, LLC ("Midflow"). Midflow is based in Millersburg, Ohio. Midflow provides packaged combustion solutions and services 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 accounting process has not been completed primarily because the valuation of the acquired assets has not been finalized. We expect to complete the purchase accounting as soon as practicable but no later than one year from the acquisition date. We do not believe there will be material adjustments. The purchase price of $3,419,617 was funded through a combination of existing cash and shares of the Company's common stock. The cash portion of the purchase price includes $500,000 placed in an escrow account for 12 months pending satisfaction of certain obligations under the purchase agreement. Based on the estimated fair value at the time of purchase, the Company recorded an estimate of intangible assets in the amount of $2,648,808 which may include goodwill once the final valuation analysis is completed.

PROFIRE ENERGY, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

For the three and nine months ended September 30, 2019, and as of December 31, 2018


The purchase price calculation is as follows:
Cash	$	2,399,617
Stock	1,020,000
	$	3,419,617

The following table summarizes the preliminary estimated fair value of the assets acquired and liabilities assumed at the date of purchase:
Cash	$	172,850
Accounts receivable	324,989
Inventory	264,986
Prepaid expenses	14,878
Property and equipment	134,500
Intangibles and goodwill	2,648,808
Accounts payable	(134,956)
Accrual liabilities	(6,438)
	$	3,419,617

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 910 – SUBSEQUENT EVENTS

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

On April 22, 2019, the Board of Directors (the “Board”) of Profire Energy, Inc. (the “Company”) approved the 2019 Executive Incentive Plan (the “EIP”) for Brenton W. Hatch, the Company’s President and Chief Executive Officer, Ryan W. Oviatt, the Company’s Chief Financial Officer, Cameron M. Tidball the Company’s Chief Business Development Officer, Jay G. Fugal, the Company’s Vice President of Operations, and Patrick D. Fisher, the Company’s Vice President of Product development. The EIP provides for the potential award of bonuses to the participants based on the Company’s financial performance in fiscal 2019. If earned, the bonuses will be payable in cash and stock, and the stock portion of the bonuses is intended to constitute an award under the Company’s 2014 Equity Incentive Plan, as amended (the “Plan”). In addition to the EIP, the Board also approved as a long term incentive plan the grants of a restricted stock unit awards to Messrs. Oviatt, Tidball, Fugal, and Fisher pursuant to the Plan (the “2019 LTIP”).

~~2019 EIP~~

Under the terms of the EIP, each participating executive officer has been assigned a target bonus amount for fiscal 2019. The target bonus amount for Mr. Hatch is $412,000, the target bonus amount for Mr. Oviatt is $90,125, the target bonus amount for Mr. Tidball is $84,357, the target bonus for Mr. Fugal is $41,200, and the target bonus for Mr. Fisher is $38,750 CAD. Under no circumstance can the participants receive more than two times the assigned target bonus.

~~PROFIRE ENERGY, INC. AND SUBSIDIARIES~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~For the three months ended March 31, 2019, and December 31, 2018~~

~~2019 LTIP~~

The 2019 LTIP consists of total awards of up to 66,213 restricted stock units (“Units”) to Mr. Oviatt, up to 51,646 Units to Mr. Tidball, up to 35,313 Units to Mr. Fugal, and up to 24,862 Units to Mr. Fisher pursuant to two separate Restricted Stock Unit Award Agreements to be entered between the Company and each participant. One such agreement will cover 33% of each award recipient’s Units that are subject to time-based vesting, and the other such agreement will cover the remaining 67% of such award recipient’s Units 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 Unit. The vesting period of the 2019 LTIP began on January 1, 2019 and terminates on December 31, 2021 (the “Performance Vesting Date”).

The Units subject to time-based vesting, including 22,071 Units to Mr. Oviatt, 17,215 Units for Mr. Tidball, 11,771 Units to Mr. Fugal, and 8,287 Units to Mr. Fisher, will vest in three equal and annual installments beginning December 31, 2019 and ending on December 31, 2021 if the award recipients’ employment continues with the Company through such dates.

The performance-vesting Units, including up to 44,142 Units to Mr. Oviatt, 34,431 Units for Mr. Tidball, 23,542 Units to Mr. Fugal, and 16,575 Units to Mr. Fisher, may vest based upon the following Company performance metrics:

Performance Metric Weight Target Above Target Outstanding
Three Year Average Revenue Growth Rate 1/3 8 % 10 % 13 %
Operating Income as a Percentage of Revenue (Three Year Target) 1/3 8 % 10 % 12 %
Return on Invested Capital (Three Year Target) 1/3 12 % 17 % 21 %

One-third of such performance-vesting Units, consisting of 14,714 Units for Mr. Oviatt, 11,477 Units for Mr. Tidball, approximately 7,847 Units for Mr. Fugal, and 5,525 Units for Mr. Fisher, may vest for each of the three 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, none 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 2019 Executive Incentive Plan and the Restricted Stock Unit Award Agreements is qualified in its entirety by the text of the 2019 Executive Incentive Plan and each of the Restricted Stock Unit Award Agreements, which the Company intends to file as exhibits to its Quarterly Report on Form 10-Q for the quarter ending June 30, 2019.

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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-month~~three and nine-month periods ended ~~March 31,~~September 30, 2019 and 2018. This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Financial Statements and Notes to the Financial Statements contained in this quarterly report on Form 10-Q and our annual report on Form 10-K for the year ended December 31, 2018.

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 ~~their dates.~~the date on which they are made. We undertake no obligation to amend this report or revise publicly these forward-looking statements (other than as required by law) to reflect subsequent events or circumstances, whether as the result of new information, future events or otherwise.

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

Overview

We are an oilfield technology company providing products that enhance the efficiency, safety, and compliance of the oil and gas industry. We specialize in the ~~creation~~design of ~~burner-management systems used~~burner and combustion management solutions utilized on ~~a variety of oilfield forced-air~~heated applicances throughout the oil and ~~natural-draft fire-tube applications.~~gas industry. We sell our products and services primarily throughout North America. Our experienced team of industry service professionals also provides supporting services for our products.

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Principal Products and Services

InAcross the ~~oil and natural gas~~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 or processing ~~functions, which~~functions. This is provided by a burner flame. This burner flame is integral to the process of separating, treating, storing, and transporting oil and gas. Factors such as the gravity, the presence of hydrates, temperature and hydrogen sulfide content contribute to the requirement for heat in oil and gas production and processing applications. Our burner-management systems ~~help~~ ignite, monitor, and manage this burner flame, which can be operated remotely, reducing the need for employee interaction with the burner, such as for the purposes of re-ignition or temperature monitoring. In addition, our burner-management systems can help reduce gas emissions by quickly reigniting a failed flame.

Oil and gas producers ~~can use our~~utilize burner-management systems to achieve increased safety, greater operational efficiencies, and improved compliance with changing industry regulations. Without burner-management systems, an employee must discover and reignite an extinguished burner flame, then restart the application manually. Therefore, without burner-management systems, all application monitoring is done directly on-site. Such on-site monitoring can result in the interruption of production for longer periods of time, risk inof reigniting a flame, which can lead to burns and explosions, and the possibility of raw gas being vented into the atmosphere when the flame fails. In addition, without a burner-management system, burners often run longer, incurring significant 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. We continue to assess compliance-interest in the industry, and we believe that enhanced burner-management products and services can help our customers be compliant with such regulatory requirements, where applicable. In addition to selling products, we train and dispatch service technicians to service burner flame installations throughout the United States and Canada.

We initially developed our first burner-management system in 2005. Since then, we have released several iterations of our initial burner-management system, increasing features and capabilities, while maintaining compliance with North American standards including, Canadian Standards Association (CSA), Underwriters Laboratories (UL), and Safety Integrity Level (SIL) standards.

Our burner-management systems have become widely used in Western Canada and throughout many regions in the United States. We have sold our burner-management systems to many large energy companies, including Anadarko, Chesapeake, ConocoPhillips, Devon, Encana, XTO, CNRL, Shell, OXY, and others. Our systems have also been sold or installed in other parts of the world, including ~~France, Italy, Argentina, India, Nigeria,~~many countries in Europe, South America, Africa, the Middle East ~~Australia,~~ and ~~Brazil.~~Asia. We are established in the North American oil and gas markets, which is our current primary focus, but we are working to expand further into ~~more~~other international ~~markets as well.~~markets.

Product ~~Extension: PF3100~~Extensions:

The PF3100 is an advanced ~~burner-management~~burner and combustion management system which is designed to operate, monitor, control, and manage a wide variety of ~~more~~ complex, ~~multi-faceted oilfield~~heated appliances. Throughout the industry, Programmable Logic Controllers, or PLCs, are used to operate and manage custom-built oilfield applications. Though capable, PLCs can be expensive, ~~tedious, and~~ difficult to ~~use~~install and ~~install.~~maintain. The PF3100 can help ~~manage and synchronize custom applications helping~~ oilfield producers meet deadlines and improve profitability through an off-the-shelf solution with dynamic customization. We are selling the PF3100 for initial use in the oil and gas industry's natural-draft and forced-draft applications.

We recognized the area of burner management most in need of innovation was the user experience. The PF2200 is designed to optimize installation, commissioning, troubleshooting and daily operation. This focus on the user will optimized the time required on-site for both installation 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.

We frequently assess market needs by participating in industry conferences and soliciting feedback from existing and potential customers, allowing us to provide quality solutions to the ~~oil~~oil- and ~~gas producing~~gas-producing companies we serve. Upon

identifying a potential market need, we begin researching the market and developing products that ~~might~~are likely to have feasibility for future sale.

Additional Complementary Products

In addition to our burner- and combustion-management systems, we also supply complementary products that provide our customers with a complete solution. These products include safety and monitoring devices such as shut-down and temperature valves, pressure ~~transmitter~~transmitters and switches, burners, pilots, and other combustion related equipment. We ~~have invested heavily~~continue to ~~develop~~invest in the development of innovative, complementary, products which we anticipate will help bolster continued long-term growth.

Chemical-Management Systems

In addition to the burner-management systems and complementary technologies we ~~have sold historically, in November 2014~~sell, we ~~expanded our product offering to include~~also offer chemical-management ~~systems through our acquisition of VIM Injection Management assets.~~systems.

Chemical injection is used for a wide variety of purposes in the oil and gas industry including down-hole inhibition of wax, hydrates, and corrosion agents, so that product can flow more efficiently to the wellhead. Once at the wellhead, chemical injection can also be used to further process the oil or gas before it is sent into a pipeline, and with other applications.

Currently, a variety of pumps are used to meter the chemicals injected but are often inaccurate in injecting the proper volume of chemical, as they may not account for all of the variables that affect how much chemical should be injected (e.g., pressure, hydrogen sulfide concentration, etc.) nor the optimal efficiency rates of varying pump systems.

Inaccurate injection levels are problematic because the chemicals injected are expensive, and over-injection causes unnecessary expense for producers. Under-injection can also be problematic because it often results in the creation of poor product (i.e., with wax, hydrate, or corrosion agents) and causes problems with pipeline operations.

Our chemical-management systems monitor and manage the chemical-injection process to ensure that optimal levels of chemicals are injected. This improves the efficiency of the pump and production quality of the well, improves safety for workers that would otherwise be exposed to these chemicals, and improves compliance with pipeline operators. Like our burner-management systems, our chemical-management systems can be monitored and managed remotely via supervisory control and data acquisition or other remote-communication systems. We hold a U.S. patent related to our chemical management system and its process for supplying a chemical agent to a process fluid.

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
March 31, 2019 December 31, 2018 September 30, 2018 June 30, 2018 March 31, 2018
Total Revenues $10,833,058 $10,605,155 $11,499,902 $11,339,760 $12,169,717
Gross Profit Percentage 53.2 % 44.9 % 53.0 % 52.1 % 50.4 %
Operating Expenses $3,626,811 $3,541,209 $3,701,281 $3,810,896 $3,873,838
Net Income $1,668,618 $831,404 $1,658,859 $1,714,270 $1,876,228
Operating Cash Flow $2,608,501 $1,829,363 $599,862 $1,670,392 $1,452,939

Despite a decline in revenues compared to the first quarter of 2018, our revenues for the quarter ended March 31, 2019 were up slightly compared to the prior quarter. If oil prices remain at or above current levels and our customers' capital budgets increase, we expect that sales volumes will continue to increase at a moderate pace. However, increases in customer spending patterns often lag several months behind sustained improvements in oil and gas prices.


	For the three months ended
	September 30, 2019			June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018
Total Revenues	$	9,905,761		$	10,124,031		$	10,833,058		$	10,605,155		$	11,499,902
Gross Profit Percentage	52.2		%	51.2		%	53.2		%	44.9		%	53.0		%
Operating Expenses	$	4,027,844		$	4,190,479		$	3,626,811		$	3,541,209		$	3,701,728
Net Income	$	921,748		$	985,504		$	1,668,618		$	831,404		$	1,659,089
Operating Cash Flow	$	2,094,454		$	2,699,154		$	2,608,501		$	1,829,363		$	599,862

Revenues for the quarter ended ~~March 31,~~September 30, 2019 decreased by ~~11%~~14% or ~~$1,336,659~~$1,594,141 compared to the quarter ended ~~March 31,~~September 30, 2018, which was mostly driven by macro industry changes over that same period. The average oil price in the first nine months of 2019 was only $57.04 per barrel compared to $66.93 per barrel in the first nine months of 2018 representing a ~~carryover result from~~decrease of 14.8%. The Q3 2019 weekly average rig count for North America was 1,024 compared to 1,239 in the ~~significant industry down turn~~same period of last year . These decreases have followed the decline in oil prices in Q4 2018. As a result of ~~the significant decline in oil prices in Q4 2018,~~these macro trends, we believe many ~~E&P~~exploration and production companies have pulled back on ~~capex~~capital expenditure budgets or deferred ~~planned spending to later in~~

1518

~~2019. Although oil prices recovered significantly during~~planned spending. Some customers have indicated to us that they intend to use cash in the ~~first quarter of 2019, the impact of the Q4 2018 downturn could continue~~near future to ~~affect our revenues during the remainder of 2019.~~ fund further debt reductions, increasing dividend payments or to initiate or expand stock repurchase programs.

Our gross profit margin was down slightly from the same quarter of last year but remains within our normally exepected range for a completed quarter. The gross margin percentage fluctuates each quarter due to changes in product mix and product related reserves. Over the past year gross profit has stayed fairly consistent, within an expected range, except for Q4 of 2018 ~~where~~when gross profit decreased due to inventory adjustments related to our ~~CMS~~chemical-management system product line. We anticipate gross margin will stay within the expected range going forward, assuming normal product mix fluctuations. ~~We believe that our gross profit percentage may improve as the PF3100 becomes a larger contributor to revenue in future periods.~~

Operating expenses ~~decreased $247,027~~increased $326,116 from the same quarter of last year, ~~primarily due to lower commissions as a result of reduced revenues and a reduction in stock based compensation due to some significant awards vesting and no longer requiring expense recognition.~~which was consistent with our previously announced strategic investment plan for 2019. As reported in our Annual Report on Form 10-K for the year ended December 31, 2018, ~~10K filing,~~ we ~~plan to make additional~~initiated investments during ~~2019. Planned investments include increased~~2019 in the areas of research and development efforts in order to expand our product offerings, international market evaluation and expansion and an expanded sales and labor force to meet expected market demand and support our expanding product offerings. We intend to continue to fund these activities during the fourth quarter.

Due to the ~~reasons~~lower revenues and higher operating cost to support strategic initiatives discussed above, net income decreased ~~11%~~44% during the quarter ended ~~March 31,~~September 30, 2019 compared to the same quarter in 2018. Operating cash flows increased ~~80%~~significantly during the ~~first~~third quarter of 2019 compared to the ~~first~~third quarter of 2018, despite lower revenue and increased costs. This increase is primarily due to ~~increases~~favorable movements in ~~customer collections.~~net working capital during the third quarter of 2019 compared to unfavorable movements in net working capital in the third quarter of 2018.

Despite the ongoing volatility in the oil and gas industry and macro trends in the short term, we remain focused on the Company's future. Assuming ~~favorable economic conditions continue and~~ we successfully implement our planned investments in research and development, in international market expansion and an expanded sales and labor force, we believe we are well-positioned for continued growth in future ~~periods.~~periods, particularly if oil prices improve and allow our customers to make higher levels of capital expenditures.

Comparison of the nine-months ended September 30, 2019 and 2018

The table below presents certain financial data comparing the nine months ended September 30, 2019 to the same period ended September 30, 2018:


	For the Nine Months Ended September 30,
	2019			2018			$ Change		% Change
Total Revenues	$	30,862,850		$	35,009,380		$	(4,146,530)	(11.8)	%
Gross Profit Percentage	52.2		%	51.8		%			0.4	%
Operating Expenses	$	11,845,134		$	11,386,462		$	458,672	4.0	%
Net Income	$	3,575,870		$	5,249,587		$	(1,673,717)	(31.9)	%
Operating Cash Flow	$	7,402,109		$	3,723,193		$	3,678,916	98.8	%

Revenues during the nine-month period ended September 30, 2019 compared to the same period last year declined 11.8% which is largely due to a 14.8% drop in the average oil price over the same time frame, which caused our customers to reduce capital expenditure. Operating expenses increased 4.0% year-over-year as a result of ongoing strategic investments during the period. As a result of the revenue and operating cost changes, there was a 31.9% decline in net income. Our gross profit percentage increased slightly by 0.4% during the nine-months ended September 30, 2019, compared to the same period in 2018, primarily due to changes in product mix, direct labor costs, and inventory adjustments.

Liquidity and Capital Resources

Working capital at ~~March 31,~~September 30, 2019 was ~~$28,281,712,~~$25,228,492, compared to $27,744,268 at December 31, 2018. This ~~increase was primarily due to~~decrease resulted from a ~~decrease~~combination of decreases in accounts receivable and inventory which were partially offset by decreases in accrued liabilities ~~related to 2018 bonuses and incentive compensation that were paid out during the first quarter.~~such as income taxes payable.

We acquired land for a new office building and research and development facility in Canada in June of 2018 and ~~have begun construction.~~construction of the facility is ongoing. Excluding the cost of the land, the total cost of the building is expected to be approximately ~~$3,500,000 USD, and as~~$4,600,000 USD. As of ~~March 31,~~September 30, 2019, we had spent approximately ~~$698,000~~$3,165,000 USD towards ~~its construction.~~construction of the building. We believe our available cash resources are sufficient to cover construction costs for the building and other expected capital expenditures for the foreseeable future, and we have no current plans to incur debt financing.

Off-Balance Sheet Arrangements

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

Item 3. Quantitative and Qualitative Disclosure about Market Risk

This section is not required.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our Management, with the participation of the Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the ~~Securities~~ Exchange Act, ~~of 1934, as amended,~~ as of the end of the period covered by this Report. 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,~~Management, including our ~~principal executive officer~~Principal Executive Officer and ~~principal financial officer,~~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,~~Management, including the ~~principal executive officer~~Principal Executive Officer and ~~principal financial officer,~~Principal Financial Officer, concluded that the disclosure controls and procedures were effective as of ~~March 31,~~September 30, 2019.

Changes in Internal Control over Financial Reporting

Our Management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the changes in our internal control over financial reporting that occurred during the quarterly period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, Management concluded that no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the quarter ended ~~March 31,~~September 30, 2019 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

1720

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 ~~averse~~adverse to us.

Item 1A. Risk Factors

In addition to the other information set forth in this quarterly report on Form 10-Q, you should carefully consider the risks discussed in our Annual Report on Form 10-K for the year ended December 31, 2018, 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.

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

On November 5, 2018, the Company announced that ~~its~~the Board ~~of Directors~~ had authorized a share repurchase program allowing the Company, at Management's discretion, to repurchase up to $2,000,000 worth of the Company's common stock from time to time through October 31, 2019. ~~All other~~The repurchase program expired on October 31, 2019 and the Company does not have an active repurchase program as of the date of this report.

On August 1, 2019 the Board approved Management to purchase up to an additional $2,000,000 worth of the Company's Common stock pursuant to the Company's existing share repurchase ~~programs previously authorized by the Board have expired.~~program.

The table below sets forth additional information regarding our share repurchases during the three months ended ~~March 31,~~September 30, 2019:

Period (a) Total Number of Shares Purchased (b) Weighted Average Price Paid Per Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans (d) Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans
January 470,303 $ 1.78 470,303 $ 494,403
February 304,984 $ 1.63 304,984 $ —
March — $ — — $ —
Total 775,287 775,287


Period	(a) Total Number of Shares Purchased	(b) Weighted Average Price Paid Per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans	(d) Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans
July	—	$	—	—	$	—
August	308,915	$	1.42	308,915	$	1,561,626
September	283,185	$	1.69	283,185	$	1,083,833
Total	592,100			592,100

Item 3. Defaults Upon Senior Securities

We do not have any debt nor any current plans to obtain debt financing.

Item 4. Mine Safety Disclosures

This item is not applicable.

Item 5. Other Information

This item is not applicable.

1821

Item 6. Exhibits

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


Exhibit 10.1			Membership Interest Purchase Agreement between Profire Energy, Inc. and Midflow Services, LLC dated August 5, 2019*

Exhibit 31.1*			Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)

Exhibit 31.2*			Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)

Exhibit 32.132 .1			Certification of Brenton W. Hatch, Principal Executive Officer ~~Pursuant~~pursuant to 18 U.S.C. Section 1350

Exhibit 32.232.2			Certification of Ryan W. Oviatt, Principal Financial Officer ~~Pursuant~~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

~~+ Indicates Management contract or compensatory plan or arrangement~~

* Filed herewith

1922

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:	~~May 8,~~November 6, 2019	By:	/s/ Brenton W. Hatch
			Brenton W. Hatch
			Chief Executive Officer


Date:	~~May 8,~~November 6, 2019	By:	/s/ Ryan W. Oviatt
			Ryan W. Oviatt
			Chief Financial Officer

2023


Performance Metric	Weight	Target		Above Target		Outstanding
Three Year Average Revenue Growth Rate	1/3	8	%	10	%	13	%
Operating Income as a Percentage of Revenue (Three Year Target)	1/3	8	%	10	%	12	%
Return on Invested Capital (Three Year Target)	1/3	12	%	17	%	21	%