Quarterly report pursuant to Section 13 or 15(d)


6 Months Ended
Jun. 30, 2019
Business Combinations [Abstract]  
ACQUISITION ACQUISITIONOn 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 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. 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 $1,268,930 USD which may include goodwill once the final valuation analysis is completed.

The purchase price calculation is a follows:
Cash $ 2,088,814 
Liabilities 237,032 
$ 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 and goodwill 1,268,930 
Accounts payable (114,187)
Accrual liabilities (261,250)
$ 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 $42,780 and were expensed as incurred and are included in general and administrative expenses.