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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
March 31, 2023
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ________ to _________

Commission File Number 001-36378

PROFIRE ENERGY, INC.
(Exact name of registrant as specified in its charter)
Nevada
20-0019425
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
321 South 1250 West, Suite 1
Lindon, Utah
84042
(Address of principal executive offices)
(Zip Code)

(801) 796-5127
(Registrant's telephone number, including area code)


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

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

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)  Yes      No ☒

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common, $0.001 Par ValuePFIENASDAQ




As of May 8, 2023, the registrant had 52,390,017 shares of common stock issued and 47,351,887 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
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)
Condensed Consolidated Statements of Stockholders' Equity (Unaudited)
Condensed Consolidated Statements of Cash Flows (Unaudited)
Notes to the Condensed Consolidated Financial Statements (Unaudited)
Item 2.  Management's Discussion and Analysis of Financial Condition And Results of Operations
Item 3.  Quantitative and Qualitative Disclosure about Market Risk
Item 4.  Controls and Procedures
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
Item 1A.  Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6.  Exhibits
Signatures




PART I. FINANCIAL INFORMATION
Item 1 Financial Information
PROFIRE ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
As of
March 31, 2023December 31, 2022
ASSETS(Unaudited)
CURRENT ASSETS
Cash and cash equivalents$7,219,356 $7,384,578 
Short-term investments2,071,834 1,154,284 
Accounts receivable, net12,308,290 10,886,145 
Inventories, net (note 3)10,589,023 10,293,980 
Prepaid expenses and other current assets (note 4)2,650,823 2,314,639 
Total Current Assets34,839,326 32,033,626 
LONG-TERM ASSETS
Long-term investments7,052,725 7,503,419 
Financing right-of-use asset106,760 120,239 
Property and equipment, net10,330,685 10,423,964 
Intangible assets, net1,225,154 1,268,907 
Goodwill2,579,381 2,579,381 
Total Long-Term Assets21,294,705 21,895,910 
TOTAL ASSETS$56,134,031 $53,929,536 
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable$1,962,882 $2,955,506 
Accrued liabilities (note 5)2,922,928 3,573,994 
Current financing lease liability (note 6)51,821 53,646 
Income taxes payable834,542 205,169 
Total Current Liabilities5,772,173 6,788,315 
LONG-TERM LIABILITIES
Net deferred income tax liability701,406 488,858 
Long-term financing lease liability (note 6)56,522 67,883 
TOTAL LIABILITIES6,530,101 7,345,056 
STOCKHOLDERS' EQUITY (note 7)
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: 52,390,017 issued and 47,351,887 outstanding at March 31, 2023, and 52,143,901 issued and 47,105,771 outstanding at December 31, 2022
52,391 52,144 
Treasury stock, at cost(7,336,323)(7,336,323)
Additional paid-in capital32,096,662 31,737,843 
Accumulated other comprehensive loss(3,224,110)(3,294,873)
Retained earnings28,015,310 25,425,689 
TOTAL STOCKHOLDERS' EQUITY49,603,930 46,584,480 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$56,134,031 $53,929,536 

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


PROFIRE ENERGY, INC. AND SUBSIDIARIES     
Condensed Consolidated Statements of Income and Comprehensive Income (Loss)
(Unaudited)     
For the Three Months Ended March 31,
20232022
(See Note 1)
REVENUES (note 8)
Sales of products, net$13,628,512 $8,878,423 
Sales of services, net924,949 624,717 
Total Revenues14,553,461 9,503,140 
COST OF SALES
Cost of sales - product5,974,339 4,382,700 
Cost of sales - services746,014 563,736 
Total Cost of Sales6,720,353 4,946,436 
GROSS PROFIT7,833,108 4,556,704 
OPERATING EXPENSES
General and administrative4,047,969 3,392,379 
Research and development336,452 308,316 
Depreciation and amortization142,887 167,015 
Total Operating Expenses4,527,308 3,867,710 
INCOME FROM OPERATIONS3,305,800 688,994 
OTHER INCOME (EXPENSE)
Gain on sale of assets53,075 95,842 
Other expense(9,553)(18,081)
Interest income58,047 21,545 
Interest expense(933)(697)
Total Other Income100,636 98,609 
INCOME BEFORE INCOME TAXES3,406,436 787,603 
INCOME TAX EXPENSE(816,815)(160,442)
NET INCOME$2,589,621 $627,161 
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation gain (loss)$(5,524)$158,359 
Unrealized gains (losses) on investments76,287 (287,126)
Total Other Comprehensive Income (Loss)70,763 (128,767)
COMPREHENSIVE INCOME$2,660,384 $498,394 
BASIC EARNINGS PER SHARE$0.05 $0.01 
FULLY DILUTED EARNINGS PER SHARE$0.05 $0.01 
BASIC WEIGHTED AVG NUMBER OF SHARES OUTSTANDING47,174,518 47,481,439 
FULLY DILUTED WEIGHTED AVG NUMBER OF SHARES OUTSTANDING48,612,833 48,536,418 

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


PROFIRE ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders' Equity
(Unaudited)
Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Treasury StockRetained EarningsTotal Stockholders' Equity
SharesAmount
Balance, December 31, 202247,105,771 $52,144 $31,737,843 $(3,294,873)$(7,336,323)$25,425,689 $46,584,480 
Stock based compensation— — 223,047— — — 223,047
Stock issued in settlement of RSUs and accrued bonuses246,116 247 378,279 — — — 378,526 
Tax withholdings paid related to stock based compensation— — (242,506)— — — (242,506)
Foreign currency translation— — — (5,524)— — (5,524)
Unrealized gains on investments— — — 76,287 — — 76,287 
Net income— — — — — 2,589,621 2,589,621 
Balance, March 31, 202347,351,887 $52,391 $32,096,662 $(3,224,110)$(7,336,323)$28,015,310 $49,603,930 

Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Treasury StockRetained EarningsTotal Stockholders' Equity
SharesAmount
Balance, December 31, 202147,643,233 $51,720 $30,819,394 $(2,100,467)$(6,107,593)$21,477,929 $44,140,983 
Stock based compensation— — 138,503— — — 138,503
Stock issued in settlement of RSUs and accrued bonuses139,894 140 212,647 — — — 212,787 
Tax withholdings paid related to stock based compensation— — (91,098)— — — (91,098)
Treasury stock repurchased(509,631)— — — (622,263)— (622,263)
Foreign currency translation— — — 158,359 — — 158,359 
Unrealized losses on investments— — — (287,126)— — (287,126)
Net income— — — — — 627,161 627,161 
Balance, March 31, 202247,273,496 $51,860 $31,079,446 $(2,229,234)$(6,729,856)$22,105,090 $44,277,306 

The accompanying notes are an integral part of these condensed consolidated financial statements.
6


PROFIRE ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the Three Months Ended March 31,
20232022
OPERATING ACTIVITIES
Net income$2,589,621 $627,161 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization expense262,039 281,119 
Gain on sale of property and equipment(53,075)(95,842)
Bad debt expense41,792 28,453 
Stock awards issued for services223,047 138,503 
Changes in operating assets and liabilities:
Accounts receivable(1,108,889)(1,663,295)
Income taxes receivable/payable629,371 439,034 
Inventories(292,119)(530,568)
Prepaid expenses and other current assets(335,832)49,283 
Deferred tax asset/liability212,548 47,030 
Accounts payable and accrued liabilities(1,646,723)(513,227)
Net Cash Provided by (Used in) Operating Activities521,780 (1,192,349)
INVESTING ACTIVITIES
Proceeds from sale of property and equipment97,886 112,982 
Sale (purchase) of investments(390,548)679,636 
Purchase of property and equipment(153,755)(207,848)
Net Cash Provided by (Used in) Investing Activities(446,417)584,770 
FINANCING ACTIVITIES
Value of equity awards surrendered by employees for tax liability(242,506)(91,098)
Cash received in exercise of stock options  
Purchase of treasury stock (622,263)
Principal paid towards lease liability(6,947)(12,629)
Net Cash Used in Financing Activities(249,453)(725,990)
Effect of exchange rate changes on cash8,868 24,766 
NET DECREASE IN CASH(165,222)(1,308,803)
CASH AT BEGINNING OF PERIOD7,384,578 8,188,270 
CASH AT END OF PERIOD$7,219,356 $6,879,467 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID FOR:
Interest$933 $697 
Income taxes$ $ 
NON-CASH FINANCING AND INVESTING ACTIVITIES
Common stock issued in settlement of accrued bonuses$378,526 $212,787 

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

PROFIRE ENERGY, INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements (Unaudited)
For the Three Months Ended March 31, 2023 and 2022


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 subsidiaries, taken together.

The accompanying condensed consolidated financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments have been made (which include only normal recurring adjustments) which are necessary to present fairly the financial position, results of operations, stockholders' equity, and cash flows at March 31, 2023 and for all periods presented herein.

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, 2022 ("Form 10-K").  The results of operations for the three-month periods ended March 31, 2023 and 2022 are not necessarily indicative of the operating results for the full years. Certain amounts in the accompanying March 31, 2022 condensed consolidated statement of income and comprehensive income (loss) have been reclassified to conform to the March 31, 2023 presentation.

NOTE 2 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Line of Business

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

The Company provides burner-management products, solutions and services primarily for the oil and gas industry within the US and Canadian markets. The Company has made progress in expansion efforts outside of these markets into other industries with combustion and burner management requirements as well as into other international locations.

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.

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.

NOTE 3 – INVENTORIES

Inventories consisted of the following at each balance sheet date:
As of
March 31, 2023December 31, 2022
Raw materials$152,080 $166,927 
Finished goods10,773,616 10,452,930 
Subtotal10,925,696 10,619,857 
Reserve for obsolescence(336,673)(325,877)
Total$10,589,023 $10,293,980 

8

PROFIRE ENERGY, INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
For the Three Months Ended March 31, 2023 and 2022
NOTE 4 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consisted of the following at each balance sheet date:
 As of
 March 31, 2023December 31, 2022
Prepaid inventory$1,273,029 $784,420 
Accrued receivables866,677 881,176 
Prepaid insurance164,951 240,785 
Interest receivables59,163 72,761 
Tax credits98,586 118,035 
Other188,417 217,462 
Total$2,650,823 $2,314,639 


NOTE 5 – ACCRUED LIABILITIES

Accrued liabilities consisted of the following at each balance sheet date:
 As of
 March 31, 2023December 31, 2022
Employee-related payables$1,416,556 $2,404,848 
Deferred revenue466,048 420,827 
Inventory-related payables644,629 285,109 
Tax-related payables106,002 54,762 
Warranty liabilities90,248 74,103 
Other199,445 334,345 
Total$2,922,928 $3,573,994 

NOTE 6 – LEASES

We have leases for office equipment and office space. The leases for office equipment are classified as financing leases, and the typical term is between 36 and 60 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 to determine the discount rate to be applied to our financing leases for the purpose of determining our lease liabilities. The weighted average discount rate applied to our financing leases is 4.50% and the weighted average remaining lease term is 3.3 years.

The following table shows the components of financing lease cost:
For the Three Months Ended March 31,
Financing Lease Cost20232022
Amortization of right-of-use assets$7,240 $12,418 
Interest on lease liabilities933 696 
Total financing lease cost$8,173 $13,114 


9

PROFIRE ENERGY, INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
For the Three Months Ended March 31, 2023 and 2022
The Company leases one warehouse space with a two-year lease, which is recorded as an operating lease. We consider the remainder of our office space leases to be short-term, and we have elected not to recognize those on our balance sheet under the short-term recognition exemption. Operating lease expense recognized during the three-months ended March 31, 2023 and March 31, 2022 was $18,852 and $20,652, respectively.

Supplemental operating lease information as of March 31, 2023 is as follows:

Operating right of use assets$30,063 
Current operating lease liabilities25,671 
Long-term operating lease liabilities4,392 
Weighted-average remaining lease term in years1.3
Weighted-average discount rate4.5 %

As of March 31, 2023, maturities of lease liabilities are as follows:
Years ending December 31,Amount
2023$43,439 
202440,886 
202511,927 
202611,927 
20276,958 
Thereafter 
Total future minimum lease payments$115,137 
Less: Amount representing interest6,794 
Present value of future payments$108,343 
Current portion$51,821 
Long-term portion$56,522 




NOTE 7 – STOCKHOLDERS' EQUITY

As of March 31, 2023 and December 31, 2022, the Company held 5,038,130 shares of its common stock in treasury at a total cost of $7,336,323, respectively.

As of March 31, 2023, the Company had 568,985 restricted stock units ("RSUs"), 640,364 performance-based RSUs, and 759,900 stock options outstanding with $651,626 in remaining compensation expense to be recognized over the next 1.5 years. See further details below about certain subsets of these outstanding equity-based awards.

2022 EIP and LTIP

On April 6, 2022, the Compensation Committee of the Board (the "Compensation Committee") approved the 2022 Executive Incentive Plan (the “2022 EIP”) for Ryan W. Oviatt, the Company's Co-CEO, Co-President, and CFO, Cameron M. Tidball, the Company's Co-CEO and Co-President, and Patrick D. Fisher, the Company's Vice President of Product Development. The 2022 EIP provided for the potential award of incentive compensation to the participants based on the Company’s financial performance in fiscal 2022. The incentive compensation was payable in cash and stock, and the stock portion of the incentive compensation is intended to constitute an award under the Company's 2014 Equity Incentive Plan, as amended (the "Plan").

10

PROFIRE ENERGY, INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
For the Three Months Ended March 31, 2023 and 2022
Participants were eligible to receive incentive compensation based upon reaching or exceeding performance goals established by the Compensation Committee for fiscal 2022. The performance goals in the 2022 EIP were based on the Company’s total revenue, EBITDA, and a non-financial milestone relating to revenue source diversification. Each of these performance goals were weighted one third in calculating incentive compensation amounts.

On March 6, 2023, the Compensation Committee approved the incentive compensation amounts based on achieving certain targets pursuant to the 2022 EIP. The incentive compensation amounts earned under the 2022 EIP were paid 50% in cash and 50% in shares of restricted stock under the Plan. The incentive compensation amounts resulted in the Compensation Committee approving a one-time bonus for Company executives that was settled by issuing a total of 341,961 shares of common stock, or 192,964 shares net of tax withholding. These shares were fully vested as of March 6, 2023.

In addition to the 2022 EIP, the Board also approved as a long-term incentive plan the grants of restricted stock unit awards to Messrs. Oviatt, Tidball, and Fisher pursuant to the Plan (the “2022 LTIP”). The 2022 LTIP consists of total awards of up to 230,232 RSUs to Mr. Oviatt, up to 230,232 RSUs to Mr. Tidball, and up to 43,023 RSUs to Mr. Fisher, pursuant to two separate restricted stock unit award agreements (collectively, the “2022 LTIP Restricted Stock Unit Award Agreements”) entered into between the Company and each participant. One such agreement covers the 33% of each award recipient’s RSUs that are subject to time-based vesting, and the other such agreement covers the remaining 67% of such award recipient’s RSUs 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 2022 LTIP began on January 1, 2022 and terminates on December 31, 2024 (the “2022 LTIP Performance Vesting Date”).

The RSUs subject to time-based vesting, including 76,744 RSUs to Mr. Oviatt, 76,744 RSUs for Mr. Tidball, and 14,341 RSUs to Mr. Fisher, will vest in three equal and annual installments beginning December 31, 2022 and ending on December 31, 2024 if the award recipients’ employment continues with the Company through such dates.

The performance-vesting RSUs, including up to 153,488 RSUs for Mr. Oviatt, 153,488 RSUs for Mr. Tidball, and 28,682 RSUs to Mr. Fisher, may vest at the end of the three-year performance period beginning January 1, 2022 based upon the following Company performance metrics:


Performance MetricWeightTargetAbove TargetOutstanding
Total Shareholder Return (based on the Company’s closing price of its common stock at the end of the Performance Period relative to its closing price as of the last trading day in 2021)1/389%136%183%
Relative Total Shareholder Return (based on the Company’s ranked performance in closing stock price growth relative to a peer group of companies during the Performance Period)1/3Third QuartileSecond QuartileFirst Quartile
EBITDA as a Percentage of Total Revenue1/310%15%20%

One-third of such performance-vesting RSUs, consisting of 51,163 RSUs for Mr. Oviatt, 51,163 RSUs for Mr. Tidball, and 9,561 RSUs for Mr. Fisher, may vest for each of the three performance metrics identified in the table above. The number of RSUs that will vest for each performance metric on the 2022 LTIP Performance Vesting Date shall be determined as follows:
a.if the “Target” level for such performance metric is not achieved, none of the RSUs relating to such performance metric will vest;
b.if the “Target” level (but no higher level) for such performance metric is achieved, 50% of the RSUs relating to such performance metric will vest;
c.if the “Above Target” level (but no higher level) for such performance metric is achieved, 75% of the RSUs relating to such performance metric will vest; and
d.if the “Outstanding” level for such performance metric is achieved, 100% of the RSUs relating to such performance metric will vest.

The foregoing summary of the 2022 EIP and the 2022 LTIP Restricted Stock Unit Award Agreements is qualified in its entirety by the text of the 2022 EIP and each of the 2022 LTIP Restricted Stock Unit Award Agreements, which are filed as exhibits to the Company's Form 10-Q for the quarter ending March 31, 2022.



11

PROFIRE ENERGY, INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
For the Three Months Ended March 31, 2023 and 2022
2022 RSUs

On June 15, 2022, pursuant to the annual renewal of director compensation, the Board approved a grant of 178,623 RSUs to the Company's independent directors. Half of the RSUs vested immediately on the date of grant and the remaining 50% of the RSUs will vest on the first anniversary of the grant date or at the Company's next annual meeting of stockholders, whichever is earlier. The awards will result in total compensation expense of approximately $234,000 to be recognized over the vesting period.

2021 LTIP

On May 28, 2021, the Board approved as a long-term incentive plan, the grants of restricted stock unit awards to Messrs. Oviatt, Tidball, Fugal, and Fisher pursuant to the Plan (the “2021 LTIP”). The 2021 LTIP consists of total awards of up to 204,543 RSUs to Mr. Oviatt, up to 204,543 RSUs to Mr. Tidball, up to 85,908 RSUs to Mr. Fugal, and up to 47,973 RSUs to Mr. Fisher, pursuant to two separate restricted stock unit award agreements (collectively, the “2021 LTIP Restricted Stock Unit Award Agreements”) between the Company and each participant. One agreement covers the 33% of each award recipient’s RSUs that are subject to time-based vesting, and the other agreement covers the remaining 67% of such award recipient’s RSUs that may vest based on performance metrics. Upon vesting, the award agreements entitle the award recipients to receive one share of the Company’s common stock for each vested RSU. The vesting period of the 2021 LTIP began on January 1, 2021 and terminates on December 31, 2023 (the “2021 LTIP Performance Vesting Date”).

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

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

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

One-third of such performance-vesting RSUs, consisting of 45,454 RSUs for Mr. Oviatt, 45,454 RSUs for Mr. Tidball, 19,091 RSUs for Mr. Fugal, and 10,661 RSUs for Mr. Fisher, are eligible to vest for each of the three performance metrics identified in the table above. The number of RSUs that will vest for each performance metric on the 2021 LTIP Performance Vesting Date shall be determined as follows:
if the “Target” level for such performance metric is not achieved, none of the RSUs relating to such performance metric will vest;
if the “Target” level (but no higher level) for such performance metric is achieved, 50% of the RSUs 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 RSUs relating to such performance metric will vest; and
if the “Outstanding” level for such performance metric is achieved, 100% of the RSUs relating to such performance metric will vest.

Mr. Fugal resigned, effective October 31, 2021, from his position as Vice President of Operations to pursue an opportunity as CEO of another company. Accordingly, Mr. Fugal will not receive incentive compensation under the 2021 LTIP, and his unvested RSUs have been forfeited.

The foregoing summary of the 2021 LTIP is qualified in its entirety by the text of each of the Restricted Stock Unit Award Agreements, which the Company filed as exhibits to its quarterly report on Form 10-Q for the quarter ended June 30, 2021.




12

PROFIRE ENERGY, INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
For the Three Months Ended March 31, 2023 and 2022
NOTE 8 – REVENUE

Performance Obligations

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

Our customers have the right to return certain unused and unopened products within 90 days for a restocking fee. We provide a warranty on some of our products ranging from 90 days to 2 years, depending on the product. See Note 5 for the amount accrued for expected returns and warranty claims as of March 31, 2023.

Contract Balances

We have elected to use the practical expedient in ASC 340-40-25-4 (regarding recognition of the incremental costs of obtaining a contract) for costs related to contracts that are estimated to be completed within one year. All of our current sales contracts and service contracts are expected to be completed within one year, and as a result, we have not recognized a contract asset account. If we had chosen not to use this practical expedient, we would not expect a material difference in the contract balances. Occasionally, we collect milestone payments up front from customers on larger jobs. These payments are classified as deferred revenue until the deliverables have been met and revenue can be properly recognized in our financial statements. Each of the contracts related to these milestone payments is short-term in nature and we expect to recognize associated revenues within one year. As a result, we consider it appropriate to record deferred revenue for these transactions and do not have any other contract liability balances.

Disaggregation of Revenue

We consider all revenue recognized in the income statement to be revenue from contracts with customers. The table below shows revenue by category:
For the Three Months Ended March 31,
20232022
Electronics$5,980,290 $3,478,112 
Manufactured1,210,325 521,128 
Re-Sell6,437,897 4,879,183 
Service924,949 624,717 
Total Revenue$14,553,461 $9,503,140 

13

PROFIRE ENERGY, INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
For the Three Months Ended March 31, 2023 and 2022
NOTE 9 – BASIC AND DILUTED EARNINGS (LOSS) 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,
20232022
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$2,589,621 47,174,518 $0.05 $627,161 47,481,439 $0.01 
Effect of Dilutive Securities
Stock options & RSUs 1,438,315  1,054,979 
Diluted EPS
Net income available to common stockholders + assumed conversions$2,589,621 $48,612,833 $0.05 $627,161 $48,536,418 $0.01 





14

PROFIRE ENERGY, INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
For the Three Months Ended March 31, 2023 and 2022
NOTE 10 – 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,
Sales20232022
Canada$2,136,204 $1,997,251 
United States12,417,257 7,505,889 
Total Consolidated$14,553,461 $9,503,140 
For the Three Months Ended March 31,
Profit (Loss)20232022
Canada$(490,538)$(352,570)
United States3,080,159 979,731 
Total Consolidated$2,589,621 $627,161 
As of
Long-Lived AssetsMarch 31, 2023December 31, 2022
Canada$5,012,993 $5,067,965 
United States5,424,452 5,476,238 
Total Consolidated$10,437,445 $10,544,203 
 
NOTE 11 – SUBSEQUENT EVENTS

In accordance with ASC 855 "Subsequent Events," Company management reviewed all material events through the date this report was issued.

On April 25, 2023, the Compensation Committee approved the 2023 Executive Incentive Plan (the “2023 EIP”) for Messrs. Oviatt, Tidball, and Fisher. The 2023 EIP provides for the potential award of incentive compensation to the participants based on the Company’s financial performance in fiscal 2023. If earned, the incentive compensation will be payable in cash and stock, and the stock portion of the incentive compensation is intended to constitute an award under the Company’s 2023 Equity Incentive Plan (the “2023 Plan”). In addition to the 2023 EIP, the Board also approved as a long-term incentive plan the grants of a restricted stock unit awards to Messrs. Oviatt, Tidball, and Fisher pursuant to the 2023 Plan (the “2023 LTIP”). The 2023 Plan was adopted by the Board of Directors on April 25, 2023, subject to shareholder approval at the annual meeting of stockholders of the Company scheduled for June 14, 2023 (the “Annual Meeting”). The Stock portion of the 2023 EIP and the 2023 LTIP will be forfeited by the executive officers if the Company’s stockholders do not approve the 2023 Plan at the Annual Meeting.

2023 EIP

Under the terms of the 2023 EIP, each participating executive officer has been assigned a target incentive compensation amount for fiscal 2023. The target incentive compensation amount for Mr. Oviatt is equal to 62% of his base salary as of December 31, 2023, the target incentive compensation amount for Mr. Tidball is equal to 62% of his base salary as of December 31, 2023, and the target incentive compensation for Mr. Fisher is equal to 37% of his base salary as of December 31, 2023. Under no circumstance can the participants receive more than two times the assigned target incentive compensation.

Participants will be eligible to receive incentive compensation based upon reaching or exceeding performance goals established by the Compensation Committee for fiscal 2023. The performance goals in the 2023 EIP are based on the Company’s total revenue, EBITDA, and two non-financial factors including revenue source diversification and safety and environmental performance. Each of the revenue, EBITDA, and revenue diversification performance goals will be weighted 30% while the safety and environment goal will be weighted 10% in calculating incentive compensation amounts.

15

PROFIRE ENERGY, INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
For the Three Months Ended March 31, 2023 and 2022
The incentive compensation amounts earned under the 2023 EIP, if any, will be paid 50% in cash and 50% in shares of restricted stock under the 2023 Plan, subject to the 2023 Plan being approved by shareholders as described above. In no event shall the total award exceed 200% of the target incentive compensation amount for each participant, or exceed any limitations otherwise set forth in the 2023 Plan. The actual incentive compensation amounts, if any, will be determined by the Compensation Committee upon the completion of fiscal 2023 and paid by March 15, 2024, subject to all applicable tax withholding.

2023 LTIP

The 2023 LTIP consists of total awards of up to 287,076 restricted stock units (“Units”) to Mr. Oviatt, up to 287,076 Units to Mr. Tidball, and up to 50,868 Units to Mr. Fisher, pursuant to two separate restricted stock unit award agreements (collectively, the “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, and subject to the 2023 Plan being approved by shareholders as described above, 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 2023 LTIP began on January 1, 2023 and terminates on December 31, 2025 (the “Performance Vesting Date”).

The Units subject to time-based vesting, including 95,692 Units to Mr. Oviatt, 95,692 Units for Mr. Tidball, and 16,956 Units to Mr. Fisher, will vest in three equal and annual installments beginning December 31, 2023 and ending on December 31, 2025 if the award recipients’ employment continues with the Company through such dates.

The performance-vesting Units, including up to 191,384 Units for Mr. Oviatt, 191,384 Units for Mr. Tidball, and 33,912 Units to Mr. Fisher, may vest over a three-year performance period beginning January 1, 2023 (the “Performance Period”) based upon the following Company performance metrics:

Performance MetricsWeightTargetAbove TargetOutstanding
Total Shareholder Return (based on the Company’s closing price of its common stock at the end of the Performance Period relative to its closing price as of the last trading day in 2022)1/394.2%142.7%191.3%
Relative Total Shareholder Return (based on the Company’s ranked performance in closing stock price growth relative to a peer group of companies during the Performance Period)1/3Third QuartileSecond QuartileFirst Quartile
EBITDA as a Percentage of Total Revenue1/315%17.5%20%


One-third of such performance-vesting Units, consisting of 63,794 Units for Mr. Oviatt, 63,794 Units for Mr. Tidball, and 11,304 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:
a.if the “Target” level for such performance metric is not achieved, none of the Units relating to such performance metric will vest;
b.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;
c.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
d.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 2023 Executive Incentive Plan and the Restricted Stock Unit Award Agreements is qualified in its entirety by the text of the 2023 Executive Incentive Plan and each of the Restricted Stock Unit Award Agreements, which are filed as exhibits to this Quarterly Report on Form 10-Q for the quarter ending March 31, 2023.
16


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 periods ended March 31, 2023 and 2022. 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, 2022.

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

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

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

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

Overview

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

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Principal Products and Services

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

Oil and gas companies, including upstream, midstream, downstream, pipeline, and gathering operators, utilize burner-management systems to achieve increased safety, greater operational efficiencies, and improved compliance with industry regulations. Without a burner-management system, a field employee must discover and reignite an extinguished burner flame, then restart the application manually. Therefore, without a proper burner-management system, all application monitoring must be accomplished in-person, directly on-site. This requirement for on-site monitoring, in an operational environment with limited field personnel, can result in the potential interruption of production for long periods of time and increased risks associated with reigniting a flame, which can lead to site hazards, including explosions and the possibility of venting gas into the atmosphere. In addition, without a burner-management system, burners often operate for longer durations, frequently with lower efficiency, resulting in increased equipment fatigue and greater expense related to fuel consumption.

We continue to assess regulatory requirements applicable to our customers. We believe that burner-management systems and services offer solutions for customers to meet compliance standards where applicable. In addition to product sales, we dispatch specialized service technicians to provide maintenance and installation support throughout the United States and Canada.

We initially developed our first burner-management controller in 2005. Since that time, our systems have become widely adopted throughout the United States and Western Canada. Profire burner-management systems have been designed to comply with widely accepted safety and industrial codes and standards in North America, including those prescribed and certified by the Canadian Standards Association (CSA), Underwriters Laboratories (UL), and Safety Integrity Level (SIL) standards.

Our systems and solutions have been widely adopted by exploration and production companies, midstream operators, pipeline operators, as well as downstream transmission and utility providers. Our customers include Antero, ATCO, Chevron, CNRL, Concho Resources, Devon Energy, Dominion Energy, EQT, Kinder Morgan, National Grid, Ovintiv, Oxy, Range Resources, Williams, XTO, and others. Our systems have also been sold and installed in other parts of the world including many countries in South America, Europe, Africa, the Middle East, and Asia. Though firmly established and primarily focused on North American oil and gas markets, we continue to invest in expansion efforts in developing sales in diversified industries where our combustion technology can be utilized.

Environmental, Social and Governance Focus

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

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

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Proper burner and combustion management control, coupled with specialized peripheral solutions, increase site and location safety while reducing emissions. Profire technology and solutions are integrated into a variety of applications to significantly reduce the release of methane and volatile organic compounds into the environment.

Profire burner-management controls and complementary solutions provide users with the ability to monitor field equipment remotely. This reduces truck rolls and the need for field personnel to travel to and manually inspect burner malfunctions in remote sites and locations. By dramatically reducing the number and frequency of physical trips to site, our automated solutions help our customers improve safety, reduce emissions, and decrease operating costs.

Operator safety is at the heart of our burner-management solution technology. Integration of our solutions and products helps our customers increase the likelihood that their employees return home safe each day. Adding greater physical distance between humans and the combustion process, as well as ensuring fuel gas for combustion equipment is properly shut off when no flame is present, are two of the critical elements of how our burner-management solutions help protect human life.

Results of Operations

Comparison quarter over quarter

The table below presents certain financial data comparing the most recent quarter to prior quarters:
For the three months ended
March 31, 2023December 31, 2022September 30, 2022June 30, 2022March 31, 2022
Total Revenues$14,553,461 $13,971,018 $12,829,338 $9,633,148 $9,503,140 
Gross Profit Percentage53.8 %47.0 %47.7 %45.7 %47.9 %
Operating Expenses$4,527,308 $4,279,751 $4,000,983 $4,308,337 $3,867,709 
Income from Operations$3,305,800 $2,292,914 $2,117,893 $94,806 $688,995 
Net Income$2,589,621 $1,825,022 $1,210,748 $284,829 $627,160 
Operating Cash Flow$521,780 $1,712,709 $(1,818,322)$1,814,039 $(1,192,349)

Revenues for the quarter ended March 31, 2023 increased by 53% or $5,050,321 compared to the quarter ended March 31, 2022, which was driven by ongoing strong customer demand, increases in Profire sales prices and improvements in Profire BMS system availability. The first quarter of 2023 weekly average rig count for North America was 977 compared to 816 in the same period of last year, which represents an increase of 20%. Strong oil and natural gas prices also have contributed to ongoing investments in new technology by E&P operators. Overall customer demand increased during the quarter ended March 31, 2023, in response to these industry trends.

Revenues for the quarter ended March 31, 2023 increased by 4% or $582,443 compared to the quarter ended December 31, 2022, which was driven by strong customer demand, higher sales prices and strength in drilling and completion activity. The first quarter of 2023 weekly average rig count for North America increased by 2% compared to the prior quarter. Overall customer demand increased during the quarter ended March 31, 2023 in response to these industry trends.

Our gross profit margin for the first quarter of 2023 was up 5.9% from the same quarter of last year and up 6.8% from quarter ended December 31, 2022. The gross margin percentage was impacted by price increases, greater quantities of higher margin products sold, normal fluctuations in product and service mix, and product related reserves. The gross margin of the first quarter of 2023 also benefited from greater fixed cost coverage from the increase in revenue over prior quarters.

Operating expenses for the quarter ended March 31, 2023 increased $659,599 from the same quarter of last year, which primarily results from increases in headcount and cost inflation across the business. Operating expenses for the quarter ended March 31, 2023 increased $247,557 from the prior quarter ended December 31, 2022 primarily due to increases in employee related costs.

Due to the factors discussed above, we reported income from operations of $3,305,800 for the quarter ended March 31, 2023 compared to income from operations of $688,995 for the same quarter in 2022 and income from operations of $2,292,914 in the quarter ended December 31, 2022.

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Due to the combination of factors discussed above relating to revenues, gross profit margin and operating expenses, we reported net income of $2,589,621 for the quarter ended March 31, 2023 compared to net income of $627,160 for the same quarter in 2022 and net income of $1,825,022 in the quarter ended December 31, 2022.

Operating cash flows increased $521,780 during the quarter ended March 31, 2023 compared to a decrease of $1,192,349 during the same quarter of 2022 due primarily to the increase in net income and changes in working capital balances.

Operating cash flows increased $521,780 during the quarter ended March 31, 2023 compared to an increase in operating cash flow of $1,712,709 during the quarter ended December 31, 2022 due primarily to changes in working capital balances, including a decrease in accounts payable.

Liquidity and Capital Resources

Working capital at March 31, 2023 was $29,067,153 compared to $25,245,311 at December 31, 2022.

Our liquidity position is impacted by operating, investing and financing activities. During the three months ended March 31, 2023, we generated $521,780 of cash from operating activities, primarily due to an increase in net income which offset an increase in accounts receivable and a decrease in accounts payable. Operating activity trends consist of cash inflows and outflows related to changes in operating assets and liabilities. During the three months ended March 31, 2023, we used $446,417 of cash from investing activities to purchase investments, property, and equipment. Investing activity trends consist of changes in the mix of our investment portfolio, purchases or sales of fixed assets, and acquisition activities. During the three months ended March 31, 2023, we used $249,453 of cash in financing activities, primarily related to taxes paid on employee stock awards issued during the quarter. Financing activity trends consist of transactions related to equity awards and purchases of treasury stock pursuant to our completed share repurchase program. The extent to which our liquidity position will be impacted in the future depends on industry trends and developments, which are highly uncertain and cannot be predicted with confidence. As of March 31, 2023, we held $16,343,915 of cash and investments that form our core excess liquidity which could be utilized, if required, due to the issues described above.

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 Officers and Principal Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Exchange Act, as of the end of the period covered by this quarterly report on Form 10-Q. Our disclosure controls and procedures are designed to ensure that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our Principal Executive Officers and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based on the evaluation performed, our management, including the Principal Executive Officers and Principal Financial Officer, concluded that the disclosure controls and procedures were effective as of March 31, 2023.
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Changes in Internal Control over Financial Reporting

Our management, with the participation of our Principal Executive Officers and Principal Financial Officer, evaluated the changes in our internal control over financial reporting that occurred during the quarterly period covered by this quarterly report 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, 2023, that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 1A.  Risk Factors

In addition to the other information set forth in this quarterly report on Form 10-Q, you should carefully consider the risks discussed in our annual report on Form 10-K for the year ended December 31, 2022, 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

This item is not applicable.

Item 3. Defaults Upon Senior Securities

This item is not applicable.

Item 4. Mine Safety Disclosures

This item is not applicable.

Item 5. Other Information

This item is not applicable.
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Item 6.  Exhibits

Exhibits.  The following exhibits are included as part of this report:
Profire Energy, Inc. 2023 Executive Incentive Plan
Restricted Stock Unit Award Agreement (Performance Vesting) between Profire Energy and Ryan Oviatt dated April 25, 2023
Restricted Stock Unit Award Agreement (Time Vesting) between Profire Energy and Ryan Oviatt dated April 25, 2023
Restricted Stock Unit Award Agreement (Performance Vesting) between Profire Energy and Cameron Tidball dated April 25, 2023
Restricted Stock Unit Award Agreement (Time Vesting) between Profire Energy and Cameron Tidball dated April 25, 2023
Restricted Stock Unit Award Agreement (Performance Vesting) between Profire Energy and Patrick Fisher dated April 25, 2023
Restricted Stock Unit Award Agreement (Time Vesting) between Profire Energy and Patrick Fisher dated April 25, 2023
Certification of Co-Principal Executive Officer Pursuant to Rule 13a-14(a) Ryan W. Oviatt
Certification of Co-Principal Executive Officer Pursuant to Rule 13a-14(a) Cameron M. Tidball
Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)
Certification of Principal Executive Officers pursuant to 18 U.S.C. Section 1350
Certification of Ryan W. Oviatt, Principal Financial Officer pursuant to 18 U.S.C. Section 1350
Exhibit 101.INS*XBRL Instance Document
Exhibit 101.SCH*XBRL Taxonomy Extension Schema Document
Exhibit 101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document
Exhibit 101.DEF*XBRL Taxonomy Definition Linkbase Document
Exhibit 101.LAB*XBRL Taxonomy Extension Label Linkbase Document
Exhibit 101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document
Exhibit 104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*    Filed herewith.
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+ Indicates Management contract, compensatory plan, or arrangement with the Company.


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 9, 2023
By:
/s/ Ryan W. Oviatt
Ryan W. Oviatt
Co-Chief Executive Officer and Chief Financial Officer
Date:
May 9, 2023
By:
/s/ Cameron M. Tidball
Cameron M. Tidball
Co-Chief Executive Officer

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