Edgar Filing: PROFIRE ENERGY INC

qa093013.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q/A

Amendment No. 1

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2013

[ ]	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 000-52376

PROFIRE ENERGY, INC.

(Exact name of registrant as specified in its charter)

Nevada		20-0019425
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files.)Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

	Large accelerated filer [ ]	Accelerated filer [ ]
	Non-accelerated filer [ ]	Smaller reporting company [X]
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes [ ] No [X]

As of November 8, 2013 the registrant had 45,490,000 shares of common stock, par value $0.001, issued and outstanding.

EXPLANATORY NOTE

This Amendment No. 1 to the Quarterly Report on Form 10-Q of Profire Energy, Inc. for the quarter ended September 30, 2013, as filed with the Securities and Exchange Commission (the “Commission”) on November 14, 2013 (the “Prior Filing”), is being filed to amend Part I, Item 1 “Financial Statements,” to correct an error in the Prior Filing in connection with Note 4 – Segment Information and the accompanying table of sales by geographic area for the six months ended September 30, 2013 and 2012. Specifically, there was an error in the revenues allocated between Canada and the United States for the six months ended September 30, 2013, with total revenue being reported correctly. Other than correcting the revenue allocation in the table for the six months ended September 30, 2013, this Amendment No. 1 does not affect any other portion of the Prior Filing. Additionally, this Amendment No.1 does not reflect any event occurring after November 14, 2013, the original filing date of the Prior Filing.

PART I. FINANCIAL INFORMATION

Item 1 Financial Info

PROFIRE ENERGY, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets

ASSETS

			September 30,		March 31,
			2013		2013
			(Unaudited)
CURRENT ASSETS

	Cash and cash equivalents		$	602,255	$	808,772
	Accounts receivable, net			8,618,943		5,879,165
	Inventories			6,169,080		3,463,614
	Prepaid expenses			62,343		1,967

		Total Current Assets		15,452,621		10,153,518

PROPERTY AND EQUIPMENT, net				2,404,442		2,232,355

		TOTAL ASSETS	$	17,857,063	$	12,385,873

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

	Accounts payable		$	2,405,817	$	1,499,330
	Accrued liabilities			164,837		189,489
	Deferred income tax liability			134,107		72,857
	Income taxes payable			969,053		161,550

		Total Current Liabilities		3,673,814		1,923,226

		TOTAL LIABILITIES		3,673,814		1,923,226

STOCKHOLDERS' EQUITY

	Preferred shares: $0.001 par value,
	10,000,000 shares authorized: no shares
	issued and outstanding			-		-
	Common shares: $0.001 par value,
	100,000,000 shares authorized: 45,390,000 and
	45,250,000 shares issued and outstanding, respectively			45,390		45,250
	Additional paid-in capital			842,888		585,735
	Accumulated other comprehensive income			171,242		371,466
	Retained earnings			13,123,729		9,460,196

		Total Stockholders' Equity		14,183,249		10,462,647

		TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	17,857,063	$	12,385,873

The accompanying notes are a integral part of these condensed consolidated financials statements.

PROFIRE ENERGY, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Operations and Other Comprehensive Income (Loss)
(Unaudited)

			For the Three Months Ended				For the Six Months Ended
			September 30				September 30
			2013		2012		2013		2012
REVENUES
	Sales of goods, net		$	8,940,062	$	4,096,452	$	15,779,023	$	7,547,959
	Sales of services, net			402,394		283,141		745,013		508,907
		Total Revenues		9,342,456		4,379,593		16,524,036		8,056,866

COST OF SALES
	Cost of goods sold-product			3,550,640		1,950,355		6,275,120		3,278,071
	Cost of goods sold-services			232,250		211,312		500,447		384,032
		Total Cost of Goods Sold		3,782,890		2,161,667		6,775,567		3,662,103

GROSS PROFIT				5,559,566		2,217,926		9,748,469		4,394,763

OPERATING EXPENSES
	General and administrative expenses			1,259,192		863,271		2,098,315		1,857,151
	Research and development			155,089		70,454		251,019		110,234
	Payroll expenses			930,993		298,802		1,766,069		640,655
	Depreciation expense			65,597		64,468		126,925		110,926

		Total Operating Expenses		2,410,871		1,296,995		4,242,328		2,718,966

INCOME FROM OPERATIONS				3,148,695		920,931		5,506,141		1,675,797

OTHER INCOME (EXPENSE)
	Interest expense			(100)		(7,426)		(10,567)		(8,678)
	Gain on disposal of fixed assets			1,617		-		1,617		-
	Rental income			1,575		-		2,190		-
	Interest income			7,565		8,246		8,366		8,315

		Total Other Income (Expense)		10,657		820		1,606		(363)

NET INCOME BEFORE INCOME TAXES				3,159,352		921,751		5,507,747		1,675,434

INCOME TAX EXPENSE				1,109,803		276,621		1,844,214		464,569

NET INCOME			$	2,049,549	$	645,130	$	3,663,533	$	1,210,865

FOREIGN CURRENCY TRANSLATION GAIN (LOSS)			$	(90,191)	$	382,438		(200,224)		219,618

TOTAL COMPREHENSIVE INCOME			$	1,959,358	$	1,027,568	$	3,463,309	$	1,430,483

BASIC EARNINGS PER SHARE			$	0.05	$	0.01	$	0.08	$	0.03

FULLY DILUTED EARNINGS PER SHARE			$	0.04	$	0.01	$	0.08	$	0.03

BASIC WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING				45,289,301		45,078,587		45,274,863		45,054,918
FULLY DILUTED WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING				45,905,364		45,460,439		45,905,364		45,436,770

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

PROFIRE ENERGY, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
(unaudited)


			For the Six Months Ended
			September 30
			2013		2012
OPERATING ACTIVITIES

	Net Income		$	3,663,533	$	1,210,865
	Adjustments to reconcile net income to
	net cash provided by operating activities:
		Depreciation expense		168,020		110,245
		Gain on the disposal of fixed assets		(1,617)		-
		Common stock issued for services		28,350		208,750
		Bad debt expense		-		9,958
		Stock options issued for services		180,944		86,904
	Changes in operating assets and liabilities:
		Changes in accounts receivable		(2,776,585)		449,996
		Changes in inventories		(2,723,568)		(1,451,619)
		Changes in prepaid expenses		(60,376)		(13,143)
		Changes in accounts payable and accrued liabilities		897,043		(204,025)
		Changes in income taxes payable		870,119		(179,045)

		Net Cash Provided by Operating Activities		245,863		228,886

INVESTING ACTIVITIES

	Proceeds from disposal of equipment			33,910		-
	Purchase of fixed assets			(389,365)		(258,233)

		Net Cash Used in Investing Activities		(355,455)		(258,233)

FINANCING ACTIVITIES
	Stock issued in exercise of stock options			48,000		-

		Net Cash Used in Financing Activities		48,000		-

	Effect of exchange rate changes on cash			(144,925)		762,078

		NET INCREASE IN CASH		(206,517)		732,731
		CASH AT BEGINNING OF PERIOD		808,772		1,914,877

		CASH AT END OF PERIOD	$	602,255	$	2,647,608

SUPPLEMENTAL DISCLOSURES OF
	CASH FLOW INFORMATION

	CASH PAID FOR:

		Interest	$	100	$	8,678
		Income taxes	$	302,300	$	685,915

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

PROFIRE ENERGY, INC. AND SUBSIDIARY

Notes to the Condensed Consolidated Financial Statements

September 30, 2013 and March 31, 2013

NOTE 1 – CONDENSED FINANCIAL STATEMENTS

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at September 30, 2013 and for all periods presented 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 have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's March 31, 2013 audited financial statements. The results of operations for the periods ended September 30, 2013 and 2012 are not necessarily indicative of the operating results for the full years.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Reclassification

Certain balances in previously issued financial statements have been reclassified to be consistent with the current period presentation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

For purposes of the statement of cash flows, cash and cash equivalents include cash and all debt securities with an original maturity of 90 days or less. As of September 30, 2013 and March 31, 2013, bank balances included $602,255 and $808,772, respectively, held by the Company’s banks guaranteed by the Province of Alberta, Canada and the FDIC.

Accounts Receivable

Receivables from the sale of goods and services are stated at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts. The allowance is calculated based on past collectability and customer relationships. The Company recorded an allowance for doubtful accounts of $126,554 and $133,974 as of September 30, 2013 and March 31, 2013, respectively.

PROFIRE ENERGY, INC. AND SUBSIDIARY

Notes to the Condensed Consolidated Financial Statements

September 30, 2013 and March 31, 2013

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (Continued)

Inventory

In accordance with ASC 330, the Company’s inventory is valued at the lower of cost (the purchase price, including additional fees) or market based on using the entire value of inventory. Inventories are determined based on the average cost basis. As of September 30, 2013 and March 31, 2013 inventory consisted of the following:

	September 30, 2013		March 31, 2013
Raw materials	$	-	$	-
Finished goods		6,256,988		3,553,140
Work in process		-		-
Subtotal		6,256,988		3,553,140
Reserve for obsolescence		(87,908)		(89,526)
Total	$	6,169,080	$	3,463,614

Revenue Recognition

The Company records sales when a firm sales agreement is in place, delivery has occurred or services have been rendered, and collectability of the fixed or determinable sales price is reasonably assured. If customer acceptance of products is not assured, the Company records sales only upon formal customer acceptance.

Income Taxes

The Company is subject to US and Canadian income taxes, respectively, on its US and Canadian income with a credit provided for foreign taxes paid. The combined effective rates of income tax expense (benefit) in the US and Canada are, respectively, 35% and 28% for the six months ended September 30, 2013 and 2012, respectively.

Basic and Diluted Earnings Per Share

The computation of basic earnings per share of common stock is based on the weighted average number of shares outstanding during the periods presented. The computation of fully diluted earnings per share includes common stock equivalents outstanding at the balance sheet date. The Company had 630,500 and 530,000 stock options included in the fully diluted earnings per share as of September 30, 2013 and 2012, respectively. The Company uses the treasury stock method to calculate the dilutive effects of stock options and warrants.

	For the Six Months Ended September 30,
	2013		2012
Net income applicable to common shareholders	$	3,663,533	$	1,210,865
Weighted average shares outstanding		45,289,301		45,054,918
Weighted average fully diluted shares outstanding		45,905,364		45,436,770
Basic earnings per share	$	0.08	$	0.03
Fully diluted earnings per share	$	0.08	$	0.03

PROFIRE ENERGY, INC. AND SUBSIDIARY

Notes to the Condensed Consolidated Financial Statements

September 30, 2013 and March 31, 2013

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (Continued)

Foreign Currency and Comprehensive Income

The Company’s functional currencies are the United States dollar (USD) and the Canadian dollar (CAD), the reporting currency is USD. All transactions initiated in other currencies are translated into the reporting currency in accordance with ASC830-20, “Foreign Currency Matters – Foreign Currency Transactions”. The period-end exchange rates of 0.97232 and 0.982898 were used to convert the Company’s September 30, 2013 and March 31, 2012 balance sheets, respectively, and the statements of operations used weighted average rates of 0.970557 and 1.02760 for the six months ended September 30, 2013 and 2012, respectively. All amounts in the financial statements and footnotes are presumed to be stated in USD, unless otherwise identified. Foreign currency translation gains or losses as a result of fluctuations in the exchange rates are reflected in the Statement of Operations and Other Comprehensive Income.

Recent Accounting Pronouncements

The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position, or statements.

Stock-Based Compensation

The Company follows the provisions of ASC 718, “Share-Based Payment.” which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. The Company uses the Black-Scholes pricing model for determining the fair value of stock based compensation.

NOTE 3 – FAIR VALUE MEASUREMENT

The Company measures its cash equivalents and marketable securities at fair value. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:

Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 - Include inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and credit ratings.

Level 3 - Unobservable inputs that are supported by little or no market activities.

PROFIRE ENERGY, INC. AND SUBSIDIARY

Notes to the Condensed Consolidated Financial Statements

September 30, 2013 and March 31, 2013

NOTE 3 – FAIR VALUE MEASUREMENT (Continued)

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The Company classifies its cash equivalents and marketable securities within Level 1. This is because it values its cash equivalents and marketable securities using quoted market prices.

Assets and liabilities measured at fair value on a recurring basis are summarized below:

	Fair Value Measurement at Reporting Date Using
Description	As of September 30, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash Equivalents	$	602,255	$	602,255	$	-	$	-

NOTE 4 – SEGMENT INFORMATION

The Company operates in the United States and Canada. Segment information for these geographic areas is as follows:

	For the Six Months Ended September 30,
Sales	2013		2012
Canada	$	7,204,313	$	6,140,601
United States		9,319,723		1,916,265
Total	$	16,524,036	$	8,056,866

Long-lived assets	September 30, 2013		March 31, 2012
Canada	$	1,490,389	$	1,583,613
United States		914,053		648,742
Total	$	2,404,442	$	2,232,355

NOTE 5 – SUBSEQUENT EVENTS

On November 12, 2013, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors and other accredited investors. Pursuant to the terms of the Purchase Agreement, the Company entered into an agreement to sell to the purchasers an aggregate of approximately $4,700,000 worth of common stock of the Company at a price per share of $2.18. The closing of the purchase is expected to occur on or before November 15, 2013, and is subject to customary closing conditions. As part of the Purchase Agreement, the Company has agreed to use best efforts to list its common stock on an exchange other than the OTC Bulletin Board (e.g. NASDAQ or NYSE MKT), and to maintain said listing thereafter.

Pursuant to the Purchase Agreement, the Company agreed to file a registration statement with the Securities and Exchange Commission covering the resale of the shares. The proceeds are expected to be used for general working capital purposes and to otherwise finance the growth of the Company.

Subsequent to quarter-end, an employee exercised previously issued options for 100,000 shares.

PART II - OTHER INFORMATION

Item 6. Exhibits

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

	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 32.1	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350

	Exhibit 32.2	Certification of 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

SIGNATURES

In accordance with Section 12 of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf, thereunto duly authorized.

		PROFIRE ENERGY, INC.


Date:	November 22, 2013	By:	/s/ Brenton W. Hatch
			Brenton W. Hatch
			Chief Executive Officer (Duly Authorized Officer)

Date:	November 22, 2013	By:	/s/ Andrew Limpert
			Andrew Limpert
			Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer)