Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 10, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2022 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2022 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity File Number | 001-36453 | ||
Entity Registrant Name | SUPERIOR DRILLING PRODUCTS, INC. | ||
Entity Central Index Key | 0001600422 | ||
Entity Tax Identification Number | 46-4341605 | ||
Entity Incorporation, State or Country Code | UT | ||
Entity Address, Address Line One | 1583 South 1700 East | ||
Entity Address, City or Town | Vernal | ||
Entity Address, State or Province | UT | ||
Entity Address, Postal Zip Code | 84078 | ||
City Area Code | 435 | ||
Local Phone Number | 789-0594 | ||
Title of 12(b) Security | Common Stock, $0.001 par value | ||
Trading Symbol | SDPI | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 10,948,000 | ||
Entity Common Stock, Shares Outstanding | 29,245,080 | ||
Documents Incorporated By Reference | NONE | ||
ICFR Auditor Attestation Flag | false | ||
Auditor Firm ID | 659 | ||
Auditor Name | Moss Adams LLP | ||
Auditor Location | Dallas, Texas |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets | ||
Cash | $ 2,158,025 | $ 2,822,100 |
Accounts receivable | 3,241,221 | 2,871,932 |
Prepaid expenses | 367,823 | 435,595 |
Inventories | 2,081,260 | 1,174,635 |
Asset held for sale | 216,000 | |
Other current assets | 140,238 | 55,159 |
Total current assets | 8,204,567 | 7,359,421 |
Property, plant and equipment, net | 8,576,851 | 6,930,329 |
Intangible assets, net | 69,444 | 236,111 |
Right of use assets | 638,102 | 20,518 |
Other noncurrent assets | 111,519 | 65,880 |
Total assets | 17,600,483 | 14,612,259 |
Current liabilities | ||
Accounts payable | 1,043,581 | 1,139,091 |
Accrued expenses | 891,793 | 467,462 |
Income tax payable | 351,618 | 206,490 |
Current portion of operating lease liability | 44,273 | 13,716 |
Current portion of financial obligation | 74,636 | 65,678 |
Current portion of long-term debt, net of discounts | 1,125,864 | 2,195,759 |
Other current liabilities | 216,000 | |
Total current liabilities | 3,747,765 | 4,088,196 |
Operating lease liability, less current portion | 523,375 | 6,802 |
Long-term financial obligation, less current portion | 4,038,022 | 4,112,658 |
Long-term debt, less current portion, net of discounts | 529,499 | 256,675 |
Deferred income | 675,000 | |
Total liabilities | 9,513,661 | 8,464,331 |
Commitments and contingencies (Note 10) | ||
Shareholders’ equity | ||
Common stock - $0.001 par value; 100,000,000 shares authorized; 29,245,080 and 28,235,001 shares issued and outstanding, respectively | 29,245 | 28,235 |
Additional paid-in-capital | 43,943,928 | 43,071,201 |
Accumulated deficit | (35,886,351) | (36,951,508) |
Total shareholders’ equity | 8,086,822 | 6,147,928 |
Total liabilities and shareholders’ equity | $ 17,600,483 | $ 14,612,259 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 29,245,080 | 28,235,001 |
Common stock, shares outstanding | 29,245,080 | 28,235,001 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Statement [Abstract] | ||
Revenue | $ 19,097,687 | $ 13,336,149 |
Operating cost and expenses | ||
Cost of revenue | 8,330,877 | 5,618,844 |
Selling, general, and administrative expenses | 7,326,384 | 6,200,522 |
Depreciation and amortization expense | 1,503,976 | 2,103,534 |
Total operating cost and expenses | 17,161,237 | 13,922,900 |
Operating income (loss) | 1,936,450 | (586,751) |
Other income (expense) | ||
Interest income | 26,675 | 228 |
Interest expense | (572,624) | (539,390) |
Recovery of related party note receivable | 707,112 | |
Impairment on asset held for sale | (130,375) | |
Loss on disposition of assets | (249) | |
Total other income (expense) | (676,324) | 167,701 |
Income (loss) before income taxes | 1,260,126 | (419,050) |
Income tax expense | (194,969) | (110,751) |
Net income (loss) | $ 1,065,157 | $ (529,801) |
Earnings (loss) per common share - basic | $ 0.04 | $ (0.02) |
Weighted average common shares outstanding - basic | 28,643,464 | 26,391,538 |
Earnings (loss) per common share - diluted | $ 0.04 | $ (0.02) |
Weighted average common shares outstanding - diluted | 28,675,100 | 26,391,538 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Balance at Dec. 31, 2020 | $ 25,762 | $ 40,619,620 | $ (36,421,707) | $ 4,223,675 |
Balance, shares at Dec. 31, 2020 | 25,762,342 | |||
Share-based compensation expense | $ 734 | 756,009 | 756,743 | |
Stock-based compensation expense, shares | 733,528 | |||
Common stock issuance | $ 1,739 | 1,695,572 | 1,697,311 | |
Common stock issuance, shares | 1,739,131 | |||
Net income (loss) | (529,801) | (529,801) | ||
Balance at Dec. 31, 2021 | $ 28,235 | 43,071,201 | (36,951,508) | 6,147,928 |
Balance, shares at Dec. 31, 2021 | 28,235,001 | |||
Share-based compensation expense | $ 1,010 | 872,727 | 873,737 | |
Stock-based compensation expense, shares | 1,010,079 | |||
Net income (loss) | 1,065,157 | 1,065,157 | ||
Balance at Dec. 31, 2022 | $ 29,245 | $ 43,943,928 | $ (35,886,351) | $ 8,086,822 |
Balance, shares at Dec. 31, 2022 | 29,245,080 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash Flows from Operating Activities | ||
Net income (loss) | $ 1,065,157 | $ (529,801) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization expense | 1,503,976 | 2,103,534 |
Amortization of right-of-use assets | 131,093 | |
Share-based compensation expense | 873,737 | 756,743 |
Impairment on asset held for sale | 130,375 | |
Loss on disposition of assets | 249 | |
Amortization of deferred loan cost | 18,524 | 18,522 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (369,289) | (1,526,310) |
Inventories | (906,625) | (143,590) |
Prepaid expenses and other current assets | (62,946) | (338,255) |
Accounts payable, accrued expenses, and other liabilities | 127,274 | 85,020 |
Income tax payable | 145,128 | 100,044 |
Other current liabilities | 216,000 | |
Deferred income | 675,000 | |
Net cash provided by operating activities | 3,547,404 | 526,156 |
Cash Flows From Investing Activities | ||
Purchases of property, plant and equipment | (3,330,206) | (936,718) |
Proceeds from sale of fixed assets | 50,000 | |
Net cash used in investing activities | (3,330,206) | (886,718) |
Cash Flows from Financing Activities | ||
Principal payments on debt | (1,694,730) | (1,277,730) |
Proceeds received from debt borrowings | 997,134 | |
Payments on revolving loan | (817,113) | (895,787) |
Proceeds received from revolving loan | 633,436 | 1,697,427 |
Proceeds from issuance of common stock | 1,697,311 | |
Net cash (used in) provided by financing activities | (881,273) | 1,221,221 |
Net (decrease) increase in cash | (664,075) | 860,659 |
Cash at beginning of period | 2,822,100 | 1,961,441 |
Cash at end of period | 2,158,025 | 2,822,100 |
Supplemental information: | ||
Cash paid for interest | 566,336 | 530,898 |
Cash paid for income taxes | ||
Non-Cash item related to deferred income | 675,000 | |
Right of use assets obtained in exchange for lease obligations | $ 749,718 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Nature of Operations Superior Drilling Products, Inc. (the “Company”, “SDPI”, “we”, “our” or “us”) is an innovative drilling and completion tool technology company providing cost saving solutions that drive production efficiencies for the oil and natural gas drilling industry. Our drilling solutions include the patented Drill-N-Ream® well bore conditioning tool (“Drill-N-Ream tool”) and the patented Strider™ Drill String Oscillation System technology (“Strider technology” or “Strider”). In addition, the Company is a manufacturer and refurbisher of PDC (polycrystalline diamond compact) drill bits for a leading oil field services company. We operate a state-of-the-art drill tool fabrication facility, where we manufacture solutions for the drilling industry, as well as customers’ custom products. Our headquarters and manufacturing operations are located in Vernal, Utah. Our subsidiaries include (a) Superior Drilling Solutions, LLC (“SDS”) (previously known as Superior Drilling Products, LLC), a Utah limited liability company, together with its wholly owned subsidiary Superior Design and Fabrication, LLC (“SDF”), a Utah limited liability company, (b) Extreme Technologies, LLC(“ET”), a Utah limited liability company, (c) Meier Properties Series, LLC (“MPS”), a Utah limited liability company, (d) Meier Leasing, LLC (“ML”), a Utah limited liability company, and (e) Hard Rock Solutions, LLC (“HR” or “Hard Rock”). Basis of Presentation The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The consolidated financial statements include the accounts of Superior Drilling Products Inc. and all of its wholly owned subsidiaries. All significant intercompany accounts have been eliminated in consolidation. The Company does not have investments in any unconsolidated subsidiaries. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates. Significant items subject to estimates and assumptions include the carrying amount and useful lives of property and equipment and intangible assets, impairment assessments, share-based compensation expense, and valuation allowances for accounts receivable, inventories, and deferred tax assets. Revenue Recognition We account for revenue in accordance with Accounting Standard Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), except for tool rental revenue. Under ASC 606 revenue is measured based on a consideration specified in a customer’s contract, excluding any sale incentives and taxes collected on behalf of third parties. Revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration that we expect to receive for those goods or services. To recognize revenue, we (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when, or as, we satisfy the performance obligation(s). Shipping and handling costs incurred are accounted for as fulfillment costs and are included in cost of revenues in the statements of operations. Tool sales, rentals and other related revenue Tool and Product Sales Tool Rental Other Related Revenue: SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Contract Services Drill Bit Manufacturing and Refurbishment Our revenue is derived from short-term contracts. Revenue is recognized when we satisfy a performance obligation by transferring control of the promised goods or services to our customers at a point in time, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. We also assess our customer’s ability and intention to pay, which is based on a variety of factors including our customer’s historical payment experience and financial condition. Payment terms and conditions vary, although terms generally include a requirement of payment within 30 days. Revenue generally does not include right of return or other significant post-delivery obligations. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. We elected to treat shipping and handling costs as a fulfillment cost instead of as a separate performance obligation. We recognize the cost for shipping and handling when incurred as an expense in cost of revenue. All of our contracts are less than one year in duration. We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. Cash We maintain cash deposits with financial institutions that may exceed federally insured limits at times. We have chosen credible institutions and believe our risk of loss is negligible. Fair Value of Financial Instruments The Company’s financial instruments consist of cash, receivables, payables, and bank debt. The Company believes that the carrying values of these instruments on the accompanying consolidated balance sheets approximate their fair values due to the relatively short period to maturity for these instruments. Accounts Receivable and Allowance for Doubtful Accounts Domestically, accounts receivable are generally due within 60 days of the invoice date. Internationally, our due date terms are generally 90 days from the invoice date. No interest is charged on past-due balances. We grant credit to our customers based upon an evaluation of each customer’s financial condition. We periodically monitor the payment history and ongoing creditworthiness of our customers. An allowance for doubtful accounts is established at a level estimated by management to be adequate based upon various factors including historical experience, aging status of customer accounts, payment history and financial condition of our customers. The allowance for doubtful accounts was $ 0 1,345,622 Inventories Inventories consist of raw materials, work-in-process and finished goods and are stated at the lower of cost, determined using the weighted-average cost method, or net realizable value. Finished goods inventories include raw materials, direct labor and production overhead. The Company regularly reviews inventories on hand and current market conditions to determine if the cost of finished goods inventories exceed current market prices and impairs the cost basis of the inventory accordingly. Assets Held for Sale The Company classifies disposal groups as held for sale in the period in which all of the following criteria are met: (1) management, having the authority to approve the action, commits to a plan to sell the disposal group; (2) the disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such disposal groups; (3) an active program to locate a buyer or buyers and other actions required to complete the plan to sell the disposal group have been initiated; (4) the sale of the disposal group is probable, and transfer of the disposal group is expected to qualify for recognition as a completed sale, within one year, except if events or circumstances beyond the Company’s control extend the period of time required to sell the disposal group beyond one year; (5) the disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (6) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A disposal group that is classified as held for sale is initially measured at the lower of its carrying amount or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Subsequent changes in the fair value of a disposal group less any costs to sell are reported as an adjustment to the carrying amount of the disposal group, as long as the new carrying amount does not exceed the carrying amount of the asset at the time it was initially classified as held for sale. Upon determining that a disposal group meets the criteria to be classified as held for sale, the Company reports the assets and liabilities of the disposal group for all periods presented in the line items assets held for sale and liabilities held for sale, respectively, in the consolidated balance sheets. Property, Plant and Equipment Property, plant and equipment is stated at cost. The cost of ordinary maintenance and repair is charged to operating expense, while replacement of critical components and major improvements are capitalized. Depreciation or amortization of property and equipment is calculated using the straight-line method over the asset’s estimated useful life as follows: SCHEDULE OF ASSETS ESTIMATED USEFUL LIFE Buildings and leasehold improvements 2 39 Machinery, equipment and rental tools 18 10 Office equipment, fixtures and software 3 7 Transportation equipment 5 30 Property, plant and equipment is reviewed for impairment on an annual basis or whenever events or changes in circumstances indicate the carrying value of an asset or asset group may not be recoverable. Indicative events or circumstances include, but are not limited to, matters such as a significant decline in market value or a significant change in business climate. An impairment loss is recognized when the carrying value of an asset exceeds the estimated undiscounted future cash flows from the use of the asset and its eventual disposition. The amount of impairment loss recognized is the excess of the asset’s carrying value over its fair value. Assets to be disposed of are reported at the lower of the carrying value or the fair value less cost to sell. Upon sale or other disposition of an asset, the Company recognizes a gain or loss on disposal measured as the difference between the net carrying value of the asset and the net proceeds received. Intangible Assets The Company’s intangible assets with finite lives consist of developed technology, customer contracts and relationships, and trade names and trademarks. The cost of intangible assets with finite lives is amortized using the straight-line method over the estimated period of economic benefit, ranging from 5 9 Intangible assets with finite lives are tested for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. These conditions may include a change in the extent or manner in which the asset is being used or a change in future operations. The Company assesses the recoverability of the carrying amount by preparing estimates of future revenue, margins, and cash flows. If the sum of expected future cash flows (undiscounted and without interest charges) is less than the carrying amount, an impairment loss is recognized. The impairment loss recognized is the amount by which the carrying amount exceeds the fair value. Fair value of these assets may be determined by a variety of methodologies, including discounted cash flow models. Leases We account for leases in accordance with ASC Topic 842 - Leases (“ASC 842”), which requires assets and liabilities that arise from all leases to be recognized on the balance sheet for lessees and expanded financial statement disclosures for both lessees and lessors. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liability represents the Company’s obligation to make lease payments arising from the lease, both of which are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. Leases with a lease term of 12 months or less at inception are not recorded on the condensed consolidated balance sheet and are expensed on a straight-line basis over the lease term in the condensed consolidated statement of operations. SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company determines whether a contract is a lease, or contains a lease, at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. The Company discounts lease payments based on an estimate of its incremental borrowing rate as the Company’s leases do not provide a readily determinable implicit rate. Operating lease assets and liabilities are included on our consolidated balance sheets. Operating lease expense (excluding variable lease costs) is recognized on a straight-line basis over the lease term. Research and Developmen We expense research and development costs as they are incurred. For the years ended December 31, 2022 and 2021, these expenses were approximately $ 436,000 487,000 Earnings (Loss) Per Share Basic earnings (loss) per common share is calculated by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) attributable to common shareholders by the weighted average number of common shares outstanding, including potentially dilutive common share equivalents, if the effect is dilutive. Potentially dilutive common shares equivalents include stock options. Income Taxes The Company recognizes an asset or liability for the deferred tax consequences of all temporary differences between the tax basis of assets or liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years when the reported amounts of the asset or liabilities are recovered or settled and for operating loss carry forwards. These deferred tax assets and liabilities are measured using the enacted tax rates that will be in effect when the differences are expected to reverse and the carry forwards are expected to be realized. Deferred tax assets are reviewed periodically for recoverability and a valuation allowance is provided as necessary. Debt Issuance Costs Costs related to debt issuance are capitalized and amortized as interest expense over the term of the related debt using the straight-line method, which approximates the effective interest method. Upon the repayment of debt, the Company accelerates the recognition of an appropriate amount of the costs as interest expense. Debt issuance costs are presented as a direct reduction from the carrying amount of the note payable. For the years ended December 31, 2022 and 2021, the amortized debt issuance costs were $ 3,087 18,522 Share-Based Compensation Share-based compensation expense related to stock option and restricted stock awards is recognized based on the grant-date fair values. The Company recognizes compensation expense on a straight-line basis over the requisite service period of the award. Concentrations of Credit Risk The Company has two significant customers that represent 88 87 1,751,000 1,910,000 The Company had two significant vendors that represent 12 74,400 13 136,000 SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Government Grant The Company applied for and received a grant award of up to $ 750,000 During 2022, the Company met the conditions of the grant and received the initial grant funding totaling $ 675,000 675,000 Foreign currency transactions Foreign currency transactions are initially measured and recorded in U.S. dollars using the exchange rate on the date of the transaction. Foreign currency denominated monetary assets and liabilities are measured at the end of each reporting period using the exchange rate at that date. Gains and losses from foreign currency transactions, which are included in selling, general, and administrative expenses, have not been significant in any of the periods presented. Nonmonetary assets and liabilities are not subsequently remeasured. Recent Accounting Pronouncements There are no recently issued accounting pronouncements that we have not yet adopted that we believe will have a material effect on our financial statements. |
REVENUE
REVENUE | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | NOTE 2. REVENUE Disaggregation of Revenue The following table presents revenue disaggregated by type: SCHEDULE OF REVENUE DISAGGREGATED BY REVENUE 2022 2021 Year Ended December 31, 2022 2021 Tool Revenue: Tool and product sales $ 3,157,710 $ 2,610,500 Tool rental 2,180,428 1,716,556 Other related revenue 7,013,806 4,917,426 Total Tool Revenue 12,351,944 9,244,482 Contract Services 6,745,743 4,091,667 Total Revenue $ 19,097,687 $ 13,336,149 Contract Balances Under our sales contracts, we invoice customers after our performance obligations have been satisfied, at which point payment is unconditional. Accordingly, our contracts do not give rise to contract assets or liabilities under ASC 606. Contract Costs We do not incur any material costs of obtaining contracts. SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2022 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | NOTE 3. INVENTORIES Inventories were comprised of the following: SCHEDULE OF INVENTORIES 2022 2021 December 31, 2022 2021 Raw material $ 1,334,669 $ 769,547 Work in progress 168,214 65,945 Finished goods 578,377 339,143 Total inventories $ 2,081,260 $ 1,174,635 |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | NOTE 4. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment was comprised of the following: SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT 2022 2021 December 31, 2022 2021 Land $ 880,416 $ 880,416 Buildings 4,764,441 4,764,441 Leasehold improvements 755,039 755,039 Machinery, equipment, and rental tools 14,546,060 12,207,497 Office equipment, fixtures and software 628,358 628,358 Transportation assets 265,760 265,760 Property, plant and equipment, gross 21,840,074 19,501,511 Accumulated depreciation (13,263,223 ) (12,571,182 ) Property, plant and equipment, net $ 8,576,851 $ 6,930,329 Depreciation expense related to property, plant and equipment for the years ended December 31, 2022 and 2021 was $ 1,337,309 1,520,201 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 5. INTANGIBLE ASSETS Intangible assets were comprised of the following: SCHEDULE OF INTANGIBLE ASSETS 2022 2021 December 31, 2022 2021 Developed technology $ 7,000,000 $ 7,000,000 Customer contracts 6,400,000 6,400,000 Trademarks 1,500,000 1,500,000 Intangible assets, gross 14,900,000 14,900,000 Accumulated amortization (14,830,556 ) (14,663,889 ) Intangible assets, net $ 69,444 $ 236,111 Amortization expense related to intangible assets for the years ended December 31, 2022 and 2021 was $ 166,667 583,333 SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS These intangible assets have been amortized using the straight-line method over their expected useful lives, which range from 5 9 69,444 |
RELATED PARTY NOTE RECEIVABLE
RELATED PARTY NOTE RECEIVABLE | 12 Months Ended |
Dec. 31, 2022 | |
Receivables [Abstract] | |
RELATED PARTY NOTE RECEIVABLE | NOTE 6. RELATED PARTY NOTE RECEIVABLE In January 2014, we entered into a Note Purchase and Sale Agreement under which we agreed to purchase a loan made to Tronco Energy Corporation in order to take over the legal position as Tronco’s senior secured lender. Tronco is an entity owned by Troy and Annette Meier. Effective August 2017, the Company fully reserved the related party note receivable of $ 6,979,043 0 8,267,860 2 6,884,000 6,749,000 |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
LEASES | NOTE 7. LEASES The Company leases certain facilities Utah and Dubai under long-term operating leases with lease terms of one year two years 140,539 7,200 The following table presents the maturities of lease liabilities: SCHEDULE OF AGGREGATE FUTURE LEASE PAYMENTS Fiscal year ending December 31, Operating 2023 $ 173,339 2024 243,794 2025 130,454 2026 60,000 2027 40,000 Thereafter - Total undiscounted lease payments 647,587 Less: Imputed lease interest (79,939 ) Total lease liabilities $ 567,648 Other information related to operating leases: SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE Year Ended December 31, 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows $ 216,394 $ 48,621 Weighted average remaining lease-term (in years) 2.86 0.97 Weighted average discount rate 7.25 % 7.25 % SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | NOTE 8. LONG-TERM DEBT Long-term debt is comprised of the following: SCHEDULE OF DEBT OBLIGATIONS 2022 2021 December 31, 2022 2021 Hard Rock Note $ - $ 750,000 Credit Agreement 813,713 1,312,194 Machinery loans 664,674 357,963 Transportation loan 20,027 32,277 Insurance loan 156,949 - Long term debt,total 1,655,363 2,452,434 Current portion of long-term debt (1,125,864 ) (2,195,759 ) Long-term debt,net $ 529,499 $ 256,675 Credit Agreement In February 2019, the Company entered into a Loan and Security Agreement (the “Credit Agreement”) with Austin Financial Services, Inc. (“AFS”). The Credit Agreement provides a $ 4,300,000 800,000 3,500,000 813,713 Amounts outstanding under the Line of Credit at any time may not exceed the sum of: (a) up to 85% of accounts receivable or such lesser percentage as AFS in its sole discretion may deem appropriate if it determines that there has been a material adverse effect (less a dilution reserve as determined by AFS in its sole good faith discretion), plus (b) the lesser of (i) up to 50% of inventory or such lesser percentage as AFS in its sole discretion may deem appropriate if it determines that there has been a material adverse effect, or (ii) the inventory sublimit, minus (c) the borrowing base reserve as may be determined from time to time by AFS 186,287 The interest rate for the Term Loan and the Line of Credit is prime plus 2 12.28 3.6 1,000,000 1,000,000 The Credit Agreement contains various restrictive covenants that, among other things, limit or restrict the ability of the borrowers to incur additional indebtedness; incur additional liens; make dividends and other restricted payments; make investments; engage in mergers, acquisitions and dispositions; make optional prepayments of other indebtedness; engage in transactions with affiliates; and enter into restrictive agreements. The Credit Agreement does not include any financial covenants. If an event of default occurs, the lenders are entitled to accelerate the advances made thereunder and exercise rights against the collateral. Borrowing under the Line of Credit is classified as current debt as a result of the required lockbox arrangement and the subjective acceleration clause. At December 31, 2022, we were in compliance with the covenants in the Credit Agreement. Machinery Loans The Company financed the purchase of machinery and equipment through various loans. The outstanding loans have interest rates ranging from 5.50 5.94 664,674 357,963 SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Insurance Loan In June 2022, the Company financed insurance premiums with a loan agreement. In September 2022 an additional insurance amount was added to the loan. The loan matures in March 2023 156,949 Transportation Loan The Company financed the purchase of a vehicle with a loan agreement. The term of the loan is 60 months June 2024 6.99 Hard Rock Note In 2014, the Company purchased all of the interests of Hard Rock Solutions, LLC (“Hard Rock”). Consideration consisted of $ 12.5 12.5 750,000 8.00 October 2022 Future annual maturities of total debt are as follows (1) SCHEDULE OF MATURITIES OF LONG TERM DEBT For the year ended December 31, (1) 2023 $ 1,125,864 2024 157,260 2025 140,156 2026 144,225 2027 87,858 Total long debt $ 1,655,363 (1) Excludes discounts for debt issuance costs. |
FINANCING OBLIGATION LIABILITY
FINANCING OBLIGATION LIABILITY | 12 Months Ended |
Dec. 31, 2022 | |
Financing Obligation Liability | |
FINANCING OBLIGATION LIABILITY | NOTE 9. FINANCING OBLIGATION LIABILITY On December 7, 2020, the Company entered into an agreement to sell land and property related to the Company’s headquarters and manufacturing facility in Vernal, Utah (the “Property”) for a purchase price of $ 4,448,500 the Company entered into a fifteen-year lease agreement 311,395 1.5 Leases The Company received cash of $ 1,622,106 2,638,773 4,260,879 6.0 2,188,710 65,678 61,616 4,112,658 4,178,336 The financing obligation liability is summarized below: SCHEDULE OF FINANCING OBLIGATION LIABILITY 2022 2021 December 31, 2022 2021 Financing obligation for sale-leaseback transaction $ 4,112,658 $ 4,178,336 Current principal portion of finance obligation (74,636 ) (65,678 ) Non-current portion of financing obligation $ 4,038,022 $ 4,112,658 SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following is the aggregate future lease payments that include principal and interest for the financing obligation liability as of December 31, 2022: SCHEDULE OF AGGREGATE FUTURE LEASE PAYMENTS FOR THE FINANCE OBLIGATION For the year ended December 31, 2023 $ 321,130 2024 325,947 2025 330,836 2026 335,799 2027 340,836 Thereafter 2,916,941 Total undiscounted lease payments 4,571,489 Residual value of the property (included in the future payments) 2,188,711 Less: effects of discounting (2,647,542 ) Present value of lease payments $ 4,112,658 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 10. COMMITMENTS AND CONTINGENCIES We are subject to litigation that arises from time to time in the ordinary course of our business activities. In February 2019, the Company filed a patent infringement lawsuit in the United States District Court for the Western District of Louisiana, Lafayette Division, asserting that Stabil Drill Specialties, LLC’s (“Stabil Drill”) Smoothbore Eccentric Reamer infringes the patents of Extreme Technologies, LLC (one of our subsidiaries) on our patented Drill-N-Ream well bore conditioning tool. The lawsuit was subsequently moved from Louisiana to the United States District Court for the Southern District of Texas, Houston Division. Additionally, on May 20, 2019, Extreme Technologies, LLC sued Short Bit & Tool Co. and Lot William Short, Jr. (“Defendants”) in the Northern District of Texas-Dallas Division for their work manufacturing the Smoothbore Eccentric Reamer for Stabil Drill. The Dallas lawsuit is stayed pending resolution of the first-filed, Houston suit. On October 1, 2020, Superior Energy Services, Stabil Drill’s parent company, filed for bankruptcy, which resulted in a brief, automatic stay of the litigation. Superior Energy Services announced on February 2, 2021, that it successfully completed its financial restructuring and emerged from Chapter 11 bankruptcy, but this bankruptcy did not affect Extreme Technologies’ claims against Stabil Drill. On March 9, 2021, the Court lifted the automatic bankruptcy stay, and on May 12, 2021, the Court denied Stabil Drill’s motion for summary judgment of non-infringement. On May 23, 2022, the Court issued its Order on Claim Construction of the patents, adopting Extreme Technologies’ proffered interpretation on the disputed claim terms. The parties are preparing this case for trial and expect a jury trial setting in mid-2023. We are not currently involved in any other litigation which management believes could have a material effect on our financial position or results of operations. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 11. INCOME TAXES Components of income tax expense was as follows: SCHEDULE OF COMPONENTS OF INCOME TAX BENEFIT 2022 2021 Year Ended December 31, 2022 2021 Current income taxes: Federal $ - $ - State 34,046 5,964 Foreign 160,923 104,787 Total current income taxes 194,969 110,751 Income tax expense $ 194,969 $ 110,751 SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The non-current deferred tax assets and liabilities consist of the following: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES 2022 2021 December 31, 2022 2021 Deferred tax assets: 263A adjustment $ 23,274 $ 14,204 Accrued expenses 140,900 - Prepaid expenses (54,589 ) (27,498 ) Stock compensation 180,753 159,315 Stock option 69,306 71,251 Amortization of intangibles 2,246,861 2,661,090 Net operating loss 2,509,855 3,246,413 Allowances 1,509,508 1,632,266 Sale-leaseback – lease liability 919,766 1,010,467 Grant Income 150,964 - Others 20,512 22,181 Total deferred tax assets 7,717,110 8,789,689 Deferred tax liabilities: Depreciation on sale-leaseback fixed assets (836,027 ) (942,799 ) Depreciation on fixed assets 134,483 (46,881 ) Total deferred tax liabilities (701,544 ) (989,680 ) Net deferred tax assets / liabilities 7,015,566 7,800,009 Less: Valuation Allowance (7,015,566 ) (7,800,009 ) Total deferred tax assets / liabilities $ - $ - The Company’s tax expense differs from the statutory tax benefit for the years ended December 31, 2022 and 2021 and the reconciliation is as follows: SCHEDULE OF STATUTORY TAX BENEFIT 2022 2021 Year Ended December 31, 2022 2021 Tax expense (benefit) at federal statutory rate $ 267,604 $ (88,001 ) State income taxes 26,896 4,712 Foreign income taxes 127,129 79,445 Permanent differences (46,609 ) 38,458 Change in valuation allowance (780,662 ) 192,512 Other - State rate effect 11,704 (13,532 ) Change in tax rate 586,430 (125,747 ) Other 2,477 22,904 Provision for income taxes $ 194,969 $ 110,751 We have total federal income tax net operating loss (“NOL”) carryforwards of $ 11,914,000 8,558,000 3,357,000 The pre-2018 losses will begin to expire between 2035 and 2037. The post-2017 losses can be carried forward indefinitely, however, only 80% of these losses can offset taxable income. We believe that it is more likely than not that the benefit from our deferred tax assets will not be realized. In recognition of this risk, we have provided a valuation allowance of $ 7,019,347 SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In accordance with the accounting under ASC Topic 740, the Company has recorded a liability for an uncertain tax position taken on its international income tax returns. Penalties related to this income tax liability are included as a component of income tax expense in the accompanying statements of operations. The Company had approximately $ 352,000 206,000 0 6,000 |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
SHARE-BASED COMPENSATION | NOTE 12. SHARE-BASED COMPENSATION Equity and equity-based compensation plans are intended to make available incentives that will assist us in attracting, retaining, and motivating employees, officers, consultants, and directors by allowing them to acquire an ownership interest in our business, and, as a result, encouraging them to contribute to our success. We may provide these incentives through the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and units, and other cash-based or stock-based awards. As a result, we expect to incur non-cash, stock-based compensation expenses in future periods. The Board of Directors has frozen the 2014 Incentive Plan, such that no future grants of awards will be made and the 2014 Incentive Plan shall only remain in effect with respect to awards under that Plan outstanding as of June 15, 2015 until they expire according to their terms. In 2014, the Company’s Board of Directors approved that the Directors stock compensation would be included in the Employee Stock Incentive Plan (“Stock Plan”) that reserves 1,724,128 2,543,448 1,500,000 7,076,326 1,038,828 Restricted stock units On August 12, 2022, the Board of Directors granted 932,500 three On August 9, 2021, the Board of Directors granted 1,231,541 three Compensation expense recognized for grants of restricted stock vesting under the 2015 Incentive Plan was approximately $ 858,000 754,000 Total unrecognized compensation expense related to unvested restricted stock units expected to be recognized over the remaining weighted vesting period of 1.84 1,806,297 three years SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Activity under the 2015 Incentive Plan for RSUs was as follows: SCHEDULE OF SHARE-BASED COMPENSATION, RESTRICTED STOCK UNITS AWARD ACTIVITY Year Ended December 31, 2022 2021 Restricted Weighted Restricted Weighted Outstanding, beginning of period 2,284,910 $ 0.70 1,796,897 $ 0.71 Granted 932,500 $ 1.00 1,231,541 $ 0.76 Forfeited (35,030 ) $ 0.59 (10,000 ) $ 0.59 Vested (1,008,214 ) $ 0.70 (733,528 ) $ 0.83 Outstanding, end of period 2,174,166 $ 0.83 2,284,910 $ 0.70 Stock Options On August 12, 2022, the Board of Directors authorized 75,000 24,000 0.82 0.35 The options vest 33.3 33.3 33.4 On August 9, 2021, the Board of Directors approved to be granted 74,996 0.78 0.31 The options vest 33.3 33.3 33.4 The Company recognized share-based compensation expense related to stock options of approximately $ 15,000 3,000 Activity under the 2015 Incentive Plan for stock options was as follows: SCHEDULE OF SHARE-BASED COMPENSATION, STOCK OPTIONS, ACTIVITY Year Ended December 31, 2022 2021 Stock Weighted Stock Weighted Outstanding, beginning of period 398,580 $ 1.34 498,277 $ 1.53 Granted 24,000 $ 0.82 74,996 $ 0.78 Exercised - $ - (1,865 ) $ 0.86 Expired (5,298 ) $ 0.81 (172,828 ) $ 1.67 Outstanding, end of period 417,282 $ 1.31 398,580 $ 1.34 Stock options exercisable at end of period 350,222 $ 1.41 321,586 $ 1.47 SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The fair value of stock options granted in 2022 and 2021 were estimated at the grant date using the Black-Scholes option pricing model using the following assumptions: SCHEDULE OF SHARE-BASED PAYMENT AWARD, STOCK OPTIONS, VALUATION ASSUMPTIONS Year Ended December 31, 2022 2021 Expected volatility 59.50 % 59.50 % Discount rate 3.98 % 1.25 % Expected life (years) 3 2 Dividend yield n/a n/a Option pricing models require the input of highly subjective assumptions, including the expected price volatility. Expected price volatility is based on the historical volatility of our common stock. Changes in the subjective input assumptions can materially affect the fair value estimate. The expected term of the options granted is derived from the output of the option pricing model and represents the period of time that the options granted are expected to be outstanding. The discount rate for the periods within the contractual term of the option is based on the U.S. Treasury yield curve in effect at the date of grant. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | NOTE 13. EARNINGS PER SHARE Basic and diluted earnings per share of common stock have been computed as follows: SCHEDULE OF BASIC AND DILUTED EARNINGS PER SHARE 2022 2021 Year Ended December 31, 2022 2021 Numerator: Net income (loss) $ 1,065,157 $ (529,801 ) Denominator: Weighted average shares of common stock outstanding - basic 28,643,464 26,391,538 Effect of dilutive options 31,636 - Weighted average shares of common stock outstanding - diluted 28,675,100 26,391,538 Earnings (loss) per common share - basic $ 0.04 $ (0.02 ) Earnings (loss) per common share - diluted $ 0.04 $ (0.02 ) |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | NOTE 14. SEGMENT REPORTING We report our segment results based on our geographic areas of operations, North America and International. These segments have similarities from a product perspective, but management believes that due to operational differences, such as sales models and regulatory environments, information about the segment would be useful to readers of the financial statements. ● North America includes our PDC drill bit and specialty tool sales and contract services business in the United States and Mexico, which have been aggregated ● International includes our specialty tool rental business in the Middle East Revenues and certain operating expenses are directly attributable to our segments. Unallocated corporate costs primarily include corporate shared costs, such as payroll and compensation, professional fees, and rent, as well as costs associated with certain shared research and development activities. Our operating segments are not evaluated using asset information. Prior periods have been restated to conform with the current year presentation. This change was made due to international revenue becoming more significant in the current year. SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table summarizes information about our segments: SCHEDULE OF SEGMENTS INFORMATION WITH GEOGRAPHIC AREAS 2022 2021 Year Ended December 31, 2022 2021 Revenues: North America $ 16,917,259 $ 11,619,593 International 2,180,428 1,716,556 Total revenue $ 19,097,687 $ 13,336,149 Operating income (loss): North America $ 9,672,853 $ 6,190,184 International (3,551 ) (577,408 ) Corporate costs, unallocated (7,732,852 ) (6,199,527 ) Total operating income (loss) $ 1,936,450 $ (586,751 ) Depreciation expense: North America $ 634,388 $ 790,565 International 702,921 729,636 Total depreciation expense $ 1,337,309 $ 1,520,201 North America revenue includes revenue from operations in Mexico totaling $ 144,984 18,000 Information about products and services See Note 2 – Revenue. Information about geographic areas The following table summarizes net property, plant and equipment by geographic location: SCHEDULE OF NET PROPERTY, PLANT AND EQUIPMENT BY GEOGRAPHIC LOCATION 2022 2021 December 31, 2022 2021 Property, plant and equipment, net: United States $ 6,560,435 $ 5,762,066 Other countries 2,016,416 1,168,263 Total property, plant and equipment, net $ 8,576,851 $ 6,930,329 None Management’s Evaluation of Disclosure Controls and Procedures Disclosure controls and procedures are our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As of the end of the period covered by this Annual Report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b). Based upon that evaluation, as of December 31, 2022, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective. Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of its internal control over financial reporting based on the framework established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as set forth in Internal Control - Integrated Framework Changes in Internal Controls over Financial Reporting There has been no change in our internal control over financial reporting that occurred during the fourth quarter of 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Inherent Limitations of the Effectiveness of Controls Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud. A control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. Attestation Report of Registered Public Accounting Firm This Annual Report does not contain an attestation report of our independent registered public accounting firm related to internal control over financial reporting because the rules for smaller reporting companies provide an exemption from the attestation requirement. Not applicable. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. The following table sets forth information concerning our directors, executive officers and significant employees as of December 31, 2022: Name Age Position G. Troy Meier 61 Board Chair, Class III Director and Chief Executive Officer Annette Meier 60 Class II Director, President and Chief Operating Officer James R. Lines 61 Class II Director Robert Iversen 68 Class III Director Michael V. Ronca 69 Class I Director Christopher D. Cashion 67 Chief Financial Officer G. Troy Meier. Mr. Meier was selected to serve on our Board of Directors and as the Board Chair because of his extensive industry experience, his role as our co-founder and chief innovator, and his and Ms. Meier’s majority shareholding. Mr. Meier is married to Annette Meier. Annette Meier. Ms. Meier was selected to serve on our Board of Directors because of her extensive industry experience, her role as our co-founder and substantial knowledge of our day-to-day operations, and her and Mr. Meier’s majority shareholding. Ms. Meier is married to G. Troy Meier. James Lines. Mr. Lines was selected to serve on the Board of Directors due to his extensive experience in growing a midsize business, as well as his background in manufacturing and engineering in the energy industry. Robert E. Iversen. Mr. Iversen was selected to serve on our Board of Directors because of his strong experience with start-up companies and the development and commercialization of new technology products. Mr. Iversen further brings his broad executive and operational management expertise in the oil and gas industry. Michael Ronca Mr. Ronca was selected to serve on our Board of Directors because of his strong experience within the oil and gas industry. Christopher D. Cashion. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) requires our directors and executive officers, and persons who own more than 10% of our equity securities, to file initial reports of ownership and reports of changes in ownership of our common stock with the SEC and to furnish us a copy of each filed report. To our knowledge, based solely on review of the copies of such reports furnished to us and written representations that no other reports were required, during the fiscal year ended December 31, 2022, our officers, directors and greater than 10% beneficial owners timely filed all required Section 16(a) reports. Material Changes in Director Nominations Process There have not been any material changes to the procedures by which shareholders may recommend nominees to our Board. Audit Committee Our Audit Committee is comprised solely of “independent” directors, as defined under and required by Rule 10A-3 of the Exchange Act and the NYSE American rules. Our Audit Committee is directly responsible for, among other things, the appointment, compensation, retention and oversight of our independent registered public accounting firm. The oversight of our independent public accounting firm includes reviewing the plans and results of the audit engagement with the firm, approving any additional professional services provided by the firm and reviewing the independence of the firm. Commencing with our first report on internal controls over financial reporting, the Committee will be responsible for discussing the effectiveness of the internal controls over financial reporting with our independent registered public accounting firm and relevant financial management. The members of this Committee are Messrs. Iversen, Ronca, and Lines with Mr. Lines serving as committee chair. Our Board of Directors has determined that Mr. Lines qualifies as an “audit committee financial expert,” as defined by the rules under the Exchange Act. The Audit Committee held four meetings in 2022. Code of Ethics We have adopted a Code of Business Conduct and Ethics that applies to all of our employees, as well as each member of our Board. The Code of Business Conduct and Ethics is available under “Corporate Governance” at the “Investors” section of our website at www.sdpi.com Corporate Governance The charters for our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee and our Code of Business Conduct and Ethics are available under “Corporate Governance” at the “Investors” section of our website at www.sdpi.com Summary Compensation Table The following table provides information concerning compensation paid or accrued during the fiscal years ended December 31, 2022 and 2021, to our principal executive officer, our chief operating officer and our principal financial officer, to whom we sometimes refer together as our “named executive officers.” Name and Principal Position Year Salary Bonus Stock Option Non-Equity All Other Total G. Troy Meier 2022 $ 475,000 (1) $ — (2) $ 332,500 (4) $ — $ — $ 2,370 (5) $ 809,870 Chief Executive Officer 2021 $ 444,666 (1) $ 665,000 (2) $ 332,500 (3) $ — $ — $ 8,012 (5) $ 1,450,178 Annette Meier 2022 $ 414,113 (1) $ — (2) $ 255,000 (4) $ — $ — $ 10,656 (5) $ 679,770 President and Chief Operating Officer 2021 $ 395,201 (1) $ 595,000 (2) $ 255,000 (3) $ — $ — $ 12,288 (5) $ 1,257,489 Christopher Cashion 2022 $ 289,029 (1) $ — $ 120,000 (4) $ — $ — $ 13,340 (6) $ 422,370 Chief Financial Officer 2021 $ 276,989 (1) $ — $ 120,000 (3) $ — $ — $ 11,566 (6) $ 408,555 (1) Salary amounts represent base compensation for the individuals indicated. (2) A bonus of $333,900 was accrued but not paid in 2022 for Mr. Meier, and $296,100 was accrued but not paid for Ms. Meier. For 2021, accrued bonuses of $665,000 for Mr. Meier and $595,000 for Ms. Meier were used to offset the Tronco related party obligation. (3) Reflects the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. See Note 12 Share-Based Compensation to our consolidated financial statements included herein. The grant date fair value for these restricted stock awards was based on the average price of our common stock on the grant date (August 9, 2021), which was $0.765 per share. The restricted stock awards will vest in accordance with the following vesting schedule: 33.3% of the shares of restricted common stock vested on August 9, 2022, 33.3% of the shares of restricted common stock will vest on August 9, 2023 and 33.4% of the shares of restricted common stock will vest on August 9, 2024. (4) The grant date fair value for these restricted stock awards was based on the average price of our common stock on the grant date (August 12, 2022), which was $1.00 per share. The restricted stock awards will vest in accordance with the following vesting schedule: 33.3% of the shares of restricted common stock will vest on August 12, 2023, 33.3% of the shares of restricted common stock will vest on August 12, 2024 and 33.4% of the shares of restricted common stock will vest on August 12, 2025. (5) Represents certain company paid health care costs and life insurance costs for G. Troy Meier and Annette Meier. (6) Represents certain company paid health care costs and life insurance costs. Narrative Disclosure to Summary Compensation Table See the footnotes to the Summary Compensation Table and “Employment Agreements and Potential Benefits Upon Termination or Change-in-Control” for narrative disclosure with respect to the table, as well as the below discussion. Employment Agreements and Potential Benefits Upon Termination or Change-in-Control In connection with our initial public offering, we planned to enter into employment agreements with each of our named executive officers, and the forms of those agreements were filed with the SEC as exhibits to our registration statement on Form S-1. However, management and the Board have continued to discuss and negotiate the final terms of those agreements and as of the date hereof, the agreements have not been executed. As a result, none of the named executive officers currently has a contractual right to any of the benefits described below. The employment agreements to be entered into with our named executive officers will provide for, among other things, the payment of base salary, reimbursement of certain costs and expenses, and for each named executive officer’s participation in our bonus plan and employee benefit plans. With the exception of G. Troy Meier’s and Annette Meier’s employment agreements, each agreement will provide for a term of employment commencing on the date of the agreement and continuing (a) until we or the executive provide 30-days written notice of termination to the other party, (b) upon termination by us for cause, or (c) upon the executive’s death or disability. Except with respect to certain items of compensation, as described below, the terms of each agreement will be similar in all material respects. In addition to the base salaries shown above, ● Mr. Meier’s form of employment agreement provides for an annual review by our Board of Directors, and a performance bonus of 70% to 110% of his base salary based on criteria to be established by the Compensation Committee and participate in our incentive plans. ● Ms. Meier’s form of employment agreement provides for an annual review by our Board of Directors, and a performance bonus of 70% to 110% of her base salary based on criteria to be established by the Compensation Committee and participate in our incentive plans. ● Mr. Cashion’s form of employment agreement entitles him to receive a performance bonus based on criteria established by the Compensation Committee, and to participate in our incentive plans. Each of the Meiers’ employment agreements will provide for customary and usual fringe benefits generally available to our executive officers, and reimbursement for reasonable out-of-pocket business expenses, including the use of a company vehicle. Change of Control Provisions (1) (a) a reorganization, merger, consolidation or other form of corporate transaction or series of transactions, in each case, with respect to which persons who were our stockholders immediately prior to such transaction do not, immediately thereafter, own more than 50% of the combined voting power entitled to vote generally in the election of directors of the reorganized, merged or consolidated company’s then outstanding voting securities, in substantially the same proportions as their ownership immediately prior to such transaction, (b) our liquidation or dissolution, or (c) the sale of all or substantially all of our assets (unless such reorganization, merger, consolidation or other corporate transaction, liquidation, dissolution or sale is subsequently abandoned); or (2) the acquisition in a transaction or series or transactions by any person, entity or “group”, within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of more than 50% of either the then outstanding shares of common stock or the combined voting power of our then outstanding voting securities entitled to vote generally in the election of directors (a “Controlling Interest”), excluding any acquisitions by (a) us or our subsidiaries, (b) any person, entity or “group” that as of the date of the amendments to the employment agreements owns beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act of a Controlling Interest, or (c) any of our employee benefit plans. G. Troy Meier’s and Annette Meier’s employment agreements will provide that (a) the non-competition covenant does not apply following the termination of employment if their employment is terminated without cause or for good reason, (b) the non-solicitation of employees covenant applies with respect to any current employee or any former employee who was employed by us within the prior six months, and (c) the non-solicitation of customers covenant applies to all actual or targeted prospective clients of ours to the extent solicited on behalf of any person or entity in connection with any business competitive with our business. As consideration and compensation to our executive officers for, and subject to each executive officer’s adherence to, the above covenants and limitations, we have agreed to continue to pay the executive officer’s base salary in the same manner as if they continued to be employed by us during the one-year non-competition period following the executive officer’s termination. Payments on Termination Outstanding Equity Awards for Year Ended December 31, 2022 The following table shows the number of shares covered by exercisable and unexercisable options awards and stock awards held by our named executive officers on December 31, 2022 that were made under the 2015 Long Term Incentive Plan. Option Awards Stock Awards Name Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) Option Exercise Price ($) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock That Have Not Vested ($) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (a) (b) (c) (d) (e) (f) (g) (h) (1) (i) (j) G. Troy Meier — 86,762 $ 50,793 (3) — — 289,906 $ 221,778 (2) — — 332,500 $ 332,500 (4) Annette Meier — 66,540 $ 39,092 (3) — — 222,334 $ 170,086 (2) — — 255,000 $ 255,000 (4) Christopher Cashion (5) 11,995 — — 1.73 03/04/2026 12,416 — — 1.67 03/18/2026 15,057 — — 1.37 03/31/2026 46,969 $ 27,594 (3) — — 104,628 $ 80,040 (2) — — 120,000 $ 120,000 (4) — — (1) See Note 12 –Share-Based Compensation in the consolidated financial statements included herein. (2) The grant date fair value for restricted stock awards is based on the average price of our common stock on the grant date (August 9, 2021), which was $0.765 per share. The remaining restricted stock awards vested in accordance with the following vesting schedule: 33.3% of the shares of restricted common stock vested on August 9, 2022, 33.3% of the shares of restricted common stock will vest on August 9, 2023, and 33.4% of the shares of restricted common stock will vest on August 9, 2024. (3) The grant date fair value for restricted stock awards is based on the average price of our common stock on the grant date (August 7, 2020), which was $0.5875 per share. The restricted stock awards vested in accordance with the following vesting schedule: 33.3% of the shares of restricted common stock vested on August 7, 2021, 33.3% of the shares of restricted common stock vested on August 7, 2022 and 33.4% of the shares of restricted common stock will vest on August 7, 2023. (4) The grant date fair value for restricted stock awards is based on the average price of our common stock on the grant date (August 12, 2022), which was $1.000 per share. The remaining restricted stock awards will vest in accordance with the following vesting schedule: 33.3% of the shares of restricted common stock will vest on August 12, 2023, 33.3% of the shares of restricted common stock will vest on August 12, 2024, and 33.4% of the shares of restricted common stock will vest on August 12, 2025. (5) During March 2016, the named executive officer agreed to receive awards of stock options in lieu of base salary. The grant date fair value for the stock option awards was based on the closing price of our common stock on the grant date of a) March 4, 2016, which was $1.73 per share; b) March 18, 2016, which was $1.67 per share; and c) March 31, 2016, which was $1.37 per share. All options vested 100% on the grant date and have a ten-year term expiring on March 4, 2026, March 18, 2026 and March 31, 2026, respectively. The fair value of the vested stock options were calculated using the Black-Scholes model with a volatility and discount rate over the expected term of each employee. Director Compensation Our employee directors are not separately compensated for their service as a director. In 2022, each of our non-employee directors received 88,008 shares of restricted common stock for his service as a director. In addition to receiving shares of stock, our non-employee directors earned the following fees: Mr. Lines, $93,343; Mr. Iverson, $87,898; and Mr. Ronca, $128,417. The members of our Board of Directors are entitled to reimbursement of their expenses incurred in connection with the attendance at Board and committee meetings in accordance with Company policy. The following table summarizes the annual compensation for our non-employee directors during 2022. Name (a) Fees Earned or Paid in Cash (b) Stock Awards (c) (1) Option Awards (d) Non-Equity Incentive Plan Compensation (e) Nonqualified Deferred Compensation Earnings (f) All Other Compensation (g) Total James R. Lines $ 93,343 $ 75,000 - - - - $ 168,343 Robert Iversen $ 87,898 $ 75,000 - - - - $ 162,898 Michael V. Ronca $ 128,417 $ 75,000 - - - - $ 203,417 (1) Reflects the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 of awards granted by the Board of Directors. See Note 12 - Share-Based Compensation in the consolidated financial statements included herein. The grant date fair value for restricted stock awards is based on the average price of our common stock on the grant date (August 12, 2022), which was $1.00 per share, respectively. As of December 31, 2022, Mr. Lines, Mr. Iversen and Mr. Ronca each have an aggregate of 169,749 outstanding shares of unvested restricted stock. The restricted stock awards have the following vesting schedule: a) for the shares granted on August 7, 2020: 33.3% of the shares of restricted common stock vested on the first anniversary of the date of grant, 33.3% of the shares of restricted common stock vested on the second anniversary of the date of grant and 33.4% of the shares of restricted common stock will vest on the third anniversary of the date of grant in each case, so long as the director continues to serve on the Board through such date; b) for the shares granted on August 9, 2021: 33.3% of the shares of restricted common stock vested on the first anniversary of the date of grant, 33.3% of the shares of restricted common stock will vest on the second anniversary of the date of grant and 33.4% of the shares of restricted common stock will vest on the third anniversary of the date of grant in each case, so long as the director continues to serve on the Board through such date and c) for the shares granted on August 12, 2022 33.3% of the shares of restricted common stock will vest on the first anniversary of the date of grant, 33.3% of the shares of restricted common stock will vest on the second anniversary of the date of grant and 33.4% of the shares of restricted common stock will vest on the third anniversary of the date of grant in each case, so long as the director continues to serve on the Board through such date The following table sets forth information with respect to the beneficial ownership of our common stock as of December 31, 2022, by: ● each person who is known by us to beneficially own 5% or more of the outstanding class of our capital stock; ● each member of the Board; ● each of our executive officers; and ● all of our directors and executive officers as a group. Beneficial ownership is determined in accordance with the rules of the SEC. To our knowledge, each of the holders of capital stock listed below has sole voting and investment power as to the capital stock owned unless otherwise noted. Name and Address of Beneficial Owner Numbers of Shares % of Common Stock (1) G. Troy Meier (2) 11,320,426 38.7 % Annette Meier (3) 10,989,062 37.6 % Christopher D. Cashion (4), (9) 926,026 3.2 % James R. Lines (5), (6) 451,290 1.5 % Robert Iversen (5), (7) 606,675 2.0 % Michael V. Ronca (5), (8) 547,202 1.9 % Jeffrey E. Eberwein 2,184,4299 7.5 % Star Equity Fund, LP 1,150,000 3.9 % Executive Officers and Directors as a group (6 persons) 14,932,224 51.1 % (1) Based on 29,245,080 shares outstanding as of December 31, 2022. Unless otherwise noted, the address for the holder is 1583 South 1700 East, Vernal, Utah 84078. (2) Includes (i) 5,641,510 shares of common stock indirectly owned through his ownership in Meier Family Holding Company, LLC, and (ii) 3,173,350 shares of common stock indirectly owned through his ownership in Meier Management Company, LLC. Also includes 702,801 shares of vested restricted common stock, 709,168 shares of unvested restricted common stock. The unvested restricted stock will vest on August 12, 2023, August 12, 2024, and August 12, 2025. (3) Includes (i) 5,641,510 shares of common stock indirectly owned through her ownership in Meier Family Holding Company, LLC, and (ii) 3,173,350 shares of common stock indirectly owned through her ownership in Meier Management Company, LLC. Also includes 536,731 shares of vested restricted common stock, 543,874 shares of unvested restricted common stock. The unvested restricted stock will vest on August 12, 2023, August 12, 2024, and August 12, 2025. (4) Includes (a) 46,969 shares of restricted common stock that vests in accordance with the following vesting schedule: 33.3% of the shares of restricted common stock vested on August 7, 2021, 33.3% of the shares of restricted common stock vested on August 7, 2022, and 33.4% of the shares of restricted common stock will vest on August 7, 2023; (b) 104,628 shares of restricted common stock that vests in accordance with the following vesting schedule: 33.3% of the shares of restricted common stock vested on August 9, 2022, 33.3% of the shares of restricted common stock will vest on August 9, 2023, and 33.4% of the shares of restricted common stock will vest on August 9, 2024 and (c) 120,000 shares of restricted common stack that vests in accordance with the following vesting schedule: 33.3% of the shares of restricted common stock will vest on August 12, 2023, 33.3% of shares of restricted common stock will vest on August 12, 2024, and 33.4% of shares of restricted common stock will vest on August 12, 2025. (5) Includes (a) 29,356 shares of restricted common stock that vests in accordance with the following vesting schedule: 33.3% of the shares of restricted common stock vested on August 7, 2021, 33.3% of the shares of restricted common stock vested on August 7, 2022, and 33.4% of the shares of restricted common stock will vest on August 7, 2023; (b) 65,393 shares of restricted common stock that vests in accordance with the following vesting schedule: 33.3% of the shares of restricted common stock vested on August 9, 2022, 33.3% of the shares of restricted common stock will vest on August 9, 2023, and 33.4% of the shares of restricted common stock will vest on August 9, 2024 and (c) 75,000 shares of restricted common stack that vests in accordance with the following vesting schedule: 33.3% of the shares of restricted common stock will vest on August 12, 2023, 33.3% of shares of restricted common stock will vest on August 12, 2024, and 33.4% of shares of restricted common stock will vest on August 12, 2025. (6) The address of Mr. Lines is c/o Superior Drilling Products Inc. (7) The address of Mr. Iversen is c/o Superior Drilling Products Inc. (8) The address of Mr. Ronca is c/o Superior Drilling Products Inc. (9) The address of Mr. Cashion is c/o Superior Drilling Products Inc. Certain Relationships and Related Party Transactions Related Party Note Receivable The Company holds 8,267,860 shares as collateral for the Tronco Note (see Note 6 – Related Party Note Receivable in our consolidated financial statements). Policies and Procedures for Related Party Transactions Any request for us to enter into a transaction with an executive officer, director, principal stockholder or any of such persons’ immediate family members or affiliates, in which the amount involved exceeds $120,000, must first be presented to our audit committee for review, consideration and approval. All of our directors and executive officers are required to report to the audit committee chair any such related person transaction. In approving or rejecting the proposed agreement, our audit committee shall consider the facts and circumstances available and deemed relevant to the audit committee, including, but not limited to, costs and benefits to us, the terms of the transaction, the availability of other sources for comparable services or products, and, if applicable, the impact on a director’s independence. Our audit committee shall approve only those agreements that, in light of known circumstances, are in, or are not inconsistent with, our best interests and the best interests of our shareholders, as our audit committee determines in the good faith exercise of its discretion. If we should discover related person transactions that have not been approved, the audit committee will be notified and will determine the appropriate action, including ratification, rescission or amendment of the transaction. Director Independence The Board has determined that the following members are independent within the meaning of the listing rules of the NYSE American: James Lines, Robert Iversen and Michael Ronca. Independent Registered Public Accountant Fees The following table sets forth the fees incurred for services performed by Moss Adams LLP: Years Ended December 31, 2022 2021 Audit Fees $ 190,900 $ 218,782 Audit-Related Fees - - Tax Fees - - All Other Fees - - Total $ 190,900 $ 218,782 Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services of Independent Registered Public Accountants The charter of the Audit Committee and its pre-approval policy require that the Audit Committee review and pre-approve the Company’s independent registered public accounting firm’s fees for audit, audit-related, tax and other services. The Chairman of the Audit Committee has the authority to grant pre-approvals, provided such approvals are within the pre-approval policy and are presented to the Audit Committee at a subsequent meeting. For the year ended December 31, 2022, the Audit Committee approved 100% of the services described above under the captions “Audit Fees.” (a) The following documents are filed as part of this Report: (1) Financial Statements – see Index to Financial Statements appearing on page 31 (2) Financial Statement Schedules – None (3) Exhibits – Exhibit No. Description 1.1 Placement Agency Agreement dated October 12, 2021, between Superior Drilling Products, Inc. and EF Hutton, division of Benchmark Investments, LLC (incorporated by reference to Exhibit 1.1 to the Company’s Current Repor |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Organization and Nature of Operations | Organization and Nature of Operations Superior Drilling Products, Inc. (the “Company”, “SDPI”, “we”, “our” or “us”) is an innovative drilling and completion tool technology company providing cost saving solutions that drive production efficiencies for the oil and natural gas drilling industry. Our drilling solutions include the patented Drill-N-Ream® well bore conditioning tool (“Drill-N-Ream tool”) and the patented Strider™ Drill String Oscillation System technology (“Strider technology” or “Strider”). In addition, the Company is a manufacturer and refurbisher of PDC (polycrystalline diamond compact) drill bits for a leading oil field services company. We operate a state-of-the-art drill tool fabrication facility, where we manufacture solutions for the drilling industry, as well as customers’ custom products. Our headquarters and manufacturing operations are located in Vernal, Utah. Our subsidiaries include (a) Superior Drilling Solutions, LLC (“SDS”) (previously known as Superior Drilling Products, LLC), a Utah limited liability company, together with its wholly owned subsidiary Superior Design and Fabrication, LLC (“SDF”), a Utah limited liability company, (b) Extreme Technologies, LLC(“ET”), a Utah limited liability company, (c) Meier Properties Series, LLC (“MPS”), a Utah limited liability company, (d) Meier Leasing, LLC (“ML”), a Utah limited liability company, and (e) Hard Rock Solutions, LLC (“HR” or “Hard Rock”). |
Basis of Presentation | Basis of Presentation The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The consolidated financial statements include the accounts of Superior Drilling Products Inc. and all of its wholly owned subsidiaries. All significant intercompany accounts have been eliminated in consolidation. The Company does not have investments in any unconsolidated subsidiaries. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates. Significant items subject to estimates and assumptions include the carrying amount and useful lives of property and equipment and intangible assets, impairment assessments, share-based compensation expense, and valuation allowances for accounts receivable, inventories, and deferred tax assets. |
Revenue Recognition | Revenue Recognition We account for revenue in accordance with Accounting Standard Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), except for tool rental revenue. Under ASC 606 revenue is measured based on a consideration specified in a customer’s contract, excluding any sale incentives and taxes collected on behalf of third parties. Revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration that we expect to receive for those goods or services. To recognize revenue, we (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when, or as, we satisfy the performance obligation(s). Shipping and handling costs incurred are accounted for as fulfillment costs and are included in cost of revenues in the statements of operations. Tool sales, rentals and other related revenue Tool and Product Sales Tool Rental Other Related Revenue: SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Contract Services Drill Bit Manufacturing and Refurbishment Our revenue is derived from short-term contracts. Revenue is recognized when we satisfy a performance obligation by transferring control of the promised goods or services to our customers at a point in time, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. We also assess our customer’s ability and intention to pay, which is based on a variety of factors including our customer’s historical payment experience and financial condition. Payment terms and conditions vary, although terms generally include a requirement of payment within 30 days. Revenue generally does not include right of return or other significant post-delivery obligations. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. We elected to treat shipping and handling costs as a fulfillment cost instead of as a separate performance obligation. We recognize the cost for shipping and handling when incurred as an expense in cost of revenue. All of our contracts are less than one year in duration. We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. |
Cash | Cash We maintain cash deposits with financial institutions that may exceed federally insured limits at times. We have chosen credible institutions and believe our risk of loss is negligible. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s financial instruments consist of cash, receivables, payables, and bank debt. The Company believes that the carrying values of these instruments on the accompanying consolidated balance sheets approximate their fair values due to the relatively short period to maturity for these instruments. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Domestically, accounts receivable are generally due within 60 days of the invoice date. Internationally, our due date terms are generally 90 days from the invoice date. No interest is charged on past-due balances. We grant credit to our customers based upon an evaluation of each customer’s financial condition. We periodically monitor the payment history and ongoing creditworthiness of our customers. An allowance for doubtful accounts is established at a level estimated by management to be adequate based upon various factors including historical experience, aging status of customer accounts, payment history and financial condition of our customers. The allowance for doubtful accounts was $ 0 1,345,622 |
Inventories | Inventories Inventories consist of raw materials, work-in-process and finished goods and are stated at the lower of cost, determined using the weighted-average cost method, or net realizable value. Finished goods inventories include raw materials, direct labor and production overhead. The Company regularly reviews inventories on hand and current market conditions to determine if the cost of finished goods inventories exceed current market prices and impairs the cost basis of the inventory accordingly. |
Assets Held for Sale | Assets Held for Sale The Company classifies disposal groups as held for sale in the period in which all of the following criteria are met: (1) management, having the authority to approve the action, commits to a plan to sell the disposal group; (2) the disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such disposal groups; (3) an active program to locate a buyer or buyers and other actions required to complete the plan to sell the disposal group have been initiated; (4) the sale of the disposal group is probable, and transfer of the disposal group is expected to qualify for recognition as a completed sale, within one year, except if events or circumstances beyond the Company’s control extend the period of time required to sell the disposal group beyond one year; (5) the disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (6) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A disposal group that is classified as held for sale is initially measured at the lower of its carrying amount or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Subsequent changes in the fair value of a disposal group less any costs to sell are reported as an adjustment to the carrying amount of the disposal group, as long as the new carrying amount does not exceed the carrying amount of the asset at the time it was initially classified as held for sale. Upon determining that a disposal group meets the criteria to be classified as held for sale, the Company reports the assets and liabilities of the disposal group for all periods presented in the line items assets held for sale and liabilities held for sale, respectively, in the consolidated balance sheets. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment is stated at cost. The cost of ordinary maintenance and repair is charged to operating expense, while replacement of critical components and major improvements are capitalized. Depreciation or amortization of property and equipment is calculated using the straight-line method over the asset’s estimated useful life as follows: SCHEDULE OF ASSETS ESTIMATED USEFUL LIFE Buildings and leasehold improvements 2 39 Machinery, equipment and rental tools 18 10 Office equipment, fixtures and software 3 7 Transportation equipment 5 30 Property, plant and equipment is reviewed for impairment on an annual basis or whenever events or changes in circumstances indicate the carrying value of an asset or asset group may not be recoverable. Indicative events or circumstances include, but are not limited to, matters such as a significant decline in market value or a significant change in business climate. An impairment loss is recognized when the carrying value of an asset exceeds the estimated undiscounted future cash flows from the use of the asset and its eventual disposition. The amount of impairment loss recognized is the excess of the asset’s carrying value over its fair value. Assets to be disposed of are reported at the lower of the carrying value or the fair value less cost to sell. Upon sale or other disposition of an asset, the Company recognizes a gain or loss on disposal measured as the difference between the net carrying value of the asset and the net proceeds received. |
Intangible Assets | Intangible Assets The Company’s intangible assets with finite lives consist of developed technology, customer contracts and relationships, and trade names and trademarks. The cost of intangible assets with finite lives is amortized using the straight-line method over the estimated period of economic benefit, ranging from 5 9 Intangible assets with finite lives are tested for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. These conditions may include a change in the extent or manner in which the asset is being used or a change in future operations. The Company assesses the recoverability of the carrying amount by preparing estimates of future revenue, margins, and cash flows. If the sum of expected future cash flows (undiscounted and without interest charges) is less than the carrying amount, an impairment loss is recognized. The impairment loss recognized is the amount by which the carrying amount exceeds the fair value. Fair value of these assets may be determined by a variety of methodologies, including discounted cash flow models. |
Leases | Leases We account for leases in accordance with ASC Topic 842 - Leases (“ASC 842”), which requires assets and liabilities that arise from all leases to be recognized on the balance sheet for lessees and expanded financial statement disclosures for both lessees and lessors. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liability represents the Company’s obligation to make lease payments arising from the lease, both of which are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. Leases with a lease term of 12 months or less at inception are not recorded on the condensed consolidated balance sheet and are expensed on a straight-line basis over the lease term in the condensed consolidated statement of operations. SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company determines whether a contract is a lease, or contains a lease, at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. The Company discounts lease payments based on an estimate of its incremental borrowing rate as the Company’s leases do not provide a readily determinable implicit rate. Operating lease assets and liabilities are included on our consolidated balance sheets. Operating lease expense (excluding variable lease costs) is recognized on a straight-line basis over the lease term. |
Research and Developmen | Research and Developmen We expense research and development costs as they are incurred. For the years ended December 31, 2022 and 2021, these expenses were approximately $ 436,000 487,000 |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings (loss) per common share is calculated by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) attributable to common shareholders by the weighted average number of common shares outstanding, including potentially dilutive common share equivalents, if the effect is dilutive. Potentially dilutive common shares equivalents include stock options. |
Income Taxes | Income Taxes The Company recognizes an asset or liability for the deferred tax consequences of all temporary differences between the tax basis of assets or liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years when the reported amounts of the asset or liabilities are recovered or settled and for operating loss carry forwards. These deferred tax assets and liabilities are measured using the enacted tax rates that will be in effect when the differences are expected to reverse and the carry forwards are expected to be realized. Deferred tax assets are reviewed periodically for recoverability and a valuation allowance is provided as necessary. |
Debt Issuance Costs | Debt Issuance Costs Costs related to debt issuance are capitalized and amortized as interest expense over the term of the related debt using the straight-line method, which approximates the effective interest method. Upon the repayment of debt, the Company accelerates the recognition of an appropriate amount of the costs as interest expense. Debt issuance costs are presented as a direct reduction from the carrying amount of the note payable. For the years ended December 31, 2022 and 2021, the amortized debt issuance costs were $ 3,087 18,522 |
Share-Based Compensation | Share-Based Compensation Share-based compensation expense related to stock option and restricted stock awards is recognized based on the grant-date fair values. The Company recognizes compensation expense on a straight-line basis over the requisite service period of the award. |
Concentrations of Credit Risk | Concentrations of Credit Risk The Company has two significant customers that represent 88 87 1,751,000 1,910,000 The Company had two significant vendors that represent 12 74,400 13 136,000 SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
Government Grant | Government Grant The Company applied for and received a grant award of up to $ 750,000 During 2022, the Company met the conditions of the grant and received the initial grant funding totaling $ 675,000 675,000 |
Foreign currency transactions | Foreign currency transactions Foreign currency transactions are initially measured and recorded in U.S. dollars using the exchange rate on the date of the transaction. Foreign currency denominated monetary assets and liabilities are measured at the end of each reporting period using the exchange rate at that date. Gains and losses from foreign currency transactions, which are included in selling, general, and administrative expenses, have not been significant in any of the periods presented. Nonmonetary assets and liabilities are not subsequently remeasured. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements There are no recently issued accounting pronouncements that we have not yet adopted that we believe will have a material effect on our financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
SCHEDULE OF ASSETS ESTIMATED USEFUL LIFE | SCHEDULE OF ASSETS ESTIMATED USEFUL LIFE Buildings and leasehold improvements 2 39 Machinery, equipment and rental tools 18 10 Office equipment, fixtures and software 3 7 Transportation equipment 5 30 |
REVENUE (Tables)
REVENUE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
SCHEDULE OF REVENUE DISAGGREGATED BY REVENUE | The following table presents revenue disaggregated by type: SCHEDULE OF REVENUE DISAGGREGATED BY REVENUE 2022 2021 Year Ended December 31, 2022 2021 Tool Revenue: Tool and product sales $ 3,157,710 $ 2,610,500 Tool rental 2,180,428 1,716,556 Other related revenue 7,013,806 4,917,426 Total Tool Revenue 12,351,944 9,244,482 Contract Services 6,745,743 4,091,667 Total Revenue $ 19,097,687 $ 13,336,149 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Inventory Disclosure [Abstract] | |
SCHEDULE OF INVENTORIES | Inventories were comprised of the following: SCHEDULE OF INVENTORIES 2022 2021 December 31, 2022 2021 Raw material $ 1,334,669 $ 769,547 Work in progress 168,214 65,945 Finished goods 578,377 339,143 Total inventories $ 2,081,260 $ 1,174,635 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT | Property, plant and equipment was comprised of the following: SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT 2022 2021 December 31, 2022 2021 Land $ 880,416 $ 880,416 Buildings 4,764,441 4,764,441 Leasehold improvements 755,039 755,039 Machinery, equipment, and rental tools 14,546,060 12,207,497 Office equipment, fixtures and software 628,358 628,358 Transportation assets 265,760 265,760 Property, plant and equipment, gross 21,840,074 19,501,511 Accumulated depreciation (13,263,223 ) (12,571,182 ) Property, plant and equipment, net $ 8,576,851 $ 6,930,329 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
SCHEDULE OF INTANGIBLE ASSETS | Intangible assets were comprised of the following: SCHEDULE OF INTANGIBLE ASSETS 2022 2021 December 31, 2022 2021 Developed technology $ 7,000,000 $ 7,000,000 Customer contracts 6,400,000 6,400,000 Trademarks 1,500,000 1,500,000 Intangible assets, gross 14,900,000 14,900,000 Accumulated amortization (14,830,556 ) (14,663,889 ) Intangible assets, net $ 69,444 $ 236,111 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
SCHEDULE OF AGGREGATE FUTURE LEASE PAYMENTS | The following table presents the maturities of lease liabilities: SCHEDULE OF AGGREGATE FUTURE LEASE PAYMENTS Fiscal year ending December 31, Operating 2023 $ 173,339 2024 243,794 2025 130,454 2026 60,000 2027 40,000 Thereafter - Total undiscounted lease payments 647,587 Less: Imputed lease interest (79,939 ) Total lease liabilities $ 567,648 |
SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE | Other information related to operating leases: SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE Year Ended December 31, 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows $ 216,394 $ 48,621 Weighted average remaining lease-term (in years) 2.86 0.97 Weighted average discount rate 7.25 % 7.25 % |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
SCHEDULE OF DEBT OBLIGATIONS | Long-term debt is comprised of the following: SCHEDULE OF DEBT OBLIGATIONS 2022 2021 December 31, 2022 2021 Hard Rock Note $ - $ 750,000 Credit Agreement 813,713 1,312,194 Machinery loans 664,674 357,963 Transportation loan 20,027 32,277 Insurance loan 156,949 - Long term debt,total 1,655,363 2,452,434 Current portion of long-term debt (1,125,864 ) (2,195,759 ) Long-term debt,net $ 529,499 $ 256,675 |
SCHEDULE OF MATURITIES OF LONG TERM DEBT | Future annual maturities of total debt are as follows (1) SCHEDULE OF MATURITIES OF LONG TERM DEBT For the year ended December 31, (1) 2023 $ 1,125,864 2024 157,260 2025 140,156 2026 144,225 2027 87,858 Total long debt $ 1,655,363 (1) Excludes discounts for debt issuance costs. |
FINANCING OBLIGATION LIABILITY
FINANCING OBLIGATION LIABILITY (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Financing Obligation Liability | |
SCHEDULE OF FINANCING OBLIGATION LIABILITY | The financing obligation liability is summarized below: SCHEDULE OF FINANCING OBLIGATION LIABILITY 2022 2021 December 31, 2022 2021 Financing obligation for sale-leaseback transaction $ 4,112,658 $ 4,178,336 Current principal portion of finance obligation (74,636 ) (65,678 ) Non-current portion of financing obligation $ 4,038,022 $ 4,112,658 |
SCHEDULE OF AGGREGATE FUTURE LEASE PAYMENTS FOR THE FINANCE OBLIGATION | The following is the aggregate future lease payments that include principal and interest for the financing obligation liability as of December 31, 2022: SCHEDULE OF AGGREGATE FUTURE LEASE PAYMENTS FOR THE FINANCE OBLIGATION For the year ended December 31, 2023 $ 321,130 2024 325,947 2025 330,836 2026 335,799 2027 340,836 Thereafter 2,916,941 Total undiscounted lease payments 4,571,489 Residual value of the property (included in the future payments) 2,188,711 Less: effects of discounting (2,647,542 ) Present value of lease payments $ 4,112,658 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
SCHEDULE OF COMPONENTS OF INCOME TAX BENEFIT | Components of income tax expense was as follows: SCHEDULE OF COMPONENTS OF INCOME TAX BENEFIT 2022 2021 Year Ended December 31, 2022 2021 Current income taxes: Federal $ - $ - State 34,046 5,964 Foreign 160,923 104,787 Total current income taxes 194,969 110,751 Income tax expense $ 194,969 $ 110,751 |
SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES | The non-current deferred tax assets and liabilities consist of the following: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES 2022 2021 December 31, 2022 2021 Deferred tax assets: 263A adjustment $ 23,274 $ 14,204 Accrued expenses 140,900 - Prepaid expenses (54,589 ) (27,498 ) Stock compensation 180,753 159,315 Stock option 69,306 71,251 Amortization of intangibles 2,246,861 2,661,090 Net operating loss 2,509,855 3,246,413 Allowances 1,509,508 1,632,266 Sale-leaseback – lease liability 919,766 1,010,467 Grant Income 150,964 - Others 20,512 22,181 Total deferred tax assets 7,717,110 8,789,689 Deferred tax liabilities: Depreciation on sale-leaseback fixed assets (836,027 ) (942,799 ) Depreciation on fixed assets 134,483 (46,881 ) Total deferred tax liabilities (701,544 ) (989,680 ) Net deferred tax assets / liabilities 7,015,566 7,800,009 Less: Valuation Allowance (7,015,566 ) (7,800,009 ) Total deferred tax assets / liabilities $ - $ - |
SCHEDULE OF STATUTORY TAX BENEFIT | The Company’s tax expense differs from the statutory tax benefit for the years ended December 31, 2022 and 2021 and the reconciliation is as follows: SCHEDULE OF STATUTORY TAX BENEFIT 2022 2021 Year Ended December 31, 2022 2021 Tax expense (benefit) at federal statutory rate $ 267,604 $ (88,001 ) State income taxes 26,896 4,712 Foreign income taxes 127,129 79,445 Permanent differences (46,609 ) 38,458 Change in valuation allowance (780,662 ) 192,512 Other - State rate effect 11,704 (13,532 ) Change in tax rate 586,430 (125,747 ) Other 2,477 22,904 Provision for income taxes $ 194,969 $ 110,751 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
SCHEDULE OF SHARE-BASED PAYMENT AWARD, STOCK OPTIONS, VALUATION ASSUMPTIONS | The fair value of stock options granted in 2022 and 2021 were estimated at the grant date using the Black-Scholes option pricing model using the following assumptions: SCHEDULE OF SHARE-BASED PAYMENT AWARD, STOCK OPTIONS, VALUATION ASSUMPTIONS Year Ended December 31, 2022 2021 Expected volatility 59.50 % 59.50 % Discount rate 3.98 % 1.25 % Expected life (years) 3 2 Dividend yield n/a n/a |
2015 Incentive Plan [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
SCHEDULE OF SHARE-BASED COMPENSATION, RESTRICTED STOCK UNITS AWARD ACTIVITY | Activity under the 2015 Incentive Plan for RSUs was as follows: SCHEDULE OF SHARE-BASED COMPENSATION, RESTRICTED STOCK UNITS AWARD ACTIVITY Year Ended December 31, 2022 2021 Restricted Weighted Restricted Weighted Outstanding, beginning of period 2,284,910 $ 0.70 1,796,897 $ 0.71 Granted 932,500 $ 1.00 1,231,541 $ 0.76 Forfeited (35,030 ) $ 0.59 (10,000 ) $ 0.59 Vested (1,008,214 ) $ 0.70 (733,528 ) $ 0.83 Outstanding, end of period 2,174,166 $ 0.83 2,284,910 $ 0.70 |
SCHEDULE OF SHARE-BASED COMPENSATION, STOCK OPTIONS, ACTIVITY | Activity under the 2015 Incentive Plan for stock options was as follows: SCHEDULE OF SHARE-BASED COMPENSATION, STOCK OPTIONS, ACTIVITY Year Ended December 31, 2022 2021 Stock Weighted Stock Weighted Outstanding, beginning of period 398,580 $ 1.34 498,277 $ 1.53 Granted 24,000 $ 0.82 74,996 $ 0.78 Exercised - $ - (1,865 ) $ 0.86 Expired (5,298 ) $ 0.81 (172,828 ) $ 1.67 Outstanding, end of period 417,282 $ 1.31 398,580 $ 1.34 Stock options exercisable at end of period 350,222 $ 1.41 321,586 $ 1.47 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
SCHEDULE OF BASIC AND DILUTED EARNINGS PER SHARE | Basic and diluted earnings per share of common stock have been computed as follows: SCHEDULE OF BASIC AND DILUTED EARNINGS PER SHARE 2022 2021 Year Ended December 31, 2022 2021 Numerator: Net income (loss) $ 1,065,157 $ (529,801 ) Denominator: Weighted average shares of common stock outstanding - basic 28,643,464 26,391,538 Effect of dilutive options 31,636 - Weighted average shares of common stock outstanding - diluted 28,675,100 26,391,538 Earnings (loss) per common share - basic $ 0.04 $ (0.02 ) Earnings (loss) per common share - diluted $ 0.04 $ (0.02 ) |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
SCHEDULE OF SEGMENTS INFORMATION WITH GEOGRAPHIC AREAS | The following table summarizes information about our segments: SCHEDULE OF SEGMENTS INFORMATION WITH GEOGRAPHIC AREAS 2022 2021 Year Ended December 31, 2022 2021 Revenues: North America $ 16,917,259 $ 11,619,593 International 2,180,428 1,716,556 Total revenue $ 19,097,687 $ 13,336,149 Operating income (loss): North America $ 9,672,853 $ 6,190,184 International (3,551 ) (577,408 ) Corporate costs, unallocated (7,732,852 ) (6,199,527 ) Total operating income (loss) $ 1,936,450 $ (586,751 ) Depreciation expense: North America $ 634,388 $ 790,565 International 702,921 729,636 Total depreciation expense $ 1,337,309 $ 1,520,201 |
SCHEDULE OF NET PROPERTY, PLANT AND EQUIPMENT BY GEOGRAPHIC LOCATION | The following table summarizes net property, plant and equipment by geographic location: SCHEDULE OF NET PROPERTY, PLANT AND EQUIPMENT BY GEOGRAPHIC LOCATION 2022 2021 December 31, 2022 2021 Property, plant and equipment, net: United States $ 6,560,435 $ 5,762,066 Other countries 2,016,416 1,168,263 Total property, plant and equipment, net $ 8,576,851 $ 6,930,329 |
SCHEDULE OF ASSETS ESTIMATED US
SCHEDULE OF ASSETS ESTIMATED USEFUL LIFE (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Buildings And Leasehold Improvements [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 2 years |
Buildings And Leasehold Improvements [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 39 years |
Machinery equipment and rental tools [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 18 months |
Machinery equipment and rental tools [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 10 years |
Office equipment fixtures and software [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 3 years |
Office equipment fixtures and software [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 7 years |
Transportation Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 5 years |
Transportation Equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 30 years |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Product Information [Line Items] | |||
Allowance for doubtful accounts | $ 0 | $ 0 | |
Accounts receivable | 3,241,221 | 2,871,932 | $ 1,345,622 |
Research and development expenses | 436,000 | 487,000 | |
Amortized debt issuance costs | 3,087 | 18,522 | |
Accounts receivable | 1,751,000 | 1,910,000 | |
Deferred income | 675,000 | ||
Manufacturing Modernization Grant Program [Member] | |||
Product Information [Line Items] | |||
Proceeds from grantors | 750,000 | ||
Two Vendor [Member] | |||
Product Information [Line Items] | |||
Accounts payable | $ 74,400 | ||
One Vendor [Member] | |||
Product Information [Line Items] | |||
Accounts payable | $ 136,000 | ||
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Two Customers [Member] | |||
Product Information [Line Items] | |||
Concentration risk percentage | 88% | 87% | |
Supplier Concentration Risk [Member] | Purchases [Member] | Two Vendor [Member] | |||
Product Information [Line Items] | |||
Concentration risk percentage | 12% | 13% | |
Minimum [Member] | |||
Product Information [Line Items] | |||
Intangible assets, amortization period | 5 years | ||
Maximum [Member] | |||
Product Information [Line Items] | |||
Intangible assets, amortization period | 9 years |
SCHEDULE OF REVENUE DISAGGREGAT
SCHEDULE OF REVENUE DISAGGREGATED BY REVENUE (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | ||
Total Revenue | $ 19,097,687 | $ 13,336,149 |
Tools And Product Sales [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 3,157,710 | 2,610,500 |
Tool Rental [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 2,180,428 | 1,716,556 |
Other Related Tool Revenue [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 7,013,806 | 4,917,426 |
Tool Revenue [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 12,351,944 | 9,244,482 |
Contract Services [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | $ 6,745,743 | $ 4,091,667 |
SCHEDULE OF INVENTORIES (Detail
SCHEDULE OF INVENTORIES (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Inventory Disclosure [Abstract] | ||
Raw material | $ 1,334,669 | $ 769,547 |
Work in progress | 168,214 | 65,945 |
Finished goods | 578,377 | 339,143 |
Total inventories | $ 2,081,260 | $ 1,174,635 |
SCHEDULE OF PROPERTY, PLANT AND
SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Abstract] | ||
Land | $ 880,416 | $ 880,416 |
Buildings | 4,764,441 | 4,764,441 |
Leasehold improvements | 755,039 | 755,039 |
Machinery, equipment, and rental tools | 14,546,060 | 12,207,497 |
Office equipment, fixtures and software | 628,358 | 628,358 |
Transportation assets | 265,760 | 265,760 |
Property, plant and equipment, gross | 21,840,074 | 19,501,511 |
Accumulated depreciation | (13,263,223) | (12,571,182) |
Property, plant and equipment, net | $ 8,576,851 | $ 6,930,329 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense related to property, plant and equipment | $ 1,337,309 | $ 1,520,201 |
SCHEDULE OF INTANGIBLE ASSETS (
SCHEDULE OF INTANGIBLE ASSETS (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 14,900,000 | $ 14,900,000 |
Accumulated amortization | (14,830,556) | (14,663,889) |
Intangible assets, net | 69,444 | 236,111 |
Developed Technology Rights [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 7,000,000 | 7,000,000 |
Customer Contracts [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 6,400,000 | 6,400,000 |
Trademarks and Trade Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 1,500,000 | $ 1,500,000 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of intangible assets | $ 166,667 | $ 583,333 | |
Subsequent Event [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of intangible assets | $ 69,444 | ||
Minimum [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Finite lived intangible assets weighted average amortization period | 5 years | ||
Maximum [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Finite lived intangible assets weighted average amortization period | 9 years |
RELATED PARTY NOTE RECEIVABLE (
RELATED PARTY NOTE RECEIVABLE (Details Narrative) - USD ($) | Aug. 31, 2017 | Dec. 31, 2022 | Dec. 31, 2021 | Jul. 07, 2020 |
Tronco Energy Corporation [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Related party note receivable | $ 6,979,043 | |||
Debt instrument, increase (decrease),net | $ 0 | |||
Common stock hold as collateral | 8,267,860 | |||
Debt interest rate | 2% | |||
Troy And Annette Meier [Member] | Tronco Note (Member) | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Related party note receivable | $ 6,884,000 | $ 6,749,000 |
SCHEDULE OF AGGREGATE FUTURE LE
SCHEDULE OF AGGREGATE FUTURE LEASE PAYMENTS (Details) | Dec. 31, 2022 USD ($) |
Leases | |
2023 | $ 173,339 |
2024 | 243,794 |
2025 | 130,454 |
2026 | 60,000 |
2027 | 40,000 |
Thereafter | |
Total undiscounted lease payments | 647,587 |
Less: Imputed lease interest | (79,939) |
Total lease liabilities | $ 567,648 |
SCHEDULE OF OTHER INFORMATION R
SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Leases | ||
Operating cash flows | $ 216,394 | $ 48,621 |
Weighted average remaining lease term | 2 years 10 months 9 days | 11 months 19 days |
Weighted average discount rate | 7.25% | 7.25% |
LEASES (Details Narrative)
LEASES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Lease expense | $ 140,539 | $ 7,200 |
Minimum [Member] | ||
Operating lease term | 1 year | |
Maximum [Member] | ||
Operating lease term | 2 years |
SCHEDULE OF DEBT OBLIGATIONS (D
SCHEDULE OF DEBT OBLIGATIONS (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | |
Debt Instrument [Line Items] | |||
Long term debt,total | $ 1,655,363 | [1] | $ 2,452,434 |
Current portion of long-term debt | (1,125,864) | (2,195,759) | |
Long-term debt,net | 529,499 | 256,675 | |
Hard Rock Note [Member] | |||
Debt Instrument [Line Items] | |||
Long term debt,total | 750,000 | ||
Credit Agreement [Member] | |||
Debt Instrument [Line Items] | |||
Long term debt,total | 813,713 | 1,312,194 | |
Machinery Loans [Member] | |||
Debt Instrument [Line Items] | |||
Long term debt,total | 664,674 | 357,963 | |
Transportation Loans [Member] | |||
Debt Instrument [Line Items] | |||
Long term debt,total | 20,027 | 32,277 | |
Insurance Financing [Member] | |||
Debt Instrument [Line Items] | |||
Long term debt,total | $ 156,949 | ||
[1]Excludes discounts for debt issuance costs. |
SCHEDULE OF MATURITIES OF LONG
SCHEDULE OF MATURITIES OF LONG TERM DEBT (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | ||
Debt Disclosure [Abstract] | ||||
2023 | [1] | $ 1,125,864 | ||
2024 | [1] | 157,260 | ||
2025 | [1] | 140,156 | ||
2026 | [1] | 144,225 | ||
2027 | [1] | 87,858 | ||
Long-Term Debt, Total | $ 1,655,363 | [1] | $ 2,452,434 | |
[1]Excludes discounts for debt issuance costs. |
LONG-TERM DEBT (Details Narrati
LONG-TERM DEBT (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2022 | Dec. 31, 2021 | Feb. 28, 2019 | |
Equipment Loans [Member] | ||||
Debt Instrument [Line Items] | ||||
Notes payable | $ 664,674 | $ 357,963 | ||
Insurance Loans [Member] | ||||
Debt Instrument [Line Items] | ||||
Notes payable | $ 156,949 | |||
Debt instrument maturity date | March 2023 | |||
Transportation Loans [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, interest rate | 6.99% | |||
Debt instrument maturity date | June 2024 | |||
Debt instrument, term | 60 months | |||
Hard Rock Note [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, interest rate | 8% | |||
Notes payable | $ 750,000 | |||
Debt instrument maturity date | October 2022 | |||
Business combination, consideration transferred | $ 12,500,000 | |||
Business combination, consideration transferred, liabilities incurred | $ 12,500,000 | |||
Minimum [Member] | Equipment Loans [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, interest rate | 5.50% | |||
Maximum [Member] | Equipment Loans [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, interest rate | 5.94% | |||
Loan and security agreement [Member] | Term Loan And Revolving Loan [Member] | ||||
Debt Instrument [Line Items] | ||||
Line of credit interest rate | 12.28% | |||
Management fee rate, percentage | 3.60% | |||
Line of credit borrowing capacity | $ 1,000,000 | |||
Line of credit borrowing interest paid | $ 1,000,000 | |||
Loan and security agreement [Member] | Term Loan And Revolving Loan [Member] | Prime Rate [Member] | ||||
Debt Instrument [Line Items] | ||||
Line of credit interest rate | 2% | |||
Loan and security agreement [Member] | Austin Financial Services Inc [Member] | ||||
Debt Instrument [Line Items] | ||||
Long term line of credit | $ 4,300,000 | |||
Loan and security agreement [Member] | Austin Financial Services Inc [Member] | Term Loan [Member] | ||||
Debt Instrument [Line Items] | ||||
Long term line of credit | 800,000 | |||
Loan and security agreement [Member] | Austin Financial Services Inc [Member] | Revolving Credit Facility [Member] | ||||
Debt Instrument [Line Items] | ||||
Long term line of credit | $ 3,500,000 | |||
Outstanding line of credit | $ 813,713 | |||
Line of credit facility description | Amounts outstanding under the Line of Credit at any time may not exceed the sum of: (a) up to 85% of accounts receivable or such lesser percentage as AFS in its sole discretion may deem appropriate if it determines that there has been a material adverse effect (less a dilution reserve as determined by AFS in its sole good faith discretion), plus (b) the lesser of (i) up to 50% of inventory or such lesser percentage as AFS in its sole discretion may deem appropriate if it determines that there has been a material adverse effect, or (ii) the inventory sublimit, minus (c) the borrowing base reserve as may be determined from time to time by AFS | |||
Availabe line of credit | $ 186,287 |
SCHEDULE OF FINANCING OBLIGATIO
SCHEDULE OF FINANCING OBLIGATION LIABILITY (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Financing Obligation Liability | ||
Financing obligation for sale-leaseback transaction | $ 4,112,658 | $ 4,178,336 |
Current principal portion of finance obligation | (74,636) | (65,678) |
Non-current portion of financing obligation | $ 4,038,022 | $ 4,112,658 |
SCHEDULE OF AGGREGATE FUTURE _2
SCHEDULE OF AGGREGATE FUTURE LEASE PAYMENTS FOR THE FINANCE OBLIGATION (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Financing Obligation Liability | ||
2023 | $ 321,130 | |
2024 | 325,947 | |
2025 | 330,836 | |
2026 | 335,799 | |
2027 | 340,836 | |
Thereafter | 2,916,941 | |
Total undiscounted lease payments | 4,571,489 | |
Residual value of the property (included in the future payments) | 2,188,711 | |
Less: effects of discounting | (2,647,542) | |
Present value of lease payments | $ 4,112,658 | $ 4,178,336 |
FINANCING OBLIGATION LIABILIT_2
FINANCING OBLIGATION LIABILITY (Details Narrative) - USD ($) | 12 Months Ended | |||
Dec. 07, 2022 | Dec. 07, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
Purchase price | $ 3,330,206 | $ 936,718 | ||
Financing obligation | 4,112,658 | 4,178,336 | ||
Sale Agreement [Member] | ||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
Proceeds from financial obligation | $ 1,622,106 | |||
Real estate debt retired | 2,638,773 | |||
Financing obligation liability | $ 4,260,879 | |||
Implied interest rate | 6% | |||
Financing obligation residual amount | $ 2,188,710 | |||
Principal payments | 65,678 | 61,616 | ||
Financing obligation | $ 4,112,658 | $ 4,178,336 | ||
Sale Agreement [Member] | UTAH | ||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
Purchase price | $ 4,448,500 | |||
Lessee finance lease description | the Company entered into a fifteen-year lease agreement | |||
Lease Agreement [Member] | ||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
Lease cost | $ 311,395 | |||
Annual rent increases | 1.50% |
SCHEDULE OF COMPONENTS OF INCOM
SCHEDULE OF COMPONENTS OF INCOME TAX BENEFIT (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Current income taxes: | ||
Federal | ||
State | 34,046 | 5,964 |
Foreign | 160,923 | 104,787 |
Total current income taxes | 194,969 | 110,751 |
Income tax expense | $ 194,969 | $ 110,751 |
SCHEDULE OF DEFERRED TAX ASSETS
SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
263A adjustment | $ 23,274 | $ 14,204 |
Accrued expenses | 140,900 | |
Prepaid expenses | (54,589) | (27,498) |
Stock compensation | 180,753 | 159,315 |
Stock option | 69,306 | 71,251 |
Amortization of intangibles | 2,246,861 | 2,661,090 |
Net operating loss | 2,509,855 | 3,246,413 |
Allowances | 1,509,508 | 1,632,266 |
Sale-leaseback – lease liability | 919,766 | 1,010,467 |
Grant Income | 150,964 | |
Others | 20,512 | 22,181 |
Total deferred tax assets | 7,717,110 | 8,789,689 |
Deferred tax liabilities: | ||
Depreciation on sale-leaseback fixed assets | (836,027) | (942,799) |
Depreciation on fixed assets | 134,483 | (46,881) |
Total deferred tax liabilities | (701,544) | (989,680) |
Net deferred tax assets / liabilities | 7,015,566 | 7,800,009 |
Less: Valuation Allowance | (7,015,566) | (7,800,009) |
Total deferred tax assets / liabilities |
SCHEDULE OF STATUTORY TAX BENEF
SCHEDULE OF STATUTORY TAX BENEFIT (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Tax expense (benefit) at federal statutory rate | $ 267,604 | $ (88,001) |
State income taxes | 26,896 | 4,712 |
Foreign income taxes | 127,129 | 79,445 |
Permanent differences | (46,609) | 38,458 |
Change in valuation allowance | (780,662) | 192,512 |
Other - State rate effect | 11,704 | (13,532) |
Change in tax rate | 586,430 | (125,747) |
Other | 2,477 | 22,904 |
Income tax expense | $ 194,969 | $ 110,751 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Operating Loss Carryforwards [Line Items] | ||
Net operating loss (NOL) carryforwards | $ 11,914,000 | |
Operating loss carryforwards, description | The pre-2018 losses will begin to expire between 2035 and 2037. The post-2017 losses can be carried forward indefinitely, however, only 80% of these losses can offset taxable income. | |
Valuation allowance on deferred tax assets | $ 7,019,347 | |
Accrued income tax payable, including accrued penalties | 352,000 | $ 206,000 |
Penalties charged to income tax expense | 0 | $ 6,000 |
Pre Two Thousand Eighteen [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss (NOL) carryforwards | 8,558,000 | |
Post Two Thousand Seventeen [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss (NOL) carryforwards | $ 3,357,000 |
SCHEDULE OF SHARE-BASED COMPENS
SCHEDULE OF SHARE-BASED COMPENSATION, RESTRICTED STOCK UNITS AWARD ACTIVITY (Details) - Restricted Stock Units (RSUs) [Member] - 2015 Incentive Plan [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Restricted Stock Units, beginning of period | 2,284,910 | 1,796,897 |
Weighted Average Price, beginning of period | $ 0.70 | $ 0.71 |
Restricted Stock Units, Granted | 932,500 | 1,231,541 |
Weighted Average Price, Granted | $ 1 | $ 0.76 |
Restricted Stock Units, Forfeited | (35,030) | (10,000) |
Weighted Average Price, Forfeited | $ 0.59 | $ 0.59 |
Restricted Stock Units, Vested | (1,008,214) | (733,528) |
Weighted Average Price, Vested | $ 0.70 | $ 0.83 |
Restricted Stock Units, end of period | 2,174,166 | 2,284,910 |
Weighted Average Price, end of period | $ 0.83 | $ 0.70 |
SCHEDULE OF SHARE-BASED COMPE_2
SCHEDULE OF SHARE-BASED COMPENSATION, STOCK OPTIONS, ACTIVITY (Details) - 2015 Incentive Plan [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Stock Options Outstanding, beginning of period | 398,580 | 498,277 |
Weighted Average Price, Outstanding, beginning of period | $ 1.34 | $ 1.53 |
Stock Options, Granted | 24,000 | 74,996 |
Weighted Average Price, Granted | $ 0.82 | $ 0.78 |
Stock Options, Exercised | (1,865) | |
Weighted Average Price, Exercised | $ 0.86 | |
Stock Options, Expired | (5,298) | (172,828) |
Weighted Average Price, Expired | $ 0.81 | $ 1.67 |
Stock Options Outstanding, end of period | 417,282 | 398,580 |
Weighted Average Price, Outstanding, end of period | $ 1.31 | $ 1.34 |
Stock Options exercisable at end of period | 350,222 | 321,586 |
Weighted Average Price, exercisable at end of period | $ 1.41 | $ 1.47 |
SCHEDULE OF SHARE-BASED PAYMENT
SCHEDULE OF SHARE-BASED PAYMENT AWARD, STOCK OPTIONS, VALUATION ASSUMPTIONS (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Payment Arrangement [Abstract] | ||
Expected volatility | 59.50% | 59.50% |
Discount rate | 3.98% | 1.25% |
Expected life (years) | 3 years | 2 years |
Dividend yield |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details Narrative) - USD ($) | 12 Months Ended | |||||||
Dec. 16, 2022 | Aug. 12, 2022 | Dec. 10, 2021 | Aug. 09, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2014 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Compensation expense recognized | $ 873,737 | $ 756,743 | ||||||
Restricted Stock Units (RSUs) [Member] | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Restricted stock units vesting period | 3 years | |||||||
Restricted stock weighted vesting period | 1 year 10 months 2 days | |||||||
Unrecognized compensation expense | $ 1,806,297 | |||||||
Employee Stock Incentive Plan [Member] | Board of Directors [Member] | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Number of common stock reserved for issuance | 1,724,128 | |||||||
2015 Incentive Plan [Member] | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Maximum aggregate number of common shares for issuance | 7,076,326 | |||||||
Compensation expense recognized | $ 15,000 | $ 3,000 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 24,000 | 74,996 | ||||||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 0.82 | $ 0.78 | ||||||
2015 Incentive Plan [Member] | Officers and Employees [Member] | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 24,000 | 75,000 | 74,996 | |||||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 0.82 | $ 0.35 | $ 0.78 | $ 0.31 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights | The options vest 33.3% on the grant date, 33.3% on the first anniversary of the grant date and 33.4% on the second anniversary of the grant date. | The options vest 33.3% on the grant date, 33.3% on the first anniversary of the grant date and 33.4% on the second anniversary of the grant date. | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 33.30% | 33.30% | ||||||
2015 Incentive Plan [Member] | Officers and Employees [Member] | First Anniversary [Member] | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 33.30% | 33.30% | ||||||
2015 Incentive Plan [Member] | Officers and Employees [Member] | Second Anniversary [Member] | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 33.40% | 33.40% | ||||||
2015 Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member] | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Number of restricted units granted | 932,500 | 1,231,541 | ||||||
Compensation expense recognized | $ 858,000 | $ 754,000 | ||||||
2015 Incentive Plan [Member] | Board of Directors [Member] | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Number of additional common stock approved | 1,500,000 | 2,543,448 | ||||||
Share-based payment, number of shares available for grant | 1,038,828 | |||||||
2015 Incentive Plan [Member] | Board of Directors [Member] | Restricted Stock Units (RSUs) [Member] | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Number of restricted units granted | 932,500 | 1,231,541 | ||||||
Restricted stock units vesting period | 3 years | 3 years |
SCHEDULE OF BASIC AND DILUTED E
SCHEDULE OF BASIC AND DILUTED EARNINGS PER SHARE (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Numerator: | ||
Net income (loss) | $ 1,065,157 | $ (529,801) |
Denominator: | ||
Weighted average shares of common stock outstanding - basic | 28,643,464 | 26,391,538 |
Effect of dilutive options | 31,636 | |
Weighted average shares of common stock outstanding - diluted | 28,675,100 | 26,391,538 |
Earnings (loss) per common share - basic | $ 0.04 | $ (0.02) |
Earnings (loss) per common share - diluted | $ 0.04 | $ (0.02) |
SCHEDULE OF SEGMENTS INFORMATIO
SCHEDULE OF SEGMENTS INFORMATION WITH GEOGRAPHIC AREAS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenues: | ||
Total revenue | $ 19,097,687 | $ 13,336,149 |
Operating income (loss): | ||
Total operating income (loss) | 1,936,450 | (586,751) |
Depreciation expense: | ||
Total depreciation expense | 1,337,309 | 1,520,201 |
North America [Member] | ||
Revenues: | ||
Total revenue | 16,917,259 | 11,619,593 |
Operating income (loss): | ||
Total operating income (loss) | 9,672,853 | 6,190,184 |
Depreciation expense: | ||
Total depreciation expense | 634,388 | 790,565 |
International [Member] | ||
Revenues: | ||
Total revenue | 2,180,428 | 1,716,556 |
Operating income (loss): | ||
Total operating income (loss) | (3,551) | (577,408) |
Depreciation expense: | ||
Total depreciation expense | 702,921 | 729,636 |
Corporate Costs Unallocated [Member] | ||
Operating income (loss): | ||
Total operating income (loss) | $ (7,732,852) | $ (6,199,527) |
SCHEDULE OF NET PROPERTY, PLANT
SCHEDULE OF NET PROPERTY, PLANT AND EQUIPMENT BY GEOGRAPHIC LOCATION (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Property, plant and equipment, net: | ||
Total property, plant and equipment, net | $ 8,576,851 | $ 6,930,329 |
UNITED STATES | ||
Property, plant and equipment, net: | ||
Total property, plant and equipment, net | 6,560,435 | 5,762,066 |
Other Countries [Member] | ||
Property, plant and equipment, net: | ||
Total property, plant and equipment, net | $ 2,016,416 | $ 1,168,263 |
SEGMENT REPORTING (Details Narr
SEGMENT REPORTING (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenue | $ 19,097,687 | $ 13,336,149 |
MEXICO | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenue | $ 144,984 | $ 18,000 |