Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Aug. 14, 2015 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | Superior Drilling Products, Inc. | |
Entity Central Index Key | 1,600,422 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | SDPI | |
Entity Common Stock, Shares Outstanding | 17,291,646 |
Consolidated Condensed Balance
Consolidated Condensed Balance Sheets - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets | ||
Cash | $ 2,456,108 | $ 5,792,388 |
Accounts receivable | 2,128,531 | 4,403,001 |
Prepaid expenses | 211,612 | 163,934 |
Inventory | 1,478,495 | 1,219,079 |
Deferred tax asset | 0 | 271,298 |
Other current assets | 143,999 | 45,000 |
Total current assets | 6,418,745 | 11,894,700 |
Property, plant and equipment, net | 15,356,949 | 15,963,629 |
Intangible assets, net | 12,249,445 | 13,472,778 |
Goodwill | 7,802,903 | 7,802,903 |
Note receivable | 8,296,717 | 8,296,717 |
Other assets | 31,318 | 112,606 |
Total assets | 50,156,077 | 57,543,333 |
Current liabilities | ||
Accounts payable | 515,220 | 893,376 |
Accrued expenses | 1,454,467 | 1,967,091 |
Income tax payable | 2,000 | 1,000 |
Current portion of capital lease obligation | 311,706 | 292,979 |
Current portion of related party debt obligation | 511,846 | 492,452 |
Current portion of long-term debt | 3,012,286 | 10,720,243 |
Total current liabilities | 5,807,525 | 14,367,141 |
Deferred tax liability | 208,966 | 744,577 |
Capital lease obligation, less current portion | 417,280 | 578,273 |
Related party debt, less current portion | 856,955 | 1,117,820 |
Long-term debt, less current portion | 15,972,768 | 10,669,311 |
Total liabilities | $ 23,263,494 | $ 27,477,122 |
Commitments and contingencies (Note 6) | ||
Stockholders' equity | ||
Common stock - $0.001 par value; 100,000,000 shares authorized; 17,291,646 shares issued and outstanding | $ 17,292 | $ 17,292 |
Additional paid-in-capital | 30,920,764 | 30,815,609 |
Retained deficit | (4,045,473) | (766,690) |
Total stockholders' equity | 26,892,583 | 30,066,211 |
Total liabilities and stockholders' equity | $ 50,156,077 | $ 57,543,333 |
Consolidated Condensed Balance3
Consolidated Condensed Balance Sheets [Parenthetical] - $ / shares | Jun. 30, 2015 | Dec. 31, 2014 |
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 100,000,000 | 100,000,000 |
Common Stock, Shares, Issued | 17,291,646 | 17,291,646 |
Common Stock, Shares, Outstanding | 17,291,646 | 17,291,646 |
Consolidated Condensed Statemen
Consolidated Condensed Statements of Operations - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Revenue | $ 2,881,372 | $ 4,468,675 | $ 6,955,990 | $ 8,202,342 |
Operating costs and expenses | ||||
Cost of revenue | 1,585,018 | 1,368,243 | 3,504,050 | 2,601,615 |
Selling, general and administrative | 1,780,649 | 1,524,762 | 3,840,423 | 2,580,028 |
Depreciation and amortization | 1,170,204 | 723,049 | 2,318,701 | 1,043,616 |
Total operating expenses | 4,535,871 | 3,616,054 | 9,663,174 | 6,225,259 |
Operating (loss) income | (1,654,499) | 852,621 | (2,707,184) | 1,977,083 |
Other income (expense) | ||||
Interest income | 73,293 | 23,072 | 146,569 | 23,072 |
Interest expense | (467,252) | (579,047) | (1,027,680) | (889,886) |
Other income | 57,026 | 89,048 | 129,085 | 186,526 |
(Loss) gain on sale of assets | (27,666) | 13,292 | (82,886) | 13,292 |
Change in guaranteed debt | 0 | 0 | 0 | (45,834) |
Total other expense | (364,599) | (453,635) | (834,912) | (712,830) |
(Loss) income before income taxes | (2,019,098) | 398,986 | (3,542,096) | 1,264,253 |
Income tax expense (benefit) | 216,599 | 1,078,045 | (263,313) | 1,078,045 |
Net (loss) income | $ (2,235,697) | $ (679,059) | $ (3,278,783) | $ 186,208 |
Basic (loss) earnings per common share | $ (0.13) | $ (0.06) | $ (0.19) | $ 0.02 |
Basic weighted average common shares outstanding | 17,291,646 | 11,795,708 | 17,291,646 | 10,313,518 |
Diluted (loss) earnings per common share | $ (0.13) | $ (0.06) | $ (0.19) | $ 0.02 |
Diluted weighted average common shares outstanding | 17,291,646 | 11,795,708 | 17,291,646 | 10,439,801 |
Consolidated Condensed Stateme5
Consolidated Condensed Statements Of Cash Flows - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash Flows From Operating Activities | ||
Net (loss) income | $ (3,278,783) | $ 186,208 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 2,318,701 | 1,043,616 |
Amortization of debt discount | 411,969 | 324,974 |
Deferred tax (benefit) expense | (264,313) | 977,326 |
Share - based compensation expense | 105,155 | 0 |
Change in guaranteed debt | 0 | 45,837 |
Loss on disposition of assets | 82,886 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 2,274,470 | (606,596) |
Inventory | (259,416) | (311,463) |
Prepaid expenses and other current assets | (146,677) | (85,578) |
Other assets | 68,069 | (106,829) |
Accounts payable and accrued expenses | (889,780) | 1,268,522 |
Net Cash Provided by Operating Activities | 422,281 | 2,736,017 |
Cash Flows From Investing Activities | ||
Purchases of property, plant and equipment | (558,355) | (429,677) |
Note receivable to Tronco | 0 | (8,296,717) |
Purchase of Hard Rock assets | 0 | (12,500,000) |
Net Cash Used in Investing Activities | (558,355) | (21,226,394) |
Cash Flows From Financing Activities | ||
Principal payments on debt | (2,816,469) | (1,085,219) |
Principal payments on related party debt | (241,471) | 0 |
Principal payments on capital lease obligations | (142,266) | (125,584) |
Proceeds received from borrowings on debt | 0 | 2,000,000 |
Proceeds received from issuance of common stock | 0 | 31,050,000 |
Initial Public Offering costs | 0 | (3,578,865) |
Capital distributions | 0 | (2,053,861) |
Net Cash (Used) Provided by Financing Activities | (3,200,206) | 26,206,471 |
Net (decrease) increase in Cash | (3,336,280) | 7,716,094 |
Cash at Beginning of Period | 5,792,388 | 11,256 |
Cash at End of Period | 2,456,108 | 7,727,350 |
Supplemental information: | ||
Cash paid for Interest | $ 577,072 | $ 528,591 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] | NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Superior Drilling Products, Inc. (the “Company”, “we”, “our” or “us”) is a drilling and completion tool technology company. We manufacture, repair, sell and rent drilling and completion tools. All of the drilling and completion tools that we rent and sale are manufactured by us. Our customers are engaged in the domestic and international exploration and production of oil and natural gas. We were incorporated on December 10, 2013 under the name SD Company, Inc. in order to facilitate (a) the reorganization of the entities that are now our consolidated subsidiaries and (b) the subsequent acquisition of Hard Rock Solutions, LLC. We changed our name from SD Company Inc. to Superior Drilling Products, Inc. on May 22, 2014 in conjunction with closing of the reorganization (the “Reorganization”). Our headquarters and principal manufacturing operations are located in Vernal, Utah. The accompanying consolidated condensed financial statements of the Company include the accounts of the Company, and of its wholly-owned subsidiaries (a) Superior Drilling Solutions, LLC (previously known as Superior Drilling Products, LLC), a Utah limited liability company (“SDS”), together with its wholly owned subsidiary, Superior Drilling Products of California, LLC, a California limited liability company (“SDPC”), (b) Superior Design and Fabrication, LLC, a Utah limited liability company (“SDF”), (c) Extreme Technologies, LLC, a Utah limited liability company (“ET”), (d) Meier Properties Series, LLC, a Utah limited liability company (“MPS”), (e) Meier Leasing, LLC, a Utah limited liability company (“ML”), and (f) Hard Rock Solutions, LLC, a Utah limited liability company (“HR”). These consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and all significant intercompany accounts have been eliminated in combination. As a company with less than $ 1.0 These interim consolidated condensed financial statements for the three and six months ended June 30, 2015 and 2014, and the related footnote disclosures included herein, are unaudited. However, in the opinion of management, these unaudited interim financial statements have been prepared on the same basis as the audited financial statements, and reflect all adjustments necessary to fairly state the results for such periods. The results of operations for the three and six months ended June 30, 2015 are not necessarily indicative of the results of operations expected for the year ended December 31, 2015. These interim consolidated condensed financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the years ended December 31, 2014 and 2013 and the notes thereto, which were included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission (the “SEC”). Basic earnings per common share are computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per share are calculated to give effect to potentially issuable common shares, which include stock warrants. As of June 30, 2015, the Company had warrants exercisable for 714,286 4.00 The Company operates as a drilling and completion tool technology company that rents drill string enhancement tools and sells tools in the completion and workover industry all for use by customers engaged in the oil and gas business. While the duration of the rents vary by job and number of runs, these rents are generally less than one month. The rental agreements do not have minimum rental payments or terms. Revenue is recognized upon completion of the job. The tools are currently rented and sold primarily to entities operating in North Dakota, Wyoming, Texas, Montana, Oklahoma, Utah, New Mexico and Colorado. 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. The Company follows ASC 718, Compensation- Stock Compensation Liquidity Our principal sources of liquidity are our cash and cash equivalents balances, cash flow from operations and access to financial markets. Our principal uses of cash are operating expenses, capital expenditures, and repayment of debt. We are currently introducing our Strider tool and OrBit completion bit to the market, which we believe will increase our cash flow. However, management does not believe this will have a large enough impact to meet all of our cash needs for the next 12 months. We are currently evaluating a range of alternatives to improve our liquidity position. However we cannot provide any assurances that any of these financing options will be available to us in the future on acceptable terms or at all. If we cannot raise required funds on acceptable terms, we may not be able to, among other things, (i) maintain our general and administrative expenses level; (ii) fund certain obligations as they become due; (iii) further refinance debt to better meet our cash flow requirements; and (iv) respond to competitive pressures or unanticipated capital requirements. Recently Enacted Accounting Standards In January 2015, the FASB issued ASU 2015-01, “ Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items.” In April 2015, the FASB issued ASU 2015-03, “ Simplifying the Presentation of Debt Issuance Costs. |
INVENTORY
INVENTORY | 6 Months Ended |
Jun. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Inventory Disclosure [Text Block] | NOTE 2. INVENTORY June 30, December 31, 2015 2014 Raw material $ 913,073 $ 990,709 Work in progress 171,178 155,903 Finished goods 394,244 72,467 $ 1,478,495 $ 1,219,079 |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment Disclosure [Text Block] | NOTE 3. PROPERTY, PLANT AND EQUIPMENT June 30, December 31, Land $ 2,268,039 $ 2,268,039 Buildings 4,847,778 4,847,778 Buildings Superior Auto Body. 2,213,729 2,213,729 Leasehold improvements 717,232 710,232 Machinery and equipment 6,682,269 6,338,521 Machinery under capital lease 2,322,340 2,322,340 Furniture and fixtures 507,556 466,213 Transportation assets 1,343,349 1,343,349 20,902,292 20,510,201 Accumulated depreciation (5,545,343) (4,546,572) $ 15,356,949 $ 15,963,629 Depreciation expense related to property, plant and equipment for the three and six months ended June 30, 2015 was $ 551,320 1,095,368 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets Disclosure [Text Block] | NOTE 4. INTANGIBLE ASSETS June 30, December 31, 2015 2014 Developed technology $ 7,000,000 $ 7,000,000 Customer contracts 6,400,000 6,400,000 Trademarks 1,500,000 1,500,000 14,900,000 14,900,000 Accumulated amortization (2,650,555) (1,427,222) $ 12,249,445 $ 13,472,778 Amortization expense related to intangible assets for the three and six months ended June 30, 2015, was $ 617,536 1,223,333 Annually, and more often as necessary, we will perform an evaluation of our intangible assets and goodwill for indications of impairment. If indications exist, we will perform an evaluation of the fair value of the intangible assets and the goodwill and, if necessary, record an impairment charge. As of June 30, 2015, the Company performed an evaluation of the intangible assets and goodwill and determined no impairment was needed. |
LONG-TERM DEBT
LONG-TERM DEBT | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Debt Disclosure [Text Block] | NOTE 5. LONG-TERM DEBT June 30, December 31, 2015 2014 Real estate loans $ 7,748,708 $ 7,912,354 Hard Rock Note (net of $416,698 and $828,667 discount, respectively) 9,583,302 11,671,333 Machinery loans 936,209 1,019,100 Transportation loans 716,834 786,767 18,985,053 21,389,554 Current portion of long-term debt (3,012,286) (10,720,243) Long term portion of long-term debt $ 15,972,767 $ 10,669,311 On May 29, 2014, the Company purchased all of the interests of Hard Rock. Consideration consisted of $ 12.5 12.5 On April 22, 2015, the Hard Rock Note was restated and amended (the “Amended and Restated Hard Rock Note”). The Amended and Restated Hard Rock Note accrued interest from April 20, 2015 until May 29, 2015 at an adjustable rate per annum equal to the JP Morgan Chase Bank, N.A. annual prime rate as it had originally accrues interest at a fixed rate equal to 5.25% per annum. Under the terms of the Amended and Restated Hard Rock Note, the Company made one installment payment of $ 2.5 On April 9, 2015, the Company refinanced its $ 5.0 5.25 39,317 4,256,355 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | NOTE 6. COMMITMENTS AND CONTINGENCIES We are subject to litigation that arises from time to time in the ordinary course of our business activities. We are not currently involved in any litigation which management believes could have a material effect on our financial position or results of operations, except as follows: In October 2013, Del-Rio Resources, Inc. (“Del-Rio”) filed suit, on its own behalf and derivatively on behalf of Philco Exploration, LLC (“Philco”), against the following co-defendants (a) Tronco Ohio, LLC and Tronco, (b) the lender on the Tronco loan, ACF Property Management, Inc. (p.k.a. Fortuna Asset Management, LLC, ) (“ACF”), (c) Troy and Annette Meier personally, and several of their family trusts, (d) Meier Family Holding Company, LLC and Meier Management Company, LLC, and (e) SDS and MPS. That suit is currently pending in the Eighth Judicial District Court, Uintah County, Utah under Cause #130800125. Tronco and Del-Rio are the sole owners and managers of Philco. Philco served as the exploration operator. Part of the collateral for the Tronco loan (as defined in Note 8) is Philco’s mineral leases. Del- Rio’s suit alleges that the defendants made amendments to the Tronco loan without complying with the voting provisions of Philco’s operating agreement, and that all of the Meier-related entities somehow benefitted from the Tronco loan proceeds in an unspecified manner. Del-Rio’s suit seeks to invalidate ACF’s deeds of trust on the Philco mineral leases, and to acquire title to those Philco mineral leases. ACF no longer has deeds of trust of any of the Philco mineral leases. Del Rio is also requesting monetary and punitive damages, disgorgement, prejudgment interest, post judgment interest, costs, and attorney fees, against all defendants, in an amount to be determined at trial. We believe that Del-Rio’s claims are without merit, and all defendants are actively defending in this matter. In particular, SDS’ and MPS’ only involvement was to grant guaranties and/or security interests in their respective separate personal and real property to ACF to additionally collateralize the Tronco loan before its purchase by us. In addition, since the Meiers’ and their personal trusts guaranty repayment of the Tronco loan, we believe that the basis of Del-Rio’s damages claims are nullified. Consequently, we do not believe that Del Rio’s purported claims against SDS and MPS will have any material adverse effect on our cash flow, business, or operations. As of June 30, 2015, there have been no updates or decisions made concerning this matter. |
ORBIT PURCHASE
ORBIT PURCHASE | 6 Months Ended |
Jun. 30, 2015 | |
Business Combinations [Abstract] | |
Business Combination Disclosure [Text Block] | NOTE 7. ORBIT PURCHASE On January 9, 2015, we purchased the exclusive manufacturing, marketing and sales rights and the current inventory of the OrBIT completion drill bit product line from Tenax Energy Solutions (“Tenax”). Consideration for the purchase of inventory was approximately $ 300,000 cash plus an earn out of up to 2 2 83,333 1,000,000 |
RELATED PARTY DEBT AND TRANSACT
RELATED PARTY DEBT AND TRANSACTIONS | 6 Months Ended |
Jun. 30, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | NOTE 8. RELATED PARTY DEBT AND TRANSACTIONS June 30, December 31, 2015 2014 Related party loan 1,368,801 1,610,272 1,368,801 1,610,272 Current portion of related party debt (511,846) (492,452) Long term portion of related party debt $ 856,955 $ 1,117,820 On May 29, 2014 as part of the Reorganization, the Company issued notes to our founders, entities owned by the Meier’s, in the aggregate amount of $ 2 Superior Auto Body The Company leases certain of its facilities to Superior Auto Body (“SAB”), a related party which is partially owned by a member of the Meier family. We recorded rental income from the related party in the amounts of $ 49,975 99,951 Tronco Related Loans In January 2014, we entered into a Note Purchase and Sale Agreement under which we agreed to purchase a loan (the “Tronco loan”) made to Tronco Energy Corporation (“Tronco”), a party related to us through common control, in order to take over the legal position as Tronco’s senior secured lender. That agreement provided that, upon our full repayment of the Tronco loan from the proceeds of our initial public offering (the “Offering”), the lender would assign to us all of its rights under the Tronco loan, including all of the collateral documents. On May 30, 2014, we closed our purchase of the Tronco loan for a total payoff of $ 8.3 As the result of our purchase of the Tronco loan, we have the direct legal right to enforce the collateral and guaranty agreements entered into in connection with the Tronco loan and to collect Tronco’s collateral sales proceeds in order to recover the loan purchase amount. The Tronco loan continues to be secured by the first position liens on all of Tronco assets, as well as by the guarantees of Troy and Annette Meier (the “Meier Guaranties”), which are directly payable to and legally enforceable by us. In addition, the Meiers have provided us with stock pledges in which they pledge all of their shares of our common stock held by their family entities (the ‘‘Meier Stock Pledge’’) as collateral for the Meiers’ guaranties until full repayment of Tronco loan. The certificates representing the 8,814,860 1.65 14.6 During July 2014, the Board of Directors agreed to restructure the Tronco loan effective May 29, 2014. As part of this restructuring the interest rate was decreased to the prime rate of JPMorgan Chase Bank plus 0.25 3.25 December 31, 2014 December 31, 2015 8,814,860 |
SHARE BASED COMPENSATION
SHARE BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2015 | |
Share-based Compensation [Abstract] | |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | NOTE 9. SHARE BASED COMPENSATION On June 15, 2015, our stockholders approved the Superior Drilling Company, Inc. 2015 Long Term Incentive Plan (the “2015 Incentive Plan”). The purpose of the 2015 Incentive Plan is to advance the interests of the Company and its stockholders by providing an incentive to attract, retain and reward persons performing services for the Company and its affiliates and by motivating such persons to contribute to the growth and profitability of the Company and our affiliates. Subject to adjustment as provided in the 2015 Incentive Plan, the maximum aggregate number of shares of the Company’s common stock that may be issued with respect to awards under the 2015 Incentive Plan is 1,592,878 leaving 1,592,878 shares As of June 30, 2015, there were 131,250 Board of Directors Compensation expense recognized for grants vesting under the 2014 Incentive Plan was $ 52,578 105,155 Total unrecognized compensation expense related to unvested restricted stock units expected to be recognized over the remaining weighted vesting period of 2.3 481,290 These shares vest over a three year time period. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | NOTE 10. SUBSEQUENT EVENTS On August 10, 2015, the Board of Directors granted the issuance of 71,202 restricted stock units from the Company’s 2015 Incentive Plan to the Directors based on the closing price of the Company’s common stock on the date of the grant. These restricted stock units will vest over a three year period. Also, on August 10, 2015, 366,000 87,500 employees based on the closing price of the Company’s common stock on the date of the grant These restricted stock units and options will vest 33% on the grant date, 33% on the first anniversary of the grant date and 34% on second anniversary of the grant date. |
SUMMARY OF SIGNIFICANT ACCOUN16
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Nature of Operations [Policy Text Block] | Nature of Operations Superior Drilling Products, Inc. (the “Company”, “we”, “our” or “us”) is a drilling and completion tool technology company. We manufacture, repair, sell and rent drilling and completion tools. All of the drilling and completion tools that we rent and sale are manufactured by us. Our customers are engaged in the domestic and international exploration and production of oil and natural gas. We were incorporated on December 10, 2013 under the name SD Company, Inc. in order to facilitate (a) the reorganization of the entities that are now our consolidated subsidiaries and (b) the subsequent acquisition of Hard Rock Solutions, LLC. We changed our name from SD Company Inc. to Superior Drilling Products, Inc. on May 22, 2014 in conjunction with closing of the reorganization (the “Reorganization”). Our headquarters and principal manufacturing operations are located in Vernal, Utah. |
Basis of Accounting, Policy [Policy Text Block] | Basis of Presentation The accompanying consolidated condensed financial statements of the Company include the accounts of the Company, and of its wholly-owned subsidiaries (a) Superior Drilling Solutions, LLC (previously known as Superior Drilling Products, LLC), a Utah limited liability company (“SDS”), together with its wholly owned subsidiary, Superior Drilling Products of California, LLC, a California limited liability company (“SDPC”), (b) Superior Design and Fabrication, LLC, a Utah limited liability company (“SDF”), (c) Extreme Technologies, LLC, a Utah limited liability company (“ET”), (d) Meier Properties Series, LLC, a Utah limited liability company (“MPS”), (e) Meier Leasing, LLC, a Utah limited liability company (“ML”), and (f) Hard Rock Solutions, LLC, a Utah limited liability company (“HR”). These consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and all significant intercompany accounts have been eliminated in combination. As a company with less than $ 1.0 |
Unaudited Interim Financial Information Policy [Policy Text Block] | Unaudited Interim Financial Information These interim consolidated condensed financial statements for the three and six months ended June 30, 2015 and 2014, and the related footnote disclosures included herein, are unaudited. However, in the opinion of management, these unaudited interim financial statements have been prepared on the same basis as the audited financial statements, and reflect all adjustments necessary to fairly state the results for such periods. The results of operations for the three and six months ended June 30, 2015 are not necessarily indicative of the results of operations expected for the year ended December 31, 2015. These interim consolidated condensed financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the years ended December 31, 2014 and 2013 and the notes thereto, which were included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission (the “SEC”). |
Earnings Per Share, Policy [Policy Text Block] | Basic and Diluted Earnings Per Share Basic earnings per common share are computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per share are calculated to give effect to potentially issuable common shares, which include stock warrants. As of June 30, 2015, the Company had warrants exercisable for 714,286 4.00 |
Rental Income Policy [Policy Text Block] | Rental and Sales Income The Company operates as a drilling and completion tool technology company that rents drill string enhancement tools and sells tools in the completion and workover industry all for use by customers engaged in the oil and gas business. While the duration of the rents vary by job and number of runs, these rents are generally less than one month. The rental agreements do not have minimum rental payments or terms. Revenue is recognized upon completion of the job. The tools are currently rented and sold primarily to entities operating in North Dakota, Wyoming, Texas, Montana, Oklahoma, Utah, New Mexico and Colorado. |
Income Tax, Policy [Policy Text Block] | 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. |
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | Share-Based Compensation The Company follows ASC 718, Compensation- Stock Compensation |
Liquidity [Policy Text Block] | Liquidity Our principal sources of liquidity are our cash and cash equivalents balances, cash flow from operations and access to financial markets. Our principal uses of cash are operating expenses, capital expenditures, and repayment of debt. We are currently introducing our Strider tool and OrBit completion bit to the market, which we believe will increase our cash flow. However, management does not believe this will have a large enough impact to meet all of our cash needs for the next 12 months. We are currently evaluating a range of alternatives to improve our liquidity position. However we cannot provide any assurances that any of these financing options will be available to us in the future on acceptable terms or at all. If we cannot raise required funds on acceptable terms, we may not be able to, among other things, (i) maintain our general and administrative expenses level; (ii) fund certain obligations as they become due; (iii) further refinance debt to better meet our cash flow requirements; and (iv) respond to competitive pressures or unanticipated capital requirements. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recently Enacted Accounting Standards In January 2015, the FASB issued ASU 2015-01, “ Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items.” In April 2015, the FASB issued ASU 2015-03, “ Simplifying the Presentation of Debt Issuance Costs. |
INVENTORY (Tables)
INVENTORY (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Current [Table Text Block] | Inventory is comprised of the following: June 30, December 31, 2015 2014 Raw material $ 913,073 $ 990,709 Work in progress 171,178 155,903 Finished goods 394,244 72,467 $ 1,478,495 $ 1,219,079 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment [Table Text Block] | Property, plant and equipment are comprised of the following: June 30, December 31, Land $ 2,268,039 $ 2,268,039 Buildings 4,847,778 4,847,778 Buildings Superior Auto Body. 2,213,729 2,213,729 Leasehold improvements 717,232 710,232 Machinery and equipment 6,682,269 6,338,521 Machinery under capital lease 2,322,340 2,322,340 Furniture and fixtures 507,556 466,213 Transportation assets 1,343,349 1,343,349 20,902,292 20,510,201 Accumulated depreciation (5,545,343) (4,546,572) $ 15,356,949 $ 15,963,629 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets [Table Text Block] | Intangible assets are comprised of the following: June 30, December 31, 2015 2014 Developed technology $ 7,000,000 $ 7,000,000 Customer contracts 6,400,000 6,400,000 Trademarks 1,500,000 1,500,000 14,900,000 14,900,000 Accumulated amortization (2,650,555) (1,427,222) $ 12,249,445 $ 13,472,778 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments [Table Text Block] | Long-term debt is comprised of the following: June 30, December 31, 2015 2014 Real estate loans $ 7,748,708 $ 7,912,354 Hard Rock Note (net of $416,698 and $828,667 discount, respectively) 9,583,302 11,671,333 Machinery loans 936,209 1,019,100 Transportation loans 716,834 786,767 18,985,053 21,389,554 Current portion of long-term debt (3,012,286) (10,720,243) Long term portion of long-term debt $ 15,972,767 $ 10,669,311 |
RELATED PARTY DEBT AND TRANSA21
RELATED PARTY DEBT AND TRANSACTIONS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions [Table Text Block] | June 30, December 31, 2015 2014 Related party loan 1,368,801 1,610,272 1,368,801 1,610,272 Current portion of related party debt (511,846) (492,452) Long term portion of related party debt $ 856,955 $ 1,117,820 |
SUMMARY OF SIGNIFICANT ACCOUN22
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual) - Jun. 30, 2015 - USD ($) $ / shares in Units, $ in Billions | Total |
Maximum Amount Of Revenue For Emerging Growth Company | $ 1 |
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 714,286 |
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 4 |
Class of Warrant or Right, Expiration Term | 4 years |
Class Of Warrant Or Right Expiration Period | February 2,018 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Inventory [Line Items] | ||
Raw material | $ 913,073 | $ 990,709 |
Work in progress | 171,178 | 155,903 |
Finished goods | 394,244 | 72,467 |
Inventory, Net | $ 1,478,495 | $ 1,219,079 |
PROPERTY, PLANT AND EQUIPMENT24
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment [Line Items] | ||
Land | $ 2,268,039 | $ 2,268,039 |
Buildings | 4,847,778 | 4,847,778 |
Buildings - Superior Auto Body. | 2,213,729 | 2,213,729 |
Leasehold improvements | 717,232 | 710,232 |
Machinery and equipment | 6,682,269 | 6,338,521 |
Machinery under capital lease | 2,322,340 | 2,322,340 |
Furniture and fixtures | 507,556 | 466,213 |
Transportation assets | 1,343,349 | 1,343,349 |
Property, Plant and Equipment, Gross | 20,902,292 | 20,510,201 |
Accumulated depreciation | (5,545,343) | (4,546,572) |
Property, Plant and Equipment, Net | $ 15,356,949 | $ 15,963,629 |
PROPERTY, PLANT AND EQUIPMENT25
PROPERTY, PLANT AND EQUIPMENT (Details Textual) - Jun. 30, 2015 - USD ($) | Total | Total |
Property, Plant and Equipment [Line Items] | ||
Depreciation | $ 551,320 | $ 1,095,368 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible Assets, Gross | $ 14,900,000 | $ 14,900,000 |
Intangible Assets, Accumulated Amortization | (2,650,555) | (1,427,222) |
Finite-Lived Intangible Assets, Net | 12,249,445 | 13,472,778 |
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 [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible Assets, Gross | $ 1,500,000 | $ 1,500,000 |
INTANGIBLE ASSETS (Details Text
INTANGIBLE ASSETS (Details Textual) - Jun. 30, 2015 - USD ($) | Total | Total |
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of Intangible Assets | $ 617,536 | $ 1,223,333 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Debt Instrument [Line Items] | ||
Long-term Debt | $ 18,985,053 | $ 21,389,554 |
Current portion of long-term debt | (3,012,286) | (10,720,243) |
Long-term Debt, Excluding Current Maturities | 15,972,767 | 10,669,311 |
Real estate loans [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | 7,748,708 | 7,912,354 |
Hard Rock Note [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | 9,583,302 | 11,671,333 |
Machinery loans [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | 936,209 | 1,019,100 |
Transportation loans [Member] | ||
Debt Instrument [Line Items] | ||
Long-term Debt | $ 716,834 | $ 786,767 |
LONG-TERM DEBT (Details Textual
LONG-TERM DEBT (Details Textual) - Related Party [Domain] - USD ($) | Apr. 09, 2015 | May. 29, 2015 | May. 29, 2014 | Jun. 30, 2015 | Aug. 15, 2018 | Dec. 31, 2014 |
Hard Rock note [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt Instrument, Maturity Date | Jul. 14, 2017 | |||||
Debt Instrument, Periodic Payment | $ 2,500,000 | |||||
Debt Instrument, Unamortized Discount | $ 416,698 | $ 828,667 | ||||
Business Combination, Consideration Transferred, Liabilities Incurred | $ 12,500,000 | |||||
Debt Instrument, Interest Rate, Stated Percentage | 5.25% | |||||
Debt Instrument, Frequency of Periodic Payment | four equal additional payments | |||||
Payments to Acquire Businesses, Gross | $ 12,500,000 | |||||
American Bank Of The North [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt Instrument, Maturity Date | May 15, 2018 | |||||
Debt Instrument, Periodic Payment | $ 39,317 | |||||
Debt Instrument, Interest Rate, Stated Percentage | 5.25% | |||||
Debt Instrument, Face Amount | $ 5,000,000 | |||||
Debt Instrument, Payment Terms | Payment on the loan will be made in 39 monthly principal plus interest payments of $39,317 plus a final payment of $4,256,355 in August 2018. | |||||
American Bank Of The North [Member] | Subsequent Event [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt Instrument, Annual Principal Payment | $ 4,256,355 |
ORBIT PURCHASE (Detail Textual)
ORBIT PURCHASE (Detail Textual) - USD ($) | Jan. 01, 2016 | Jan. 09, 2015 |
OrBIT patents [Member] | Subsequent Event [Member] | ||
Business Acquisition [Line Items] | ||
Payments to Acquire Intangible Assets | $ 1,000,000 | |
Tenax Energy Solutions [Member] | Maximum [Member] | ||
Business Acquisition [Line Items] | ||
Contractual Obligation | $ 83,333 | |
Tenax Energy Solutions [Member] | OrBIT Product Line [Member] | ||
Business Acquisition [Line Items] | ||
Payments to Acquire Businesses, Gross | $ 300,000 | |
Sales Revenue Period | 2 years | |
Tenax Energy Solutions [Member] | OrBIT Product Line [Member] | Maximum [Member] | ||
Business Acquisition [Line Items] | ||
Other Payments to Acquire Businesses | $ 2,000,000 |
RELATED PARTY DEBT AND TRANSA31
RELATED PARTY DEBT AND TRANSACTIONS (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Related Party Transaction [Line Items] | ||
Related party loan | $ 1,368,801 | $ 1,610,272 |
Current portion of related party debt | (511,846) | (492,452) |
Long term portion of related party debt | $ 856,955 | $ 1,117,820 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
May. 29, 2014 | Jun. 30, 2015 | Jun. 30, 2015 | Dec. 31, 2014 | May. 30, 2014 | |
Related Party Transaction [Line Items] | |||||
Notes Receivable, Related Parties, Current | $ 8,296,717 | $ 8,296,717 | $ 8,296,717 | ||
Founders [Member] | |||||
Related Party Transaction [Line Items] | |||||
Notes Issued | $ 2,000,000 | ||||
Superior Auto Body [Member] | |||||
Related Party Transaction [Line Items] | |||||
Rental Income, Nonoperating | $ 49,975 | $ 99,951 | |||
Tronco Energy Corporation [Member] | |||||
Related Party Transaction [Line Items] | |||||
Notes Receivable, Related Parties, Current | $ 8,300,000 | ||||
Pledged Shares, Notes Receivable | 8,814,860 | 8,814,860 | |||
Notes Receivable Pledged Shares, Price Per Share | $ 1.65 | $ 1.65 | |||
Notes Receivable Pledged Shares, Market Value | $ 14,600,000 | $ 14,600,000 | |||
Loans Receivable, Basis Spread on Variable Rate | 0.25% | 0.25% | |||
Loans Receivable, Variable Interest Rate | 3.25% | ||||
Receivable with Imputed Interest, Due Date | Dec. 31, 2014 | ||||
Debt Instrument, Maturity Date | Dec. 31, 2015 | ||||
Adjustments to Additional Paid in Capital, Other | $ 8,814,860 |
SHARE BASED COMPENSATION (Detai
SHARE BASED COMPENSATION (Details Textual) - Jun. 30, 2015 - Relationship to Entity [Domain] - USD ($) | Total | Total |
Stock Compensation Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options | $ 481,290 | $ 481,290 |
Employee Service Share Based Compensation Nonvested Awards Total Compensation Cost Not Yet Recognized Stock Options Vesting Period | 2 years 3 months 18 days | |
2015 Incentive Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 1,592,878 | 1,592,878 |
2014 Incentive Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 131,250 | |
Allocated Share-based Compensation Expense | $ 52,578 | $ 105,155 |
SUBSEQUENT EVENTS (Details Text
SUBSEQUENT EVENTS (Details Textual) - Aug. 10, 2015 - Subsequent Event [Member] - shares | Total |
Officers And Employees [Member] | 2015 Incentive Plan [Member] | |
Subsequent Event [Line Items] | |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights | These restricted stock units and options will vest 33% on the grant date, 33% on the first anniversary of the grant date and 34% on second anniversary of the grant date. |
Restricted Stock Units (RSUs) [Member] | Director [Member] | |
Subsequent Event [Line Items] | |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years |
Restricted Stock Units (RSUs) [Member] | Director [Member] | 2015 Incentive Plan [Member] | |
Subsequent Event [Line Items] | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 71,202 |
Restricted Stock Units (RSUs) [Member] | Officers And Employees [Member] | 2015 Incentive Plan [Member] | |
Subsequent Event [Line Items] | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 366,000 |
Employee Stock Option [Member] | Officers And Employees [Member] | 2015 Incentive Plan [Member] | |
Subsequent Event [Line Items] | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 87,500 |