Superior Drilling Products (SDPI) 10-Q 16 May 16 2016 Q1 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2016	May. 16, 2016
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2016
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q1
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		17,459,605

Consolidated Condensed Balance

Consolidated Condensed Balance Sheets - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Current assets
Cash	$ 767,023	$ 1,297,002
Accounts receivable	830,952	1,861,002
Prepaid expenses	96,564	179,450
Inventory	1,478,763	1,410,794
Other current assets	123,435	0
Total current assets	3,296,737	4,748,248
Property, plant and equipment, net	14,252,931	14,655,502
Intangible assets, net	10,414,445	11,026,111
Note receivable	8,296,717	8,296,717
Other assets	17,554	28,321
Total assets	36,278,384	38,754,899
Current liabilities
Accounts payable	558,355	638,593
Accrued expenses	459,041	809,765
Line of credit, net	194,136	0
Income tax payable	2,000	2,000
Current portion of capital lease obligation	342,882	332,185
Current portion of related party debt obligation	781,922	555,393
Current portion of long-term debt	4,723,548	2,636,241
Total current liabilities	7,061,884	4,974,177
Other long term liability	880,032	880,032
Capital lease obligation, less current portion	156,162	246,090
Related party debt, less current portion	0	271,190
Long-term debt, net, less current portion	13,990,827	16,208,699
Total liabilities	$ 22,088,905	$ 22,580,188
Commitments and contingencies (Note 6)
Stockholders' equity
Common stock - $0.001 par value; 100,000,000 shares authorized; 17,459,605 and 17,459,605 shares issued and outstanding, respectively	$ 17,460	$ 17,460
Additional paid-in-capital	31,636,828	31,379,520
Retained deficit	(17,464,809)	(15,222,269)
Total stockholders' equity	14,189,479	16,174,711
Total liabilities and stockholders' equity	$ 36,278,384	$ 38,754,899

Consolidated Condensed Balance3

Consolidated Condensed Balance Sheets [Parenthetical] - $ / shares	Mar. 31, 2016	Dec. 31, 2015
Common Stock, Par or Stated Value Per Share (in dollars per share)	$ 0.001	$ 0.001
Common Stock, Shares Authorized	100,000,000	100,000,000
Common Stock, Shares, Issued	17,459,605	17,459,605
Common Stock, Shares, Outstanding	17,459,605	17,459,605

Consolidated Condensed Statemen

Consolidated Condensed Statements of Operations - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Revenue	$ 1,444,626	$ 4,074,617
Operating cost and expenses
Cost of revenue	1,020,614	1,921,430
Selling, general, and administrative expenses	1,290,606	2,057,380
Depreciation and amortization expense	1,234,424	1,148,496
Total operating costs and expenses	3,545,644	5,127,306
Operating loss	(2,101,018)	(1,052,689)
Other (expense) income
Interest income	78,368	73,275
Interest expense	(363,468)	(560,426)
Other income	56,726	72,060
Gain (loss) on disposal of PP&E	86,852	(55,220)
Total other expense	(141,522)	(470,311)
Loss before income taxes	(2,242,540)	(1,523,000)
Income tax expense (benefit)	0	(479,912)
Net loss	$ (2,242,540)	$ (1,043,088)
Basic loss per common share (in dollars per share)	$ (0.13)	$ (0.06)
Basic Weighted Average Common Shares Outstanding (in shares)	17,459,605	17,291,646
Diluted loss Per Common Share (in dollars per share)	$ (0.13)	$ (0.06)
Diluted Weighted Average Common Shares Outstanding (in shares)	17,459,605	17,291,646

Consolidated Condensed Stateme5

Consolidated Condensed Statements Of Cash Flows - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Cash Flows From Operating Activities
Net loss	$ (2,242,540)	$ (1,043,088)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization expense	1,246,880	1,148,496
Amortization of debt discount	34,884	226,000
Deferred tax benefit	0	(480,912)
Share - based compensation expense	257,309	52,577
(Loss) gain on disposition of assets	(86,852)	55,220
Changes in operating assets and liabilities:
Accounts receivable	1,030,050	859,576
Inventory	(67,969)	(255,960)
Prepaid expenses and other current assets	(40,549)	37,080
Other assets	(45,566)	87,075
Accounts payable and accrued expenses	(430,964)	(111,278)
Net Cash (Used in) Provided by Operating Activities	(345,317)	574,786
Cash Flows From Investing Activities
Purchases of property, plant and equipment	(145,791)	(223,452)
Net Cash Used in Investing Activities	(145,791)	(223,452)
Cash Flows From Financing Activities
Principal payments on debt	(915,125)	(268,071)
Principal payments on related party debt	(44,661)	0
Principal payments on capital lease obligations	(79,231)	(70,160)
Proceeds received from debt	1,000,000	0
Proceeds received from sale of subsidiary	50,700	0
Proceeds received from payment on note receivable	5,634	0
Debt issuance costs	(56,188)	(32,525)
Net Cash Used in Financing Activities	(38,871)	(370,756)
Net Decrease in Cash	(529,979)	(19,422)
Cash at Beginning of Period	1,297,002	5,792,388
Cash at End of Period	767,023	5,772,966
Supplemental information:
Cash paid for Interest	$ 536,315	$ 334,426

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	3 Months Ended
	Mar. 31, 2016
Accounting Policies [Abstract]
Significant Accounting Policies [Text Block]	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 tools. All of the drilling tools that we rent 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 that 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 Design and Fabrication, LLC, a Utah limited liability company (“SDF”), (b) Extreme Technologies, LLC, a Utah limited liability company (“ET”), (c) Meier Properties Series, LLC, a Utah limited liability company (“MPS”), (d) Meier Leasing, LLC, a Utah limited liability company (“ML”), and (e) 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 consolidation. As a company with less than $ 1.0 These interim consolidated condensed financial statements for the three months ended March 31, 2016 and 2015, 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 months ended March 31, 2016 are not necessarily indicative of the results of operations expected for the year ended December 31, 2016. 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, 2015 and 2014 and the notes thereto, which were included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission (the “SEC”). Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is calculated to give effect to potentially issuable common shares, which include stock warrants. As of March 31, 2016, the Company had warrants exercisable for 714,286 4.00 During the month of March 2016, the Board of Directors granted options to acquire 309,133 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. As of March 31, 2016 a full valuation allowance has been applied to the Company’s deferred tax assets. The Company follows ASC 718, Compensation- Stock Compensation On March 4, 2016, the Board of Directors granted options to acquire 78,944 1.73 100 March 4, 2026 On March 18, 2016, the Board of Directors granted options to acquire 81,714 1.67 100 March 18, 2026 On March 31, 2016, the Board of Directors granted options to acquire 148,475 1.37 100 March 31, 2026 As of March 31, 2016 we had a working capital deficit of $ 3,765,147 345,317 2,242,540 Our operational and financial strategies include lowering our operating costs and DNR rental tool capital spending to match revenue trends, managing our working capital and managing our debt to enhance liquidity. On March 8, 2016, the Company entered into a financing agreement with Federal National Commercial Credit (“FNCC”) in the amount $ 3 500,000 2.5 85 242,716 Our current ability to fund our monthly debt payments is dependent on our cash flows from operations. We will attempt to renegotiate the Hard Rock Note, with the intent to postpone debt repayment dates and/or convert debt to common shares. To further conserve cash, during the first quarter, we implemented a salary for stock options program for senior management and board of directors and further reduced our workforce. Based on our current 2016 operating financial expectations and availability under our financing agreement with FNCC, and based on the assumption that we are successful in both restructuring the Hard Rock Note, and raising third party capital, we believe we will have sufficient cash to fund our operations, capital expenditures and debt payments for the remainder of 2016. We are also continuing to pursue various other possible options for raising necessary capital. Although as a public company we have access to the public markets for capital raises, we cannot provide any assurances that financing 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 current general and administrative spending levels; (ii) fund certain obligations as they become due; and (iii) respond to competitive pressures or unanticipated capital requirements. This will require us to find additional avenues to decrease spending which may hinder our ability to effectively compete in the current oil and gas market. In April 2015, FASB issued an accounting standards update for “Interest – Imputation of Interest,” which simplifies the presentation of debt issuance costs. This accounting standard update requires that debt issuance cost related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The new update if effective for financial statements issued for fiscal years beginning after December 15, 2015 (and interim periods within those fiscal years). The adoption of this new accounting standard update resulted in a reclassification of debt issuance costs from Other assets to Line of Credit, net and Long term debt, net. See Note 5 “Long-Term Debt” for disclosure of debt issuance costs. Adoption of this accounting standard update did not impact our statements of operations or cash flows.

INVENTORY

INVENTORY	3 Months Ended
	Mar. 31, 2016
Inventory Disclosure [Abstract]
Inventory Disclosure [Text Block]	NOTE 2. INVENTORY March 31, December 31, Raw material $ 964,766 $ 968,254 Work in progress 134,723 117,661 Finished goods 379,274 324,879 $ 1,478,763 $ 1,410,794

PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT	3 Months Ended
	Mar. 31, 2016
Property, Plant and Equipment [Abstract]
Property, Plant and Equipment Disclosure [Text Block]	NOTE 3. PROPERTY, PLANT AND EQUIPMENT March 31, 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 717,232 717,232 Machinery and equipment 7,397,974 7,200,530 Machinery under capital lease 2,322,340 2,322,340 Furniture and fixtures 507,557 507,554 Transportation assets 1,317,397 1,317,397 21,592,046 21,394,599 Accumulated depreciation (7,339,115) (6,739,097) $ 14,252,931 $ 14,655,502 Depreciation expense related to property, plant and equipment for the three months ended March 31, 2016 and 2015 was $ 622,757 530,827

INTANGIBLE ASSETS

INTANGIBLE ASSETS	3 Months Ended
	Mar. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible Assets Disclosure [Text Block]	NOTE 4. INTANGIBLE ASSETS March 31, December 31, 2016 2015 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 (4,485,555) (3,873,889) $ 10,414,445 $ 11,026,111 Amortization expense related to intangible assets for the three months ended March 31, 2016 and 2015 was $ 611,667 617,669 Annually, and more often as necessary, we will perform an evaluation of our intangible assets for indications of impairment. If indications exist, we will perform an evaluation of the fair value of the intangible assets and, if necessary, record an impairment charge. As of March 31, 2016, the Company reviewed the net balance of the intangible assets and determined no impairment was needed.

LONG-TERM DEBT

LONG-TERM DEBT	3 Months Ended
	Mar. 31, 2016
Debt Disclosure [Abstract]
Debt Disclosure [Text Block]	NOTE 5. LONG-TERM DEBT March 31, December 31, 2016 2015 Real estate loans (net of debt issuance costs discount of $4,427) $ 7,503,490 $ 7,590,042 Hard Rock Note (net of $229,776 and $261,493 discount, respectively) 9,270,224 9,738,521 Line of credit (net of debt issuance costs discount of $48,580) 194,136 - Machinery loans 1,317,695 857,947 Transportation loans 622,966 658,430 18,908,511 18,844,940 Current portion of long-term debt (4,917,684) (2,636,241) $ 13,990,827 $ 16,208,699 New Credit Agreement 3 2.5 500,000 The accounts receivable revolving promissory note has availability of up to 85 This note has a variable interest rate of prime plus 1% plus a monthly service fee of 0.48% of the current outstanding balance on the note. The term loan is for a period of 60 8,333 This note carries an interest rate of prime plus 5% plus a monthly service fee of 0.30% of the outstanding balance. The credit facility also includes the following debt covenants: (a) Fixed Charge Coverage Ratio (b) Debt-to-Tangible Net Worth (c) Liquid Ratio As of March 31, 2016, the outstanding balance of the revolving promissory note and term promissory note was $ 242,716 500,000 485,000 On May 12, 2016 the Company and FNCC entered into an amendment to the credit agreement changing the following: (a) Fixed Charge Coverage Ratio (b) Debt-to-Tangible Net Worth (c) Liquid Ratio

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	3 Months Ended
	Mar. 31, 2016
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 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 March 31, 2016, there have been no updates or decisions made concerning this matter.

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	3 Months Ended
	Mar. 31, 2016
Related Party Transactions [Abstract]
Related Party Transactions Disclosure [Text Block]	NOTE 7. RELATED PARTY TRANSACTIONS Superior Auto Body On January 1, 2016, the Company completed the divestiture of our interest in Superior Auto Body and Paint (“SAB”), by selling the remaining ownership interests in the business operations to a third party. The Company hired an independent third party evaluation firm to determine the value of the operations of SAB. The Firm determined the value was $ 101,400 50,700 50,700 5,633 The Company will continue to lease certain of its facilities to SAB. We recorded rental income from the related party in the amounts of $ 49,976 49,975 Tronco Related Loans 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 (“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 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 8,814,860 1.80 15.8 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 0.25 3.75 December 31, 2015 December 31, 2017

SHARE BASED COMPENSATION

SHARE BASED COMPENSATION	3 Months Ended
	Mar. 31, 2016
Share-based Compensation [Abstract]
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]	NOTE 8. 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 On March 4, 2016, the Board of Directors granted options to acquire 78,944 1.73 100 March 4, 2026 On March 18, 2016, the Board of Directors granted options to acquire 81,714 1.67 100 March 18, 2026 On March 31, 2016, the Board of Directors granted options to acquire 148,475 1.37 100 March 31, 2026 Years Ended March 31 2016 2015 Expected volatility 49 % N/A Discount rate 1.09 % N/A Expected life (years) 3 N/A Dividend yield N/A N/A

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	3 Months Ended
	Mar. 31, 2016
Subsequent Events [Abstract]
Subsequent Events [Text Block]	NOTE 9. SUBSEQUENT EVENTS On May 12, 2016, the Company and FNCC signed an second amendment to the loan and security agreement changing the dates of the covenant calculations to the following: (a) Fixed Charge Coverage Ratio Debt-to-Tangible Net Worth Liquid Ratio On May 12, 2016, the Company entered into a distribution agreement with Drilling Tools International, Inc. (“DTI”) establishing DTI as the exclusive distributor of SDP’s patented Drill-N-Ream tool. In exchange for the distribution rights, DTI has agreed to purchase a minimum operating fleet of Drill-N-Ream tools in 2016. DTI’s exclusive rights to provide the Drill-N-Ream to customers in the distribution territory are dependent upon achievement of certain sales objectives. The agreement is a multi-year agreement and will remain in effect subject to the performance targets being met during the term of the agreement.

SUMMARY OF SIGNIFICANT ACCOUN15

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
	Mar. 31, 2016
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 tools. All of the drilling tools that we rent 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 that 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 Design and Fabrication, LLC, a Utah limited liability company (“SDF”), (b) Extreme Technologies, LLC, a Utah limited liability company (“ET”), (c) Meier Properties Series, LLC, a Utah limited liability company (“MPS”), (d) Meier Leasing, LLC, a Utah limited liability company (“ML”), and (e) 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 consolidation. 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 months ended March 31, 2016 and 2015, 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 months ended March 31, 2016 are not necessarily indicative of the results of operations expected for the year ended December 31, 2016. 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, 2015 and 2014 and the notes thereto, which were included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, as 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 is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is calculated to give effect to potentially issuable common shares, which include stock warrants. As of March 31, 2016, the Company had warrants exercisable for 714,286 4.00 During the month of March 2016, the Board of Directors granted options to acquire 309,133
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. As of March 31, 2016 a full valuation allowance has been applied to the Company’s deferred tax assets.
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]	Share-Based Compensation The Company follows ASC 718, Compensation- Stock Compensation On March 4, 2016, the Board of Directors granted options to acquire 78,944 1.73 100 March 4, 2026 On March 18, 2016, the Board of Directors granted options to acquire 81,714 1.67 100 March 18, 2026 On March 31, 2016, the Board of Directors granted options to acquire 148,475 1.37 100 March 31, 2026
Liquidity [Policy Text Block]	As of March 31, 2016 we had a working capital deficit of $ 3,765,147 345,317 2,242,540 Our operational and financial strategies include lowering our operating costs and DNR rental tool capital spending to match revenue trends, managing our working capital and managing our debt to enhance liquidity. On March 8, 2016, the Company entered into a financing agreement with Federal National Commercial Credit (“FNCC”) in the amount $ 3 500,000 2.5 85 242,716 Our current ability to fund our monthly debt payments is dependent on our cash flows from operations. We will attempt to renegotiate the Hard Rock Note, with the intent to postpone debt repayment dates and/or convert debt to common shares. To further conserve cash, during the first quarter, we implemented a salary for stock options program for senior management and board of directors and further reduced our workforce. Based on our current 2016 operating financial expectations and availability under our financing agreement with FNCC, and based on the assumption that we are successful in both restructuring the Hard Rock Note, and raising third party capital, we believe we will have sufficient cash to fund our operations, capital expenditures and debt payments for the remainder of 2016. We are also continuing to pursue various other possible options for raising necessary capital. Although as a public company we have access to the public markets for capital raises, we cannot provide any assurances that financing 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 current general and administrative spending levels; (ii) fund certain obligations as they become due; and (iii) respond to competitive pressures or unanticipated capital requirements. This will require us to find additional avenues to decrease spending which may hinder our ability to effectively compete in the current oil and gas market.
New Accounting Pronouncements, Policy [Policy Text Block]	Accounting Standards In April 2015, FASB issued an accounting standards update for “Interest – Imputation of Interest,” which simplifies the presentation of debt issuance costs. This accounting standard update requires that debt issuance cost related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The new update if effective for financial statements issued for fiscal years beginning after December 15, 2015 (and interim periods within those fiscal years). The adoption of this new accounting standard update resulted in a reclassification of debt issuance costs from Other assets to Line of Credit, net and Long term debt, net. See Note 5 “Long-Term Debt” for disclosure of debt issuance costs. Adoption of this accounting standard update did not impact our statements of operations or cash flows.

INVENTORY (Tables)

INVENTORY (Tables)	3 Months Ended
	Mar. 31, 2016
Inventory Disclosure [Abstract]
Schedule of Inventory, Current [Table Text Block]	Inventory is comprised of the following: March 31, December 31, Raw material $ 964,766 $ 968,254 Work in progress 134,723 117,661 Finished goods 379,274 324,879 $ 1,478,763 $ 1,410,794

PROPERTY, PLANT AND EQUIPMENT (

PROPERTY, PLANT AND EQUIPMENT (Tables)	3 Months Ended
	Mar. 31, 2016
Property, Plant and Equipment [Abstract]
Property, Plant and Equipment [Table Text Block]	Property, plant and equipment are comprised of the following: March 31, 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 717,232 717,232 Machinery and equipment 7,397,974 7,200,530 Machinery under capital lease 2,322,340 2,322,340 Furniture and fixtures 507,557 507,554 Transportation assets 1,317,397 1,317,397 21,592,046 21,394,599 Accumulated depreciation (7,339,115) (6,739,097) $ 14,252,931 $ 14,655,502

INTANGIBLE ASSETS (Tables)

INTANGIBLE ASSETS (Tables)	3 Months Ended
	Mar. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of Finite-Lived Intangible Assets [Table Text Block]	Intangible assets are comprised of the following: March 31, December 31, 2016 2015 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 (4,485,555) (3,873,889) $ 10,414,445 $ 11,026,111

LONG-TERM DEBT (Tables)

LONG-TERM DEBT (Tables)	3 Months Ended
	Mar. 31, 2016
Debt Disclosure [Abstract]
Schedule of Long-term Debt Instruments [Table Text Block]	Long-term debt is comprised of the following: March 31, December 31, 2016 2015 Real estate loans (net of debt issuance costs discount of $4,427) $ 7,503,490 $ 7,590,042 Hard Rock Note (net of $229,776 and $261,493 discount, respectively) 9,270,224 9,738,521 Line of credit (net of debt issuance costs discount of $48,580) 194,136 - Machinery loans 1,317,695 857,947 Transportation loans 622,966 658,430 18,908,511 18,844,940 Current portion of long-term debt (4,917,684) (2,636,241) $ 13,990,827 $ 16,208,699

SHARE BASED COMPENSATION (Table

SHARE BASED COMPENSATION (Tables)	3 Months Ended
	Mar. 31, 2016
Share-based Compensation [Abstract]
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]	The fair value of stock options granted to employees and directors was estimated at the grant date using the Black-Scholes option pricing model using the following assumptions: Years Ended March 31 2016 2015 Expected volatility 49 % N/A Discount rate 1.09 % N/A Expected life (years) 3 N/A Dividend yield N/A N/A

SUMMARY OF SIGNIFICANT ACCOUN21

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual) - USD ($)	Mar. 08, 2016	Mar. 04, 2016	Mar. 18, 2016	Mar. 31, 2016	Mar. 31, 2015
Maximum Amount Of Revenue For Emerging Growth Company				$ 1,000,000,000
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
Working Capital Deficit				$ 3,765,147
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross		78,944	81,714	148,475
Line of Credit Facility, Maximum Borrowing Capacity	$ 3,000,000
Line of Credit Facility, Capacity Available for Trade Purchases	2,500,000			$ 485,000
Line of Credit Facility, Capacity Available for Specific Purpose Other than for Trade Purchases	$ 500,000
Line of Credit Facility, Percentage Available for Accounts Receivables	85.00%
Share Price		$ 1.73	$ 1.67	$ 1.37
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Date		Mar. 4, 2026	Mar. 18, 2026	Mar. 31, 2026
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period		10 years	10 years	10 years
Long-term Line of Credit				$ 242,716
Net Income (Loss) Attributable to Parent				$ (2,242,540)	$ (1,043,088)
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage		100.00%	100.00%	100.00%
Cash Used In Operations				$ 345,317
Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross				309,133

INVENTORY (Details)

INVENTORY (Details) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Inventory [Line Items]
Raw material	$ 964,766	$ 968,254
Work in progress	134,723	117,661
Finished goods	379,274	324,879
Inventory, Net	$ 1,478,763	$ 1,410,794

PROPERTY, PLANT AND EQUIPMENT23

PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
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	717,232
Machinery and equipment	7,397,974	7,200,530
Machinery under capital lease	2,322,340	2,322,340
Furniture and fixtures	507,557	507,554
Transportation assets	1,317,397	1,317,397
Property, Plant and Equipment, Gross	21,592,046	21,394,599
Accumulated depreciation	(7,339,115)	(6,739,097)
Property, Plant and Equipment, Net	$ 14,252,931	$ 14,655,502

PROPERTY, PLANT AND EQUIPMENT24

PROPERTY, PLANT AND EQUIPMENT (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Property, Plant and Equipment [Line Items]
Depreciation	$ 622,757	$ 530,827

INTANGIBLE ASSETS (Details)

INTANGIBLE ASSETS (Details) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Intangible Assets, Gross	$ 14,900,000	$ 14,900,000
Accumulated amortization	(4,485,555)	(3,873,889)
Finite-Lived Intangible Assets, Net	10,414,445	11,026,111
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 [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible Assets, Gross	$ 1,500,000	$ 1,500,000

INTANGIBLE ASSETS (Details Text

INTANGIBLE ASSETS (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Amortization of Intangible Assets	$ 611,667	$ 617,669

LONG-TERM DEBT (Details)

LONG-TERM DEBT (Details) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Long-term Debt	$ 18,908,511	$ 18,844,940
Current portion of long-term debt	(4,917,684)	(2,636,241)
Long term portion of long-term debt	13,990,827	16,208,699
Line of Credit [Member]
Debt Instrument [Line Items]
Long-term Debt	194,136	0
Real estate loans [Member]
Debt Instrument [Line Items]
Long-term Debt	7,503,490	7,590,042
Hard Rock Note [Member]
Debt Instrument [Line Items]
Long-term Debt	9,270,224	9,738,521
Machinery loans [Member]
Debt Instrument [Line Items]
Long-term Debt	1,317,695	857,947
Transportation loans [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 622,966	$ 658,430

LONG-TERM DEBT (Details Textual

LONG-TERM DEBT (Details Textual) - USD ($)	May. 12, 2016	Mar. 08, 2016	Mar. 31, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Line of Credit Facility, Periodic Payment			$ 242,716
Notes Payable			500,000
Line of Credit Facility, Maximum Borrowing Capacity		$ 3,000,000
Line of Credit Facility, Capacity Available for Trade Purchases		2,500,000	485,000
Line of Credit Facility, Capacity Available for Specific Purpose Other than for Trade Purchases		$ 500,000
Line of Credit Facility, Percentage Available for Accounts Receivables		85.00%
Line of Credit Facility, Interest Rate Description		This note has a variable interest rate of prime plus 1% plus a monthly service fee of 0.48% of the current outstanding balance on the note.
Fixed Charge Coverage Ratio Maintainable Terms		(a) Fixed Charge Coverage Ratio of not less than 0.10 tested monthly from June 30 through August 31, 2016, then 0.35 for September 30 and October 31, 2016, and then 1.00 for November 30, 2016 and each month thereafter;
Ratio Of Indebtedness To Net Worth Maintainable Terms		(b) Debt-to-Tangible Net Worth of not greater than 4.35 tested monthly from April 30 through August 31, 2016 and then 4.25 for September 30, 2016 and each month thereafter
Liquidity Ratio Maintainable Terms		(c) Liquid Ratio of at least 0.325 tested monthly from April 30 through September 30, 2016 and then 0.40 for October 30, 2016 and each month thereafter
Term Loan [Member]
Debt Instrument [Line Items]
Debt Instrument, Periodic Payment, Principal		$ 8,333
Debt Instrument, Term		60 months
Line of Credit Facility, Interest Rate Description		This note carries an interest rate of prime plus 5% plus a monthly service fee of 0.30% of the outstanding balance.
Subsequent Event [Member]
Debt Instrument [Line Items]
Fixed Charge Coverage Ratio Maintainable Terms	(a) Fixed Charge Coverage Ratio of not less than 0.10 tested monthly from July 30 through August 31, 2016, then 0.35 for September 30 and October 31, 2016, and then 1.00 for November 30, 2016 and each month thereafter;
Ratio Of Indebtedness To Net Worth Maintainable Terms	(b) Debt-to-Tangible Net Worth of not greater than 4.35 tested monthly from June 30 through August 31, 2016 and then 4.25 for September 30, 2016 and each month thereafter; and
Liquidity Ratio Maintainable Terms	(c) Liquid Ratio of at least 0.325 tested monthly from June 30 through September 30, 2016 and then 0.40 for October 30, 2016 and each month thereafter.
Hard Rock note [Member]
Debt Instrument [Line Items]
Debt Instrument, Unamortized Discount			226,595	$ 261,493
Real estate loans [Member]
Debt Instrument [Line Items]
Debt Instrument, Unamortized Discount			4,427
Line of Credit [Member]
Debt Instrument [Line Items]
Debt Instrument, Unamortized Discount			$ 48,580

RELATED PARTY TRANSACTIONS (Det

RELATED PARTY TRANSACTIONS (Details Textual) - USD ($)	Nov. 10, 2015	Jan. 31, 2016	Jul. 31, 2014	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015	May. 30, 2014
Related Party Transaction [Line Items]
Notes Receivable, Related Parties, Current				$ 8,296,717		$ 8,296,717
Superior Auto Body [Member]
Related Party Transaction [Line Items]
Rental Income, Nonoperating				$ 49,976	$ 49,975
Debt Instrument, Periodic Payment, Total		$ 5,633
Equity Method Investments		101,400
Proceeds from Divestiture of Businesses		50,700
Noncash or Part Noncash Divestiture, Amount of Consideration Received		$ 50,700
Tronco Energy Corporation [Member]
Related Party Transaction [Line Items]
Notes Receivable, Related Parties, Current							$ 8,300,000
Pledged Shares, Notes Receivable				8,814,860
Notes Receivable Pledged Shares, Price Per Share				$ 1.80
Notes Receivable Pledged Shares, Market Value				$ 15,800,000
Loans Receivable, Description of Variable Rate Basis				prime rate
Loans Receivable, Basis Spread on Variable Rate				0.25%
Loans Receivable, Variable Interest Rate				3.75%
Debt Instrument, Maturity Date	Dec. 31, 2017		Dec. 31, 2015

SHARE BASED COMPENSATION (Detai

SHARE BASED COMPENSATION (Details)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility	49.00%	0.00%
Discount rate	1.09%	0.00%
Expected life (years)	3 years	0 years
Dividend yield	0.00%	0.00%

SHARE BASED COMPENSATION (Det31

SHARE BASED COMPENSATION (Details Textual) - $ / shares	Mar. 04, 2016	Mar. 18, 2016	Mar. 31, 2016
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	78,944	81,714	148,475
Share Price	$ 1.73	$ 1.67	$ 1.37
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Date	Mar. 4, 2026	Mar. 18, 2026	Mar. 31, 2026
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	10 years	10 years	10 years
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage	100.00%	100.00%	100.00%
2015 Incentive Plan [Member]
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

SUBSEQUENT EVENTS (Details Text

SUBSEQUENT EVENTS (Details Textual)	May. 12, 2016	Mar. 08, 2016
Subsequent Event [Line Items]
Fixed Charge Coverage Ratio Maintainable Terms		(a) Fixed Charge Coverage Ratio of not less than 0.10 tested monthly from June 30 through August 31, 2016, then 0.35 for September 30 and October 31, 2016, and then 1.00 for November 30, 2016 and each month thereafter;
Ratio Of Indebtedness To Net Worth Maintainable Terms		(b) Debt-to-Tangible Net Worth of not greater than 4.35 tested monthly from April 30 through August 31, 2016 and then 4.25 for September 30, 2016 and each month thereafter
Liquidity Ratio Maintainable Terms		(c) Liquid Ratio of at least 0.325 tested monthly from April 30 through September 30, 2016 and then 0.40 for October 30, 2016 and each month thereafter
Subsequent Event [Member]
Subsequent Event [Line Items]
Fixed Charge Coverage Ratio Maintainable Terms	(a) Fixed Charge Coverage Ratio of not less than 0.10 tested monthly from July 30 through August 31, 2016, then 0.35 for September 30 and October 31, 2016, and then 1.00 for November 30, 2016 and each month thereafter;
Ratio Of Indebtedness To Net Worth Maintainable Terms	(b) Debt-to-Tangible Net Worth of not greater than 4.35 tested monthly from June 30 through August 31, 2016 and then 4.25 for September 30, 2016 and each month thereafter; and
Liquidity Ratio Maintainable Terms	(c) Liquid Ratio of at least 0.325 tested monthly from June 30 through September 30, 2016 and then 0.40 for October 30, 2016 and each month thereafter.