Superior Drilling Products (SDPI) 10-Q 12 May 23 2023 Q1 Quarterly report Financial data

Cover

Cover - shares	3 Months Ended
	Mar. 31, 2023	May 05, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2023
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2023
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	NYSEAMER
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 Common Stock, Shares Outstanding		29,245,080

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Current assets
Cash	$ 1,955,903	$ 2,158,025
Accounts receivable	3,959,754	3,241,221
Prepaid expenses	356,696	367,823
Inventories	2,248,861	2,081,260
Asset held for sale		216,000
Other current assets	152,219	140,238
Total current assets	8,673,433	8,204,567
Property, plant and equipment, net	10,241,092	8,576,851
Intangible assets, net	27,778	69,444
Right of use assets	606,323	638,102
Other noncurrent assets	112,619	111,519
Total assets	19,661,245	17,600,483
Current liabilities
Accounts payable	1,664,491	1,043,581
Accrued expenses	782,054	891,793
Income tax payable	427,165	351,618
Current portion of operating lease liability	51,182	44,273
Current portion of financial obligation	76,406	74,636
Current portion of long-term debt, net of discounts	1,157,879	1,125,864
Other current liabilities		216,000
Total current liabilities	4,159,177	3,747,765
Operating lease liability, less current portion	493,296	523,375
Long-term financial obligation, less current portion	4,017,280	4,038,022
Long-term debt, less current portion, net of discounts	489,303	529,499
Deferred income	675,000	675,000
Total liabilities	9,834,056	9,513,661
Shareholders’ equity
Common stock - $0.001 par value; 100,000,000 shares authorized; 29,245,080 shares issued and outstanding	29,245	29,245
Additional paid-in-capital	44,171,076	43,943,928
Accumulated deficit	(34,373,132)	(35,886,351)
Total shareholders’ equity	9,827,189	8,086,822
Total liabilities and shareholders’ equity	$ 19,661,245	$ 17,600,483

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Mar. 31, 2023	Dec. 31, 2022
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	29,245,080
Common stock, shares outstanding	29,245,080	29,245,080

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Income Statement [Abstract]
Revenue	$ 6,281,214	$ 4,130,164
Operating cost and expenses
Cost of revenue	2,238,597	1,767,903
Selling, general, and administrative expenses	2,338,841	1,646,643
Depreciation and amortization expense	326,014	410,733
Total operating cost and expenses	4,903,452	3,825,279
Operating income	1,377,762	304,885
Other income (expense)
Interest income	16,898	197
Interest expense	(154,091)	(123,861)
Recovery of related party note receivable	350,262
Total other income (expense)	213,069	(123,664)
Income before income taxes	1,590,831	181,221
Income tax expense	(77,612)	(31,384)
Net income	$ 1,513,219	$ 149,837
Earnings per common share - basic	$ 0.05	$ 0.01
Weighted average common shares outstanding - basic	29,245,080	28,235,001
Earnings per common share - diluted	$ 0.05	$ 0.01
Weighted average common shares outstanding - diluted	29,305,216	28,305,101

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Cash Flows from Operating Activities
Net income	$ 1,513,219	$ 149,837
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	326,014	410,733
Share-based compensation expense	227,148	210,133
Amortization of right-of-use assets	51,257
Amortization of deferred loan cost	3,087	4,631
Changes in operating assets and liabilities:
Accounts receivable	(718,533)	(283,974)
Inventories	(167,601)	150,290
Prepaid expenses and other current assets	(1,954)	186,508
Accounts payable, accrued expenses, and other liabilities	(262,804)	248,560
Income tax payable	75,547	6,388
Net cash provided by operating activities	1,045,380	1,083,106
Cash Flows From Investing Activities
Purchases of property, plant and equipment	(1,567,524)	(919,127)
Proceeds from recovery of related party note receivable	350,262
Net cash used in investing activities	(1,217,262)	(919,127)
Cash Flows from Financing Activities
Principal payments on debt	(213,905)	(131,978)
Payments on revolving loan	(472,089)	(21,541)
Proceeds received from revolving loan	655,754	21,533
Net cash used in financing activities	(30,240)	(131,986)
Net (decrease) increase in cash	(202,122)	31,993
Cash at beginning of period	2,158,025	2,822,100
Cash at end of period	1,955,903	2,854,093
Supplemental information:
Cash paid for interest	151,107	122,157
Property, plant and equipment in accounts payable	381,064
Disposal of asset held for sale	216,000
Right of use assets obtained in exchange for lease obligations	$ 19,478

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
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		210,133		210,133
Net income			149,837	149,837
Balance at Mar. 31, 2022	$ 28,235	43,281,334	(36,801,671)	6,507,898
Balance, shares at Mar. 31, 2022	28,235,001
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
Share-based compensation expense		227,148		227,148
Net income			1,513,219	1,513,219
Balance at Mar. 31, 2023	$ 29,245	$ 44,171,076	$ (34,373,132)	$ 9,827,189
Balance, shares at Mar. 31, 2023	29,245,080

NATURE OF OPERATIONS AND SUMMAR

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	3 Months Ended
	Mar. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 (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 (“HR” or “Hard Rock”). Basis of Presentation The Company’s condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The condensed 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. These condensed consolidated financial statements for the three months ended March 31, 2023 and 2022, and the related footnote disclosures included herein, are unaudited. The preparation of financial statements in conformity with GAAP requires the use of management’s estimates. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results of operations expected for the year ended December 31, 2023. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the years ended December 31, 2022 and 2021 and the notes thereto, which were included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (the “SEC”). Significant Accounting Policies The Company’s accounting policies are set forth in Note 1 – Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC. There were no significant updates or revisions to our accounting policies during the three months ended March 31, 2023. Concentrations of Credit Risk The Company has two significant customers that represented 87 90 1,880,000 1,751,000 The Company had two vendors that represented 13 354,000 136,000

REVENUE

REVENUE	3 Months Ended
	Mar. 31, 2023
Revenue from Contract with Customer [Abstract]
REVENUE	2. REVENUE Disaggregation of Revenue The following table presents revenue disaggregated by type: SCHEDULE OF REVENUE DISAGGREGATED BY REVENUE 2023 2022 Three Months Ended March 31, 2023 2022 Tool revenue: Tool and product sales $ 1,537,380 $ 664,300 Tool rental 806,153 385,150 Other related revenue 1,910,676 1,719,797 Total tool revenue 4,254,209 2,769,247 Contract services 2,027,005 1,360,917 Total revenue $ 6,281,214 $ 4,130,164 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 did not incur any material costs of obtaining contracts.

INVENTORIES

INVENTORIES	3 Months Ended
	Mar. 31, 2023
Inventory Disclosure [Abstract]
INVENTORIES	3. INVENTORIES Inventories were comprised of the following: SCHEDULE OF INVENTORIES March 31, December 31, 2023 2022 Raw material $ 1,156,935 $ 1,334,669 Work in progress 478,906 168,214 Finished goods 613,020 578,377 Total inventories $ 2,248,861 $ 2,081,260

PROPERTY, PLANT & EQUIPMENT

PROPERTY, PLANT & EQUIPMENT	3 Months Ended
	Mar. 31, 2023
Property, Plant and Equipment [Abstract]
PROPERTY, PLANT & EQUIPMENT	4. PROPERTY, PLANT & EQUIPMENT Property, plant and equipment was comprised of the following: SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT March 31, December 31, 2023 2022 Land $ 880,416 $ 880,416 Buildings 4,764,441 4,764,441 Leasehold improvements 755,039 755,039 Machinery, equipment, and rental tools 16,494,647 14,546,060 Office equipment, fixtures and software 628,358 628,358 Transportation assets 265,760 265,760 Property, plant and equipment, gross 23,788,661 21,840,074 Accumulated depreciation (13,547,569 ) (13,263,223 ) Total property, plant and equipment, net $ 10,241,092 $ 8,576,851 Depreciation expense related to property, plant and equipment for the three months ended March 31, 2023 and 2022 was $ 284,347 369,066

INTANGIBLE ASSETS

INTANGIBLE ASSETS	3 Months Ended
	Mar. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
INTANGIBLE ASSETS	5. INTANGIBLE ASSETS Intangible assets were comprised of the following: SCHEDULE OF INTANGIBLE ASSETS March 31, December 31, 2023 2022 Developed technology $ 7,000,000 $ 7,000,000 Customer contracts 6,400,000 6,400,000 Trademarks 1,500,000 1,500,000 Total intangible assets, gross 1,500,000 1,500,000 Less: accumulated amortization (14,872,222 ) (14,830,556 ) Total intangible assets, net $ 27,778 $ 69,444 Amortization expense related to intangible assets for the three months ended March 31, 2023 and 2022 was $ 41,667 41,667

RELATED PARTY RECEIVABLE

RELATED PARTY RECEIVABLE	3 Months Ended
	Mar. 31, 2023
Receivables [Abstract]
RELATED PARTY RECEIVABLE	6. RELATED PARTY 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 On March 31, 2023, the Company entered into a fourth amended and restated loan agreement and note with Tronco to extend the maturity date of the principal to March 31, 2033 2.8% 750,000 In the event the average closing price for the Company’s common stock for 10 consecutive trading days is equal to or greater than $3.00 per share, Tronco shall pay fifty percent of the then outstanding principal balance together with all accrued, unpaid interest within ten days of the date on which the 10-day trading average first equals or exceeds $3.00. In the event the average closing price for 10 consecutive trading days is $4.00 per share or greater, Tronco shall pay the entire outstanding principal balance together with all accrued, unpaid interest within ten (10) days of the date on which the 10-day average first equals or exceeds $4.00. 350,262 6,567,000 6,884,000

LONG-TERM DEBT

LONG-TERM DEBT	3 Months Ended
	Mar. 31, 2023
Debt Disclosure [Abstract]
LONG-TERM DEBT	7. LONG-TERM DEBT Long-term debt is comprised of the following: SCHEDULE OF DEBT OBLIGATIONS March 31, December 31, 2023 2022 Credit Agreement $ 1,000,466 $ 813,713 Machinery loans 629,866 664,674 Transportation loan 16,850 20,027 Insurance loan - 156,949 Total long-term debt 1,647,182 1,655,363 Less: current portion of long-term debt, net of discounts (1,157,879 ) (1,125,864 ) Total long-term debt, less current portion, net of discounts $ 489,303 $ 529,499 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 1,001,000 814,000 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. As of March 31, 2023, the Company had approximately $ 101,000 The interest rate for the Term Loan and the Line of Credit is prime plus 2 13.60 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 March 31, 2023, 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 5.94 630,000 665,000 Transportation Loan The Company financed the purchase of a vehicle with a loan agreement. The term of the loan is 60 months and matures in June 2024 6.99 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 balance of the insurance loan totaled $ 156,949

FINANCING OBLIGATION LIABILITY

FINANCING OBLIGATION LIABILITY	3 Months Ended
	Mar. 31, 2023
Financing Obligation Liability
FINANCING OBLIGATION LIABILITY	8. 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 18,971 16,796 The financing obligation liability is summarized below: SCHEDULE OF FINANCING OBLIGATION LIABILITY March 31, December 31, 2023 2022 Financing obligation for sale-leaseback transaction $ 4,093,686 $ 4,112,658 Current principal portion of finance obligation (76,406 ) (74,636 ) Non-current portion of financing obligation $ 4,017,280 $ 4,038,022

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	3 Months Ended
	Mar. 31, 2023
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	9. 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. On February 13, 2023, the lawsuit was reassigned to United States District Judge Drew B. Tipton and United States Magistrate Judge Peter Bray. On March 27, 2023, Magistrate Bray entered an amended Scheduling Order. In accordance with such amended Scheduling Order, fact discovery ended on April 14, 2023, and expert discovery is scheduled to end on or before June 8, 2023. The parties are preparing this case for trial and expect a jury trial setting during the fall or early winter of 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.

EARNINGS PER SHARE

EARNINGS PER SHARE	3 Months Ended
	Mar. 31, 2023
Earnings Per Share [Abstract]
EARNINGS PER SHARE	10. 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 2023 2022 Three Months Ended March 31, 2023 2022 Numerator: Net income $ 1,513,219 $ 149,837 Denominator: Weighted average shares of common stock outstanding - basic 29,245,080 28,235,001 Effect of dilutive options 60,136 70,100 Weighted average shares of common stock outstanding - diluted 29,305,216 28,305,101 Earnings per common share - basic $ 0.05 $ 0.01 Earnings per common share - diluted $ 0.05 $ 0.01

LEASES

LEASES	3 Months Ended
	Mar. 31, 2023
Leases
LEASES	11. LEASES The Company leases certain facilities Utah and Dubai under long-term operating leases with lease terms of one year two years 62,748 1,800 Other information related to operating leases: SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE Three Months Ended March 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows $ 54,138 $ 38,559 Weighted average remaining lease-term (in years) 2.7 .75 Weighted average discount rate 7.25 % 7.25 %

SEGMENT REPORTING

SEGMENT REPORTING	3 Months Ended
	Mar. 31, 2023
Segment Reporting [Abstract]
SEGMENT REPORTING	12. 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 segments 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. The following table summarizes information about our segments: SCHEDULE OF SEGMENTS INFORMATION WITH GEOGRAPHIC AREAS 2023 2022 Three Months Ended March 31, 2023 2022 Revenues: North America $ 5,475,061 $ 3,745,014 International 806,153 385,150 Total revenue $ 6,281,214 $ 4,130,164 Operating income: North America $ 3,605,959 $ 2,096,321 International 109,810 (144,871 ) Corporate costs, unallocated (2,338,007 ) (1,646,565 ) Total operating income $ 1,377,762 $ 304,885 North America revenue includes revenue from operations in Mexico totaling approximately $ 15,000 18,000 Information about products and services See Note 2 – Revenue.

NATURE OF OPERATIONS AND SUMM_2

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
	Mar. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Nature of Operations	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 (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 (“HR” or “Hard Rock”).
Basis of Presentation	Basis of Presentation The Company’s condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The condensed 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. These condensed consolidated financial statements for the three months ended March 31, 2023 and 2022, and the related footnote disclosures included herein, are unaudited. The preparation of financial statements in conformity with GAAP requires the use of management’s estimates. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results of operations expected for the year ended December 31, 2023. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the years ended December 31, 2022 and 2021 and the notes thereto, which were included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (the “SEC”).
Significant Accounting Policies	Significant Accounting Policies The Company’s accounting policies are set forth in Note 1 – Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC. There were no significant updates or revisions to our accounting policies during the three months ended March 31, 2023.
Concentrations of Credit Risk	Concentrations of Credit Risk The Company has two significant customers that represented 87 90 1,880,000 1,751,000 The Company had two vendors that represented 13 354,000 136,000

REVENUE (Tables)

REVENUE (Tables)	3 Months Ended
	Mar. 31, 2023
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 2023 2022 Three Months Ended March 31, 2023 2022 Tool revenue: Tool and product sales $ 1,537,380 $ 664,300 Tool rental 806,153 385,150 Other related revenue 1,910,676 1,719,797 Total tool revenue 4,254,209 2,769,247 Contract services 2,027,005 1,360,917 Total revenue $ 6,281,214 $ 4,130,164

INVENTORIES (Tables)

INVENTORIES (Tables)	3 Months Ended
	Mar. 31, 2023
Inventory Disclosure [Abstract]
SCHEDULE OF INVENTORIES	Inventories were comprised of the following: SCHEDULE OF INVENTORIES March 31, December 31, 2023 2022 Raw material $ 1,156,935 $ 1,334,669 Work in progress 478,906 168,214 Finished goods 613,020 578,377 Total inventories $ 2,248,861 $ 2,081,260

PROPERTY, PLANT & EQUIPMENT (Ta

PROPERTY, PLANT & EQUIPMENT (Tables)	3 Months Ended
	Mar. 31, 2023
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 March 31, December 31, 2023 2022 Land $ 880,416 $ 880,416 Buildings 4,764,441 4,764,441 Leasehold improvements 755,039 755,039 Machinery, equipment, and rental tools 16,494,647 14,546,060 Office equipment, fixtures and software 628,358 628,358 Transportation assets 265,760 265,760 Property, plant and equipment, gross 23,788,661 21,840,074 Accumulated depreciation (13,547,569 ) (13,263,223 ) Total property, plant and equipment, net $ 10,241,092 $ 8,576,851

INTANGIBLE ASSETS (Tables)

INTANGIBLE ASSETS (Tables)	3 Months Ended
	Mar. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
SCHEDULE OF INTANGIBLE ASSETS	Intangible assets were comprised of the following: SCHEDULE OF INTANGIBLE ASSETS March 31, December 31, 2023 2022 Developed technology $ 7,000,000 $ 7,000,000 Customer contracts 6,400,000 6,400,000 Trademarks 1,500,000 1,500,000 Total intangible assets, gross 1,500,000 1,500,000 Less: accumulated amortization (14,872,222 ) (14,830,556 ) Total intangible assets, net $ 27,778 $ 69,444

LONG-TERM DEBT (Tables)

LONG-TERM DEBT (Tables)	3 Months Ended
	Mar. 31, 2023
Debt Disclosure [Abstract]
SCHEDULE OF DEBT OBLIGATIONS	Long-term debt is comprised of the following: SCHEDULE OF DEBT OBLIGATIONS March 31, December 31, 2023 2022 Credit Agreement $ 1,000,466 $ 813,713 Machinery loans 629,866 664,674 Transportation loan 16,850 20,027 Insurance loan - 156,949 Total long-term debt 1,647,182 1,655,363 Less: current portion of long-term debt, net of discounts (1,157,879 ) (1,125,864 ) Total long-term debt, less current portion, net of discounts $ 489,303 $ 529,499

FINANCING OBLIGATION LIABILITY

FINANCING OBLIGATION LIABILITY (Tables)	3 Months Ended
	Mar. 31, 2023
Financing Obligation Liability
SCHEDULE OF FINANCING OBLIGATION LIABILITY	The financing obligation liability is summarized below: SCHEDULE OF FINANCING OBLIGATION LIABILITY March 31, December 31, 2023 2022 Financing obligation for sale-leaseback transaction $ 4,093,686 $ 4,112,658 Current principal portion of finance obligation (76,406 ) (74,636 ) Non-current portion of financing obligation $ 4,017,280 $ 4,038,022

EARNINGS PER SHARE (Tables)

EARNINGS PER SHARE (Tables)	3 Months Ended
	Mar. 31, 2023
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 2023 2022 Three Months Ended March 31, 2023 2022 Numerator: Net income $ 1,513,219 $ 149,837 Denominator: Weighted average shares of common stock outstanding - basic 29,245,080 28,235,001 Effect of dilutive options 60,136 70,100 Weighted average shares of common stock outstanding - diluted 29,305,216 28,305,101 Earnings per common share - basic $ 0.05 $ 0.01 Earnings per common share - diluted $ 0.05 $ 0.01

LEASES (Tables)

LEASES (Tables)	3 Months Ended
	Mar. 31, 2023
Leases
SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE	Other information related to operating leases: SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE Three Months Ended March 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows $ 54,138 $ 38,559 Weighted average remaining lease-term (in years) 2.7 .75 Weighted average discount rate 7.25 % 7.25 %

SEGMENT REPORTING (Tables)

SEGMENT REPORTING (Tables)	3 Months Ended
	Mar. 31, 2023
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 2023 2022 Three Months Ended March 31, 2023 2022 Revenues: North America $ 5,475,061 $ 3,745,014 International 806,153 385,150 Total revenue $ 6,281,214 $ 4,130,164 Operating income: North America $ 3,605,959 $ 2,096,321 International 109,810 (144,871 ) Corporate costs, unallocated (2,338,007 ) (1,646,565 ) Total operating income $ 1,377,762 $ 304,885

NATURE OF OPERATIONS AND SUMM_3

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Product Information [Line Items]
Accounts receivable	$ 1,880,000		$ 1,751,000
Accounts payable current	1,664,491		1,043,581
Two Vendors [Member]
Product Information [Line Items]
Accounts payable current	$ 354,000		$ 136,000
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Two Customers [Member]
Product Information [Line Items]
Concentration risk percentage	87%	90%
Supplier Concentration Risk [Member] | Purchases [Member] | Two Vendors [Member]
Product Information [Line Items]
Concentration risk percentage	13%	13%

SCHEDULE OF REVENUE DISAGGREGAT

SCHEDULE OF REVENUE DISAGGREGATED BY REVENUE (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Disaggregation of Revenue [Line Items]
Total revenue	$ 6,281,214	$ 4,130,164
Tools and Product Sales [Member]
Disaggregation of Revenue [Line Items]
Total revenue	1,537,380	664,300
Tool Rental [Member]
Disaggregation of Revenue [Line Items]
Total revenue	806,153	385,150
Other Related Revenue [Member]
Disaggregation of Revenue [Line Items]
Total revenue	1,910,676	1,719,797
Tool Revenue [Member]
Disaggregation of Revenue [Line Items]
Total revenue	4,254,209	2,769,247
Contract Services [Member]
Disaggregation of Revenue [Line Items]
Total revenue	$ 2,027,005	$ 1,360,917

SCHEDULE OF INVENTORIES (Detail

SCHEDULE OF INVENTORIES (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Inventory Disclosure [Abstract]
Raw material	$ 1,156,935	$ 1,334,669
Work in progress	478,906	168,214
Finished goods	613,020	578,377
Total inventories	$ 2,248,861	$ 2,081,260

SCHEDULE OF PROPERTY, PLANT AND

SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
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	16,494,647	14,546,060
Office equipment, fixtures and software	628,358	628,358
Transportation assets	265,760	265,760
Property, plant and equipment, gross	23,788,661	21,840,074
Accumulated depreciation	(13,547,569)	(13,263,223)
Total property, plant and equipment, net	$ 10,241,092	$ 8,576,851

PROPERTY, PLANT & EQUIPMENT (De

PROPERTY, PLANT & EQUIPMENT (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Property, Plant and Equipment [Abstract]
Depreciation expense related to property, plant and equipment	$ 284,347	$ 369,066

SCHEDULE OF INTANGIBLE ASSETS (

SCHEDULE OF INTANGIBLE ASSETS (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Less: accumulated amortization	$ (14,872,222)	$ (14,830,556)
Total intangible assets, net	27,778	69,444
Developed Technology Rights [Member]
Finite-Lived Intangible Assets [Line Items]
Total intangible assets, gross	7,000,000	7,000,000
Customer Contracts [Member]
Finite-Lived Intangible Assets [Line Items]
Total intangible assets, gross	6,400,000	6,400,000
Trademarks and Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Total intangible assets, gross	$ 1,500,000	$ 1,500,000

INTANGIBLE ASSETS (Details Narr

INTANGIBLE ASSETS (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of intangible assets	$ 41,667	$ 41,667

RELATED PARTY RECEIVABLE (Detai

RELATED PARTY RECEIVABLE (Details Narrative) - Tronco Energy Corporation [Member] - USD ($)	Mar. 31, 2023	Mar. 24, 2023	Aug. 31, 2017	Dec. 31, 2022
Related Party Transaction [Line Items]
Related party note receivable			$ 6,979,043
Debt instrument, increase (decrease),net			$ 0
Common stock hold as collateral			8,267,860
Principal maturity date	Mar. 31, 2033
Interest rate	2.80%
Principal amount	$ 750,000
Debt average conversion	In the event the average closing price for the Company’s common stock for 10 consecutive trading days is equal to or greater than $3.00 per share, Tronco shall pay fifty percent of the then outstanding principal balance together with all accrued, unpaid interest within ten days of the date on which the 10-day trading average first equals or exceeds $3.00. In the event the average closing price for 10 consecutive trading days is $4.00 per share or greater, Tronco shall pay the entire outstanding principal balance together with all accrued, unpaid interest within ten (10) days of the date on which the 10-day average first equals or exceeds $4.00.
Principal and interest payment		$ 350,262
Accured interest	$ 6,567,000			$ 6,884,000

SCHEDULE OF DEBT OBLIGATIONS (D

SCHEDULE OF DEBT OBLIGATIONS (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Total long-term debt	$ 1,647,182	$ 1,655,363
Less: current portion of long-term debt, net of discounts	(1,157,879)	(1,125,864)
Total long-term debt, less current portion, net of discounts	489,303	529,499
Credit Agreement [Member]
Debt Instrument [Line Items]
Total long-term debt	1,000,466	813,713
Machinery Loans [Member]
Debt Instrument [Line Items]
Total long-term debt	629,866	664,674
Transportation Loans [Member]
Debt Instrument [Line Items]
Total long-term debt	16,850	20,027
Insurance Loan [Member]
Debt Instrument [Line Items]
Total long-term debt		$ 156,949

LONG-TERM DEBT (Details Narrati

LONG-TERM DEBT (Details Narrative) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2023	Dec. 31, 2022	Feb. 28, 2019
Debt Instrument [Line Items]
Line of credit availability	$ 101,000
Equipment Loans [Member]
Debt Instrument [Line Items]
Notes payable	$ 630,000	$ 665,000
Transportation Loans [Member]
Debt Instrument [Line Items]
Debt instrument, variable rate	6.99%
Loan matures	June 2024
Insurance Loans [Member]
Debt Instrument [Line Items]
Notes payable		156,949
Minimum [Member] | Equipment Loans [Member]
Debt Instrument [Line Items]
Debt instrument, variable rate	5.50%
Maximum [Member] | Equipment Loans [Member]
Debt Instrument [Line Items]
Debt instrument, variable rate	5.94%
Loan and security agreement [Member] | Term Loan and Revolving Loan [Member]
Debt Instrument [Line Items]
Line of credit interest rate	13.60%
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	$ 1,001,000	$ 814,000
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. As of March 31, 2023, the Company had approximately $101,000 of availability under the Line of Credit.

SCHEDULE OF FINANCING OBLIGATIO

SCHEDULE OF FINANCING OBLIGATION LIABILITY (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Financing Obligation Liability
Financing obligation for sale-leaseback transaction	$ 4,093,686	$ 4,112,658
Current principal portion of finance obligation	(76,406)	(74,636)
Non-current portion of financing obligation	$ 4,017,280	$ 4,038,022

FINANCING OBLIGATION LIABILIT_2

FINANCING OBLIGATION LIABILITY (Details Narrative) - USD ($)			3 Months Ended
	Dec. 07, 2022	Dec. 07, 2020	Mar. 31, 2023	Mar. 31, 2022
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Purchase price			$ 1,567,524	$ 919,127
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			$ 18,971	$ 16,796
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 BASIC AND DILUTED E

SCHEDULE OF BASIC AND DILUTED EARNINGS PER SHARE (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Numerator:
Net income	$ 1,513,219	$ 149,837
Denominator:
Weighted average shares of common stock outstanding - basic	29,245,080	28,235,001
Effect of dilutive options	60,136	70,100
Weighted average shares of common stock outstanding - diluted	29,305,216	28,305,101
Earnings per common share - basic	$ 0.05	$ 0.01
Earnings per common share - diluted	$ 0.05	$ 0.01

SCHEDULE OF OTHER INFORMATION R

SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Leases
Operating cash flows	$ 54,138	$ 38,559
Weighted average remaining lease term	2 years 8 months 12 days	9 months
Weighted average discount rate	7.25%	7.25%

LEASES (Details Narrative)

LEASES (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Operating lease expense	$ 62,748	$ 1,800
Minimum [Member]
Operating lease term	1 year
Maximum [Member]
Operating lease term	2 years

SCHEDULE OF SEGMENTS INFORMATIO

SCHEDULE OF SEGMENTS INFORMATION WITH GEOGRAPHIC AREAS (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Revenues:
Total revenue	$ 6,281,214	$ 4,130,164
Operating income:
Total operating income	1,377,762	304,885
North America [Member]
Revenues:
Total revenue	5,475,061	3,745,014
Operating income:
Total operating income	3,605,959	2,096,321
International [Member]
Revenues:
Total revenue	806,153	385,150
Operating income:
Total operating income	109,810	(144,871)
Corporate Costs, Unallocated [Member]
Operating income:
Total operating income	$ (2,338,007)	$ (1,646,565)

SEGMENT REPORTING (Details Narr

SEGMENT REPORTING (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	$ 6,281,214	$ 4,130,164
MEXICO
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	$ 15,000	$ 18,000