Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Mar. 15, 2024 | Jun. 30, 2023 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2023 | ||
Document Fiscal Period Focus | FY | ||
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 | NYSE | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 13,340,466 | ||
Entity Common Stock, Shares Outstanding | 30,391,240 | ||
Documents Incorporated By Reference | NONE | ||
ICFR Auditor Attestation Flag | false | ||
Document Financial Statement Error Correction [Flag] | false | ||
Auditor Firm ID | 659 | ||
Auditor Name | Moss Adams LLP | ||
Auditor Location | Dallas, Texas |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash and restricted cash | $ 2,670,626 | $ 2,158,025 |
Accounts receivable | 2,670,361 | 3,241,221 |
Prepaid expenses | 335,152 | 367,823 |
Inventories | 2,706,491 | 2,081,260 |
Asset held for sale | 216,000 | |
Other current assets | 373,587 | 140,238 |
Total current assets | 8,756,217 | 8,204,567 |
Property, plant and equipment, net | 11,242,251 | 8,576,851 |
Intangible assets, net | 69,444 | |
Right of use assets | 451,094 | 638,102 |
Deferred tax asset | 6,387,240 | |
Other noncurrent assets | 199,816 | 111,519 |
Total assets | 27,036,618 | 17,600,483 |
Current liabilities | ||
Accounts payable | 1,547,619 | 1,043,581 |
Accrued expenses | 870,060 | 891,793 |
Income tax payable | 626,455 | 351,618 |
Current portion of operating lease liability | 54,034 | 44,273 |
Current portion of financial obligation | 83,648 | 74,636 |
Current portion of long-term debt, net of discounts | 635,273 | 1,125,864 |
Other current liabilities | 216,000 | |
Total current liabilities | 3,817,089 | 3,747,765 |
Operating lease liability, less current portion | 325,480 | 523,375 |
Long-term financial obligation, less current portion | 3,954,373 | 4,038,022 |
Long-term debt, less current portion, net of discounts | 1,609,868 | 529,499 |
Deferred income | 675,000 | 675,000 |
Total liabilities | 10,381,810 | 9,513,661 |
Commitments and contingencies (Note 10) | ||
Shareholders’ equity | ||
Common stock - $0.001 par value; 100,000,000 shares authorized; 30,391,240 and 29,245,080 shares issued and outstanding, respectively | 30,391 | 29,245 |
Additional paid-in-capital | 45,074,723 | 43,943,928 |
Accumulated deficit | (28,450,306) | (35,886,351) |
Total shareholders’ equity | 16,654,808 | 8,086,822 |
Total liabilities and shareholders’ equity | $ 27,036,618 | $ 17,600,483 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 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 | 30,391,240 | 29,245,080 |
Common stock, shares outstanding | 30,391,240 | 29,245,080 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Statement [Abstract] | ||
Revenue | $ 20,973,551 | $ 19,097,687 |
Operating cost and expenses | ||
Cost of revenue | 8,195,501 | 8,330,877 |
Selling, general, and administrative expenses | 9,643,647 | 7,326,384 |
Depreciation and amortization expense | 1,357,438 | 1,503,976 |
Total operating cost and expenses | 19,196,586 | 17,161,237 |
Operating income | 1,776,965 | 1,936,450 |
Other income (expense) | ||
Interest income | 60,950 | 26,675 |
Interest expense | (689,449) | (572,624) |
Recovery of related party note receivable | 350,262 | |
Impairment on asset held for sale | (130,375) | |
Loss on disposition of assets | (70,664) | |
Loss on extinguishment of debt | (43,000) | |
Total other income (expense) | (391,901) | (676,324) |
Income before income taxes | 1,385,064 | 1,260,126 |
Income tax (expense)/benefit | 6,050,981 | (194,969) |
Net income | $ 7,436,045 | $ 1,065,157 |
Earnings per common share - basic | $ 0.25 | $ 0.04 |
Weighted average common shares outstanding - basic | 29,698,498 | 28,643,464 |
Earnings per common share - diluted | $ 0.25 | $ 0.04 |
Weighted average common shares outstanding - diluted | 29,772,498 | 28,675,100 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Balance at Dec. 31, 2021 | $ 28,235 | $ 43,071,201 | $ (36,951,508) | $ 6,147,928 |
Balance, shares at Dec. 31, 2021 | 28,235,001 | |||
Share-based compensation expense | $ 1,010 | 872,727 | 873,737 | |
Stock-based compensation expense, shares | 1,010,079 | |||
Net income | 1,065,157 | 1,065,157 | ||
Balance at Dec. 31, 2022 | $ 29,245 | 43,943,928 | (35,886,351) | 8,086,822 |
Balance, shares at Dec. 31, 2022 | 29,245,080 | |||
Share-based compensation expense | $ 1,138 | 925,493 | 926,639 | |
Stock-based compensation expense, shares | 1,138,368 | |||
Stock option exercised | $ 8 | 6,408 | 6,408 | |
Stock option exercised, shares | 7,792 | |||
Disgorgement of profits | 198,894 | 198,894 | ||
Net income | 7,436,045 | 7,436,045 | ||
Balance at Dec. 31, 2023 | $ 30,391 | $ 45,074,723 | $ (28,450,306) | $ 16,654,808 |
Balance, shares at Dec. 31, 2023 | 30,391,240 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Cash Flows from Operating Activities | ||
Net income | $ 7,436,045 | $ 1,065,157 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 1,357,438 | 1,503,976 |
Amortization of right-of-use assets | 211,935 | 131,093 |
Share-based compensation expense | 926,639 | 873,737 |
Deferred tax benefit | (6,345,914) | |
Impairment on asset held for sale | 130,375 | |
Loss on disposition of assets | 70,664 | |
Amortization of deferred loan cost | 10,618 | 18,524 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 570,860 | (369,289) |
Inventories | (625,231) | (906,625) |
Prepaid expenses and other assets | (288,975) | (62,946) |
Accounts payable, accrued expenses, and other liabilities | (363,657) | 127,274 |
Income tax payable | 233,511 | 145,128 |
Other current liabilities | 216,000 | |
Deferred income | 675,000 | |
Net cash provided by operating activities | 3,193,933 | 3,547,404 |
Cash Flows from Investing Activities | ||
Purchases of property, plant and equipment | (3,741,419) | (3,330,206) |
Proceeds from recovery of related party note receivable | 350,262 | |
Net cash used in investing activities | (3,391,157) | (3,330,206) |
Cash Flows from Financing Activities | ||
Principal payments on debt | (660,706) | (1,694,730) |
Proceeds received from debt borrowings | 2,072,406 | 997,134 |
Payments on revolving loan | (1,645,427) | (817,113) |
Proceeds received from revolving loan | 828,626 | 633,436 |
Proceeds from issuance of common stock | 6,408 | |
Payments of debt issuance costs | (90,376) | |
Disgorgement of profits | 198,894 | |
Net cash (used in) provided by financing activities | 709,825 | (881,273) |
Net increase in cash and restricted cash | 512,601 | (664,075) |
Cash and restricted cash at beginning of period | 2,158,025 | 2,822,100 |
Cash and restricted cash at end of period | 2,670,626 | 2,158,025 |
Supplemental information: | ||
Cash paid for interest | 516,987 | 566,336 |
Cash paid for income taxes | 63,101 | |
Non-Cash item related to deferred income | 675,000 | |
Right of use assets obtained in exchange for lease obligations | 24,927 | 748,677 |
Property, plant and equipment in accounts payable | $ 282,639 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Nature of Operations Superior Drilling Products, Inc. (the “Company”, “SDPI”, “we”, “our” or “us”) is an innovative drilling and completion tool technology company providing cost saving solutions that drive production efficiencies for the oil and natural gas drilling industry. Our drilling solutions include the patented Drill-N-Ream ® 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 consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The consolidated financial statements include the accounts of Superior Drilling Products Inc. and all of its wholly owned subsidiaries. All significant intercompany accounts have been eliminated in consolidation. The Company does not have investments in any unconsolidated subsidiaries. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates. Significant items subject to estimates and assumptions include the carrying amount and useful lives of property and equipment and intangible assets, impairment assessments, share-based compensation expense, and valuation allowances for accounts receivable, inventories, and deferred tax assets. Revenue Recognition We account for revenue in accordance with Accounting Standard Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), except for tool rental revenue. Under ASC 606 revenue is measured based on a consideration specified in a customer’s contract, excluding any sale incentives and taxes collected on behalf of third parties. Revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration that we expect to receive for those goods or services. To recognize revenue, we (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when, or as, we satisfy the performance obligation(s). Shipping and handling costs incurred are accounted for as fulfillment costs and are included in cost of revenues in the statements of operations. Tool sales, rentals and other related revenue Tool and Product Sales Tool Rental SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Other Related Revenue: Contract Services Drill Bit Manufacturing and Refurbishment Our revenue is derived from short-term contracts. Revenue is recognized when we satisfy a performance obligation by transferring control of the promised goods or services to our customers at a point in time, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. We also assess our customer’s ability and intention to pay, which is based on a variety of factors including our customer’s historical payment experience and financial condition. Payment terms and conditions vary, although terms generally include a requirement of payment within 30 days. Revenue generally does not include right of return or other significant post-delivery obligations. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. We elected to treat shipping and handling costs as a fulfillment cost instead of as a separate performance obligation. We recognize the cost for shipping and handling when incurred as an expense in cost of revenue. All of our contracts are less than one year in duration. We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. Cash and Restricted Cash We maintain cash deposits with financial institutions that may exceed federally insured limits at times. We have chosen credible institutions and believe our risk of loss is negligible. Cash and restricted cash were comprised of the following: SCHEDULE OF CASH AND RESTRICTED CASH 2023 2022 December 31, 2023 2022 Cash $ 2,504,487 $ 2,158,025 Restricted cash 166,139 - Cash and restricted cash $ 2,670,626 $ 2,158,025 Fair Value of Financial Instruments The Company’s financial instruments consist of cash, receivables, payables, and bank debt. The Company believes that the carrying values of these instruments on the accompanying consolidated balance sheets approximate their fair values due to the relatively short period to maturity for these instruments. Accounts Receivable and Allowance for Credit Losses Domestically, accounts receivable are generally due within 60 days of the invoice date. Internationally, our due date terms are generally 90 days from the invoice date. No interest is charged on past-due balances. We grant credit to our customers based upon an evaluation of each customer’s financial condition. We periodically monitor the payment history and ongoing creditworthiness of our customers. An allowance for credit losses is established at a level estimated by management to be adequate based upon various factors including historical experience, aging status of customer accounts, payment history and financial condition of our customers. The allowance for credit losses was $ 0 SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company analyzes each customer’s length of time a receivable is outstanding, geographical location, and any potential economic conditions that could cause concern for credit instability. On a weekly basis, this data is reviewed, and a determination made if there are potential concerns for losses. This historical data, geographical location, review of current economic conditions, and the current receivables helps establish a forecast for credit risk. Inventories Inventories consist of raw materials, work-in-process and finished goods and are stated at the lower of cost, determined using the weighted-average cost method, or net realizable value. Finished goods inventories include raw materials, direct labor and production overhead. The Company regularly reviews inventories on hand and current market conditions to determine if the cost of finished goods inventories exceed current market prices and impairs the cost basis of the inventory accordingly. Assets Held for Sale The Company classifies disposal groups as held for sale in the period in which all of the following criteria are met: (1) management, having the authority to approve the action, commits to a plan to sell the disposal group; (2) the disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such disposal groups; (3) an active program to locate a buyer or buyers and other actions required to complete the plan to sell the disposal group have been initiated; (4) the sale of the disposal group is probable, and transfer of the disposal group is expected to qualify for recognition as a completed sale, within one year, except if events or circumstances beyond the Company’s control extend the period of time required to sell the disposal group beyond one year; (5) the disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (6) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. A disposal group that is classified as held for sale is initially measured at the lower of its carrying amount or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Subsequent changes in the fair value of a disposal group less any costs to sell are reported as an adjustment to the carrying amount of the disposal group, as long as the new carrying amount does not exceed the carrying amount of the asset at the time it was initially classified as held for sale. Upon determining that a disposal group meets the criteria to be classified as held for sale, the Company reports the assets and liabilities of the disposal group for all periods presented in the line items assets held for sale and liabilities held for sale, respectively, in the consolidated balance sheets. Property, Plant and Equipment Property, plant and equipment is stated at cost. The cost of ordinary maintenance and repair is charged to operating expense, while replacement of critical components and major improvements are capitalized. Depreciation or amortization of property and equipment is calculated using the straight-line method over the asset’s estimated useful life as follows: SCHEDULE OF ASSETS ESTIMATED USEFUL LIFE Buildings and leasehold improvements 2 39 Machinery, equipment and rental tools 18 10 Office equipment, fixtures and software 3 7 Transportation equipment 5 30 SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Property, plant and equipment is reviewed for impairment on an annual basis or whenever events or changes in circumstances indicate the carrying value of an asset or asset group may not be recoverable. Indicative events or circumstances include, but are not limited to, matters such as a significant decline in market value or a significant change in business climate. An impairment loss is recognized when the carrying value of an asset exceeds the estimated undiscounted future cash flows from the use of the asset and its eventual disposition. The amount of impairment loss recognized is the excess of the asset’s carrying value over its fair value. Assets to be disposed of are reported at the lower of the carrying value or the fair value less cost to sell. Upon sale or other disposition of an asset, the Company recognizes a gain or loss on disposal measured as the difference between the net carrying value of the asset and the net proceeds received. Intangible Assets The Company’s intangible assets with finite lives consist of developed technology, customer contracts and relationships, and trade names and trademarks. The cost of intangible assets with finite lives is amortized using the straight-line method over the estimated period of economic benefit, ranging from 5 9 Intangible assets with finite lives are tested for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. These conditions may include a change in the extent or manner in which the asset is being used or a change in future operations. The Company assesses the recoverability of the carrying amount by preparing estimates of future revenue, margins, and cash flows. If the sum of expected future cash flows (undiscounted and without interest charges) is less than the carrying amount, an impairment loss is recognized. The impairment loss recognized is the amount by which the carrying amount exceeds the fair value. Fair value of these assets may be determined by a variety of methodologies, including discounted cash flow models. Leases We account for leases in accordance with ASC Topic 842 - Leases (“ASC 842”), which requires assets and liabilities that arise from all leases to be recognized on the balance sheet for lessees and expanded financial statement disclosures for both lessees and lessors. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liability represents the Company’s obligation to make lease payments arising from the lease, both of which are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. Leases with a lease term of 12 months or less at inception are not recorded on the condensed consolidated balance sheet and are expensed on a straight-line basis over the lease term in the condensed consolidated statement of operations. The Company determines whether a contract is a lease, or contains a lease, at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. The Company discounts lease payments based on an estimate of its incremental borrowing rate as the Company’s leases do not provide a readily determinable implicit rate. Operating lease assets and liabilities are included on our consolidated balance sheets. Operating lease expense (excluding variable lease costs) is recognized on a straight-line basis over the lease term. Research and Development We expense research and development costs as they are incurred. For the years ended December 31, 2023 and 2022, these expenses were approximately $ 765,000 436,000 SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Earnings (Loss) Per Share Basic earnings (loss) per common share is calculated by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) attributable to common shareholders by the weighted average number of common shares outstanding, including potentially dilutive common share equivalents, if the effect is dilutive. Potentially dilutive common shares equivalents include stock options. Income Taxes The Company recognizes an asset or liability for the deferred tax consequences of all temporary differences between the tax basis of assets or liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years when the reported amounts of the asset or liabilities are recovered or settled and for operating loss carry forwards. These deferred tax assets and liabilities are measured using the enacted tax rates that will be in effect when the differences are expected to reverse and the carry forwards are expected to be realized. In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that the deferred tax assets will be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations. The Company accounts for uncertainty in income taxes using a recognition and measurement threshold for tax positions taken or expected to be taken in a tax return, which are subject to examination by federal and state taxing authorities. The tax benefit from an uncertain tax position is recognized when it is more likely than not that the position will be sustained upon examination by taxing authorities based on the technical merits of the position. The amount of the tax benefit recognized is the largest amount of the benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The effective tax rate and the tax basis of assets and liabilities reflect management’s estimates of the ultimate outcome of various tax uncertainties. The Company recognizes penalties and interest related to uncertain tax positions within the income tax expense financial statement caption in the accompanying consolidated statements of operations. Debt Issuance Costs Costs related to debt issuance are capitalized and amortized as interest expense over the term of the related debt using the straight-line method, which approximates the effective interest method. Upon the repayment of debt, the Company accelerates the recognition of an appropriate amount of the costs as interest expense. Debt issuance costs are presented as a direct reduction from the carrying amount of the note payable. For the years ended December 31, 2023 and 2022, the amortized debt issuance costs were $ 10,618 3,087 Share-Based Compensation Share-based compensation expense related to stock option and restricted stock awards is recognized based on the grant-date fair values. The Company recognizes compensation expense on a straight-line basis over the requisite service period of the award. Concentrations of Credit Risk The Company has two significant customers that represent 85 88 1,677,000 1,751,000 The Company had two significant vendors that represent 12 440,000 12 74,000 SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Government Grant The Company applied for and received a grant award of up to $ 750,000 During 2022, the Company met the conditions of the grant and received the initial grant funding totaling $ 675,000 675,000 Foreign currency transactions Foreign currency transactions are initially measured and recorded in U.S. dollars using the exchange rate on the date of the transaction. Foreign currency denominated monetary assets and liabilities are measured at the end of each reporting period using the exchange rate at that date. Gains and losses from foreign currency transactions, which are included in selling, general, and administrative expenses, have not been significant in any of the periods presented. Nonmonetary assets and liabilities are not subsequently remeasured. Recent Accounting Pronouncements There are no recently issued accounting pronouncements that we have not yet adopted that we believe will have a material effect on our financial statements. |
REVENUE
REVENUE | 12 Months Ended |
Dec. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | NOTE 2. REVENUE Disaggregation of Revenue The following table presents revenue disaggregated by type: SCHEDULE OF REVENUE DISAGGREGATED BY REVENUE 2023 2022 Year Ended December 31, 2023 2022 Tool Revenue: Tool and product sales $ 3,255,300 $ 3,157,710 Tool rental 3,064,642 2,180,428 Other related revenue 7,240,670 7,013,806 Total Tool Revenue 13,560,612 12,351,944 Contract Services 7,412,939 6,745,743 Total Revenue $ 20,973,551 $ 19,097,687 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. SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2023 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | NOTE 3. INVENTORIES Inventories were comprised of the following: SCHEDULE OF INVENTORIES 2023 2022 December 31, 2023 2022 Raw material $ 1,835,850 $ 1,334,669 Work in progress 728,840 168,214 Finished goods 141,801 578,377 Total inventories $ 2,706,491 $ 2,081,260 |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | NOTE 4. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment was comprised of the following: SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT 2023 2022 December 31, 2023 2022 Land $ 880,416 $ 880,416 Buildings 4,340,078 4,764,441 Leasehold improvements 946,247 755,039 Machinery, equipment, and rental tools 16,462,886 14,546,060 Office equipment, fixtures and software 278,158 628,358 Transportation assets 261,760 265,760 Property, plant and equipment, gross 23,169,545 21,840,074 Accumulated depreciation (11,927,294 ) (13,263,223 ) Total property, plant and equipment, net $ 11,242,251 $ 8,576,851 Depreciation expense related to property, plant and equipment for the years ended December 31, 2023 and 2022 was approximately $ 1,288,000 1,337,000 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 5. INTANGIBLE ASSETS Intangible assets were comprised of the following: SCHEDULE OF INTANGIBLE ASSETS 2023 2022 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 14,900,000 14,900,000 Accumulated amortization (14,900,000 ) (14,830,556 ) Total intangible assets, net $ - $ 69,444 Amortization expense related to intangible assets for the years ended December 31, 2023 and 2022 was approximately $ 69,000 167,000 These intangible assets have been amortized using the straight-line method over their expected useful lives, which range from 5 9 SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
RELATED PARTY NOTE RECEIVABLE
RELATED PARTY NOTE RECEIVABLE | 12 Months Ended |
Dec. 31, 2023 | |
Receivables [Abstract] | |
RELATED PARTY NOTE RECEIVABLE | NOTE 6. RELATED PARTY NOTE RECEIVABLE In January 2014, we entered into a Note Purchase and Sale Agreement under which we agreed to purchase a loan made to Tronco Energy Corporation in order to take over the legal position as Tronco’s senior secured lender. Tronco is an entity owned by Troy and Annette Meier. Effective August 2017, the Company fully reserved the related party note receivable of $ 6,979,043 0 8,267,860 2 March 31, 2023 6,703,000 6,884,000 |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2023 | |
Leases | |
LEASES | NOTE 7. LEASES The Company leases certain facilities Utah and Dubai under long-term operating leases with lease terms of one year two years 253,000 140,000 The following table presents the maturities of lease liabilities: SCHEDULE OF AGGREGATE FUTURE LEASE PAYMENTS Fiscal year ending December 31, Operating 2024 $ 253,929 2025 67,200 2026 60,000 2027 40,000 Total undiscounted lease payments 421,129 -Less: Imputed lease interest (41,615 ) Total lease liabilities $ 379,514 Other information related to operating leases: SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE Year Ended December 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows $ 253,292 $ 216,394 Weighted average remaining lease-term (in years) 2.19 2.86 Weighted average discount rate 7.25 % 7.25 % |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | NOTE 8. LONG-TERM DEBT Long-term debt is comprised of the following: SCHEDULE OF DEBT OBLIGATIONS 2023 2022 December 31, 2023 2022 Loan Agreement $ 1,518,947 $ - Credit Agreement - 813,713 Machinery loans 522,520 664,674 Transportation loan 6,981 20,027 Insurance loan 196,693 156,949 Total long-term debt 2,245,141 1,655,363 Current portion of long-term debt (635,273 ) (1,125,864 ) Total long-term debt, net of current portion $ 1,609,868 $ 529,499 SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Loan Agreement On July 28, 2023, the Company entered into a Loan Agreement (the “Loan Agreement”) among Vast Bank, National Association, as lender (the “Lender”), and various subsidiaries of the Company as guarantors (the “Guarantors”). The Loan Agreement provides for loans through the following facilities (collectively, the “Loans”): ● Revolving Line: The lesser of $ 750,000 50 July 28, 2025 ● Term Loan: $ 1,719,200 July 28, 2028 The interest rate per annum applicable to the Revolving Line is the greater of (a) Prime plus 1.00 7.50 8 8.18 0 1,602,000 The Loan Agreement contains customary covenants limiting, among other things, the incurrence of additional indebtedness, the creation of liens, mergers, consolidations, liquidations and dissolutions, sales of assets, dividends and other payments in respect of equity interests, acquisitions, investments, loans and guarantees, subject, in each case, to customary exceptions, thresholds and baskets. The Loan Agreement also includes certain financial covenants which include a current assets/liabilities ratio, a debt service coverage ratio and a leverage ratio, as defined in the Loan Agreement. The Loan Agreement also contains customary events of default. As of December 31, 2023, the Company was in compliance with all covenants. The Company’s obligations under the Loan Agreement are guaranteed by the Guarantors, and the obligations of the Company and any Guarantors are secured by a perfected first priority security interest in substantially all of the existing and future personal property of the Company and each Guarantor, subject to certain exceptions as noted in the Loan Agreement. 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 provided a $ 4,300,000 800,000 3,500,000 Machinery Loans The Company financed the purchase of machinery and equipment through various loans. The outstanding loans have interest rates ranging from 5.50 5.94 523,000 665,000 Insurance Loan In June 2022, the Company financed insurance premiums with a loan agreement. In September 2022 an additional insurance amount was added to the loan. The loan matures in March 2023. The balance of the insurance loans totaled approximately $ 197,000 157,000 SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 Future annual maturities of total debt are as follows (1) SCHEDULE OF MATURITIES OF LONG TERM DEBT For the year ended December 31, (1) 2024 $ 635,272 2025 447,648 2026 479,768 2027 453,871 2028 228,582 Total long debt $ 2,245,141 (1) Excludes discounts for debt issuance costs. |
FINANCING OBLIGATION LIABILITY
FINANCING OBLIGATION LIABILITY | 12 Months Ended |
Dec. 31, 2023 | |
Financing Obligation Liability | |
FINANCING OBLIGATION LIABILITY | NOTE 9. FINANCING OBLIGATION LIABILITY On December 7, 2020, the Company entered into an agreement to sell land and property related to the Company’s headquarters and manufacturing facility in Vernal, Utah (the “Property”) for a purchase price of $ 4,448,500 the Company entered into a fifteen-year lease agreement 311,395 1.5 Leases The Company received cash of $ 1,622,106 2,638,773 4,260,879 6.0 2,188,710 74,636 65,678 4,038,021 4,112,658 The financing obligation liability is summarized below: SCHEDULE OF FINANCING OBLIGATION LIABILITY 2023 2022 December 31, 2023 2022 Financing obligation for sale-leaseback transaction $ 4,038,021 $ 4,112,658 Current principal portion of finance obligation (83,648 ) (74,636 ) Non-current portion of financing obligation $ 3,954,373 $ 4,038,022 The following is the aggregate future lease payments that include principal and interest for the financing obligation liability as of December 31, 2023: SCHEDULE OF AGGREGATE FUTURE LEASE PAYMENTS FOR THE FINANCE OBLIGATION For the year ended December 31, 2024 $ 325,947 2025 330,836 2026 335,799 2027 340,836 2028 345,948 Thereafter 2,553,574 Total undiscounted lease payments 4,232,940 Residual value of the property (included in the future payments) 2,188,711 Less: effects of discounting (2,383,630 ) Present value of lease payments $ 4,038,021 SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 10. COMMITMENTS AND CONTINGENCIES We are subject to litigation that arises from time to time in the ordinary course of our business activities. In February 2019, the Company filed a patent infringement lawsuit, asserting that Stabil Drill Specialties, LLC’s (“Stabil Drill”) SmoothboreTM Eccentric Reamer infringes several patents of Extreme Technologies, LLC (one of our subsidiaries) on our patented Drill-N-Ream® well bore conditioning tool. This lawsuit is pending in the United States District Court for the Southern District of Texas, Houston Division. 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 October 12, 2022, the Court granted Extreme’s motion for leave to add its exclusive licensee Hard Rock Solutions, LLC, as a necessary party and co-plaintiff. On February 13, 2023, the lawsuit was reassigned to United States District Judge Drew B. Tipton and United States Magistrate Judge Peter Bray. On August 29, 2023, Judge Tipton granted Extreme’s and Hard Rock’s motion for summary judgment striking Stabil Drill’s patent invalidity affirmative defenses. Discovery ended on August 31, 2021, and the parties have fully briefed dispositive and Daubert motions. The parties are preparing this case for trial and expect a jury trial setting in summer of 2024. We are not currently involved in any other litigation which management believes could have a material effect on our financial position or results of operations. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 11. INCOME TAXES Components of income tax expense was as follows: SCHEDULE OF COMPONENTS OF INCOME TAX BENEFIT 2023 2022 Year Ended December 31, 2023 2022 Current income taxes: Federal $ - $ - State 5,346 34,046 Foreign 289,587 160,923 Total current income taxes $ 294,933 $ 194,969 Deferred provision (benefit) for income taxes: Federal $ (6,387,240 ) $ - State Deferred UTP 41,326 Total deferred income taxes (6,345,914 ) Income tax expense (benefit) $ (6,050,981 ) $ 194,969 SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The non-current deferred tax assets and liabilities consist of the following: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES 2023 2022 December 31, 2023 2022 Deferred tax assets: 263A adjustment $ 28,514 $ 23,274 Accrued expenses 132,745 140,900 Prepaid expenses (54,589 ) Stock compensation 179,723 180,753 Stock option 4,618 69,306 Amortization of intangibles 1,938,657 2,246,861 Net operating loss 2,326,992 2,509,855 Allowances 1,383,247 1,509,508 Sale-leaseback – lease liability 850,804 919,766 ROU Assets 95,048 - Grant Income 142,227 150,964 Other Depreciation on fixed assets 196,305 - -Others 20,187 20,512 Total deferred tax assets 7,299,067 7,717,110 Deferred tax liabilities: Depreciation on sale-leaseback fixed assets (756,823 ) (836,027 ) Depreciation on fixed assets 134,483 ) Prepaid expense (59,956 ) - ROU Liability (95,048 ) - Total deferred tax liabilities (911,827 ) (701,544 ) Net deferred tax assets 6,387,240 7,015,566 Less: Valuation Allowance - (7,015,566 ) Total deferred tax assets, net $ 6,387,240 $ - SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company’s tax (benefit) expense differs from the statutory tax expense for the years ended December 31, 2023 and 2022 and the reconciliation is as follows: SCHEDULE OF STATUTORY TAX EXPENSE 2023 2022 Year Ended December 31, 2023 2022 Tax expense (benefit) at federal statutory rate $ 290,863 $ 267,604 State income taxes 4,223 26,896 Foreign income taxes 228,774 127,129 Permanent differences (61,350 ) (46,609 ) Change in valuation allowance (628,326 ) (780,662 ) Other - State rate effect 563 11,704 Change in tax rate 406,461 586,430 FIN 48 – Adjustment item 41,326 - Valuation allowance (6,387,240 ) - Other 53,725 2,477 Provision (benefit) for income taxes $ (6,050,981 ) $ 194,969 We have total federal income tax net operating loss (“NOL”) carryforwards of $ 11,043,780 7,686,746 pertains to pre-2018 losses and $ 3,357,034 pertains to post-2017 losses. The pre-2018 losses will begin to expire between 2035 and 2037. The post-2017 losses can be carried forward indefinitely, however, only 80% of these losses can offset taxable income in a given year. In accordance with the accounting under ASC Topic 740, the Company has recorded a liability for an uncertain tax position taken on its international income tax returns. Penalties related to this income tax liability are included as a component of income tax expense in the accompanying statements of operations. The Company had approximately $ 626,000 352,000 0 0 |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
SHARE-BASED COMPENSATION | NOTE 12. SHARE-BASED COMPENSATION Equity and equity-based compensation plans are intended to make available incentives that will assist us in attracting, retaining, and motivating employees, officers, consultants, and directors by allowing them to acquire an ownership interest in our business, and, as a result, encouraging them to contribute to our success. We may provide these incentives through the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and units, and other cash-based or stock-based awards. As a result, we expect to incur non-cash, stock-based compensation expenses in future periods. The Board of Directors has frozen the 2014 Incentive Plan, such that no future grants of awards will be made and the 2014 Incentive Plan shall only remain in effect with respect to awards under that Plan outstanding as of June 15, 2015 until they expire according to their terms. SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In 2014, the Company’s Board of Directors approved that the Directors stock compensation would be included in the Employee Stock Incentive Plan (“Stock Plan”) that reserves 1,724,128 2,543,448 1,500,000 7,076,326 306,486 Restricted stock units On August 10, 2023, the Board of Directors authorized 75,000 74,000 0.7127 0.7127 33.3 33.3 33.4 On August 10, 2023, the Board of Directors granted 777,764 three On August 12, 2022, the Board of Directors granted 932,500 three Compensation expense recognized for grants of restricted stock vesting under the 2015 Incentive Plan was approximately $ 918,000 858,000 Total unrecognized compensation expense related to unvested restricted stock units expected to be recognized over the remaining weighted vesting period of 2.57 1,918,000 Activity under the 2015 Incentive Plan for RSUs was as follows: SCHEDULE OF SHARE-BASED COMPENSATION, RESTRICTED STOCK UNITS AWARD ACTIVITY Year Ended December 31, 2023 2022 Restricted Weighted Restricted Weighted Outstanding, beginning of period 2,174,166 $ 0.83 2,284,910 $ 0.70 Granted 777,764 $ 1.27 932,500 $ 1.00 Forfeited (6,680 ) $ 0.59 (35,030 ) $ 0.59 Vested (1,138,372 ) $ 0.76 (1,008,214 ) $ 0.70 Outstanding, end of period 1,806,878 $ 1.06 2,174,166 $ 0.83 SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Stock Options On August 12, 2022, the Board of Directors authorized 75,000 24,000 0.82 0.35 The options vest 33.3 33.3 33.4 The Company recognized share-based compensation expense related to stock options of approximately $ 9,000 15,000 Activity under the 2015 Incentive Plan for stock options was as follows: SCHEDULE OF SHARE-BASED COMPENSATION, STOCK OPTIONS, ACTIVITY Year Ended December 31, 2023 2022 Stock Weighted Stock Weighted Outstanding, beginning of period 417,282 $ 1.31 398,580 $ 1.34 Granted - $ - 24,000 $ 0.82 Exercised (7,792 ) $ 0.82 - $ - Expired (38,742 ) $ 1.09 (5,298 ) $ 0.81 Outstanding, end of period 370,748 $ 1.35 417,282 $ 1.31 Stock options exercisable at end of period 334,480 $ 1.41 350,222 $ 1.41 SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The fair value of stock options granted in 2023 and 2022 were estimated at the grant date using the Black-Scholes option pricing model using the following assumptions: SCHEDULE OF SHARE-BASED PAYMENT AWARD, STOCK OPTIONS, VALUATION ASSUMPTIONS Year Ended December 31, 2023 2022 Expected volatility 59.50 % 59.50 % Discount rate 3.98 % 3.98 % Expected life (years) 3.0 3.0 Dividend yield n/a n/a Option pricing models require the input of highly subjective assumptions, including the expected price volatility. Expected price volatility is based on the historical volatility of our common stock. Changes in the subjective input assumptions can materially affect the fair value estimate. The expected term of the options granted is derived from the output of the option pricing model and represents the period of time that the options granted are expected to be outstanding. The discount rate for the periods within the contractual term of the option is based on the U.S. Treasury yield curve in effect at the date of grant. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2023 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | NOTE 13. EARNINGS PER SHARE Basic and diluted earnings per share of common stock have been computed as follows: SCHEDULE OF BASIC AND DILUTED EARNINGS PER SHARE 2023 2022 Year Ended December 31, 2023 2022 Numerator: Net income $ 7,436,045 $ 1,065,157 Denominator: Weighted average shares of common stock outstanding - basic 29,698,498 28,643,464 Effect of dilutive restricted stock units 74,000 - Effect of dilutive options - 31,636 Weighted average shares of common stock outstanding - diluted 29,772,498 28,675,100 Earnings per common share - basic $ 0.25 $ 0.04 Earnings per common share - diluted $ 0.25 $ 0.04 |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Dec. 31, 2023 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | NOTE 14. SEGMENT REPORTING We report our segment results based on our geographic areas of operations, North America and International. These segments have similarities from a product perspective, but management believes that due to operational differences, such as sales models and regulatory environments, information about the segment would be useful to readers of the financial statements. ● North America includes our PDC drill bit and specialty tool sales and contract services business in the United States, Canada and Mexico, which have been aggregated ● International includes our specialty tool rental business in the Middle East Revenues and certain operating expenses are directly attributable to our segments. Unallocated corporate costs primarily include corporate shared costs, such as payroll and compensation, professional fees, and rent, as well as costs associated with certain shared research and development activities. Our operating segments are not evaluated using asset information. Prior periods have been restated to conform with the current year presentation. This change was made due to international revenue becoming more significant in the current year. SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table summarizes information about our segments: SCHEDULE OF SEGMENTS INFORMATION WITH GEOGRAPHIC AREAS 2023 2022 Year Ended December 31, 2023 2022 Revenues: North America $ 17,908,909 $ 16,917,259 International 3,064,642 2,180,428 Total revenue $ 20,973,551 $ 19,097,687 Operating income: North America $ 11,727,062 $ 9,672,853 International (308,655 ) (3,551 ) Corporate costs, unallocated (9,641,442 ) (7,732,852 ) Total operating income $ 1,776,965 $ 1,936,450 Depreciation expense: North America $ 487,021 $ 634,388 International 800,973 702,921 Total depreciation expense $ 1,287,994 $ 1,337,309 North America revenue includes revenue from operations in Mexico totaling approximately $ 69,000 145,000 Information about products and services See Note 2 – Revenue. Information about geographic areas The following table summarizes net property, plant and equipment by geographic location: SCHEDULE OF NET PROPERTY, PLANT AND EQUIPMENT BY GEOGRAPHIC LOCATION 2023 2022 December 31, 2023 2022 Property, plant and equipment, net: United States $ 6,158,853 $ 6,560,435 Other countries 5,083,398 2,016,416 Total property, plant and equipment, net $ 11,242,251 $ 8,576,851 SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
TRANSFER OF FINANCIAL ASSETS
TRANSFER OF FINANCIAL ASSETS | 12 Months Ended |
Dec. 31, 2023 | |
Transfers and Servicing [Abstract] | |
TRANSFER OF FINANCIAL ASSETS | NOTE 15. TRANSFER OF FINANCIAL ASSETS In connection with entering into the Loan Agreement, the Company entered into Business Manager Agreements for the purchase by the Lender of certain domestic and international accounts receivable of the Company. The face amount of the accounts under each agreement that may be purchased cannot exceed $ 2,500,000 2,000,000 1.25 2.0 Generally, at the transfer date, the Company receives cash equal to 90 60 166,139 The Company accounts for trade receivable transfers as sales and derecognizes the sold receivables from the condensed consolidated balance sheets. During the year ended December 31, 2023, the Company sold receivables to the Lender having an aggregate face value of $ 4,211,786 4,150,932 83,109 83,337 307,310 |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 12 Months Ended |
Dec. 31, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | NOTE 16. SUBSEQUENT EVENT On March 6, 2024, the Company entered into an Agreement and Plan of Merger with Drilling Tools International Corporation (DTI), which DTI agreed to acquire SDP for total consideration of approximately $ 32.2 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Organization and Nature of Operations | Organization and Nature of Operations Superior Drilling Products, Inc. (the “Company”, “SDPI”, “we”, “our” or “us”) is an innovative drilling and completion tool technology company providing cost saving solutions that drive production efficiencies for the oil and natural gas drilling industry. Our drilling solutions include the patented Drill-N-Ream ® 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 consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The consolidated financial statements include the accounts of Superior Drilling Products Inc. and all of its wholly owned subsidiaries. All significant intercompany accounts have been eliminated in consolidation. The Company does not have investments in any unconsolidated subsidiaries. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates. Significant items subject to estimates and assumptions include the carrying amount and useful lives of property and equipment and intangible assets, impairment assessments, share-based compensation expense, and valuation allowances for accounts receivable, inventories, and deferred tax assets. |
Revenue Recognition | Revenue Recognition We account for revenue in accordance with Accounting Standard Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), except for tool rental revenue. Under ASC 606 revenue is measured based on a consideration specified in a customer’s contract, excluding any sale incentives and taxes collected on behalf of third parties. Revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration that we expect to receive for those goods or services. To recognize revenue, we (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when, or as, we satisfy the performance obligation(s). Shipping and handling costs incurred are accounted for as fulfillment costs and are included in cost of revenues in the statements of operations. Tool sales, rentals and other related revenue Tool and Product Sales Tool Rental SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Other Related Revenue: Contract Services Drill Bit Manufacturing and Refurbishment Our revenue is derived from short-term contracts. Revenue is recognized when we satisfy a performance obligation by transferring control of the promised goods or services to our customers at a point in time, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. We also assess our customer’s ability and intention to pay, which is based on a variety of factors including our customer’s historical payment experience and financial condition. Payment terms and conditions vary, although terms generally include a requirement of payment within 30 days. Revenue generally does not include right of return or other significant post-delivery obligations. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. We elected to treat shipping and handling costs as a fulfillment cost instead of as a separate performance obligation. We recognize the cost for shipping and handling when incurred as an expense in cost of revenue. All of our contracts are less than one year in duration. We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. |
Cash and Restricted Cash | Cash and Restricted Cash We maintain cash deposits with financial institutions that may exceed federally insured limits at times. We have chosen credible institutions and believe our risk of loss is negligible. Cash and restricted cash were comprised of the following: SCHEDULE OF CASH AND RESTRICTED CASH 2023 2022 December 31, 2023 2022 Cash $ 2,504,487 $ 2,158,025 Restricted cash 166,139 - Cash and restricted cash $ 2,670,626 $ 2,158,025 |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s financial instruments consist of cash, receivables, payables, and bank debt. The Company believes that the carrying values of these instruments on the accompanying consolidated balance sheets approximate their fair values due to the relatively short period to maturity for these instruments. |
Accounts Receivable and Allowance for Credit Losses | Accounts Receivable and Allowance for Credit Losses Domestically, accounts receivable are generally due within 60 days of the invoice date. Internationally, our due date terms are generally 90 days from the invoice date. No interest is charged on past-due balances. We grant credit to our customers based upon an evaluation of each customer’s financial condition. We periodically monitor the payment history and ongoing creditworthiness of our customers. An allowance for credit losses is established at a level estimated by management to be adequate based upon various factors including historical experience, aging status of customer accounts, payment history and financial condition of our customers. The allowance for credit losses was $ 0 SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company analyzes each customer’s length of time a receivable is outstanding, geographical location, and any potential economic conditions that could cause concern for credit instability. On a weekly basis, this data is reviewed, and a determination made if there are potential concerns for losses. This historical data, geographical location, review of current economic conditions, and the current receivables helps establish a forecast for credit risk. |
Inventories | Inventories Inventories consist of raw materials, work-in-process and finished goods and are stated at the lower of cost, determined using the weighted-average cost method, or net realizable value. Finished goods inventories include raw materials, direct labor and production overhead. The Company regularly reviews inventories on hand and current market conditions to determine if the cost of finished goods inventories exceed current market prices and impairs the cost basis of the inventory accordingly. |
Assets Held for Sale | Assets Held for Sale The Company classifies disposal groups as held for sale in the period in which all of the following criteria are met: (1) management, having the authority to approve the action, commits to a plan to sell the disposal group; (2) the disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such disposal groups; (3) an active program to locate a buyer or buyers and other actions required to complete the plan to sell the disposal group have been initiated; (4) the sale of the disposal group is probable, and transfer of the disposal group is expected to qualify for recognition as a completed sale, within one year, except if events or circumstances beyond the Company’s control extend the period of time required to sell the disposal group beyond one year; (5) the disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (6) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. A disposal group that is classified as held for sale is initially measured at the lower of its carrying amount or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Subsequent changes in the fair value of a disposal group less any costs to sell are reported as an adjustment to the carrying amount of the disposal group, as long as the new carrying amount does not exceed the carrying amount of the asset at the time it was initially classified as held for sale. Upon determining that a disposal group meets the criteria to be classified as held for sale, the Company reports the assets and liabilities of the disposal group for all periods presented in the line items assets held for sale and liabilities held for sale, respectively, in the consolidated balance sheets. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment is stated at cost. The cost of ordinary maintenance and repair is charged to operating expense, while replacement of critical components and major improvements are capitalized. Depreciation or amortization of property and equipment is calculated using the straight-line method over the asset’s estimated useful life as follows: SCHEDULE OF ASSETS ESTIMATED USEFUL LIFE Buildings and leasehold improvements 2 39 Machinery, equipment and rental tools 18 10 Office equipment, fixtures and software 3 7 Transportation equipment 5 30 SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Property, plant and equipment is reviewed for impairment on an annual basis or whenever events or changes in circumstances indicate the carrying value of an asset or asset group may not be recoverable. Indicative events or circumstances include, but are not limited to, matters such as a significant decline in market value or a significant change in business climate. An impairment loss is recognized when the carrying value of an asset exceeds the estimated undiscounted future cash flows from the use of the asset and its eventual disposition. The amount of impairment loss recognized is the excess of the asset’s carrying value over its fair value. Assets to be disposed of are reported at the lower of the carrying value or the fair value less cost to sell. Upon sale or other disposition of an asset, the Company recognizes a gain or loss on disposal measured as the difference between the net carrying value of the asset and the net proceeds received. |
Intangible Assets | Intangible Assets The Company’s intangible assets with finite lives consist of developed technology, customer contracts and relationships, and trade names and trademarks. The cost of intangible assets with finite lives is amortized using the straight-line method over the estimated period of economic benefit, ranging from 5 9 Intangible assets with finite lives are tested for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. These conditions may include a change in the extent or manner in which the asset is being used or a change in future operations. The Company assesses the recoverability of the carrying amount by preparing estimates of future revenue, margins, and cash flows. If the sum of expected future cash flows (undiscounted and without interest charges) is less than the carrying amount, an impairment loss is recognized. The impairment loss recognized is the amount by which the carrying amount exceeds the fair value. Fair value of these assets may be determined by a variety of methodologies, including discounted cash flow models. |
Leases | Leases We account for leases in accordance with ASC Topic 842 - Leases (“ASC 842”), which requires assets and liabilities that arise from all leases to be recognized on the balance sheet for lessees and expanded financial statement disclosures for both lessees and lessors. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liability represents the Company’s obligation to make lease payments arising from the lease, both of which are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. Leases with a lease term of 12 months or less at inception are not recorded on the condensed consolidated balance sheet and are expensed on a straight-line basis over the lease term in the condensed consolidated statement of operations. The Company determines whether a contract is a lease, or contains a lease, at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. The Company discounts lease payments based on an estimate of its incremental borrowing rate as the Company’s leases do not provide a readily determinable implicit rate. Operating lease assets and liabilities are included on our consolidated balance sheets. Operating lease expense (excluding variable lease costs) is recognized on a straight-line basis over the lease term. |
Research and Development | Research and Development We expense research and development costs as they are incurred. For the years ended December 31, 2023 and 2022, these expenses were approximately $ 765,000 436,000 SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings (loss) per common share is calculated by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) attributable to common shareholders by the weighted average number of common shares outstanding, including potentially dilutive common share equivalents, if the effect is dilutive. Potentially dilutive common shares equivalents include stock options. |
Income Taxes | Income Taxes The Company recognizes an asset or liability for the deferred tax consequences of all temporary differences between the tax basis of assets or liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years when the reported amounts of the asset or liabilities are recovered or settled and for operating loss carry forwards. These deferred tax assets and liabilities are measured using the enacted tax rates that will be in effect when the differences are expected to reverse and the carry forwards are expected to be realized. In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that the deferred tax assets will be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations. The Company accounts for uncertainty in income taxes using a recognition and measurement threshold for tax positions taken or expected to be taken in a tax return, which are subject to examination by federal and state taxing authorities. The tax benefit from an uncertain tax position is recognized when it is more likely than not that the position will be sustained upon examination by taxing authorities based on the technical merits of the position. The amount of the tax benefit recognized is the largest amount of the benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The effective tax rate and the tax basis of assets and liabilities reflect management’s estimates of the ultimate outcome of various tax uncertainties. The Company recognizes penalties and interest related to uncertain tax positions within the income tax expense financial statement caption in the accompanying consolidated statements of operations. |
Debt Issuance Costs | Debt Issuance Costs Costs related to debt issuance are capitalized and amortized as interest expense over the term of the related debt using the straight-line method, which approximates the effective interest method. Upon the repayment of debt, the Company accelerates the recognition of an appropriate amount of the costs as interest expense. Debt issuance costs are presented as a direct reduction from the carrying amount of the note payable. For the years ended December 31, 2023 and 2022, the amortized debt issuance costs were $ 10,618 3,087 |
Share-Based Compensation | Share-Based Compensation Share-based compensation expense related to stock option and restricted stock awards is recognized based on the grant-date fair values. The Company recognizes compensation expense on a straight-line basis over the requisite service period of the award. |
Concentrations of Credit Risk | Concentrations of Credit Risk The Company has two significant customers that represent 85 88 1,677,000 1,751,000 The Company had two significant vendors that represent 12 440,000 12 74,000 SUPERIOR DRILLING PRODUCTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
Government Grant | Government Grant The Company applied for and received a grant award of up to $ 750,000 During 2022, the Company met the conditions of the grant and received the initial grant funding totaling $ 675,000 675,000 |
Foreign currency transactions | Foreign currency transactions Foreign currency transactions are initially measured and recorded in U.S. dollars using the exchange rate on the date of the transaction. Foreign currency denominated monetary assets and liabilities are measured at the end of each reporting period using the exchange rate at that date. Gains and losses from foreign currency transactions, which are included in selling, general, and administrative expenses, have not been significant in any of the periods presented. Nonmonetary assets and liabilities are not subsequently remeasured. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements There are no recently issued accounting pronouncements that we have not yet adopted that we believe will have a material effect on our financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
SCHEDULE OF CASH AND RESTRICTED CASH | Cash and restricted cash were comprised of the following: SCHEDULE OF CASH AND RESTRICTED CASH 2023 2022 December 31, 2023 2022 Cash $ 2,504,487 $ 2,158,025 Restricted cash 166,139 - Cash and restricted cash $ 2,670,626 $ 2,158,025 |
SCHEDULE OF ASSETS ESTIMATED USEFUL LIFE | SCHEDULE OF ASSETS ESTIMATED USEFUL LIFE Buildings and leasehold improvements 2 39 Machinery, equipment and rental tools 18 10 Office equipment, fixtures and software 3 7 Transportation equipment 5 30 |
REVENUE (Tables)
REVENUE (Tables) | 12 Months Ended |
Dec. 31, 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 Year Ended December 31, 2023 2022 Tool Revenue: Tool and product sales $ 3,255,300 $ 3,157,710 Tool rental 3,064,642 2,180,428 Other related revenue 7,240,670 7,013,806 Total Tool Revenue 13,560,612 12,351,944 Contract Services 7,412,939 6,745,743 Total Revenue $ 20,973,551 $ 19,097,687 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Inventory Disclosure [Abstract] | |
SCHEDULE OF INVENTORIES | Inventories were comprised of the following: SCHEDULE OF INVENTORIES 2023 2022 December 31, 2023 2022 Raw material $ 1,835,850 $ 1,334,669 Work in progress 728,840 168,214 Finished goods 141,801 578,377 Total inventories $ 2,706,491 $ 2,081,260 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 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 2023 2022 December 31, 2023 2022 Land $ 880,416 $ 880,416 Buildings 4,340,078 4,764,441 Leasehold improvements 946,247 755,039 Machinery, equipment, and rental tools 16,462,886 14,546,060 Office equipment, fixtures and software 278,158 628,358 Transportation assets 261,760 265,760 Property, plant and equipment, gross 23,169,545 21,840,074 Accumulated depreciation (11,927,294 ) (13,263,223 ) Total property, plant and equipment, net $ 11,242,251 $ 8,576,851 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
SCHEDULE OF INTANGIBLE ASSETS | Intangible assets were comprised of the following: SCHEDULE OF INTANGIBLE ASSETS 2023 2022 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 14,900,000 14,900,000 Accumulated amortization (14,900,000 ) (14,830,556 ) Total intangible assets, net $ - $ 69,444 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Leases | |
SCHEDULE OF AGGREGATE FUTURE LEASE PAYMENTS | The following table presents the maturities of lease liabilities: SCHEDULE OF AGGREGATE FUTURE LEASE PAYMENTS Fiscal year ending December 31, Operating 2024 $ 253,929 2025 67,200 2026 60,000 2027 40,000 Total undiscounted lease payments 421,129 -Less: Imputed lease interest (41,615 ) Total lease liabilities $ 379,514 |
SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE | Other information related to operating leases: SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE Year Ended December 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows $ 253,292 $ 216,394 Weighted average remaining lease-term (in years) 2.19 2.86 Weighted average discount rate 7.25 % 7.25 % |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
SCHEDULE OF DEBT OBLIGATIONS | Long-term debt is comprised of the following: SCHEDULE OF DEBT OBLIGATIONS 2023 2022 December 31, 2023 2022 Loan Agreement $ 1,518,947 $ - Credit Agreement - 813,713 Machinery loans 522,520 664,674 Transportation loan 6,981 20,027 Insurance loan 196,693 156,949 Total long-term debt 2,245,141 1,655,363 Current portion of long-term debt (635,273 ) (1,125,864 ) Total long-term debt, net of current portion $ 1,609,868 $ 529,499 |
SCHEDULE OF MATURITIES OF LONG TERM DEBT | Future annual maturities of total debt are as follows (1) SCHEDULE OF MATURITIES OF LONG TERM DEBT For the year ended December 31, (1) 2024 $ 635,272 2025 447,648 2026 479,768 2027 453,871 2028 228,582 Total long debt $ 2,245,141 (1) Excludes discounts for debt issuance costs. |
FINANCING OBLIGATION LIABILITY
FINANCING OBLIGATION LIABILITY (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Financing Obligation Liability | |
SCHEDULE OF FINANCING OBLIGATION LIABILITY | The financing obligation liability is summarized below: SCHEDULE OF FINANCING OBLIGATION LIABILITY 2023 2022 December 31, 2023 2022 Financing obligation for sale-leaseback transaction $ 4,038,021 $ 4,112,658 Current principal portion of finance obligation (83,648 ) (74,636 ) Non-current portion of financing obligation $ 3,954,373 $ 4,038,022 |
SCHEDULE OF AGGREGATE FUTURE LEASE PAYMENTS FOR THE FINANCE OBLIGATION | The following is the aggregate future lease payments that include principal and interest for the financing obligation liability as of December 31, 2023: SCHEDULE OF AGGREGATE FUTURE LEASE PAYMENTS FOR THE FINANCE OBLIGATION For the year ended December 31, 2024 $ 325,947 2025 330,836 2026 335,799 2027 340,836 2028 345,948 Thereafter 2,553,574 Total undiscounted lease payments 4,232,940 Residual value of the property (included in the future payments) 2,188,711 Less: effects of discounting (2,383,630 ) Present value of lease payments $ 4,038,021 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
SCHEDULE OF COMPONENTS OF INCOME TAX BENEFIT | Components of income tax expense was as follows: SCHEDULE OF COMPONENTS OF INCOME TAX BENEFIT 2023 2022 Year Ended December 31, 2023 2022 Current income taxes: Federal $ - $ - State 5,346 34,046 Foreign 289,587 160,923 Total current income taxes $ 294,933 $ 194,969 Deferred provision (benefit) for income taxes: Federal $ (6,387,240 ) $ - State Deferred UTP 41,326 Total deferred income taxes (6,345,914 ) Income tax expense (benefit) $ (6,050,981 ) $ 194,969 |
SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES | The non-current deferred tax assets and liabilities consist of the following: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES 2023 2022 December 31, 2023 2022 Deferred tax assets: 263A adjustment $ 28,514 $ 23,274 Accrued expenses 132,745 140,900 Prepaid expenses (54,589 ) Stock compensation 179,723 180,753 Stock option 4,618 69,306 Amortization of intangibles 1,938,657 2,246,861 Net operating loss 2,326,992 2,509,855 Allowances 1,383,247 1,509,508 Sale-leaseback – lease liability 850,804 919,766 ROU Assets 95,048 - Grant Income 142,227 150,964 Other Depreciation on fixed assets 196,305 - -Others 20,187 20,512 Total deferred tax assets 7,299,067 7,717,110 Deferred tax liabilities: Depreciation on sale-leaseback fixed assets (756,823 ) (836,027 ) Depreciation on fixed assets 134,483 ) Prepaid expense (59,956 ) - ROU Liability (95,048 ) - Total deferred tax liabilities (911,827 ) (701,544 ) Net deferred tax assets 6,387,240 7,015,566 Less: Valuation Allowance - (7,015,566 ) Total deferred tax assets, net $ 6,387,240 $ - |
SCHEDULE OF STATUTORY TAX EXPENSE | The Company’s tax (benefit) expense differs from the statutory tax expense for the years ended December 31, 2023 and 2022 and the reconciliation is as follows: SCHEDULE OF STATUTORY TAX EXPENSE 2023 2022 Year Ended December 31, 2023 2022 Tax expense (benefit) at federal statutory rate $ 290,863 $ 267,604 State income taxes 4,223 26,896 Foreign income taxes 228,774 127,129 Permanent differences (61,350 ) (46,609 ) Change in valuation allowance (628,326 ) (780,662 ) Other - State rate effect 563 11,704 Change in tax rate 406,461 586,430 FIN 48 – Adjustment item 41,326 - Valuation allowance (6,387,240 ) - Other 53,725 2,477 Provision (benefit) for income taxes $ (6,050,981 ) $ 194,969 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
SCHEDULE OF SHARE-BASED PAYMENT AWARD, STOCK OPTIONS, VALUATION ASSUMPTIONS | The fair value of stock options granted in 2023 and 2022 were estimated at the grant date using the Black-Scholes option pricing model using the following assumptions: SCHEDULE OF SHARE-BASED PAYMENT AWARD, STOCK OPTIONS, VALUATION ASSUMPTIONS Year Ended December 31, 2023 2022 Expected volatility 59.50 % 59.50 % Discount rate 3.98 % 3.98 % Expected life (years) 3.0 3.0 Dividend yield n/a n/a |
2015 Incentive Plan [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
SCHEDULE OF SHARE-BASED COMPENSATION, RESTRICTED STOCK UNITS AWARD ACTIVITY | Activity under the 2015 Incentive Plan for RSUs was as follows: SCHEDULE OF SHARE-BASED COMPENSATION, RESTRICTED STOCK UNITS AWARD ACTIVITY Year Ended December 31, 2023 2022 Restricted Weighted Restricted Weighted Outstanding, beginning of period 2,174,166 $ 0.83 2,284,910 $ 0.70 Granted 777,764 $ 1.27 932,500 $ 1.00 Forfeited (6,680 ) $ 0.59 (35,030 ) $ 0.59 Vested (1,138,372 ) $ 0.76 (1,008,214 ) $ 0.70 Outstanding, end of period 1,806,878 $ 1.06 2,174,166 $ 0.83 |
SCHEDULE OF SHARE-BASED COMPENSATION, STOCK OPTIONS, ACTIVITY | Activity under the 2015 Incentive Plan for stock options was as follows: SCHEDULE OF SHARE-BASED COMPENSATION, STOCK OPTIONS, ACTIVITY Year Ended December 31, 2023 2022 Stock Weighted Stock Weighted Outstanding, beginning of period 417,282 $ 1.31 398,580 $ 1.34 Granted - $ - 24,000 $ 0.82 Exercised (7,792 ) $ 0.82 - $ - Expired (38,742 ) $ 1.09 (5,298 ) $ 0.81 Outstanding, end of period 370,748 $ 1.35 417,282 $ 1.31 Stock options exercisable at end of period 334,480 $ 1.41 350,222 $ 1.41 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 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 Year Ended December 31, 2023 2022 Numerator: Net income $ 7,436,045 $ 1,065,157 Denominator: Weighted average shares of common stock outstanding - basic 29,698,498 28,643,464 Effect of dilutive restricted stock units 74,000 - Effect of dilutive options - 31,636 Weighted average shares of common stock outstanding - diluted 29,772,498 28,675,100 Earnings per common share - basic $ 0.25 $ 0.04 Earnings per common share - diluted $ 0.25 $ 0.04 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 12 Months Ended |
Dec. 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 Year Ended December 31, 2023 2022 Revenues: North America $ 17,908,909 $ 16,917,259 International 3,064,642 2,180,428 Total revenue $ 20,973,551 $ 19,097,687 Operating income: North America $ 11,727,062 $ 9,672,853 International (308,655 ) (3,551 ) Corporate costs, unallocated (9,641,442 ) (7,732,852 ) Total operating income $ 1,776,965 $ 1,936,450 Depreciation expense: North America $ 487,021 $ 634,388 International 800,973 702,921 Total depreciation expense $ 1,287,994 $ 1,337,309 |
SCHEDULE OF NET PROPERTY, PLANT AND EQUIPMENT BY GEOGRAPHIC LOCATION | The following table summarizes net property, plant and equipment by geographic location: SCHEDULE OF NET PROPERTY, PLANT AND EQUIPMENT BY GEOGRAPHIC LOCATION 2023 2022 December 31, 2023 2022 Property, plant and equipment, net: United States $ 6,158,853 $ 6,560,435 Other countries 5,083,398 2,016,416 Total property, plant and equipment, net $ 11,242,251 $ 8,576,851 |
SCHEDULE OF CASH AND RESTRICTED
SCHEDULE OF CASH AND RESTRICTED CASH (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Accounting Policies [Abstract] | ||
Cash | $ 2,504,487 | $ 2,158,025 |
Restricted cash | 166,139 | |
Cash and restricted cash | $ 2,670,626 | $ 2,158,025 |
SCHEDULE OF ASSETS ESTIMATED US
SCHEDULE OF ASSETS ESTIMATED USEFUL LIFE (Details) | Dec. 31, 2023 |
Buildings And Leasehold Improvements [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 2 years |
Buildings And Leasehold Improvements [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 39 years |
Machinery equipment and rental tools [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 18 months |
Machinery equipment and rental tools [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 10 years |
Office equipment fixtures and software [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 3 years |
Office equipment fixtures and software [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 7 years |
Transportation Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 5 years |
Transportation Equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 30 years |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Product Information [Line Items] | ||
Allowance for credit losses | $ 0 | $ 0 |
Research and development expenses | 765,000 | 436,000 |
Amortized debt issuance costs | 10,618 | 3,087 |
Accounts payable current | 1,547,619 | 1,043,581 |
Deferred income | 675,000 | 675,000 |
Manufacturing Modernization Grant Program [Member] | ||
Product Information [Line Items] | ||
Proceeds from grantors | 750,000 | |
Two Vendors [Member] | ||
Product Information [Line Items] | ||
Accounts payable current | 440,000 | 74,000 |
Two Customers [Member] | ||
Product Information [Line Items] | ||
Accounts receivable | $ 1,677,000 | $ 1,751,000 |
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Two Customers [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 85% | 88% |
Supplier Concentration Risk [Member] | Purchases [Member] | Two Vendors [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 12% | 12% |
Minimum [Member] | ||
Product Information [Line Items] | ||
Intangible assets, amortization period | 5 years | |
Maximum [Member] | ||
Product Information [Line Items] | ||
Intangible assets, amortization period | 9 years |
SCHEDULE OF REVENUE DISAGGREGAT
SCHEDULE OF REVENUE DISAGGREGATED BY REVENUE (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Total Revenue | $ 20,973,551 | $ 19,097,687 |
Tools and Product Sales [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 3,255,300 | 3,157,710 |
Tool Rental [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 3,064,642 | 2,180,428 |
Other Related Tool Revenue [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 7,240,670 | 7,013,806 |
Tool Revenue [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 13,560,612 | 12,351,944 |
Contract Services [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | $ 7,412,939 | $ 6,745,743 |
SCHEDULE OF INVENTORIES (Detail
SCHEDULE OF INVENTORIES (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Raw material | $ 1,835,850 | $ 1,334,669 |
Work in progress | 728,840 | 168,214 |
Finished goods | 141,801 | 578,377 |
Total inventories | $ 2,706,491 | $ 2,081,260 |
SCHEDULE OF PROPERTY, PLANT AND
SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Abstract] | ||
Land | $ 880,416 | $ 880,416 |
Buildings | 4,340,078 | 4,764,441 |
Leasehold improvements | 946,247 | 755,039 |
Machinery, equipment, and rental tools | 16,462,886 | 14,546,060 |
Office equipment, fixtures and software | 278,158 | 628,358 |
Transportation assets | 261,760 | 265,760 |
Property, plant and equipment, gross | 23,169,545 | 21,840,074 |
Accumulated depreciation | (11,927,294) | (13,263,223) |
Total property, plant and equipment, net | $ 11,242,251 | $ 8,576,851 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense related to property, plant and equipment | $ 1,287,994 | $ 1,337,309 |
SCHEDULE OF INTANGIBLE ASSETS (
SCHEDULE OF INTANGIBLE ASSETS (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets, gross | $ 14,900,000 | $ 14,900,000 |
Accumulated amortization | (14,900,000) | (14,830,556) |
Total intangible assets, net | 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 ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of intangible assets | $ 69,000 | $ 167,000 |
Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite lived intangible assets weighted average amortization period | 5 years | |
Maximum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite lived intangible assets weighted average amortization period | 9 years |
RELATED PARTY NOTE RECEIVABLE (
RELATED PARTY NOTE RECEIVABLE (Details Narrative) - Tronco Energy Corporation [Member] - USD ($) | Jan. 31, 2023 | Aug. 31, 2017 | Dec. 31, 2023 | Dec. 31, 2022 | Jul. 07, 2020 |
Defined Benefit Plan Disclosure [Line Items] | |||||
Related party note receivable | $ 6,979,043 | $ 6,703,000 | $ 6,884,000 | ||
Debt instrument, increase (decrease),net | $ 0 | ||||
Common stock hold as collateral | 8,267,860 | ||||
Debt interest rate | 2% | ||||
Maturity date | Mar. 31, 2023 |
SCHEDULE OF AGGREGATE FUTURE LE
SCHEDULE OF AGGREGATE FUTURE LEASE PAYMENTS (Details) | Dec. 31, 2023 USD ($) |
Leases | |
2024 | $ 253,929 |
2025 | 67,200 |
2026 | 60,000 |
2027 | 40,000 |
Total undiscounted lease payments | 421,129 |
-Less: Imputed lease interest | (41,615) |
Total lease liabilities | $ 379,514 |
SCHEDULE OF OTHER INFORMATION R
SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Leases | ||
Operating cash flows | $ 253,292 | $ 216,394 |
Weighted average remaining lease-term (in years) | 2 years 2 months 8 days | 2 years 10 months 9 days |
Weighted average discount rate | 7.25% | 7.25% |
LEASES (Details Narrative)
LEASES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Operating lease expense | $ 253,000 | $ 140,000 |
Minimum [Member] | ||
Operating lease term | 1 year | |
Maximum [Member] | ||
Operating lease term | 2 years |
SCHEDULE OF DEBT OBLIGATIONS (D
SCHEDULE OF DEBT OBLIGATIONS (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | |||
Total long-term debt | $ 2,245,141 | [1] | $ 1,655,363 |
Current portion of long-term debt | (635,273) | (1,125,864) | |
Total long-term debt, net of current portion | 1,609,868 | 529,499 | |
Loan Agreement [Member] | |||
Debt Instrument [Line Items] | |||
Total long-term debt | 1,518,947 | ||
Credit Agreement [Member] | |||
Debt Instrument [Line Items] | |||
Total long-term debt | 813,713 | ||
Machinery Loans [Member] | |||
Debt Instrument [Line Items] | |||
Total long-term debt | 522,520 | 664,674 | |
Transportation Loans [Member] | |||
Debt Instrument [Line Items] | |||
Total long-term debt | 6,981 | 20,027 | |
Insurance Loan [Member] | |||
Debt Instrument [Line Items] | |||
Total long-term debt | $ 196,693 | $ 156,949 | |
[1]Excludes discounts for debt issuance costs. |
SCHEDULE OF MATURITIES OF LONG
SCHEDULE OF MATURITIES OF LONG TERM DEBT (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 | ||
Debt Disclosure [Abstract] | ||||
2024 | [1] | $ 635,272 | ||
2025 | [1] | 447,648 | ||
2026 | [1] | 479,768 | ||
2027 | [1] | 453,871 | ||
2028 | [1] | 228,582 | ||
Long-Term Debt, Total | $ 2,245,141 | [1] | $ 1,655,363 | |
[1]Excludes discounts for debt issuance costs. |
LONG-TERM DEBT (Details Narrati
LONG-TERM DEBT (Details Narrative) - USD ($) | 12 Months Ended | |||
Jul. 28, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Feb. 28, 2019 | |
Term Loan [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, variable rate | 8.18% | |||
Equipment Loans [Member] | ||||
Debt Instrument [Line Items] | ||||
Notes payable | $ 523,000 | $ 665,000 | ||
Equipment Loans [Member] | Minimum [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, variable rate | 5.50% | |||
Equipment Loans [Member] | Maximum [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, variable rate | 5.94% | |||
Insurance Loans [Member] | ||||
Debt Instrument [Line Items] | ||||
Notes payable | $ 197,000 | $ 157,000 | ||
Transportation Loans [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, variable rate | 6.99% | |||
Loan matures | June 2024 | |||
Loan Agreement [Member] | Revolving Line [Member] | ||||
Debt Instrument [Line Items] | ||||
Line of credit facility current borrowing capacity | $ 750,000 | $ 0 | ||
Debt instrument, variable rate | 50% | |||
Loan maturity date | Jul. 28, 2025 | |||
Line of credit interest rate | 7.50% | |||
Management fee rate, percentage | 8% | |||
Loan Agreement [Member] | Revolving Line [Member] | Prime Rate [Member] | ||||
Debt Instrument [Line Items] | ||||
Line of credit interest rate | 1% | |||
Loan Agreement [Member] | Term Loan [Member] | ||||
Debt Instrument [Line Items] | ||||
Loan maturity date | Jul. 28, 2028 | |||
Long term line of credit | $ 1,719,200 | $ 1,602,000 | ||
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 |
SCHEDULE OF FINANCING OBLIGATIO
SCHEDULE OF FINANCING OBLIGATION LIABILITY (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Financing Obligation Liability | ||
Financing obligation for sale-leaseback transaction | $ 4,038,021 | $ 4,112,658 |
Current principal portion of finance obligation | (83,648) | (74,636) |
Non-current portion of financing obligation | $ 3,954,373 | $ 4,038,022 |
SCHEDULE OF AGGREGATE FUTURE _2
SCHEDULE OF AGGREGATE FUTURE LEASE PAYMENTS FOR THE FINANCE OBLIGATION (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Financing Obligation Liability | ||
2024 | $ 325,947 | |
2025 | 330,836 | |
2026 | 335,799 | |
2027 | 340,836 | |
2028 | 345,948 | |
Thereafter | 2,553,574 | |
Total undiscounted lease payments | 4,232,940 | |
Residual value of the property (included in the future payments) | 2,188,711 | |
Less: effects of discounting | (2,383,630) | |
Present value of lease payments | $ 4,038,021 | $ 4,112,658 |
FINANCING OBLIGATION LIABILIT_2
FINANCING OBLIGATION LIABILITY (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 07, 2020 | Dec. 31, 2023 | Dec. 31, 2022 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Purchase price | $ 3,741,419 | $ 3,330,206 | |
Financing obligation | 4,038,021 | 4,112,658 | |
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 | $ 74,636 | $ 65,678 | |
Sale Agreement [Member] | UTAH | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Purchase price | 4,448,500 | ||
Lease Agreement [Member] | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Lease cost | $ 311,395 | ||
Annual rent increases | 1.50% | ||
Lease Agreement [Member] | UTAH | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Lessee finance lease description | the Company entered into a fifteen-year lease agreement |
SCHEDULE OF COMPONENTS OF INCOM
SCHEDULE OF COMPONENTS OF INCOME TAX BENEFIT (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Current income taxes: | ||
Federal | ||
State | 5,346 | 34,046 |
Foreign | 289,587 | 160,923 |
Total current income taxes | 294,933 | 194,969 |
Deferred provision (benefit) for income taxes: | ||
Federal | (6,387,240) | |
State Deferred UTP | 41,326 | |
Total deferred income taxes | (6,345,914) | |
Income tax expense (benefit) | $ (6,050,981) | $ 194,969 |
SCHEDULE OF DEFERRED TAX ASSETS
SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Deferred tax assets: | ||
263A adjustment | $ 28,514 | $ 23,274 |
Accrued expenses | 132,745 | 140,900 |
Prepaid expenses | (54,589) | |
Stock compensation | 179,723 | 180,753 |
Stock option | 4,618 | 69,306 |
Amortization of intangibles | 1,938,657 | 2,246,861 |
Net operating loss | 2,326,992 | 2,509,855 |
Allowances | 1,383,247 | 1,509,508 |
Sale-leaseback – lease liability | 850,804 | 919,766 |
ROU Assets | 95,048 | |
Grant Income | 142,227 | 150,964 |
Other Depreciation on fixed assets | 196,305 | |
-Others | 20,187 | 20,512 |
Total deferred tax assets | 7,299,067 | 7,717,110 |
Deferred tax liabilities: | ||
Depreciation on sale-leaseback fixed assets | (756,823) | (836,027) |
Depreciation on fixed assets | 134,483 | |
Prepaid expense | (59,956) | |
ROU Liability | (95,048) | |
Total deferred tax liabilities | (911,827) | (701,544) |
Net deferred tax assets | 6,387,240 | 7,015,566 |
Less: Valuation Allowance | (7,015,566) | |
Total deferred tax assets, net | $ 6,387,240 |
SCHEDULE OF STATUTORY TAX EXPEN
SCHEDULE OF STATUTORY TAX EXPENSE (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
Tax expense (benefit) at federal statutory rate | $ 290,863 | $ 267,604 |
State income taxes | 4,223 | 26,896 |
Foreign income taxes | 228,774 | 127,129 |
Permanent differences | (61,350) | (46,609) |
Change in valuation allowance | (628,326) | (780,662) |
Other - State rate effect | 563 | 11,704 |
Change in tax rate | 406,461 | 586,430 |
FIN 48 – Adjustment item | 41,326 | |
Valuation allowance | (6,387,240) | |
Other | 53,725 | 2,477 |
Income tax expense (benefit) | $ (6,050,981) | $ 194,969 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards | $ 11,043,780 | |
Operating Loss Carryforwards, Limitations on Use | The pre-2018 losses will begin to expire between 2035 and 2037. The post-2017 losses can be carried forward indefinitely, however, only 80% of these losses can offset taxable income in a given year. | |
Accrued income tax payable, including accrued penalties | $ 626,000 | $ 352,000 |
Penalties charged to income tax expense | 0 | $ 0 |
Pre-2018 [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards | 7,686,746 | |
Post-2017 [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards | $ 3,357,034 |
SCHEDULE OF SHARE-BASED COMPENS
SCHEDULE OF SHARE-BASED COMPENSATION, RESTRICTED STOCK UNITS AWARD ACTIVITY (Details) - Restricted Stock Units (RSUs) [Member] - 2015 Incentive Plan [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Restricted Stock Units, beginning of period | 2,174,166 | 2,284,910 |
Weighted Average Price, beginning of period | $ 0.83 | $ 0.70 |
Restricted Stock Units, Granted | 777,764 | 932,500 |
Weighted Average Price, Granted | $ 1.27 | $ 1 |
Restricted Stock Units, Forfeited | (6,680) | (35,030) |
Weighted Average Price, Forfeited | $ 0.59 | $ 0.59 |
Restricted Stock Units, Vested | (1,138,372) | (1,008,214) |
Weighted Average Price, Vested | $ 0.76 | $ 0.70 |
Restricted Stock Units, end of period | 1,806,878 | 2,174,166 |
Weighted Average Price, end of period | $ 1.06 | $ 0.83 |
SCHEDULE OF SHARE-BASED COMPE_2
SCHEDULE OF SHARE-BASED COMPENSATION, STOCK OPTIONS, ACTIVITY (Details) - 2015 Incentive Plan [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Stock Options Outstanding, beginning of period | 417,282 | 398,580 |
Weighted Average Price, Outstanding, beginning of period | $ 1.31 | $ 1.34 |
Stock Options, Granted | 24,000 | |
Weighted Average Price, Granted | $ 0.82 | |
Stock Options, Exercised | (7,792) | |
Weighted Average Price, Exercised | $ 0.82 | |
Stock Options, Expired | (38,742) | (5,298) |
Weighted Average Price, Expired | $ 1.09 | $ 0.81 |
Stock Options Outstanding, end of period | 370,748 | 417,282 |
Weighted Average Price, Outstanding, end of period | $ 1.35 | $ 1.31 |
Stock Options exercisable at end of period | 334,480 | 350,222 |
Weighted Average Price, exercisable at end of period | $ 1.41 | $ 1.41 |
SCHEDULE OF SHARE-BASED PAYMENT
SCHEDULE OF SHARE-BASED PAYMENT AWARD, STOCK OPTIONS, VALUATION ASSUMPTIONS (Details) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | ||
Expected volatility | 59.50% | 59.50% |
Discount rate | 3.98% | 3.98% |
Expected life (years) | 3 years | 3 years |
Dividend yield |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details Narrative) - USD ($) | 12 Months Ended | |||||||
Dec. 15, 2023 | Aug. 10, 2023 | Dec. 16, 2022 | Aug. 12, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2020 | Dec. 31, 2014 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Compensation expense recognized | $ 926,639 | $ 873,737 | ||||||
Employee Stock Incentive Plan [Member] | Board of Directors [Member] | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Number of common stock reserved for issuance | 1,724,128 | |||||||
2015 Incentive Plan [Member] | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Share-based compensation arrangement by share-based payment award, options, grants in period, gross | 24,000 | |||||||
Share-based compensation arrangements by share-based payment award, options, grants in period, weighted average exercise price | $ 0.82 | |||||||
2015 Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member] | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Number of restricted units granted | 777,764 | 932,500 | ||||||
Compensation expense recognized | $ 918,000 | $ 858,000 | ||||||
Restricted stock weighted vesting period | 2 years 6 months 25 days | |||||||
Unrecognized compensation expense | $ 1,918,000 | |||||||
2015 Incentive Plan [Member] | Board of Directors [Member] | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Number of additional common stock approved | 1,500,000 | 2,543,448 | ||||||
Maximum aggregate number of common shares for issuance | 7,076,326 | |||||||
Share-based payment, number of shares available for grant | 306,486 | |||||||
2015 Incentive Plan [Member] | Board of Directors [Member] | Restricted Stock Units (RSUs) [Member] | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Number of restricted units granted | 777,764 | 932,500 | ||||||
Restricted stock units vesting period | 3 years | 3 years | ||||||
2015 Incentive Plan [Member] | Employees [Member] | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage | 33.30% | |||||||
Compensation expense recognized | $ 9,000 | $ 15,000 | ||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Authorized | 75,000 | |||||||
Share-based compensation arrangement by share-based payment award, options, grants in period, gross | 24,000 | |||||||
Share-based compensation arrangements by share-based payment award, options, grants in period, weighted average exercise price | $ 0.82 | $ 0.35 | ||||||
Share-based compensation arrangement by share-based payment award, award vesting rights | The options vest 33.3% on the grant date, 33.3% on the first anniversary of the grant date and 33.4% on the second anniversary of the grant date. | |||||||
2015 Incentive Plan [Member] | Employees [Member] | First Anniversary [Member] | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage | 33.30% | |||||||
2015 Incentive Plan [Member] | Employees [Member] | Second Anniversary [Member] | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage | 33.40% | |||||||
2015 Incentive Plan [Member] | Employees [Member] | Restricted Stock Units (RSUs) [Member] | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Number of restricted units granted | 74,000 | 75,000 | ||||||
Number of restricted units grant price | $ 0.7127 | $ 0.7127 | ||||||
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage | 33.30% | |||||||
2015 Incentive Plan [Member] | Employees [Member] | Restricted Stock Units (RSUs) [Member] | First Anniversary [Member] | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage | 33.30% | |||||||
2015 Incentive Plan [Member] | Employees [Member] | Restricted Stock Units (RSUs) [Member] | Second Anniversary [Member] | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage | 33.40% |
SCHEDULE OF BASIC AND DILUTED E
SCHEDULE OF BASIC AND DILUTED EARNINGS PER SHARE (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Numerator: | ||
Net income | $ 7,436,045 | $ 1,065,157 |
Denominator: | ||
Weighted average shares of common stock outstanding - basic | 29,698,498 | 28,643,464 |
Effect of dilutive restricted stock units | 74,000 | |
Effect of dilutive options | 31,636 | |
Weighted average shares of common stock outstanding - diluted | 29,772,498 | 28,675,100 |
Earnings per common share - basic | $ 0.25 | $ 0.04 |
Earnings per common share - diluted | $ 0.25 | $ 0.04 |
SCHEDULE OF SEGMENTS INFORMATIO
SCHEDULE OF SEGMENTS INFORMATION WITH GEOGRAPHIC AREAS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Revenues: | ||
Total revenue | $ 20,973,551 | $ 19,097,687 |
Operating income: | ||
Total operating income | 1,776,965 | 1,936,450 |
Depreciation expense: | ||
Total depreciation expense | 1,287,994 | 1,337,309 |
North America [Member] | ||
Revenues: | ||
Total revenue | 17,908,909 | 16,917,259 |
Operating income: | ||
Total operating income | 11,727,062 | 9,672,853 |
Depreciation expense: | ||
Total depreciation expense | 487,021 | 634,388 |
International [Member] | ||
Revenues: | ||
Total revenue | 3,064,642 | 2,180,428 |
Operating income: | ||
Total operating income | (308,655) | (3,551) |
Depreciation expense: | ||
Total depreciation expense | 800,973 | 702,921 |
Corporate Costs Unallocated [Member] | ||
Operating income: | ||
Total operating income | $ (9,641,442) | $ (7,732,852) |
SCHEDULE OF NET PROPERTY, PLANT
SCHEDULE OF NET PROPERTY, PLANT AND EQUIPMENT BY GEOGRAPHIC LOCATION (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Property, plant and equipment, net: | ||
Total property, plant and equipment, net | $ 11,242,251 | $ 8,576,851 |
UNITED STATES | ||
Property, plant and equipment, net: | ||
Total property, plant and equipment, net | 6,158,853 | 6,560,435 |
Other Countries [Member] | ||
Property, plant and equipment, net: | ||
Total property, plant and equipment, net | $ 5,083,398 | $ 2,016,416 |
SEGMENT REPORTING (Details Narr
SEGMENT REPORTING (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenue | $ 20,973,551 | $ 19,097,687 |
MEXICO | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenue | $ 69,000 | $ 145,000 |
TRANSFER OF FINANCIAL ASSETS (D
TRANSFER OF FINANCIAL ASSETS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Customer Securities for which Entity has Right to Sell or Repledge (Including Securities Sold or Repledged) [Line Items] | ||
Accounts receivable, net current | $ 2,670,361 | $ 3,241,221 |
Prepaid expense, current | 335,152 | $ 367,823 |
Cash And Restricted Cash [Member] | ||
Customer Securities for which Entity has Right to Sell or Repledge (Including Securities Sold or Repledged) [Line Items] | ||
Assets, fair value disclosure | 166,139 | |
Domestic Agreement [Member] | ||
Customer Securities for which Entity has Right to Sell or Repledge (Including Securities Sold or Repledged) [Line Items] | ||
Debt instrument face amount | $ 2,500,000 | |
Debt instrument, interest rate, stated percentage | 1.25% | |
Domestic Agreement [Member] | Service [Member] | ||
Customer Securities for which Entity has Right to Sell or Repledge (Including Securities Sold or Repledged) [Line Items] | ||
Debt instrument, interest rate, stated percentage | 90% | |
International Agreement [Member] | ||
Customer Securities for which Entity has Right to Sell or Repledge (Including Securities Sold or Repledged) [Line Items] | ||
Debt instrument face amount | $ 2,000,000 | |
Debt instrument, interest rate, stated percentage | 2% | |
International Account Receivable [Member] | Service [Member] | ||
Customer Securities for which Entity has Right to Sell or Repledge (Including Securities Sold or Repledged) [Line Items] | ||
Debt instrument, interest rate, stated percentage | 60% | |
Loan Agreement [Member] | ||
Customer Securities for which Entity has Right to Sell or Repledge (Including Securities Sold or Repledged) [Line Items] | ||
Debt instrument face amount | $ 307,310 | |
Accounts receivable, net current | 4,211,786 | |
Accounts receivable, sale | 4,150,932 | |
Prepaid expense, current | 83,109 | |
Service fees | $ 83,337 |
SUBSEQUENT EVENT (Details Narra
SUBSEQUENT EVENT (Details Narrative) - USD ($) | Mar. 06, 2024 | Dec. 31, 2023 | Dec. 31, 2022 |
Subsequent Event [Line Items] | |||
Consideration payable in cash | $ 2,504,487 | $ 2,158,025 | |
Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Consideration payable in cash | $ 32,200,000 |