superior drilling products, inc. (sdpi)

by:kingtool aluminium machinery     2020-05-13
Washington, D. C. Securities and Exchange CommissionC. 20549FORM10-Q(MarkOne)[X]
Quarterly reports submitted under section 13, 15 (d)
Quarterly period 1934 Securities Trading Act as of March 31, 2019 []
Transition reports submitted under sections 13 or 15 (d)
Securities Exchange Law 1934 file number of the Commission: 001-
36453 superfoods Products, Inc. (
The exact name of the registrant specified in the articles of association)Utah46-4341605(
State or other jurisdiction of company or organization)(
Irsemployeridentification no)
1583 South 1700 East Vernal, Utah 84078 (
Main executive office address)435-789-0594(
Phone number)(
If there has been a change since the last report, it is the form name, address and fiscal year)
Check if the registrant (1)
All reports requested by Article 13 or 15 have been submitted (d)
12 months before the Securities Trading Act of 1934 (
Or a shorter period requiring the registrant to submit such a report (s)),and (2)
This filing requirement has been bound for the last 90 days. Yes[X]No []
According to S-regulation 405th, check if the registrant has submitted each Interactive Data document that needs to be submitted and submitted electronicallyT (§232.
This Chapter 405)
Within the first 12 months (
Or within a shorter period of time when the registrant is required to submit such documents). Yes[X]No []
Check if the registrant is a large accelerated file manager, a non-accelerated file manager
A small reporting company.
See the definition of \"large accelerated reporting companies\", \"Small reporting companies\" and \"emerging growth companies\" in rule 12b
2 of the Trading Act. (Check one)
: Big acceleration document []
Accelerating film []Non-
Accelerating film []
Small report Company [X]
Emerging growth companies [X]
Ifan Emerging Growth Corporation, by checking marks indicating whether the registrant chooses not to use the extended transition period to comply with any new or revised financial accounting standards provided under section 13 (a)
The Trading Act. []
Check whether the registrant is a shell company (
Defined in Rule 12b-
2 parts of the transaction law). Yes[]No [X]
There are 25,034,763 ordinary shares worth $0.
001 face value, issued and not issued as of May 8, 2019.
Superfoods Products, Inc. FORM10-
Qquarterended tableof CONTENTSPagePARTI, March 31, 2019-
Financial information 1.
Consolidated Balance Sheet (Unaudited)
Condensedalglidated monthly statements on March 31, 2019 and December 31, 2018 (Unaudited)
Consolidated cash flow statement for the three months ended March 31, 2019 and 20184 (Unaudited)
Notes to the three months and 20185 ended March 31, 2019 streamline Consolidated Financial Statements (Unaudited)6Item2.
Management Discussion and Analysis of the financial status and results of operational Project 4.
Control and procedure 17 partii-
Other information 1.
Legal proceedings.
Risk factors 18 items 6.
Exhibit s20signature21parti-
Financial information. Item1.
Financial statements of financial products companies
Compressed Consolidated Balance Sheet (Unaudited)
March31, 209december31, 2018 $4,346,466 $4,264,767 accounts available, net2, 778, 9012, 273,189 monthly, 869133,607 InterestReceivable104, indventories1, 231,7531 003,623 Othercurrent assets158, 131-
Totalcurrent assets8, 730,5737, 675,186 property, factory and equipment, net8, 165,3368 226,009 Intangibleassets, net3, 074,4443 686,111 Relatedparty note soundable7, 367,2127 367,212 Othernoncurrent assets51, 88751,887 Total assets $27,389,452 $27,006,405 liabilities and equity of shareholders $1,345,440 $721 $687631,860
Regular debt, deducting the Total current liabilities of 4, 35, 7, 9, 57, 4, and 578,759 of the discount 6, 60, 8, 08, 45, 931,
Regular debt, minus the current portion, deducting the total liabilities of discount 5, 96, 50 86, 296, 994 12, 571,59212, 228,974 commitments and unexpected expenses (Note 9)
Common shares of shareholders\' equity-$0. 001 par value;
Authorized 100,000,000 shares;
25,018,098 issued and outstanding shares, 01825 sharesin-
Accumulated deficits of capital 39, 622,46 339 and 440,611 (24,829,621)(24,688,198)
Total shareholder equity 14, 817,86014, 777,431 Total liabilities and shareholder equity $27,389,452 $27,006,405 accompanying notes are an integral part of these consolidated condensed financial statements.
Superfoods Products, Inc.
Prepare consolidated business statements (Unaudited)
The operating costs and expenditure costs of the three months are 600,293, 04, 0281, and 798,944 respectively. Sales, general and administrative expenses 2, 069,0401, 697,663 Depreciation and amortization Operating income 432,634 (loss)(86,827)
Other income (167,659)expense)
Interest expenditure (38692,428)177,982)(191,553)
Other expenses (54,596)(99,125)Netincome (loss)$(141,423)
Basic income of $68,534 (loss)
Common stock earnings per share $ (0. 01)$0.
00 the dilution of the basic weighted average common stock is prominent at 25, 018,098 24 and 535,155 (loss)
Common Stock per share $ (0. 01)$0.
00 Diluted weighted average common stock is more than 25, 018, 098, 25, 140,646 and the accompanying notes are an integral part of these consolidated Consolidated consolidated financial statements.
Superfoods Products, Inc.
Consolidated Statement of Cash Flow (Unaudited)
Cash flow from three months of business activities (loss)$(141,423)
$68,534 Adjustment to reconcile net losses with net cash used in operating activities: Amortization of depreciation and amortization costs 1, 011,105936, 027 debt discounts-
17,061 share-based compensation costs 1, 852137,017 loss of inventory 41, amortization of 396 Deferred loan charges 1, 603-
Changes in operating assets and liabilities: Accounts receivable (505,712)(556,004)Inventories(228,130)(6,079)
Assets and Other non-current assets (135,393)(54,991)
Accounting and accrued 906 (62,113)
NetCash 976 generated by business activities and 355520,848 cash flow generated by investment activities to purchase property, plant and equipment (338,765)(94,780)
NetCash generated by investment activities (338,765)(94,780)
Cash flow from financing activities1,993,172)(625,905)
Litigation received from debt borrowing
Paymentson revolving loan (301,969)-
Revolving loan 1,000,000-litigation received
Debit fee (60,750)-
NetCash from financing activities (555,891)(625,905)Netincrease (decrease)in Cash81,699(199,837)
Opening cash of $375,179, ending cash of $4,346,466 $2,175,342 Supplementary information: payment of interest cash of $247,865 $210,065 accompanying notes is an integral part of these consolidated streamlined financial statements.
Superfoods Products, Inc.
Notes to the consolidated financial statements (Unaudited)
March31, 2019 note 1.
Overview of important accounting policy organizational and operational nature(
\"Company\", \"SDPI\", \"we\" or \"we \")
an innovative drilling and completion tool technology company that provides cost-saving solutions for the oil and gas drilling and completion industry to improve drilling efficiency.
Our headquarters and production base are located in Vernal, Utah.
Our drilling solutions include patented drill bits. N-
Order®Drilling adjustment tool (“Drill-N-Ream tool”)
And patent strivers™Drilling column oscillation system technology (
\"Technology\" or \"technology \").
In addition, the company is PDC (
Compact polycrystal diamond
Drill bits from a leading oilfield service company.
We run a state. of-the-
We offer solutions for the drilling industry and customize products for our customers.
Subsidiaries include (a)
Excellent drilling solutions (LLC (
Previously known as excellence Drilling Products Co. , Ltd)
Utah Limited (“SDS”)
Together with Superior Design and Fabrication, LLC, its wholly owned subsidiary, utah Co. , Ltd (“SDF”), (b)
Extreme Technologies, LLC, Utah Limited (“ET”),(c)
Mayr property series, Utah Limited (“MPS”), (d)
Meyer Leasing Co. , Ltd. , Utah Co. , Ltd (“ML”), and (e)
Hard stone Solution Co. , Ltd (
\"HR\" or \"hard stone \").
The consolidated financial statements of the company are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”).
The consolidated financial statements include the accounts of the advanced drilling products company.
And it\'s all
Subsidiaries.
In the merger, all important inter-company accounts were deleted.
The company has not invested in any of its unincorporated subsidiaries.
The Employment Act was promulgated in 2012.
Section 107th of the Employment Act provides that emerging growth companies can use the extended transition period specified in Section VII (a)(2)(B)
Securities laws that implement new or revised accounting standards.
In other words, an emerging growth company may delay the adoption of certain accounting standards until they apply to other non-issuers.
We have decided to postpone the adoption of new or revised accounting standards, so we may not supplement new or revised accounting standards on the relevant dates that other issuer companies need to adopt such standards.
Subject to certain conditions set out in the Employment Act, as an emerging growth company, we intend to rely on certain of these exemptions, including but not limited, in accordance with section 404th, provide the auditor\'s supporting report on our financial reporting internal control system and implement any requirements regarding mandatory audit company rotation, or supplement the auditor\'s report, provide additional information on audit and financial statements (
Discussion and Analysis).
We will always be a growing company. i)
At the end of the fiscal year, the market value of the common stock we hold
As at June 30, the subsidiaries exceeded $0. 7 billion ,(ii)
At the end of the fiscal year, our total annual income was $1.
For the financial year, 7 billion euros (iii)
The date we issue more than $1. Billion innon-
Three dollars. Period or (iv)
January 1, 2020.
Unaudited interim financial reports the Consolidated consolidated financial statements for the three months ended March 31, 2019 and 2018 and the relevant financial statements contained in this report are unaudited.
However, management believes that these unaudited interim financial statements are prepared on the same basis as audited financial statements and reflect all adjustments required to fairly account for the results of these periods.
The results of the three-month action as at March 31, 2019 are not necessarily indicators of the results of the annual expected action as at December 31, 2019.
These interim consolidated streamlined financial statements shall be read in conjunction with the audited consolidated financial statements and their notes of the company as of December 31, 2018 and 2017, including in the Company\'s Annual Report on Form 10
K. 2018 submitted to the Securities and Exchange Commission (the “SEC”).
Preparing financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amount reported in the financial statements and accompanying notes.
The actual results may be different from those estimates.
Significant matters affected by estimates and assumptions include the book amount and service life of property and equipment and intangible assets, impairment assessment, share
Base compensation and valuation allowance for accounts receivable, inventory and deferred tax assets.
In the three months ended March 31, 2019, two customers accounted for 93% of our total revenue.
In the three months ended March 31, 2018, two customers accounted for 97% of our total revenue.
Significantvendorsco has a supplier that accounts for 10% of our purchases in the three months ended March 31, 2019. The supplier\'s accounts payable in March 31, 2019 amounted to approximately $248,000 and $248,000 in 2019.
In the first three months of the third quarter, no supplier accounted for more than 10% of our purchases.
The recently released accounting standards were adopted in 2019, and the company adopted the accounting standards guidelines in the Accounting Standards Update (“ASU”)No. 2014-
09, \"income from signing contracts with customers.
\"The standard replaces most of the existing revenue recognition requirements in the United States. S.
GAAP under the compilation of accounting standards (“ASC”)
605, and a new revenue standard ASC 606 has been established.
This new standard requires entities to recognize revenue in amounts that reflect the consideration that these entities expect to be entitled to in exchange for the transfer of goods or services to the customer of orientation.
The new standard also requires a substantial expansion of the disclosure of qualitative and quantitative information on the nature of the entity, the amount, the time, and the uncertainty of income and cash flow generated by signing contracts with customers.
The company adopts the full backtracking method and ASC 606.
The adoption of this standard has no significant impact on the consolidated financial statements of the company.
See Note 2-Income.
ASU No. standard released by FASB has not yet adopted the 2016 standard2016-
02, \"lease\", presentation of the lessee\'s confirmation of all lease assets and lease liabilities for non-short term leasesterm in nature.
The new standard requires a retroactive transition to the earliest comparison period shown in the financial statements either at the beginning or after the beginning of the existing capital or operating lease.
The company is currently evaluating the impact of the statement on consolidated financial statements and related disclosures and will adopt the standard in January 1, 2020. NOTE2.
According to the theme 606 we adopted in January 1, 2019, revenueaccount uses a full traceability method to account for revenue.
The adoption of Topic 606 has no significant impact on the time or amount of revenue recognized in our unaudited consolidated financial statements, and therefore has no significant impact on our financial position, operating, equity or cash flow results for the adoption date for the three months ended March 31, 2019.
For any period submitted as of December 31, 2017 or before, the company has not recorded any adjustments to the retained earnings at the beginning of the period.
In addition, the impact of adopting new standards is not important for our income and gross profit.
Revenue comes from short-term contracts.
When we perform our performance obligations by transferring control of the promised goods or services to our customers at a certain point in time, the revenue is recognized, the amount reflects the consideration that the company expects to be entitled to in exchange for these goods or services.
We also evaluate the customer\'s ability to pay and intent based on various factors, including the customer\'s historical payment experience and financial status.
Although the terms of payment generally include a requirement for payment within 30 days, the terms and conditions of payment vary.
Fulfillment of the obligation is a commitment in the contract to transfer unique goods or services to the customer in accordance with subject 606.
The transfer price of the contract is assigned to each different performance obligation and is recognized as income in the performance of the obligation or in the performance of the obligation.
Most of our contracts with our customers include a single obligation to perform as agreed --
Products or services.
For contracts with multiple fulfillment obligations, we distribute revenue to each fulfillment obligation based on its relatively independent sales price.
According to subject 606, if the promised goods or services do not matter in the contract with the customer, we will not assess whether they are a performance obligation.
All of our contracts are less than one year old.
We do not disclose the value of non-performance obligations (i)
A contract with an original expected term of one year or less and (ii)
We confirm the contract of revenue at amounrecognize and we are entitled to invoice the services provided.
The classification of loss of income does not generate material costs for any acquisition of the contract.
According to our sales contract, we issue an invoice to the customer after fulfilling our obligations, at which time the payment is unconditional.
Therefore, our contract will not generate contract assets or liabilities under ASC 606. NOTE3.
Ventoriesventoriesare consists of the following parts: March31, 209december31, 2018, 1,038,210, 738,330, 408217, 13548,135, 1,231,753, 1,003,
Property, plant and equipmentproperty plant and equipment are by the following personnel of: March31 2019December31, 2018 a $880,416 $880,416 buildings4 847,7784 847,778 buildingimprovements755 039755,039 machineryand equipment9 137,7058, 816,880 accumulated depreciation of office equipment, fixtures and software 518, 806518, 806 and 811 transportation equipment 630,297, 378811,18. 16, 95 1,12216 (8,785,786)(8,404,288)
As of March 31, 2019 of three a month 8,165,336 dollars of property, plant and equipment depreciation expense for 8,226,009 dollar 2018 dollars respectively for 399,438 beauty and 324,360 dollars.
The increase in machinery and equipment is mainly the result of the establishment of tool inventory for the Middle East business. NOTE5.
Intangibles are made up of: March31, 209december31 2018 development Technology $7,000,000 $7,000,000 customercontrts6, 400,0006, 400,000 Trademarks1, 500,0001, 500,00014, 900,00014 900,000 RMB (11,825,556)(11,213,889)
$3,074,444 $3,686,111 amortizationexpense about intangible assets is $611,667 March 31, 2019 for the three a month of 2018.
We evaluate our intangible assets every year to find signs of impairment.
If there is gender discrimination in the prosecution, we will evaluate the fair value of intangible assets and record the impairment costs if necessary.
As at March 31, 2019, the company had reviewed the net balance of intangible assets and determined that no impairment was required. NOTE6.
On 2014, we entered into an agreement for the sale and sale of notes under which we agreed to purchase a loan to Tronco EnergyCorporation (“Tronco”)
By co-controlling the party associated with us to take over the legal status of asTronco\'s senior secured lender.
The agreement provides that, after we fully repay the telonko loan from the offer action, the lender will transfer to us all its rights under the telonko loan, including all the guarantee documents.
On May 30, 2014, we ended our purchase of the Tronco loan with a total return of $8.
3 million, including principal, interest and early termination fees.
As a result of this purchase, we became a senior secured lender for Tronco and are therefore entitled to all proceeds from the sale of Tronco
Collateral owned, as described below.
The interest rate on the bill is 5. 75%.
The interest we receive is $104,453 and $86,287. The rate for the three months of March 31, 2019 can reach 2018.
OnAugust 2017, the board agreed to extend the terms of the Tronco loan to interest payments due on December 31, 2018, 2019, 2020 and 2021, and balloon payments for all outstanding interest and principal will expire on December 31, 2022.
We have direct legal rights to execute the mortgage and guarantee agreement with troncoloran and collect the collateral sales revenue of Tronco to recover the loan purchase amount.
The Tronco loan continues to be secured by Troy and Annette Mel (
\"Mel guarantee \")
Paid directly to us and enforced by US legally.
In addition, Meiers provided us with a stock pledge in which they pledged a portion of the shares of our common stock held by their family entity (
\"Mayr stock pledge \")
As collateral for Meiers, provide a guarantee before the full repayment of the Tronco loan.
Subject to Rule 144 of the Securities Act, pledged shares are subject to internal time requirements and quantity restrictions and require regular black
Held in Phase III
Prior to the full repayment of the Tronco loan, it was managed by a corporate attorney with a balance of $7,367,212.
As of March 31, 2019, the company held 8,267,860 shares of Tronco notes as collateral.
The Company believes that the market value of the 8,267,860 shares is sufficient as collateral for the notes. NOTE7. LONG-TERM DEBTLong-
Termdebt includes the following: March31, 209december31, 2018 real estate loans $3,169,227, $4,255,152, $438,884
840327,514292, below 722: Current part (4,357,957)(4,578,759)Long-
Termdebt, $5,963,508 Net real estate loan of $6,296,994, $2019, we signed a loan agreement to refinance $3,129,861 for our commercial bank loan, which is made by our ver
We paid $1,000,000 for the previous loan, which was scheduled to expire in February 15, 2019 after refinancing.
The loan is subject to approximately $43,000 per month, including principal and interest at 7 points.
25%, protected by theland and buildings at ver NAL campus, Utah.
Balloon payments of approximately $2,500,000 will be paid when they expire on February 15, 2021.
The company purchased all rights and interests of hard rock Solutions Co. , Ltd (“Hard Rock”).
Consider $12.
5 million paid in cash at closing, $12.
5 million notes from sellers (
\"Hard stone note \").
The HardRock notes and subsequent amendments are guaranteed by all patents, pending patents, other patents and trademarks transferred to hard rock.
2019. The company signed a loan and guarantee agreement (
\"Credit Agreement \")
Austin Financial Services Limited(“AFS”).
The credit agreement provides $4.
The credit line of 3 million, including $0.
8 million regular loans (\"Term Loan \")and a $3.
5 million revolver (
\"Revolving Loan \").
As at March 31, 2019, the revolving loan was outstanding at $698,031.
The outstanding amount of the revolver at any time shall not exceed :(a)
Up to 85% of accounts receivable or a smaller percentage of their sole discretion may be deemed appropriate if a significant adverse effect is determined;
Minus the diluted reserve determined by afs with its sole discretion of good faith, plus (b)the lesser of (i)
Up to 50% of inventory or a smaller percentage at its discretion, if significant adverse effects are determined, or (ii)
Inventory sub-limit, minus (c)
Loan base Reserve determined by AFS from time to time.
As of March 31, 2019, the outstanding amount of revolutionary loans shall not exceed $2,712,645, calculated on the basis of 85% of accounts receivable and 50% of inventory.
The use portion of revolving loans and term loans pays monthly mortgage management fees.
If we borrow less than $1,000,000, then we pay interest like we borrow $1,000,000.
As at March 31, 2019, our Accrued interest was approximately $18,000.
Credit agreements contain a variety of restrictive covenants that, among other things, limit or limit the borrower\'s ability to assume additional debt;
Create an additional lien;
Dividends and other restricted payments;
Investment;
Engaged in mergers and acquisitions and disposal business;
Selective prepayment of other liabilities;
Conduct transactions with related companies;
A restrictive agreement was reached.
The credit agreement does not include any financial covenants.
In the event of a breach of contract, the lender has the right to expedite the advance payment made pursuant to the event of default and exercise its rights over the collateral.
Borrowing under revolving loans is classified as current debt due to the required lockbox arrangement and subjective acceleration terms.
As at March 31, 2019, some $698,000 in loans remained outstanding.
Also in March 31, 2019, we followed the deed in the credit agreement.
The interest rate for both term and revolving loans is prime plus 2%.
On March 31, 2019, the interest rate was 7. 5%.
Under the agreement, the borrower\'s obligations are guaranteed by the borrower\'s security interest in almost all tangible and intangible assets, except for any assets owned by the borrower who constitutes the real estate (
And fixtures attached to such real estate)
Certain equipment, intellectual property, or aircraft excluded.
The credit agreement expires on February 20, 2023, but is terminated in advance under the terms of the agreement or an extension agreed by both parties.
Summary of total share capital changes for the three months ended March 31, 2019 and 2018 is as follows: note 9.
Promises and incidents occur from time to time during the normal course of our business activities.
On February 2019, the company filed a patent infringement lawsuit with the Western District Court of Luiz Anna state, claiming that Stabil Drill Specialties, LLC (“Stabil Drill”)
Infringement of our patent, which covers the drilling adjustment tools of the companyN-Ream.
The lawsuit against the Stabil drill has not yet been answered.
As of the date of the release of the quarterly report, the proceedings were still in their initial stages.
We cannot predict the outcome of this matter, but our legal costs may have a substantial impact on our financial position or operational results for some time to come.
We are currently not involved in any other litigation that management believes may have a significant impact on our financial position or operational results. Item2.
Management\'s Discussion and Analysis of the financial position and results of operations the following discussion and analysis is to supplement the information contained in the attached financial statements and intends to provide certain details of our financial position as of March 31, 2019, as of March 31, 2019 and 2018, the results of our three-month operations.
Should be read in conjunction with unaudited financial statements and their notes contained in this quarterly report form 10Q (
This \"Quarterly Report \")
And our audited financial statements as of December 31, 2018 and 2017, which are included in the Company\'s Annual Report on Form 10
For the year ended December 31, 2018, the force submitted to the Securities and Exchange Commission (the “SEC”).
Unless otherwise required by the context, a reference to \"Company\" or \"us\", \"us\" or \"us\" and other similar terms is a reference to the company of advanced drilling products
And all its subsidiaries.
2012 2012 the Employment Bill of issued.
Section 107th of the Employment Act provides that emerging growth companies can use the extended transition period specified in Section VII (a)(2)(B)
Securities laws that implement new or revised accounting standards.
In other words, an emerging growth company may delay the adoption of certain accounting standards until they apply to other non-issuers.
We have decided to postpone the adoption of new or revised accounting standards, so we may not supplement new or revised accounting standards on the relevant dates that other issuer companies need to adopt such standards.
Subject to certain conditions set out in the Employment Act, as an emerging growth company, we intend to rely on certain of these exemptions, including but not limited, in accordance with section 404th, provide the auditor\'s supporting report on our financial reporting internal control system and implement any requirements regarding mandatory audit company rotation, or supplement the auditor\'s report, provide additional information on audit and financial statements (
Discussion and Analysis).
We will always be a growing company. i)
At the end of the fiscal year, the market value of the common stock we hold
More than $700 in affiliates.
As of June 30 ,(ii)
At the end of the fiscal year, our total annual income was $1.
For the financial year, 7 billion euros (iii)
The date we issue more than $1. Billion innon-
Three dollars. Period or (iv)
January 1, 2020. Forward-
Quarterly Report on Form 10
Q includes certain statements that may be considered \"forwarded\"
The revised \"outlook statement\" referred to in Article 27A of the Securities Act of 1933 \"(
Securities law)
And article 21E of the Securities Trading Act of 1934, as amended (
Trade Act).
The statements of all parts of the non-historical facts contained in this document are forward --
Forward-looking statements involving risks and uncertainties beyond the control of the company.
You can determine where the company is headed.
Looking for statements with \"expectations\", \"estimates\", \"expectations\", \"possibilities\", \"projects\", \"beliefs\" and similar expressions, or through the company\'s discussion of strategies or trends.
Although the company believes this expectation is reflected in
It appears that the statement is reasonable and there is no guarantee that these expectations will prove correct. These forward-
The following types of information and statements related to the company: ● future operations, financial results, business plans, cash flow and cash requirements;
• Plans, budgets and other future capital expenditures;
Working capital requirements;
● Availability of expected sources of liquidity;
● Market introduction of the company\'s future products;
● Market of existing and future products of the company;
● The Company\'s ability to develop new applications for its technology;
● Exploration, development and production activities of the company\'s customers;
● Compliance with current and future environmental regulations and costs related to environmental-related penalties, capital expenditures, remedial actions and procedures;
● The effectiveness of potential legal proceedings;
● Changes in the customer\'s future product and service requirements, which may not be cost-effective or in line with the company\'s capabilities;
These assessments are based on assumptions and analysis, taking into account the company\'s experience and perception of historical trends, current conditions, expected future developments and other factors that the company considers appropriate in the circumstances of the presentation. Forward-
In nature, statements involve significant risks and uncertainties and may have a significant impact on the expected results, and actual future results may differ materially from the results described in these statements.
Despite the inability to identify all factors, the company still faces many risks and uncertainties.
Factors that may lead to significant differences in future actual results include the risks and uncertainties discussed under Project 1A.
Risk factors in the Company\'s Annual Report Form 10-
The data for the year ended December 31, 2018 are as follows: ● fluctuations in oil and gas prices;
The cyclical nature of the oil and gas industry;
● Availability of financing, flexibility to restructure existing debt and access to capital markets;
Our dependence on important customers;
● Integration within the customer industry;
Competitive products and pricing pressure;
● Ability to develop and commercialize new and/or innovative drilling and completion tool technologies;
● Fluctuations in our operating results;
● Reliance on key personnel;
Cost of raw materials;
● Reliance on third-party suppliers;
● Unforeseen risks in the manufacturing process;
● The needs of skilled workers;
● Ability to manage our growth strategy successfully;
● Unexpected risks associated with the acquisition and our ability to integrate the acquisition;
● Current and potential government regulatory actions in the United States and regulatory actions and political turmoil in other countries;
Terrorist threats or acts, wars and internal unrest;
Our ability to protect intellectual property rights;
● The impact of environmental matters, including future environmental regulations;
Implementation and compliance with security policies;
● Security of our information system and other network security risks;
Related party transactions with founders;
Risks associated with our common stock.
Many of these factors are beyond the control or prediction of the company.
Any factor, or combination of these factors, may have a significant impact on the company\'s future operating results and the final accuracy of the forward period
Look at the report.
Management warns against overreliance on strikers
View reports or forecast any future results based on such reports or current or previous income levels. Every forward-
The outlook statement speaks only on the date of the particular statement and the company is not obliged to publicly update or amend any forward statement
Statement.
Italian oil drilling Products Co. , Ltd. (
\"Company\", \"SDPI\", \"we\" or \"we \")
an innovative drilling and completion tool technology company that provides cost-saving solutions for the oil and gas drilling and completion industry to improve drilling efficiency.
Our headquarters and production base are located in Vernal, Utah.
Our drilling solutions include patented drill bits. N-
Order®Drilling adjustment tool (“Drill-N-Ream tool”)
And patent strivers™Drilling column oscillation system technology (
\"Technology\" or \"technology \").
In addition, the company is PDC (
Compact polycrystal diamond
Drill bits from a leading oilfield service company.
We run a state. of-the-
We manufacture our own solutions for the drilling industry, as well as customized products for our customers.
We innovate, design, engineer, manufacture, sell and repair drilling and completion tools in USA, Canada and Middle East.
We currently have three basic businesses: ● Our renovation and manufacturing services for pdc drill bits and other tools, ● technical business for making drill bitsN-
Ream tools, our innovative drill column enhancement tools, strider technologies and other tools, as well as our new product development business for research and development and the design of our horizontal drill column enhancement tools
Drilling Technology and drilling tool manufacturing technology.
Our growth strategy is to leverage our expertise in bit technology and precision machining to broaden our products and solutions for the oil and gas industry.
We believe that with our patented technology and underdeveloped technology, we can provide the industry with the solutions needed to improve drilling efficiency and reduce production costs. Ourco-
Founder Troy Mel developed the first business-
Feasible process to refurbish the PDC bit after successful completion of 13-
Spent a year with Baker Hughes\'s predecessor. He was also co-
Inventor of patented drill bitN-
Order®Well Body adjustment tool (“Drill-N-
Ream tools \"or\" DNR \").
In 2016, we made a major strategic shift focusing on the core competencies of manufacturing technology innovation, creating solutions for the upstream oil and gas industry, rapid maintenance and repair of drilling tools and development engineering and manufacturing of new tools and technologies.
Over the past 24 years, we have specialized in manufacturing and renovating PDC drill bits for Baker Hughes field operations in Rocky Mountain, California and Alaska, as well as other areas needed to support its internal operations.
2018. we signed a new supplier agreement (\"Agreement \")
Baker Hughes Oilfield Operation Co. , Ltd (“Baker Hughes”)
Replace the previous supplier agreement due on March 31, 2018.
According to the agreement, we will now serve an expanding market across the United States. S.
Get basic minimum volume in bit refurbishment and continue to provide our bit refurbishment service for Baker Hughes.
There are four agreements-
The annual period of the minimum maintenance level and allows for modifications in the event of deterioration of the market.
Either party has the right to cancel with 6-months’ notice.
We have been expanding our products and expanding our customer base and terminal.
By demonstrating our expertise in engineering, design and manufacturing, users of our technology
Drilling tools.
In addition to the patent drill-N-
Our products include patent Strider. ™Drilling column oscillation system (
\"Strider technology \"), the V-
Advanced adjustment system and special knife sting.
We are designing and developing a set of other horizontal drilling column tools, each of which addresses the different technical challenges presented by today\'s horizontal drilling design.
In addition, in order to improve efficiency and safety and solve complex drilling problems, we work with our customers to develop new products and enhance capabilities for existing products.
InMay 2016, the Company entered into an agreement with the International Drilling Tools Company (“DTI”)
According to this requirement, we need to buy our drill bit. N-
Provide Ream tools for their rental tools business and fulfill market share requirements to maintain exclusive marketing rights for drillsN-Ream.
This agreement begins the shift in our business model from leasing tool companies to manufacturers that design, manufacture and sell tools.
Our department owns the exclusive market for the drill. N-Ream in the U. S.
And Canada, both at sea and at sea.
It must achieve a clear market share target through the tools we have increased since June 2017 and at the end of 2020.
Depending on the use of the tool, we receive revenue from tms for tool sales, tool repair, and royalties.
Also at 2016, the company entered a non-
An exclusive agreement with Baker Hughes to provide them with Strider technology and related services.
Under the agreement, the shipment of tools is expected to begin at the end of 2019.
No expiration date or minimum shipping requirements are set for this agreement.
It will remain in force as provided for in the agreement until we or Baker Hughes cancel.
2017, the Company entered into an agreement with Westford American. S. , L. P. (“Weatherford”)
Launch a joint market development program to introduce our drill-N-
Ream tools in the Middle East.
According to the development protocol, the exercises will be presented by weatherford and SDPIN-
Ream is working with large Middle East operators in Saudi Arabia, Kuwait and Oman.
The project ended in January 31, 2019 and the two companies are currently discussing plans for the next step.
Both SDPI and Weatherford hired a local product champion to execute the pilot test program for 20 drillsN-Ream tools.
InNovember 2018, we reached a joint market development drilling with Odfjell.
Similar to the Weatherford agreement, this project will introduce our walkthrough furtherN-
Provide Ream tools for large Middle East operators in Kuwait.
The show endedalgl 30,209, the company is currently discussing the next steps.
Industry trends and market factors business is highly dependent on the dynamism of oil and gas drilling operations primarily in the United StatesS.
Oil and gas prices have historically been volatile. The total U. S.
Baker Hughes reported 1,006 rigs at the end of first quarter of 2019, an increase of 13 over 993 in 2018.
Oil production in the United StatesS.
It has risen to a record level of around 11.
7 million barrels a day, which makes the United StatesS.
The world\'s largest oil producer.
Oil production in the United StatesS.
Thanks to stricter technology and higher productivity per drill, the growth rate is faster than the increase in the number of rigs.
With the increase of market activities, our demand for products and services has increased.
As we expand into international markets, we will be more vulnerable to industry changes in countries we operate, such as Saudi Arabia, Kuwait and Oman.
Military, political and economic events around the world have led to fluctuations in oil and gas prices and may continue to do so in the future.
Although the company\'s oil and gas related products and services in the United States and Canada are affected by these industry conditions, we continue to actively promote our drilling products.
The oil and gas industry is increasingly using orientation (e. g. , horizontal)
Since these methods can significantly improve the recovery rate, drilling is carried out in exploration and production activities.
With the rise of this type of drilling, the traditional drilling tool for vertical drilling does not necessarily have the best performance, nor is it suitable for directional drilling.
In addition, current and expected oil and gas prices, coupled with more technically challenging horizontal drilling, have driven demand for new technologies.
We believe in the value of our exercises. N-
Ream tools have proven to provide significant operational efficiency and cost savings for horizontal drilling activities, combined with our low market penetration rate, providing us with sales opportunities in weak and strong markets
The early results of our Strider technology have brought similar results.
We are a drilling and completion tool technology company and we earn revenue from the renovation, manufacture, repair, lease and sale of the drill string tool.
Our manufactured products are produced in standard manufacturing operations, even if they are produced to the customer\'s specifications.
Under certain arrangements for the tools we sell, we also earn royalties.
In May 2016, the Company entered into an agreement with the Trade Development Bureau to become the exclusive distributor of our drillingN-
Ream tools in the United States and Canada.
This agreement began the transformation of our business from leasing tools to selling tools.
Tool revenue tools and product sales: revenue from sales of tools and products is recognized when shipping tools or products to customers.
Shipment and handling costs related to the sale of tools and products are recorded as an integral part of the sales price and the cost of selling products.
Tool rental: tool rental income is confirmed after the work of the tool rental customer is completed.
While the duration of the rent varies depending on the number of jobs and runs, these rents are usually less than a month.
The lease agreement is usually based on the price of each operation or the lens of the drilling, without any minimum rent payment or term.
Other related revenue: we earn revenue from tool fixes when delivering repair tools to our customers.
When our customers issue invoices to their customers for the use of our tools, we receive royal commission income.
Contract service drill bit manufacturing and refurbishment: we confirm revenue for our PDC drill bit service after the drill bit is shipped.
Shipping and handling fees related to the renovation service are paid directly by Baker Hughes at the time of shipment.
Under the contract, we can only renovate and manufacture oil or gas drill bits for Baker Hughes, but under the contract we are not prohibited from producing drill bits for the mining industry.
The cost of operating our business the main elements of the revenue cost of manufacturing, repairing, leasing and selling tools (“product”)
the direct and indirect cost of manufacturing, repairing and supplying products, including labor, materials, utilities, equipment repairs, rental costs related to our facilities, supplies and freight charges.
Sales, general and administrative expenses include costs such as new business development, technical product support, research and development costs, compensation costs for general company operations including accounting, human resources, risk management, etc, related administrative functions such as information technology expenses, security environment expenses, legal and professional expenses. Otherincome (expense)
The net amount is mainly composed of interest expenses on outstanding loans, and interest income is deducted (losses)
Disposal of assets.
Compared with the three months ended March 31, 2019, the consolidated operational results for the three months ended March 31, 2018 are as follows: Summary consolidated operational results for the period shown in the table: III-
From March 31 ,(inthousands)
2092018toolrevenue3 44468% 3,52577% contract service 1 59232% 1,07523% 4,600100% Operatingcosts and expenses 5 5,036100% revenue $ 123102% 4,432016% revenue (loss)
From operations (87)(2)
1674% Other expenses 992% Netincome (loss)$(141)(3)
The following is a discussion of the substantial changes of $ 682% for certain items in the comparative period operating statements contained in our financial statements.
Compared with the previous
Period of year unless otherwise stated. Revenue.
Due to the increase in revenue from contract services, our income has increased by about $436,000, or $ 9%, exceeding the slight decline in tool income.
Tool revenue was $3,444,000, down $ 2% or $81,000 from the previousyear period.
The main reason for the decline was the decline in tool rental and sales revenue by $239,000, or 2%, to about $1,753,000, mainly due to the decline in tool sales in the United StatesS.
Offset by growth in tool rental revenue in the Middle East.
Revenue from other related tools increased by $158,000, or $ 10%, to $1,691,000, reflecting a high level of activity in DNR.
Other related tool income includes tool usage fees, maintenance and maintenance costs.
Revenue from contract services increased by approximately $517,000, or 48%, to $1,592,000.
The increase is due to the increase in exercise refurbishment activities that reflect the level of activity in the United StatesS.
Oil and gas drilling industry.
Operating costs and expenses.
Total operating costs and expenses increased by approximately $690,000 in 2019month period.
● Revenue costs increased by about $244,000 due to the increase in volume.
As a percentage of income, the cost of sales for the three months ended March 31, 2019 was 41%, and the cost of sales for the three months ended March 31, 2018 was 39%.
Revenue costs as a percentage increase in sales due to international starters
The increase in costs is offset by the number of bit renovations.
● Sales, general and administrative expenses increased by approximately $371,000 to $2,069,000, representing 41% of revenue compared to the previous 37%year period.
The main reasons for the increase are the increase in professional fees, stock compensation fees and accumulated bonus fees.
The issuance of bonuses shall be subject to the company\'s annual financial performance targets. OtherIncome (Expenses).
Other income and expenses mainly include rental income, interest expense and losson disposal of assets. ● Interest income.
For the three months ended March 31, 2019, 2018 of interest income was approximately $123,000 and $92,000, respectively, primarily related to interest received from notes receivable by the associated party of Tronco.
● Interest expenditure.
Interest expenditures for the three months ended March 31, 2019 and 2018 were approximately $178,000 and $192,000, respectively.
The decline in interest expenditure was mainly due to a decrease in the outstanding balance on hard rock notes.
In 2019 months, our liquidity was about $2,100,000.
The main uses of our cash are operating expenses, working capital needs, capital expenditures and debt repayment payments.
Our operational and financial strategies include reducing operating costs and capital expenditures to accommodate revenue trends and managing our working capital and debt to improve liquidity.
In 2019, we will continue our efforts to increase revenue, manage costs and make cash flow positive.
If we can\'t do this, we may not be able to do it, among other things (i)
Maintain our current level of general and administrative management; (ii)
Provision of funds for certain obligations due; and (iii)
Respond to competitive pressures or unexpected capital demands.
We cannot guarantee that we will be able to obtain financing in the conditions that will be acceptable in the future.
Revised and reiterated as of November 21, 2018, the remaining balance of hard rock notes was $5.
As at 31 th of 25 million, interest was 2019 per cent.
25% per year and due in October 5, 2020.
Under the current terms of the hard rock note, we need to pay the principal of $750,000 (
Plus accrued interest)
January 5, April5, July 5 and October 5 were 2019 and 2020, respectively.
We paid in January 5, 2019 and April 5, 2019.
InFebruary 2019, we refinance our commercial bank loan, which is secured by our Vernal Utah campus.
The loan is subject to approximately $43,000 per month, including a principal and interest of £ 7.
25%, balloon payments of $2,500,000 due on February 15, 2021.
We also invested $4 in February 2019.
3 million a credit agreement of $0.
Regular loans of 8 million and $3.
5 million revolution loans.
As of March 31, 2019, our balance of regular loans was $800,000 and the balance of revolving loans was $698,031.
The interest rates for both loans are 2%.
The credit agreement expired on February 20, 2023.
The three-month cash flows as at March 31, 2019 compared to the three months ended March 31, 2018, net cash provided for the three-month operating activities as at March 31, 2019 and 976,355 were $520,848 and $2018 respectively.
The main reason for the improvement is the change in working capital demand.
Netcash for investment activities is $338,765 and $94,780 for the three months ended March 31, 2019 at 2018, and the related property, plant and equipment procurement is mainly used to support the expansion of the Middle East.
Netcash was used to fund activities for $555,891 and $625,905 for the three months ending March 31, 2019 at 2018.
The increase in debt principal payments is offset by the proceeds of debt borrowing.
Key accounting policy discussions on our financial position and results of operations are based on our consolidated condensed financial statements prepared in accordance with the requirements of the United StatesS. GAAP.
In the preparation of our financial statements, we need to make estimates and assumptions that affect the amount of reports on assets, liabilities, income, costs and expenses, as well as related disclosures.
We constantly evaluate our estimates and assumptions, including those discussed below.
We make estimates based on historical experience and various other assumptions that we believe are reasonable in this case.
The results of our analysis are the basis for assumptions about the book value of assets and liabilities, which are not obvious from other sources.
While we believe that the estimates and assumptions used in the preparation of consolidated financial statements are appropriate, the actual results may differ from those under different assumptions or conditions, the impact of these differences may be important to streamline our consolidated financial statements.
Our assessments and assumptions are assessed on a regular basis and adjusted if necessary.
More important estimates affecting the amount reported in our consolidated condensed financial statements include, but are not limited: revenue recognition, stock-based compensation, determination of allowance for suspicious accounts, valuation of inventory, recoverability of long-
Living assets, useful life for calculating depreciation and amortization, and valuation of intangible assets. Item4.
With the participation of our CEO and CFO, control and procedural evaluation of disclosure control and procedural resource management assessed the effectiveness of our disclosure control and procedures (
Defined in Rule 13a-15(e)and 15d-15(e)
Under the transaction act)
As of the end of the reporting period for this quarter.
Based on such an assessment, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures came into effect on March 31, 2019.
Changes in internal control of financial reports non-internal controls and procedures this quarter report does not include management\'s assessment report on internal control of financial reports or certificates issued by the company\'s certified public accountants during the transaction period the rules set by the Securities and Exchange Commission for new listed companies.
Under these rules, under the provisions of the Employment Act, as long as we are an \"emerging growth company\" or a \"smaller reporting company\", we do not need to include proof of reporting rule 12b-
2 of the Trading Act. PARTIIItem1.
Legal proceedings occur from time to time in our business activities.
InFebruary 2019, the company filed a patent infringement lawsuit with the United States District Court, requiring Stabil Drill Specialties, LLC (“Stabil Drill”)
Infringement of our patent, which covers the drilling adjustment tools of the companyN-Ream.
The lawsuit against the Stabil drill has not yet been answered.
As of the date of the release of the quarterly report, the proceedings were still in their initial stages.
We cannot predict the outcome of this matter, but legal costs may have a significant impact on our financial position or on the results of our operations for some time to come.
We are currently not involved in any other litigation that management believes may have a significant impact on our financial position or operational results. Item1A.
Risk factors may not be able to maintain sufficient liquidity to repay our debt.
In 2019, we had about $2,100,000 in working capital.
The main uses of our cash are operating expenses, working capital needs, capital expenditures and debt repayment payments.
Our operational and financial strategies include: Operating costs and capital expenditures matching revenue trends, managing working capital and debt to improve liquidity.
We will continue our efforts in 2019 to increase revenue, review additional cost controls and maintain positive growth in cash flow.
If we can\'t do this, we may not be able to do it, among other things (i)
Maintain our current level of overall and administrative expenditure; (ii)
Provision of funds for certain obligations due; and (iii)
Respond to competitive pressures or unexpected capital demands.
We cannot guarantee that in the future we will have access to financing on acceptable terms.
As of November 21, 2018, the interest on hard rock bills has been revised and restated.
£ 25% per year and expires on October 5, 2020.
Under the current terms of the hard rock note, we need to pay the principal of $750,000 (
Interest accrued)
January 5, April 5, July 5 and October 5, 2019 and 2020 each year.
If we can\'t pay what we need, we may lose the right to sell the exerciseN-Ream.
$2019, we got $4.
3 million a credit agreement of $0.
Regular loans of 8 million and $3.
5 million revolution loans.
As of March 31, 2019, our balance of regular loans was $800,000 and the balance of revolving loans was $698,031.
The interest rates for both loans are 2%.
The credit agreement expired on February 20, 2023.
If we are unable to pay the required amount under the credit agreement, we will default under the Credit Agreement, which will allow the debt holder to expedite the expiration unless we are able to obtain, make the necessary waiver or correction in a timely manner.
Any exemption or amendment may require us to amend the terms of the agreement, which may increase the cost of our borrowing and will require additional costs and adversely affect our operating results.
In the event of any non-waiver breach, the lender may elect to exercise any of its available remedies, including the right not to lend out any additional amount, or, if we have outstanding debts under the Credit Agreement, declare any outstanding debts, and any accrued interest and other expenses, due immediately.
If we are unable to repay the outstanding debt (if any) under the credit agreement upon expiration, the lender will be allowed to continue using their collateral, this can have a significant adverse effect on our business and financial situation.
Failure to generate sufficient income to pay hard rock notes may result in the loss of our patent for such notes.
The hard stone note is made by all patents, patents being applied, other patents and drills-N-
Ream trademark purchased in the Hard Rock acquisition (the “Drill-N-
Mortgage order \").
If we do not have the necessary funds to make future payments under the hard rock note and do not make any payments as required under the hard rock note, and we have no success in modifying or restructuring the payment terms. holders of hard rock bills can redeem for sale during the exercise. N-
The Ream collaterorder order orders to use its proceeds for the repayment of hard rock notes and all foreclosure charges, as well as our subsidiary SuperiorDrilling Solutions, LLC will be responsible for any shortfall, or any excess from sales revenue.
Failure to retain and use drill bits-N-
Ream collateral in our business can lead to significant losses in our investment and may have a significant adverse impact on our financial position and operational results, as well as our ability to develop the drill string tool business.
Our debt levels may adversely affect our ability to raise additional capital in the future to support growth, limit our responsiveness to business or industry changes, and put us at a competitive disadvantage.
We need to pay the balance on the $3 hard rock note.
Million per year
Plus accrued interest)
2019 and 2020.
In addition, we also need to pay about $92,000 per month for other debts.
Our debt levels and debt-servicing requirements can have important consequences.
For example, it can (i)
Causing our key assets to be foreclosed. ii)
Increasing our vulnerability to generally unfavorable economic and industrial conditions ,(iii)
Limits our ability to fund future capital expenditures and working capital, limits our ability to engage in future acquisitions or development activities, or to make the most of the value of our assets and opportunities, because we need to use most of our cash flow from operations to debt repayment to pay the debt ,(iv)
Increase our borrowing costs,v)
We are restricted from making strategic acquisitions.
Strategic divestiture ,(vi)
Limiting our flexibility in planning or responding to changes in the business or industry we operate, puts us at a competitive disadvantage compared to our competitorsvii)
Damage our ability to receive additional financing in the future.
Our customer base is centralized, the loss or non-performance of one or more of our important customers, or our failure to expand our channels to the market and further commercialize, may lead to our
We have two big customers, which currently account for 93% of our total revenue.
In the future, we are likely to continue to earn some revenue from relatively small customers.
If major customers decide not to continue using our services or significantly reduce their drilling plans, or if we are unable to expand our channels to the market or further commercialize our revenues, our business performance and financial situation will also be damaged.
In addition, we face credit risk due to the concentration of customer groups.
Due to changes in financial and economic conditions or other reasons, any increase in non-payment and non-performance by our counterparty may have a significant impact on our business, the results of the operating and financial conditions, it may adversely affect our liquidity. Item6.
The exhibition listed below is submitted as part of this report: ExhibitNo. Description31.
1 * certificate issued under section Sabans-302
Oglesley Act of 2002GTroy Meier. 31.
2 * certificate issued under section Sabans-302
Christopher D. Oakley Act 2002Cashion. 32.
1 * issuance of certificates under section 906th of the Sabans act
Oglesley Act of 2002GTroy Meier. **32.
2 * certificates issued under section Sabans-906
Christopher D. Oakley Act 2002Cashion. **101.
INS * XBRLInstance101.
XSD * XBRLSchema101.
CAL * xbrlcalculation 101.
DEF * xbrldefintion101.
Lab * xbrllabel101.
* Before XBRLPresentation * is attached. * Submit here.
Kingtool Aluminum Doors and Windows Machinery Co., Ltd. is different from other companies as we provide timely and unique services to our respected clients.
We are dedicated to providing you with more than just customer service by utilizing our qualified team who pride themselves on meeting and exceeding customer's needs. We also have ell-equipped plantin China with advanced facilities to manufacture cnc machine accessories cnc router manufacturers products according to customers requirements. Welcome to send your enquiry and visit our factory. Our website is Kingtool Aluminium Machinery.
Kingtool Aluminum Doors and Windows Machinery Co., Ltd.'s core technology of aluminum saw enables us to understand and utilize in a right way.
plate bending machine manufacture allows users to apply in different ways for satisfying their needs.
Like anything else in curtain wall manufacturers, there are a variety of choices and types to choose from, and each of them will affect your budget in some form. Kingtool Aluminum Doors and Windows Machinery Co., Ltd. offers a range of quality at competitive prices.
Custom message
Chat Online 编辑模式下无法使用
Chat Online inputting...