false FY 0001600422 P3Y P3Y

 2023-06-30

 2024-03-15

 us-gaap: CustomerConcentrationRiskMember
 us-gaap: SalesRevenueNetMember
 SDPI:TwoCustomersMember

 us-gaap: CustomerConcentrationRiskMember
 us-gaap: SalesRevenueNetMember
 SDPI:TwoCustomersMember

 SDPI:TwoCustomersMember

 SDPI:TwoCustomersMember

 us-gaap: SupplierConcentrationRiskMember
 SDPI:PurchasesMember
 SDPI:TwoVendorsMember

 SDPI:TwoVendorsMember

 us-gaap: SupplierConcentrationRiskMember
 SDPI:PurchasesMember
 SDPI:TwoVendorsMember

 SDPI:TwoVendorsMember

 SDPI:ManufacturingModernizationGrantProgramMember

 SDPI:BuildingsAndLeaseholdImprovementsMember

 SDPI:BuildingsAndLeaseholdImprovementsMember

 SDPI:MachineryEquipmentAndRentalToolsMember

 SDPI:MachineryEquipmentAndRentalToolsMember

 SDPI:OfficeEquipmentFixturesAndSoftwareMember

 SDPI:OfficeEquipmentFixturesAndSoftwareMember

 us-gaap: TransportationEquipmentMember

 us-gaap: TransportationEquipmentMember

 SDPI:ToolsAndProductSalesMember

 SDPI:ToolsAndProductSalesMember

 SDPI:ToolRentalMember

 SDPI:ToolRentalMember

 SDPI:OtherRelatedToolRevenueMember

 SDPI:OtherRelatedToolRevenueMember

 SDPI:ToolRevenueMember

 SDPI:ToolRevenueMember

 SDPI:ContractServicesMember

 SDPI:ContractServicesMember

 us-gaap: DevelopedTechnologyRightsMember

 us-gaap: DevelopedTechnologyRightsMember

 us-gaap: CustomerContractsMember

 us-gaap: CustomerContractsMember

 us-gaap: TrademarksAndTradeNamesMember

 us-gaap: TrademarksAndTradeNamesMember

 2017-08-31

 2017-08-30
 2017-08-31

 2020-07-07

 2023-01-31
 2023-01-31

 SDPI:CreditAgreementMember

 SDPI:CreditAgreementMember

 SDPI:MachineryLoansMember

 SDPI:MachineryLoansMember

 SDPI:TransportationLoansMember

 SDPI:TransportationLoansMember

 SDPI:InsuranceLoanMember

 SDPI:InsuranceLoanMember

 us-gaap: PrimeRateMember

 SDPI:LoanAndSecurityAgreementMember
 SDPI:AustinFinancialServicesIncMember

 2019-02-28

 SDPI:LoanAndSecurityAgreementMember
 SDPI:AustinFinancialServicesIncMember

 2019-02-28

 SDPI:LoanAndSecurityAgreementMember
 SDPI:AustinFinancialServicesIncMember
 us-gaap: RevolvingCreditFacilityMember

 2019-02-28

 SDPI:EquipmentLoansMember

 SDPI:EquipmentLoansMember

 SDPI:EquipmentLoansMember

 SDPI:EquipmentLoansMember

 SDPI:InsuranceLoansMember

 SDPI:InsuranceLoansMember

 SDPI:TransportationLoansMember

 SDPI:TransportationLoansMember

 stpr: UT

 SDPI:LeaseAgreementMember
 stpr: UT

 SDPI:LeaseAgreementMember

 SDPI:PreTwoThousandEighteenMember

 SDPI:PostTwoThousandSeventeenMember

 SDPI:EmployeeStockIncentivePlanMember

 2014-12-31

 2020-01-01
 2020-12-31

 2023-12-15
 2023-12-15

 SDPI:FirstAnniversaryMember

 SDPI:SecondAnniversaryMember

 2022-12-16
 2022-12-16

 SDPI:FirstAnniversaryMember

 SDPI:SecondAnniversaryMember

 srt: NorthAmericaMember

 srt: NorthAmericaMember

 SDPI:InternationalMember

 SDPI:InternationalMember

 SDPI:CorporateCostsUnallocatedMember

 SDPI:CorporateCostsUnallocatedMember

 country: MX

 country: MX

 country: US

 country: US

 SDPI:OtherCountriesMember

 SDPI:OtherCountriesMember

 SDPI:DomesticAgreementMember

 SDPI:InternationalAgreementMember

 SDPI:DomesticAgreementMember
 us-gaap: ServiceMember

 SDPI:InternationalAccountReceivableMember
 us-gaap: ServiceMember

 SDPI:CashAndRestrictedCashMember

 us-gaap: SubsequentEventMember

 2024-03-06

 UNITED
STATES

 SECURITIES
AND EXCHANGE COMMISSION

 Washington,
DC 20549

 FORM

 (Mark
One)

 ANNUAL
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the Fiscal Year Ended December 31, 2023

 or

 TRANSITION
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the Transition Period from ____________ to ____________

 Commission
File Number 001-36453

 (Name
of registrant as specified in its charter)

 Utah

 46-4341605

 (State
 or other jurisdiction of

 incorporation
 or organization)

 (I.R.S.
 Employer

 Identification
 No.)

 1583
 South 1700 East

 Vernal,
 Utah

 84078

 (Address
 of Principal Executive Offices)

 (Zip
 Code)

 Issuer's
Telephone Number: ( 435) 789-0594

Registered Pursuant to Section 12(b) of the Exchange Act:

 Title
 of each class:

 Trading
 Symbol(s)

 Name
 of each exchange on which registered:

 Common
 Stock, $0.001 par value

 SDPI

 NYSE
 American

Registered Pursuant to Section 12(g) of the Exchange Act: None

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange. Yes
 No

by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange
Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes No

by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes No

by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer,"
"smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 Large
 accelerated filer

 Accelerated
 filer

 Non-accelerated
 filer (Do not check if a smaller reporting company)

 Smaller
 reporting company

 Emerging
 growth company

 If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No

by check mark whether the registrant has filed a report on and attestation of the effectiveness of its internal control over financial
reporting under Section 404(b) of Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by registered public accounting firm that prepared or issued
its audit report

 If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. Yes No

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). Yes
No

 The
aggregate market value of common stock held by non-affiliates of the registrant as of June 30, 2023 was approximately $ 13,340,466
based on the closing market price of $1.23 per share. Shares of common stock held by executive officers and directors of the registrant
are not included in the computation. The registrant, solely for the purpose of this required presentation, has deemed its executive officers
and directors to be affiliates.

 The
registrant had 30,391,240 shares of its common stock issued and outstanding on March 15,
2024.

 Documents
incorporated by reference: NONE.

 FORM

 FOR
THE YEAR ENDED DECEMBER 31, 2023

 ITEM
 1.

 BUSINESS

 ITEM
 1A.

 RISK FACTORS

 ITEM
 1B.

 UNRESOLVED STAFF COMMENTS

 ITEM
 2.

 PROPERTIES

 ITEM
 3.

 LEGAL PROCEEDINGS

 ITEM
 4.

 MINE SAFETY DISCLOSURES

 ITEM
 5.

 MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 ITEM
 6.

 RESERVED

 ITEM
 7.

 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 ITEM
 7A.

 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 ITEM
 8.

 CONSOLIDATED FINANCIAL STATEMENTS

 ITEM
 9.

 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 ITEM
 9A.

 CONTROLS AND PROCEDURES

 ITEM
 9B.

 OTHER INFORMATION

 ITEM
 9C.

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 ITEM
 10.

 DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 ITEM
 11.

 EXECUTIVE COMPENSATION

 ITEM
 12.

 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS' MATTERS

 ITEM
 13.

 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

 ITEM
 14.

 PRINCIPAL ACCOUNTANT FEES AND SERVICES

 ITEM
 15.

 EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 ITEM
 16.

 FORM 10-K SUMMARY

 SIGNATURES

 Cautionary
Note Regarding Forward-Looking Statements

 This
Annual Report on Form 10-K includes certain statements that may be deemed to be "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). Statements contained in all parts of this document that are not historical
facts are forward-looking statements that involve risks and uncertainties that are beyond the control of Superior Drilling Products,
Inc. (the "Company" or "SDPI"). You can identify the Company's forward-looking statements by the words
"anticipate," "estimate," "expect," "may," "project," "believe"
and similar expressions, or by the Company's discussion of strategies or trends. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, no assurances can be given that these expectations will prove to be correct.
The forward-looking statements contained in or incorporated by reference into this Form 10-K are largely based on our expectations, which
reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently
known market conditions and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain
and involve a number of risks and uncertainties that are beyond our control, including:

 the
 volatility of oil and natural gas prices;

 the
 cyclical nature of the oil and gas industry;

 our
 reliance on significant customers;

 the
 risk in implanting strategic options as recommended by Piper Sandler

 consolidation
 within our customers' industries;

 competitive
 products and pricing pressures;

 current
 and potential governmental regulatory actions in the United States and regulatory actions and political unrest in other countries,
 specifically the Middle East region and Eastern Europe;

 our
 ability to develop and commercialize new and/or innovative drilling and completion tool technologies;

 fluctuations
 in our operating results;

 our
 dependence on key personnel;

 costs
 and availability of raw materials;

 our
 dependence on third party suppliers;

 unforeseen
 risks in our manufacturing processes;

 the
 need for skilled workers;

 availability
 of financing and access to capital markets;

 our
 ability to successfully manage our growth strategy;

 unanticipated
 risks associated with, and our ability to integrate, acquisitions;

 our
 expectations regarding the reconsideration of strategic alternatives in the event a transaction is not completed;

 the
 potential impact of the coronavirus, variants of the coronavirus or other major health crises on our business and results of operations,
 including the impact to our supply chain;

 terrorist
 threats or acts, war and civil disturbances;

 our
 ability to protect our intellectual property;

 impact
 of environmental matters, including future environmental regulations;

 implementing
 and complying with safety policies;

 breaches
 of security in our information systems and other cybersecurity risks;

 related
 party transactions with our founders; and

 risks
 associated with our common stock.

 Many
of these factors are beyond our ability to control or predict. These factors are not intended to represent a complete list of the general
or specific factors that may affect us. The events in Russia and surrounding areas may result in political instability and may add a
potential risk.

 In
addition, management's assumptions about future events may prove to be inaccurate. All readers are cautioned that the forward-looking
statements contained in this Annual Report on Form 10-K are not guarantees of future performance, and we cannot assure any reader that
such statements will be realized or that the forward-looking events and circumstances will occur. Actual results may differ materially
from those anticipated or implied in the forward-looking statements due to factors described in "Item 1A. Risk Factors" included
elsewhere in this Annual Report and in the documents that we include as exhibits to this Annual Report, and our subsequent SEC filings.
All forward-looking statements speak only as of the date they are made. We do not intend to update or revise any forward-looking statements
as a result of new information, future events or otherwise, except as required by law. These cautionary statements qualify all forward-looking
statements attributable to us or persons acting on our behalf.

 PART
I

 ITEM
1. BUSINESS

 Our
Company

 Superior
Drilling Products, Inc. (the "Company", "SDPI", "we", "our" or "us") is an
innovative drilling and completion tool technology company providing cost saving solutions that drive production efficiencies for the
oil and natural gas drilling industry. Our drilling solutions include the patented Drill-N-Ream well bore conditioning
tool ("Drill-N-Ream tool") and the patented Strider Drill String Oscillation System technology ("Strider technology"
or "Strider"). In addition, the Company is a manufacturer and refurbisher of PDC (polycrystalline diamond compact) drill
bits for leading oil field services companies. We operate a state-of-the-art drill tool fabrication facility in Vernal, Utah, where we
manufacture solutions for the drilling industry, as well as customers' custom products. Our headquarters are co-located in Vernal,
Utah with our manufacturing operations. We also operate a repair facility in Dubai.

 Our
history dates back to 1995 when we were founded by Troy and Annette Meier as a drill bit refurbishment company. Our co-founder, Troy
Meier, developed the first commercially-viable process for refurbishing PDC drill bits after a successful 13-year career with a predecessor
of Baker Hughes Inc. He was also co-inventor of the patented Drill-N-Ream tool. We were incorporated on December 10, 2013 under
the name SD Company, Inc. in order to facilitate (a) the reorganization of the entities that are now our consolidated subsidiaries and
(b) the subsequent acquisition of Hard Rock Solutions, LLC ("HR"). We changed our name from SD Company Inc. to Superior Drilling
Products, Inc. on May 22, 2014 in conjunction with closing of that reorganization and our initial public offering, which occurred on
May 23, 2014 ("Offering" or "IPO"). Our common stock trades on the NYSE American exchange under the ticker symbol
"SDPI".

 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").

 Global
Market Conditions

 Activity
in the oil field is typically measured by rig counts. The oil and gas industry recovered from the significant fall off of activity
with the global pandemic in March 2020 peaking in early 2023 to settle near current rig count levels. Total U.S. rig count as
reported by Baker Hughes as of March 1, 2024 was 629 rigs, an increase of 7 rigs from the rig count as of December 31, 2023. The
Middle East market began to improve during 2022 after a slow rebound from the impact of the global pandemic. Total rig count in that
region as of the end of February 2024 was 349 rigs, compared with 327 rigs at the same time last year.

 The
Russia – Ukraine conflict is a global concern. The Company does not have any direct exposure to Russia or Ukraine through its operations,
employee base, investments or sanctions. The Company does not receive goods or services sourced from those countries, does not anticipate
any disruption in its supply chain and has no business relationships, connections to or assets in Russia, Belarus or Ukraine. No impairments
to assets have been made due to the conflict. The global oil industry has been impacted by this situation, but the Company's operations
and business in the Middle East has not been disrupted to date. The increase in oil producing activities in the United States has benefitted
the Company's operations.

 The
Israel conflict – We have not been directly impacted by the Israel-Hamas conflict. However, the historic volatility in the Middle
East, including as a result of recent events in Israel and Gaza, may result in political instability and societal disruption could reduce
overall demand for oil and natural gas, potentially putting downward pressure on demand for our services and causing a reduction in our
revenue.

 Background
of Business

 We
innovate, design, engineer, manufacture, sell, and repair drilling and completion tools in the United States, Canada, and the Middle
East.

 We
currently have three basic operations:

 Our
 PDC drill bit and other tool refurbishing and manufacturing service,

 Our
 emerging technologies business that manufactures the Drill-N-Ream tool, our innovative drill string enhancement tool, the Strider
 technology and other tools, and

 Our
 new product development business that conducts our research and development, and designs our horizontal drill string enhancement
 tools, other down-hole drilling technologies, and drilling tool manufacturing technologies.

 Our
strategy for growth is to expand the global market penetration of our current drilling tool solutions and to leverage our expertise in
drilling tool technologies and precision machining in order to broaden our product offerings and solutions for the oil and gas industry,
as well as other industries that require precision machining and quality. We believe through our patented technologies, as well as technologies
under development, that we can offer the oil and gas industry the solutions it demands to improve drilling efficiencies and reduce production
costs.

 Major
Customers

 The
Company has Vendor Agreements with Baker Hughes Oilfield Operations LLC ("Baker Hughes"), Drilling Tools International ("DTI"),
Weatherford U.S., L.P. ("Weatherford"), Odfjell Drilling, National Energy Services Reunited Corp. ("NESR") and
Schlumberger Oman & Co. LLC ("Schlumberger").

 Baker
Hughes: We have manufactured and refurbished PDC drill bits exclusively for Baker Hughes's oilfield operations in the Rocky
Mountain, California and Alaska regions as well as other areas as needed since 1996. In 2018, we re-negotiated our agreement with Baker
Hughes whereby we now refurbish PDC bits for all of Baker Hughes's U.S. geographic areas. In 2020, we further re-negotiated our
agreement whereby we can now refurbish PDC bits for any PDC bit supplier. In addition to the bit refurbish work, we have added new blade
manufacturing and blade repairs. We are currently in the process of renewing our contract, which expired April 4, 2022.

 DTI:
 We have been working with DTI since 2016. DTI purchases our Drill-N-Ream tool for their rental tool business. We receive revenue
from DTI for tool sales, tool repairs and a royalty fee based on tool usage. Pursuant to our original agreement, DTI was required to
achieve certain market share requirements in order to maintain exclusive marketing rights for the Drill-N-Ream in the U.S. and Canada,
both onshore and offshore. DTI did not achieve the defined market share goals in 2017 and, therefore, no longer has exclusive rights
to market the Drill-N-Ream. As a result, the Company can work with other customers to expand the market reach of the Drill-N-Ream in
the U.S. and Canada.

 International:
 We are working with Weatherford, Odfjell Drilling, NESR, and Schlumberger to introduce and gain exposure of our Drill-N-Ream tool
to large Middle East operators in Kuwait and Oman and we intend to expand sales into other Middle East countries as we execute our international
expansion strategy.

 Our
Products

 Drill-N-Ream
Tool. The Drill-N-Ream tool is a dual-section wellbore conditioning tool which is located approximately 150 feet behind the bottom
hole assembly, also known as BHA. Concurrently as the well bore is being drilled, the Drill-N-Ream tool conditions the well bore. It
smooths and slightly enlarges the well drift in all sections of horizontal or directionally-drilled wells, in both oil and water-based
mud. It reduces tortuosity resulting from the geo-steering drill bit, and the overcorrections and formation interactions that occur during
directional drilling. With the well bore conditioned by the Drill-N-Ream, the drill string is then able to move through the conditioned
well bore with less friction and stress which reduces power consumption and extends life of drill string.

 The
Drill-N-Ream tool accelerates drilling speed and extends the horizontal distance of the well bore by:

 Smoothing
 out ledges and doglegs left by the bit, which allows the drill string to move through a conditioned well bore with less friction
 and stress,

 Reducing
 tool joint damages and trip time (i.e. the time required to remove and reinsert the drill string),

 Enhancing
 the power available to drive the drill bit assembly,

 Extending
 the horizontal distance that can be drilled during a run,

 Improving
 the running of casing in the completed well much easier, and

 Tripping
 out of the hole on elevators, rotation not required.

 The
number of "trips" required by the operator, or the number of times the drill string has to be removed and reinserted in the
wellbore, is reduced as a result of the performance of the Drill-N-Ream tool. Each time a drilling operator has to trip the drill string
and replace a bit or other drill string component, it costs the operator substantial time and money, so we believe anything that allows
each run to extend further without additional tripping is of great value to our customers. Traditional methods for conditioning the well
bore entails removing the drill string and running a dedicated reamer through the well bore, typically in two separate runs. The Drill-N-Ream
tool eliminates the need for dedicated reamer runs, and therefore reduces the cost of drilling a horizontal well.

 The
Drill-N-Ream tool is available in multiple sizes and can be custom manufactured to accommodate most drill hole sizes.

 We
believe that the Drill-N-Ream tool's rapid adoption and continued use by operators validates its effectiveness and industry acceptance.
We observe that leading operators have begun to standardize their drilling assembly with a Drill-N-Ream tool. In addition, we understand
that a number of end users have rented the Drill-N-Ream tool after first trying competitive products. We expect the above factors to
support increasing interest in, and revenue from, the Drill-N-Ream tool over the next several years as more well operators' reports
of its effectiveness are transmitted through word-of-mouth by an increasing user base to other well operators globally.

 Strider
Technology. The Strider technology utilizes its unique patented design to reduce drill string friction on horizontal wells, resulting
in improved rates of penetration and cost savings. The Strider technology is designed to help dissipate the inertial drag of a horizontal
drill string by generating rhythmic pulses that break the frictional connection between the drill strings and well bore greatly enhancing
drilling rates. Its revolutionary engineering provides a cost-effective alternative to conventional downhole vibration tools.

 The
Strider technology is composed of two main parts, a hydraulic channeling chamber ("HCC") and a rhythmic pulsation chamber
("RPC"). The RPC contains a precisely engineered, high speed pulse-valve that systematically restricts flow area. During
flow restriction, or "closure", the ideal amount of fluid is allowed to continue down hole. This perfectly controlled hydraulic
flow produces an optimal pulse frequency, which is preferred for bottom hole assembly equipment. The optimal pulse frequency also allows
for placement of the Strider technology closer to the bit than typical oscillation tools.

 We
believe that our Strider technology is at the forefront of drill string tool technological development for horizontal drilling. We also
believe our Strider technology offers significant advantages over our competitors' drill string stimulation tools. We expect this
technology to grow in the near term.

 V-Stream
advanced conditioning system ("V-Stream"). The V-Stream tool is an integral spiral blade stabilizer and is engineered
to combine stabilization with reaming. A cavity or plenum in the middle of the blades facilitates enhanced fluid flow for cuttings transport
and reduces torque when compared with typical stabilizers with similar overall blade length. Non-active cutters at gauge enable the V-Stream
to remove formation and condition the hole while controlling deviation. With these unique features, the V-Stream will stabilize the bottom
hole assembly and condition the hole simultaneously to optimize the drilling operations.

 Our
Strategy for Growth

 Our
strategy for growth is to expand the global market penetration of our current drilling tool solutions and to leverage our expertise in
drilling tool technologies and precision machining in order to broaden our product offerings and solutions for the oil and gas industry,
as well as other industries that require precision machining and quality. We believe through our patented technologies, as well as technologies
under development, that we can offer the oil and gas industry the solutions it demands to improve drilling efficiencies and reduce production
costs. Specific examples of this strategy include:

 Leverage
highly advanced tool technologies. We currently have two highly differentiated advanced drilling tool technologies (the Drill-N-Ream
tool and the Strider technology) that address challenges encountered in the oil and gas drilling marketplace.

 Expand
our channels to market and geographic reach. We are leveraging existing distribution channels in the exploration and production industry.
We have entered into an agreement with DTI, establishing DTI as a distributor of our patented Drill-N-Ream tool in the United States
and Canada onshore and offshore markets. As a result of this agreement, our technology has penetrated the market more efficiently by
leveraging DTI's long-term relationships with end users. We are also evaluating opportunities to further our reach into the North
American market.

 We
are expanding our channels to market and our geographic presence, especially in the Middle East as evidenced by agreements that we entered
into with Weatherford in December 2017, Odfjell Drilling in November 2018, NESR in 2019 and Schlumberger in 2021. We expect to add additional
distributors as we expand our tool offering and geographic reach. We also expect to leverage our distributor and customer relationships
to identify needs for new tool development and to use these channels to market a broadened product offering as it is developed.

 Strengthen
and support our employees. Our experienced employees and management team are some of our most valuable resources. Attracting, training,
and retaining key personnel, has been and will continue to be critical to our success. To achieve our goals, we intend to remain focused
on providing our employees with training, personal and professional growth opportunities, as well as adding performance-based incentives,
including opportunities for stock ownership, and other competitive benefits. We are also working with the local university and high school
to develop and teach local programs in machining and engineering expertise and technical resources.

 Seek
strategic acquisitions to enhance or expand our product lines. While our focus is on organic growth, we may identify new technologies
to add to our arsenal of tools for the exploration and production industry. In analyzing new acquisitions, we intend to pursue opportunities
that complement our existing product line and/or that are geographically situated within our current market. We believe that strategic
acquisitions will enable us to exploit economies of scale in the areas of finance, human resources, marketing, administration, information
technology, and legal, while also providing cross-marketing opportunities among our drill tool product offerings. Effective May 2023,
we engaged Piper Sandler to assist in the evaluation of strategic alternatives.

 New
Product Development and Intellectual Property

 Our
sales and earnings are influenced by our ability to successfully provide the high-level service and state-of-the-art products that our
customers demand, which in turn relies on our ability to develop new processes, technology, and products. We have also historically dedicated
additional resources toward the development of new technology and equipment to enhance the effectiveness, safety, and efficiency of the
products and services we provide. We expect that with our extensive knowledge and experience in the oilfield industry, we can identify
additional challenges with directional drilling, and then design and develop tools that will help our customers with their drilling challenges.
Further development of additional drill string components will become increasingly important to our business as we continue to grow through
both organic expansion and strategic acquisitions.

 Research
and development costs were approximately $765,000 for the year ended December 31, 2023, compared with $436,000 for the year ended December
31, 2022. Costs included in research and development include payroll for engineers, materials for the Strider technology, and third-party
engineering costs. Research and development costs represented less than approximately 4% and 2% of our revenue for the years ended December
31, 2023 and 2022, respectively. Legal costs relating to our patents are not included in research and development costs.

 Although
we highly value our proprietary products and technology, we also depend on our technological capabilities, customer service-oriented
culture, and application of our know-how to distinguish ourselves from our competitors. We also consider the services and products we
provide to our customers, our customer relationships, and the technical knowledge and skill of our personnel, to be more important than
our registered intellectual property in our ability to compete. While we stress the importance of our research and development programs,
the technical challenges and market uncertainties associated with the development and successful introduction of new and updated products
are such that we cannot assure investors that we will realize any particular amount of future revenue from the services and related products
resulting from our research and development programs.

 Suppliers
and Raw Materials

 We
acquire supplies, component parts, products and raw materials from suppliers, including steel suppliers, foundries, forge shops and original
equipment manufacturers. The prices we pay for our raw materials may be affected by, among other things, energy, industrial diamond,
steel and other commodity prices, tariffs and duties on imported materials and foreign currency exchange rates. Certain of our component
parts, products or specific raw materials are only available from a limited number of suppliers. Costs have increased from impacts of
inflation and supply chain constraints.

 Our
ability to obtain suitable quality raw materials and components, such as PDC's, steel and flux, solder and heating elements, is
critical to our ability to remanufacture Baker Hughes drill bits, and to manufacture the Drill-N-Ream tool and Strider technology tools
and other future drilling products. In order to purchase raw materials and components in timely and cost-effective manner, we have developed
both domestic and international sourcing connections and arrangements. We maintain quality assurance and testing programs to analyze
and test these raw materials and components in order to assure their compliance with our rigorous specifications and standards. We generally
try to purchase our raw materials from multiple suppliers, so we are not dependent on any one supplier, but this is not always possible.

 The
price and availability of commodities and components, in particular steel, can have an impact on our operations. We have no assurance
that we will be able to continue to purchase these raw materials on a timely basis or at historical prices.

 Proprietary
Rights

 We
rely primarily on a combination of patent, trade secret, copyright and trademark laws, confidential procedures, and other intellectual
property protection methods to protect our proprietary technology. The Company currently has U.S. patent applications pending, and related
international patent applications pending as co-inventor, and individually with respect to the Strider technology and other pending drilling
tools. There is no assurance that our patent applications will result in issued patents, that the existing patents or that any future
patents issued to us will provide any competitive advantages for their products or technology, or that, if challenged, the patents issued
to us will be held valid and enforceable. Despite our precautions, unauthorized parties may attempt to copy aspects of our products or
obtain and use information that we regard as proprietary. Existing intellectual property laws afford only limited protection and policing
violations of such laws is difficult. The laws of certain countries in which our products are or may be used by our customers do not
protect our products and intellectual property rights to the same extent as do the laws of the United States. There is no assurance that
these protections will be adequate or that our competitors will not independently develop similar technology, gain access to our trade
secrets or other proprietary information, or design around our patents.

 We
may be required to enter into costly litigation to enforce our intellectual property rights or to defend infringement claims by others.
Such infringement claims could require us to license the intellectual property rights of third parties. There is no assurance that such
licenses would be available on reasonable terms, or at all.

 Competition

 Drill
Bit Refurbishing. The primary competitors for our drill bit refurbishing services are the in-house units at Hughes Christensen, the
division of Baker Hughes responsible for drill bits. Other drill bit manufacturers also have in-house refurbishing units and are now
competitors given the removal of the exclusivity clause under our contract with Baker Hughes.

 Drilling
Enhancement Tools. The primary competitors for our Drill-N-Ream tool are several single-section reaming tool manufacturers, including
Baker Oil Tools (a division of Baker Hughes), NOV, Schlumberger and Tercel, and one dual-section reaming tool manufactured by Stabil
Drill (which is the subject of the lawsuit described in Item 3). We believe that the Drill-N-Ream tool is the only patented dual-section
or dual cutting structure drill string reamer on the market today. We believe that distinction will allow us to continue building on
the Drill-N-Ream tool's first-mover advantage.

 We
believe that our Strider technology is at the forefront of drill string tool technological development for horizontal drilling. There
are existing tools that would compete with our Strider technology, such as the Agitator tool marketed by NOV. However, we believe our
Strider technology offers significant advantages over the Agitator tool.

 Customers

 Our
customer concentration of revenue is dependent upon a limited number of customers. For the years ended December 31, 2023 and 2022, two
customers represented 85% and 88% of our total revenue, respectively.

 Manufacturing

 We
manufacture our solutions, as well as custom products, in our state-of-the-art drill tool fabrication facility where we operate a technologically
advanced PDC drill bit refurbishing facility, as well as a state-of-the-art, high-tech drilling and completion tool engineering design
and manufacturing operation. We manufacture our drill string enhancement tools, including the patented Drill-N-Ream tool and the patented
Strider technology, and conduct our new product research and development from this facility.

 We
employ a senior work force with specialized training and extensive experience related to drill bit refurbishing and drill and completion
tool manufacturing. They produce our products and services using a suite of highly technical, purpose-built equipment, much of which
we design and manufacture for our proprietary use. Our manufacturing equipment and products use advanced technologies that enable us
to increase efficiency, enhance product integrity, improve efficiency and safety, and solve complex drilling tool problems.

 In
December 2020, we were awarded the AS9100D with ISO 9001:2015 certification for our quality management systems (QMS) and for meeting
QMS requirements specific to the aviation, space and defense industries. To date we have maintained our certification.

 We
believe that we can leverage our certification as well as our precision machining and manufacturing expertise to produce other products
for customers in a variety of industries.

 Cyclicality

 We
are substantially dependent on conditions in the oil and gas industry, including the level of exploration, development and production
activity of, and the corresponding capital spending by, oil and natural gas companies.

 The
level of exploration, development and production activity is directly affected by trends in oil and natural gas prices, which have historically
been volatile, and by capital spending discipline imposed by customers.

 Inflationary
and/or recessionary factors relating to the oil and gas industry may directly affect the Company's operations. The increased demand
for oil and gas production has benefited the Company's operations. The Company is not immune to the effects of inflation on its
labor requirements, supply chain and costs of revenues.

 Declines
in oil and gas prices could negatively affect the level of these activities and capital spending, which could adversely affect demand
for our products and services and, in certain instances, result in the cancellation, modification or rescheduling of existing and expected
orders and the ability of our customers to pay us for our products and services. These factors could have an adverse effect on our revenue
and profitability. Conversely, increases in oil and gas prices could positively affect production activities and capital spending, which
could positively affect demand for our products and services.

 Seasonality

 Our
business is not significantly impacted by seasonality, although our fourth quarter has historically been negatively impacted by holidays
and our clients' budget cycles. A small portion of the revenue we generate from selected operations may benefit from higher first
quarter activity levels, as operators take advantage of the winter freeze to gain access to remote drilling and production areas. In
the past, some of our revenue in Alaska and Canada has declined during the second quarter due to warming weather conditions that resulted
in thawing, softer ground, difficulty accessing drill sites and road bans that curtailed drilling activity.

 Environmental,
Health and Safety Regulation

 Our
operations are subject to numerous stringent and complex laws and regulations governing the discharge of materials into the environment,
health and safety aspects of our operations, or otherwise relating to human health and environmental protection, and we have put a strong
focus on these issues.

 We
designed and built our Vernal facility as a fully-contained business park, except for the city sewer connection. Underlying our entire
facility, including parking lots and runoff storage areas, is a complete capture and containment field that collects all building drainage
and ground run off in isolated tanks. Captured drainage and runoff, as well as all hazardous waste generated in our manufacturing processes
is regularly removed from our facility by a certified hazardous waste disposal company. Any changes in environmental laws and regulations
or in enforcement policies that result in more stringent and costly waste handling, storage, transport, disposal, or remediation requirements
could have a material adverse effect on our operations and financial position. Moreover, accidental releases or spills of regulated substances
may occur in the course of our operations, and we cannot assure you that we will not incur significant costs and liabilities as a result
of such releases or spills, including any third-party claims for damage to property, natural resources or persons. Failure to comply
with these laws or regulations or to obtain or comply with permits may result in the assessment of administrative, civil and criminal
penalties, imposition of remedial or corrective action requirements, and the imposition of orders or injunctions to prohibit or restrict
certain activities or force future compliance.

 The
following is a summary of the more significant existing environmental, health and safety laws and regulations to which our business operations
are subject and for which compliance could have a material adverse impact on our capital expenditures, results of operations or financial
position.

 Hazardous
Substances and Waste. The Resource Conservation and Recovery Act (" RCRA ") and comparable state statutes,
regulate the generation, transportation, treatment, storage, disposal and cleanup of hazardous and non-hazardous wastes. Under the auspices
of the EPA, the individual states administer some or all of the provisions of RCRA, sometimes in conjunction with their own, more stringent
requirements. We are required to manage hazardous and non-hazardous wastes in compliance with RCRA and its state counterparts.

 The
Comprehensive Environmental Response, Compensation, and Liability Act (" CERCLA "), also known as the Superfund law,
imposes joint and several liability, without regard to fault or legality of conduct, on classes of persons who are considered to be responsible
for the release of a hazardous substance into the environment. These persons include the owner or operator of the site where the release
occurred, and anyone who disposed or arranged for the disposal of a hazardous substance released at the site. We currently own, lease,
or operate numerous properties that have been used for manufacturing and other operations for many years. We also contract with waste
removal services and landfills. These properties and the substances disposed or released on them may be subject to CERCLA, RCRA and analogous
state laws. Under such laws, we could be required to remove previously disposed substances and wastes, remediate contaminated property,
or perform remedial operations to prevent future contamination. In addition, it is not uncommon for neighboring landowners and other
third parties to file claims for personal injury and property damage allegedly caused by hazardous substances released into the environment.

 Water
Discharges. The Federal Water Pollution Control Act (the " Clean Water Act ") and analogous state laws impose restrictions
and strict controls with respect to the discharge of pollutants, including spills and leaks of oil and other substances, into "Waters
of the United States," including wetlands. The discharge of pollutants into regulated waters is prohibited, except in accordance
with the terms of a permit issued by the EPA or an analogous state agency. A responsible party includes the owner or operator of a facility
from which a discharge occurs. The Clean Water Act and analogous state laws provide for administrative, civil and criminal penalties
for unauthorized discharges and, together with the Oil Pollution Act of 1990, impose rigorous requirements for spill prevention and response
planning, as well as substantial potential liability for the costs of removal, remediation, and damages in connection with any unauthorized
discharges. Further, proposed revisions to the definition of "Waters of the United States" have been subject to judicial
challenges and administrative action, resulting in uncertainty as to the scope of the regulatory definition. Our obligations under the
Clean Water Act could be expanded when the definition of "Waters of the United States" is ultimately resolved.

 Employee
Health and Safety. We are subject to a number of federal and state laws and regulations, including OSHA and comparable state statutes,
establishing requirements to protect the health and safety of workers. In addition, the OSHA hazard communication standard, the EPA community
right-to-know regulations under Title III of the federal Superfund Amendment and Reauthorization Act and comparable state statutes require
that information be maintained concerning hazardous materials used, stored, produced or released in our operations and that this information
be provided to employees, state and local government authorities and the public. Substantial fines and penalties can be imposed and orders
or injunctions limiting or prohibiting certain operations may be issued in connection with any failure to comply with laws and regulations
relating to worker health and safety.

 In
addition, on January 20, 2021, the Biden Administration came into office and immediately issued a number of executive orders related
to environmental matters that could affect our operations and those of our customers, including an Executive Order on "Protecting
Public Health and the Environment and Restoring Science to Tackle the Climate Crisis" seeking to adopt new regulations and policies
to address climate change and suspend, revise, or rescind, prior agency actions that are identified as conflicting with the Biden Administration's
climate policies. The Biden Administration has also issued other orders that could ultimately affect our business and the business of
our customers, such as the executive order rejoining the Paris Agreement, and could seek, in the future, to put into place additional
executive orders, policy and regulatory reviews, and seek to have Congress pass legislation that could adversely affect the production
of oil and gas assets and our operations and those of our customers. New legislation, regulations or international agreements in the
future could result in increased costs to operate and maintain our facilities, capital expenditures to install new emission controls
at our facilities, and costs to administer and manage any potential greenhouse gas emissions or carbon trading or tax programs. These
costs and capital expenditures could be material. Although the Company has not incurred additional costs due to new policies to date,
these developments could increase our costs, reduce the demand for crude oil and condensate, NGLs, and natural gas, and create delays
in our obtaining air pollution permits for new or modified facilities. As of the end of 2023, there have been no costs or specific concerns
to Superior Drilling Products, Inc.

 Insurance
and Risk Management

 We
maintain insurance coverage of types and amounts that we believe to be customary and reasonable for companies of our size and with similar
operations. In accordance with industry practice, however, we do not maintain insurance coverage against all of the operating risks to
which our business is exposed. Therefore, there is a risk our insurance program may not be sufficient to cover any particular loss or
all losses.

 Currently,
our insurance program includes, among other things, general liability, umbrella liability, sudden and accidental pollution, personal
property, vehicle, workers' compensation, directors and officers and employer's liability coverage. Our insurance includes
various limits and deductibles or retentions, which must be met prior to or in conjunction with recovery.

 Human
Capital Resources

 As
of December 31, 2023, we had 75 full-time compared with 86 full-time employees as of December 31, 2022. We have never had a work stoppage,
and none of our employees are represented by a labor union. We consider our relations with our employees to be good.

 Our
human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our current
and future employees. We encourage and support the growth and development of our employees. Continual learning and career development
is advanced through ongoing performance and development conversations with employees, and reimbursement is available to employees for
seminars, conferences, formal education and other training events employees attend in connection with their job duties.

 Our
core values of accountability, openness and integrity underscore everything we do and drive our day-to-day interactions. The safety,
health and wellness of our employees is a top priority.

 Available
Information

 We
are required to file annual, quarterly and current reports, proxy statements and certain other information with the SEC. The SEC maintains
a website at www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file
electronically with the SEC. Any documents filed by us with the SEC, including this Annual Report, can be downloaded from the SEC's
website at www. SEC.gov.

 Our
principal executive offices are located at 1583 South 1700 East, Vernal, Utah, 84078, and our telephone number at that address is (435)
789-0594. Our website address is www.sdpi.com. Our periodic reports and other information filed with or furnished to the SEC are
available, free of charge, through our website, as soon as reasonably practicable after those reports and other information are electronically
filed with or furnished to the SEC. Information on our website or any other website is not incorporated by reference into this Annual
Report and does not constitute a part of this Annual Report.

 ITEM
1A. Risk Factors

 Risks
Related to Our Business and Industry

 A
decline in expenditures by the oil and gas industry could impact our revenue and income and result in an impairment of our assets.

 Our
business depends upon the condition of the oil and gas industry and, in particular, the willingness of oil and gas companies to make
capital expenditures on exploration and development, drilling and production operations. The level of capital expenditures is generally
dependent on the prevailing view of future oil and gas prices, which are influenced by numerous factors affecting the supply and demand
for oil and gas, including:

 worldwide
 economic activity, including any impacts from the global pandemics;

 worldwide
 or specific region turmoil affecting oil global oil supplies, including the impact of inflationary and/or recessionary factors and
 the Russia – Ukraine conflict;

 the
 level of exploration and production activity;

 interest
 rates and the cost of capital;

 new
 tariffs by the United States or other countries;

 environmental
 regulation;

 federal,
 state and foreign policies regarding exploration and development of oil and gas;

 the
 ability of OPEC to set and maintain production levels and pricing;

 governmental
 regulations regarding future oil and gas exploration and production;

 the
 cost of exploring and producing oil and gas;

 the
 cost of developing alternative energy sources;

 the
 availability, expiration date and price of leases;

 the
 discovery rate of new oil and gas reserves;

 the
 success of drilling for oil and gas in unconventional resource plays such as shale formations;

 technological
 advances; and

 weather
 conditions.

 We
expect continued volatility in both crude oil and natural gas prices, as well as in the level of drilling and production related activities.
Even during periods of high prices for oil and natural gas, companies exploring for oil and gas may cancel or curtail programs, seek
to renegotiate contract terms, including the price of our products and services, or reduce their levels of capital expenditures for exploration
and production for a variety of reasons. These risks are greater during periods of low or declining commodity prices. Continued significant
or prolonged declines in hydrocarbon prices have had, and may continue to have, a material adverse effect on our results of operations.

 There
may be significant annual and quarterly fluctuations in our operating results.

 Significant
annual and quarterly fluctuations in our results of operations may be caused by, among other factors, our volume of revenue, the timing
of new product or service announcements, releases by us and our competitors in the marketplace of new products or services, seasonality
and general economic conditions. Our revenue could also be impacted by inflationary and/or recessionary factors relating to the oil and
gas industry that may directly affect the Company's operations or the Russia – Ukraine conflict. There can be no assurance
that the level of revenue achieved by us in any particular fiscal period will not be significantly lower than in other comparable fiscal
periods. We believe quarter-to-quarter comparisons of our revenue and operating results are not necessarily meaningful and should not
be relied on as indicators of future performance. Our operating expenses are relatively fixed in the short term and are based on management's
expectations of future revenue. As a result, if future revenue is below expectations, net income or loss may be disproportionately affected
by a reduction in revenue, as any corresponding reduction in expenses may not be proportionate to the reduction in revenue.

 Our
customer base is concentrated and the loss of, or nonperformance by, one or more of our significant customers could cause our revenue
to decline substantially.

 We
had two large customers that comprised 85% of our total revenue in 2023 and 88% in 2022. It is likely that we will continue to derive
a significant portion of our revenue from a relatively small number of customers in the future. If a major customer decided not to continue
to use our services or has a significant reduction in its business, our revenue would decline, and our operating results and financial
condition could be harmed. In addition, we are subject to credit risk due to the concentration of our customer base. Any increase in
the non-payment of and non-performance by our counterparties, either as a result of changes in financial and economic conditions or otherwise,
could have a material effect on our business, results of operations and financial condition and could adversely affect our liquidity.

 We
must continue to develop new technologies, methodologies and products on a timely and cost-effective basis to satisfy the needs of our
customers.

 The
drilling industry is driven primarily by cost minimization, and our strategy is aimed at reducing drilling costs through the application
of new drill bit assembly and drill string tool technologies. Our continued success will depend on our ability to meet our customers'
changing needs, on a timely and cost-effective basis, by successfully enhancing our current products and processes; developing, producing
and marketing new products and processes; and responding to evolving industry standards and other technological changes.

 We
cannot assure you that our products will be able to satisfy the specifications of our customers or that we will be able to perform the
testing necessary to prove that the product specifications are satisfied in the future, or that the costs of modifications to our products
to satisfy their requirements will not adversely affect our results of operations. We believe our Strider technology for horizontal drilling
offers advantages compared to competition, but failure to meet our customer's demand for services may adversely affect our business.
We may encounter resource constraints, competition, or other difficulties that may delay our ability to expand our bit remanufacturing
services to the level desired or required by our customer. If our products are unable to satisfy such requirements, or we are unable
to perform any required testing, our customers may cancel their contracts and/or seek new suppliers, and our business, results of operations,
cash flows or financial position may be adversely affected.

 Our
related party transactions with the Meiers and their affiliated entities may cause conflicts of interests that may adversely affect us.

 We
have entered into, and may, in the future, enter into various transactions and agreements with the Meiers and their affiliated entities.
We believe that the transactions and agreements that we have entered into with the Meiers are on terms that are at least as favorable
as could reasonably have been obtained at such time from third parties. However, these relationships could create, or appear to create
potential conflicts of interest when our board of directors is faced with decisions that could have different implications for us and
the Meiers or their affiliates. The appearance of conflicts, even if such conflicts do not materialize, might adversely affect the public's
perception of us, as well as our relationship with other companies and our ability to enter into new relationships in the future, which
may have a material adverse effect on our ability to do business.

 Our
customers' industries are undergoing continuing consolidation that may impact our results of operations.

 The
oil and gas industry is rapidly consolidating and, as a result, some of our largest end users of our product have consolidated and are
using their size and purchasing power to seek economies of scale and pricing concessions. This consolidation may result in reduced capital
spending by some of our customers or the acquisition of one or more of our primary customers, which may lead to decreased demand for
our products and services. We cannot assure you that we will be able to maintain our level of sales to a customer that has consolidated
or replace that revenue with increased business activity with other customers. As a result, the acquisition of one or more of our primary
customers, such as Baker Hughes and DTI, may have a significant negative impact on our results of operations, financial position or cash
flows. We are unable to predict what effect consolidations in the industry may have on price, capital spending by our customers, our
market share and selling strategies, our competitive position, our ability to retain customers or our ability to negotiate favorable
agreements with our customers.

 We
may be unable to successfully compete with other manufacturers of drilling equipment.

 Several
of our competitors are diversified multinational companies with substantially larger operating staffs and greater capital resources than
ours and which have been engaged in the manufacturing business for a much longer time than us. If these competitors substantially increase
the resources they devote to developing and marketing competitive products and services, we may not be able to compete effectively. Similarly,
consolidation among our competitors could enhance their competing market share, product and service offerings and financial resources,
further intensifying competition.

 We
are dependent on key personnel who may be difficult to replace.

 Our
success is dependent to a significant degree upon the business expertise and continued contributions of our founders and senior management
team. In particular, we are dependent upon the efforts and services of our founders, Mr. Troy Meier, our Chairman and Chief Executive
Officer ("CEO"), and Ms. Annette Meier, our President and Chief Operating Officer ("COO"), because of their knowledge,
experience, skills, and relationships with major clients and the other members of our management team. Our future success also depends
on our ability to identify, attract, hire, train, retain and motivate other highly skilled technical, managerial, marketing and customer
service personnel. Competition for such personnel in is intense, and we cannot assure you that we will be able to successfully attract,
integrate or retain sufficiently qualified personnel. Our inability to retain these types of individuals could have a material adverse
effect on our business, results of operations and financial condition.

 Increases
in the cost of raw materials used in our manufacturing processes could negatively impact our profitability.

 We
rely on the availability of volume and quality of synthetic diamond cutters for drill bit refurbishment and manufacturing and for our
drill string tool manufacturing business. In addition, we must have a reliable source of steel available for manufacturing which is both
of sufficient quality, and available at a cost-effective price. We do not have fixed price contracts or arrangements for all of the raw
materials and other supplies that we purchase. Baker Hughes provides the diamond cutters for our drill bit refurbishment. However, sourcing
cost-effective supplies of quality steel in the relatively low volumes that our tool manufacturing requires can be challenging. Shortages
of, and price increases for, steel and other raw materials and supplies that we use in our business may occur. Future shortages or price
fluctuations in synthetic diamond cutters or steel could have a material adverse effect on our ability to conduct either our drill bit
refurbishment or our drill tool manufacturing in a timely and cost-effective manner.

 We
depend on third-party suppliers for timely deliveries of raw materials, and our results of operations could be adversely affected if
we are unable to obtain adequate supplies in a timely manner.

 Our
manufacturing operations depend upon obtaining adequate supplies of raw materials from third parties. Events beyond our control may impact
the ability of these third parties to deliver raw materials. Any interruption in the supply of raw materials needed to manufacture our
products could adversely affect our business, results of operations and reputation with our customers.

 We
may be unable to maintain adequate liquidity and make payments on our debt.

 At
December 31, 2023, we had working capital of approximately $4,939,000. Our principal uses of cash are operating expenses, working capital
requirements, capital expenditures and debt service payments. Our operational and financial strategies include lowering our operating
costs and capital spending to match revenue trends, managing our working capital and debt to enhance liquidity.

 While
we believe that our borrowing capacity and cash generated from operations will be sufficient to fund our operations for 2023, our operational
and financial strategies include managing our operating costs, working capital and debt to enhance liquidity. We expect to be cash flow
positive in 2024. If we are unable to do this, we may not be able to, among other things, (i) maintain our current general and administrative
spending levels; (ii) fund certain obligations as they become due; and (iii) respond to competitive pressures or unanticipated capital
requirements. We cannot provide any assurance that financing will be available to us in the future on acceptable terms.

 Our
Loan Agreement with Vast Bank provides a Revolving Line that allows us to borrow the lesser of $750,000 or the borrowing base, which
is currently 50% of eligible inventory as calculated under the Loan Agreement.

 If
we are unable to make required payments under the Loan Agreement, we would be in default thereunder, which would permit the holders of
the indebtedness to accelerate the maturity thereof, unless we are able to obtain, on a timely basis, a necessary waiver or amendment.
Any waiver or amendment may require us to revise the terms of the Loan Agreement which could increase the cost of our borrowings, require
the payment of additional fees, and adversely impact the results of our operations. Upon the occurrence of any event of default that
is not waived, the lenders could elect to exercise any of their available remedies, which include the right to not lend any additional
amounts or, in the event we have outstanding indebtedness under the Loan Agreement, to declare any outstanding indebtedness, together
which any accrued interest and other fees, to be immediately due and payable. If we are unable to repay the outstanding indebtedness,
if any, under the Loan Agreement when due, the lenders would be permitted to proceed against their collateral, and this could have a
material adverse effect on our business and financial condition.

 We
may be exposed to unforeseen risks in our product manufacturing and processes which could adversely affect our financial conditions and
results of operations.

 We
operate our business from our Vernal, Utah headquarters. A natural disaster, extended utility failure or other significant event at our
facility could significantly affect our ability to manufacture sufficient quantities of key products or otherwise deliver products to
meet customer demand or contractual requirements which may result in a loss of revenue and other adverse business consequences. In addition,
the equipment and management systems necessary for our operations are subject to wear and tear, break down and obsolescence, which could
cause them to perform poorly or fail, resulting in fluctuations in manufacturing efficiencies and production costs. Significant manufacturing
fluctuations may affect our ability to deliver products to our customers on a timely basis and we may suffer financial penalties and
a diminution of our commercial reputation and future product orders. Additionally, some of our business may in the future be conducted
under fixed price contracts. Fluctuations in our manufacturing process, or inaccurate estimates and assumptions used in pricing our contracts,
even if due to factors out of our control, may result in cost overruns which we may be required to absorb. Any shut down of our manufacturing
facility, reductions in our manufacturing process or efficiency, or cost overruns could adversely affect our business, financial condition
and results of operations.

 We
may be unable to employ enough skilled and qualified workers to sustain or expand our current operations.

 Our
operations require personnel with specialized skills and experience. The supply of skilled and experienced personnel may not be sufficient
to meet current or expected demand. Any significant increase in the wages paid by competing employers could result in a reduction of
our skilled labor force, increases in the wage rates that we must pay, or both. If any of these events were to occur, our capacity could
be diminished, our ability to respond quickly to customer demands or strong market conditions may be inhibited and our growth potential
impaired, any of which could have a material adverse effect on our business, financial condition and results of operations.

 If
we are not able to manage our growth strategy successfully, our business, and results of operations may be adversely affected.

 Our
growth strategy includes acquisitions and the development and implementation of new product designs and improvements, which presents
numerous managerial, administrative, operational, and other challenges. Our ability to manage the growth of our operations will depend
on our ability to develop systems and services and related technologies to meet evolving industry requirements and at prices acceptable
to our customers to compete in the industry in which we operate. Our ability to compete effectively will also depend on our ability to
continue to obtain patents on our proprietary technology and products. Although we do not consider any single patent to be material to
our business, the inability to protect our future innovations through patents could have a material adverse effect. In addition, our
growth will increase our need to attract, develop, motivate, and retain both our management and professional employees. The inability
of our management to manage our growth effectively or the inability of our employees to achieve anticipated performance could have a
material adverse effect on our business.

 Acquisitions
and investments may not result in anticipated benefits and may present risks not originally contemplated, which could have a material
adverse effect on our financial condition, results of operations and cash flows.

 Should
our growth strategy include acquiring other companies that complement our service offerings or broaden our technical capabilities and
geographic presence, these transactions may not result in the anticipated realization of savings, creation of efficiencies, offering
of new products or services, generation of cash or income or reduction of risk. In addition, acquisitions may be financed by borrowings,
requiring us to incur debt, or by the issuance of our common stock. These transactions involve numerous risks, and we cannot ensure that:

 any
 acquisition would be successfully integrated into our operations and internal controls;

 the
 due diligence conducted prior to an acquisition would uncover situations that could result in financial or legal exposure;

 the
 use of cash for acquisitions would not adversely affect our cash available for capital expenditures and other uses;

 any
 disposition, investment, acquisition or integration would not divert management resources from the operation of our business; or

 any
 disposition, investment, acquisition or integration would not have a material adverse effect on our financial condition, results
 of operations or cash flows.

 Our
inability to integrate acquisitions successfully could impede us from realizing all of the benefits of the acquisitions which could have
a material adverse effect on our financial condition and results of operations.

 If
we are unable to successfully integrate future acquisitions, we could be impeded from realizing all of the anticipated benefits of those
acquisitions and could weaken our business operations. The integration process may disrupt our business and, if implemented ineffectively,
may preclude realization of the anticipated benefits expected by us and could harm our results of operations. In addition, the overall
integration of the combining companies may result in unanticipated problems, expenses, liabilities and competitive responses, and may
cause our stock price to decline. The difficulties of integrating an acquisition include, among others:

 unanticipated
 issues in integration of information, communications, and other systems;

 unanticipated
 incompatibility of logistics, marketing, and administration methods;

 maintaining
 employee morale and retaining key employees;

 integrating
 the business cultures of both companies;

 preserving
 important strategic client relationships;

 coordinating
 geographically separate organizations; and

 consolidating
 corporate and administrative infrastructures and eliminating duplicative operations.

 Even
if the operations of an acquisition are integrated successfully, we may not realize the anticipated benefits of the acquisition, including
the synergies, cost savings or growth opportunities that we expect. These benefits may not be achieved within the anticipated time frame,
or at all. Failing to realize the benefits could have a material adverse effect on our financial condition and results of operations.

 Conditions
in the global financial system may have impacts on our business and financial position that we currently cannot predict.

 Uncertainty
in the credit markets may negatively impact the ability of our customers to finance purchases of our products and services and could
result in a decrease in, or cancellation of, orders or adversely affect the collectability of our receivables. If the availability of
credit to our customers is reduced, they may reduce their drilling and production expenditures, thereby decreasing demand for our products
and services, which could have a negative impact on our financial position. Additionally, unsettled conditions could have an impact on
our suppliers, causing them to be unable to meet their obligations to us. Although we do not currently anticipate a need to access the
credit markets in the short term, a prolonged constriction on future lending by banks or investors could result in higher interest rates
on future debt obligations or could restrict our ability to obtain sufficient financing to meet our long-term operational and capital
needs.

 In
addition, the global financial system may be impacted by the effects of global health epidemics and concerns of turmoil and military
actions. Weakness or deterioration of the global economy could reduce our customers' spending levels and could impact our revenues
and operating results. We are unable to predict the effect of this on our business and results of operations.

 A
terrorist attack or armed conflict could harm our business.

 Terrorist
activities, anti-terrorist efforts and other armed conflicts involving the United States or other countries may adversely affect the
United States and global economies and could prevent us from meeting our financial and other obligations. The events in Russia and surrounding
areas and the historic volatility in the Middle East may result in political instability and societal disruption could reduce overall
demand for oil and natural gas, potentially putting downward pressure on demand for our services and causing a reduction in our revenue.
Oil and natural gas related facilities could be direct targets of terrorist attacks, and our operations could be adversely impacted if
infrastructure integral to our customers' operations is destroyed or damaged. Costs for insurance and other security may increase
as a result of these threats, and some insurance coverage may become more difficult to obtain, if available at all.

 Materials
and minerals used in our manufacturing process may become subject to laws and regulations that may expose us to significant costs and
liabilities.

 The
diamonds comprising the diamond cutting discs used in our operations are synthetic and manufactured in the United States, South Africa
and China. Neither those diamond cutters nor any other minerals used in our operations are currently identified as "conflict minerals"
in the Dodd-Frank Wall Street Reform and Consumer Protection Act. However, we cannot predict or control if the United States Secretary
of State will or will not identify one of the minerals used in our manufacturing process as a conflict mineral. Should the materials
used in our manufacturing process be designated as a conflict mineral, we will be required to file Form SD with the SEC and conduct the
required diligence to determine the source of the conflict mineral in connection with such disclosure. Any increased costs and expenses
associated with this could have a material adverse impact on our financial condition and results of operations.

 The
use and protection of our proprietary technology will affect our success. There are limitations to our intellectual property rights in
our proprietary technology, and thus our right to exclude others from the use of such proprietary technology.

 Our
success will be affected by our development and implementation of new product designs and improvements and by our ability to protect
and maintain critical intellectual property assets related to these developments. Although in many cases our products are not protected
by any registered intellectual property rights, in other cases we rely on a combination of patents and trade secret laws to establish
and protect this proprietary technology.

 We
currently hold multiple U.S. patents and have multiple pending patent applications for products and processes in the U.S. and certain
non-U.S. countries. Patent rights give the owner of a patent the right to exclude third parties from making, using, selling, and offering
for sale the inventions claimed in the patents in the applicable country. Patent rights do not necessarily grant the owner of a patent
the right to practice the invention claimed in a patent, but merely the right to exclude others from practicing the invention claimed
in the patent. It may also be possible for a third party to design around our patents. Furthermore, patent rights have strict territorial
limits. Some of our work will be conducted in international waters and therefore may not fall within the scope of any country's
patent jurisdiction. We may not be able to enforce our patents against infringement occurring in international waters and other "non-covered"
territories. Also, we do not have patents in every jurisdiction in which we conduct business and our patent portfolio will not protect
all aspects of our business and may relate to obsolete or unusual methods, which would not prevent third parties from entering the same
market.

 We
attempt to limit access to and distribution of our technology by customarily entering into confidentiality and/or license agreements
with our employees, customers and potential customers and suppliers. Our rights in our confidential information, trade secrets, and confidential
know-how will not prevent third parties from independently developing similar information. Publicly available information (e.g. information
in expired issued patents, published patent applications, and scientific literature) can also be used by third parties to independently
develop technology. We cannot provide assurance that this independently developed technology will not be equivalent or superior to our
proprietary technology.

 Our
competitors may infringe upon, misappropriate, violate or challenge the validity or enforceability of our intellectual property and we
may not able to adequately protect or enforce our intellectual property rights in the future.

 Our
businesses and our customers' businesses are subject to environmental laws and regulations that may increase our costs, limit the
demand for our products and services or restrict our operations.

 Our
operations and the operations of our customers are also subject to federal, state, local and foreign laws and regulations relating to
the protection of human health and the environment. These environmental laws and regulations affect the products and services we design,
market and sell, as well as the facilities where we manufacture our products. For example, our operations are subject to numerous and
complex laws and regulations that, among other things, may regulate the management and disposal of hazardous and non-hazardous wastes;
require acquisition of environmental permits related to our operations; restrict the types, quantities and concentrations of various
materials that can be released into the environment; limit or prohibit operation activities in certain ecologically sensitive and other
protected areas; regulate specific health and safety criteria addressing worker protection; require compliance with operational and equipment
standards; impose testing, reporting and record-keeping requirements; and require remedial measures to mitigate pollution from former
and ongoing operations at our facilities or at facilities where wastes generated by our operations have been disposed. Sanctions for
noncompliance may include revocation of permits, corrective action orders, administrative or civil penalties or other enforcement, and
criminal prosecution. We are required to invest financial and managerial resources to comply with such environmental, health and safety
laws and regulations and anticipate that we will continue to be required to do so in the future. In addition, environmental laws and
regulations could limit our customers' exploration and production activities. These laws and regulations change frequently, which
makes it impossible for us to predict their cost or impact on our future operations. The adoption of legislation or regulatory programs
to reduce greenhouse gas emissions could also increase the cost of consuming, and thereby reduce demand for, the hydrocarbons that our
customers produce. Consequently, such legislation or regulatory programs could have an adverse effect on our financial condition and
results of operations. It is too early to determine whether, or in what form, further regulatory action regarding greenhouse gas emissions
may ultimately be adopted or what specific impact a new regulatory action might have on us or our customers. Generally, the anticipated
regulatory actions do not appear to affect us in any material respect that is different, or to any materially greater or lesser extent,
than other companies that are our competitors. However, our business and prospects could be adversely affected to the extent laws are
enacted or modified or other governmental action is taken that prohibits or restricts our customers' exploration and production
activities or imposes environmental protection requirements that result in increased costs to us or our customers.

 Environmental
laws may provide for "strict liability" for damages to natural resources or threats to public health and safety, rendering
a party liable for environmental damage without regard to negligence or fault on the part of such party. Some environmental laws and
regulations provide for joint and several strict liability for remediation of spills and releases of hazardous substances. In addition,
we may be subject to claims alleging personal injury or property damage as a result of alleged exposure to hazardous substances, as well
as damage to natural resources. These laws and regulations also may expose us to liability for the conduct of or conditions caused by
others, or for our acts that were in compliance with all applicable laws and regulations at the time such acts were performed. Any of
these laws and regulations could result in claims, fines or expenditures that could be material to results of operations, financial position
and cash flows.

 New
government regulations could have an impact on our business and the business of our customers.

 On
January 20, 2021, the Biden Administration came into office and immediately issued a number of executive orders related to environmental
matters that could affect our operations and those of our customers, including an Executive Order on "Protecting Public Health
and the Environment and Restoring Science to Tackle the Climate Crisis" seeking to adopt new regulations and policies to address
climate change and suspend, revise, or rescind, prior agency actions that are identified as conflicting with the Biden Administration's
climate policies. Among the areas that could be affected by the review are regulations addressing methane emissions and the part of the
extraction process known as hydraulic fracturing. The Biden Administration has also issued other orders that could ultimately affect
our business and the business of our customers, such as the executive order rejoining the Paris Agreement, and could seek, in the future,
to put into place additional executive orders, policy and regulatory reviews, and seek to have Congress pass legislation that could adversely
affect the production of oil and gas assets. However, the status of recent and future rules and rulemaking initiatives under the Biden
Administration remains uncertain. As of the end of 2023, there have been no costs or specific concerns to Superior Drilling Products,
Inc.

 The
increasing attention to global climate change risks has created the potential for the likelihood of private and public litigation and
governmental investigations. Such actions would increase costs and adversely impact our business.

 Our
failure to implement and comply with our safety program could adversely affect our operating results or financial condition.

 Our
safety program is a fundamental element of our overall approach to risk management, and the implementation of the safety program is a
significant issue in our dealings with our clients. Unsafe job sites and office environments have the potential to increase employee
turnover, increase the cost of a project to our clients, expose us to types and levels of risk that are fundamentally unacceptable, and
raise our operating costs. The implementation of our safety processes and procedures are monitored by various agencies and rating bureaus
and may be evaluated by certain clients in cases in which safety requirements have been established in our contracts. If we fail to comply
with safety regulations or maintain an acceptable level of safety at our facilities, we may incur fines, penalties or other liabilities,
or may be held criminally liable. We may incur additional costs to upgrade equipment or conduct additional training, or otherwise incur
costs in connection with compliance with safety regulations. Failure to maintain safe operations or achieve certain safety performance
metrics could disqualify us from doing business with certain customers, particularly major oil companies.

 Our
products are used in operations that are subject to potential hazards inherent in the oil and gas industry and, as a result, we are exposed
to potential liabilities that may affect our financial condition and reputation.

 Our
products are used in potentially hazardous drilling, completion and production applications in the oil and gas industry where an accident
or a failure of a product can potentially have catastrophic consequences. Risks inherent to these applications, such as equipment malfunctions
and failures, equipment misuse and defects, explosions, blowouts and uncontrollable flows of oil, natural gas or well fluids and natural
disasters, on land or in deep water or shallow-water environments, can cause personal injury, loss of life, suspension of operations,
damage to formations, damage to facilities, business interruption and damage to or destruction of property, surface water and drinking
water resources, equipment and the environment. In addition, we provide certain services that could cause, contribute to or be implicated
in these events. If our products or services fail to meet specifications or are involved in accidents or failures, we could face warranty,
contract or other litigation claims, which could expose us to substantial liability for personal injury, wrongful death, property damage,
loss of oil and gas production, and pollution and other environmental damages. Our insurance policies may not be adequate to cover all
liabilities. Further, insurance may not be generally available in the future or, if available, insurance premiums may make such insurance
commercially unjustifiable. Moreover, even if we are successful in defending a claim, it could be time-consuming and costly to defend.

 In
addition, the frequency and severity of such incidents could affect operating costs, insurability and relationships with customers, employees
and regulators. In particular, our customers may elect not to purchase our products or services if they view our safety record as unacceptable,
which could cause us to lose customers and substantial revenue. In addition, these risks may be greater for us because we may acquire
companies that have not allocated significant resources and management focus to quality, or safety requiring rehabilitative efforts during
the integration process. We may incur liabilities for losses associated with these newly acquired companies before we are able to rehabilitate
such companies' quality, safety and environmental programs.

 Our
information systems may experience an interruption or breach in security.

 We
rely on our proprietary production management technology which has changed how users connect to our knowledge and other information technology
("IT") systems to conduct our business. Despite our security and back-up measures, our IT systems are vulnerable to computer
viruses, natural disasters and other disruptions or failures. The failure of our IT systems to perform as anticipated for any reason
or any significant breach of security could disrupt our business and result in numerous adverse consequences, including reduced effectiveness
and efficiency of our operations and those of our customers, inappropriate disclosure of confidential information, increased overhead
costs, loss of intellectual property, loss of data privacy and damage to our reputation, which could have a material adverse effect on
our business and results of operations. In addition, we may be required to incur significant costs to prevent or respond to damage caused
by these disruptions or security breaches in the future.

 Cybersecurity
breaches and other disruptions could compromise our information and operations, and expose us to liability, which would cause our business
and reputation to suffer.

 In
the ordinary course of our business, we collect and store sensitive data in our data centers and on our networks, including intellectual
property, proprietary business information, information regarding our customers, suppliers and business partners, and personally identifiable
information of our employees. The secure processing, maintenance and transmission of this information is critical to our operations and
business strategy. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers
or breached due to employee error, malfeasance or other disruptions. Any such breach could compromise our networks and the information
stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result
in legal claims or proceedings, liability under laws that protect the privacy of personal information, regulatory penalties, disruption
of our operations, damage to our reputation, and loss of confidence in our services, which could adversely affect our business.

 Our
information technology infrastructure is critical to the efficient operation of our business and essential to our ability to perform
day-to-day operations. Breaches in our information technology infrastructure or physical facilities, or other disruptions, could result
in damage to our assets, safety incidents, damage to the environment, loss of data privacy, potential liability or the loss of contracts,
and have a material adverse effect on our operations, financial position and results of operations.

 Possible
tariffs could have a material adverse effect on our business.

 The
United States has in the past announced the implementation of tariffs on imported steel and could in the future consider tariffs on additional
items. If this were to occur, it could result in the adoption of additional tariffs by other countries as well. Any resulting trade war
could negatively impact the global market for oil field products and services and could have a significant adverse effect on our business.
While we cannot predict how any future enacted tariffs will impact our business, the imposition of tariffs on items we import from other
countries could increase our costs and could result in lowering our gross margin on products sold.
The Company has not experienced a negative impact as a result of tariffs imposed on imported oil and gas products.

 Our
international activities are subject to many of the same risks as described above, as well as to risks associated with the legislative,
judicial, regulatory, political, economic and cultural factors specific to the countries or regions in which we operate.

 We
have operations in the Middle East. Our International segment's operations generated 15 % and 11%
 of our revenue for the years ended December 31, 2023 and 2022, respectively. In general, the risk
factors identified above also have relevance to our International operations. In addition, our International operations also expose us
to other risks, including those related to, for example:

 political
 conditions and geopolitical events, including war and terrorism;

 economic
 conditions, including monetary and fiscal policies and tax rules;

 legal
 and regulatory environments;

 rules
 governing international trade and potential changes to trade policies or trade agreements and ownership of foreign entities;

 risks
 associated with foreign currency exchange rates;

 cultural
 differences that we may be unable to anticipate or respond to appropriately;

 different
 rules or practices regarding employee relations, including the existence of works councils or unions;

 difficulties
 in enforcing intellectual property rights; and

 difficulties
 encountered in exerting appropriate management oversight to operations in remote locations.

 These
factors could significantly disrupt our International operations and have a material adverse effect on our revenue and profitability
and could lead us to incur material impairments and other exit costs.

 Risks
Relating to Our Common Stock

 As
a smaller reporting company, we are subject to scaled disclosure requirements that may make it more challenging for investors to analyze
our results of operations and financial prospects.

 Currently,
we are a "smaller reporting company," meaning that our outstanding common stock held by non-affiliates had a market value
of less than $250 million as of June 30, 2023. As a "smaller reporting company," we are able to provide simplified executive
compensation disclosures in our filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent
registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; and
have certain other decreased disclosure obligations in our SEC filings, including, being required to provide only two years of audited
financial statements in annual reports. Consequently, it may be more challenging for investors to analyze our results of operations and
financial prospects.

 As
long as we are substantially controlled by the Meiers, the ability of our shareholders to influence the outcome of matters will be limited.

 The
Meiers continue to own a substantial portion of our outstanding common stock and serve on our Board of Directors. As long as they have
substantial voting control of our company, SDPI will not have the ability to take many stockholder actions, including the election or
removal of directors, irrespective of the vote of, and without prior notice to, any other stockholder. As a result, the Meiers will have
the ability to influence or control all matters affecting us, including:

 the
 composition of our board of directors and, through our board of directors, decision-making with respect to our governance and business
 direction and policies, including the appointment and removal of our officers;

 any
 determinations with respect to acquisitions of businesses, mergers or other business combinations and change of control transactions;

 our
 acquisition or disposition of assets; and

 our
 capital structure.

 The
market price of our common stock has been and may continue to be volatile.

 The
trading price of our common stock and the price at which we may sell common stock in the future are subject to large fluctuations in
response to any of the following:

 limited
 trading volume in our common stock;

 quarterly
 variations in operating results;

 general
 financial market conditions;

 the
 prices of natural gas and oil;

 announcements
 by us and our competitors;

 our
 liquidity;

 changes
 in government regulations;

 our
 ability to raise additional funds;

 our
 involvement in litigation; and

 other
 events.

 We
do not anticipate paying dividends on our common stock.

 We
have not paid any dividends in the past and do not intend to pay cash dividends on our common stock in the foreseeable future. We currently
intend to retain any earnings for the future operation and development of our business. In addition, under Utah law no distribution may
be made if, after giving it effect: (a) we would be unable to pay our debts as they come due, or (b) our total assets would be less than
our total liabilities. We can provide no assurance that those restrictions will not prevent us from paying a dividend in future periods.

 We
may issue preferred stock whose terms could adversely affect the voting power or value of our common stock.

 Our
articles of incorporation authorize us to issue, without the approval of our shareholders, one or more classes or series of preferred
stock having such designations, preferences, limitations and relative rights, including preferences over our common stock respecting
dividends and distributions, as our board of directors may determine. The terms of one or more classes or series of preferred stock could
adversely impact the voting power or value of our common stock. For example, we might grant holders of preferred stock the right to elect
some number of our directors in all events or on the happening of specified events or the right to veto specified transactions. Similarly,
the repurchase or redemption rights or liquidation preferences we might assign to holders of preferred stock could affect the residual
value of the common stock.

 Certain
provisions in our organizational documents could delay or prevent a change in control.

 The
existence of some provisions in our organizational documents could delay or prevent a change in control of our company, even if that
change would be beneficial to our shareholders. Our articles of incorporation and bylaws contain provisions that may make acquiring control
of our company difficult, including:

 provisions
 regulating the ability of our shareholders to nominate directors for election or to bring matters for action at annual meetings of
 our shareholders;

 limitations
 on the ability of our shareholders to call a special meeting and act by written consent;

 the
 authorization given to our board of directors to issue and set the terms of preferred stock; and

 establishment
 of a classified board of directors.

 Significant
short sales of our stock, or the perception that such sales could occur, could depress the market price of our common stock and impair
our ability to raise capital.

 If
there are significant short sales of our stock, the price decline that could result from this activity may cause the share price to decline
more so, which, in turn, may cause long holders of the stock to sell their shares, thereby contributing to sales of stock in the market.
Such sales also may impair our ability to raise capital through the sale of additional equity securities in the future at a time and
price that our management deems acceptable, if at all.

 ITEM
1B. UNRESOLVED STAFF COMMENTS

 Not
applicable to smaller reporting companies.

 ITEM
1C. CYBERSECURITY

 We
face various cybersecurity threats that could adversely affect our business, financial condition, and results of operations. We have
implemented processes and procedures to assess, identify, and manage these risks, as well as to respond to and mitigate the impact of
any potential or actual cybersecurity incidents to our information systems and the information residing therein. Our processes for assessing
and identifying cybersecurity risks include regular network security assessments, vulnerability scans, penetration tests, and audits
of our information systems, as well as monitoring and analysis of network activity and threat intelligence. We engage third-party service
providers to assist us with some of these activities. We also have processes to oversee and identify cybersecurity risks associated with
our use of third-party service providers, such as conducting due diligence, reviewing contracts, and verifying compliance with security
standards and best practices. Our cybersecurity risk management processes have been integrated into our enterprise risk framework, which
identifies, aggregates, and evaluates risks across the enterprise. We identify our enterprise risks through each member of our management
team, along with counsel from our internal auditors and attorneys and we present an assessment of our enterprise risks to our board of
directors on an annual basis. Our information technology management plays an integral part in the identification and communication of
cybersecurity risks to our management team.

 Despite
our efforts, there is the ever-present risk that our systems and/or data will suffer a successful cyber incident such as unauthorized
access, use, disclosure, modification, or destruction by hackers, cybercriminals, state-sponsored actors, insiders, or other malicious
actors. We have experienced attempts to compromise our systems and/or data. These attempts included phishing attacks, malware infections,
and unauthorized access attempts. We do not believe that these attempts, if successful, would have resulted in a material adverse effect
on our business, financial condition, or results of operations. We continue to be diligent in preventing, detecting, and responding to
a cyber incident. However, we cannot guarantee that we will not suffer cybersecurity incidents in the future, which could result in:

 Loss of or damage to our data, intellectual property, or other
proprietary or confidential information

 Interruption or degradation of our operations, services, or
systems availability

 Compromise or corruption of our data or systems integrity

 Reputational harm or loss of customer trust or confidence

 Legal liability, regulatory fines, penalties, or sanctions

 Remediation or mitigation costs, such as increased security
expenditures, investigation expenses, or litigation fees

 Increased insurance premiums or difficulty in obtaining adequate
insurance coverage or

 Other negative consequences.

 Any
of these outcomes could have a material adverse effect on our business, financial condition, or results of operations.

 ITEM
2. PROPERTIES

 The
Company operates out of six buildings as part of its Vernal, Utah offices, which are used for manufacturing and executive offices. On
December 7, 2020, the Company closed a sale-leaseback agreement for its headquarters and manufacturing facilities. Under the terms of
the transaction, the Company sold the property for $4.5 million and simultaneously entered into a 15-year lease. Under the lease agreement,
the Company has an option to extend the term of the lease and to repurchase the property. In 2022, the company entered into a five-year
lease agreement for a building located in Vernal Utah. This location is used for manufacturing purposes. The Company's management
believes its current manufacturing facilities, executive offices, and its new repair center in the Middle East are sufficient for its
current operations.

 ITEM
3. LEGAL PROCEEDINGS

 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.

 ITEM
4. MINE SAFETY DISCLOSURES

 Not
applicable.

 PART
II

 ITEM
5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 Approximate
Number of Equity Security Holders

 As
of March 15, 2024, 30,391,240 shares of the Company's common stock were outstanding
and held by 19 shareholders of record. This figure does not take into account those shareholders
whose certificates are held in the name of broker-dealer or other nominees.

 The
Company's common stock trades on the NYSE American market under the symbol "SDPI".

 Dividends

 The
Company does not presently pay dividends on its common stock. The Company intends for the foreseeable future to continue the policy of
not paying dividends and retaining earnings, if any, to finance the development and growth of its business.

Authorized for Issuance under Equity Compensation Plans

 Plan Category

 Number of
 restricted
 shares and
 securities to be
 issued upon
 exercise of
 outstanding
 options,
 warrants and
 rights
 (a)

 average exercise
 price of
 outstanding
 options,
 warrants and
 rights
 (b)

 Number of
 securities
 remaining
 available for
 future issuance
 under equity
 compensation
 plans
 (excluding
 securities
 reflected in
 column (a))
 (c)

 Equity compensation plans approved by security holders (1)

 7,076,326
 (1)

 $
 1.11

 306,486
 (2)

 Equity compensation plans not approved by security holders

 -

 -

 -

 Total as of December 31, 2023

 7,076,326

 (1)

 Consists
 of 7,076,326 shares under the 2015 Employee Stock Incentive Plan.

 (2)

 Consists
 of 306,486 shares remaining available for future issuance under the 2015 Employee Stock Incentive Plan. The 2014 Employee Stock Incentive
 Plan was frozen by the Board of Directors such that no future grants of awards will be made and the 2014 Employee Stock Incentive
 Plan remains effective only with respect to awards outstanding as of June 15, 2015 until they expire according to their terms.

 Stock
Performance Graph

 As
a "smaller reporting company," as defined by Rule 12b-2 of the Exchange Act, we have elected scaled disclosure reporting
and therefore are not required to provide the stock performance graph.

 ITEM
6. RESERVED

 ITEM
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 Overview

 Superior
Drilling Products, Inc. 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 headquarters and manufacturing operations are located in Vernal, Utah.
Our drilling solutions include the patented Drill-N-Ream well bore conditioning tool ("Drill-N-Ream tool") and the patented
Strider Drill String Oscillation System technology ("Strider technology" or "Strider"). In addition, the
Company is a manufacturer of Drill-N-Ream tools and refurbisher of PDC (polycrystalline diamond compact) drill bits for a leading oil
field services company. We operate a state-of-the-art drill tool fabrication facility, where we manufacture solutions for the drilling
industry, as well as customers' custom products.

 Our
strategy for growth is to leverage our expertise in drill tool technology and precision machining in order to broaden our product offerings
and solutions for the oil and gas industry. We believe through our patented technologies, as well as technologies under development,
that we can offer the industry the solutions it demands to improve drilling efficiencies and reduce production costs.

 In
addition, in December 2020, the Company successfully obtained ISO 9000 certification and is now qualified to bid on projects in industries
outside oil and gas. We believe that with this certification, and our history of supplying high quality parts to research and development
departments operating in the aerospace industry, we can effectively execute our industry diversification strategy. We continue to maintain
this certification, comply with the yearly audits, and are currently certified for 2023-2024.

 In
May 2023, we engaged Piper Sandler & Co. as our financial advisor to investigate a range of strategic alternatives with the intent
to maximize shareholder value. We have not set a timetable for the conclusion of our review of potential alternatives.

 Industry
Trends and Market Factors

 The
Russia – Ukraine conflict is a global concern. The Company does not have any direct exposure to Russia or Ukraine through its operations,
employee base, investments or sanctions. The Company does not receive goods or services sourced from those countries, does not anticipate
any disruption in its supply chain and has no business relationships, connections to or assets in Russia, Belarus or Ukraine. No impairments
to assets have been made due to the conflict. The global oil industry has been impacted by this situation, but the Company's operations
and business in the Middle East has not been disrupted to date. The increase in oil producing activities in the United States has benefitted
the Company's operations. We are unable at this time to know the full ramifications of the Russia – Ukraine conflict and
its effects on our business.

 The
Israel conflict – We have not been directly impacted by the Israel-Hamas conflict. However, the historic volatility in the Middle
East, including as a result of recent events in Israel and Gaza, may result in political instability and societal disruption could reduce
overall demand for oil and natural gas, potentially putting downward pressure on demand for our services and causing a reduction in our
revenue.

 Inflationary
and/or recessionary factors relating to the oil and gas industry may directly affect the Company's operations. The increased demand
for oil and gas production has benefited the Company's operations. The Company is not immune to the effects of inflation on its
labor requirements, supply chain and costs of revenues. The Company continues to monitor these economic trends as part of its strategic
forward planning.

 The
total U.S. rig count as reported by Baker Hughes as of December 31, 2023 was 622 rigs, a decrease of 157 rigs from the rig count as of
December 31, 2022.

 The
Middle East market began to improve during 2022 after a slow rebound from the COVID-19 impact. Total rig count in that region as of February
28, 2024 was 349 compared with 327 at the same time last year.

 How
We Generate our Revenue

 We
are a drilling and completion tool technology company. We generate revenue from the refurbishment, manufacturing, repair, rental and
sale of drill string tools. Our manufactured products are produced in a standard manufacturing operation, even when produced to our customer's
specifications. We also earn royalty fees under certain arrangements for certain tools we sell.

 Tool
sales, rentals and other related revenue

 Tool
and Product Sales: Revenue for tool and product sales is recognized upon shipment of tools or products to the customer. Shipping
and handling costs related to tool and product sales are recorded gross as a component of both the sales price and cost of the product
sold.

 Tool
Rental: Rental revenue is recognized upon completion of the customer's job for which the tool was rented. While the duration
of the rental will vary by job and number of runs, these rentals are generally less than one month. The rental agreements are typically
based on the price per run or footage drilled and do not have any minimum rental payments or term.

 Other
Related Revenue: We receive revenue from the repair of tools upon delivery of the repaired tool to the customer. We earn royalty
commission revenue when our customer invoices their customer for the use of our tools.

 Contract
Services

 Drill
Bit Manufacturing and Refurbishment: We recognize revenue for our PDC drill bit services upon transfer of control, which we have
determined to be upon shipment of the product. Shipping and handling costs related to refurbishing services are paid directly by the
customer at the time of shipment. We also provide contracting manufacturing services to customers.

 Costs
of Conducting Our Business

 Cost
of revenue is comprised of direct and indirect costs to manufacture, repair and supply our products, including labor, materials, utilities,
equipment repair, lease expense related to our facilities, supplies and freight.

 Selling,
general and administrative expense is comprised of costs such as new business development, technical product support, research and development
costs, compensation expense for general corporate operations including accounting, human resources, risk management, etc., information
technology expenses, safety and environmental expenses, legal and professional fees and other related administrative functions.

 Other
income (expense), net is comprised primarily of interest expense associated with outstanding borrowings net of interest income, impairment
of asset held for sale and losses on disposition of assets.

 RESULTS
OF OPERATIONS

 The
following table represents our consolidated statement of operations for the periods indicated:

 2023

 2022

 Tool Revenue

 $
 13,560,612

 %

 $
 12,351,944

 %

 Contract Services

 7,412,939

 %

 6,745,743

 %

 Total 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
)

 -3
 %

 (572,624
)

 -3
 %

 Recovery of related party note receivable

 350,262

 %

 -

 %

 Impairment on asset held for sale

 -

 %

 (130,375
)

 -1
 %

 Loss on disposition of assets

 (70,664
)

 %

 -

 %

 Loss on extinguishment of debt

 (43,000
)

 %

 -

 %

 Total other income (expense)

 (391,901
)

 -2
 %

 (676,324
)

 -4
 %

 Income before income taxes

 1,385,064

 %

 1,260,126

 %

 Income tax (expense)/benefit

 6,050,981

 %

 (194,969
)

 -1
 %

 $

 %

 $

 %

 Comparison
of the years ended December 31, 2023 and 2022

 Our
revenue increased approximately $1,876,000, or 10%, for the year ended December 31, 2023 compared with the year ended December 31, 2022.
The increase was driven by an approximately $1,209,000, or 10%, increase in tool revenue compared with the prior year reflecting the
strong market share of the DNR in the U.S. and expansion of our business in the Middle East. Revenue in the Middle East contributed approximately
$884,000, or approximately 73%, of the increase in tool revenue. Contract services revenue increased by $667,000, or 10%, over the prior
year, primarily due to expansion of services for our major customer.

 Operating
Costs and Expenses

 Cost
of Revenue

 Cost
of revenue decreased approximately $135,000, or 2%, for the year ended December 31, 2023 compared with the year ended December 31,
2022. The decrease in cost was impacted by the utilization of capacity to build rental tools owned by us. Additional savings were
obtained from lowering domestic headcount costs during the fourth quarter of 2023. International cost of revenue increased 20% due
to higher costs in freight and travel. Increase in cost of revenue was driven by the increase in bit refurbishment.

 Selling,
general and administrative expenses

 Selling,
general and administrative expenses increased approximately $2,315,000, or 32%, for the year ended December 31, 2023 compared to the
year ended December 31, 2022. The increase was a result of higher payroll and benefits for building the Middle East team along with an
increase in travel and increased legal fees pertaining to the patent infringement lawsuit. Patent infringement legal expenses increased
approximately $600,000 in 2023 compared to 2022.

 Depreciation
and amortization expenses

 Depreciation
and amortization expenses decreased approximately $147,000, or 10%, for the year ended December 31, 2023 compared with the year ended
December 31, 2022. The decrease was due to intellectual property intangible reaching its full amortization.

 Other
Income (Expenses)

 Interest
Income

 Interest
income increased approximately $34,000, or 128%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The
increase was due to an increase in interest rates earned on the average cash balance held in interest bearing accounts.

 Interest
Expense

 Interest
expense increased approximately $ 117,000, or 20%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
The increase in interest expense was mainly due to a new term loan at 8.18% interest.

 Recovery
of related party note receivable

 Recovery
of related party note receivable was approximately $350,000 for the year ended December 31, 2023 pertaining to partial recovery of the
related party note receivable (See Critical Accounting Policies and Estimates – Relates Party Note Receivable). There was no such
recovery for the year ended December 31, 2022.

 Impairment
on Asset Held for Sale

 There
was no such impairment on asset held for sale for the year ended December 31, 2023. In December 2022, the Company entered into an agreement
to sell certain equipment, which closed in January 2023. As such, management made adjustments to reflect the fair value of this equipment
as of December 31, 2023.

 Loss
on Disposition of Assets

 Loss
on disposition of assets was $70,664 for the year ended December 31, 2023.

 Liquidity
and Capital Resources

 At
December 31, 2023, we had working capital of approximately $4,939,000. Our principal uses of cash are operating expenses, working capital
requirements, capital expenditures and debt service payments. Our operational and financial strategies include managing our operating
costs and capital spending to reflect revenue trends, accelerating collections of international receivables, and controlling our working
capital and debt to enhance liquidity. We will continue to work to grow revenue and manage costs and expect to be cash flow positive
in 2024. If we are unable to do this, we may not be able to, among other things, (i) maintain our current general and administrative
spending levels; (ii) fund certain obligations as they become due; and (iii) respond to competitive pressures or unanticipated capital
requirements. We cannot provide any assurance that financing will be available to us in the future on acceptable terms.

 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 borrowings with the following facilities (collectively, the "Loans"):

 Revolving
 Line: The lesser of $750,000 or the borrowing base, which is currently 50% of eligible inventory as calculated under the Loan
 Agreement ("Revolving Line"), which matures on July 28, 2025.

 Term
 Loan: $1,719,200 term loan (the "Term Loan"), which matures on July 28, 2028.

 The
interest rate per annum applicable to the Revolving Line is the greater of (a) Prime plus 1.00% and (b) 7.50%, which was 8% at December
31, 2023. The interest rate per annum applicable to the Term Loan is 8.18%. Payments of principal and interest monthly on the Term Loan,
and interest only on the Revolving Line, commenced on August 28, 2023. The balance of principal and interest on both Loans will be due
upon maturity, if not sooner repaid. The Company may prepay and/or repay the Loans, in whole or in part, at any time without premium
or penalty, subject to certain conditions. The balance of the Revolving Line and Term Loan totaled approximately $0 and $1,602,000 as
of December 31, 2023, respectively.

 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.

 Business
Manager Agreements

 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 under the domestic agreement and $2,000,000 under the international agreement. The service charge
associated with the purchases is 1.25% under the domestic agreement and 2.0% under the international agreement. There are additional
charges if accounts are not paid within 45 days. The Business Manager Agreements include recourse arrangements, which require the Company
to repurchase transferred accounts receivable that remain unpaid for a specified period of time. The accounts are secured by a security
interest in the accounts receivable in all of the Company's present and after-acquired accounts receivable of the customers as
defined in the agreements.

 Generally,
at the transfer date, the Company receives cash equal to 90% of the value of the sold domestic accounts receivable and 60% of the value
of the sold international accounts receivable, less the service charge. The remaining balance is held back as a reserve. The reserve
balance is carried at fair value, which is remeasured monthly to take into account activity during the period (the Company's interest
in newly-transferred receivables and collections on previously transferred receivables), as well as changes in estimates of future interest
rates and anticipated credit losses. Fluctuations in interest rates and revised estimates of credit losses were zero as of December 31,
2023. The carrying amount of the reserve was $169,139 as of December 31, 2023 and is classified within cash and restricted cash on the
consolidated balance sheet.

 During
the year ended December 31, 2023, the Company sold receivables having an aggregate face value of $4,211,786 in exchange for cash proceeds
of $4,150,932. Service fees for the period totaled $83,109, which are initially recorded as prepaids in the consolidated balance sheets
and amortized over 45 days. The Company recognized expense of $83,337 related to the service fees for both the year ended December 31,
2023 which is included in interest expense in the consolidated statements of operations. The outstanding principal amount of the receivables
sold under this facility amounted to $307,310 as of December 31, 2023.

 Financing
Obligation Liability

 On
December 7, 2020, the Company closed a sale-leaseback agreement for its headquarters and manufacturing facilities. Under the terms of
the transaction, the Company sold the property for $4.45 million and simultaneously entered into a 15-year lease. After fees, the Company
netted approximately $4.26 million in proceeds of which $2.64 million was used to repay in full the outstanding mortgage on the property.
Under the lease agreement, the Company has an option to extend the term of the lease and to repurchase the property. Due to this repurchase
option, the Company was unable to account for the transfer as a sale under ASC Topic 842, Leases, and as such, the transaction is a failed
sale-leaseback that is accounted for as a financing transaction.

 Machinery
Loans

 The
Company financed the purchase of machinery and equipment in July 2022. The term of the loan is 5 years and matures in July 2027. The
loan has an interest rate of 5.50%. The balance of the equipment loan totaled $620,176 as of December 31, 2023.

 Insurance
Loan

 In
June 2023, the Company financed insurance premiums with a loan agreement. In September 2023, an additional amount for insurance premiums
was added to the loan. The loan matures in March 2024. The balance of the insurance loan totaled $196,693 as of December 31, 2023.

 The
Company had no off balance sheet arrangements.

 Cash
Flow

 2023

 2022

 Net cash provided by operating activities

 $
 3,193,933

 $
 3,547,404

 Net cash used in investing activities

 (3,391,157
)

 (3,330,206
)

 Net cash (used in) provided by financing activities

 709,825

 (881,273
)

 Net (decrease) increase in cash and restricted cash

 $
 512,601

 $
 (664,075
)

 Operating
Cash Flows

 For
the year ended December 31, 2023, net cash provided by operating activities was approximately $3,194,000. The Company had approximately
$7,436,000 of net income, and a $2,577,000 increase in non-cash expenses, offset by a $437,000 decrease in working capital accounts.

 Investing
Cash Flows

 For
the year ended December 31, 2023, net cash used in investing activities was approximately $3,391,000, primarily related to purchases
of property, plant and equipment.

 Financing
Cash Flows

 For
the year ended December 31, 2023, net cash provided by financing activities was approximately $710,000, primarily related to proceeds
from debt borrowings of approximately $2,901,000, offset by principal payments on debt of approximately $2,306,000.

 Critical
Accounting Policies and Estimates

 The
discussion of our financial condition and results of operations is based upon our consolidated financial statements, which have been
prepared in accordance with GAAP. During the preparation of these financial statements, we are required to make estimates and assumptions
that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. On an ongoing basis, we
evaluate our estimates and assumptions, including those discussed below. We base our estimates on historical experience and on various
other assumptions that we believe are reasonable under the circumstances. The results of our analysis form the basis for making assumptions
about the carrying values of assets and liabilities that are not readily apparent from other sources. While we believe that the estimates
and assumptions used in the preparation of our consolidated financial statements are appropriate, actual results may differ from these
estimates under different assumptions or conditions, and the impact of such differences may be material to our consolidated financial
statements. Our estimates and assumptions are evaluated periodically and adjusted when necessary. Described below are the most significant
policies we apply in preparing our consolidated financial statements, some of which are subject to alternative treatment under GAAP.
We also describe the most significant estimates and assumptions we make in applying these policies. See Note 1 to our consolidated financial
statements.

 Accounts
Receivable and Allowance for Credit Losses

 Accounts
receivable are generally due within 60 days and 90 days of the invoice date for domestic and international customers, respectively. 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 at both December
31, 2023 and 2022.

 Substantially
all of our revenue is derived from our refurbishing of PDC drill bits for Baker Hughes and from DTI when we 1) sell the Drill-N-Ream
tool, 2) repair drilling bits and the Drill-N-Ream tool, and 3) earn royalty on our customer's rental of the Drill-N-Ream tool
to the end user. Internationally our revenue is derived from the rental of our Drill-N-Ream tool to large oilfield service companies.
While our credit risk is concentrated, all of our customers have historically had excellent payment history. Management monitors accounts
receivable collections on a weekly basis.

 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.

 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
("Tronco"), a party related to us through common control, in order to take over the legal position as Tronco's senior
secured lender. That agreement provided that, upon our full repayment of the Tronco loan from the proceeds of our initial public offering,
the lender would assign to us all of its rights under the Tronco loan, including all of the collateral documents. On May 30, 2014, we
closed our purchase of the Tronco loan for a total payoff of $8.3 million, including principal, interest, and early termination fees.

 The
Meier Guaranties were determined not to be substantive based on GAAP that states that the substance of a personal guarantee depends on
the ability of the guarantor to perform, the practicality of enforcing the guarantee, and the demonstrated intent to enforce the guarantee.
Since the Company did not demonstrate intent by either enforcing the redemption of collateral or the guarantees by the borrowers to repay
the loan when the related party note receivable was due and payable on December 31, 2017 and instead modified the loan by extending the
payment term, the Company determined the guarantees are not substantive and therefore should not serve as the basis for concluding the
loan is well secured and collateralized. As a result, the Company fully reserved the related party note receivable effective August 2017.

 On
March 31, 2023, the Company entered into a fourth amended and restated loan agreement and note with Tronco to extend the maturity date
of the principal to March 31, 2033. As amended, the interest rate on the note is fixed at 2.8% per annum and provides for principal and
accrued interest payments in the amount of $750,000 annually on March 31, 2024 through 2032, with the balance of all remaining outstanding
principal and accrued interest due on March 31, 2033. In the event the average closing price for the Company's common stock for
10 consecutive trading days is equal to or greater than $3.00 per share, Tronco shall pay fifty percent of the then outstanding principal
balance together with all accrued, unpaid interest within ten days of the date on which the 10-day trading average first equals or exceeds
$3.00. In the event the average closing price for 10 consecutive trading days is $4.00 per share or greater, Tronco shall pay the entire
outstanding principal balance together with all accrued, unpaid interest within ten (10) days of the date on which the 10-day average
first equals or exceeds $4.00. In addition, in the event of a sale of all or substantially all of the assets or a controlling equity
interest in the Company, Tronco and the Meiers must utilize the proceeds received from such sale to pay the entire outstanding principal
balance on the note receivable together with all accrued, unpaid interest. On March 24, 2023, there was a principal and interest payment
of $350,262 which was reflected as a recovery of related party note receivable in other income and expense on the condensed consolidated
statements of operations. The Tronco note balance, including accrued interest, was approximately $6,706,000 and $6,884,000 as of December
31, 2023 and 2022, respectively, which is fully reserved. The Company continues to hold the 8,267,860 shares of the Company's common
stock as collateral. The Company will record a recovery of the loan upon receiving repayment of the note, but there is no guarantee a
full recovery of the loan will occur.

 Government
Grant

 The
Company applied for and received a grant award of up to $750,000 from the State of Utah's Manufacturing Modernization Grant Program.
The program helps develop manufacturing industry in the state. Current GAAP has no specific authoritative guidance on the accounting
for government assistance received by business entities. However, Accounting Standard Codification ("ASC") 105 describes
the decision-making framework for determining the guidance to apply when guidance is not specified by GAAP. ASC 105 points to IAS 20,
Accounting for Government Grants and Disclosure of Government Assistance, and ASC 958-605, Not-for-Profit Entities - Revenue Recognition,
that require conditions of the grant to be met in order to recognize the income.

 During
2022, the Company met the conditions of the grant and, therefore, recorded the initial grant funding totaling $675,000 as deferred income
on the balance sheet, as portions of the grant are approved by the State of Utah. Income will be recognized on a straight-line basis
over the life of the asset once all project requirements, such as employee training and installation of the equipment, have been completed.

 Income
Taxes and Valuation Allowance for Deferred Tax Assets

 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 realization of deferred tax
assets is primarily dependent upon earnings in federal and various state and local jurisdictions.

 We
consider a number of factors to reliably estimate future taxable income so we can determine the extent of our ability to realize net
operating loss ("NOL"), foreign tax credits, realized capital loss and other carryforwards. These factors include forecasts
of future income for each of our businesses and actual and planned business and operational changes, both of which include assumptions
about future macroeconomic and company-specific conditions and events. We subject the forecasts to stresses of key assumptions and evaluate
the effect on tax attribute utilization. If certain future operating results do not meet current expectations it could cause us to establish
an additional valuation allowance on our deferred tax assets.

 ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 We
do not maintain any derivative instruments such as interest rate swap arrangements, hedging contracts, futures contracts or the like.

 Concentration
of Credit Risk

 We
are dependent on a limited number of significant customers. For the year ended December 31, 2023, the Company had two significant customers
that represented 85% of our revenue. These customers had approximately $1,677,000 in accounts receivable at December 31, 2023. For the
year ended December 31, 2022, the Company had two significant customers that represented 88% of our revenue. These customers had approximately
$1,751,000 in accounts receivable at December 31, 2022.

 Developing
new products and tools and selling more existing products to additional customers continues to be a strategic initiative which we believe
will broaden our customer base, which should have a positive effect on diversifying our concentration of credit risk.

 For
the year ended December 31, 2023, the Company had two vendors that represented 12% of our purchases. These vendors had approximately
$440,000 in accounts payable at December 31, 2023. For the year ended December 31, 2022, the Company had two vendors that represented
12% of our purchases. These vendors had approximately $74,000 in accounts payable at December 31, 2022.

 ITEM
8. CONSOLIDATED FINANCIAL STATEMENTS

 Page

 Report of Independent Registered Public Accounting Firm (Moss Adams LLP, Dallas, Texas, PCAOB ID: 659)

 Consolidated Balance Sheets

 Consolidated Statements of Operations

 Consolidated Statements of Shareholders' Equity

 Consolidated Statements of Cash Flows

 Notes to Consolidated Financial Statements

 Report
of Independent Registered Public Accounting Firm

 To
the Shareholders and the Board of Directors of

 Superior
Drilling Products, Inc.

 Opinion
on the Financial Statements

 We
have audited the accompanying consolidated balance sheets of Superior Drilling Products, Inc. and subsidiaries (the Company) as of December
31, 2023 and 2022, the related consolidated statements of operations, shareholders' equity and cash flows for the years then ended,
and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial
statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2023 and 2022,
and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.

 Basis
for Opinion

 These
consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part
of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing
an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 Our
audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether
due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that our audits provide a reasonable basis for our opinion.

 Critical
Audit Matter

 The
critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that
was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material
to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication
of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are
not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or
disclosures to which it relates.

 Accounting
for Income Taxes – Valuation Allowance on Deferred Tax Assets

 As
discussed in Note 11 to the Company's consolidated financial statements, the Company recorded income tax benefit totaling $6 million for the year ended December 31, 2023. As of December 31, 2023, the Company is in a three-year cumulative pretax book income position
and relying on forecasted future taxable income to conclude that it is more likely than not that deferred tax assets will be realized
resulting in a reversal of the valuation allowance.

 We
identified the estimation of future taxable income as a critical audit matter. The projection of future taxable income used in the determination
of the recoverability of deferred tax assets requires significant judgment. Auditing these judgments involved especially challenging
auditor effort due to the nature of audit evidence available and the extent of specialized skills or knowledge needed to address these
matters.

 The
primary procedures we performed to address this critical audit matter included:

 With
 the assistance of internal income tax specialists:

 Evaluating
 management's assessment and weighing of the positive and negative evidence utilized to conclude that the full valuation allowance
 should be released; and

 Assessing
 reasonableness of management's conclusion about tax benefits that are more likely than not to be realized after considering
 forecasted book/tax differences and utilization of net operating losses.

 Testing
 the reasonableness of the key assumptions and data in the taxable income forecast by:

 Comparing
 future revenues and expenses to historical data;

 Performing
 a sensitivity analysis on income growth; and

 Considering
 the timing of future reversal of temporary differences

 /s/
 Moss Adams
 LLP

 Dallas,
 Texas

 March

 We
have served as the Company's auditor since 2017.

BALANCE SHEETS

 DECEMBER
31, 2023 and 2022

 2023

 2022

 2023

 2022

 ASSETS

 Current assets

 Cash and restricted cash

 $
 2,670,626

 $

 Accounts receivable

 2,670,361

 3,241,221

 Prepaid expenses

 335,152

 367,823

 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

 LIABILITIES AND SHAREHOLDERS' EQUITY

 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

 The
accompanying notes are an integral part of these consolidated financial statements.

STATEMENTS OF OPERATIONS

 FOR
THE YEARS ENDED DECEMBER 31, 2023 and 2022

 2023

 2022

 2023

 2022

 $
 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
)

 $

 $

 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

 The
accompanying notes are an integral part of these consolidated financial statements.

STATEMENTS OF SHAREHOLDERS' EQUITY

 FOR
THE YEARS ENDED DECEMBER 31, 2023 and 2022

 Shares

 Par Value

 Capital

 Deficit

 Common Stock

 Additional
 Paid-in

 Accumulated

 Total Shareholders'

 Shares

 Par Value

 Capital

 Deficit

 Balance - December 31, 2021

 28,235,001

 28,235

 43,071,201

 ( 36,951,508
)

 6,147,928

 Share-based compensation expense

 1,010,079

 1,010

 872,727

 -

 873,737

 Stock option exercised

 7,792

 Disgorgement of profits

 -

 -

 -

 -

 Balance - December 31, 2022

 29,245,080

 $
 29,245

 $
 43,943,928

 $
 ( 35,886,351
)

 $
 8,086,822

 Balance

 29,245,080

 $
 29,245

 $
 43,943,928

 $
 ( 35,886,351
)

 $
 8,086,822

 Share-based compensation expense

 1,138,368

 1,138

 925,493

 -

 926,639

 Stock option exercised

 7,792

 6,408

 -

 6,408

 Disgorgement of profits

 -

 -

 198,894

 -

 198,894

 -

 -

 -

 Balance - December 31, 2023

 30,391,240

 30,391

 45,074,723

 ( 28,450,306
)

 16,654,808

 Balance

 30,391,240

 30,391

 45,074,723

 ( 28,450,306
)

 16,654,808

 The
accompanying notes are an integral part of these consolidated financial statements.

STATEMENTS OF CASH FLOWS

 FOR
THE YEARS ENDED DECEMBER 31, 2023 AND 2022

 2023

 2022

 2023

 2022

 Cash Flows from Operating Activities

 $

 $

 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
)

 ( 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

 2,822,100

 Cash and restricted cash at end of period

 $
 2,670,626

 $

 The
accompanying notes are an integral part of these consolidated financial statements.

STATEMENTS OF CASH FLOWS (continued)

 FOR
THE YEARS ENDED DECEMBER 31, 2023 AND 2022

 2023

 2022

 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

 $
 -

 The
accompanying notes are an integral part of these consolidated financial statements.

 SUPERIOR DRILLING PRODUCTS, INC.

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 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 well bore conditioning
tool ("Drill-N-Ream tool") and the patented Strider Drill String Oscillation System technology ("Strider technology"
or "Strider"). In addition, the Company is a manufacturer and refurbisher of PDC (polycrystalline diamond compact) drill
bits for leading oil field services companies. We operate a state-of-the-art drill tool fabrication facility in Vernal, Utah, where we
manufacture solutions for the drilling industry, as well as customers' custom products. We also operate a repair facility in Dubai.
Our headquarters are also located in Vernal, Utah.

 Our
subsidiaries include (a) Superior Drilling Solutions, LLC (previously known as Superior Drilling Products, LLC), a Utah limited liability
company ("SDS"), together with its wholly owned subsidiary Superior Design and Fabrication, LLC, a Utah limited liability
company ("SDF"), (b) Extreme Technologies, LLC, a Utah limited liability company ("ET"), (c) Meier Properties
Series, LLC, a Utah limited liability company ("MPS"), (d) Meier Leasing, LLC, a Utah limited liability company ("ML"),
and (e) Hard Rock Solutions, LLC ("HR" or "Hard Rock").

 Basis
of Presentation

 The
Company's 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.

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: Revenue is recognized upon shipment of tools or products to the customer. Shipping and handling costs related
to tool and product sales are recorded gross as a component of both the sales price and cost of the product sold.

 Tool
Rental: Tool rental revenue is recognized under ASC Topic 842, Leases ("ASC 842"). While the duration of the rents varies
by job and number of runs, the rental terms are generally less than one month; are typically based on the price per run or footage drilled;
and do not have any minimum rental payments or term. Tool rental revenue is recognized upon completion of the customer's job for
which the tool was rented.

 SUPERIOR DRILLING PRODUCTS,
INC.

 NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

 Other
Related Revenue: We receive revenue from the repair of tools and recognize revenue upon delivery of the repaired tool to the customer.
We earn royalty commission revenue when our customer invoices their customer for the use of our tools.

 Contract
Services

 Drill
Bit Manufacturing and Refurbishment: We recognize revenue for our PDC drill bit services upon transfer of control, which we determined
to be the shipping point. Shipping and handling costs related to refurbishing services are paid directly by the customer at the time
of shipment. By contract, we can only refurbish and manufacture oil or gas drill bits for Baker Hughes, but we are not contractually
prohibited from manufacturing drill bits for the mining industry.

 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.

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

 $

 Restricted
 cash

 166,139

 -

 Cash
 and restricted cash

 $

 2,670,626

 $

 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 as of both December 31, 2023 and 2022.

 NOTES

 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.

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
 years

 Machinery,
 equipment and rental tools

 months - 10 years

 Office
 equipment, fixtures and software

 3 - 7
 years

 Transportation
 equipment

 - 30 years

 NOTES

 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 to 9 years. Asset lives are adjusted whenever there is a change in the estimated period of economic benefit. No residual
value has been assigned to these intangible assets.

 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 and $ 436,000, respectively, and include payroll for engineers, materials for the Strider technology, and third-party engineering
costs. The prior year amount has been reclassified to conform to the current year presentation and these costs are included in the selling,
general, and administrative expenses in the consolidated statement of operations.

 NOTES

 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 and $ 3,087, respectively.

 Share-Based

 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 % and 88 % of our revenue for our North America segment for the years ended December
31, 2023 and 2022, respectively. These customers had approximately $ 1,677,000 and $ 1,751,000 in accounts receivable at December 31, 2023
and 2022, respectively.

 The
Company had two significant vendors that represent 12 % of our purchases and had approximately $ 440,000 in accounts payable at December
31, 2023. The Company had two significant vendors that represent 12 % of our purchases and had approximately $ 74,000 in accounts payable
at December 31, 2022.

 NOTES

 Government
Grant

 The
Company applied for and received a grant award of up to $ 750,000 from the State of Utah's Manufacturing Modernization Grant Program.
The program helps develop manufacturing industry in the state. Current GAAP has no specific authoritative guidance on the accounting
for government assistance received by business entities. However, Accounting Standard Codification ("ASC") 105 describes
the decision-making framework for determining the guidance to apply when guidance is not specified by GAAP. ASC 105 points to IAS 20,
Accounting for Government Grants and Disclosure of Government Assistance, and ASC 958-605, Not-for-Profit Entities - Revenue Recognition,
that require conditions of the grant to be met in order to recognize the income.

 During
2022, the Company met the conditions of the grant and received the initial grant funding totaling $ 675,000. As of December 31, 2023,
project requirements, such as employee training and installation and operation of the equipment, had not been completed and, as such,
the entire funded amount of $ 675,000 was included as deferred income on the balance sheet. Income will be recognized on a straight-line
basis over the life of the asset once all project requirements are met.

 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.

 NOTE
2. REVENUE

 Disaggregation
of Revenue

 The
following table presents revenue disaggregated by type:

 SCHEDULE OF REVENUE DISAGGREGATED BY REVENUE

 2023

 2022

 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.

 NOTES

 NOTE
3. INVENTORIES

were comprised of the following:

 SCHEDULE OF INVENTORIES

 2023

 2022

 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

 NOTE
4. PROPERTY, PLANT AND EQUIPMENT

 Property,
plant and equipment was comprised of the following:

 SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT

 2023

 2022

 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 and $ 1,337,000
respectively.

 NOTE
5. INTANGIBLE ASSETS

 Intangible
assets were comprised of the following:

 SCHEDULE OF INTANGIBLE ASSETS

 2023

 2022

 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 and $ 167,000, respectively.

 These
intangible assets have been amortized using the straight-line method over their expected useful lives, which range from 5 to 9 years.

 NOTES

 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, which reduced the related party note
receivable balance to $ 0. The Company continues to hold the 8,267,860 shares of the Company's common stock as collateral. The Company
will record a recovery of the loan upon receiving repayment of the note or interest in other income. On July 7, 2020, the Company entered
into an amended and restated loan agreement and note with Tronco changing the payment terms on the note. As amended, the interest rate
on the note is fixed at 2 % per annum. On January 31, 2023, the Company entered into a second amended and restated loan agreement and
note with Tronco to extend the maturity date of the principal to March 31, 2023. The Tronco note balance, including accrued interest,
was approximately $ 6,703,000 and $ 6,884,000 as of December 31, 2023 and 2022, respectively.

 NOTE
7. LEASES

 The
Company leases certain facilities Utah and Dubai under long-term operating leases with lease terms of one year to two years. The lease
expense and the cash paid under operating leases was approximately $ 253,000 and $ 140,000 for the years ended December 31, 2023 and 2022,
respectively.

 The
following table presents the maturities of lease liabilities:

 SCHEDULE OF AGGREGATE FUTURE LEASE PAYMENTS

 Fiscal year ending December 31,

 Operating
 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

 Other
information related to operating leases:

 SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE

 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
 %

 NOTE
8. LONG-TERM DEBT

 Long-term
debt is comprised of the following:

 SCHEDULE OF DEBT OBLIGATIONS

 2023

 2022

 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

 NOTES

 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 or the borrowing base, which is currently 50 % of eligible inventory as calculated under the Loan
 Agreement ("Revolving Line"), which matures on July 28, 2025.

 Term
 Loan: $ 1,719,200 term loan (the "Term Loan"), which matures on July 28, 2028.

 The
interest rate per annum applicable to the Revolving Line is the greater of (a) Prime plus 1.00 % and (b) 7.50 %, which was 8 %
at December 31, 2023. The interest rate per annum applicable to the Term Loan is 8.18 %. Payments of principal and interest monthly
on the Term Loan, and interest only on the Revolving Line, commenced on August 28, 2023. The balance of principal and interest on both
Loans will be due upon maturity, if not sooner repaid. The Company may prepay and/or repay the Loans, in whole or in part, at any time
without premium or penalty, subject to certain conditions. The balance of the Revolving Line and Term Loan totaled approximately $ 0 and
$ 1,602,000 as of December 31, 2023, respectively.

 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 credit facility, which included a $ 800,000 term loan (the "Term
Loan") and a $ 3,500,000 line of credit (the "Line of Credit"). The Credit Agreement was fully repaid in July 2023 using
proceeds from the Loan Agreement.

 Machinery
Loans

 The
Company financed the purchase of machinery and equipment through various loans. The outstanding loans have interest rates ranging from
 5.50 % to 5.94 %, and repayment terms of 48-60 months. The balance of the equipment loans totaled approximately $ 523,000 and $ 665,000 as
of December 31, 2023 and 2022, respectively.

 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 and $ 157,000 as of December
31, 2023 and 2022, respectively.

 NOTES

 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. The interest
rate of the loan is 6.99 %. The loan is collateralized by the vehicle.

 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.

 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 "Sale Agreement"). Concurrent
with the sale of the Property, the Company entered into a fifteen-year lease agreement (the "Lease Agreement") to lease back
the Property at an annual rate of $ 311,395 with payments made monthly, subject to annual rent increases of 1.5 %. Under the Lease Agreement,
the Company has an option to extend the term of the lease and to repurchase the Property. Due to this repurchase option, the Company
was unable to account for the transfer as a sale under ASC 842, Leases, and as such, the transaction is a failed sale-leaseback
that is accounted for as a financing transaction.

 The
Company received cash of $ 1,622,106, retired real estate debt of $ 2,638,773 and recorded a financing obligation liability of $ 4,260,879
related to the transaction. There was no gain recorded since sale accounting was precluded. The financing obligation has an implied interest
rate of 6.0 %. At the conclusion of the fifteen-year lease period, the financing obligation residual is estimated to be $ 2,188,710, which
corresponds to the carrying value of the property. The Company paid $ 74,636 and $ 65,678 of principal in 2023 and 2022, respectively.
The balance of the financing obligation was $ 4,038,021 and $ 4,112,658, at December 31, 2023 and 2022, respectively.

 The
financing obligation liability is summarized below:

 SCHEDULE OF FINANCING OBLIGATION LIABILITY

 2023

 2022

 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

 NOTES

 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.

 NOTE
11. INCOME TAXES

 Components
of income tax expense was as follows:

 SCHEDULE OF COMPONENTS OF INCOME TAX BENEFIT

 2023

 2022

 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

 NOTES

 The
non-current deferred tax assets and liabilities consist of the following:

 SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

 2023

 2022

 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

 $
 -

 NOTES

 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

 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

 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
of which $ 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 and $ 352,000 of accrued income tax payable, including accrued penalties, as of December 31, 2023 and
2022, respectively, which are included as a separate line in current liabilities in the accompanying balance sheets. The amount of penalties
charged to income tax expense as a result of this uncertain tax position was $ 0 and $ 0 for the years ended December 31, 2023 and 2022,
respectively.

 NOTE
12. SHARE-BASED COMPENSATION

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.

 NOTES

 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 shares of common stock for issuance. In 2015, our stockholders approved the Superior
Drilling Company, Inc. 2015 Long Term Incentive Plan (the "2015 Incentive Plan"). In 2020, the Company's board of directors
approved an additional 2,543,448 shares of the Company's common stock to be added to the 2015 Incentive Plan. In 2022, the Company's
board of directors approved an additional 1,500,000 shares of the Company's stock to be added to the 2015 Incentive Plan. Subject
to adjustment as provided in the 2015 Incentive Plan, the maximum aggregate number of shares of the Company's common stock that
may be issued with respect to awards under the 2015 Incentive Plan is 7,076,326. As of December 31, 2023, there were 306,486 shares remaining
available for grant under the Company's 2015 Incentive Plan.

 Restricted
stock units

 On
August 10, 2023, the Board of Directors authorized 75,000 shares of restricted stock or stock options under the 2015 Incentive Plan to
be granted to employees. Of these authorized restricted stock or stock options, 74,000 restricted stock shares were granted to employees
on December 15, 2023 at a grant price of $ 0.7127. The fair value, based on the Black-Scholes option pricing model, on the date of grant
was $ 0.7127. The restricted stock shares 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.

 On
August 10, 2023, the Board of Directors granted 777,764 restricted stock units from the 2015 Incentive Plan to executive management and
directors based on the average price of the Company's common stock on the date of the grant. These restricted units will vest over
a three - year period.

 On
August 12, 2022, the Board of Directors granted 932,500 restricted stock units from the 2015 Incentive Plan to executive management and
directors based on the average price of the Company's common stock on the date of the grant. These restricted units will vest over
a three - year period.

expense recognized for grants of restricted stock vesting under the 2015 Incentive Plan was approximately $ 918,000 and $ 858,000 for the
years ending December 31, 2023 and 2022, respectively. The Company recognized compensation expense and recorded it as share-based compensation
in the consolidated statement of operations.

 Total
unrecognized compensation expense related to unvested restricted stock units expected to be recognized over the remaining weighted vesting
period of 2.57 years equaled approximately $ 1,918,000 at December 31, 2023. These shares vest over three years.

 Activity
under the 2015 Incentive Plan for RSUs was as follows:

 SCHEDULE
OF SHARE-BASED COMPENSATION, RESTRICTED STOCK UNITS AWARD ACTIVITY

 2023

 2022

 Restricted
 Stock Units

 Average Price

 Restricted
 Stock Units

 Average Price

 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

 ( 1,138,372
)

 $
 0.76

 ( 1,008,214
)

 $
 0.70

 Outstanding, end of period

 1,806,878

 $
 1.06

 2,174,166

 $
 0.83

 NOTES

 Stock

 On
August 12, 2022, the Board of Directors authorized 75,000 stock options under the 2015 Incentive Plan to be granted to employees. Of
these authorized stock options, 24,000 stock options were granted to employees on December 16, 2022 at a grant price of $ 0.82. The fair
value, based on the Black-Scholes option pricing model, on the date of grant was $ 0.35. 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.

 The
Company recognized share-based compensation expense related to stock options of approximately $ 9,000 and $ 15,000 during the years ended
December 31, 2023 and 2022, respectively.

 Activity
under the 2015 Incentive Plan for stock options was as follows:

 SCHEDULE OF SHARE-BASED COMPENSATION, STOCK OPTIONS, ACTIVITY

 2023

 2022

 Stock

 Average Price

 Stock

 Average Price

 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

 NOTES

 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

 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.

 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

 2023

 2022

 Numerator:

 $

 $

 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

 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.

 NOTES

 The
following table summarizes information about our segments:

 SCHEDULE OF SEGMENTS INFORMATION WITH GEOGRAPHIC AREAS

 2023

 2022

 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 and $ 145,000 for the years ended December 31,
2023 and 2022, respectively. The remainder of the North America revenue was derived from operations in the United States of America.

 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

 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

 NOTES

 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 under the domestic agreement and $ 2,000,000 under the international agreement. The service charge
associated with the purchases is 1.25 % under the domestic agreement and 2.0 % under the international agreement. There are additional
charges if accounts are not paid within 45 days. The Business Manager Agreements include recourse arrangements, which require the Company
to repurchase transferred accounts receivable that remain unpaid for a specified period of time. The accounts are secured by a security
interest in the accounts receivable in all of the Company's present and after-acquired accounts receivable of the customers as
defined in the agreements.

 Generally,
at the transfer date, the Company receives cash equal to 90 % of the value of the sold domestic accounts receivable and 60 %
of the value of the sold international accounts receivable, less the service charge. The remaining balance is held back as a reserve.
The reserve balance is carried at fair value, which is remeasured monthly to take into account activity during the period (the Company's
interest in newly-transferred receivables and collections on previously transferred receivables), as well as changes in estimates of
future interest rates and anticipated credit losses. Fluctuations in interest rates and revised estimates of credit losses were zero
as of December 31, 2023. The carrying amount of the reserve was $ 166,139 as of December 31, 2023 and is classified within cash and
restricted cash on the condensed consolidated balance sheet.

 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
in exchange for cash proceeds of $ 4,150,932. Cash received from the selling of receivables are presented as a change in trade receivables
within the operating activities section of the consolidated statements of cash flows. Service fees for the period totaled $ 83,109, which
are initially recorded as prepaids in the condensed consolidated balance sheets and amortized over 45 days. The Company recognized expense
of $ 83,337 related to the service fees for the year ended December 31, 2023, which is included in interest expense in the condensed consolidated
statements of operations. The outstanding principal amount of the receivables sold under this facility amounted to $ 307,310 as of December
31, 2023.

 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 million
payable in cash and DTI stock. The transaction was unanimously approved by the Board of Directors of DTI and SDP and a Special
Committee of the Board of Directors of SDP. The closing of the transaction is expected to occur in the third quarter of
2024.

 ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

 None

 ITEM
9A. CONTROLS AND PROCEDURES

 Management's
Evaluation of Disclosure Controls and Procedures

 Disclosure
controls and procedures are our controls and other procedures that are designed to ensure that information required to be disclosed by
us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated
and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure.

 As
of the end of the period covered by this Annual Report, we carried out an evaluation, under the supervision and with the participation
of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation
of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b). Based upon that evaluation, as of December 31, 2023,
our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective.

 Management's
Report on Internal Control over Financial Reporting

 Our
management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange
Act Rule 13a-15(f). The Company's internal control over financial reporting is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles.

 Under
the supervision and with the participation of the Company's management, including its Chief Executive Officer and Chief Financial
Officer, the Company conducted an evaluation of the effectiveness of its internal control over financial reporting based on the framework
established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as set forth in Internal Control - Integrated
Framework. Upon evaluation, the Company's management has concluded that the Company's internal control over financial
reporting was effective in connection with the preparation of the consolidated financial statements as of December 31, 2023.

 Changes
in Internal Controls over Financial Reporting

 There
has been no change in our internal control over financial reporting that occurred during the fourth quarter of 2023 that has materially
affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 Inherent
Limitations of the Effectiveness of Controls

 Management
does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all
error and fraud. A control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable,
not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements
due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.

 Attestation
Report of Registered Public Accounting Firm

 This
Annual Report does not contain an attestation report of our independent registered public accounting firm related to internal control
over financial reporting because the rules for smaller reporting companies provide an exemption from the attestation requirement.

 ITEM
9B. OTHER INFORMATION

 Not
applicable.

 ITEM
9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

 Not
applicable.

 PART
III

 Item
10. Directors, Executive Officers and Corporate Governance.

 The
following table sets forth information concerning our directors, executive officers and significant employees as of December 31, 2023:

 Name

 Age

 Position

 G. Troy Meier

 Board Chair, Class III Director and Chief Executive Officer

 Annette Meier

 Class II Director, President and Chief Operating Officer

 James R. Lines

 Class II Director

 Robert Iversen

 Class III Director

 Michael V. Ronca

 Class I Director

 Christopher D. Cashion

 Chief Financial Officer

 G.
Troy Meier. Mr. Meier has served as our Board Chair, one of our Class III Directors and Chief Executive Officer since 2014. Mr.
Meier has over 40 years of experience in the oil and gas industry. Mr. Meier and co-founder Annette Meier founded our predecessor company
in 1999. Since that time through the present, Mr. Meier has spearheaded the development of our new manufacturing business and our research
and development activities. As our chief innovator, Mr. Meier has been responsible for not only inventing, but also designing, engineering
and manufacturing industry specific machinery and processes and has several patent applications pending. Previously, in 1993, Mr. Meier
started our predecessor company, Rocky Mountain Diamond, after thirteen years with Christensen Diamond and its successors. At Christensen
Diamond, Mr. Meier established overseas factories in Ireland, Venezuela and China. In addition, Mr. Meier designed tools to improve efficiency
both in the plants and in the field. Previously, Mr. Meier had been Christensen Diamond's first drill bit fabricator specialist
and by age 28, was made the Northern Region design engineer responsible for designing drill bits, core systems, centric bits, nozzle
systems and related products. As the co-founder, Mr. Meier for the last seven years has focused 100% of his attention on our development
and growth.

 Mr.
Meier was selected to serve on our Board of Directors and as the Board Chair because of his extensive industry experience, his role as
our co-founder and chief innovator, and his and Ms. Meier's majority shareholding. Mr. Meier is married to Annette Meier.

 Annette
Meier. Ms. Meier has served as our Class II Director, President and Chief Operating Officer since 2014. Ms. Meier has over 25
years of experience in the oil and gas industry. Since our inception in 1999 to the present, Ms. Meier has managed all of our day-to-day
operations and business. In 2008, Ms. Meier envisioned and co-created "CHUCK," our custom shop management and inventory program
software. Ms. Meier was also instrumental to the development of the "nucleus grinding system" that is currently utilized
in our new manufacturing processes. In 2005, Ms. Meier served as the creator and chief architect of the Ropers Business Park, the state-of-the-art
campus that houses our remanufacturing and new manufacturing facilities in Vernal, Utah. Ms. Meier's understanding of our business
processes resulted in her designing and facilitating the SMART FACILITY layout, process and control systems within the manufacturing
plant. Previously, in 1993, Ms. Meier co-founded and managed our predecessor company, Rocky Mountain Diamond. As the co-founder, Ms.
Meier for the last seven years has focused 100% of her attention on our development and growth. In 2015, Ms. Meier was elected to serve
on the Governor's Office of Economic Development Board (GOED) for the state of Utah. Ms. Meier has been the recipient of numerous
state, local and industry awards over the years that recognized her for innovation and leadership.

 Ms.
Meier was selected to serve on our Board of Directors because of her extensive industry experience, her role as our co-founder and substantial
knowledge of our day-to-day operations, and her and Mr. Meier's majority shareholding. Ms. Meier is married to G. Troy Meier.

 James
Lines. Mr. Lines has served as a Class II director since December 2016 and is Chairman of the Audit Committee. He also serves
on the Compensation Committee and the Nominating and Governance Committee of our Board of Directors. Mr. Lines had served as President
and Chief Executive Officer of Graham Corporation since January 2008 and retired on August 31, 2021. Graham designs, manufactures and
sells critical equipment for the energy, defense and chemical/petrochemical industries. Previously, Mr. Lines served as Graham's
President and Chief Operating Officer since June 2006. Mr. Lines has served Graham in various capacities since 1984, including Vice President
and General Manager, Vice President of Engineering and Vice President of Sales and Marketing. Prior to joining its management team, he
served Graham as an application engineer and sales engineer as well as a product supervisor. Mr. Lines holds a B.S. in Aerospace Engineering
from the State University of New York at Buffalo.

 Mr.
Lines was selected to serve on the Board of Directors due to his extensive experience in growing a midsize business, as well as his background
in manufacturing and engineering in the energy industry.

 Robert
E. Iversen. Mr. Iversen has served as a Class III Director since 2014, was the Lead Independent Director from December 2016 to
August 2019, and is the Chairman of the Compensation Committee since joining the Board. He has also been a member of the Audit Committee
and the Nominating and Governance Committee since 2014. Mr. Iversen has broad executive and operational management experience in the
sales, service, and manufacturing sectors of the global upstream oil and gas industry. Currently, Mr. Iversen is a partner and president
of CTI Energy Services, LLC of Springtown, Texas, a drilling services company he started in 2011. Mr. Iversen has strong experience in
the development and commercialization of new technology products and in company marketing and advertising programs. Previously, Mr. Iversen
collaborated with G. Troy Meier as a partner and senior vice president in Tronco Energy Services from 2008 to 2011. From 2002 to 2008,
he served as President and other C-level positions with Ulterra Drilling Technologies (Fort Worth, Texas), INRG (Houston, Texas) and
NQL Energy Services (Nisku, Alberta). In 1994, Mr. Iversen and partners purchased the U.S. division of DBS Stratabit, a small, underperforming
diamond bit company, where, as President until 2002, he built it into a top tier provider of high technology products. Mr. Iversen previously
held numerous executive positions in marketing, technology and engineering at various divisions of the Baker Hughes companies, and their
predecessors, from 1980 through 1994. Mr. Iversen holds a Bachelor of Science Petroleum Engineering, Montana Tech, as well as numerous
technical and executive post-graduate certifications.

 Mr.
Iversen was selected to serve on our Board of Directors because of his strong experience with start-up companies and the development
and commercialization of new technology products. Mr. Iversen further brings his broad executive and operational management expertise
in the oil and gas industry.

 Michael
Ronca. Mr. Ronca has served as a Class I director since 2014, has been the Lead Independent Director since August 2019, and is
Chairman of the Nominating and Governance Committee. He also serves on the Audit Committee and Compensation Committee of our Board of
Directors. Mr. Ronca has over 30 years of experience as an executive building and monetizing businesses. Since 2009, Mr. Ronca has served
as President and Chief Executive Officer of Eagle Ridge Energy, LLC, an oil and gas exploration and development company active in north
and central Texas. Previously, he served as Chairman of BAS Oil & Gas, a private company active in developing reserves in the Barnett
Shale trend in North Texas. Mr. Ronca has a long history of participating in the energy industry starting with his time at Tenneco Inc.,
where he served as the Assistant to the Chairman and CEO and later established a new oil and gas division which operated throughout the
offshore and onshore Gulf Coast region. He later executed a leveraged buyout with the backing of private equity and soon after took the
company public on the NYSE under the name of Domain Energy where he also served as President and CEO. In 1998, Domain Energy merged into
Range Resources where Mr. Ronca served as Chief Operating Officer for several years. Mr. Ronca has a BS degree from Villanova University
and an MBA in Finance from Drexel University.

 Mr.
Ronca was selected to serve on our Board of Directors because of his strong experience within the oil and gas industry.

 Christopher
D. Cashion. Mr. Cashion has over 40 years of experience in the fields of accounting, finance and private equity. Mr. Cashion
joined us in March 2014 to serve as our Chief Financial Officer on a full-time basis. Previously, Mr. Cashion worked as an independent
financial and business consultant since 1998. From January 2013 through February 2014, Mr. Cashion was the Chief Financial Officer for
Surefire Industries USA LLC, a Houston-based hydraulic fracturing equipment manufacturing company. Previously, from January 2005 to August
2012, Mr. Cashion provided chief financial officer services to five start-up portfolio companies owned by the Shell Technology Venture
Fund, a private equity fund. Prior to his tenure with the start-up portfolio companies, Mr. Cashion worked for First Reserve Corporation,
a private equity firm, from 1991 to 1993. Mr. Cashion worked with Baker Hughes, Inc. from 1981 to 1991 and with Ernst & Young from
1977 to 1981. Mr. Cashion holds a B.S. in Accounting from the University of Tennessee and an M.B.A. in Finance and International Business
from the University of Houston. Mr. Cashion has been a Certified Public Accountant since 1979.

 Section
16(a) Beneficial Ownership Reporting Compliance

 Section
16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") requires our directors and executive officers,
and persons who own more than 10% of our equity securities, to file initial reports of ownership and reports of changes in ownership
of our common stock with the SEC and to furnish us a copy of each filed report.

 To
our knowledge, based solely on review of the copies of such reports furnished to us and written representations that no other reports
were required, during the fiscal year ended December 31, 2023, our officers, directors and greater than 10% beneficial owners timely
filed all required Section 16(a) reports.

 Material
Changes in Director Nominations Process

 There
have not been any material changes to the procedures by which shareholders may recommend nominees to our Board.

 Audit
Committee

 Our
Audit Committee is comprised solely of "independent" directors, as defined under and required by Rule 10A-3 of the Exchange
Act and the NYSE American rules. Our Audit Committee is directly responsible for, among other things, the appointment, compensation,
retention and oversight of our independent registered public accounting firm. The oversight of our independent public accounting firm
includes reviewing the plans and results of the audit engagement with the firm, approving any additional professional services provided
by the firm and reviewing the independence of the firm. Commencing with our first report on internal controls over financial reporting,
the Committee will be responsible for discussing the effectiveness of the internal controls over financial reporting with our independent
registered public accounting firm and relevant financial management. The members of this Committee are Messrs. Iversen, Ronca, and Lines
with Mr. Lines serving as committee chair. Our Board of Directors has determined that Mr. Lines qualifies as an "audit committee
financial expert," as defined by the rules under the Exchange Act. The Audit Committee held four meetings in 2023.

 Code
of Ethics

 We
have adopted a Code of Business Conduct and Ethics that applies to all of our employees, as well as each member of our Board. The Code
of Business Conduct and Ethics is available under "Corporate Governance" at the "Investors" section of our website
at www.sdpi.com. We intend to post amendments to or waivers from the Code of Business Conduct and Ethics (to the extent applicable
to our principal executive officer, principal financial officer or principal accounting officer) at this location on our website.

 Corporate
Governance

 The
charters for our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee and our Code of Business Conduct
and Ethics are available under "Corporate Governance" at the "Investors" section of our website at www.sdpi.com.
Copies of these documents are also available in print form at no charge by sending a request to Christopher Cashion, our Chief Financial
Officer, Superior Drilling Products, Inc., 1583 South 1700 East, Vernal, Utah 84078, telephone (435) 789-0594.

 Item
11. Executive and Director Compensation.

 Summary
Compensation Table

 The
following table provides information concerning compensation paid or accrued during the fiscal years ended December 31, 2023 and 2022,
to our principal executive officer, our chief operating officer and our principal financial officer, to whom we sometimes refer together
as our "named executive officers."

 Name and
 Principal Position

 Year

 Salary

 Bonus

 Stock
 Awards

 Option
 Awards

 Non-Equity
 Incentive Plan

 All Other

 Total

 G. Troy Meier

 2023

 $
 475,000
 (1)

 $
 333,900
 (2)

 $
 332,361
 (4)

 $
 —

 $
 —

 $
 2,041
 (5)

 $
 1,143,302

 Chief Executive Officer

 2022

 $
 475,000
 (1)

 $
 —
 (2)

 $
 332,500
 (4)

 $
 —

 $
 —

 $
 2,370
 (5)

 $
 809,870

 Annette Meier

 2023

 $
 425,000
 (1)

 $
 296,100
 (2)

 $
 254,894
 (4)

 $
 —

 $
 —

 $
 11,772
 (5)

 $
 987,766

 President and Chief Operating Officer

 2022

 $
 414,113
 (1)

 $
 —
 (2)

 $
 255,000
 (4)

 $
 —

 $
 —

 $
 10,656
 (5)

 $
 679,770

 Christopher Cashion

 2023

 $
 300,000
 (1)

 $
 —

 $
 119,941
 (4)

 $
 —

 $
 —

 $
 17,225
 (6)

 $
 437,166

 Chief Financial Officer

 2022

 $
 289,029
 (1)

 $
 —

 $
 120,000
 (4)

 $
 —

 $
 —

 $
 13,340
 (6)

 $
 422,370

 (1)

 Salary
 amounts represent base compensation for the individuals indicated.

 (2)

 For
 2023, a bonus of $333,900 was accrued but not paid for Mr. Meier, and $296,100 was accrued but not paid for Ms. Meier. During 2023,
 bonus amounts paid pertain to the 2022 bonus of $333,900 that was accrued but not paid in 2022 for Mr. Meier, and $296,100 was accrued
 but not paid in 2022 for Ms. Meier.

 (3)

 Reflects
 the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. See Note 12 - Share-Based Compensation to our
 consolidated financial statements included herein.

 The
grant date fair value for these restricted stock awards was based on the average price of our common stock on the grant date (August
9, 2021), which was $0.765 per share. The restricted stock awards will vest in accordance with the following vesting schedule: 33.3%
of the shares of restricted common stock vested on August 9, 2022, 33.3% of the shares of restricted common stock vested on August 9,
2023 and 33.4% of the shares of restricted common stock will vest on August 9, 2024.

 The
grant date fair value for these restricted stock awards was based on the average price of our common stock on the grant date (August
12, 2022), which was $1.00 per share. The restricted stock awards will vest in accordance with the following vesting schedule: 33.3%
of the shares of restricted common stock vested on August 12, 2023, 33.3% of the shares of restricted common stock will vest on August
12, 2024 and 33.4% of the shares of restricted common stock will vest on August 12, 2025.

 (4)

 The
 grant date fair value for these restricted stock awards was based on the average price of our common stock on the grant date (August
 10, 2023), which was $1.32 per share. The restricted stock awards will vest in accordance with the following vesting schedule: 33.3%
 of the shares of restricted common stock vested on August 10, 2024, 33.3% of the shares of restricted common stock will vest on August
 10, 2025 and 33.4% of the shares of restricted common stock will vest on August 10, 2026.

 (5)

 Represents
 certain company paid health care costs and life insurance costs for G. Troy Meier and Annette Meier.

 (6)

 Represents
 certain company paid health care costs and life insurance costs.

 Narrative
Disclosure to Summary Compensation Table

 See
the footnotes to the Summary Compensation Table and "Employment Agreements and Potential Benefits Upon Termination or Change-in-Control"
for narrative disclosure with respect to the table, as well as the below discussion.

 Employment
Agreements and Potential Benefits Upon Termination or Change-in-Control

 In
connection with our initial public offering, we planned to enter into employment agreements with each of our named executive officers,
and the forms of those agreements were filed with the SEC as exhibits to our registration statement on Form S-1. However, management
and the Board have continued to discuss and negotiate the final terms of those agreements and as of the date hereof, the agreements have
not been executed. As a result, none of the named executive officers currently has a contractual right to any of the benefits described
below. The employment agreements to be entered into with our named executive officers will provide for, among other things, the payment
of base salary, reimbursement of certain costs and expenses, and for each named executive officer's participation in our bonus
plan and employee benefit plans.

 With
the exception of G. Troy Meier's and Annette Meier's employment agreements, each agreement will provide for a term of employment
commencing on the date of the agreement and continuing (a) until we or the executive provide 30-days written notice of termination to
the other party, (b) upon termination by us for cause, or (c) upon the executive's death or disability. Except with respect to
certain items of compensation, as described below, the terms of each agreement will be similar in all material respects.

 In
addition to the base salaries shown above,

 Mr.
 Meier's form of employment agreement provides for an annual review by our Board of Directors, and a performance bonus of 70%
 to 110% of his base salary based on criteria to be established by the Compensation Committee and participate in our incentive plans.

 Ms.
 Meier's form of employment agreement provides for an annual review by our Board of Directors, and a performance bonus of 70%
 to 110% of her base salary based on criteria to be established by the Compensation Committee and participate in our incentive plans.

 Mr.
 Cashion's form of employment agreement entitles him to receive a performance bonus based on criteria established by the Compensation
 Committee, and to participate in our incentive plans.

 Each
of the Meiers' employment agreements will provide for customary and usual fringe benefits generally available to our executive
officers, and reimbursement for reasonable out-of-pocket business expenses, including the use of a company vehicle.

 Change
of Control Provisions. Each named executive officer's employment agreement will also provide that in the event of a Change
in Control (as defined below), during the term of executive's employment, (a) we are obligated to pay such executive a single lump
sum payment, within 30 days of the termination of such executive officer's employment, equal to one year salary, and (b) the executive's
equity awards, if any, shall immediately vest. "Change in Control" means approval by our stockholders of:

 (1)
(a) a reorganization, merger, consolidation or other form of corporate transaction or series of transactions, in each case, with respect
to which persons who were our stockholders immediately prior to such transaction do not, immediately thereafter, own more than 50% of
the combined voting power entitled to vote generally in the election of directors of the reorganized, merged or consolidated company's
then outstanding voting securities, in substantially the same proportions as their ownership immediately prior to such transaction, (b)
our liquidation or dissolution, or (c) the sale of all or substantially all of our assets (unless such reorganization, merger, consolidation
or other corporate transaction, liquidation, dissolution or sale is subsequently abandoned); or

 (2)
the acquisition in a transaction or series or transactions by any person, entity or "group", within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act, of more than 50% of either the then outstanding shares of common stock or the combined voting
power of our then outstanding voting securities entitled to vote generally in the election of directors (a "Controlling Interest"),
excluding any acquisitions by (a) us or our subsidiaries, (b) any person, entity or "group" that as of the date of the amendments
to the employment agreements owns beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act of a Controlling Interest,
or (c) any of our employee benefit plans.

 G.
Troy Meier's and Annette Meier's employment agreements will provide that (a) the non-competition covenant does not apply
following the termination of employment if their employment is terminated without cause or for good reason, (b) the non-solicitation
of employees covenant applies with respect to any current employee or any former employee who was employed by us within the prior six
months, and (c) the non-solicitation of customers covenant applies to all actual or targeted prospective clients of ours to the extent
solicited on behalf of any person or entity in connection with any business competitive with our business.

 As
consideration and compensation to our executive officers for, and subject to each executive officer's adherence to, the above covenants
and limitations, we have agreed to continue to pay the executive officer's base salary in the same manner as if they continued
to be employed by us during the one-year non-competition period following the executive officer's termination.

 Payments
on Termination. Except as noted above, upon termination of employment under these agreements, (a) we are only required to pay each
executive officer that portion of their respective annual base salary that have accrued and remain unpaid through the effective date
of the executive officer's termination, and (b) we have no further obligation whatsoever to the executive officer other than reimbursement
of previously incurred expenses which are appropriately reimbursable under our expense reimbursement policy. However, if employment termination
is due to the executive's death, we will continue to pay the executive's annual base salary for the period through the end
of the calendar month in which death occurs to the executive's estate.

 Outstanding
Equity Awards for Year Ended December 31, 2023

 The
following table shows the number of shares covered by exercisable and unexercisable options awards and stock awards held by our named
executive officers on December 31, 2023 that were made under the 2015 Long Term Incentive Plan.

 Option Awards

 Stock Awards

 Name

 of
 Underlying
 Unexercised
 (#)
 Exercisable

 of
 Underlying
 Unexercised
 (#)
 Unexercisable

 Incentive
 Plan
 Awards:
 of
 Underlying
 Unexercised
 Unearned
 (#)

 Option
 Exercise
 Price
 ($)

 Option
 Expiration
 Date

 of Shares
 or Units
 of Stock
 That
 Have
 Not
 (#)

 Market
 Value of
 Shares or
 Units of
 Stock
 That Have
 Not
 ($)

 Incentive
 Plan
 Awards:
 of
 Unearned
 Shares,
 Units or
 Other
 Rights
 That
 Have
 Not
 (#)

 Incentive
 Plan
 Awards:
 Market
 or
 Payout
 Value
 of
 Unearned
 Shares,
 Units or
 Other
 Rights
 That
 Have
 Not
 ($)

 (a)

 (b)

 (c)

 (d)

 (e)

 (f)

 (g)

 (h) (1)

 (i)

 (j)

 G. Troy Meier

 —

 250,943

 $
 332,361
 (3)

 —

 —

 145,171

 $
 111,056
 (2)

 —

 —

 221,778

 $
 221,778
 (4)

 Annette Meier

 —

 192,453

 $
 254,894
 (3)

 —

 —

 111,334

 $
 85,171
 (2)

 —

 —

 170,085

 $
 170,085
 (4)

 Christopher Cashion (5)

 11,995

 —

 —

 1.73

 03/04/2026

 12,416

 —

 —

 1.67

 03/18/2026

 15,057

 —

 —

 1.37

 03/31/2026

 90,556

 $
 119,941
 (3)

 —

 —

 52,393

 $
 40,081
 (2)

 —

 —

 80,040

 $
 80,040
 (4)

 —

 —

 (1)

 See
 Note 12 –Share-Based Compensation in the consolidated financial statements included herein.

 (2)

 The
 grant date fair value for restricted stock awards is based on the average price of our common stock on the grant date (August 9,
 2021), which was $0.765 per share. The remaining restricted stock awards vested in accordance with the following vesting schedule:
 33.3% of the shares of restricted common stock vested on August 9, 2022, 33.3% of the shares of restricted common stock vested on
 August 9, 2023, and 33.4% of the shares of restricted common stock will vest on August 9, 2024.

 (3)

 The
 grant date fair value for restricted stock awards is based on the average price of our common stock on the grant date (August 10,
 2023), which was $1.32 per share. The restricted stock awards vested in accordance with the following vesting schedule: 33.3% of
 the shares of restricted common stock vested on August 10, 2024, 33.3% of the shares of restricted common stock vested on August
 10, 2025 and 33.4% of the shares of restricted common stock vested on August 10, 2026.

 (4)

 The
 grant date fair value for restricted stock awards is based on the average price of our common stock on the grant date (August 12,
 2022), which was $1.000 per share. The remaining restricted stock awards will vest in accordance with the following vesting schedule:
 33.3% of the shares of restricted common stock vested on August 12, 2023, 33.3% of the shares of restricted common stock will vest
 on August 12, 2024, and 33.4% of the shares of restricted common stock will vest on August 12, 2025.

 (5)

 During
 March 2016, the named executive officer agreed to receive awards of stock options in lieu of base salary. The grant date fair value
 for the stock option awards was based on the closing price of our common stock on the grant date of a) March 4, 2016, which was $1.73
 per share; b) March 18, 2016, which was $1.67 per share; and c) March 31, 2016, which was $1.37 per share. All options vested 100%
 on the grant date and have a ten-year term expiring on March 4, 2026, March 18, 2026 and March 31, 2026, respectively. The fair value
 of the vested stock options were calculated using the Black-Scholes model with a volatility and discount rate over the expected term
 of each employee.

 Director

 Our
employee directors are not separately compensated for their service as a director. In 2023, each of our non-employee directors received
86,978 shares of restricted common stock for his service as a director. In addition to receiving shares of stock, our non-employee directors
earned the following fees: Mr. Lines, $82,500; Mr. Iverson, $78,000; and Mr. Ronca, $115,000. The members of our Board of Directors are
entitled to reimbursement of their expenses incurred in connection with the attendance at Board and committee meetings in accordance
with Company policy.

 The
following table summarizes the annual compensation for our non-employee directors during 2023.

 Name
 (a)

 Fees Earned or Paid in Cash (b)

 Stock Awards (1)

 Option Awards (d)

 Non-Equity Incentive Plan Compensati (e)

 Nonqualified Deferred Compensation Earnings (f)

 All Other Compensation (g)

 Total
 (h)

 James R. Lines

 $
 82,500

 $
 115,970

 -

 -

 -

 -

 $
 198,470

 Robert Iversen

 $
 78,000

 $
 115,970

 -

 -

 -

 -

 $
 193,970

 Michael V. Ronca

 $
 115,000

 $
 115,970

 -

 -

 -

 -

 $
 230,970

 (1)

 Reflects
 the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 of awards granted by the Board of Directors. See
 Note 12 - Share-Based Compensation in the consolidated financial statements included herein. The grant date fair value for restricted
 stock awards is based on the average price of our common stock on the grant date (August 10, 2023), which was $1.32 per share, respectively.
 As of December 31, 2023, Mr. Lines, Mr. Iversen and Mr. Ronca each have an aggregate of 139,375 outstanding shares of unvested
 restricted stock. The restricted stock awards have the following vesting schedule: a) for the shares granted on August 9, 2021: 33.3%
 of the shares of restricted common stock vested on the first anniversary of the date of grant, 33.3% of the shares of restricted
 common stock vested on the second anniversary of the date of grant and 33.4% of the shares of restricted common stock will vest on
 the third anniversary of the date of grant in each case, so long as the director continues to serve on the Board through such date;
 b) for the shares granted on August 12, 2022: 33.3% of the shares of restricted common stock vested on the first anniversary of the
 date of grant, 33.3% of the shares of restricted common stock will vest on the second anniversary of the date of grant and 33.4%
 of the shares of restricted common stock will vest on the third anniversary of the date of grant in each case, so long as the director
 continues to serve on the Board through such date and c) for the shares granted on August 10, 2023: 33.3% of the shares of restricted
 common stock will vest on the first anniversary of the date of grant, 33.3% of the shares of restricted common stock will vest on
 the second anniversary of the date of grant and 33.4% of the shares of restricted common stock will vest on the third anniversary
 of the date of grant in each case, so long as the director continues to serve on the Board through such date.

 Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 The
following table sets forth information with respect to the beneficial ownership of our common stock as of December 31, 2023, by:

 each
 person who is known by us to beneficially own 5% or more of the outstanding class of our capital stock;

 each
 member of the Board;

 each
 of our executive officers; and

 all
 of our directors and executive officers as a group.

 Beneficial
ownership is determined in accordance with the rules of the SEC. To our knowledge, each of the holders of capital stock listed below
has sole voting and investment power as to the capital stock owned unless otherwise noted.

 Name and Address of Beneficial Owner

 Numbers of Shares
 of Common Stock
 Beneficially Owned

 % of Common Stock
 Outstanding (1)

 G. Troy Meier (2)

 11,571,369

 38.07
 %

 Annette Meier (3)

 11,181,515

 36.79
 %

 Christopher D. Cashion (4), (9)

 1,016,582

 3.34
 %

 James R. Lines (5), (6)

 507,894

 1.67
 %

 Robert Iversen (5), (7)

 663,279

 2.18
 %

 Michael V. Ronca (5), (8)

 603,806

 1.99
 %

 Jeffrey E. Eberwein

 1,983,027

 6.52
 %

 Star Equity Fund, LP

 1,080,985

 3.56
 %

 Executive Officers and Directors as a group (6 persons)

 15,635,988

 51.45
 %

 (1)

 Based
 on 30,391,240 shares outstanding as of December 31, 2023. Unless otherwise noted, the address for the holder is 1583 South 1700 East,
 Vernal, Utah 84078.

 (2)

 Includes
 (i) 5,641,510 shares of common stock indirectly owned through his ownership in Meier Family Holding Company, LLC, and (ii) 3,173,350
 shares of common stock indirectly owned through his ownership in Meier Management Company, LLC. Also includes 702,801 shares of vested
 restricted common stock, 709,168 shares of unvested restricted common stock. The unvested restricted stock will vest on August 12,
 2024 and August 12, 2025.

 (3)

 Includes
 (i) 5,641,510 shares of common stock indirectly owned through her ownership in Meier Family Holding Company, LLC, and (ii) 3,173,350
 shares of common stock indirectly owned through her ownership in Meier Management Company, LLC. Also includes 536,731 shares of vested
 restricted common stock, 543,874 shares of unvested restricted common stock. The unvested restricted stock will vest on August 12,
 2023, August 12, 2024, and August 12, 2025.

 (4)

 Includes
 (a) 46,969 shares of restricted common stock that vests in accordance with the following vesting schedule: 33.3% of the shares of
 restricted common stock vested on August 7, 2021, 33.3% of the shares of restricted common stock vested on August 7, 2022, and 33.4%
 of the shares of restricted common stock will vest on August 7, 2023; (b) 104,628 shares of restricted common stock that vests in
 accordance with the following vesting schedule: 33.3% of the shares of restricted common stock vested on August 9, 2022, 33.3% of
 the shares of restricted common stock will vest on August 9, 2023, and 33.4% of the shares of restricted common stock will vest on
 August 9, 2024 and (c) 120,000 shares of restricted common stack that vests in accordance with the following vesting schedule: 33.3%
 of the shares of restricted common stock will vest on August 12, 2023, 33.3% of shares of restricted common stock will vest on August
 12, 2024, and 33.4% of shares of restricted common stock will vest on August 12, 2025.

 (5)

 Includes
 (a) 29,356 shares of restricted common stock that vests in accordance with the following vesting schedule: 33.3% of the shares of
 restricted common stock vested on August 7, 2021, 33.3% of the shares of restricted common stock vested on August 7, 2022, and 33.4%
 of the shares of restricted common stock will vest on August 7, 2023; (b) 65,393 shares of restricted common stock that vests in
 accordance with the following vesting schedule: 33.3% of the shares of restricted common stock vested on August 9, 2022, 33.3% of
 the shares of restricted common stock will vest on August 9, 2023, and 33.4% of the shares of restricted common stock will vest on
 August 9, 2024 and (c) 75,000 shares of restricted common stack that vests in accordance with the following vesting schedule: 33.3%
 of the shares of restricted common stock will vest on August 12, 2023, 33.3% of shares of restricted common stock will vest on August
 12, 2024, and 33.4% of shares of restricted common stock will vest on August 12, 2025.

 (6)

 The
 address of Mr. Lines is c/o Superior Drilling Products Inc.

 (7)

 The
 address of Mr. Iversen is c/o Superior Drilling Products Inc.

 (8)

 The
 address of Mr. Ronca is c/o Superior Drilling Products Inc.

 (9)

 The
 address of Mr. Cashion is c/o Superior Drilling Products Inc.

 Item
13. Certain Relationships and Related Transactions, and Director Independence.

 Certain
Relationships and Related Party Transactions

 Related
Party Note Receivable

 The
Company holds 8,267,860 shares as collateral for the Tronco Note (see Note 6 – Related Party Note Receivable in our consolidated
financial statements).

 Policies
and Procedures for Related Party Transactions

 Any
request for us to enter into a transaction with an executive officer, director, principal stockholder or any of such persons' immediate
family members or affiliates, in which the amount involved exceeds $120,000, must first be presented to our audit committee for review,
consideration and approval. All of our directors and executive officers are required to report to the audit committee chair any such
related person transaction. In approving or rejecting the proposed agreement, our audit committee shall consider the facts and circumstances
available and deemed relevant to the audit committee, including, but not limited to, costs and benefits to us, the terms of the transaction,
the availability of other sources for comparable services or products, and, if applicable, the impact on a director's independence.
Our audit committee shall approve only those agreements that, in light of known circumstances, are in, or are not inconsistent with,
our best interests and the best interests of our shareholders, as our audit committee determines in the good faith exercise of its discretion.
If we should discover related person transactions that have not been approved, the audit committee will be notified and will determine
the appropriate action, including ratification, rescission or amendment of the transaction.

 Director
Independence

 The
Board has determined that the following members are independent within the meaning of the listing rules of the NYSE American: James Lines,
Robert Iversen and Michael Ronca.

 Item
14. Principal Accountant Fees and Services.

 Independent
Registered Public Accountant Fees

 The
following table sets forth the fees incurred for services performed by Moss Adams LLP:

 Years Ended December 31,

 2023

 2022

 Audit Fees

 $
 273,301

 $
 190,900

 Audit-Related Fees

 -

 -

 Tax Fees

 -

 -

 All Other Fees

 -

 -

 Total

 $
 273,301

 $
 190,900

 Policy
on Audit Committee Pre-Approval of Audit and Non-Audit Services of Independent Registered Public Accountants

 The
charter of the Audit Committee and its pre-approval policy require that the Audit Committee review and pre-approve the Company's
independent registered public accounting firm's fees for audit, audit-related, tax and other services. The Chairman of the Audit
Committee has the authority to grant pre-approvals, provided such approvals are within the pre-approval policy and are presented to the
Audit Committee at a subsequent meeting. For the year ended December 31, 2023, the Audit Committee approved 100% of the services described
above under the captions "Audit Fees."

 PART
IV

 ITEM
15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 (a)
The following documents are filed as part of this Report:

 (1)
Financial Statements – see Index to Financial Statements appearing on page 31

 (2)
Financial Statement Schedules – None

 (3)
Exhibits –

 No.

 1.1

 Placement Agency Agreement dated October 12, 2021, between Superior Drilling Products, Inc. and EF Hutton, division of Benchmark Investments, LLC (incorporated by reference to Exhibit 1.1 to the Company's Current Report on Form 8-K filed on October 19,2021).

 2.1

 Agreement and Plan of Reorganization, dated December 15, 2013, between Meier Management Company, LLC, Meier Family Holding Company, LLC, and SD Company, Inc. (incorporated by reference to Exhibit 2.1 to the Registrant' s Registration Statement on Form S-1 (Registration No. 333- 195085) filed with the SEC on April 7, 2014).

 3.1

 Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Registrant' s Registration Statement on Form S-1 (Registration No. 333- 195085) filed with the SEC on April 7, 2014S-1).

 3.2

 Articles of Amendment to Articles of Incorporation (name change) (incorporated by reference to Exhibit 3.5 to Amendment No. 2 to the Registrant' s Registration Statement on Form S-1 (Registration No. 333- 195085) filed with the SEC on May 6, 2014).

 3.3

 Bylaws with Exhibit A (incorporated by reference to Exhibit 3.3 to the Registrant' s Registration Statement on Form S-1 (Registration No. 333- 195085) filed with the SEC on April 7, 2014).

 4.1*

 Description of Company Securities.

 10.1

 Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Registrant' s Registration Statement on Form S-1 (Registration No. 333- 195085) filed with the SEC on April 7, 2014).

 10.2

 2014 Employee Stock Incentive Plan with forms of award agreements as Exhibits (incorporated by reference to Exhibit 10.2 to the Registrant' s Registration Statement on Form S-1 (Registration No. 333- 195085) filed with the SEC on April 7, 2014).

 10.3

 Form of Executive Employment Agreement between SD Company, Inc. and Troy Meier, as CEO (incorporated by reference to Exhibit 10.3 to Amendment No. 1 to the Registrant' s Registration Statement on Form S-1 (Registration No. 333- 195085) filed with the SEC on April 30, 2014).

 10.4

 Form of Executive Employment Agreement between SD Company, Inc. and Annette Meier, as President (incorporated by reference to Exhibit 10.4 to Amendment No. 1 to the Registrant' s Registration Statement on Form S-1 (Registration No. 333- 195085) filed with the SEC on April 30, 2014).

 10.5

 Form of Executive Employment Agreement between SD Company, Inc. and Christopher Cashion, as CFO (incorporated by reference to Exhibit 10.5 to Amendment No. 1 to the Registrant' s Registration Statement on Form S-1 (Registration No. 333- 195085) filed with the SEC on April 30, 2014).

 10.6

 Vendor Agreement between Superior Drilling Products, LLC, and Hughes Christensen, a division of Baker Hughes Oilfield Operations, Inc., dated October 28, 2013 with Exhibit A (incorporated by reference to Exhibit 10.6 to the Registrant' s Registration Statement on Form S-1 (Registration No. 333- 195085) filed with the SEC on April 7, 2014).

 10.7

 Commercial Lease, dated August 15, 2013, between Meier Properties, Series LLC, as landlord, and Baker Hughes Oilfield Operations, Inc., as tenant (incorporated by reference to Exhibit 10.7 to the Registrant' s Registration Statement on Form S-1 (Registration No. 333- 195085) filed with the SEC on April 7, 2014).

 No.

 10.8

 Third Amendment to Loan Agreement (dated December 18, 2013), Second Amendment to Loan Agreement (dated June 15, 2009), First Amendment to Loan Agreement (dated December 10, 2007), and original Loan Agreement (dated August 10, 2007), between Tronco Energy Corporation, as borrower, Philco Exploration, LLC, as subsidiary, and Fortuna Asset Management LLC (and its assignee ACF Property Management, Inc. for the amendments). (Tronco Loan) (incorporated by reference to Exhibit 10.43 to the Registrant' s Registration Statement on Form S-1 (Registration No. 333- 195085) filed with the SEC on April 7, 2014).

 10.9

 Second Amended and Restated Promissory Note, dated January 1, 2014, between Tronco Energy Corporation, as borrower, and ACF Property Management Inc. as lender (assignee from Fortuna Asset Management LLC). (Tronco Loan) (incorporated by reference to Exhibit 10.44 to the Registrant' s Registration Statement on Form S-1 (Registration No. 333- 195085) filed with the SEC on April 7, 2014).

 10.10

 Security Agreement Pledge between Tronco Energy Corporation, as debtor, and ACF Property Management Inc. as secured party; and Owner Consent to Pledge from Meier Family Holding Company, LLC, with respect to 95% of the limited liability company interests in Superior Drilling Products, LLC, each dated June 15, 2009. (Tronco Loan) (incorporated by reference to Exhibit 10.45 to the Registrant' s Registration Statement on Form S-1 (Registration No. 333- 195085) filed with the SEC on April 7, 2014).

 10.11

 Security Agreement Pledge between Tronco Energy Corporation, as debtor, and ACF Property Management Inc. as secured party; and Owner Consent to Pledge from Meier Management Company, LLC, with respect to 5% of the limited liability company interests in Superior Drilling Products, LLC, each dated June 15, 2009. (Tronco Loan) (incorporated by reference to Exhibit 10.46 to the Registrant' s Registration Statement on Form S-1 (Registration No. 333- 195085) filed with the SEC on April 7, 2014).

 10.12

 Security Agreement Pledge between Tronco Energy Corporation, as debtor, and ACF Property Management Inc., as secured party; and Owner Consent to Pledge from Meier Management Company, with respect to 100% of the limited liability company interests in Superior Design and Fabrication, LLC, each dated December 18, 2013. (Tronco Loan) (incorporated by reference to Exhibit 10.47 to the Registrant' s Registration Statement on Form S-1 (Registration No. 333- 195085) filed with the SEC on April 7, 2014).

 10.13

 Guaranty(s) from Gilbert Troy Meier Trust (dated August 10, 2009), and from Superior Drilling Products, LLC and Superior Design and Fabrication, LLC (dated December 18th, 2013), in favor of ACF Property Management, Inc., as lender. (Tronco Loan) (incorporated by reference to Exhibit 10.48 to the Registrant' s Registration Statement on Form S-1 (Registration No. 333- 195085) filed with the SEC on April 7, 2014).

 10.14

 Loan Purchase Agreement between ACF Property Management Inc., as lender and seller, SD Company Inc., as buyer, and Tronco Energy Corporation, as borrower, dated January 1, 2014. (Tronco Loan) (incorporated by reference to Exhibit 10.49 to the Registrant' s Registration Statement on Form S-1 (Registration No. 333- 195085) filed with the SEC on April 7, 2014).

 10.15

 Continuing Guaranty, dated May 20, 2011, by Superior Drilling Products, as guarantor, to Mountain America Federal Credit Union, as lender. (SABP Loans 1 and 2) (incorporated by reference to Exhibit 10.55 to the Registrant' s Registration Statement on Form S-1 (Registration No. 333- 195085) filed with the SEC on April 7, 2014).

 10.16

 Lease, dated May 25, 2012, between Meier Properties, Series LLC, as lessor, and SABP, as lessee (incorporated by reference to Exhibit 10.56 to the Registrant' s Registration Statement on Form S-1 (Registration No. 333- 195085) filed with the SEC on April 7, 2014).

 10.17

 Confirmation of Guaranties from Troy Meier, Annette Meier, the G. Troy Meier Trust, and the Annette Deuel Meier Trust, to Superior Drilling Products, Inc. (incorporated by reference to Exhibit 10.57 to Amendment No. 3 to the Registrant' s Registration Statement on Form S-1 (Registration No. 333- 195085) filed with the SEC on May 12, 2014).

 10.18

 Stock Pledge Agreement between Meier Management Company, LLC and Superior Drilling Products, Inc. (incorporated by reference to Exhibit 10.58 to Amendment No. 3 to the Registrant' s Registration Statement on Form S-1 (Registration No. 333- 195085) filed with the SEC on May 12, 2014).

 10.19

 Stock Pledge Agreement between Meier Family Holding Company, LLC and Superior Drilling Products, Inc. (incorporated by reference to Exhibit 10.59 to Amendment No. 3 to the Registrant' s Registration Statement on Form S-1 (Registration No. 333- 195085) filed with the SEC on May 12, 2014).

 10.20

 Exclusive Manufacturing, Marketing, Sales and Consulting Agreement among Hard Rock Solutions, LLC, Extreme Technologies, LLC, Tenax Energy Solutions, LLC and Kevin Jones dated January 9, 2015 (incorporated by reference to Exhibit 10.45 to the Company's annual report on form 10-K for the year ended December 31, 2014 filed on March 31, 2015.

 No.

 10.21

 Amended and Restated Promissory Note from Hard Rock Solutions, LLC and Superior Drilling Solutions, LLC in favor of WMAFC, Inc. dated April 28, 2015 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on April 15, 2015).

 10.22

 Form of Nonstatutory Stock Option Agreement (3 Year Vesting) under the 2015 Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on April 28, 2015).

 10.23

 Form of Nonstatutory Stock Option Agreement (2 Year Vesting) under the 2015 Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed on April 28, 2015).

 10.24

 Form of Award of Restricted Stock (3 Year Vesting) under the 2015 Incentive Plan (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q filed on April 28, 2015).

 10.25

 Form of Award of Restricted Stock (2 Year Vesting) under the 2015 Incentive Plan (incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q filed on April 28, 2015).

 10.26

 2015 Long Term Incentive Plan effective June 15, 2015 (incorporated herein by reference to Appendix A to the Company's Definitive Proxy Statement on Schedule 14A filed with the Commission on April 30, 2015).

 10.27

 Second Amended and Restated Promissory Note from Hard Rock Solutions, LLC and Superior Drilling Solutions, LLC in favor of WMAFC, Inc. dated September 28, 2015 (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on October 1, 2015).

 10.28++

 Business Agreement between Hard Rock Solutions, LLC and Baker Hughes Oilfield Operations, Inc. dated January 25, 2016 (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on January 29, 2016).

 10.29

 Loan and Security Agreement among Superior Drilling Products, Inc., Superior Drilling Solutions, LLC, Hard Rock, LLC and Extreme Technologies, LLC as co-Borrowers and Federal National Commercial Credit as Lender date March 8, 2016 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on March 10, 2016).

 10.30

 Form of Fully Vested Non-Statutory Stock Option Agreement (incorporated by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K filed on March 10, 2016).

 10.31

 Distribution Agreement between Hard Rock Solutions, LLC and Drilling Tools International, Inc. dated May 12, 2016 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on May 13, 2016).

 10.32

 Promissory Note from Superior Drilling Products Inc. in favor of the Donald A. Foss Revocable Living Trust dated August 5, 2016 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on August 11, 2016).

 10.33

 Warrant issued by Superior Drilling Products, Inc. in favor of the Donald A. Foss Revocable Living Trust dated August 5, 2016 (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on August 11, 2016).

 10.34

 Promissory Note from Hard Rock Solutions, LLC and Superior Drilling Solutions, LLC in favor of WMAFC, Inc. dated August 10, 2016 (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed on August 11, 2016).

 No.

 10.35

 Amended and Restated Distribution Agreement between Hard Rock Solutions, LLC and Drilling Tools International, Inc. dated August 30, 2016 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on August 31, 2016).

 10.36

 Special Warranty Deed between MPS and SABP dated February 9, 2017 (incorporated by reference to Exhibit 10.4 to the Registrant's Current Report on Form 8-K filed with the SEC on February 14, 2017).

 10.37

 Termination of Real Property Lease between MPS and SABP dated February 9, 2017 (incorporated by reference to Exhibit 10.5 to the Registrant's Current Report on Form 8-K filed with the SEC on February 14, 2017).

 10.38

 Second Amended and Restated Loan Agreement between the Company and Tronco Energy Corporation dated August 8, 2017 (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed with the SEC on August 14, 2017).

 10.39

 Second Amended and Restated Promissory Note between the Company and Tronco Energy Corporation dated August 8, 2017 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the SEC on August 14, 2017).

 10.40

 Letter Agreement between Superior Drilling Solutions, LLC and Baker Hughes Oilfield Operations LLC dated October 27, 2017 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the SEC on November 1, 2017).

 10.41

 Commercial Lease between Alan Pitts & Mikaela Allmand and Hard Rock Solutions, LLC dated August 27,2018 (incorporated by reference from Exhibit 10.1 to the Company's Current Report on Form 10-Q filed on August 30, 2018).

 10.42++

 Vendor Agreement dated effective April 1, 2018 between Superior Drilling Solutions, LLC and Baker Hughes Oilfield Operations LLC (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on May 11, 2018).

 10.43

 Form of Stock Option Agreement under 2015 Long Term Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed on November 9, 2018).

 10.44

 Form of Restricted Stock Unit Agreement under 2015 Long Term Incentive Plan (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q filed on November 9, 2018).

 10.45

 Fourth Amended and Restated Promissory Note from Hard Rock Solutions, LLC and Superior Drilling Solutions, LLC in favor of WMAFC, Inc. dated November 21, 2018 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on May 11, 2018).

 10.46

 Sale-leaseback agreement dated November 12, 2020 (incorporated by reference from Exhibit 10.1 to the Company's Current Report on Form 8-K filed on December 9, 2020).

 No.

 10.47

 Share Purchase Agreement dated October 14, 2021, between Superior Drilling Products, Inc. and the purchasers identified on the signature pages thereto (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on October 19, 2021).

 10.48

 Exclusive Channel Partner and Distribution Agreement with Bin Zayed Petroleum for Investment Ltd. dated effective June 26, 2022 between Hard Rock Solutions, LLC and Superior Drilling Products, Inc. (incorporated by reference from Exhibit 10.2 to the Company's Current Report on Form 8-K filed on June 29, 2022).

 10.49

 Second Amendment to Third Amended and Restated Loan Agreement between the Company and Tronco Energy Corporation dated January 31, 2023 (incorporated by reference from Exhibit 10.1 to the Company's Current Report on Form 8-K filed on February 2, 2023).

 10.50

 Second Amendment to Third Amended and Restated Promissory Note between the Company and Tronco Energy Corporation dated January 31, 2023 (incorporated by reference from Exhibit 10.2 to the Company's Current Report on Form 8-K filed on February 2, 2023).

 10.51

 Loan Agreement among Superior Drilling Products, Inc., Vast Bank, National Association, and the guarantors named therein dated July 28, 2023 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on August 2, 2023).

 10.52

 Term Loan Promissory Note between Superior Drilling Products, Inc. and Vast Bank, National Association dated July 28, 2023 (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on August 2, 2023).

 10.53

 Revolving Line Promissory Note between Superior Drilling Products, Inc. and Vast Bank, National Association dated July 28, 2023 (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed on August 2, 2023).

 10.54

 Business Manager Agreement (Domestic) between Vast Bank, National Association and Superior Drilling Company, Inc. dated July 28, 2023 (incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed on August 2, 2023).

 10.55

 Business Manager Agreement (International) between Vast Bank, National Association and Superior Drilling Company, Inc. dated July 28, 2023 (incorporated by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K filed on August 2, 2023).

 10.56

 First Amendment to Commercial Lease dated July 17, 2023 between Ernest M. Cherry, Jr. Revocable Trust and Carole A. Cherry Revocable Trust, as landlord, and Meier Properties, Series LLC, as tenant (incorporated by reference to Exhibit 10.6 to the Company's Current Report on Form 8-K filed on August 2, 2023).

 21.1*

 Subsidiaries of the Registrant

 23.1*

 Consent of Moss Adams LLP

 31.1*

 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for G. Troy Meier.

 31.2*

 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Christopher D. Cashion.

 32**

 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for G. Troy Meier and Christopher D. Cashion.

 97.1

 Superior Drilling Products, Inc. Compensation Clawback Policy dated September 18, 2023

 101*

 Interactive
 data files pursuant to Rule 405 of Regulation S-T

 101.INS

 101.SCH

 101.CAL

 101.DEF

 101.LAB

 101.PRE

 Cover

 *

 Filed
 herewith.

 **

 Furnished
 herewith.

 Indicates
 a management contract or compensatory plan, contract or arrangement.

 ++

 Portions
 of this exhibit have been omitted pursuant to a request for confidential treatment submitted to the Securities and Exchange Commission
 and this exhibit has been filed separately with the Securities and Exchange Commission in connection with such request.

 ITEM
16. FORM 10-K SUMMARY

 None

 SIGNATURES

 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized.

 March

 By:

 /s/
 G. TROY MEIER

 G.
 Troy Meier, Chief Executive Officer

 ( Principal
 Executive Officer)

 March

 By:

 /s/
 CHRISTOPHER CASHION

 Christopher
 Cashion, Chief Financial Officer

 (Principal Financial Officer and Principal Accounting Officer)

 March

 By:

 /s/
 ANNETTE MEIER

 Annette
 Meier, President, Chief Operating Officer and Director

 March

 By:

 /s/
 JAMES LINES

 James
 Lines, Director

 March

 By:

 /s/
 ROBERT IVERSEN

 Robert
 Iversen, Director

 March

 By:

 /s/
 MICHAEL RONCA

 Michael
 Ronca, Director