Inventories

12 Months Ended

Dec. 31, 2016

Inventory Disclosure [Abstract]

Inventories

NOTE 3. INVENTORIES

Inventories is comprised of the following:

	December 31, 2016		December 31, 2015
Raw material	$	952,419	$	968,254
Work in progress		90,017		117,661
Finished goods		125,256		324,879
	$	1,167,692	$	1,410,794

During 2016, the Company entered into a distribution agreement with Drilling Tools International (“DTI”), under which DTI has a requirement to purchase our Drill-N-Ream tool for their rental tool business and achieve market share requirements in order to maintain exclusive marketing rights for the Drill-N-Ream tool. This agreement began the change of direction of our business from renting tools to selling tools. Due to this change in our business model, we moved tools with a net book value of $225,710 from property, plant and equipment into inventory during 2016.

The Company recorded an impairment loss in the cost of sales of $210,745 and $124,872 during the years ended December 31, 2016 and 2015, respectively, relating to the discontinuation of OrBit, a completion drill line product line. As of December 31, 2016, the OrBit product line was fully impaired with a net book value of $0.

The Company recorded an impairment loss in the cost of sales of $147,801 during the year ended December 31, 2016 relating to several Strider technologies. Several parts of these tools needed to be replaced so an impairment charge was recognized.