0001193125-23-214431 | S-1/A | XBRL Viewer | Drilling Tools International Corp

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INTANGIBLE ASSETS, NET (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of Components of Intangible Assets, Net

The following table shows the components of intangible assets, net (in thousands):


	Useful Lives (in Years)	June 30, 2023			December 31, 2022
Trade Name	10-13	$	1,280		$	1,280
Technology	13		270			270

Total intangible assets			1,550			1,550
Less: accumulated amortization			(1,311	)		(1,287	)

Intangible assets, net		$	239		$	263

The following table shows the components of intangible assets, net (in thousands):


	Useful Lives (in Years)		December 31, 2022			December 31, 2021
Trade Name		10 – 13	$	1,280		$	1,280
Technology		13		270			270

Total intangible assets				1,550			1,550
Less: accumulated amortization				(1,287	)		(1,148	)

Intangible assets, net			$	263		$	402

REVOLVING CREDIT FACILITY	6 Months Ended	12 Months Ended
REVOLVING CREDIT FACILITY	Jun. 30, 2023	Dec. 31, 2022
Line of Credit Facility [Abstract]
REVOLVING CREDIT FACILITY	NOTE 7 – REVOLVING CREDIT FACILITY In December 2015, the Company entered into a credit facility with a bank. The facility provides for a revolving line of credit with a maximum borrowing amount totaling $60.0 million, as of June 20, 2023 and December 31, 2022. On June 20, 2023, the Company entered into an amended and restated revolving credit, security and guaranty agreement that modified the terms of its previous agreement and related amendments. This amended agreement modified certain defined terms in the previous agreement, removed the $20.0 million unfunded capital expenditures requirement, removed the $9.0 million sublimit to the Company’s Canadian entity and changed the legal debtor from DTIH to DTIC. See Note 2 - Merger for further discussion of the Merger. For the three and six months ended June 30, 2023, the interest on the amount drawn was based on SOFR or the bank’s base lending rate plus applicable margin (approximately 8.56% at June 30, 2023). The credit facility is collateralized by substantially all the assets of the Company and matures December 31, 2025. As of June 30, 2023, there were no amounts drawn against the line of credit. The Company is subject to various restrictive covenants associated with these borrowings including, but not limited to, a fixed charge ratio, and a minimum amount of undrawn availability. As of June 30, 2023, the Company was in compliance with all restrictive covenants. Contingent Interest Embedded Derivative Liability Under the credit facility agreement, the interest rate will reset (the ‘Default Rate’) upon the event of a default and an additional 2% will be added to the base rate. The Company analyzed the Default Rate feature of the credit facility for derivative accounting consideration under ASC 815, Derivatives and Hedging , and determined the Default Rate met the definition of a derivative as it is a contingent interest feature. The Company also noted that the Default Rate feature (the ‘Default Rate Derivative’) required bifurcation from the host contract and was to be accounted for at fair value. In accordance with ASC 815-15, the Company bifurcated the Default Rate feature of the note and determined the derivative is liability classified. The Default Rate Derivative is treated as a liability, initially measured at fair value with subsequent changes in fair value recorded in earnings. Management has assessed the probability of occurrence for a non-credit default event and determined the likelihood of a referenced event to be remote. Therefore, the estimated fair value of the Default Rate Derivative was negligible as of June 30, 2023 and December 31, 2022 and therefore no amounts were recorded as of June 30, 2023 or December 31, 2022.	NOTE 6 — REVOLVING CREDIT FACILITY In December 2015, the Company entered into a credit facility with a bank. The facility provides for a revolving line of credit in the original amount of $48.0 million, which is $60.0 million, as amended, at December 31, 2022. For the year ended December 31, 2021 the interest on the amount drawn was based on LIBOR or the bank’s base lending rate plus applicable margin (approximately 4.1% at December 31, 2021). For the year ended December 31, 2022 the interest on the amount drawn was based on SOFR or the bank’s base lending rate plus applicable margin (approximately 7.42% at December 31, 2022). The credit facility is collateralized by substantially all the assets of the Company and matures December 31, 2025 . On April 23, 2018, the Company entered into an amendment and joinder to the credit agreement. This amendment waived certain events of default under the credit agreement, changed the borrowing capacity under the credit facility and created a term loan of approximately $7.0 million which is collateralized by the assets of Premium Tools LLC. On December 3, 2018, the Company entered into an amendment to the credit agreement. This amendment changed the borrowing capacity under the credit agreement and increased the amount of permitted capital expenditures from $15.0 million to $20.0 million for the year ended 2019, and $22.0 million for subsequent years. On April 30, 2020, the Company entered into an amendment to the credit agreement. This amendment modified certain defined terms in the agreement and waived the excess cash flow payment for the year ended December 31, 2019. On March 31, 2021, the Company entered an amendment to the credit agreement. This amendment waived certain events of default under the credit agreement and modified certain financial covenants, including, the minimum undrawn availability, fixed charge coverage ratio, leverage ratio and minimum EBITDA. The amendment also reduced the amount available under the revolving credit facility from to the current $50.0 million and reduced the maximum available borrowings under the entire credit agreement to $57.0 million. On June 29, 2021, the Company entered into an amendment to the credit agreement. This amendment waived certain events of default under the credit agreement by modifying certain terms including waiving the requirement for the prepayment related to the excess cash flows, as defined, for December 31, 2020 that was due in 2021. Additionally, the amendment modified the repayment schedule of the term loan entered in April 2018. On April 25, 2022, the Company entered into an amendment to the credit agreement. This amendment modified certain covenants to extend certain financial reporting deadlines. On September 13, 2022, the Company extended the maturity date of the revolving line of credit from December 31, 2022 to December 31, 2025. As of December 31, 2022, amounts outstanding under the revolving line of credit have been classified as current liabilities despite the maturity date extension. Amounts outstanding have been classified as current liabilities because the agreement for the revolving line of credit, as amended on September 13, 2022, includes a subjective acceleration clause and a lockbox requirement. The Company is subject to various restrictive covenants associated with these borrowings including, but not limited to, a fixed charge ratio, and a minimum amount of undrawn availability. At December 31, 2022, the Company was in compliance with these covenants.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(c))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 470
-Name Accounting Standards Codification
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-URI https://asc.fasb.org//470/tableOfContent

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (i)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Name Accounting Standards Codification
-Section 50
-Paragraph 1E
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1E

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

+ Details

EARNINGS PER SHARE - Summary of Computation of Company's Basic and Diluted Net Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended		12 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Numerator:
Net income	$ 937	$ 5,701	$ 5,934	$ 1,333	$ 6,638	$ 7,267	$ 21,080	$ 2,101
Less: Redeemable convertible preferred stock dividends							(1,189)	(1,119)
Net income available to common shareholders	937		5,639		6,324	6,678	19,891	982
Add: Redeemable convertible preferred stock dividends							1,189	1,119
Net income (loss) attributable to common shareholders - diluted	$ 937		5,934		6,638	7,267	21,080	2,101
Less: Redeemable convertible preferred stock dividends			(295)		(314)	(589)	$ (1,189)	$ (1,119)
Add: Redeemable convertible preferred stock dividends			$ 295		$ 314	$ 589
Denominator
Weighted-average common shares used in computing earnings per share - basic	13,910,670		11,951,123		12,936,310	11,951,123	52,363,872	52,363,872
Weighted-average effect of potentially dilutive securities:
Effect of potentially dilutive stock options							4,410,987	4,552,060
Effect of potentially dilutive redeemable convertible preferred stock							20,370,377	0
Weighted-average effect of potentially dilutive securities:
Effect of potentially dilutive redeemable convertible preferred stock	5,981,219		6,719,641		6,350,430	6,719,641
Weighted-average common shares outstanding - diluted	20,746,976		19,677,493		20,217,648	19,677,493	77,145,236	56,915,932
Earnings (net loss) per share - basic	$ 0.07		$ 0.47		$ 0.49	$ 0.56	$ 0.38	$ 0.02
Earnings (net loss) per share - diluted	$ 0.05		$ 0.3		$ 0.33	$ 0.37	$ 0.27	$ 0.04
Time-based Stock Options
Weighted-average effect of potentially dilutive securities:
Effect of potentially dilutive stock options	744,573		1,006,729		875,651	1,006,729
Performance-based Stock Options
Weighted-average effect of potentially dilutive securities:
Effect of potentially dilutive stock options	110,514				55,257	0

LEASES - Summary of Future Undiscounted Cash Flows (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Lessee, Operating Lease, Liability, to be Paid, Fiscal Year Maturity [Abstract]
2023	$ 2,544
2024	4,579	$ 4,265
2025	3,980	3,879
2026	3,511	3,485
2027	2,486	3,167
Thereafter	7,546
Total lease payments	24,646	24,228
Less: imputed interest	(4,188)	(4,226)
Present value of lease liabilities	$ 20,458	$ 20,002

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Cash flows from operating activities:
Net income	$ 6,638	$ 7,267	$ 21,080	$ 2,101
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	9,732	9,962	19,709	21,718
Amortization of deferred financing costs	37	69	94	197
Amortization of debt discount		35	58	70
Non-cash lease expense	2,275	2,395
Provision for excess and obsolete inventory	19	2	44	400
Provision for excess and obsolete property and equipment	238	272
Bad debt expense	418	140	307	307
Deferred tax expense	2,008	1,737	1,080	(1,053)
Deferred tax expense (benefit)			1,080	(1,341)
Gain on sale of property	(68)	(5)	(127)	(899)
Unrealized gain on equity securities	(387)	(323)	(234)	(157)
Unrealized (gain) loss on interest rate swap	91	(998)	(1,423)	(913)
Gross profit from sale of lost-in-hole equipment	(9,146)	(6,432)	(16,813)	(7,855)
Stock-based compensation expense	3,986			32
Amortization of operating leases			(3,768)
Gain on forgiveness of PPP loan			0	(8,575)
Changes in operating assets and liabilities:
Accounts receivable, net	(1,777)	(6,041)	(9,268)	(9,351)
Prepaid expenses and other current assets	(1,531)	(1,748)	(3,459)	(113)
Inventories, net	1,409	(543)	(940)	648
Operating lease liabilities	(2,179)	(2,407)	3,733
Accounts payable	1,982	(2,514)	(981)	3,080
Accrued expenses and other current liabilities	316	1,310	4,808	557
Net cash flows from operating activities	14,061	2,178	13,856	(494)
Cash flows from investing activities:
Proceeds from sale of property and equipment	126	80	1,042	4,972
Purchase of property, plant and equipment	(24,617)	(9,169)	(23,753)	(11,387)
Proceeds from sale of lost-in-hole equipment	11,103	8,983	20,319	9,753
Net cash from investing activities	(13,388)	(106)	(2,392)	3,338
Cash flows from financing activities:
Proceeds from Merger and PIPE Financing, net of transaction costs	23,162
Payment of deferred financing costs	(281)
Proceeds from revolving line of credit	71,646	49,659
Payments on revolving line of credit	(89,995)	(51,494)	(8,076)	(842)
Payments of deferred financing costs			(251)	(152)
Proceeds from PPP loan				2,000
Payments on long-term debt			(1,000)	(3,874)
Payments to capital leases			(10)
Payments to capital leases		(10)
Payments to holders of DTIH redeemable convertible preferred stock in connection with retiring their DTI stock upon the Merger	(194)
Net cash from financing activities	4,338	(1,845)	(9,337)	(2,868)
Effect of Changes in Foreign Exchange Rate	(207)	(62)	173	(59)
Net Change in Cash	4,804	165	2,300	(83)
Cash at Beginning of Year	2,352	52	52	135
Cash at End of Year	7,156	217	2,352	52
Supplemental cash flow information:
Cash paid for interest	851	514	340	1,928
Cash paid for income taxes	2,139	1,203	723	422
Non-cash investing and financing activities:
ROU assets obtained in exchange for lease liabilities	2,635	399	9,451
Undeclared dividends			$ 1,189	1,119
PPP loan forgiveness				$ 8,575
Purchases of inventory included in accounts payable and accrued expenses and other current liabilities	4,076	860
Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities	7,640	451
Non-cash directors and officers insurance	1,472
Non-cash Merger financing	2,000
Exchange of DTIH redeemable convertible preferred stock for DTIC Common Stock in connection with Merger	7,193
Issuance of DTIC common stock to former holders of DTIH redeemable convertible preferred stock in connection with Exchange Agreements	10,805
Deferred financing fees included in accounts payable	2
Accretion of redeemable convertible preferred stock to redemption value	$ 314	$ 589

INCOME TAXES (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
INCOME TAXES (Details) - USD ($)	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Schedule Of Income Taxes Reconciliation [Line Items]
Operating loss carryforwards					$ 15,100,000	$ 25,400,000
Change to the valuation allowance	$ 0	$ 0	$ 0	$ 0
Effective income tax rate balance sheet adjustments					10.60%	31.60%
Effective income tax balance sheet adjustments					$ 2,600,000	$ 600,000
Effective income tax rate changes in foreign and state tax						12.10%
Effective income tax changes in foreign and state tax						$ 200,000
Effective income tax rate provision adjustments						24.70%
Effective income tax provision adjustments						$ 500,000
Cumulative operating loss carryforwards					3,100,000
Valuation allowance					0	526,000
Income tax expense	$ 1,376,000	$ 1,791,000	$ 3,099,000	$ 2,220,000	$ 3,697,000	$ (209,000)
Effective tax rate	59.50%	23.20%	31.80%	23.40%	14.50%	(11.00%)
Federal Statutory rate	21.00%	21.00%	21.00%	21.00%	21.00%	21.00%
State and Local Jurisdiction [Member]
Schedule Of Income Taxes Reconciliation [Line Items]
Operating loss carryforwards					$ 9,800,000	$ 10,600,000

MERGER - Summary of Common Stock Outstanding Immediately after Merger (Details) - shares	Jun. 30, 2023	Jun. 20, 2023	Dec. 31, 2022	Dec. 31, 2021
Business Acquisition [Line Items]
Total - DTIC Common Stock outstanding as a result of Merger, PIPE Financing, DTIH for DTIC share exchanges, transaction services agreement, Exchange Agreements, and exercise of stock options	29,768,568		11,951,137	52,363,872
Merger Agreement
Business Acquisition [Line Items]
Exchange of ROC common stock not subject to possible redemption for DTIC Common Stock upon Merger		3,403,500
Conversion of ROC Public Rights into shares of DTIC Common Stock		2,070,000
Conversion of ROC Private Rights into shares of DTIC Common Stock		79,600
Exchange of ROC common stock subject to possible redemption that was not redeemed for DTIC Common Stock		158,621
Subtotal - Merger, net of redemptions		5,711,721
Issuance of DTIC Common Stock in connection with PIPE Financing		2,970,296
Exchange of DTIH common stock outstanding as of December 31, 2022 for DTIC Common Stock			11,951,137
Exchange of DTIH redeemable convertible preferred stock outstanding as of December 31, 2022 for DTIC Common Stock			6,719,641
Issuance of shares as stock-based compensation to former DTIH stockholders as part of transaction services agreement upon the Merger		337,429
Issuance of DTIC Common Stock to former holders of DTIH redeemable convertible preferred stock in connection with Exchange Agreements		2,042,181
Net exercise of stock options by DTIH stockholder		36,163
Total - DTIC Common Stock outstanding as a result of Merger, PIPE Financing, DTIH for DTIC share exchanges, transaction services agreement, Exchange Agreements, and exercise of stock options		29,768,568

LEASES - Summary of Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Leases [Abstract]
Weighted-average remaining lease term (in years)	6 years 9 months 18 days		7 years 6 months 10 days
Weighted average discount rate	5.73%		5.34%
Right-of-use assets obtained in exchange for new operating lease liabilities	$ 2,635	$ 399	$ 9,451
Cash paid for amounts included in the measurement of lease liabilities	$ 2,733		5,003
Right of use assets obtained in exchange for new operating lease liabilities one			$ 25,087

INCOME TAXES - Schedule Of Company's Deferred Tax Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Deferred tax assets
Net operating loss carryforward	$ 3,378	$ 5,594
Allowance for doubtful accounts	323	287
Share-based compensation	941	952
Bonus accrual	599	175
Inventory	53	373
Intangible assets	1,152	1,316
Federal credits	0	27
Other	140	3
Total deferred tax asset	6,587	8,727
Valuation allowance	0	(526)
Net deferred tax assets	6,587	8,201
Deferred tax liabilities
Depreciation on property, plant and equipment	(8,958)	(10,383)
Other	(814)	78
Net deferred tax liabilities	(9,771)	(10,305)
Net deferred tax assets (liabilities)	$ (3,185)	$ (2,104)

OTHER EXPENSES, NET (Tables)

6 Months Ended

Jun. 30, 2023

Other Income and Expenses [Abstract]

Summary of Components of Other Expenses, Net

The following table shows the components of other expenses, net for the three months ended June 30, 2023 and 2022 (in thousands):


	Three months ended June 30, 2023			Three months ended June 30, 2022
HHLLC stock-based compensation	$	(2,339	)	$	—
Transaction fees		(1,803	)		—
Other, net		(240	)		(23	)

Total Other expense, net	$	(4,382	)	$	(23	)

The following table shows the components of other expenses, net for the six months ended June 30, 2023 and 2022 (in thousands):


	Six Months Ended June 30, 2023			Six Months Ended June 30, 2022
HHLLC stock-based compensation	$	(2,339	)	$	—
Transaction fees	$	(3,499	)		—
Other, net	$	(245	)		(95	)
Interest income	$	48			—

Total Other expense, net	$	(6,035	)	$	(95	)

EMPLOYEE BENEFITS (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
EMPLOYEE BENEFITS (Details) - USD ($)	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Defined Benefit Plan [Abstract]
Defined contribution plan, matching contribution rate					3.00%
Employer matching contribution, percent of match					150.00%
Maximum annual contributions per employee, percent					3.00%
Defined contribution per employee					$ 2,000
Total expense	$ 100,000	$ 100,000	$ 400,000	$ 300,000	$ 400,000	$ 0
Defined contribution plan nature and effect of change, description			All employees are auto enrolled at a 3% contribution, unless they opt out, beginning on the first plan entry date following six months of service. Plan entry dates are the first day of January and July. In March of 2020, the Company suspended any employee contribution match effective immediately and through the end of 2021. The match was reinstated on January 1, 2022. For 2022, the Company matched employee contributions 150% of the first 3% of employee contributions, not to exceed $2 thousand per participant per calendar year. Employees vest in employer contributions over six years. The contribution is limited to the maximum contribution allowed under the Internal Revenue Service Regulations.

DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS (Details)	12 Months Ended
	Dec. 31, 2022 Day
Minimum [Member]
Organization, Consolidation and Presentation of Financial Statements Disclosure [Abstract]
Number Of Days Determining Due In Accounts Receivable	30
Maximum [Member]
Organization, Consolidation and Presentation of Financial Statements Disclosure [Abstract]
Number Of Days Determining Due In Accounts Receivable	60

COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands			12 Months Ended
	Mar. 15, 2021	Apr. 11, 2020	Dec. 31, 2022	Dec. 31, 2021
Commitments And Contingencies Disclosure [Line Items]
Litigation claims			$ 0	$ 0
Paycheck Protection Program Loan [Member]
Commitments And Contingencies Disclosure [Line Items]
Proceeds from Loans	$ 2,000	$ 6,600

INCOME TAXES

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Schedule Of Income Taxes Reconciliation [Line Items]

INCOME TAXES

NOTE 8 – INCOME TAXES

The Company recorded income tax expense on the unaudited condensed consolidated statements of income and comprehensive income of $1.4 million and $1.8 million for the three months ended June 30, 2023 and 2022. The Company recorded income tax expense on the unaudited condensed consolidated statements of income and comprehensive income of $3.1 million and $2.2 million for the six months ended June 30, 2023 and 2022, respectively.

The Company calculates its tax provision using the discreet quarter methodology. The Company’s effective tax rate for the three months ended June 30, 2023 and 2022 were provisions of 59.5% and 23.2%, respectively.The Company’s effective tax rate for the six months ended June 30, 2023 and 2022 were provisions of 31.8% and 23.4%, respectively. Such rates differed from the Federal Statutory rate of 21.0% primarily due to the state taxes, foreign income taxes on the Company’s international operations and state income taxes, and permanent differences.

The Company records deferred tax assets and liabilities for the future tax benefit or expense that will result from differences between the carrying value of its assets for income tax purposes and for financial reporting purposes, as well as for operating loss and tax credit carryovers. A valuation allowance is recorded to bring the net deferred tax assets to a level that is more likely than not to be realized in the foreseeable future. This level will be estimated based on a number of factors, especially the amount of net deferred tax assets of the Company that are actually expected to be realized, for tax purposes, in the foreseeable future. There was no change to the valuation allowance during the three and six months ended June 30, 2023 and 2022.

NOTE 8 — INCOME TAXES

For the years ended December 31, 2022, and 2021, income from continuing operations before taxes consisted of amounts related to U.S. operations and income associated with the Company’s foreign operations predominantly in Canada. The geographical breakdown of the Company’s income before expense from income taxes was as follows (in thousands):


	Year Ended December 31,
	2022		2021
Domestic	$	19,093	$	1,790
International		5,683		102

Profits before benefit from income taxes	$	24,777	$	1,892

Income tax expense attributable to income from continuing operations consists of (in thousands):


	Year Ended December 31,
	2022		2021
Current provisions for income taxes:
Federal	$	702	$	302
Foreign		1,444		489
State		472		53

Total current		2,618		844
Deferred tax expense (benefit):
Federal		574		(642	)
Foreign		488		(149	)
State		18		(262	)

Total deferred expense (benefit)		1,080		(1,053	)

Total provision for (benefit from) income taxes	$	3,697	$	(209	)

Tax rate reconciliation

The following table presents a reconciliation of the federal statutory rate to the Company’s effective tax rate:


	Year Ended December 31,
	2022			2021
U.S. federal tax benefit at statutory rate		21.0	%		21.0	%
State income taxes, net of federal benefit		2.1	%		(3.7	)%
PPP loan forgiveness		0.0	%		(95.2	)%
Permanent differences		2.0	%		1.7	%
Foreign rate differential		0.5	%		0.3	%
Valuation allowance		(2.1	)%		(3.5	)%
Other		(9.0	)%		68.4	%

Effective tax rate		14.5	%		(11.0	)%

The effective tax rate impact of the other category for the year ended December 31, 2022, is primarily made up of tax basis balance sheet adjustments resulting in a decrease of 10.6% or $2.6 million. The effective tax rate impact of the other category for the year ended December 31, 2021 is primarily made up of the impact of changes in foreign and state tax rates of 12.1% or $0.2 million, return to provision adjustments of 24.7% or $0.5 million and tax basis balance sheet adjustments of 31.6% or $0.6 million.

Significant components of deferred taxes

The tax effects of temporary differences and carryforwards that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2022 and 2021 are presented below (in thousands):


	Year Ended December 31,
	2022			2021
Deferred tax assets
Net operating loss carryforward	$	3,378		$	5,594
Allowance for doubtful accounts		323			287
Share-based compensation		941			952
Bonus accrual		599			175
Inventory		53			373
Intangible assets		1,152			1,316
Federal credits		—			27
Other		140			3

Gross deferred tax assets		6,587			8,727
Valuation allowance		—			(526	)

Net deferred tax assets		6,587			8,201
Deferred tax liabilities
Depreciation on property, plant and equipment		(8,958	)		(10,383	)
Other		(814	)		78

Net deferred tax liabilities		(9,771	)		(10,305	)

Net deferred tax assets (liabilities)	$	(3,185	)	$	(2,104	)

At December 31, 2022 and 2021, the Company had federal net operating loss carryforwards of approximately $15.1 million and $25.4 million, respectively, and state and local net operating loss carryforwards of approximately $9.8 million and $10.6 million as of December 31, 2022 and 2021, respectively, which expire at various dates.

The utilization of the Company’s net operating losses may be subject to a limitation due to the “change in ownership provisions” under Section 382 of the Internal Revenue Code and similar state and foreign provisions. Such limitations may result in the expiration of the net operating loss carryforwards before their utilization.

The Company is subject to income taxes in the U.S. federal jurisdiction, various state jurisdictions as well as Canada. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. The Company’s tax years remain open for examination by all tax authorities since inception and carryover attributes remain open to adjustment by the U.S. and state authorities.

In evaluating the need for a valuation allowance, we have assessed all available evidence, both positive and negative, on a more likely than not threshold. We note that the Company is in a 3-year cumulative income position of $3.1 million, representing positive evidence against the need to apply a full valuation allowance against its existing deferred tax assets. We also analyzed the four sources of taxable income in accordance with ASC 740-10-30-18, taking into consideration a schedule of existing deferred tax assets and liabilities and their future reversals. Based on a scheduling period of ten years, all deferred tax assets are expected to turn against the deferred tax liabilities, eliminating the need for a valuation allowance. Accordingly, as of December 31, 2022, we have determined no valuation allowance is required.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-13

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//740/tableOfContent

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-14

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 21
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-21

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 270
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482526/740-270-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 17
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-17

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 30
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482603/740-30-50-2

+ Details

INCOME TAXES - Schedule of Income Tax Provision (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Current provisions for income taxes:
Federal Current					$ 702	$ 302
Foreign Current					1,444	489
State Current					472	53
Total Current					2,618	844
Deferred tax expense (benefit):
Federal Deferred					574	(642)
Foreign Deferred					488	(149)
State Deferred					18	(262)
Total Deferred			$ 2,008	$ 1,737	1,080	(1,053)
Income tax provision	$ 1,376	$ 1,791	$ 3,099	$ 2,220	$ 3,697	$ (209)

COMMITMENTS AND CONTINGENCIES	6 Months Ended	12 Months Ended
COMMITMENTS AND CONTINGENCIES	Jun. 30, 2023	Dec. 31, 2022
Loss Contingencies [Line Items]
COMMITMENTS AND CONTINGENCIES	NOTE 14 – COMMITMENTS AND CONTINGENCIES The Company maintains operating leases for various facilities and vehicles. See Note 12— Leases , for further information. Litigation From time to time, the Company may become involved in various legal proceedings in the ordinary course of its business and may be subject to third-party infringement claims. In the normal course of business, the Company may agree to indemnify third parties with whom it enters into contractual relationships, including customers, lessors, and parties to other transactions with the Company, with respect to certain matters. The Company has agreed, under certain conditions, to hold these third parties harmless against specified losses, such as those arising from a breach of representations or covenants, other third-party claims that the Company’s products when used for their intended purposes infringe the intellectual property rights of such other third parties, or other claims made against certain parties. It is not possible to determine the maximum potential amount of liability under these indemnification obligations due to the Company’s limited history of prior indemnification claims and the unique facts and circumstances that are likely to be involved in each particular claim. As of June 30, 2023 and December 31, 2022, the Company has not been subject to any pending litigation claims. Management Fee The Company is required to pay a monthly management fee to a shareholder. The fee is based upon a percentage of the Company’s trailing twelve months, earnings before interest, taxes and accumulated depreciation amount, as defined in the management agreement.	NOTE 13 — COMMITMENTS AND CONTINGENCIES The Company maintains operating leases for various facilities and vehicles. See note 11, Leases, for further information. Litigation From time to time, the Company may become involved in various legal proceedings in the ordinary course of its business and may be subject to third-party infringement claims. In the normal course of business, the Company may agree to indemnify third parties with whom it enters into contractual relationships, including customers, lessors, and parties to other transactions with the Company, with respect to certain matters. The Company has agreed, under certain conditions, to hold these third parties harmless against specified losses, such as those arising from a breach of representations or covenants, other third-party claims that the Company’s products when used for their intended purposes infringe the intellectual property rights of such other third parties, or other claims made against certain parties. It is not possible to determine the maximum potential amount of liability under these indemnification obligations due to the Company’s limited history of prior indemnification claims and the unique facts and circumstances that are likely to be involved in each particular claim. As of December 31, 2022 and December 31, 2021, the Company has not been subject to any pending litigation claims. Management Fee The Company is required to pay a monthly management fee to a shareholder. The fee is based upon a percentage of the Company’s trailing twelve months, earnings before interest, taxes and accumulated depreciation amount, as defined in the management agreement. PPP Loan On April 11, 2020 and March 15, 2021, the Company received proceeds from two separate PPP loans of $6.6 million and $2.0 million, respectively. The April 2020 PPP loan and the March 2021 PPP loan and related accrued interest were forgiven by the SBA on July 27, 2021 and December 31, 2021, respectively. See note 1, Summary of significant accounting policies, for further information.

BALANCE SHEET DETAILS - CURRENT ASSETS AND CURRENT LIABILITIES

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BALANCE SHEET DETAILS - CURRENT ASSETS AND CURRENT LIABILITIES

NOTE 4 – BALANCE SHEET DETAILS – CURRENT ASSETS AND CURRENT LIABILITIES

Inventories, net

The following table shows the components of inventory (in thousands):


	June 30, 2023			December 31, 2022
Raw materials	$	5,945		$	3,377
Finished goods		118			115

Total inventories		6,063			3,492
Allowance for obsolete inventory		(134	)		(211	)

Inventories, net	$	5,929		$	3,281

Prepaid expenses and other current assets

The following table shows the components of prepaid expenses and other current assets (in thousands):


	June 30, 2023		December 31, 2022
Prepaid expenses:
ERC benefits receivable	$	—	$	2,117
Deposits on inventory		2,809		680
Prepaid income tax		536		—
Prepaid insurance		2,230		358
Prepaid rent		388		381
Prepaid equipment		254		179
Prepaid other		202		173
Other current assets:
Interest rate swap asset	$	385	$	476
Other		—		17

Total	$	6,804	$	4,381

Accrued expenses and other current liabilities

The following table shows the components of accrued expenses and other current liabilities (in thousands):


	June 30, 2023		December 31, 2022
Accrued expenses:
Accrued compensation and related benefits	$	4,246	$	3,392
Accrued insurance		2,307		525
Accrued transaction advisory fees		2,000		—
Accrued professional services		840		509
Accrued interest		47		62
Accrued property taxes		575		41
Other		34		38
Other current liabilities:
Income tax payable	$	1,910	$	1,780
Sales tax payable		524		587
Unbilled lost-in-hole revenue		146		282
Deferred revenue		—		83

Total accrued expenses and other current liabilities	$	12,629	$	7,299

NOTE 3 — BALANCE SHEET DETAILS — CURRENT ASSETS AND CURRENT LIABILITIES

Inventories, net

The following table shows the components of inventory (in thousands):


	December 31, 2022			December 31, 2021
Raw materials	$	3,377		$	2,285
Finished goods		115			130

Total inventories		3,492			2,415
Allowance for obsolete inventory		(211	)		(74	)

Inventories, net	$	3,281		$	2,341

Inventory write-downs for the years ended December 31, 2022 and 2021 were $44 thousand and $0.4 million, respectively and are recorded within cost of tool rental revenue in the consolidated statements of operations and comprehensive income.

Prepaid expenses and other current assets

The following table shows the components of prepaid expenses and other current assets (in thousands):


	December 31, 2022		December 31, 2021
Prepaid expenses:
ERC benefits receivable	$	2,117	$	—
Deposits on inventory		680		—
Prepaid income tax		—		—
Prepaid insurance		358		252
Prepaid rent		381		336
Prepaid equipment		179		155
Prepaid other		173		150
Other current assets:
Interest rate swap asset	$	476	$	—
Other		17		12

Total	$	4,381	$	905

The following table shows the components of prepaid expenses and other current assets (in thousands):

Accrued expenses and other current liabilities

The following table shows the components of accrued expenses and other current liabilities (in thousands):


	December 31, 2022		December 31, 2021
Accrued expenses:
Accrued compensation and related benefits	$	3,392	$	952
Accrued insurance		525		301
Accrued professional services		509		61
Accrued interest		62		74
Accrued property taxes		41		35
Other		38		48
Other current liabilities:
Income tax payable	$	1,780	$	895
Sales tax payable		587		422
Unbilled lost-in-hole revenue		282		116
Deferred revenue		83		63
Interest rate swap liability		—		947

Total accrued expenses and other current liabilities	$	7,299	$	3,914

PROPERTY, PLANT AND EQUIPMENT, NET - Summary of Component of Property, Plant and Equipment, Net (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Total property, plant and equipment	$ 193,887	$ 169,691	$ 162,043
Less: accumulated deprecation	(129,437)	(125,537)	(117,651)
Property, plant and equipment, net	64,450	44,154	44,392
Land
Property, Plant and Equipment [Line Items]
Total property, plant and equipment			898
Rental Tools and Equipment
Property, Plant and Equipment [Line Items]
Total property, plant and equipment	184,284	160,973	152,986
Buildings and improvements
Property, Plant and Equipment [Line Items]
Total property, plant and equipment		5,781	5,177
Office Furniture, Fixtures and Equipment
Property, Plant and Equipment [Line Items]
Total property, plant and equipment	2,282	2,101	1,869
Transportation and Equipment
Property, Plant and Equipment [Line Items]
Total property, plant and equipment	796	827	947
Construction in Progress
Property, Plant and Equipment [Line Items]
Total property, plant and equipment	286	9	$ 166
Buildings and Improvements
Property, Plant and Equipment [Line Items]
Total property, plant and equipment	$ 6,239	$ 5,781
Minimum \| Rental Tools and Equipment
Property, Plant and Equipment [Line Items]
Estimated useful lives (in years)	5 years	5 years
Minimum \| Buildings and improvements
Property, Plant and Equipment [Line Items]
Estimated useful lives (in years)	5 years	5 years
Minimum \| Office Furniture, Fixtures and Equipment
Property, Plant and Equipment [Line Items]
Estimated useful lives (in years)	3 years	3 years
Minimum \| Transportation and Equipment
Property, Plant and Equipment [Line Items]
Estimated useful lives (in years)		3 years
Minimum \| Construction in Progress
Property, Plant and Equipment [Line Items]
Estimated useful lives (in years)	3 years
Maximum \| Rental Tools and Equipment
Property, Plant and Equipment [Line Items]
Estimated useful lives (in years)	10 years	10 years
Maximum \| Buildings and improvements
Property, Plant and Equipment [Line Items]
Estimated useful lives (in years)	40 years	40 years
Maximum \| Office Furniture, Fixtures and Equipment
Property, Plant and Equipment [Line Items]
Estimated useful lives (in years)	5 years	5 years
Maximum \| Transportation and Equipment
Property, Plant and Equipment [Line Items]
Estimated useful lives (in years)		5 years
Maximum \| Construction in Progress
Property, Plant and Equipment [Line Items]
Estimated useful lives (in years)	5 years

RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 20, 2023	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021	Mar. 02, 2023	Dec. 06, 2022
Related Party Transaction [Line Items]
Management fees paid to shareholder		$ 300	$ 100	$ 600	$ 200
Rent expense paid to shareholder		$ 13		$ 26
Working capital loan amount	$ 400
PIPE Financing
Related Party Transaction [Line Items]
Payoff convertible promissory notes issued								$ 2,100	$ 2,100
Shareholder
Related Party Transaction [Line Items]
Payments for management fees						$ 400	$ 300
Payments for rent						51	300
Payments for tools						$ 4	$ 25

BALANCE SHEET DETAILS - CURRENT ASSETS AND CURRENT LIABILITIES - Summary of Prepaid Expenses and Other Current Assets (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Prepaid expenses:
ERC benefits receivable		$ 2,117,000
Deposits on inventory		680,000
Prepaid income tax	$ 536,000
Prepaid insurance	2,230,000	358,000	$ 252,000
Prepaid rent	388,000	381,000	336,000
Prepaid equipment	254,000	179,000	155,000
Prepaid other	202,000	173,000	150,000
ERC benefits receivable		2,117
Deposits on inventory	2,809,000	680,000
Other current assets:
Interest rate swap asset		476,000
Other		17,000	12,000
Interest rate swap asset	385,000	476,000
Total	$ 6,804,000	$ 4,381,000	$ 905,000

INVESTMENTS - EQUITY SECURITIES

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Investments, Debt and Equity Securities [Abstract]

INVESTMENTS - EQUITY SECURITIES

NOTE 3 – INVESTMENTS – EQUITY SECURITIES

The following table shows the cost and fair value of the Company’s investments in equity securities (in thousands):


	Cost		Unrealized Gain		Fair Value
June 30, 2023	$	999	$	531	$	1,530


	Cost		Unrealized Gain		Fair Value
December 31, 2022	$	999	$	144	$	1,143

Unrealized holding gains (losses) on equity securities for the three months ended June 30, 2023 and 2022 were approximately $0.4 million in gains and $0.1 million in losses, respectively. Unrealized holding gains on equity securities for the six months ended June 30, 2023 and 2022 were approximately $0.4 million and $0.3 million, respectively.

NOTE 2 — INVESTMENTS — EQUITY SECURITIES

The following table shows the cost and fair value of the Company’s investments in equity securities (in thousands):


	Cost		Unrealized Gain			Fair Value
December 31, 2022	$	999	$	144		$	1,143


	Cost		Unrealized Loss			Fair Value
December 31, 2021	$	999	$	(90	)	$	909

Unrealized holding gains (losses) on equity securities for the years ended December 31, 2022 and 2021 were approximately $0.1 million, respectively.

INTANGIBLE ASSETS, NET (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
INTANGIBLE ASSETS, NET (Details) - USD ($)	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Indefinite-Lived Intangible Assets [Line Items]
Amortization expense	$ 12,000	$ 12,000	$ 24,000		$ 100	$ 1,100
Maximum
Indefinite-Lived Intangible Assets [Line Items]
Amortization expense				$ 100,000

BALANCE SHEET DETAILS - CURRENT ASSETS AND CURRENT LIABILITIES (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Summary of Inventories, Net

The following table shows the components of inventory (in thousands):


	June 30, 2023			December 31, 2022
Raw materials	$	5,945		$	3,377
Finished goods		118			115

Total inventories		6,063			3,492
Allowance for obsolete inventory		(134	)		(211	)

Inventories, net	$	5,929		$	3,281

The following table shows the components of inventory (in thousands):


	December 31, 2022			December 31, 2021
Raw materials	$	3,377		$	2,285
Finished goods		115			130

Total inventories		3,492			2,415
Allowance for obsolete inventory		(211	)		(74	)

Inventories, net	$	3,281		$	2,341

Summary of Prepaid Expenses and Other Current Assets

The following table shows the components of prepaid expenses and other current assets (in thousands):


	June 30, 2023		December 31, 2022
Prepaid expenses:
ERC benefits receivable	$	—	$	2,117
Deposits on inventory		2,809		680
Prepaid income tax		536		—
Prepaid insurance		2,230		358
Prepaid rent		388		381
Prepaid equipment		254		179
Prepaid other		202		173
Other current assets:
Interest rate swap asset	$	385	$	476
Other		—		17

Total	$	6,804	$	4,381

The following table shows the components of prepaid expenses and other current assets (in thousands):


	December 31, 2022		December 31, 2021
Prepaid expenses:
ERC benefits receivable	$	2,117	$	—
Deposits on inventory		680		—
Prepaid income tax		—		—
Prepaid insurance		358		252
Prepaid rent		381		336
Prepaid equipment		179		155
Prepaid other		173		150
Other current assets:
Interest rate swap asset	$	476	$	—
Other		17		12

Total	$	4,381	$	905

Summary of Accrued Expenses and Other Current Liabilities

The following table shows the components of accrued expenses and other current liabilities (in thousands):


	June 30, 2023		December 31, 2022
Accrued expenses:
Accrued compensation and related benefits	$	4,246	$	3,392
Accrued insurance		2,307		525
Accrued transaction advisory fees		2,000		—
Accrued professional services		840		509
Accrued interest		47		62
Accrued property taxes		575		41
Other		34		38
Other current liabilities:
Income tax payable	$	1,910	$	1,780
Sales tax payable		524		587
Unbilled lost-in-hole revenue		146		282
Deferred revenue		—		83

Total accrued expenses and other current liabilities	$	12,629	$	7,299

The following table shows the components of accrued expenses and other current liabilities (in thousands):


	December 31, 2022		December 31, 2021
Accrued expenses:
Accrued compensation and related benefits	$	3,392	$	952
Accrued insurance		525		301
Accrued professional services		509		61
Accrued interest		62		74
Accrued property taxes		41		35
Other		38		48
Other current liabilities:
Income tax payable	$	1,780	$	895
Sales tax payable		587		422
Unbilled lost-in-hole revenue		282		116
Deferred revenue		83		63
Interest rate swap liability		—		947

Total accrued expenses and other current liabilities	$	7,299	$	3,914

STOCK-BASED COMPENSATION (Details) - USD ($)			3 Months Ended		6 Months Ended		12 Months Ended
STOCK-BASED COMPENSATION (Details) - USD ($)	Jun. 20, 2023	Jun. 19, 2023	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Sep. 01, 2013
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of common stock authorized to issue										13,000,000
Stock options granted				0	0	0	0	0
Number of options exercised				0		0	0	0
Number of options forfeited							0	300,000
Non-vested shares							2,340,000	2,340,000
Unrecognized compensation expense							$ 300,000
Share-based compensation expense							$ 0	$ 32,000
Common stock canceled in exchange for options		158,444
Common stock shares issued in exchange		36,163
Share-Based Payment Arrangement, Expense				$ 0		$ 0
Share-based compensation arrangement by share-based payment award, options, outstanding, number			2,361,722		2,361,722		10,927,890	10,927,890	11,227,890
Selling, General and Administrative Expenses
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share-Based Payment Arrangement, Expense			$ 1,700,000		$ 1,700,000
Other Expense
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share-Based Payment Arrangement, Expense			$ 2,300,000		$ 2,300,000
2023 Plan
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Maximum percentage of common stock issuable in accordance with outstanding Common stock	10.00%
Annual increase in percentage of common stock issuable in accordance with outstanding common stock	3.00%
Common stock issuable in accordance with outstanding Common stock					2,976,854
Shares of common stock available for issuance			615,132		615,132
Nonqualified Stock Option Plan
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of common stock authorized to issue							4,555,779
Performance-based Stock Options
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Non-vested shares							2,340,000
Number of accelerated vesting stock options					534,063
Number of stock options vested					534,063

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Nature of Operations

Drilling Tools International Corporation, a Delaware corporation (“DTIC” or the “Company”) manufactures, rents, inspects, and refurbishes downhole drilling tools primarily to companies in the oil and natural gas industry for bottom hole assemblies used in onshore and offshore horizontal and directional drilling.

On June 20, 2023 (the “Closing Date”), a merger transaction between Drilling Tools International Holdings, Inc. (“DTIH”), ROC Energy Acquisition Corp (“ROC”), and ROC Merger Sub, Inc., a directly, wholly owned subsidiary of ROC (“Merger Sub”), was completed (the “Merger”, see Note 2) pursuant to the initial merger agreement dated February 13, 2023 and subsequent amendment to the merger agreement dated June 5, 2023 collectively, (the “Merger Agreement”). In connection with the closing of the Merger, ROC changed its name to Drilling Tools International Corporation. The common stock of DTIC (“DTIC Common Stock” or the “Company’s Common Stock”) commenced trading on the Nasdaq Stock Market LLC (“Nasdaq”) under the symbol “DTI” on June 21, 2023.

The Company’s United States (“U.S.”) operations have locations in Texas, California, Louisiana, Oklahoma, Pennsylvania, North Dakota, New Mexico, Utah, and Wyoming. The Company’s international operations are located in Canada. Operations outside the U.S. are subject to risks inherent in operating under different legal systems and various political and economic environments. Among the risks are changes in existing tax laws and possible limitations on foreign investment. The Company does not engage in hedging activities to mitigate its exposure to fluctuations in foreign currency exchange rates.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as set forth by the Financial Accounting Standards Board (“FASB”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). References to US GAAP issued by the FASB in these notes to the accompanying unaudited condensed consolidated financial statements are to the FASB Accounting Standards Codifications (“ASC”) and Accounting Standards Update (“ASUs”).

Unaudited Interim Financial Information

The accompanying interim unaudited condensed consolidated financial statements included in this prospectus have been prepared in accordance with U.S. GAAP and, in the opinion of the Company, contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of June 30, 2023, and its results of operations for the three and six months ended June 30, 2023 and 2022, and cash flows for the six months ended June 30, 2023 and 2022. The condensed consolidated balance sheet at December 31, 2022, was derived from the audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements.

COVID-19

Related Credits and Relief

As a response to the

COVID-19

outbreak, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) provided an Employee Retention Credit (“ERC”) which is a refundable tax credit against certain employment taxes equal to 50% of qualified wages paid, up to $10 thousand per employee annually for wages paid. Additional relief provisions were passed by the United States government, which extended and expanded the qualified wage caps on these credits to 70% of qualified wages paid, up to $10 thousand per employee per quarter, through September 30, 2021. In November 2021, the Infrastructure Investment and Jobs Act was signed into law and ended the employee retention credit early, making wages paid after December 31, 2021, ineligible for the credit.

ERC benefits of $4.3 million were included in selling, general, administrative expense as an offset to the related compensation expenses in the unaudited condensed consolidated statements of income and comprehensive income for the three and six months ended June 30, 2022. ERC benefits receivable of nil and $2.1 million were included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheet as of June 30, 2023 and December 31, 2022, respectively. The Company received all ERC benefits receivables in January 2023, resulting in the ERC benefits receivable balance to be nil for the three and six months ended June 30, 2023.

Laws and regulations concerning government programs, including the ERC, are complex and subject to varying interpretations. Claims made under these programs may also be subject to retroactive audit and review. While the Company does not believe there is a basis for estimation of an audit or recapture risk at this time, there can be no assurance that regulatory authorities will not challenge the Company’s claim to the ERC in a future period.

Emerging Growth Company

non-emerging

growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard, until such time the Company is no longer considered to be an emerging growth company. At times, the Company may elect to early adopt a new or revised standard. As such, the Company’s financial statements may not be comparable to companies that comply with public company effective dates.

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses and the disclosure of contingent assets and liabilities in the Company’s unaudited condensed consolidated financial statements and accompanying notes as of the date of the unaudited condensed consolidated financial statements. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. In the current macroeconomic and business environment affected by the Russia-Ukraine conflict and inflationary pressures, these estimates require increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, these estimates may change materially in future periods.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated on consolidation.

Foreign Currency Translation and Transactions

have been translated into U.S. dollars using the rate of exchange at the respective balance sheet date. Components of the unaudited condensed consolidated statements of income and comprehensive income have been translated at the average rates for the year of the reporting period. Translation gains and losses are recorded in accumulated other comprehensive loss as a component of stockholders’ equity. Gains or losses arising from currency exchange rate fluctuations on transactions denominated in a currency other than the local functional currency are included in the unaudited condensed consolidated statements of income and comprehensive income. For the three and six months ended June 30, 2023, the aggregate foreign currency translation included in the unaudited condensed consolidated statements of income and comprehensive income totaled approximately $0.2 million and $0.2 million in losses, respectively. For the three and six months ended June 30, 2022, the aggregate foreign currency translation included in the unaudited condensed consolidated statements of income

and

comprehensive income totaled $13 thousand in gains and $0.1 million in losses, respectively.

Revenue Recognition

The Company recognizes revenue in accordance with Topic 842 (which addresses lease accounting) and Topic 606 (which addresses revenue from contracts with customers). The Company derives its revenue from two revenue types, tool rental services and product sales.

Tool Rental Services

Tool rental services consist of rental services, inspection services, and repair services. Tool rental services are accounted for under Topic 842.

Owned tool rentals represent the most significant revenue type and are governed by the Company’s standard rental contract. The Company accounts for such rentals as operating leases. The lease terms are included in the contracts, and the determination of whether the Company’s contracts contain leases generally does not require significant assumptions or judgments. The Company’s lease revenues do not include material amounts of variable payments. Owned tool rentals represent revenue from renting tools that the Company owns. The Company does not generally provide an option for the lessee to purchase the rented equipment at the end of the lease.

The Company recognizes revenues from renting tools on a straight-line basis. The Company’s rental contract periods are daily, monthly, per well, or based on footage. As part of this straight-line methodology, when the equipment is returned, the Company recognizes as incremental revenue the excess, if any, between the amount the customer is contractually required to pay, which is based on the rental contract period applicable to the actual number of days the drilling tool was out on rent, over the cumulative amount of revenue recognized to date. In any given accounting period, the Company will have customers return the drilling tool and be contractually required to pay the Company more than the cumulative amount of revenue recognized to date under the straight-line methodology.

The Company records the amounts billed to customers in excess of recognizable revenue as deferred revenue on its condensed consolidated balance sheet.

As noted above, the Company is unsure of when the customer will return rented drilling tools. As such, the Company does not know how much the customer will owe the Company upon return of the tool and cannot provide a maturity analysis of future lease payments. The Company’s drilling tools are generally rented for short periods of time (significantly less than a year). Lessees do not provide residual value guarantees on rented equipment.

The Company expects to derive significant future benefits from its drilling tools following the end of the rental term. The Company’s rentals are generally short-term in nature, and its tools are typically rented for the majority of the time that the Company owns them.

Product Sales

Product sales consist of charges for rented tools that are damaged beyond repair, charges for

lost-in-hole,

and charges for

lost-in-transit

while in the care, custody or control of the Company’s customers, and other charges for made to order product sales. Product sales are accounted for under Topic 606.

Revenue is recognized when control of promised goods or services is transferred to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To determine revenue recognition for its arrangements with customers, the Company performs the following five steps: (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) the entity satisfies a performance obligation. The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in the revenue standard. The transaction price is measured as consideration specified in a contract with a customer and excludes any sales incentives and taxes or other amounts collected on behalf of third parties. As each of the Company’s contracts with customers contain a single performance obligation to provide a product sale, the Company does not have any performance obligations requiring allocation of transaction prices.

The performance obligation for made to order product sales is satisfied and revenue is recognized at a point in time when control of the asset transfers to the customer, which typically occurs upon delivery of the product or when the product is made available to the customer for pickup at the Company’s shipping dock. Additionally, pursuant to the contractual terms with the Company’s customers, the customer must notify the Company of, and purchase from the Company, any rented tools that are damaged beyond repair,

lost-in-hole,

lost-in-transit

while in the care, custody or control of the Company’s customers. Revenue is recognized for these products at a point in time upon the customer’s notification to the Company of the occurrence of one of these noted events.

The Company does not have any revenue expected to be recognized in the future related to remaining performance obligations or contracts with variable consideration related to undelivered performance obligations. There was no revenue recognized in the current period from performance obligations satisfied in previous periods.

Revenue per geographic location

Revenue generated was concentrated within the United States. For the three and six months ended June 30, 2023, the revenue generated within the United States was $35.1 million and $71.6 million, respectively, or 92% and 91% of total revenues, respectively. For the three and six months ended June 30, 2023, the revenue generated outside of the United States, in Canada, was $2.9 million and $7.1 million, respectively, or 8% and 9% of total revenues, respectively. For the three and six months ended June 30, 2022, the revenue generated within the United States was $28.0 million and $51.5 million, respectively, or 92% and 91% of total revenues, respectively. For the three and six months ended June 30, 2022, the revenue generated outside of the United States, in Canada, was $2.4 million and $4.8 million, respectively, or 8% and 9% of total revenues, respectively.

Contract Assets and Contract Liabilities

Contract assets represent the Company’s rights to consideration for work completed but not billed. As of June 30, 2023 and December 31, 2022, the Company had contract assets of $4.1 million and $4.8 million, respectively. Contract assets were recorded in accounts receivable, net in the accompanying condensed consolidated balance sheets.

Contract liabilities consist of fees invoiced or paid by the Company’s customers for which the associated services have not been performed and revenue has not been recognized based on the Company’s revenue recognition criteria described above. As of June 30, 2023 and December 31, 2022, the Company did not have any material contract liabilities. All deferred revenue were expected to be recognized during the following 12 months, and they were recorded in accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheets.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of

three

months or less to be cash equivalents. The Company did not have any cash equivalents as of June 30, 2023 and December 31, 2022.

Accounts Receivable, net

The Company’s accounts receivable consists principally of uncollateralized amounts billed to customers. These receivables are generally due within 30 to 60 days of the period in which the corresponding sales or rentals occur and do not bear interest. They are recorded at net realizable value less an allowance for doubtful accounts and are classified as account receivable, net on the condensed consolidated balance sheets.

Allowance for Doubtful Accounts

The Company adopted ASU

2016-13,

Financial Instruments - Credit Losses

, on December 31, 2022, which was retroactively applied as of the first day of fiscal year 2022, as further described within the section below titled

Recently Adopted Accounting Pronouncements

. This accounting standard requires companies to measure expected credit losses on financial instruments based on the total estimated amount to be collected over the lifetime of the instrument. Prior to the adoption of this accounting standard, the Company recorded incurred loss reserves against receivable balances based on current and historical information.

Expected credit losses for uncollectible receivable balances consider both current conditions and reasonable and supportable forecasts of future conditions. Current conditions considered include predefined aging criteria, as well as specified events that indicate the balance due is not collectible. Reasonable and supportable forecasts used in determining the probability of future collection consider publicly available macroeconomic data and whether future credit losses are expected to differ from historical losses.

The Company is not party to any

off-balance

sheet arrangements that would require an allowance for credit losses in accordance with this accounting standard.

As of June 30, 2023 and December 31, 2022, the allowance for doubtful accounts totaled $1.8 million and $1.5 million, respectively.

Inventories, net

Inventories are stated at the lower of cost or net realizable value. Cost is determined by using the specific identification method. Inventory that is obsolete or in excess of forecasted usage is written down to its net realizable value based on assumptions regarding future demand and market conditions. Inventory write-downs are charged to operating costs and establish a new cost basis for the inventory. Inventory includes raw material and finished goods.

Property, Plant and Equipment, net

Property, plant and equipment purchased by the Company are recorded at cost less accumulated depreciation. Depreciation is recorded using the straight-line method based on the estimated useful lives of the depreciable property or, for leasehold improvements, the remaining term of the lease, whichever is shorter. Assets not yet placed in use are not depreciated.

Property, plant and equipment acquired as part of a business acquisition is recorded at acquisition date fair value with subsequent additions at cost.

The cost of refurbishments and renewals are capitalized when the value of the property, plant or equipment is enhanced for an extended period. Expenditures to maintain and repair property, plant and equipment, which do not improve or extend the life of the related assets, are charged to operations when incurred. When property, plant and equipment is retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in operations.

Leases

The Company adopted ASC 842,

Leases

(“ASC 842”) as of January 1, 2022 using the modified retrospective transition approach, with no restatement of prior periods or cumulative adjustments to retained earnings. Upon adoption, the Company elected the package of transition practical expedients, which allowed it to carry forward prior conclusions related to whether any expired or existing contracts are or contain leases, the lease classification for any expired or existing leases and initial direct costs for existing leases. The Company elected the

use-of-hindsight

to reassess lease term. The Company elected not to recognize leases with an initial term of 12 months or less within the condensed consolidated balance sheets and to recognize those lease payments on a straight-line basis in the unaudited condensed consolidated statements of income and comprehensive income over the lease term. The new lease accounting standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the practical expedient to not separate lease and

non-lease

components for all leases.

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease

right-of-use

(“ROU”) assets and current operating lease liabilities and operating lease liabilities, net of current portion on the condensed consolidated balance sheets. The Company recognizes lease expense for its operating leases on a straight-line basis over the term of the lease.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from a lease. ROU assets and operating lease liabilities are recognized at the commencement date based on the present value of the future minimum lease payments over the lease term. Operating lease ROU assets also include the impact of any lease incentives. An amendment to a lease is assessed to determine if it represents a lease modification or a separate contract. Lease modifications are reassessed as of the effective date of the modification using an incremental borrowing rate based on the information available at the commencement date. For modified leases the Company also reassess the lease classification as of the effective date of the modification.

The interest rate used to determine the present value of the future lease payments is the Company’s incremental borrowing rate because the interest rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located.

The Company’s lease terms include periods under options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option in the measurement of its ROU assets and liabilities. The Company considers contractual-based factors such as the nature and terms of the renewal or termination, asset-based factors such as physical location of the asset and entity-based factors such as the importance of the leased asset to the Company’s operations to determine the lease term. The Company generally uses the base, noncancelable, lease term when determining the ROU assets and lease liabilities. The

right-of-use

asset is tested for impairment in accordance with Accounting Standards Codification Topic 360,

Property, Plant, and Equipment.

Lessor Accounting

Our leased equipment primarily consists of rental tools and equipment. Our agreements with our customers for rental equipment contain an operating lease component under ASC 842 because (i) there are identified assets, (ii) the customer has the right to obtain substantially all of the economic benefits from the use of the identified asset throughout the period of use and (iii) the customer directs the use of the identified assets throughout the period of use.

Our lease contract periods are daily, monthly, per well or based on footage. Lease revenue is recognized on a straight-line basis based on these rates. We do not provide an option for the lessee to purchase the rented tools at the end of the lease and the lessees do not provide residual value guarantees on the rented assets.

We recognized operating lease revenue within “Tool rental” on the unaudited condensed consolidated statements of income and comprehensive income.

Intangible Assets

Intangible assets with finite useful lives include customer relationships, trade name, patents,

non-compete

agreements and a supply agreement. These intangible assets are amortized either on a straight-line basis over the asset’s estimated useful life or on a basis that reflects the pattern in which the economic benefits of the intangible are realized.

Accounting for Impairment of Long-lived Assets

Long-lived assets with finite lives include property, plant and equipment and acquired intangible assets. The Company evaluates long-lived assets, including acquired intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets held and used is measured by comparison of the carrying amount of an asset or an asset group to estimated undiscounted future net cash flows expected to be generated by the asset or asset group. If the carrying amount of an asset exceeds these estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the assets exceeds the fair value of the asset or asset group.

For the three and six months ended June 30, 2023 and 2022, management determined that there was no impairment with regard to property, plant, and equipment or intangible assets.

Investments - Equity Securities

Equity securities are stated at fair value. Unrealized gains and losses are reflected in the unaudited condensed consolidated statements of income and comprehensive income. The Company periodically reviews the securities for other than temporary declines in fair value below cost and more frequently when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. As of the three and six months ended June 30, 2023 and June 30, 2022, the Company believes the cost of the securities was recoverable in all material respects.

Redeemable Convertible Preferred Stock

Prior to the closing of the Merger, there were outstanding shares of DTIH Series A redeemable convertible preferred stock (“Series A”), which was classified outside of permanent equity in mezzanine equity on the condensed consolidated balance sheets as it was redeemable on a fixed date.

Upon the closing of the Merger, all of the DTIH Series A redeemable convertible preferred stock was canceled in exchange for DTIC common stock and the right to receive cash. Accordingly, there was no redeemable convertible preferred stock outstanding as of June 30, 2023. As of December 31, 2022, the carrying value of the redeemable convertible preferred stock outstanding was $17.9 million.

Preferred Stock

As of the closing of the Merger, the Board of Directors have expressly granted authority to issue shares of preferred stock, in one or more series, and to fix for each such series such voting powers, full or limited, and such designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issue of such series and as may be permitted by the Delaware General Corporation Law. The number of authorized shares of preferred stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of all of the then outstanding shares of the capital stock of the corporation entitled to vote generally in the election of directors, voting together as a single class, without a separate vote of the holders of the preferred stock, or any series thereof, unless a vote of any such holders is required pursuant to any preferred stock designation.

The Board of Directors of the Company has not issued any shares of any classes or series of preferred stock as of June 30, 2023, and through the date these financial statements were available to be issued.

Cost of Revenue

The Company recorded all operating costs associated with its product sales and tool rental revenue streams in cost of product sale revenue and cost of tool rental revenue, respectively, in the unaudited condensed consolidated statements of income and comprehensive income. All indirect operating costs, including labor, freight, contract labor and others, are included in selling, general, administrative in the unaudited condensed consolidated statements of income and comprehensive income.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718,

Compensation—Stock Compensation

(“ASC 718”). ASC 718 requires that the cost of awards of equity instruments offered in exchange for employee services, including employee stock options and restricted stock awards, be measured based on the grant-date fair value of the award. The Company determines the fair value of stock options granted using the Black-Scholes-Merton option-pricing model (“Black-Scholes model”) and recognizes the cost over the period during which an employee is required to provide service in exchange for the award, generally the vesting period, net of estimated forfeitures. Because the Company’s common stock was not yet publicly traded for any of its stock options granted to date, the Company estimated the fair value of its common stock as of the grant date and used these estimates as inputs into the Black-Scholes model. The Board of Directors considered numerous objective and subjective factors to determine the fair value of the Company’s common stock at each meeting in which awards were approved. The factors considered include, but were not limited to: (i) the results of contemporaneous independent third-party valuations of the Company’s common stock; (ii) the prices, rights, preferences, and privileges of the Company’s Redeemable Convertible Preferred Stock relative to those of its common stock; (iii) the lack of marketability of the Company’s common stock; (iv) actual operating and financial results; (v) current business conditions and projections; (vi) the likelihood of achieving a liquidity event, such as an initial public offering or sale of the Company, given prevailing market conditions; and (vii) precedent transactions involving the Company’s shares. During the six months ended June 30, 2023 and June 30, 2022, the Company did not grant any stock options. For any grants of stock options subsequent to the Company being publicly traded, the Company will use the quoted market price as of the grant date as an input into the Black-Scholes model.

Earnings Per Share

Basic earnings per share is computed by dividing the net income (loss) by the weighted-average number of common shares outstanding for the period. Diluted earnings is computed by adjusting net income (loss) to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted earnings is

computed by dividing the diluted net income (loss) by the weighted-average number of common shares outstanding for the period, including potential dilutive common stock. For the purposes of this calculation, outstanding stock options and redeemable convertible preferred stock are considered potential dilutive common stock and are excluded from the computation of net loss per share if their effect is anti-dilutive.

The redeemable convertible preferred stock did not contractually entitle its holders to participate in profits or losses. As such, it was not treated as a participating security in periods of net income or net loss.

Income Taxes

Income taxes are provided for the tax effects of transactions reported in the unaudited condensed consolidated financial statements and consist of taxes currently due plus deferred taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the condensed consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and liabilities.

The Company is subject to state income taxes in various jurisdictions.

two-step

process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits and upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the condensed consolidated financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. The Company has no uncertain tax positions at June 30, 2023 and December 31, 2022. The Company believes there are no tax positions taken or expected to be taken that would significantly increase or decrease unrecognized tax benefits within twelve months of the reporting date.

The Company records income tax related interest and penalties, if applicable, as a component of the provision for income tax expense. However, there were no amounts recognized relating to interest and penalties in the condensed consolidated statements of income and comprehensive income for the three and six months ended June 30, 2023 and 2022.

Derivative Financial Instruments

From time to time, the Company may enter into derivative instruments to manage exposure to interest rate fluctuations. During 2016, the Company entered into an interest swap agreement with respect to amounts outstanding under its revolving line of credit.

marked-to-market

at the end of each quarter and the realized/unrealized gain or loss is recorded as interest expense. For the three and six months ended June 30, 2022 and three months ended June 30, 2023, the Company recognized an unrealized gain due to the change in fair value of its interest rate swap of approximately $0.3 million, $1.0 million, and $13 thousand, respectively in its unaudited condensed consolidated

statements of income and comprehensive income. For the six months ended June 30, 2023, the Company recognized an unrealized loss due to the change in fair value of its interest rate swap

approximately $0.1 million in its unaudited condensed consolidated statements of income and comprehensive income.

Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There is a hierarchy based upon the transparency of inputs used in the valuation of an asset or liability. Classification within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The valuation hierarchy contains three levels:

Level

– Valuation inputs are unadjusted quoted market prices for identical assets or liabilities in active markets.

Level

– Valuation inputs are quoted prices for identical assets or liabilities in markets that are not active, quoted market prices for similar assets and liabilities in active markets and other observable inputs directly or indirectly related to the assets or liabilities being measured.

Level

– Valuation inputs are unobservable and significant to the fair value measurement.

The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

In determining the appropriate levels, the Company performs a detailed analysis of the assets and liabilities that are measured and reported on a fair value basis. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs are classified as Level 3.

Asset and liabilities measured at fair value are summarized as follows (in thousands):


	Assets at Fair Value as of June 30, 2023
	Level 1		Level 2		Level 3		Total
Investments, equity securities	$	1,530	$	—	$	—	$	1,530
Interest rate swap		—		385		—		385

Total assets at fair value	$	1,530	$	385	$	—	$	1,915


	Assets at Fair Value as of December 31, 2022
	Level 1		Level 2		Level 3		Total
Investments, equity securities	$	1,143	$	—	$	—	$	1,143
Interest rate swap		—		476		—		476

Total assets at fair value	$	1,143	$	476	$	—	$	1,619

The Company’s interest rate swap is a

pay-fixed,

receive-variable interest rate swap based on SOFR swap rate. The SOFR swap rate is observable at commonly quoted intervals for the full term of the swap and therefore is considered a Level 2 item. For interest rate swaps in an asset position, the credit standing of the counterparty is analyzed and factored into the fair value measurement of the asset. The impact of the Company’s creditworthiness has also been factored into the fair value measurement of the interest rate swap in a liability position. For the three and six months ended June 30, 2023 and 2022, the application of valuation techniques applied to similar assets and liabilities has been consistent.

As of June 30, 2023 and December 31, 2022, the interest rate swap is included in prepaid expenses and other current assets on the condensed consolidated balance sheets.

As of June 30, 2023 and December 31, 2022, the Company did not have any Level 3 assets or liabilities.

Fair Value of Financial Instruments

The Company’s financial instruments consist primarily of cash, accounts receivable, accounts payable. The carrying amount of such instruments approximates fair value due to their short-term nature.

Concentration of Credit Risk and Other Risks and Uncertainties

The Company’s customer concentration may impact its overall credit risk, either positively or negatively, in that these entities may be similarly affected by changes in economic or other conditions affecting the oil and gas industry.

During the three months ended June 30, 2023 and 2022, the Company generated approximately 29% and 25%, respectively, of its revenue from two customers. During the six months ended June 30, 2023 and 2022, the Company generated approximately 30% and 27%, respectively, of its revenue from two customers. Amounts due from these customers included in accounts receivable at June 30, 2023 and December 31, 2022 were approximately $10.1 million and $8.6 million, respectively.

During the three months ended June 30, 2023 and 2022, the Company had two and one vendor that represented approximately 25% and 11% of its vendor purchases, respectively. During the six months ended June 30, 2023 and 2022, the Company had one and one vendor that represented approximately 10% and 12% of its vendor purchases, respectively. Amounts due to these vendors included in accounts payable at June 30, 2023 and December 31, 2022 were approximately $9.0 million and $1.0 million, respectively.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash. The Company maintains accounts in federally insured financial institutions in excess of federally insured limits. Management believes the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which these deposits are held and of the money market funds in which these investments are made.

Operating Segment

Operating segments are identified as components of an enterprise about which discrete financial information is available for evaluation by the chief operating decision-maker (“CODM”) in deciding resource allocation and assessing performance. The Company’s Chief Executive Officer and Chief Financial Officer work together as the CODM. The Company’s CODM reviews financial information presented on a consolidated basis for the purposes of making operations decisions, allocating resources and evaluating financial performance. Consequently, the Company has determined it operates in one operating and reportable segment.

Accounting Standards Issued But Not Yet Effective

The Company’s management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying unaudited condensed consolidated financial statements.

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Nature of Operations

Drilling Tools International Holdings, Inc. (the “Company”) is a Delaware corporation formed January 2012. The Company manufactures, rents, inspects, and refurbishes downhole drilling tools primarily to companies in the oil and natural gas industry for bottom hole assemblies used in onshore and offshore horizontal and directional drilling. The Company’s United States (“U.S.”) operations have locations in Texas, California, Louisiana, Oklahoma, Pennsylvania, North Dakota, New Mexico, Utah, and Wyoming. The Company’s international operations are located in Canada. Operations outside the U.S. are subject to risks inherent in operating under different legal systems and various political and economic environments. Among the risks are changes in existing tax laws and possible limitations on foreign investment. The Company does not engage in hedging activities to mitigate its exposure to fluctuations in foreign currency exchange rates.

Basis of Presentation

The accompanying consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as set forth by the Financial Accounting Standards Board (FASB) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). References to US GAAP issued by the FASB in these notes to the accompanying consolidated financial statements are to the FASB Accounting Standards Codifications (“ASC”) and Accounting Standards Update (“ASUs”)

COVID-19 Related Credits and Relief

In March 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted in response to COVID-19. On April 11, 2020 and March 15, 2021, the Company received proceeds from two separate loans pursuant to the Paycheck Protection Program of the CARES Act (the “PPP Loan”) in the amounts of $6.6 million and $2.0 million, respectively. The April 2020 PPP loan and the March 2021 PPP loan and related accrued interest were forgiven by the U.S. Small Business Administration (“SBA”) on July 27, 2021 and December 30, 2021, respectively.

There is no guidance in U.S. GAAP that specifically addresses the accounting by a business entity that obtains a forgivable loan from a government entity. Notwithstanding the absence of specific guidance in U.S. GAAP and given the significant uncertainties related to whether many entities that received loans are qualified for a PPP Loan and would meet the conditions for loan forgiveness, the Company accounted for the PPP Loan as debt in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 470,

Debt

. Based upon the guidance in ASC 470, the Company recorded a liability for the total amount of the loan upon receipt of the proceeds. Upon confirmation from the SBA that the PPP Loan was forgiven in full, and the PPP Loan had been canceled, the Company reversed the liability and related accrued interest and recorded a gain on forgiveness of the PPP Loan in its consolidated statements of operations and comprehensive income.

In December 2020, the Consolidated Appropriations Act (the “Appropriations Act”) was signed into law to further address the ongoing impacts of COVID-19. The Appropriations Act introduced several additional potential credits and benefits for employers to consider applying for, including, but not limited to, the ability for employers who have previously obtained a PPP Loan to qualify for Employee Retention Credits (“ERC”) potentially also, initially created as part of the CARES Act. The ERC provided a per employee credit to eligible businesses based on a percentage of qualified wages and health insurance benefits paid to employees. The benefit was provided as a refundable payroll tax credit claimed quarterly as a reduction to payroll taxes or cash refunds. The initial credit available was equal to 50% of qualified wages paid to employees during a quarter, capped at $10,000 of qualified wages per employee through December 31, 2021. In March 2021, the American Rescue Plan

of 2021 was enacted to, amongst other things, extend and expand ERC benefits through December 31, 2021. In accordance with these additional relief provisions, the tax credit was increased to 70% of qualified wages paid to employees during a quarter, and the limit on qualified wages per employee was set at $10,000 of qualified wages per quarter. In November 2021, the Infrastructure Investment and Jobs Act was signed into law and ended the employee retention credit early, making wages paid after December 31, 2021, ineligible for the credit.

The Company qualified for certain ERC benefits during the year ended December 31, 2022. As there is no guidance in U.S. GAAP that specifically addresses the accounting for the receipt of government assistance similar to the ERC, the Company considered two primary approaches in accounting for the ERC. The first was as government grants, by reference to ASC 958-605,

Not-for-Profit-Entities Revenue Recognition

, and the other by reference to IAS 20, Accounting for Government Grants and Disclosure of Government Assistance. With reference to IAS 20, the Company considered the following: (1) Under this model, the Company would not recognize government assistance until reasonably sure any conditions attached to the assistance would be met, and the Company would in fact receive the funds. (2) Once the Company was reasonably certain the conditions were met, the Company would then record the earnings impact of the grants over the periods in which the Company recognizes the costs the grants are intended to pay for. These costs should be recognized as expenses. (3) The funds could be recorded as other income or as an offset to related qualifying expenses. Because the ERC was intended to reimburse the Company for actual costs incurred (i.e., related qualifying expenses) during the given period or quarter, the Company determined that it was appropriate to account for these credits as an offset to the related qualifying payroll expenses recorded in selling, general, administrative expenses in the Company’s consolidated statements of operations and comprehensive income for the year ended December 31, 2022.

ERC benefits of $4.3 million were included in selling, general, administrative expense as an offset to the related compensation expenses in the accompanying consolidated statements of operations and comprehensive income for the year ended December 31, 2022. The Company did not record any ERC benefits for the year ended December 31, 2021.

ERC benefits receivable of $2.1 million were included in prepaid expenses and other current assets in the accompanying consolidated balance sheets as of December 31, 2022. The Company did not record any ERC benefit receivable as of December 31, 2021.

The Company has also applied the guidance in Accounting Standards Update (“ASU”) 2021-10,

Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance

retrospectively to the ERC in its financial reporting for the year ended December 31, 2021.

Laws and regulations concerning government programs, including the ERC and PPP Loan, are complex and subject to varying interpretations. Claims made under these programs may also be subject to retroactive audit and review. While the Company does not believe there is a basis for estimation of an audit or recapture risk at this time, there can be no assurance that regulatory authorities will not challenge the Company’s claim to the ERC or PPP Loan in a future period.

Emerging Growth Company

Section 102(b)(1) of the Jumpstart Our Business Startups Act (“JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or

revised standard at the time private companies adopt the new or revised standard, until such time the Company is no longer considered to be an emerging growth company. At times, the Company may elect to early adopt a new or revised standard. As such, the Company’s financial statements may not be comparable to companies that comply with public company

effective

dates.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses and the disclosure of contingent assets and liabilities in the Company’s consolidated financial statements and accompanying notes as of the date of the consolidated financial statements. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Estimates are used for, but not limited to, unbilled accounts receivable, allowance for doubtful accounts, write-down for excess and obsolete inventories, asset lives for property and equipment, fair value of derivatives, and impairment of tangible and intangible assets. Actual results may differ materially and adversely from these estimates. In the current macroeconomic and business environment affected by COVID-19, the Russia-Ukraine conflict and inflationary pressures, these estimates require increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, these estimates may change materially in future periods.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Drilling Tools Services, Inc., Drilling Tools International, Inc., Reamco, Inc., Downhole Inspection Solutions, LLC, Premium Tools LLC, Slick Tools International, LLC (formerly, Stinger Oil Tools, LLC), Data Automation Technology LLC, and Drilling Tools International Corporation (Canada). All intercompany accounts and transactions have been eliminated on consolidation.

Foreign Currency Translation and Transactions

The Company has determined that the functional and reporting currency for its operations across the globe is the functional currency of the Company’s international subsidiaries. Accordingly, all foreign balance sheet accounts have been translated into U.S. dollars using the rate of exchange at the respective balance sheet date. Components of the consolidated statements of operations and comprehensive income have been translated at the average rates for the year of the reporting period. Translation gains and losses are recorded in accumulated other comprehensive income as a component of stockholders’ equity. Gains or losses arising from currency exchange rate fluctuations on transactions denominated in a currency other than the local functional currency are included in the consolidated statements of operations and comprehensive income. For the year ended December 31, 2022 and 2021, the aggregate foreign currency translation included in the consolidated statements of operations and comprehensive income totaled approximately $0.2 million in gains and $0.1 million in loss, respectively.

Revenue Recognition

The Company recognizes revenue in accordance with Topic 606 (which addresses revenue from contracts with customers). The Company derives its revenue from two revenue types, tool rental services and product sales.

Tool Rental Services

Tool rental services consist of rental services, inspection services, and repair services. Tool rental services are accounted for under Topic 842.

Owned tool rentals represent the most significant revenue type and are governed by the Company’s standard rental contract. The Company accounts for such rentals as operating leases. The lease terms are included in the contracts, and the determination of whether the Company’s contracts contain leases generally does not require significant assumptions or judgements. The Company’s lease revenues do not include material amounts of variable payments. Owned tool rentals represent revenue from renting tools that the Company owns. The Company does not generally provide an option for the lessee to purchase the rented equipment at the end of the lease.

The Company records the amounts billed to customers in excess of recognizable revenue as deferred revenue on its consolidated balance sheet.

Product Sales

Product sales consist of charges for rented tools that are damaged beyond repair, charges for lost-in-hole, and charges for lost-in-transit while in the care, custody or control of the Company’s customers, and other charges for made to order product sales. Product sales are accounted for under Topic 606.

when the product is made available to the customer for pickup at the Company’s shipping dock. Additionally, pursuant to the contractual terms with the Company’s customers, the customer must notify the Company of, and purchase from the Company, any rented tools that are damaged beyond repair, lost-in-hole, or lost-in-transit while in the care, custody or control of the Company’s customers. Revenue is recognized for these products at a point in time upon the customer’s notification to the Company of the occurrence of one of these noted events.

Revenue per geographic location

Revenue generated was concentrated within the United States. For the year ended December 31, 2022 and 2021, the revenue generated within the United States was $118.3 million and $ 71 million, respectively, or 91% and 92% of total revenues, respectively. For the year ended December 31, 2022 and 2021, the revenue generated outside of the United States, in Canada, was $11.3 million and $6.4 million, respectively, or 9% and 8% of total revenues, respectively.

Contract Assets and Contract Liabilities

Contract assets represent the Company’s rights to consideration for work completed but not billed. As of December 31, 2022 and 2021, the Company had contract assets of $4.8 million and $3.0 million, respectively. Contract assets were recorded in accounts receivable, net in the accompanying consolidated balance sheets.

Contract liabilities consist of fees invoiced or paid by the Company’s customers for which the associated services have not been performed and revenue has not been recognized based on the Company’s revenue recognition criteria described above. As of December 31, 2022 and 2021, the Company did not have any material contract liabilities. All deferred revenue were expected to be recognized during the following 12 months, and they were recorded in accrued expenses and other current liabilities in the accompanying consolidated balance sheets.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company did not have any cash equivalents as of December 31, 2022 and 2021.

Accounts Receivable, net

Allowance for Doubtful Accounts

The Company adopted ASU 2016-13,

Financial Instruments — Credit Losses

, on December 31, 2022, which was retroactively applied as of the first day of fiscal year 2022, as further described within the section below titled

Recently Adopted Accounting Pronouncements

. This accounting standard requires companies to

measure expected credit losses on financial instruments based on the total estimated amount to be collected over the lifetime of the instrument. Prior to the adoption of this accounting standard, the Company recorded incurred loss reserves against receivable balances based on current and historical information.

Expected credit losses for uncollectible receivable balances consider both current conditions and reasonable and supportable forecasts of future conditions. Current conditions considered include pre-defined aging criteria, as well as specified events that indicate the balance due is not collectible. Reasonable and supportable forecasts used in determining the probability of future collection consider publicly available macroeconomic data and whether future credit losses are expected to differ from historical losses.

The Company is not party to any off-balance sheet arrangements that would require an allowance for credit losses in accordance with this accounting standard.

The changes in the allowance for uncollectible receivables for the year ended December 31, 2022 were as follows (in thousands):


Allowance for doubtful accounts
Balance at December 31, 2020	$	(1,116	)
Addition during the period		(544	)
Utilization of allowance for doubtful accounts		438
Balance at December 31, 2021		(1,222	)
Cumulative effect adjustment upon adoption of ASU 2016-13		—
Addition during the period		(336	)
Utilization of allowance for doubtful accounts		60

Balance at December 31, 2022	$	(1,498	)

Inventories, net

Property, Plant and Equipment, net

Property, plant and equipment acquired as part of a business acquisition is recorded at acquisition date fair value with subsequent additions at cost.

Leases

The Company adopted ASC 842,

Leases

(“ASC 842”) as of January 1, 2022. ASC 842 was adopted using the modified retrospective transition approach, with no restatement of prior periods or cumulative adjustments to retained earnings. Upon adoption, the Company elected the package of transition practical expedients, which allowed it to carry forward prior conclusions related to whether any expired or existing contracts are or contain leases, the lease classification for any expired or existing leases and initial direct costs for existing leases. The Company elected the use-of-hindsight to reassess lease term. The Company elected not to recognize leases with an initial term of 12 months or less within the consolidated balance sheets and to recognize those lease payments on a straight-line basis in the consolidated statements of operation over the lease term. The new lease accounting standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the practical expedient to not separate lease and non- lease components for all leases.

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and current operating lease liabilities and operating lease liabilities, net of current portion on the consolidated balance sheets. The Company recognizes lease expense for its operating leases on a straight-line basis over the term of the lease.

The interest rate used to determine the present value of the future lease payments is the Company’s incremental borrowing rate, because the interest rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located.

The Company’s lease terms include periods under options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option in the measurement of its ROU assets and liabilities. The Company considers contractual-based factors such as the nature and terms of the renewal or termination, asset-based factors such as physical location of the asset and entity-based factors such as the importance of the leased asset to the Company’s operations to determine the lease term. The Company generally uses the base, non-cancelable, lease term when determining the ROU assets and lease liabilities. The right-of-use asset is tested for impairment in accordance with Accounting Standards Codification Topic 360, Property, Plant, and Equipment.

Lessor Accounting

Our lease agreements have contract terms based on hourly, daily, weekly or monthly rates. Lease revenue is recognized on a straight-line basis based on these rates. We do not provide an option for the lessee to purchase the rented tools at the end of the lease and the lessees do not provide residual value guarantees on the rented assets.

We recognized operating lease revenue within “Tool rentals” on the consolidated statements of operations and comprehensive

income

Intangible Assets

Intangible assets with finite useful lives include customer relationships, trade name, patents, non-compete agreements and a supply agreement. These intangible assets are amortized either on a straight-line basis over the asset’s estimated useful life or on a basis that reflects the pattern in which the economic benefits of the intangible are realized.

Accounting for Impairment of Long-lived Asset

For the year ended December 31, 2022 and 2021, management determined that there was no impairment with regard to their property, plant, and equipment or intangible assets.

Investments — Equity Securities

Equity securities are stated at fair value. Unrealized gains and losses are reflected in the consolidated statements of operations and comprehensive income. The Company periodically reviews the securities for other than temporary declines in fair value below cost and more frequently when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. As of the year ended December 31, 2022 and 2021, the Company believes the cost of the securities was recoverable in all material respects.

Redeemable Convertible Preferred Stock

The Company’s Series A redeemable convertible preferred stock (“Series A”), which represents the Company’s sole class of redeemable convertible preferred stock issued to date, was established on December 28, 2015. Upon establishment of the Series A, the Company issued 20,370,377 shares of Series A for $0.54 per share resulting in aggregate proceeds of $11.0 million.

The Company records shares of its redeemable convertible preferred stock at their respective fair values on the dates of issuance. The Company classifies its redeemable convertible preferred stock outside of permanent equity in mezzanine equity on its consolidated balance sheets as it is redeemable at a fixed date. In accordance with ASC 480-10-S99-3A, the Company recognizes changes in the redemption value of its redeemable convertible preferred stock immediately as they occur and adjusts the carrying amount to redemption value at the end of each reporting period. The Company records accretion of its redeemable convertible preferred stock as a reduction to additional paid-in capital as the Company has an accumulated deficit.

Dividend Rights

Each holder of Series A is entitled to receive cumulative dividends payable at the rate of 7% annually, payable in kind. The dividends accumulate and compound quarterly at the stated dividend rate to the extent they are not paid.

Liquidation Rights

Upon the liquidation, dissolution or winding up of the Company’s business, after provision for payment of all debts and liabilities of the Company, any remaining assets of the Company shall be distributed first to the holders of the Series A and then pro rata to the holders of common stock. Each holder of Series A shall be entitled to receive, in full before any distributions or payments out of the assets of the Company, an amount equal to the Series A stated value of $0.54 per share along with an amount equal to all accumulated and unpaid dividends as of the date of payment. As of December 31, 2022 and as of December 31, 2021, the liquidation preference of the redeemable convertible preferred stock was approximately $17.9 million and $16.7 million, respectively.

Redemption

The Company must redeem all outstanding shares of Series A on the earlier of the seventh anniversary, as amended, of the issuance of the shares, or subject to compliance with the Company’s credit agreement, such earlier date as is determined by the election of holders of at least two-thirds of the outstanding shares of Series A, or the consummation of a firm commitment underwritten public offering by the Company. The redemption price is payable in cash equal to the original purchase price plus accumulated and unpaid dividends.

Conversion Rights

At any time before redemption, each Series A share is convertible into common stock at the option of the holder at its stated value of $0.54 per share, subject to adjustment for stock splits, stock dividends, combinations of shares, and similar recapitalization transactions.

Voting Rights

Each holder of Series A has a right to vote with a number of votes equal to the number of shares of common stock issuable upon conversion of such holder’s Series A at the time such shares are voted. Holders of Series A shall vote together with the holders of common stock (and of any other class or series that may similarly be entitled to vote with the holders of common stock) as a single class on all matters on which holders of common stock are entitled to vote.

Cost of Revenue

statements of operations and comprehensive income. All indirect operating costs, including labor, freight, contract labor and others, are included in selling, general, administrative in the consolidated statements of operations and comprehensive income.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718,

Compensation — Stock Compensation

(“ASC 718”). ASC 718 requires that the cost of awards of equity instruments offered in exchange for employee services, including employee stock options and restricted stock awards, be measured based on the grant-date fair value of the award. The Company adopted FASB ASU No. 2016-09, Compensation — Stock Compensation (“Topic 718”): Improvements to Employee Share-Based Payment Accounting, on February 1, 2019. This ASU involves several aspects of the accounting for stock-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification in the accompanying consolidated statements of cash flows. The adoption did not have a material impact on the accompanying consolidated financial statements of the Company. The Company determines the fair value of

stock options granted using the Black-Scholes-Merton option-pricing model (“Black-Scholes model”) and recognizes the cost over the period during which an employee is required to provide service in exchange for the award, generally the vesting period, net of estimated forfeitures. Because the Company’s common stock is not yet publicly traded, the Company must estimate the fair value of its common stock. The Board of Directors considers numerous objective and subjective factors to determine the fair value of the Company’s common stock at each meeting in which awards are approved. The factors considered include, but are not limited to: (i) the results of contemporaneous independent third-party valuations of the Company’s common stock; (ii) the prices, rights, preferences, and privileges of the Company’s Redeemable Convertible Preferred Stock relative to those of its common stock; (iii) the lack of marketability of the Company’s common stock; (iv) actual operating and financial results; (v) current business conditions and projections; (vi) the likelihood of achieving a liquidity event, such as an initial public offering or sale of the Company, given prevailing market conditions; and (vii) precedent transactions involving the Company’s shares. The Company did not grant stock options in financial year 2021 or 2

022.

Earnings Per Share

Basic earnings per share is computed by dividing the net income by the weighted-average number of common shares outstanding for the period. Diluted earnings is computed by adjusting net income to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted earnings is computed by dividing the diluted net income by the weighted-average number of common shares outstanding for the period, including potential dilutive common stock. For the purposes of this calculation, outstanding stock options and redeemable convertible preferred stock are considered potential dilutive common stock and are excluded from the computation of net loss per share if their effect is anti-dilutive.

The Company’s redeemable convertible preferred stock does not contractually entitle its holders to participate in profits or losses. As such, it is not treated as a participating security in periods of net income or net loss.

Income Taxes

Income taxes are provided for the tax effects of transactions reported in consolidated financial statements and consist of taxes currently due plus deferred taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

The Company is subject to state income taxes in various jurisdictions.

The Company follows guidance issued by the FASB in accounting for uncertainty in income taxes. This guidance clarifies the accounting for income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognized in the consolidated financial statements and applies to all income tax positions. Each income tax position is assessed using a two-step process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits and upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the consolidated financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. The Company has no uncertain tax

positions at December 31, 2022 and December 31, 2021. The Company believes there are no tax positions taken or expected to be taken that would significantly increase or decrease unrecognized tax benefits within twelve months of the reporting date.

The Company records income tax related interest and penalties, if applicable, as a component of the provision for income tax expense. However, there were no amounts recognized relating to interest and penalties in the consolidated statements of operations and comprehensive income for the year ended December 31, 2022 and 2021.

Derivative Financial Instruments

This arrangement was designed to manage exposure to interest rate fluctuations by effectively exchanging existing obligations to pay interest based on floating rates for obligations to pay interest based on a fixed rate. These derivatives are marked-to-market at the end of each quarter and the realized/unrealized gain or loss is recorded as interest expense. For the year ended December 31, 2022 and 2021, the Company recognized an unrealized gain due to the change in fair value of its interest rate swap of approximately $1.4 million and $0.9 million, respectively in its consolidated statements of operations and comprehensive income.

Fair Value Measurements


Level 1 —		Valuation inputs are unadjusted quoted market prices for identical assets or liabilities in active markets.

Level 2 —		Valuation inputs are quoted prices for identical assets or liabilities in markets that are not active, quoted market prices for similar assets and liabilities in active markets and other observable inputs directly or indirectly related to the assets or liabilities being measured.

Level 3 —		Valuation inputs are unobservable and significant to the fair value measurement.

Asset and liabilities measured at fair value are summarized as follows (in thousands):


	Assets at Fair Value as of December 31, 2022
	Level 1		Level 2			Level 3		Total
Investments, equity securities	$	1,143	$	—		$	—	$	1,143
Interest rate swap	$	—	$	476		$	—	$	476

Total assets at fair value	$	1,143	$	476		$	—	$	1,619


	Assets and Liabilities at Fair Value as of December 31, 2021
	Level 1		Level 2			Level 3		Total
Investments, equity securities	$	909	$	—		$	—	$	909

Total assets at fair value	$	909	$	—		$	—	$	909

Interest rate swap	$	—	$	(947	)	$	—	$	(947	)

Total liabilities at fair value	$	—	$	(947	)	$	—	$	(947	)

The Company’s interest rate swap is a pay-fixed, receive-variable interest rate swap based on LIBOR swap rate. The LIBOR swap rate is observable at commonly quoted intervals for the full term of the swap and therefore is considered a Level 2 item. For interest rate swaps in an asset position, the credit standing of the counterparty is analyzed and factored into the fair value measurement of the asset. The impact of the Company’s creditworthiness has also been factored into the fair value measurement of the interest rate swap in a liability position. For the year ended December 31, 2022 and 2021, the application of valuation techniques applied to similar assets and liabilities has been consistent.

As of December 31, 2022, the interest rate swap is included in prepaid expenses and other current assets on the consolidated balance sheet. At December 31, 2021, the interest rate swap is included in accrued expenses and other current liabilities on the consolidated balance sheet.

As of December 31, 2022 and December 31, 2021, the Company did not have any Level 3 assets or liabilities.

Fair Value of Financial Instruments

The Company’s financial instruments consist primarily of cash, accounts receivable, accounts payable, and long-term debt. The carrying amount of such instruments approximates fair value due to their short- term nature. The carrying value of long-term debt approximates fair value because of the market interest rate of the debt.

Concentration of Credit Risk and Other Risks and Uncertainties

During the year ended December 31, 2022, the Company generated approximately 28% of its revenue from two customers. Amounts due from these customers included in accounts receivable at December 31, 2022 were approximately $8.6 million.

During the year ended December 31, 2022, the Company had one vendor that represented approximately 12% of its purchases. Amounts due to this vendor included in accounts payable at December 31, 2022 were approximately $0.9 million.

During the year ended December 31, 2021, the Company generated approximately 18% of its revenue from one customer. Amounts due from this customer included in accounts receivable at December 31, 2021 were approximately $4.2 million.

During the year ended December 31, 2021, the Company had one vendor that represented approximately 16% of its purchases. Amounts due to this vendor included in accounts payable at December 31, 2021 were approximately $1.5 million.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities. The Company maintains accounts in federally insured financial institutions in excess of federally insured limits. Management believes the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which these deposits are held and of the money market funds in which these investments are made. The Company holds marketable securities with high credit ratings.

Operating Segment

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02,

Leases (Topic 842)

, to improve financial reporting and disclosures about leasing transactions. This ASU requires companies that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases, for substantially all leases. The recognition, measurement and presentation of expense and cash flows arising from a lease by a lessee will depend primarily on its classification as a finance or operating lease; both types of leases will be recognized on the balance sheet. This ASU also requires disclosures to help financial statement users to better understand the amount, timing and uncertainty of cash flows arising from leases. The new lease standard was adopted by the Company on its effective date of January 1, 2022. The Company used the optional transition method set forth in ASU 2018-11 that allows entities to elect not to recast their comparative periods in transition.

In addition, the Company elected the transition package of practical expedients permitted within the standard, which allowed it to carry forward the historical lease classification for arrangements that commenced prior to the effective date. As a result of the adoption of ASU 2016-02 on January 1, 2022, the Company recorded both operating lease assets of $16.3 million and operating lease liabilities of $16.3 million. The adoption of ASU 2016-02 had an immaterial impact on the Company’s consolidated statements of operations and comprehensive income and consolidated statement of cash flows.

In June 2016, the FASB issued ASU 2016-13,

Financial Instruments — Credit Losses

, which requires entities to estimate all expected credit losses for financial assets measured at amortized cost basis, including trade receivables, held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. The Company adopted this guidance using the modified retrospective adoption method on December 31, 2022, which was retroactively applied as of the first day of fiscal year 2022. The adoption of this accounting standard did not have a material impact to the Company’s consolidated financial statements.

In November 2021, the FASB issued ASU 2021-10,

Government Assistance: Disclosures by Business Entities about Government Assistance

, which aims to provide increased transparency by requiring business

entities to disclose information about certain types of governmental assistance they receive in the notes to the financial statements. The disclosures include information around the nature of the assistance, the related accounting policies used to account for government assistance, the effect of government assistance on the entity’s financial statements, and any significant terms and conditions of the agreements, including commitments and contingencies. The new guidance does not apply to transactions that a business accounts for under the income tax, revenue recognition, gain contingency or debt rules. The guidance in ASU 2021-10 was effective for financial statements of all entities for annual periods beginning after December 15, 2021. The Company has early adopted this guidance retrospectively, applying it to all transactions within the scope of the amendments reflected in its consolidated financial statements as of December 31, 2021 and for the financial statements for the year ending December 31, 2022. As the Company’s accounting for ERC benefits was in accordance with this guidance, the impact of adoption was limited to disclosures relating to these

transactions

Recently Issued Accounting Pronouncements Not Yet Adopted

No other new accounting pronouncements issued or effective during 2022 had, or are expected to have, a material impact on the Company’s consolidated financial statements.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (Parenthetical) - $ / shares	Dec. 31, 2022	Dec. 09, 2021
Common stock, par value	$ 0.01	$ 0.01
Redeemable Convertible Preferred Stock [Member]
Preferred Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01

INTANGIBLE ASSETS, NET - Summary of Components of Intangible Assets, Net (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Indefinite-Lived Intangible Assets [Line Items]
Total intangible assets	$ 1,550	$ 1,550	$ 1,550
Less: accumulated amortization	(1,311)	(1,287)	(1,148)
Intangible assets, net	239	263	402
Trade Name [Member]
Indefinite-Lived Intangible Assets [Line Items]
Total intangible assets	1,280	$ 1,280	1,280
Trade Name [Member] \| Minimum
Indefinite-Lived Intangible Assets [Line Items]
Useful lives (in years)		10 years
Trade Name [Member] \| Maximum
Indefinite-Lived Intangible Assets [Line Items]
Useful lives (in years)		13 years
Technology [Member]
Indefinite-Lived Intangible Assets [Line Items]
Total intangible assets	$ 270	$ 270	$ 270
Useful lives (in years)	13 years	13 years
Technology [Member] \| Minimum
Indefinite-Lived Intangible Assets [Line Items]
Useful lives (in years)	10 years
Technology [Member] \| Maximum
Indefinite-Lived Intangible Assets [Line Items]
Useful lives (in years)	13 years

OTHER EXPENSES, NET

6 Months Ended

Jun. 30, 2023

Other Income and Expenses [Abstract]

OTHER EXPENSES, NET

NOTE 10 – OTHER EXPENSES, NET

The following table shows the components of other expenses, net for the three months ended June 30, 2023 and 2022 (in thousands):


	Three months ended June 30, 2023			Three months ended June 30, 2022
HHLLC stock-based compensation	$	(2,339	)	$	—
Transaction fees		(1,803	)		—
Other, net		(240	)		(23	)

Total Other expense, net	$	(4,382	)	$	(23	)

The following table shows the components of other expenses, net for the six months ended June 30, 2023 and 2022 (in thousands):


	Six Months Ended June 30, 2023			Six Months Ended June 30, 2022
HHLLC stock-based compensation	$	(2,339	)	$	—
Transaction fees	$	(3,499	)		—
Other, net	$	(245	)		(95	)
Interest income	$	48			—

Total Other expense, net	$	(6,035	)	$	(95	)

NOTES PAYABLE NET (Details) - USD ($)	Oct. 31, 2018	Dec. 31, 2021	Jan. 01, 2021	Dec. 31, 2020	Apr. 23, 2018
Debt Instrument [Line Items]
Unsecured notes current		$ 900,000
Debt instrument date of first required payment	Oct. 31, 2022
Notes Payable In Conjunction With Business Combination [Member]
Debt Instrument [Line Items]
Unsecured notes current		900,000
Debt instrument face value	$ 5,500,000
Debt instrument down payment	1,500,000
Debt instrument annual payment	$ 1,000,000
Debt instrument imputed discount rate	5.20%
Debt instrument discount amount based on implicit rate	0.50%
Debt instrument effective interest rate percentage	10.91%
Debt instrument unamortized discount		$ 58,000
Term Loan Agreement [Member]
Debt Instrument [Line Items]
Debt instrument annual payment					$ 100,000
Debt instrument effective interest rate percentage				4.65%
Term Loan Amendment Agreement [Member]
Debt Instrument [Line Items]
Debt instrument annual payment			$ 400,000

EARNINGS PER SHARE - Summary of Company's Potentially Dilutive Securities Excluded - Performance-based Options Outstanding (Details) - shares	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2022	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total			2,954,000	23,324,377
Performance-based Options Outstanding
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	534,063	534,063	2,340,000	2,340,000

INCOME TAXES - Schedule Of Reconciliation Company's Effective Tax Rate (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Schedule Of Income Taxes Reconciliation [Line Items]
U.S. federal tax benefit at statutory rate	21.00%	21.00%	21.00%	21.00%	21.00%	21.00%
State income taxes, net of federal benefit					2.10%	(3.70%)
PPP loan forgiveness					0.00%	(95.20%)
Permanent differences					2.00%	1.70%
Foreign rate differential					0.50%	0.30%
Change in valuation allowance					(2.10%)	(3.50%)
Other					(9.00%)	68.40%
Effective tax rate	59.50%	23.20%	31.80%	23.40%	14.50%	(11.00%)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of Asset and Liabilities Measured at Fair Value (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments, equity securities		$ 1,143,000	$ 909,000
Interest rate swap		476,000
Interest rate swap			(947,000)
Total assets at fair value	$ 1,915,000	1,619,000	909,000
Total liabilities at fair value			(947,000)
Investments, equity securities	1,530,000	1,143,000
Interest Rate Swap
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate swap	385,000	476,000
Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments, equity securities		1,143,000	909,000
Interest rate swap		0
Interest rate swap			0
Total assets at fair value	1,530,000	1,143,000	909,000
Total liabilities at fair value			0
Investments, equity securities	1,530,000	1,143,000
Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments, equity securities		0	0
Interest rate swap		476,000
Interest rate swap			(947,000)
Total assets at fair value	385,000	476,000	0
Total liabilities at fair value			(947,000)
Level 2 \| Interest Rate Swap
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest rate swap	385,000	476,000
Level 3
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments, equity securities		0	0
Interest rate swap		0
Interest rate swap			0
Total assets at fair value	0	0	0
Total liabilities at fair value	$ 0	$ 0	$ 0

EARNINGS PER SHARE

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Earnings Per Share [Abstract]

EARNINGS PER SHARE

NOTE 15 – EARNINGS PER SHARE

Basic earnings per share is computed using the weighted-average number of common shares outstanding for the period. Diluted earnings per share is computed using the weighted-average number of common shares outstanding for the period plus dilutive potential common shares, including performance share awards, using the treasury stock method. Performance share awards are included based on the number of shares that would be issued as if the end of the reporting period was the end of the performance period and the result was dilutive.

The following table sets forth the computation of the Company’s basic and diluted net earnings per share for the three and six months ended June 30, 2023 and 2022 (in thousands except share and per share data):


	Three months ended June 30,					Six months ended June 30,
	2023		2022			2023			2022
Numerator:
Net income (loss)	$	937	$	5,934		$	6,638		$	7,267
Less: Redeemable convertible preferred stock dividends		—		(295	)		(314	)		(589	)

Net income (loss) attributable to common shareholders — basic	$	937	$	5,639		$	6,324		$	6,678

Add: Redeemable convertible preferred stock dividends		—		295			314			589

Net income (loss) attributable to common shareholders — diluted	$	937	$	5,934		$	6,638		$	7,267

Denominator
Weighted-average common shares used in computing earnings per share — basic		13,910,670		11,951,123			12,936,310			11,951,123


	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Weighted-average effect of potentially dilutive securities:
Effect of potentially dilutive time-based stock options		744,573		1,006,729		875,651		1,006,729
Effect of potentially dilutive performance-based stock options		110,514		—		55,257		—
Effect of potentially dilutive redeemable convertible preferred stock		5,981,219		6,719,641		6,350,430		6,719,641

Weighted-average common shares outstanding — diluted		20,746,976		19,677,493		20,217,648		19,677,493

Earnings (net loss) per share — basic	$	0.07	$	0.47	$	0.49	$	0.56

Earnings (net loss) per share — diluted	$	0.05	$	0.30	$	0.33	$	0.37

As of June 30, 2023, the Company’s potentially dilutive securities consisted of options to purchase common stock. As of June 30, 2022, the Company’s potentially dilutive securities consisted of redeemable convertible preferred stock and options to purchase common stock. Based on the amounts outstanding as of the three and six months ended June 30, 2023 and 2022, the Company excluded the following potential common shares from the computation of diluted net loss per share because including them would have had an anti-dilutive effect:


	Three months ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Time-based options outstanding		140,135		140,135		140,135		140,135

Total		140,135		140,135		140,135		140,135

Our performance-based stock options were excluded from the diluted earnings per share calculations for the three and six months ended June 30, 2022 because all necessary performance conditions were not satisfied by June 30, 2022. Our performance-based stock options excluded from diluted earnings per share for the three and six months ended June 30, 2022 were as follows:


	Three months ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Performance-based options outstanding		—		534,063		—		534,063

Total		—		534,063		—		534,063

NOTE 14 — EARNINGS PER SHARE

outstanding for the period plus dilutive potential common shares, including performance share awards, using the treasury stock method. Performance share awards are included based on the number of shares that would be issued as if the end of the reporting period was the end of the performance period and the result was dilutive.

The following table sets forth the computation of the Company’s basic and diluted net earnings per share for the year ended December 31, 2022 and 2021 (in thousands except share and per share data):


	Year ended December 31,
	2022			2021
Numerator:
Net income	$	21,080		$	2,101
Less: Redeemable convertible preferred stock dividends		(1,189	)		(1,119	)

Net income attributable to common shareholders – basic	$	19,891		$	982

Add: Redeemable convertible preferred stock dividends		1,189			1,119

Net income attributable to common shareholders – diluted	$	21,080		$	2,101

Denominator
Weighted-average common shares used in computing earnings pershare – basic		52,363,872			52,363,872
Weighted-average effect of potentially dilutive securities:
Effect of potentially dilutive stock options		4,410,987			4,552,060
Effect of potentially dilutive redeemable convertible preferred stock		20,370,377			—

Weighted-average common shares outstanding – diluted		77,145,236			56,915,932

Earnings per share – basic	$	0.38		$	0.02

Earnings per share – diluted	$	0.27		$	0.04

As of December 31, 2022 and December 31, 2021, the Company’s potentially dilutive securities were redeemable convertible preferred stock and options to purchase common stock. Based on the amounts outstanding as of the year ended December 31, 2022 and December 31, 2021, the Company excluded the

following potential common shares from the computation of diluted net loss per share because including them would have had an anti-dilutive effect:


	Year Ended December 31,
	2022		2021
Performance-based options outstanding		2,340,000		2,340,000
Time-based options outstanding		614,000		614,000
Redeemable convertible preferred stock		—		20,370,377

Total		2,954,000		23,324,377

PROPERTY, PLANT AND EQUIPMENT, NET

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

PROPERTY, PLANT AND EQUIPMENT, NET

NOTE 5 – PROPERTY, PLANT AND EQUIPMENT, NET

The following table shows the component of property, plant and equipment, net (in thousands):


	Estimated Useful Lives (in Years)	June 30, 2023			December 31, 2022
Rental tools and equipment	5-10		184,284			160,973
Buildings and improvements	5-40		6,239			5,781
Office furniture, fixtures and equipment	3-5		2,282			2,101
Transportation and equipment	3-5		796			827
Construction in progress			286			9

Total property, plant and equipment			193,887			169,691
Less: accumulated deprecation			(129,437	)		(125,537	)

Property, plant and equipment, net		$	64,450		$	44,154

Total depreciation expense for the three months ended June 30, 2023 and 2022 was approximately $4.7 million and $4.9 million, respectively. Total depreciation expense for the six months ended June 30, 2023 and 2022 was approximately $9.7 million and $10.0 million, respectively. The Company has not acquired any property, plant and equipment under capital leases.

Property, plant and equipment, net, were concentrated within the United States. As of June 30, 2023 and December 31, 2022, property, plant and equipment, net held within the United States was $62.6 million and $41.8 million, respectively, or 97% and 95% of total property, plant and equipment, net, respectively. As of June 30, 2023 and December 31, 2022 property, plant and equipment, net held outside of the United States, in Canada, was $1.9 million and $2.3 million, or 3% and 5% of total property, plant and equipment net for both periods.

NOTE 4 — PROPERTY, PLANT AND EQUIPMENT, NET

The following table shows the component of property, plant and equipment, net (in thousands):


	Estimated Useful Lives (in Years)		December 31, 2022			December 31, 2021
Land		—	$	—		$	898
Rental tools and equipment		5 – 10		160,973			152,986
Buildings and improvements		5 – 40		5,781			5,177
Office furniture, fixtures and equipment		3 – 5		2,101			1,869
Transportation and equipment		3 – 5		827			947
Construction in progress				9			166

Total property, plant and equipment				169,691			162,043
Less: accumulated deprecation				(125,537	)		(117,651	)

Property, plant and equipment, net			$	44,154		$	44,392

Total depreciation expense for the year ended December 31, 2022 and 2021 was approximately $19.6 million and $20.6 million, respectively. The Company has not acquired any property, plant and equipment under capital leases.

Property, plant and equipment, net, were concentrated within the United States. As of December 31, 2022 and 2021 property, plant and equipment, net held within the United States was $41.8 million and $42.1 million, respectively, or 95% of total property, plant and equipment, net for both periods. As of December 31, 2022 and 2021 property, plant and equipment, net held outside of the United States, in Canada, was $2.3 million, or 5% of total property, plant and equipment net for both periods.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Revenue, net:
Revenue, net	$ 37,908	$ 30,372	$ 78,707	$ 56,349	$ 129,556	$ 77,379
Operating costs and expenses:
Selling, general, and administrative expense	17,718	9,498	34,447	21,732	51,566	38,309
Depreciation and amortization expense	4,717	4,886	9,732	9,962	19,709	21,718
Total operating costs and expenses	31,284	22,324	62,468	47,099	104,279	83,656
Operating income	6,624	8,048	16,239	9,250	25,277	(6,277)
Other (expense) income:
Interest income (expense), net	(348)	(213)	(922)	4
Gain (loss) on sale of property	(1)		68	5
Unrealized gain (loss) on equity securities	420	(87)	387	323	234	157
Other expense, net	(4,382)	(23)	(6,035)	(95)	(384)	(233)
Interest expense	(4,382)	(23)	(6,035)	(95)	(477)	(1,229)
Gain on sale of property					127	899
Gain on forgiveness of PPP loan					0	8,575
Total other (expense) income, net	(4,311)	(323)	(6,502)	237	(500)	8,169
Income before income tax (expense) benefit	2,313	7,725	9,737	9,487	24,777	1,892
Income tax expense	(1,376)	(1,791)	(3,099)	(2,220)	(3,697)	209
Net income	937	5,934	6,638	7,267	21,080	2,101
Accumulated dividends on redeemable convertible preferred stock		295	314	589
Net income available to common shareholders	$ 937	$ 5,639	$ 6,324	$ 6,678	$ 19,891	$ 982
Basic earnings per share	$ 0.07	$ 0.47	$ 0.49	$ 0.56	$ 0.38	$ 0.02
Diluted earnings per share	$ 0.05	$ 0.3	$ 0.33	$ 0.37	$ 0.27	$ 0.04
Basic weighted-average common shares outstanding	13,910,670	11,951,123	12,936,310	11,951,123	52,363,872	52,363,872
Diluted weighted-average common shares outstanding	20,746,976	19,677,493	20,217,648	19,677,493	77,145,236	56,915,932
Comprehensive income:
Net income	$ 937	$ 5,934	$ 6,638	$ 7,267	$ 21,080	$ 2,101
Foreign currency translation adjustment, net of tax	(207)	13	(207)	(62)	173	(59)
Net comprehensive income	730	5,947	6,431	7,205	21,253	2,042
Tool Rental
Revenue, net:
Revenue, net	29,002	23,024	61,278	43,440	99,018	59,287
Operating costs and expenses:
Operating costs and expenses	7,692	6,678	15,829	12,992	27,581	19,941
Product Sale [Member]
Revenue, net:
Revenue, net					30,538	18,092
Operating costs and expenses:
Operating costs and expenses					$ 5,423	$ 3,688
Product Sale
Revenue, net:
Revenue, net	8,906	7,348	17,429	12,909
Operating costs and expenses:
Operating costs and expenses	$ 1,157	$ 1,262	$ 2,460	$ 2,413

MERGER (Details)				3 Months Ended		6 Months Ended
MERGER (Details)	Jun. 20, 2023 USD ($) $ / shares shares	Jun. 19, 2023 $ / shares shares	Feb. 13, 2023 shares	Jun. 30, 2023 USD ($) $ / shares shares	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) $ / shares shares	Jun. 30, 2022 USD ($)	Mar. 02, 2023 shares	Sep. 01, 2013 shares
Business Acquisition [Line Items]
Common stock cancelled due to exercise \| $ / shares		$ 158,444
Common stock shares issued in exchange		36,163
Aggregate gross proceeds \| $				$ 30,000,000
Stock issued, shares price per share \| $ / shares	$ 10.1
Goodwill \| $	$ 0
Other intangible assets \| $	0
Proceeds received from the Merger and PIPE Financing, net of transaction costs \| $	$ 23,100,000
Number of common stock authorized to issue									13,000,000
Stock-based compensation expense \| $					$ 0		$ 0
Quoted market price \| $ / shares				$ 6.95		$ 6.95
Other Expense
Business Acquisition [Line Items]
Stock-based compensation expense \| $				$ 2,300,000		$ 2,300,000
Hicks Holdings Operating LLC
Business Acquisition [Line Items]
Percentage on transaction amount as services agreement transaction fee			1.50%
Stock-based compensation expense \| $				$ (2,339,000)		(2,339,000)
Exchange Agreements
Business Acquisition [Line Items]
Issuance of shares after conversion of stock	2,042,181
Cash consideration in exchange for cancellation \| $	$ 200,000
Common Stock \| Hicks Holdings Operating LLC
Business Acquisition [Line Items]
Number of common stock authorized to issue								1,149,830
Common Stock \| Affiliated with HHLLC
Business Acquisition [Line Items]
Number of common stock authorized to issue								328,611
Common Stock \| Exchange Agreements
Business Acquisition [Line Items]
Cash consideration related to merger \| $	$ 11,000,000
DTIH \| Redeemable Convertible Preferred Stock
Business Acquisition [Line Items]
Stock issued and outstanding	20,370,377
DTIH \| Common Stock
Business Acquisition [Line Items]
Stock issued and outstanding	52,363,876
DTIC
Business Acquisition [Line Items]
Common stock conversion basis	ten-for-one basis
Stock-based compensation expense \| $						$ 2,300,000
DTIC \| PIPE Financing
Business Acquisition [Line Items]
Aggregate gross proceeds \| $	$ 4,100,000
Amount received in cash in PIPE Financing \| $	$ 25,900,000
DTIC \| Employee Stock Option
Business Acquisition [Line Items]
Common stock exchange ratio		0.2282
Common stock shares issued in exchange		36,163
DTIC \| Public Rights
Business Acquisition [Line Items]
Right outstanding	2,070,000
DTIC \| Private Rights
Business Acquisition [Line Items]
Right outstanding	79,600
DTIC \| Redeemable Convertible Preferred Stock
Business Acquisition [Line Items]
Stock issued and outstanding	6,719,641
Preferred exchange ratio	0.3299
DTIC \| Common Stock
Business Acquisition [Line Items]
Stock issued and outstanding			337,429
Common stock exchange ratio	0.2282
Issuance of shares after conversion of stock	11,951,137
Common stock conversion basis	one-for-one basis
DTIC \| Common Stock \| PIPE Financing
Business Acquisition [Line Items]
Stock issued	2,970,296
Aggregate gross proceeds \| $	$ 30,000,000
ROC \| Public Rights
Business Acquisition [Line Items]
Right outstanding				20,700,000		20,700,000
ROC \| Private Rights
Business Acquisition [Line Items]
Right outstanding				796,000		796,000
ROC \| Non-redeemable Share
Business Acquisition [Line Items]
Stock issued and outstanding	3,403,500
Common stock conversion basis	one-for-one basis
ROC \| Common Stock
Business Acquisition [Line Items]
Redeemable convertible preferred stock issued and outstanding	158,621

SUBSEQUENT EVENTS	6 Months Ended	12 Months Ended
SUBSEQUENT EVENTS	Jun. 30, 2023	Dec. 31, 2022
Subsequent Event [Line Items]
SUBSEQUENT EVENTS	NOTE 16 – SUBSEQUENT EVENTS The Company has evaluated all events occurring through June 30, 2023, the date on which the accompanying unaudited condensed consolidated financial statements were issued, and during which time, nothing has occurred outside the normal course of business operation that would require disclosure, except for the following: On July 12, 2023, the Company terminated its interest rate swap which resulted in a payment of $0.4 million from PNC to the Company.	NOTE 15 — SUBSEQUENT EVENTS The Company has evaluated all events occurring through March 31, 2023, the date on which these consolidated financial statements were issued, and during which time, nothing has occurred outside the normal course of business operation that would require disclosure, except for the following. On February 13, 2023, the Company entered into a merger agreement (the “Merger Agreement”) with ROC Energy Acquisition Corp (“ROC”), a special purpose acquisition company, and ROC Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of ROC (“Merger Sub”). Pursuant to the Merger Agreement, Merger Sub will merge with and into the Company with the Company surviving the merger (the “Merger”). As a result of the Merger, the Company will become a wholly-owned subsidiary of ROC, with the stockholders of the Company becoming stockholders of ROC. The transaction will be a combination of cash and equity consideration.

BALANCE SHEET DETAILS - CURRENT ASSETS AND CURRENT LIABILITIES - Summary of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Accrued expenses:
Accrued compensation and related benefits	$ 4,246	$ 3,392	$ 952
Accrued insurance	2,307	525	301
Accrued professional services	840	509	61
Accrued interest	47	62	74
Accrued property taxes	575	41	35
Other	34	38	48
Accrued transaction advisory fees	2,000
Total accrued expenses and other current liabilities		7,299	3,914
Other current liabilities:
Income tax payable		1,780	895
Sales tax payable	524	587	422
Unbilled lost-in-hole revenue		282	116
Deferred revenue		83	63
Interest rate swap liability			$ 947
Income tax payable	1,910	1,780
Unbilled lost-in-hole revenue	146	282
Deferred revenue		83
Total accrued expenses and other current liabilities	$ 12,629	$ 7,299

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)			1 Months Ended		3 Months Ended		6 Months Ended		12 Months Ended
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	Mar. 15, 2021 USD ($)	Apr. 11, 2020 USD ($)	Sep. 30, 2021 USD ($)	Mar. 31, 2021 USD ($)	Jun. 30, 2023 USD ($) shares	Jun. 30, 2022 USD ($) shares	Jun. 30, 2023 USD ($) Segment shares	Jun. 30, 2022 USD ($) shares	Dec. 31, 2022 USD ($) $ / shares shares	Dec. 31, 2021 USD ($) $ / shares shares	Jun. 20, 2023 $ / shares	Jan. 01, 2022 USD ($)	Dec. 31, 2020 USD ($) shares
Accounting Policies [Line Items]
Cash equivalents					$ 0		$ 0		$ 0	$ 0
Unrecognized tax benefits					0		0		0	0
Unrecognized tax benefits accrued for interest and penalties					0	$ 0	0	$ 0
Tax credit to each employees				$ 10,000,000
Accounts receivable net current					30,357,000		30,357,000		28,998,000	20,037,000
Accounts payable current					19,530,000		19,530,000		7,281,000	8,262,000
Foreign currency translation adjustment, net of tax					$ (207,000)	$ 13,000	$ (207,000)	$ (62,000)	173,000	(59,000)
Asset Impairment Charges									$ 0	$ 0
Preferred stock, shares issued \| shares
Preferred stock, par value (in dollars per share) \| $ / shares											$ 10.1
Stock options granted \| shares						0	0	0	0	0
Unrecognized tax benefits income tax penalties and interest expenses									$ 0	$ 0
Operating lease right of use assets					$ 20,397,000		$ 20,397,000		20,037,000	0
Operating lease liabilities					20,458,000		20,458,000		20,002,000
Allowance for doubtful accounts					1,800,000		$ 1,800,000		1,500,000
Percentage of refundable tax credit against certain employment taxes equal to qualified wages paid							50.00%
Maximum wages per employee annually paid under employee retention credit							$ 10,000
Percentage of refundable tax credit against certain employment taxes extended and expanded qualified wage caps to qualified wages paid							70.00%
Maximum wages per employee per quarterly paid under employee retention credit							$ 10,000
Revenue					37,908,000	$ 30,372,000	78,707,000	$ 56,349,000	129,556,000	77,379,000
Contract assets					4,100,000		4,100,000		$ 4,800,000
Impairment to property, plant, and equipment					$ 0	0	$ 0	0
Redeemable convertible preferred stock, shares outstanding \| shares					6,719,641		6,719,641		6,719,641
Carrying value of redeemable convertible preferred stock outstanding									$ 17,878,000	16,689,000
Number of operating segment \| Segment							1
Number of reportable segment \| Segment							1
Minimum percentage of unrecognized tax benefits that would impact effective tax rate							50.00%
Employee retention credit benefits receivable					$ 0		$ 0
Assets fair value					1,915,000		1,915,000		1,619,000	909,000
Liabilities fair value										947,000
Level 3
Accounting Policies [Line Items]
Assets fair value					0		0		0	0
Liabilities fair value					0		0		0	0
Accounting Standards Update 2016-02 [Member]
Accounting Policies [Line Items]
Operating lease right of use assets												$ 16,300,000
Operating lease liabilities												$ 16,300,000
Pay Fixed Receive Floating Interest Rate Swap [Member]
Accounting Policies [Line Items]
Unrealized gain loss on derivatives									$ 1,400,000	$ 900,000
Interest Rate Swap
Accounting Policies [Line Items]
Unrealized gain (loss) due to change in fair value					$ 13,000	$ 300,000	$ (100,000)	$ 1,000,000
Series A Redeemable Convertible Preferred Stock [Member]
Accounting Policies [Line Items]
Preferred stock, shares issued \| shares									20,370,377
Preferred stock, par value (in dollars per share) \| $ / shares									$ 0.54
Proceeds from Issuance of Convertible Preferred Stock									$ 11,000,000
Temporary equity redemption price per share \| $ / shares									$ 0.54	$ 0.54
Temporary equity liquidation preference									$ 17,900,000	$ 16,700,000
Temporary Equity Conversion Price Per Share \| $ / shares									$ 0.54	$ 0.54
Preferred Stock, Dividend Rate, Percentage									7.00%
Preferred Stock, Dividend Payment Terms									Each holder of Series A is entitled to receive cumulative dividends payable at the rate of 7% annually, payable in kind
Redeemable convertible preferred stock, shares outstanding \| shares									20,370,377	20,370,377
Redeemable Convertible Preferred Stock
Accounting Policies [Line Items]
Redeemable convertible preferred stock, shares outstanding \| shares					0		0		20,370,377	20,370,377			20,370,377
Carrying value of redeemable convertible preferred stock outstanding									$ 17,878,000	$ 16,689,000			$ 15,570,000
United States
Accounting Policies [Line Items]
Revenue generated									$ 118,300,000	$ 71,000,000
Percentage of revenue					92.00%	92.00%	91.00%	91.00%	91.00%	92.00%
Revenue					$ 35,100,000	$ 28,000,000	$ 71,600,000	$ 51,500,000
Canada
Accounting Policies [Line Items]
Revenue generated									$ 11,300,000	$ 6,400,000
Percentage of revenue					8.00%	8.00%	9.00%	9.00%	9.00%	8.00%
Revenue					$ 2,900,000	$ 2,400,000	$ 7,100,000	$ 4,800,000
Paycheck Protection Program Loan [Member]
Accounting Policies [Line Items]
Proceeds from loans	$ 2,000,000	$ 6,600,000
Prepaid Expenses and Other Current Assets
Accounting Policies [Line Items]
Employee retention credits receivable									$ 2,100,000	$ 0
Employee retention credit benefits receivables					$ 0		$ 0		2,100,000
Selling, General and Administrative Expenses
Accounting Policies [Line Items]
Employee retention credits benefits									4,300,000	0
Employee retention credit benefits						$ 4,300,000		$ 4,300,000	4,300,000
One Supplier [Member]
Accounting Policies [Line Items]
Accounts receivable net current									900,000
Accounts payable current										1,500,000
Two Customers
Accounting Policies [Line Items]
Accounts receivable net current									$ 8,600,000	$ 4,200,000
Sales Revenue \| Customer Concentration Risk \| Two Customers
Accounting Policies [Line Items]
Concentration risk percentage					29.00%	25.00%	30.00%	27.00%	28.00%
Sales Revenue \| Customer Concentration Risk \| One Customer [Member]
Accounting Policies [Line Items]
Concentration risk percentage										18.00%
Purchases [Member] \| Supplier Concentration Risk [Member] \| One Supplier [Member]
Accounting Policies [Line Items]
Concentration risk percentage									12.00%	16.00%
Vendor Purchases \| Customer Concentration Risk \| One Vendor
Accounting Policies [Line Items]
Concentration risk percentage						11.00%	10.00%	12.00%
Vendor Purchases \| Customer Concentration Risk \| Two Vendors
Accounting Policies [Line Items]
Concentration risk percentage					25.00%
Accounts Receivable
Accounting Policies [Line Items]
Contract assets									$ 4,800,000	$ 3,000,000
Accounts Receivable \| Customer Concentration Risk
Accounting Policies [Line Items]
Receivables from customers					$ 10,100,000		$ 10,100,000		8,600,000
Accounts Payable \| Customer Concentration Risk
Accounting Policies [Line Items]
Amounts due to vendors					$ 9,000,000		$ 9,000,000		$ 1,000,000
CARES Act [Member]
Accounting Policies [Line Items]
Tax Credit To Employee Percentage			70.00%	50.00%
Tax credit to each employees			$ 10,000,000

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule Of Allowance For Uncollectible Receivables (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	$ (1,222)	$ (1,116)
Addition during the period	(336)	(544)
Utilization of allowance for doubtful accounts	60	438
Ending balance	(1,498)	(1,222)
Cumulative effect adjustment upon adoption of ASU 2016-13
Accounts, Notes, Loans and Financing Receivable [Line Items]
Beginning balance	$ 0
Ending balance		$ 0

PROPERTY, PLANT AND EQUIPMENT, NET (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

Summary of Component of Property, Plant and Equipment, Net

The following table shows the component of property, plant and equipment, net (in thousands):


	Estimated Useful Lives (in Years)	June 30, 2023			December 31, 2022
Rental tools and equipment	5-10		184,284			160,973
Buildings and improvements	5-40		6,239			5,781
Office furniture, fixtures and equipment	3-5		2,282			2,101
Transportation and equipment	3-5		796			827
Construction in progress			286			9

Total property, plant and equipment			193,887			169,691
Less: accumulated deprecation			(129,437	)		(125,537	)

Property, plant and equipment, net		$	64,450		$	44,154

The following table shows the component of property, plant and equipment, net (in thousands):


	Estimated Useful Lives (in Years)		December 31, 2022			December 31, 2021
Land		—	$	—		$	898
Rental tools and equipment		5 – 10		160,973			152,986
Buildings and improvements		5 – 40		5,781			5,177
Office furniture, fixtures and equipment		3 – 5		2,101			1,869
Transportation and equipment		3 – 5		827			947
Construction in progress				9			166

Total property, plant and equipment				169,691			162,043
Less: accumulated deprecation				(125,537	)		(117,651	)

Property, plant and equipment, net			$	44,154		$	44,392

OTHER EXPENSES, NET - Summary of Components of Other Expenses, Net (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Schedule Of Other Expenses [Line Items]
Stock-based compensation		$ 0		$ 0
Transaction Fees	$ (1,803,000)		$ (3,499,000)
Other, net	(240,000)	(23,000)	(245,000)	(95,000)
Interest income			48,000
Total Other expense, net	(4,382,000)	$ (23,000)	(6,035,000)	$ (95,000)	$ (477,000)	$ (1,229,000)
Hicks Holdings Operating LLC
Schedule Of Other Expenses [Line Items]
Stock-based compensation	$ (2,339,000)		$ (2,339,000)

MERGER (Tables)

6 Months Ended

Jun. 30, 2023

Business Combinations [Abstract]

Summary of Common Stock Outstanding Immediately after Merger

The following table presents the total DTIC Common Stock outstanding immediately after the closing of the Merger:


Exchange of ROC common stock not subject to possible redemption for DTIC Common Stock upon Merger			3,403,500
Conversion of ROC Public Rights into shares of DTIC Common Stock			2,070,000
Conversion of ROC Private Rights into shares of DTIC Common Stock			79,600
Exchange of ROC common stock subject to possible redemption that was not redeemed for DTIC Common Stock			158,621

Subtotal - Merger, net of redemptions			5,711,721

Issuance of DTIC Common Stock in connection with PIPE Financing			2,970,296

Exchange of DTIH common stock outstanding as of December 31, 2022 for DTIC Common Stock			11,951,137

Exchange of DTIH redeemable convertible preferred stock outstanding as of December 31, 2022 for DTIC Common Stock			6,719,641

Issuance of shares as stock-based compensation to former DTIH stockholders as part of transaction services agreement upon the Merger			337,429

Issuance of DTIC Common Stock to former holders of DTIH redeemable convertible preferred stock in connection with Exchange Agreements			2,042,181

Net exercise of stock options by DTIH stockholder			36,163

Total - DTIC Common Stock outstanding as a result of Merger, PIPE Financing, DTIH for DTIC share exchanges, transaction services agreement, Exchange Agreements, and exercise of stock options			29,768,568

EARNINGS PER SHARE (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Earnings Per Share [Abstract]

Summary of Computation of The Company's Basic and Diluted Net Earnings Per Share


	Three months ended June 30,					Six months ended June 30,
	2023		2022			2023			2022
Numerator:
Net income (loss)	$	937	$	5,934		$	6,638		$	7,267
Less: Redeemable convertible preferred stock dividends		—		(295	)		(314	)		(589	)

Net income (loss) attributable to common shareholders — basic	$	937	$	5,639		$	6,324		$	6,678

Add: Redeemable convertible preferred stock dividends		—		295			314			589

Net income (loss) attributable to common shareholders — diluted	$	937	$	5,934		$	6,638		$	7,267

Denominator
Weighted-average common shares used in computing earnings per share — basic		13,910,670		11,951,123			12,936,310			11,951,123


	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Weighted-average effect of potentially dilutive securities:
Effect of potentially dilutive time-based stock options		744,573		1,006,729		875,651		1,006,729
Effect of potentially dilutive performance-based stock options		110,514		—		55,257		—
Effect of potentially dilutive redeemable convertible preferred stock		5,981,219		6,719,641		6,350,430		6,719,641

Weighted-average common shares outstanding — diluted		20,746,976		19,677,493		20,217,648		19,677,493

Earnings (net loss) per share — basic	$	0.07	$	0.47	$	0.49	$	0.56

Earnings (net loss) per share — diluted	$	0.05	$	0.30	$	0.33	$	0.37


	Year ended December 31,
	2022			2021
Numerator:
Net income	$	21,080		$	2,101
Less: Redeemable convertible preferred stock dividends		(1,189	)		(1,119	)

Net income attributable to common shareholders – basic	$	19,891		$	982

Add: Redeemable convertible preferred stock dividends		1,189			1,119

Net income attributable to common shareholders – diluted	$	21,080		$	2,101

Denominator
Weighted-average common shares used in computing earnings pershare – basic		52,363,872			52,363,872
Weighted-average effect of potentially dilutive securities:
Effect of potentially dilutive stock options		4,410,987			4,552,060
Effect of potentially dilutive redeemable convertible preferred stock		20,370,377			—

Weighted-average common shares outstanding – diluted		77,145,236			56,915,932

Earnings per share – basic	$	0.38		$	0.02

Earnings per share – diluted	$	0.27		$	0.04

Summary of Company's Potentially Dilutive Securities Excluded


	Three months ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Time-based options outstanding		140,135		140,135		140,135		140,135

Total		140,135		140,135		140,135		140,135


	Three months ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Performance-based options outstanding		—		534,063		—		534,063

Total		—		534,063		—		534,063

following potential common shares from the computation of diluted net loss per share because including them would have had an anti-dilutive effect:


	Year Ended December 31,
	2022		2021
Performance-based options outstanding		2,340,000		2,340,000
Time-based options outstanding		614,000		614,000
Redeemable convertible preferred stock		—		20,370,377

Total		2,954,000		23,324,377

EARNINGS PER SHARE - Schedule of antidilutive securities excluded from computation of earnings per share (Details) - shares	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2022	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount			2,954,000	23,324,377
Performance-based options outstanding
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount	534,063	534,063	2,340,000	2,340,000
Time-based options outstanding
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount			614,000	614,000
Redeemable convertible preferred stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount			0	20,370,377

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Assets, Current [Abstract]
Cash	$ 7,156	$ 2,352	$ 52
Accounts receivable, net	30,357	28,998	20,037
Inventories, net	5,929	3,281	2,341
Prepaid expenses and other current assets	6,804	4,381	905
Investments - equity securities, at fair value	1,530	1,143	909
Total current assets	51,776	40,155	24,244
Property, plant and equipment, net	64,450	44,154	44,392
Operating lease right-of-use asset	20,397	20,037	0
Intangible assets, net	239	263	402
Deferred financing costs, net	472	226	69
Deposits and other long-term assets	963	383	400
Total assets	138,297	105,218	69,507
Current liabilities
Accounts payable	19,530	7,281	8,262
Accrued expenses and other current liabilities	12,629	7,299	3,914
Current portion of operating lease liabilities	3,836	3,311	0
Revolving line of credit		18,349	26,425
Notes payable, net		0	942
Total current liabilities	35,995	36,240	39,543
Operating lease liabilities, less current portion	16,622	16,691	0
Deferred tax liabilities, net	5,193	3,185	2,105
Other long-term liabilities		0	10
Total liabilities	57,810	56,116	41,658
Commitments and contingencies (See Note 14)
Redeemable convertible preferred stock
Series A redeemable convertible preferred stock		17,878	16,689
Shareholders' equity
Common stock	3	1	532
Preferred stock, par value $0.0001; 10,000,000 and nil shares authorized at June 30, 2023 and December 31, 2022, respectively; nil shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively
Additional paid-in-capital	95,218	52,388	53,979
Accumulated deficit	(14,416)	(21,054)	(42,134)
Less treasury stock		(933)	(933)
Accumulated other comprehensive loss	(318)	(111)	(284)
Total shareholders' equity	80,487	31,224	11,160
Total liabilities, redeemable convertible preferred stock and shareholders' equity	$ 138,297	$ 105,218	$ 69,507

INTANGIBLE ASSETS, NET

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS, NET

NOTE 6 – INTANGIBLE ASSETS, NET

The following table shows the components of intangible assets, net (in thousands):


	Useful Lives (in Years)	June 30, 2023			December 31, 2022
Trade Name	10-13	$	1,280		$	1,280
Technology	13		270			270

Total intangible assets			1,550			1,550
Less: accumulated amortization			(1,311	)		(1,287	)

Intangible assets, net		$	239		$	263

Total amortization expense for the three months ended June 30, 2023 and 2022 was approximately $12 thousand and $12 thousand, respectively. Total amortization expense for the six months ended June 30, 2023 and 2022 was approximately $24 thousand and less than $0.1 million, respectively.

NOTE 5 — INTANGIBLE ASSETS, NET

The following table shows the components of intangible assets, net (in thousands):


	Useful Lives (in Years)		December 31, 2022			December 31, 2021
Trade Name		10 – 13	$	1,280		$	1,280
Technology		13		270			270

Total intangible assets				1,550			1,550
Less: accumulated amortization				(1,287	)		(1,148	)

Intangible assets, net			$	263		$	402

Total amortization expense for the year ended December 31, 2022 and 2021 was approximately $0.1 million and $1.1 million, respectively.

PROPERTY, PLANT AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 4,700	$ 4,900	$ 9,700	$ 10,000	$ 19,600	$ 20,600
Property, plant and equipment, net	64,450		64,450		44,154	44,392
United States
Property, Plant and Equipment [Line Items]
Property, plant and equipment, net	$ 62,600		$ 62,600		$ 41,800	$ 42,100
Percentage Of Property Plant And Equipment Held Within United Status					95.00%	95.00%
Property, plant and equipment net, Percentage	97.00%		97.00%		95.00%
Canada
Property, Plant and Equipment [Line Items]
Property, plant and equipment, net	$ 1,900		$ 1,900		$ 2,300	$ 2,300
Percentage Of Property Plant And Equipment Held Within United Status					5.00%	5.00%
Property, plant and equipment net, Percentage	3.00%		3.00%		5.00%

INCOME TAXES - Schedule Of Income Before Expense From Income Tax (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Geographical Breakdown Of Income Before Expense From Income Tax [Line Items]
Profits before benefit from income taxes	$ 2,313	$ 7,725	$ 9,737	$ 9,487	$ 24,777	$ 1,892
Domestic [Member]
Geographical Breakdown Of Income Before Expense From Income Tax [Line Items]
Profits before benefit from income taxes					19,093	1,790
International [Member]
Geographical Breakdown Of Income Before Expense From Income Tax [Line Items]
Profits before benefit from income taxes					$ 5,683	$ 102

- Definition

Amount of income (loss) from continuing operations, including income (loss) from equity method investments, before deduction of income tax expense (benefit), and income (loss) attributable to noncontrolling interest.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 944
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04(11))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483586/944-220-S99-1

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 30
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-30

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (f)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 5: http://www.xbrl.org/2003/role/exampleRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 31
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-31

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 942
-SubTopic 235
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-05(b)(2))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479557/942-235-S99-1

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Name Accounting Standards Codification
-Section 25
-Paragraph 1
-SubTopic 20
-Topic 940
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481913/940-20-25-1

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 220
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03(10))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483621/220-10-S99-2

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 942
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-04(15))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483589/942-220-S99-1

+ Details

LEASES - Summary of Components of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Lease, Cost [Abstract]
Operating Lease Cost	$ 1,532	$ 1,428	$ 3,050	$ 2,871	$ 5,722
Short-term Lease Cost	33	36	63	72	143
Variable Lease Cost	81	78	165	155	319
Sublease Income	(30)	(46)	(76)	(91)	(183)
Total Lease Cost	$ 1,616	$ 1,496	$ 3,202	$ 3,007	$ 6,001

LEASES

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Leases [Abstract]

LEASES

NOTE 12 – LEASES

The Company leases various facilities and vehicles under noncancelable operating lease agreements. The remaining lease terms for our leases range from 1 month to 14 years. These leases often include options to extend the term of the lease which may be for periods of up to 5 years. When it is reasonably certain that the option will be exercised, the impact of the renewal term is included in the lease term for purposes of determining total future lease payments and measuring the ROU asset and lease liability. We apply the short-term lease policy election, which allows us to exclude from recognition leases with an original term of 12 months or less. We have not entered into any finance leases as of June 30, 2023.

For the three and six months ended June 30, 2023, the components of the Company’s lease expense were as follows (in thousands):


	Six months ended June 30, 2023			Six months ended June 30, 2022
Operating Lease Cost	$	3,050		$	2,871
Short-term Lease Cost		63			72
Variable Lease Cost		165			155
Sublease Income		(76	)		(91	)

Total Lease Cost	$	3,202		$	3,007


	Three months ended June 30, 2023			Three months ended June 30, 2022
Operating Lease Cost	$	1,532		$	1,428
Short-term Lease Cost		33			36
Variable Lease Cost		81			78
Sublease Income		(30	)		(46	)

Total Lease Cost	$	1,616		$	1,496

Supplemental balance sheet information related to leases was as follows (in thousands):


	Six months ended June 30, 2023
Weighted-average remaining lease term (in years)		6.80
Weighted average discount rate		5.73	%

	Six months ended June 30, 2023
Right-of-use assets obtained in exchange for new operating lease liabilities	$	2,635
Cash paid for amounts included in the measurement of lease liabilities		2,733

Future undiscounted cash flows for each of the next five years and thereafter and reconciliation to the lease liabilities recognized on the condensed consolidated balance sheet as of June 30, 2023 were as follows (in thousands):


2023	$	2,544
2024		4,579
2025		3,980
2026		3,511
2027		2,486
Thereafter		7,546

Total lease payments	$	24,646
Less: imputed interest		(4,188	)

Present value of lease liabilities	$	20,458

The Company leases downhole drilling tools to companies in the oil and natural gas industry. Such leases are accounted for in accordance with ASC 842. For the three and six months ended June 30, 2023, tool rental revenue was approximately $29.0 million and $61.3 million, respectively. Our lease contract periods are short-term in nature and are typically daily, monthly, per well, or footage based. Due to the short term nature of the contracts,

maturity table is presented.

NOTE 11 — LEASES

The Company adopted ASC Topic 842 on January 1, 2022 using the modified retrospective approach. Comparative information has not been restated and continues to be reported under ASC Topic 840,

Leases

, which was the accounting standard in effect for those periods.

The Company leases various facilities and vehicles under non-cancelable operating lease agreements. As of December 31, 2022, all of the Company’s leases were operating leases.

For the year ended December 31, 2022, the components of the Company’s lease expense were as follows (in thousands):


	Year ended December 31, 2022
Operating Lease Cost	$	5,722
Short-term Lease Cost		143
Variable Lease Cost		319
Sublease Income		(183	)

Total Lease Cost	$	6,001

Supplemental balance sheet information related to leases was as follows (in thousands):


	Year ended December 31, 2022
Weighted-average remaining lease term (in years)		7.53
Weighted average discount rate		5.34	%

	Year ended December 31, 2022
Right-of-use assets obtained in exchange for new operating lease liabilities	$	25,087
Cash paid for amounts included in the measurement of lease liabilities		5,003

Future undiscounted cash flows for each of the next five years and thereafter and reconciliation to the lease liabilities recognized on the balance sheet as of December 31, 2022 were as follows (in thousands):


Years Ending December 31
2023	$	4,265
2024		3,879
2025		3,485
2026		3,167
2027		2,178
Thereafter		7,254

Total lease payments	$	24,228
Less: imputed interest		(4,226	)

Present value of lease liabilities	$	20,002

The Company entered into a lease agreement for general office space, the Southcreek Lease, in Houston, Texas on November 1, 2021. The lease requires a Standby Letter of Credit (LOC) of approximately $0.3 million that expires April 2023.

For the years ended December 31, 2022 and 2021, tool rental revenue was approximately $99.0 million and $59.3 million, respectively. Due to the short term nature of the contracts, no maturity table is presented. There are no minimum fixed lease payments that are to be earned over the years as the weighted average remaining lease term is 7.53 years.

STOCK-BASED COMPENSATION - Summary of Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Share-Based Payment Arrangement, Disclosure [Abstract]
Beginning Balance (Share)	10,927,890	11,227,890
Forfeited	0	300,000
Ending Balance (Share)	10,927,890	10,927,890	11,227,890
UNVESTED	2,340,000	2,340,000
EXERCISABLE	8,587,890	8,587,890
Beginning Balance (Weighted Average)	$ 1.21	$ 1.14
Forfeited		0.22
Ending Balance (Weighted Average)	1.21	1.21	$ 1.14
UNVESTED	0.85	0.85
EXERCISABLE	$ 1.21	$ 1.21
Beginning Balance of Remaining	2 years 11 months 15 days	3 years 7 months 6 days	4 years 5 months 8 days
Ending Balance of Remaining	2 years 11 months 15 days	3 years 7 months 6 days	4 years 5 months 8 days
UNVESTED	4 years 3 months	5 years 3 months
EXERCISABLE	2 years 10 months 2 days	3 years 1 month 20 days
Beginning Balnce (Aggregate Intrinsic Value)	$ 11,687	$ 12,032
Ending Balance (Aggregate Intrinsic Value)	11,687	11,687	$ 12,032
UNVESTED	2,691	2,691
EXERCISABLE	$ 8,996	$ 8,996

BALANCE SHEET DETAILS - CURRENT ASSETS AND CURRENT LIABILITIES - Summary of Inventories, Net (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Inventory, Net [Abstract]
Raw materials	$ 5,945	$ 3,377	$ 2,285
Finished goods	118	115	130
Total inventories	6,063	3,492	2,415
Allowance for obsolete inventory		(211)	(74)
Inventories, net	5,929	3,281	$ 2,341
Allowance for obsolete inventory	$ (134)	$ (211)

INVESTMENTS - EQUITY SECURITIES (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Investments, Debt and Equity Securities [Abstract]

Summary of Cost and Fair Value of Investments in Equity Securities

The following table shows the cost and fair value of the Company’s investments in equity securities (in thousands):


	Cost		Unrealized Gain		Fair Value
June 30, 2023	$	999	$	531	$	1,530


	Cost		Unrealized Gain		Fair Value
December 31, 2022	$	999	$	144	$	1,143

The following table shows the cost and fair value of the Company’s investments in equity securities (in thousands):


	Cost		Unrealized Gain			Fair Value
December 31, 2022	$	999	$	144		$	1,143


	Cost		Unrealized Loss			Fair Value
December 31, 2021	$	999	$	(90	)	$	909

INVESTMENTS - EQUITY SECURITIES - Summary of Cost and Fair Value of Investments in Equity Securities (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Net Investment Income [Line Items]
Cost		$ 999	$ 999
Unrealized Gain		144
Equity Securities Readily Determinable Fair Value Cumulative Unrealized Loss			(90)
Fair Value		1,143	$ 909
Cost	$ 999	999
Unrealized gain	531	144
Fair value	$ 1,530	$ 1,143

NOTES PAYABLE NET	12 Months Ended
NOTES PAYABLE NET	Dec. 31, 2022
Debt Disclosure [Abstract]
NOTES PAYABLE NET	NOTE 7 — NOTES PAYABLE, NET Notes payable, net consisted of the unsecured promissory notes, net of discount amounting to $0.9 million as of December 31, 2021. The unsecured promissory notes were paid off in full as of December 31, 2022. On October 31, 2018, in conjunction with an acquisition, the Company entered into an unsecured promissory note with the seller in the amount of $5.5 million. Periodic payments on this note are due as follows, $1.5 million on February 1, 2019; $1.0 million annually on October 31 beginning in 2019, and through 2022. There is no stated interest rate in the agreement; therefore, management imputed an interest rate of 5.2% and recorded a discount of $0.5 million on the note and will accrete the discount to interest expense over the term of the note. The effective interest rate on the note is 10.91%. At December 31, 2021, the outstanding balance, net of the unamortized discount of $58 thousand, was $0.9 million. The note matured and was paid in full, including the unamortized discount, on October 31, 2022. On April 23, 2018, the Company entered into a term loan with a financial institution. At December 31, 2020, the interest rate on the term loan was 4.65%. Periodic payments on this note are due monthly in the amount of $0.1 million commencing on July 23, 2018 with the balance due on the maturity date. Originally, the term loan matured on April 22, 2022. In conjunction with the eighth amendment, starting July 1, 2021, the monthly payments were increased to $0.4 million and continued until the loan was paid off in December 2021. This note was collateralized by the assets of Premium Tools LLC. Under the original terms of the credit facility, the Company was obligated to prepay the term loan based upon the excess cash flow calculation, as defined in the agreement. This requirement was waived for 2019 and 2020 in the eighth amendment. This loan balance was paid off in full as of December 31, 2021. As of December 31, 2022, there are no future minimum payments related to notes payable, net.

INVESTMENTS - EQUITY SECURITIES (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Investments, Debt and Equity Securities [Abstract]
Unrealized holding gains (losses) on equity securities	$ 420	$ (87)	$ 387	$ 323	$ 234	$ 157
Equity Securities, FV-NI, Unrealized Gain					$ 100	$ 100

STOCK-BASED COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement, Disclosure [Abstract]

Summary of option activity

For the years ended December 31, 2022 and 2021, a summary of option activity under the Plan is presented below (in thousands):


	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in Years)		Aggregate Intrinsic Value
OUTSTANDING, December 31, 2020		11,227,890	$	1.14		4.44	$	12,032
Granted		—		—		—		—
Exercised		—		—		—		—
Forfeited		300,000	$	0.22		—		—
OUTSTANDING, December 31, 2021		10,927,890	$	1.21		3.60	$	11,687

UNVESTED, December 31, 2021		2,340,000	$	0.85		5.25	$	2,691

EXERCISABLE, December 31, 2021		8,587,890	$	1.21		3.14	$	8,996

Granted		—		—		—		—
Exercised		—		—		—		—
Forfeited		—		—		—		—
OUTSTANDING, December 31, 2022		10,927,890	$	1.21		2.96	$	11,687

UNVESTED, December 31, 2022		2,340,000	$	0.85		4.25	$	2,691

EXERCISABLE, December 31, 2022		8,587,890	$	1.21		2.84	$	8,996

MERGER

6 Months Ended

Jun. 30, 2023

Business Combinations [Abstract]

MERGER

NOTE 2 – MERGER

As discussed in Note 1 -

Summary of Significant Accounting Policies

, on June 20, 2023, the Company completed the Merger. Upon the closing of the Merger, the following occurred:

•

Each share of DTIH common stock issued and outstanding immediately prior to the closing of the Merger, which totaled 52,363,876 shares (other than the shares described for the net exercise of the option and as compensation pursuant to the TSA), was exchanged for the right to receive 0.2282 shares of DTIC Common Stock (the “Common Exchange Ratio”) resulting in the issuance of 11,951,137 shares of DTIC Common Stock.

•

Each share of DTIH redeemable convertible preferred stock issued and outstanding immediately prior to the closing of the Merger, which totaled 20,370,377 shares, was exchanged for the right to receive 0.3299 shares of DTIC Common Stock (the “Preferred Exchange Ratio”) resulting in the issuance of 6,719,641 shares of DTIC Common Stock.

•

Each

non-redeemable

share of ROC common stock issued and outstanding immediately prior to the closing of the Merger, which totaled 3,403,500 shares, was exchanged for, on a

one-for-one

basis, shares of DTIC Common Stock.

•

Each share of ROC common stock subject to possible redemption that was not redeemed prior to the closing of the Merger, which totaled 158,621 shares, was exchanged for, on a

one-for-one

basis, shares of DTIC Common Stock.

•

Each of ROC’s public rights and private rights outstanding immediately prior to the closing of the Merger, which totaled 20,700,000 and 796,000, respectively, were exchanged for, on a

ten-for-one

basis, 2,070,000 and 79,600 shares of DTIC Common Stock, respectively.

•

Prior to the closing of the Merger, one DTIH stock option holder elected to net exercise all of such holder’s options, resulting in the issuance of 158,444 shares of DTIH common stock, which upon the closing of the Merger, were canceled and exchanged for the right to receive 0.2282 shares of DTIC Common Stock per share of DTIH common stock, which resulted in the issuance of 36,163 shares of DTIC Common Stock.

•

DTIH entered into a transaction services agreement (the “TSA”) with Hicks Holdings Operating LLC (“HHLLC”) on January 27, 2012, as amended February 13, 2023, pursuant to which DTIH must pay HHLLC a transaction fee equal to 1.5% of any subsequent transaction, as defined in the TSA. The Merger constitutes a subsequent transaction per the TSA and, therefore, the Board authorized DTIH to issue 1,149,830 shares of DTIH common stock to HHLLC and 328,611 shares of DTIH common stock to a stockholder of DTIH who is affiliated with HHLLC, immediately prior to the closing of the Merger. The DTIH common stock was issued immediately prior to the closing of the Merger and the issuance resulted in the recognition of $2.3 million of stock-based compensation expense within other expense on the unaudited condensed consolidated statements of income and comprehensive income for the three and six months ended June 30, 2023. The shares of DTIH common stock issued were exchanged for 337,429 shares of DTIC Common Stock as of the date of the closing of the Merger in accordance with the Common Exchange Ratio. The $2.3 million of stock-based compensation was recorded by taking the $6.95 quoted market price of the Company’s common stock as of the date and time of the closing of the Merger and multiplying this price by the 337,429 shares of DTIC Common Stock Issued.

•

In connection with the Merger, certain holders of DTIH redeemable convertible preferred stockholders entered into exchange agreements (the “Exchange Agreements”) wherein the DTIH redeemable convertible preferred stockholders exchanged their rights to receive a portion of the $11.0 million Aggregate Company Cash Consideration (as defined within the Merger Agreement) for the rights to receive shares of DTIC Common Stock. Immediately following the effectiveness of the Exchange Agreements, which became effective as of the closing of the Merger, the holders of DTIH redeemable convertible preferred stock that participated in the Exchange Agreements held 2,042,181 shares of DTIC Common Stock as a result of their participation in the Exchange Agreements. In addition, the holders of DTIH redeemable convertible preferred stock that did not participate in the Exchange Agreements were paid $0.2 million from the Aggregate Company Cash Consideration in exchange for the cancellation of their DTIH redeemable convertible preferred stock in connection with the closing of the Merger.

•

In connection with the Merger, ROC entered into subscription agreements (the “Subscription Agreements”) with certain accredited investors (which were related parties of ROC due to their affiliation with ROC Energy Holdings, LLC, which is ROC’s sponsor (“Sponsor” or “ROC Sponsor”)) (the “PIPE Investors”) for an aggregate of 2,970,296 shares of DTIC Common Stock at a price of

$10.10 per share, for a total of $30.0 million (the “PIPE Financing”). Upon the closing of the PIPE Financing (which closed in connection with the closing of the Merger), the Company received $25.9 million in cash and $4.1 million worth of shares from the PIPE Financing were used to settle related party promissory notes issued by ROC to the ROC Sponsor and an affiliate of ROC Sponsor.

The proceeds received by the Company from the Merger and PIPE Financing, net of transaction costs, totaled $23.1 million.

The Merger was accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, ROC was treated as the acquired company for financial reporting purposes (see Note 1 for further details

)

. Accordingly, for accounting purposes, the Merger was treated as the equivalent of the Company issuing shares for the net assets of ROC, accompanied by a recapitalization. The net assets of ROC were stated at historical cost with no goodwill or other intangible assets recorded.

The following table presents the total DTIC Common Stock outstanding immediately after the closing of the Merger:


Exchange of ROC common stock not subject to possible redemption for DTIC Common Stock upon Merger			3,403,500
Conversion of ROC Public Rights into shares of DTIC Common Stock			2,070,000
Conversion of ROC Private Rights into shares of DTIC Common Stock			79,600
Exchange of ROC common stock subject to possible redemption that was not redeemed for DTIC Common Stock			158,621

Subtotal - Merger, net of redemptions			5,711,721

Issuance of DTIC Common Stock in connection with PIPE Financing			2,970,296

Exchange of DTIH common stock outstanding as of December 31, 2022 for DTIC Common Stock			11,951,137

Exchange of DTIH redeemable convertible preferred stock outstanding as of December 31, 2022 for DTIC Common Stock			6,719,641

Issuance of shares as stock-based compensation to former DTIH stockholders as part of transaction services agreement upon the Merger			337,429

Issuance of DTIC Common Stock to former holders of DTIH redeemable convertible preferred stock in connection with Exchange Agreements			2,042,181

Net exercise of stock options by DTIH stockholder			36,163

Total - DTIC Common Stock outstanding as a result of Merger, PIPE Financing, DTIH for DTIC share exchanges, transaction services agreement, Exchange Agreements, and exercise of stock options			29,768,568

EMPLOYEE BENEFITS	6 Months Ended	12 Months Ended
EMPLOYEE BENEFITS	Jun. 30, 2023	Dec. 31, 2022
Defined Benefit Plan [Abstract]
EMPLOYEE BENEFITS	NOTE 13 – EMPLOYEE BENEFITS The Company has a defined contribution plan that complies with Section 401(k) of the Internal Revenue Code. All employees are auto enrolled at a 3% contribution, unless they opt out, beginning on the first plan entry date following six months of service. Plan entry dates are the first day of January and July. In March of 2020, the Company suspended any employee contribution match effective immediately and through the end of 2021. The match was reinstated on January 1, 2022. For 2022, the Company matched employee contributions 150% of the first 3% of employee contributions, not to exceed $2 thousand per participant per calendar year. Employees vest in employer contributions over six years. The contribution is limited to the maximum contribution allowed under the Internal Revenue Service Regulations. The total expense for the three months ended June 30, 2023 and 2022 was approximately $0.1 million and $0.1 million, respectively. Th e to tal expense for the six months ended June 30, 2023 and 2022 was approximate ly $0.4 million and $0.3 million, respectively.	NOTE 12 — EMPLOYEE BENEFITS The Company has a defined contribution plan that complies with Section 401(k) of the Internal Revenue Code. All employees are auto enrolled at a 3% contribution, unless they opt out, beginning on the first plan entry date following six months of service. Plan entry dates are the first day of January and July. In March of 2020, the Company suspended any employee contribution match effective immediately and through the end of 2021. The match was reinstated on January 1, 2022. For 2022, the Company matched employee contributions 150% of the first 3% of employee contributions, not to exceed $2 thousand per participant per calendar year. Employees vest in employer contributions over six years. The contribution is limited to the maximum contribution allowed under the Internal Revenue Service Regulations. The total expense for the years ended December 31, 2022 and 2021 was approximately $0.4 million and nil, respectively.

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2022

Class of Stock [Line Items]

Schedule of income before expense from income tax

The geographical breakdown of the Company’s income before expense from income taxes was as follows (in thousands):


	Year Ended December 31,
	2022		2021
Domestic	$	19,093	$	1,790
International		5,683		102

Profits before benefit from income taxes	$	24,777	$	1,892

Schedule of income tax provision

Income tax expense attributable to income from continuing operations consists of (in thousands):


	Year Ended December 31,
	2022		2021
Current provisions for income taxes:
Federal	$	702	$	302
Foreign		1,444		489
State		472		53

Total current		2,618		844
Deferred tax expense (benefit):
Federal		574		(642	)
Foreign		488		(149	)
State		18		(262	)

Total deferred expense (benefit)		1,080		(1,053	)

Total provision for (benefit from) income taxes	$	3,697	$	(209	)

Schedule of reconciliation company's effective tax rate

The following table presents a reconciliation of the federal statutory rate to the Company’s effective tax rate:


	Year Ended December 31,
	2022			2021
U.S. federal tax benefit at statutory rate		21.0	%		21.0	%
State income taxes, net of federal benefit		2.1	%		(3.7	)%
PPP loan forgiveness		0.0	%		(95.2	)%
Permanent differences		2.0	%		1.7	%
Foreign rate differential		0.5	%		0.3	%
Valuation allowance		(2.1	)%		(3.5	)%
Other		(9.0	)%		68.4	%

Effective tax rate		14.5	%		(11.0	)%

Schedule of company's deferred tax assets


	Year Ended December 31,
	2022			2021
Deferred tax assets
Net operating loss carryforward	$	3,378		$	5,594
Allowance for doubtful accounts		323			287
Share-based compensation		941			952
Bonus accrual		599			175
Inventory		53			373
Intangible assets		1,152			1,316
Federal credits		—			27
Other		140			3

Gross deferred tax assets		6,587			8,727
Valuation allowance		—			(526	)

Net deferred tax assets		6,587			8,201
Deferred tax liabilities
Depreciation on property, plant and equipment		(8,958	)		(10,383	)
Other		(814	)		78

Net deferred tax liabilities		(9,771	)		(10,305	)

Net deferred tax assets (liabilities)	$	(3,185	)	$	(2,104	)

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (d)
-Publisher FASB
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Reference 2: http://www.xbrl.org/2003/role/recommendedDisclosureRef
-Topic 272
-SubTopic 10
-Name Accounting Standards Codification
-Section 45
-Paragraph 3
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-URI https://asc.fasb.org//1943274/2147483014/272-10-45-3

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 272
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Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 235
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-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(d))
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-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
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-Section 50
-Paragraph 13
-Subparagraph (a)
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-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
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-Paragraph 13
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Subparagraph (b)
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-URI https://asc.fasb.org//1943274/2147481112/505-10-50-14

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 18
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 210
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(27)(b))
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-URI https://asc.fasb.org//1943274/2147480566/210-10-S99-1

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 210
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(28))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480566/210-10-S99-1

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-2

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-Topic 210
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(29))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480566/210-10-S99-1

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
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-Paragraph 3
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Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
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Reference 17: http://www.xbrl.org/2003/role/disclosureRef
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-Subparagraph (SX 210.6-03(i)(2)(i))
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Reference 18: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 3
-Subparagraph (SX 210.6-03(i)(2)(ii))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479886/946-10-S99-3

+ Details

LEASES (Details) - USD ($) $ in Millions		3 Months Ended	6 Months Ended	12 Months Ended
LEASES (Details) - USD ($) $ in Millions	Nov. 01, 2021	Jun. 30, 2023	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Lessee, Lease, Description [Line Items]
Letter of credit	$ 0.3
Rental revenue				$ 99.0	$ 59.3
Weighted average remaining lease term, operating lease		6 years 9 months 18 days	6 years 9 months 18 days	7 years 6 months 10 days
Operating lease description			The Company leases various facilities and vehicles under noncancelable operating lease agreements. The remaining lease terms for our leases range from 1 month to 14 years.
Operating lease, existence of option to extend			true
Operating lease option to extend			These leases often include options to extend the term of the lease which may be for periods of up to 5 years.
Operating lease renewl term		5 years	5 years
Tool rental revenue		$ 29.0	$ 61.3
Minimum
Lessee, Lease, Description [Line Items]
Remaining lease term		1 month	1 month
Maximum
Lessee, Lease, Description [Line Items]
Remaining lease term		14 years	14 years
Letter of Credit [Member]
Lessee, Lease, Description [Line Items]
Line of credit, expiration date	2023-04

RELATED PARTY TRANSACTIONS	6 Months Ended	12 Months Ended
RELATED PARTY TRANSACTIONS	Jun. 30, 2023	Dec. 31, 2022
Related Party Transaction [Line Items]
RELATED PARTY TRANSACTIONS	NOTE 11 – RELATED PARTY TRANSACTIONS Management fees For the three months ended June 30, 2023 and 2022, management fees paid to a shareholder were approximately $0.3 million and $0.1 million, respectively. For the six months ended June 30, 2023 and 2022, management fees paid to a shareholder were approximately $0.6 million and $0.2 million, respectively. Management fees paid to a shareholder are included in selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of income and comprehensive income. Leases For the three months ended June 30, 2023 and 2022, the Company paid rent expense to a shareholder of approximately $13 thousand, respectively, relating to the lease of a building. For the six months ended June 30, 2023 and 2022, the Company paid rent expense to a shareholder of approximately $26 thousand, respectively, relating to the lease of a building. Future minimum lease payments related to this lease are included in the future minimum lease schedule in Note 12 - Leases . Promissory Notes Upon consummation of the Merger on June 20, 2023, the Company issued shares of DTIC Common Stock in connection with the PIPE Financing to payoff convertible promissory notes which were issued to an affiliate of the ROC Sponsor on December 6, 2022 and March 2, 2023, respectively. The notes did not bear interest and were in the amounts of $2.1 million and $2.1 million, respectively. Working Capital Loan Prior to the Merger on June 20, 2023, ROC paid the remaining outstanding principal amount owed to an affiliate of the ROC Sponsor in the amount of $0.4 million for a loan to fund working capital deficiencies or finance transaction costs in connection with the Merger. The loan did not bear interest.	NOTE 10 — RELATED PARTY TRANSACTIONS For the year ended December 31, 2022 and 2021, management fees paid to a shareholder were approximately $0.4 million and $0.3 million, respectively, and are included in selling, general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income. For the year ended December 31, 2022 and 2021, the Company paid rent expense to a shareholder of approximately $51 thousand and $0.3 million, respectively, relating to the lease of a building. Future minimum lease payments related to this lease are included in the future minimum lease schedule in Note 11. For the year ended December 31, 2022 and 2021, the Company paid $4 thousand and $25 thousand, respectively to a shareholder for tools.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-2

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
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-URI https://asc.fasb.org//1943274/2147480990/946-20-50-5

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
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-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-6

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(g)(3))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483575/946-220-S99-1

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(c))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483575/946-220-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(e))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483575/946-220-S99-1

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//850/tableOfContent

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
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-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-6

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

+ Details

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Summary of Asset and Liabilities Measured at Fair Value

Asset and liabilities measured at fair value are summarized as follows (in thousands):


	Assets at Fair Value as of June 30, 2023
	Level 1		Level 2		Level 3		Total
Investments, equity securities	$	1,530	$	—	$	—	$	1,530
Interest rate swap		—		385		—		385

Total assets at fair value	$	1,530	$	385	$	—	$	1,915


	Assets at Fair Value as of December 31, 2022
	Level 1		Level 2		Level 3		Total
Investments, equity securities	$	1,143	$	—	$	—	$	1,143
Interest rate swap		—		476		—		476

Total assets at fair value	$	1,143	$	476	$	—	$	1,619

Asset and liabilities measured at fair value are summarized as follows (in thousands):


	Assets at Fair Value as of December 31, 2022
	Level 1		Level 2			Level 3		Total
Investments, equity securities	$	1,143	$	—		$	—	$	1,143
Interest rate swap	$	—	$	476		$	—	$	476

Total assets at fair value	$	1,143	$	476		$	—	$	1,619


	Assets and Liabilities at Fair Value as of December 31, 2021
	Level 1		Level 2			Level 3		Total
Investments, equity securities	$	909	$	—		$	—	$	909

Total assets at fair value	$	909	$	—		$	—	$	909

Interest rate swap	$	—	$	(947	)	$	—	$	(947	)

Total liabilities at fair value	$	—	$	(947	)	$	—	$	(947	)

Schedule Of Allowance For Uncollectible Receivables

The changes in the allowance for uncollectible receivables for the year ended December 31, 2022 were as follows (in thousands):


Allowance for doubtful accounts
Balance at December 31, 2020	$	(1,116	)
Addition during the period		(544	)
Utilization of allowance for doubtful accounts		438
Balance at December 31, 2021		(1,222	)
Cumulative effect adjustment upon adoption of ASU 2016-13		—
Addition during the period		(336	)
Utilization of allowance for doubtful accounts		60

Balance at December 31, 2022	$	(1,498	)

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Previously Reported	Adjusted	Redeemable Convertible Preferred Stock	Redeemable Convertible Preferred Stock Previously Reported	Redeemable Convertible Preferred Stock Revision of Prior Period, Adjustment	Redeemable Convertible Preferred Stock Adjusted	Common Stock	Common Stock Previously Reported	Common Stock Revision of Prior Period, Adjustment	Common Stock Adjusted	Treasury Stock	Treasury Stock Previously Reported	Treasury Stock Revision of Prior Period, Adjustment	Additional Paid-In Capital	Additional Paid-In Capital Previously Reported	Additional Paid-In Capital Revision of Prior Period, Adjustment	Additional Paid-In Capital Adjusted	Accumulated Deficit	Accumulated Deficit Previously Reported	Accumulated Deficit Adjusted	Accumulated Other Comprehensive Loss	Accumulated Other Comprehensive Loss Previously Reported	Accumulated Other Comprehensive Loss Adjusted
Beginning balance, Redeemable Convertible Preferred Stock at Dec. 31, 2020				$ 15,570
Beginning balance, Redeemable Convertible Preferred Stock (in shares) at Dec. 31, 2020				20,370,377
Beginning balance at Dec. 31, 2020	$ 10,205							$ 532				$ (933)			$ 55,066				$ (44,235)			$ (225)
Beginning balance, shares at Dec. 31, 2020								53,175,028				(811,156)
Stock-based compensation	32														32
Accretion of redeemable convertible preferred stock to redemption value				$ 1,119
Accretion of redeemable convertible preferred stock to redemption value	(1,119)														(1,119)
Net income	2,101																		2,101
Ending balance, Redeemable Convertible Preferred Stock at Dec. 31, 2021	16,689			$ 16,689
Ending balance, Redeemable Convertible Preferred Stock (in shares) at Dec. 31, 2021				20,370,377
Ending balance at Dec. 31, 2021	$ 11,160	$ 11,160	$ 11,160					$ 532	$ 532	$ (531)	$ 1	$ (933)	$ (933)	$ 933	53,979	$ 53,979	$ (402)	$ 53,577	(42,134)	$ (42,134)	$ (42,134)	(284)	$ (284)	$ (284)
Ending balance, shares at Dec. 31, 2021								53,175,028	53,175,028	(41,223,891)	11,951,137	(811,156)	(811,156)	811,156
Net exercise of DTIH stockholders stock options, shares	0
Foreign currency translation adjustment, net of tax	$ (59)																					(59)
Temporary equity, ending balance at Dec. 31, 2021					$ 16,689		$ 16,689
Temporary equity, ending balance, shares at Dec. 31, 2021					20,370,377	(13,650,736)	6,719,641
Accretion of redeemable convertible preferred stock to redemption value				$ 294
Net income	1,333																		1,333
Ending balance at Mar. 31, 2022	12,124							$ 1							53,283				(40,801)			(359)
Ending balance, shares at Mar. 31, 2022								11,951,137
Accretion of redeemable convertible preferred stock to redemption value	(294)														(294)
Foreign currency translation adjustment, net of tax	(75)																					(75)
Temporary equity, ending balance at Mar. 31, 2022				$ 16,983
Temporary equity, ending balance, shares at Mar. 31, 2022				6,719,641
Beginning balance, Redeemable Convertible Preferred Stock at Dec. 31, 2021	16,689			$ 16,689
Beginning balance, Redeemable Convertible Preferred Stock (in shares) at Dec. 31, 2021				20,370,377
Beginning balance at Dec. 31, 2021	11,160	11,160	11,160					$ 532	$ 532	$ (531)	$ 1	$ (933)	$ (933)	$ 933	53,979	53,979	(402)	53,577	(42,134)	(42,134)	(42,134)	(284)	(284)	(284)
Beginning balance, shares at Dec. 31, 2021								53,175,028	53,175,028	(41,223,891)	11,951,137	(811,156)	(811,156)	811,156
Accretion of redeemable convertible preferred stock to redemption value	(589)
Net income	7,267
Ending balance at Jun. 30, 2022	$ 17,776							$ 1							52,988				(34,867)			(346)
Ending balance, shares at Jun. 30, 2022								11,951,137
Temporary equity, beginning balance at Dec. 31, 2021					$ 16,689		$ 16,689
Temporary equity, beginning balance, shares at Dec. 31, 2021					20,370,377	(13,650,736)	6,719,641
Net exercise of DTIH stockholders stock options, shares	0
Temporary equity, ending balance at Jun. 30, 2022				$ 17,278
Temporary equity, ending balance, shares at Jun. 30, 2022				6,719,641
Beginning balance, Redeemable Convertible Preferred Stock at Dec. 31, 2021	$ 16,689			$ 16,689
Beginning balance, Redeemable Convertible Preferred Stock (in shares) at Dec. 31, 2021				20,370,377
Beginning balance at Dec. 31, 2021	11,160	11,160	11,160					$ 532	$ 532	$ (531)	$ 1	$ (933)	$ (933)	$ 933	53,979	53,979	(402)	53,577	(42,134)	(42,134)	(42,134)	(284)	(284)	(284)
Beginning balance, shares at Dec. 31, 2021								53,175,028	53,175,028	(41,223,891)	11,951,137	(811,156)	(811,156)	811,156
Accretion of redeemable convertible preferred stock to redemption value				$ 1,189
Accretion of redeemable convertible preferred stock to redemption value	(1,189)														(1,189)
Net income	21,080																		21,080
Ending balance, Redeemable Convertible Preferred Stock at Dec. 31, 2022	$ 17,878			$ 17,878
Ending balance, Redeemable Convertible Preferred Stock (in shares) at Dec. 31, 2022	6,719,641			20,370,377
Ending balance at Dec. 31, 2022	$ 31,224	31,224	31,224					$ 532	$ 532	$ (531)	$ 1	$ (933)	$ (933)	$ 933	52,790	52,790	(402)	52,388	(21,054)	(21,054)	(21,054)	(111)	(111)	(111)
Ending balance, shares at Dec. 31, 2022								53,175,028	53,175,028	(41,223,891)	11,951,137	(811,156)	(811,156)	811,156
Temporary equity, beginning balance at Dec. 31, 2021					$ 16,689		$ 16,689
Temporary equity, beginning balance, shares at Dec. 31, 2021					20,370,377	(13,650,736)	6,719,641
Net exercise of DTIH stockholders stock options, shares	0
Foreign currency translation adjustment, net of tax	$ 173																					173
Temporary equity, ending balance at Dec. 31, 2022					$ 17,878		$ 17,878
Temporary equity, ending balance, shares at Dec. 31, 2022	6,719,641				20,370,377	(13,650,736)	6,719,641
Beginning balance at Mar. 31, 2022	$ 12,124							$ 1							53,283				(40,801)			(359)
Beginning balance, shares at Mar. 31, 2022								11,951,137
Accretion of redeemable convertible preferred stock to redemption value				$ 295
Accretion of redeemable convertible preferred stock to redemption value	(295)
Net income	5,934																		5,934
Ending balance at Jun. 30, 2022	17,776							$ 1							52,988				(34,867)			(346)
Ending balance, shares at Jun. 30, 2022								11,951,137
Temporary equity, beginning balance at Mar. 31, 2022				$ 16,983
Temporary equity, beginning balance, shares at Mar. 31, 2022				6,719,641
Accretion of redeemable convertible preferred stock to redemption value	$ (295)														(295)
Net exercise of DTIH stockholders stock options, shares	0
Foreign currency translation adjustment, net of tax	$ 13																					13
Temporary equity, ending balance at Jun. 30, 2022				$ 17,278
Temporary equity, ending balance, shares at Jun. 30, 2022				6,719,641
Beginning balance at Dec. 31, 2022	31,224	31,224	31,224					$ 532	$ 532	$ (531)	$ 1	$ (933)	$ (933)	$ 933	52,790	52,790	(402)	52,388	(21,054)	(21,054)	(21,054)	(111)	(111)	(111)
Beginning balance, shares at Dec. 31, 2022								53,175,028	53,175,028	(41,223,891)	11,951,137	(811,156)	(811,156)	811,156
Accretion of redeemable convertible preferred stock to redemption value				$ 314
Net income	5,701																		5,701
Ending balance at Mar. 31, 2023	$ 36,611							$ 1							52,074				(15,353)			(111)
Ending balance, shares at Mar. 31, 2023								11,951,137
Temporary equity, beginning balance at Dec. 31, 2022					$ 17,878		$ 17,878
Temporary equity, beginning balance, shares at Dec. 31, 2022	6,719,641				20,370,377	(13,650,736)	6,719,641
Accretion of redeemable convertible preferred stock to redemption value	$ (314)														(314)
Temporary equity, ending balance at Mar. 31, 2023				$ 18,192
Temporary equity, ending balance, shares at Mar. 31, 2023				6,719,641
Beginning balance, Redeemable Convertible Preferred Stock at Dec. 31, 2022	$ 17,878			$ 17,878
Beginning balance, Redeemable Convertible Preferred Stock (in shares) at Dec. 31, 2022	6,719,641			20,370,377
Beginning balance at Dec. 31, 2022	$ 31,224	$ 31,224	$ 31,224					$ 532	$ 532	$ (531)	$ 1	$ (933)	$ (933)	$ 933	52,790	$ 52,790	$ (402)	$ 52,388	(21,054)	$ (21,054)	$ (21,054)	(111)	$ (111)	$ (111)
Beginning balance, shares at Dec. 31, 2022								53,175,028	53,175,028	(41,223,891)	11,951,137	(811,156)	(811,156)	811,156
Accretion of redeemable convertible preferred stock to redemption value	(314)
Net income	$ 6,638
Ending balance, Redeemable Convertible Preferred Stock (in shares) at Jun. 30, 2023	6,719,641			0
Ending balance at Jun. 30, 2023	$ 80,487							$ 3							95,218				(14,416)			(318)
Ending balance, shares at Jun. 30, 2023								29,768,568
Temporary equity, beginning balance at Dec. 31, 2022					$ 17,878		$ 17,878
Temporary equity, beginning balance, shares at Dec. 31, 2022	6,719,641				20,370,377	(13,650,736)	6,719,641
Temporary equity, ending balance, shares at Jun. 30, 2023	6,719,641
Beginning balance at Mar. 31, 2023	$ 36,611							$ 1							52,074				(15,353)			(111)
Beginning balance, shares at Mar. 31, 2023								11,951,137
Stock-based compensation	3,986														3,986
Net income	937																		937
Issuance of common stock in connection with the consummation of the PIPE Financing	$ 30,000														30,000
Issuance of common stock in connection with the consummation of the PIPE Financing, shares								2,970,296
Ending balance, Redeemable Convertible Preferred Stock (in shares) at Jun. 30, 2023	6,719,641			0
Ending balance at Jun. 30, 2023	$ 80,487							$ 3							95,218				$ (14,416)			(318)
Ending balance, shares at Jun. 30, 2023								29,768,568
Temporary equity, beginning balance at Mar. 31, 2023				$ 18,192
Temporary equity, beginning balance, shares at Mar. 31, 2023				6,719,641
Net exercise of DTIH stockholders stock options, shares								36,163
Exchange of DTIH redeemable convertible preferred stock for DTIC Common Stock				$ (18,192)
Exchange of DTIH redeemable convertible preferred stock for DTIC Common Stock, shares				(6,719,641)
Exchange of DTIH redeemable convertible preferred stock for DTIC Common Stock	7,193							$ 1							7,192
Exchange of DTIH redeemable convertible preferred stock for DTIC Common Stock, shares								6,719,641
Issuance of DTIC Common Stock to former holders of DTIH redeemable convertible preferred stock in connection with Exchange Agreements	10,805														10,805
Issuance of DTIC Common Stock to former holders of DTIH redeemable convertible preferred stock in connection with Exchange Agreements, shares								2,042,181
Merger, net of redemptions and transaction costs	(8,838)							$ 1							$ (8,839)
Merger, net of redemptions and transaction costs, shares								5,711,721
Stock-based compensation								337,429
Foreign currency translation adjustment, net of tax	$ (207)																					$ (207)
Temporary equity, ending balance, shares at Jun. 30, 2023	6,719,641

LEASES - Summary of Reconciliation to the Lease Liabilities Recognized on the Balance Sheet (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Lessee, Operating Lease, Liability, to be Paid, Fiscal Year Maturity [Abstract]
2023	$ 4,579	$ 4,265
2024	3,980	3,879
2025	3,511	3,485
2026	2,486	3,167
2027		2,178
Thereafter		7,254
Total lease payments	24,646	24,228
Less: imputed interest	(4,188)	(4,226)
Present value of lease liabilities	$ 20,458	$ 20,002

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Accounting Policies [Abstract]

Organization and Nature of Operations

Basis of Presentation

Unaudited Interim Financial Information

COVID-19 Related Credits and Relief

COVID-19

Related Credits and Relief

As a response to the

COVID-19

COVID-19 Related Credits and Relief

Debt

Not-for-Profit-Entities Revenue Recognition

The Company has also applied the guidance in Accounting Standards Update (“ASU”) 2021-10,

Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance

retrospectively to the ERC in its financial reporting for the year ended December 31, 2021.

Emerging Growth Company

non-emerging

Emerging Growth Company

effective

dates.

Use of Estimates

Principles of Consolidation

Foreign Currency Translation and Transactions

and

comprehensive income totaled $13 thousand in gains and $0.1 million in losses, respectively.

Foreign Currency Translation and Transactions

Revenue Recognition

Tool Rental Services

Tool rental services consist of rental services, inspection services, and repair services. Tool rental services are accounted for under Topic 842.

The Company records the amounts billed to customers in excess of recognizable revenue as deferred revenue on its condensed consolidated balance sheet.

Product Sales

Product sales consist of charges for rented tools that are damaged beyond repair, charges for

lost-in-hole,

and charges for

lost-in-transit

while in the care, custody or control of the Company’s customers, and other charges for made to order product sales. Product sales are accounted for under Topic 606.

lost-in-hole,

lost-in-transit

Revenue per geographic location

Revenue Recognition

Tool Rental Services

Tool rental services consist of rental services, inspection services, and repair services. Tool rental services are accounted for under Topic 842.

Owned tool rentals represent the most significant revenue type and are governed by the Company’s standard rental contract. The Company accounts for such rentals as operating leases. The lease terms are included in the contracts, and the determination of whether the Company’s contracts contain leases generally does not require significant assumptions or judgements. The Company’s lease revenues do not include material amounts of variable payments. Owned tool rentals represent revenue from renting tools that the Company owns. The Company does not generally provide an option for the lessee to purchase the rented equipment at the end of the lease.

The Company records the amounts billed to customers in excess of recognizable revenue as deferred revenue on its consolidated balance sheet.

Product Sales

Revenue per geographic location

Contract Assets and Contract Liabilities

Contract liabilities consist of fees invoiced or paid by the Company’s customers for which the associated services have not been performed and revenue has not been recognized based on the Company’s revenue recognition criteria described above. As of December 31, 2022 and 2021, the Company did not have any material contract liabilities. All deferred revenue were expected to be recognized during the following 12 months, and they were recorded in accrued expenses and other current liabilities in the accompanying consolidated balance sheets.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of

three

months or less to be cash equivalents. The Company did not have any cash equivalents as of June 30, 2023 and December 31, 2022.

Cash and Cash Equivalents

Accounts Receivable, net

Allowance for Doubtful Accounts

The Company adopted ASU

2016-13,

Financial Instruments - Credit Losses

, on December 31, 2022, which was retroactively applied as of the first day of fiscal year 2022, as further described within the section below titled

Recently Adopted Accounting Pronouncements

The Company is not party to any

off-balance

sheet arrangements that would require an allowance for credit losses in accordance with this accounting standard.

As of June 30, 2023 and December 31, 2022, the allowance for doubtful accounts totaled $1.8 million and $1.5 million, respectively.

Allowance for Doubtful Accounts

The Company adopted ASU 2016-13,

Financial Instruments — Credit Losses

, on December 31, 2022, which was retroactively applied as of the first day of fiscal year 2022, as further described within the section below titled

Recently Adopted Accounting Pronouncements

. This accounting standard requires companies to

Expected credit losses for uncollectible receivable balances consider both current conditions and reasonable and supportable forecasts of future conditions. Current conditions considered include pre-defined aging criteria, as well as specified events that indicate the balance due is not collectible. Reasonable and supportable forecasts used in determining the probability of future collection consider publicly available macroeconomic data and whether future credit losses are expected to differ from historical losses.

The Company is not party to any off-balance sheet arrangements that would require an allowance for credit losses in accordance with this accounting standard.

The changes in the allowance for uncollectible receivables for the year ended December 31, 2022 were as follows (in thousands):


Allowance for doubtful accounts
Balance at December 31, 2020	$	(1,116	)
Addition during the period		(544	)
Utilization of allowance for doubtful accounts		438
Balance at December 31, 2021		(1,222	)
Cumulative effect adjustment upon adoption of ASU 2016-13		—
Addition during the period		(336	)
Utilization of allowance for doubtful accounts		60

Balance at December 31, 2022	$	(1,498	)

Inventories, net

Property, Plant and Equipment, net

Property, plant and equipment acquired as part of a business acquisition is recorded at acquisition date fair value with subsequent additions at cost.

Property, Plant and Equipment, net

Property, plant and equipment acquired as part of a business acquisition is recorded at acquisition date fair value with subsequent additions at cost.

Leases

The Company adopted ASC 842,

Leases

use-of-hindsight

non-lease

components for all leases.

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease

right-of-use

asset is tested for impairment in accordance with Accounting Standards Codification Topic 360,

Property, Plant, and Equipment.

Lessor Accounting

We recognized operating lease revenue within “Tool rental” on the unaudited condensed consolidated statements of income and comprehensive income.

Leases

The Company adopted ASC 842,

Leases

The Company’s lease terms include periods under options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option in the measurement of its ROU assets and liabilities. The Company considers contractual-based factors such as the nature and terms of the renewal or termination, asset-based factors such as physical location of the asset and entity-based factors such as the importance of the leased asset to the Company’s operations to determine the lease term. The Company generally uses the base, non-cancelable, lease term when determining the ROU assets and lease liabilities. The right-of-use asset is tested for impairment in accordance with Accounting Standards Codification Topic 360, Property, Plant, and Equipment.

Lessor Accounting

We recognized operating lease revenue within “Tool rentals” on the consolidated statements of operations and comprehensive

income

Intangible Assets

Intangible assets with finite useful lives include customer relationships, trade name, patents,

non-compete

Intangible Assets

Accounting for Impairment of Long-lived Assets

For the three and six months ended June 30, 2023 and 2022, management determined that there was no impairment with regard to property, plant, and equipment or intangible assets.

Accounting for Impairment of Long-lived Asset

For the year ended December 31, 2022 and 2021, management determined that there was no impairment with regard to their property, plant, and equipment or intangible assets.

Investments - Equity Securities

Investments — Equity Securities

Redeemable Convertible Preferred Stock

Dividend Rights

Liquidation Rights

Redemption

Conversion Rights

Voting Rights

Preferred Stock

Cost of Revenue

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718,

Compensation — Stock Compensation

(“ASC 718”). ASC 718 requires that the cost of awards of equity instruments offered in exchange for employee services, including employee stock options and restricted stock awards, be measured based on the grant-date fair value of the award. The Company adopted FASB ASU No. 2016-09, Compensation — Stock Compensation (“Topic 718”): Improvements to Employee Share-Based Payment Accounting, on February 1, 2019. This ASU involves several aspects of the accounting for stock-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification in the accompanying consolidated statements of cash flows. The adoption did not have a material impact on the accompanying consolidated financial statements of the Company. The Company determines the fair value of

022.

Earnings Per Share

Income Taxes

The Company is subject to state income taxes in various jurisdictions.

two-step

Income Taxes

The Company is subject to state income taxes in various jurisdictions.

The Company records income tax related interest and penalties, if applicable, as a component of the provision for income tax expense. However, there were no amounts recognized relating to interest and penalties in the consolidated statements of operations and comprehensive income for the year ended December 31, 2022 and 2021.

Derivative Financial Instruments

marked-to-market

statements of income and comprehensive income. For the six months ended June 30, 2023, the Company recognized an unrealized loss due to the change in fair value of its interest rate swap

approximately $0.1 million in its unaudited condensed consolidated statements of income and comprehensive income.

Derivative Financial Instruments

Fair Value Measurements

Level

– Valuation inputs are unadjusted quoted market prices for identical assets or liabilities in active markets.

Level

– Valuation inputs are unobservable and significant to the fair value measurement.

Asset and liabilities measured at fair value are summarized as follows (in thousands):


	Assets at Fair Value as of June 30, 2023
	Level 1		Level 2		Level 3		Total
Investments, equity securities	$	1,530	$	—	$	—	$	1,530
Interest rate swap		—		385		—		385

Total assets at fair value	$	1,530	$	385	$	—	$	1,915


	Assets at Fair Value as of December 31, 2022
	Level 1		Level 2		Level 3		Total
Investments, equity securities	$	1,143	$	—	$	—	$	1,143
Interest rate swap		—		476		—		476

Total assets at fair value	$	1,143	$	476	$	—	$	1,619

The Company’s interest rate swap is a

pay-fixed,

As of June 30, 2023 and December 31, 2022, the interest rate swap is included in prepaid expenses and other current assets on the condensed consolidated balance sheets.

As of June 30, 2023 and December 31, 2022, the Company did not have any Level 3 assets or liabilities.

Fair Value Measurements


Level 1 —		Valuation inputs are unadjusted quoted market prices for identical assets or liabilities in active markets.

Level 2 —		Valuation inputs are quoted prices for identical assets or liabilities in markets that are not active, quoted market prices for similar assets and liabilities in active markets and other observable inputs directly or indirectly related to the assets or liabilities being measured.

Level 3 —		Valuation inputs are unobservable and significant to the fair value measurement.

Asset and liabilities measured at fair value are summarized as follows (in thousands):


	Assets at Fair Value as of December 31, 2022
	Level 1		Level 2			Level 3		Total
Investments, equity securities	$	1,143	$	—		$	—	$	1,143
Interest rate swap	$	—	$	476		$	—	$	476

Total assets at fair value	$	1,143	$	476		$	—	$	1,619


	Assets and Liabilities at Fair Value as of December 31, 2021
	Level 1		Level 2			Level 3		Total
Investments, equity securities	$	909	$	—		$	—	$	909

Total assets at fair value	$	909	$	—		$	—	$	909

Interest rate swap	$	—	$	(947	)	$	—	$	(947	)

Total liabilities at fair value	$	—	$	(947	)	$	—	$	(947	)

As of December 31, 2022 and December 31, 2021, the Company did not have any Level 3 assets or liabilities.

Operating Segment

Fair Value of Financial Instruments

The Company’s financial instruments consist primarily of cash, accounts receivable, accounts payable. The carrying amount of such instruments approximates fair value due to their short-term nature.

Fair Value of Financial Instruments

Concentration of Credit Risk and Other Risks and Uncertainties

Accounting Standards Issued But Not Yet Effective

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02,

Leases (Topic 842)

In June 2016, the FASB issued ASU 2016-13,

Financial Instruments — Credit Losses

In November 2021, the FASB issued ASU 2021-10,

Government Assistance: Disclosures by Business Entities about Government Assistance

, which aims to provide increased transparency by requiring business

transactions

Recently Issued Accounting Pronouncements Not Yet Adopted

No other new accounting pronouncements issued or effective during 2022 had, or are expected to have, a material impact on the Company’s consolidated financial statements.

Investments - Equity Securities

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718,

Compensation—Stock Compensation

EARNINGS PER SHARE - Summary of Company's Potentially Dilutive Securities Excluded - Time-based Options Outstanding (Details) - shares	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total					2,954,000	23,324,377
Time-based Options Outstanding
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	140,135	140,135	140,135	140,135

Cover Page	6 Months Ended
Cover Page	Jun. 30, 2023
Cover Page
Document Type	S-1/A
Entity Registrant Name	DRILLING TOOLS INTERNATIONAL CORPORATION
Entity Incorporation, State or Country Code	DE
Entity Primary SIC Number	1389
Entity Tax Identification Number	87-2488708
Entity Address, Address Line One	3701 Briarpark Drive
Entity Address, Address Line Two	Suite 150
Entity Address, City or Town	Houston
Entity Address State Or Province	TX
Entity Address, Postal Zip Code	77042
City Area Code	832
Local Phone Number	742-8500
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Central Index Key	0001884516
Amendment Flag	true
Amendment Description	AMENDMENT NO. 1
Business Contact [Member]
Cover Page
Entity Address, Address Line One	3701 Briarpark Drive
Entity Address, Address Line Two	Suite 150
Entity Address, City or Town	Houston
Entity Address State Or Province	TX
Entity Address, Postal Zip Code	77042
City Area Code	832
Local Phone Number	742-8500
Contact Personnel Name	R. Wayne Prejean

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Series A redeemable convertible preferred stock, par value	$ 0.01	$ 0.01
Series A redeemable convertible preferred stock, shares authorized	30,000,000	30,000,000
Series A redeemable convertible preferred stock, shares issued	6,719,641	6,719,641
Series A redeemable convertible preferred stock, shares outstanding	6,719,641	6,719,641
Common stock, par value	$ 0.0001	$ 0.01	$ 0.01
Common stock, shares authorized	500,000,000	65,000,000	65,000,000
Common stock, shares issued	29,768,568	11,951,137	53,175,028
Common stock, shares outstanding	29,768,568	11,951,137	52,363,872
Preferred stock, par value	$ 0.0001
Preferred stock, shares authorized	10,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Treasury stock, shares			811,156
Series A Redeemable Convertible Preferred Stock [Member]
Series A redeemable convertible preferred stock, par value		$ 0.01	$ 0.01
Series A redeemable convertible preferred stock, shares authorized		30,000,000	30,000,000
Series A redeemable convertible preferred stock, shares issued		20,370,377	20,370,377
Series A redeemable convertible preferred stock, shares outstanding		20,370,377	20,370,377
Preferred stock, shares issued		20,370,377

LEASES (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Leases [Abstract]

Summary of Components of Lease Expense

For the three and six months ended June 30, 2023, the components of the Company’s lease expense were as follows (in thousands):


	Six months ended June 30, 2023			Six months ended June 30, 2022
Operating Lease Cost	$	3,050		$	2,871
Short-term Lease Cost		63			72
Variable Lease Cost		165			155
Sublease Income		(76	)		(91	)

Total Lease Cost	$	3,202		$	3,007


	Three months ended June 30, 2023			Three months ended June 30, 2022
Operating Lease Cost	$	1,532		$	1,428
Short-term Lease Cost		33			36
Variable Lease Cost		81			78
Sublease Income		(30	)		(46	)

Total Lease Cost	$	1,616		$	1,496

For the year ended December 31, 2022, the components of the Company’s lease expense were as follows (in thousands):


	Year ended December 31, 2022
Operating Lease Cost	$	5,722
Short-term Lease Cost		143
Variable Lease Cost		319
Sublease Income		(183	)

Total Lease Cost	$	6,001

Summary of Future Undiscounted Cash Flows


2023	$	2,544
2024		4,579
2025		3,980
2026		3,511
2027		2,486
Thereafter		7,546

Total lease payments	$	24,646
Less: imputed interest		(4,188	)

Present value of lease liabilities	$	20,458


Years Ending December 31
2023	$	4,265
2024		3,879
2025		3,485
2026		3,167
2027		2,178
Thereafter		7,254

Total lease payments	$	24,228
Less: imputed interest		(4,226	)

Present value of lease liabilities	$	20,002

Summary of Supplemental Balance Sheet Information Related to Leases

Supplemental balance sheet information related to leases was as follows (in thousands):


	Six months ended June 30, 2023
Weighted-average remaining lease term (in years)		6.80
Weighted average discount rate		5.73	%

	Six months ended June 30, 2023
Right-of-use assets obtained in exchange for new operating lease liabilities	$	2,635
Cash paid for amounts included in the measurement of lease liabilities		2,733

Supplemental balance sheet information related to leases was as follows (in thousands):


	Year ended December 31, 2022
Weighted-average remaining lease term (in years)		7.53
Weighted average discount rate		5.34	%

	Year ended December 31, 2022
Right-of-use assets obtained in exchange for new operating lease liabilities	$	25,087
Cash paid for amounts included in the measurement of lease liabilities		5,003

SUBSEQUENT EVENTS (Details) $ in Millions	Jul. 12, 2023 USD ($)
Subsequent Event \| Interest Rate Swap \| PNC
Subsequent Event [Line Items]
Termination payment received	$ 0.4

BALANCE SHEET DETAILS - CURRENT ASSETS AND CURRENT LIABILITIES - Additional Information (Details) - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Balance Sheet Related Disclosures [Abstract]
Inventory write-downs	$ 19	$ 2	$ 44	$ 400

REVOLVING CREDIT FACILITY (Details) - USD ($)				3 Months Ended	6 Months Ended	12 Months Ended
REVOLVING CREDIT FACILITY (Details) - USD ($)	Sep. 13, 2022	Apr. 23, 2018	Dec. 31, 2015	Jun. 30, 2023	Jun. 30, 2023	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Jun. 20, 2023	Dec. 31, 2022	Dec. 31, 2021	Mar. 31, 2021
Line of Credit Facility [Line Items]
Line of credit										$ 18,349,000	$ 26,425,000
Revolving Credit Facility
Line of Credit Facility [Line Items]
Revolving line of credit			$ 48,000,000	$ 60,000,000	$ 60,000,000					$ 60,000,000		$ 50,000,000
Date the credit facility terminates	Dec. 31, 2025		Dec. 31, 2022
Line of credit facility capital expenditures restrictions						$ 22,000,000	$ 20,000,000	$ 15,000,000
Line of credit facility interest rate at period end										7.42%	4.10%
Unfunded capital expenditures requirement removed									$ 20,000,000
Sublimit removed									$ 9,000,000
Credit Facility, collateral					The credit facility is collateralized by substantially all the assets of the Company and matures December 31, 2025.
Line of credit				$ 0	$ 0
Revolving Credit Facility \| SOFR
Line of Credit Facility [Line Items]
Basis spread on variable rate (as a percent)				8.56%	8.56%
Revolving Credit Facility \| Base Rate
Line of Credit Facility [Line Items]
Basis spread on variable rate (as a percent)					2.00%
Secured Debt
Line of Credit Facility [Line Items]
Line of credit facility, revolving credit conversion to term loan		$ 7,000,000
Revolving Credit Facility and Term Loan
Line of Credit Facility [Line Items]
Revolving line of credit												$ 57,000,000

STOCK-BASED COMPENSATION

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

NOTE 9 – STOCK-BASED COMPENSATION

On June 20, 2023, the Company adopted the Drilling Tools International Corporation 2023 Omnibus Incentive Plan (the 2023 Plan). The 2023 Plan became effective on the closing of the Merger, which also occurred on June 20, 2023. The 2023 Plan provides for the issuance of shares of Common Stock up to ten percent (10%) of the shares of outstanding Common Stock as of the closing of the Merger (which equates to 2,976,854 shares as of June 30, 2023) and automatically increases on the first trading day of each calendar year by the number of shares of Common Stock equal to three percent (3%) of the total number of outstanding Common Stock on the last day of the prior calendar year. The 2023 Plan allows for awards to be issued to employees,

non-employee

directors, and consultants in the form of options, stock appreciation rights, restricted shares, restricted stock units, performance based awards, other share-based awards, other cash-based awards, or a combination of the foregoing. As of June 30, 2023, there were 615,132 shares of Common Stock available for issuance under the 2023 Plan.

In connection with the Merger, all outstanding options to purchase shares of DTIH common stock were canceled and exchanged for options to purchase shares of DTIC Common Stock (“Company Options”). The number of Company Options issued and the associated exercise prices were adjusted using the Common Exchange Ratio used for the Merger (see Note 2 -

Merger

). As a result of the Merger, the Company issued options to purchase a total of 2,361,722 shares of the Company’s Common Stock to former holders of the DTIH stock options. The vesting schedules, remaining term, and provisions (other than the adjusted number of underlying shares and exercise prices) of the Company Options issued, are identical to the vesting schedules, remaining term, and other provisions of the DTIH stock options that were exchanged.

The fair value of each stock option award is estimated on the date of grant using a Black-Scholes option valuation model. Expected volatilities are based on comparable public company data. The Company uses future estimated employee termination and forfeiture rates of the options within the valuation model. The expected term of options granted is derived using the “plain vanilla” method due to the lack of history and volume of option activity at the Company. The risk-free rate is based on the approximate U.S. Treasury yield rate in effect at the time of grant. The Company’s calculation of share price involves the use of different valuation techniques, including a combination of an income and market approach. For any grants of stock options subsequent to the

Company being publicly traded, the Company will use the quoted market price as of the grant date as an input into the Black-Scholes model.

Determination of the fair value is a matter of judgment and often involves the use of estimates and assumptions. In June of 2022 and prior to the closing of the Merger, one holder of DTIH stock options elected to net exercise all of such holder’s stock options, resulting in 158,444 shares of DTIH common stock being issued prior to the Merger and subsequently canceled and exchanged for a total of 36,163 shares of DTIC Common Stock as of the date of the Merger.

During the three and six months ended June 30, 2022, there were no options granted, exercised or forfeited.

During the three and six months ended June 30, 2023, the Company recognized $1.7 million of stock-based compensation expense within selling, general, and administrative expense on the unaudited condensed consolidated statements of income and comprehensive income related to the accelerated vesting of an executive’s 534,063 performance-based stock options. The performance conditions were satisfied upon completion of the Merger and all 534,063 performance-based stock options vested on June 20, 2023.

During the three and six months ended June 30, 2023, the Company recognized $2.3 million of stock-based compensation expense within other expense on the unaudited condensed consolidated statements of income and comprehensive income as a result of the issuance of shares in accordance with the TSA with HHLLC (see Note 2 -

Merger

During the three and six months ended June 30, 2022, there was no stock-based compensation expense recognized.

NOTE 9 — SHARE-BASED COMPENSATION

The Company’s 2012 Nonqualified Stock Option Plan (the Plan) permitted the grant of share options to its employees for up to 4,555,779 shares of common stock. On September 1, 2013, the Company amended the Plan to permit the grant of share options to its employees for up to 13,000,000 shares of common stock. Under the Plan, option awards are generally granted with an exercise price equal to the market price for the Company’s stock at the date of grant; those option awards generally vest over three years of continuous service with one-third vesting on the first, second, and third anniversaries of the option’s grant date. Those awards which contain performance conditions vest upon satisfaction of such performance conditions. Certain option awards provide for conditional or accelerated vesting if there is a change in control, as defined in the Plan.

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model. Expected volatilities are based on comparable public company data. The Company uses future estimated employee termination and forfeiture rates of the options within the valuation model. The expected term of options granted is derived using the “plain vanilla” method due to the lack of history and volume of option activity at the Company. The risk-free rate is based on the approximate U.S. Treasury yield rate in effect at the time of grant. The Company’s calculation of share price involves the use of different valuation techniques, including a combination of an income and market approach.

Determination of the fair value is a matter of judgment and often involves the use of estimates and assumptions. During the year ended December 31, 2022, there were no options granted, exercised or forfeited. During the year ended December 31, 2021, there were no options granted or exercised.

For the years ended December 31, 2022 and 2021, a summary of option activity under the Plan is presented below (in thousands):


	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in Years)		Aggregate Intrinsic Value
OUTSTANDING, December 31, 2020		11,227,890	$	1.14		4.44	$	12,032
Granted		—		—		—		—
Exercised		—		—		—		—
Forfeited		300,000	$	0.22		—		—
OUTSTANDING, December 31, 2021		10,927,890	$	1.21		3.60	$	11,687

UNVESTED, December 31, 2021		2,340,000	$	0.85		5.25	$	2,691

EXERCISABLE, December 31, 2021		8,587,890	$	1.21		3.14	$	8,996

Granted		—		—		—		—
Exercised		—		—		—		—
Forfeited		—		—		—		—
OUTSTANDING, December 31, 2022		10,927,890	$	1.21		2.96	$	11,687

UNVESTED, December 31, 2022		2,340,000	$	0.85		4.25	$	2,691

EXERCISABLE, December 31, 2022		8,587,890	$	1.21		2.84	$	8,996

The aggregate intrinsic value is calculated as the difference between the exercise price and the estimated fair value of the Company’s common stock as of December 31, 2022 and 2021.

Non-vested shares at December 31, 2022 totaled 2,340,000, which consist of performance shares, for which the performance conditions have not been satisfied at December 31, 2022. At December 31, 2022, there was unrecognized compensation expense of approximately $0.3 million related to non-vested share- based compensation arrangements granted under the Plan.

For the years ended December 31, 2022 and 2021, share-based compensation expense charged to operating costs and expenses was nil and approximately $32 thousand, respectively.