Superior Drilling Products (US:SDPI) shareholder and Star Equity Executive Chairman Jeffrey Eberwein accused the company in a letter to the company’s board of deceiving investors and “failing to properly disclose certain ownership of SDPI shares at the time it requested votes from shareholders within its 2022 annual proxy.” 

In a 13D/A filing with the US Securities and Exchange Commission, Eberwein said that Star Equity Fund owns Just under 10% of Superior’s public float but that the drilling products didn’t list it on its 14A filing. He noted too that the filing in question referred only to two shareholders with more than five percent Stakes; the company CEO and CFO.

Star Equity Fund is the second largest shareholder on the register and only falls behind Co-founder, CEO and Chairman Troy Meier, who owns roughly 36.5% of the company.

Star Equity used the filing to push management to consider several strategic options for the company.

“We strongly believe SDPI should become part of a larger entity,” Eberwein wrote, adding the com, pany’s size is not cost efficient for investor returns.

He argued that the ratio between “management compensation and public company costs” vs. revenue shows the problem he wants to solve for shareholders.

Eberwein proposed a trio of suggestions to improve return, including an outright sale, adding scale via a reverse merger, or ultimately, taking the company private.

In April’s second quarter results, Superior Drilling Products reported 34% year-over-year revenue growth but a 13% EBITDA retreat.

SDPI ended the quarter with $2.8 million in cash, flat with the beginning of the year.

The company expects $8-9 million and adjusted EBITDA of $3.5-4 million for the third quarter.

For the full year, Superior forecast $22-25 million in sales, with SG & A expenses of $7.0-7.3 million, resulting in adjusted EBITDA of between $6 and $8 million.

CEO Meier noted that the guidance includes the impact of a sale worth $3.8 million for stage one of the MENA DNR fleet to Bin Zayed Petroleum in the third quarter.

Analyst Ben Piggot from EF Hutton discusses the positives around the Bin Zayed deal as it shifts capital off SDPI’s balance sheet while simultaneously allowing products to serve a wider audience while leveraging an external sales force.

Piggot highlighted that management expects to open a servicing center in Dubai by the end of this year due to the deal, which could create additional opportunities for SDPI in the region.

EF Hutton remains ‘buy’ rated on the stock with a $2 price target.

This article originally appeared on Fintel

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