QUEST RESOURCE HOLDING CORP, 10-Q filed on 5/15/2015
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 31, 2015
May 1, 2015
Document And Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Mar. 31, 2015 
 
Document Fiscal Year Focus
2015 
 
Document Fiscal Period Focus
Q1 
 
Trading Symbol
QRHC 
 
Entity Registrant Name
Quest Resource Holding Corporation 
 
Entity Central Index Key
0001442236 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Smaller Reporting Company 
 
Entity Common Stock, Shares Outstanding
 
111,657,804 
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)
Mar. 31, 2015
Dec. 31, 2014
Current assets:
 
 
Cash and cash equivalents
$ 3,311,537 
$ 3,154,540 
Accounts receivable, less allowance for doubtful accounts of $533,094 and $760,917 as of March 31, 2015 and December 31, 2014, respectively
28,621,862 
29,631,843 
Prepaid expenses and other current assets
752,015 
684,032 
Total current assets
32,685,414 
33,470,415 
Goodwill
58,337,290 
58,337,290 
Intangible assets, net
14,363,363 
15,115,617 
Property and equipment, net, and other assets
860,268 
753,493 
Total assets
106,246,335 
107,676,815 
Current liabilities:
 
 
Line of credit
5,250,000 
5,250,000 
Accounts payable and accrued liabilities
26,379,122 
26,621,907 
Deferred revenue and other current liabilities
323,521 
282,189 
Total current liabilities
31,952,643 
32,154,096 
Other long-term liabilities
44,127 
45,206 
Total liabilities
31,996,770 
32,199,302 
Commitments and contingencies
   
   
Stockholders’ equity:
 
 
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued or outstanding as of March 31, 2015 and December 31, 2014, respectively
   
   
Common stock, $0.001 par value, 200,000,000 shares authorized, 111,657,804 and 111,601,304 shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively
111,658 
111,601 
Additional paid-in capital
151,080,327 
150,789,292 
Accumulated deficit
(76,942,420)
(75,423,380)
Total stockholders’ equity
74,249,565 
75,477,513 
Total liabilities and stockholders’ equity
$ 106,246,335 
$ 107,676,815 
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
Mar. 31, 2015
Dec. 31, 2014
Statement Of Financial Position [Abstract]
 
 
Allowance for doubtful accounts receivable
$ 533,094 
$ 760,917 
Preferred stock, par value
$ 0.001 
$ 0.001 
Preferred stock, shares authorized
10,000,000 
10,000,000 
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value
$ 0.001 
$ 0.001 
Common stock, shares authorized
200,000,000 
200,000,000 
Common stock, shares issued
111,657,804 
111,601,304 
Common stock, shares outstanding
111,657,804 
111,601,304 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $)
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Income Statement [Abstract]
 
 
Revenue
$ 40,008,609 
$ 38,160,050 
Cost of revenue
36,722,933 
34,827,635 
Gross profit
3,285,676 
3,332,415 
Operating expenses:
 
 
Selling, general, and administrative
3,776,982 
2,993,708 
Depreciation and amortization
979,137 
951,663 
Total operating expenses
4,756,119 
3,945,371 
Operating loss
(1,470,443)
(612,956)
Other expense:
 
 
Interest expense
(48,597)
(875,467)
Total other expense
(48,597)
(875,467)
Loss before taxes
(1,519,040)
(1,488,423)
Net loss
(1,519,040)
(1,488,423)
Net loss applicable to common stockholders
$ (1,519,040)
$ (1,488,423)
Net loss per share
 
 
Basic and diluted
$ (0.01)
$ (0.02)
Weighted average number of common shares outstanding
 
 
Basic and diluted
111,617,626 
95,821,525 
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) (USD $)
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Accumulated Deficit[Member]
Beginning Balance at Dec. 31, 2014
$ 75,477,513 
$ 111,601 
$ 150,789,292 
$ (75,423,380)
Beginning Balance, Shares at Dec. 31, 2014
 
11,601,304 
 
 
Stock-based compensation
291,092 
 
291,092 
 
Shares issued for vested restricted stock units, Value
57 
57 
(57)
 
Shares issued for vested restricted stock units, Shares
56,500 
56,500 
 
 
Net loss
(1,519,040)
 
 
(1,519,040)
Ending Balance at Mar. 31, 2015
$ 74,249,565 
$ 111,658 
$ 151,080,327 
$ (76,942,420)
Ending Balance, Shares at Mar. 31, 2015
 
11,657,804 
 
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $)
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Cash flows from operating activities:
 
 
Net loss
$ (1,519,040)
$ (1,488,423)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
 
 
Depreciation
76,046 
69,567 
Amortization of intangibles
903,091 
882,096 
Amortization of debt discount and deferred financing costs
 
451,642 
Provision for doubtful accounts
 
41,338 
Stock-based compensation
285,156 
162,995 
Changes in operating assets and liabilities:
 
 
Accounts receivable
1,009,981 
(785,408)
Prepaid expenses and other current assets
(67,983)
(148,483)
Security deposits and other assets
(12,677)
332 
Accounts payable and accrued liabilities
(236,849)
(2,800,411)
Deferred revenue and other current liabilities
41,332 
108,014 
Other long-term liabilities
4,557 
 
Net cash provided by (used in) operating activities
483,614 
(3,506,741)
Cash flows from investing activities:
 
 
Purchase of property and equipment
(170,144)
(6,698)
Purchase of capitalized software development
(150,837)
(77,425)
Net cash used in investing activities
(320,981)
(84,123)
Cash flows from financing activities:
 
 
Proceeds from line of credit
 
2,000,000 
Repayments of capital lease obligations
(5,636)
(3,952)
Net cash provided by (used in) financing activities
(5,636)
1,996,048 
Net increase (decrease) in cash and cash equivalents
156,997 
(1,594,816)
Cash and cash equivalents at beginning of period
3,154,540 
2,676,984 
Cash and cash equivalents at end of period
3,311,537 
1,082,168 
Supplemental cash flow information:
 
 
Cash paid for interest
48,521 
423,826 
Notes Payable [Member]
 
 
Supplemental non-cash flow activities:
 
 
Common stock issued for conversion of notes payable
 
29,001 
Restricted Stock Units [Member]
 
 
Supplemental non-cash flow activities:
 
 
Common stock issued for vested restricted stock units
$ 57 
 
The Company, Description of Business, and Future Liquidity Needs
The Company, Description of Business, and Future Liquidity Needs

1. The Company, Description of Business, and Future Liquidity Needs

The accompanying condensed consolidated financial statements include the accounts of Quest Resource Holding Corporation (“QRHC”) and its subsidiaries, Earth911, Inc. (“Earth911”), Quest Resource Management Group, LLC (“Quest”), Landfill Diversion Innovations, LLC, and Youchange, Inc. (“YouChange”) (collectively, “QRHC,” the “Company,” “we,” “us,” or “our company”).

Operations – We are an environmental solutions company that serves as a single-source provider of full service recycling and waste stream management solutions, as well as an environmental program services and information provider. We offer innovative, cost-effective, one-stop reuse, recycling, and waste disposal management programs designed to provide regional and national customers with a single point of contact for managing a variety of recyclables and disposables. Two customers accounted for 61.5% and 76.1% of revenue for the three months ended March 31, 2015 and 2014, respectively.  We also own the Earth911.com website, offering original online environmental related content about reuse, recycling, and disposal of waste and recyclables, and we own a comprehensive online database of local recycling and proper disposal options. Our principal offices are located in Frisco, Texas.

Liquidity – As of March 31, 2015 and December 31, 2014, our working capital balance was $732,771 and $1,316,319, respectively.  We plan to increase liquidity by increasing our sales and operating leverage, in addition to other initiatives, which may include additional debt and/or equity financings.  

Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Principals of Presentation, Consolidation, and Reclassifications

The condensed consolidated financial statements included herein have been prepared by us without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements for the year ended December 31, 2014. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted, as permitted by the SEC, although we believe the disclosures that are made are adequate to make the information presented herein not misleading.

The accompanying condensed consolidated financial statements reflect, in our opinion, all normal recurring adjustments necessary to present fairly our financial position at March 31, 2015, and the results of our operations and cash flows for the periods presented. We derived the December 31, 2014 condensed consolidated balance sheet data from audited financial statements, but did not include all disclosures required by GAAP. As Quest, Earth911, and YouChange are operating as ecology based green service companies, we did not deem segment reporting necessary.

All intercompany accounts and transactions have been eliminated in consolidation. Certain reclassifications have been made to prior year balances to conform to the current year presentation that did not have an effect on our net loss or net loss per share. Interim results are subject to seasonal variations, and the results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results to be expected for the full year.

Revenue Recognition

We recognize revenue only when all of the following criteria have been met:

·

persuasive evidence of an arrangement exists;

·

delivery has occurred or services have been rendered;

·

the fee for the arrangement is fixed or determinable; and

·

collectability is reasonably assured.

Persuasive Evidence of an Arrangement – We document all terms of an arrangement in a service agreement or quote signed or confirmed by the customer prior to recognizing revenue.

Delivery Has Occurred or Services Have Been Performed – We perform all services or deliver all products prior to recognizing revenue. Services are deemed to be performed when the services are complete.

The Fee for the Arrangement is Fixed or Determinable – Prior to recognizing revenue, a customer’s fee is either fixed or determinable under the terms of the quote, service agreement, or accepted customer purchase order.

Collectability Is Reasonably Assured – We assess collectability on a customer by customer basis based on criteria outlined by management.

We provide businesses with management programs to reuse, recycle, and dispose of a wide variety of waste streams and recyclables generated by their business. We utilize third-party subcontractors to execute the collection, transport, and recycling or disposal of used motor oil, oil filters, scrap tires, cooking oil, and expired food products. We evaluate the criteria outlined in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 605-45, Revenue Recognition—Principal Agent Considerations, in determining whether it is appropriate to record the gross amount of service revenue and related costs or the net amount earned as management fees. Generally, when we are primarily obligated in a transaction, have latitude in establishing prices and selecting suppliers, have credit risk, or have several but not all of these indicators, we record revenue gross and record amounts collected from customers for sales tax on a net basis. In situations in which we are not primarily obligated, we do not have credit risk, or we determine amounts earned using fixed percentage or fixed payment schedules, we record the net amounts as management fees earned. Currently, we have no contracts accounted for as management fees.

Earth911 revenue primarily represents licensing fees that we recognize ratably over the term of the license. We derive some revenue from advertising contracts, which we recognize ratably over the term that the advertisement appears on our website.

Net Loss Per Share

We compute basic net loss per share by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period. We have other potentially dilutive securities outstanding that are not shown in a diluted net loss per share calculation because their effect in both 2015 and 2014 would be anti-dilutive. These potentially dilutive securities include options, restricted stock units, warrants, and convertible promissory notes, and totaled 16,832,380 and 15,096,948 shares at March 31, 2015 and 2014, respectively.

The following table sets forth the computation of basic and diluted loss per share:  

 

 

 

Three Months Ended March 31,

 

 

 

2015

 

 

2014

 

 

 

(Unaudited)

 

 

(Unaudited)

 

Net loss applicable to common stockholders - numerator for

   basic and diluted earnings per share

 

$

(1,519,040

)

 

$

(1,488,423

)

Weighted average common shares outstanding -

   denominator for basic and diluted earnings per share

 

 

111,617,626

 

 

 

95,821,525

 

Net loss per share:

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.01

)

 

$

(0.02

)

The following table sets forth the anti-dilutive securities excluded from diluted loss per share:

 

 

 

March 31,

 

 

 

2015

 

 

2014

 

 

 

(Unaudited)

 

 

(Unaudited)

 

Anti-dilutive securities excluded from diluted loss per share:

 

 

 

 

 

 

 

 

Stock options

 

 

4,965,280

 

 

 

4,096,948

 

Restricted stock units

 

 

76,100

 

 

 

 

Warrants

 

 

11,791,000

 

 

 

 

Convertible notes

 

 

 

 

 

11,000,000

 

 

 

 

16,832,380

 

 

 

15,096,948

 

 

Inventories

We record inventories within “Prepaid expenses and other current assets” within our condensed consolidated balance sheets.  As of March 31, 2015 and December 31, 2014, all inventories were finished goods with a balance of $41,544 and $30,759, respectively, and consisted of waste disposal equipment, with no reserve for inventory obsolescence at either date.

 

Property and Equipment, Net, and Other Assets
Property and Equipment, Net, and Other Assets

3. Property and Equipment, Net, and Other Assets

At March 31, 2015 and December 31, 2014, property and equipment, net, and other assets consisted of the following:

 

 

 

March 31,

 

 

December 31,

 

 

 

2015

 

 

2014

 

 

 

(Unaudited)

 

 

 

 

 

Property and equipment, net of accumulated depreciation of $1,768,881

     and $1,692,835 as of March 31, 2015 and December 31, 2014,

     respectively

 

$

627,935

 

 

$

533,837

 

Security deposits and other assets

 

 

232,333

 

 

 

219,656

 

    Property and equipment, net, and other assets

 

$

860,268

 

 

$

753,493

 

 

We compute depreciation using the straight-line method over the estimated useful lives of the property and equipment. The depreciation expense related to property and equipment was $76,046 and $69,567 for the three months ended March 31, 2015 and 2014, respectively.  

 

Goodwill and Other Intangible Assets
Goodwill and Other Intangible Assets

4. Goodwill and Other Intangible Assets

The components of goodwill and other intangible assets were as follows:

  

March 31, 2015 (Unaudited)

 

Estimated

Useful Life

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

 

Finite lived intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

5 years

 

$

12,720,000

 

 

$

4,346,000

 

 

$

8,374,000

 

Trademarks

 

7 years

 

 

6,230,000

 

 

 

1,520,417

 

 

 

4,709,583

 

Patents

 

7 years

 

 

230,683

 

 

 

230,683

 

 

 

 

Software

 

7 years

 

 

1,164,551

 

 

 

55,132

 

 

 

1,109,419

 

Customer lists

 

5 years

 

 

307,153

 

 

 

136,792

 

 

 

170,361

 

Total finite lived intangible assets

 

 

 

$

20,652,387

 

 

$

6,289,024

 

 

$

14,363,363

 

 

December 31, 2014

 

Estimated

Useful Life

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

 

Finite lived intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

5 years

 

$

12,720,000

 

 

$

3,710,000

 

 

$

9,010,000

 

Trademarks

 

7 years

 

 

6,230,000

 

 

 

1,297,917

 

 

 

4,932,083

 

Patents

 

7 years

 

 

230,683

 

 

 

230,683

 

 

 

 

Software

 

7 years

 

 

1,013,714

 

 

 

25,899

 

 

 

987,815

 

Customer lists

 

5 years

 

 

307,153

 

 

 

121,434

 

 

 

185,719

 

Total finite lived intangible assets

 

 

 

$

20,501,550

 

 

$

5,385,933

 

 

$

15,115,617

 

 

March 31, 2015 (Unaudited) and December 31, 2014

 

Estimated

Useful Life

 

Carrying

Amount

 

 

 

 

 

Indefinite lived intangible asset:

 

 

 

 

 

 

 

 

 

 

Goodwill

 

Indefinite

 

$

58,337,290

 

 

 

 

 

 

We compute amortization using the straight-line method over the estimated useful lives of the finite lived intangible assets. The amortization expense related to finite lived intangible assets was $903,091 and $882,096 for the three months ended March 31, 2015 and 2014, respectively. We have no indefinite-lived intangible assets other than goodwill. The goodwill is not deductible for tax purposes.

Line of Credit
Line of Credit

5. Line of Credit

On December 15, 2010, Quest entered into a Revolving Credit Note and Loan Agreement with Regions Bank (“Regions”), a national banking association. This agreement, as amended, provides Quest with a loan facility up to $10,000,000 for working capital with advances generally limited to 80% of eligible accounts receivable from Quest’s largest customer and 85% of all other eligible accounts receivable. The interest on the outstanding principal amount accrues daily and is payable monthly based on a fluctuating interest rate per annum, which is the base rate plus 1.50% (2.67% as of March 31, 2015). The base rate for any day is the greater of (a) the federal funds rate plus one-half of 1%, (b) Region’s published effective prime rate, or (c) the Eurodollar rate for such day based on an interest period of one month. To secure the amounts due under the agreement, Quest granted Regions a security interest in all of its assets. Quest had $5,250,000 outstanding and $4,750,000 available to be borrowed as of March 31, 2015. The amount of interest expense related to the Regions line of credit for the three months ended March 31, 2015 and 2014 was $35,050 and $43,080, respectively.

On May 9, 2014, Quest entered into a Sixth Amendment to Loan Agreement with Regions. The loan agreement was amended to, among other things, (i) add a $5.0 million accordion feature, (ii) increase the borrowing base, (iii) reduce the applicable margin for eurodollar rate loans by 1.0% per annum, (iv) add an unused fee of 0.25% per annum, (v) extend the maturity date to May 31, 2015, (vi) release the guaranty of our Chief Executive Officer previously executed in favor of Regions, (vii) add our company and our wholly owned subsidiary, Earth911, as guarantors, (viii) allow for permitted acquisitions, and (ix) delete two of the financial covenants and modify the other financial covenants in certain respects.  As of March 31, 2015, we were in compliance with the financial covenants.

In connection with the Sixth Amendment, on May 9, 2014, QRHC and Earth911(collectively, the “Guarantors”) entered into a Guaranty (the “Guaranty”) for the benefit of Regions to guarantee the obligations of Quest under the loan agreement and other loan documents. In addition, on May 9, 2014, Earth911 entered into a Pledge Agreement with Regions, pursuant to which Earth911 pledged to Regions 50% of the membership interests in Quest held by Earth911 to secure the prompt and complete payment and performance of the obligations of Quest and the Guarantors under the loan agreement and other loan documents.

On May 13, 2015, Quest and Regions made amendments to the loan agreement as discussed in Note 11 — Material Subsequent Events.

Capital Lease Obligations
Capital Lease Obligations

6. Capital Lease Obligations

At March 31, 2015 and December 31, 2014, total capital lease obligations outstanding consisted of the following:

 

 

 

March 31,

 

 

December 31,

 

 

 

2015

 

 

2014

 

 

 

(Unaudited)

 

 

 

 

 

Capital lease obligations, imputed interest at 4.75%, with monthly payments of $1,507, through November 2016, secured by computer equipment

 

$

41,614

 

 

$

47,250

 

Total

 

 

41,614

 

 

 

47,250

 

Less: current maturities

 

 

(23,171

)

 

 

(22,853

)

Long-term portion

 

$

18,443

 

 

$

24,397

 

 

Our capital lease obligations are included within “Deferred revenue and other current liabilities” and “other long-term liabilities” in our condensed consolidated balance sheets.  The amount of interest expense related to our capital leases for the three months ended March 31, 2015 and 2014 was $487 and $638, respectively.

 

Income Taxes
Income Taxes

7. Income Taxes

We compute income taxes using the asset and liability method in accordance with FASB ASC Topic 740, Income Taxes. Under the asset and liability method, we determine deferred income tax assets and liabilities based on the differences between the financial reporting and tax bases of assets and liabilities and measure them using currently enacted tax rates and laws. We provide a valuation allowance for the amount of deferred tax assets that, based on available evidence, are more likely than not expected to be realized. In our opinion, realization of our net operating loss carryforward was not reasonably assured as of March 31, 2015 and December 31, 2014, and we have recorded a valuation allowance of $9,713,000 and $9,108,000, respectively, against deferred tax assets in excess of deferred tax liabilities in the accompanying condensed consolidated financial statements. As of March 31, 2015 and December 31, 2014, we had federal income tax net operating loss carryforwards of approximately $16,000,000 and $14,800,000, respectively, which expire at various dates beginning in 2031.

 

Fair Value of Financial Instruments
Fair Value of Financial Instruments

8. Fair Value of Financial Instruments

Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, line of credit, capital lease obligations, and warrant liability. We do not believe that we are exposed to significant interest, currency, or credit risks arising from these financial instruments. With the exception of the warrant liability, the fair values of these financial instruments approximate their carrying values using Level 3 inputs, based on their short maturities or, for long-term portions of capital lease obligations, based on borrowing rates currently available to us for loans with similar terms and maturities.

On May 7, 2014, we issued an aggregate of 200,000 warrants to purchase shares of our common stock to a consultant in exchange for services rendered during 2014.  Of these warrants, 100,000 vested immediately, and resulted in no expense recorded for the three months ended March 31, 2015.  The remaining 100,000 warrants, which we classified as a liability, vested on May 7, 2015, subject to performance conditions.  We measured the warrants at fair value by applying the Black-Scholes-Merton valuation model, which utilizes Level 3 inputs. As of March 31, 2015, the assumptions used in the Black-Scholes-Merton valuation for the 100,000 warrants that vested on May 7, 2015 were as follows: volatility of 81.1%; risk free interest rate of 0.59%; expected term of 2.1 years; and expected dividend yield of 0%. The grant date fair value of the warrant valuation described above was $0.32 per warrant. We based the risk free interest rate on U.S. Treasury rates with maturity dates approximating the expected term of the warrants. We determined the historical volatility using the historical changes in the market price of our common stock and applicable comparable companies.  We report the warrant liability in “Accounts payable and accrued liabilities” within our balance sheets.  Our warrant liability was $28,921 and $34,857 at March 31, 2015 and December 31, 2014, respectively.

 

Stockholders' Equity
Stockholders' Equity

9. Stockholders’ Equity

Preferred StockOur authorized preferred stock includes 10,000,000 shares of preferred stock with a par value of $0.001, of which no shares have been issued or are outstanding.

Common Stock – Our authorized common stock includes 200,000,000 shares of common stock with a par value of $0.001, of which 111,657,804 and 111,601,304 shares were issued and outstanding as of March 31, 2015 and December 31, 2014, respectively.

 

During the three months ended March 31, 2015, we issued shares of common stock as follows:

 

 

 

Common Stock

 

 

 

Shares

 

 

Amount

 

Shares issued for vested restricted stock units

 

 

56,500

 

 

$

57

 

 

 

 

56,500

 

 

$

57

 

·

Shares issued for vested restricted stock units

o

On March 5, 2015, we issued 56,500 shares to an employee for the restricted stock units that vested and were expensed during fiscal year 2014.  

During the three months ended March 31, 2014, we issued shares of common stock as follows:

 

 

 

Common Stock

 

 

 

Shares

 

 

Amount

 

Shares issued upon conversion of note

 

 

23,201

 

 

$

29,001

 

 

 

 

23,201

 

 

$

29,001

 

·

Shares issued upon conversion of note

o

During September 2012, we issued a convertible note payable to an unrelated party.  During the three months ended March 31, 2014, $25,000 of principal and $4,001 of interest were converted into 23,201 shares of our common stock.

Warrants – During the three months ended March 31, 2015 and 2014, we did not issue any warrants and no holders exercised warrants.  During the three months ended March 31, 2015, a third party forfeited 1,200,000 contingent warrants, with no corresponding expirations during the three months ended March 31, 2014.  At March 31, 2015, we had outstanding exercisable warrants to purchase 11,691,000 shares of common stock and contingent warrants to purchase 100,000 shares of common stock.

·

Warrants for services

o

On May 7, 2014, we issued to a third party for services rendered an aggregate of 200,000 warrants to purchase 200,000 shares of our common stock at $2.65 per share. Of the 200,000 warrants, 100,000 were exercisable immediately and the remaining become exercisable one year from the date of grant based on the achievement of performance conditions. Due to the decline in the fair value of these warrants, we recorded a reduction of stock-based compensation expense of $5,936 for the three months ended March 31, 2015 related to these warrants. See Note 8 for a discussion of our Black-Scholes-Merton valuation assumptions.  

o

On May 28, 2014, we issued to a third party for services rendered an aggregate of 1,650,000 contingent warrants to purchase 1,650,000 shares of our common stock at $4.31 per share. The warrants become exercisable at various times after achieving future performance conditions related to services and revenue targets for Earth911. During the three months ended March 31, 2015, we terminated the contract with the third party, resulting in the forfeiture of 1,200,000 unvested warrants.  Due to the uncertainty of attaining any of the performance conditions, we had not recognized any additional expense for the non-vested warrants.  As these warrants related to internally developed software, we did not capitalize any costs or recognize any expense for the three months ended March 31, 2015.

The following table summarizes the warrants issued and outstanding as of March 31, 2015:

 

Warrants Issued and Outstanding as of March 31, 2015

 

 

 

Date of

 

Exercise

 

 

Shares of

 

Description

 

Issuance

 

Expiration

 

Price

 

 

Common Stock

 

Exercisable warrants

 

 

 

 

 

 

 

 

 

 

 

 

Warrants

 

04/18/2014

 

04/01/2017

 

$

2.00

 

 

 

1,441,000

 

Warrant

 

05/07/2014

 

05/07/2017

 

$

2.65

 

 

 

100,000

 

Warrant

 

05/28/2014

 

10/31/2016

 

$

4.31

 

 

 

450,000

 

Warrants

 

09/24/2014

 

09/24/2019

 

$

2.50

 

 

 

9,000,000

 

Warrants

 

10/20/2014

 

10/20/2019

 

$

2.50

 

 

 

700,000

 

Total exercisable warrants

 

 

 

 

 

 

 

 

 

 

11,691,000

 

Contingent warrants

 

 

 

 

 

 

 

 

 

 

 

 

Warrant

 

05/07/2014

 

05/07/2017

 

$

2.65

 

 

 

100,000

 

Warrants

 

05/28/2014

 

10/31/2018

 

$

4.31

 

 

 

1,200,000

 

Less warrants cancelled

 

 

 

 

 

 

 

 

 

 

(1,200,000

)

Total contingent warrants

 

 

 

 

 

 

 

 

 

 

100,000

 

Total warrants issued and outstanding

 

 

 

 

 

 

11,791,000

 

Restricted Stock Units – During April 2014, we granted restricted stock units representing 132,600 shares of common stock under our 2012 Incentive Compensation Plan. The restricted stock units vest based on a combination of financial performance factors and continued service. The financial performance factors are based on the revenue generated by new business activity of one of our subsidiaries. All payouts of restricted stock units that vest will be exercisable immediately and will be paid in the form of common stock. While we do not anticipate issuing dividends, the restricted stock unit awards will not participate in any dividends prior to vesting.

We determined the fair value of the restricted stock unit awards granted based on the market value of our common stock on the date of grant, which was $3.75 per share. We assumed a forfeiture rate of 0%. Due to the uncertainty of attaining any of the remaining performance conditions, we recorded no additional stock-based compensation expense for the remaining performance conditions for the three months ended March 31, 2015. We issued 56,500 shares during the three months ended March 31, 2015 for the restricted stock units that vested during 2014.  As of March 31, 2015 and December 31, 2014, outstanding restricted stock units totaled 76,100 and 132,600, respectively.  

Employee Stock Purchase Plan – On September 17, 2014, our stockholders approved the Quest Resource Holding Corporation 2014 Employee Stock Purchase Plan (the “ESPP”). We recorded expense of $9,726 related to the ESPP during the three months ended March 31, 2015.

Stock Options – The following table summarizes the stock option activity for the three month period ended March 31, 2015:

 

 

 

Stock Options

 

 

 

 

 

 

 

 

 

Weighted-

 

 

 

 

 

 

 

Exercise

 

Average

 

 

 

Number

 

 

Price Per

 

Exercise Price

 

 

 

of Shares

 

 

Share

 

Per Share

 

Outstanding at December 31, 2014

 

 

5,006,532

 

 

1.45 — 3.75

 

 

2.66

 

Granted

 

 

45,000

 

 

1.28 — 1.46

 

 

1.30

 

Canceled/Forfeited

 

 

(86,252

)

 

2.05 — 2.10

 

 

2.05

 

Outstanding at March 31, 2015

 

 

4,965,280

 

 

1.28 — 3.75

 

 

2.65

 

 

Related Party Transactions
Related Party Transactions

10. Related Party Transactions

Acquisition of the Quest Interests – On July 16, 2013, we acquired all of the Quest Interests held by Quest Resource Group LLC, or QRG, comprising 50% of the membership interests of Quest Resource Management Group, LLC, or Quest. The purchase price for the Quest Interests consisted of 22,000,000 shares of our common stock issued at a fair market value of $2.50 per share based on the closing price of the stock on the date of the transaction and convertible secured promissory notes (collectively, the “Sellers’ Notes”) in the aggregate principal amount of $22,000,000. The total purchase price of $77,000,000 was paid to the owners of QRG who at the time of the transaction were related parties: the Chief Executive Officer of Quest and the former President of Quest. After the close of the transaction, the Chief Executive Officer of Quest became the President, Chief Executive Officer, and member of the Board of Directors of our company. On September 24, 2014, we paid $11,000,000 to the holders of the Sellers’ Notes and such holders converted the remaining $11,000,000 of principal, plus accrued interest through September 24, 2014 of $101,260, into 5,550,630 shares of our common stock. For the three months ended March 31, 2014, we recognized interest expense of $379,726, with no comparable interest expense for the three months ended March 31, 2015.

Material Subsequent Events
Material Subsequent Events

11. Material Subsequent Events

 

On May 13, 2015, Quest entered into a Seventh Amendment to Loan Agreement with Regions. The loan agreement was amended to, among other things, (i) reduce the applicable margin for eurodollar rate loans by 0.25% per annum, (ii) extend the maturity date to May 13, 2018, and (iii) modify the permitted acquisitions in certain respects.

 

Summary of Significant Accounting Policies (Policies)

Principals of Presentation, Consolidation, and Reclassifications

The condensed consolidated financial statements included herein have been prepared by us without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements for the year ended December 31, 2014. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted, as permitted by the SEC, although we believe the disclosures that are made are adequate to make the information presented herein not misleading.

The accompanying condensed consolidated financial statements reflect, in our opinion, all normal recurring adjustments necessary to present fairly our financial position at March 31, 2015, and the results of our operations and cash flows for the periods presented. We derived the December 31, 2014 condensed consolidated balance sheet data from audited financial statements, but did not include all disclosures required by GAAP. As Quest, Earth911, and YouChange are operating as ecology based green service companies, we did not deem segment reporting necessary.

All intercompany accounts and transactions have been eliminated in consolidation. Certain reclassifications have been made to prior year balances to conform to the current year presentation that did not have an effect on our net loss or net loss per share. Interim results are subject to seasonal variations, and the results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results to be expected for the full year.

Revenue Recognition

We recognize revenue only when all of the following criteria have been met:

·

persuasive evidence of an arrangement exists;

·

delivery has occurred or services have been rendered;

·

the fee for the arrangement is fixed or determinable; and

·

collectability is reasonably assured.

Persuasive Evidence of an Arrangement – We document all terms of an arrangement in a service agreement or quote signed or confirmed by the customer prior to recognizing revenue.

Delivery Has Occurred or Services Have Been Performed – We perform all services or deliver all products prior to recognizing revenue. Services are deemed to be performed when the services are complete.

The Fee for the Arrangement is Fixed or Determinable – Prior to recognizing revenue, a customer’s fee is either fixed or determinable under the terms of the quote, service agreement, or accepted customer purchase order.

Collectability Is Reasonably Assured – We assess collectability on a customer by customer basis based on criteria outlined by management.

We provide businesses with management programs to reuse, recycle, and dispose of a wide variety of waste streams and recyclables generated by their business. We utilize third-party subcontractors to execute the collection, transport, and recycling or disposal of used motor oil, oil filters, scrap tires, cooking oil, and expired food products. We evaluate the criteria outlined in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 605-45, Revenue Recognition—Principal Agent Considerations, in determining whether it is appropriate to record the gross amount of service revenue and related costs or the net amount earned as management fees. Generally, when we are primarily obligated in a transaction, have latitude in establishing prices and selecting suppliers, have credit risk, or have several but not all of these indicators, we record revenue gross and record amounts collected from customers for sales tax on a net basis. In situations in which we are not primarily obligated, we do not have credit risk, or we determine amounts earned using fixed percentage or fixed payment schedules, we record the net amounts as management fees earned. Currently, we have no contracts accounted for as management fees.

Earth911 revenue primarily represents licensing fees that we recognize ratably over the term of the license. We derive some revenue from advertising contracts, which we recognize ratably over the term that the advertisement appears on our website.

Net Loss Per Share

We compute basic net loss per share by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period. We have other potentially dilutive securities outstanding that are not shown in a diluted net loss per share calculation because their effect in both 2015 and 2014 would be anti-dilutive. These potentially dilutive securities include options, restricted stock units, warrants, and convertible promissory notes, and totaled 16,832,380 and 15,096,948 shares at March 31, 2015 and 2014, respectively.

The following table sets forth the computation of basic and diluted loss per share:  

 

 

 

Three Months Ended March 31,

 

 

 

2015

 

 

2014

 

 

 

(Unaudited)

 

 

(Unaudited)

 

Net loss applicable to common stockholders - numerator for

   basic and diluted earnings per share

 

$

(1,519,040

)

 

$

(1,488,423

)

Weighted average common shares outstanding -

   denominator for basic and diluted earnings per share

 

 

111,617,626

 

 

 

95,821,525

 

Net loss per share:

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.01

)

 

$

(0.02

)

The following table sets forth the anti-dilutive securities excluded from diluted loss per share:

 

 

 

March 31,

 

 

 

2015

 

 

2014

 

 

 

(Unaudited)

 

 

(Unaudited)

 

Anti-dilutive securities excluded from diluted loss per share:

 

 

 

 

 

 

 

 

Stock options

 

 

4,965,280

 

 

 

4,096,948

 

Restricted stock units

 

 

76,100

 

 

 

 

Warrants

 

 

11,791,000

 

 

 

 

Convertible notes

 

 

 

 

 

11,000,000

 

 

 

 

16,832,380

 

 

 

15,096,948

 

 

Inventories

We record inventories within “Prepaid expenses and other current assets” within our condensed consolidated balance sheets.  As of March 31, 2015 and December 31, 2014, all inventories were finished goods with a balance of $41,544 and $30,759, respectively, and consisted of waste disposal equipment, with no reserve for inventory obsolescence at either date.

Summary of Significant Accounting Policies (Tables)

The following table sets forth the computation of basic and diluted loss per share:  

 

 

 

Three Months Ended March 31,

 

 

 

2015

 

 

2014

 

 

 

(Unaudited)

 

 

(Unaudited)

 

Net loss applicable to common stockholders - numerator for

   basic and diluted earnings per share

 

$

(1,519,040

)

 

$

(1,488,423

)

Weighted average common shares outstanding -

   denominator for basic and diluted earnings per share

 

 

111,617,626

 

 

 

95,821,525

 

Net loss per share:

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.01

)

 

$

(0.02

)

 

The following table sets forth the anti-dilutive securities excluded from diluted loss per share:

 

 

 

March 31,

 

 

 

2015

 

 

2014

 

 

 

(Unaudited)

 

 

(Unaudited)

 

Anti-dilutive securities excluded from diluted loss per share:

 

 

 

 

 

 

 

 

Stock options

 

 

4,965,280

 

 

 

4,096,948

 

Restricted stock units

 

 

76,100

 

 

 

 

Warrants

 

 

11,791,000

 

 

 

 

Convertible notes

 

 

 

 

 

11,000,000

 

 

 

 

16,832,380

 

 

 

15,096,948

 

 

Property and Equipment, Net, and Other Assets (Tables)
Components Property and Equipment, net, and other assets

At March 31, 2015 and December 31, 2014, property and equipment, net, and other assets consisted of the following:

 

 

 

March 31,

 

 

December 31,

 

 

 

2015

 

 

2014

 

 

 

(Unaudited)

 

 

 

 

 

Property and equipment, net of accumulated depreciation of $1,768,881

     and $1,692,835 as of March 31, 2015 and December 31, 2014,

     respectively

 

$

627,935

 

 

$

533,837

 

Security deposits and other assets

 

 

232,333

 

 

 

219,656

 

    Property and equipment, net, and other assets

 

$

860,268

 

 

$

753,493

 

 

Goodwill and Other Intangible Assets (Tables)

The components of goodwill and other intangible assets were as follows:

  

March 31, 2015 (Unaudited)

 

Estimated

Useful Life

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

 

Finite lived intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

5 years

 

$

12,720,000

 

 

$

4,346,000

 

 

$

8,374,000

 

Trademarks

 

7 years

 

 

6,230,000

 

 

 

1,520,417

 

 

 

4,709,583

 

Patents

 

7 years

 

 

230,683

 

 

 

230,683

 

 

 

 

Software

 

7 years

 

 

1,164,551

 

 

 

55,132

 

 

 

1,109,419

 

Customer lists

 

5 years

 

 

307,153

 

 

 

136,792

 

 

 

170,361

 

Total finite lived intangible assets

 

 

 

$

20,652,387

 

 

$

6,289,024

 

 

$

14,363,363

 

 

December 31, 2014

 

Estimated

Useful Life

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

 

Finite lived intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

5 years

 

$

12,720,000

 

 

$

3,710,000

 

 

$

9,010,000

 

Trademarks

 

7 years

 

 

6,230,000

 

 

 

1,297,917

 

 

 

4,932,083

 

Patents

 

7 years

 

 

230,683

 

 

 

230,683

 

 

 

 

Software

 

7 years

 

 

1,013,714

 

 

 

25,899

 

 

 

987,815

 

Customer lists

 

5 years

 

 

307,153

 

 

 

121,434

 

 

 

185,719

 

Total finite lived intangible assets

 

 

 

$

20,501,550

 

 

$

5,385,933

 

 

$

15,115,617

 

 

March 31, 2015 (Unaudited) and December 31, 2014

 

Estimated

Useful Life

 

Carrying

Amount

 

 

 

 

 

Indefinite lived intangible asset:

 

 

 

 

 

 

 

 

 

 

Goodwill

 

Indefinite

 

$

58,337,290

 

 

 

 

 

 

Capital Lease Obligations (Tables)
Summary of Capital Lease Obligations

At March 31, 2015 and December 31, 2014, total capital lease obligations outstanding consisted of the following:

 

 

 

March 31,

 

 

December 31,

 

 

 

2015

 

 

2014

 

 

 

(Unaudited)

 

 

 

 

 

Capital lease obligations, imputed interest at 4.75%, with monthly payments of $1,507, through November 2016, secured by computer equipment

 

$

41,614

 

 

$

47,250

 

Total

 

 

41,614

 

 

 

47,250

 

Less: current maturities

 

 

(23,171

)

 

 

(22,853

)

Long-term portion

 

$

18,443

 

 

$

24,397

 

 

Stockholders' Equity (Tables)

During the three months ended March 31, 2015, we issued shares of common stock as follows:

 

 

 

Common Stock

 

 

 

Shares

 

 

Amount

 

Shares issued for vested restricted stock units

 

 

56,500

 

 

$

57

 

 

 

 

56,500

 

 

$

57

 

 

During the three months ended March 31, 2014, we issued shares of common stock as follows:

 

 

 

Common Stock

 

 

 

Shares

 

 

Amount

 

Shares issued upon conversion of note

 

 

23,201

 

 

$

29,001

 

 

 

 

23,201

 

 

$

29,001

 

 

The following table summarizes the warrants issued and outstanding as of March 31, 2015:

 

Warrants Issued and Outstanding as of March 31, 2015

 

 

 

Date of

 

Exercise

 

 

Shares of

 

Description

 

Issuance

 

Expiration

 

Price

 

 

Common Stock

 

Exercisable warrants

 

 

 

 

 

 

 

 

 

 

 

 

Warrants

 

04/18/2014

 

04/01/2017

 

$

2.00

 

 

 

1,441,000

 

Warrant

 

05/07/2014

 

05/07/2017

 

$

2.65

 

 

 

100,000

 

Warrant

 

05/28/2014

 

10/31/2016

 

$

4.31

 

 

 

450,000

 

Warrants

 

09/24/2014

 

09/24/2019

 

$

2.50

 

 

 

9,000,000

 

Warrants

 

10/20/2014

 

10/20/2019

 

$

2.50

 

 

 

700,000

 

Total exercisable warrants

 

 

 

 

 

 

 

 

 

 

11,691,000

 

Contingent warrants

 

 

 

 

 

 

 

 

 

 

 

 

Warrant

 

05/07/2014

 

05/07/2017

 

$

2.65

 

 

 

100,000

 

Warrants

 

05/28/2014

 

10/31/2018

 

$

4.31

 

 

 

1,200,000

 

Less warrants cancelled

 

 

 

 

 

 

 

 

 

 

(1,200,000

)

Total contingent warrants

 

 

 

 

 

 

 

 

 

 

100,000

 

Total warrants issued and outstanding

 

 

 

 

 

 

11,791,000

 

 

Stock Options – The following table summarizes the stock option activity for the three month period ended March 31, 2015:

 

 

 

Stock Options

 

 

 

 

 

 

 

 

 

Weighted-

 

 

 

 

 

 

 

Exercise

 

Average

 

 

 

Number

 

 

Price Per

 

Exercise Price

 

 

 

of Shares

 

 

Share

 

Per Share

 

Outstanding at December 31, 2014

 

 

5,006,532

 

 

1.45 — 3.75

 

 

2.66

 

Granted

 

 

45,000

 

 

1.28 — 1.46

 

 

1.30

 

Canceled/Forfeited

 

 

(86,252

)

 

2.05 — 2.10

 

 

2.05

 

Outstanding at March 31, 2015

 

 

4,965,280

 

 

1.28 — 3.75

 

 

2.65

 

 

The Company, Description of Business, and Future Liquidity Needs - Additional Information (Detail) (USD $)
3 Months Ended
Mar. 31, 2015
Dec. 31, 2014
Mar. 31, 2015
Revenue [Member]
Customer
Mar. 31, 2015
Revenue [Member]
Customer Accounted [Member]
Mar. 31, 2014
Revenue [Member]
Customer Accounted [Member]
Concentration Risk [Line Items]
 
 
 
 
 
Number of customer
 
 
 
 
Percentage of revenue
 
 
 
61.50% 
76.10% 
Working capital
$ 732,771 
$ 1,316,319 
 
 
 
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Dec. 31, 2014
Accounting Policies [Abstract]
 
 
 
Potentially dilutive securities include options, restricted stock units, warrants, and convertible promissory notes
16,832,380 
15,096,948 
 
Finished goods inventory
$ 41,544 
 
$ 30,759 
Reserve for inventory obsolescence
$ 0 
 
 
Summary of Significant Accounting Policies - Schedule of Computation of Basic and Diluted Earnings Per Share (Detail) (USD $)
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Accounting Policies [Abstract]
 
 
Net loss applicable to common stockholders - numerator for basic and diluted earnings per share
$ (1,519,040)
$ (1,488,423)
Weighted - average common shares outstanding -denominator for basic and diluted earnings per share
111,617,626 
95,821,525 
Basic and diluted
$ (0.01)
$ (0.02)
Summary of Significant Accounting Policies - Schedule of Anti-dilutive Securities Excluded from Diluted Loss Per Share (Detail)
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
 
 
Anti-dilutive securities excluded from diluted earnings per share
16,832,380 
15,096,948 
Stock options [Member]
 
 
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
 
 
Anti-dilutive securities excluded from diluted earnings per share
4,965,280 
4,096,948 
Restricted Stock Units [Member]
 
 
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
 
 
Anti-dilutive securities excluded from diluted earnings per share
76,100 
 
Stock Warrants
 
 
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
 
 
Anti-dilutive securities excluded from diluted earnings per share
11,791,000 
 
Convertible Senior Notes
 
 
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
 
 
Anti-dilutive securities excluded from diluted earnings per share
 
11,000,000 
Property and Equipment, Net, and Other Assets - Components of Property and Equipment,net,and other assets (Detail) (USD $)
Mar. 31, 2015
Dec. 31, 2014
Property Plant And Equipment [Abstract]
 
 
Property and equipment, net of depreciation
$ 627,935 
$ 533,837 
Security deposits and other assets
232,333 
219,656 
Property and Equipment net and other assets
$ 860,268 
$ 753,493 
Property and Equipment, Net, and Other Assets - Components of Property and Equipment,net,and other assets ( Parenthetical) (Detail) (USD $)
Mar. 31, 2015
Dec. 31, 2014
Property Plant And Equipment [Abstract]
 
 
Depreciation
$ 1,768,881 
$ 1,692,835 
Property and Equipment, Net, and Other Assets - Additional Information (Detail) (USD $)
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Property Plant And Equipment [Abstract]
 
 
Depreciation
$ 76,046 
$ 69,567 
Goodwill and Other Intangible Assets - Schedule of Finite-Lived Intangible Assets (Detail) (USD $)
3 Months Ended 12 Months Ended
Mar. 31, 2015
Dec. 31, 2014
Finite Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
$ 20,652,387 
$ 20,501,550 
Accumulated Amortization
6,289,024 
5,385,933 
Net
14,363,363 
15,115,617 
Customer relationships [Member]
 
 
Finite Lived Intangible Assets [Line Items]
 
 
Estimated Useful Life
5 years 
5 years 
Gross Carrying Amount
12,720,000 
12,720,000 
Accumulated Amortization
4,346,000 
3,710,000 
Net
8,374,000 
9,010,000 
Trademarks [Member]
 
 
Finite Lived Intangible Assets [Line Items]
 
 
Estimated Useful Life
7 years 
7 years 
Gross Carrying Amount
6,230,000 
6,230,000 
Accumulated Amortization
1,520,417 
1,297,917 
Net
4,709,583 
4,932,083 
Patents [Member]
 
 
Finite Lived Intangible Assets [Line Items]
 
 
Estimated Useful Life
7 years 
7 years 
Gross Carrying Amount
230,683 
230,683 
Accumulated Amortization
230,683 
230,683 
Software [Member]
 
 
Finite Lived Intangible Assets [Line Items]
 
 
Estimated Useful Life
7 years 
7 years 
Gross Carrying Amount
1,164,551 
1,013,714 
Accumulated Amortization
55,132 
25,899 
Net
1,109,419 
987,815 
Customer lists [Member]
 
 
Finite Lived Intangible Assets [Line Items]
 
 
Estimated Useful Life
5 years 
5 years 
Gross Carrying Amount
307,153 
307,153 
Accumulated Amortization
136,792 
121,434 
Net
$ 170,361 
$ 185,719 
Goodwill and Other Intangible Assets - Schedule of Indefinite-Lived Intangible Assets (Detail) (USD $)
3 Months Ended
Mar. 31, 2015
Dec. 31, 2014
Indefinite lived intangible asset:
 
 
Goodwill Useful Life Description
Indefinite 
 
Goodwill
$ 58,337,290 
$ 58,337,290 
Goodwill and Other Intangible Assets - Additional Information (Detail) (USD $)
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Goodwill And Intangible Assets Disclosure [Abstract]
 
 
Amortization of intangibles
$ 903,091 
$ 882,096 
Indefinite-lived intangible assets other than goodwill
$ 0 
 
Line of Credit - Additional Information (Detail) (USD $)
3 Months Ended 3 Months Ended 0 Months Ended 3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Dec. 31, 2014
Mar. 31, 2015
Revolving Credit Facility [Member]
Mar. 31, 2014
Revolving Credit Facility [Member]
May 9, 2014
Revolving Credit Facility [Member]
Sixth Amendment to Loan Agreement with Regions Bank [Member]
Mar. 31, 2015
Revolving Credit Facility [Member]
Sixth Amendment to Loan Agreement with Regions Bank [Member]
Mar. 31, 2015
Revolving Credit Facility [Member]
Base Rate [Member]
Mar. 31, 2015
Revolving Credit Facility [Member]
Eurodollar [Member]
Sixth Amendment to Loan Agreement with Regions Bank [Member]
Mar. 31, 2015
Revolving Credit Facility [Member]
Eligible Accounts Receivable [Member]
Largest Customer [Member]
Mar. 31, 2015
Revolving Credit Facility [Member]
Eligible Accounts Receivable [Member]
Other Customer [Member]
Line of Credit Facility [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Line of credit facility agreement date
 
 
 
Dec. 15, 2010 
 
 
 
 
 
 
 
Working capital from loan agreement with Regions Bank
 
 
 
$ 10,000,000 
 
 
 
 
 
 
 
Percentage of accounts receivable form Quest's customers
 
 
 
 
 
 
 
 
 
80.00% 
85.00% 
Interest on outstanding principal amount
 
 
 
2.67% 
 
 
 
 
 
 
 
Fluctuating interest rate based on base rate
 
 
 
 
 
 
 
1.50% 
 
 
 
Outstanding principal amount on line of credit facility
5,250,000 
 
5,250,000 
5,250,000 
 
 
 
 
 
 
 
Amount available to be borrow under line of credit facility
 
 
 
4,750,000