QUEST RESOURCE HOLDING CORP, 10-Q filed on 11/14/2017
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2017
Nov. 1, 2017
Document And Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Sep. 30, 2017 
 
Document Fiscal Year Focus
2017 
 
Document Fiscal Period Focus
Q3 
 
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
 
15,281,324 
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $)
Sep. 30, 2017
Dec. 31, 2016
Current assets:
 
 
Cash and cash equivalents
$ 1,115,761 
$ 1,328,174 
Accounts receivable, less allowance for doubtful accounts of $824,074 and $333,578 as of September 30, 2017 and December 31, 2016, respectively
20,030,064 
34,828,495 
Prepaid expenses and other current assets
1,483,696 
2,671,002 
Total current assets
22,629,521 
38,827,671 
Goodwill
58,337,290 
58,337,290 
Intangible assets, net
5,910,239 
8,489,586 
Property and equipment, net, and other assets
1,582,006 
2,414,921 
Total assets
88,459,056 
108,069,468 
Current liabilities:
 
 
Accounts payable and accrued liabilities
17,822,741 
35,305,559 
Deferred revenue and other current liabilities
324,065 
406,057 
Total current liabilities
18,146,806 
35,711,616 
Revolving credit facility, net
6,730,893 
4,750,000 
Other long-term liabilities
43,552 
335,644 
Total liabilities
24,921,251 
40,797,260 
Commitments and contingencies
   
   
Stockholders’ equity:
 
 
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued or outstanding as of September 30, 2017 and December 31, 2016, respectively
   
   
Common stock, $0.001 par value, 200,000,000 shares authorized, 15,281,324 and 15,272,575 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively
15,281 
15,273 
Additional paid-in capital
158,677,737 
158,171,831 
Accumulated deficit
(95,155,213)
(90,914,896)
Total stockholders’ equity
63,537,805 
67,272,208 
Total liabilities and stockholders’ equity
$ 88,459,056 
$ 108,069,468 
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (Unaudited) (USD $)
Sep. 30, 2017
Dec. 31, 2016
Statement Of Financial Position [Abstract]
 
 
Allowance for doubtful accounts receivable
$ 824,074 
$ 333,578 
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
15,281,324 
15,272,575 
Common stock, shares outstanding
15,281,324 
15,272,575 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Income Statement [Abstract]
 
 
 
 
Revenue
$ 31,930,550 
$ 46,157,414 
$ 115,840,966 
$ 138,771,985 
Cost of revenue
27,904,006 
42,562,397 
103,180,609 
128,036,082 
Gross profit
4,026,544 
3,595,017 
12,660,357 
10,735,903 
Operating expenses:
 
 
 
 
Selling, general, and administrative
3,977,662 
4,923,283 
13,539,654 
14,215,944 
Depreciation and amortization
1,002,687 
1,013,225 
2,999,747 
3,039,653 
Total operating expenses
4,980,349 
5,936,508 
16,539,401 
17,255,597 
Operating loss
(953,805)
(2,341,491)
(3,879,044)
(6,519,694)
Other expense:
 
 
 
 
Interest expense
(126,507)
(62,345)
(361,273)
(176,207)
Total other expense
(126,507)
(62,345)
(361,273)
(176,207)
Loss before taxes
(1,080,312)
(2,403,836)
(4,240,317)
(6,695,901)
Net loss
(1,080,312)
(2,403,836)
(4,240,317)
(6,695,901)
Net loss applicable to common stockholders
$ (1,080,312)
$ (2,403,836)
$ (4,240,317)
$ (6,695,901)
Net loss per share
 
 
 
 
Basic and diluted
$ (0.07)
$ (0.16)
$ (0.28)
$ (0.46)
Weighted average number of common shares outstanding
 
 
 
 
Basic and diluted
15,281,324 
14,853,675 
15,276,741 
14,559,874 
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, 2016
$ 67,272,208 
$ 15,273 
$ 158,171,831 
$ (90,914,896)
Beginning Balance, Shares at Dec. 31, 2016
 
15,272,575 
 
 
Stock-based compensation
493,942 
 
493,942 
 
Shares issued for Employee Stock Purchase Plan options, Value
11,972 
11,964 
 
Shares issued for Employee Stock Purchase Plan options, Shares
 
8,749 
 
 
Net loss
(4,240,317)
 
 
(4,240,317)
Ending Balance at Sep. 30, 2017
$ 63,537,805 
$ 15,281 
$ 158,677,737 
$ (95,155,213)
Ending Balance, Shares at Sep. 30, 2017
 
15,281,324 
 
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $)
9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Cash flows from operating activities:
 
 
Net loss
$ (4,240,317)
$ (6,695,901)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
Depreciation
339,272 
354,495 
Amortization of intangibles
2,787,236 
2,771,912 
Amortization of debt issuance costs
54,775 
 
Provision for doubtful accounts
618,939 
269,057 
Stock-based compensation
1,540,817 
1,882,572 
Changes in operating assets and liabilities:
 
 
Accounts receivable
14,179,492 
824,928 
Prepaid expenses and other current assets
140,431 
(690,394)
Security deposits and other assets
533,810 
(943,102)
Accounts payable and accrued liabilities
(17,482,818)
(547,751)
Deferred revenue and other current liabilities
(79,913)
191,109 
Other long-term liabilities
(33,356)
114,240 
Net cash used in operating activities
(1,641,632)
(2,468,835)
Cash flows from investing activities:
 
 
Purchase of property and equipment
(40,167)
(451,590)
Purchase of capitalized software development
(207,889)
(272,012)
Net cash used in investing activities
(248,056)
(723,602)
Cash flows from financing activities:
 
 
Proceeds from credit facilities
81,939,205 
16,500,000 
Repayments of credit facilities
(79,991,362)
(17,250,000)
Debt issuance costs
(234,334)
 
Proceeds from the sale of common stock and warrants, net of issuance costs
 
2,889,350 
Proceeds from shares issued for Employee Stock Purchase Plan
11,972 
27,435 
Repayments of capital lease obligations
(48,206)
(90,304)
Net cash provided by financing activities
1,677,275 
2,076,481 
Net decrease in cash and cash equivalents
(212,413)
(1,115,956)
Cash and cash equivalents at beginning of period
1,328,174 
2,989,731 
Cash and cash equivalents at end of period
1,115,761 
1,873,775 
Supplemental cash flow information:
 
 
Cash paid for interest
270,094 
175,219 
Supplemental non-cash activities:
 
 
Repayment of Regions line of credit
(9,250,000)
 
Acquisition of equipment under capital leases
 
33,106 
Shares issued for consulting services
 
1,675,000 
ABL Facility [Member]
 
 
Supplemental non-cash activities:
 
 
Draw on Citizens ABL facility
9,250,000 
 
Draw on Citizens ABL facility for repayment of capital lease obligation
212,609 
 
Debt issuance costs financed with Citizens ABL facility
$ 235,173 
 
The Company, Description of Business, and Liquidity
The Company, Description of Business, and Liquidity

1. The Company, Description of Business, and Liquidity

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 (“LDI”), Youchange, Inc. (“Youchange”), Quest Vertigent Corporation (“QVC”), and Quest Vertigent One, LLC (“QV One”) (collectively, “we,” “us,” “our,” or “our company”).  

Operations – We provide businesses with one-stop management programs to reuse, recycle, and dispose of a wide variety of waste streams and recyclables generated by their businesses.  Our comprehensive reuse, recycling, and proper disposal management programs are designed to enable regional and national customers to have a single point of contact for managing a variety of waste streams and recyclables.  This business generates substantially all of our revenue.  We also operate environmentally based social media and online data platforms that contain information and instructions necessary to empower consumers and consumer product companies to recycle or properly dispose of household products and materials.  Our directory of local recycling and proper disposal options empowers consumers directly and enables consumer product companies to empower their customers by giving them the guidance necessary for the proper recycling or disposal of a wide range of household products and materials, including the “why, where, and how” of recycling.  Three customers accounted for 52.0% and two customers accounted for 55.6% of revenue for the three months ended September 30, 2017 and 2016, respectively.  Three customers accounted for 57.8% and two customers accounted for 55.5% of revenue for the nine months ended September 30, 2017 and 2016, respectively.

Liquidity – As of September 30, 2017 and December 31, 2016, our working capital balance was $4,482,715 and $3,116,055, respectively.

Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Principles of Presentation and Consolidation

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 our audited financial statements for the year ended December 31, 2016. 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 September 30, 2017 and the results of our operations and cash flows for the periods presented. We derived the December 31, 2016 condensed consolidated balance sheet data from audited financial statements, but did not include all disclosures required by GAAP. As Quest, Earth911, LDI, Youchange, QVC, and QV One each operate as ecology-based green service companies, we did not deem segment reporting necessary.

All intercompany accounts and transactions have been eliminated in consolidation. Interim results are subject to seasonal variations, and the results of operations for the three months ended September 30, 2017 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

 

collectibility is reasonably assured.

Persuasive Evidence of an Arrangement Exists – 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 Rendered – We perform all services or deliver all products prior to recognizing revenue. We deem services to be performed when the services have been completed.

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.

Collectibility Is Reasonably Assured – We assess collectibility on a customer by customer basis based on criteria developed by us.

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.  We 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. Through the second quarter of 2017, we had one contract accounted for as management fees with revenue of nil and $88,997 for the three months ended September 30, 2017 and 2016, respectively, and revenue of $78,145 and $239,723 for the nine months ended September 30, 2017 and 2016, respectively.  Our gross billings on this management fee contract were nil and $1,523,282 for the three months ended September 30, 2017 and 2016, respectively, and $2,173,022 and $3,788,592 for the nine months ended September 30, 2017 and 2016, respectively.  This management fee contract ended in the second quarter of 2017 and we no longer have any similar contracts. 

We recognize licensing fees 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 2017 and 2016 would be anti-dilutive. These potentially dilutive securities include stock options and warrants and totaled 3,094,321 and 3,266,799 shares at September 30, 2017 and 2016, respectively.

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

 

 

 

September 30,

 

 

 

2017

 

 

2016

 

 

 

(Unaudited)

 

 

(Unaudited)

 

Anti-dilutive securities excluded from diluted loss per share:

 

 

 

 

 

 

 

 

Stock options

 

 

1,360,756

 

 

 

1,271,858

 

Warrants

 

 

1,733,565

 

 

 

1,994,941

 

Total anti-dilutive securities excluded from diluted loss per share

 

 

3,094,321

 

 

 

3,266,799

 

 

Inventories

We record inventories within “Prepaid expenses and other current assets” in our condensed consolidated balance sheets.  As of September 30, 2017 and December 31, 2016, all inventories consisted of waste disposal equipment with cost balances of $11,271 and $12,996, respectively, with no reserve for inventory obsolescence at either date.

Recent Accounting Pronouncements

Adopted

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment, which aims to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test.  Previously, Step 2 measured a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill.  Instead, under the new ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and a goodwill impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. In no circumstances would the loss recognized exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for us on January 1, 2020, with early adoption permitted.  We adopted this ASU in the second quarter of 2017 with our interim impairment test as further discussed in Note 4.

Pending Adoption

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). This standard replaces existing revenue recognition guidance, which in many cases was tailored for specific industries, with a uniform accounting standard applicable to all industries and transactions. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to correlate with the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The standard also requires enhanced disclosures regarding revenue recognition.  This new standard, as amended, will be effective for us on January 1, 2018 and can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. While we are still evaluating the impact of adopting ASU 2014-09 on our consolidated financial statements, we currently do not expect it to have a material impact on the timing of revenue recognition.  We anticipate adopting the standard on a full retrospective basis.

To assess the impact of the standard, we are using internal resources to lead the implementation efforts.  Our internal resources reviewed the amended guidance, attended training classes and consulted with other accounting professionals to assist with interpretation of the amended guidance. We completed an impact assessment of the guidance changes affecting our company and developed an approach to address each change. We are in the process of reviewing our portfolio of service contracts and documenting key contract terms for areas impacted by the amended guidance.  In addition, we are assessing the effect this guidance may have on the timing of the recognition of costs we incur to obtain and fulfill our contracts.  Changes to processes and internal controls are being identified to meet the standard’s reporting and disclosure requirements. We continue to work through an analysis of the increased disclosures required by the new guidance.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842).  The update improves financial reporting about leasing transactions by requiring a lessee to record on the balance sheet the assets and liabilities for the rights and obligations created by lease terms of more than 12 months. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are still evaluating the impact of adopting ASU 2016-02 on our consolidated financial statements, but given the material amount of our future minimum payments under non-cancellable operating leases, primarily office rent, at September 30, 2017, we expect to recognize a material right-of-use lease asset and lease liability upon adoption of the ASU.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which provides guidance on measuring credit losses on financial instruments.  The amended guidance replaces current incurred loss impairment methodology of recognizing credit losses when a loss is probable with a methodology that reflects expected credit losses and requires a broader range of reasonable and supportable information to assess credit loss estimates.  ASU 2016-13 is effective for us on January 1, 2020, with early adoption permitted on January 1, 2019.  We are assessing the provisions of this amended guidance; however, the adoption of the standard is not expected to have a material effect on our consolidated financial statements.  

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which provides guidance on the treatment of cash receipts and cash payments for certain types of cash transactions, to eliminate diversity in practice in the presentation of the cash flow statement. The adoption of ASU 2016-15 will be required on a retrospective basis beginning January 1, 2018, with early adoption permitted. We have not yet determined when we will adopt ASU 2016-15.  The adoption of the standard is not expected to have a material effect on our consolidated financial statements.

There have been no other recent accounting pronouncements or changes in accounting pronouncements that have been issued but not yet adopted that are of significance, or potential significance to us.

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

3. Property and Equipment, Net, and Other Assets

At September 30, 2017 and December 31, 2016, property and equipment, net, and other assets consisted of the following:

 

 

 

September 30,

 

 

December 31,

 

 

 

2017

 

 

2016

 

 

 

(Unaudited)

 

 

 

 

 

Property and equipment, net of accumulated depreciation of $2,089,097

     and $2,442,549 as of September 30, 2017 and December 31, 2016,

     respectively

 

$

1,041,745

 

 

$

1,340,850

 

Security deposits and other assets

 

 

540,261

 

 

 

1,074,071

 

    Property and equipment, net, and other assets

 

$

1,582,006

 

 

$

2,414,921

 

 

We compute depreciation using the straight-line method over the estimated useful lives of the property and equipment. Depreciation expense for the three months ended September 30, 2017 was $110,582, inclusive of $43,462 of depreciation expense reflected within “Cost of revenue” in our condensed consolidated statement of operations as it related to assets used in directly servicing customer contracts, and was $339,272 for the nine months ended September 30, 2017, inclusive of $126,761 of depreciation expense reflected within “Cost of revenue.” Depreciation expense for the three months ended September 30, 2016 was $123,283, inclusive of $38,490 of depreciation expense reflected within “Cost of revenue,” and was $354,495 for the nine months ended September 30, 2016, inclusive of $86,754 reflected within “Cost of revenue.”  At September 30, 2017, the carrying value of our capital lease assets was $269,598, net of $230,499 of accumulated depreciation. At December 31, 2016, the carrying value of our capital lease assets was $347,135, net of $152,962 of accumulated depreciation.  

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:

  

September 30, 2017 (Unaudited)

 

Estimated

Useful Life

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

 

Finite lived intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

5 years

 

$

12,720,000

 

 

$

10,706,000

 

 

$

2,014,000

 

Trademarks

 

7 years

 

 

6,242,055

 

 

 

3,746,893

 

 

 

2,495,162

 

Patents

 

7 years

 

 

230,683

 

 

 

230,683

 

 

 

 

Software

 

7 years

 

 

1,857,396

 

 

 

488,819

 

 

 

1,368,577

 

Customer lists

 

5 years

 

 

307,153

 

 

 

274,653

 

 

 

32,500

 

Total finite lived intangible assets

 

 

 

$

21,357,287

 

 

$

15,447,048

 

 

$

5,910,239

 

 

December 31, 2016

 

Estimated

Useful Life

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

 

Finite lived intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

5 years

 

$

12,720,000

 

 

$

8,798,000

 

 

$

3,922,000

 

Trademarks

 

7 years

 

 

6,242,055

 

 

 

3,078,845

 

 

 

3,163,210

 

Patents

 

7 years

 

 

230,683

 

 

 

230,683

 

 

 

 

Software

 

7 years

 

 

1,649,507

 

 

 

307,989

 

 

 

1,341,518

 

Customer lists

 

5 years

 

 

307,153

 

 

 

244,295

 

 

 

62,858

 

Total finite lived intangible assets

 

 

 

$

21,149,398

 

 

$

12,659,812

 

 

$

8,489,586

 

 

September 30, 2017 (Unaudited) and December 31, 2016

 

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. Amortization expense related to finite lived intangible assets was $935,567 and $928,431 for the three months ended September 30, 2017 and 2016, respectively. Amortization expense related to finite lived intangible assets was $2,787,236 and $2,771,912 for the nine months ended September 30, 2017 and 2016, respectively.  We have no indefinite-lived intangible assets other than goodwill. The goodwill is not deductible for tax purposes.

 

We performed our annual impairment analysis for goodwill and other intangible assets in the second quarter of 2017 with no impairment recorded.

Accounts Payable and Accrued Liabilities
Accounts Payable and Accrued Liabilities

5.  Accounts Payable and Accrued Liabilities

The components of Accounts payable and accrued liabilities are as follows:

 

 

 

September 30,

 

 

December 31,

 

 

 

2017

 

 

2016

 

 

 

(Unaudited)

 

 

 

 

 

Accounts payable

 

$

16,220,566

 

 

$

32,944,202

 

Accrued taxes

 

 

959,743

 

 

 

1,272,832

 

Employee compensation

 

 

405,326

 

 

 

529,945

 

Other

 

 

237,106

 

 

 

558,580

 

 

 

$

17,822,741

 

 

$

35,305,559

 

 

Revolving Credit Facility
Revolving Credit Facility

6. Revolving Credit Facility

We entered into a Loan, Security and Guaranty Agreement (the “Citizens Loan Agreement”), dated as of February 24, 2017, with Citizens Bank, National Association as a lender, and as administrative agent, collateral agent, and issuing bank, which provides for an asset-based revolving credit facility (the “ABL Facility”) of up to $20 million, and an equipment loan facility in the maximum principal amount of $2.0 million. The ABL Facility replaced our Revolving Credit Note and Loan Agreement with Regions Bank, which was paid off and terminated effective February 24, 2017.  

Each loan under the ABL Facility bears interest, at our option, at either the Base Rate, as defined in the agreement, plus a margin ranging from 1.0% to 1.5% (5.75% as of September 30, 2017), or the LIBOR lending rate for the interest period in effect, plus a margin ranging from 2.0% to 2.5% (3.54% as of September 30, 2017). The maturity date of the revolving credit facility is February 24, 2022.  

Loans under the equipment loan facility may be requested at any time until February 24, 2019. Each loan under the equipment loan facility bears interest, at our option, at either the Base Rate, as defined in the agreement, plus 2.00%, or the LIBOR lending rate for the interest period in effect, plus 3.00%. The maturity date of the equipment loan facility is February 24, 2022.

The ABL Facility contains certain specific financial covenants regarding a minimum liquidity requirement and a minimum fixed charge coverage ratio. The minimum fixed charge coverage ratio covenant will not apply until May 15, 2018, when the trailing 12-month period ending March 31, 2018 has been reported. In addition, the ABL Facility contains negative covenants limiting, among other things, additional indebtedness, transactions with affiliates, additional liens, sales of assets, dividends, investments and advances, mergers and acquisitions, and other matters customarily restricted in such agreements.

The amount of interest expense related to borrowings for the three months ended September 30, 2017 and 2016 was $100,511 and $57,331, respectively.  The amount of interest expense related to borrowings for the nine months ended September 30, 2017 and 2016 was $297,870 and $161,642, respectively.    Debt issuance cost of $469,507 is being amortized to interest expense over the life of the new revolving credit facility beginning March 1, 2017.  As of September 30, 2017, the unamortized portion of the debt issuance costs was $414,732.  The amount of interest expense related to the amortization of the discount on the revolving credit facility for the nine months ended September 30, 2017 was $54,775.  The ABL Facility liability was $6,730,893, net of unamortized debt issuance cost of $414,732, with approximately $4,151,000 of additional availability as of September 30, 2017.  There were no draws made on the equipment loan facility as of September 30, 2017.

Capital Lease Obligations
Capital Lease Obligations

7. Capital Lease Obligations

At September 30, 2017 and December 31, 2016, total capital lease obligations outstanding consisted of the following:

 

 

 

September 30,

 

 

December 31,

 

 

 

2017

 

 

2016

 

 

 

(Unaudited)

 

 

 

 

 

Capital lease obligations, imputed interest at 3.00% to 13.29%, with monthly payments of approximately $6,000, expiring through November 2020, secured by computer and telephone equipment

 

$

54,438

 

 

$

315,253

 

Total

 

 

54,438

 

 

 

315,253

 

Less: current maturities

 

 

(48,775

)

 

 

(106,184

)

Long-term portion

 

$

5,663

 

 

$

209,069

 

 

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 September 30, 2017 and 2016 was $992 and $3,464, respectively.  The amount of interest expense related to our capital leases for the nine months ended September 30, 2017 and 2016 was $5,090 and $11,117, respectively.

Income Taxes
Income Taxes

8. 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 to be realized. Realization of our net operating loss carryforward was not reasonably assured as of September 30, 2017 and December 31, 2016, and we have recorded a valuation allowance of $17,400,000 and $15,555,000, respectively, against deferred tax assets in excess of deferred tax liabilities in the accompanying condensed consolidated financial statements. As of September 30, 2017 and December 31, 2016, we had federal income tax net operating loss carryforwards of approximately $19,300,000 and $18,500,000, respectively, which expire at various dates beginning in 2031.

 

Fair Value of Financial Instruments
Fair Value of Financial Instruments

9. Fair Value of Financial Instruments

Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, deferred revenue, revolving credit facility, and capital lease obligations. We do not believe that we are exposed to significant interest, currency, or credit risks arising from these financial instruments.  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 and revolving credit facility, based on borrowing rates currently available to us for loans with similar terms and maturities.

 

Stockholders' Equity
Stockholders' Equity

10. 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 15,281,324 and 15,272,575 shares were issued and outstanding as of September 30, 2017 and December 31, 2016, respectively.

Shares Issued for Employee Stock Purchase Plan Options On May 23, 2017, we issued 8,749 shares to employees for $11,972 under our 2014 Employee Stock Purchase Plan (“ESPP”) for options that vested and were exercised.    

Shares Issued for Consulting Services – On September 28, 2016, we issued 418,750 fully vested restricted shares of our common stock to a third party for consulting services under a one-year contract.  We recorded an expense of $1,046,875 for the nine months ended September 30, 2017 within “Selling, general, and administrative” expenses in our condensed consolidated statement of operations.  The prepaid asset associated with this consulting services contract was fully amortized as of September 30, 2017.

Warrants – During 2016, we issued warrants to purchase 521,060 shares, and no holders have exercised warrants.  At September 30, 2017, we had outstanding exercisable warrants to purchase 1,733,565 shares of common stock.  

The following table summarizes the warrants issued and outstanding as of September 30, 2017:

 

 

 

 

Date of

 

Exercise

 

 

Shares of

 

Description

 

Issuance

 

Expiration

 

Price

 

 

Common Stock

 

Exercisable warrants

 

 

 

 

 

 

 

 

 

 

 

 

Warrants

 

09/24/2014

 

09/24/2019

 

$

20.00

 

 

 

1,125,005

 

Warrants

 

10/20/2014

 

10/20/2019

 

$

20.00

 

 

 

87,500

 

Warrants

 

3/30/2016

 

03/30/2021

 

$

3.88

 

 

 

521,060

 

Total warrants issued and outstanding

 

 

 

 

 

 

1,733,565

 

Employee Stock Purchase Plan – On September 17, 2014, our stockholders approved our 2014 ESPP. We recorded expense of $14,686 and $28,200 related to the ESPP during the nine months ended September 30, 2017 and 2016, respectively.

Stock Options – We recorded stock option expense of $479,256 and $1,623,029 for the nine months ended September 30, 2017 and 2016, respectively.  The following table summarizes the stock option activity for the nine month period ended September 30, 2017:

 

 

 

Stock Options

 

 

 

 

 

 

 

 

 

Weighted-

 

 

 

 

 

 

 

Exercise

 

Average

 

 

 

Number

 

 

Price Per

 

Exercise Price

 

 

 

of Shares

 

 

Share

 

Per Share

 

Outstanding at December 31, 2016

 

 

1,317,402

 

 

$2.08 — $26.00

 

$

9.09

 

Granted

 

 

79,500

 

 

$2.13  —  $2.71

 

$

2.50

 

Canceled/Forfeited

 

 

(36,146

)

 

$6.40 — $23.20

 

$

12.35

 

Outstanding at September 30, 2017

 

 

1,360,756

 

 

$2.08 — $26.00

 

$

8.62

 

 

Summary of Significant Accounting Policies (Policies)

Principles of Presentation and Consolidation

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 our audited financial statements for the year ended December 31, 2016. 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 September 30, 2017 and the results of our operations and cash flows for the periods presented. We derived the December 31, 2016 condensed consolidated balance sheet data from audited financial statements, but did not include all disclosures required by GAAP. As Quest, Earth911, LDI, Youchange, QVC, and QV One each operate as ecology-based green service companies, we did not deem segment reporting necessary.

All intercompany accounts and transactions have been eliminated in consolidation. Interim results are subject to seasonal variations, and the results of operations for the three months ended September 30, 2017 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

 

collectibility is reasonably assured.

Persuasive Evidence of an Arrangement Exists – 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 Rendered – We perform all services or deliver all products prior to recognizing revenue. We deem services to be performed when the services have been completed.

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.

Collectibility Is Reasonably Assured – We assess collectibility on a customer by customer basis based on criteria developed by us.

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.  We 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. Through the second quarter of 2017, we had one contract accounted for as management fees with revenue of nil and $88,997 for the three months ended September 30, 2017 and 2016, respectively, and revenue of $78,145 and $239,723 for the nine months ended September 30, 2017 and 2016, respectively.  Our gross billings on this management fee contract were nil and $1,523,282 for the three months ended September 30, 2017 and 2016, respectively, and $2,173,022 and $3,788,592 for the nine months ended September 30, 2017 and 2016, respectively.  This management fee contract ended in the second quarter of 2017 and we no longer have any similar contracts. 

We recognize licensing fees 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 2017 and 2016 would be anti-dilutive. These potentially dilutive securities include stock options and warrants and totaled 3,094,321 and 3,266,799 shares at September 30, 2017 and 2016, respectively.

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

 

 

 

September 30,

 

 

 

2017

 

 

2016

 

 

 

(Unaudited)

 

 

(Unaudited)

 

Anti-dilutive securities excluded from diluted loss per share:

 

 

 

 

 

 

 

 

Stock options

 

 

1,360,756

 

 

 

1,271,858

 

Warrants

 

 

1,733,565

 

 

 

1,994,941

 

Total anti-dilutive securities excluded from diluted loss per share

 

 

3,094,321

 

 

 

3,266,799

 

 

Inventories

We record inventories within “Prepaid expenses and other current assets” in our condensed consolidated balance sheets.  As of September 30, 2017 and December 31, 2016, all inventories consisted of waste disposal equipment with cost balances of $11,271 and $12,996, respectively, with no reserve for inventory obsolescence at either date.

Recent Accounting Pronouncements

Adopted

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment, which aims to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test.  Previously, Step 2 measured a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill.  Instead, under the new ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and a goodwill impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. In no circumstances would the loss recognized exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for us on January 1, 2020, with early adoption permitted.  We adopted this ASU in the second quarter of 2017 with our interim impairment test as further discussed in Note 4.

Pending Adoption

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). This standard replaces existing revenue recognition guidance, which in many cases was tailored for specific industries, with a uniform accounting standard applicable to all industries and transactions. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to correlate with the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The standard also requires enhanced disclosures regarding revenue recognition.  This new standard, as amended, will be effective for us on January 1, 2018 and can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. While we are still evaluating the impact of adopting ASU 2014-09 on our consolidated financial statements, we currently do not expect it to have a material impact on the timing of revenue recognition.  We anticipate adopting the standard on a full retrospective basis.

To assess the impact of the standard, we are using internal resources to lead the implementation efforts.  Our internal resources reviewed the amended guidance, attended training classes and consulted with other accounting professionals to assist with interpretation of the amended guidance. We completed an impact assessment of the guidance changes affecting our company and developed an approach to address each change. We are in the process of reviewing our portfolio of service contracts and documenting key contract terms for areas impacted by the amended guidance.  In addition, we are assessing the effect this guidance may have on the timing of the recognition of costs we incur to obtain and fulfill our contracts.  Changes to processes and internal controls are being identified to meet the standard’s reporting and disclosure requirements. We continue to work through an analysis of the increased disclosures required by the new guidance.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842).  The update improves financial reporting about leasing transactions by requiring a lessee to record on the balance sheet the assets and liabilities for the rights and obligations created by lease terms of more than 12 months. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are still evaluating the impact of adopting ASU 2016-02 on our consolidated financial statements, but given the material amount of our future minimum payments under non-cancellable operating leases, primarily office rent, at September 30, 2017, we expect to recognize a material right-of-use lease asset and lease liability upon adoption of the ASU.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which provides guidance on measuring credit losses on financial instruments.  The amended guidance replaces current incurred loss impairment methodology of recognizing credit losses when a loss is probable with a methodology that reflects expected credit losses and requires a broader range of reasonable and supportable information to assess credit loss estimates.  ASU 2016-13 is effective for us on January 1, 2020, with early adoption permitted on January 1, 2019.  We are assessing the provisions of this amended guidance; however, the adoption of the standard is not expected to have a material effect on our consolidated financial statements.  

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which provides guidance on the treatment of cash receipts and cash payments for certain types of cash transactions, to eliminate diversity in practice in the presentation of the cash flow statement. The adoption of ASU 2016-15 will be required on a retrospective basis beginning January 1, 2018, with early adoption permitted. We have not yet determined when we will adopt ASU 2016-15.  The adoption of the standard is not expected to have a material effect on our consolidated financial statements.

There have been no other recent accounting pronouncements or changes in accounting pronouncements that have been issued but not yet adopted that are of significance, or potential significance to us.

Summary of Significant Accounting Policies (Tables)
Schedule of Anti-dilutive Securities Excluded from Diluted Loss Per Share

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

 

 

 

September 30,

 

 

 

2017

 

 

2016

 

 

 

(Unaudited)

 

 

(Unaudited)

 

Anti-dilutive securities excluded from diluted loss per share:

 

 

 

 

 

 

 

 

Stock options

 

 

1,360,756

 

 

 

1,271,858

 

Warrants

 

 

1,733,565

 

 

 

1,994,941

 

Total anti-dilutive securities excluded from diluted loss per share

 

 

3,094,321

 

 

 

3,266,799

 

 

Property and Equipment, Net, and Other Assets (Tables)
Components Property and Equipment, Net, and Other Assets

At September 30, 2017 and December 31, 2016, property and equipment, net, and other assets consisted of the following:

 

 

 

September 30,

 

 

December 31,

 

 

 

2017

 

 

2016

 

 

 

(Unaudited)

 

 

 

 

 

Property and equipment, net of accumulated depreciation of $2,089,097

     and $2,442,549 as of September 30, 2017 and December 31, 2016,

     respectively

 

$

1,041,745

 

 

$

1,340,850

 

Security deposits and other assets

 

 

540,261

 

 

 

1,074,071

 

    Property and equipment, net, and other assets

 

$

1,582,006

 

 

$

2,414,921

 

 

Goodwill and Other Intangible Assets (Tables)

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

  

September 30, 2017 (Unaudited)

 

Estimated

Useful Life

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

 

Finite lived intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

5 years

 

$

12,720,000

 

 

$

10,706,000

 

 

$

2,014,000

 

Trademarks

 

7 years

 

 

6,242,055

 

 

 

3,746,893

 

 

 

2,495,162

 

Patents

 

7 years

 

 

230,683

 

 

 

230,683

 

 

 

 

Software

 

7 years

 

 

1,857,396

 

 

 

488,819

 

 

 

1,368,577

 

Customer lists

 

5 years

 

 

307,153

 

 

 

274,653

 

 

 

32,500

 

Total finite lived intangible assets

 

 

 

$

21,357,287

 

 

$

15,447,048

 

 

$

5,910,239

 

 

December 31, 2016

 

Estimated

Useful Life

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

 

Finite lived intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

5 years

 

$

12,720,000

 

 

$

8,798,000

 

 

$

3,922,000

 

Trademarks

 

7 years

 

 

6,242,055

 

 

 

3,078,845

 

 

 

3,163,210

 

Patents

 

7 years

 

 

230,683

 

 

 

230,683

 

 

 

 

Software

 

7 years

 

 

1,649,507

 

 

 

307,989

 

 

 

1,341,518

 

Customer lists

 

5 years

 

 

307,153

 

 

 

244,295

 

 

 

62,858

 

Total finite lived intangible assets

 

 

 

$

21,149,398

 

 

$

12,659,812

 

 

$

8,489,586

 

 

 

September 30, 2017 (Unaudited) and December 31, 2016

 

Estimated

Useful Life

 

Carrying

Amount

 

Indefinite lived intangible asset:

 

 

 

 

 

 

Goodwill

 

Indefinite

 

$

58,337,290

 

 

Accounts Payable and Accrued Liabilities (Tables)
Components of Accounts Payable and Accrued Liabilities

The components of Accounts payable and accrued liabilities are as follows:

 

 

 

September 30,

 

 

December 31,

 

 

 

2017

 

 

2016

 

 

 

(Unaudited)

 

 

 

 

 

Accounts payable

 

$

16,220,566

 

 

$

32,944,202

 

Accrued taxes

 

 

959,743

 

 

 

1,272,832

 

Employee compensation

 

 

405,326

 

 

 

529,945

 

Other

 

 

237,106

 

 

 

558,580

 

 

 

$

17,822,741

 

 

$

35,305,559

 

 

Capital Lease Obligations (Tables)
Summary of Capital Lease Obligations

At September 30, 2017 and December 31, 2016, total capital lease obligations outstanding consisted of the following:

 

 

 

September 30,

 

 

December 31,

 

 

 

2017

 

 

2016

 

 

 

(Unaudited)

 

 

 

 

 

Capital lease obligations, imputed interest at 3.00% to 13.29%, with monthly payments of approximately $6,000, expiring through November 2020, secured by computer and telephone equipment

 

$

54,438

 

 

$

315,253

 

Total

 

 

54,438

 

 

 

315,253

 

Less: current maturities

 

 

(48,775

)

 

 

(106,184

)

Long-term portion

 

$

5,663

 

 

$

209,069

 

 

Stockholders' Equity (Tables)

The following table summarizes the warrants issued and outstanding as of September 30, 2017:

 

 

 

 

Date of

 

Exercise

 

 

Shares of

 

Description

 

Issuance

 

Expiration

 

Price

 

 

Common Stock

 

Exercisable warrants

 

 

 

 

 

 

 

 

 

 

 

 

Warrants

 

09/24/2014

 

09/24/2019

 

$

20.00

 

 

 

1,125,005

 

Warrants

 

10/20/2014

 

10/20/2019

 

$

20.00

 

 

 

87,500

 

Warrants

 

3/30/2016

 

03/30/2021

 

$

3.88

 

 

 

521,060

 

Total warrants issued and outstanding

 

 

 

 

 

 

1,733,565

 

 

Stock Options – We recorded stock option expense of $479,256 and $1,623,029 for the nine months ended September 30, 2017 and 2016, respectively.  The following table summarizes the stock option activity for the nine month period ended September 30, 2017:

 

 

 

Stock Options

 

 

 

 

 

 

 

 

 

Weighted-

 

 

 

 

 

 

 

Exercise

 

Average

 

 

 

Number

 

 

Price Per

 

Exercise Price

 

 

 

of Shares

 

 

Share

 

Per Share

 

Outstanding at December 31, 2016

 

 

1,317,402

 

 

$2.08 — $26.00

 

$

9.09

 

Granted

 

 

79,500

 

 

$2.13  —  $2.71

 

$

2.50

 

Canceled/Forfeited

 

 

(36,146

)

 

$6.40 — $23.20

 

$

12.35

 

Outstanding at September 30, 2017

 

 

1,360,756

 

 

$2.08 — $26.00

 

$

8.62

 

 

The Company, Description of Business, and Liquidity - Additional Information (Detail) (USD $)
3 Months Ended 9 Months Ended 3 Months Ended 9 Months Ended
Sep. 30, 2017
Dec. 31, 2016
Sep. 30, 2017
Revenue [Member]
Customer
Sep. 30, 2016
Revenue [Member]
Customer
Sep. 30, 2017
Revenue [Member]
Customer
Sep. 30, 2016
Revenue [Member]
Customer
Sep. 30, 2017
Customer Accounted [Member]
Revenue [Member]
Sep. 30, 2016
Customer Accounted [Member]
Revenue [Member]
Sep. 30, 2017
Customer Accounted [Member]
Revenue [Member]
Sep. 30, 2016
Customer Accounted [Member]
Revenue [Member]
Concentration Risk [Line Items]
 
 
 
 
 
 
 
 
 
 
Number of customer
 
 
 
 
 
 
Percentage of revenue
 
 
 
 
 
 
52.00% 
55.60% 
57.80% 
55.50% 
Working Capital
$ 4,482,715 
$ 3,116,055 
 
 
 
 
 
 
 
 
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2017
Jun. 30, 2017
Contract
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Dec. 31, 2016
Accounting Policies [Abstract]
 
 
 
 
 
 
Number of contracts accounted for management fees
 
 
 
 
 
Management fees earned, net
$ 0 
 
$ 88,997 
$ 78,145 
$ 239,723 
 
Management fees earned, gross
 
1,523,282 
2,173,022 
3,788,592 
 
Potentially dilutive securities include options and warrants
 
 
 
3,094,321 
3,266,799 
 
Inventories waste disposal equipment
11,271 
 
 
11,271 
 
12,996 
Reserve for inventory obsolescence
$ 0 
 
 
$ 0 
 
$ 0 
Summary of Significant Accounting Policies - Schedule of Anti-dilutive Securities Excluded from Diluted Loss Per Share (Detail)
9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
 
 
Anti-dilutive securities excluded from diluted loss per share
3,094,321 
3,266,799 
Stock options [Member]
 
 
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
 
 
Anti-dilutive securities excluded from diluted loss per share
1,360,756 
1,271,858 
Warrants [Member]
 
 
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
 
 
Anti-dilutive securities excluded from diluted loss per share
1,733,565 
1,994,941 
Property and Equipment, Net, and Other Assets - Components of Property and Equipment, Net, and Other Assets (Detail) (USD $)
Sep. 30, 2017
Dec. 31, 2016
Property Plant And Equipment [Abstract]
 
 
Property and equipment, net of accumulated depreciation of $2,588,002 and $2,442,549 as of June 30, 2017 and December 31, 2016, respectively
$ 1,041,745 
$ 1,340,850 
Security deposits and other assets
540,261 
1,074,071 
Property and Equipment net and other assets
$ 1,582,006 
$ 2,414,921 
Property and Equipment, Net, and Other Assets - Components of Property and Equipment, Net, and Other Assets ( Parenthetical) (Detail) (USD $)
Sep. 30, 2017
Dec. 31, 2016
Property Plant And Equipment [Abstract]
 
 
Accumulated depreciation, Property and equipment
$ 2,089,097 
$ 2,442,549 
Property and Equipment, Net, and Other Assets - Additional Information (Detail) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Dec. 31, 2016
Property Plant And Equipment [Abstract]
 
 
 
 
 
Depreciation
$ 110,582 
$ 123,283 
$ 339,272 
$ 354,495 
 
Depreciation reflected in cost of revenue
43,462 
38,490 
126,761 
86,754 
 
Capital lease assets, net
269,598 
 
269,598 
 
347,135 
Capital lease assets, accumulated depreciation
$ 230,499 
 
$ 230,499 
 
$ 152,962 
Goodwill and Other Intangible Assets - Schedule of Finite-Lived Intangible Assets (Detail) (USD $)
9 Months Ended 12 Months Ended
Sep. 30, 2017
Dec. 31, 2016
Finite Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
$ 21,357,287 
$ 21,149,398 
Accumulated Amortization
15,447,048 
12,659,812 
Net
5,910,239 
8,489,586 
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
10,706,000 
8,798,000 
Net
2,014,000 
3,922,000 
Trademarks [Member]
 
 
Finite Lived Intangible Assets [Line Items]
 
 
Estimated Useful Life
7 years 
7 years 
Gross Carrying Amount
6,242,055 
6,242,055 
Accumulated Amortization
3,746,893 
3,078,845 
Net
2,495,162 
3,163,210 
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
1,857,396 
1,649,507 
Accumulated Amortization
488,819 
307,989 
Net
1,368,577 
1,341,518 
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
274,653 
244,295 
Net
$ 32,500 
$ 62,858 
Goodwill and Other Intangible Assets - Schedule of Indefinite-Lived Intangible Assets (Detail) (USD $)
9 Months Ended
Sep. 30, 2017
Dec. 31, 2016
Goodwill And Intangible Assets Disclosure [Abstract]
 
 
Goodwill Useful Life Description
Indefinite 
 
Goodwill
$ 58,337,290 
$ 58,337,290 
Goodwill and Other Intangible Assets - Additional Information (Detail) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2017
Jun. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Goodwill And Intangible Assets Disclosure [Abstract]
 
 
 
 
 
Amortization of intangibles
$ 935,567 
 
$ 928,431 
$ 2,787,236 
$ 2,771,912 
Indefinite-lived intangible assets other than goodwill
 
 
 
 
Impairment of goodwill and other intangible assets
 
$ 0 
 
 
 
Accounts Payable and Accrued Liabilities - Components of Accounts Payable and Accrued Liabilities (Detail) (USD $)
Sep. 30, 2017
Dec. 31, 2016
Accounts Payable And Accrued Liabilities Current [Abstract]
 
 
Accounts payable
$ 16,220,566 
$ 32,944,202 
Accrued taxes
959,743 
1,272,832 
Employee compensation
405,326 
529,945 
Other
237,106 
558,580 
Accounts payable and accrued liabilities
$ 17,822,741 
$ 35,305,559 
Revolving Credit Facility - Additional Information (Detail) (USD $)
3 Months Ended 9 Months Ended 0 Months Ended 3 Months Ended 9 Months Ended 0 Months Ended 0 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Dec. 31, 2016
Feb. 24, 2017
ABL Facility [Member]
Sep. 30, 2017
ABL Facility [Member]
Sep. 30, 2016
ABL Facility [Member]
Sep. 30, 2017
ABL Facility [Member]
Sep. 30, 2016
ABL Facility [Member]
Sep. 30, 2017
ABL Facility [Member]
Base Rate [Member]
Sep. 30, 2017
ABL Facility [Member]
LIBOR [Member]
Feb. 24, 2017
ABL Facility [Member]
Minimum [Member]
Base Rate [Member]
Feb. 24, 2017
ABL Facility [Member]
Minimum [Member]
LIBOR [Member]
Feb. 24, 2017
ABL Facility [Member]
Maximum [Member]
Base Rate [Member]
Feb. 24, 2017
ABL Facility [Member]
Maximum [Member]
LIBOR [Member]
Feb. 24, 2017
Equipment Loan Facility [Member]
Sep. 30, 2017
Equipment Loan Facility [Member]
Feb. 24, 2017
Equipment Loan Facility [Member]
Base Rate [Member]
Feb. 24, 2017
Equipment Loan Facility [Member]
LIBOR [Member]
Sep. 30, 2017
Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revolving credit facility maximum principal amount
 
 
 
 
 
$ 20,000,000 
 
 
 
 
 
 
 
 
 
 
$ 2,000,000 
 
 
 
 
Revolving credit facility agreement with regions bank, paid off and terminated effective date
 
 
 
 
 
Feb. 24, 2017 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument interest rate
 
 
 
 
 
 
 
 
 
 
5.75% 
3.54% 
1.00% 
2.00% 
1.50% 
2.50% 
 
 
2.00% 
3.00% 
 
Debt instrument maturity date
 
 
 
 
 
Feb. 24, 2022 
 
 
 
 
 
 
 
 
 
 
Feb. 24, 2022 
 
 
 
 
Interest expense related to borrowings
126,507 
62,345 
361,273 
176,207 
 
 
100,511 
57,331 
297,870 
161,642 
 
 
 
 
 
 
 
 
 
 
 
Debt issuance cost
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
469,507 
Unamortized portion of debt discount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
414,732 
Interest expense related to amortization of discount
 
 
54,775 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
54,775 
Revolving credit facility liability
6,730,893 
 
6,730,893 
 
4,750,000 
 
6,730,893 
 
6,730,893 
 
 
 
 
 
 
 
 
 
 
 
Unamortized debt issuance cost
 
 
 
 
 
 
414,732 
 
414,732 
 
 
 
 
 
 
 
 
 
 
 
 
Additional amount available to be borrow under revolving credit facility
 
 
 
 
 
 
$ 4,151,000 
 
$ 4,151,000 
 
 
 
 
 
 
 
 
 
 
 
 
Capital Lease Obligations - Summary of Capital Lease Obligations (Detail) (USD $)
Sep. 30, 2017
Dec. 31, 2016
Leases [Abstract]
 
 
Total Capital lease obligations, imputed interest at 3.00% to 13.29%, with monthly payments of approximately $6,000, expiring through November 2020, secured by computer and telephone equipment
$ 54,438 
$ 315,253 
Less: current maturities
(48,775)
(106,184)
Long-term portion
$ 5,663 
$ 209,069 
Capital Lease Obligations - Summary of Capital Lease Obligations (Parenthetical) (Detail) (Capital lease obligations, imputed interest at 3.00% to 13.29% [Member], USD $)
9 Months Ended 12 Months Ended
Sep. 30, 2017
Dec. 31, 2016
Capital lease obligations, imputed interest at 3.00% to 13.29% [Member]
 
 
Debt Instrument [Line Items]
 
 
Imputed interest rate for capital lease obligation, minimum
3.00% 
3.00% 
Imputed interest rate for capital lease obligation, maximum
13.29% 
13.29% 
Monthly installment capital lease obligation
$ 6,000 
$ 6,000 
Debt instrument expiring date, description
expiring through November 2020 
 
Capital Lease Obligations - Additional Information (Detail) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Debt Disclosure [Abstract]
 
 
 
 
Interest expense related to capital leases
$ 992 
$ 3,464 
$ 5,090 
$ 11,117 
Income Taxes - Additional Information (Detail) (USD $)
9 Months Ended
Sep. 30, 2017
Dec. 31, 2016
Income Tax Disclosure [Abstract]
 
 
Valuation allowance
$ 17,400,000 
$ 15,555,000 
Federal income tax net operating loss carry forward
$ 19,300,000 
$ 18,500,000 
Net operating loss carry forwards expiration beginning year
2031 
 
Stockholders' Equity - Additional Information (Detail) (USD $)
9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Dec. 31, 2016
Equity [Abstract]
 
 
 
Preferred stock, shares authorized
10,000,000 
 
10,000,000 
Preferred stock, par value
$ 0.001 
 
$ 0.001 
Preferred stock, shares issued
 
Preferred stock, shares outstanding
 
Common stock, shares authorized
200,000,000 
 
200,000,000 
Common stock, par value
$ 0.001 
 
$ 0.001 
Common stock, shares issued
15,281,324 
 
15,272,575 
Common stock, shares outstanding
15,281,324 
 
15,272,575 
Employee stock purchase plan expense
$ 14,686 
$ 28,200 
 
Stockholders' Equity - Additional Information - Shares Issued for Employee Stock Purchase Plan Options (Detail) (USD $)
9 Months Ended 0 Months Ended
Sep. 30, 2017
May 23, 2017
2014 Employee Stock Purchase Plan [Member]
Schedule Of Stockholders Equity [Line Items]
 
 
Shares issued for Employee Stock Purchase Plan options, Shares
 
8,749 
Shares issued for Employee Stock Purchase Plan options, Value
$ 11,972 
$ 11,972 
Stockholders' Equity - Additional Information - Shares Issued for Consulting Services (Detail) (USD $)
0 Months Ended 9 Months Ended
Sep. 28, 2016
Common Stock [Member]
Sep. 30, 2017
Selling, General and Administrative Expenses [Member]
Schedule Of Stockholders Equity [Line Items]
 
 
Fully-vested restricted shares of common stock issued to third party consulting services, Shares
418,750 
 
Fully-vested restricted shares of common stock issued to third party consulting services, contract period
1 year 
 
Expenses recorded for consulting services
 
$ 1,046,875 
Stockholders' Equity - Additional Information - Warrants (Detail)
9 Months Ended
Sep. 30, 2017
Dec. 31, 2016
Class Of Warrant Or Right [Line Items]
 
 
Warrants issued
 
521,060 
Number of exercised warrants
 
Warrants outstanding
1,733,565 
 
Exercisable Warrants [Member]
 
 
Class Of Warrant Or Right [Line Items]
 
 
Warrants outstanding
1,733,565 
 
Stockholders' Equity - Summary of Warrants Issued and Outstanding (Detail) (USD $)
9 Months Ended
Sep. 30, 2017
Class Of Warrant Or Right [Line Items]
 
Shares of Common Stock
1,733,565 
Exercisable Warrants [Member]
 
Class Of Warrant Or Right [Line Items]
 
Shares of Common Stock
1,733,565 
Exercisable Warrants [Member] |
Warrants One [Member]
 
Class Of Warrant Or Right [Line Items]
 
Date of Issuance
Sep. 24, 2014 
Date of Expiration
Sep. 24, 2019 
Exercise Price
$ 20.00 
Shares of Common Stock
1,125,005 
Exercisable Warrants [Member] |
Warrants Two [Member]
 
Class Of Warrant Or Right [Line Items]
 
Date of Issuance
Oct. 20, 2014 
Date of Expiration
Oct. 20, 2019 
Exercise Price
$ 20.00 
Shares of Common Stock
87,500 
Exercisable Warrants [Member] |
Warrants Three [Member]