QUEST RESOURCE HOLDING CORP, 10-Q filed on 8/15/2016
Quarterly Report
Document and Entity Information
6 Months Ended
Jun. 30, 2016
Aug. 11, 2016
Document And Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Jun. 30, 2016 
 
Document Fiscal Year Focus
2016 
 
Document Fiscal Period Focus
Q2 
 
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
 
14,844,502 
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $)
Jun. 30, 2016
Dec. 31, 2015
Current assets:
 
 
Cash and cash equivalents
$ 2,025,343 
$ 2,989,731 
Accounts receivable, less allowance for doubtful accounts of $162,563 and $586,941 as of June 30, 2016 and December 31, 2015, respectively
35,566,902 
33,298,797 
Prepaid expenses and other current assets
1,775,139 
946,908 
Total current assets
39,367,384 
37,235,436 
Goodwill
58,337,290 
58,337,290 
Intangible assets, net
10,201,020 
11,828,008 
Property and equipment, net, and other assets
2,297,567 
1,608,632 
Total assets
110,203,261 
109,009,366 
Current liabilities:
 
 
Accounts payable and accrued liabilities
36,142,203 
34,847,359 
Deferred revenue and other current liabilities
467,055 
328,829 
Total current liabilities
36,609,258 
35,176,188 
Line of credit
4,000,000 
4,000,000 
Other long-term liabilities
388,436 
341,142 
Total liabilities
40,997,694 
39,517,330 
Commitments and contingencies
   
   
Stockholders’ equity:
 
 
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued or outstanding as of June 30, 2016 and December 31, 2015, respectively
   
   
Common stock, $0.001 par value, 200,000,000 shares authorized, 14,844,502 and 13,973,528 shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively, given retroactive effect to the 1-for-8 reverse stock split effective August 10, 2016
14,845 
13,974 
Additional paid-in capital
156,352,097 
152,347,372 
Accumulated deficit
(87,161,375)
(82,869,310)
Total stockholders’ equity
69,205,567 
69,492,036 
Total liabilities and stockholders’ equity
$ 110,203,261 
$ 109,009,366 
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (Unaudited) (USD $)
Jun. 30, 2016
Dec. 31, 2015
Allowance for doubtful accounts receivable
$ 162,563 
$ 586,941 
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
14,844,502 
13,973,528 
Common stock, shares outstanding
14,844,502 
13,973,528 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Income Statement [Abstract]
 
 
 
 
Revenue
$ 46,843,675 
$ 42,330,214 
$ 92,614,571 
$ 82,338,823 
Cost of revenue
43,189,149 
38,913,605 
85,473,685 
75,636,538 
Gross profit
3,654,526 
3,416,609 
7,140,886 
6,702,285 
Operating expenses:
 
 
 
 
Selling, general, and administrative
4,637,498 
3,906,276 
9,292,661 
7,683,258 
Depreciation and amortization
1,007,864 
972,334 
2,026,428 
1,951,471 
Total operating expenses
5,645,362 
4,878,610 
11,319,089 
9,634,729 
Operating loss
(1,990,836)
(1,462,001)
(4,178,203)
(2,932,444)
Other expense:
 
 
 
 
Interest expense
(57,274)
(42,236)
(113,862)
(90,833)
Total other expense
(57,274)
(42,236)
(113,862)
(90,833)
Loss before taxes
(2,048,110)
(1,504,237)
(4,292,065)
(3,023,277)
Net loss
(2,048,110)
(1,504,237)
(4,292,065)
(3,023,277)
Net loss applicable to common stockholders
$ (2,048,110)
$ (1,504,237)
$ (4,292,065)
$ (3,023,277)
Net loss per share
 
 
 
 
Basic and diluted
$ (0.14)
$ (0.11)
$ (0.30)
$ (0.22)
Weighted average number of common shares outstanding, given retroactive effect to the 1-for-8 reverse stock split effective August 10, 2016
 
 
 
 
Basic and diluted
14,839,591 
13,960,836 
14,408,890 
13,956,543 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) (UNAUDITED) (Subsequent Event [Member])
0 Months Ended
Aug. 10, 2016
Subsequent Event [Member]
 
Reverse stock split ratio of common stock
0.125 
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY, GIVEN RETROACTIVE ADJUSMENT FOR THE 1-FOR-8 REVERSE STOCK SPLIT ON AUGUST 10, 2016 (UNAUDITED) (USD $)
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Accumulated Deficit [Member]
Beginning Balance at Dec. 31, 2015
$ 69,492,036 
$ 13,974 
$ 152,347,372 
$ (82,869,310)
Beginning Balance, Shares at Dec. 31, 2015
 
13,973,529 
 
 
Stock-based compensation
1,088,811 
 
1,088,811 
 
Sale of common stock and warrants, net of issuance costs, Value
2,889,350 
861 
2,888,489 
 
Sale of common stock and warrants, net of issuance costs, Shares
870,973 
861,250 
 
 
Shares issued for Employee Stock Purchase Plan options, Value
27,435 
10 
27,425 
 
Shares issued for Employee Stock Purchase Plan options, Shares
9,723 
9,723 
 
 
Net loss
(4,292,065)
 
 
(4,292,065)
Ending Balance at Jun. 30, 2016
$ 69,205,567 
$ 14,845 
$ 156,352,097 
$ (87,161,375)
Ending Balance, Shares at Jun. 30, 2016
 
14,844,502 
 
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $)
6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Cash flows from operating activities:
 
 
Net loss
$ (4,292,065)
$ (3,023,277)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
Depreciation
231,212 
146,381 
Amortization of intangibles
1,843,481 
1,805,090 
Provision for doubtful accounts
170,288 
2,972 
Stock-based compensation
1,088,811 
625,508 
Changes in operating assets and liabilities:
 
 
Accounts receivable
(2,438,393)
(2,275,592)
Prepaid expenses and other current assets
(828,231)
(468,443)
Security deposits and other assets
(520,117)
(7,991)
Accounts payable and accrued liabilities
1,294,844 
(718,732)
Deferred revenue and other current liabilities
136,734 
(32,493)
Other long-term liabilities
81,485 
1,360 
Net cash used in operating activities
(3,231,951)
(3,945,217)
Cash flows from investing activities:
 
 
Purchase of property and equipment
(373,326)
(235,296)
Purchase of capitalized software development and intellectual property
(216,493)
(481,600)
Net cash used in investing activities
(589,819)
(716,896)
Cash flows from financing activities:
 
 
Proceeds from line of credit
10,750,000 
2,000,000 
Repayments to line of credit
(10,750,000)
 
Proceeds from the sale of common stock and warrants, net of issuance costs
2,889,350 
60,705 
Proceeds from shares issued for Employee Stock Purchase Plan
27,435 
 
Repayments of capital lease obligations
(59,403)
(11,334)
Net cash provided by financing activities
2,857,382 
2,049,371 
Net increase (decrease) in cash and cash equivalents
(964,388)
(2,612,742)
Cash and cash equivalents at beginning of period
2,989,731 
3,154,540 
Cash and cash equivalents at end of period
2,025,343 
541,798 
Supplemental cash flow information:
 
 
Cash paid for interest
111,617 
96,459 
Supplemental non-cash flow activities:
 
 
Acquisition of equipment under capital leases
26,704 
 
Warrant liability issued for services
 
34,857 
Restricted Stock Units [Member]
 
 
Supplemental non-cash flow activities:
 
 
Common stock issued
 
$ 57 
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, and Youchange, Inc. (“YouChange”) (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.  Two customers accounted for 55.6% and 59.3% of revenue for the three months ended June 30, 2016 and 2015, respectively.  Two customers accounted for 55.4% and 60.3% of revenue for the six months ended June 30, 2016 and 2015, respectively.  Our principal offices are located in The Colony, Texas.

Liquidity – As of June 30, 2016 and December 31, 2015, our working capital balance was $2,758,126 and $2,059,248, respectively.

Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Principals 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, 2015. 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 June 30, 2016 and the results of our operations and cash flows for the periods presented. We derived the December 31, 2015 condensed consolidated balance sheet data from audited financial statements, but did not include all disclosures required by GAAP. As Quest, Earth911, and YouChange 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 and six months ended June 30, 2016 are not necessarily indicative of the results to be expected for the full year.

On August 10, 2016, we filed amended and restated articles of incorporation with the Secretary of State of the state of Nevada to effect a 1-for-8 reverse stock split of our common stock.  As required by GAAP, we retroactively adjusted all share and per share amounts in our condensed consolidated financial statements and notes thereto to reflect the 1-for-8 reverse stock split effective August 10, 2016, subject to anticipated fractional share adjustments.  See Note 10 for a discussion of the reverse stock split.

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 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. 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 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. Currently, we have one contract accounted for as management fees with revenue of $63,036 and $150,725 for the three and six months ended June 30, 2016, respectively.  Our gross billings on this management fee contract were $1,143,667 and $2,265,310 for the three and six months ended June 30, 2016, respectively.  Our net and gross revenue on this contract for the three and six months ended June 30, 2015 was nil.

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 2016 and 2015 would be anti-dilutive. These potentially dilutive securities include stock options, restricted stock units, and warrants and related to 3,261,023 and 2,113,522 shares at June 30, 2016 and 2015, respectively.

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

 

 

 

June 30,

 

 

 

2016

 

 

2015

 

 

 

(Unaudited)

 

 

(Unaudited)

 

Anti-dilutive securities excluded from diluted loss per share:

 

 

 

 

 

 

 

 

Stock options

 

 

1,266,087

 

 

 

630,134

 

Restricted stock units

 

 

 

 

 

9,513

 

Warrants

 

 

1,994,936

 

 

 

1,473,875

 

Total anti-dilutive securities excluded from diluted loss per share

 

 

3,261,023

 

 

 

2,113,522

 

 

Inventories

We record inventories within “Prepaid expenses and other current assets” in our condensed consolidated balance sheets.  As of June 30, 2016 and December 31, 2015, all inventories were waste disposal equipment with cost balances of $181,251 and $54,473, respectively, 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 June 30, 2016 and December 31, 2015, property and equipment, net, and other assets consisted of the following:

 

 

 

June 30,

 

 

December 31,

 

 

 

2016

 

 

2015

 

 

 

(Unaudited)

 

 

 

 

 

Property and equipment, net of accumulated depreciation of $2,204,750

     and $1,973,538 as of June 30, 2016 and December 31, 2015,

     respectively

 

$

1,477,054

 

 

$

1,308,236

 

Security deposits and other assets

 

 

820,513

 

 

 

300,396

 

    Property and equipment, net, and other assets

 

$

2,297,567

 

 

$

1,608,632

 

 

We compute depreciation using the straight-line method over the estimated useful lives of the property and equipment. The depreciation expense for the three months ended June 30, 2016 was $122,296, inclusive of $38,848 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.  The depreciation expense for the six months ended June 30, 2016 was $231,212, inclusive of $48,265 of depreciation expense recorded to “Cost of revenue.”  The depreciation expense for the three and six months ended June 30, 2015 was $70,335 and $146,381, respectively, with no depreciation expense recorded to “Cost of revenue.” At June 30, 2016, our capital lease assets were $392,971, net of $100,722 of accumulated depreciation. At December 31, 2015, our capital lease assets were $426,757, net of $34,041 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:

  

June 30, 2016 (Unaudited)

 

Estimated

Useful Life

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

 

Finite lived intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

5 years

 

$

12,720,000

 

 

$

7,526,000

 

 

$

5,194,000

 

Trademarks

 

7 years

 

 

6,242,055

 

 

 

2,633,480

 

 

 

3,608,575

 

Patents

 

7 years

 

 

230,683

 

 

 

230,683

 

 

 

 

Software

 

7 years

 

 

1,504,856

 

 

 

199,984

 

 

 

1,304,872

 

Customer lists

 

5 years

 

 

307,153

 

 

 

213,580

 

 

 

93,573

 

Total finite lived intangible assets

 

 

 

$

21,004,747

 

 

$

10,803,727

 

 

$

10,201,020

 

 

December 31, 2015

 

Estimated

Useful Life

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

 

Finite lived intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

5 years

 

$

12,720,000

 

 

$

6,254,000

 

 

$

6,466,000

 

Trademarks

 

7 years

 

 

6,239,950

 

 

 

2,188,129

 

 

 

4,051,821

 

Patents

 

7 years

 

 

230,683

 

 

 

230,683

 

 

 

 

Software

 

7 years

 

 

1,290,468

 

 

 

104,570

 

 

 

1,185,898

 

Customer lists

 

5 years

 

 

307,153

 

 

 

182,864

 

 

 

124,289

 

Total finite lived intangible assets

 

 

 

$

20,788,254

 

 

$

8,960,246

 

 

$

11,828,008

 

 

June 30, 2016 (Unaudited) and December 31, 2015

 

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 $924,416 and $901,998 for the three months ended June 30, 2016 and 2015, respectively.  The amortization expense related to finite lived intangible assets was $1,843,481 and $1,805,090 for the six months ended June 30, 2016 and 2015, 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 of up to $15,000,000 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 facility matures May 13, 2018.  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% (2.70% as of June 30, 2016). 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 with guarantees from QRHC and Earth911. Quest had $4,000,000 outstanding and $10,645,734 available to be borrowed as of June 30, 2016. The amount of interest expense related to the Regions line of credit for the three months ended June 30, 2016 and 2015 was $55,002 and $53,479, respectively.  The amount of interest expense related to the Regions line of credit for the six months ended June 30, 2016 and 2015 was $108,259 and $88,529, respectively.  As of June 30, 2016, we were in compliance with the financial covenants.  

Capital Lease Obligations
Capital Lease Obligations

6. Capital Lease Obligations

At June 30, 2016 and December 31, 2015, total capital lease obligations outstanding consisted of the following:

 

 

 

June 30,

 

 

December 31,

 

 

 

2016

 

 

2015

 

 

 

(Unaudited)

 

 

 

 

 

Capital lease obligations, imputed interest at 2.65% to 9.39%, with monthly payments of $11,168, through June 2019, secured by computer and telephone equipment

 

$

369,471

 

 

$

402,170

 

Total

 

 

369,471

 

 

 

402,170

 

Less: current maturities

 

 

(112,722

)

 

 

(112,125

)

Long-term portion

 

$

256,749

 

 

$

290,045

 

 

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 June 30, 2016 and 2015 was $1,749 and $426, respectively.  The amount of interest expense related to our capital leases for the six months ended June 30, 2016 and 2015 was $3,705 and $913, 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 to be realized. Realization of our net operating loss carryforward was not reasonably assured as of June 30, 2016 and December 31, 2015, and we have recorded a valuation allowance of $12,600,000 and $12,313,000, respectively, against deferred tax assets in excess of deferred tax liabilities in the accompanying condensed consolidated financial statements. As of June 30, 2016 and December 31, 2015, we had federal income tax net operating loss carryforwards of approximately $16,300,000 and $14,500,000, 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, 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 line of credit, based on borrowing rates currently available to us for loans with similar terms and maturities.

 

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 14,844,502 and 13,973,528 shares were issued and outstanding as of June 30, 2016 and December 31, 2015, respectively.

During the six months ended June 30, 2016, we issued shares of common stock as follows:

 

 

 

Common Stock

 

 

 

Shares

 

 

Amount

 

Sale of common stock and warrants, net of issuance costs of $452,300

 

 

861,250

 

 

$

2,889,350

 

Shares issued for Employee Stock Purchase Plan options

 

 

9,723

 

 

 

27,435

 

 

 

 

870,973

 

 

$

2,916,785

 

 

·

Sale of Common Stock and Warrants  

 

o

On March 30, 2016, we issued 861,250 shares of our common stock, together with warrants to purchase 430,626 shares of our common stock, at a price per share and warrant of $3.88. We also issued the underwriters warrants to purchase 90,431 shares of our common stock.  The warrants may be exercised for a period of five years at an initial exercise price of $3.88 per share, subject to adjustment for certain dilutive events.

 

·

Shares Issued for Employee Stock Purchase Plan Options

 

o

On May 16, 2016, we issued 9,732 shares to employees for $27,435 under our 2014 Employee Stock Purchase Plan (“ESPP”) for options that vested and were exercised.    

Warrants – During the six months ended June 30, 2016, we issued warrants to purchase 521,057 shares and no holders exercised warrants.  At June 30, 2016, we had outstanding exercisable warrants to purchase 1,994,936 shares of common stock.  

The following table summarizes the warrants issued and outstanding as of June 30, 2016:

 

Warrants Issued and Outstanding as of June 30, 2016

 

 

 

Date of

 

Exercise

 

 

Shares of

 

Description

 

Issuance

 

Expiration

 

Price

 

 

Common Stock

 

Exercisable warrants

 

 

 

 

 

 

 

 

 

 

 

 

Warrants

 

04/18/2014

 

04/01/2017

 

$

16.00

 

 

 

180,126

 

Warrant

 

05/07/2014

 

05/07/2017

 

$

21.20

 

 

 

25,000

 

Warrant

 

05/28/2014

 

10/31/2016

 

$

34.48

 

 

 

56,250

 

Warrants

 

09/24/2014

 

09/24/2019

 

$

20.00

 

 

 

1,125,003

 

Warrants

 

10/20/2014

 

10/20/2019

 

$

20.00

 

 

 

87,500

 

Warrants

 

3/30/2016

 

03/30/2021

 

$

3.88

 

 

 

521,057

 

Total warrants issued and outstanding

 

 

 

 

 

 

1,994,936

 

Employee Stock Purchase Plan – On September 17, 2014, our stockholders approved the ESPP. We recorded expense of $15,466 and $25,102 related to the ESPP during the three months ended June 30, 2016 and 2015, respectively.  We recorded expense of $24,672 and $36,924 related to the ESPP during the six months ended June 30, 2016 and 2015, respectively.

Stock Options – The following table summarizes the stock option activity for the six month period ended June 30, 2016:

 

 

 

Stock Options

 

 

 

 

 

 

 

 

 

Weighted-

 

 

 

 

 

 

 

Exercise

 

Average

 

 

 

Number

 

 

Price Per

 

Exercise Price

 

 

 

of Shares

 

 

Share

 

Per Share

 

Outstanding at December 31, 2015

 

 

742,989

 

 

$  6.24 — 30.00

 

$

16.32

 

Granted

 

 

690,756

 

 

$  3.12 —   6.40

 

$

4.03

 

Canceled/Forfeited

 

 

(167,658

)

 

$  6.24 — 30.00

 

$

13.16

 

Outstanding at June 30, 2016

 

 

1,266,087

 

 

$  3.12 — 30.00

 

$

9.56

 

 

Material Subsequent Events
Material Subsequent Events

10. Material Subsequent Events

On August 10, 2016, we filed amended and restated articles of incorporation with the Secretary of State of the state of Nevada to effect a 1-for-8 reverse stock split of our common stock.  The reverse split became effective as of 5:00 p.m. Eastern time on Wednesday, August 10, 2016, or the Effective Time.  At the Effective Time, each lot of eight shares of common stock issued and outstanding immediately prior to the Effective Time were, automatically and without any further action on the part of our stockholders, converted into and became one share of common stock, and each certificate which, immediately prior to the Effective Time represented pre-reverse split shares, was deemed cancelled and, for all corporate purposes, was deemed to evidence ownership of post-reverse split shares.  In lieu of issuing any fractional shares, we will round up to the nearest whole share in the event a stockholder would be entitled to receive less than one share of common stock.  As required by GAAP, we retroactively adjusted all share and per share amounts in our condensed consolidated financial statements and notes thereto to reflect the 1-for-8 reverse stock split effective August 10, 2016, subject to anticipated fractional share adjustments.

 

Summary of Significant Accounting Policies (Policies)

Principals 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, 2015. 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 June 30, 2016 and the results of our operations and cash flows for the periods presented. We derived the December 31, 2015 condensed consolidated balance sheet data from audited financial statements, but did not include all disclosures required by GAAP. As Quest, Earth911, and YouChange 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 and six months ended June 30, 2016 are not necessarily indicative of the results to be expected for the full year.

On August 10, 2016, we filed amended and restated articles of incorporation with the Secretary of State of the state of Nevada to effect a 1-for-8 reverse stock split of our common stock.  As required by GAAP, we retroactively adjusted all share and per share amounts in our condensed consolidated financial statements and notes thereto to reflect the 1-for-8 reverse stock split effective August 10, 2016, subject to anticipated fractional share adjustments.  See Note 10 for a discussion of the reverse stock split.

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 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. 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 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. Currently, we have one contract accounted for as management fees with revenue of $63,036 and $150,725 for the three and six months ended June 30, 2016, respectively.  Our gross billings on this management fee contract were $1,143,667 and $2,265,310 for the three and six months ended June 30, 2016, respectively.  Our net and gross revenue on this contract for the three and six months ended June 30, 2015 was nil.

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 2016 and 2015 would be anti-dilutive. These potentially dilutive securities include stock options, restricted stock units, and warrants and related to 3,261,023 and 2,113,522 shares at June 30, 2016 and 2015, respectively.

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

 

 

 

June 30,

 

 

 

2016

 

 

2015

 

 

 

(Unaudited)

 

 

(Unaudited)

 

Anti-dilutive securities excluded from diluted loss per share:

 

 

 

 

 

 

 

 

Stock options

 

 

1,266,087

 

 

 

630,134

 

Restricted stock units

 

 

 

 

 

9,513

 

Warrants

 

 

1,994,936

 

 

 

1,473,875

 

Total anti-dilutive securities excluded from diluted loss per share

 

 

3,261,023

 

 

 

2,113,522

 

 

Inventories

We record inventories within “Prepaid expenses and other current assets” in our condensed consolidated balance sheets.  As of June 30, 2016 and December 31, 2015, all inventories were waste disposal equipment with cost balances of $181,251 and $54,473, respectively, with no reserve for inventory obsolescence at either date.

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:

 

 

 

June 30,

 

 

 

2016

 

 

2015

 

 

 

(Unaudited)

 

 

(Unaudited)

 

Anti-dilutive securities excluded from diluted loss per share:

 

 

 

 

 

 

 

 

Stock options

 

 

1,266,087

 

 

 

630,134

 

Restricted stock units

 

 

 

 

 

9,513

 

Warrants

 

 

1,994,936

 

 

 

1,473,875

 

Total anti-dilutive securities excluded from diluted loss per share

 

 

3,261,023

 

 

 

2,113,522

 

 

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

At June 30, 2016 and December 31, 2015, property and equipment, net, and other assets consisted of the following:

 

 

 

June 30,

 

 

December 31,

 

 

 

2016

 

 

2015

 

 

 

(Unaudited)

 

 

 

 

 

Property and equipment, net of accumulated depreciation of $2,204,750

     and $1,973,538 as of June 30, 2016 and December 31, 2015,

     respectively

 

$

1,477,054

 

 

$

1,308,236

 

Security deposits and other assets

 

 

820,513

 

 

 

300,396

 

    Property and equipment, net, and other assets

 

$

2,297,567

 

 

$

1,608,632

 

 

Goodwill and Other Intangible Assets (Tables)

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

  

June 30, 2016 (Unaudited)

 

Estimated

Useful Life

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

 

Finite lived intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

5 years

 

$

12,720,000

 

 

$

7,526,000

 

 

$

5,194,000

 

Trademarks

 

7 years

 

 

6,242,055

 

 

 

2,633,480

 

 

 

3,608,575

 

Patents

 

7 years

 

 

230,683

 

 

 

230,683

 

 

 

 

Software

 

7 years

 

 

1,504,856

 

 

 

199,984

 

 

 

1,304,872

 

Customer lists

 

5 years

 

 

307,153

 

 

 

213,580

 

 

 

93,573

 

Total finite lived intangible assets

 

 

 

$

21,004,747

 

 

$

10,803,727

 

 

$

10,201,020

 

 

December 31, 2015

 

Estimated

Useful Life

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

 

Finite lived intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

5 years

 

$

12,720,000

 

 

$

6,254,000

 

 

$

6,466,000

 

Trademarks

 

7 years

 

 

6,239,950

 

 

 

2,188,129

 

 

 

4,051,821

 

Patents

 

7 years

 

 

230,683

 

 

 

230,683

 

 

 

 

Software

 

7 years

 

 

1,290,468

 

 

 

104,570

 

 

 

1,185,898

 

Customer lists

 

5 years

 

 

307,153

 

 

 

182,864

 

 

 

124,289

 

Total finite lived intangible assets

 

 

 

$

20,788,254

 

 

$

8,960,246

 

 

$

11,828,008

 

 

 

June 30, 2016 (Unaudited) and December 31, 2015

 

Estimated

Useful Life

 

Carrying

Amount

 

Indefinite lived intangible asset:

 

 

 

 

 

 

Goodwill

 

Indefinite

 

$

58,337,290

 

 

Capital Lease Obligations (Tables)
Summary of Capital Lease Obligations

At June 30, 2016 and December 31, 2015, total capital lease obligations outstanding consisted of the following:

 

 

 

June 30,

 

 

December 31,

 

 

 

2016

 

 

2015

 

 

 

(Unaudited)

 

 

 

 

 

Capital lease obligations, imputed interest at 2.65% to 9.39%, with monthly payments of $11,168, through June 2019, secured by computer and telephone equipment

 

$

369,471

 

 

$

402,170

 

Total

 

 

369,471

 

 

 

402,170

 

Less: current maturities

 

 

(112,722

)

 

 

(112,125

)

Long-term portion

 

$

256,749

 

 

$

290,045

 

 

Stockholders' Equity (Tables)

During the six months ended June 30, 2016, we issued shares of common stock as follows:

 

 

 

Common Stock

 

 

 

Shares

 

 

Amount

 

Sale of common stock and warrants, net of issuance costs of $452,300

 

 

861,250

 

 

$

2,889,350

 

Shares issued for Employee Stock Purchase Plan options

 

 

9,723

 

 

 

27,435

 

 

 

 

870,973

 

 

$

2,916,785

 

 

The following table summarizes the warrants issued and outstanding as of June 30, 2016:

 

Warrants Issued and Outstanding as of June 30, 2016

 

 

 

Date of

 

Exercise

 

 

Shares of

 

Description

 

Issuance

 

Expiration

 

Price

 

 

Common Stock

 

Exercisable warrants

 

 

 

 

 

 

 

 

 

 

 

 

Warrants

 

04/18/2014

 

04/01/2017

 

$

16.00

 

 

 

180,126

 

Warrant

 

05/07/2014

 

05/07/2017

 

$

21.20

 

 

 

25,000

 

Warrant

 

05/28/2014

 

10/31/2016

 

$

34.48

 

 

 

56,250

 

Warrants

 

09/24/2014

 

09/24/2019

 

$

20.00

 

 

 

1,125,003

 

Warrants

 

10/20/2014

 

10/20/2019

 

$

20.00

 

 

 

87,500

 

Warrants

 

3/30/2016

 

03/30/2021

 

$

3.88

 

 

 

521,057

 

Total warrants issued and outstanding

 

 

 

 

 

 

1,994,936

 

 

Stock Options – The following table summarizes the stock option activity for the six month period ended June 30, 2016:

 

 

 

Stock Options

 

 

 

 

 

 

 

 

 

Weighted-

 

 

 

 

 

 

 

Exercise

 

Average

 

 

 

Number

 

 

Price Per

 

Exercise Price

 

 

 

of Shares

 

 

Share

 

Per Share

 

Outstanding at December 31, 2015

 

 

742,989

 

 

$  6.24 — 30.00

 

$

16.32

 

Granted

 

 

690,756

 

 

$  3.12 —   6.40

 

$

4.03

 

Canceled/Forfeited

 

 

(167,658

)

 

$  6.24 — 30.00

 

$

13.16

 

Outstanding at June 30, 2016

 

 

1,266,087

 

 

$  3.12 — 30.00

 

$

9.56

 

 

The Company, Description of Business, and Liquidity - Additional Information (Detail) (USD $)
3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended
Jun. 30, 2016
Dec. 31, 2015
Jun. 30, 2016
Revenue [Member]
Customer
Jun. 30, 2016
Revenue [Member]
Customer
Jun. 30, 2016
Customer Accounted [Member]
Revenue [Member]
Jun. 30, 2015
Customer Accounted [Member]
Revenue [Member]
Jun. 30, 2016
Customer Accounted [Member]
Revenue [Member]
Jun. 30, 2015
Customer Accounted [Member]
Revenue [Member]
Concentration Risk [Line Items]
 
 
 
 
 
 
 
 
Number of customer
 
 
 
 
 
 
Percentage of revenue
 
 
 
 
55.60% 
59.30% 
55.40% 
60.30% 
Working Capital
$ 2,758,126 
$ 2,059,248 
 
 
 
 
 
 
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)
3 Months Ended 6 Months Ended 0 Months Ended
Jun. 30, 2016
Contract
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Dec. 31, 2015
Aug. 10, 2016
Subsequent Event [Member]
Significant Accounting Policies [Line Items]
 
 
 
 
 
 
Reverse stock split ratio of common stock
 
 
 
 
 
0.125 
Number of contracts accounted for management fees
 
 
 
 
 
Management fees earned, net
$ 63,036 
$ 0 
$ 150,725 
$ 0 
 
 
Management fees earned, gross
1,143,667 
2,265,310 
 
 
Potentially dilutive securities include options, restricted stock units, and warrants
 
 
3,261,023 
2,113,522 
 
 
Inventories waste disposal equipment
181,251 
 
181,251 
 
54,473 
 
Reserve for inventory obsolescence
$ 0 
 
$ 0 
 
 
 
Summary of Significant Accounting Policies - Schedule of Anti-dilutive Securities Excluded from Diluted Loss Per Share (Detail)
6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
 
 
Anti-dilutive securities excluded from diluted loss per share
3,261,023 
2,113,522 
Stock options [Member]
 
 
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
 
 
Anti-dilutive securities excluded from diluted loss per share
1,266,087 
630,134 
Restricted Stock Units [Member]
 
 
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
 
 
Anti-dilutive securities excluded from diluted loss per share
 
9,513 
Warrant [Member]
 
 
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
 
 
Anti-dilutive securities excluded from diluted loss per share
1,994,936 
1,473,875 
Property and Equipment, Net, and Other Assets - Components of Property and Equipment, Net, and Other Assets (Detail) (USD $)
Jun. 30, 2016
Dec. 31, 2015
Property Plant And Equipment [Abstract]
 
 
Property and equipment, net of depreciation
$ 1,477,054 
$ 1,308,236 
Security deposits and other assets
820,513 
300,396 
Property and Equipment net and other assets
$ 2,297,567 
$ 1,608,632 
Property and Equipment, Net, and Other Assets - Components of Property and Equipment, Net, and Other Assets ( Parenthetical) (Detail) (USD $)
Jun. 30, 2016
Dec. 31, 2015
Property Plant And Equipment [Abstract]
 
 
Accumulated depreciation, Property and equipment
$ 2,204,750 
$ 1,973,538 
Property and Equipment, Net, and Other Assets - Additional Information (Detail) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Dec. 31, 2015
Property Plant And Equipment [Abstract]
 
 
 
 
 
Depreciation
$ 122,296 
$ 70,335 
$ 231,212 
$ 146,381 
 
Depreciation reflected in cost of revenue
38,848 
48,265 
 
Capital lease assets, net
392,971 
 
392,971 
 
426,757 
Capital lease assets, accumulated depreciation
$ 100,722 
 
$ 100,722 
 
$ 34,041 
Goodwill and Other Intangible Assets - Schedule of Finite-Lived Intangible Assets (Detail) (USD $)
6 Months Ended 12 Months Ended
Jun. 30, 2016
Dec. 31, 2015
Finite Lived Intangible Assets [Line Items]
 
 
Gross Carrying Amount
$ 21,004,747 
$ 20,788,254 
Accumulated Amortization
10,803,727 
8,960,246 
Net
10,201,020 
11,828,008 
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
7,526,000 
6,254,000 
Net
5,194,000 
6,466,000 
Trademarks [Member]
 
 
Finite Lived Intangible Assets [Line Items]
 
 
Estimated Useful Life
7 years 
7 years 
Gross Carrying Amount
6,242,055 
6,239,950 
Accumulated Amortization
2,633,480 
2,188,129 
Net
3,608,575 
4,051,821 
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
1,504,856 
1,290,468 
Accumulated Amortization
199,984 
104,570 
Net
1,304,872 
1,185,898 
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
213,580 
182,864 
Net
$ 93,573 
$ 124,289 
Goodwill and Other Intangible Assets - Schedule of Indefinite-Lived Intangible Assets (Detail) (USD $)
6 Months Ended
Jun. 30, 2016
Dec. 31, 2015
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 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Goodwill And Intangible Assets Disclosure [Abstract]
 
 
 
 
Amortization of intangibles
$ 924,416 
$ 901,998 
$ 1,843,481 
$ 1,805,090 
Indefinite-lived intangible assets other than goodwill
 
 
$ 0 
 
Line of Credit - Additional Information (Detail) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Dec. 31, 2015
Line of Credit Facility [Line Items]
 
 
 
 
 
Outstanding principal amount on line of credit facility
$ 4,000,000 
 
$ 4,000,000 
 
$ 4,000,000 
Interest expense related to line of credit facility
57,274 
42,236 
113,862 
90,833 
 
Revolving Credit Note and Loan Agreement with Regions Bank (“Regions”) [Member]
 
 
 
 
 
Line of Credit Facility [Line Items]
 
 
 
 
 
Line of credit facility agreement date
 
 
Dec. 15, 2010 
 
 
Working capital from loan agreement with Regions Bank
15,000,000 
 
15,000,000 
 
 
Interest on outstanding principal amount
2.70% 
 
2.70% 
 
 
Outstanding principal amount on line of credit facility
4,000,000 
 
4,000,000 
 
 
Amount available to be borrow under line of credit facility
10,645,734 
 
10,645,734 
 
 
Interest rate line of credit facility description
 
 
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. 
 
 
Interest expense related to line of credit facility
$ 55,002 
$ 53,479 
$ 108,259 
$ 88,529 
 
Maturity date of loan agreement with Regions Bank
 
 
May 13, 2018 
 
 
Revolving Credit Note and Loan Agreement with Regions Bank (“Regions”) [Member] |
Base Rate [Member]
 
 
 
 
 
Line of Credit Facility [Line Items]
 
 
 
 
 
Fluctuating interest rate based on base rate
 
 
1.50% 
 
 
Revolving Credit Note and Loan Agreement with Regions Bank (“Regions”) [Member] |
Eligible Accounts Receivable [Member] |
Largest Customer [Member]
 
 
 
 
 
Line of Credit Facility [Line Items]
 
 
 
 
 
Percentage of accounts receivable form Quest's customers
80.00% 
 
80.00% 
 
 
Revolving Credit Note and Loan Agreement with Regions Bank (“Regions”) [Member] |
Eligible Accounts Receivable [Member] |
Other Customer [Member]
 
 
 
 
 
Line of Credit Facility [Line Items]
 
 
 
 
 
Percentage of accounts receivable form Quest's customers
85.00% 
 
85.00% 
 
 
Capital Lease Obligations - Summary of Capital Lease Obligations (Detail) (USD $)
Jun. 30, 2016
Dec. 31, 2015
Leases [Abstract]
 
 
Total capital lease obligations, imputed interest at 2.65% to 9.39%, with monthly payments of $11,168, through June 2019, secured by computer and telephone equipment
$ 369,471 
$ 402,170 
Less: current maturities
(112,722)
(112,125)
Long-term portion
$ 256,749 
$ 290,045 
Capital Lease Obligations - Summary of Capital Lease Obligations (Parenthetical) (Detail) (Capital lease obligations, imputed interest at 2.65% to 9.39% [Member], USD $)
6 Months Ended 12 Months Ended
Jun. 30, 2016
Dec. 31, 2015
Capital lease obligations, imputed interest at 2.65% to 9.39% [Member]
 
 
Debt Instrument [Line Items]
 
 
Imputed interest rate for capital lease obligation, minimum
2.65% 
2.65% 
Imputed interest rate for capital lease obligation, maximum
9.39% 
9.39% 
Monthly installment capital lease obligation
$ 11,168 
$ 11,168 
Capital Lease Obligations - Additional Information (Detail) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Debt Disclosure [Abstract]
 
 
 
 
Interest expense related to capital leases
$ 1,749 
$ 426 
$ 3,705 
$ 913 
Income Taxes - Additional Information (Detail) (USD $)
6 Months Ended
Jun. 30, 2016
Dec. 31, 2015
Income Tax Disclosure [Abstract]
 
 
Valuation allowance
$ 12,600,000 
$ 12,313,000 
Federal income tax net operating loss carry forward
$ 16,300,000 
$ 14,500,000 
Net operating loss carry forwards expiration beginning year
2031 
 
Stockholders' Equity - Additional Information (Detail) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Mar. 30, 2016
Dec. 31, 2015
Equity [Abstract]
 
 
 
 
 
 
Preferred stock, shares authorized
10,000,000 
 
10,000,000 
 
 
10,000,000 
Preferred stock, par value
$ 0.001 
 
$ 0.001 
 
 
$ 0.001 
Preferred stock, shares issued
 
 
 
Preferred stock, shares outstanding
 
 
 
Common stock, shares authorized
200,000,000 
 
200,000,000 
 
 
200,000,000 
Common stock, par value
$ 0.001 
 
$ 0.001 
 
 
$ 0.001 
Common stock, shares issued
14,844,502 
 
14,844,502 
 
861,250 
13,973,528 
Common stock, shares outstanding
14,844,502 
 
14,844,502 
 
 
13,973,528 
Employee stock purchase plan expense
$ 15,466 
$ 25,102 
$ 24,672 
$ 36,924 
 
 
Stockholders' Equity - Schedule of Common Stock Shares Issued (Detail) (USD $)
6 Months Ended
Jun. 30, 2016
Equity [Abstract]
 
Sale of common stock and warrants, net of issuance costs, Shares
861,250 
Shares issued for Employee Stock Purchase Plan options, Shares
9,723 
Total common stock shares
870,973 
Sale of common stock and warrants, net of issuance costs, Value
$ 2,889,350 
Shares issued for Employee Stock Purchase Plan options, Value
27,435 
Total common stock amount
$ 2,916,785 
Stockholders' Equity - Schedule of Common Stock Shares Issued (Parenthetical) (Detail) (USD $)
6 Months Ended
Jun. 30, 2016
Equity [Abstract]
 
Common stock and warrants issued, issuance cost
$ 452,300 
Stockholders' Equity - Additional Information - Sale of Common Stock and Warrants (Detail) (USD $)
0 Months Ended
Mar. 30, 2016
Jun. 30, 2016
Dec. 31, 2015
Schedule Of Sale Of Common Stock And Warrants [Line Items]
 
 
 
Common stock, shares issued
861,250 
14,844,502 
13,973,528 
Warrants issued
 
521,057 
 
Common stock, stock price
$ 3.88 
 
 
Common stock at a price per warrant
3.88 
 
 
Warrants exercised period
5 years 
 
 
Warrants exercise price
$ 3.88 
 
 
Warrants To Purchase Common Stock [Member]
 
 
 
Schedule Of Sale Of Common Stock And Warrants [Line Items]
 
 
 
Warrants issued
430,626 
 
 
Underwriters Warrants To Purchase Common Stock [Member]
 
 
 
Schedule Of Sale Of Common Stock And Warrants [Line Items]
 
 
 
Warrants issued
90,431 
 
 
Stockholders' Equity - Additional Information - Shares Issued for Employee Stock Purchase Plan Options (Detail) (USD $)
6 Months Ended 0 Months Ended
Jun. 30, 2016
May 16, 2016
2014 Employee Stock Purchase Plan [Member]
Schedule Of Stockholders Equity [Line Items]
 
 
Shares issued for Employee Stock Purchase Plan options, Shares
9,723 
9,732 
Shares issued for Employee Stock Purchase Plan options, Value
$ 27,435 
$ 27,435 
Stockholders' Equity - Additional Information - Warrants (Detail)
6 Months Ended
Jun. 30, 2016
Class Of Warrant Or Right [Line Items]
 
Warrants issued
521,057 
Number of exercised warrants
Warrants outstanding
1,994,936 
Exercisable Warrants [Member]
 
Class Of Warrant Or Right [Line Items]
 
Warrants outstanding
1,994,936 
Stockholders' Equity - Summary of Warrants Issued and Outstanding (Detail) (USD $)
6 Months Ended
Jun. 30, 2016
Mar. 30, 2016
Jun. 30, 2016
Exercisable Warrants [Member]
Jun. 30, 2016
Exercisable Warrants [Member]
Warrants One [Member]
Jun. 30, 2016
Exercisable Warrants [Member]
Warrant Two [Member]
Jun. 30, 2016
Exercisable Warrants [Member]
Warrants Three [Member]
Jun. 30, 2016
Exercisable Warrants [Member]
Warrants Four [Member]
Jun. 30, 2016
Exercisable Warrants [Member]
Warrant Five [Member]
Jun. 30, 2016
Exercisable Warrants [Member]
Warrant Six [Member]
Class Of Warrant Or Right [Line Items]
 
 
 
 
 
 
 
 
 
Date of Issuance
 
 
 
Apr. 18, 2014 
May 07, 2014 
May 28, 2014 
Sep. 24, 2014 
Oct. 20, 2014 
Mar. 30, 2016 
Date of Expiration
 
 
 
Apr. 01, 2017 
May 07, 2017 
Oct. 31, 2016 
Sep. 24, 2019 
Oct. 20, 2019 
Mar. 30, 2021 
Exercise Price
 
$ 3.88 
 
$ 16.00 
$ 21.20 
$ 34.48 
$ 20.00 
$ 20.00 
$ 3.88 
Shares of Common Stock
1,994,936 
 
1,994,936 
180,126 
25,000 
56,250 
1,125,003 
87,500 
521,057 
Stockholders' Equity - Summary of Stock Option Activity (Detail) (USD $)
6 Months Ended
Jun. 30, 2016
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
 
Outstanding Beginning Balance, Number of Shares
742,989 
Granted, Number of Shares
690,756 
Canceled/Forfeited, Number of Shares
(167,658)
Outstanding Ending Balance, Number of Shares
1,266,087 
Outstanding Beginning Balance, Weighted-Average Exercise Price Per Share
$ 16.32 
Granted, Weighted-Average Exercise Price Per Share
$ 4.03 
Canceled/Forfeited, Weighted Average Exercise Price Per Share
$ 13.16 
Outstanding Ending Balance, Weighted Average Exercise Price Per Share
$ 9.56 
Outstanding, 6.24-30.00 [Member]
 
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
 
Exercise Price Per Share, Minimum
$ 6.24 
Exercise Price Per Share, Maximum
$ 30.00 
Granted, 3.12-6.40 [Member]
 
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
 
Exercise Price Per Share, Minimum
$ 3.12 
Exercise Price Per Share, Maximum
$ 6.40 
Canceled/Forfeited, 6.24-30.00 [Member]
 
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
 
Exercise Price Per Share, Minimum
$ 6.24 
Exercise Price Per Share, Maximum
$ 30.00 
Outstanding, 3.12-30.00 [Member]
 
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
 
Exercise Price Per Share, Minimum
$ 3.12 
Exercise Price Per Share, Maximum
$ 30.00 
Material Subsequent Events - Additional Information (Detail)
6 Months Ended 0 Months Ended
Jun. 30, 2016
Aug. 10, 2016
Subsequent Event [Member]
Subsequent Event [Line Items]
 
 
Reverse stock split ratio of common stock