Document and Entity Information - shares |
6 Months Ended | |
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Jun. 30, 2019 |
Aug. 01, 2019 |
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Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | QRHC | |
Entity Registrant Name | Quest Resource Holding Corporation | |
Entity Central Index Key | 0001442236 | |
Entity Current Reporting Status | Yes | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 15,350,153 | |
Entity File Number | 001-36451 | |
Entity Tax Identification Number | 510665952 | |
Entity Address, Address Line One | 3481 Plano Parkway | |
Entity Address, City or Town | The Colony | |
Entity Address, State or Province | Texas | |
Entity Address, Postal Zip Code | 75056 | |
City Area Code | 972 | |
Local Phone Number | 464-0004 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (Unaudited) - USD ($) |
Jun. 30, 2019 |
Dec. 31, 2018 |
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Statement Of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 977,088 | $ 929,399 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 15,350,153 | 15,328,870 |
Common stock, shares outstanding | 15,350,153 | 15,328,870 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
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Income Statement [Abstract] | ||||
Revenue | $ 25,445,373 | $ 27,928,626 | $ 52,094,414 | $ 52,624,549 |
Cost of revenue | 20,695,798 | 23,500,848 | 42,801,994 | 44,648,944 |
Gross profit | 4,749,575 | 4,427,778 | 9,292,420 | 7,975,605 |
Operating expenses: | ||||
Selling, general, and administrative | 4,226,912 | 3,879,280 | 8,441,142 | 7,631,040 |
Depreciation and amortization | 327,093 | 981,610 | 652,880 | 1,966,191 |
Total operating expenses | 4,554,005 | 4,860,890 | 9,094,022 | 9,597,231 |
Operating income (loss) | 195,570 | (433,112) | 198,398 | (1,621,626) |
Interest expense | 113,697 | 105,430 | 225,508 | 229,435 |
Income (loss) before taxes | 81,873 | (538,542) | (27,110) | (1,851,061) |
Income tax expense | 54,771 | 109,540 | ||
Net income (loss) | 27,102 | (538,542) | (136,650) | (1,851,061) |
Net income (loss) applicable to common stockholders | $ 27,102 | $ (538,542) | $ (136,650) | $ (1,851,061) |
Net income (loss) per share applicable to common stockholders | ||||
Basic | $ 0.00 | $ (0.04) | $ (0.01) | $ (0.12) |
Diluted | $ 0.00 | $ (0.04) | $ (0.01) | $ (0.12) |
Weighted average number of common shares outstanding | ||||
Basic | 15,339,743 | 15,307,859 | 15,334,397 | 15,305,172 |
Diluted | 15,362,406 | 15,307,859 | 15,334,397 | 15,305,172 |
The Company and Description of Business |
6 Months Ended |
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Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
The Company and Description of Business |
1. The Company and Description of Business The accompanying condensed consolidated financial statements include the accounts of Quest Resource Holding Corporation (“QRHC”) and its subsidiaries, Quest Resource Management Group, LLC (“Quest”), Landfill Diversion Innovations, LLC (“LDI”), Youchange, Inc. (“Youchange”), Quest Vertigent Corporation (“QVC”), Quest Vertigent One, LLC (“QV One”), and Quest Sustainability Services, Inc. (“QSS”) (collectively, “we,” “us,” “our,” or “our company”). Operations – We are a national provider of reuse, recycling, and disposal services that enable our customers to achieve and satisfy their environmental and sustainability goals and responsibilities. We provide businesses across multiple industry sectors with single source solutions for the reuse, recycling, and disposal of a wide variety of waste streams and recyclables generated by their operations. |
Summary of Significant Accounting Policies |
6 Months Ended |
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Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
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, 2018. 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, 2019 and the results of our operations and cash flows for the periods presented. We derived the December 31, 2018 condensed consolidated balance sheet data from audited financial statements; however, we did not include all disclosures required by GAAP. As QRHC, Quest, LDI, Youchange, QVC, QV One, and QSS each operate as environmental-based 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 six months ended June 30, 2019 are not necessarily indicative of the results to be expected for the full year. Recent Accounting Pronouncements Adopted On January 1, 2019, we adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), using a modified retrospective approach with an effective date as of January 1, 2019. Accordingly, prior year financial statement data is presented in accordance with the previous ASC Topic 840, Leases, and no retrospective adjustments were made to the comparative periods presented. We elected the package of practical expedients, which allowed us to carryforward our historical assessment of (1) whether contracts are or contain leases, (2) lease classification, and (3) initial direct costs. As of January 1, 2019, we recognized an operating right-of-use asset of approximately $2.0 million and corresponding operating lease liabilities of approximately $2.2 million. Finance lease assets were not impacted by the adoption of ASC 842, as finance lease liabilities and the corresponding assets were already recorded on the balance sheet under ASC 840. The adoption did not materially impact our results of operations or cash flows and no cumulative adjustment to accumulated deficit was necessary as of January 1, 2019. Refer to Note 7, Leases for additional information and enhanced disclosures related to this amended guidance. On January 1, 2018, we adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606), using the full retrospective approach for all ongoing customer contracts. Refer to Note 8, Revenue for additional information and disclosures related to this amended guidance. Pending Adoption 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. 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. 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 |
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Property Plant And Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment, Net, and Other Assets |
3. Property and Equipment, net, and Other Assets At June 30, 2019 and December 31, 2018, property and equipment, net, and other assets consisted of the following:
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 June 30, 2019 was $49,112, including $15,511 of depreciation expense reflected within “Cost of revenue” in our condensed consolidated statements of operations as it related to assets used in directly servicing customer contracts, and was $116,629 for the six months ended June 30, 2019, including $49,009 of depreciation expense reflected within “Cost of revenue.” Depreciation expense for the three months ended June 30, 2018 was $100,662, including $45,702 of depreciation expense reflected within “Cost of revenue,” and was $203,972 for the six months ended June 30, 2018, including $90,998 reflected within “Cost of revenue.” We recorded a right-of-use operating lease asset of $2.0 million related to our corporate office lease upon the adoption of ASC 842 effective January 1, 2019. Refer to Note 7, Leases for additional information. On February 20, 2018 (the “Closing Date”), we entered into an Asset Purchase Agreement with Earth Media Partners, LLC to sell certain assets of our wholly owned subsidiary, Earth911, Inc., in exchange for a 19% interest in Earth Media Partners, LLC, which was recorded as an investment in the amount of $246,585 as of the Closing Date, and a potential future earn-out amount of approximately $350,000. The net assets sold related to the Earth911.com website business and consisted primarily of the website and its content and customers, deferred revenue, and accounts receivable as of the Closing Date. Earth911, Inc. was subsequently renamed Quest Sustainability Services, Inc. In addition to our investment in Earth Media Partners, LLC, we accrued a receivable in the amount of $107,815 related to the earn-out as of June 30, 2019. The carrying amount of our investment and the accrued earn-out receivable are included in other assets. |
Goodwill and Other Intangible Assets |
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Goodwill And Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets |
4. Goodwill and Other Intangible Assets The components of goodwill and other intangible assets were as follows:
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 $293,491 and $926,650 for the three months ended June 30, 2019 and 2018, respectively. Amortization expense related to finite lived intangible assets was $585,260 and $1,853,217 for the six months ended June 30, 2019 and 2018, 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 third quarter of 2018 with no impairment recorded. |
Accounts Payable and Accrued Liabilities |
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Accounts Payable And Accrued Liabilities Current [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Liabilities |
5. Accounts Payable and Accrued Liabilities The components of Accounts payable and accrued liabilities were as follows:
Refer to Note 7, Leases for additional disclosure related to the operating lease liability recorded upon the adoption of ASC 842 Leases. |
Revolving Credit Facility |
6 Months Ended |
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Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
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. Each loan under the ABL Facility bears interest, at our option, at either the Base Rate, as defined in the Citizens Loan Agreement, plus a margin ranging from 1.0% to 1.5% (6.75% as of June 30, 2019), or the LIBOR lending rate for the interest period in effect, plus a margin ranging from 2.0% to 2.5% (4.77% as of June 30, 2019). The maturity date of the ABL Facility is February 24, 2022. We had no borrowings under the equipment loan facility, which were required to be requested no later than February 24, 2019. The ABL Facility contains certain specific financial covenants regarding a minimum liquidity requirement and a minimum fixed charge coverage ratio. 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 June 30, 2019 and 2018 was $90,035 and $81,140, respectively. The amount of interest expense related to borrowings for the six months ended June 30, 2019 and 2018 was $176,777 and $165,428, respectively. Debt issuance cost of $469,507 is being amortized to interest expense over the term of the ABL Facility beginning March 1, 2017. As of June 30, 2019, the unamortized portion of the debt issuance costs was $250,404. The amount of interest expense related to the amortization of the discount on the ABL Facility for the six months ended June 30, 2019 and 2018 was $46,951. As of June 30, 2019, the ABL Facility borrowing base availability was $11,631,000 and the outstanding liability was $4,861,355, net of unamortized debt issuance cost of $250,404. |
Leases |
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Lessee Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases |
7. Leases ASU 2016-02 Adoption On January 1, 2019, we adopted ASU 2016-02, Leases (Topic 842), and the related amendments (collectively “ASC 842”). We used the optional transition method of adoption, in which the cumulative effect of initially applying the new standard, as of January 1, 2109, to our existing leases was approximately $2.0 million and $2.2 million to record the operating lease right-of-use asset and the related liabilities, respectively, all of which relate to our corporate office lease. Under this method of adoption, the comparative information in the condensed consolidated financial statements has not been revised and continues to be reported under the previous applicable lease accounting guidance (ASC 840). Leases with terms of 12 months or less are not recorded on the balance sheet. When we have the option to extend the lease term, terminate the lease before the contractual expiration date, or purchase the leased asset, and if it is reasonably certain that we will exercise the option, we consider these options in determining the classification and measurement of the lease. As of December 31, 2018, leases classified as capital leases under ASC 840 were included in Property and equipment, net and represented almost fully depreciated office equipment with a negligible book value. We lease certain equipment to a customer under a lease arrangement that expires in 2020. The capital lease receivable amounts are approximately $30,000 at June 30, 2019, the majority of which is included in Prepaid expenses and other current assets. Balance Sheet Classification The table below presents the lease related assets and liabilities recorded on the balance sheet. Right-of-use assets and related liabilities related to finance leases at June 30, 2019 are de minimis and mature in less than 12 months.
Lease Costs For the three and six months ended June 30, 2019, we recorded approximately $150,000 and $300,000 of fixed cost operating lease expense, respectively. Our operating lease expense is offset by a minimum annual incentive received from a local Economic Development Council, which is accrued monthly and will continue over the term of the lease through August 2022. This minimum annual incentive is $63,000, which will increase to $93,600 for the annual incentive period starting September 2020. Cash paid for operating leases approximated operating lease expense and non-cash right of use asset amortization for the three and six months ended June 30, 2019. We did not obtain any new operating lease right-of-use assets in the six months ended June 30, 2019. Other Information Our office lease had a remaining term of 3.25 years as of June 30, 2019, and we used an effective interest rate of 2.456%, which was our incremental borrowing rate in effect at the inception of the lease as our lease does not provide a readily determinable implicit rate. The future minimum lease payments required under our office lease as of June 30, 2019 were as follows:
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Revenue |
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Revenue From Contract With Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue |
8. Revenue Operating Revenues We provide businesses with services to reuse, recycle, and dispose of a wide variety of waste streams and recyclables generated by their operations. In addition, we have product sales and other revenue primarily from sales of products, such as antifreeze and windshield washer fluid, as well as minor ancillary services. Revenue Recognition We recognize revenue as services are performed or products are delivered. For example, we recognize revenue as waste and recyclable material are collected or when products are delivered. We recognize revenue net of any contracted pricing discounts or rebate arrangements. We generally recognize revenue for the gross amount of consideration received as we are generally the primary obligor (or principal) in our contracts with customers as we hold complete responsibility to the customer for contract fulfillment. We record amounts collected from customers for sales tax on a net basis. Disaggregation of Revenue The following table presents our revenue disaggregated by source. Sales and usage-based taxes are excluded from revenue. Three customers accounted for 54.1% of revenue for the three months ended June 30, 2019, and three customers accounted for 53.0% of revenue for the three months ended June 30, 2018. Three customers accounted for 57.0% of revenue for the six months ended June 30, 2019, and three customers accounted for 50.8% of revenue for the six months ended June 30, 2018. We operate primarily in the United States, with minor services in Canada.
Contract Balances Our incremental direct costs of obtaining a customer contract are generally deferred and amortized to selling, general, and administrative expense or as a reduction to revenue (depending on the nature of the cost) over the estimated life of the customer contract. We classify our contract acquisition costs as current or noncurrent based on the timing of when we expect to recognize the amortization and are included in other assets. As of June 30, 2019 and December 31, 2018, we had $121,250 and $7,448, respectively, of deferred contract costs. During the three months ended June 30, 2019, we amortized $53,750 and nil of deferred contract costs to selling, general, and administrative expense and as a reduction to revenue, respectively. During the three months ended June 30, 2018, we amortized $70,417 and $18,070 of deferred contract costs to selling, general, and administrative expense and as a reduction to income, respectively. During the six months ended June 30, 2019, we amortized $107,500, and nil of deferred contract costs to selling, general, and administrative expense and as a reduction to income, respectively. During the six months ended June 30, 2018, we amortized $103,750 and $36,139 of deferred contract costs to selling, general, and administrative expense and as a reduction to income, respectively. We bill certain customers in advance, and, accordingly, we defer recognition of related revenues as a contract liability until the services are provided and control is transferred to the customer. As of June 30, 2019 and December 31, 2018, we had $22,416 and $69,473, respectively, of deferred revenue, the majority of which was classified in “Deferred revenue and other current liabilities.” |
Income Taxes |
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Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes |
9. Income Taxes Our statutory income tax rate is anticipated to be 27%. However, we had income tax expense of $109,540 on a net operating loss for the six months ended June 30, 2019, which is attributable to state tax obligations for states with no net operating loss carryforwards, and the continued reserve against the benefit of the net operating losses at the federal level. 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 to reduce the amount of deferred tax assets that, based on available evidence, is more likely than not to be realized. Realization of our net operating loss carryforward was not reasonably assured as of June 30, 2019 and December 31, 2018, and we had recorded a valuation allowance of $12,152,000 and $12,202,000, respectively, against deferred tax assets in excess of deferred tax liabilities in the accompanying condensed consolidated financial statements. As of June 30, 2019 and December 31, 2018, we had federal income tax net operating loss carryforwards of approximately $18,300,000 and $18,900,000, respectively, which expire at various dates ranging from 2031-2037.
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Fair Value of Financial Instruments |
6 Months Ended |
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Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments |
10. Fair Value of Financial Instruments Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, deferred revenue, and the ABL Facility. 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 the ABL Facility, based on borrowing rates currently available to us for loans with similar terms and maturities.
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Stockholders' Equity |
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Stockholders' Equity |
11. Stockholders’ Equity Preferred Stock – Our authorized preferred stock consists of 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 consists of 200,000,000 shares of common stock with a par value of $0.001, of which 15,350,153 and 15,328,870 shares were issued and outstanding as of June 30, 2019 and December 31, 2018, respectively. Employee Stock Purchase Plan – On September 17, 2014, our stockholders approved our 2014 Employee Stock Purchase Plan (“ESPP”). On May 14, 2019, we issued 21,283 shares to employees for $29,669 under our ESPP for options that vested and were exercised. We recorded expense of $13,827 and $5,262 related to the ESPP for the six months ended June 30, 2019 and 2018, respectively. Warrants – At June 30, 2019, 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 June 30, 2019:
Stock Options – We recorded stock option expense of $459,405 and $401,453 for the six months ended June 30, 2019 and 2018, respectively. The following table summarizes the stock option activity for the six months ended June 30, 2019:
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Net Income (Loss) per Share |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income (Loss) per Share |
12. Net Income (Loss) per Share We compute basic net income (loss) per share using the weighted average number of shares of common stock outstanding during the period. We compute diluted net income (loss) per share using the weighted average number of shares of common stock outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods where losses are reported, the weighted average number of shares of common stock outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. Dilutive potential common shares consist of the incremental common shares issuable upon the exercise of outstanding stock options. Dilutive potential securities are excluded from the computation of earnings per share if their effect is antidilutive. The dilutive effect of outstanding stock options and warrants is reflected in diluted earnings per share by application of the treasury stock method. The computation of basic and diluted net income (loss) per share attributable to common stockholders is as follows:
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Related Party Transactions |
6 Months Ended |
---|---|
Jun. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions |
13. Related Party Transactions During the quarter ended June 30, 2019, three stockholders sold approximately 4.3 million shares of our common stock in a registered public offering that closed on April 11, 2019. In a separate private transaction, a certain selling stockholder sold 1,750,000 shares of our common stock. The offering and private transaction, together the “Transactions”, closed on April 11, 2019. We did not receive any proceeds from sales by the selling stockholders in the Transactions. We incurred costs and expenses in connection with the Transactions, consisting of various registration, due diligence, printing, and professional service fees and expenses, and such costs, less amounts reimbursed by the selling stockholders at the closing of the Transactions, were approximately $248,000, and is included in selling, general, and administrative expense for the six months ended June 30, 2019. The majority of the costs associated with the Transactions were recognized in the first quarter of 2019, with approximately $17,000 recognized in the quarter ended June 30, 2019.
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Summary of Significant Accounting Policies (Policies) |
6 Months Ended |
---|---|
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Principles of Presentation and Consolidation |
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, 2018. 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, 2019 and the results of our operations and cash flows for the periods presented. We derived the December 31, 2018 condensed consolidated balance sheet data from audited financial statements; however, we did not include all disclosures required by GAAP. As QRHC, Quest, LDI, Youchange, QVC, QV One, and QSS each operate as environmental-based 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 six months ended June 30, 2019 are not necessarily indicative of the results to be expected for the full year. |
Recent Accounting Pronouncements |
Recent Accounting Pronouncements Adopted On January 1, 2019, we adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), using a modified retrospective approach with an effective date as of January 1, 2019. Accordingly, prior year financial statement data is presented in accordance with the previous ASC Topic 840, Leases, and no retrospective adjustments were made to the comparative periods presented. We elected the package of practical expedients, which allowed us to carryforward our historical assessment of (1) whether contracts are or contain leases, (2) lease classification, and (3) initial direct costs. As of January 1, 2019, we recognized an operating right-of-use asset of approximately $2.0 million and corresponding operating lease liabilities of approximately $2.2 million. Finance lease assets were not impacted by the adoption of ASC 842, as finance lease liabilities and the corresponding assets were already recorded on the balance sheet under ASC 840. The adoption did not materially impact our results of operations or cash flows and no cumulative adjustment to accumulated deficit was necessary as of January 1, 2019. Refer to Note 7, Leases for additional information and enhanced disclosures related to this amended guidance. On January 1, 2018, we adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606), using the full retrospective approach for all ongoing customer contracts. Refer to Note 8, Revenue for additional information and disclosures related to this amended guidance. Pending Adoption 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. 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. 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 (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property Plant And Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components Property and Equipment, Net, and Other Assets |
At June 30, 2019 and December 31, 2018, property and equipment, net, and other assets consisted of the following:
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Goodwill and Other Intangible Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill And Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets |
The components of goodwill and other intangible assets were as follows:
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Schedule of Indefinite-Lived Intangible Assets |
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Accounts Payable and Accrued Liabilities (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable And Accrued Liabilities Current [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Accounts Payable and Accrued Liabilities |
The components of Accounts payable and accrued liabilities were as follows:
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Leases (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||
Lessee Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Summary of Lease Related Assets and Liabilities Recorded on Balance Sheet |
The table below presents the lease related assets and liabilities recorded on the balance sheet. Right-of-use assets and related liabilities related to finance leases at June 30, 2019 are de minimis and mature in less than 12 months.
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Future Minimum Lease Payments Required Under Office Lease |
The future minimum lease payments required under our office lease as of June 30, 2019 were as follows:
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Revenue (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Revenue From Contract With Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Revenue Disaggregated by Source | The following table presents our revenue disaggregated by source.
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Stockholders' Equity (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Warrants Issued and Outstanding |
The following table summarizes the warrants issued and outstanding as of June 30, 2019:
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Summary of Stock Option Activity | The following table summarizes the stock option activity for the six months ended June 30, 2019
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Net Income (Loss) per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Basic and Diluted Net Income (Loss) per Share Attributable to Common Stockholders |
The computation of basic and diluted net income (loss) per share attributable to common stockholders is as follows:
|
Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) |
Jun. 30, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
---|---|---|---|
Significant Accounting Policies [Line Items] | |||
Operating lease right-of-use asset | $ 1,872,499 | ||
Operating lease liability | 2,061,761 | ||
Accumulated deficit | $ (99,310,803) | $ (99,174,153) | |
ASU 2016-02 [Member] | |||
Significant Accounting Policies [Line Items] | |||
Operating lease right-of-use asset | $ 2,000,000 | ||
Operating lease liability | 2,200,000 | ||
Accumulated deficit | $ 0 |
Property and Equipment, Net, and Other Assets - Components of Property and Equipment, Net, and Other Assets (Detail) - USD ($) |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Property And Equipment Net And Other Assets [Abstract] | ||
Property and equipment, net of accumulated depreciation of $2,640,329 and $2,523,700 as of June 30, 2019 and December 31, 2018, respectively | $ 534,752 | $ 614,518 |
Right-of-use operating lease asset | 1,872,499 | |
Security deposits and other assets | 399,191 | 353,507 |
Property and equipment, net, and other assets | $ 2,806,442 | $ 968,025 |
Property and Equipment, Net, and Other Assets - Components of Property and Equipment, Net, and Other Assets ( Parenthetical) (Detail) - USD ($) |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Property And Equipment Net And Other Assets [Abstract] | ||
Accumulated depreciation, Property and equipment | $ 2,640,329 | $ 2,523,700 |
Goodwill and Other Intangible Assets - Schedule of Indefinite-Lived Intangible Assets (Detail) - USD ($) |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Intangible Assets Net Including Goodwill [Abstract] | ||
Carrying Amount | $ 58,208,490 | $ 58,208,490 |
Goodwill and Other Intangible Assets - Additional Information (Detail) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2019 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Goodwill And Intangible Assets Disclosure [Abstract] | |||||
Amortization of intangibles | $ 293,491 | $ 926,650 | $ 585,260 | $ 1,853,217 | |
Indefinite-lived intangible assets other than goodwill | $ 0 | ||||
Impairment of goodwill and other intangible assets | $ 0 |
Accounts Payable and Accrued Liabilities - Components of Accounts Payable and Accrued Liabilities (Detail) - USD ($) |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Accounts Payable And Accrued Liabilities Current [Abstract] | ||
Accounts payable | $ 12,895,242 | $ 14,025,221 |
Accrued taxes | 743,347 | 548,126 |
Employee compensation | 765,837 | 910,796 |
Operating lease liability - current portion | 609,304 | |
Other | 234,356 | 293,778 |
Accounts payable and accrued liabilities | $ 15,248,086 | $ 15,777,921 |
Leases - Additional Information (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 01, 2020 |
Jun. 30, 2019 |
Jun. 30, 2019 |
Jan. 01, 2019 |
|
Lessee Lease Description [Line Items] | ||||
Operating right-of-use asset | $ 1,872,499 | $ 1,872,499 | ||
Operating lease liabilities | 2,061,761 | $ 2,061,761 | ||
Equipment lease expire year | 2020 | |||
Fixed cost operating lease expense | $ 150,000 | $ 300,000 | ||
Operating lease minimum annual incentive payment | $ 63,000 | |||
Operating lease, remaining lease term | 3 years 3 months | 3 years 3 months | ||
Operating lease, effective interest rate | 2.456% | 2.456% | ||
Scenario, Forecast [Member] | ||||
Lessee Lease Description [Line Items] | ||||
Operating lease minimum annual incentive payment | $ 93,600 | |||
Maximum [Member] | ||||
Lessee Lease Description [Line Items] | ||||
Finance leases maturity period | 12 months | 12 months | ||
ASU 2016-02 [Member] | ||||
Lessee Lease Description [Line Items] | ||||
Operating right-of-use asset | $ 2,000,000 | |||
Operating lease liabilities | $ 2,200,000 |
Leases - Additional Information 1 (Details) |
Jun. 30, 2019
USD ($)
|
---|---|
Lessor Disclosure [Abstract] | |
Capital lease receivable amounts | $ 30,000 |
Leases - Summary of Lease Related Assets and Liabilities Recorded on Balance Sheet (Details) |
Jun. 30, 2019
USD ($)
|
---|---|
Assets And Liabilities Lessee [Abstract] | |
Right-of-use operating lease asset | $ 1,872,499 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | qrhc:PropertyAndEquipmentNetAndOtherAssetsMember |
Operating lease liability - current portion | $ 609,304 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | us-gaap:AccountsPayableAndAccruedLiabilitiesMember |
Other long-term liabilities | $ 1,452,457 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | us-gaap:OtherNoncurrentLiabilitiesMember |
Total operating lease liabilities | $ 2,061,761 |
Leases - Future Minimum Lease Payments Required Under Office Lease (Details) |
Jun. 30, 2019
USD ($)
|
---|---|
Operating Lease Liabilities Payments Due [Abstract] | |
2019 | $ 321,120 |
2020 | 664,200 |
2021 | 664,200 |
2022 | 498,150 |
Total lease payments | 2,147,670 |
Less: Interest | 85,909 |
Operating lease liability | $ 2,061,761 |
Revenue - Additional Information (Detail) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2019
USD ($)
Customer
|
Jun. 30, 2018
USD ($)
Customer
|
Jun. 30, 2019
USD ($)
Customer
|
Jun. 30, 2018
USD ($)
Customer
|
Dec. 31, 2018
USD ($)
|
|
Revenue Recognition [Line Items] | |||||
Number of customer | Customer | 3 | 3 | 3 | 3 | |
Percentage of revenue | 54.10% | 53.00% | 57.00% | 50.80% | |
Deferred contract costs | $ 121,250 | $ 121,250 | $ 7,448 | ||
Deferred revenue | 22,416 | 22,416 | $ 69,473 | ||
Selling, General and Administrative Expense [Member] | |||||
Revenue Recognition [Line Items] | |||||
Amortized deferred contract costs | $ 53,750 | $ 70,417 | $ 107,500 | $ 103,750 | |
Reduction to Income [Member] | |||||
Revenue Recognition [Line Items] | |||||
Amortized deferred contract costs | $ 18,070 | $ 36,139 |
Revenue - Summary of Revenue Disaggregated by Source (Detail) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Disaggregation Of Revenue [Line Items] | ||||
Total revenue | $ 25,445,373 | $ 27,928,626 | $ 52,094,414 | $ 52,624,549 |
Services [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total revenue | 22,767,059 | 25,324,837 | 46,821,578 | 47,330,409 |
Product Sales and Other [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Total revenue | $ 2,678,314 | $ 2,603,789 | $ 5,272,836 | $ 5,294,140 |
Income Taxes - Additional Information (Detail) - USD ($) |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2019 |
Dec. 31, 2018 |
|
Income Tax Disclosure [Abstract] | |||
Income tax expense | $ 54,771 | $ 109,540 | |
Federal corporate income tax rate | 27.00% | ||
Operating loss carryforwards | 0 | $ 0 | |
Valuation allowance | 12,152,000 | 12,152,000 | $ 12,202,000 |
Federal income tax net operating loss carry forward | $ 18,300,000 | $ 18,300,000 | $ 18,900,000 |
Net operating loss carry forwards expiration beginning year | 2031 | ||
Net operating loss carry forwards expiration ending year | 2037 |
Stockholders' Equity - Additional Information (Detail) - USD ($) |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
May 14, 2019 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Dec. 31, 2018 |
|
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 | 0 | 0 | 0 | |||
Preferred stock, shares outstanding | 0 | 0 | 0 | |||
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 | 15,350,153 | 15,350,153 | 15,328,870 | |||
Common stock, shares outstanding | 15,350,153 | 15,350,153 | 15,328,870 | |||
Employee stock purchase plan expense | $ 13,827 | $ 5,262 | ||||
Shares issued for Employee Stock Purchase Plan options, Shares | 21,283 | |||||
Shares issued for Employee Stock Purchase Plan options, Value | $ 29,669 | $ 29,669 | $ 18,396 |
Stockholders' Equity - Additional Information - Warrants (Detail) |
Jun. 30, 2019
shares
|
---|---|
Class Of Warrant Or Right [Line Items] | |
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) |
6 Months Ended |
---|---|
Jun. 30, 2019
$ / shares
shares
| |
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 | $ / shares | $ 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 | $ / shares | $ 20.00 |
Shares of Common Stock | 87,500 |
Exercisable Warrants [Member] | Warrants Three [Member] | |
Class Of Warrant Or Right [Line Items] | |
Date of Issuance | Mar. 30, 2016 |
Date of Expiration | Mar. 30, 2021 |
Exercise Price | $ / shares | $ 3.88 |
Shares of Common Stock | 521,060 |
Stockholders' Equity - Additional Information - Stock Options (Detail) - USD ($) |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Equity [Abstract] | ||
Stock options expense | $ 459,405 | $ 401,453 |
Related Party Transactions - Additional Information (Detail) - USD ($) |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2019 |
|
Related Party Transaction [Line Items] | ||
Sale of common stock, description | The offering and private transaction, together the “Transactions”, closed on April 11, 2019. | |
Proceeds from sale of common stock | $ 0 | |
Public Offering [Member] | ||
Related Party Transaction [Line Items] | ||
Number of common stock sold by shareholders | 4,300,000 | |
Private Transaction [Member] | ||
Related Party Transaction [Line Items] | ||
Number of common stock sold by shareholders | 1,750,000 | |
Transactions [Member] | ||
Related Party Transaction [Line Items] | ||
Costs and expenses | $ 17,000 | |
Transactions [Member] | Selling, General and Administrative Expense [Member] | ||
Related Party Transaction [Line Items] | ||
Costs and expenses | $ 248,000 |