CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
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Statement Of Financial Position [Abstract] | |||
Allowance for doubtful accounts receivable | $ 935,261 | $ 767,464 | $ 929,339 |
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 | 18,413,419 | 15,372,905 | |
Common stock, shares outstanding | 18,413,419 | 15,372,905 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) |
12 Months Ended | |
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Dec. 31, 2020 |
Dec. 31, 2019 |
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Income Statement [Abstract] | ||
Revenue | $ 98,660,035 | $ 98,979,140 |
Cost of revenue | 79,604,958 | 80,253,172 |
Gross profit | 19,055,077 | 18,725,968 |
Operating expenses: | ||
Selling, general, and administrative | 17,140,996 | 16,815,767 |
Depreciation and amortization | 1,163,812 | 1,314,731 |
Total operating expenses | 18,304,808 | 18,130,498 |
Operating income | 750,269 | 595,470 |
Other income | 1,408,000 | |
Interest expense | (701,932) | (431,628) |
Loss on extinguishment of debt | (167,964) | |
Income before taxes | 1,288,373 | 163,842 |
Income tax expense | 254,004 | 219,082 |
Net income (loss) | 1,034,369 | (55,240) |
Deemed dividend for warrant down round feature | (205,014) | |
Net income (loss) applicable to common stockholders | $ 829,355 | $ (55,240) |
Net income (loss) per share applicable to common stockholders | ||
Basic | $ 0.05 | $ 0.00 |
Diluted | $ 0.05 | $ 0.00 |
Weighted average number of common shares outstanding | ||
Basic | 16,661,472 | 15,347,039 |
Diluted | 16,755,560 | 15,347,039 |
The Company and Description of Business |
12 Months Ended |
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Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
The Company and Description of Business |
1. The Company and Description of Business The accompanying 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,” or “our company”). Operations We are a national provider of waste and recycling services to customers from across multiple industry sectors that are typically larger, multi-location businesses. We create customer-specific programs and perform the related services for the collection, processing, recycling, disposal, and tracking of waste streams and recyclables. In addition, we offer products such as antifreeze and windshield washer fluid and other minor ancillary services. We also provide information and data that tracks and reports the detailed transactional and environmental results of our services and provides actionable data to improve business operations. The data we generate also enables our customers to address their environmental and sustainability goals and responsibilities. Our principal office is located in The Colony, Texas within the Dallas metroplex. In March 2020, the World Health Organization categorized Coronavirus Disease 2019 (“COVID-19”) as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. The waste management and recycling services we provide are currently designated an essential critical infrastructure business under the President’s COVID-19 guidance, the continued operation of which is vital for national public health, safety and national economic security. The extent of the impact of the COVID-19 outbreak on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, its impact on our customers and subcontractors, and the range of governmental and community reactions to the pandemic, which are uncertain and cannot be fully predicted at this time. On October 19, 2020, Quest acquired substantially all of the assets used in the business of Green Remedies Waste and Recycling, Inc. (“Green Remedies”), a leading provider of independent environmental services, particularly in multi-family housing, located in Burlington, NC. See Note 3 for more information regarding the acquisition. |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies |
2. Summary of Significant Accounting Policies Principles of Presentation and Consolidation The consolidated financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The accompanying consolidated financial statements include the operating activity of QRHC and its subsidiaries for the years ended December 31, 2020 and 2019. As QRHC, Quest, LDI, Youchange, QVC, QV One, and QSS each operate as environmental-based service companies, we did not deem segment reporting necessary. Accounting Estimates The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could materially differ from those estimates. We use significant estimates when accounting for the carrying amounts of accounts receivable, goodwill and other intangible assets, stock-based compensation expense, deferred taxes, and the fair value of assets and liabilities acquired in asset acquisitions, all of which are discussed in their respective notes to the consolidated financial statements. 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. Cash and Cash Equivalents We consider all highly liquid instruments with a maturity of three months or less when purchased to be cash equivalents. Accounts Receivable We follow the allowance method of recognizing uncollectible accounts receivable, which recognizes bad debt expense based on a review of the individual accounts outstanding and our prior history of uncollectible accounts receivable. We extend credit based on an evaluation of each customer’s financial condition, and our receivables are generally unsecured. Accounts receivable are stated net of an allowance for doubtful accounts in the consolidated balance sheets. We consider accounts past due if outstanding longer than contractual payment terms. We record an allowance based on consideration of a number of factors, including the length of time trade accounts are past due, our previous loss history, the creditworthiness of individual customers, economic conditions affecting specific customer industries, and economic conditions in general. We charge-off accounts receivable after all reasonable collection efforts have been exhausted. We credit payments subsequently received on such receivables to bad debt expense in the period we receive the payment. As of December 31, 2020 and 2019, we had established an allowance of $935,261 and $767,464, respectively, for potentially uncollectible accounts receivable. We record delinquent finance charges on outstanding accounts receivable only if they are collected. In the year ended December 31, 2020 we recorded a $47,940 increase in our allowance for doubtful accounts related to certain receivables acquired in the Green Remedies acquisition as further described in Note 3. The changes in our allowance for doubtful accounts for the years ended December 31, 2020 and 2019 were as follows:
Fair Value Measurements ASC Topic 820, Fair Value Measurements, defines fair value as the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Topic 820 also specifies a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value as follows: Level 1: Quoted prices in active markets for identical assets or liabilities; Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3: Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect our own estimate of assumptions that market participants would use in pricing the asset or liability. Property and Equipment We record property and equipment at cost. We provide for depreciation on the straight-line method, over the estimated useful lives of the assets. We amortize leasehold improvements over the shorter of the estimated useful life or the remaining term of the related leases. We charge expenditures for repairs and maintenance to operations as incurred; we capitalize renewals and betterments when they extend the useful life of the asset. We record gains and losses on the disposition of property and equipment in the period incurred. We report assets held for sale, if any, at the lower of the carrying amount or fair value less costs to sell. The useful lives of property and equipment for purposes of computing depreciation are as follows:
Impairment of Long-Lived Assets We analyze long-lived assets, including property and equipment and definite-lived intangible assets, which are held and used in our operations, for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. We review the amortization method and estimated period of useful life at least at each balance sheet date. We record the effects of any revision to operations when the change arises. We recognize impairment when the estimated undiscounted cash flow generated by those assets is less than the carrying amounts of such assets. The amount of impairment is the excess of the carrying amount over the fair value of such assets. We did not recognize any impairment charges for long-lived assets during 2020 and 2019. Goodwill We record as goodwill the excess of (i) the consideration transferred, the amount of any non-controlling interest in the acquiree, and the acquisition date fair value of any previous equity interest in the acquired entity over the (ii) fair value of the net identifiable assets acquired. We do not amortize goodwill; however, annually, or whenever there is an indication that goodwill may be impaired, we evaluate qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. Our test of goodwill impairment includes assessing qualitative factors and the use of judgment in evaluating economic conditions, industry and market conditions, cost factors, and entity-specific events, as well as overall financial performance. We performed our most recent goodwill impairment analysis in the third quarter of 2020, utilizing an income approach with no impairment recorded. We believe that the discounted cash flow method best captures the significant value-creating activities we are undertaking. The primary assumptions in our income approach included estimating cash flows and projections. We determined that the fair value of our goodwill exceeded our carrying value, and consequently, no impairment was deemed to have occurred. However, a prolonged period of declining gross margins or a significant decrease in our anticipated revenue growth could result in the write-off of a portion or all of our goodwill and other intangible assets in future periods. Net Income (Loss) per Share We compute basic net income (loss) per share using the weighted average number of shares of common stock outstanding plus the number of common stock equivalents for Deferred Stock Units, or “DSUs”, 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. 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. Concentrations Financial instruments that potentially subject us to credit risk consist principally of cash, cash equivalents, and trade accounts receivable. We deposit our cash with commercial banks. Cash deposits at commercial banks are at risk to the extent that the balances exceed the Federal Deposit Insurance Corporation insured level per institution. The bank cash balances on deposit may periodically exceed federally insured limits, such as $6,875,321 at December 31, 2020; however, we have never experienced any losses related to these balances. We sell our services and products primarily to customers without requiring collateral; however, we routinely assess the financial condition of our customers and maintain allowances for anticipated losses. From year to year, the customers that exceed 10% of our annual revenue, if any, may change. The following table discloses the number of customers that accounted for more than 10% of our annual revenue and their related receivable balances for the years ended December 31, 2020 and 2019:
We believe we have no significant credit risk in excess of recorded reserves.
Leases
We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and current and long-term operating lease liabilities on our consolidated balance sheets. We currently do not have any material finance lease arrangements. Operating lease ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate in effect at the commencement date of the lease in determining the present value of future payments. 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. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Income Taxes We recognize deferred tax assets and liabilities for the future tax consequences of temporary differences between the book and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. We establish valuation allowances to reduce a deferred tax asset to the amount expected to be realized. We assess our ability to realize deferred tax assets based on current earnings performance and on projections of future taxable income in the relevant tax jurisdictions. These projections do not include taxable income from the reversal of deferred tax liabilities and do not reflect a general growth assumption but do consider known or pending events, such as the passage of legislation. We review our estimates of future taxable income annually. We first analyze all tax positions to determine if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of any related appeals or litigation processes. After the initial analysis, we measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. Our income tax returns are subject to adjustment under audit for approximately the last three years. If we are required to pay interest on the underpayment of income taxes, we recognize interest expense in the first period the interest becomes due according to the provisions of the relevant tax law. If we are subject to payment of penalties, we recognize an expense for the amount of the statutory penalty in the period when the position is taken on the income tax return. If we did not recognize the penalty in the period when the position was initially taken, we recognize the expense in the period when we change our judgment about meeting minimum statutory thresholds related to the initial position taken. Advertising We charge our advertising costs to expense when incurred. During the years ended December 31, 2020 and 2019, advertising expense totaled $51,247 and $20,364, respectively. Stock-Based Compensation We measure all share-based payments, including grants of options to purchase common stock and the issuance of deferred stock units to employees, third parties and board members, using a fair value-based method, in accordance with ASC Topic 718, Stock Compensation. We classify all share-based awards as equity instruments and recognize the vesting of the awards ratably over their respective terms. See Note 13 for a description of our share-based compensation plan and information related to awards granted under the plan. We estimate the fair value of stock options using the Black-Scholes-Merton valuation model. Significant assumptions used in the calculation are as follows:
Deferred Stock Units Effective September 1, 2019, nonemployee directors can elect to receive all or a portion of their annual retainers in the form of DSUs. The DSUs are recognized at their fair value on the date of grant. Director fees deferred into stock units are calculated and expensed each month by taking fees earned during the month and dividing by the closing price of our common stock on the last trading day of the month, rounded down to the nearest whole share. Each DSU represents the right to receive one share of our common stock following the completion of a director’s service. Business Combinations Our acquisition of the assets of Green Remedies was accounted for in accordance with ASC Topic 805, Business Combinations. In purchase accounting, identifiable assets acquired and liabilities assumed are recognized at their estimated fair values at the acquisition date, and any remaining purchase price is recorded as goodwill. In determining the fair values of assets acquired and liabilities assumed, we make significant estimates and assumptions, particularly with respect to long-lived tangible and intangible assets. Critical estimates used in valuing tangible and intangible assets include, but are not limited to, future expected cash flows, discount rates, market prices and asset lives. See Note 3 for more information related to our acquisition. Our consolidated financial statements include the results of operations from the date of the acquisition. We expense all acquisition-related costs as incurred in selling, general and administrative expenses in the consolidated statements of operations. Recently Issued Accounting Pronouncements Adopted In July 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-11 Earnings per Share (Topic 260). The amendments in Part I of this ASU changed the classification analysis of certain equity-linked financial instruments with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity-classified financial instruments, the amendments require entities that present earnings per share in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. A deemed dividend of $205,014 was recorded in the year ended December 31, 2020 as a result of the down round provision in certain outstanding warrants. See Notes 13 and 14. On January 1, 2020, we adopted ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40). The ASU allows companies to capitalize implementation costs incurred in a hosting arrangement that is a service contract over the term of the hosting arrangement, including periods covered by renewal options that are reasonably certain to be exercised. This guidance also requires entities to present the expense in the same line item in the statement of operations as the fees associated with the hosting arrangement and classify payments for capitalized implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting element. The adoption of the standard did not have a material effect on our consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This standard provides operational guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting due to the cessation of the London Interbank Offered Rate (“LIBOR”). The amendments are elective and apply to all entities that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued. The expedients and exceptions provided by the amendments generally do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. As further discussed in Note 7, our ABL Facility provides procedures for determining a replacement or alternative rate in the event that LIBOR is unavailable. As such, we do not expect the transition away from LIBOR to have a material impact on our consolidated financial statements. 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, 2023. We are assessing the provisions of this amended guidance; however, the adoption of the standard is not expected to have a material effect on our consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes – (Topic 740), which simplifies the accounting for income taxes by removing certain exceptions and amending guidance to improve consistent application of accounting over income taxes. This guidance is effective January 1, 2021 with early adoption permitted. 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. |
Acquisition |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition |
3. Acquisition On October 19, 2020, we acquired substantially all of the assets of Green Remedies (the “Green Remedies Assets”) pursuant to the Asset Purchase Agreement (the “Asset Purchase Agreement”), dated as of October 19, 2020, among the Company, Green Remedies and Alan Allred (the “Acquisition”). Green Remedies is a leading provider of independent environmental services, particularly in the multi-family housing market, and is located in Burlington, NC. The acquisition strengthens our presence across key markets, particularly in multi-family housing. The total purchase price for the Green Remedies Assets was approximately $16.1 million at close, which includes an earn out estimate tied to future performance over the next three years. As of December 31, 2020, we paid $10.9 million in cash and recorded $5.2 million in accrued liabilities for deferred payments due to the previous owner. We funded the acquisition primarily with a term note to Monroe Capital, as further discussed in Note 7, which is secured by a first priority lien on substantially all of QRHC’s tangible and intangible assets. The following table sets forth the purchase consideration paid and the amount of assets acquired and liabilities assumed as of the acquisition date:
The purchase price has been allocated based on an estimate of the fair value of assets acquired and liabilities assumed as of the acquisition date. The intangible assets acquired were valued using an income approach; specifically, the multi-period excess earnings method for valuing the customer list and the relief from royalty method for valuing the trademark. The key assumptions used to value the customer list at $5,480,000 included, among others, attrition rates, average customer life, and discount rate. The key assumptions used to value the trademark at $410,000 included, among others, revenue projection, pretax royalty rate, and discount rate. Goodwill represents the amount by which the purchase price exceeds the estimated fair value of the net assets acquired and primarily reflects future synergies. The goodwill related to the Green Remedies assets is deductible for income tax purposes. Deferred consideration payable to the seller includes $2,290,000 net payable in either cash or shares of our common stock, and an earn-out not to exceed $2,250,000 over an earn-out period, as defined in the Asset Purchase Agreement. We valued the earn-out liability at $440,000 using a Monte Carlo simulation. As the earn-out liability is a contingent consideration arrangement, it is subject to periodic revaluation in accordance with ASC 820 Fair Value Measurement. We incurred acquisition and integration costs of approximately $550,000, which is included in Selling, General and Administrative expense in the year ended December 31, 2020. The following table presents unaudited pro forma information for the years ended December 31, 2020 and 2019 as if the Acquisition had occurred at the beginning of our 2019 fiscal year. The unaudited pro forma information includes adjustments for amortization expense on definite lived intangible assets acquired, interest expense on debt incurred related to the acquisition, and the related income tax effects. The unaudited pro forma financial information is presented for informational purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the Acquisition had been effected on the dates previously set forth, nor is it indicative of the future operating results or financial position in combination.
Included in our Consolidated Statement of Operations as of December 31, 2020 related to Green Remedies, is revenue of approximately $2.6 million and net income of approximately $550,000 since the acquisition date of October 19, 2020. |
Property and Equipment, Net, and Other Assets |
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Property and Equipment, Net, and Other Assets |
4. Property and Equipment, net, and Other Assets At December 31, 2020 and 2019, 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 year ended December 31, 2020 was $261,809, including $112,619 of depreciation expense reflected within “Cost of revenue” in our consolidated statement of operations as it related to assets used directly in servicing customer contracts. Depreciation expense for the year ended December 31, 2019 was $225,061, including $87,053 depreciation expense recorded in “Cost of revenue.” We recorded right-of-use operating lease assets related to our corporate office lease and the office lease space in Burlington, NC in accordance with ASC 842. Refer to Note 8, 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 revenues, and accounts receivable as of the Closing Date. Earth911, Inc. was subsequently renamed Quest Sustainability Services, Inc. The carrying amount of our investment in Earth Media Partners, LLC is included in “Security deposits and other assets” and we have an accrued receivable in the amount of $259,017 and $163,781 related to the earn-out included in “Accounts receivable” as of December 31, 2020 and December 31, 2019, respectively. |
Goodwill and Other Intangible Assets |
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Goodwill and Other Intangible Assets |
5. Goodwill and Other Intangible Assets The components of goodwill and other intangible assets are as follows:
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 $1,014,622 and $1,176,722 for the years ended December 31, 2020 and 2019, respectively. We expect amortization expense to be approximately $1.45 million for the year ending December 31, 2021, approximately $1.4 million for the year ending December 31, 2022, approximately $1.3 million for the year ending December 31, 2023, approximately $1.25 million for the year ending December 31, 2024, approximately $1.0 million for the year ending December 31, 2025, and approximately $130,000 thereafter. We have no indefinite-lived intangible assets other than goodwill. $58.2 million of the goodwill is not deductible for tax purposes, while $8.1 million of goodwill added in the Green Remedies asset acquisition is deductible over its tax-basis life. As required by FASB ASC Topic 350, Intangibles – Goodwill and Other, we performed our goodwill impairment analysis in the third quarter of 2020 and 2019 with no impairment recorded in either period. In October 2020, we recorded $8.1 million in goodwill and $5.9 million of intangible assets as part of the Green Remedies asset acquisition. See Note 3 for more information on the acquisition. |
Current Liabilities |
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Current Liabilities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current Liabilities |
6. Current liabilities
The components of Accounts payable and accrued liabilities are as follows:
Refer to Note 8 for additional disclosure related to the operating lease liability recorded in accordance with ASC 842. The components of Other current liabilities is as follows:
Refer to Note 3 for additional disclosure related to the deferred seller consideration related to the Green Remedies asset acquisition. |
Notes Payable and Other Long-Term Liabilities, Net |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable and Other Long-Term Liabilities, Net |
7. Notes payable and Other long-term liabilities, net Our debt obligations are as follows:
The future minimum principal payments as of December 31, 2020 are as follows:
We capitalize financing costs we incur related to implementing our debt arrangements. We record these debt issuance costs associated with our revolving credit facility and our term loan as a reduction of long-term debt, net and amortize them over the contractual life of the related debt arrangements. The table below summarizes changes in debt issuance costs.
Revolving Credit Facility On August 5, 2020 and then as amended on October 19, 2020, QRHC and certain of its domestic subsidiaries entered into a Loan, Security and Guaranty Agreement (the “BBVA Loan Agreement”) with BBVA USA, as a lender, and as administrative agent, collateral agent, and issuing bank, which provides for a credit facility (the “ABL Facility”) comprising the following:
Certain of QRHC’s domestic subsidiaries are the borrowers under the BBVA Loan Agreement. QRHC and one of its domestic subsidiaries are guarantors under the BBVA Loan Agreement. As security for the obligations of the borrowers under the BBVA Loan Agreement, (i) the borrowers under the BBVA Loan Agreement have granted a first priority lien on substantially all of their tangible and intangible personal property, including a pledge of the capital stock and membership interests, as applicable, of certain of QRHC’s direct and indirect subsidiaries, and (ii) the guarantors under the BBVA Loan Agreement have granted a first priority lien on the capital stock and membership interests, as applicable, of certain of QRHC’s direct and indirect domestic subsidiaries. The BBVA Loan Agreement contains certain financial covenants, including a minimum fixed charge coverage ratio. In addition, the BBVA Loan Agreement contains negative covenants limiting, among other things, additional indebtedness, transactions with affiliates, additional liens, sales of assets, dividends, investments and advances, prepayments of debt, mergers and acquisitions, and other matter customarily restricted in such agreements. The BBVA Loan Agreement also contains customary events of default, including payment defaults, breaches of representations and warranties, covenant defaults, events of bankruptcy and insolvency, change of control, and failure of any guaranty or security document supporting the BBVA Loan Agreement to be in full force and effect. Upon the occurrence of an event of default, the outstanding obligations under the BBVA Loan Agreement may be accelerated and become immediately due and payable. The ABL Facility bears interest, at our option, at either the Base Rate, as defined in the BBVA Loan Agreement, plus a margin ranging from 0.75% to 1.25% (3.0% as of December 31, 2020), or the LIBOR Lending Rate for the interest period in effect, plus a margin ranging from 1.75% to 2.25% (no borrowings as of December 31, 2020). The BBVA Loan Agreement replaced our Loan, Security and Guaranty Agreement, dated as of February 24, 2017, with Citizens Bank, National Association (the “Citizens Bank Loan Agreement”), which was paid off and terminated effective August 5, 2020. We recorded $167,964 in loss on extinguishment of debt in connection with this loan termination, including the write-off of the unamortized portion of debt issuance costs and fees directly associated with the loan payoff. As of December 31, 2020, the ABL Facility borrowing base availability was $12,816,237, of which $4,299,333 principal was outstanding. LIBOR is expected to be discontinued after 2021. The ABL Facility provides procedures for determining a replacement or alternative rate in the event that LIBOR is unavailable. However, there can be no assurances as to whether such replacement or alternative rate will be more or less favorable than LIBOR. We intend to monitor the developments with respect to the potential phasing out of LIBOR after 2021 and will work with BBVA USA to ensure any transition away from LIBOR will have minimal impact on our financial condition. We, however, can provide no assurances regarding the impact of the discontinuation of LIBOR on the interest rate that we would be required to pay or on our financial condition. PPP Loan As a result of the uncertainty surrounding the COVID-19 pandemic and its impact on our operating results, we applied for and, on May 5, 2020, we received loan proceeds of $1.4 million under the Paycheck Protection Program (“PPP”) under a promissory note from BMO Harris Bank National Association (the “PPP Loan”). The PPP was established as part of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) and is administered by the U.S. Small Business Administration (“SBA”). The PPP Loan has a two-year term and bears interest at an annual interest rate of 1%. Monthly principal and interest payments are deferred for six months, and the maturity date is April 30, 2022. We used the $1.4 million of loan proceeds to fund eligible payroll, rent and utility expenses under the terms of the PPP Loan. As a result, we met the PPP eligibility criteria for forgiveness and have concluded that the PPP Loan represents, in substance, funds provided under a government grant. We received confirmation from BMO Harris Bank of the full loan forgiveness and repayment by the SBA effective December 28, 2020. As such, in accordance with IAS 20 “Accounting for Government Grants and Disclosure of Government Assistance,” we have recognized the use of $1.4 million of the loan proceeds as of December 31, 2020 as Other Income. Monroe Term Loan On October 19, 2020, QRHC and certain of its domestic subsidiaries entered into a Credit Agreement (the “Credit Agreement”), dated as of October 19, 2020, with Monroe Capital, as administrative agent for the lenders thereto. Among other things, the Credit Agreement provides for the following:
Certain of QRHC’s domestic subsidiaries are the borrowers under the Credit Agreement. QRHC is the guarantor under the Credit Agreement. As security for the obligations of the borrowers under the Credit Agreement, (i) the borrowers under the Credit Agreement have granted a first priority lien on substantially all of their tangible and intangible personal property, including a pledge of the capital stock and membership interests, as applicable, of certain of QRHC’s direct and indirect subsidiaries, and (ii) the guarantors under the Credit Agreement have granted a first priority lien on the capital stock and membership interests, as applicable, of QRHC’s direct and indirect domestic subsidiaries. The Credit Agreement contains certain financial covenants, including a minimum fixed charge coverage ratio and a senior net leverage ratio. In addition, the Credit Agreement contains negative covenants limiting, among other things, additional indebtedness, transactions with affiliates, additional liens, sales of assets, dividends, investments and advances, prepayments of debt, mergers and acquisitions, and other matters customarily restricted in such agreements. The Credit Agreement also contains customary events of default, including payment defaults, breaches of representations and warranties, covenant defaults, events of bankruptcy and insolvency, change of control, and failure of any guaranty or security document supporting the Credit Agreement to be in full force and effect. Upon the occurrence of an event of default, the outstanding obligations under the Credit Agreement may be accelerated and become immediately due and payable. At the same time as the borrowing of the $11.5 million under the Credit Agreement, in a separate agreement, we issued Monroe Capital a warrant to purchase 500,000 shares of QRHC’s common stock exercisable immediately. For the $12.5 million delayed draw term loan facility, we will issue a separate warrant to purchase 350,000 shares upon drawing on this facility or on October 19, 2021, whichever occurs first, or upon certain other events. Both warrants have an exercise price of $1.50 per share and an expiration date of March 19, 2028. We estimated the value of the 500,000-share warrant issued using the Black Scholes option pricing model and recorded a debt discount of approximately $766,000 which will be amortized over the term of the Credit Agreement. We also executed a letter agreement that provides that the warrant holder will receive minimum net proceeds of $1 million less any net proceeds received from the sale of the warrant shares, which is conditional on the full exercise and sale of all the warrant shares at the same time and upon a date two years after the closing date of the agreement. Green Remedies Promissory Note On October 19, 2020, we issued an unsecured subordinated promissory note to the seller of Green Remedies in the aggregate principal amount of $2,684,250, payable commencing on January 1, 2021 in quarterly installments through October 1, 2025 and subject to an interest rate of 3.0% per annum. Interest Expense The amount of interest expense related to borrowings for the years ended December 31, 2020 and 2019 was $475,071 and $326,212, respectively. Debt issuance cost of $1,757,856 is being amortized to interest expense over the lives of the related debt arrangements. As of December 31, 2020, the unamortized portion of the debt issuance costs was $1,670,529. The amount of interest expense related to the amortization of debt issuance costs for the years ended December 31, 2020 and 2019 was $143,365 and $93,901, respectively. Debt discount (“OID”) of $1,674,178 is being amortized to interest expense over the lives of the related debt and consideration arrangements. As of December 31, 2020, the unamortized portion of OIDs was $1,596,144. The amount of interest expense related to the amortization of OID costs for the years ended December 31, 2020 and 2019 is $78,034 and nil, respectively. Other long-term liabilities, net
We recorded deferred consideration in connection with the Green Remedies asset purchase as further described in Note 3. The non-current portion of deferred consideration payable to the seller is payable in either cash or shares of our common stock. The earn-out is not to exceed $2,250,000 over an earn-out period, as defined in the Asset Purchase Agreement. We valued the earn-out liability at $440,000 using a Monte Carlo simulation. |
Leases |
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Lessee Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases |
8. Leases We lease corporate office space in The Colony, Texas under an 84-month, non-cancelable operating lease. Upon the adoption of ASC 842 on January 1, 2019, we recorded approximately $2.0 million and $2.2 million to record the operating lease right-of-use asset and the related liabilities, respectively. The lease expires in October 2022. Our office lease has a remaining term of 1.75 years as of December 31, 2020, 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. In connection with our acquisition of the assets of Green Remedies, we entered into a lease for office space in Burlington, NC. We recorded a right of use asset associated with this lease of approximately $80,000. The lease expires in October 2023. This office lease had a remaining term of 2.8 years as of December 31, 2020, and we used an effective interest rate of 9.50%, 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. This lease may be terminated under certain conditions as defined in the lease agreement. The lessor is a related party that is owned by the seller of Green Remedies and is employed by us. The future minimum lease payments required under our office leases as of December 31, 2020 are as follows:
We leased certain equipment to a customer under a lease arrangement that expired in 2020. The capital lease receivable amounts are approximately $5,000 at December 31, 2019, which was 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 December 31, 2020 are de minimis.
Lease Costs For the years ended December 31, 2020 and 2019, we recorded $608,674 and $602,587, respectively, of fixed cost operating lease expense. 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 increased to $93,600 for the annual incentive period starting September 2020 through the remainder of the lease term. Effective December 1, 2019, we subleased a portion of our corporate office space to a single tenant. The sublease agreement is accounted for as an operating lease and we recognize sublease income as an offset to operating lease expense on a straight-line basis over the term of the sublease agreement through August 2022. Sublease income, net of amortized leasing costs, for the year ended December 31, 2020 and 2019 was approximately $49,000 and $4,000, respectively. Cash paid for operating leases approximated operating lease expense and non-cash right of use asset amortization for the years ended December 31, 2020 and 2019. |
Revenue |
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Revenue From Contract With Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue |
9. 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. Service revenues are primarily generated from fees charged for our collection, transfer, disposal and recycling services and from sales of commodities by our recycling 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. Three customers accounted for 51% of revenue for the year ended December 31, 2020, and three customers accounted for 53% of revenue for the year ended December 31, 2019. 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 December 31, 2020 and 2019 we had $100,000 and $113,750, respectively, of deferred contract costs. During the year ended December 31, 2020, we amortized $203,750 deferred contract costs to selling, general, and administrative expense. During the year ended December 31, 2019, we amortized $215,000 deferred contract costs to selling, general, and administrative expense. Certain customers are billed in advance, and, accordingly, recognition of related revenues is deferred as a contract liability until the services are provided and control transferred to the customer. As of December 31, 2020 and 2019, we had $50,454 and $19,644, respectively, of deferred revenue, which was classified in “Other current liabilities.” |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes |
10. 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 December 31, 2020 and 2019, and we have recorded a valuation allowance of $12,533,000 and $12,452,000, respectively, against deferred tax assets in excess of deferred tax liabilities in the accompanying consolidated financial statements. The components of net deferred taxes are as follows:
Our statutory income tax rate is expected to be approximately 27%. We had state income tax expense of $254,004 and $219,082 for the years ended December 31, 2020 and 2019, respectively, which is attributable to state 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. The provision for income taxes consisted of the following:
The reconciliation between the income tax expense calculated by applying statutory rates to net loss and the income tax expense reported in the accompanying consolidated financial statements is as follows:
As of December 31, 2020 and 2019, we had federal income tax net operating loss carryforwards of approximately $14,500,000 and $17,200,000, respectively, which expire at various dates ranging from 2032 through 2037. We are subject to limitations existing under Internal Revenue Code Section 382 (Change of Control) relating to the availability of the operating loss. Such limitation of the net operating losses may have occurred, which we have not fully analyzed at this time as we have fully reserved the deferred tax asset. As of December 31, 2020 and 2019, we did not recognize any assets or liabilities relative to uncertain tax positions, nor do we anticipate any significant unrecognized tax benefits will be recorded during 2021. It is our policy to classify interest and penalties on income taxes as interest expense or penalties expense, should any be incurred. Tax positions are positions taken in a previously filed tax return or positions expected to be taken in a future tax return that are reflected in measuring current or deferred income tax assets and liabilities reported in the financial statements. Tax positions include the following:
We are potentially subject to tax audits for federal and state tax returns for tax years ended 2017 to 2020. Tax audits by their very nature are often complex and can require several years to complete. |
Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments |
11. Fair Value of Financial Instruments Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, deferred revenue and notes payable. 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 notes payable, based on borrowing rates currently available to us for loans with similar terms and maturities. |
Commitments and Contingencies |
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Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies |
12. Commitments and Contingencies Indemnifications During the normal course of business, we make certain indemnities and commitments under which we may be required to make payments in relation to certain transactions. These may include (i) intellectual property indemnities to customers in connection with the use, sales, and/or license of products and services; (ii) indemnities to customers in connection with losses incurred while performing services on their premises; (iii) indemnities to vendors and service providers pertaining to claims based on negligence or willful misconduct; and (iv) indemnities involving the representations and warranties in certain contracts. In addition, under our bylaws we are committed to our directors and officers for providing for payments upon the occurrence of certain prescribed events. The majority of these indemnities and commitments do not provide for any limitation on the maximum potential for future payments that we could be obligated to make. We have not incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, we believe the estimated fair value of these agreements is minimal. Accordingly, we had no liabilities recorded for these agreements as of December 31, 2020 and 2019. Defined Contribution Plan We maintain a defined contribution 401(k) plan covering substantially all full-time employees. Employees are permitted to make voluntary contributions, which we match at a certain percentage, to the plan. For the years ended December 31, 2020 and 2019, our plan contribution expense was $184,148 and $182,702, respectively. |
Stockholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity |
13. 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 were outstanding as of December 31, 2020 and 2019. Preferred stock is to be designated in classes or series and the number of each class or series and the voting powers, designations, preferences, limitations, restrictions, relative rights, and distinguishing designation of each class or series of stock as the Board of Directors shall determine in its sole discretion. Common Stock Our authorized common stock consists of 200,000,000 shares of common stock with a par value of $0.001, of which 18,413,419 and 15,372,905 shares were issued and outstanding as of December 31, 2020 and 2019, respectively.
Employee Stock Purchase Plan On September 17, 2014, our stockholders approved our 2014 Employee Stock Purchase Plan (“ESPP”). We recorded expense of $36,480 and $31,848 related to the ESPP during the years ended December 31, 2020 and 2019, respectively. During the year ended December 31, 2020, we issued an aggregate 62,398 shares of common stock for $63,149, all to employees under our ESPP, as follows:
During the year ended December 31, 2019 we issued an aggregate 44,035 shares of common stock for $70,668, all to employees under our ESPP, as follows:
Warrants The following table summarizes the warrants issued and outstanding as of December 31, 2020:
During the year ended December 31, 2020, we had the following warrant activity:
During the year ended December 31, 2019, we did not issue any warrants and no holders exercised warrants.
Incentive Compensation Plan In October 2012, we adopted our 2012 Incentive Compensation Plan (the “2012 Plan”) as the sole plan for providing equity-based incentive compensation to our employees, non-employee directors, and other service providers. The plan allows for the grant of stock options, restricted stock, restricted stock units, stock appreciation rights, performance awards, and other incentive awards to our employees, non-employee directors, and other service providers who are in a position to make a significant contribution to our success and our affiliates. The purpose of the plan is to attract and retain individuals, further align employee and stockholder interests, and closely link compensation with our performance. The plan is administered by the compensation committee of our board of directors. Our policy is to fulfill any exercise of options from common stock that is authorized and unissued. The maximum number of shares of common stock available for grant under the plan is 4,837,500. The number of shares available for award under the plan is subject to adjustment for certain corporate changes in accordance with the provisions of the plan. Stock Options The following table summarizes the stock option activity from January 1, 2019 through December 31, 2020:
The weighted-average grant-date fair value of options granted was $1.01 and $1.23 for the years ended December 31, 2020 and 2019, respectively. For the years ended December 31, 2020 and 2019, the intrinsic value of options outstanding was approximately $1,149,021 and $360,573, respectively, and the intrinsic value of options exercisable was approximately $432,248 and $53,259, respectively. The following additional information applies to options outstanding at December 31, 2020:
The following additional information applies to options outstanding at December 31, 2019:
Stock-based compensation expense for stock-based incentive awards was $1,171,885 and $1,019,409 for the years ended December 31, 2020 and 2019, respectively. At December 31, 2020, the balance of unearned stock-based compensation to be expensed in future periods related to unvested share-based awards was approximately $1.0 million. The weighted-average period over which the unearned stock-based compensation is expected to be recognized is approximately 2 years. Stock-Based Compensation We account for all stock-based payment awards made to employees and directors, including stock options and employee stock purchases, based on estimated fair values. We estimate the fair value of share-based payment awards on the date of grant using an option-pricing model and the value of the portion of the award is recognized as expense over the requisite service period. We recognize the effects of forfeitures in compensation cost when they occur. We use the Black-Scholes-Merton option-pricing model as our method of valuation. The fair value is amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. The fair value of share-based payment awards on the date of grant as determined by the Black-Scholes-Merton model is affected by our stock price as well as other assumptions. These assumptions include the expected stock price volatility over the term of the awards, and the actual and projected employee stock option exercise behaviors. The weighted-average estimated value of employee stock options granted during the years ended December 31, 2020 and 2019 were estimated using the Black-Scholes-Merton option pricing model with the following weighted-average assumptions:
Deferred Stock Units – During the year ended December 31, 2020, we granted 47,212 DSUs and recorded director compensation expense of $74,496 related to the grants. In addition, during the year ended December 31, 2020 we granted 39,684 DSUs to executive employees and recorded compensation expense of $205,316, which includes an accrual of anticipated bonus expense to be paid in DSUs for certain executive employees. During the year ended December 31, 2019, we granted 14,451 DSUs and recorded director compensation expense of $34,649 related to the grants. We had 73,231 and 14,451 DSUs outstanding at December 31, 2020 and 2019, respectively. |
Net Income (Loss) per Share |
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Net Income (Loss) per Share |
14. Net Income (Loss) per Share We compute basic net income (loss) per share using the weighted average number of shares of common stock outstanding plus the number of common stock equivalents for DSUs 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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Supplemental Cash Flow Information |
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Supplemental Cash Flow Information |
15. Supplemental Cash Flow Information The following is provided as supplemental information to the consolidated statements of cash flows:
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Related Party Transactions |
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Related Party Transactions [Abstract] | |
Related Party Transactions |
16. Related Party Transactions During the year ended December 31, 2019, three stockholders sold approximately 4.3 million shares of our common stock in a registered public offering. 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 are included in selling, general, and administrative expense for the year ended December 31, 2019. See Note 7 for further information regarding a promissory note issued to the seller of Green Remedies in connection with the asset purchase. The seller of Green Remedies is currently an employee of ours. See Note 8 for further information regarding an operating lease held by a current employee and seller of Green Remedies. See Note 13 for further information regarding additional purchases of QRHC’s common stock by our Chairman of the Board and our largest stockholder in the Offering that closed on August 5, 2020. |
Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles of Presentation and Consolidation |
Principles of Presentation and Consolidation The consolidated financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The accompanying consolidated financial statements include the operating activity of QRHC and its subsidiaries for the years ended December 31, 2020 and 2019. As QRHC, Quest, LDI, Youchange, QVC, QV One, and QSS each operate as environmental-based service companies, we did not deem segment reporting necessary. |
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Accounting Estimates |
Accounting Estimates The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could materially differ from those estimates. We use significant estimates when accounting for the carrying amounts of accounts receivable, goodwill and other intangible assets, stock-based compensation expense, deferred taxes, and the fair value of assets and liabilities acquired in asset acquisitions, all of which are discussed in their respective notes to the consolidated financial statements. |
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Revenue Recognition |
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. |
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Cash and Cash Equivalents |
Cash and Cash Equivalents We consider all highly liquid instruments with a maturity of three months or less when purchased to be cash equivalents. |
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Accounts Receivable |
Accounts Receivable We follow the allowance method of recognizing uncollectible accounts receivable, which recognizes bad debt expense based on a review of the individual accounts outstanding and our prior history of uncollectible accounts receivable. We extend credit based on an evaluation of each customer’s financial condition, and our receivables are generally unsecured. Accounts receivable are stated net of an allowance for doubtful accounts in the consolidated balance sheets. We consider accounts past due if outstanding longer than contractual payment terms. We record an allowance based on consideration of a number of factors, including the length of time trade accounts are past due, our previous loss history, the creditworthiness of individual customers, economic conditions affecting specific customer industries, and economic conditions in general. We charge-off accounts receivable after all reasonable collection efforts have been exhausted. We credit payments subsequently received on such receivables to bad debt expense in the period we receive the payment. As of December 31, 2020 and 2019, we had established an allowance of $935,261 and $767,464, respectively, for potentially uncollectible accounts receivable. We record delinquent finance charges on outstanding accounts receivable only if they are collected. In the year ended December 31, 2020 we recorded a $47,940 increase in our allowance for doubtful accounts related to certain receivables acquired in the Green Remedies acquisition as further described in Note 3. The changes in our allowance for doubtful accounts for the years ended December 31, 2020 and 2019 were as follows:
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Fair Value Measurements |
Fair Value Measurements ASC Topic 820, Fair Value Measurements, defines fair value as the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Topic 820 also specifies a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value as follows: Level 1: Quoted prices in active markets for identical assets or liabilities; Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3: Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect our own estimate of assumptions that market participants would use in pricing the asset or liability. |
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Property and Equipment |
Property and Equipment We record property and equipment at cost. We provide for depreciation on the straight-line method, over the estimated useful lives of the assets. We amortize leasehold improvements over the shorter of the estimated useful life or the remaining term of the related leases. We charge expenditures for repairs and maintenance to operations as incurred; we capitalize renewals and betterments when they extend the useful life of the asset. We record gains and losses on the disposition of property and equipment in the period incurred. We report assets held for sale, if any, at the lower of the carrying amount or fair value less costs to sell. The useful lives of property and equipment for purposes of computing depreciation are as follows:
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Impairment of Long-Lived Assets |
Impairment of Long-Lived Assets We analyze long-lived assets, including property and equipment and definite-lived intangible assets, which are held and used in our operations, for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. We review the amortization method and estimated period of useful life at least at each balance sheet date. We record the effects of any revision to operations when the change arises. We recognize impairment when the estimated undiscounted cash flow generated by those assets is less than the carrying amounts of such assets. The amount of impairment is the excess of the carrying amount over the fair value of such assets. We did not recognize any impairment charges for long-lived assets during 2020 and 2019. |
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Goodwill |
Goodwill We record as goodwill the excess of (i) the consideration transferred, the amount of any non-controlling interest in the acquiree, and the acquisition date fair value of any previous equity interest in the acquired entity over the (ii) fair value of the net identifiable assets acquired. We do not amortize goodwill; however, annually, or whenever there is an indication that goodwill may be impaired, we evaluate qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. Our test of goodwill impairment includes assessing qualitative factors and the use of judgment in evaluating economic conditions, industry and market conditions, cost factors, and entity-specific events, as well as overall financial performance. We performed our most recent goodwill impairment analysis in the third quarter of 2020, utilizing an income approach with no impairment recorded. We believe that the discounted cash flow method best captures the significant value-creating activities we are undertaking. The primary assumptions in our income approach included estimating cash flows and projections. We determined that the fair value of our goodwill exceeded our carrying value, and consequently, no impairment was deemed to have occurred. However, a prolonged period of declining gross margins or a significant decrease in our anticipated revenue growth could result in the write-off of a portion or all of our goodwill and other intangible assets in future periods. |
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Net Income (Loss) per Share |
Net Income (Loss) per Share We compute basic net income (loss) per share using the weighted average number of shares of common stock outstanding plus the number of common stock equivalents for Deferred Stock Units, or “DSUs”, 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. 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. |
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Concentrations |
Concentrations Financial instruments that potentially subject us to credit risk consist principally of cash, cash equivalents, and trade accounts receivable. We deposit our cash with commercial banks. Cash deposits at commercial banks are at risk to the extent that the balances exceed the Federal Deposit Insurance Corporation insured level per institution. The bank cash balances on deposit may periodically exceed federally insured limits, such as $6,875,321 at December 31, 2020; however, we have never experienced any losses related to these balances. We sell our services and products primarily to customers without requiring collateral; however, we routinely assess the financial condition of our customers and maintain allowances for anticipated losses. From year to year, the customers that exceed 10% of our annual revenue, if any, may change. The following table discloses the number of customers that accounted for more than 10% of our annual revenue and their related receivable balances for the years ended December 31, 2020 and 2019:
We believe we have no significant credit risk in excess of recorded reserves. |
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Leases |
Leases
We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and current and long-term operating lease liabilities on our consolidated balance sheets. We currently do not have any material finance lease arrangements. Operating lease ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate in effect at the commencement date of the lease in determining the present value of future payments. 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. Leases with an initial term of 12 months or less are not recorded on the balance sheet. |
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Income Taxes |
Income Taxes We recognize deferred tax assets and liabilities for the future tax consequences of temporary differences between the book and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. We establish valuation allowances to reduce a deferred tax asset to the amount expected to be realized. We assess our ability to realize deferred tax assets based on current earnings performance and on projections of future taxable income in the relevant tax jurisdictions. These projections do not include taxable income from the reversal of deferred tax liabilities and do not reflect a general growth assumption but do consider known or pending events, such as the passage of legislation. We review our estimates of future taxable income annually. We first analyze all tax positions to determine if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of any related appeals or litigation processes. After the initial analysis, we measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. Our income tax returns are subject to adjustment under audit for approximately the last three years. If we are required to pay interest on the underpayment of income taxes, we recognize interest expense in the first period the interest becomes due according to the provisions of the relevant tax law. If we are subject to payment of penalties, we recognize an expense for the amount of the statutory penalty in the period when the position is taken on the income tax return. If we did not recognize the penalty in the period when the position was initially taken, we recognize the expense in the period when we change our judgment about meeting minimum statutory thresholds related to the initial position taken. |
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Advertising |
Advertising We charge our advertising costs to expense when incurred. During the years ended December 31, 2020 and 2019, advertising expense totaled $51,247 and $20,364, respectively. |
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Stock-Based Compensation |
Stock-Based Compensation We measure all share-based payments, including grants of options to purchase common stock and the issuance of deferred stock units to employees, third parties and board members, using a fair value-based method, in accordance with ASC Topic 718, Stock Compensation. We classify all share-based awards as equity instruments and recognize the vesting of the awards ratably over their respective terms. See Note 13 for a description of our share-based compensation plan and information related to awards granted under the plan. We estimate the fair value of stock options using the Black-Scholes-Merton valuation model. Significant assumptions used in the calculation are as follows:
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Deferred Stock Units |
Deferred Stock Units Effective September 1, 2019, nonemployee directors can elect to receive all or a portion of their annual retainers in the form of DSUs. The DSUs are recognized at their fair value on the date of grant. Director fees deferred into stock units are calculated and expensed each month by taking fees earned during the month and dividing by the closing price of our common stock on the last trading day of the month, rounded down to the nearest whole share. Each DSU represents the right to receive one share of our common stock following the completion of a director’s service. |
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Business Combinations |
Business Combinations Our acquisition of the assets of Green Remedies was accounted for in accordance with ASC Topic 805, Business Combinations. In purchase accounting, identifiable assets acquired and liabilities assumed are recognized at their estimated fair values at the acquisition date, and any remaining purchase price is recorded as goodwill. In determining the fair values of assets acquired and liabilities assumed, we make significant estimates and assumptions, particularly with respect to long-lived tangible and intangible assets. Critical estimates used in valuing tangible and intangible assets include, but are not limited to, future expected cash flows, discount rates, market prices and asset lives. See Note 3 for more information related to our acquisition. Our consolidated financial statements include the results of operations from the date of the acquisition. We expense all acquisition-related costs as incurred in selling, general and administrative expenses in the consolidated statements of operations. |
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Recently Issued Accounting Pronouncements |
Recently Issued Accounting Pronouncements Adopted In July 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-11 Earnings per Share (Topic 260). The amendments in Part I of this ASU changed the classification analysis of certain equity-linked financial instruments with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity-classified financial instruments, the amendments require entities that present earnings per share in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. A deemed dividend of $205,014 was recorded in the year ended December 31, 2020 as a result of the down round provision in certain outstanding warrants. See Notes 13 and 14. On January 1, 2020, we adopted ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40). The ASU allows companies to capitalize implementation costs incurred in a hosting arrangement that is a service contract over the term of the hosting arrangement, including periods covered by renewal options that are reasonably certain to be exercised. This guidance also requires entities to present the expense in the same line item in the statement of operations as the fees associated with the hosting arrangement and classify payments for capitalized implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting element. The adoption of the standard did not have a material effect on our consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This standard provides operational guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting due to the cessation of the London Interbank Offered Rate (“LIBOR”). The amendments are elective and apply to all entities that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued. The expedients and exceptions provided by the amendments generally do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. As further discussed in Note 7, our ABL Facility provides procedures for determining a replacement or alternative rate in the event that LIBOR is unavailable. As such, we do not expect the transition away from LIBOR to have a material impact on our consolidated financial statements. 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, 2023. We are assessing the provisions of this amended guidance; however, the adoption of the standard is not expected to have a material effect on our consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes – (Topic 740), which simplifies the accounting for income taxes by removing certain exceptions and amending guidance to improve consistent application of accounting over income taxes. This guidance is effective January 1, 2021 with early adoption permitted. The adoption of the standard is not expected to have a material effect on our consolidated financial statements. There have been no other recent accounting pronouncements or changes in accounting pronouncements that have been issued but not yet adopted that are of significance, or potential significance, to us. |
Summary of Significant Accounting Policies (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Allowance for Doubtful Accounts |
The changes in our allowance for doubtful accounts for the years ended December 31, 2020 and 2019 were as follows:
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Schedule of Property and Equipment Useful Lives |
The useful lives of property and equipment for purposes of computing depreciation are as follows:
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Schedule of Number of Customers that Accounted for More than Ten Percentage of Annual Sales and Receivable Balances | The following table discloses the number of customers that accounted for more than 10% of our annual revenue and their related receivable balances for the years ended December 31, 2020 and 2019:
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Acquisition (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Purchase Consideration Paid and Amount of Assets Acquired and Liabilities Assumed |
The following table sets forth the purchase consideration paid and the amount of assets acquired and liabilities assumed as of the acquisition date:
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Schedule of Unaudited Pro Forma Information |
The unaudited pro forma financial information is presented for informational purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the Acquisition had been effected on the dates previously set forth, nor is it indicative of the future operating results or financial position in combination.
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Property and Equipment, Net, and Other Assets (Tables) |
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property Plant And Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components Property and Equipment, Net, and Other Assets |
At December 31, 2020 and 2019, Property and equipment, net, and other assets consisted of the following:
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Goodwill and Other Intangible Assets (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill And Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets |
The components of goodwill and other intangible assets are as follows:
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Schedule of Changes in Goodwill |
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Current Liabilities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Accounts Payable and Accrued Liabilities |
The components of Accounts payable and accrued liabilities are as follows:
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Components of Other Current Liabilities |
The components of Other current liabilities is as follows:
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Notes Payable and Other Long-Term Liabilities, Net (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt Obligations |
Our debt obligations are as follows:
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Schedule of Future Minimum Principal Payments |
The future minimum principal payments as of December 31, 2020 are as follows:
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Schedule of Changes in Debt Issuance Costs | The table below summarizes changes in debt issuance costs.
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Schedule of Other Long-Term Liabilities, Net |
Other long-term liabilities, net
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Leases (Tables) |
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lessee Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Future Minimum Lease Payments Required Under Office Leases |
The future minimum lease payments required under our office leases as of December 31, 2020 are as follows:
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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 December 31, 2020 are de minimis.
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Revenue (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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Income Taxes (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Deferred Taxes |
The components of net deferred taxes are as follows:
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Schedule of Provision of Income Taxes | The provision for income taxes consisted of the following:
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Schedule of Effective Income Tax Rate Reconciliation |
The reconciliation between the income tax expense calculated by applying statutory rates to net loss and the income tax expense reported in the accompanying consolidated financial statements is as follows:
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Stockholders' Equity (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Warrants Issued and Outstanding |
The following table summarizes the warrants issued and outstanding as of December 31, 2020:
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Summary of Stock Option Activity |
The following table summarizes the stock option activity from January 1, 2019 through December 31, 2020:
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Summary of Stock Option Outstanding |
The following additional information applies to options outstanding at December 31, 2020:
The following additional information applies to options outstanding at December 31, 2019:
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Schedule of Weighted-Average Estimated Value of Employee Stock Options Granted |
The weighted-average estimated value of employee stock options granted during the years ended December 31, 2020 and 2019 were estimated using the Black-Scholes-Merton option pricing model with the following weighted-average assumptions:
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Net Income (Loss) per Share (Tables) |
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
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Supplemental Cash Flow Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Supplemental Information to Consolidated Statements of Cash Flows |
The following is provided as supplemental information to the consolidated statements of cash flows:
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The Company and Description of Business - Additional Information (Detail) |
Oct. 19, 2020 |
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Green Remedies Waste and Recycling, Inc [Member] | |
Description Of Business [Line Items] | |
Business acquisition, effective date | Oct. 19, 2020 |
Summary of Significant Accounting Policies - Changes in Allowance for Doubtful Accounts (Detail) - USD ($) |
12 Months Ended | |
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Dec. 31, 2020 |
Dec. 31, 2019 |
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Receivables [Abstract] | ||
Beginning balance | $ 767,464 | $ 929,339 |
Bad debt expense | 120,936 | 60,000 |
Uncollectible accounts written off, net | (1,079) | (221,875) |
Addition related to acquisition | 47,940 | |
Ending balance | $ 935,261 | $ 767,464 |
Summary of Significant Accounting Policies - Schedule of Number of Customers that Accounted for More than Ten Percentage of Annual Sales and Receivable Balances (Detail) - Customer |
12 Months Ended | |
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Dec. 31, 2020 |
Dec. 31, 2019 |
|
Concentration Risk [Line Items] | ||
Number of Customers | 3 | 3 |
Revenue Combined Percent | 51.00% | 53.00% |
Revenue [Member] | ||
Concentration Risk [Line Items] | ||
Number of Customers | 3 | 3 |
Customer Accounted [Member] | Revenue [Member] | ||
Concentration Risk [Line Items] | ||
Revenue Combined Percent | 51.00% | 53.00% |
Customer Accounted [Member] | Accounts Receivable | ||
Concentration Risk [Line Items] | ||
Revenue Combined Percent | 27.00% | 36.00% |
Acquisition - Schedule of Purchase Consideration Paid and Amount of Assets Acquired and Liabilities Assumed (Parenthetical) (Detail) - Green Remedies [Member] |
Oct. 19, 2020
USD ($)
|
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Seller's Note, Net [Member] | |
Business Acquisition [Line Items] | |
Business combination consideration transferred liabilities incurred gross | $ 2,684,250 |
Deferred Seller Consideration | |
Business Acquisition [Line Items] | |
Business combination consideration transferred liabilities incurred gross | $ 2,684,250 |
Acquisition - Schedule of Unaudited Pro Forma Information (Detail) - USD ($) |
12 Months Ended | |
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Dec. 31, 2020 |
Dec. 31, 2019 |
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Business Combinations [Abstract] | ||
Revenue | $ 108,350,773 | $ 109,796,405 |
Net income (loss) | $ 942,746 | $ (578,226) |
Income (loss) per share - basic and diluted | $ 0.06 | $ (0.04) |
Property and Equipment, Net, and Other Assets - Additional Information (Detail) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Feb. 20, 2018 |
|
Property And Equipment Net And Other Assets [Line Items] | |||
Depreciation | $ 261,809 | $ 225,061 | |
Asset Purchase Agreement [Member] | Earth Media Partners, LLC [Member] | |||
Property And Equipment Net And Other Assets [Line Items] | |||
Percentage of ownership interest | 19.00% | ||
Ownership interest amount recorded as investment | $ 246,585 | ||
Accrued earn-out amount | 259,017 | 163,781 | |
Asset Purchase Agreement [Member] | Earth Media Partners, LLC [Member] | Wholly Owned Subsidiary and Earth911, Inc. [Member] | Disposal Group, Not Discontinued Operations [Member] | |||
Property And Equipment Net And Other Assets [Line Items] | |||
Future earn-out amount | $ 350,000 | ||
Service [Member] | |||
Property And Equipment Net And Other Assets [Line Items] | |||
Depreciation reflected in cost of revenue | $ 112,619 | $ 87,053 |
Goodwill and Other Intangible Assets - Schedule of Changes in Goodwill (Detail) |
12 Months Ended |
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Dec. 31, 2020
USD ($)
| |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill balance at December 31, 2019 | $ 58,208,490 |
Additional goodwill related to Green Remedies asset purchase | 8,101,895 |
Goodwill balance at December 31, 2020 | $ 66,310,385 |
Current Liabilities - Components of Accounts Payable and Accrued Liabilities (Detail) - USD ($) |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Accounts Payable And Accrued Liabilities Current [Abstract] | ||
Accounts payable | $ 12,511,678 | $ 10,436,715 |
Accrued taxes | 837,443 | 716,545 |
Employee compensation | 1,003,365 | 1,384,360 |
Operating lease liability - current portion | 668,019 | 627,896 |
Other | 226,334 | 151,289 |
Accounts payable and accrued liabilities | $ 15,246,839 | $ 13,316,805 |
Current Liabilities - Components of Other Current Liabilities (Detail) - USD ($) |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Other Liabilities Current [Abstract] | ||
Deferred seller consideration, current | $ 1,342,125 | |
Deferred revenue | 50,454 | $ 19,644 |
Other current liabilities | $ 1,392,579 | $ 19,644 |
Notes Payable and Other Long-term Liabilities, Net - Schedule of Debt Obligations (Detail) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Debt Instrument [Line Items] | ||
Total notes payable | $ 18,483,583 | $ 4,738,136 |
Less: Current portion of long-term debt | (624,383) | |
Less: Unamortized debt issuance costs | (1,670,529) | (203,453) |
Less: Unamortized OID | (494,343) | |
Less: Unamortized OID warrant | (745,703) | |
Notes payable, net | $ 14,948,625 | 4,534,683 |
Monroe Term Loan [Member] | ||
Debt Instrument [Line Items] | ||
Interest Rate | 9.75% | |
Total notes payable | $ 11,500,000 | |
Green Remedies Promissory Note [Member] | ||
Debt Instrument [Line Items] | ||
Interest Rate | 3.00% | |
Total notes payable | $ 2,684,250 | |
BBVA ABL Facility [Member] | ||
Debt Instrument [Line Items] | ||
Interest Rate | 3.00% | |
Total notes payable | $ 4,299,333 | |
Citizens Bank ABL Facility [Member] | ||
Debt Instrument [Line Items] | ||
Total notes payable | $ 4,738,136 |
Notes Payable and Other Long-term Liabilities, Net - Schedule of Debt Obligations (Parenthetical) (Detail) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Oct. 19, 2020 |
|
Debt Instrument [Line Items] | ||
Debt instrument stated interest rate | 3.00% | |
Green Remedies Promissory Note [Member] | LIBOR [Member] | ||
Debt Instrument [Line Items] | ||
Debt instrument stated interest rate | 3.00% | |
Discounted cash flow rate | 13.00% | |
Minimum [Member] | Monroe Term Loan [Member] | ||
Debt Instrument [Line Items] | ||
Debt instrument interest rate | 7.50% | |
Minimum [Member] | BBVA ABL Facility [Member] | Base Rate [Member] | ||
Debt Instrument [Line Items] | ||
Debt instrument interest rate | 0.75% | |
Maximum [Member] | Monroe Term Loan [Member] | ||
Debt Instrument [Line Items] | ||
Debt instrument interest rate | 10.50% | |
Maximum [Member] | BBVA ABL Facility [Member] | Base Rate [Member] | ||
Debt Instrument [Line Items] | ||
Debt instrument interest rate | 1.25% |
Notes Payable and Other Long-term Liabilities, Net - Schedule of Future Minimum Principal Payments (Detail) - USD ($) |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Debt Disclosure [Abstract] | ||
2021 | $ 624,383 | |
2022 | 651,897 | |
2023 | 651,850 | |
2024 | 651,850 | |
2025 | 15,903,603 | |
Total | $ 18,483,583 | $ 4,738,136 |
Notes Payable and Other Long-term Liabilities, Net - Schedule of Changes in Debt Issuance Costs (Detail) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Debt Disclosure [Abstract] | ||
Beginning balance | $ 203,453 | $ 297,354 |
Financing costs deferred | 1,757,856 | |
Less: Amortization expense | (143,365) | (93,901) |
Less: Write-offs | (147,415) | |
Debt issuance costs, net of accumulated amortization | $ 1,670,529 | $ 203,453 |
Notes Payable and Other Long-term Liabilities, Net - Schedule of Other Long-Term Liabilities, Net (Detail) - USD ($) |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Debt Disclosure [Abstract] | ||
Deferred seller consideration, net of discount | $ 986,028 | |
Deferred consideration - earn-out | 440,000 | |
Other | 547,731 | $ 1,140,749 |
Other long-term liabilities, net | $ 1,973,759 | $ 1,140,749 |
Leases - Future Minimum Lease Payments Required Under Office Leases (Detail) - USD ($) |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Operating Lease Liabilities Payments Due [Abstract] | ||
2021 | $ 694,800 | |
2022 | 528,750 | |
2023 | 24,513 | |
Total lease payments | 1,248,063 | |
Less: Interest | (36,480) | |
Present value of lease payments | $ 1,211,583 | $ 1,764,479 |
Leases - Additional Information 1 (Detail) |
Dec. 31, 2019
USD ($)
|
---|---|
Lessor Disclosure [Abstract] | |
Capital lease receivable amounts | $ 5,000 |
Leases - Summary of Lease Related Assets and Liabilities Recorded on Balance Sheet (Detail) - USD ($) |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Assets And Liabilities Lessee [Abstract] | ||
Right-of-use operating lease assets | $ 1,103,761 | $ 1,595,044 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | qrhc:PropertyPlantAndEquipmentNetIncludingDepositsAssetsNoncurrent | qrhc:PropertyPlantAndEquipmentNetIncludingDepositsAssetsNoncurrent |
Operating lease liability - current portion | $ 668,019 | $ 627,896 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | us-gaap:AccountsPayableAndAccruedLiabilitiesCurrent | us-gaap:AccountsPayableAndAccruedLiabilitiesCurrent |
Other long-term liabilities | $ 543,564 | $ 1,136,583 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | us-gaap:OtherLiabilitiesNoncurrent | us-gaap:OtherLiabilitiesNoncurrent |
Total operating lease liabilities | $ 1,211,583 | $ 1,764,479 |
Revenue - Additional Information (Detail) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020
USD ($)
Customer
|
Dec. 31, 2019
USD ($)
Customer
|
|
Revenue Recognition [Line Items] | ||
Number of customer | Customer | 3 | 3 |
Percentage of revenue | 51.00% | 53.00% |
Deferred contract costs | $ 100,000 | $ 113,750 |
Deferred revenue | 50,454 | 19,644 |
Selling, General and Administrative Expenses [Member] | ||
Revenue Recognition [Line Items] | ||
Amortized deferred contract costs | $ 203,750 | $ 215,000 |
Revenue - Summary of Revenue Disaggregated by Source (Detail) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Disaggregation Of Revenue [Line Items] | ||
Total revenue | $ 98,660,035 | $ 98,979,140 |
Services [Member] | ||
Disaggregation Of Revenue [Line Items] | ||
Total revenue | 90,088,862 | 88,841,868 |
Product Sales and Other [Member] | ||
Disaggregation Of Revenue [Line Items] | ||
Total revenue | $ 8,571,173 | $ 10,137,272 |
Income Taxes - Additional Information (Detail) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Income Tax [Line Items] | ||
Valuation allowance | $ 12,533,000 | $ 12,452,000 |
Federal corporate income tax rate | 27.00% | |
Income tax expense | $ 254,004 | 219,082 |
Federal income tax net operating loss carry forward | $ 14,500,000 | 17,200,000 |
Net operating loss carry forwards expiration beginning year | 2032 | |
Net operating loss carry forwards expiration ending year | 2037 | |
State [Member] | ||
Income Tax [Line Items] | ||
Operating loss carryforwards | $ 0 | $ 0 |
Income Taxes - Components of Net Deferred Taxes (Detail) - USD ($) |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Net operating loss | $ 3,961,000 | $ 4,616,000 |
Depreciation and amortization | 4,829,000 | 5,002,000 |
Stock-based compensation | 3,442,000 | 3,113,000 |
Capitalized software costs | (237,000) | (561,000) |
Bonus accrual | 221,000 | |
Allowance for doubtful accounts | 255,000 | 206,000 |
Other | 62,000 | 76,000 |
Total deferred tax assets, net | 12,533,000 | 12,452,000 |
Less: valuation allowance | $ (12,533,000) | $ (12,452,000) |
Income Taxes - Schedule of Provision of Income Taxes (Detail) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Income Tax Disclosure [Abstract] | ||
Current | $ 254,004 | $ 219,082 |
Total income tax expense (benefit) | $ 254,004 | $ 219,082 |
Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Detail) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Income Tax Disclosure [Abstract] | ||
U.S. federal statutory rate applied to pretax income | $ 271,000 | $ 34,000 |
State taxes, net of federal benefit | 237,004 | 165,082 |
Permanent differences | (378,000) | 11,000 |
Benefit of federal operating loss carryforwards | (411,000) | (381,000) |
Change in state tax rates and other | 454,000 | 140,000 |
Change in valuation allowance | 81,000 | 250,000 |
Total income tax expense (benefit) | $ 254,004 | $ 219,082 |
Commitments and Contingencies - Additional Information (Detail) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Commitments And Contingencies Disclosure [Abstract] | ||
Liabilities incurred to defend lawsuits | $ 0 | $ 0 |
Plan contribution expense | $ 184,148 | $ 182,702 |
Stockholders' Equity - Additional Information - Employee Stock Purchase Plan (Detail) - USD ($) |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Nov. 14, 2020 |
May 14, 2020 |
Nov. 14, 2019 |
May 14, 2019 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Schedule Of Stockholders Equity [Line Items] | ||||||
Employee stock purchase plan expense | $ 36,480 | $ 31,848 | ||||
Common Stock [Member] | ||||||
Schedule Of Stockholders Equity [Line Items] | ||||||
Stock issued for employee stock purchase plans options, shares | 62,398 | 44,035 | ||||
2014 Employee Stock Purchase Plan [Member] | Common Stock [Member] | ||||||
Schedule Of Stockholders Equity [Line Items] | ||||||
Stock issued for employee stock purchase plans options, shares | 32,192 | 30,206 | 22,752 | 21,283 | 62,398 | 44,035 |
Purchase price for ESPP stock issued | $ 33,109 | $ 30,040 | $ 40,999 | $ 29,669 | $ 63,149 | $ 70,668 |
Stockholders' Equity - Summary of Warrants Issued and Outstanding (Detail) - $ / shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Mar. 30, 2016 |
|
Class Of Warrant Or Right [Line Items] | ||
Date of Expiration | Mar. 19, 2028 | |
Exercise Price | $ 1.50 | $ 3.88 |
Shares of Common Stock | 1,021,060 | 430,629 |
Exercisable Warrants [Member] | Warrants One [Member] | ||
Class Of Warrant Or Right [Line Items] | ||
Date of Issuance | Mar. 30, 2016 | |
Date of Expiration | Mar. 30, 2021 | |
Exercise Price | $ 3.88 | |
Shares of Common Stock | 90,431 | |
Exercisable Warrants [Member] | Warrants Two [Member] | ||
Class Of Warrant Or Right [Line Items] | ||
Date of Issuance | Mar. 30, 2016 | |
Date of Expiration | Mar. 30, 2021 | |
Exercise Price | $ 1.15 | |
Shares of Common Stock | 430,629 | |
Exercisable Warrants [Member] | Warrants Three [Member] | ||
Class Of Warrant Or Right [Line Items] | ||
Date of Issuance | Oct. 19, 2020 | |
Date of Expiration | Mar. 19, 2028 | |
Exercise Price | $ 1.50 | |
Shares of Common Stock | 500,000 |
Stockholders' Equity - Additional Information - Warrants (Detail) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Mar. 30, 2016 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Equity [Abstract] | |||
Warrants previously issued to purchase shares of common stock | 430,629 | 1,021,060 | |
Exercise Price | $ 3.88 | $ 1.50 | |
Exercise price of warrants adjusted | $ 1.15 | ||
Deemed dividend for warrant down round provision | $ 205,014 | ||
Sale of stock, number of shares issued in transaction | 500,000 | ||
Warrant expiration date | Mar. 19, 2028 | ||
Number of exercised warrants | 0 | 0 | |
Warrants issued | 0 |
Stockholders' Equity - Additional Information - Incentive Compensation Plan (Detail) |
Oct. 31, 2012
shares
|
---|---|
Incentive Compensation Plan [Member] | Maximum [Member] | |
Schedule Of Stockholders Equity [Line Items] | |
Number of shares available for grant | 4,837,500 |
Stockholders' Equity - Additional Information - Stock Options (Detail) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Schedule Of Stockholders Equity [Line Items] | ||
Options outstanding, intrinsic value | $ 1,149,021 | $ 360,573 |
Options exercisable, intrinsic value | 432,248 | 53,259 |
Stock-based compensation expense | 1,171,885 | $ 1,019,409 |
Unvested share-based awards | $ 1,000,000 | |
Expected weighted average period to recognize unearned stock-based compensation | 2 years | |
Stock Options [Member] | ||
Schedule Of Stockholders Equity [Line Items] | ||
Weighted-average grant-date fair value | $ 1.01 | $ 1.23 |
Stockholders' Equity - Summary of Stock Option Outstanding (Detail) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Equity [Abstract] | |||
Option Outstanding - Range of Exercise Prices, Lower Limit | $ 1.17 | $ 1.17 | |
Option Outstanding - Range of Exercise Prices, Upper Limit | $ 23.20 | $ 23.20 | |
Option Outstanding - Number of Shares | 3,177,942 | 2,445,453 | 1,773,066 |
Option Outstanding - Weighted-Average Remaining Contractual Life | 7 years 4 months 24 days | 7 years 7 months 6 days | |
Option Outstanding - Weighted Average Exercise Price | $ 2.78 | $ 3.37 | $ 7.02 |
Option Exercisable | 1,877,392 | 1,209,087 | |
Option Exercisable - Weighted Average Exercise Price | $ 3.40 | $ 4.47 |
Stockholders' Equity - Schedule of Weighted-Average Estimated Value of Employee Stock Options Granted (Detail) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Equity [Abstract] | ||
Expected volatility | 75.00% | 76.00% |
Risk-free interest rate | 0.49% | 2.37% |
Expected dividends | 0.00% | 0.00% |
Expected term in years | 5 years 8 months 12 days | 5 years 9 months 18 days |
Stockholders' Equity - Additional Information - Deferred Stock Units (Detail) - Deferred Stock Units [Member] - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Schedule Of Stockholders Equity [Line Items] | ||
Deferred stock units | 47,212 | 14,451 |
DSUs outstanding | 73,231 | 14,451 |
Director [Member] | ||
Schedule Of Stockholders Equity [Line Items] | ||
Compensation expense related to grants | $ 74,496 | $ 34,649 |
Executive Employees [Member] | ||
Schedule Of Stockholders Equity [Line Items] | ||
Deferred stock units | 39,684 | |
Compensation expense related to grants | $ 205,316 |
Supplemental Cash Flow Information - Summary of Supplemental Information to Consolidated Statements of Cash Flows (Detail) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Supplemental cash flow information: | ||
Cash paid for interest | $ 371,930 | $ 351,741 |
Cash paid for income taxes | 272,308 | $ 76,030 |
Supplemental non-cash activities: | ||
Repayment of Citizens ABL | 3,385,560 | |
Debt issuance costs | 700,878 | |
Original issue discount - Seller's Note, Monroe Loan, Deferred consideration | 1,674,178 | |
Deemed dividend for warrant down round provision | 205,014 | |
Acquisition of Green Remedies | $ 16,065,883 |
Related Party Transactions - Additional Information (Detail) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 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] | Selling, General and Administrative Expenses [Member] | ||
Related Party Transaction [Line Items] | ||
Costs and expenses | $ 248,000 |