10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

Commission file number: 001-36451

Quest Resource Holding Corporation

(Exact Name of Registrant as Specified in its Charter)

Nevada	51-0665952
(State or other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

3481 Plano Parkway

The Colony, Texas 75056

(Address of Principal Executive Offices and Zip Code)

(972) 464-0004

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock	QRHC	NASDAQ

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 2, 2022, there were 19,045,988 shares of the registrant’s common stock, $0.001 par value, outstanding.

TABLE OF CONTENTS

	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)	2
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3. Quantitative and Qualitative Disclosures About Market Risk	23
Item 4. Controls and Procedures	23
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	24
Item 1A. Risk Factors	24
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3. Defaults Upon Senior Securities	24
Item 4. Mine Safety Disclosures	24
Item 5. Other Information	24
Item 6. Exhibits	24
Signatures	25

1

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

QUEST RESOURCE HOLDING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31,			December 31,
	2022			2021
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	7,921,587		$	8,427,858
Accounts receivable, less allowance for doubtful accounts of $1,054,365 and $840,522 as of March 31, 2022 and December 31, 2021, respectively		46,561,628			39,948,973
Prepaid expenses and other current assets		2,008,491			1,952,566
Total current assets		56,491,706			50,329,397
Goodwill		81,164,900			80,621,503
Intangible assets, net		39,716,880			39,118,940
Property and equipment, net, and other assets		5,394,971			5,596,566
Total assets	$	182,768,457		$	175,666,406
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	34,861,721		$	30,195,696
Other current liabilities		7,045,808			6,195,170
Current portion of notes payable		1,644,149			1,329,109
Total current liabilities		43,551,678			37,719,975
Notes payable, net		65,715,702			62,409,201
Other long-term liabilities		1,798,484			1,908,966
Total liabilities		111,065,864			102,038,142
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued or outstanding as of March 31, 2022 and December 31, 2021		—			—
Common stock, $0.001 par value, 200,000,000 shares authorized, 19,045,988 shares issued and outstanding as of March 31, 2022 and December 31, 2021		19,046			19,046
Additional paid-in capital		170,576,837			170,318,199
Accumulated deficit		(98,893,290	)		(96,708,981	)
Total stockholders’ equity		71,702,593			73,628,264
Total liabilities and stockholders’ equity	$	182,768,457		$	175,666,406

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

QUEST RESOURCE HOLDING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended March 31,
	2022			2021
Revenue	$	71,522,168		$	35,101,991
Cost of revenue		60,273,753			28,662,113
Gross profit		11,248,415			6,439,878
Operating expenses:
Selling, general, and administrative		9,344,462			4,262,560
Depreciation and amortization		2,364,862			407,283
Total operating expenses		11,709,324			4,669,843
Operating income (loss)		(460,909	)		1,770,035
Interest expense		(1,556,585	)		(561,462	)
Income (loss) before taxes		(2,017,494	)		1,208,573
Income tax expense		166,815			61,833
Net income (loss)		(2,184,309	)		1,146,740
Net income (loss) applicable to common stockholders	$	(2,184,309	)	$	1,146,740
Net income (loss) per share applicable to common stockholders
Basic	$	(0.11	)	$	0.06
Diluted	$	(0.11	)	$	0.06
Weighted average number of common shares outstanding
Basic		19,244,634			18,504,993
Diluted		19,244,634			19,412,685

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

QUEST RESOURCE HOLDING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

					Additional					Total
	Common Stock				Paid-in		Accumulated			Stockholders’
	Shares		Par Value		Capital		Deficit			Equity
Balance, December 31, 2021		19,045,988	$	19,046	$	170,318,199	$	(96,708,981	)	$	73,628,264
Stock-based compensation		—		—		258,638		—			258,638
Net loss		—		—		—		(2,184,309	)		(2,184,309	)
Balance, March 31, 2022		19,045,988	$	19,046	$	170,576,837	$	(98,893,290	)	$	71,702,593

					Additional					Total
	Common Stock				Paid-in		Accumulated			Stockholders’
	Shares		Par Value		Capital		Deficit			Equity
Balance, December 31, 2020		18,413,419	$	18,413	$	166,424,597	$	(98,400,038	)	$	68,042,972
Stock-based compensation		—		—		309,610		—			309,610
Stock option and warrant exercises		276,388		277		253,112		—			253,389
Net income		—		—		—		1,146,740			1,146,740
Balance, March 31, 2021		18,689,807	$	18,690	$	166,987,319	$	(97,253,298	)	$	69,752,711

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

QUEST RESOURCE HOLDING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the Three Months Ended March 31,
	2022			2021
Cash flows from operating activities:
Net income (loss)	$	(2,184,309	)	$	1,146,740
Adjustments to reconcile net income (loss) to net cash provided (used in) by operating activities:
Depreciation		173,573			110,136
Amortization of intangibles		2,263,637			365,524
Amortization of debt issuance costs and discounts		324,779			211,622
Provision for doubtful accounts		261,973			34,486
Stock-based compensation		258,638			309,610
Changes in operating assets and liabilities:
Accounts receivable		(6,697,540	)		(3,336,188	)
Prepaid expenses and other current assets		(53,289	)		(114,960	)
Security deposits and other assets		124,284			(860	)
Accounts payable and accrued liabilities		4,418,010			5,036,660
Other liabilities		718,682			191,041
Net cash provided by (used in) operating activities		(391,562	)		3,953,811
Cash flows from investing activities:
Purchase of property and equipment		(261,417	)		(115,886	)
Purchase of intangible assets		(61,577	)		(42,725	)
Acquisition, net of cash acquired		(3,137,758	)		—
Net cash used in investing activities		(3,460,752	)		(158,611	)
Cash flows from financing activities:
Proceeds from credit facilities		15,149,625			13,361,685
Repayments of credit facilities		(15,197,782	)		(14,036,808	)
Proceeds from long-term debt		3,500,000			—
Repayments of long-term debt		(60,000	)		(135,543	)
Proceeds from stock option exercises		—			253,389
Debt issuance costs		(45,800	)		—
Net cash provided by (used in) financing activities		3,346,043			(557,277	)
Net increase (decrease) in cash and cash equivalents		(506,271	)		3,237,923
Cash and cash equivalents at beginning of period		8,427,858			7,516,260
Cash and cash equivalents at end of period	$	7,921,587		$	10,754,183
Supplemental cash flow information:
Cash paid for interest	$	1,137,877		$	353,960
Cash paid for income taxes	$	29,510		$	4,000

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

QUEST RESOURCE HOLDING CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. The Company and Description of Business

The accompanying condensed consolidated financial statements include the accounts of Quest Resource Holding Corporation (“QRHC”) and its subsidiaries, Quest Resource Management Group, LLC (“Quest”), Landfill Diversion Innovations, LLC (“LDI”), Youchange, Inc. (“Youchange”), Quest Vertigent Corporation (“QVC”), Quest Vertigent One, LLC (“QV One”), Quest Sustainability Services, Inc. (“QSS”), RWS Facility Services, LLC ("RWS"), Sustainable Solutions Group, LLC (”SSG”), and Sequoia Waste Management Solutions, LLC (”Sequoia”) (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 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.

We made significant strategic acquisitions in 2021, including the November 30, 2021 acquisition of the membership interests of RWS, a Chadds Ford, PA-based environmental services company. On February 10, 2022, we acquired an independent environmental services company that primarily services customers in the northeast region of the United States. See Note 3 for more information regarding the acquisitions.

2. Summary of Significant Accounting Policies

Principles of Presentation and Consolidation

The condensed consolidated financial statements included herein have been prepared by us without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with our audited financial statements for the year ended December 31, 2021. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted as permitted by the SEC, although we believe the disclosures that are made are adequate to make the information presented herein not misleading.

The accompanying condensed consolidated financial statements reflect, in our opinion, all normal recurring adjustments necessary to present fairly our financial position at March 31, 2022 and the results of our operations and cash flows for the periods presented. We derived the December 31, 2021 condensed consolidated balance sheet data from audited financial statements; however, we did not include all disclosures required by GAAP. As QRHC, Quest, LDI, Youchange, QVC, QV One, QSS, RWS, SSG, and Sequoia each operate as environmental-based service companies, we did not deem segment reporting necessary.

All intercompany accounts and transactions have been eliminated in consolidation. Interim results are subject to seasonal variations, and the results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the full year.

Recent Accounting Pronouncements

Adopted

On January 1, 2021, we adopted Accounting Standards Update (“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. The adoption of the standard did not have a material effect on our consolidated financial statements.

6

In March 2020, the Financial Accounting Standards Board (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.

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.

3. Acquisitions

RWS

On December 7, 2021, QSS, a wholly-owned subsidiary of Quest, entered into a Membership Interest Purchase Agreement (the "MIPA"), effective as of November 30, 2021, among QSS, Rome Holdings, LLC, M&A Business Consulting, Inc., and solely for purposes of Section 5.3(a) of the MIPA, Anthony J. DiIenno, Sr., RWS Investors, LLC and ATAR RWS Investors, LLC, pursuant to which QSS acquired all of the outstanding membership interests of RWS. RWS is a provider of independent environmental services, particularly in the commercial property and industrial markets and is located in Chadds Ford, PA. The RWS acquisition strengthens our presence across key markets, particularly in commercial property management and adds to our industrial market base. The total purchase price for RWS was $33.0 million in cash subject to certain adjustments set forth in the MIPA. We funded the acquisition primarily with a term note to Monroe Capital Management Advisors, LLC (”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:

Sources of consideration paid:
Cash (1)	$	32,048,438
Other (2)		1,964,562
	$	34,013,000
Purchase price allocation:
Accounts receivable, net (3)		7,888,586
Other assets		1,103,253
Machinery and equipment, net		494,614
Intangible assets		25,390,000
Goodwill		6,901,756
Current liabilities		(7,765,209	)
	$	34,013,000
(1) Financed with Monroe Capital term loan
(2) Net working capital
(3) Gross receivables of $10,359,526, net of allowance of $2,470,940

The purchase price allocation was preliminary and was based on information existing at the acquisition date. Accordingly, the purchase price allocation is subject to change.

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 RWS acquisition is not deductible for income tax purposes.

The following table presents unaudited pro forma information for the three months ended March 31, 2021 as if the RWS acquisition had occurred at the beginning of our 2021 fiscal year. The unaudited pro forma information includes adjustments for amortization

7

expense on definite lived intangible assets acquired, interest expense on debt incurred related to the acquisition, certain management adjustments, and the related income tax effects.

	Three months ended
	March 31, 2021
Pro Forma	(unaudited)
Revenue	$	46,816,822
Net loss	$	(523,531	)
Net loss per share - basic and diluted	$	(0.03	)

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 RWS acquisition had been effected on the dates previously set forth, nor is it indicative of the future operating results or financial position in combination.

Other

On February 10, 2022, we acquired an independent environmental services company that primarily services customers in the northeast region of the United States for approximately $3.35 million. This acquisition was paid in cash and was financed with a draw down on the term loan pursuant to the Credit Agreement (as defined in Note 7). The purchase price was allocated to the acquired assets, primarily customer relationship intangibles and goodwill.

We acquired three other environmental services businesses during the year ended December 31, 2021. These acquisitions are not material to our results of operations, individually or in the aggregate.

4. Property and Equipment, net, and Other Assets

At March 31, 2022 and December 31, 2021, property and equipment, net, and other assets consisted of the following:

	March 31,		December 31,
	2022		2021
	(Unaudited)
Property and equipment, net of accumulated depreciation of $1,944,949      and $1,771,376 as of March 31, 2022 and December 31, 2021,      respectively	$	2,638,199	$	2,542,120
Right-of-use operating lease asset		1,703,764		1,945,438
Security deposits and other assets		1,053,008		1,109,008
Property and equipment, net, and other assets	$	5,394,971	$	5,596,566

We compute depreciation using the straight-line method over the estimated useful lives of the property and equipment. Depreciation expense for the three months ended March 31, 2022 was $173,573, including $72,348 of depreciation expense reflected within “Cost of revenue” in our condensed consolidated statements of operations as it related to assets used in directly servicing customer contracts. Depreciation expense for the three months ended March 31, 2021 was $110,136, including $68,376 of depreciation expense reflected within “Cost of revenue”.

We recorded right-of-use operating lease assets related to our office leases 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 revenue, 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” above and we have an accrued receivable in the amount of $333,667 and $339,667 related to the earn-out included as of March 31, 2022 and December 31, 2021, respectively.

8

5. Goodwill and Other Intangible Assets

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

March 31, 2022 (Unaudited)	Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization		Net
Finite lived intangible assets:
Customer relationships	5 years	$	39,250,000	$	3,921,354	$	35,328,646
Software	7 years		2,075,995		1,505,820		570,175
Trademarks	7 years		2,002,869		155,366		1,847,503
Non-compete agreements	3 years		2,250,000		279,444		1,970,556
Total finite lived intangible assets		$	45,578,864	$	5,861,984	$	39,716,880

December 31, 2021	Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization		Net
Finite lived intangible assets:
Customer relationships	5 years	$	36,820,000	$	1,999,355	$	34,820,645
Software	7 years		2,030,754		1,416,638		614,116
Trademarks	7 years		1,716,533		87,632		1,628,901
Non-compete agreements	3 years		2,150,000		94,722		2,055,278
Total finite lived intangible assets		$	42,717,287	$	3,598,347	$	39,118,940

	Carrying Amount
Changes in goodwill:
Goodwill balance at December 31, 2021	$	80,621,503
Addition related to acquisition		543,397
Goodwill balance at March 31, 2022	$	81,164,900

We compute amortization using the straight-line method over the useful lives of the finite lived intangible assets. Amortization expense related to finite lived intangible assets was $2,263,637 and $365,524 for the three months ended March 31, 2022 and 2021, respectively.

We have no indefinite-lived intangible assets other than goodwill. $65.7 million of the goodwill is not deductible for tax purposes, while $15.5 million of goodwill is deductible over its tax-basis life.

We performed our annual impairment analysis for goodwill and other intangible assets in the third quarter of 2021 with no impairment recorded.

6. Current Liabilities

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

	March 31,		December 31,
	2022		2021
	(Unaudited)
Accounts payable	$	31,700,134	$	26,434,732
Accrued taxes		808,326		797,394
Employee compensation		1,405,026		1,864,145
Operating lease liability - current portion		715,140		868,799
Other		233,095		230,626
	$	34,861,721	$	30,195,696

Refer to Note 8, Leases for additional disclosure related to the operating lease liability.

9

The components of Other current liabilities were as follows:

	March 31,		December 31,
	2022		2021
	(Unaudited)
Deferred seller consideration, current	$	1,232,434	$	1,183,153
Deferred consideration - earn-out		1,290,000		1,290,000
Deferred revenue		4,523,374		3,722,017
	$	7,045,808	$	6,195,170

Deferred seller consideration in connection with our 2020 acquisition of Green Remedies Waste and Recycling, Inc. (”Green Remedies”) is payable in either cash or shares of our common stock. As of March 31, 2022 and December 31, 2021, the unamortized portion of OID on the deferred seller consideration was $109,691 and $158,972, respectively. The current portion of earn-out consideration related to other acquisitions is $1,290,000 as of March 31, 2022 and December 31, 2021.

7. Notes Payable and Other Long-term Liabilities

Our debt obligations are as follows:

	Interest Rate	March 31,			December 31,
	(1)	2022			2021
		(Unaudited)
Monroe Term Loan (2)	7.5%	$	62,025,000		$	58,585,000
Green Remedies Promissory Note (3)	3.0%		2,040,607			2,040,607
PNC ABL Facility (4)	3.0%		7,186,580			7,234,737
Total notes payable			71,252,187			67,860,344
Less: Current portion of long-term debt			(1,644,149	)		(1,329,109	)
Less: Unamortized debt issuance costs			(2,505,235	)		(2,637,483	)
Less: Unamortized OID			(365,781	)		(391,493	)
Less: Unamortized OID warrant			(1,021,320	)		(1,093,058	)
Notes payable, net		$	65,715,702		$	62,409,201
(1) Interest rates as of March 31, 2022
(2) Bears interest at LIBOR rate plus Applicable Margin ranging from 5.5%-7.5%
(3) Stated interest rate of 3.0%, discounted cash flow rate of 13%
(4) Bears interest at a Base rate, as defined, plus a margin of 0.75% to 1.25%

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.

	March 31,
	2022
	(Unaudited)
Debt issuance costs
Beginning balance	$	2,637,483
Financing costs deferred		45,800
Less: Amortization expense		(178,048	)
Debt issuance costs, net of accumulated amortization	$	2,505,235

Revolving Credit Facility

On August 5, 2020, QRHC and certain of its domestic subsidiaries entered into a Loan, Security and Guaranty Agreement (the “PNC Loan Agreement”), which was subsequently amended on October 19, 2020 and December 7, 2021, with BBVA USA(which was subsequently succeeded in interest by PNC Bank, National Association (“PNC”)), as a lender, and as administrative agent, collateral agent, and issuing bank, which provides for a credit facility (the “ABL Facility”) comprising the following:

•An asset-based revolving credit facility in the maximum principal amount of $15.0 million with a sublimit for issuance of letters of credit of up to 10% of the maximum principal amount of the revolving credit facility. Each loan under the revolving credit facility bears interest, at the borrowers’ option, at either the Base Rate, plus a margin ranging from 0.75% to 1.25% (3.0% as of March 31, 2022), 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 March 31, 2022). The maturity date of the revolving credit facility is April 19, 2025. The revolving credit facility contains an accordion feature permitting the revolving credit facility to be increased by up to $10 million.

10

•An equipment loan facility in the maximum principal amount of $2.0 million. Loans under the equipment loan facility may be requested at any time until August 5, 2023. Each loan under the equipment loan facility bears interest, at the borrowers’ option, at either the Base Rate, plus 1.75%, or the LIBOR Lending Rate for the Interest Period in effect, plus 2.75%. The maturity date of the equipment loan facility is April 19, 2025.

The PNC Loan Agreement contains certain financial covenants, including a minimum fixed charge coverage ratio. In addition, the PNC 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 PNC 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 PNC Loan Agreement to be in full force and effect. Upon the occurrence of an event of default, the outstanding obligations under the PNC Loan Agreement may be accelerated and become immediately due and payable.

As of March 31, 2022, the ABL Facility borrowing base availability was $15,000,000, of which $7,186,580 principal was outstanding.

It is possible that LIBOR may be phased out beginning in 2022. 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 beginning in 2022 and will work with PNC 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.

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, which was subsequently amended on September 3, 2021, December 1, 2021 and December 7, 2021, with Monroe Capital, as administrative agent for the lenders thereto. Among other things, the Credit Agreement provides for the following:

•A senior secured term loan facility in the principal amount of $58.7 million. The senior secured term loan accrues interest at the LIBOR Rate for LIBOR Loans plus the Applicable Margin; provided, that if the provision of LIBOR Loans becomes unlawful or unavailable, then interest will be payable at a rate per annum equal to the Base Rate from time to time in effect plus the Applicable Margin for Base Rate Loans. The maturity date of the term loan facility is October 19, 2025 (the "Maturity Date"). The senior secured term loan will amortize in aggregate annual amounts equal to 1.00% of the original principal amount of the senior secured term loan facility with the balance payable on the Maturity Date. Proceeds of the senior secured term loan are permitted to be used for Permitted Acquisitions (as defined in the Credit Agreement).

•A delayed draw term loan facility in the maximum principal amount of $12.5 million. Loans under the delayed draw term loan facility may be requested at any time until June 7, 2022. Pricing and maturity for the outstanding principal amount of the delayed draw term loan shall be the same as for the senior secured term loan. Proceeds of the delayed draw term loan are to be used for Permitted Acquisitions.

•An accordion term loan facility in the maximum principal amount of $5.3 million. Loans under the accordion loan facility may be requested at any time until the Maturity Date. Each accordion term loan shall be on the same terms as those applicable to the senior secured term loan. Proceeds of accordion term loans are permitted to be used for Permitted Acquisitions.

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 initial $11.5 million under the Credit Agreement in October 2020, in a separate agreement, we issued Monroe Capital a warrant to purchase 500,000 shares of QRHC’s common stock exercisable immediately. For the delayed draw term loan facility, we issued a separate warrant to purchase 350,000 shares upon drawing on this facility on October 19, 2021. 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 warrants issued using the Black Scholes option pricing model and recorded a debt discount of approximately $766,000 in 2020 for the 500,000-share warrant and $536,000 in 2021 for the 350,000-share warrant which are being 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

11

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 such agreement.

Green Remedies Promissory Note

On October 19, 2020, we issued an unsecured subordinated promissory note to 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 three months ended March 31, 2022 and 2021 was $1,233,319 and $348,307, respectively. Debt issuance costs of $3,155,156 are being amortized to interest expense over the lives of the related debt arrangements. As of March 31, 2022, the unamortized portion of the debt issuance costs was $2,505,235. The amount of interest expense related to the amortization of debt issuance costs for the three months ended March 31, 2022 and 2021 was $178,048 and $88,718, respectively. Debt discount (“OID”) of $2,210,148 is being amortized to interest expense over the lives of the related debt and consideration arrangements. As of March 31, 2022, the unamortized portion of OIDs was $1,387,101. The amount of interest expense related to the amortization of OID costs for the three months ended March 31, 2022 and 2021 is $146,732 and $122,905, respectively.

Other long-term liabilities

	March 31,		December 31,
	2022		2021
	(Unaudited)
Deferred consideration - earn-out	$	781,000	$	781,000
Operating lease liability - long-term portion		1,013,318		1,123,799
Other		4,166		4,167
	$	1,798,484	$	1,908,966

We recorded deferred consideration in connection with certain business acquisitions. We valued the earn-out liability using a Monte Carlo simulation. The inputs used in estimating the fair value of the earn-out liability represent Level 3 inputs under the fair value hierarchy.

8. Leases

Our leases are primarily related to office space and are classified as operating leases.

Lease Costs

For the three months ended March 31, 2022, we recorded approximately $245,000 of fixed cost operating lease expense. For the three months ended March 31, 2021, we recorded approximately $158,000 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 corporate office lease through August 2022. This minimum annual incentive is $93,600 effective 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 three months ended March 31, 2022 was approximately $13,000.

Cash paid for operating leases approximated operating lease expense and non-cash right of use asset amortization for the three months ended March 31, 2022 and 2021. We did not obtain any new operating lease right-of-use assets in the three months ended March 31, 2022.

The future minimum lease payments required under our office leases as of March 31, 2022 are as follows:

	Amount
2022	$	691,601
2023		470,366
2024		455,656
2025		310,354
Total lease payments		1,927,977
Less: Interest		(199,519	)
Present value of lease liabilities	$	1,728,458

12

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 March 31, 2022 are de minimis.

	March 31,		December 31,
	2022		2021
Operating Leases:	(Unaudited)
Right-of-use operating lease asset:
Property and equipment, net and other assets	$	1,703,764	$	1,945,438
Lease Liabilities:
Accounts payable and accrued liabilities	$	715,140	$	868,799
Other long-term liabilities		1,013,318		1,123,799
Total operating lease liabilities	$	1,728,458	$	1,992,598

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, equipment, 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. Depending on the key terms of the arrangement, which may include situations in which we are not primarily obligated, we do not have credit risk, or we determine amounts earned using fixed percentage or fixed fee schedules, we may record the revenue net of certain cost amounts. We had certain management fee contracts accounted for under the net basis method with net revenue of $160,320 and $0 for the three months ended March 31, 2022 and 2021, respectively. 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. One customer accounted for 16.5% of revenue for the three months ended March 31, 2022, and two customers accounted for 46.9% of revenue for the three months ended March 31, 2021. We operate primarily in the United States, with minor services in Canada.

13

	Three Months Ended March 31,
	2022		2021
	(Unaudited)
Revenue Type:
Services	$	68,721,608	$	32,704,583
Product sales and other		2,800,560		2,397,408
Total revenue	$	71,522,168	$	35,101,991

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 March 31, 2022 and December 31, 2021, we had $675,000 and $775,000 of deferred contract costs, respectively. During the three months ended March 31, 2022, we amortized $102,500 of deferred contract costs to selling, general, and administrative expense. During the three months ended March 31, 2021, we amortized $50,000 of deferred contract costs to selling, general, and administrative expense.

We bill certain customers in advance, and, accordingly, we defer recognition of related revenues as a contract liability until the services are provided and control is transferred to the customer. As of March 31, 2022 and December 31, 2021, we had $4,523,374 and $3,722,017, respectively, of deferred revenue which was classified in “Other current liabilities.”

10. Income Taxes

Our statutory income tax rate is anticipated to be 27%. We had income tax expense of $166,815 and $61,833 for the three months ended March 31, 2022 and 2021, respectively, which was attributable to state tax obligations based on current estimated state tax apportionments for states with no net operating loss carryforwards, and the continued reserve against the benefit of the net operating losses at the federal level.

We compute income taxes using the asset and liability method in accordance with FASB ASC Topic 740, Income Taxes. Under the asset and liability method, we determine deferred income tax assets and liabilities based on the differences between the financial reporting and tax bases of assets and liabilities and measure them using currently enacted tax rates and laws. We provide a valuation allowance to reduce the amount of deferred tax assets that, based on available evidence, is more likely than not to be realized. Realization of our net operating loss carryforward was not reasonably assured as of March 31, 2022 and December 31, 2021, and we had recorded a valuation allowance of $11,589,000 and $11,138,000, respectively, against deferred tax assets in excess of deferred tax liabilities in the accompanying condensed consolidated financial statements. As of March 31, 2022 and December 31, 2021, we had federal income tax net operating loss carryforwards of approximately $10,300,000 and $10,100,000, respectively, which expire at various dates ranging from 2034-2037.

11. Fair Value of Financial Instruments

Our financial instruments consist primarily 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, based on their short maturities or, for notes payable, based on borrowing rates currently available to us for loans with similar terms and maturities. Contingent liabilities are measured at fair value on a recurring basis. The fair value measurements are generally determined using unobservable inputs and are classified within Level 3 of the fair value hierarchy. See discussion of the contingent earn-out liability in Note 7.

12. Stockholders’ Equity

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

Common Stock – Our authorized common stock consists of 200,000,000 shares of common stock with a par value of $0.001, of which 19,045,988 shares were issued and outstanding as of March 31, 2022 and December 31, 2021.

14

Employee Stock Purchase Plan – On September 17, 2014, our stockholders approved our 2014 Employee Stock Purchase Plan (as amended, the “ESPP”). We recorded expense of $11,370 and $4,224 related to the ESPP for the three months ended March 31, 2022 and 2021, respectively.

Warrants – The following table summarizes the warrants issued and outstanding as of March 31, 2022:

Warrants Issued and Outstanding as of March 31, 2022
	Date of		Exercise		Shares of
Description	Issuance	Expiration			Common Stock
Exercisable Warrants	10/19/2020	3/19/2028	$	1.50		500,000
Exercisable Warrants	10/19/2021	3/19/2028	$	1.50		350,000
Total warrants issued and outstanding						850,000

Stock Options – We recorded stock option expense of $183,419 and $216,958 for the three months ended March 31, 2022 and 2021, respectively. The following table summarizes the stock option activity for the three months ended March 31, 2022:

	Stock Options
					Weighted-
				Exercise	Average
	Number			Price Per	Exercise Price
	of Shares			Share	Per Share
Outstanding at December 31, 2021		3,280,585		$1.17 — $23.20	$	2.87
Granted		58,889		$6.06  — $7.20	$	6.33
Cancelled/Forfeited		(667	)	$1.94  — $1.94	$	1.94
Outstanding at March 31, 2022		3,338,807		$1.17 — $23.20	$	2.93

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 deferred stock units (“DSUs”). The DSUs are recognized at their fair value on the date of grant. Each DSU represents the right to receive one share of our common stock following the completion of a director’s service. During the three months ended March 31, 2022, we granted 1,507 DSUs and recorded director compensation expense of $9,638 related to the grants. In addition, during the three months ended March 31, 2022 we recorded compensation expense of $54,212, which includes an accrual of anticipated bonus expense to be paid in DSUs for certain executive employees. During the three months ended March 31, 2021, we granted 2,845 DSUs and recorded director compensation expense of $8,661 related to the grants. In addition, during the three months ended March 31, 2021, we granted 13,333 DSUs to executive employees and recorded compensation expense of $79,768. We had 199,652 and 198,145 DSUs outstanding at March 31, 2022 and December 31, 2021, respectively.

15

13. Net Income (Loss) per Share

We compute basic net income 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 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, warrants and shares issued pursuant to a Consideration Agreement as discussed in Note 6. 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:

	Three Months Ended March 31,
	2022			2021
	(Unaudited)
Numerator:
Net income (loss) applicable to common stockholders	$	(2,184,309	)	$	1,146,740
Denominator:
Weighted average common shares outstanding, basic		19,244,634			18,504,993
Effect of dilutive common shares		—			907,692
Weighted average common shares outstanding, diluted		19,244,634			19,412,685
Net income (loss) per share:
Basic	$	(0.11	)	$	0.06
Diluted	$	(0.11	)	$	0.06
Anti-dilutive securities excluded from diluted net income (loss) per share:
Stock options		75,157			984,768
Warrants		—			—
Total anti-dilutive securities excluded from net income (loss) per share		75,157			984,768

16

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in or incorporated by reference into this Form 10-Q, including statements regarding our future operating results, future financial position, business strategy, objectives, goals, plans, prospects, and markets, and plans and objectives for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “targets,” “contemplates,” “projects,” “predicts,” “may,” “might,” “plan,” “will,” “would,” “should,” “could,” “can,” “potential,” “continue,” “objective,” or the negative of those terms, or similar expressions intended to identify forward-looking statements. However, not all forward-looking statements contain these identifying words. Specific forward-looking statements in this Form 10-Q include statements regarding the impact, if any, of the adoption of the ASU on our consolidated financial statements; the impact of the COVID-19 pandemic on our results of operations and any changes to inflation rates; exposure to significant interest, currency, or credit risks arising from our financial instruments; and sufficiency of our cash and cash equivalents, borrowing capacity, and cash generated from operations to fund our operations for the next 12 months. All forward-looking statements included herein are based on information available to us as of the date hereof and speak only as of such date. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. The forward-looking statements contained in or incorporated by reference into this Form 10-Q reflect our views as of the date of this Form 10-Q about future events and are subject to risks, uncertainties, assumptions, and changes in circumstances that may cause our actual results, performance, or achievements to differ significantly from those expressed or implied in any forward-looking statement. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, results, performance, or achievements. A number of factors, including the impact of our business acquisitions in 2022 and 2021 on future results, the state of the U.S. economy in general, general economic conditions and the potential effect of inflationary pressures and increased interest rates on our cost of doing business, could cause actual results to differ materially from those indicated by the forward-looking statements and other risks detailed from time to time in our reports to the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Annual Report”).

Overview

We were incorporated in Nevada in July 2002 under the name BlueStar Financial Group, Inc. On July 16, 2013, we acquired all of the issued and outstanding membership interests of Quest Resource Management Group, LLC, or Quest, held by Quest Resource Group LLC, or QRG, comprising 50% of the membership interests of Quest, or the Quest Interests. Our wholly owned subsidiary, Quest Sustainability Services, Inc., or QSS (formerly known as Earth911, Inc.), held the remaining 50% of the membership interests of Quest for several years. Concurrently with our acquisition of the Quest Interests, we assigned the Quest Interests to QSS so that QSS now holds 100% of the issued and outstanding membership interests of Quest. On October 28, 2013, we changed our name to Quest Resource Holding Corporation, or QRHC. On October 19, 2020, Quest acquired substantially all of the assets used in the business of Green Remedies Waste and Recycling, Inc., a leading provider of independent environmental services, particularly in multi-family housing, located in Burlington, NC. On December 7, 2021, QSS acquired all of the outstanding membership interests of RWS Facility Services, LLC (”RWS”), a full-service management company engaged in the brokering of recycling, waste and sustainability solutions, located in Chadds Ford, PA. See Note 3 to our condensed consolidated financial statements for more information regarding the acquisitions. The results for the three months ended March 31, 2022 reflect the impact of the RWS acquisition, but the prior year period does not.

This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” is based on and relates primarily to the operations of QRHC and Quest (collectively, “we,” “us,” “our,” or “our company”).

17

Three Months Ended March 31, 2022 and 2021 Operating Results

The following table summarizes our operating results for the three months ended March 31, 2022 and 2021:

	Three Months Ended March 31,
	2022			2021
	(Unaudited)
Revenue	$	71,522,168		$	35,101,991
Cost of revenue		60,273,753			28,662,113
Gross profit		11,248,415			6,439,878
Operating expenses:
Selling, general, and administrative		9,344,462			4,262,560
Depreciation and amortization		2,364,862			407,283
Total operating expenses		11,709,324			4,669,843
Operating income (loss)		(460,909	)		1,770,035
Interest expense		(1,556,585	)		(561,462	)
Income before taxes		(2,017,494	)		1,208,573
Income tax expense		166,815			61,833
Net income (loss)	$	(2,184,309	)	$	1,146,740

Three Months Ended March 31, 2022 compared to Three Months Ended March 31, 2021

Impact of the COVID-19 Pandemic and Global Economic Trends

In response to the global COVID-19 pandemic crisis, we have prioritized the health and safety of our employees, customers and subcontractors and continue to work to support their needs. While we continue to implement actions to mitigate the effects of this crisis on our business and operations, the uncertainty around the duration and economic impact of this crisis makes it difficult for management to predict the future impact on our business operations and financial performance.

To date, we have experienced some limitations in employee resources resulting from travel restrictions and “stay at home” orders. Despite these restrictions, we continue to efficiently manage supply chain requirements of our customers and subcontractors. 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. While some of our customers shut down or scaled back their businesses in the short term, other customers operating in the restaurant, grocery, automotive and certain specialty retail industries, which may be considered as essential businesses in different jurisdictions or who are more capable of working remotely than other industries, have continued to operate.

The extent of the impact of the COVID-19 pandemic on our operational and financial performance will depend on future developments, including the severity and duration of the crisis and the impact of actions taken and that will be taken to contain COVID-19 or treat its impact. These future impacts are highly uncertain and cannot be predicted with confidence. The economic impact from COVID-19 or other global crises may adversely impact our results of operations in the future and may affect the credit condition of some of our customers, which could increase delays in customer payments and credit losses.

The global economy, including credit and financial markets, has experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, increases in inflation rates and uncertainty about economic stability. For example, as noted above, the COVID-19 pandemic resulted in widespread unemployment, economic slowdown and extreme volatility in the capital markets. Similarly, the current conflict between Ukraine and Russia has created extreme volatility in the global capital markets and is expected to have further global economic consequences, including disruptions of the global supply chain and energy markets. Any such volatility and disruptions may have adverse consequences on us or the third parties on whom we rely. If the equity and credit markets deteriorate, including as a result of political unrest or war, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive. Inflation can adversely affect us by increasing our costs, including salary costs. Any significant increases in inflation and related increase in interest rates could have a material adverse effect on our business, results of operations and financial condition.

Revenue

For the quarter ended March 31, 2022, revenue was $71.5 million, an increase of $36.4 million, or 103.8%, compared to $35.1 million for the quarter ended March 31, 2021. The increase was primarily due to the impact of heightened customer production levels, increased value for recycled materials compared to a year ago, increased services from certain new and continuing customers, and $26.4 million contribution from the acquired customer base related to the business acquisitions in 2022 and 2021, partially offset by lower levels of services due to reduced operations at certain other customers. See Note 3 to our condensed consolidated financial statements for a discussion of acquisitions during 2022 and 2021.

18

Cost of Revenue/Gross Profit

Cost of revenue increased $31.6 million to $60.3 million for the quarter ended March 31, 2022 from $28.7 million for the quarter ended March 31, 2021. The increase was primarily due to the same reasons impacting the increase in revenue including $22.6 million from the acquired customer base related to the business acquisitions in 2022 and 2021.

Gross profit for the quarter ended March 31, 2022 was $11.2 million, an increase of $4.8 million, compared to $6.4 million for the quarter ended March 31, 2021. The gross profit margin was 15.7% for the first quarter of 2022 compared with 18.3% for the first quarter of 2021. The changes in gross profit and gross profit margin percentage for the quarter ended March 31, 2022 were primarily due to the net effect of the impact of increased services from certain new and continuing customers, the business operations acquired in 2022 and 2021, change in the mix of services and relative gross profit margins from new and acquired customer base, increased value for certain recycled materials compared to a year ago, and reduced operations at certain other customers.

Revenue, gross profit, and gross profit margins are affected period to period by the volumes of waste and recycling materials generated by our customers, the frequency and type of services provided, the price and mix of the services provided, commodity price changes for recycled materials, the cost and mix of subcontracted services provided in any one reporting period, and the timing of acquisitions. Volumes of waste and recycling materials generated by our customers is impacted period to period based on several factors including their production or sales levels, demand of their product or services in the market, supply chain reliability, and labor force stability, among other business factors. If the impact of these factors either individually or in the aggregate cause a significant decline in the volume of waste and recycling materials generated by our customers, it could have an adverse effect on our revenues, gross profit, and gross profit margins.

Operating Expenses

Operating expenses were approximately $11.7 million and $4.7 million for the quarters ended March 31, 2022 and 2021, respectively, an increase of $7.0 million. The increase in operating expenses was primarily related to the business operations acquired after the quarter ended March 31, 2021 and totaled $4.8 million for the quarter ended March 31, 2022.

Selling, general, and administrative expenses were $9.3 million and $4.3 million for the quarters ended March 31, 2022 and 2021, respectively, an increase of approximately $5.1 million. The increase primarily relates to increases in labor related expenses of $2.7 million, acquisition/integration related expenses of $1.2 million, inclusive of professional fees of $756,000, travel/marketing expenses of $137,000 and other administrative expenses of $708,000.

Operating expenses for the quarters ended March 31, 2022 and 2021 included depreciation and amortization of approximately $2.4 million and $407,000, respectively, an increase of approximately $2.0 million. The increase in depreciation and amortization was primarily related to the business operations acquired after the quarter ended March 31, 2021 and totaled $1.9 million for the quarter ended March 31, 2022.

Interest Expense

Interest expense was $1.6 million and $561,000 for the three months ended March 31, 2022 and 2021, respectively, an increase of approximately $1.0 million. The increase is due to an increase in debt, primarily related to the acquisitions in 2021 and 2022. We are amortizing debt issuance costs of $3.2 million and OID of $2.2 million to interest expense over the life of the related debt arrangements as discussed in Note 7 to our condensed consolidated financial statements.

Income Taxes

We recorded a provision for income tax of $167,000 and $62,000 for the three months ended March 31, 2022 and 2021, respectively. The provision for income tax is primarily attributable to state tax obligations based on current estimated state tax apportionments for states with no net operating loss carryforwards.

We recorded a full valuation allowance against all our deferred tax assets (“DTAs”) as of both March 31, 2022 and December 31, 2021. We intend on maintaining a full valuation allowance on our DTAs until there is sufficient evidence to support the reversal of all or some portion of these allowances. However, given our current earnings and anticipated future earnings, we believe that there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to allow us to reach a conclusion that a significant portion of the valuation allowance will no longer be needed. Release of the valuation allowance would result in the recognition of certain DTAs and a decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change based on the level of profitability that we are able to actually achieve.

Net Income (Loss)

Net loss for the quarter ended March 31, 2022 was $(2.2) million compared to net income of $1.1 million for the quarter ended March 31, 2021. The explanations above detail the majority of the changes related to the change in net results.

19

Our operating results, including revenue, operating expenses, and operating margins, will vary from period to period depending on commodity prices of recycled materials, the volumes and mix of services provided, as well as customer mix during the reporting period, and the timing of acquisitions.

Income (Loss) per Share

Net loss per basic and diluted share attributable to common stockholders was $(0.11) per share for the quarter ended March 31, 2022 compared with net income per basic and diluted share of $0.06 for the quarter ended March 31, 2021.

The basic and diluted weighted average number of shares of common stock outstanding were approximately 19.2 million for the three months ended March 31, 2022. The basic and diluted weighted average number of shares of common stock outstanding were approximately 18.5 million and 19.4 million, respectively, for the three months ended March 31, 2021.

Adjusted EBITDA

In the quarter ended March 31,2022, Adjusted EBITDA, a non-GAAP financial measure, increased 42.2% to $3.7 million, from $2.6 million in 2021.

We use the non-GAAP measurement of earnings before interest, taxes, depreciation, amortization, stock-related compensation charges, and other adjustments, or “Adjusted EBITDA,” to evaluate our performance. Adjusted EBITDA is a non-GAAP measure that is also frequently used by analysts, investors and other interested parties to evaluate the market value of companies considered to be in similar businesses. We suggest that Adjusted EBITDA be viewed in conjunction with our reported financial results or other financial information prepared in accordance with GAAP. For the three months ended March 31, 2022 other adjustments of $196,000 included recruiting costs and certain administrative costs related to borrowings. For the three months ended March 31, 2021 other adjustments of $53,000 included severance costs and certain administrative fees related to borrowings.

The following table reflects Adjusted EBITDA for the three months ended March 31, 2022 and 2021:

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA

(UNAUDITED)

	As Reported
	Three Months Ended March 31,
	2022			2021
	(Unaudited)
Net income (loss)	$	(2,184,309	)	$	1,146,740
Depreciation and amortization		2,437,209			475,660
Interest expense		1,556,585			561,462
Stock-based compensation expense		258,638			309,610
Acquisition, integration and related costs		1,305,936			19,476
Other adjustments		195,858			53,342
Income tax expense		166,815			61,833
Adjusted EBITDA	$	3,736,732		$	2,628,123

20

Adjusted Net Income and Adjusted Net Income per Diluted Share

Adjusted net income, a non-GAAP financial measure, was $1.3 million for the quarter ended March 31, 2022, compared with $1.5 million for the quarter ended March 31, 2021. We present adjusted net income and adjusted net income per diluted share, both non-GAAP financial measures, supplementally because they are widely used by investors as a valuation measure in the solid waste industry. Management uses adjusted net income and adjusted net income per diluted share as one of the principal measures to evaluate and monitor the ongoing financial performance of our operations. We provide adjusted net income to exclude the effects of items management believes impact the comparability of operating results between periods. Adjusted net income has limitations due to the fact that it excludes items that have an impact on our financial condition and results of operations. Adjusted net income and adjusted net income per diluted share are not a substitute for, and should be used in conjunction with, GAAP financial measures. Other companies may calculate these non-GAAP financial measures differently. Our adjusted net income and adjusted net income per diluted share for the three months ended March 31, 2022 and 2021, are calculated as follows:

	As Reported
	Three Months Ended March 31,
	2022			2021
Reported net income (loss) (a)	$	(2,184,309	)	$	1,146,740
Amortization of intangibles (b)		2,174,455			288,643
Acquisition, integration and related costs (c)		1,305,936			19,476
Adjusted net income	$	1,296,082		$	1,454,859
Diluted earnings (loss) per share:
Reported net income (loss)	$	(0.11	)	$	0.06
Adjusted net income	$	0.06		$	0.07
Weighted average number of common shares outstanding:
Diluted (d)		21,715,982			19,412,685
(a) Applicable to common stockholders
(b) Reflects the elimination of the non-cash amortization of acquisition-related intangible assets
(c) Reflects the add back of acquisition/integration related transaction costs
(d) Reflects adjustment for dilution as adjusted net income is positive

Liquidity and Capital Resources

As of March 31, 2022 and December 31, 2021, we had $7.9 million and $8.4 million in cash and cash equivalents, respectively. Working capital was $12.9 million and $12.6 million as of March 31, 2022 and December 31, 2021, respectively.

We derive our primary sources of funds for conducting our business activities from operating revenues; borrowings under our credit facilities; and the placement of our equity securities to investors. We require working capital primarily to carry accounts receivable, service debt, purchase capital assets, fund operating expenses, address unanticipated competitive threats or technical problems, withstand adverse economic conditions, fund potential acquisition transactions, and pursue goals and strategies.

We believe our existing cash and cash equivalents of $7.9 million, our borrowing availability under our $15.0 million ABL Facility (as defined and discussed in Note 7 to our condensed consolidated financial statements), and cash expected to be generated from operations will be sufficient to fund our operations for the next 12 months. We have no agreements, commitments, or understandings with respect to any such placements of our securities and any such placements could be dilutive to our stockholders.

Cash Flows

The following discussion relates to the major components of our cash flows for the three months ended March 31, 2022 and 2021.

Cash Flows from Operating Activities

Net cash used in operating activities was $(0.4) million for the three months ended March 31, 2022 compared with net cash provided by operating activities of $4.0 million for the three months ended March 31, 2021.

Net cash used in operating activities for the three months ended March 31, 2022 related primarily to the net effect of the following:

•net loss of $(2,184,000);

•non-cash items of $3,283,000, which primarily related to depreciation, amortization of intangible assets and debt issuance costs, provision for doubtful accounts, and stock-based compensation; and

•net cash used in the net change in operating assets and liabilities of $(1,490,000), primarily associated with relative changes in accounts receivable, accounts payable, and accrued liabilities.

21

Net cash provided by operating activities for the three months ended March 31, 2021 related primarily to the net effect of the following:

•net income of $1,147,000;

•non-cash items of $1,031,000, which primarily related to depreciation, amortization of intangible assets and debt issuance costs, provision for doubtful accounts, and stock-based compensation; and

•net cash provided by the net change in operating assets and liabilities of $1,776,000, primarily associated with relative changes in accounts receivable, accounts payable, and accrued liabilities.

Our business, including revenue, operating expenses, and operating margins, may vary depending on the blend of services we provide to our customers, the terms of customer contracts, commodity contracts, and our business volume levels. Our operating activities may require additional cash in the future from our debt facilities and/or equity financings depending on the level of our operations.

Cash Flows from Investing Activities

Cash used in investing activities for the three months ended March 31, 2022 and 2021 was $3.5 million and $159,000, respectively. Cash used in 2022 relates mainly to the $3.1 million net purchase of the assets of a Northeast-based independent environmental services company on February 10, 2022. Other investing activities are primarily from purchases of property and equipment and intangible assets.

Cash Flows from Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2022 was $3.3 million compared to net cashed used in financing activities of $(557,000) for the three months ended March 31, 2021. Net cash provided by financing activities for the three months ended March 31, 2022 was primarily from term loan proceeds used to finance the February 2022 acquisition of an independent environmental services company, mostly offset by net borrowings on our ABL Facility and by repayments of notes payable. Net cash used in financing activities for the three months ended March 31, 2021 was primarily related to net repayments on our ABL Facility. See Note 7 to our condensed consolidated financial statements for a discussion of the ABL Facility and other notes payable.

Inflation

We do not believe that inflation had a material impact on us during the three months ended March 31, 2022 and 2021. We believe that current inflationary increases in costs, such as fuel, labor, and certain capital items, can be addressed by our flexible pricing structures and cost recovery fees allowing us to recover certain of the cost of inflation from our customer base. Consistent with industry practice, many of our contracts allow us to pass through certain costs to our customers or adjust pricing. Although we believe that we should be able to offset many cost increases that result from inflation in the ordinary course of business, we may be required to absorb at least part of these costs increases due to competitive pressures or delays in timing of rate increases. Although we have not been materially affected by inflation in the past, we can provide no assurance that we will not be affected in the future by higher rates of inflation.

Critical Accounting Estimates and Policies

Our discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of our condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to areas that require a significant level of judgment or are otherwise subject to an inherent degree of uncertainty. These areas include 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. We base our estimates on historical experience, our observance of trends in particular areas, and information or valuations and various other assumptions that we believe to be reasonable under the circumstances and which form the basis for making judgments about the carrying value of assets and liabilities that may not be readily apparent from other sources. Actual amounts could differ significantly from amounts previously estimated. For a discussion of our critical accounting policies, refer to Part I, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2021 Annual Report. There have been no changes in our critical accounting policies during the first three months of 2022.

Recent Accounting Pronouncements

See Note 2 to our condensed consolidated financial statements.

Off-Balance Sheet Arrangements

We have no off-balance sheet debt or similar obligations. We have no transactions or obligations with related parties that are not disclosed, consolidated into, or reflected in our reported results of operations or financial position. We do not guarantee any third-party debt.

22

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2022.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, misstatements, errors, and instances of fraud, if any, within our Company have been or will be prevented or detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls also can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. We base the design of any system of controls in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, internal controls may become inadequate as a result of changes in conditions, or through the deterioration of the degree of compliance with policies or procedures.

23

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We may be subject to legal proceedings in the ordinary course of business. As of the date of this Quarterly Report on Form 10-Q, we are not aware of any legal proceedings to which we are a party that we believe could have a material adverse effect on us.

Item 1A. Risk Factors

The following risk factor supplements the risk factors described in Item 1A of our 2021 Annual Report and should be read in conjunction with the risk factors described in our 2021 Annual Report:

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

All of the borrowings under the senior secured credit facilities bear interest at variable rates. As a result, an increase in interest rates, whether due to an increase in market interest rates or an increase in our own cost of borrowing, would increase the cost of servicing our debt even though the amount borrowed remained the same resulting in our net income and cash flows, including cash available for servicing our indebtedness, to decrease correspondingly. The impact of such an increase would be more significant than it would be for some other companies because of our substantial debt.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit No.	Exhibit
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.1	Section 1350 Certification of Chief Executive Officer
32.2	Section 1350 Certification of Chief Financial Officer
101	The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Changes in Stockholders’ Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements (unaudited), tagged as blocks of text and including detailed tags
104	Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101)

24

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	QUEST RESOURCE HOLDING CORPORATION
Date: May 16, 2022	By:	/s/ S. Ray Hatch
	S. Ray Hatch
	President and Chief Executive Officer
Date: May 16, 2022	By:	/s/ Laurie L. Latham
	Laurie L. Latham
	Senior Vice President and Chief Financial Officer

25

EX-31.1

Exhibit 31.1

Rule 13a-14(a)/15 d -14(a) Certification of Chief Executive Officer

I, S. Ray Hatch, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Quest Resource Holding Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 16, 2022	/s/ S. Ray Hatch
	S. Ray Hatch
	President and Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Rule 13a-14(a)/15 d -14(a) Certification of Chief Financial Officer

I, Laurie L. Latham, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Quest Resource Holding Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 16, 2022	/s/ Laurie L. Latham
	Laurie L. Latham
	Senior Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

SECTION 1350 CERTIFICATION OF CHIEF EXECUTIVE OFFICER

In connection with the Quarterly Report on Form 10-Q of Quest Resource Holding Corporation (the “Company”) for the quarterly period ended March 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, S. Ray Hatch, President and Chief Executive Officer of the Company, certify, to the best of my knowledge and belief, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ S. Ray Hatch

S. Ray Hatch

President and Chief Executive Officer

(Principal Executive Officer)

Date: May 16, 2022

This certification accompanies the Quarterly Report on Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Quest Resource Holding Corporation under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Quarterly Report on Form 10-Q), irrespective of any general incorporation language contained in such filing.

EX-32.2

Exhibit 32.2

SECTION 1350 CERTIFICATION OF CHIEF FINANCIAL OFFICER

In connection with the Quarterly Report on Form 10-Q of Quest Resource Holding Corporation (the “Company”) for the quarterly period ended March 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Laurie L. Latham, Senior Vice President and Chief Financial Officer of the Company, certify, to the best of my knowledge and belief, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Laurie L. Latham

Laurie L. Latham

Senior Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

Date: May 16, 2022

This certification accompanies the Quarterly Report on Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Quest Resource Holding Corporation under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Quarterly Report on Form 10-Q), irrespective of any general incorporation language contained in such filing.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2022	May 02, 2022
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2022
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Trading Symbol	QRHC
Entity Registrant Name	Quest Resource Holding Corporation
Entity Central Index Key	0001442236
Entity Current Reporting Status	Yes
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		19,045,988
Entity File Number	001-36451
Entity Tax Identification Number	51-0665952
Entity Address, Address Line One	3481 Plano Parkway
Entity Address, City or Town	The Colony
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75056
City Area Code	972
Local Phone Number	464-0004
Entity Interactive Data Current	Yes
Title of 12(b) Security	Common stock
Entity Incorporation, State or Country Code	NV
Security Exchange Name	NASDAQ
Document Quarterly Report	true
Document Transition Report	false

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 7,921,587	$ 8,427,858
Accounts receivable, less allowance for doubtful accounts of $1,054,365 and $840,522 as of March 31, 2022 and December 31, 2021, respectively	46,561,628	39,948,973
Prepaid expenses and other current assets	2,008,491	1,952,566
Total current assets	56,491,706	50,329,397
Goodwill	81,164,900	80,621,503
Intangible assets, net	39,716,880	39,118,940
Property and equipment, net, and other assets	5,394,971	5,596,566
Total assets	182,768,457	175,666,406
Current liabilities:
Accounts payable and accrued liabilities	34,861,721	30,195,696
Other current liabilities	7,045,808	6,195,170
Current portion of notes payable	1,644,149	1,329,109
Total current liabilities	43,551,678	37,719,975
Notes payable, net	65,715,702	62,409,201
Other long-term liabilities	1,798,484	1,908,966
Total liabilities	111,065,864	102,038,142
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued or outstanding as of March 31, 2022 and December 31, 2021
Common stock, $0.001 par value, 200,000,000 shares authorized, 19,045,988 shares issued and outstanding as of March 31, 2022 and December 31, 2021	19,046	19,046
Additional paid-in capital	170,576,837	170,318,199
Accumulated deficit	(98,893,290)	(96,708,981)
Total stockholders’ equity	71,702,593	73,628,264
Total liabilities and stockholders’ equity	$ 182,768,457	$ 175,666,406

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (Unaudited) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Statement Of Financial Position [Abstract]
Allowance for doubtful accounts receivable	$ 1,054,365	$ 840,522
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	19,045,988	19,045,988
Common stock, shares outstanding	19,045,988	19,045,988

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Income Statement [Abstract]
Revenue	$ 71,522,168	$ 35,101,991
Cost of revenue	60,273,753	28,662,113
Gross profit	11,248,415	6,439,878
Operating expenses:
Selling, general, and administrative	9,344,462	4,262,560
Depreciation and amortization	2,364,862	407,283
Total operating expenses	11,709,324	4,669,843
Operating income (loss)	(460,909)	1,770,035
Interest expense	(1,556,585)	(561,462)
Income (loss) before taxes	(2,017,494)	1,208,573
Income tax expense	166,815	61,833
Net income (loss)	(2,184,309)	1,146,740
Net income (loss) applicable to common stockholders	$ (2,184,309)	$ 1,146,740
Net income (loss) per share applicable to common stockholders
Basic	$ (0.11)	$ 0.06
Diluted	$ (0.11)	$ 0.06
Weighted average number of common shares outstanding
Basic	19,244,634	18,504,993
Diluted	19,244,634	19,412,685

XML

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($)	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]
Beginning Balance at Dec. 31, 2020	$ 68,042,972	$ 18,413	$ 166,424,597	$ (98,400,038)
Beginning Balance, Shares at Dec. 31, 2020		18,413,419
Stock-based compensation	309,610		309,610
Stock option and warrant exercises	253,389	$ 277	253,112
Stock option and warrant exercises, Shares		276,388
Net income (loss)	1,146,740			1,146,740
Ending Balance at Mar. 31, 2021	69,752,711	$ 18,690	166,987,319	(97,253,298)
Ending Balance, Shares at Mar. 31, 2021		18,689,807
Beginning Balance at Dec. 31, 2021	73,628,264	$ 19,046	170,318,199	(96,708,981)
Beginning Balance, Shares at Dec. 31, 2021		19,045,988
Stock-based compensation	258,638		258,638
Net income (loss)	(2,184,309)			(2,184,309)
Ending Balance at Mar. 31, 2022	$ 71,702,593	$ 19,046	$ 170,576,837	$ (98,893,290)
Ending Balance, Shares at Mar. 31, 2022		19,045,988

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Cash flows from operating activities:
Net income (loss)	$ (2,184,309)	$ 1,146,740
Adjustments to reconcile net income (loss) to net cash provided (used in) by operating activities:
Depreciation	173,573	110,136
Amortization of intangibles	2,263,637	365,524
Amortization of debt issuance costs and discounts	324,779	211,622
Provision for doubtful accounts	261,973	34,486
Stock-based compensation	258,638	309,610
Changes in operating assets and liabilities:
Accounts receivable	(6,697,540)	(3,336,188)
Prepaid expenses and other current assets	(53,289)	(114,960)
Security deposits and other assets	124,284	(860)
Accounts payable and accrued liabilities	4,418,010	5,036,660
Other liabilities	718,682	191,041
Net cash provided by (used in) operating activities	(391,562)	3,953,811
Cash flows from investing activities:
Purchase of property and equipment	(261,417)	(115,886)
Purchase of intangible assets	(61,577)	(42,725)
Acquisition, net of cash acquired	(3,137,758)
Net cash used in investing activities	(3,460,752)	(158,611)
Cash flows from financing activities:
Proceeds from credit facilities	15,149,625	13,361,685
Repayments of credit facilities	(15,197,782)	(14,036,808)
Proceeds from long-term debt	3,500,000
Repayments of long-term debt	(60,000)	(135,543)
Proceeds from stock option exercises		253,389
Debt issuance costs	(45,800)
Net cash provided by (used in) financing activities	3,346,043	(557,277)
Net increase (decrease) in cash and cash equivalents	(506,271)	3,237,923
Cash and cash equivalents at beginning of period	8,427,858	7,516,260
Cash and cash equivalents at end of period	7,921,587	10,754,183
Supplemental cash flow information:
Cash paid for interest	1,137,877	353,960
Cash paid for income taxes	$ 29,510	$ 4,000

XML

The Company and Description of Business

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

The Company and Description of Business

1. The Company and Description of Business

The accompanying condensed consolidated financial statements include the accounts of Quest Resource Holding Corporation (“QRHC”) and its subsidiaries, Quest Resource Management Group, LLC (“Quest”), Landfill Diversion Innovations, LLC (“LDI”), Youchange, Inc. (“Youchange”), Quest Vertigent Corporation (“QVC”), Quest Vertigent One, LLC (“QV One”), Quest Sustainability Services, Inc. (“QSS”), RWS Facility Services, LLC ("RWS"), Sustainable Solutions Group, LLC (”SSG”), and Sequoia Waste Management Solutions, LLC (”Sequoia”) (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 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.

We made significant strategic acquisitions in 2021, including the November 30, 2021 acquisition of the membership interests of RWS, a Chadds Ford, PA-based environmental services company. On February 10, 2022, we acquired an independent environmental services company that primarily services customers in the northeast region of the United States. See Note 3 for more information regarding the acquisitions.

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Principles of Presentation and Consolidation

The condensed consolidated financial statements included herein have been prepared by us without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with our audited financial statements for the year ended December 31, 2021. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted as permitted by the SEC, although we believe the disclosures that are made are adequate to make the information presented herein not misleading.

The accompanying condensed consolidated financial statements reflect, in our opinion, all normal recurring adjustments necessary to present fairly our financial position at March 31, 2022 and the results of our operations and cash flows for the periods presented. We derived the December 31, 2021 condensed consolidated balance sheet data from audited financial statements; however, we did not include all disclosures required by GAAP. As QRHC, Quest, LDI, Youchange, QVC, QV One, QSS, RWS, SSG, and Sequoia each operate as environmental-based service companies, we did not deem segment reporting necessary.

All intercompany accounts and transactions have been eliminated in consolidation. Interim results are subject to seasonal variations, and the results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the full year.

Recent Accounting Pronouncements

Adopted

On January 1, 2021, we adopted Accounting Standards Update (“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. The adoption of the standard did not have a material effect on our consolidated financial statements.

In March 2020, the Financial Accounting Standards Board (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.

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.

XML

Acquisitions

3 Months Ended

Mar. 31, 2022

Business Combinations [Abstract]

Acquisitions

3. Acquisitions

RWS

On December 7, 2021, QSS, a wholly-owned subsidiary of Quest, entered into a Membership Interest Purchase Agreement (the "MIPA"), effective as of November 30, 2021, among QSS, Rome Holdings, LLC, M&A Business Consulting, Inc., and solely for purposes of Section 5.3(a) of the MIPA, Anthony J. DiIenno, Sr., RWS Investors, LLC and ATAR RWS Investors, LLC, pursuant to which QSS acquired all of the outstanding membership interests of RWS. RWS is a provider of independent environmental services, particularly in the commercial property and industrial markets and is located in Chadds Ford, PA. The RWS acquisition strengthens our presence across key markets, particularly in commercial property management and adds to our industrial market base. The total purchase price for RWS was $33.0 million in cash subject to certain adjustments set forth in the MIPA. We funded the acquisition primarily with a term note to Monroe Capital Management Advisors, LLC (”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:

Sources of consideration paid:
Cash (1)	$	32,048,438
Other (2)		1,964,562
	$	34,013,000
Purchase price allocation:
Accounts receivable, net (3)		7,888,586
Other assets		1,103,253
Machinery and equipment, net		494,614
Intangible assets		25,390,000
Goodwill		6,901,756
Current liabilities		(7,765,209	)
	$	34,013,000
(1) Financed with Monroe Capital term loan
(2) Net working capital
(3) Gross receivables of $10,359,526, net of allowance of $2,470,940

The purchase price allocation was preliminary and was based on information existing at the acquisition date. Accordingly, the purchase price allocation is subject to change.

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 RWS acquisition is not deductible for income tax purposes.

The following table presents unaudited pro forma information for the three months ended March 31, 2021 as if the RWS acquisition had occurred at the beginning of our 2021 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, certain management adjustments, and the related income tax effects.

	Three months ended
	March 31, 2021
Pro Forma	(unaudited)
Revenue	$	46,816,822
Net loss	$	(523,531	)
Net loss per share - basic and diluted	$	(0.03	)

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 RWS acquisition had been effected on the dates previously set forth, nor is it indicative of the future operating results or financial position in combination.

Other

On February 10, 2022, we acquired an independent environmental services company that primarily services customers in the northeast region of the United States for approximately $3.35 million. This acquisition was paid in cash and was financed with a draw down on the term loan pursuant to the Credit Agreement (as defined in Note 7). The purchase price was allocated to the acquired assets, primarily customer relationship intangibles and goodwill.

We acquired three other environmental services businesses during the year ended December 31, 2021. These acquisitions are not material to our results of operations, individually or in the aggregate.

XML

Property and Equipment, Net, and Other Assets

3 Months Ended

Mar. 31, 2022

Property Plant And Equipment [Abstract]

Property and Equipment, Net, and Other Assets

4. Property and Equipment, net, and Other Assets

At March 31, 2022 and December 31, 2021, property and equipment, net, and other assets consisted of the following:

	March 31,		December 31,
	2022		2021
	(Unaudited)
Property and equipment, net of accumulated depreciation of $1,944,949      and $1,771,376 as of March 31, 2022 and December 31, 2021,      respectively	$	2,638,199	$	2,542,120
Right-of-use operating lease asset		1,703,764		1,945,438
Security deposits and other assets		1,053,008		1,109,008
Property and equipment, net, and other assets	$	5,394,971	$	5,596,566

We compute depreciation using the straight-line method over the estimated useful lives of the property and equipment. Depreciation expense for the three months ended March 31, 2022 was $173,573, including $72,348 of depreciation expense reflected within “Cost of revenue” in our condensed consolidated statements of operations as it related to assets used in directly servicing customer contracts. Depreciation expense for the three months ended March 31, 2021 was $110,136, including $68,376 of depreciation expense reflected within “Cost of revenue”.

We recorded right-of-use operating lease assets related to our office leases 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 revenue, 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” above and we have an accrued receivable in the amount of $333,667 and $339,667 related to the earn-out included as of March 31, 2022 and December 31, 2021, respectively.

XML

Goodwill and Other Intangible Assets

3 Months Ended

Mar. 31, 2022

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

5. Goodwill and Other Intangible Assets

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

March 31, 2022 (Unaudited)	Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization		Net
Finite lived intangible assets:
Customer relationships	5 years	$	39,250,000	$	3,921,354	$	35,328,646
Software	7 years		2,075,995		1,505,820		570,175
Trademarks	7 years		2,002,869		155,366		1,847,503
Non-compete agreements	3 years		2,250,000		279,444		1,970,556
Total finite lived intangible assets		$	45,578,864	$	5,861,984	$	39,716,880

December 31, 2021	Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization		Net
Finite lived intangible assets:
Customer relationships	5 years	$	36,820,000	$	1,999,355	$	34,820,645
Software	7 years		2,030,754		1,416,638		614,116
Trademarks	7 years		1,716,533		87,632		1,628,901
Non-compete agreements	3 years		2,150,000		94,722		2,055,278
Total finite lived intangible assets		$	42,717,287	$	3,598,347	$	39,118,940

	Carrying Amount
Changes in goodwill:
Goodwill balance at December 31, 2021	$	80,621,503
Addition related to acquisition		543,397
Goodwill balance at March 31, 2022	$	81,164,900

We compute amortization using the straight-line method over the useful lives of the finite lived intangible assets. Amortization expense related to finite lived intangible assets was $2,263,637 and $365,524 for the three months ended March 31, 2022 and 2021, respectively.

We have no indefinite-lived intangible assets other than goodwill. $65.7 million of the goodwill is not deductible for tax purposes, while $15.5 million of goodwill is deductible over its tax-basis life.

We performed our annual impairment analysis for goodwill and other intangible assets in the third quarter of 2021 with no impairment recorded.

XML

Current Liabilities

3 Months Ended

Mar. 31, 2022

Current Liabilities Disclosure [Abstract]

Current Liabilities

6. Current Liabilities

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

	March 31,		December 31,
	2022		2021
	(Unaudited)
Accounts payable	$	31,700,134	$	26,434,732
Accrued taxes		808,326		797,394
Employee compensation		1,405,026		1,864,145
Operating lease liability - current portion		715,140		868,799
Other		233,095		230,626
	$	34,861,721	$	30,195,696

Refer to Note 8, Leases for additional disclosure related to the operating lease liability.

The components of Other current liabilities were as follows:

	March 31,		December 31,
	2022		2021
	(Unaudited)
Deferred seller consideration, current	$	1,232,434	$	1,183,153
Deferred consideration - earn-out		1,290,000		1,290,000
Deferred revenue		4,523,374		3,722,017
	$	7,045,808	$	6,195,170

Deferred seller consideration in connection with our 2020 acquisition of Green Remedies Waste and Recycling, Inc. (”Green Remedies”) is payable in either cash or shares of our common stock. As of March 31, 2022 and December 31, 2021, the unamortized portion of OID on the deferred seller consideration was $109,691 and $158,972, respectively. The current portion of earn-out consideration related to other acquisitions is $1,290,000 as of March 31, 2022 and December 31, 2021.

XML

Notes Payable and Other Long-Term Liabilities

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Notes Payable and Other Long-Term Liabilities

7. Notes Payable and Other Long-term Liabilities

Our debt obligations are as follows:

	Interest Rate	March 31,			December 31,
	(1)	2022			2021
		(Unaudited)
Monroe Term Loan (2)	7.5%	$	62,025,000		$	58,585,000
Green Remedies Promissory Note (3)	3.0%		2,040,607			2,040,607
PNC ABL Facility (4)	3.0%		7,186,580			7,234,737
Total notes payable			71,252,187			67,860,344
Less: Current portion of long-term debt			(1,644,149	)		(1,329,109	)
Less: Unamortized debt issuance costs			(2,505,235	)		(2,637,483	)
Less: Unamortized OID			(365,781	)		(391,493	)
Less: Unamortized OID warrant			(1,021,320	)		(1,093,058	)
Notes payable, net		$	65,715,702		$	62,409,201
(1) Interest rates as of March 31, 2022
(2) Bears interest at LIBOR rate plus Applicable Margin ranging from 5.5%-7.5%
(3) Stated interest rate of 3.0%, discounted cash flow rate of 13%
(4) Bears interest at a Base rate, as defined, plus a margin of 0.75% to 1.25%

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.

	March 31,
	2022
	(Unaudited)
Debt issuance costs
Beginning balance	$	2,637,483
Financing costs deferred		45,800
Less: Amortization expense		(178,048	)
Debt issuance costs, net of accumulated amortization	$	2,505,235

Revolving Credit Facility

On August 5, 2020, QRHC and certain of its domestic subsidiaries entered into a Loan, Security and Guaranty Agreement (the “PNC Loan Agreement”), which was subsequently amended on October 19, 2020 and December 7, 2021, with BBVA USA(which was subsequently succeeded in interest by PNC Bank, National Association (“PNC”)), as a lender, and as administrative agent, collateral agent, and issuing bank, which provides for a credit facility (the “ABL Facility”) comprising the following:

•An asset-based revolving credit facility in the maximum principal amount of $15.0 million with a sublimit for issuance of letters of credit of up to 10% of the maximum principal amount of the revolving credit facility. Each loan under the revolving credit facility bears interest, at the borrowers’ option, at either the Base Rate, plus a margin ranging from 0.75% to 1.25% (3.0% as of March 31, 2022), 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 March 31, 2022). The maturity date of the revolving credit facility is April 19, 2025. The revolving credit facility contains an accordion feature permitting the revolving credit facility to be increased by up to $10 million.

•An equipment loan facility in the maximum principal amount of $2.0 million. Loans under the equipment loan facility may be requested at any time until August 5, 2023. Each loan under the equipment loan facility bears interest, at the borrowers’ option, at either the Base Rate, plus 1.75%, or the LIBOR Lending Rate for the Interest Period in effect, plus 2.75%. The maturity date of the equipment loan facility is April 19, 2025.

The PNC Loan Agreement contains certain financial covenants, including a minimum fixed charge coverage ratio. In addition, the PNC 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 PNC 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 PNC Loan Agreement to be in full force and effect. Upon the occurrence of an event of default, the outstanding obligations under the PNC Loan Agreement may be accelerated and become immediately due and payable.

As of March 31, 2022, the ABL Facility borrowing base availability was $15,000,000, of which $7,186,580 principal was outstanding.

It is possible that LIBOR may be phased out beginning in 2022. 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 beginning in 2022 and will work with PNC 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.

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, which was subsequently amended on September 3, 2021, December 1, 2021 and December 7, 2021, with Monroe Capital, as administrative agent for the lenders thereto. Among other things, the Credit Agreement provides for the following:

•A senior secured term loan facility in the principal amount of $58.7 million. The senior secured term loan accrues interest at the LIBOR Rate for LIBOR Loans plus the Applicable Margin; provided, that if the provision of LIBOR Loans becomes unlawful or unavailable, then interest will be payable at a rate per annum equal to the Base Rate from time to time in effect plus the Applicable Margin for Base Rate Loans. The maturity date of the term loan facility is October 19, 2025 (the "Maturity Date"). The senior secured term loan will amortize in aggregate annual amounts equal to 1.00% of the original principal amount of the senior secured term loan facility with the balance payable on the Maturity Date. Proceeds of the senior secured term loan are permitted to be used for Permitted Acquisitions (as defined in the Credit Agreement).

•A delayed draw term loan facility in the maximum principal amount of $12.5 million. Loans under the delayed draw term loan facility may be requested at any time until June 7, 2022. Pricing and maturity for the outstanding principal amount of the delayed draw term loan shall be the same as for the senior secured term loan. Proceeds of the delayed draw term loan are to be used for Permitted Acquisitions.

•An accordion term loan facility in the maximum principal amount of $5.3 million. Loans under the accordion loan facility may be requested at any time until the Maturity Date. Each accordion term loan shall be on the same terms as those applicable to the senior secured term loan. Proceeds of accordion term loans are permitted to be used for Permitted Acquisitions.

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 initial $11.5 million under the Credit Agreement in October 2020, in a separate agreement, we issued Monroe Capital a warrant to purchase 500,000 shares of QRHC’s common stock exercisable immediately. For the delayed draw term loan facility, we issued a separate warrant to purchase 350,000 shares upon drawing on this facility on October 19, 2021. 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 warrants issued using the Black Scholes option pricing model and recorded a debt discount of approximately $766,000 in 2020 for the 500,000-share warrant and $536,000 in 2021 for the 350,000-share warrant which are being 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 such agreement.

Green Remedies Promissory Note

On October 19, 2020, we issued an unsecured subordinated promissory note to 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 three months ended March 31, 2022 and 2021 was $1,233,319 and $348,307, respectively. Debt issuance costs of $3,155,156 are being amortized to interest expense over the lives of the related debt arrangements. As of March 31, 2022, the unamortized portion of the debt issuance costs was $2,505,235. The amount of interest expense related to the amortization of debt issuance costs for the three months ended March 31, 2022 and 2021 was $178,048 and $88,718, respectively. Debt discount (“OID”) of $2,210,148 is being amortized to interest expense over the lives of the related debt and consideration arrangements. As of March 31, 2022, the unamortized portion of OIDs was $1,387,101. The amount of interest expense related to the amortization of OID costs for the three months ended March 31, 2022 and 2021 is $146,732 and $122,905, respectively.

Other long-term liabilities

	March 31,		December 31,
	2022		2021
	(Unaudited)
Deferred consideration - earn-out	$	781,000	$	781,000
Operating lease liability - long-term portion		1,013,318		1,123,799
Other		4,166		4,167
	$	1,798,484	$	1,908,966

We recorded deferred consideration in connection with certain business acquisitions. We valued the earn-out liability using a Monte Carlo simulation. The inputs used in estimating the fair value of the earn-out liability represent Level 3 inputs under the fair value hierarchy.

XML

Leases

3 Months Ended

Mar. 31, 2022

Lessee Disclosure [Abstract]

Leases

8. Leases

Our leases are primarily related to office space and are classified as operating leases.

Lease Costs

For the three months ended March 31, 2022, we recorded approximately $245,000 of fixed cost operating lease expense. For the three months ended March 31, 2021, we recorded approximately $158,000 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 corporate office lease through August 2022. This minimum annual incentive is $93,600 effective 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 three months ended March 31, 2022 was approximately $13,000.

Cash paid for operating leases approximated operating lease expense and non-cash right of use asset amortization for the three months ended March 31, 2022 and 2021. We did not obtain any new operating lease right-of-use assets in the three months ended March 31, 2022.

The future minimum lease payments required under our office leases as of March 31, 2022 are as follows:

	Amount
2022	$	691,601
2023		470,366
2024		455,656
2025		310,354
Total lease payments		1,927,977
Less: Interest		(199,519	)
Present value of lease liabilities	$	1,728,458

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 March 31, 2022 are de minimis.

	March 31,		December 31,
	2022		2021
Operating Leases:	(Unaudited)
Right-of-use operating lease asset:
Property and equipment, net and other assets	$	1,703,764	$	1,945,438
Lease Liabilities:
Accounts payable and accrued liabilities	$	715,140	$	868,799
Other long-term liabilities		1,013,318		1,123,799
Total operating lease liabilities	$	1,728,458	$	1,992,598

XML

Revenue

3 Months Ended

Mar. 31, 2022

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, equipment, 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. Depending on the key terms of the arrangement, which may include situations in which we are not primarily obligated, we do not have credit risk, or we determine amounts earned using fixed percentage or fixed fee schedules, we may record the revenue net of certain cost amounts. We had certain management fee contracts accounted for under the net basis method with net revenue of $160,320 and $0 for the three months ended March 31, 2022 and 2021, respectively. 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. One customer accounted for 16.5% of revenue for the three months ended March 31, 2022, and two customers accounted for 46.9% of revenue for the three months ended March 31, 2021. We operate primarily in the United States, with minor services in Canada.

	Three Months Ended March 31,
	2022		2021
	(Unaudited)
Revenue Type:
Services	$	68,721,608	$	32,704,583
Product sales and other		2,800,560		2,397,408
Total revenue	$	71,522,168	$	35,101,991

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 March 31, 2022 and December 31, 2021, we had $675,000 and $775,000 of deferred contract costs, respectively. During the three months ended March 31, 2022, we amortized $102,500 of deferred contract costs to selling, general, and administrative expense. During the three months ended March 31, 2021, we amortized $50,000 of deferred contract costs to selling, general, and administrative expense.

We bill certain customers in advance, and, accordingly, we defer recognition of related revenues as a contract liability until the services are provided and control is transferred to the customer. As of March 31, 2022 and December 31, 2021, we had $4,523,374 and $3,722,017, respectively, of deferred revenue which was classified in “Other current liabilities.”

XML

Income Taxes

3 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

10. Income Taxes

Our statutory income tax rate is anticipated to be 27%. We had income tax expense of $166,815 and $61,833 for the three months ended March 31, 2022 and 2021, respectively, which was attributable to state tax obligations based on current estimated state tax apportionments for states with no net operating loss carryforwards, and the continued reserve against the benefit of the net operating losses at the federal level.

We compute income taxes using the asset and liability method in accordance with FASB ASC Topic 740, Income Taxes. Under the asset and liability method, we determine deferred income tax assets and liabilities based on the differences between the financial reporting and tax bases of assets and liabilities and measure them using currently enacted tax rates and laws. We provide a valuation allowance to reduce the amount of deferred tax assets that, based on available evidence, is more likely than not to be realized. Realization of our net operating loss carryforward was not reasonably assured as of March 31, 2022 and December 31, 2021, and we had recorded a valuation allowance of $11,589,000 and $11,138,000, respectively, against deferred tax assets in excess of deferred tax liabilities in the accompanying condensed consolidated financial statements. As of March 31, 2022 and December 31, 2021, we had federal income tax net operating loss carryforwards of approximately $10,300,000 and $10,100,000, respectively, which expire at various dates ranging from 2034-2037.

XML

Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

11. Fair Value of Financial Instruments

Our financial instruments consist primarily 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, based on their short maturities or, for notes payable, based on borrowing rates currently available to us for loans with similar terms and maturities. Contingent liabilities are measured at fair value on a recurring basis. The fair value measurements are generally determined using unobservable inputs and are classified within Level 3 of the fair value hierarchy. See discussion of the contingent earn-out liability in Note 7.

XML

Stockholders' Equity

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

Stockholders' Equity

12. Stockholders’ Equity

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

Common Stock – Our authorized common stock consists of 200,000,000 shares of common stock with a par value of $0.001, of which 19,045,988 shares were issued and outstanding as of March 31, 2022 and December 31, 2021.

Employee Stock Purchase Plan – On September 17, 2014, our stockholders approved our 2014 Employee Stock Purchase Plan (as amended, the “ESPP”). We recorded expense of $11,370 and $4,224 related to the ESPP for the three months ended March 31, 2022 and 2021, respectively.

Warrants – The following table summarizes the warrants issued and outstanding as of March 31, 2022:

Warrants Issued and Outstanding as of March 31, 2022
	Date of		Exercise		Shares of
Description	Issuance	Expiration			Common Stock
Exercisable Warrants	10/19/2020	3/19/2028	$	1.50		500,000
Exercisable Warrants	10/19/2021	3/19/2028	$	1.50		350,000
Total warrants issued and outstanding						850,000

Stock Options – We recorded stock option expense of $183,419 and $216,958 for the three months ended March 31, 2022 and 2021, respectively. The following table summarizes the stock option activity for the three months ended March 31, 2022:

	Stock Options
					Weighted-
				Exercise	Average
	Number			Price Per	Exercise Price
	of Shares			Share	Per Share
Outstanding at December 31, 2021		3,280,585		$1.17 — $23.20	$	2.87
Granted		58,889		$6.06  — $7.20	$	6.33
Cancelled/Forfeited		(667	)	$1.94  — $1.94	$	1.94
Outstanding at March 31, 2022		3,338,807		$1.17 — $23.20	$	2.93

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 deferred stock units (“DSUs”). The DSUs are recognized at their fair value on the date of grant. Each DSU represents the right to receive one share of our common stock following the completion of a director’s service. During the three months ended March 31, 2022, we granted 1,507 DSUs and recorded director compensation expense of $9,638 related to the grants. In addition, during the three months ended March 31, 2022 we recorded compensation expense of $54,212, which includes an accrual of anticipated bonus expense to be paid in DSUs for certain executive employees. During the three months ended March 31, 2021, we granted 2,845 DSUs and recorded director compensation expense of $8,661 related to the grants. In addition, during the three months ended March 31, 2021, we granted 13,333 DSUs to executive employees and recorded compensation expense of $79,768. We had 199,652 and 198,145 DSUs outstanding at March 31, 2022 and December 31, 2021, respectively.

XML

Net Income (Loss) per Share

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

Net Income (Loss) per Share

13. Net Income (Loss) per Share

We compute basic net income 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 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, warrants and shares issued pursuant to a Consideration Agreement as discussed in Note 6. 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:

	Three Months Ended March 31,
	2022			2021
	(Unaudited)
Numerator:
Net income (loss) applicable to common stockholders	$	(2,184,309	)	$	1,146,740
Denominator:
Weighted average common shares outstanding, basic		19,244,634			18,504,993
Effect of dilutive common shares		—			907,692
Weighted average common shares outstanding, diluted		19,244,634			19,412,685
Net income (loss) per share:
Basic	$	(0.11	)	$	0.06
Diluted	$	(0.11	)	$	0.06
Anti-dilutive securities excluded from diluted net income (loss) per share:
Stock options		75,157			984,768
Warrants		—			—
Total anti-dilutive securities excluded from net income (loss) per share		75,157			984,768

XML

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Principles of Presentation and Consolidation

Principles of Presentation and Consolidation

The condensed consolidated financial statements included herein have been prepared by us without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with our audited financial statements for the year ended December 31, 2021. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted as permitted by the SEC, although we believe the disclosures that are made are adequate to make the information presented herein not misleading.

The accompanying condensed consolidated financial statements reflect, in our opinion, all normal recurring adjustments necessary to present fairly our financial position at March 31, 2022 and the results of our operations and cash flows for the periods presented. We derived the December 31, 2021 condensed consolidated balance sheet data from audited financial statements; however, we did not include all disclosures required by GAAP. As QRHC, Quest, LDI, Youchange, QVC, QV One, QSS, RWS, SSG, and Sequoia each operate as environmental-based service companies, we did not deem segment reporting necessary.

All intercompany accounts and transactions have been eliminated in consolidation. Interim results are subject to seasonal variations, and the results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the full year.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Adopted

On January 1, 2021, we adopted Accounting Standards Update (“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. The adoption of the standard did not have a material effect on our consolidated financial statements.

In March 2020, the Financial Accounting Standards Board (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.

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.

XML

Acquisitions (Tables) - RWS [Member]

3 Months Ended

Mar. 31, 2022

Business Acquisition [Line Items]

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:

Sources of consideration paid:
Cash (1)	$	32,048,438
Other (2)		1,964,562
	$	34,013,000
Purchase price allocation:
Accounts receivable, net (3)		7,888,586
Other assets		1,103,253
Machinery and equipment, net		494,614
Intangible assets		25,390,000
Goodwill		6,901,756
Current liabilities		(7,765,209	)
	$	34,013,000
(1) Financed with Monroe Capital term loan
(2) Net working capital
(3) Gross receivables of $10,359,526, net of allowance of $2,470,940

Schedule of Unaudited Pro Forma Information

The following table presents unaudited pro forma information for the three months ended March 31, 2021 as if the RWS acquisition had occurred at the beginning of our 2021 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, certain management adjustments, and the related income tax effects.

	Three months ended
	March 31, 2021
Pro Forma	(unaudited)
Revenue	$	46,816,822
Net loss	$	(523,531	)
Net loss per share - basic and diluted	$	(0.03	)

XML

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

3 Months Ended

Mar. 31, 2022

Property Plant And Equipment [Abstract]

Components Property and Equipment, Net, and Other Assets

At March 31, 2022 and December 31, 2021, property and equipment, net, and other assets consisted of the following:

	March 31,		December 31,
	2022		2021
	(Unaudited)
Property and equipment, net of accumulated depreciation of $1,944,949      and $1,771,376 as of March 31, 2022 and December 31, 2021,      respectively	$	2,638,199	$	2,542,120
Right-of-use operating lease asset		1,703,764		1,945,438
Security deposits and other assets		1,053,008		1,109,008
Property and equipment, net, and other assets	$	5,394,971	$	5,596,566

XML

Goodwill and Other Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2022

Goodwill And Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets

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

March 31, 2022 (Unaudited)	Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization		Net
Finite lived intangible assets:
Customer relationships	5 years	$	39,250,000	$	3,921,354	$	35,328,646
Software	7 years		2,075,995		1,505,820		570,175
Trademarks	7 years		2,002,869		155,366		1,847,503
Non-compete agreements	3 years		2,250,000		279,444		1,970,556
Total finite lived intangible assets		$	45,578,864	$	5,861,984	$	39,716,880

December 31, 2021	Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization		Net
Finite lived intangible assets:
Customer relationships	5 years	$	36,820,000	$	1,999,355	$	34,820,645
Software	7 years		2,030,754		1,416,638		614,116
Trademarks	7 years		1,716,533		87,632		1,628,901
Non-compete agreements	3 years		2,150,000		94,722		2,055,278
Total finite lived intangible assets		$	42,717,287	$	3,598,347	$	39,118,940

Schedule of Changes in Goodwill

	Carrying Amount
Changes in goodwill:
Goodwill balance at December 31, 2021	$	80,621,503
Addition related to acquisition		543,397
Goodwill balance at March 31, 2022	$	81,164,900

XML

Current Liabilities (Tables)

3 Months Ended

Mar. 31, 2022

Current Liabilities Disclosure [Abstract]

Components of Accounts Payable and Accrued Liabilities

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

	March 31,		December 31,
	2022		2021
	(Unaudited)
Accounts payable	$	31,700,134	$	26,434,732
Accrued taxes		808,326		797,394
Employee compensation		1,405,026		1,864,145
Operating lease liability - current portion		715,140		868,799
Other		233,095		230,626
	$	34,861,721	$	30,195,696

Components of Other Current Liabilities

The components of Other current liabilities were as follows:

	March 31,		December 31,
	2022		2021
	(Unaudited)
Deferred seller consideration, current	$	1,232,434	$	1,183,153
Deferred consideration - earn-out		1,290,000		1,290,000
Deferred revenue		4,523,374		3,722,017
	$	7,045,808	$	6,195,170

XML

Notes Payable and Other Long-Term Liabilities (Tables)

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Schedule of Debt Obligations

Our debt obligations are as follows:

	Interest Rate	March 31,			December 31,
	(1)	2022			2021
		(Unaudited)
Monroe Term Loan (2)	7.5%	$	62,025,000		$	58,585,000
Green Remedies Promissory Note (3)	3.0%		2,040,607			2,040,607
PNC ABL Facility (4)	3.0%		7,186,580			7,234,737
Total notes payable			71,252,187			67,860,344
Less: Current portion of long-term debt			(1,644,149	)		(1,329,109	)
Less: Unamortized debt issuance costs			(2,505,235	)		(2,637,483	)
Less: Unamortized OID			(365,781	)		(391,493	)
Less: Unamortized OID warrant			(1,021,320	)		(1,093,058	)
Notes payable, net		$	65,715,702		$	62,409,201
(1) Interest rates as of March 31, 2022
(2) Bears interest at LIBOR rate plus Applicable Margin ranging from 5.5%-7.5%
(3) Stated interest rate of 3.0%, discounted cash flow rate of 13%
(4) Bears interest at a Base rate, as defined, plus a margin of 0.75% to 1.25%

Schedule of Changes in Debt Issuance Costs

The table below summarizes changes in debt issuance costs.

	March 31,
	2022
	(Unaudited)
Debt issuance costs
Beginning balance	$	2,637,483
Financing costs deferred		45,800
Less: Amortization expense		(178,048	)
Debt issuance costs, net of accumulated amortization	$	2,505,235

Schedule of Other Long-Term Liabilities

Other long-term liabilities

	March 31,		December 31,
	2022		2021
	(Unaudited)
Deferred consideration - earn-out	$	781,000	$	781,000
Operating lease liability - long-term portion		1,013,318		1,123,799
Other		4,166		4,167
	$	1,798,484	$	1,908,966

XML

Leases (Tables)

3 Months Ended

Mar. 31, 2022

Lessee Disclosure [Abstract]

Future Minimum Lease Payments Required Under Office Leases

The future minimum lease payments required under our office leases as of March 31, 2022 are as follows:

	Amount
2022	$	691,601
2023		470,366
2024		455,656
2025		310,354
Total lease payments		1,927,977
Less: Interest		(199,519	)
Present value of lease liabilities	$	1,728,458

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 March 31, 2022 are de minimis.

	March 31,		December 31,
	2022		2021
Operating Leases:	(Unaudited)
Right-of-use operating lease asset:
Property and equipment, net and other assets	$	1,703,764	$	1,945,438
Lease Liabilities:
Accounts payable and accrued liabilities	$	715,140	$	868,799
Other long-term liabilities		1,013,318		1,123,799
Total operating lease liabilities	$	1,728,458	$	1,992,598

XML

Revenue (Tables)

3 Months Ended

Mar. 31, 2022

Revenue From Contract With Customer [Abstract]

Summary of Revenue Disaggregated by Source

The following table presents our revenue disaggregated by source.

	Three Months Ended March 31,
	2022		2021
	(Unaudited)
Revenue Type:
Services	$	68,721,608	$	32,704,583
Product sales and other		2,800,560		2,397,408
Total revenue	$	71,522,168	$	35,101,991

XML

Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2022

Summary of Warrant Activity

The following table summarizes the warrants issued and outstanding as of March 31, 2022:

Warrants Issued and Outstanding as of March 31, 2022
	Date of		Exercise		Shares of
Description	Issuance	Expiration			Common Stock
Exercisable Warrants	10/19/2020	3/19/2028	$	1.50		500,000
Exercisable Warrants	10/19/2021	3/19/2028	$	1.50		350,000
Total warrants issued and outstanding						850,000

Summary of Stock Option Activity

The following table summarizes the stock option activity for the three months ended March 31, 2022:

	Stock Options
					Weighted-
				Exercise	Average
	Number			Price Per	Exercise Price
	of Shares			Share	Per Share
Outstanding at December 31, 2021		3,280,585		$1.17 — $23.20	$	2.87
Granted		58,889		$6.06  — $7.20	$	6.33
Cancelled/Forfeited		(667	)	$1.94  — $1.94	$	1.94
Outstanding at March 31, 2022		3,338,807		$1.17 — $23.20	$	2.93

XML

Net Income (Loss) per Share (Tables)

3 Months Ended

Mar. 31, 2022

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:

	Three Months Ended March 31,
	2022			2021
	(Unaudited)
Numerator:
Net income (loss) applicable to common stockholders	$	(2,184,309	)	$	1,146,740
Denominator:
Weighted average common shares outstanding, basic		19,244,634			18,504,993
Effect of dilutive common shares		—			907,692
Weighted average common shares outstanding, diluted		19,244,634			19,412,685
Net income (loss) per share:
Basic	$	(0.11	)	$	0.06
Diluted	$	(0.11	)	$	0.06
Anti-dilutive securities excluded from diluted net income (loss) per share:
Stock options		75,157			984,768
Warrants		—			—
Total anti-dilutive securities excluded from net income (loss) per share		75,157			984,768

XML

Acquisitions - Additional Information (Detail) - USD ($)			3 Months Ended
	Feb. 10, 2022	Nov. 30, 2021	Mar. 31, 2022
Business Acquisition [Line Items]
Cash consideration			$ 3,137,758
RWS [Member]
Business Acquisition [Line Items]
Total purchase price		$ 33,000,000.0
Cash consideration		$ 32,048,438
Independent Environmental Services Company [Member]
Business Acquisition [Line Items]
Cash consideration	$ 3,350,000

XML

Acquisitions - Schedule of Purchase Consideration Paid and Amount of Assets Acquired and Liabilities Assumed (Detail) - USD ($)		3 Months Ended
	Nov. 30, 2021	Mar. 31, 2022	Dec. 31, 2021
Sources of consideration paid:
Cash		$ 3,137,758
Purchase price allocation:
Goodwill		$ 81,164,900	$ 80,621,503
RWS [Member]
Sources of consideration paid:
Cash	$ 32,048,438
Total purchase consideration	34,013,000
Purchase price allocation:
Accounts receivable, net	7,888,586
Other assets	1,103,253
Machinery and equipment	494,614
Intangible assets	25,390,000
Goodwill	6,901,756
Current liabilities	(7,765,209)
Assets acquired and liabilities assumed, net	34,013,000
Other [Member] | RWS [Member]
Sources of consideration paid:
Business combination, consideration transferred, liabilities incurred	$ 1,964,562

XML

Acquisitions - Schedule of Purchase Consideration Paid and Amount of Assets Acquired and Liabilities Assumed (Parenthetical) (Detail) - RWS [Member]	Nov. 30, 2021 USD ($)
Business Acquisition [Line Items]
Gross receivables	$ 10,359,526
Net of allowance	$ 2,470,940

XML

Acquisitions - Schedule of Unaudited Pro Forma Information (Detail) - RWS [Member]	3 Months Ended
	Mar. 31, 2021 USD ($) $ / shares
Business Acquisition [Line Items]
Revenue	$ 46,816,822
Net loss	$ (523,531)
Net loss per share - basic and diluted | $ / shares	$ (0.03)

XML

Property and Equipment, Net, and Other Assets - Components of Property and Equipment, Net, and Other Assets (Detail) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Property And Equipment Net And Other Assets [Abstract]
Property and equipment, net of accumulated depreciation of $1,944,949 and $1,771,376 as of March 31, 2022 and December 31, 2021, respectively	$ 2,638,199	$ 2,542,120
Right-of-use operating lease asset	1,703,764	1,945,438
Security deposits and other assets	1,053,008	1,109,008
Property and equipment, net, and other assets	$ 5,394,971	$ 5,596,566

XML

Property and Equipment, Net, and Other Assets - Components of Property and Equipment, Net, and Other Assets (Parenthetical) (Detail) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Property And Equipment Net And Other Assets [Abstract]
Accumulated depreciation, Property and equipment	$ 1,944,949	$ 1,771,376

XML

Property and Equipment, Net, and Other Assets - Additional Information (Detail) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Feb. 20, 2018
Property And Equipment Net And Other Assets [Line Items]
Depreciation	$ 173,573	$ 110,136
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	333,667		$ 339,667
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	$ 72,348	$ 68,376

XML

Goodwill and Other Intangible Assets - Schedule of Finite-Lived Intangible Assets (Detail) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 45,578,864	$ 42,717,287
Accumulated Amortization	5,861,984	3,598,347
Net	$ 39,716,880	$ 39,118,940
Customer Relationships [Member]
Finite Lived Intangible Assets [Line Items]
Estimated Useful Life	5 years	5 years
Gross Carrying Amount	$ 39,250,000	$ 36,820,000
Accumulated Amortization	3,921,354	1,999,355
Net	$ 35,328,646	$ 34,820,645
Software [Member]
Finite Lived Intangible Assets [Line Items]
Estimated Useful Life	7 years	7 years
Gross Carrying Amount	$ 2,075,995	$ 2,030,754
Accumulated Amortization	1,505,820	1,416,638
Net	$ 570,175	$ 614,116
Trademarks [Member]
Finite Lived Intangible Assets [Line Items]
Estimated Useful Life	7 years	7 years
Gross Carrying Amount	$ 2,002,869	$ 1,716,533
Accumulated Amortization	155,366	87,632
Net	$ 1,847,503	$ 1,628,901
Non-compete Agreements [Member]
Finite Lived Intangible Assets [Line Items]
Estimated Useful Life	3 years	3 years
Gross Carrying Amount	$ 2,250,000	$ 2,150,000
Accumulated Amortization	279,444	94,722
Net	$ 1,970,556	$ 2,055,278

XML

Goodwill and Other Intangible Assets - Schedule of Changes in Goodwill (Detail)	3 Months Ended
	Mar. 31, 2022 USD ($)
Intangible Assets Net Including Goodwill [Abstract]
Goodwill balance at December 31, 2021	$ 80,621,503
Addition related to acquisition	543,397
Goodwill balance at March 31, 2022	$ 81,164,900

XML

Goodwill and Other Intangible Assets - Additional Information (Detail) - USD ($)	3 Months Ended
	Mar. 31, 2022	Sep. 30, 2021	Mar. 31, 2021	Dec. 31, 2021
Goodwill And Intangible Assets Disclosure [Abstract]
Amortization of intangibles	$ 2,263,637		$ 365,524
Indefinite-lived intangible assets other than goodwill	0
Goodwill	81,164,900			$ 80,621,503
Impairment of goodwill		$ 0
Not Deductible for Tax Purposes [Member]
Goodwill And Intangible Assets Disclosure [Abstract]
Goodwill	65,700,000
Deductible for Tax Purposes [Member]
Goodwill And Intangible Assets Disclosure [Abstract]
Goodwill	$ 15,500,000

XML

Current Liabilities - Components of Accounts Payable and Accrued Liabilities (Detail) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Accounts Payable And Accrued Liabilities Current [Abstract]
Accounts payable	$ 31,700,134	$ 26,434,732
Accrued taxes	808,326	797,394
Employee compensation	1,405,026	1,864,145
Operating lease liability - current portion	715,140	868,799
Other	233,095	230,626
Accounts payable and accrued liabilities	$ 34,861,721	$ 30,195,696

XML

Current Liabilities - Components of Other Current Liabilities (Detail) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Other Liabilities Current [Abstract]
Deferred seller consideration, current	$ 1,232,434	$ 1,183,153
Deferred consideration - earn-out	1,290,000	1,290,000
Deferred revenue	4,523,374	3,722,017
Other current liabilities	$ 7,045,808	$ 6,195,170

XML

Current Liabilities - Additional Information (Detail) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Green Remedies [Member] | OID [Member]
Business Acquisition [Line Items]
Deferred seller consideration unamortized amount	$ 109,691	$ 158,972
Other Acquisitions [Member]
Business Acquisition [Line Items]
Earn-out liability, current	$ 1,290,000	$ 1,290,000

XML

Notes Payable and Other Long-term Liabilities - Schedule of Debt Obligations (Detail) - USD ($)	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Total notes payable	$ 71,252,187	$ 67,860,344
Less: Current portion of long-term debt	(1,644,149)	(1,329,109)
Less: Unamortized debt issuance costs	(2,505,235)	(2,637,483)
Less: Unamortized OID	(365,781)	(391,493)
Less: Unamortized OID warrant	(1,021,320)	(1,093,058)
Notes payable, net	$ 65,715,702	62,409,201
Monroe Term Loan [Member]
Debt Instrument [Line Items]
Interest Rate	7.50%
Total notes payable	$ 62,025,000	58,585,000
Green Remedies Promissory Note [Member]
Debt Instrument [Line Items]
Interest Rate	3.00%
Total notes payable	$ 2,040,607	2,040,607
PNC ABL Facility [Member]
Debt Instrument [Line Items]
Interest Rate	3.00%
Total notes payable	$ 7,186,580	$ 7,234,737

XML

Notes Payable and Other Long-term Liabilities - Schedule of Debt Obligations (Parenthetical) (Detail)	3 Months Ended
	Mar. 31, 2022	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	5.50%
Minimum [Member] | PNC 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	7.50%
Maximum [Member] | PNC ABL Facility [Member] | Base Rate [Member]
Debt Instrument [Line Items]
Debt instrument interest rate	1.25%

XML

Notes Payable and Other Long-term Liabilities - Schedule of Changes in Debt Issuance Costs (Detail) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Debt Disclosure [Abstract]
Beginning balance	$ 2,637,483
Financing costs deferred	45,800
Less: Amortization expense	(178,048)	$ (88,718)
Debt issuance costs, net of accumulated amortization	$ 2,505,235

XML

Notes Payable and Other Long-term Liabilities - Additional Information (Detail) - USD ($)			3 Months Ended		12 Months Ended
	Oct. 19, 2020	Aug. 05, 2020	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Dec. 31, 2020	Oct. 31, 2020
Debt Instrument [Line Items]
Aggregate principal amount	$ 2,684,250
Debt instrument annual interest rate	3.00%
Interest expense related to borrowings			$ 1,233,319	$ 348,307
Debt issuance cost			3,155,156
Unamortized portion of debt discount			2,505,235		$ 2,637,483
Interest expense related to amortization of debt issuance costs			178,048	88,718
OID [Member]
Debt Instrument [Line Items]
Unamortized portion of debt discount			1,387,101
Interest expense related to amortization of debt issuance costs			146,732	$ 122,905
Debt discounts			2,210,148
Monroe Capital Credit Agreement [Member]
Debt Instrument [Line Items]
Debt discounts					$ 536,000	$ 766,000
Monroe Capital Credit Agreement [Member] | Equity Offering [Member]
Debt Instrument [Line Items]
Sale of stock, number of shares issued in transaction	500,000				350,000	500,000
Warrant issued	350,000
Price per warrant	$ 1.50
Warrant expiration date	Mar. 19, 2028
Minimum net proceeds receivable by warrant holders	$ 1,000,000
Monroe Capital Credit Agreement [Member] | Senior Secured Term Loan [Member]
Debt Instrument [Line Items]
Debt instrument maturity date	Oct. 19, 2025
Revolving credit current borrowing facility							$ 11,500,000
Revolving credit current borrowing facility, outstanding	$ 58,700,000
Percentage of original principal amount	1.00%
Maximum [Member] | Monroe Capital Credit Agreement [Member] | Delayed Draw Term Loan Facility [Member]
Debt Instrument [Line Items]
Revolving credit facility maximum principal amount	$ 12,500,000
Maximum [Member] | Monroe Capital Credit Agreement [Member] | Accordion Term Loan Facility [Member]
Debt Instrument [Line Items]
Revolving credit facility maximum principal amount	$ 5,300,000
ABL Facility [Member]
Debt Instrument [Line Items]
Revolving credit facility maximum principal amount		$ 15,000,000.0
Sublimit for issuance of letters of credit, percentage		10.00%
Debt instrument maturity date		Apr. 19, 2025
Revolving credit facility, increase (decrease)		$ 10,000,000
Revolving credit current borrowing facility			15,000,000
Revolving credit current borrowing facility, outstanding			$ 7,186,580
ABL Facility [Member] | Base Rate [Member]
Debt Instrument [Line Items]
Debt instrument interest rate			3.00%
ABL Facility [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Debt instrument interest rate			0.00%
ABL Facility [Member] | Minimum [Member] | Base Rate [Member]
Debt Instrument [Line Items]
Debt instrument interest rate		0.75%
ABL Facility [Member] | Minimum [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Debt instrument interest rate		1.75%
ABL Facility [Member] | Maximum [Member] | Base Rate [Member]
Debt Instrument [Line Items]
Debt instrument interest rate		1.25%
ABL Facility [Member] | Maximum [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Debt instrument interest rate		2.25%
Equipment Loan Facility [Member]
Debt Instrument [Line Items]
Revolving credit facility maximum principal amount		$ 2,000,000.0
Debt instrument maturity date		Apr. 19, 2025
Equipment Loan Facility [Member] | Base Rate [Member]
Debt Instrument [Line Items]
Debt instrument interest rate		1.75%
Equipment Loan Facility [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Debt instrument interest rate		2.75%

XML

Notes Payable and Other Long-term Liabilities - Schedule of Other Long-Term Liabilities (Detail) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Debt Disclosure [Abstract]
Deferred consideration - earn-out	$ 781,000	$ 781,000
Operating lease liability - long-term portion	1,013,318	1,123,799
Other	4,166	4,167
Other long-term liabilities	$ 1,798,484	$ 1,908,966

XML

Leases - Additional Information (Detail) - USD ($)	3 Months Ended		24 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Aug. 31, 2022
Lessee Lease Description [Line Items]
Fixed cost operating lease expense	$ 245,000	$ 158,000
Sublease commencement period	Dec. 01, 2019
Sublease expiration, month and year	2022-08
Sublease income, net of amortized leasing costs	$ 13,000
Scenario, Forecast [Member]
Lessee Lease Description [Line Items]
Operating lease minimum annual incentive payment			$ 93,600

XML

Leases - Future Minimum Lease Payments Required Under Office Lease (Detail) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Operating Lease Liabilities Payments Due [Abstract]
2022	$ 691,601
2023	470,366
2024	455,656
2025	310,354
Total lease payments	1,927,977
Less: Interest	(199,519)
Operating Lease Liability	$ 1,728,458	$ 1,992,598

XML

Leases - Summary of Lease Related Assets and Liabilities Recorded on Balance Sheet (Detail) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Assets And Liabilities Lessee [Abstract]
Right-of-use operating lease asset	$ 1,703,764	$ 1,945,438
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Property Plant And Equipment Net Including Deposits Assets Noncurrent	Property Plant And Equipment Net Including Deposits Assets Noncurrent
Operating lease liability - current portion	$ 715,140	$ 868,799
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]	Accounts payable and accrued liabilities	Accounts payable and accrued liabilities
Operating lease liability - long-term portion	$ 1,013,318	$ 1,123,799
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	Other long-term liabilities	Other long-term liabilities
Total operating lease liabilities	$ 1,728,458	$ 1,992,598

XML

Revenue - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2022 USD ($) Customer	Mar. 31, 2021 USD ($) Customer	Dec. 31, 2021 USD ($)
Revenue Recognition [Line Items]
Revenue	$ 71,522,168	$ 35,101,991
Number of customer | Customer	1	2
Deferred contract costs	$ 675,000		$ 775,000
Deferred revenue	4,523,374		$ 3,722,017
Management Fee [Member]
Revenue Recognition [Line Items]
Revenue	160,320	$ 0
Selling, General and Administrative Expense [Member]
Revenue Recognition [Line Items]
Amortized deferred contract costs	$ 102,500	$ 50,000
Customer Concentration Risk [Member] | Sales Revenue Net [Member] | Customers [Member]
Revenue Recognition [Line Items]
Percentage of revenue	16.50%	46.90%

XML

Revenue - Summary of Revenue Disaggregated by Source (Detail) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Disaggregation Of Revenue [Line Items]
Total revenue	$ 71,522,168	$ 35,101,991
Services [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	68,721,608	32,704,583
Product Sales and Other [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	$ 2,800,560	$ 2,397,408

XML

Income Taxes - Additional Information (Detail) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Income Tax [Line Items]
Income tax expense	$ 166,815	$ 61,833
Federal corporate income tax rate	27.00%
Valuation allowance	$ 11,589,000		$ 11,138,000
Federal income tax net operating loss carry forward	$ 10,300,000		$ 10,100,000
Net operating loss carry forwards expiration beginning year	2034
Net operating loss carry forwards expiration ending year	2037
State [Member]
Income Tax [Line Items]
Operating loss carryforwards	$ 0	$ 0

XML

Stockholders' Equity - Additional Information (Detail) - $ / shares	Mar. 31, 2022	Dec. 31, 2021
Equity [Abstract]
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, shares authorized	200,000,000	200,000,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares issued	19,045,988	19,045,988
Common stock, shares outstanding	19,045,988	19,045,988

XML

Stockholders' Equity - Additional Information - Employee Stock Purchase Plan (Detail) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Equity [Abstract]
Employee stock purchase plan expense	$ 11,370	$ 4,224

XML

Stockholders' Equity - Summary of Warrants Issued and Outstanding (Detail)	3 Months Ended
	Mar. 31, 2022 $ / shares shares
Class Of Warrant Or Right [Line Items]
Shares of Common Stock	850,000
Exercisable Warrants [Member] | Warrants One [Member]
Class Of Warrant Or Right [Line Items]
Date of Issuance	Oct. 19, 2020
Date of Expiration	Mar. 19, 2028
Price per warrant | $ / shares	$ 1.50
Shares of Common Stock	500,000
Exercisable Warrants [Member] | Warrants Two [Member]
Class Of Warrant Or Right [Line Items]
Date of Issuance	Oct. 19, 2021
Date of Expiration	Mar. 19, 2028
Price per warrant | $ / shares	$ 1.50
Shares of Common Stock	350,000

XML

Stockholders' Equity - Additional Information - Stock Options (Detail) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Equity [Abstract]
Stock options expense	$ 183,419	$ 216,958

XML

Stockholders' Equity - Summary of Stock Option Activity (Detail) - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Outstanding Beginning Balance, Number of Shares	3,280,585
Granted, Number of Shares	58,889
Canceled/Forfeited, Number of Shares	(667)
Outstanding Ending Balance, Number of Shares	3,338,807	3,280,585
Outstanding Beginning Balance, Weighted-Average Exercise Price Per Share	$ 2.87
Granted, Weighted-Average Exercise Price Per Share	6.33
Cancelled/Forfeited, Weighted-Average Exercise Price Per Share	1.94
Outstanding Ending Balance, Weighted-Average Exercise Price Per Share	2.93	$ 2.87
Outstanding, $1.17 - $23.20 [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise Price Per Share, Minimum		1.17
Exercise Price Per Share, Maximum		$ 23.20
Granted, $6.06 - $7.20 [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise Price Per Share, Minimum	6.06
Exercise Price Per Share, Maximum	7.20
Cancelled/Forfeited, $1.94 - $1.94 [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise Price Per Share, Minimum	1.94
Exercise Price Per Share, Maximum	1.94
Outstanding, $1.17 - $23.20 [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise Price Per Share, Minimum	1.17
Exercise Price Per Share, Maximum	$ 23.20

XML

Stockholders' Equity - Additional Information - Deferred Stock Units (Detail) - Deferred Stock Units [Member] - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Sep. 01, 2019
Schedule Of Stockholders Equity [Line Items]
Number of stock unit received				1
Deferred stock units	1,507	2,845
Compensation expense related to grants	$ 54,212	$ 79,768
DSUs outstanding	199,652		198,145
Director [Member]
Schedule Of Stockholders Equity [Line Items]
Compensation expense related to grants	$ 9,638	$ 8,661
Executive Employees [Member]
Schedule Of Stockholders Equity [Line Items]
Deferred stock units		13,333

XML

Net Income (Loss) per Share - Computation of Basic and Diluted Net Income (Loss) per Share Attributable to Common Stockholders (Detail) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Numerator:
Net income (loss) applicable to common stockholders	$ (2,184,309)	$ 1,146,740
Denominator:
Weighted average common shares outstanding, basic	19,244,634	18,504,993
Effect of dilutive common shares		907,692
Weighted average common shares outstanding, diluted	19,244,634	19,412,685
Net income (loss) per share applicable to common stockholders
Basic	$ (0.11)	$ 0.06
Diluted	$ (0.11)	$ 0.06
Anti-dilutive securities excluded from diluted net income (loss) per share:
Anti-dilutive securities excluded from diluted net income (loss) per share	75,157	984,768
Stock options [Member]
Anti-dilutive securities excluded from diluted net income (loss) per share:
Anti-dilutive securities excluded from diluted net income (loss) per share	75,157	984,768