Form 10-Q - Quarterly report [Sections 13 or 15(d)]

September 30, 2024 (Unaudited) and December 31, 2023

Estimated
Useful Life

Carrying
Amount

Indefinite lived intangible asset:

Indefinite

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 September 30, 2024

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, Suite 100

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 October 29, 2024, there were 20,587,675 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		16

Item 3. Quantitative and Qualitative Disclosures About Market Risk		22

Item 4. Controls and Procedures		22

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		23

Item 1A. Risk Factors		23

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		23

Item 3. Defaults Upon Senior Securities		23

Item 4. Mine Safety Disclosures		23

Item 5. Other Information		23

Item 6. Exhibits		24

Signatures		25

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

QUEST RESOURCE HOLDING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


	September 30,			December 31,
	2024			2023
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,133,278		$	324,014
Accounts receivable, less allowance for doubtful accounts of $1,990,167 and $1,581,595 as of September 30, 2024 and December 31, 2023, respectively		60,125,301			58,147,058
Prepaid expenses and other current assets		3,309,387			2,142,071
Total current assets		64,567,966			60,613,143

Goodwill		85,828,238			85,828,238
Intangible assets, net		20,005,758			26,051,428
Property and equipment, net, and other assets		7,752,843			4,626,090
Total assets	$	178,154,805		$	177,118,899
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	39,947,392		$	41,296,166
Other current liabilities		1,434,217			2,469,690
Current portion of notes payable		1,158,800			1,158,800
Total current liabilities		42,540,409			44,924,656

Notes payable, net		71,900,781			64,638,180
Other long-term liabilities		946,182			1,274,691
Total liabilities		115,387,372			110,837,527

Commitments and contingencies

Stockholders’ equity:
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued or outstanding as of September 30, 2024 and December 31, 2023		—			—
Common stock, $0.001 par value, 200,000,000 shares authorized, 20,464,260 and 20,161,400 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively		20,464			20,161
Additional paid-in capital		178,350,513			176,309,463
Accumulated deficit		(115,603,544	)		(110,048,252	)
Total stockholders’ equity		62,767,433			66,281,372
Total liabilities and stockholders’ equity	$	178,154,805		$	177,118,899

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

QUEST RESOURCE HOLDING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Revenue	$	72,765,415		$	70,425,425		$	218,561,988		$	219,036,423
Cost of revenue		61,065,266			57,995,192			179,293,559			180,471,602
Gross profit		11,700,149			12,430,233			39,268,429			38,564,821
Operating expenses:
Selling, general, and administrative		10,272,870			9,620,114			29,456,728			28,249,820
Depreciation and amortization		2,367,594			2,341,581			7,094,337			7,218,683
Total operating expenses		12,640,464			11,961,695			36,551,065			35,468,503
Operating income (loss)		(940,315	)		468,538			2,717,364			3,096,318
Interest expense		(2,723,579	)		(2,408,076	)		(7,807,531	)		(7,407,207	)
Loss before taxes		(3,663,894	)		(1,939,538	)		(5,090,167	)		(4,310,889	)
Income tax expense (benefit)		(278,336	)		111,104			465,125			650,387
Net loss	$	(3,385,558	)	$	(2,050,642	)	$	(5,555,292	)	$	(4,961,276	)
Net loss per share applicable to common stockholders
Basic	$	(0.16	)	$	(0.10	)	$	(0.27	)	$	(0.25	)
Diluted	$	(0.16	)	$	(0.10	)	$	(0.27	)	$	(0.25	)
Weighted average number of common shares outstanding
Basic		20,665,681			20,059,528			20,542,294			19,984,890
Diluted		20,665,681			20,059,528			20,542,294			19,984,890

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

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 2023		20,161,400	$	20,161	$	176,309,463		$	(110,048,252	)	$	66,281,372
Stock-based compensation		—		—		356,870			—			356,870
Stock option exercises		68,421		69		327,667			—			327,736
Net loss		—		—		—			(655,326	)		(655,326	)
Balance, March 31, 2024		20,229,821		20,230		176,994,000			(110,703,578	)		66,310,652
Stock-based compensation		—		—		362,867			—			362,867
Stock option exercises		102,640		102		286,915			—			287,017
Shares issued for Employee Stock Purchase Plan options		24,763		25		149,420			—			149,445
Net loss		—		—		—			(1,514,408	)		(1,514,408	)
Balance, June 30, 2024		20,357,224		20,357		177,793,202			(112,217,986	)		65,595,573
Stock-based compensation		—		—		446,205			—			446,205
Stock option exercises		29,927		30		111,183			—			111,213
Release of restricted and deferred stock units		77,109		77		(77	)		—			—
Net loss		—		—		—			(3,385,558	)		(3,385,558	)
Balance, September 30, 2024		20,464,260	$	20,464	$	178,350,513		$	(115,603,544	)	$	62,767,433


					Additional					Total
	Common Stock				Paid-in		Accumulated			Stockholders’
	Shares		Par Value		Capital		Deficit			Equity
Balance, December 31, 2022		19,696,006	$	19,696	$	173,876,319	$	(102,756,967	)	$	71,139,048
Stock-based compensation		—		—		298,431		—			298,431
Stock option exercises		28,166		28		62,520		—			62,548
Net loss		—		—		—		(2,024,053	)		(2,024,053	)
Balance, March 31, 2023		19,724,172		19,724		174,237,270		(104,781,020	)		69,475,974
Stock-based compensation		—		—		362,319		—			362,319
Stock option exercises		35,000		35		52,815		—			52,850
Shares issued for Employee Stock Purchase Plan options		22,888		23		106,979		—			107,002
Net loss		—		—		—		(886,581	)		(886,581	)
Balance, June 30, 2023		19,782,060		19,782		174,759,383		(105,667,601	)		69,111,564
Stock-based compensation		—		—		288,563		—			288,563
Stock option exercises		177,617		178		335,277		—			335,455
Net loss		—		—		—		(2,050,642	)		(2,050,642	)
Balance, September 30, 2023		19,959,677	$	19,960	$	175,383,223	$	(107,718,243	)	$	67,684,940

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

QUEST RESOURCE HOLDING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	For the Nine Months Ended September 30,
	2024			2023
Cash flows from operating activities:
Net loss	$	(5,555,292	)	$	(4,961,276	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation		739,298			645,047
Amortization of intangibles		6,974,382			6,840,559
Amortization of debt issuance costs and discounts		813,279			875,385
Provision for doubtful accounts		962,618			1,210,179
Stock-based compensation		1,290,942			949,313
Changes in operating assets and liabilities:
Accounts receivable		(2,940,861	)		(5,251,088	)
Prepaid expenses and other current assets		(1,167,316	)		(435,523	)
Security deposits and other assets		(14,197	)		195,634
Accounts payable and accrued liabilities		(1,386,564	)		8,747,102
Other liabilities		(1,035,473	)		(2,147,507	)
Net cash provided by (used in) operating activities		(1,319,184	)		6,667,825
Cash flows from investing activities:
Purchase of property and equipment		(4,267,573	)		(204,915	)
Purchase of intangible assets		(928,712	)		(1,051,978	)
Net cash used in investing activities		(5,196,285	)		(1,256,893	)
Cash flows from financing activities:
Proceeds from credit facilities		81,513,502			63,672,337
Repayments of credit facilities		(76,254,298	)		(70,514,967	)
Proceeds from long-term debt		2,517,080			—
Repayments of long-term debt		(869,138	)		(7,819,633	)
Proceeds from stock option exercises		725,966			450,853
Proceeds from shares issued for Employee Stock Purchase Plan		149,445			107,002
Debt issuance costs		(457,824	)		—
Net cash provided (used in) by financing activities		7,324,733			(14,104,408	)
Net increase (decrease) in cash and cash equivalents		809,264			(8,693,476	)
Cash and cash equivalents at beginning of period		324,014			9,563,709
Cash and cash equivalents at end of period	$	1,133,278		$	870,233

Supplemental cash flow information:
Cash paid for interest	$	7,149,534		$	6,575,490
Cash paid for income taxes, net	$	791,766		$	328,098

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

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”), Quest Equipment, LLC (“QE”), formerly known as Landfill Diversion Innovations, LLC, Youchange, Inc. (“Youchange”), Quest Vertigent Corporation (“QVC”), Quest Vertigent One, LLC (“QV One”), and Quest Sustainability Services, Inc. (“QSS”) (collectively, “we”, “us”, or “our company”).

We are a national provider of waste and recycling services to customers from across multiple industry sectors that are typically larger, multi-location businesses. We create customer-specific programs and perform the related services for the collection, processing, recycling, disposal, and tracking of waste streams and recyclables. In addition, we offer products such as antifreeze and windshield washer fluid and other minor ancillary services. We also provide information and data that tracks and reports the detailed transactional and environmental results of our services and provides actionable data to improve business operations. The data we generate also enables our customers to address their environmental and sustainability goals and responsibilities.

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, 2023. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted as permitted by the SEC, although we believe the disclosures that are made are adequate to make the information presented herein not misleading.

The accompanying condensed consolidated financial statements reflect, in our opinion, all normal recurring adjustments necessary to present fairly our financial position at September 30, 2024 and the results of our operations and cash flows for the periods presented. We derived the December 31, 2023 condensed consolidated balance sheet data from audited financial statements. As QRHC, Quest, QE, Youchange, QVC, QV One, and QSS each operate as an environmental-based service company, we do 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 nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the full year.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires incremental disclosures related to reportable segments, including significant segment expense categories and amounts for each reportable segment. Entities with a single reportable segment are required to provide the new disclosures required under Accounting Standards Codification (“ASC”) 280. This authoritative guidance is required to be applied retrospectively and will be effective for our annual disclosures beginning in 2024 and interim periods starting 2025. This guidance is only related to disclosures and is not expected to have a significant impact on our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires entities to provide additional disclosure related to the transparency and decision usefulness of income tax disclosures, including additional disclosure around the rate reconciliation and income taxes paid. The authoritative guidance should be applied prospectively and will be effective for us starting in 2025. Retrospective application is permitted. This guidance is only related to disclosures and is not expected to have a significant impact 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. Accounts Receivable, Net of Allowance for Doubtful Accounts

Our receivables, which are recorded when billed or when services are performed, are claims against third parties that will generally be settled in cash. The carrying value of our receivables, net of the allowance for doubtful accounts, represents the estimated net realizable value. We estimate our allowance for doubtful accounts based on consideration of a number of factors, including the length of time trade accounts are past due, our previous loss history, the creditworthiness of individual customers, economic conditions

affecting specific customer industries, and economic conditions in general. We write off past-due receivable balances after all reasonable collection efforts have been exhausted. We credit payments subsequently received on such receivables to bad debt expense in the period we receive the payment.

The following table reflects the activity in our allowance for doubtful accounts of trade receivables for the three and nine months ended September 30, 2024 and 2023:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
	(Unaudited)						(Unaudited)
Beginning balance	$	1,888,307		$	2,095,947		$	1,581,595		$	2,176,010
Bad debt expense		388,805			639,820			962,618			1,210,179
Uncollectible accounts written off, net of recoveries		(286,945	)		(378,422	)		(554,046	)		(1,028,844	)
Ending balance	$	1,990,167		$	2,357,345		$	1,990,167		$	2,357,345

4. Property and Equipment, Net, and Other Assets

At September 30, 2024 and December 31, 2023, property and equipment, net, and other assets consisted of the following:


	September 30,		December 31,
	2024		2023
	(Unaudited)
Property and equipment, net of accumulated depreciation of $3,652,779 and $2,932,371 as of September 30, 2024 and December 31, 2023, respectively	$	5,673,966	$	2,129,176
Right-of-use operating lease assets		1,446,736		1,862,455
Security deposits and other assets		632,141		634,459
Property and equipment, net, and other assets	$	7,752,843	$	4,626,090

We compute depreciation using the straight-line method over the estimated useful lives of the property and equipment. Depreciation expense for the three months ended September 30, 2024 was $286,259, including $244,597 of depreciation expense reflected within “Cost of revenue” in our condensed consolidated statements of operations, as it related to assets used in directly servicing customer contracts and was $739,298 for the nine months ended September 30, 2024, including $619,343 of depreciation expense reflected within “Cost of revenue”. Depreciation expense for the three months ended September 30, 2023 was $150,594, including $96,086 of depreciation expense reflected within “Cost of revenue”, and was $645,047 for the nine months ended September 30, 2023, including $266,923 of depreciation expense reflected in “Cost of revenue”.

During the nine months ended September 30, 2024, we purchased 208 compactors and related equipment for approximately $3.1 million. This equipment, which we previously leased, is located at various customer locations. In connection with the purchase, we financed 80% of the aggregate purchase price with draws on our PNC equipment term loan. Refer to Note 7, Notes Payable for additional information.

Right-of-use operating lease assets related to our office leases are recognized in accordance with ASC 842. Refer to Note 8, Leases for additional information.

5. Goodwill and Other Intangible Assets

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


September 30, 2024 (Unaudited)	Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization		Net
Finite lived intangible assets:
Customer relationships	5 years	$	39,250,000	$	23,518,660	$	15,731,340
Software	7 years		5,159,004		2,143,753		3,015,251
Trademarks	7 years		2,026,163		874,218		1,151,945
Non-compete agreements	3 years		2,250,000		2,142,778		107,222
Total finite lived intangible assets		$	48,685,167	$	28,679,409	$	20,005,758


December 31, 2023	Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization		Net
Finite lived intangible assets:
Customer relationships	5 years	$	39,250,000	$	17,636,463	$	21,613,537
Software	7 years		4,230,291		1,819,287		2,411,004
Trademarks	7 years		2,026,163		657,331		1,368,832
Non-compete agreements	3 years		2,250,000		1,591,945		658,055
Total finite lived intangible assets		$	47,756,454	$	21,705,026	$	26,051,428

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 $2.3 million and $2.3 million for the three months ended September 30, 2024 and 2023, respectively. Amortization expense related to finite lived intangible assets was $7.0 million and $6.8 million for the nine months ended September 30, 2024 and 2023, respectively.

We have no indefinite-lived intangible assets other than goodwill. $70.8 million of the goodwill is not deductible for tax purposes, while $15.0 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 2024 with no impairment indicated.

6. Current Liabilities

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


	September 30,		December 31,
	2024		2023
	(Unaudited)
Accounts payable	$	35,655,844	$	38,600,461
Accrued taxes		988,713		484,854
Employee compensation		2,325,693		1,478,826
Operating lease liabilities - current portion		449,425		493,928
Miscellaneous		527,717		238,097
	$	39,947,392	$	41,296,166

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

The components of Other current liabilities were as follows:


	September 30,		December 31,
	2024		2023
	(Unaudited)
Deferred revenue	$	1,434,217	$	1,509,690
Deferred consideration - earn-out		—		960,000
	$	1,434,217	$	2,469,690

We made a $1.0 million earn-out payment in the first quarter of 2024 related to an acquisition.

7. Notes Payable

Our debt obligations were as follows:


	Interest	September 30,			December 31,
	Rate (1)	2024			2023
		(Unaudited)
Monroe Term Loan (2)	11.82%	$	53,034,156		$	53,500,656
PNC ABL Facility (3)	7.25%		18,504,692			13,245,489
PNC Equipment Term Loan (4)	8.11%		2,517,080			—
Green Remedies Promissory Note (5)	3.00%		698,482			1,101,120
Total notes payable			74,754,410			67,847,265
Less: Current portion of long-term debt			(1,158,800	)		(1,158,800	)
Less: Unamortized debt issuance costs			(1,282,236	)		(1,345,339	)
Less: Unamortized OID			(108,656	)		(185,793	)
Less: Unamortized OID warrant			(303,937	)		(519,153	)
Notes payable, net		$	71,900,781		$	64,638,180

(1) Interest rates as of September 30, 2024
(2) Bears interest based on SOFR plus Applicable Margin ranging from 5.5% to 7.5%
(3) Bears interest based on Term SOFR plus a margin of 2.25%
(4) Bears interest based on Term SOFR plus a margin of 3.0%
(5) Stated interest rate of 3.0%

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.


	September 30,
	2024

Debt issuance costs, net of accumulated amortization
Balance at December 31, 2023	$	1,345,339
Financing costs deferred		457,824
Less: Amortization expense		(520,927	)
Balance at September 30, 2024 (Unaudited)	$	1,282,236

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, December 7, 2021, August 9, 2022, December 2, 2022, and March 29, 2024 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, and which provides for a credit facility (the “ABL Facility”) comprising an asset-based revolving credit facility in the maximum principal amount of $35.0 million with a sublimit for issuance of letters of credit of up to 10% of the maximum principal amount of the revolving credit facility. The revolving credit facility bears interest, at the borrowers’ option, at either the Base Rate, plus a margin of 1.25% (no borrowings as of September 30, 2024), or the Term SOFR Rate for the interest period in effect plus a margin of 2.25% (7.25% as of September 30, 2024). The maturity date of the revolving credit facility is April 19, 2026. The PNC Loan Agreement also provides for an equipment term loan facility in the maximum principal amount of $5.0 million. The equipment term loan bears interest, at the borrower’s option, at either the Base Rate, plus a margin of 2.0%, or the Term SOFR Rate for the interest period in effect plus a margin of 3.0%. As further discussed in Note 4, we drew $2.5 million on the equipment term loan in April 2024 to fund 80% of the aggregate purchase price of certain compactors and related equipment.

As of September 30, 2024, the ABL Facility borrowing base availability was $28.9 million, of which $18.5 million principal was outstanding.

Monroe Term Loan

On October 19, 2020, QRHC and certain of its domestic subsidiaries entered into a Credit Agreement (the “Credit Agreement”), which was subsequently amended on September 3, 2021, December 1, 2021, December 7, 2021, December 2, 2022, and March 29, 2024 with Monroe Capital Management Advisors, LLC (“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 $53.0 million as of September 30, 2024. The senior secured term loan accrues interest at the SOFR Rate for SOFR Loans plus the Applicable Margin; provided, that if the provision of

SOFR 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, 2026 (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).

•

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.

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 (“OID”) 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.

Green Remedies Promissory Note

On October 19, 2020, we issued an unsecured subordinated promissory note to Green Remedies Waste and Recycling, Inc. 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 September 30, 2024 and 2023 was $2,057,359 and $1,915,631, respectively. The amount of interest expense related to borrowings for the nine months ended September 30, 2024 and 2023 was $6,107,628 and $5,944,798, respectively. Interest expense related to amortization of debt issuance fees and debt discount costs as well as interest related to vendor supply chain financing programs totaled $666,220 and $492,445, respectively, for the three months ended September 30, 2024 and 2023. Interest expense related to amortization of debt issuance fees and debt discount costs as well as interest related to vendor supply chain financing programs totaled $1,699,903 and $1,462,408, respectively, for the nine months ended September 30, 2024 and 2023.

8. Leases

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

Lease Costs

For the three months ended September 30, 2024 and 2023, we recorded approximately $174,000 and $186,000, respectively, of fixed cost operating lease expense. For the nine months ended September 30, 2024 and 2023 we recorded approximately $526,000 and $561,000, respectively, of fixed cost operating lease expense.

Cash paid for operating leases approximated operating lease expense and non-cash right of use asset amortization for the nine months ended September 30, 2024 and 2023. We did not obtain any new operating lease right-of-use assets in the nine months ended September 30, 2024.

Balance Sheet Classification

The table below presents the lease related assets and liabilities recorded on the balance sheet.


	September 30,		December 31,
	2024		2023
Operating leases:	(Unaudited)
Right-of-use operating lease assets:
Property and equipment, net and other assets	$	1,446,736	$	1,862,455

Lease liabilities:
Accounts payable and accrued liabilities	$	449,425	$	493,928
Other long-term liabilities		946,182		1,274,691
Total operating lease liabilities	$	1,395,607	$	1,768,619

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. Our service revenue is primarily generated from fees charged for the collection, transfer, disposal and recycling services and from sales of commodities by our recycling operations. In addition, we have product sales and other revenue primarily from sales of products such as antifreeze and windshield washer fluid, as well as minor ancillary services.

Revenue Recognition

We recognize revenue as services are performed or products are delivered. For example, we recognize revenue as waste and recyclable material are collected or when products are delivered. We recognize revenue net of any contracted pricing discounts or rebate arrangements.

We generally recognize revenue for the gross amount of consideration received when we hold complete responsibility to the customer for contract fulfillment, making us the primary obligor (or principal). Depending on the key terms of the arrangement, which may include situations in which we are not the primary obligor, 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. During the three months ended September 30, 2024 and 2023, we had certain management fee contracts accounted for under the net basis method with net revenue totaling $119,672 and $120,467, respectively. We had net revenue from management fee contracts accounted for under the net basis revenue method of $374,570 and $277,121 for the nine months ended September 30, 2024 and 2023, 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 29.1% of revenue for the three months ended September 30, 2024 and two customers accounted for 28.2% of revenue for the three months ended September 30, 2023. One customer accounted for 27.5% of revenue for the nine months ended September 30, 2024 and two customers accounted for 28.1% of revenue for the nine months ended September 30, 2023. We operate primarily in the United States, with minor services in Canada.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(Unaudited)				(Unaudited)
Revenue Type:
Services	$	69,976,761	$	67,672,666	$	209,901,590	$	210,622,181
Product sales and other		2,788,654		2,752,759		8,660,398		8,414,242
Total revenue	$	72,765,415	$	70,425,425	$	218,561,988	$	219,036,423

Deferred Revenue

We bill certain customers one month 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 September 30, 2024 and December 31, 2023, we had $1,434,217 and $1,509,690, respectively, of deferred revenue which was classified in “Other current liabilities”.

10. Income Taxes

Our statutory income tax rate is anticipated to be approximately 26%. We had income tax expense of $465,125 and $650,387 for the nine months ended September 30, 2024 and 2023, respectively, which was attributable to state tax obligations for states with no net operating loss carryforwards, federal income tax after anticipated utilization of all federal net operating loss carryforwards by year end, and other timing differences.

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 deferred tax assets was not reasonably assured as of September 30, 2024 and December 31, 2023, and we had recorded a valuation allowance of $19,131,000 and $17,413,000, respectively, against deferred tax assets in excess of deferred tax liabilities in the accompanying condensed consolidated financial statements. As of September 30, 2024 and December 31, 2023, we had federal income tax net operating loss carryforwards of approximately $1,800,000 and $5,900,000, 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 currency or credit risks arising from these financial instruments. Our variable rate indebtedness subjects us to interest rate risk as all of the borrowings under the senior secured credit facilities bear interest at variable rates. The fair values of our 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.

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 20,464,260 and 20,161,400 shares were issued and outstanding as of September 30, 2024 and December 31, 2023, respectively.

Employee Stock Purchase Plan – On September 17, 2014, our stockholders approved our 2014 Employee Stock Purchase Plan (as amended, the “2014 ESPP”). On May 14, 2024, we issued 24,763 shares to employees for $149,445 under our 2014 ESPP for options that vested and were exercised. We recorded expense of $61,700 and $79,993 related to the 2014 ESPP for the nine months ended September 30, 2024 and 2023, respectively. On July 8, 2024, our stockholders approved our 2024 Employee Stock Purchase Plan (the “2024 ESPP”). The 2024 ESPP will become effective on November 15, 2024.

Warrants – The following table summarizes the warrants issued and outstanding as of September 30, 2024:

        Warrants Issued and Outstanding as of  September 30, 2024

         
        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 (Unaudited)

850,000

Incentive Compensation Plan – In October 2012, we adopted our 2012 Incentive Compensation Plan, as amended (the “2012 Plan”), as the sole plan for providing equity-based incentive compensation to our employees, directors and service providers. The 2012 Plan allows for the grant of stock options, restricted stock, restricted stock units (“RSUs”), stock appreciation rights, performance awards, and other incentive awards to our employees, directors and service providers. The purpose of the 2012 Plan is to attract and retain these individuals and further align their interests with the interests of our stockholders by linking their compensation with our performance. The 2012 Plan is administered by the compensation committee of our board of directors.

On July 8, 2024, our stockholders approved the adoption of our 2024 Incentive Compensation Plan (the “2024 Plan”), which replaced the 2012 Plan for all future grants. Awards previously granted under the 2012 Plan are unaffected by the adoption of the 2024 Plan and remain outstanding under the terms pursuant to which they were granted. The 2024 Plan allows for the grant of stock options (both nonqualified stock options and incentive stock options), stock appreciation rights, restricted stock, RSUs, bonus stock, dividend equivalents, other stock-based awards, and performance awards that may be settled in cash, stock, or other property in our sole discretion. The purpose of our 2024 Plan is to assist us and our Designated Subsidiaries (as such term is defined in the 2024 Plan) in attracting, motivating, retaining, and rewarding high-quality executives and other employees, officers, directors, and individual consultants who provide services to us or our Designated Subsidiaries, by enabling such persons to acquire or increase a proprietary interest in our company in order to strengthen the mutuality of interests between such persons and our stockholders, and providing such persons with performance incentives to expend their maximum efforts in the creation of stockholder value. There are 1,500,000 shares available for grant under the 2024 Plan.

Stock Options – We recorded stock option expense of $393,720 and $664,629 for the nine months ended September 30, 2024 and 2023, respectively. The following table summarizes the stock option activity for the nine months ended September 30, 2024:


	Stock Options
					Weighted-
				Exercise	Average
	Number			Price Per	Exercise Price
	of Shares			Share	Per Share
Outstanding at December 31, 2023		2,869,013		$1.17 — $23.20	$	3.33
Granted		15,000		$6.98 — $7.63	$	7.41
Exercised		(200,988	)	$1.51 — $6.40	$	3.61
Cancelled/Forfeited		(33,828	)	$1.83 — $23.20	$	5.02
Outstanding at September 30, 2024 (Unaudited)		2,649,197		$1.17 — $11.60	$	3.31

Deferred Stock Units – 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 nine months ended September 30, 2024, we granted 20,601 DSUs to directors and recorded director compensation expense of $173,524 related to the grants. In addition, during the nine months ended September 30, 2024, we granted 11,990 DSUs to certain employees and recorded compensation expense of $133,310, which includes a $125,000 accrual of anticipated bonus expense to be paid in DSUs for certain employees. This bonus accrual is recorded in accrued liabilities until it is granted. We had 248,173 and 231,635 DSUs outstanding at September 30, 2024 and December 31, 2023, respectively.

During the nine months ended September 30, 2023, we granted 4,662 DSUs to directors and recorded director compensation expense of $30,128 related to the grants. In addition, during the nine months ended September 30, 2023, we granted 14,089 DSUs to executive employees and recorded compensation expense of $118,162, which includes an accrual of anticipated bonus expense to be paid in DSUs for certain executive employees.

Restricted Stock Units - RSUs are recognized at their fair value on the date of grant. Each RSU represents the right to receive one share of our common stock once fully vested. All outstanding unvested RSUs currently have vesting terms ranging from one to three years. During the nine months ended September 30, 2024, we granted 52,045 RSUs to directors and recorded director compensation expense of $334,566 related to the RSU grants. In addition, during the nine months ended September 30, 2024, we granted 165,000 RSUs and recorded employee compensation expense of $165,927 related to the RSU grants. During the nine months ended September 30, 2024, 62,056 RSUs were released or forfeited. We had 216,045 and 61,056 unvested RSUs outstanding at September 30, 2024 and December 31, 2023, respectively.

During the nine months ended September 30, 2023, we granted 61,056 RSUs to directors and recorded director compensation expense of $56,401 related to the grants.

Performance Stock Units - During the nine months ended September 30, 2024, we granted 130,000 performance stock units (“PSUs”) to certain employees under our 2024 Plan. Any earned PSUs will be fully vested and paid based on defined performance metrics achieved at the end of the three-year performance period. The number of shares of our common stock that each participant is eligible to receive following such period will be determined based on the initial target number of PSUs granted and the actual performance level achieved.

The PSUs are recognized at their fair value on the date of grant, based on the probable issuance at the end of the performance period. We will evaluate the probable share of common stock issuance and will adjust the expense as appropriate. We recorded compensation expense of $28,195 during the nine months ended September 30, 2024.

13. Net Loss per Share

We compute basic net loss per share using the weighted average number of shares of common stock outstanding plus the number of common stock equivalents for DSUs during the period. We compute diluted net income (loss) per share using the weighted average number of shares of common stock outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods where losses are reported, the weighted average number of shares of common stock outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. Dilutive potential common shares consist of the incremental common shares issuable upon the exercise of outstanding stock options and warrants. 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 loss per share attributable to common stockholders is as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
	(Unaudited)						(Unaudited)
Numerator:
Net loss applicable to common stockholders	$	(3,385,558	)	$	(2,050,642	)	$	(5,555,292	)	$	(4,961,276	)
Denominator:
Weighted average common shares outstanding, basic		20,665,681			20,059,528			20,542,294			19,984,890
Effect of dilutive common shares		—			—			—			—
Weighted average common shares outstanding, diluted		20,665,681			20,059,528			20,542,294			19,984,890
Net loss per share:
Basic	$	(0.16	)	$	(0.10	)	$	(0.27	)	$	(0.25	)
Diluted	$	(0.16	)	$	(0.10	)	$	(0.27	)	$	(0.25	)
Anti-dilutive securities excluded from diluted net loss per share:
Stock options		46,579			68,455			46,579			82,344

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 an ASU on our consolidated financial statements; 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 state of the U.S. economy, 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, 2023 (the “2023 Annual Report”).

Business Overview

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. We also provide information and data that tracks and reports the detailed transactional and environmental results of our services and provides actionable data to improve business operations. The data we generate also enables our customers to address their business, sustainability, environmental, social and governance goals and responsibilities.

Our revenue is primarily generated from fees charged for our collection, transfer, disposal and services for both solid waste and recyclable materials and from sales of recyclable materials. In addition, we have product sales and other revenue primarily from sales of products such as antifreeze and windshield washer fluid, as well as minor ancillary services.

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

Three and Nine Months Ended September 30, 2024 and 2023 Operating Results

The following table summarizes our operating results for the three and nine months ended September 30, 2024 and 2023:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
	(Unaudited)						(Unaudited)
Revenue	$	72,765,415		$	70,425,425		$	218,561,988		$	219,036,423
Cost of revenue		61,065,266			57,995,192			179,293,559			180,471,602
Gross profit		11,700,149			12,430,233			39,268,429			38,564,821
Operating expenses:
Selling, general, and administrative		10,272,870			9,620,114			29,456,728			28,249,820
Depreciation and amortization		2,367,594			2,341,581			7,094,337			7,218,683
Total operating expenses		12,640,464			11,961,695			36,551,065			35,468,503
Operating income (loss)		(940,315	)		468,538			2,717,364			3,096,318
Interest expense		(2,723,579	)		(2,408,076	)		(7,807,531	)		(7,407,207	)
Loss before taxes		(3,663,894	)		(1,939,538	)		(5,090,167	)		(4,310,889	)
Income tax expense (benefit)		(278,336	)		111,104			465,125			650,387
Net loss	$	(3,385,558	)	$	(2,050,642	)	$	(5,555,292	)	$	(4,961,276	)

Three and Nine Months Ended September 30, 2024, compared to Three and Nine Months Ended September 30, 2023

Global Economic Trends

There has been heightened uncertainty in the macroeconomic environment, and concerns that the U.S. economy may fall into a recession since the Federal Reserve began aggressively raising interest rates in March 2022 to address persistently high inflation. There are also significant geopolitical concerns, including the current conflict between Ukraine and Russia and the Israel-Hamas war, which have created extreme volatility in the global capital markets and are 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 continue to 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 increases in interest rates could have a material adverse effect on our business, results of operations and financial condition.

Revenue

For the quarter ended September 30, 2024, revenue was $72.8 million, an increase of $2.4 million, or 3.3%, compared to $70.4 million for the quarter ended September 30, 2023. For the nine months ended September 30, 2024, revenue was $218.6 million, a decrease of $0.4 million, or 0.2%, compared to $219.0 million for the nine months ended September 30, 2023.

The increase in revenue for the quarter ended September 30, 2024 was attributable to newly added customers in the quarter ended September 30, 2024 and strong overall demand in existing customer base which, in total, contributed approximately $16 million in additional revenue, an increase of 32% from the same period in 2023. This was partially offset by lower volumes due to lost customers and to soft conditions in certain customer end markets, resulting in a decrease of revenues of approximately $13 million.

For the nine months ended September 30, 2024, the decrease in revenue was attributable to lower volumes from lost customers, whose margins were lower overall than the rest of the business, resulting in a decrease of revenues of approximately $33 million, which includes lower than expected production volumes at one of our largest customers due to soft conditions in their end market. This was mostly offset by both newly added customers in the current quarter and strong overall demand for the remaining business which, in total, contributed approximately $33 million in additional revenue, an increase of 22% from the same period in 2023.

Cost of Revenue/Gross Profit

Cost of revenue increased $3.1 million to $61.1 million for the quarter ended September 30, 2024 from $58.0 million for the quarter ended September 30, 2023. We experienced higher cost of revenue as a percentage of revenue in the quarter ended September 30, 2024 due to onboarding and ramping up of new customers. Cost of revenue decreased $1.2 million to $179.3 million for the nine months ended September 30, 2024, compared to $180.5 million for the nine months ended September 30, 2023. The changes were primarily due to the same reasons impacting the decrease in revenue.

Gross profit for the quarter ended September 30, 2024 was $11.7 million, compared to $12.4 million for the quarter ended September 30, 2023. The gross profit margin was 16.1% for the quarter ended September 30, 2024, compared to 17.7% for the same quarter of 2023. Gross profit margin was negatively impacted in the quarter ended September 30, 2024 by approximately 2% due to a combination of temporarily lower revenues and higher cost of revenue for an isolated group of customers in a specific end market. Additionally, margins were impacted in the quarter by approximately 1% as new customers typically come on board at lower margins and can take multiple quarters to ramp. Gross profit for the nine months ended September 30, 2024 was $39.3 million, compared to $38.6 million for the nine months ended September 30, 2023. The gross profit margin was 18.0% for the nine months ended September 30, 2024, compared to 17.6% for the nine months ended September 30, 2023. The changes in gross profit and gross profit margin percentage for the quarter and year to date periods were primarily due to the net impacts of the changes in both revenue and cost of revenue combined with broad margin gains across most of our business.

Revenue, gross profit, and gross profit margins are affected period to period by the volumes of waste and recyclable materials generated by our customers, the frequency and type of services provided, the price and mix of the services provided, price changes for recyclable materials, the cost and mix of subcontracted services provided in any one reporting period, and the timing of acquisitions and integration. Volumes of waste and recyclable 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.

Operating Expenses

Operating expenses were $12.6 million and $12.0 million for the quarters ended September 30, 2024 and 2023, respectively. Operating expenses were $36.6 million and $35.5 million for the nine months ended September 30, 2024 and 2023, respectively.

Selling, general, and administrative expenses were $10.3 million and $9.6 million for the quarters ended September 30, 2024 and 2023, respectively. The increase primarily relates to increases in labor related expenses. Selling, general, and administrative expenses

were $29.5 million and $28.2 million for the nine months ended September 30, 2024 and 2023, respectively. The increase primarily relates to increases in labor related expenses and certain professional fees.

Operating expenses for the quarters ended September 30, 2024 and 2023 included depreciation and amortization of $2.4 million and $2.3 million, respectively. Operating expenses for the nine months ended September 30, 2024 and 2023 included depreciation and amortization of $7.1 million and $7.2 million, respectively.

Interest Expense

Interest expense was $2.7 million and $2.4 million for the quarters ended September 30, 2024 and 2023, respectively. Interest expense was $7.8 million and $7.4 million for the nine months ended September 30, 2024 and 2023, respectively. The increase is primarily due to increased borrowings under our revolving credit facility and our equipment term loan, partially offset by reduced borrowings from voluntary paydowns on the term loan in 2023. We are amortizing debt issuance costs of $3.8 million and OID of $1.8 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 an income tax benefit of $(0.3) million and a provision for income taxes of $0.1 million for the quarters ended September 30, 2024 and 2023, respectively. We recorded a provision for income tax of $0.5 million and $0.7 million for the nine months ended September 30, 2024 and 2023, respectively. The provision/(benefit) 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, federal income tax after anticipated utilization of all federal net operating loss carryforwards by year end, and other timing differences.

We recorded a full valuation allowance against all our deferred tax assets (“DTAs”) as of both September 30, 2024 and December 31, 2023. 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 to 24 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 Loss

Net loss for the quarter ended September 30, 2024 was $(3.4) million, compared to net loss of $(2.1) million for the quarter ended September 30, 2023. Net loss for the nine months ended September 30, 2024 was $(5.6) million, compared to net loss of $(5.0) million for the nine months ended September 30, 2023. The explanations above detail the majority of the changes related to the change in net results.

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

Loss per Share

Net loss per basic and diluted share attributable to common stockholders was $(0.16) and $(0.10) for the quarters ended September 30, 2024 and 2023, respectively. Net loss per basic and diluted share attributable to common stockholders was $(0.27) and $(0.25) for the nine months ended September 30, 2024 and 2023, respectively.

The basic and diluted weighted average number of shares of common stock outstanding were approximately 20.7 million and 20.1 million for the three months ended September 30, 2024 and 2023, respectively. The basic and diluted weighted average number of shares of common stock outstanding were approximately 20.5 million and 20.0 million for the nine months ended September 30, 2024 and 2023, respectively.

Adjusted EBITDA

For the three months ended September 30, 2024, Adjusted EBITDA (as defined below), a non-GAAP financial measure, decreased 31.7% to $2.5 million from $3.7 million for the three months ended September 30, 2023. For the nine months ended September 30, 2024, Adjusted EBITDA increased 0.5% to $12.8 million from $12.7 million for the same period in 2023.

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.

The following table reflects the reconciliation of net loss to Adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023:


	As Reported						As Reported
	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
	(Unaudited)						(Unaudited)
Net loss	$	(3,385,558	)	$	(2,050,642	)	$	(5,555,292	)	$	(4,961,276	)
Depreciation and amortization		2,612,190			2,437,667			7,713,680			7,485,606
Interest expense		2,723,579			2,408,076			7,807,531			7,407,207
Stock-based compensation expense		571,205			288,563			1,290,942			949,313
Acquisition, integration and related costs		29,799			374,035			91,156			1,026,325
Other adjustments		260,860			141,231			979,757			172,086
Income tax expense (benefit)		(278,336	)		111,104			465,125			650,387
Adjusted EBITDA	$	2,533,739		$	3,710,034		$	12,792,899		$	12,729,648

For the three and nine months ended September 30, 2024, other adjustments included certain professional fees as well as certain administrative fees related to borrowings. For the three and nine months ended September 30, 2023, other adjustments included severance and project costs, as well as certain administrative costs related to borrowings.

Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share

Adjusted net income (loss), a non-GAAP financial measure, was $(1.1) million for the three months ended September 30, 2024, compared with $0.5 million for the three months ended September 30, 2023. Adjusted net income was $1.2 million for the nine months ended September 30, 2024, compared with $2.7 million for the nine months ended September 30, 2023. We present adjusted net income (loss) and adjusted net income (loss) 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 (loss) and adjusted net income (loss) per diluted share as two of the principal measures to evaluate and monitor the ongoing financial performance of our operations. We provide adjusted net income (loss) to exclude the effects of items management believes impact the comparability of operating results between periods. Adjusted net income (loss) 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 (loss) and adjusted net income (loss) 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 (loss) and adjusted net income (loss) per diluted share for the three and nine months ended September 30, 2024 and 2023 are calculated as follows:


	As Reported						As Reported
	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
	(Unaudited)						(Unaudited)
Reported net loss (a)	$	(3,385,558	)	$	(2,050,642	)	$	(5,555,292	)	$	(4,961,276	)
Adjustments:
Amortization of intangibles (b)		2,208,861			2,224,210			6,649,917			6,667,814
Acquisition, integration and related costs (c)		29,799			374,035			91,156			1,026,325
Other adjustments (d)		—			1,721			—			(74,605	)
Adjusted net income (loss)	$	(1,146,898	)	$	549,324		$	1,185,781		$	2,658,258

Diluted earnings (loss)per share:
Reported net loss	$	(0.16	)	$	(0.10	)	$	(0.27	)	$	(0.25	)
Adjusted net income (loss)	$	(0.06	)	$	0.02		$	0.05		$	0.12

Weighted average number of common shares outstanding:
Diluted (e)		20,665,681			22,425,421			22,872,519			22,218,274

(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 adjustments to earn-out fair value
(e) Reflects adjustment for dilution when adjusted net income is positive

Liquidity and Capital Resources

As of September 30, 2024 and December 31, 2023, we had $1.1 million and $0.3 million in cash and cash equivalents, respectively. Working capital was $22.0 million and $15.7 million as of September 30, 2024 and December 31, 2023, 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 $1.1 million, our borrowing availability under our $35.0 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 and thereafter for the foreseeable future. Our known current- and long-term uses of cash include, among other possible demands, capital expenditures, lease payments and repayments to service debt and other long-term obligations. 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 nine months ended September 30, 2024 and 2023.

Cash Flows from Operating Activities

Net cash used in operating activities was $(1.3) million for the nine months ended September 30, 2024 compared with net cash provided by operating activities of $6.7 million for the nine months ended September 30, 2023.

Net cash used in operating activities for the nine months ended September 30, 2024 related primarily to the net effect of the following:

•

net loss of $(5.6) million;

•

non-cash items of $10.8 million, 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 $(6.5) million, primarily associated with relative changes in accounts receivable, accounts payable, and accrued liabilities, including an earn-out payment of $(1.0) million.

Net cash provided by operating activities for the nine months ended September 30, 2023 related primarily to the net effect of the following:

•

net loss of $(5.0) million;

•

non-cash items of $10.5 million, 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 $1.1 million, 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, recyclable materials contracts, and our business volume levels. Fluctuations in net accounts receivable are generally attributable to a variety of factors including, but not limited to, the timing of cash receipts from customers, and the inception, increase, modification, or termination of customer relationships. 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 nine months ended September 30, 2024 was $(5.2) million and primarily related to the purchase of compactors and related equipment. Cash used in investing activities for the nine months ended September 30, 2023 was $(1.3) million. Other investing activities are primarily from purchases of intangible assets such as software development costs and other property and equipment.

Cash Flows from Financing Activities

Net cash provided by financing activities for the nine months ended September 30, 2024 was $7.3 million, primarily from net borrowings of $5.3 million on our ABL Facility and $2.5 million borrowings from our PNC equipment term loan. Net cash used in financing activities for the nine months ended September 30, 2023 was $(14.1) million, primarily from net repayments of $(6.8) million on our ABL Facility and $(7.8) million repayment of long-term debt. See Note 7 to our condensed consolidated financial statements for a discussion of the ABL Facility and other notes payable.

Inflation

Although the overall economy has experienced some inflationary pressures, we do not believe that inflation had a material impact on us during the nine months ended September 30, 2024 and 2023. 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 and increases in interest rates.

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 business 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 II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2023 Annual Report. There have been no significant changes in our critical accounting policies during the nine months ended September 30, 2024.

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.

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 September 30, 2024.

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.

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

Not applicable.

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

Our board of directors approved the Company’s Third Amended and Restated Bylaws (the “Third Amended and Restated Bylaws”), effective November 7, 2024. The Third Amended and Restated Bylaws incorporate certain amendments to, among other things: (i) permit only our board of directors to call a special meeting of stockholders; (ii) revise the time period during which notices of director nominations or proposals of other business for an annual meeting of stockholders shall be delivered, such that any such notice must be received by the Company not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting; (iii) enhance the disclosure requirements for director nominations or proposals of other business such that additional information is now required to be included in the stockholder’s notice (these include, but are not limited to, (a) requiring certain representations, (b) requiring additional disclosures (as to certain material interests or relationships, voting arrangements, agreement, arrangement or understanding and derivative instruments), (c) expanding the disclosure requirements to include any beneficial owners, affiliates or others acting in concert and (d) updating the procedural requirements); and (iv) remove the limitation on expanding the number of directors to above eight (8) directors without the unanimous consent of our board of directors.

The foregoing description of the Third Amended and Restated Bylaws is qualified in its entirety by reference to the copy of the Third Amended and Restated Bylaws which is filed as Exhibit 3.1 to this Quarterly Report on Form 10-Q.

Item 6. Exhibits


Exhibit No.		Exhibit
3.1		Third Amended and Restated Bylaws of Quest Resource Holding Corporation
10.1		Form of Performance Stock Unit Award Agreement (incorporated by reference to the Company’s Form 8-K, filed with the Commission on August 16, 2024).
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 September 30, 2024, 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)

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: November 7, 2024	By:	/s/ S. Ray Hatch
	S. Ray Hatch
	President and Chief Executive Officer

Date: November 7, 2024	By:	/s/ Brett W. Johnston
	Brett W. Johnston
	Senior Vice President and Chief Financial Officer

Exhibit 3.1

THIRD AMENDED AND RESTATED BYLAWS

QUEST RESOURCE HOLDING CORPORATION

A Nevada Corporation

ARTICLE I: OFFICES

SECTION 1.1 Registered Office.

The registered office of Quest Resource Holding Corporation (the “Corporation”) shall be at 2215-B Renaissance Drive, Las Vegas, Nevada 89119, and the name of its registered agent at that address is Corporation Service Company.

SECTION 1.2 Principal Office.

The principal office for the transaction of the business of the Corporation shall be 3481 Plano Parkway, The Colony, Texas 75056, or otherwise as set forth in a resolution adopted by the Board of Directors of the Corporation (the “Board”).

SECTION 1.3 Other Offices.

The Corporation may also have an office or offices at such other place or places, either within or without the state of Nevada, as the Board may from time to time determine or as the business of the Corporation may require.

ARTICLE II: MEETINGS OF STOCKHOLDERS

SECTION 2.1 Place of Meetings.

All annual meetings of stockholders and all other meetings of stockholders shall be held either at the principal office of the Corporation or at any other place within or without the state of Nevada that may be designated by the Board pursuant to authority hereinafter granted to the Board.

SECTION 2.2 Annual Meetings.

Annual meetings of stockholders of the Corporation for the purpose of electing directors and for the transaction of such other business as may properly come before such meetings may be held at such time and place and on such date as designated by the Board.

SECTION 2.3 Special Meetings.

A special meeting of the stockholders for the transaction of any proper business may be called at any time exclusively by the Board, and may not be called by any other person or persons, to be held at such date and time as shall be designated in the notice or waiver of notice thereof. Only business within the purposes described in the Corporation’s notice of stockholders’ meetings may be conducted at the special meeting. This

provision may be altered, amended, repealed, or rescinded only by the unanimous consent of the Board or by the affirmative vote of a majority of the outstanding shares entitled to vote at any annual or special meeting of stockholders.

SECTION 2.4 Notice of Meetings.

Except as otherwise required by law, the Corporation’s Articles of Incorporation, or these Bylaws, notice of each meeting of stockholders, whether annual or special, shall be given not less than ten (10) days nor more than sixty (60) days before the date of the meeting to each stockholder of record entitled to vote at such meeting by delivering a typewritten or printed notice thereof to such stockholder personally, or by depositing such notice in the United States mail, in a postage prepaid envelope, directed to such stockholder at such stockholder’s post office address furnished by such stockholder to the Secretary of the Corporation for such purpose, or, if such stockholder shall not have furnished an address to the Secretary for such purpose, then at such stockholder’s post office address last known to the Secretary, or by transmitting a notice thereof to such stockholder at such address by telegraph, cable, email, wireless or facsimile. Except as otherwise expressly required by law, no publication of any notice of a meeting of stockholders shall be required.

Every notice of a meeting of stockholders shall state the place, date, and hour of the meeting and shall also state, (i) in the case of a special meeting, the purpose for which the meeting is called, or (ii) in the case of the annual meeting, those matters which the Board, at the time of giving the notice, intends to present for action by the stockholders. The notice of any meeting at which directors are to be elected shall include the name of any nominee or nominees which, at the time of the notice, management intends to present for election. If action is proposed to be taken at any meeting for approval of (i) contracts or transactions in which a director has a direct or indirect financial interest, (ii) an amendment to the Articles of Incorporation, (iii) a reorganization of the Corporation, (iv) dissolution of the Corporation, or (v) a distribution to preferred stockholders, the notice shall also state the general nature of such proposal.

Notice of any meeting of stockholders shall not be required to be given to any stockholder to whom notice may be omitted pursuant to applicable Nevada law or who shall have waived such notice, and such notice shall be deemed waived by any stockholder who shall attend such meeting in person or by proxy, except a stockholder who shall attend such meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Except as otherwise expressly required by law, notice of any adjourned meeting of stockholders need not be given if the time and place thereof are announced at the meeting at which the adjournment is taken.

SECTION 2.5 Quorum.

Except as otherwise required by law, the Articles of Incorporation, or these Bylaws the holders of record of a majority in voting interest of the shares of stock of the Corporation entitled to be voted thereat, present in person or by proxy, shall constitute a quorum for the transaction of business at any meeting of stockholders of the Corporation or any adjournment thereof. Subject to the requirement of a larger percentage vote, if any, contained in the Articles of Incorporation, these Bylaws, or by statute, the stockholders present at a duly called or held meeting at which a quorum is present may continue to do business until adjournment, notwithstanding any withdrawal of stockholders that may leave less than a quorum remaining, if any action taken (other than adjournment) is approved by the vote of at least a majority in voting interest of the shares required to constitute a quorum.

SECTION 2.6 Adjourned Meeting and Notice Thereof.

In the absence of a quorum at any meeting or any adjournment thereof, a majority in voting interest of the stockholders present in person or by proxy and entitled to vote thereat or, in the absence therefrom of all the stockholders, any officer entitled to preside at, or to act as secretary of, such meeting may adjourn such meeting from time to time.

When any meeting of stockholders, either annual or special, is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof, and the means of remote communications, if any, are announced at a meeting at which the adjournment is taken. If the adjournment is for more than sixty (60) days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting must be given to each stockholder of record as of the new record date. At any such adjourned meeting at which a quorum is present, any business may be transacted that might have been transacted at the meeting as originally called.

SECTION 2.7 Organization.

Meetings of stockholders shall be presided over by the Chairman, if any, or in his or her absence, by the Chief Executive Officer, if any, or in his or her absence, by the President, or in his or her absence, by a vice president, or in the absence of the foregoing persons, by a chairman designated by the Board, or in the absence of such designation, by a chairman chosen at the meeting. The Secretary of the Corporation shall act as secretary of the meeting, but in his or her absence, the chairman of the meeting may appoint any person to act as secretary of the meeting.

SECTION 2.8 Voting.

(A) Each stockholder shall, at each meeting of stockholders, be entitled to vote, in the manner prescribed by the Corporation’s Articles of Incorporation, in person or by proxy each share of the stock of the Corporation that has voting rights on the matter in question and that shall have been held by such stockholder and registered in such stockholder’s name on the books of the Corporation:

(i) on the date fixed pursuant to Section 6.4 of these Bylaws as the record date for the determination of stockholders entitled to notice of and to vote at such meeting; or

(ii) if no such record date shall have been so fixed, then (a) at the close of business on the business day next preceding the day upon which notice of the meeting shall be given or (b) if notice of the meeting shall be waived, at the close of business on the business day next preceding the day upon which the meeting shall be held.

(B) Shares of the Corporation’s own stock belonging to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors in such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor be counted for quorum purposes. Persons holding stock of the Corporation in a fiduciary capacity shall be entitled to vote such stock. Persons whose stock is pledged shall be entitled to vote, unless in the transfer by the pledgor on the books of the Corporation the pledgor shall have expressly empowered the pledgee to vote thereon, in which case only the pledgee, or the pledgee’s proxy, may represent such stock and vote thereon. Stock having voting power standing of record in the names of two or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety or otherwise, or with respect to which two or more persons have the same fiduciary relationship, shall be voted in accordance with the provisions of the Nevada Revised Statutes, as the same exists or may hereafter be amended (the “NRS”).

(C) At any meeting of stockholders at which a quorum is present, all matters, except as otherwise provided in the Articles of Incorporation, in these Bylaws, or by law, shall be decided by the vote of a majority in voting interest of the stockholders present in person or by proxy and entitled to vote thereat and thereon. Every stockholder of record of the Corporation shall be entitled at each meeting of stockholders to one vote for each share of stock standing in his name on the books of the Corporation. The vote at any meeting of stockholders on any question need not be by ballot, unless so directed by the chairman of the meeting. On a vote by ballot, each ballot shall be signed by the stockholder voting, or by such stockholder’s proxy, if there be such proxy, and it shall state the number of shares voted.

SECTION 2.9 Proxies.

Every person entitled to vote for directors or on any other matter shall have the right to do so either in person or by one or more agents authorized by a written proxy signed by the person and filed with the Secretary of the Corporation. A proxy shall be deemed signed if the stockholder’s name is placed on the proxy (whether by manual signature, typewriting, or otherwise) by the stockholder or the stockholder’s attorney in fact. A validly executed proxy which does not state that it is irrevocable shall continue in full force and effect unless revoked by the person executing it, prior to the vote pursuant thereto, by a writing delivered to the Corporation stating that the proxy is revoked or by a subsequent proxy executed by, or attendance at the meeting and voting in person by the person executing the proxy; provided, however, that no such proxy shall be valid after the expiration of six (6) months from the date of such proxy, unless, and only as long as, it is coupled with an interest, or unless the person executing it specifies therein the length of time for which it is to continue in force, which in no case shall exceed seven (7) years from the date of its execution. Subject to the above and the provisions of Section 78.355 of the General Corporation Law of the state of Nevada, any proxy duly executed is not revoked and continues in full force and effect until an instrument revoking it or a duly executed proxy bearing a later date is filed with the Secretary of the Corporation.

SECTION 2.10 Inspectors of Election.

Prior to each meeting of stockholders, the Chairman of such meeting shall appoint an inspector(s) of election to act with respect to any vote. Each inspector of election so appointed shall first subscribe an oath faithfully to execute the duties of an inspector of election at such meeting with strict impartiality and according to the best of such inspector of election’s ability. Such inspector(s) of election shall decide upon the qualification of the voters and shall certify and report the number of shares represented at the meeting and entitled to vote on any question, determine the number of votes entitled to be cast by each share, shall conduct the vote and, when the voting is completed, accept the votes and ascertain and report the number of shares voted respectively for and against each question, and determine, and retain for a reasonable period a record of the disposition of, any challenge made to any determination made by such inspector(s) of election. Reports of inspector(s) of election shall be in writing and subscribed and delivered by them to the Secretary of the Corporation. The inspector(s) of election need not be stockholders of the Corporation, and any officer of the Corporation may be an inspector(s) of election on any question other than a vote for or against a proposal in which such officer shall have a material interest. The inspector(s) of election may appoint or retain other persons or entities to assist the inspector(s) of election in the performance of the duties of the inspector(s) of election.

SECTION 2.11 Advance Notice of Stockholder Proposals and Stockholder Nominations.

Nominations of persons for election to the Board and the proposal of other business to be considered by the stockholders may be made at any meeting of stockholders only (a) pursuant to the Corporation’s notice of meeting (or any supplement thereto); (b) by or at the direction of the Board; or (c) by any stockholder of the

Corporation who was a stockholder of record at the time of giving of the notice provided for in these Bylaws, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 2.11.

To be timely, a stockholder’s notice must be received by the Secretary at the principal executive offices of the Corporation no earlier than the close of business on the one hundred twentieth (120th) day and no later than the close of business on the ninetieth (90th) day prior to the first anniversary of the preceding year’s annual meeting of stockholders; provided, however, that in the event that the date of the annual meeting is advanced by more than thirty (30) days or delayed by more than sixty (60) days from such anniversary date or if the Corporation has not previously held an annual meeting, such notice by the stockholder to be timely must be received by the Secretary at the principal executive offices of the Corporation no earlier than the close of business on the one hundred twentieth (120th) day prior to such annual meeting and no later than the close of business on the ninetieth (90th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall the public announcement of a postponement or adjournment or any other delay of an annual meeting to a later date or time commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.

A stockholder’s notice to the Secretary must set forth the following:

(A) as to each person whom the stockholder proposes to nominate for election or reelection as a director:

such person’s name, age, business address, residence address and principal occupation or employment;

the class and number of shares of the Corporation that are held of record or are beneficially owned by such person and any (i) Derivative Instruments (as defined below) held or beneficially owned by such person, including, without limitation, the full notional amount of any securities that, directly or indirectly, underlie any Derivative Instrument; and (ii) other agreement, arrangement or understanding that has been made the effect or intent of which is to create or mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of such person with respect to the Corporation’s securities;

all information relating to such person that is required to be disclosed in connection with solicitations of proxies for the election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “1934 Act”);

such person’s written consent (x) to being named in the proxy statement as a nominee of such stockholder, (y) to being named in the Corporation’s form of proxy pursuant to Rule 14a-19 under the 1934 Act and (z) to serving as a director of the Corporation if elected;

any direct or indirect compensatory, payment, indemnification or other agreement, arrangement or understanding that such person has, or has had within the past three years, with any person or entity other than the Corporation (including, without limitation, the amount of any payment or payments received or receivable thereunder), in each case in connection with candidacy or service as a director of the Corporation (such agreement, arrangement or understanding, a “Third-Party Arrangement”); and

a description of any other material relationships between such person and such person’s respective affiliates, or others acting in concert with them, on the one hand, and such stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made, and their respective affiliates, or others acting in concert with them, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 under Regulation S-K if such stockholder, beneficial owner or affiliate were the “registrant” for purposes of such rule and such person were a director or executive officer of such registrant;

(B)

as to the stockholder giving the notice, the beneficial owner, if any, on whose behalf the nomination is made, and each of their affiliates or others acting in concert with them, all the items listed in Sections 2.11(C)(5) shall be provided;

(C)

as to any other business that the stockholder proposes to bring before the annual

meeting:

a brief description of the business desired to be brought before the meeting;

the text of the proposal or business (including the text of any resolutions proposed for consideration and, if applicable, the text of any proposed amendment to these Bylaws);

the reasons for conducting such business at the meeting;

any material interest in such business of such stockholder giving the notice and the beneficial owner, if any, on whose behalf the proposal is made, and their respective affiliates, or others acting in concert with them; and

as to the stockholder giving the notice, the beneficial owner, if any, on whose behalf the nomination or proposal is made and each of their respective affiliates or others acting in concert with them:

the name and address of such stockholder, as they appear on the Corporation’s books, of such beneficial owner, and of their respective affiliates or others acting in concert with them;

for each class or series, the number of shares of stock of the Corporation that are, directly or indirectly, held of record or are beneficially owned by such stockholder, such beneficial owner or their respective affiliates or others acting in concert with them;

any agreement, arrangement or understanding between such stockholder, such beneficial owner or their respective affiliates or others acting in concert with them, and any other person or persons (including, in each case, their names) in connection with the proposal of such nomination or other business;

any (i) agreement, arrangement or understanding (including, without limitation and regardless of the form of settlement, any derivative, long or short positions, profit interests, forwards, futures, swaps, options, warrants, convertible securities, stock appreciation or similar rights, hedging transactions and borrowed or loaned shares) that has been entered into by or on behalf of such stockholder, such beneficial owner or their respective affiliates or others acting in concert with them with respect to the Corporation’s securities (any of the foregoing, a “Derivative Instrument”), including, without limitation, the full notional amount of any

securities that, directly or indirectly, underlie any Derivative Instrument; and (ii) other agreement, arrangement or understanding that has been made the effect or intent of which is to create or mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, such stockholder, such beneficial owner or their respective affiliates or others acting in concert with them with respect to the Corporation’s securities;

any proxy, contract, arrangement, agreement, understanding or relationship pursuant to which such stockholder, such beneficial owner or their respective affiliates or others acting in concert with them has a right to vote any shares of any security of the Corporation;

any rights to dividends on the Corporation’s securities owned beneficially by such stockholder, such beneficial owner or their respective affiliates or others acting in concert with them that are separated or separable from the underlying security;

any proportionate interest in the Corporation’s securities or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such stockholder, such beneficial owner or their respective affiliates or others acting in concert with them is a general partner or, directly or indirectly, beneficially owns an interest in a general partner of such general or limited partnership;

any performance-related fees (other than an asset-based fee) that such stockholder, such beneficial owner or their respective affiliates or others acting in concert with them is entitled to based on any increase or decrease in the value of the Corporation’s securities or Derivative Instruments, including, without limitation, any such interests held by members of the immediate family of such persons sharing the same household;

any direct or indirect interest of such stockholder, such beneficial owner or their respective affiliates or others acting in concert with them in any contract with the Corporation or any affiliate of the Corporation (in each case, including, without limitation, any employment agreement, collective bargaining agreement or consulting agreement);

any material pending or threatened legal proceeding in which such stockholder, such beneficial owner or their respective affiliates or others acting in concert with them is a party or material participant involving the Corporation or any of its officers, directors or affiliates;

any material relationship between such stockholder, such beneficial owner or their respective affiliates or others acting in concert with them, on the one hand, and the Corporation or any of its officers, directors or affiliates, on the other hand;

a representation and undertaking that the stockholder is a holder of record of stock of the Corporation as of the date of submission of the stockholder’s notice and intends to appear in person or by proxy at the annual meeting to bring such nomination or other business before the annual meeting and will be entitled to vote at the meeting;

a representation and undertaking as to whether such stockholder, such beneficial owner or their respective affiliates or others acting in concert with them intends, or is part of a group that intends, to (x) deliver a proxy statement or form of proxy to holders of at least the percentage of the voting power of the Corporation’s then-outstanding stock required to approve or adopt the proposal or to elect each such nominee (which representation and undertaking must include a statement as to whether such stockholder, such beneficial owner or their respective affiliates or others acting in concert with them intends to solicit the requisite percentage of the voting

power of the Corporation’s stock under Rule 14a-19 of the 1934 Act); or (y) otherwise solicit proxies from stockholders in support of such proposal or nomination;

a representation that the stockholder giving the notice and the beneficial owners, if any, has or have compiled with all applicable federal, state and other legal requirements in connection with such stockholders and/or each such beneficial owners’ acquisition of shares of capital stock or other securities of the Corporation and/or such stockholder’s and/or each such beneficial owner’s acts or omission as a stockholder of the Corporation, including, without limitation, in connection with such nomination or proposal.

any other information relating to such stockholder, such beneficial owner or their respective affiliates or others acting in concert with them, or director nominee or proposed business, that, in each case, would be required to be disclosed in a proxy statement or other filing required to be made in connection with the solicitation of proxies in support of such nominee (in a contested election of directors) or proposal pursuant to Section 14 of the 1934 Act; and

such other information relating to any proposed item of business as the Corporation may reasonably require to determine whether such proposed item of business is a proper matter for stockholder action.

In addition to the requirements of this Section 2.11, to be timely, a stockholder’s notice (and any additional information submitted to the Corporation in connection therewith) must further be updated and supplemented (1) if necessary, so that the information provided or required to be provided in such notice is true and correct as of the record date for determining the stockholders entitled to notice of, and to vote at, the annual meeting and as of the date that is 10 business days prior to the annual meeting or any adjournment, rescheduling, postponement or other delay thereof; and (2) to provide any additional information that the Corporation may reasonably request. Any such update and supplement or additional information must be received by the Secretary at the principal executive offices of the Corporation (A) in the case of a request for additional information, promptly following a request therefor, which response must be received by the Secretary not later than such reasonable time as is specified in any such request from the Corporation; or (B) in the case of any other update or supplement of any information, not later than five (5) business days after the record date for the annual meeting (in the case of any update and supplement required to be made as of the record date), and not later than eight (8) business days prior to the date for the annual meeting or any adjournment, rescheduling, postponement or other delay thereof (in the case of any update or supplement required to be made as of ten (10) business days prior to the annual meeting or any adjournment, rescheduling, postponement or other delay thereof).

No later than five (5) business days prior to the annual meeting or any adjournment, rescheduling, postponement or other delay thereof, a stockholder nominating individuals for election as a director will provide the Corporation with reasonable evidence that such stockholder has met the requirements of Rule 14a-19. The failure to timely provide such update, supplement, evidence or additional information shall result in the nomination or proposal no longer being eligible for consideration at the annual meeting. If the stockholder fails to comply with the requirements of Rule 14a-19 (including because the stockholder fails to provide the Corporation with all information or notices required by Rule 14a-19), then the director nominees proposed by such stockholder shall be ineligible for election at the annual meeting and any votes or proxies in respect of such nomination shall be disregarded, notwithstanding that such proxies may have been received by the Corporation and counted for the purposes of determining quorum. For the avoidance of doubt, the obligation to update and supplement, or provide additional information or evidence, as set forth in these Bylaws shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any

applicable deadlines pursuant to these bylaws or enable or be deemed to permit a stockholder who has previously submitted notice pursuant to these bylaws to amend or update any nomination or to submit any new nomination. No disclosure pursuant to these Bylaws will be required with respect to the ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who is the stockholder submitting a notice pursuant to this Section 2.11 solely because such broker, dealer, commercial bank, trust company or other nominee has been directed to prepare and submit the notice required by these Bylaws on behalf of a beneficial owner.

(D) Other Requirements and Procedures.

1. To be eligible to be a nominee of any stockholder for election as a director of the Corporation, the proposed nominee must provide to the Secretary, in accordance with the applicable time periods prescribed for delivery of notice under this Section:

a signed and completed written questionnaire (in the form provided by the Secretary at the written request of the nominating stockholder, which form will be provided by the Secretary within ten (10) days of receiving such request) containing information regarding such nominee’s background and qualifications and such other information as may reasonably be required by the Corporation to determine the eligibility of such nominee to serve as a director of the Corporation or to serve as an independent director of the Corporation;

a written representation and undertaking that, unless previously disclosed to the Corporation, such nominee is not, and will not become, a party to any voting agreement, arrangement, commitment, assurance or understanding with any person or entity as to how such nominee, if elected as a director, will vote on any issue;

a written representation and undertaking that, unless previously disclosed to the Corporation, such nominee is not, and will not become, a party to any Third-Party Arrangement;

a written representation and undertaking that, if elected as a director, such nominee would be in compliance, and will continue to comply, with the Corporation’s corporate governance, conflict of interest, confidentiality, stock ownership and trading guidelines, and other policies and guidelines applicable to directors and in effect during such person’s term in office as a director (and, if requested by any candidate for nomination, the Secretary will provide to such proposed nominee all such policies and guidelines then in effect); and

a written representation and undertaking that such nominee, if elected, intends to serve a full term on the Board of Directors.

2. At the request of the Board of Directors, any person nominated by the Board of Directors for election as a director must furnish to the Secretary any other information that may be reasonably required.

3. No person will be eligible to be nominated by a stockholder for election as a director of the Corporation, or to be seated as a director of the Corporation, unless nominated and elected in accordance with the procedures set forth in this Section 2.11. No business proposed by a stockholder will be conducted at any meeting of the stockholders except in accordance with the procedures set forth in this Section 2.11.

4. The Chairman of the meeting of stockholders will, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by these Bylaws or that other proposed business was not properly brought before the meeting. If the Chairman of the meeting should so determine, then the Chairman of the meeting will so declare to the meeting and the defective nomination will be disregarded or such business will not be transacted, as the case may be.

5. Notwithstanding anything to the contrary in this Section 2.11, unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear in person at the meeting to present a nomination or other proposed business, such nomination will be disregarded or such business will not be transacted, as the case may be, notwithstanding that proxies in respect of such nomination or business may have been received by the Corporation and counted for purposes of determining a quorum. For purposes of this Section 2.11, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting, and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting.

6. Without limiting this Section 2.11, a stockholder must also comply with all applicable requirements of the 1934 Act with respect to the matters set forth in this Section 2.11, it being understood that (1) any references in these Bylaws to the 1934 Act are not intended to, and will not, limit any requirements applicable to nominations or proposals as to any other business to be considered pursuant to this Section 2.11; and (2) compliance with Section 2.11 are the exclusive means for a stockholder to make nominations or submit other business (other than as provided in Section 2.11(D)(7)).

7. Notwithstanding anything to the contrary in this Section 2.11, the notice requirements set forth in these Bylaws with respect to the proposal of any business pursuant to this Section 2.11 will be deemed to be satisfied by a stockholder if (1) such stockholder has submitted a proposal to the Corporation in compliance with Rule 14a-8 under the 1934 Act; and (2) such stockholder’s proposal has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for the meeting of stockholders. Subject to Rule 14a-8 and other applicable rules and regulations under the 1934 Act, nothing in these Bylaws will be construed to permit any stockholder, or give any stockholder the right, to include or have disseminated or described in the Corporation’s proxy statement any nomination of a director or any other business proposal.

SECTION 2.12 Action Without Meeting.

Any action required to be taken at any annual or special meeting of stockholders of the Corporation, or any action which may be taken at any annual or special meeting of such stockholders, may, if such action has been earlier approved by the Board, be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.

ARTICLE III: BOARD OF DIRECTORS

SECTION 3.1 General Powers.

Subject to any requirements in the Articles of Incorporation, these Bylaws, or of the General Corporation Law of the state of Nevada as to action which must be authorized or approved by the stockholders,

any and all corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be under the direction of, the Board to the fullest extent permitted by law. Without limiting the generality of the foregoing, it is hereby expressly declared that the Board shall have the power and authority to:

(A) select and remove all the officers, agents, and employees of the Corporation, prescribe such powers and duties for them as may not be inconsistent with law, the Articles of Incorporation, or these Bylaws, fix their compensation, and require from them security for faithful service;

(B) conduct, manage, and control the affairs and business of the Corporation, and make such rules and regulations therefor not inconsistent with law, the Articles of Incorporation, or these Bylaws, as it may deem best;

(C) change the location of the registered office of the Corporation in Section 1.1 hereof; change the principal office for the transaction of the business of the Corporation from one location to another as provided in Section 1.2 hereof; fix and locate from time to time one or more offices of the Corporation within or without the state of Nevada as provided in Section 1.3 hereof; designate any place within or without the state of Nevada for the holding of any meeting or meetings of stockholders; and adopt, make, and use a corporate seal, and prescribe the forms of certificates of stock, and alter the form of such seal and of such certificates from time to time, and in its judgment as it may deem best, provided such seal and such certificate shall at all times comply with the provisions of law;

(D) authorize the issuance of shares of stock of the Corporation from time to time, upon such terms and for such considerations as may be lawful;

(E) borrow money and incur indebtedness for the purposes of the Corporation, and cause to be executed and delivered therefor, in the corporate name, promissory notes, bonds, debentures, deeds of trust, and securities therefor; and

(F) by resolution adopted by a majority of the whole Board, designate an executive and other committees of the Board, each consisting of one or more directors, to serve at the pleasure of the Board, and prescribe the manner in which proceedings of such committee or committees shall be conducted.

SECTION 3.2 Number and Term of Office.

The total number of directors shall be no less than one (1) director and no more than [8] directors. The number of authorized directors shall from time to time be set by resolution of the Board. Each of the directors of the Corporation shall hold office for the full term and until his successor shall have been duly elected and shall qualify, or until his earlier death or disqualification, or until he shall resign or shall have been removed in the manner hereinafter provided. A director need not be a resident of the state of Nevada or a stockholder of the Corporation.

SECTION 3.3 Organization.

Meetings of the Board shall be presided over by the Chairman, if any, or in his or her absence, by the vice chairman of the Board, if any, or in his or her absence, by the Chief Executive Officer, or in the absence of the foregoing persons, by a chairman chosen at the meeting. The Secretary shall act as the secretary of the meeting, but in his or her absence, the chairman of the meeting may appoint any person to act as secretary of the meeting.

SECTION 3.4 Election of Directors.

At each annual meeting of stockholders, directors of each class, the term of which shall then expire, shall be elected to serve for a three-year term, but if any such annual meeting is not held or the directors are not elected at any annual meeting, the directors may be elected at any special meeting of stockholders held for that purpose, or at the next annual meeting of stockholders held thereafter. Each director, including a director elected to fill a vacancy, shall hold office until the next election of the class for which such director shall have been chosen and until a successor has been elected and qualified or until his earlier resignation or removal or his office has been declared vacant in the manner provided in these Bylaws.

SECTION 3.5 Resignation and Removal of Directors.

Any director of the Corporation may resign at any time by giving written notice to the Board or to the Secretary of the Corporation. Any such resignation shall take effect at the time specified therein, or, if the time is not specified, it shall take effect immediately upon receipt, and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. To the extent allowed by law, any person who serves as a director and is also an employee of the Corporation shall resign if that person is no longer an employee by giving written notice to the Corporation. The Board may declare vacant the office of a director who has been declared of unsound mind by an order of a court or convicted of a felony. Any or all of the directors may be removed without cause only by the vote of stockholders representing not less than two-thirds of the voting power of the issued and outstanding stock entitled to vote.

SECTION 3.6 Vacancies.

Except as otherwise provided in the Articles of Incorporation, as amended, if a vacancy occurs on the Board from whatever cause, including a vacancy resulting from death, resignation, removal, increase in the number of Directors, or otherwise, the Board may fill the vacancy, except that stockholders may fill a vacancy by the affirmative vote of a majority of the outstanding shares entitled to vote, if the vacancy results from removal by stockholders. A Director elected to fill a vacancy shall serve until the next election of the class for which such director shall have been chosen and until a successor has been duly elected and qualified. No decrease in the number of directors constituting the Board shall shorten the term of any incumbent director. This provision may be altered, amended, repealed, or rescinded only by the unanimous consent of the Board or by the affirmative vote of a majority of the outstanding shares at any annual or special meeting of stockholders.

SECTION 3.7 Place of Meeting.

The Board or any committee thereof may hold any of its meetings at such place or places within or without the state of Nevada as the Board or such committee may from time to time by resolution designate or as shall be designated by the person or persons calling the meeting or in the notice or a waiver of notice of any such meeting. Directors may participate in any regular or special meeting of the Board or any committee thereof by means of conference telephone, electronic communications, videoconferencing, or other available technology or similar communications, so long as all directors participating in such meeting can hear one another, and such participation shall constitute presence in person at such meeting.

SECTION 3.8 Regular Meetings.

Regular meetings of the Board may be held at such times as the Board shall from time to time by resolution determine.

SECTION 3.9 Special Meetings.

Special meetings of the Board for any purpose or purposes shall be called at any time by the Chairman of the Board, the Chief Executive Officer, the President, or any two members of the Board. Except as otherwise provided by law or by these Bylaws, written notice of the time and place of special meetings shall be delivered personally or by electronic mail, or sent to each director by mail or by other form of written communication, charges prepaid, addressed to such director at such director’s address as it is shown upon the records of the Corporation, or, if it is not so shown on such records and is not readily ascertainable, at the place in which the meetings of the directors are regularly held. In case such notice is mailed, it shall be deposited in the United States mail at least four (4) days prior to the time of the holding of the meeting. In case such notice is delivered personally or by electronic mail as above provided, it shall be delivered at least 24 hours prior to the time of the holding of the meeting. Such mailing, delivery or electronic mail transmission as above provided shall be due, legal, and personal notice to such director. Except where otherwise required by law or by these Bylaws, notice of the purpose of a special meeting need not be given. Notice of any meeting of the Board shall not be required to be given to any director who is present at such meeting, except a director who shall attend such meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

SECTION 3.10 Quorum and Manner of Acting.

Except as otherwise provided in these Bylaws, the Articles of Incorporation, or by applicable law, the presence of a majority of the authorized number of directors shall be required to constitute a quorum for the transaction of business at any meeting of the Board, and all matters shall be decided at any such meeting, a quorum being present, by the affirmative votes of a majority of the directors present, subject to the provisions of Section 78.140 (approval of contracts or transactions in which a director has a direct or indirect material financial interest), Section 78.125 (appointment of committees), and Section 78.751 (indemnification of directors) of the General Corporation Law of the state of Nevada. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, provided any action taken is approved by at least a majority of the required quorum for such meeting. In the absence of a quorum, a majority of directors present at any meeting may adjourn the same from time to time until a quorum shall be present. Notice of any adjourned meeting need not be given.

SECTION 3.11 Action by Unanimous Written Consent.

Any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting if consent in writing is given thereto by all members of the Board or of such committee, as the case may be, and such consent is filed with the minutes of proceedings of the Board or of such committee.

SECTION 3.12 Compensation.

Directors, whether or not employees of the Corporation or any of its subsidiaries, may receive an annual fee for their services as directors in an amount fixed by resolution of the Board plus other compensation, including options to acquire capital stock of the Corporation, in an amount and of a type fixed by resolution of the Board, and, in addition, a fixed fee, with or without expenses of attendance, may be allowed by resolution of the Board for attendance at each meeting, including each meeting of a committee of the Board. Nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity as an officer, agent, employee, or otherwise, and receiving compensation therefor.

SECTION 3.13 Committees.

The Board may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. Any such committee, to the extent provided in the resolution of the Board and subject to any restrictions or limitations on the delegation of power and authority imposed by applicable law, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. Any such committee shall keep written minutes of its meetings and report the same to the Board at the next regular meeting of the Board. Unless the Board or these Bylaws shall otherwise prescribe the manner of proceedings of any such committee, meetings of such committee may be regularly scheduled in advance and may be called at any time by the chairman of the committee or by any two members thereof; otherwise, the provisions of these Bylaws with respect to notice and conduct of meetings of the Board shall govern.

SECTION 3.14 Affiliated Transactions.

Notwithstanding any other provision of these Bylaws, each transaction, or, if an individual transaction constitutes a part of a series of transactions, each series of transactions, proposed to be entered into between the Corporation, on the one hand, and any affiliate of the Corporation, on the other hand, must be approved by the Board. For the purposes of this Section 3.14, (a) “affiliate” is defined in Rule 405 promulgated under the Securities Act of 1933 as “a person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified.” (b) “person” shall mean and include individuals, corporations, general and limited partnerships, stock companies or associations, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts, or other entities and governments and agencies and political subdivisions thereof; and (c) “control” (including the correlative meanings of the terms “controlled by” and “under common control with”), as used with respect to any person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person, through the ownership of voting securities, partnership interests, or other equity interests.

ARTICLE IV: OFFICERS

SECTION 4.1 Officers.

The officers of the Corporation shall be a Chief Executive Officer, a President, a Secretary, a Chief Financial Officer, a Treasurer. The Corporation may also have one or more Vice Presidents (the number thereof and their respective titles to be determined by the Board), one or more assistant secretaries, one or more assistant treasurers, and such other officers as may be appointed at the discretion of the Board in accordance with the provisions of Section 4.3 hereof. Any two or more offices may be held by the same person.

SECTION 4.2 Election.

The officers of the Corporation, except such officers as may be appointed or elected in accordance with the provisions of Sections 4.3 or 4.5 hereof, shall be chosen annually by the Board at the first meeting thereof after the annual meeting of stockholders, and each officer shall hold office until such officer shall resign or shall be removed or otherwise disqualified to serve, or until such officer’s successor shall be elected and qualified.

SECTION 4.3 Other Officers.

In addition to the officers chosen annually by the Board at its first meeting, the Board also may appoint or elect such other officers as the business of the Corporation may require, each of whom shall have such authority and perform such duties as are provided in these Bylaws or as the Board may from time to time

specify, and shall hold office until such officer shall resign or shall be removed or otherwise disqualified to serve, or until such officer’s successor shall be elected and qualified.

SECTION 4.4 Removal and Resignation.

Except as provided by NRS Section 141(k), any officer may be removed, either with or without cause, by resolution of the Board, at any regular or special meeting of the Board, or, except in case of an officer chosen by the Board, by any officer upon whom such power of removal may be conferred by the Board. Any officer or assistant may resign at any time by giving written notice of his resignation to the Board or the Secretary of the Corporation. Any such resignation shall take effect at the time specified therein, or, if the time is not specified, upon receipt thereof by the Board or the Secretary, as the case may be; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

SECTION 4.5 Vacancies.

A vacancy in any office because of death, resignation, removal, disqualification, or any other cause may be filled by the vote of the majority of the directors present at any meeting in which a quorum is present, or pursuant to Section 3.11 of these Bylaws.

SECTION 4.6 Powers and Duties of Executive Officers.

The officers of the Corporation shall have such powers and duties in the management of the Corporation as ay be prescribed by the Board and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board.

ARTICLE V: CORPORATE INSTRUMENTS, CHECKS,

DRAFTS, BANK ACCOUNTS, ETC.

SECTION 5.1 Execution of Corporate Instruments.

The Board may, in its discretion, determine the method and designate the signatory officer or officers, or other person or persons, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation without limitation, except where otherwise provided by law or these Bylaws, and such execution or signature shall be binding upon the Corporation. Such authority may be general or confined to specific instances, and unless so authorized by the Board or by these Bylaws, no officer, agent, or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or in any amount.

SECTION 5.2 Checks, Drafts, Evidence of Indebtedness.

All checks, drafts, or other orders for payment of money, notes, or other evidence of indebtedness, issued in the name of or payable to the Corporation, shall be signed or endorsed by such person or persons and in such manner as, from time to time, shall be determined by resolution of the Board.

SECTION 5.3 Deposits.

All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies, or other depositories as the Board may select, or as may be selected by any officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation to whom such power shall have been delegated by the Board. For the purpose of deposit and for the

purpose of collection for the account of the Corporation, the Chairman of the Board, the Chief Executive Officer, the President, any Vice President (or any other officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation who shall from time to time be determined by the Board) may endorse, assign, and deliver checks, drafts, and other orders for the payment of money which are payable to the order of the Corporation.

SECTION 5.4 General and Special Bank Accounts.

The Board may from time to time authorize the opening and keeping of general and special bank accounts with such banks, trust companies, or other depositories as the Board may select or as may be selected by any officer or officers, assistant or assistants, agent or agents, or attorney or attorneys of the Corporation to whom such power shall have been delegated by the Board. The Board may make such special rules and regulations with respect to such bank accounts, not inconsistent with the provisions of these Bylaws, as it may deem expedient.

ARTICLE VI: SHARES AND THEIR TRANSFER

SECTION 6.1 Stock Certificates.

Shares of the capital stock of the Corporation may be certificated or uncertificated, as provided under the General Corporation Law of the state of Nevada. Each stockholder, upon written request to the transfer agent or registrar of the Corporation, shall be entitled to a certificate of the capital stock of the Corporation in such form as may from time to time be prescribed by the Board. Such certificate shall be numbered in the order in which they shall be issued and shall bear the Corporation seal and shall be signed by the Chairman of the Board or the President or a Vice President and by the Treasurer or an assistant treasurer or the Secretary or an assistant secretary. The Corporation seal and the signatures by Corporation officers may be facsimiles if the certificate is manually countersigned by an authorized person on behalf of a transfer agent or registrar other than the Corporation or its employee. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed on such certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such officer, transfer agent, or registrar were such officer, transfer agent, or registrar at the time of its issue. Every certificate for shares of stock which are subject to any restriction on transfer and every certificate issued when the Corporation is authorized to issue more than one class or series of stock shall contain such legend with respect thereto as is required by law. The Corporation shall keep at its principal office, or at the office of its transfer agent or registrar, if either be appointed as determined by resolution of the Board, a record of the respective names and addresses of the persons, firms, or corporations owning the stock represented by such certificates, the number and class or series of shares represented by such certificates, respectively, and the respective dates thereof, and in the case of cancellation, the respective dates of cancellation.

SECTION 6.2 Transfers.

Subject to any restrictions on transfer and unless otherwise provided by the Board, shares of stock may be transferred only on the books of the Corporation, if such shares are certificated, by the surrender to the Corporation or its transfer agent of the certificate therefore properly endorsed or accompanied by a written assignment or power of attorney properly executed, with transfer stamps (if necessary) affixed, or upon proper instructions from the holder of uncertificated shares, in each case with such proof of the authenticity of signature as the Corporation or its transfer agent may reasonably require.

SECTION 6. 3 Record Holders.

Except as may otherwise be required by law, by the Articles of Incorporation, or by these Bylaws, the Corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect thereto, regardless of any transfer, pledge, or other disposition of such stock, until the shares have been transferred on the books of the Corporation in accordance with the requirements of these Bylaws.

It shall be the duty of each stockholder to notify the Corporation of his, her, or its post office address and any changes thereto.

SECTION 6.4 Record Date.

For purposes of determining the stockholders entitled to receive notice of or to vote at any meeting of stockholders or any adjournments thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion, or exchange of stock or for the purpose of any other lawful action, the Board may fix, in advance, a record date, which shall be not more than sixty (60) nor less than ten (10) days prior to the date of such meeting, nor more than sixty (60) days prior to any other action, and in such case, only stockholders of record on such record date shall be so entitled, notwithstanding any transfer of stock on the books of the Corporation after the record date, except as otherwise required by law.

If no record date is fixed (i) the record date for determining stockholders entitled to receive notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; (ii) the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the Board has been taken, shall be the day on which the first written consent is expressed; and (iii) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto, or the sixtieth (60th) day prior to the date of such other action, whichever is later.

SECTION 6. 5 Replacement of Stock Certificates.

In case of the alleged loss, destruction, or mutilation of a certificate of stock, a duplicate certificate may be issued in place thereof, upon such terms as the Board may prescribe; provided, however, that if such shares have ceased to be certificated, a new certificate shall be issued only upon written request to the transfer agent or registrar of the Corporation.

SECTION 6.6 Regulations.

The Board may make such rules and regulations as it may deem expedient, not inconsistent with these Bylaws, concerning the issue, transfer and registration of certificates for shares of the stock of the Corporation. It may appoint, or authorize any officer or officers to appoint, one or more transfer clerks or one or more transfer agents and one or more registrars, and may require all certificates for stock to bear the signature or signatures of any of them.

ARTICLE VII: INDEMNIFICATION

SECTION 7.1 Actions Other than by the Corporation.

The Corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, except an action by or in the right of the Corporation, by reason of the fact that he is or was a director, officer, employee, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses, including attorneys’ fees, judgments, fines, and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit, or proceeding if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, has no reasonable cause to believe his conduct was unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, does not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and that, with respect to any criminal action or proceeding, he had reasonable cause to believe that his conduct was unlawful.

SECTION 7.2 Actions by the Corporation.

The Corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise against expenses, including amounts paid in settlement and attorneys’ fees, actually and reasonably incurred by him in connection with the defense or settlement of the action or suit if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation. Indemnification may not be made for any claim, issue, or matter as to which such a person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the Corporation or for amounts paid in settlement to the Corporation, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.

SECTION 7.3 Successful Defense.

To the extent that a director, officer, employee, or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit, or proceeding referred to in Sections 7.1 and 7.2, or in defense of any claim, issue, or matter therein, he must be indemnified by the Corporation against expenses, including attorneys’ fees, actually and reasonably incurred by him in connection with the defense.

SECTION 7.4 Required Approval.

Any indemnification under Sections 7.1 and 7.2, unless ordered by a court or advanced pursuant to Section 7.5, must be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee, or agent is proper in the circumstances. The determination must be made:

(a)

By the stockholders;

(b)

By the Board majority vote of a quorum consisting of directors who were not parties to the act, suit, or proceeding;

(c)

If a majority vote of a quorum consisting of directors who were not parties to the act, suit, or proceeding so orders, by independent legal counsel in a written opinion; or

(d)

If a quorum consisting of directors who were not parties to the act, suit, or proceeding cannot be obtained, by independent legal counsel in a written opinion.

SECTION 7.5 Advance of Expenses.

The Articles of Incorporation, the Bylaws, or an agreement made by the Corporation may provide that the expenses of officers and directors incurred in defending a civil or criminal action, suit, or proceeding must be paid by the Corporation as they are incurred and in advance of the final disposition of the action, suit, or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by the Corporation. The provisions of this section do not affect any rights to advancement of expenses to which corporate personnel other than directors or officers may be entitled under any contract or otherwise by law.

SECTION 7.6 Other Rights.

The indemnification and advancement of expenses authorized in or ordered by a court pursuant to this Article VII:

(a) Does not exclude any other rights to which a person seeking indemnification or advancement of expenses may be entitled under the Articles of Incorporation or any Bylaw, agreement, vote of stockholders or disinterested directors, or otherwise, for either an action in his official capacity or an action in another capacity while holding his office, except that indemnification, unless ordered by a court pursuant to Section 7.2 or for the advancement of expenses made pursuant to Section 7.5, may not be made to or on behalf of any director or officer if a final adjudication establishes that his acts or omissions involved intentional misconduct, fraud, or a knowing violation of the law and was material to the cause of action.

(b) Continues for a person who has ceased to be a director, officer, employee, or agent and inures to the benefit of the heirs, executors, and administrators of such a person.

SECTION 7.7 Claims.

If a claim for indemnification (following the final disposition of the relevant proceeding) or payment of expenses under this Article VII is not paid in full within thirty (30) days after a written claim therefor by the indemnitee has been received by the Corporation, the indemnitee may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expenses of prosecuting such claim. In any such action, the Corporation shall have the burden of proving that the indemnitee was not entitled to the requested indemnification or payment of expenses under applicable law.

SECTION 7.8 Other Indemnification.

The Corporation’s obligation, if any, to indemnify or advance expenses to any person who was or is serving at its request as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, enterprise, or nonprofit entity shall be reduced by any amount such person may collect as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, enterprise, or nonprofit enterprise.

SECTION 7.9 Insurance.

The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise for any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article VII.

SECTION 7.10 Reliance on Provisions.

Each person who shall act as an authorized representative of the Corporation shall be deemed to be doing so in reliance upon the rights of indemnification provided by this Article VII.

SECTION 7.11 Severability.

If any of the provisions of this Article VII are held to be invalid or unenforceable, this Article shall be construed as if it did not contain such invalid or unenforceable provision and the remaining provisions of this Article VII shall remain in full force and effect.

SECTION 7.12 Retroactive Effect.

To the extent permitted by applicable law, the rights and powers granted pursuant to this Article VII shall apply to acts and actions occurring or in progress prior to its adoption by the Board.

SECTION 7.13 Other Indemnification and Prepayment of Expenses.

This Article VII shall not limit the right of the Corporation, to the extent and in the manner permitted by law, to indemnify and to advance expenses to persons other than those discussed in this Article VII when and as authorized by appropriate corporate action.

ARTICLE VIII: MISCELLANEOUS

SECTION 8.1 Seal.

The Board shall adopt a corporate seal, which shall be in the form set forth in a resolution approved by the Board.

SECTION 8.2 Waiver of Notices.

Whenever notice is required to be given by these Bylaws or the Articles of Incorporation or by law, the person entitled to said notice may waive such notice in writing, either before or after the time stated therein, and such waiver shall be deemed equivalent to notice.

SECTION 8.3 Fiscal Year.

The fiscal year of the Corporation shall be fixed by resolution of the Board.

SECTION 8.4 Amendments.

Except as otherwise provided herein, by law, or in the Articles of Incorporation, these Bylaws or any of them may be altered, amended, repealed, or rescinded and new Bylaws may be adopted by the Board or by the

stockholders at any annual or special meeting of stockholders, provided that notice of such proposed alteration, amendment, repeal, recession, or adoption is given in the notice of such meeting of stockholders.

SECTION 8.4. Acquisition of Controlling Interests.

The provisions of the NRS’s Acquisition of Controlling Interest statute (NRS §§ 78.378 to 78.3793, inclusive) shall not apply to the Corporation.

CERTIFICATE OF SECRETARY OF ADOPTION OF THIRD AMENDED AND RESTATED BYLAWS

I, the undersigned, do hereby certify:

That I am the Secretary of Quest Resource Holding Corporation, a Nevada corporation, that the foregoing Bylaws constitute the Bylaws of said corporation as duly adopted by the Board of Directors of the corporation on November 7, 2024.

IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the seal of said corporation on this 7th day of November 2024.



By:		/s/ Brett W. Johnston
		Brett W. Johnston, Secretary

Exhibit 31.1

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

I, S. Ray Hatch, certify that:

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

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;

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;

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

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: November 7, 2024		/s/ S. Ray Hatch
		S. Ray Hatch
		President and Chief Executive Officer
		(Principal Executive Officer)

Exhibit 31.2

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

I, Brett W. Johnston, certify that:

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

(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: November 7, 2024		/s/ Brett W. Johnston
		Brett W. Johnston
		Senior Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

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 September 30, 2024, 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: November 7, 2024

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.

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 September 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brett W. Johnston, 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/ Brett W. Johnston

   

    Brett W. Johnston

   

    Senior Vice President and Chief Financial Officer

   

    (Principal Financial and Accounting Officer)

   

Date: November 7, 2024

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2024	Oct. 29, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2024
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
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	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		20,587,675
Entity File Number	001-36451
Entity Tax Identification Number	51-0665952
Entity Address, Address Line One	3481 Plano Parkway
Entity Address, Address Line Two	Suite 100
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

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 1,133,278	$ 324,014
Accounts receivable, less allowance for doubtful accounts of $1,990,167 and $1,581,595 as of September 30, 2024 and December 31, 2023, respectively	60,125,301	58,147,058
Prepaid expenses and other current assets	3,309,387	2,142,071
Total current assets	64,567,966	60,613,143
Goodwill	85,828,238	85,828,238
Intangible assets, net	20,005,758	26,051,428
Property and equipment, net, and other assets	7,752,843	4,626,090
Total assets	178,154,805	177,118,899
Current liabilities:
Accounts payable and accrued liabilities	39,947,392	41,296,166
Other current liabilities	1,434,217	2,469,690
Current portion of notes payable	1,158,800	1,158,800
Total current liabilities	42,540,409	44,924,656
Notes payable, net	71,900,781	64,638,180
Other long-term liabilities	946,182	1,274,691
Total liabilities	115,387,372	110,837,527
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued or outstanding as of September 30, 2024 and December 31, 2023
Common stock, $0.001 par value, 200,000,000 shares authorized, 20,464,260 and 20,161,400 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively	20,464	20,161
Additional paid-in capital	178,350,513	176,309,463
Accumulated deficit	(115,603,544)	(110,048,252)
Total stockholders’ equity	62,767,433	66,281,372
Total liabilities and stockholders’ equity	$ 178,154,805	$ 177,118,899

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (Unaudited) - USD ($)	Sep. 30, 2024	Jun. 30, 2024	Dec. 31, 2023	Sep. 30, 2023	Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Allowance for doubtful accounts receivable	$ 1,990,167	$ 1,888,307	$ 1,581,595	$ 2,357,345	$ 2,095,947	$ 2,176,010
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	20,464,260		20,161,400
Common stock, shares outstanding	20,464,260		20,161,400

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Income Statement [Abstract]
Revenue	$ 72,765,415	$ 70,425,425	$ 218,561,988	$ 219,036,423
Cost of revenue	61,065,266	57,995,192	179,293,559	180,471,602
Gross profit	11,700,149	12,430,233	39,268,429	38,564,821
Operating expenses:
Selling, general, and administrative	10,272,870	9,620,114	29,456,728	28,249,820
Depreciation and amortization	2,367,594	2,341,581	7,094,337	7,218,683
Total operating expenses	12,640,464	11,961,695	36,551,065	35,468,503
Operating income (loss)	(940,315)	468,538	2,717,364	3,096,318
Interest expense	(2,723,579)	(2,408,076)	(7,807,531)	(7,407,207)
Loss before taxes	(3,663,894)	(1,939,538)	(5,090,167)	(4,310,889)
Income tax expense (benefit)	(278,336)	111,104	465,125	650,387
Net loss	(3,385,558)	(2,050,642)	(5,555,292)	(4,961,276)
Net loss applicable to common stockholders	$ (3,385,558)	$ (2,050,642)	$ (5,555,292)	$ (4,961,276)
Net loss per share applicable to common stockholders
Basic	$ (0.16)	$ (0.1)	$ (0.27)	$ (0.25)
Diluted	$ (0.16)	$ (0.1)	$ (0.27)	$ (0.25)
Weighted average number of common shares outstanding
Basic	20,665,681	20,059,528	20,542,294	19,984,890
Diluted	20,665,681	20,059,528	20,542,294	19,984,890

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, 2022	$ 71,139,048	$ 19,696	$ 173,876,319	$ (102,756,967)
Beginning Balance, Shares at Dec. 31, 2022		19,696,006
Stock-based compensation	298,431		298,431
Stock option exercises, Shares		28,166
Stock option exercises	62,548	$ 28	62,520
Net loss	(2,024,053)			(2,024,053)
Ending Balance at Mar. 31, 2023	69,475,974	$ 19,724	174,237,270	(104,781,020)
Ending Balance, Shares at Mar. 31, 2023		19,724,172
Beginning Balance at Dec. 31, 2022	71,139,048	$ 19,696	173,876,319	(102,756,967)
Beginning Balance, Shares at Dec. 31, 2022		19,696,006
Net loss	(4,961,276)
Ending Balance at Sep. 30, 2023	67,684,940	$ 19,960	175,383,223	(107,718,243)
Ending Balance, Shares at Sep. 30, 2023		19,959,677
Beginning Balance at Mar. 31, 2023	69,475,974	$ 19,724	174,237,270	(104,781,020)
Beginning Balance, Shares at Mar. 31, 2023		19,724,172
Stock-based compensation	362,319		362,319
Stock option exercises, Shares		35,000
Stock option exercises	52,850	$ 35	52,815
Shares issued for Employee Stock Purchase Plan options, Shares		22,888
Shares issued for Employee Stock Purchase Plan options	107,002	$ 23	106,979
Net loss	(886,581)			(886,581)
Ending Balance at Jun. 30, 2023	69,111,564	$ 19,782	174,759,383	(105,667,601)
Ending Balance, Shares at Jun. 30, 2023		19,782,060
Stock-based compensation	288,563		288,563
Stock option exercises, Shares		177,617
Stock option exercises	335,455	$ 178	335,277
Net loss	(2,050,642)			(2,050,642)
Ending Balance at Sep. 30, 2023	67,684,940	$ 19,960	175,383,223	(107,718,243)
Ending Balance, Shares at Sep. 30, 2023		19,959,677
Beginning Balance at Dec. 31, 2023	66,281,372	$ 20,161	176,309,463	(110,048,252)
Beginning Balance, Shares at Dec. 31, 2023		20,161,400
Stock-based compensation	356,870		356,870
Stock option exercises, Shares		68,421
Stock option exercises	327,736	$ 69	327,667
Net loss	(655,326)			(655,326)
Ending Balance at Mar. 31, 2024	66,310,652	$ 20,230	176,994,000	(110,703,578)
Ending Balance, Shares at Mar. 31, 2024		20,229,821
Beginning Balance at Dec. 31, 2023	66,281,372	$ 20,161	176,309,463	(110,048,252)
Beginning Balance, Shares at Dec. 31, 2023		20,161,400
Net loss	(5,555,292)
Ending Balance at Sep. 30, 2024	62,767,433	$ 20,464	178,350,513	(115,603,544)
Ending Balance, Shares at Sep. 30, 2024		20,464,260
Beginning Balance at Mar. 31, 2024	66,310,652	$ 20,230	176,994,000	(110,703,578)
Beginning Balance, Shares at Mar. 31, 2024		20,229,821
Stock-based compensation	362,867		362,867
Stock option exercises, Shares		102,640
Stock option exercises	287,017	$ 102	286,915
Shares issued for Employee Stock Purchase Plan options, Shares		24,763
Shares issued for Employee Stock Purchase Plan options	149,445	$ 25	149,420
Net loss	(1,514,408)			(1,514,408)
Ending Balance at Jun. 30, 2024	65,595,573	$ 20,357	177,793,202	(112,217,986)
Ending Balance, Shares at Jun. 30, 2024		20,357,224
Stock-based compensation	446,205		446,205
Stock option exercises, Shares		29,927
Stock option exercises	111,213	$ 30	111,183
Release of restricted and deferred stock units, shares		77,109
Release of restricted and deferred stock units		$ 77	(77)
Net loss	(3,385,558)			(3,385,558)
Ending Balance at Sep. 30, 2024	$ 62,767,433	$ 20,464	$ 178,350,513	$ (115,603,544)
Ending Balance, Shares at Sep. 30, 2024		20,464,260

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Cash flows from operating activities:
Net loss	$ (5,555,292)	$ (4,961,276)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation	739,298	645,047
Amortization of intangibles	6,974,382	6,840,559
Amortization of debt issuance costs and discounts	813,279	875,385
Provision for doubtful accounts	962,618	1,210,179
Stock-based compensation	1,290,942	949,313
Changes in operating assets and liabilities:
Accounts receivable	(2,940,861)	(5,251,088)
Prepaid expenses and other current assets	(1,167,316)	(435,523)
Security deposits and other assets	(14,197)	195,634
Accounts payable and accrued liabilities	(1,386,564)	8,747,102
Other liabilities	(1,035,473)	(2,147,507)
Net cash provided by (used in) operating activities	(1,319,184)	6,667,825
Cash flows from investing activities:
Purchase of property and equipment	(4,267,573)	(204,915)
Purchase of intangible assets	(928,712)	(1,051,978)
Net cash used in investing activities	(5,196,285)	(1,256,893)
Cash flows from financing activities:
Proceeds from credit facilities	81,513,502	63,672,337
Repayments of credit facilities	(76,254,298)	(70,514,967)
Proceeds from long-term debt	2,517,080
Repayments of long-term debt	(869,138)	(7,819,633)
Proceeds from stock option exercises	725,966	450,853
Proceeds from shares issued for Employee Stock Purchase Plan	149,445	107,002
Debt issuance costs	(457,824)
Net cash provided (used in) by financing activities	7,324,733	(14,104,408)
Net increase (decrease) in cash and cash equivalents	809,264	(8,693,476)
Cash and cash equivalents at beginning of period	324,014	9,563,709
Cash and cash equivalents at end of period	1,133,278	870,233
Supplemental cash flow information:
Cash paid for interest	7,149,534	6,575,490
Cash paid for income taxes, net	$ 791,766	$ 328,098

Pay vs Performance Disclosure - USD ($)	3 Months Ended						9 Months Ended
Pay vs Performance Disclosure - USD ($)	Sep. 30, 2024	Jun. 30, 2024	Mar. 31, 2024	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2024	Sep. 30, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ (3,385,558)	$ (1,514,408)	$ (655,326)	$ (2,050,642)	$ (886,581)	$ (2,024,053)	$ (5,555,292)	$ (4,961,276)

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Sep. 30, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

The Company and Description of Business

9 Months Ended

Sep. 30, 2024

Accounting Policies [Abstract]

The Company and Description of Business

1. The Company and Description of Business

Summary of Significant Accounting Policies	9 Months Ended
Summary of Significant Accounting Policies	Sep. 30, 2024
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, 2023. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted as permitted by the SEC, although we believe the disclosures that are made are adequate to make the information presented herein not misleading. The accompanying condensed consolidated financial statements reflect, in our opinion, all normal recurring adjustments necessary to present fairly our financial position at September 30, 2024 and the results of our operations and cash flows for the periods presented. We derived the December 31, 2023 condensed consolidated balance sheet data from audited financial statements. As QRHC, Quest, QE, Youchange, QVC, QV One, and QSS each operate as an environmental-based service company, we do 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 nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the full year. Recent Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires incremental disclosures related to reportable segments, including significant segment expense categories and amounts for each reportable segment. Entities with a single reportable segment are required to provide the new disclosures required under Accounting Standards Codification (“ASC”) 280. This authoritative guidance is required to be applied retrospectively and will be effective for our annual disclosures beginning in 2024 and interim periods starting 2025. This guidance is only related to disclosures and is not expected to have a significant impact on our consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires entities to provide additional disclosure related to the transparency and decision usefulness of income tax disclosures, including additional disclosure around the rate reconciliation and income taxes paid. The authoritative guidance should be applied prospectively and will be effective for us starting in 2025. Retrospective application is permitted. This guidance is only related to disclosures and is not expected to have a significant impact 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.

Accounts Receivable, Net of Allowance for Doubtful Accounts

9 Months Ended

Sep. 30, 2024

Receivables [Abstract]

Accounts Receivable, Net of Allowance For Doubtful Accounts

3. Accounts Receivable, Net of Allowance for Doubtful Accounts

The following table reflects the activity in our allowance for doubtful accounts of trade receivables for the three and nine months ended September 30, 2024 and 2023:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
	(Unaudited)						(Unaudited)
Beginning balance	$	1,888,307		$	2,095,947		$	1,581,595		$	2,176,010
Bad debt expense		388,805			639,820			962,618			1,210,179
Uncollectible accounts written off, net of recoveries		(286,945	)		(378,422	)		(554,046	)		(1,028,844	)
Ending balance	$	1,990,167		$	2,357,345		$	1,990,167		$	2,357,345

Property and Equipment, Net, and Other Assets

9 Months Ended

Sep. 30, 2024

Property, Plant and Equipment [Abstract]

Property and Equipment, Net, and Other Assets

4. Property and Equipment, Net, and Other Assets

At September 30, 2024 and December 31, 2023, property and equipment, net, and other assets consisted of the following:


	September 30,		December 31,
	2024		2023
	(Unaudited)
Property and equipment, net of accumulated depreciation of $3,652,779 and $2,932,371 as of September 30, 2024 and December 31, 2023, respectively	$	5,673,966	$	2,129,176
Right-of-use operating lease assets		1,446,736		1,862,455
Security deposits and other assets		632,141		634,459
Property and equipment, net, and other assets	$	7,752,843	$	4,626,090

Right-of-use operating lease assets related to our office leases are recognized in accordance with ASC 842. Refer to Note 8, Leases for additional information.

Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2024

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:


September 30, 2024 (Unaudited)	Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization		Net
Finite lived intangible assets:
Customer relationships	5 years	$	39,250,000	$	23,518,660	$	15,731,340
Software	7 years		5,159,004		2,143,753		3,015,251
Trademarks	7 years		2,026,163		874,218		1,151,945
Non-compete agreements	3 years		2,250,000		2,142,778		107,222
Total finite lived intangible assets		$	48,685,167	$	28,679,409	$	20,005,758


December 31, 2023	Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization		Net
Finite lived intangible assets:
Customer relationships	5 years	$	39,250,000	$	17,636,463	$	21,613,537
Software	7 years		4,230,291		1,819,287		2,411,004
Trademarks	7 years		2,026,163		657,331		1,368,832
Non-compete agreements	3 years		2,250,000		1,591,945		658,055
Total finite lived intangible assets		$	47,756,454	$	21,705,026	$	26,051,428

We performed our annual impairment analysis for goodwill and other intangible assets in the third quarter of 2024 with no impairment indicated.

Current Liabilities

9 Months Ended

Sep. 30, 2024

Current Liabilities Disclosure [Abstract]

Current Liabilities

6. Current Liabilities

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


	September 30,		December 31,
	2024		2023
	(Unaudited)
Accounts payable	$	35,655,844	$	38,600,461
Accrued taxes		988,713		484,854
Employee compensation		2,325,693		1,478,826
Operating lease liabilities - current portion		449,425		493,928
Miscellaneous		527,717		238,097
	$	39,947,392	$	41,296,166

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

The components of Other current liabilities were as follows:


	September 30,		December 31,
	2024		2023
	(Unaudited)
Deferred revenue	$	1,434,217	$	1,509,690
Deferred consideration - earn-out		—		960,000
	$	1,434,217	$	2,469,690

We made a $1.0 million earn-out payment in the first quarter of 2024 related to an acquisition.

Notes Payable

9 Months Ended

Sep. 30, 2024

Debt Disclosure [Abstract]

Notes Payable

7. Notes Payable

Our debt obligations were as follows:


	Interest	September 30,			December 31,
	Rate (1)	2024			2023
		(Unaudited)
Monroe Term Loan (2)	11.82%	$	53,034,156		$	53,500,656
PNC ABL Facility (3)	7.25%		18,504,692			13,245,489
PNC Equipment Term Loan (4)	8.11%		2,517,080			—
Green Remedies Promissory Note (5)	3.00%		698,482			1,101,120
Total notes payable			74,754,410			67,847,265
Less: Current portion of long-term debt			(1,158,800	)		(1,158,800	)
Less: Unamortized debt issuance costs			(1,282,236	)		(1,345,339	)
Less: Unamortized OID			(108,656	)		(185,793	)
Less: Unamortized OID warrant			(303,937	)		(519,153	)
Notes payable, net		$	71,900,781		$	64,638,180

(1) Interest rates as of September 30, 2024
(2) Bears interest based on SOFR plus Applicable Margin ranging from 5.5% to 7.5%
(3) Bears interest based on Term SOFR plus a margin of 2.25%
(4) Bears interest based on Term SOFR plus a margin of 3.0%
(5) Stated interest rate of 3.0%


	September 30,
	2024

Debt issuance costs, net of accumulated amortization
Balance at December 31, 2023	$	1,345,339
Financing costs deferred		457,824
Less: Amortization expense		(520,927	)
Balance at September 30, 2024 (Unaudited)	$	1,282,236

Revolving Credit Facility

As of September 30, 2024, the ABL Facility borrowing base availability was $28.9 million, of which $18.5 million principal was outstanding.

Monroe Term Loan

•

Green Remedies Promissory Note

Interest Expense

Leases

9 Months Ended

Sep. 30, 2024

Lessee Disclosure [Abstract]

Leases

8. Leases

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

Lease Costs

Balance Sheet Classification

The table below presents the lease related assets and liabilities recorded on the balance sheet.


	September 30,		December 31,
	2024		2023
Operating leases:	(Unaudited)
Right-of-use operating lease assets:
Property and equipment, net and other assets	$	1,446,736	$	1,862,455

Lease liabilities:
Accounts payable and accrued liabilities	$	449,425	$	493,928
Other long-term liabilities		946,182		1,274,691
Total operating lease liabilities	$	1,395,607	$	1,768,619

Revenue

9 Months Ended

Sep. 30, 2024

Revenue from Contract with Customer [Abstract]

Revenue

9. Revenue

Operating Revenues

Revenue Recognition

Disaggregation of Revenue


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(Unaudited)				(Unaudited)
Revenue Type:
Services	$	69,976,761	$	67,672,666	$	209,901,590	$	210,622,181
Product sales and other		2,788,654		2,752,759		8,660,398		8,414,242
Total revenue	$	72,765,415	$	70,425,425	$	218,561,988	$	219,036,423

Deferred Revenue

Income Taxes

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

Income Taxes

10. Income Taxes

Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2024

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

11. Fair Value of Financial Instruments

Stockholders' Equity

9 Months Ended

Sep. 30, 2024

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.

Warrants – The following table summarizes the warrants issued and outstanding as of September 30, 2024:

        Warrants Issued and Outstanding as of  September 30, 2024

         
        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 (Unaudited)

850,000


	Stock Options
					Weighted-
				Exercise	Average
	Number			Price Per	Exercise Price
	of Shares			Share	Per Share
Outstanding at December 31, 2023		2,869,013		$1.17 — $23.20	$	3.33
Granted		15,000		$6.98 — $7.63	$	7.41
Exercised		(200,988	)	$1.51 — $6.40	$	3.61
Cancelled/Forfeited		(33,828	)	$1.83 — $23.20	$	5.02
Outstanding at September 30, 2024 (Unaudited)		2,649,197		$1.17 — $11.60	$	3.31

During the nine months ended September 30, 2023, we granted 61,056 RSUs to directors and recorded director compensation expense of $56,401 related to the grants.

Net Loss per Share

9 Months Ended

Sep. 30, 2024

Earnings Per Share [Abstract]

Net Loss per Share

13. Net Loss per Share

The computation of basic and diluted net loss per share attributable to common stockholders is as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
	(Unaudited)						(Unaudited)
Numerator:
Net loss applicable to common stockholders	$	(3,385,558	)	$	(2,050,642	)	$	(5,555,292	)	$	(4,961,276	)
Denominator:
Weighted average common shares outstanding, basic		20,665,681			20,059,528			20,542,294			19,984,890
Effect of dilutive common shares		—			—			—			—
Weighted average common shares outstanding, diluted		20,665,681			20,059,528			20,542,294			19,984,890
Net loss per share:
Basic	$	(0.16	)	$	(0.10	)	$	(0.27	)	$	(0.25	)
Diluted	$	(0.16	)	$	(0.10	)	$	(0.27	)	$	(0.25	)
Anti-dilutive securities excluded from diluted net loss per share:
Stock options		46,579			68,455			46,579			82,344

Summary of Significant Accounting Policies (Policies)	9 Months Ended
Summary of Significant Accounting Policies (Policies)	Sep. 30, 2024
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, 2023. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted as permitted by the SEC, although we believe the disclosures that are made are adequate to make the information presented herein not misleading. The accompanying condensed consolidated financial statements reflect, in our opinion, all normal recurring adjustments necessary to present fairly our financial position at September 30, 2024 and the results of our operations and cash flows for the periods presented. We derived the December 31, 2023 condensed consolidated balance sheet data from audited financial statements. As QRHC, Quest, QE, Youchange, QVC, QV One, and QSS each operate as an environmental-based service company, we do 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 nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the full year.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires incremental disclosures related to reportable segments, including significant segment expense categories and amounts for each reportable segment. Entities with a single reportable segment are required to provide the new disclosures required under Accounting Standards Codification (“ASC”) 280. This authoritative guidance is required to be applied retrospectively and will be effective for our annual disclosures beginning in 2024 and interim periods starting 2025. This guidance is only related to disclosures and is not expected to have a significant impact on our consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires entities to provide additional disclosure related to the transparency and decision usefulness of income tax disclosures, including additional disclosure around the rate reconciliation and income taxes paid. The authoritative guidance should be applied prospectively and will be effective for us starting in 2025. Retrospective application is permitted. This guidance is only related to disclosures and is not expected to have a significant impact 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.

Accounts Receivable, Net of Allowance for Doubtful Accounts (Tables)

9 Months Ended

Sep. 30, 2024

Receivables [Abstract]

Activity in Allowance for Doubtful Accounts of Trade Receivables

The following table reflects the activity in our allowance for doubtful accounts of trade receivables for the three and nine months ended September 30, 2024 and 2023:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
	(Unaudited)						(Unaudited)
Beginning balance	$	1,888,307		$	2,095,947		$	1,581,595		$	2,176,010
Bad debt expense		388,805			639,820			962,618			1,210,179
Uncollectible accounts written off, net of recoveries		(286,945	)		(378,422	)		(554,046	)		(1,028,844	)
Ending balance	$	1,990,167		$	2,357,345		$	1,990,167		$	2,357,345

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

9 Months Ended

Sep. 30, 2024

Property, Plant and Equipment [Abstract]

Components Property and Equipment, Net, and Other Assets

At September 30, 2024 and December 31, 2023, property and equipment, net, and other assets consisted of the following:


	September 30,		December 31,
	2024		2023
	(Unaudited)
Property and equipment, net of accumulated depreciation of $3,652,779 and $2,932,371 as of September 30, 2024 and December 31, 2023, respectively	$	5,673,966	$	2,129,176
Right-of-use operating lease assets		1,446,736		1,862,455
Security deposits and other assets		632,141		634,459
Property and equipment, net, and other assets	$	7,752,843	$	4,626,090

Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets

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


September 30, 2024 (Unaudited)	Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization		Net
Finite lived intangible assets:
Customer relationships	5 years	$	39,250,000	$	23,518,660	$	15,731,340
Software	7 years		5,159,004		2,143,753		3,015,251
Trademarks	7 years		2,026,163		874,218		1,151,945
Non-compete agreements	3 years		2,250,000		2,142,778		107,222
Total finite lived intangible assets		$	48,685,167	$	28,679,409	$	20,005,758


December 31, 2023	Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization		Net
Finite lived intangible assets:
Customer relationships	5 years	$	39,250,000	$	17,636,463	$	21,613,537
Software	7 years		4,230,291		1,819,287		2,411,004
Trademarks	7 years		2,026,163		657,331		1,368,832
Non-compete agreements	3 years		2,250,000		1,591,945		658,055
Total finite lived intangible assets		$	47,756,454	$	21,705,026	$	26,051,428

Schedule of Indefinite-Lived Intangible Assets

Current Liabilities (Tables)

9 Months Ended

Sep. 30, 2024

Current Liabilities Disclosure [Abstract]

Components of Accounts Payable and Accrued Liabilities

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


	September 30,		December 31,
	2024		2023
	(Unaudited)
Accounts payable	$	35,655,844	$	38,600,461
Accrued taxes		988,713		484,854
Employee compensation		2,325,693		1,478,826
Operating lease liabilities - current portion		449,425		493,928
Miscellaneous		527,717		238,097
	$	39,947,392	$	41,296,166

Components of Other Current Liabilities

The components of Other current liabilities were as follows:


	September 30,		December 31,
	2024		2023
	(Unaudited)
Deferred revenue	$	1,434,217	$	1,509,690
Deferred consideration - earn-out		—		960,000
	$	1,434,217	$	2,469,690

We made a $1.0 million earn-out payment in the first quarter of 2024 related to an acquisition.

Notes Payable (Tables)

9 Months Ended

Sep. 30, 2024

Debt Disclosure [Abstract]

Schedule of Debt Obligations

Our debt obligations were as follows:


	Interest	September 30,			December 31,
	Rate (1)	2024			2023
		(Unaudited)
Monroe Term Loan (2)	11.82%	$	53,034,156		$	53,500,656
PNC ABL Facility (3)	7.25%		18,504,692			13,245,489
PNC Equipment Term Loan (4)	8.11%		2,517,080			—
Green Remedies Promissory Note (5)	3.00%		698,482			1,101,120
Total notes payable			74,754,410			67,847,265
Less: Current portion of long-term debt			(1,158,800	)		(1,158,800	)
Less: Unamortized debt issuance costs			(1,282,236	)		(1,345,339	)
Less: Unamortized OID			(108,656	)		(185,793	)
Less: Unamortized OID warrant			(303,937	)		(519,153	)
Notes payable, net		$	71,900,781		$	64,638,180

(1) Interest rates as of September 30, 2024
(2) Bears interest based on SOFR plus Applicable Margin ranging from 5.5% to 7.5%
(3) Bears interest based on Term SOFR plus a margin of 2.25%
(4) Bears interest based on Term SOFR plus a margin of 3.0%
(5) Stated interest rate of 3.0%

Schedule of Changes in Debt Issuance Costs

The table below summarizes changes in debt issuance costs.


	September 30,
	2024

Debt issuance costs, net of accumulated amortization
Balance at December 31, 2023	$	1,345,339
Financing costs deferred		457,824
Less: Amortization expense		(520,927	)
Balance at September 30, 2024 (Unaudited)	$	1,282,236

Leases (Tables)

9 Months Ended

Sep. 30, 2024

Lessee Disclosure [Abstract]

Summary of Lease Related Assets and Liabilities Recorded on Balance Sheet

The table below presents the lease related assets and liabilities recorded on the balance sheet.


	September 30,		December 31,
	2024		2023
Operating leases:	(Unaudited)
Right-of-use operating lease assets:
Property and equipment, net and other assets	$	1,446,736	$	1,862,455

Lease liabilities:
Accounts payable and accrued liabilities	$	449,425	$	493,928
Other long-term liabilities		946,182		1,274,691
Total operating lease liabilities	$	1,395,607	$	1,768,619

Revenue (Tables)

9 Months Ended

Sep. 30, 2024

Revenue from Contract with Customer [Abstract]

Summary of Revenue Disaggregated by Source

The following table presents our revenue disaggregated by source.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(Unaudited)				(Unaudited)
Revenue Type:
Services	$	69,976,761	$	67,672,666	$	209,901,590	$	210,622,181
Product sales and other		2,788,654		2,752,759		8,660,398		8,414,242
Total revenue	$	72,765,415	$	70,425,425	$	218,561,988	$	219,036,423

Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2024

Summary of Warrant Activity

The following table summarizes the warrants issued and outstanding as of September 30, 2024:

        Warrants Issued and Outstanding as of  September 30, 2024

         
        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 (Unaudited)

850,000

Summary of Stock Option Activity

The following table summarizes the stock option activity for the nine months ended September 30, 2024:


	Stock Options
					Weighted-
				Exercise	Average
	Number			Price Per	Exercise Price
	of Shares			Share	Per Share
Outstanding at December 31, 2023		2,869,013		$1.17 — $23.20	$	3.33
Granted		15,000		$6.98 — $7.63	$	7.41
Exercised		(200,988	)	$1.51 — $6.40	$	3.61
Cancelled/Forfeited		(33,828	)	$1.83 — $23.20	$	5.02
Outstanding at September 30, 2024 (Unaudited)		2,649,197		$1.17 — $11.60	$	3.31

Net Loss per Share (Tables)

9 Months Ended

Sep. 30, 2024

Earnings Per Share [Abstract]

Computation of Basic and Diluted Net Loss per Share Attributable to Common Stockholders

The computation of basic and diluted net loss per share attributable to common stockholders is as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
	(Unaudited)						(Unaudited)
Numerator:
Net loss applicable to common stockholders	$	(3,385,558	)	$	(2,050,642	)	$	(5,555,292	)	$	(4,961,276	)
Denominator:
Weighted average common shares outstanding, basic		20,665,681			20,059,528			20,542,294			19,984,890
Effect of dilutive common shares		—			—			—			—
Weighted average common shares outstanding, diluted		20,665,681			20,059,528			20,542,294			19,984,890
Net loss per share:
Basic	$	(0.16	)	$	(0.10	)	$	(0.27	)	$	(0.25	)
Diluted	$	(0.16	)	$	(0.10	)	$	(0.27	)	$	(0.25	)
Anti-dilutive securities excluded from diluted net loss per share:
Stock options		46,579			68,455			46,579			82,344

Accounts Receivable, Net of Allowance for Doubtful Accounts - Activity in Allowance for Doubtful Accounts of Trade Receivables (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Receivables [Abstract]
Beginning balance	$ 1,888,307	$ 2,095,947	$ 1,581,595	$ 2,176,010
Bad debt expense	388,805	639,820	962,618	1,210,179
Uncollectible accounts written off, net of recoveries	(286,945)	(378,422)	(554,046)	(1,028,844)
Ending balance	$ 1,990,167	$ 2,357,345	$ 1,990,167	$ 2,357,345

Property and Equipment, Net, and Other Assets - Components of Property and Equipment, Net, and Other Assets (Detail) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Property And Equipment Net And Other Assets [Abstract]
Property and equipment, net of accumulated depreciation of $3,652,779 and $2,932,371 as of September 30, 2024 and December 31, 2023, respectively	$ 5,673,966	$ 2,129,176
Right-of-use operating lease assets	1,446,736	1,862,455
Security deposits and other assets	632,141	634,459
Property and equipment, net, and other assets	$ 7,752,843	$ 4,626,090

Property and Equipment, Net, and Other Assets - Components of Property and Equipment, Net, and Other Assets (Parenthetical) (Detail) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Property And Equipment Net And Other Assets [Abstract]
Accumulated depreciation, Property and equipment	$ 3,652,779	$ 2,932,371

Property and Equipment, Net, and Other Assets - Additional Information (Detail)	3 Months Ended		9 Months Ended
	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($) Compactors	Sep. 30, 2023 USD ($)	Oct. 19, 2020
Property And Equipment Net And Other Assets [Line Items]
Depreciation	$ 286,259	$ 150,594	$ 739,298	$ 645,047
Purchase of compactors and related equipment \| Compactors			208
Purchase of compactors	$ 3,100,000		$ 3,100,000
Debt instrument stated interest rate	80.00%		80.00%		3.00%
Service [Member]
Property And Equipment Net And Other Assets [Line Items]
Depreciation reflected in cost of revenue	$ 244,597	$ 96,086	$ 619,343	$ 266,923

Goodwill and Other Intangible Assets - Schedule of Finite-Lived Intangible Assets (Detail) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 48,685,167	$ 47,756,454
Accumulated Amortization	28,679,409	21,705,026
Goodwill	85,828,238	85,828,238
Net	$ 20,005,758	$ 26,051,428
Customer Relationships [Member]
Finite Lived Intangible Assets [Line Items]
Estimated Useful Life	5 years	5 years
Gross Carrying Amount	$ 39,250,000	$ 39,250,000
Accumulated Amortization	23,518,660	17,636,463
Net	$ 15,731,340	$ 21,613,537
Software [Member]
Finite Lived Intangible Assets [Line Items]
Estimated Useful Life	7 years	7 years
Gross Carrying Amount	$ 5,159,004	$ 4,230,291
Accumulated Amortization	2,143,753	1,819,287
Net	$ 3,015,251	$ 2,411,004
Trademarks [Member]
Finite Lived Intangible Assets [Line Items]
Estimated Useful Life	7 years	7 years
Gross Carrying Amount	$ 2,026,163	$ 2,026,163
Accumulated Amortization	874,218	657,331
Net	$ 1,151,945	$ 1,368,832
Non-compete Agreements [Member]
Finite Lived Intangible Assets [Line Items]
Estimated Useful Life	3 years	3 years
Gross Carrying Amount	$ 2,250,000	$ 2,250,000
Accumulated Amortization	2,142,778	1,591,945
Net	$ 107,222	$ 658,055

Goodwill and Other Intangible Assets - Schedule of Indefinite-Lived Intangible Assets (Detail) - Goodwill [Member] - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
Indefinite-Lived Intangible Assets [Line Items]
Indefinite lived intangible asset, estimated useful life	Indefinite	Indefinite
Indefinite lived intangible asset, carrying amount	$ 85,828,238	$ 85,828,238

Goodwill and Other Intangible Assets - Additional Information (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Goodwill And Intangible Assets Disclosure [Abstract]
Amortization of intangibles	$ 2,300,000	$ 2,300,000	$ 6,974,382	$ 6,840,559
Indefinite-lived intangible assets other than goodwill			0
Goodwill	85,828,238		85,828,238		$ 85,828,238
Impairment of goodwill	0
Not Deductible for Tax Purposes [Member]
Goodwill And Intangible Assets Disclosure [Abstract]
Goodwill	70,800,000		70,800,000
Deductible for Tax Purposes [Member]
Goodwill And Intangible Assets Disclosure [Abstract]
Goodwill	$ 15,000,000		$ 15,000,000

Current Liabilities - Components of Accounts Payable and Accrued Liabilities (Detail) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Accounts Payable and Accrued Liabilities, Current [Abstract]
Accounts payable	$ 35,655,844	$ 38,600,461
Accrued taxes	988,713	484,854
Employee compensation	2,325,693	1,478,826
Operating lease liabilities - current portion	449,425	493,928
Miscellaneous	527,717	238,097
Accounts payable and accrued liabilities	$ 39,947,392	$ 41,296,166

Current Liabilities - Components of Other Current Liabilities (Detail) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Other Liabilities, Current [Abstract]
Deferred revenue	$ 1,434,217	$ 1,509,690
Deferred consideration - earn-out		960,000
Other current liabilities	$ 1,434,217	$ 2,469,690

Current Liabilities - Additional Information (Detail) $ in Millions	Mar. 31, 2024 USD ($)
Other Acquisitions [Member]
Business Acquisition [Line Items]
Earn-out liability, current	$ 1.0

Notes Payable - Schedule of Debt Obligations (Detail) - USD ($)	9 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
Debt Instrument [Line Items]
Total notes payable	$ 74,754,410	$ 67,847,265
Less: Current portion of long-term debt	(1,158,800)	(1,158,800)
Less: Unamortized debt issuance costs	(1,282,236)	(1,345,339)
Less: Unamortized OID	(108,656)	(185,793)
Less: Unamortized OID warrant	(303,937)	(519,153)
Notes payable, net	$ 71,900,781	64,638,180
Monroe Term Loan [Member]
Debt Instrument [Line Items]
Interest Rate	11.82%
Total notes payable	$ 53,034,156	53,500,656
PNC ABL Facility [Member]
Debt Instrument [Line Items]
Interest Rate	7.25%
Total notes payable	$ 18,504,692	13,245,489
PNC Equipment Term Loan [Member]
Debt Instrument [Line Items]
Interest Rate	8.11%
Total notes payable	$ 2,517,080
Green Remedies Promissory Note [Member]
Debt Instrument [Line Items]
Interest Rate	3.00%
Total notes payable	$ 698,482	$ 1,101,120

Notes Payable - Schedule of Debt Obligations (Parenthetical) (Detail)	9 Months Ended
	Sep. 30, 2024	Oct. 19, 2020
Debt Instrument [Line Items]
Debt instrument interest rate	3.00%
Debt instrument stated interest rate	80.00%	3.00%
Green Remedies Promissory Note [Member]
Debt Instrument [Line Items]
Debt instrument stated interest rate	3.00%
PNC ABL Facility [Member]
Debt Instrument [Line Items]
Debt instrument interest rate	2.25%
PNC Equipment Term Loan [Member]
Debt Instrument [Line Items]
Debt instrument interest rate	3.00%
Minimum [Member] \| Monroe Term Loan [Member]
Debt Instrument [Line Items]
Debt instrument interest rate	5.50%
Maximum [Member] \| Monroe Term Loan [Member]
Debt Instrument [Line Items]
Debt instrument interest rate	7.50%

Notes Payable - Schedule of Changes in Debt Issuance Costs (Detail)	9 Months Ended
	Sep. 30, 2024 USD ($)
Debt Disclosure [Abstract]
Balance at December 31, 2023	$ 1,345,339
Financing costs deferred	457,824
Less: Amortization expense	(520,927)
Balance at September 30, 2024 (Unaudited)	$ 1,282,236

Notes Payable - Additional Information (Detail) - USD ($)			3 Months Ended		9 Months Ended		12 Months Ended
	Oct. 19, 2020	Aug. 05, 2020	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2023	Oct. 31, 2020
Debt Instrument [Line Items]
Debt instrument interest rate					3.00%
Aggregate principal amount	$ 2,684,250
Debt instrument annual interest rate	3.00%		80.00%		80.00%
Interest expense related to borrowings			$ 2,057,359	$ 1,915,631	$ 6,107,628	$ 5,944,798
Interest expense related to amortization of debt issuance fees, and debt discount costs, interest related to vendor supply chain financing programs			666,220	$ 492,445	1,699,903	$ 1,462,408
Borrowings			74,754,410		74,754,410				$ 67,847,265
Total notes payable			74,754,410		74,754,410				$ 67,847,265
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	$ 1.5
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, 2026
Revolving credit current borrowing facility										$ 11,500,000
Percentage of original principal amount	1.00%
Revolving credit current borrowing facility, outstanding			53,000,000		53,000,000
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		$ 35,000,000
Sublimit for issuance of letters of credit, percentage		10.00%
Debt instrument maturity date		Apr. 19, 2026
Revolving credit current borrowing facility			28,900,000		28,900,000
Revolving credit current borrowing facility, outstanding			18,500,000		18,500,000
Borrowings			0		0
Total notes payable			$ 0		$ 0
ABL Facility [Member] \| Base Rate [Member]
Debt Instrument [Line Items]
Debt instrument interest rate			1.25%		1.25%
ABL Facility [Member] \| SOFR [Member]
Debt Instrument [Line Items]
Debt instrument interest rate					2.25%
Debt instrument interest rate			7.25%		7.25%
Equipment Loan Facility [Member]
Debt Instrument [Line Items]
Revolving credit facility maximum principal amount		$ 5,000,000
Debt instrument interest rate					2.00%
Equipment Term Loan [Member]
Debt Instrument [Line Items]
Borrowings			$ 2,500,000		$ 2,500,000
Total notes payable			$ 2,500,000		$ 2,500,000

Leases - Additional Information (Detail) - USD ($)	3 Months Ended		9 Months Ended
Leases - Additional Information (Detail) - USD ($)	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Lessee Lease Description [Line Items]
Fixed cost operating lease expense	$ 174,000	$ 186,000	$ 526,000	$ 561,000

Leases - Summary of Lease Related Assets and Liabilities Recorded on Balance Sheet (Detail) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Assets and Liabilities, Lessee [Abstract]
Right-of-use operating lease assets	$ 1,446,736	$ 1,862,455
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 liabilities - current portion	$ 449,425	$ 493,928
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	$ 946,182	$ 1,274,691
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	Other long-term liabilities	Other long-term liabilities
Total operating lease liabilities	$ 1,395,607	$ 1,768,619

Revenue - Additional Information (Detail)	3 Months Ended		9 Months Ended
Revenue - Additional Information (Detail)	Sep. 30, 2024 USD ($) Customer	Sep. 30, 2023 USD ($) Customer	Sep. 30, 2024 USD ($) Customer	Sep. 30, 2023 USD ($) Customer	Dec. 31, 2023 USD ($)
Revenue Recognition [Line Items]
Revenue	$ 72,765,415	$ 70,425,425	$ 218,561,988	$ 219,036,423
Number of customer \| Customer	1	2	1	2
Advance payment period			1 month
Deferred revenue	$ 1,434,217		$ 1,434,217		$ 1,509,690
Management Fee [Member]
Revenue Recognition [Line Items]
Revenue	$ 119,672	$ 120,467	$ 374,570	$ 277,121
Customer Concentration Risk [Member] \| Sales Revenue Net [Member] \| Customers [Member]
Revenue Recognition [Line Items]
Percentage of revenue	29.10%	28.20%	27.50%	28.10%

Revenue - Summary of Revenue Disaggregated by Source (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Disaggregation Of Revenue [Line Items]
Total revenue	$ 72,765,415	$ 70,425,425	$ 218,561,988	$ 219,036,423
Services [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	69,976,761	67,672,666	209,901,590	210,622,181
Product Sales and Other [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	$ 2,788,654	$ 2,752,759	$ 8,660,398	$ 8,414,242

Income Taxes - Additional Information (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Income Tax [Line Items]
Income tax expense	$ (278,336)	$ 111,104	$ 465,125	$ 650,387
Federal corporate income tax rate			26.00%
Valuation allowance	19,131,000		$ 19,131,000		$ 17,413,000
Federal income tax net operating loss carry forward	1,800,000		$ 1,800,000		$ 5,900,000
Minimum [Member]
Income Tax [Line Items]
Net operating loss carry forwards expiration year			2034
Maximum [Member]
Income Tax [Line Items]
Net operating loss carry forwards expiration year			2037
State [Member]
Income Tax [Line Items]
Operating loss carryforwards	$ 0		$ 0

Stockholders' Equity - Additional Information (Detail) - $ / shares	Sep. 30, 2024	Dec. 31, 2023
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	20,464,260	20,161,400
Common stock, shares outstanding	20,464,260	20,161,400

Stockholders' Equity - Additional Information - Employee Stock Purchase Plan (Detail) - USD ($)		3 Months Ended		9 Months Ended
	May 14, 2024	Jun. 30, 2024	Jun. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Equity [Abstract]
Shares issued for employee stock purchase plans options, shares	24,763
Shares issued for employee stock purchase plans options	$ 149,445	$ 149,445	$ 107,002
Employee stock purchase plan expense				$ 61,700	$ 79,993

Stockholders' Equity - Summary of Warrants Issued and Outstanding (Detail)	9 Months Ended
	Sep. 30, 2024 $ / 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
Exercise Price \| $ / shares	$ 1.5
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
Exercise Price \| $ / shares	$ 1.5
Shares of Common Stock	350,000

Stockholders' Equity - Additional Information - Incentive Compensation Plan (Detail)	Jul. 08, 2024 shares
Equity [Abstract]
Shares available for grant under the 2024 Plan	1,500,000

Stockholders' Equity - Additional Information - Stock Options (Detail) - USD ($)	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Equity [Abstract]
Stock options expense	$ 393,720	$ 664,629

Stockholders' Equity - Summary of Stock Option Activity (Detail) - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Outstanding Beginning Balance, Number of Shares	2,869,013
Granted, Number of Shares	15,000
Exercised, Number of Shares	(200,988)
Canceled/Forfeited, Number of Shares	(33,828)
Outstanding Ending Balance, Number of Shares	2,649,197	2,869,013
Outstanding Beginning Balance, Weighted-Average Exercise Price Per Share	$ 3.33
Granted, Weighted-Average Exercise Price Per Share	7.41
Exercised, Weighted-Average Exercise Price Per Share	3.61
Cancelled/Forfeited, Weighted-Average Exercise Price Per Share	5.02
Outstanding Ending Balance, Weighted-Average Exercise Price Per Share	3.31	$ 3.33
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		$ 23.2
Granted, $6.98 - $7.63 [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise Price Per Share, Minimum	6.98
Exercise Price Per Share, Maximum	7.63
Exercised, $1.51 - $6.40 [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise Price Per Share, Minimum	1.51
Exercise Price Per Share, Maximum	6.4
Cancelled/Forfeited, $1.83 - $23.20 [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise Price Per Share, Minimum	1.83
Exercise Price Per Share, Maximum	23.2
Outstanding, $1.17 - $11.60 [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise Price Per Share, Minimum	1.17
Exercise Price Per Share, Maximum	$ 11.6

Stockholders' Equity - Additional Information - Deferred Stock Units (Detail) - Deferred Stock Units [Member] - USD ($)	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Schedule Of Stockholders Equity [Line Items]
Number of stock unit received	1
Deferred stock units	20,601	4,662
Compensation expense related to grants	$ 133,310	$ 118,162
Anticipated bonus expense	$ 125,000
DSUs outstanding	248,173		231,635
Director [Member]
Schedule Of Stockholders Equity [Line Items]
Compensation expense related to grants	$ 173,524	$ 30,128
Executive Employees [Member]
Schedule Of Stockholders Equity [Line Items]
Deferred stock units	11,990	14,089

Stockholders' Equity - Additional Information - Restricted Stock Units (Detail) - Restricted Stock Units [Member] - USD ($)	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Schedule Of Stockholders Equity [Line Items]
RSUs/PSUs granted		61,056
Number of stock unit received	1
RSUs outstanding	216,045		61,056
RSUs released or forfeited	62,056
Minimum [Member]
Schedule Of Stockholders Equity [Line Items]
Vesting terms	1 year
Maximum [Member]
Schedule Of Stockholders Equity [Line Items]
Vesting terms	3 years
Director [Member]
Schedule Of Stockholders Equity [Line Items]
RSUs/PSUs granted	52,045
Compensation expense related to grants	$ 334,566	$ 56,401
Employee [Member]
Schedule Of Stockholders Equity [Line Items]
RSUs/PSUs granted	165,000
Compensation expense related to grants	$ 165,927

Stockholders' Equity - Additional Information - Performance Stock Units (Detail) - Performance Stock Units [Member]	9 Months Ended
	Sep. 30, 2024 USD ($) shares
Schedule Of Stockholders Equity [Line Items]
Compensation expense related to grants \| $	$ 28,195
Employee [Member]
Schedule Of Stockholders Equity [Line Items]
RSUs/PSUs granted \| shares	130,000

Net Loss per Share - Computation of Basic and Diluted Net Loss per Share Attributable to Common Stockholders (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Numerator:
Net loss applicable to common stockholders	$ (3,385,558)	$ (2,050,642)	$ (5,555,292)	$ (4,961,276)
Denominator:
Weighted average common shares outstanding, basic	20,665,681	20,059,528	20,542,294	19,984,890
Weighted average common shares outstanding, diluted	20,665,681	20,059,528	20,542,294	19,984,890
Net loss per share:
Basic	$ (0.16)	$ (0.1)	$ (0.27)	$ (0.25)
Diluted	$ (0.16)	$ (0.1)	$ (0.27)	$ (0.25)
Stock options [Member]
Anti-dilutive securities excluded from diluted net loss per share:
Anti-dilutive securities excluded from diluted net loss per share	46,579	68,455	46,579	82,344