Quest Resource Holding Corporation (NASDAQ:QRHC) Q3 2023 Earnings Conference Call November 14, 2023 5:00 PM ET Company Participants Dave Mossberg - Investor Relations Ray Hatch - Chief Executive Officer Brett Johnston - Chief Financial Officer Conference Call Participants Aaron Spychalla - Craig Hallum Gerry Sweeney - ROTH Capital Sameer Joshi - H.C. Wainwright Greg Kitt - Pinnacle Fund George Melas - MKH Management Operator Thank you for standing by. This is the conference operator. Welcome to the Quest Re ...

PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for Quest Resource Holding Corporation [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including the balance sheets, statements of operations, changes in stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, acquisitions, and specific financial line items for Quest Resource Holding Corporation and its subsidiaries [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheets (Selected Items) | Metric | Sep 30, 2023 (Unaudited) | Dec 31, 2022 | | :--------------------------------- | :----------------------- | :----------- | | Cash and cash equivalents | $870,233 | $9,563,709 | | Accounts receivable, net | $49,932,053 | $45,891,144 | | Total current assets | $53,548,232 | $57,765,276 | | Total assets | $170,439,918 | $181,491,049 | | Accounts payable and accrued liabilities | $40,916,726 | $32,207,461 | | Total current liabilities | $44,573,358 | $38,054,866 | | Total liabilities | $102,754,978 | $110,352,001 | | Total stockholders' equity | $67,684,940 | $71,139,048 | - Cash and cash equivalents **decreased significantly by** **$8.69 million** from December 31, 2022, to September 30, 2023[8](index=8&type=chunk) - Total assets **decreased by** **$11.05 million**, while total liabilities **decreased by** **$7.6 million**, and total stockholders' equity **decreased by** **$3.45 million**[8](index=8&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance over periods, including revenue, expenses, and net loss Condensed Consolidated Statements of Operations (Selected Items) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Revenue | $70,425,425 | $73,358,293 | $219,036,423 | $221,785,249 | | Gross profit | $12,430,233 | $12,183,333 | $38,564,821 | $38,100,138 | | Operating income | $468,538 | $377,273 | $3,096,318 | $2,815,997 | | Interest expense | $(2,408,076) | $(1,911,989) | $(7,407,207) | $(5,057,400) | | Net loss | $(2,050,642) | $(1,686,335) | $(4,961,276) | $(2,720,414) | | Basic net loss per share | $(0.10) | $(0.09) | $(0.25) | $(0.14) | | Diluted net loss per share | $(0.10) | $(0.09) | $(0.25) | $(0.14) | - Revenue **decreased by** **4.0%** for the three months and **1.2%** for the nine months ended September 30, 2023, compared to the prior year periods[10](index=10&type=chunk) - Net loss **widened to** **$(2.05) million** for the three months and **$(4.96) million** for the nine months ended September 30, 2023, from **$(1.69) million** and **$(2.72) million**, respectively, in the prior year[10](index=10&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This section details the changes in the company's equity, including common stock, additional paid-in capital, and accumulated deficit Changes in Stockholders' Equity (Selected Items) | Metric | Dec 31, 2022 | Sep 30, 2023 | | :-------------------------- | :----------- | :----------- | | Common Stock Shares | 19,696,006 | 19,959,677 | | Common Stock Par Value | $19,696 | $19,960 | | Additional Paid-in Capital | $173,876,319 | $175,383,223 | | Accumulated Deficit | $(102,756,967) | $(107,718,243) | | Total Stockholders' Equity | $71,139,048 | $67,684,940 | - Total stockholders' equity **decreased by** approximately **$3.45 million** from December 31, 2022, to September 30, 2023, **primarily due to net losses**[12](index=12&type=chunk) - Additional paid-in capital **increased by** **$1.51 million**, **driven by stock-based compensation and stock option exercises**[12](index=12&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Selected Items) | Cash Flow Activity | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $6,667,825 | $(4,318,893) | | Net cash used in investing activities | $(1,256,893) | $(4,396,589) | | Net cash provided by (used in) financing activities | $(14,104,408) | $7,381,516 | | Net decrease in cash and cash equivalents | $(8,693,476) | $(1,333,966) | | Cash and cash equivalents at end of period | $870,233 | $7,093,892 | - Operating activities **generated** **$6.67 million** in cash for the nine months ended September 30, 2023, **a significant improvement from cash used of** **$(4.32) million** in the prior year[14](index=14&type=chunk) - Cash **used in** financing activities was **$(14.10) million** in 2023, **primarily due to debt repayments**, **a reversal from** **$7.38 million** provided in 2022[14](index=14&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the condensed consolidated financial statements [Note 1. The Company and Description of Business](index=7&type=section&id=Note%201.%20The%20Company%20and%20Description%20of%20Business) This note describes Quest Resource Holding Corporation's business, services, and recent corporate structure changes - Quest Resource Holding Corporation and its subsidiaries provide national waste and recycling services to larger, multi-location businesses[17](index=17&type=chunk) - Services include collection, processing, recycling, disposal, and tracking of waste streams, along with data reporting for business operations and sustainability goals[17](index=17&type=chunk) - RWS Facility Services, LLC and Sustainable Solutions Group were merged into Quest and dissolved as separate legal entities in 2023[16](index=16&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=7&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting policies and principles applied in preparing the financial statements, including recent pronouncements - The condensed consolidated financial statements are unaudited and prepared in accordance with SEC rules, with certain GAAP disclosures condensed or omitted[19](index=19&type=chunk) - The company adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), on January 1, 2023, which **did not have a material impact** on its financial statements[22](index=22&type=chunk) - Interim results are subject to seasonal variations and are **not necessarily indicative of full-year results**[21](index=21&type=chunk) [Note 3. Acquisition](index=7&type=section&id=Note%203.%20Acquisition) This note details the company's acquisition of an environmental services company, including purchase price and allocation - On February 10, 2022, the company acquired an independent environmental services company in the northeast U.S. for approximately **$3.35 million**[24](index=24&type=chunk) - The acquisition was paid in cash and financed with a draw down on the term loan[24](index=24&type=chunk) - The purchase price was **primarily allocated to customer relationship intangibles and goodwill**[24](index=24&type=chunk) [Note 4. Accounts Receivable, Net of Allowance for Doubtful Accounts](index=8&type=section&id=Note%204.%20Accounts%20Receivable%2C%20Net%20of%20Allowance%20for%20Doubtful%20Accounts) This note provides details on accounts receivable and the allowance for doubtful accounts, including activity and balances Allowance for Doubtful Accounts Activity | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Beginning balance | $2,095,947 | $1,728,974 | $2,176,010 | $840,522 | | Bad debt expense | $639,820 | $411,802 | $1,210,179 | $1,143,757 | | Uncollectible accounts written off, net | $(378,422) | $(63,129) | $(1,028,844) | $93,368 | | Ending balance | $2,357,345 | $2,077,647 | $2,357,345 | $2,077,647 | - The allowance for doubtful accounts **increased to** **$2,357,345** as of September 30, 2023, from **$2,176,010** at December 31, 2022[8](index=8&type=chunk)[26](index=26&type=chunk) - Bad debt expense for the nine months ended September 30, 2023, was **$1,210,179**, **an increase from** **$1,143,757** in the prior year[26](index=26&type=chunk) [Note 5. Property and Equipment, Net, and Other Assets](index=8&type=section&id=Note%205.%20Property%20and%20Equipment%2C%20Net%2C%20and%20Other%20Assets) This note details the company's property, equipment, right-of-use assets, and other assets, along with depreciation information Property and Equipment, Net, and Other Assets | Asset Category | Sep 30, 2023 (Unaudited) | Dec 31, 2022 | | :------------------------------------ | :----------------------- | :----------- | | Property and equipment, net | $2,237,547 | $2,623,704 | | Right-of-use operating lease assets | $1,998,975 | $2,385,870 | | Security deposits and other assets | $629,199 | $901,653 | | Total | $4,865,721 | $5,911,227 | - Total property and equipment, net, and other assets **decreased by** approximately **$1.05 million** from December 31, 2022, to September 30, 2023[27](index=27&type=chunk) - Depreciation expense for the nine months ended September 30, 2023, was **$645,047**, including **$266,923** reflected in 'Cost of revenue'[27](index=27&type=chunk) [Note 6. Goodwill and Other Intangible Assets](index=8&type=section&id=Note%206.%20Goodwill%20and%20Other%20Intangible%20Assets) This note provides information on goodwill and finite-lived intangible assets, including their balances and amortization Finite Lived Intangible Assets (Net) | Asset Category | Sep 30, 2023 (Unaudited) | Dec 31, 2022 | | :-------------------------- | :----------------------- | :----------- | | Customer relationships | $23,553,645 | $29,441,145 | | Software | $1,934,805 | $1,067,874 | | Trademarks | $1,433,754 | $1,639,266 | | Non-compete agreements | $845,555 | $1,408,055 | | Total finite lived intangible assets | $27,767,759 | $33,556,340 | - Goodwill **remained constant at** **$84,258,206** as of September 30, 2023, and December 31, 2022[29](index=29&type=chunk) - Net finite-lived intangible assets **decreased by** approximately **$5.79 million** due to amortization[28](index=28&type=chunk)[29](index=29&type=chunk) - Amortization expense for finite-lived intangible assets was **$6.8 million** for the nine months ended September 30, 2023[29](index=29&type=chunk) [Note 7. Current Liabilities](index=9&type=section&id=Note%207.%20Current%20Liabilities) This note details the company's current liabilities, including accounts payable, accrued liabilities, and deferred consideration Accounts Payable and Accrued Liabilities | Liability Category | Sep 30, 2023 (Unaudited) | Dec 31, 2022 | | :-------------------------- | :----------------------- | :----------- | | Accounts payable | $37,120,877 | $28,744,858 | | Accrued taxes | $963,580 | $331,936 | | Employee compensation | $1,709,313 | $1,812,028 | | Operating lease liabilities - current | $493,048 | $489,938 | | Miscellaneous | $629,908 | $828,701 | | Total | $40,916,726 | $32,207,461 | Other Current Liabilities | Liability Category | Sep 30, 2023 (Unaudited) | Dec 31, 2022 | | :-------------------------- | :----------------------- | :----------- | | Deferred consideration - earn-out | $680,502 | $1,957,255 | | Deferred revenue | $1,817,330 | $2,731,350 | | Total | $2,497,832 | $4,688,605 | - Accounts payable and accrued liabilities **increased by** **$8.71 million**, while other current liabilities **decreased by** **$2.19 million**, **primarily due to a** **$1.2 million** earn-out payment and reduced deferred revenue[31](index=31&type=chunk)[32](index=32&type=chunk) [Note 8. Notes Payable](index=9&type=section&id=Note%208.%20Notes%20Payable) This note outlines the company's various debt instruments, interest rates, and repayment activities Notes Payable (Selected Items) | Debt Instrument | Interest Rate (Sep 30, 2023) | Sep 30, 2023 (Unaudited) | Dec 31, 2022 | | :-------------------------- | :--------------------------- | :----------------------- | :----------- | | Monroe Term Loan | 11.94% | $53,656,156 | $61,073,151 | | Green Remedies Promissory Note | 3.00% | $1,235,332 | $1,637,970 | | PNC ABL Facility | 7.47% | $5,395,404 | $12,238,034 | | Total notes payable | | $60,286,892 | $74,949,155 | | Notes payable, net | | $56,786,013 | $70,572,891 | - Total notes payable **decreased by** **$14.66 million** from December 31, 2022, to September 30, 2023, driven by repayments on the Monroe Term Loan and PNC ABL Facility[34](index=34&type=chunk) - Interest expense related to borrowings for the nine months ended September 30, 2023, was **$5,944,798**, **an increase from** **$4,097,400** in the prior year, **primarily due to higher base interest rates**[43](index=43&type=chunk) - The company has warrants outstanding to Monroe Capital to purchase **850,000** shares of common stock at an exercise price of **$1.50** per share, expiring March 19, 2028[41](index=41&type=chunk)[63](index=63&type=chunk) [Note 9. Leases](index=11&type=section&id=Note%209.%20Leases) This note provides details on the company's operating lease assets and liabilities, including lease expenses Operating Lease Assets and Liabilities | Lease Item | Sep 30, 2023 (Unaudited) | Dec 31, 2022 | | :------------------------------------ | :----------------------- | :----------- | | Right-of-use operating lease assets | $1,998,975 | $2,385,870 | | Total operating lease liabilities | $1,888,655 | $2,214,182 | - Fixed cost operating lease expense for the nine months ended September 30, 2023, was approximately **$561,000**, a **decrease from** **$669,000** in the prior year[45](index=45&type=chunk) - Right-of-use operating lease assets and total operating lease liabilities both **decreased from** December 31, 2022, to September 30, 2023[48](index=48&type=chunk) [Note 10. Revenue](index=12&type=section&id=Note%2010.%20Revenue) This note disaggregates revenue by source and discusses customer concentration and deferred revenue Revenue Disaggregated by Source | Revenue Type | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Services | $67,672,666 | $70,895,554 | $210,622,181 | $213,934,853 | | Product sales and other | $2,752,759 | $2,462,739 | $8,414,242 | $7,850,396 | | Total revenue | $70,425,425 | $73,358,293 | $219,036,423 | $221,785,249 | - Total revenue **decreased by** **4.0%** for the three months and **1.2%** for the nine months ended September 30, 2023, compared to the prior year[53](index=53&type=chunk) - Two customers accounted for an aggregate of **28.2%** of revenue for the three months ended September 30, 2023[52](index=52&type=chunk) - Deferred revenue **decreased to** **$1,817,330** at September 30, 2023, from **$2,731,350** at December 31, 2022[56](index=56&type=chunk) [Note 11. Income Taxes](index=13&type=section&id=Note%2011.%20Income%20Taxes) This note details the company's income tax expense, deferred tax assets, and net operating loss carryforwards - Income tax expense for the nine months ended September 30, 2023, was **$650,387**, up from **$479,011** in the prior year, **primarily due to state tax obligations**[57](index=57&type=chunk) - The company **maintains a full valuation allowance** against deferred tax assets, totaling **$15,942,000** at September 30, 2023[58](index=58&type=chunk) - Federal net operating loss carryforwards were approximately **$6,900,000** at September 30, 2023[58](index=58&type=chunk) [Note 12. Fair Value of Financial Instruments](index=13&type=section&id=Note%2012.%20Fair%20Value%20of%20Financial%20Instruments) This note discusses the fair value of financial instruments and the company's exposure to interest rate risk - The fair values of the company's financial instruments approximate their carrying values[59](index=59&type=chunk) - The company is exposed to interest rate risk due to its variable rate indebtedness[59](index=59&type=chunk) - Contingent liabilities are measured at fair value using unobservable inputs (Level 3 of the fair value hierarchy)[59](index=59&type=chunk) [Note 13. Stockholders' Equity](index=13&type=section&id=Note%2013.%20Stockholders'%20Equity) This note provides details on common stock, warrants, and stock option activity, including stock-based compensation - Common stock shares issued and outstanding **increased to** **19,959,677** at September 30, 2023, from **19,696,006** at December 31, 2022[60](index=60&type=chunk) Warrants Issued and Outstanding | Description | Date of Issuance | Expiration | Exercise Price | Shares of 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 | | | | 850,000 | Stock Option Activity (Nine Months Ended Sep 30, 2023) | Activity | Number of Shares | Weighted Average Exercise Price Per Share | | :-------------------------- | :--------------- | :---------------------------------------- | | Outstanding at Dec 31, 2022 | 3,179,388 | $3.23 | | Granted | 152,500 | $5.50 | | Exercised | (240,783) | $1.87 | | Cancelled/Forfeited | (25,021) | $12.89 | | Outstanding at Sep 30, 2023 | 3,066,084 | $3.37 | - Stock-based compensation expense for stock options was **$664,629** for the nine months ended September 30, 2023[63](index=63&type=chunk) [Note 14. Net Loss per Share](index=14&type=section&id=Note%2014.%20Net%20Loss%20per%20Share) This note presents the calculation of basic and diluted net loss per share, including anti-dilutive securities Net Loss per Share (Basic and Diluted) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net loss applicable to common stockholders | $(2,050,642) | $(1,686,335) | $(4,961,276) | $(2,720,414) | | Weighted average common shares outstanding, basic | 20,059,528 | 19,368,192 | 19,984,890 | 19,297,636 | | Net loss per share: Basic | $(0.10) | $(0.09) | $(0.25) | $(0.14) | | Net loss per share: Diluted | $(0.10) | $(0.09) | $(0.25) | $(0.14) | - Basic and diluted net loss per share **increased for both the three and nine months** ended September 30, 2023, **reflecting higher net losses**[68](index=68&type=chunk) - Anti-dilutive securities (stock options and warrants) were excluded from diluted net loss per share calculations **due to the reported net losses**[67](index=67&type=chunk)[68](index=68&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=14&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations for the three and nine months ended September 30, 2023, compared to the prior year, discussing revenue, expenses, profitability, liquidity, and key accounting policies [Forward-Looking Statements](index=15&type=section&id=Forward-Looking%20Statements) This section highlights the inherent uncertainties and risks associated with forward-looking statements in the report - The report contains forward-looking statements regarding future operating results, financial position, business strategy, and market conditions[69](index=69&type=chunk) - These statements are subject to risks, uncertainties, and changes in circumstances that may cause actual results to differ significantly[69](index=69&type=chunk) - The company does not undertake to update any forward-looking statements, except as required by law[69](index=69&type=chunk) [Business Overview](index=15&type=section&id=Business%20Overview) This section describes Quest's core business as a national provider of waste and recycling services to multi-location businesses - Quest is a national provider of waste and recycling services to large, multi-location businesses across various industry sectors[70](index=70&type=chunk) - The company offers customer-specific programs for waste collection, processing, recycling, disposal, and tracking, along with data reporting for environmental and sustainability goals[70](index=70&type=chunk) - Revenue is primarily generated from service fees and sales of recyclable materials, supplemented by product sales like antifreeze and windshield washer fluid[71](index=71&type=chunk) [Operating Results](index=15&type=section&id=Operating%20Results) This section analyzes the company's financial performance across key metrics like revenue, costs, and profitability [Revenue Analysis](index=16&type=section&id=Revenue%20Analysis) This section examines the trends and drivers behind the company's revenue performance for the reported periods Revenue Performance | Period | 2023 Revenue | 2022 Revenue | Change ($) | Change (%) | | :-------------------------- | :----------- | :----------- | :--------- | :--------- | | Three Months Ended Sep 30 | $70,425,425 | $73,358,293 | $(2,932,868) | (4.0)% | | Nine Months Ended Sep 30 | $219,036,423 | $221,785,249 | $(2,748,826) | (1.2)% | - The **decrease in revenue for the quarter was primarily due to an approximately** **$6 million** decrease at RWS and a **$1 million** decrease in recyclable materials revenues, **partially offset by a** **$4 million** increase in non-recyclable materials services[76](index=76&type=chunk) - For the nine months, revenues **declined due to an** **$11 million** decrease at RWS and a **$7 million** decrease in recyclable materials revenues, **partially offset by a** **$15.5 million** increase in non-recyclable materials services[77](index=77&type=chunk) [Cost of Revenue and Gross Profit Analysis](index=16&type=section&id=Cost%20of%20Revenue%20and%20Gross%20Profit%20Analysis) This section analyzes the cost of revenue and its impact on gross profit and gross profit margins Cost of Revenue and Gross Profit Performance | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Cost of revenue | $57,995,192 | $61,174,960 | $180,471,602 | $183,685,111 | | Gross profit | $12,430,233 | $12,183,333 | $38,564,821 | $38,100,138 | | Gross profit margin | 17.7% | 16.6% | 17.6% | 17.2% | - Cost of revenue **decreased by** **$3.2 million** for both the three and nine months ended September 30, 2023, **aligning with the revenue decline**[78](index=78&type=chunk) - Gross profit **increased by** **$0.2 million** for the quarter and **$0.46 million** for the nine months, with gross profit margins **improving to** **17.7%** and **17.6%** respectively[79](index=79&type=chunk) [Operating Expenses Analysis](index=16&type=section&id=Operating%20Expenses%20Analysis) This section reviews the trends and components of the company's selling, general, administrative, and depreciation expenses Operating Expenses Performance | Expense Category | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Selling, general, and administrative | $9,620,114 | $9,332,721 | $28,249,820 | $27,975,550 | | Depreciation and amortization | $2,341,581 | $2,473,339 | $7,218,683 | $7,308,591 | | Total operating expenses | $11,961,695 | $11,806,060 | $35,468,503 | $35,284,141 | - Total operating expenses **remained relatively flat**, **increasing slightly by** **$0.16 million** for the quarter and **$0.18 million** for the nine months[81](index=81&type=chunk) - Selling, general, and administrative expenses were **mostly flat** compared to the prior year periods[82](index=82&type=chunk) [Interest Expense Analysis](index=17&type=section&id=Interest%20Expense%20Analysis) This section details the changes in interest expense, primarily driven by interest rates and debt levels Interest Expense | Period | 2023 Interest Expense | 2022 Interest Expense | Change ($) | | :-------------------------- | :-------------------- | :-------------------- | :--------- | | Three Months Ended Sep 30 | $2,408,076 | $1,911,989 | $496,087 | | Nine Months Ended Sep 30 | $7,407,207 | $5,057,400 | $2,349,807 | - Interest expense **increased significantly by** approximately **$0.5 million** for the quarter and **$2.3 million** for the nine months, **primarily due to increases in base interest rates**[84](index=84&type=chunk) - The increase was **partially offset by reduced borrowings** from voluntary paydowns on the term loan in the first nine months of 2023[84](index=84&type=chunk) [Income Tax Analysis](index=17&type=section&id=Income%20Tax%20Analysis) This section discusses the company's income tax provision, state tax obligations, and valuation allowance Income Tax Expense | Period | 2023 Income Tax Expense | 2022 Income Tax Expense | Change ($) | | :-------------------------- | :---------------------- | :---------------------- | :--------- | | Three Months Ended Sep 30 | $111,104 | $151,619 | $(40,515) | | Nine Months Ended Sep 30 | $650,387 | $479,011 | $171,376 | - The income tax provision is **primarily attributable to state tax obligations** for states with no net operating loss carryforwards[85](index=85&type=chunk) - The company **maintains a full valuation allowance** against all deferred tax assets, but believes a significant portion **may be released within 12 to 24 months**[86](index=86&type=chunk) [Net Loss Analysis](index=17&type=section&id=Net%20Loss%20Analysis) This section analyzes the factors contributing to the company's net loss for the reported periods Net Loss | Period | 2023 Net Loss | 2022 Net Loss | Change ($) | | :-------------------------- | :------------ | :------------ | :--------- | | Three Months Ended Sep 30 | $(2,050,642) | $(1,686,335) | $(364,307) | | Nine Months Ended Sep 30 | $(4,961,276) | $(2,720,414) | $(2,240,862) | - Net loss for the quarter **widened to** **$(2.1) million** from **$(1.7) million**, and for the nine months to **$(5.0) million** from **$(2.7) million**[87](index=87&type=chunk) - Operating results vary based on commodity prices of recyclable materials, volumes and mix of services, customer mix, and timing of acquisitions and integration[88](index=88&type=chunk) [Loss per Share Analysis](index=17&type=section&id=Loss%20per%20Share%20Analysis) This section examines the basic and diluted net loss per share, considering outstanding shares and anti-dilutive securities Net Loss per Share | Period | 2023 Basic/Diluted EPS | 2022 Basic/Diluted EPS | | :-------------------------- | :--------------------- | :--------------------- | | Three Months Ended Sep 30 | $(0.10) | $(0.09) | | Nine Months Ended Sep 30 | $(0.25) | $(0.14) | - Net loss per basic and diluted share **increased for both the three and nine months** ended September 30, 2023[89](index=89&type=chunk) - The weighted average number of common shares outstanding increased to approximately **20.1 million** for the three months and **20.0 million** for the nine months ended September 30, 2023[90](index=90&type=chunk) [Adjusted EBITDA (Non-GAAP)](index=17&type=section&id=Adjusted%20EBITDA%20(Non-GAAP)) This section presents Adjusted EBITDA, a non-GAAP measure, to evaluate the company's operational performance Adjusted EBITDA Performance | Period | 2023 Adjusted EBITDA | 2022 Adjusted EBITDA | Change ($) | Change (%) | | :-------------------------- | :------------------- | :------------------- | :--------- | :--------- | | Three Months Ended Sep 30 | $3,710,034 | $3,847,119 | $(137,085) | (3.6)% | | Nine Months Ended Sep 30 | $12,729,648 | $14,141,441 | $(1,411,793) | (10.0)% | - Adjusted EBITDA **decreased by** **3.6%** for the three months and **10.0%** for the nine months ended September 30, 2023[91](index=91&type=chunk) - Adjusted EBITDA is a non-GAAP measure **used to evaluate performance**, excluding interest, taxes, depreciation, amortization, stock-related compensation, and other adjustments[92](index=92&type=chunk) [Adjusted Net Income and Adjusted Net Income per Diluted Share (Non-GAAP)](index=18&type=section&id=Adjusted%20Net%20Income%20and%20Adjusted%20Net%20Income%20per%20Diluted%20Share%20(Non-GAAP)) This section provides non-GAAP adjusted net income and diluted EPS, excluding certain non-recurring or non-cash items Adjusted Net Income and EPS Performance | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Adjusted net income | $549,324 | $862,642 | $2,658,258 | $6,198,498 | | Adjusted net income per diluted share | $0.02 | $0.04 | $0.12 | $0.29 | - Adjusted net income **decreased by** **36.3%** for the three months and **57.1%** for the nine months ended September 30, 2023[94](index=94&type=chunk) - Adjusted net income and EPS are non-GAAP measures **used by investors and management to evaluate ongoing financial performance**, excluding certain items like amortization of intangibles and acquisition costs[94](index=94&type=chunk) [Liquidity and Capital Resources](index=18&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its short-term and long-term financial obligations, including cash and working capital Liquidity Metrics | Metric | Sep 30, 2023 | Dec 31, 2022 | | :-------------------------- | :----------- | :----------- | | Cash and cash equivalents | $0.9 million | $9.6 million | | Working capital | $9.0 million | $19.7 million | - Cash and cash equivalents **decreased significantly by** **$8.7 million**, and working capital **declined by** **$10.7 million**[95](index=95&type=chunk) - The company made **$7.0 million** in prepayments toward its variable rate debt in the first nine months of 2023[96](index=96&type=chunk) - Management believes existing cash, borrowing availability under the **$25.0 million** ABL Facility, and cash from operations will be **sufficient to fund operations for the next 12 months**[98](index=98&type=chunk) [Cash Flows Analysis](index=19&type=section&id=Cash%20Flows%20Analysis) This section provides a detailed breakdown of cash flows from operating, investing, and financing activities Cash Flow Summary (Nine Months Ended Sep 30) | Cash Flow Activity | 2023 | 2022 | | :--------------------------------- | :----------- | :----------- | | Operating activities | $6.7 million | $(4.3) million | | Investing activities | $(1.3) million | $(4.4) million | | Financing activities | $(14.1) million | $7.4 million | - Net cash **provided by** operating activities was **$6.7 million** in 2023, **a significant improvement from cash used in** 2022[100](index=100&type=chunk) - Net cash **used in** investing activities **decreased due to lower acquisition spending** in 2023 compared to a **$3.1 million** acquisition in 2022[101](index=101&type=chunk) - Net cash **used in** financing activities was **$(14.1) million**, **primarily from net repayments of** **$6.8 million** on the ABL Facility and **$7.8 million** on long-term debt[102](index=102&type=chunk) [Inflation Impact](index=20&type=section&id=Inflation%20Impact) This section discusses the perceived impact of inflation on the company's operations and its strategies for mitigation - The company **does not believe inflation had a material impact** during the nine months ended September 30, 2023 and 2022[103](index=103&type=chunk) - **Flexible pricing structures and cost recovery fees allow the company to address inflationary increases** in costs such as fuel, labor, and capital items[103](index=103&type=chunk) [Critical Accounting Estimates and Policies](index=20&type=section&id=Critical%20Accounting%20Estimates%20and%20Policies) This section highlights the significant judgments and estimates used in preparing the financial statements - The preparation of financial statements requires significant estimates and judgments in areas such as accounts receivable, goodwill, intangible assets, stock-based compensation, deferred taxes, and fair value measurements[104](index=104&type=chunk) - There have been **no significant changes in critical accounting policies** during the nine months ended September 30, 2023, other than the adoption of ASU 2016-13[104](index=104&type=chunk) [Recent Accounting Pronouncements](index=20&type=section&id=Recent%20Accounting%20Pronouncements) This section summarizes the adoption and impact of new accounting standards on the company's financial reporting - Refer to Note 2 for details on recent accounting pronouncements, specifically the adoption of ASU 2016-13, which had **no material impact**[105](index=105&type=chunk) [Off-Balance Sheet Arrangements](index=20&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of material off-balance sheet debt or undisclosed related-party transactions - The company has **no off-balance sheet debt or similar obligations**[106](index=106&type=chunk) - There are **no transactions or obligations with related parties** that are not disclosed, consolidated, or reflected in reported results[106](index=106&type=chunk) - The company **does not guarantee any third-party debt**[106](index=106&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=20&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there are no material quantitative or qualitative disclosures about market risk beyond what is already discussed in the financial statements and management's discussion and analysis - This item is marked as '**Not applicable**', indicating no material quantitative or qualitative disclosures about market risk[107](index=107&type=chunk) [Item 4. Controls and Procedures](index=20&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2023, with no material changes in internal control over financial reporting, while acknowledging the inherent limitations of any control system [Evaluation of Disclosure Controls and Procedures](index=20&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section details management's evaluation and conclusion regarding the effectiveness of the company's disclosure controls and procedures - Management, with CEO and CFO participation, evaluated the effectiveness of disclosure controls and procedures as of September 30, 2023[108](index=108&type=chunk) - Disclosure controls and procedures were concluded to be **effective at a reasonable assurance level**[108](index=108&type=chunk) [Changes in Internal Control Over Financial Reporting](index=20&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports on any material changes in the company's internal control over financial reporting during the period - There were **no changes in internal control over financial reporting that materially affected**, or are reasonably likely to materially affect, the company's internal control over financial reporting during the period[109](index=109&type=chunk) [Limitations on Effectiveness of Controls and Procedures](index=20&type=section&id=Limitations%20on%20Effectiveness%20of%20Controls%20and%20Procedures) This section acknowledges the inherent limitations of any control system, which can only provide reasonable assurance - Management acknowledges that control systems **provide only reasonable, not absolute, assurance** and are **subject to inherent limitations**[110](index=110&type=chunk) - Limitations include faulty judgments, simple errors, circumvention by individual acts or collusion, and management override[110](index=110&type=chunk) PART II. OTHER INFORMATION This section covers other important information not included in the financial statements, such as legal proceedings and risk factors [Item 1. Legal Proceedings](index=22&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently aware of any legal proceedings that are expected to have a material adverse effect on its business or financial condition - The company is **not aware of any legal proceedings that could have a material adverse effect** on it[113](index=113&type=chunk) [Item 1A. Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) This section supplements the risk factors from the 2022 Annual Report, specifically highlighting the potential adverse impacts of financial institution instability on the company's operations, vendors, and customers, which could negatively affect its financial condition, results of operations, and cash flows - **A new risk factor addresses the instability of certain financial institutions and its potential adverse impacts** on vendors, customers, and the company's ability to access cash or borrowings[114](index=114&type=chunk) - **Tight credit conditions could lead to economic slowdown and reduced demand** for the company's services[114](index=114&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=22&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section confirms no unregistered sales of equity securities or use of proceeds during the reporting period - **No unregistered sales of equity securities and use of proceeds**[115](index=115&type=chunk) [Item 3. Defaults Upon Senior Securities](index=22&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms no defaults on senior securities during the reporting period - **No defaults upon senior securities**[115](index=115&type=chunk) [Item 4. Mine Safety Disclosures](index=22&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - This item is marked as '**Not applicable**'[115](index=115&type=chunk) [Item 5. Other Information](index=22&type=section&id=Item%205.%20Other%20Information) This section confirms no other material information to report - **No other information to report**[115](index=115&type=chunk) [Item 6. Exhibits](index=23&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including various certifications, the Restricted Stock Unit Agreement, and the Inline XBRL financial statements - Exhibits include the Form of Quest Resource Holding Corporation Restricted Stock Unit Agreement (10.1†)[116](index=116&type=chunk) - **Certifications from the Chief Executive Officer and Chief Financial Officer** (31.1, 31.2, 32.1, 32.2) are included[116](index=116&type=chunk) - The financial statements are formatted in Inline XBRL (101)[116](index=116&type=chunk) [Signatures](index=24&type=section&id=Signatures) This section provides the official signatures of the company's executive officers, certifying the report's accuracy - The report was signed by S. Ray Hatch, President and Chief Executive Officer, and Brett W. Johnston, Senior Vice President and Chief Financial Officer[119](index=119&type=chunk) - **The signing date for the report was November 14, 2023**[119](index=119&type=chunk)

© 2023 Quest Resource Holding Corporation. Copying, publishing or redistributing outside of Quest is strictly prohibited. I N V E S T O R P R E S E N T A T I O N Quest Resource Holding Corporation (NASDAQ: QRHC) NATIONAL PROVIDER OF WASTE & RECYCLING SOLUTIONS SEC SAFE HARBOR The statements contained in this Investor Presentation 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 Exchang ...

Financial Data and Key Metrics Changes - The company reported a gross profit of $13.5 million and EBITDA of $5 million for Q2 2023, marking the second highest quarterly performance in its history [7][8] - Adjusted EBITDA increased by 26% and gross profit dollars rose by 7% sequentially [8][10] - SG&A expenses were $9.2 million, slightly down from $9.3 million in the same period last year, with expectations to average about $9.5 million per quarter moving forward [13][14] Business Line Data and Key Metrics Changes - Most growth was attributed to ramping up new clients and penetrating existing ones, with significant contributions from improvements at RWS [9][11] - The integration of acquired businesses has led to standardized processes, benefiting gross profit dollars based on volumes rather than fluctuations in recyclable material prices [12][19] Market Data and Key Metrics Changes - The company noted stable activity levels across its end markets, managing cost pressures effectively despite fluctuations in recycled material prices [17][19] - The waste business is generally resistant to recessions, with clients continuing to generate waste regardless of economic cycles [17] Company Strategy and Development Direction - The company aims for double-digit growth in gross profit dollars and adjusted EBITDA for the year, supported by organic growth and integration improvements [10][20] - A focus on technology investments is intended to enhance customer value and operational efficiency, with recent developments including a new vendor onboarding system [34][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to endure economic headwinds due to the resilient nature of the waste business [17] - The outlook for gross profit dollars remains robust, with expectations for continued sequential growth in the second half of the year [20][39] Other Important Information - The company has reduced debt levels significantly, paying down $7 million year-to-date, and expects to continue this trend while balancing growth investments [10][15] - Integration of acquisitions is progressing well, with five out of six completed, and the final integration expected to be completed ahead of schedule [32][33] Q&A Session Summary Question: Can you talk about the vertical for this new customer and the timing of closing new business? - Management noted that conversations with prospects have become easier due to rising costs and sustainability demands, with optimism about future growth [43][44] Question: Can you discuss the health of the vendor network? - The vendor base remains strong, with no significant issues reported, and the company is focused on optimizing vendor relationships [47][49] Question: How far along is the integration process for RWS? - The integration went live on August 1, and management expects to be on a normal run rate by the end of the quarter [55][61] Question: What is the strategic direction regarding technology and market opportunities? - The company is assessing market opportunities and enhancing its value proposition through technology, aiming to expand beyond traditional waste services [63][64] Question: How many waste streams are there that the company can leverage more effectively? - Management indicated that out of over 100 waste streams, approximately two-thirds present significant opportunities for scale and margin improvement [65][68]

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 June 30, 2023 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 ...

Financial Data and Key Metrics Changes - The company reported a 12% year-over-year increase in gross profit dollars, reaching $12.6 million, driven by ramping up new customers and adding new programs with existing customers [46][48] - Sequentially, gross profit dollars increased by 17% from the fourth quarter of 2022 due to organic growth, seasonal trends, and improvements at RWS [48] - SG&A expenses were $9.4 million, slightly up from $9.3 million year-over-year, with expectations of $9.5 million in the second quarter of 2023 [50] Business Line Data and Key Metrics Changes - The integration of RWS is on schedule to be completed by year-end, with the company beginning to pass through contract costs, which is expected to positively impact gross profit throughout the year [54] - The company has seen improvements in gross profit from RWS due to the implementation of pass-through costs and fuel surcharges [31][54] Market Data and Key Metrics Changes - The company continues to see stable activity levels across its end markets, with a strong value proposition resonating well with customers [35] - The economic environment is characterized by pressures to improve sustainability and increasing regulations, which are driving demand for recycling services [58] Company Strategy and Development Direction - The company is focused on delivering double-digit profitable growth and has multiple sources of organic growth, including upselling existing clients and ramping recent wins [32][36][79] - M&A remains a key growth pillar, with a disciplined approach to acquisitions based on strategic fit [56] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued profitable growth and strong cash flow generation in 2023, with expectations for incremental contributions from acquisition integrations [30][79] - The company is confident in its ability to generate cash flow and has recently paid down $5 million on its credit facility [34][79] Other Important Information - The company has a cash balance of $9.8 million and has increased its operating borrowing line from $15 million to $25 million [33] - The company expects to see continued sequential growth in gross profit throughout the year, despite challenges in year-over-year comparisons due to acquisition-related adjustments [32] Q&A Session Summary Question: Can you provide more details on rolling out new services to existing customers? - Management indicated that they are still early in the process but see significant upside in cross-selling opportunities [61] Question: How is the ramp-up of new customers progressing? - Management noted that while the ramp is moving slower than desired, there is confidence in the pipeline and the potential for significant growth [68][90] Question: What is the outlook for acquisition and integration costs for the rest of the year? - Management expects acquisition and integration costs to remain relatively flat compared to the first quarter [106]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents Quest Resource Holding Corporation's unaudited condensed consolidated financial statements and related notes for the quarter ended March 31, 2023 [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section provides the unaudited condensed consolidated financial statements and comprehensive notes for Quest Resource Holding Corporation for Q1 2023 [Condensed Consolidated Balance Sheets](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) This section presents the company's financial position, detailing assets, liabilities, and equity as of March 31, 2023, and December 31, 2022 | Metric | March 31, 2023 (Unaudited) | December 31, 2022 | | :-------------------------------- | :--------------------------- | :------------------ | | Total Assets | $177,084,799 | $181,491,049 | | Total Current Assets | $55,790,596 | $57,765,276 | | Cash and Cash Equivalents | $9,805,228 | $9,563,709 | | Accounts Receivable, net | $43,578,263 | $45,891,144 | | Total Liabilities | $107,608,825 | $110,352,001 | | Total Current Liabilities | $37,710,968 | $38,054,866 | | Total Stockholders' Equity | $69,475,974 | $71,139,048 | - Total assets decreased by approximately **$4.4 million** from December 31, 2022, to March 31, 2023, primarily driven by a decrease in accounts receivable and intangible assets[9](index=9&type=chunk) - Total liabilities decreased by approximately **$2.7 million**, mainly due to a reduction in notes payable and other current liabilities[9](index=9&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) This section outlines the company's financial performance, including revenue, gross profit, and net loss for the three months ended March 31, 2023 and 2022 | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change (YoY) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Revenue | $74,113,703 | $71,522,168 | +3.6% | | Cost of Revenue | $61,483,944 | $60,273,753 | +2.0% | | Gross Profit | $12,629,759 | $11,248,415 | +12.3% | | Operating Income (Loss) | $787,479 | $(460,909) | N/A (swing to profit) | | Net Loss | $(2,024,053) | $(2,184,309) | -7.3% | | Basic Net Loss per Share | $(0.10) | $(0.11) | -9.1% | | Diluted Net Loss per Share | $(0.10) | $(0.11) | -9.1% | - The company achieved operating income of **$787,479** in Q1 2023, a significant improvement from an operating loss of **$(460,909)** in Q1 2022[11](index=11&type=chunk) - Despite increased interest expense, net loss decreased by **7.3%** year-over-year, indicating improved operational efficiency[11](index=11&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20STOCKHOLDERS'%20EQUITY) This section details changes in stockholders' equity, including common stock, additional paid-in capital, and accumulated deficit for Q1 2023 | Metric | Balance, Dec 31, 2022 | Stock-based Compensation | Stock Option Exercises | Net Loss | Balance, Mar 31, 2023 | | :----------------------- | :-------------------- | :----------------------- | :--------------------- | :--------- | :-------------------- | | Common Stock Shares | 19,696,006 | — | 28,166 | — | 19,724,172 | | Common Stock Par Value | $19,696 | — | $28 | — | $19,724 | | Additional Paid-in Capital | $173,876,319 | $298,431 | $62,520 | — | $174,237,270 | | Accumulated Deficit | $(102,756,967) | — | — | $(2,024,053) | $(104,781,020) | | Total Stockholders' Equity | $71,139,048 | $298,431 | $62,548 | $(2,024,053) | $69,475,974 | - Total stockholders' equity decreased by approximately **$1.66 million** from December 31, 2022, to March 31, 2023, primarily due to the net loss incurred during the quarter, partially offset by stock-based compensation and stock option exercises[12](index=12&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) This section presents the cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2023 and 2022 | Cash Flow Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net Cash Provided by (Used in) Operating Activities | $2,977,461 | $(391,562) | | Net Cash Used in Investing Activities | $(240,721) | $(3,460,752) | | Net Cash Provided by (Used in) Financing Activities | $(2,495,221) | $3,346,043 | | Net Increase (Decrease) in Cash and Cash Equivalents | $241,519 | $(506,271) | | Cash and Cash Equivalents at End of Period | $9,805,228 | $7,921,587 | - Operating activities generated **$3.0 million** in cash in Q1 2023, a significant improvement from cash used in operating activities of **$(0.4) million** in Q1 2022[14](index=14&type=chunk) - Cash used in investing activities decreased substantially from **$(3.5) million** in Q1 2022 (due to an acquisition) to **$(0.2) million** in Q1 2023[14](index=14&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed explanations of significant accounting policies, financial instrument fair values, and other relevant financial disclosures [1. The Company and Description of Business](index=7&type=section&id=1.%20The%20Company%20and%20Description%20of%20Business) This note describes Quest Resource Holding Corporation's business, focusing on national waste and recycling services for multi-location businesses - Quest Resource Holding Corporation (QRHC) and its subsidiaries provide national waste and recycling services to large, multi-location businesses, including collection, processing, recycling, disposal, and tracking of waste streams and recyclables[16](index=16&type=chunk)[17](index=17&type=chunk) - The company also offers products like antifreeze and windshield washer fluid and provides data for environmental and sustainability goal tracking[17](index=17&type=chunk) [2. Summary of Significant Accounting Policies](index=7&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and policies applied in preparing the condensed consolidated financial statements - The condensed consolidated financial statements are unaudited and prepared in accordance with SEC rules, omitting some GAAP disclosures[19](index=19&type=chunk) - The company adopted ASU 2016-13 (Financial Instruments – Credit Losses) on January 1, 2023, which did not materially impact its financial statements[22](index=22&type=chunk) [3. Acquisitions](index=7&type=section&id=3.%20Acquisitions) This note details the company's acquisition activities, including the purchase of an environmental services company in February 2022 - On February 10, 2022, the company acquired an independent environmental services company in the northeast U.S. for approximately **$3.35 million**, financed by a term loan draw-down[24](index=24&type=chunk) [4. Accounts receivable, net of allowance for doubtful accounts](index=7&type=section&id=4.%20Accounts%20receivable,%20net%20of%20allowance%20for%20doubtful%20accounts) This note provides details on accounts receivable and the allowance for doubtful accounts, including changes during the reporting period | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Beginning balance | $2,176,010 | $840,522 | | Bad debt expense | $243,909 | $261,973 | | Uncollectible accounts written off, net | $(145,379) | $(48,130) | | Ending balance | $2,274,540 | $1,054,365 | - The allowance for doubtful accounts increased to **$2,274,540** as of March 31, 2023, from **$2,176,010** at December 31, 2022[9](index=9&type=chunk)[27](index=27&type=chunk) [5. Property and Equipment, net, and Other Assets](index=8&type=section&id=5.%20Property%20and%20Equipment,%20net,%20and%20Other%20Assets) This note presents the carrying values of property and equipment, right-of-use assets, and other assets, along with related depreciation | Asset Category | March 31, 2023 (Unaudited) | December 31, 2022 | | :-------------------------------- | :--------------------------- | :------------------ | | Property and equipment, net | $2,414,747 | $2,623,704 | | Right-of-use operating lease asset | $2,278,547 | $2,385,870 | | Security deposits and other assets | $845,653 | $901,653 | | Total Property and equipment, net, and other assets | $5,538,947 | $5,911,227 | - Depreciation expense for the three months ended March 31, 2023, was **$238,163**, including **$84,123** related to cost of revenue[28](index=28&type=chunk) [6. Goodwill and Other Intangible Assets](index=8&type=section&id=6.%20Goodwill%20and%20Other%20Intangible%20Assets) This note details the company's goodwill and finite-lived intangible assets, including customer relationships, software, and trademarks | Intangible Asset | March 31, 2023 Net | December 31, 2022 Net | | :----------------------- | :----------------- | :-------------------- | | Customer relationships | $27,478,645 | $29,441,145 | | Software | $1,230,348 | $1,067,874 | | Trademarks | $1,567,502 | $1,639,266 | | Non-compete agreements | $1,220,555 | $1,408,055 | | Total finite lived intangible assets | $31,497,050 | $33,556,340 | | Goodwill | $84,258,206 | $84,258,206 | - Amortization expense for finite-lived intangible assets was approximately **$2.3 million** for both Q1 2023 and Q1 2022[30](index=30&type=chunk) - The company performed its annual impairment analysis for goodwill and other intangible assets in Q3 2022, with no impairment recorded[31](index=31&type=chunk) [7. Current Liabilities](index=9&type=section&id=7.%20Current%20Liabilities) This note provides a breakdown of current liabilities, including accounts payable, accrued taxes, and deferred consideration | Current Liability | March 31, 2023 (Unaudited) | December 31, 2022 | | :-------------------------- | :--------------------------- | :------------------ | | Accounts payable | $30,008,906 | $28,744,858 | | Accrued taxes | $676,277 | $331,936 | | Employee compensation | $1,808,456 | $1,812,028 | | Operating lease liability - current portion | $494,767 | $489,938 | | Other (Accounts payable and accrued liabilities) | $329,213 | $828,701 | | Deferred consideration - earn-out | $680,503 | $1,957,255 | | Deferred revenue | $2,554,046 | $2,731,350 | - A **$1.2 million** earn-out payment related to an acquisition was made in the first quarter of 2023, significantly reducing deferred consideration[33](index=33&type=chunk) [8. Notes Payable](index=9&type=section&id=8.%20Notes%20Payable) This note details the company's debt obligations, including the Monroe Term Loan, Green Remedies Promissory Note, and PNC ABL Facility | Debt Obligation | Interest Rate (as of Mar 31, 2023) | March 31, 2023 (Unaudited) | December 31, 2022 | | :-------------------------- | :--------------------------------- | :--------------------------- | :------------------ | | Monroe Term Loan | 11.67% | $60,917,651 | $61,073,151 | | Green Remedies Promissory Note | 3.00% | $1,503,757 | $1,637,970 | | PNC ABL Facility | 6.95% | $9,969,976 | $12,238,034 | | Total notes payable | | $72,391,384 | $74,949,155 | | Notes payable, net | | $68,306,916 | $70,572,891 | - The PNC ABL Facility had **$9,969,976** principal outstanding as of March 31, 2023, with a borrowing base availability of **$19,044,729**[38](index=38&type=chunk) - Interest expense related to borrowings increased to **$1,956,089** for Q1 2023 from **$1,233,319** for Q1 2022, primarily due to additional borrowing and increased base interest rates[42](index=42&type=chunk) [9. Leases](index=12&type=section&id=9.%20Leases) This note outlines the company's operating lease arrangements, including lease expense and future minimum lease payments - Operating lease expense for office leases was approximately **$190,000** for Q1 2023, down from **$245,000** in Q1 2022[44](index=44&type=chunk) Future Minimum Lease Payments | Year | Future Minimum Lease Payments | | :--- | :---------------------------- | | 2023 | $445,142 | | 2024 | $525,237 | | 2025 | $495,161 | | 2026 | $484,441 | | 2027 | $387,909 | | Total Lease Payments | $2,337,890 | | Present Value of Lease Liabilities | $2,085,708 | [10. Revenue](index=12&type=section&id=10.%20Revenue) This note describes the company's revenue streams, primarily from waste and recycling services and commodity sales - Revenue is primarily generated from fees for waste and recycling services and sales of commodities, with additional product sales (e.g., antifreeze) and ancillary services[48](index=48&type=chunk) Revenue by Type | Revenue Type | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :---------------- | :-------------------------------- | :-------------------------------- | | Services | $71,306,740 | $68,721,608 | | Product sales and other | $2,806,963 | $2,800,560 | | Total Revenue | $74,113,703 | $71,522,168 | - Two customers accounted for **26.3%** of revenue in Q1 2023, while one customer accounted for **16.5%** in Q1 2022[51](index=51&type=chunk) [11. Income Taxes](index=13&type=section&id=11.%20Income%20Taxes) This note details income tax expense, deferred tax assets, and the valuation allowance, reflecting the company's tax position Income Tax Expense | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :---------------- | :-------------------------------- | :-------------------------------- | | Income Tax Expense | $368,504 | $166,815 | - The company recorded a full valuation allowance against all deferred tax assets, totaling **$14,604,000** as of March 31, 2023, due to uncertainty of realization[56](index=56&type=chunk) - Federal income tax net operating loss carryforwards were approximately **$5.5 million** as of March 31, 2023[56](index=56&type=chunk) [12. Fair Value of Financial Instruments](index=13&type=section&id=12.%20Fair%20Value%20of%20Financial%20Instruments) This note discusses the fair value of financial instruments and the company's exposure to interest rate risk from variable rate debt - The fair values of financial instruments (cash, receivables, payables, notes payable) approximate their carrying values due to short maturities or similar borrowing rates[57](index=57&type=chunk) - The company is exposed to interest rate risk due to variable rate indebtedness under its senior secured credit facilities[57](index=57&type=chunk) [13. Stockholders' Equity](index=14&type=section&id=13.%20Stockholders%27%20Equity) This note provides details on common stock, warrants, stock options, and deferred stock units, along with stock-based compensation expense Equity Instruments Outstanding | Equity Instrument | March 31, 2023 | December 31, 2022 | | :-------------------------- | :------------- | :---------------- | | Common Stock Shares Outstanding | 19,724,172 | 19,696,006 | | Warrants Outstanding | 850,000 | 850,000 | | Stock Options Outstanding | 3,129,139 | 3,179,388 | | Deferred Stock Units (DSUs) Outstanding | 215,231 | 211,415 | - Stock-based compensation expense for Q1 2023 included **$22,910** for ESPP, **$250,254** for stock options, and **$25,267** for DSUs[60](index=60&type=chunk)[61](index=61&type=chunk) [14. Net Loss per Share](index=14&type=section&id=14.%20Net%20Loss%20per%20Share) This note presents the calculation of basic and diluted net loss per share, including factors affecting anti-dilutive securities Net Loss per Share Calculation | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net Loss Applicable to Common Stockholders | $(2,024,053) | $(2,184,309) | | Weighted Average Common Shares Outstanding, Basic | 19,931,711 | 19,244,634 | | Weighted Average Common Shares Outstanding, Diluted | 19,931,711 | 19,244,634 | | Basic Net Loss per Share | $(0.10) | $(0.11) | | Diluted Net Loss per Share | $(0.10) | $(0.11) | - Stock options and warrants were excluded from diluted net loss per share calculation as their inclusion would be anti-dilutive due to the net loss[62](index=62&type=chunk)[64](index=64&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and operating results for the three months ended March 31, 2023, compared to the prior year [Overview](index=16&type=section&id=Overview) This section provides a brief history of Quest Resource Holding Corporation and its growth through strategic acquisitions - Quest Resource Holding Corporation (QRHC) was incorporated in Nevada in 2002 and has grown through acquisitions, including QRMG (2013), Green Remedies Waste and Recycling, Inc. (2020), and RWS Facility Services, LLC (2021)[67](index=67&type=chunk) [Three Months Ended March 31, 2023 and 2022 Operating Results](index=17&type=section&id=Three%20Months%20Ended%20March%2031,%202023%20and%202022%20Operating%20Results) This section summarizes key operating results, including revenue, gross profit, operating income, and net loss for Q1 2023 and Q1 2022 | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Revenue | $74,113,703 | $71,522,168 | | Gross Profit | $12,629,759 | $11,248,415 | | Operating Income (Loss) | $787,479 | $(460,909) | | Net Loss | $(2,024,053) | $(2,184,309) | [Global Economic Trends](index=17&type=section&id=Global%20Economic%20Trends) This section discusses the impact of global economic volatility, inflation, and geopolitical conflicts on the company's operations and financial condition - The global economy has experienced volatility and disruptions, including increased inflation rates and interest rates, which could adversely affect the company's costs and financial condition[70](index=70&type=chunk) - The company acknowledges potential adverse consequences from geopolitical conflicts (e.g., Ukraine-Russia) on global supply chains and energy markets[70](index=70&type=chunk) [Revenue](index=17&type=section&id=Revenue) This section analyzes the drivers of revenue growth, including increased demand and customer production, and offsetting factors like commodity values - Revenue for Q1 2023 increased by **$2.6 million (3.6%)** to **$74.1 million**, driven by increased demand, heightened customer production levels, and new/continuing customers[71](index=71&type=chunk) - The increase was partially offset by lower service levels at some customers and reduced commodity values[71](index=71&type=chunk) [Cost of Revenue/Gross Profit](index=17&type=section&id=Cost%20of%20Revenue/Gross%20Profit) This section examines changes in cost of revenue, gross profit, and gross profit margin, influenced by service mix and commodity prices - Gross profit increased by **$1.4 million** to **$12.6 million** in Q1 2023, with the gross profit margin improving to **17.0%** from **15.7%** in Q1 2022[73](index=73&type=chunk) - Changes in gross profit and margin were influenced by increased services from new/continuing customers, changes in service mix, and commodity price fluctuations[73](index=73&type=chunk)[74](index=74&type=chunk) [Operating Expenses](index=17&type=section&id=Operating%20Expenses) This section reviews total operating expenses, highlighting changes in selling, general, and administrative costs - Total operating expenses slightly increased to **$11.8 million** in Q1 2023 from **$11.7 million** in Q1 2022[76](index=76&type=chunk) - Selling, general, and administrative (SG&A) expenses increased by **$72,974**, primarily due to higher labor-related expenses, partially offset by reduced professional fees[76](index=76&type=chunk) [Interest Expense](index=18&type=section&id=Interest%20Expense) This section analyzes the increase in interest expense due to additional borrowing and rising base interest rates - Interest expense increased by approximately **$0.9 million** to **$2.4 million** in Q1 2023, compared to **$1.6 million** in Q1 2022[78](index=78&type=chunk) - The increase was attributed to additional borrowing for the 2022 acquisition and rising base interest rates[78](index=78&type=chunk) [Income Taxes](index=18&type=section&id=Income%20Taxes) This section discusses income tax expense, the valuation allowance against deferred tax assets, and future profitability expectations - Income tax expense was **$368,504** in Q1 2023, primarily due to state tax obligations[79](index=79&type=chunk) - The company maintains a full valuation allowance against deferred tax assets but anticipates a reasonable possibility of reversal within 12-24 months, contingent on achieving sufficient profitability[80](index=80&type=chunk) [Net Loss](index=18&type=section&id=Net%20Loss) This section reports the net loss for the period, noting an improvement compared to the prior year - Net loss for Q1 2023 was **$(2.0) million**, an improvement from **$(2.2) million** in Q1 2022[81](index=81&type=chunk) [Loss per Share](index=18&type=section&id=Loss%20per%20Share) This section details the basic and diluted net loss per share, indicating an improvement year-over-year - Basic and diluted net loss per share improved to **$(0.10)** in Q1 2023 from **$(0.11)** in Q1 2022[83](index=83&type=chunk) [Adjusted EBITDA](index=18&type=section&id=Adjusted%20EBITDA) This section presents Adjusted EBITDA, a non-GAAP measure, and its reconciliation to net loss, showing an increase for Q1 2023 - Adjusted EBITDA, a non-GAAP measure, increased by **6.7%** to **$4.0 million** in Q1 2023 from **$3.7 million** in Q1 2022[84](index=84&type=chunk) Adjusted EBITDA Reconciliation | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(2,024,053) | $(2,184,309) | | Depreciation and amortization | $2,508,967 | $2,437,209 | | Interest expense | $2,443,028 | $1,556,585 | | Stock-based compensation expense | $298,431 | $258,638 | | Acquisition, integration and related costs | $477,601 | $1,305,936 | | Other adjustments | $(85,593) | $195,858 | | Income tax expense | $368,504 | $166,815 | | Adjusted EBITDA | $3,986,885 | $3,736,732 | [Adjusted Net Income and Adjusted Net Income per Diluted Share](index=19&type=section&id=Adjusted%20Net%20Income%20and%20Adjusted%20Net%20Income%20per%20Diluted%20Share) This section provides Adjusted Net Income and Adjusted Net Income per Diluted Share, non-GAAP measures, and their reconciliation - Adjusted net income, a non-GAAP measure, decreased to **$0.6 million** in Q1 2023 from **$1.3 million** in Q1 2022[88](index=88&type=chunk) Adjusted Net Income Reconciliation | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Reported net loss | $(2,024,053) | $(2,184,309) | | Amortization of intangibles | $2,221,669 | $2,174,455 | | Acquisition, integration and related costs | $477,601 | $1,305,936 | | Other adjustments | $(76,326) | — | | Adjusted net income | $598,891 | $1,296,082 | | Adjusted net income per diluted share | $0.03 | $0.06 | | Diluted weighted average shares outstanding | 22,158,132 | 21,715,982 | [Liquidity and Capital Resources](index=19&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's liquidity position, including cash, working capital, and borrowing capacity to fund future operations Key Liquidity Metrics | Metric | March 31, 2023 | December 31, 2022 | | :-------------------------- | :------------- | :---------------- | | Cash and Cash Equivalents | $9.8 million | $9.6 million | | Working Capital | $18.1 million | $19.7 million | - The company believes its existing cash, borrowing capacity under its **$25.0 million** ABL Facility, and cash from operations will be sufficient to fund operations for the next 12 months and the foreseeable future[92](index=92&type=chunk) [Cash Flows](index=20&type=section&id=Cash%20Flows) This section analyzes cash flows from operating, investing, and financing activities, highlighting significant year-over-year changes - Net cash provided by operating activities was **$3.0 million** in Q1 2023, a significant improvement from net cash used of **$(0.4) million** in Q1 2022[94](index=94&type=chunk) - Net cash used in investing activities decreased to **$(0.2) million** in Q1 2023 from **$(3.5) million** in Q1 2022, primarily due to the absence of a large acquisition[95](index=95&type=chunk) - Net cash used in financing activities was **$(2.5) million** in Q1 2023, mainly due to net repayments on the ABL Facility, contrasting with **$3.3 million** provided in Q1 2022 from acquisition financing[96](index=96&type=chunk) [Inflation](index=20&type=section&id=Inflation) This section discusses the impact of inflation on the company and its strategies for mitigating cost increases through flexible pricing - The company does not believe inflation had a material impact in Q1 2023 or Q1 2022[98](index=98&type=chunk) - Flexible pricing structures and cost recovery fees in contracts are expected to help offset inflationary cost increases (fuel, labor, capital items)[98](index=98&type=chunk)[99](index=99&type=chunk) [Critical Accounting Estimates and Policies](index=21&type=section&id=Critical%20Accounting%20Estimates%20and%20Policies) This section identifies key accounting estimates and policies, noting no significant changes other than a new ASU adoption - Key accounting estimates include accounts receivable, goodwill and other intangible assets, stock-based compensation, deferred taxes, and fair value of acquired assets/liabilities[100](index=100&type=chunk) - No significant changes in critical accounting policies occurred during Q1 2023, other than the adoption of ASU 2016-13[100](index=100&type=chunk) [Recent Accounting Pronouncements](index=21&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 2 for details on recently adopted accounting pronouncements, specifically ASU 2016-13 - Refer to Note 2 for details on recent accounting pronouncements, specifically the adoption of ASU 2016-13[101](index=101&type=chunk) [Off-Balance Sheet Arrangements](index=21&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of off-balance sheet debt, similar obligations, or undisclosed related-party transactions - The company has no off-balance sheet debt, similar obligations, or undisclosed related-party transactions[102](index=102&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=21&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there are no applicable quantitative and qualitative disclosures about market risk for the company - The company states that this item is not applicable[103](index=103&type=chunk) [Item 4. Controls and Procedures](index=21&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details management's evaluation of the company's disclosure controls and procedures and internal control over financial reporting, concluding on their effectiveness and acknowledging inherent limitations [Evaluation of Disclosure Controls and Procedures](index=21&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section presents management's conclusion on the effectiveness of disclosure controls and procedures as of March 31, 2023 - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2023[104](index=104&type=chunk) [Changes in Internal Control Over Financial Reporting](index=21&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section confirms no material changes in internal control over financial reporting during the first quarter of 2023 - There were no changes in internal control over financial reporting during Q1 2023 that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[105](index=105&type=chunk) [Limitations on Effectiveness of Controls and Procedures](index=21&type=section&id=Limitations%20on%20Effectiveness%20of%20Controls%20and%20Procedures) This section acknowledges the inherent limitations of control systems, providing only reasonable assurance against misstatements - Management acknowledges that control systems provide only reasonable, not absolute, assurance and are subject to inherent limitations such as faulty judgments, simple errors, circumvention by individuals, or management override[106](index=106&type=chunk) [PART II. OTHER INFORMATION](index=23&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits [Item 1. Legal Proceedings](index=23&type=section&id=Item%201.%20Legal%20Proceedings) This section states that the company is not aware of any legal proceedings that could have a material adverse effect on its business - The company is not aware of any material legal proceedings as of the filing date[109](index=109&type=chunk) [Item 1A. Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) This section introduces a new risk factor concerning the instability of financial institutions and its potential adverse impacts on the company's vendors, customers, and access to cash/borrowings - A new risk factor highlights potential adverse impacts from financial institution instability on vendors, customers, and the company's ability to access cash deposits and borrowings[110](index=110&type=chunk) - Tight credit conditions resulting from financial instability could lead to an economic slowdown and reduced demand for the company's services[110](index=110&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=23&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section indicates that there were no unregistered sales of equity securities or use of proceeds to report - No unregistered sales of equity securities or use of proceeds occurred during the period[111](index=111&type=chunk) [Item 3. Defaults Upon Senior Securities](index=23&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms that there were no defaults upon senior securities - There were no defaults upon senior securities[112](index=112&type=chunk) [Item 4. Mine Safety Disclosures](index=23&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company[113](index=113&type=chunk) [Item 5. Other Information](index=23&type=section&id=Item%205.%20Other%20Information) This section discloses a new Severance and Change in Control Agreement with the CFO, Brett W. Johnston, outlining terms for termination, change in control, and non-compete/non-solicitation clauses - A Severance and Change in Control Agreement was entered into with CFO Brett W. Johnston, effective May 12, 2023[114](index=114&type=chunk) - The agreement provides for **12 months of salary** and a pro-rata cash incentive bonus upon termination without good cause or voluntary termination for good reason[114](index=114&type=chunk) - In a change in control scenario, if Mr. Johnston terminates employment or is terminated without good cause, he receives **12 months of base salary**, an average cash bonus, and accelerated vesting of unvested stock options and restricted stock units[114](index=114&type=chunk) - The agreement includes a **12-month non-compete clause** and a **24-month non-solicitation clause** for employees following termination[114](index=114&type=chunk) [Item 6. Exhibits](index=24&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Severance and Change in Control Agreement, CEO/CFO certifications, and XBRL financial statements - Key exhibits include the Severance and Change in Control Agreement (Exhibit 10.1), CEO/CFO certifications (Exhibits 31.1, 31.2, 32.1, 32.2), and Inline XBRL financial statements (Exhibit 101)[115](index=115&type=chunk) [SIGNATURES](index=25&type=section&id=SIGNATURES) This section contains the official signatures of the company's President, CEO, and CFO, certifying the report's accuracy - The report is signed by S. Ray Hatch, President and Chief Executive Officer, and Brett W. Johnston, Senior Vice President and Chief Financial Officer, on May 15, 2023[118](index=118&type=chunk)

Quest Resource Holding Corp (NASDAQ:QRHC) Q4 2022 Earnings Conference Call March 23, 2023 5:00 PM ET Company Participants David Mossberg - Three Part Advisors Ray Hatch - President, CEO & Director Brett Johnston - SVP & CFO Conference Call Participants Aaron Spychalla - Craig-Hallum Capital Group Gerard Sweeney - ROTH MKM Partners Chip Moore - EF Hutton George Melas - MKH Management Company Gregg Kitt - Pinnacle Family Office Investments Operator Thank you for standing by. This is the conference operator. W ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM to 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 Incorporatio ...

I N V E S T O R P R E S E N T A T I O N Quest Resource Holding Corporation (NASDAQ: QRHC) © 2022 Quest Resource Holding Corporation. Copying, publication or redistribution outside of Quest is strictly prohibited. NATIONAL PROVIDER OF WASTE & RECYCLING SOLUTIONS N O V E M B E R SEC SAFE HARBOR 2 © 2022 Quest Resource Holding Corporation. Copying, publication or redistribution outside of Quest is strictly prohibited. The statements contained in this Investor Presentation that are not purely historical are for ...