What changed in Quest Resource Holding Corp's 10-K — 2022 vs 2023
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Paragraph-level year-over-year comparison of Quest Resource Holding Corp's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.
+201 added−210 removedSource: 10-K (2024-03-12) vs 10-K (2023-03-23)
Top changes in Quest Resource Holding Corp's 2023 10-K
201 paragraphs added · 210 removed · 158 edited across 1 sections
- Item 1. Business+201 / −210 · 158 edited
Item 1. Business
Business — how the company describes what it does
158 edited+43 added−52 removed176 unchanged
Item 1. Business
Business — how the company describes what it does
158 edited+43 added−52 removed176 unchanged
2022 filing
2023 filing
Biggest changeNet cash used in operating activities for the year ended December 31, 2022, related primarily to the net effect of the following: • net loss of $(6.0) million; • non-cash items of $14.3 million, which related primarily to depreciation, amortization of intangible assets and debt issuance costs, provision for doubtful accounts, and stock-based compensation; and • cash used in the net change in operating assets and liabilities of $10.6 million, primarily associated with relative changes in accounts receivable, accounts payable, and accrued liabilities.
Biggest changeNet cash used in operating activities for the year ended December 31, 2023, related primarily to the net effect of the following: • net loss of $(7.3) million; • non-cash items of $14.2 million, which related primarily to depreciation, amortization of intangible assets and debt issuance costs, provision for doubtful accounts, and stock-based compensation; and • cash used in the net change in operating assets and liabilities of $(8.2) million, primarily associated with relative changes in accounts receivable, accounts payable, and accrued liabilities. 23 Net cash used in operating activities for the year ended December 31, 2022, related primarily to the net effect of the following: • net loss of $(6.0) million; • non-cash items of $14.3 million, which related primarily to depreciation, amortization of intangible assets and debt issuance costs, provision for doubtful accounts, and stock-based compensation; and • cash used in the net change in operating assets and liabilities of $(10.6) million, primarily associated with relative changes in accounts receivable, accounts payable, and accrued liabilities.
We currently concentrate on programs for recycling motor oil and automotive lubricants, oil filters, scrap tires, oily water, goods destruction, food waste, meat renderings, cooking oil and grease trap waste, plastics, cardboard, pallets, metal, glass, mixed paper, construction debris, as well as a large variety of regulated and non-regulated solid, liquid, and gas wastes.
We currently concentrate on programs for recycling cardboard, pallets, metal, glass, motor oil and automotive lubricants, oil filters, scrap tires, oily water, goods destruction, food waste, meat renderings, cooking oil and grease trap waste, plastics, , mixed paper, construction debris, as well as a large variety of regulated and non-regulated solid, liquid, and gas wastes.
We intend to emphasize the monetary advantages of recycling by demonstrating to businesses their ability to capture the commodity value of their waste streams and recyclables, better manage their disposal and total operating cost, enhance their management of environmental risks, enhance their legal and regulatory compliance, and achieve their business, sustainability, and ESG goals. 1 • Pursue Strategic Acquisitions .
We intend to emphasize the monetary advantages of recycling by demonstrating to businesses their ability to capture the commodity value of their waste streams and recyclables, better 1 manage their disposal and total operating cost, enhance their management of environmental risks, enhance their legal and regulatory compliance, and achieve their business, sustainability, and ESG goals. • Pursue Strategic Acquisitions .
Our services are designed to enable our business customers to capture the commodity value of their waste streams and recyclables, better manage their disposal and total operating costs, enhance their management of environmental risks, enhance their legal and regulatory compliance, and achieve their business and environmental goals while maximizing the efficiency of their assets.
Our services are designed to enable our business customers to capture the commodity value of their waste streams and recyclables, better manage their disposal and total operating costs, enhance their management of environmental risks, enhance their legal and regulatory compliance, and achieve their business and environmental goals while maximizing the efficiency of their assets.
In addition to the risk factors described in this section and elsewhere in this Annual Report on Form 10-K, factors that may cause the price of our Common Stock to fluctuate include the following: • limited trading activity in our Common Stock; • actual or anticipated fluctuations in our quarterly or annual financial results; • the financial guidance we may provide to the public, any changes in such guidance, or our failure to meet such guidance; • the failure of industry or securities analysts to maintain coverage of our company, changes in financial estimates by any industry or securities analysts that follow our company, or our failure to meet such estimates; • various market factors or perceived market factors, including rumors, whether or not correct, involving us, our customers, our strategic partners, or our competitors; • sales, or anticipated sales, of large blocks of our stock; • short selling of our Common Stock by investors; • additions or departures of key personnel; • announcements of technological innovations by us or by our competitors; • introductions of new services or new pricing policies by us or by our competitors; • changing competitive factors; • regulatory or political developments; • fluctuating commodity prices, including oil; • litigation and governmental or regulatory investigations; • acquisitions or strategic alliances by us or by our competitors; and • general economic, political, and financial market conditions or events.
In addition to the risk factors described in this section and elsewhere in this Annual Report on Form 10-K, factors that may cause the price of our Common Stock to fluctuate include the following: • limited trading activity in our Common Stock; • actual or anticipated fluctuations in our quarterly or annual financial results; • the financial guidance we may provide to the public, any changes in such guidance, or our failure to meet such guidance; • the failure of industry or securities analysts to maintain coverage of our company, changes in financial estimates by any industry or securities analysts that follow our company, or our failure to meet such estimates; • various market factors or perceived market factors, including rumors, whether or not correct, involving us, our customers, our strategic partners, or our competitors; • sales, or anticipated sales, of large blocks of our stock; • short selling of our Common Stock by investors; • additions or departures of key personnel; • announcements of technological innovations by us or by our competitors; • introductions of new services or new pricing policies by us or by our competitors; • changing competitive factors; • regulatory or political developments; • fluctuating commodity prices, including oil; • litigation and governmental or regulatory investigations; 14 • acquisitions or strategic alliances by us or by our competitors; and • general economic, political, and financial market conditions or events.
On October 28, 2013, we changed our name to Quest Resource Holding Corporation, increased our shares of Common Stock authorized for issuance, and changed our trading symbol to “QRHC.” On February 20, 2018, we entered into an Asset Purchase Agreement with Earth Media Partners, LLC to sell certain assets of our wholly owned subsidiary, Earth 911, related to the Earth911.com website business in exchange for an aggregate earn-out amount of 6 approximately $350,000 and a 19% interest in Earth Media Partners, LLC.
On October 28, 2013, we changed our name to Quest Resource Holding Corporation, increased our shares of Common Stock authorized for issuance, and changed our trading symbol to “QRHC.” On February 20, 2018, we entered into an Asset Purchase Agreement with Earth Media Partners, LLC to sell certain assets of our wholly owned subsidiary, Earth 911, related to the Earth911.com website business in exchange for an aggregate earn-out amount of approximately $350,000 and a 19% interest in Earth Media Partners, LLC.
These factors include the following: • the cyclicality of the markets we serve; • the timing and size of orders; • the volume of business opportunities relative to our capacity; • service introductions and market acceptance of new service offerings; • timing of expenses in anticipation of future business; • changes in the mix of the services we render; 12 • changes in cost and availability of labor and third-party vendors; • changes in the value of commodities; • changes in prices or market requirements for recyclable materials; • timely delivery of services to customers; • pricing and availability of competitive services; • pressures on reducing selling prices; • the success in serving new markets; • introduction of new technologies into the markets we serve; and • changes in economic conditions.
These factors include the following: • the cyclicality of the markets we serve; • the timing and size of orders; • the volume of business opportunities relative to our capacity; • service introductions and market acceptance of new service offerings; • timing of expenses in anticipation of future business; • changes in the mix of the services we render; • changes in cost and availability of labor and third-party vendors; • changes in the value of commodities; • changes in prices or market requirements for recyclable materials; • timely delivery of services to customers; • pricing and availability of competitive services; • pressures on reducing selling prices; • the success in serving new markets; • introduction of new technologies into the markets we serve; and • changes in economic conditions.
Any perceived uncertainties as to our future direction and control, our ability to execute on our strategy, or changes to the composition of our board of directors or senior management team arising from a proxy 17 contest could lead to the perception of a change in the direction of our business or instability which may result in the loss of potential business opportunities, make it more difficult to pursue our strategic initiatives, or limit our ability to attract and retain qualified personnel and business partners, any of which could adversely affect our business and operating results.
Any perceived uncertainties as to our future direction and control, our ability to execute on our strategy, or changes to the composition of our board of directors or senior management team arising from a proxy contest could lead to the perception of a change in the direction of our business or instability which may result in the loss of potential business opportunities, make it more difficult to pursue our strategic initiatives, or limit our ability to attract and retain qualified personnel and business partners, any of which could adversely affect our business and operating results.
Our services currently focus on the waste streams and recyclables from big box grocers and other specialty retailers; automotive after-market operations such as automotive maintenance, quick lube, dealerships, and collision repair; transportation, logistics, and fleet operators; manufacturing and industrial facilities; multi-family and commercial properties; restaurant chains and food operations; malls and shopping centers; and construction and demolition projects.
Our services currently focus on the waste streams and recyclables from big box retailers, including grocers and other specialty retailers; transportation, logistics, and fleet operators; manufacturing and industrial facilities; automotive after-market operations such as automotive maintenance, quick lube, dealerships, and collision repair; multi-family and commercial properties; restaurant chains and food operations; malls and shopping centers; and construction and demolition projects.
Our services currently focus on the waste streams and recyclables from big box grocers and other specialty retailers; automotive after-market operations such as automotive maintenance, quick lube, dealerships, and collision repair; transportation, logistics, and fleet operators; manufacturing and industrial facilities; multi-family and commercial properties; restaurant chains and food operations; malls and shopping centers; and construction and demolition projects.
Our services currently focus on the waste streams and recyclables from big box retailers, including grocers and other specialty retailers; transportation, logistics, and fleet operators; manufacturing and industrial facilities; automotive after-market operations such as automotive maintenance, quick lube, dealerships, and collision repair; multi-family and commercial properties; restaurant chains and food operations; malls and shopping centers; and construction and demolition projects.
The fair values of these financial instruments approximate their carrying values using Level 3 inputs, based on their short maturities or, for long-term portions of notes payable, based on borrowing rates currently available to us for loans with similar terms and maturities. Recently Issued Accounting Pronouncements See Note 2 to our consolidated financial statements.
The fair values of these financial instruments approximate their carrying values using Level 3 inputs, based on their short maturities or, for long-term portions of notes payable, based on borrowing rates currently available to us for loans with similar terms and maturities. 25 Recently Issued Accounting Pronouncements See Note 2 to our consolidated financial statements.
If the equity and credit markets deteriorate, including as a result of political unrest or war, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive. Inflation can adversely affect us by increasing our costs, including salary costs.
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.
Further, under our agreements with our customers, we are often required to indemnify our customers from any liabilities or claims arising out of our actions or those of our subcontractors and from any release, threatened release, handling, or storage of hazardous and other materials from our customers’ premises as a result of or connected with the performance of services by us or our subcontractors to our customers.
Further, under our agreements with our customers, we are often required to indemnify our customers from any liabilities or claims arising out of our actions or those of our subcontractors and from any release, threatened release, handling, or storage of hazardous and other materials from our customers’ premises as a result of or connected with the performance of services by us or our 8 subcontractors to our customers.
These contracts structure our revenue primarily in three ways: fixed fee, contracted pricing, or revenue from the sale of commodities. 4 Our business depends to a significant extent on revenue from our largest customers. Any material reduction in the business we do with those customers could have an adverse effect on our company.
These contracts structure our revenue primarily in three ways: fixed fee, contracted pricing, or revenue from the sale of commodities. Our business depends to a significant extent on revenue from our largest customers. Any material reduction in the business we do with those customers could have an adverse effect on our company.
Any provision of our articles of incorporation or bylaws or Nevada law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our Common Stock and could also affect the price that some investors are willing to pay for our Common Stock.
Any provision of our articles of incorporation or bylaws or Nevada law that has the effect of delaying or deterring a change in control 15 could limit the opportunity for our stockholders to receive a premium for their shares of our Common Stock and could also affect the price that some investors are willing to pay for our Common Stock.
Scope of Competitors’ Services Our services address a broad and comprehensive scope of materials such as motor oil, scrap tires, grease, meat, organics, regulated waste, construction debris, cardboard, pallets, plastics, metals, and solid waste. Most of our competitors specialize in only one or a few of these service areas.
Scope of Competitors’ Services Our services address a broad and comprehensive scope of materials such as cardboard, pallets, plastics, metals, solid waste, motor oil, scrap tires, grease, meat, organics, regulated and hazardous waste, and construction debris. Most of our competitors specialize in only one or a few of these service areas.
As security for the obligations of the borrowers under the Credit Agreement, (i) the borrowers under the Credit Agreement have granted a first priority lien on substantially all of their tangible and intangible personal property, including a pledge of the capital stock and membership interests, as applicable, of certain of the Company’s direct and indirect subsidiaries, and (ii) the guarantors under the Credit Agreement have granted a first priority lien on the capital stock and membership interests, as applicable, of the Company’s direct and indirect domestic subsidiaries.
As security for the obligations of the borrowers under the Credit Agreement, (i) the borrowers under the Credit Agreement have granted a first priority lien on substantially all of their tangible and intangible personal property, including a pledge of the capital stock and membership interests, as applicable, of certain of the Company’s direct and indirect subsidiaries, and (ii) the guarantors under the Credit Agreement have granted a first priority lien on the capital stock and membership interests, as applicable, of the Company’s direct and indirect subsidiaries.
The diversion of 13 management’s attention and any delays or difficulties encountered in connection with the pursuit of business acquisitions and the integration of acquired businesses, and the incurrence of significant, acquisition related costs in connection with proposed and completed acquisitions, could have an adverse effect on our business, financial condition or results of operations.
The diversion of management’s attention and any delays or difficulties encountered in connection with the pursuit of business acquisitions and the integration of acquired businesses, and the incurrence of significant, acquisition related costs in connection with proposed and completed acquisitions, could have an adverse effect on our business, financial condition or results of operations.
We seek to • ensure our customers can focus on their core businesses instead of waste disposal and recycling; • provide cost-effective choices that improve overall operational economics and maximize the value of recyclable commodities; 2 • help our customers with flexible programs that work toward sustainability and ESG initiatives by lowering the percentage of the waste streams that must be disposed of in landfills and providing the necessary data to report accurate and complete results; • assist our customers with liability protection and services to assist with environmental compliance; and • provide our customers with a centralized point of contact with the convenience of 24/7/365 support.
We seek to • ensure our customers can focus on their core businesses instead of waste disposal and recycling; • provide cost-effective choices that improve overall operational economics and maximize the value of recyclable commodities; • help our customers with flexible programs that work toward operational efficiencies, sustainability and ESG initiatives by lowering the percentage of the waste streams that must be disposed of in landfills and providing the necessary data to report accurate and complete results; • assist our customers with liability protection and services to assist with environmental compliance; and • provide our customers with a centralized point of contact with the convenience of 24/7/365 support.
As a result, they may be able to devote greater resources to the promotion and sale of services similar to those we offer, to provide comparable services at lower prices, and to introduce new solutions and respond to customer requirements more quickly than we can.
As a result, they may be able to devote greater 4 resources to the promotion and sale of services similar to those we offer, to provide comparable services at lower prices, and to introduce new solutions and respond to customer requirements more quickly than we can.
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 require working capital primarily to carry accounts receivable, 22 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.
As a result of our considerable industry experience and relationships, we believe we are well positioned to identify and evaluate acquisition candidates and assess their growth prospects, the quality of their management teams, their local reputation with customers, and the suitability of their locations.
As a result of our considerable industry experience and relationships, we believe we are well positioned to identify and evaluate acquisition candidates and assess their growth prospects, the quality of their management teams, their reputation with customers, and the suitability of their locations.
An adverse determination of any litigation or defense proceedings could cause us to pay substantial damages, including treble damages, if we willfully infringe and also could increase the risk of our patent applications not being issued.
An adverse determination of any litigation or defense proceedings could 9 cause us to pay substantial damages, including treble damages, if we willfully infringe and also could increase the risk of our patent applications not being issued.
These and other factors may cause the market price and demand for our Common Stock to 15 fluctuate substantially, which may limit or prevent investors from readily selling their shares of common stock and may otherwise negatively affect the price or liquidity of our Common Stock.
These and other factors may cause the market price and demand for our Common Stock to fluctuate substantially, which may limit or prevent investors from readily selling their shares of common stock and may otherwise negatively affect the price or liquidity of our Common Stock.
In addition, our level of indebtedness may limit our financial flexibility and could affect our operations. Even if new financing is available, it may not be on terms that are 11 acceptable to us.
In addition, our level of indebtedness may limit our financial flexibility and could affect our operations. Even if new financing is available, it may not be on terms that are acceptable to us.
They also may provide more diverse opportunities and better chances for career advancement. Some of these characteristics may be more appealing to high-quality candidates than those which we have to offer.
They also may provide more diverse opportunities and better chances for career advancement. Some of these characteristics may be more appealing to high-quality candidates than those 13 which we have to offer.
If economic, industry, or customer specific business trends worsen, we increase the allowance for uncollectible accounts by recording additional expense in the period in which we become aware of the new conditions.
If economic, industry, or customer specific business 24 trends worsen, we increase the allowance for uncollectible accounts by recording additional expense in the period in which we become aware of the new conditions.
Increased competition for acquisition candidates may increase purchase prices for acquisitions to levels beyond our financial capability or to levels that would not result in the returns required by our acquisition criteria.
Increased competition for acquisition candidates 12 may increase purchase prices for acquisitions to levels beyond our financial capability or to levels that would not result in the returns required by our acquisition criteria.
These areas include carrying amounts of accounts receivable, goodwill and other intangible assets, deferred taxes and the fair value of assets and liabilities acquired in business acquisitions and 24 stock-based compensation expense.
These areas include carrying amounts of accounts receivable, goodwill and other intangible assets, deferred taxes and the fair value of assets and liabilities acquired in business acquisitions and stock-based compensation expense.
None of our employees are represented by a union in collective bargaining with us. Intellectual Property Trademarks Our trademarks are important to the success of our business.
None of our employees are represented by a union in collective bargaining with us. 5 Intellectual Property Trademarks Our trademarks are important to the success of our business.
The provision for income taxes for both periods is primarily attributable to state tax obligations based on current estimated state tax apportionments for states with no net operating loss carryforwards. We recorded a full valuation allowance against all of our deferred tax assets (“DTAs”) as of both December 31, 2022 and 2021.
The provision for income taxes for both periods is primarily attributable to state tax obligations based on current estimated state tax apportionments for states with no net operating loss carryforwards. We recorded a full valuation allowance against all of our deferred tax assets (“DTAs”) as of both December 31, 2023 and 2022.
Equity Compensation Plan Information For equity compensation plan information, refer to Item 12 in Part III of this Annual Report on Form 10-K. Recent Sales of Unregistered Securities Except as previously disclosed in the Company’s filings with the SEC, there were no sales of unregistered securities for the year ended December 31, 2022.
Equity Compensation Plan Information For equity compensation plan information, refer to Item 12 in Part III of this Annual Report on Form 10-K. Recent Sales of Unregistered Securities Except as previously disclosed in the Company’s filings with the SEC, there were no sales of unregistered securities for the year ended December 31, 2023.
Earth911 was subsequently renamed Quest Sustainability Services, Inc. On October 19, 2020, we acquired substantially all of the assets used in the business of Green Remedies Waste and Recycling, Inc. ("Green Remedies"), a leading provider of independent environmental services, particularly in multi-family housing, located in Burlington, NC.
Earth911 was subsequently renamed Quest Sustainability Services, Inc. On October 19, 2020, we acquired substantially all of the assets used in the business of Green Remedies Waste and Recycling, Inc. (“Green Remedies”), a leading provider of independent environmental services, particularly in multi-family housing, located in Burlington, NC.
As of December 31, 2022 and 2021, we did not recognize any assets or liabilities relative to uncertain tax positions, nor do we anticipate any significant unrecognized tax benefits will be recorded during the next 12 months. We recognize any interest or penalties related to unrecognized tax benefits in income tax expense.
As of December 31, 2023 and 2022, we did not recognize any assets or liabilities relative to uncertain tax positions, nor do we anticipate any significant unrecognized tax benefits will be recorded during the next 12 months. We recognize any interest or penalties related to unrecognized tax benefits in income tax expense.
We rely on our subcontractors to maintain high levels of service. The loss of our relationships with our subcontractors, or their failure to conduct their services for us as anticipated in terms of cost, quality, and timeliness could adversely affect our ability to service our customers in accordance with required service, quality, and performance requirements.
We rely on our subcontractors to maintain high levels of service. The loss of our relationships with our subcontractors, or their failure to conduct their services for us as anticipated in terms of cost, quality, and timeliness could adversely affect our ability to service our customers in accordance with certain service, quality, and performance requirements.
Our ability to expand successfully will depend upon a number of factors, including the following: • the continued development of our business; • the hiring, training, and retention of additional personnel; • the ability to enhance our operational, financial, and management systems; • the availability of adequate financing; • competitive factors; • general economic and business conditions; • the ability to leverage on the factors expanding the growth of recycling; • the ability to expand our customer base, the types of recyclable materials covered by our services, and our network of third-party service providers; • the ability to implement new methods for revenue generation; and • the ability to expand our relationships with third parties that are also engaged in activities relating to reducing, reusing, and recycling.
Our ability to expand successfully will depend upon a number of factors, including the following: 7 • our ability to successfully expand, operate, and manage our operations; • the continued development of our business; • the hiring, training, and retention of additional personnel; • the ability to enhance our operational, financial, and management systems; • the availability of adequate financing; • competitive factors; • general economic and business conditions; • the ability to leverage on the factors expanding the growth of recycling; • the ability to expand our customer base, the types of recyclable materials covered by our services, and our network of third-party service providers; • the ability to implement new methods for revenue generation; and • the ability to expand our relationships with third parties that are also engaged in activities relating to reducing, reusing, and recycling.
Our sales and marketing efforts focus on emphasizing the benefits of our nationwide, one-stop, comprehensive service offerings and the ability to improve overall customers’ operational economics, maximize the value of their recyclable commodities, and foster the benefits of environmental sustainability. We plan to continue to increase our sales and marketing efforts.
Our sales and marketing efforts focus on emphasizing the benefits of our nationwide, one-stop, comprehensive service offerings and the 3 ability to improve overall operational economics, maximize the value of their recyclable commodities, and foster the benefits of environmental sustainability. We plan to continue to increase our sales and marketing efforts.
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.
While 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.
To the extent we establish or increase a valuation allowance in a period, we include an adjustment within the tax provision of our consolidated statements of operations. As of December 31, 2022 and 2021, we had established a full valuation allowance for all deferred tax assets.
To the extent we establish or increase a valuation allowance in a period, we include an adjustment within the tax provision of our consolidated statements of operations. As of December 31, 2023 and 2022, we had established a full valuation allowance for all deferred tax assets.
We help construction site managers across the United States recycle construction waste, including cardboard, plastics, metal, pallets, wood, drywall, and concrete. In addition, we provide temporary containers, offices, storage, toilets, eye washing stations, and water holding tanks. • Food/Organic Waste .
We help construction site managers across the United States recycle construction waste, including cardboard, plastics, metal, pallets, wood, drywall, and concrete. In addition, we provide temporary containers, offices, storage, toilets, eye washing stations, and water holding tanks.
Our programs focus on various types of food facilities (grocers, manufacturers, distributors, etc.) to capture the maximum amount of food and other organic waste material and to use the most valuable recovery process available to meet their business and sustainability goals. • Manufacturing Services.
Our programs focus on various types of food facilities (grocers, manufacturers, distributors, etc.) to capture the maximum amount of food and other organic waste material and to use the most valuable recovery process available to meet their business and sustainability goals.
We currently concentrate on programs for recycling motor oil and automotive lubricants, oil filters, scrap tires, oily water, goods destruction, food waste, meat renderings, cooking oil and grease trap waste, plastics, cardboard, pallet, metal, glass, mixed paper, construction debris, as well as a large variety of regulated and non-regulated solid, liquid, and gas wastes.
We currently concentrate on programs for recycling cardboard, pallets, wood waste, metal, glass, motor oil and automotive lubricants, oil filters, scrap tires, oily water, goods destruction, food waste, meat renderings, cooking oil and grease trap waste, plastics, mixed paper, construction debris, as well as a large variety of regulated and non-regulated solid, liquid, and gas wastes.
We performed our most recent goodwill impairment analysis in the third quarter of 2022 with no impairment recorded. Stock Options We estimate the fair value of stock options using the Black-Scholes-Merton valuation model.
We performed our most recent goodwill impairment analysis in the third quarter of 2023 with no impairment recorded. Stock Options We estimate the fair value of stock options using the Black-Scholes-Merton valuation model.
We create customer-specific programs and perform the related services for the collection, processing, recycling, disposal, and tracking of waste streams and recyclables. Our programs and services enable our customers to address their business, sustainability and Environmental, Social and Governance (“ESG”) goals and responsibilities. We believe our services are comprehensive, innovative, and cost effective.
We create customer-specific programs and perform the related services for the collection, processing, recycling, disposal, and tracking of waste streams and recyclables to maximize resource utilization. Our programs and services enable our customers to address their business, sustainability and Environmental, Social and Governance (“ESG”) goals and responsibilities. We believe our services are comprehensive, innovative, and cost effective.
Recent Developments On February 10, 2022, we acquired an independent environmental services company that primarily services customers in the northeast region of the United States for approximately $3.35 million.
On February 10, 2022, we acquired an independent environmental services company that primarily services customers in the northeast region of the United States for approximately $3.35 million.
Our Business 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.
Our Business 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 to maximize resource utilization.
Volumes of waste and recycling materials generated by our customers are 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.
Volumes of waste and recyclable materials generated by our customers are impacted period to period based on 20 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.
Cash Flows from Financing Activities Net cash provided by financing activities was $7.8 million for the year ended December 31, 2022, primarily from borrowings of $3.5 million from the Credit Agreement with Monroe Capital used to finance the February 2022 acquisition of an independent environmental services company, net borrowings of $5.0 million on our ABL Facility, and $933,000 proceeds from stock option exercises and shares issued under our 2014 Employee Stock Purchase Plan, partially offset by $1.4 million repayments of notes payable.
Net cash provided by financing activities was $7.8 million for the year ended December 31, 2022, primarily from borrowings of $3.5 million from the Credit Agreement with Monroe Capital used to finance the February 2022 acquisition of an independent environmental services company, net borrowings of $5.0 million on our ABL Facility, and $933,000 proceeds from stock option exercises and shares issued under our 2014 ESPP, partially offset by $1.4 million repayments of notes payable.
If we were to incur substantial liability for environmental damage, our or our subcontractors’ insurance coverage may not fully cover or may be inadequate to cover such liability. Also, because of the variable condition of the insurance market, we may experience future increases in self-insurance levels, increased retention levels, and increased premiums.
If we were to incur substantial liability for environmental damage, our or our subcontractors’ insurance coverage may be inadequate to cover such liability. Also, because of the variable condition of the insurance market, we may experience future increases in self-insurance levels, retention levels, and premiums.
To record our accounts receivable at their net realizable value, we assess their collectability, which requires a considerable amount of judgment. We perform a detailed analysis of the aging of our receivables, the credit worthiness of our customers, our historical bad debts, and other adjustments.
To record our accounts receivable at their net realizable value, we assess their collectability, which requires a considerable amount of judgment. We perform a detailed analysis of the aging of our receivables, the creditworthiness of our customers, our historical bad debts, and other adjustments.
Changing environmental regulations could require us or enterprises with which we do business to take any number of actions, including the purchase of emission allowances or installation of additional pollution control technology, and could make some operations less profitable, which could reduce the ability or willingness of our customers to use our services and adversely affect our results of operations.
Changing environmental regulations could require us or enterprises with which we do business to take any number of actions, including the purchase of emission allowances or installation of additional pollution control technology. These actions could make some operations less profitable and reduce the ability or willingness of our customers to use our services.
Two customers accounted for 24% of our revenue for the year ended December 31, 2022, and two customers accounted for 38% of our revenue for the year ended December 31, 2021. We believe that we are unique in our ability to offer comprehensive national solutions in the highly fractionalized waste, disposal, and recycling service business.
Two customers accounted for 29% of our revenue for the year ended December 31, 2023, and two customers accounted for 24% of our revenue for the year ended December 31, 2022. We believe that we are unique in our ability to offer comprehensive national solutions in the highly fractionalized waste, disposal, and recycling service business.
Our failure to maintain effective internal control over financial reporting could prevent us from filing our periodic reports on a timely basis, which could result in the loss of investor confidence in the reliability of our consolidated financial statements, harm our business, and negatively impact the trading price of our Common Stock. 14 Increased prices and inflation could negatively impact our financial results.
Our failure to maintain effective internal control over financial reporting could prevent us from filing our periodic reports on a timely basis, which could result in the loss of investor confidence in the reliability of our consolidated financial statements, harm our business, and negatively impact the trading price of our Common Stock.
Our customers impose substantial requirements relating to the recycling and waste management services we provide them.
Our customers impose substantial requirements relating to the recycling and waste management services that we provide.
Finally, various states have enacted, or are considering enacting, laws that restrict the disposal within the state of solid or hazardous wastes generated outside the state. While courts have declared unconstitutional laws that overtly discriminate against out of state waste, courts have upheld some laws that are less overtly discriminatory.
Finally, various states have enacted, or are considering enacting, laws that restrict the disposal within the state of solid or hazardous wastes generated outside the state. While courts have declared unconstitutional laws that overtly discriminate against out of state waste, courts have upheld some laws that are less overtly discriminatory. Challenges to other such laws are pending.
We can provide disposal and recycling services for virtually all forms of solids and liquids, although our current services primarily relate to used motor oil, oil filters, scrap tires, solid waste, metals, grease, cooking oil, food waste, expired food products, glass, cardboard, paper, industrial cleaning (separator cleaning and tank cleaning), plastics, construction debris, universal waste (batteries, mercury, lights), regulated waste, and electronic devices.
We can provide disposal and recycling services for virtually all forms of solids and liquids, with our current services being primarily related to cardboard, paper, metals, used motor oil, oil filters, scrap tires, plastics, grease, cooking oil, food waste, expired food 2 products, glass, industrial cleaning (separator cleaning and tank cleaning), construction debris, universal waste (batteries, mercury, lights), regulated waste, and electronic devices.
Cash Flows from Investing Activities Cash used in investing activities for the year ended December 31, 2022, was $4.3 million and primarily related to the $3.1 million net purchase of the assets of a Northeast-based independent environmental services company on February 10, 2022, which was partially offset by a $500,000 purchase price adjustment of a prior year acquisition.
Cash used for the year ended December 31, 2022, was $(4.3) million primarily related to the $3.1 million net purchase of the assets of a Northeast-based independent environmental services company on February 10, 2022, which was partially offset by a $500,000 purchase price adjustment of a prior year acquisition.
We suggest that Adjusted EBITDA be viewed in conjunction with our reported financial results or other financial information prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). For the year ended December 31, 2022, other adjustments included earn-out adjustments, certain recruiting, severance and project costs, and certain administrative fees related to borrowings.
We suggest that Adjusted EBITDA be viewed in conjunction with our reported financial results or other financial information prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). For the year ended December 31, 2023, other adjustments included an earn-out adjustment, severance and project costs as well as certain administrative fees related to borrowings.
Some of the industries that we target and the nature of the products and services that we market to those industries are as follows: • Automotive/Transportation o Retail service providers (car dealerships, tire dealerships, quick lubes, aftermarket automotive parts and accessories retailers, automotive service franchises, car washes) o Trucking and fleet o Car and equipment rental companies • Manufacturing o Packaging o Food and beverages o Machinery and industrial o Chemicals and lubricants • Hospitality and Retail o Grocers o Big box o Specialty o Restaurants o Hotels and stadiums o Malls and shopping centers • Construction and Demolition o Commercial o Multi-family o Industrial • Commercial and Multi-family Property Management Customers We generally enter into multi-year contracts with our customers that are designed to provide us with recurring monthly revenue.
Some of the industries that we target are as follows: • Automotive o Retail service providers (car dealerships, tire dealerships, quick lubes, aftermarket automotive parts and accessories retailers, automotive service franchises, car washes) o Car and equipment rental companies • Industrial/Manufacturing o Food and beverages o Machinery and equipment o Chemicals and lubricants • Distribution and Logistics o Trucking and fleet o Warehouses and distribution centers • Hospitality and Retail o Grocers o Big box o Specialty o Restaurants o Hotels • Property Management o Commercial o Malls and shopping centers o Multi-family • Construction and Demolition Customers We generally enter into multi-year contracts with our customers that are designed to provide us with recurring monthly revenue.
We may experience periodic systems interruptions. Any substantial increase in the volume of traffic on our infrastructure may require us to expand and upgrade our technology, transaction-processing systems, and other features.
Any substantial increase in the volume of traffic on our infrastructure may require us to expand and upgrade our technology, transaction-processing systems, and other features.
The COVID-19 pandemic may affect our operations in the future. All of these factors may have far reaching impacts on our business, operations, and financial results and conditions, directly and indirectly, including without limitation impacts on the health of our company’s management and employees, marketing and sales operations, customer and consumer behaviors, and on the overall economy.
All of these factors may have far reaching impacts on our business, operations, and financial results and conditions, directly and indirectly, including without limitation impacts on the health of our company’s management and employees, marketing and sales operations, customer and consumer behaviors, and on the overall economy.
We believe that we can provide value to our business customers by servicing a larger portion of disposable and recyclable materials, including construction and debris waste. • Maintain Virtual Facilities and Equipment .
We believe that we can provide value to our business customers by servicing a larger portion of disposable and recyclable materials, including additional niche waste streams. • Maintain Virtual Facilities and Equipment .
Adjusted EBITDA For the year ended December 31, 2022, Adjusted EBITDA, a non-GAAP financial measure, increased 51.2% to $16.4 million from $10.9 million for the year ended December 31, 2021. 21 We use the non-GAAP measurement of earnings before interest, taxes, depreciation, amortization, stock-related compensation charges, acquisition-related costs, and other adjustments, or “Adjusted EBITDA,” to evaluate our performance.
Adjusted EBITDA For the year ended December 31, 2023, Adjusted EBITDA, a non-GAAP financial measure, decreased (1.4)% to $16.2 million from $16.4 million for the year ended December 31, 2022. We use the non-GAAP measurement of earnings before interest, taxes, depreciation, amortization, stock-related compensation charges, acquisition-related costs, and other adjustments, or “Adjusted EBITDA,” to evaluate our performance.
Sales of substantial amounts of our Common Stock in the public market could adversely affect the market price for our Common Stock. As of December 31, 2022, we had 4,240,803 shares of Common Stock issuable upon the exercise of outstanding stock options, DSUs, and warrants under our incentive compensation plan and other option and warrant agreements.
Sales of substantial amounts of our Common Stock in the public market could adversely affect the market price for our Common Stock. 16 As of December 31, 2023, we had 4,011,704 shares of Common Stock issuable upon the exercise of outstanding stock options, DSUs, RSUs, and warrants under our incentive compensation plan and other option and warrant agreements.
Our Strategy Our goal is to be a leading environmental services company. Key elements of our strategy to achieve our goal include the following: • Recycling Services .
Our Strategy Our goal is to be a leading environmental services company. Key elements of our strategy to achieve our goal include the following: • Offer Complete Waste and Recycling Services .
We are amortizing debt issuance costs of $3.3 million and OID of $2.2 million to interest expense over the life of the related debt arrangements as discussed in Note 7 to our consolidated financial statements. Income Taxes We recorded a provision for income taxes of $172,604 and $321,169 for the years ended December 31, 2022 and 2021, respectively.
We are amortizing debt issuance costs of $3.3 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 consolidated financial statements. Income Taxes We recorded a provision for income taxes of $386,932 and $172,604 for the years ended December 31, 2023 and 2022, respectively.
In addition, actions such as those described above could cause significant fluctuations in our stock price based upon temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business. I TEM 1B. UNRESOLVED STAFF COMMENTS None I TEM 2.
In addition, actions such as those described above could cause significant fluctuations in our stock price based upon temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.
We also rely on third-party providers for components of our technology platform, such as hardware and software providers and domain 9 name registrars. A failure or limitation of service or available capacity by any of these third-party providers could adversely affect our business. Problems with our computer and communication systems may harm our business.
We also rely on third-party providers for components of our technology platform, such as hardware and software providers and domain name registrars. A failure or limitation of service or available capacity by any of these third-party providers could adversely affect our business.
Net Income (Loss) Net loss for the year ended December 31, 2022, was $(6.0) million compared with net income of $1.7 million for the year ended December 31, 2021. The discussions above explain the primary changes related to the change in net results.
Net Loss Net loss for the year ended December 31, 2023 was $(7.3) million compared to net loss of $(6.0) million for the year ended December 31, 2022. The discussions above explain the primary changes related to the change in net results.
Employees As of December 31, 2022, we employed a total of 203 persons, of whom 197 were full time employees. Three were executive employees, 113 were administrative and customer services employees, 74 were accounting and finance employees and 13 were sales and marketing employees. We consider our relationship with our employees to be good.
Employees As of December 31, 2023, we employed a total of 198 persons, of whom 195 were full time employees. Three were executive employees, 108 were administrative and customer services employees, 74 were accounting and finance employees and 13 were sales and marketing employees. We consider our relationship with our employees to be good.
If we sell Common Stock, convertible securities, or other equity securities in more than one transaction, investors may be materially diluted by subsequent sales and new investors could gain rights superior to our existing stockholders.
If we sell Common Stock, convertible securities, or other equity securities in more than one transaction, investors may be materially diluted by subsequent sales and new investors could gain rights superior to our existing stockholders. I TEM 1B. UNRESOLVED STAFF COMMENTS None I TEM 1C.
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 year ended December 31, 2022, revenue was $284.0 million, an increase of $128.3 million, or 82.4%, compared with revenue of $155.7 million for the year ended December 31, 2021.
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 year ended December 31, 2023, revenue was $288.4 million, an increase of $4.4 million, or 1.5%, compared with revenue of $284.0 million for the year ended December 31, 2022.
The market price of our Common Stock could decline as a result of sales of a large number of shares of our Common Stock in the market, and even the perception that these sales could occur may depress the market price. As of December 31, 2022, we had 19,696,006 shares of our Common Stock outstanding.
The market price of our Common Stock could decline as a result of sales of a large number of shares of our Common Stock in the market, and even the perception that these sales could occur may depress the market price. As of December 31, 2023, we had 20,161,400 shares of our Common Stock outstanding.
Our business is operated under the control of our board of directors and officers. Stockholders have no right to take part in the control of our affairs or the day-to-day management or operation of the business. Stockholders are permitted to vote only in a limited number of circumstances.
Stockholders have no right to take part in the control of our affairs or the day-to-day management or operation of the business. Stockholders are permitted to vote only in a limited number of circumstances.
The basic and diluted weighted average number of shares of Common Stock outstanding was approximately 19.5 million for the year ended December 31, 2022, compared to basic and diluted weighted average number of shares of Common Stock outstanding of approximately 18.9 million and 20.7 million, respectively, for the year ended December 31, 2021.
The basic and diluted weighted average number of shares of Common Stock outstanding was approximately 20.1 million for the year ended December 31, 2023, compared to basic and diluted weighted average number of shares of Common Stock outstanding of approximately 19.5 million for the year ended December 31, 2022.
The ultimate extent of the effects of the COVID-19 pandemic on our company is highly uncertain and will depend on future developments, and such effects could exist for an extended period of time even after the pandemic. The members of our board of directors and our executive officers have broad rights.
The ultimate extent of the effects of the COVID-19 pandemic on our company is highly uncertain and will depend on future developments, and such effects could exist for an extended period of time even after the pandemic.
Cash Flows The following discussion relates to the major components of our cash flows. 23 Cash Flows from Operating Activities Net cash used in operating activities was $(2.3) million for the year ended December 31, 2022, compared with net cash provided by operating activities of $2.6 million for the year ended December 31, 2021.
Cash Flows The following discussion relates to the major components of our cash flows. Cash Flows from Operating Activities Net cash used in operating activities was $(1.4) million for the year ended December 31, 2023, compared with net cash used in operating activities of $(2.3) million for the year ended December 31, 2022.
The costs of complying with these regulations could be substantial, which may reduce the ability or willingness of our customers to use our services and adversely affect our results of operations. Environmental advocacy groups and regulatory agencies have been focusing considerable attention on the emissions of greenhouse gases and their potential role in climate change.
The costs of complying with these regulations could be substantial, and may reduce the ability or willingness of our customers to use our services. This may adversely affect our results of operations. Environmental advocacy groups and regulatory agencies have focused on the potential role that greenhouse gases have on climate change.
While we own a limited amount of compacting and other service equipment, we do not own significant recycling or waste management assets, such as trucks or landfills, or have a significant number of employees devoted to in-the-field recycling operations. As part of our operations, we maintain strong relationships with a multitude of subcontractors.
While we own a limited amount of compacting and other service equipment, we do not own significant recycling or waste management assets, such as trucks, processing facilities or landfills, or have a significant number of employees devoted to in-the-field recycling operations.
Challenges to other such laws are pending. 5 Equipment and Installation We currently pursue an “asset light” strategy that utilizes third-party subcontractors for the collection, sorting, and processing of recyclable and waste materials for businesses.
Equipment and Installation We currently pursue an “asset light” strategy that utilizes third-party subcontractors for the collection, sorting, and processing of recyclable and waste materials for businesses.
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