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Timestamp: 2020-01-24 13:17:30
Document Index: 800953458

Matched Legal Cases: ['arth911', 'arth911', 'arth911', 'arth911', 'arth911', 'arth911', 'arth911', 'arth911', 'arth911', 'arth911']

QUEST RESOURCE HOLDING CORP, 10-Q filed on 5/21/2012
41,964,269�
$�14,976�
135,934�
158,400�
174,650�
439,460�
112,338�
4,748�
70,500�
Convertible notes payable - short-term, net of discount of $26,638 and nil
33,362�
271,948�
Convertible notes payable - related party, net of discount of nil and $20,729 as of March 31, 2012 and June 30, 2011, respectively
349,948�
Shareholders' equity: Common stock, $.001 par value; 60,000,000 shares authorized; 40,089,269 and 38,426,227 shares issued as of March 31, 2012 and June 30, 2011, respectively; 40,014,269 and 38,351,227 shares outstanding as of March 31, 2012 and June 30, 2011, respectively
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2,454,568�
(2,378,895)
89,512�
$�439,460�
$�26,638�
40,089,269�
40,014,269�
3 Months Ended 9 Months Ended 43 Months Ended
$�33,568�
$�1,320�
$�61,768�
$�70,928�
16,609�
30,188�
50,545�
54,319�
149,227�
75,035�
319,430�
311,707�
1,083,038�
46,302�
22,352�
109,830�
71,112�
208,568�
32,793�
15,408�
71,983�
45,328�
182,512�
28,133�
15,122�
62,030�
33,135�
121,556�
256,455�
127,917�
563,273�
540,412�
2,304,844�
(226,267)
(2,250,525)
9,900�
13,486�
37,473�
$�(245,739)
$�(151,850)
$�(556,460)
$�(566,027)
$�(2,378,895)
39,205,804�
36,725,799�
38,964,217�
36,195,091�
350,554�
351,781�
1,226,705�
53,618�
(556,460)
$�89,512�
9 Months Ended 43 Months Ended
30,482�
133,297�
298,694�
761,107�
111,348�
17,829�
(233,234)
(880,912)
(376,415)
222,000�
1,272,303�
169,366�
14,976�
$�213,675�
Interim results are subject of significant variations and the results of operations for the nine months ended March 31, 2012 are not necessarily indicative of the results to be expected for the full year.
Basic earnings (loss) per share includes no dilution and is computed by dividing net income (loss) available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings (loss) per share is calculated based on the weighted average shares of Common Stock outstanding during the period plus the dilutive effect of outstanding Common Stock purchase warrants and stock options using the treasury stock method and the dilutive effects of convertible securities using the if-converted method. Basic and diluted loss per share were the same for all periods reported due to the net losses attributable to common shareholders for all periods reported. As of March 31, 2012, we had convertible notes payable outstanding that, with accrued interest, were convertible into approximately 549,650 common shares. As of March 31, 2012, the conversion ratio for these notes was lower than our closing stock price. These convertible notes payable are described in more detail in Note 7.
During May 2011, the FASB issued ASU No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASC 2011-04”). The amendments in ASC 2011-04 were issued in order to align the fair value measurement and disclosure requirements in GAAP and International Financial Reporting Standards. Consequently, the amendments change the wording used to describe many of the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. However, many of the amendments in ASC 2011-04 will not result in a change in the application of the requirements in ASC 820, Fair Value Measurement. The amendments in ASU 2011-04 are effective, on a prospective basis, for public entities for interim and annual periods beginning after December 15, 2011, and for nonpublic entities for annual periods beginning after December 15, 2011. The adoption of this guidance has not had a material impact on our financial position and results of operations.
The Company executed a non-exclusive fulfillment agreement with Feature Marketing on March 29, 2011. Under the terms of the fulfillment agreement, Feature Marketing will provide receiving, refurbishment, shipping and storage services and repay the amounts previously advanced towards the acquisition discussed above. As of March 31, 2012 and June 30, 2011 advances outstanding totaled approximately $96,000 and $97,000, respectively, which are secured by the assets of Feature Marketing and are supported by a promissory note from Feature Marketing. These advances bear interest at a rate of 24.0% per annum. We have recognized interest income totaling approximately $37,000 relative to these advances for the period from August 22, 2008 (inception) to March 31, 2012. During June 2011, Feature Marketing returned 75,000 common shares it had previously owned, in exchange for a reduction of amounts due us of approximately $26,000, which was the fair value of the shares at the time they were returned. These shares have been accounted for as treasury stock. As of March 31, 2012 and June 30, 2011, management believes all outstanding advances to Feature Marketing, and interest on such advances, will be fully realized and accordingly, has not provided for any allowance for these balances as of such dates.
During the first nine months of fiscal 2012, we issued common shares for the following transactions:
During the first nine months of fiscal 2012, we issued 248,522 common shares to an entity controlled by Naser Ahmad, the Chief Technology Officer of Youchange, Inc. We expensed $90,000 as professional fees for the issuance of these shares.
During the first nine months of fiscal 2012, we issued 49,705 common shares to Richard Papworth, our Chief Financial Officer for services rendered. We expensed $18,000 as professional fees for the issuance of these shares.
During the first nine months of fiscal 2012, we issued 219,282 common shares to and entity controlled by Derrick Mains, our Executive Vice President of Business Development and Operations, for services rendered. We expensed $75,000 as professional fees for the issuance of these shares.
During the first nine months of fiscal 2012, we issued 61,521 common shares to Dan Fogel, our Vice President of Strategic Initiatives, for services rendered. We expensed $20,000 as professional fees for the issuance of these shares.
During the first nine months of fiscal 2012, we also issued 647,675 common shares in exchange for other professional services. We expensed approximately $28,500 as professional fees and approximately $3,000 as marketing expense and recorded $117,500 as prepaid expense for the issuance of these shares.
During the nine months ended March 31, 2012 we received $40,500 in short-term advances from Jeffrey Rassás, our Chief Executive Officer and Chairman of our Board of Directors, of which, $7,500 was repaid during such time.
During November 2011, we issued a $25,000 note payable with an unrelated, accredited third party in exchange for cash. The note matures 60 days from the date of issuance and bears interest at a rate of 10.0% per annum with an increase to 12.0% per annum following the maturity date. We paid $5,000 against this note prior to March 31, 2012, and we repaid the remaining $20,000 on the note as of the date of this filing.
During March 2012, we received $6,000 from an unrelated party under a short-term advance. The advance has no stated maturity nor stated interest rate.
During March 2012, we also received $10,000 from an unrelated party under a 30 day advance. This advance was repaid as of the March 31, 2012.
During March 2012, we also received $25,000 from an unrelated party under a 30 day advance. This advance was repaid as of the filing date.
During October 2011, we issued a $10,000 convertible note with an unrelated, accredited third party in exchange for cash. The note matures three months from the date of issuance and may be extended by an additional 30 days if the Company so chooses. The note bears interest at a rate of 10.0% per annum and is convertible at any time, with accrued interest, at the discretion of the investor to shares of our common stock at a rate of $0.25 per share. Based on our share price at the time the note agreement was entered into, we recognized a beneficial conversion feature of $5,200 for this convertible note. This note was repaid as of the date of this filing.
During January 2012, we issued a $25,000 convertible note with an unrelated, accredited third party in exchange for cash. The note matures six months from the date of issuance and may be extended by an additional 30 days if the Company so chooses. The note bears interest at a rate of 10.0% per annum and is convertible at any time, with accrued interest, at the discretion of the investor to shares of our common stock at a rate of $0.25 per share. Based on our share price at the time the note agreement was entered into, we recognized a beneficial conversion feature of $9,500 for this convertible note.
During February 2012, we issued a $24,000 convertible note with an unrelated, accredited third party in exchange for cash. The note matures two years from the date of issuance and may be extended by an additional 180 days if the Company so chooses. The note bears interest at a rate of 8.0% per annum and is convertible at any time, with accrued interest, at the discretion of the investor to shares of our common stock at a rate of $0.25 per share. Based on our share price at the time the note agreement was entered into, we recognized a beneficial conversion feature of $4,800 for this convertible note.
During February 2012, we issued a $24,000 convertible note with an unrelated, accredited third party in exchange for cash. The note matures two years from the date of issuance and may be extended by an additional 180 days if the Company so chooses. The note bears interest at a rate of 8.0% per annum and is convertible at any time, with accrued interest, at the discretion of the investor to shares of our common stock at a rate of $0.25 per share. Based on our share price at the time the note agreement was entered into, we recognized a beneficial conversion feature of $6,720 for this convertible note.
During March 2012, we issued a $5,000 convertible note with an unrelated, accredited third party in exchange for cash. The note matures two years from the date of issuance and may be extended by an additional 180 days if the Company so chooses. The note bears interest at a rate of 8.0% per annum and is convertible at any time, with accrued interest, at the discretion of the investor to shares of our common stock at a rate of $0.25 per share. Based on our share price at the time the note agreement was entered into, we recognized a beneficial conversion feature of $2,400 for this convertible note.
As of March 31, 2012, the convertible notes payable and associated accrued interest described above are convertible into a total of approximately 549,650 common shares.
Included in professional fees on the accompanying Condensed Consolidated Statements of Operations are charges relative to certain of the Company’s officers of approximately $105,000 and $42,000 for the three months ended March 31, 2012 and 2011, respectively, $233,000 and $236,300 for the nine months ended March 31, 2012 and 2011, respectively and $765,000 for the period from August 22, 2008 (inception) to March 31, 2012.
The Company leases approximately 2,400 square feet of office space in Scottsdale, Arizona. The lease agreement expires during August 2012 and calls for rent of approximately $2,500 per month. We entered into a lease beginning May 1, 2012 for approximately 6,800 square feet of combined office and warehouse space in Tempe, Arizona. The lease expires during June 2015.
During April and May 2012, we raised $287,500 through the sale of 1,150,000 restricted shares of our common shares in private placement transactions with accredited investors at a sales price of $0.25 per common share.
Merger with Earth911
On May 21, 2012, the Company entered into an Agreement and Plan of Merger (the “Agreement”) with Earth911, Inc., a Delaware corporation (“Earth911”), whereby upon the closing (intended to be July 1, 2012), the Company will issue shares of its common stock in exchange for all of the outstanding capital stock of Earth911 such that the former Earth911 stockholders will own 85% of the outstanding shares of the Company’s Common Stock on a fully diluted basis, and Earth911 will become a wholly-owned subsidiary of the Company. In addition, outstanding options and warrants to acquire shares of capital stock of Earth911 will be exchanged for options and warrants to acquire shares of the Company’s Common Stock using the same ratio that shares of Earth911 capital stock are exchanged for shares of the Company’s Common Stock to achieve the 85% noted above.
Also upon the closing, the Company’s Articles of Incorporation will be amended (i) to reverse split all issued and outstanding shares of the Company’s Common Stock at the ratio of 5 shares to 1 share, (ii) to change the name of the Company to “Infinity Resources Corp.” and (iii) to increase the Company’s authorized capital to 100,000,000 shares of Common Stock and 10,000,000 shares of Preferred Stock. The amendments to the Company’s Articles of Incorporation are subject to approval by the stockholders of the Company. The former Earth911 stockholders and ten (10) of the existing stockholders of the Company entered into voting agreements with regard to voting their shares of capital stock in favor of approval of the Agreement and in favor of approval of the amendments to the Company’s Articles of Incorporation, respectively.
Upon the closing pursuant to other requirements of the Agreement, the existing members of the Company’s Board of Directors and executive officers of the Company (other than the Company’s CFO) will resign and seven (7) new members of the Board will be appointed along with the appointment of new executive officers. The shares of the Company’s Common Stock issued pursuant to the Agreement will be issued to the Earth911 stockholders in reliance upon an exemption from registration afforded under Section 4(2) of the Securities Act of 1933, as amended, for transactions not involving a public offering and in reliance upon exemptions from registration under applicable state securities laws. This description is a summary only and is subject to the specific provisions of the Agreement, which is attached to this Report as Exhibit 2.4.