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Share Name | Share Symbol | Market | Type |
---|---|---|---|
HireQuest Inc | NASDAQ:HQI | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.11 | -0.87% | 12.48 | 5.00 | 14.94 | 12.81 | 12.40 | 12.81 | 5,633 | 01:00:00 |
Delaware
|
|
91-2079472
|
(State of incorporation or organization)
|
|
(I.R.S. employer identification no.)
|
|
|
|
111 Springhall Drive, Goose Creek, SC 29445
|
||
(Address of principal executive offices) (Zip Code)
|
||
|
|
|
Registrant’s telephone number, including area code:
(843)
723-7400
|
Title
of Each Class
|
|
Trading
Symbol(s)
|
|
Name of
Each Exchange on Which Registered
|
Common Stock, $0.001 par value
|
|
HQI
|
|
The NASDAQ Stock Market LLC
|
|
||||
|
|
|||
|
|
3
|
||
|
|
4
|
||
|
|
5
|
||
|
|
6
|
||
|
|
7
|
||
|
18
|
|||
|
25
|
|||
|
25
|
|||
|
|
|
|
|
|
||||
|
26
|
|||
|
26
|
|||
|
28
|
|||
|
28
|
|||
|
29
|
|||
|
|
30
|
|
September
29,
2019
|
December
31,
2018
|
ASSETS
|
(unaudited)
|
|
Current
assets
|
|
|
Cash and restricted
cash
|
$1,528,334
|
$1,291,317
|
Accounts
receivable, net of allowance for doubtful accounts
|
35,710,457
|
20,725,170
|
Notes
receivable
|
4,527,645
|
-
|
Prepaid expenses,
deposits, and other assets
|
492,676
|
-
|
Prepaid workers'
compensation
|
1,254,671
|
-
|
Due from
affiliates
|
114
|
209,685
|
Current assets of
discontinued operations
|
2,256,960
|
-
|
Total current
assets
|
45,770,857
|
22,226,172
|
Property and
equipment, net
|
2,097,605
|
2,045,881
|
Notes receivable,
net of current portion
|
10,500,455
|
85,500
|
Deposits and other
assets
|
-
|
8,334
|
Right-of-use
asset
|
174,460
|
-
|
Total
assets
|
$58,543,377
|
$24,365,887
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
Current
liabilities
|
|
|
Accounts
payable
|
$39,234
|
$53,435
|
Line of
credit
|
6,889,848
|
-
|
Other current
liabilities
|
8,076,594
|
1,947,551
|
Accrued wages and
benefits
|
1,989,158
|
504,035
|
Due to
affiliates
|
85,605
|
7,740,083
|
Due to
franchisees
|
5,338,721
|
620,385
|
Lease
liability
|
151,900
|
-
|
Workers'
compensation claims liability
|
1,189,132
|
-
|
Current liabilities
of discontinued operations
|
77,154
|
-
|
Total current
liabilities
|
23,837,346
|
10,865,489
|
Workers'
compensation claims liability, net of current portion
|
1,081,819
|
-
|
Franchisee
deposits
|
1,433,163
|
767,509
|
Deferred tax
liability
|
3,080,184
|
-
|
Lease liability,
net of current portion
|
48,315
|
-
|
Total
liabilities
|
29,480,827
|
11,632,998
|
Commitments and
contingencies (Note 9)
|
|
|
Stockholders'
equity
|
|
|
Preferred stock -
$0.001 par value, 1,000,000 shares authorized; none
issued
|
-
|
-
|
Common stock -
$0.001 par value, 30,000,000 shares authorized; 13,472,334 and
9,939,668 shares issued and outstanding, respectively
|
13,472
|
9,940
|
Additional paid-in
capital
|
25,861,985
|
6,938,953
|
Retained
earnings
|
3,187,093
|
5,783,996
|
Total stockholders'
equity
|
29,062,550
|
12,732,889
|
Total liabilities
and stockholders' equity
|
$58,543,377
|
$24,365,887
|
|
Quarter
ended
|
Three
quarters ended
|
||
|
September
29,
2019
|
September
30,
2018
|
September
29,
2019
|
September
30,
2018
|
Franchise royalties
|
$3,139,158
|
$2,175,960
|
$9,276,714
|
$8,032,132
|
Service revenue
|
241,362
|
166,148
|
817,693
|
762,330
|
Total revenue
|
3,380,520
|
2,342,108
|
10,094,407
|
8,794,462
|
Selling, general and administrative
expenses
|
7,393,380
|
1,270,547
|
9,817,245
|
3,980,006
|
Depreciation and
amortization
|
40,200
|
8,428
|
75,630
|
26,357
|
Income (loss) from
operations
|
(4,053,060)
|
1,063,133
|
201,532
|
4,788,099
|
Other miscellaneous
income
|
417,188
|
29,096
|
661,077
|
148,684
|
Interest and other financing
expense
|
(106,461)
|
(13,057)
|
(521,838)
|
(14,697)
|
Net income (loss) before
income taxes
|
(3,742,333)
|
1,079,172
|
340,771
|
4,922,086
|
Provision for income
taxes
|
4,716,731
|
13,783
|
4,816,337
|
35,678
|
Income (loss) income
from continuing operations
|
(8,459,064)
|
1,065,389
|
(4,475,566)
|
4,886,408
|
Income from discontinued operations, net of
tax
|
682,674
|
20,246
|
722,756
|
40,561
|
Net income
(loss)
|
$(7,776,390)
|
$1,085,635
|
$(3,752,810)
|
$4,926,969
|
|
|
|
|
|
Earnings per share -
basic and diluted:
|
|
|
|
|
Continuing
operations
|
$(0.65)
|
$0.11
|
$(0.41)
|
$0.49
|
Discontinued
operations
|
0.05
|
0.00
|
0.07
|
0.01
|
Basic and diluted net
income (loss) per share
|
$(0.60)
|
$0.11
|
$(0.34)
|
$0.50
|
|
|
|
|
|
Weighted average shares
outstanding:
|
|
|
|
|
Basic and diluted
|
12,927,634
|
9,939,668
|
10,939,318
|
9,939,668
|
|
Common
Stock
|
Additional
|
Retained
|
Total
stockholders'
|
|
|
Shares
|
Par
Value
|
paid-in
capital
|
earnings
|
equity
|
Balance at December 31,
2017
|
9,939,668
|
$9,940
|
$6,938,953
|
$5,683,223
|
$12,632,116
|
Net
distributions
|
-
|
-
|
-
|
(4,252,106)
|
(4,252,106)
|
Net income for the
period
|
-
|
-
|
-
|
4,926,969
|
4,926,969
|
Balance at September
30, 2018
|
9,939,668
|
$9,940
|
$6,938,953
|
$6,358,086
|
$13,306,979
|
|
|
|
|
|
|
Balance at December 31,
2018
|
9,939,668
|
$9,940
|
$6,938,953
|
$5,783,996
|
$12,732,889
|
Net
contributions
|
-
|
-
|
-
|
1,155,907
|
1,155,907
|
Merger with Command
Center, Inc.
|
4,677,487
|
4,677
|
26,937,648
|
-
|
26,942,325
|
Stock-based
compensation
|
-
|
-
|
251,266
|
-
|
251,266
|
Restricted stock
granted
|
250,000
|
250
|
101,649
|
-
|
101,899
|
Common stock purchased
and retired
|
(1,394,821)
|
(1,395)
|
(8,367,531)
|
-
|
(8,368,926)
|
Net loss for the
period
|
-
|
-
|
-
|
(3,752,810)
|
(3,752,810)
|
Balance at September
29, 2019
|
13,472,334
|
$13,472
|
$25,861,985
|
$3,187,093
|
$29,062,550
|
|
Three
quarters ended
|
|
|
September
29,
2019
|
September
30,
2018
|
Cash flows from operating activities
|
|
|
Net (loss)
income
|
$(3,752,810)
|
$4,926,969
|
Income from discontinued operations
|
722,756
|
-
|
Net income
(loss) from continuing operations
|
(4,475,566)
|
4,926,969
|
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
continuing operations:
|
|
|
Depreciation
and amortization
|
75,630
|
26,357
|
Stock based
compensation
|
353,165
|
-
|
Deferred
taxes
|
283,666
|
-
|
(Gain) loss on
disposition of property and equipment
|
(528,786)
|
(34,912)
|
Changes in
operating assets and liabilities:
|
|
|
Accounts
receivable
|
(12,728,327)
|
(3,958,087)
|
Prepaid
expenses, deposits, and other assets
|
1,284,002
|
(149,829)
|
Prepaid
workers' compensation
|
(765,910)
|
-
|
Due from
affiliates
|
209,570
|
(369,657)
|
Accounts
payable
|
(91,354)
|
(1,143)
|
Deposits and
other assets
|
8,334
|
-
|
Other current
liabilities
|
4,127,267
|
(469,169)
|
Accrued wages
and benefits
|
(526,930)
|
(339,371)
|
Due to
franchisees
|
4,718,335
|
694,998
|
Operating
leases
|
25,755
|
-
|
Workers'
compensation claims liability
|
431,042
|
-
|
Net cash (used
in) provided by operating activities-continuing
operations
|
(7,600,107)
|
326,156
|
Net cash
provided by operating activities-discontinued
operations
|
6,400,550
|
-
|
Net cash (used
in) provided by operating activities
|
(1,199,557)
|
326,156
|
Cash flows from investing activities
|
|
|
Purchase of
property and equipment
|
(284,919)
|
(313,961)
|
Proceeds from
the sale of property and equipment
|
573,840
|
560,277
|
Net notes
receivable issued
|
(55,380)
|
(167,828)
|
Sale of
intangible assets
|
221,845
|
-
|
Net change in
in franchisee deposits
|
665,654
|
62,046
|
Net cash
provided by investing activities
|
1,121,040
|
140,534
|
Cash flows from financing activities
|
|
|
Net change in
line of credit
|
7,602,202
|
1,338,073
|
Net change in
due to affiliates
|
(5,450,192)
|
2,672,555
|
Proceeds from
the sale of common stock in Command Center
acquisition
|
5,376,543
|
-
|
Purchase of
treasury stock
|
(8,368,926)
|
-
|
Net
contributions by (distributions to) HQ, LLC
members
|
1,155,907
|
(4,252,105)
|
Net cash used
in financing activities
|
315,534
|
(241,477)
|
Net increase in cash
|
237,017
|
225,213
|
Cash and restricted cash, beginning of period
|
1,291,317
|
275,920
|
Cash and restricted cash, end of period
|
$1,528,334
|
$501,133
|
Non-cash investing and financing activities
|
|
|
Purchase of net assets
of Command Center with shares of common stock
|
21,565,782
|
-
|
Sale of assets in
exchange for accounts receivable
|
2,204,286
|
-
|
Sale of intangible
assets in exchange for notes receivable
|
14,887,220
|
-
|
Supplemental disclosure of cash flow
information
|
|
|
Interest
paid
|
521,837
|
-
|
Income taxes
paid
|
-
|
-
|
Stock
issued
|
4,677,487
|
Closing
share price on July 15, 2019
|
$5.76
|
Total
allocable purchase price
|
$26,942,325
|
|
|
Accounts
receivable
|
$10,480,907
|
Cash
and cash equivalents
|
5,376,543
|
Identifiable
intangible assets
|
16,881,428
|
Other
current assets
|
725,453
|
Property,
plant and equipment, net
|
281,186
|
Other
non-current assets
|
1,642,695
|
Current
liabilities
|
(4,002,805)
|
Deferred
tax liability
|
(2,796,518)
|
Other
liabilities
|
(1,646,564)
|
Preliminary
purchase price allocation
|
$26,942,325
|
|
September
29,
2019
|
December
31,
2018
|
Due
to (from) franchisees
|
$71,509
|
$(254,943
) |
Risk
management incentive program liability
|
817,857
|
988,562
|
|
Quarter
ended
|
Three
quarters ended
|
||
|
September
29,
2019
|
September
30,
2018
|
September
29,
2019
|
September
30,
2018
|
Franchise
royalties
|
1,786,975
|
1,375,439
|
5,529,777
|
4,500,617
|
Branches,
December 31, 2017
|
79
|
Closed
in 2018
|
(3)
|
Opened
in 2018
|
21
|
Branches,
December 31, 2018
|
97
|
Closed
in 2019
|
(5)
|
Opened
in 2019
|
60
|
Branches,
September 29, 2019
|
152
|
|
Number
of shares underlying options
|
Weighted
average exercise price per share
|
Weighted
average grant date fair value
|
Outstanding,
December 31, 2018
|
-
|
$-
|
$-
|
Granted
|
160,831
|
5.86
|
3.18
|
Forfeited
|
(100,000)
|
5.70
|
3.16
|
Outstanding,
September 29, 2019
|
60,831
|
6.11
|
3.20
|
|
Number
of shares underlying options
|
Weighted
average exercise price per share
|
Weighted
average grant date fair value
|
Non-vested,
December 31, 2018
|
-
|
$-
|
$-
|
Granted
|
84,523
|
5.56
|
3.05
|
Forfeited
|
(57,857)
|
5.70
|
6.16
|
Vested
|
(21,250)
|
5.09
|
2.93
|
Non-vested,
September 29, 2019
|
5,416
|
5.48
|
3.01
|
|
Number of shares underlying options
|
Weighted
average exercise price per share
|
Weighted
average remaining contractual life (years)
|
Aggregate
intrinsic value
|
Outstanding
|
60,831
|
$6.11
|
6.65
|
$109,267
|
Exercisable
|
55,415
|
6.17
|
6.46
|
37,916
|
|
Outstanding options
|
Vested options
|
||
Range of exercise prices
|
Number of shares underlying options
|
Weighted
average remaining contractual life (years)
|
Number of shares exercisable
|
Weighted
average remaining contractual life (years)
|
$4.80 - 7.00
|
44,582
|
8.28
|
39,166
|
8.24
|
$7.01 - 8.76
|
16,249
|
2.17
|
16,249
|
2.17
|
|
Year
1
|
Year
2
|
Thereafter
|
Total
|
Future
minimum lease payments
|
$40,921
|
$153,317
|
$12,154
|
$206,392
|
Lease
liability interest
|
(2,174)
|
(4,003)
|
-
|
(6,177)
|
Lease
liability as of September 29, 2019
|
$38,747
|
$149,314
|
$12,154
|
$200,215
|
Period
|
(a) Total number
of shares (or units) purchased
|
(b) Average price
paid per share (or unit)
|
(c) Total number
of shares (or units) purchased as part of publicly announced plans
or programs
|
(d) Maximum number
(or approximate dollar value) of shares (or units) that may yet be
purchased under the plans or programs
|
July 1 – July
28, 2019
|
1,394,8211
|
$6.00
|
1,394,821
|
-
|
July 29 –
August 25, 2019
|
-
|
-
|
-
|
-
|
August 26 –
September 29, 2019
|
-
|
-
|
-
|
-
|
Total:
|
1,394,821
|
6.00
|
1,394,821
|
-
|
Exhibit No.
|
Description
|
Plan of
Conversion, dated September 9, 2019 (incorporated by reference to
Exhibit 2.1 to the Company’s Current Report on Form 8-K,
filed with the SEC on September 9, 2019).
|
|
Articles
of Amendment, filed on July 12, 2019 (incorporated by reference to
Exhibit 3.1 to the Company’s Current Report on Form 8-K,
filed with the SEC on July 17, 2019).
|
|
Certificate
of Conversion, as filed with the Secretary of State of the State of
Delaware on September 9, 2019 (incorporated by reference to Exhibit
3.1 to the Company’s Current Report on Form 8-K, filed with
the SEC on September 9, 2019).
|
|
Certificate
of Incorporation, as filed with the Secretary of State of the State
of Delaware on September 9, 2019 (incorporated by reference to
Exhibit 3.2 to the Company’s Current Report on Form 8-K,
filed with the SEC on September 9, 2019).
|
|
Cover
Sheet for Conversion of Business Entity and Articles of Conversion,
as filed with the Secretary of State of Washington on September 11,
2019 (incorporated by reference to Exhibit 3.3 to the
Company’s Current Report on Form 8-K, filed with the SEC on
September 9, 2019) .
|
|
Bylaws,
effective September 11, 2019 (incorporated by reference to Exhibit
3.4 to the Company’s Current Report on Form 8-K, filed with
the SEC on September 9, 2019).
|
|
Employment
Agreement among HQ LTS Corporation, the Company, and Richard
Hermanns (incorporated by reference to Exhibit 10.2 to the
Company’s Current Report on Form 8-K, filed with the SEC on
September 26, 2019).
|
|
Employment
Agreement among HQ LTS Corporation, the Company, and John D.
McAnnar (incorporated by reference to Exhibit 10.3 to the
Company’s Current Report on Form 8-K, filed with the SEC on
September 26, 2019).
|
|
Loan
Agreement, dated as of July 11, 2019, by and among Branch Banking
and Trust Company, Command Center, Inc., Command Florida, LLC, Hire
Quest, L.L.C., HQ LTS Corporation, HQ Real Property Corporation, HQ
Insurance Corporation, HQ Financial Corporation and HQ Franchising
Corporation (incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K, filed with the SEC on
July 17, 2019).
|
|
Separation
and Release of Claims Agreement, executed August 29, 2019
(incorporated by reference to Exhibit 10.1 to the Company’s
Current Report on Form 8-K, filed with the SEC on September 4,
2019).
|
|
Form of
Indemnification Agreement (Directors and Officers) (incorporated by
reference to Exhibit 10.1 to the Company’s Current Report on
Form 8-K, filed with the SEC on September 9, 2019).
|
|
2019
HireQuest, Inc. Non-Employee Director Compensation Plan
(incorporated by reference to Exhibit 10.1 to the Company’s
Current Report on Form 8-K, filed with the SEC on September 26,
2019).
|
|
Addendum
to Employment Agreement between the Company and Cory Smith
(incorporated by reference to Exhibit 10.4 to the Company’s
Current Report on Form 8-K, filed with the SEC on September 26,
2019).
|
|
10.8
|
Consulting
Agreement, dated as of July 15, 2019, by and between Command
Center, Inc. and Dock Square HQ, LLC (filed
herewith).
|
10.9
|
Form of
Restricted Stock Award Agreement pursuant to the Company’s
2016 Stock Incentive Plan (filed herewith).
|
Executive
Employment Agreement, dated as of June 30, 2019, by and between the
Company and Brendan Simaytis (incorporated by reference to Exhibit
10.1 to the Company’s Current Report on Form 8-K, filed with
the SEC on July 1, 2019)
|
|
Consulting
and Nondisclosure Agreement, dated as of June 30, 2019, by and
between the Company and Brendan Simaytis (incorporated by reference
to Exhibit 10.2 to the Company’s Current Report on Form 8-K,
filed with the SEC on July 1, 2019)
|
|
Form of
Asset Purchase Agreement (filed
herewith).
|
|
Certification
of Richard Hermanns, Chief Executive Officer of HireQuest, Inc.
pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 (filed herewith)
|
|
Certification
of Cory Smith, Chief Financial Officer of HireQuest, Inc. pursuant
to Rule 13a-14(a) as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (filed herewith)
|
|
Certification
of Richard Hermanns, Chief Executive Officer of HireQuest, Inc.,
and Cory Smith, Chief Financial Officer of HireQuest, Inc.,
pursuant to 18 U.S.C. Section 1350, as adopted in Section 906 of
the Sarbanes-Oxley Act of 2002 (furnished herewith)
|
|
101.INS
|
XBRL
Instance Document (filed herewith)
|
101.SCH
|
XBRL
Taxonomy Extension Schema Document (filed herewith)
|
101.CAL
|
XBRL
Taxonomy Extension Calculation Linkbase Document (filed
herewith)
|
101.DEF
|
XBRL
Taxonomy Extension Definition Linkbase Document (filed
herewith)
|
101.LAB
|
XBRL
Taxonomy Extension Label Linkbase Document (filed
herewith)
|
101.PRE
|
XBRL
Taxonomy Extension Presentation Linkbase Document (filed
herewith)
|
/s/ Richard Hermanns
|
November
13, 2019
|
Richard
Hermanns
|
Date
|
President
and Chief Executive Officer
|
|
|
|
/s/
Cory Smith
|
November
13, 2019
|
Cory
Smith
|
Date
|
Chief
Financial Officer
|
|
1 Year HireQuest Chart |
1 Month HireQuest Chart |
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