| Basis of Presentation and Significant Accounting Policies [Text Block] | Note 1 Nature of Business HireQuest, Inc., together with its subsidiaries, (“HQI, the “Company,” “we,” us,” or “our”) is a nationwide franchisor of offices providing direct-dispatch, executive search, and commercial staffing solutions primarily in the light industrial and blue-collar segments of the staffing industry and traditional commercial staffing. Our franchisees provide various types of temporary personnel through two On January 24, 2022, February 21, 2022 February 28, 2022 December 12, 2022 For additional information related to these transactions, see Note 2 As of March 31, 2023 1 Basis of Presentation We have prepared the accompanying consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and with the instructions to Article 8 X. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report filed on Form 10 December 31, 2022 not Consolidation The consolidated financial statements include the accounts of HQI and all of its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated. U.S. GAAP requires the primary beneficiary of a variable interest entity (“VIE”) to consolidate that entity. To be the primary beneficiary of a VIE, an entity must have both the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that are significant to the beneficiary. We provide acquisition financing to some of our franchisees that could result in our having to absorb losses. This results in some franchisees being considered VIEs. We have reviewed our relationship with each of these franchisees and determined that we are not not Foreign Currency Translation The functional currency of the company and all of its' subsidiaries is the United States dollar. Certain franchises located outside the United States may may March 31, 2023 March 31, 2022 Use of Estimates The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. Actual results could differ from those estimates. Significant estimates and assumptions underlie our workers’ compensation claim liabilities, our workers’ compensation Risk Management Incentive Program, our deferred taxes, our allowance for credit losses, potential impairment of goodwill and other intangibles, stock-based compensation, and estimated fair value of assets and liabilities acquired. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable consist of amounts due for staffing services provided to customers of franchisees and of accounts receivable originating at company-owned locations. At March 31, 2023 December 31, 2022 42 84 not not For staffing services provided by company-owned offices, we record accounts receivable at face value less an allowance for doubtful accounts. We determine the allowance for doubtful accounts based on historical write-off experience, the age of the receivable, other qualitative factors and extenuating circumstances, and current economic data which represents our best estimate of the amount of expected credit losses on these accounts receivable, if any. We review the allowance for doubtful accounts periodically and evaluate how conditions that existed during the historical charge-off period may may March 31, 2023 December 31, 2022 Revenue Recognition Our primary source of revenue comes from royalty fees based on the operation of our franchised offices. Royalty fees from our HireQuest Direct business model are based on a percentage of sales for services our franchisees provide to customers, which ranges from 6.0% to 8.0%. Royalty fees from our HireQuest business line, including HireQuest franchisees, DriverQuest franchisees, the Northbound franchisee, the HireQuest Health franchisees, and Snelling and LINK franchisees who executed new franchise agreements upon closing, are 4.5% of the payroll we fund plus 18.0% of the gross margin for the territory. The MRI franchises with a lower royalty scale generally pay a flat annual fee plus a percentage-based royalty. For temporary labor, MRI franchises pay a royalty that ranges from 20% to 25% of payroll, depending on sales volume. Some customers that utilize qualified independent contractors cause the franchise to pay a royalty that ranges from 4% to 10% of contractor payments, depending on sales volume. Royalty fees from the Snelling franchise agreements assumed and not For franchised locations, we recognize revenue when we satisfy our performance obligations. Our performance obligations primarily take the form of a franchise license and promised services. Promised services consist primarily of paying temporary employees, completing all statutory payroll related obligations, and providing workers' compensation insurance on behalf of temporary employees. Because these performance obligations are interrelated, we do not For owned locations, we account for revenue when both parties to the contract have approved the contract, the rights and obligations of the parties are identified, payment terms are identified, and collectability of consideration is probable. Revenue derived from owned locations is recognized at the time we satisfy our performance obligation. Our contracts have a single performance obligation, which is the transfer of services. Because our customers receive and consume the benefits of our services simultaneously, our performance obligations are satisfied when our services are provided. Revenue from owned locations is reported net of customer credits, discounts, and taxes collected from customers that are remitted to taxing authorities. Our customers are invoiced every week and we rarely require payment prior to the delivery of service. Substantially all of our contracts include payment terms of 30 no not one Below are summaries of our franchise royalties disaggregated by business model (in thousands): Three months ended March 31, 2023 March 31, 2022 HireQuest Direct model $ 4,012 $ 3,526 HireQuest, Snelling, DriverQuest, HireQuest Health, MRI, Northbound, SearchPath and TradeCorp 5,311 3,049 Total $ 9,323 $ 6,575 Service revenue, which forms the other component of our total revenue, consists of interest we charge our franchisees on overdue customer accounts receivable, trademark license fees, and other fees for optional services we provide. We recognize interest income based on the effective interest rate applied to the outstanding principal balance of overdue accounts. License fees are charged to some locations that utilize our intellectual property that are not Notes Receivable Notes receivable from franchisees consist primarily of amounts due to us related to the financing of franchised locations. We charge interest at a fixed rate and interest income is calculated by applying the effective rate to the outstanding principal balance. The Company estimates expected credit losses over the life of its notes receivable as of the reporting date based on relevant information about past events, current conditions, and reasonable and supportable forecasts. The Company records the estimate of expected credit losses as an allowance for credit losses. Our notes receivable are measured at an amortized cost basis with the allowance for credit losses reported as a valuation account on the balance sheet that adjusts the asset’s amortized cost basis. Our notes receivable are generally secured by the assets of each location and the ownership interests in the franchise. We monitor the financial condition of our debtors and compare the amortized cost basis of a note and the fair value of collateral securing the note as of the reporting date. This includes reserves we have collected and hold in cash, any amounts payable to the franchisee, workers’ compensation rebates not March 31, 2023 December 31, 2022 Some of our notes receivable have contingent consideration based on a percentage of specified system-wide sales that exceed certain thresholds. Notes with contingent consideration are recorded at fair value when originated. Probability of payment is reflected in the fair value, as is the time value of money. Subsequent changes in the recorded amount of contingent consideration are recognized during period in which the change was recognized. Notes receivable from non-franchisees consist primarily of amounts due to us from the sale of non-core assets acquired after an acquisition. We report notes receivable from non-franchisees at the principal balance outstanding less an allowance for losses. We charge interest at a fixed rate and interest income is calculated by applying the effective rate to the outstanding principal balance. Notes receivable are generally unsecured. We monitor the financial condition of our debtors and evaluate the potential impairment of notes receivable based on various analyses, including estimated discounted future cash flows, at least annually and whenever events or changes in circumstances indicate that the carrying amount of the assets may not no March 31, 2023 December 31, 2022 Intangible Assets Intangible assets acquired are recorded at fair value. We test our finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not may not not 2023 2022. Finite-lived intangible assets are amortized using the straight-line method over their estimated useful lives, which ranges from 5 to 15 years. Our finite-lived intangible assets include acquired franchise agreements, acquired customer relationships, acquired customer lists, internally developed software, and purchased software. Our indefinite-lived intangible assets include acquired domain names and acquired trade names. For additional information related to significant additions to intangible assets, see Note 2 Intangible assets internally developed are measured at cost. We capitalize costs to develop or purchase computer software for internal use which are incurred during the application development stage. These costs include fees paid to third not The table below reflects information related to our intangible assets (in thousands). March 31, 2023 December 31, 2022 Estimated useful life Gross Accumulated amortization Net Gross Accumulated amortization Net Finite-lived intangible assets: Franchise agreements 15 years $ 25,556 $ (2,838 ) $ 22,718 $ 25,556 $ (2,413 ) $ 23,143 Purchased software 7 years 3,200 (686 ) 2,514 3,200 (571 ) 2,629 Internally developed software 5 years 2,375 (152 ) 2,223 2,294 (38 ) 2,256 Total finite-lived intangible assets 31,131 (3,676 ) 27,455 31,050 (3,022 ) 28,028 Indefinite-lived intangible assets: Domain name Indefinite 2,226 - 2,226 2,226 - 2,226 Trade name Indefinite 3,580 - 3,580 3,580 - 3,580 Total intangible assets $ 36,937 $ (3,676 ) $ 33,261 $ 36,856 $ (3,022 ) $ 33,834 Impairment - Intangible Assets Indefinite-lived intangible assets are tested annually for impairment during the fourth not may Impairment of indefinite-lived intangibles is determined using a two first not no may none, Goodwill Goodwill represents the excess purchase price over the fair value of identifiable assets received attributable to business combinations. Goodwill is measured for impairment at least annually, or whenever events and circumstances arise that indicate an impairment may Impairment March 31, 2023 The table below summarizes our goodwill at December 31, 2022 three March 31, 2023 Goodwill balance at December 31, 2022 $ 5,870 Change in goodwill during 2023 - Goodwill balance at March 31, 2023 $ 5,870 Impairment - Goodwill Goodwill is tested annually for impairment during the third not may For purposes of our impairment test, we operate as a single reporting unit. Determining the fair value of a reporting unit when performing a quantitative impairment test involves the use of significant estimates and assumptions by management. Different judgments relating to the determination of reporting units could significantly affect the testing of goodwill for impairment and the amount of any impairment recognized. When evaluating goodwill for impairment, we have the option to first not not not no Based on our annual qualitative assessment, we have concluded that it is more likely than not not not Earnings per Share We calculate basic earnings per share by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding. We do not March 31, 2023 March 31, 2022 We use the treasury stock method to calculate the diluted common shares outstanding which were as follows (in thousands): Three months ended March 31, 2023 March 31, 2022 Weighted average number of common shares used in basic net income per common share 13,707 13,526 Dilutive effects of unvested restricted stock and stock options 75 133 Weighted average number of common shares used in diluted net income per common share 13,782 13,659 Fair Value Measures Fair value is the price that would be received to sell an asset, or paid to transfer a liability, in the principal or most advantageous market for the asset or liability in an ordinary transaction between market participants on the measurement date. Our policy on fair value measures requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The policy establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The policy prioritizes the inputs into three may Level 1: Level 2: Level 3: The carrying amounts of cash, accounts receivable, accounts payable, the line of credit and all other current assets and liabilities approximate fair values due to their short-term nature. The fair value of notes receivable approximates the amortized cost basis as adjusted by an allowance for credit losses, as we believe the stated interest rates reflects the prevailing market rates given our unique collateral position and the scarce capital resources willing to finance a franchise. The fair value of the term loan payable approximates its carrying value because interest rates approximate the current rates available for similar borrowing. March 31, 2023 (in thousands) Total Level 1 Level 2 Level 3 Cash $ 8,207 $ 8,207 $ - $ - Notes receivable 5,330 - 5,330 - Accounts receivable 48,118 - 48,118 - Total assets at fair value $ 61,655 $ 8,207 $ 53,448 $ - Term loans payable $ 1,017 $ - $ 1,017 $ - Line of credit 21,214 - 21,214 - Total liabilities at fair value $ 22,231 $ - $ 22,231 $ - December 31, 2022 (in thousands) Total Level 1 Level 2 Level 3 Cash $ 3,049 $ 3,049 $ - $ - Notes receivable 3,492 - 3,492 - Accounts receivable 45,728 - 45,728 - Total assets at fair value $ 52,269 $ 3,049 $ 49,220 $ - Term loan payable $ 3,995 $ - $ 3,995 $ - Line of credit 12,543 - 12,543 - Total liabilities at fair value $ 16,538 $ - $ 16,538 $ - For additional information related to our impaired notes receivable, see Note 10 Discontinued Operations Company-owned offices that have been disposed of by sale, disposed of other than by sale, or are classified as held-for-sale, are reported separately as discontinued operations. In addition, a newly acquired business that, upon acquisition, meets the held-for-sale criteria will be reported as discontinued operations. Accordingly, the assets and liabilities, operating results, and cash flows for these businesses are presented separate from our continuing operations for all periods presented in our consolidated financial statements and footnotes, unless indicated otherwise. The assets and liabilities of a discontinued operation held for sale are measured at the lower of the carrying value or fair value less cost to sell. Reclassification Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no Recently Adopted Accounting Pronouncements In June 2016, 2016 13, Financial Instruments – Credit Losses (Topic 326 not first 2023. not In October 2021, 2021 08, Business Combinations – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. 606 January 1, 2023 not Recently Issued Accounting Pronouncements In March 2020, 2020 04, Reference Rate Reform (Topic 848 December 21, 2022, 2022 06, Reference Rate Reform (Topic 848 848 2022 04. February 28, 2023 no 4 |
