HireQuest (HQI) 10-Q 11 Aug 20 2020 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2020	Aug. 10, 2020
Document And Entity Information
Entity Registrant Name	HireQuest, Inc.
Entity Central Index Key	0001140102
Document Type	10-Q
Document Period End Date	Jun. 30, 2020
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Shell Company	false
Entity Interactive Data Current	Yes
Entity Incorporation, State or Country Code	DE
Entity File Number	000-53088
Entity Common Stock, Shares Outstanding		13,590,465
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2020

Statement - Consolidated Conden

Statement - Consolidated Condensed Balance Sheets (Unaudited) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Current assets
Cash and restricted cash	$ 13,746,445	$ 4,187,450
Accounts receivable, net of allowance for doubtful accounts	19,646,917	28,201,279
Notes receivable	2,190,431	3,419,458
Prepaid expenses, deposits and other assets	1,097,399	188,560
Prepaid workers' compensation	1,899,899	822,938
Other assets	0	201,440
Total current assets	38,581,091	37,021,125
Property and equipment, net	2,788,683	1,900,686
Intangible assets, net	23,978	0
Notes receivable, net of current portion and reserve	6,799,848	7,990,251
Total assets	48,193,600	46,912,062
Current liabilities
Accounts payable	85,359	253,845
Other current liabilities	1,143,872	1,893,846
Accrued benefits and payroll taxes	1,520,677	1,113,904
Due to franchisees	2,744,587	3,610,596
Risk management incentive program liability	2,021,605	1,811,917
Workers' compensation claims liability	2,884,656	2,327,869
Total current liabilities	10,400,756	11,011,977
Workers' compensation claims liability, net of current portion	1,871,457	1,516,633
Franchisee deposits	1,423,635	1,412,924
Deferred tax liability	618,376	1,688,446
Total liabilities	14,314,224	15,629,980
Commitments and contingencies (Note 8)
Stockholders' equity
Preferred stock 0 $0.001 par value, 1,000,000 shares authorized; none issued	0	0
Common stock 0 $0.001 par value, 30,000,000 shares authorized; 13,575,123 and 13,518,036 shares issued and outstanding, respectively	13,575	13,518
Additional paid-in capital	28,149,667	27,584,610
Retained earnings	5,716,134	3,683,954
Total stockholders' equity	33,879,376	31,282,082
Total liabilities and stockholders' equity	$ 48,193,600	$ 46,912,062

Statement - Consolidated Cond_2

Statement - Consolidated Condensed Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2020	Dec. 31, 2019
Stockholders' equity
Preferred stock par value	$ .001	$ 0.001
Preferred stock shares authorized	1,000,000	1,000,000
Preferred stock shares issued	0	0
Common stock par value	$ .001	$ 0.001
Common stock shares authorized	30,000,000	30,000,000
Common stock shares issued	13,575,123	13,518,036
Common stock shares outstanding	13,575,123	13,518,036

Consolidated Condensed Statemen

Consolidated Condensed Statements of Income (Operations) (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Revenue	$ 2,900,990	$ 3,238,665	$ 7,020,970	$ 6,710,915
Selling, general, and administrative expenses	1,931,076	871,444	5,184,447	2,423,865
Depreciation and amortization	32,402	21,393	64,215	35,430
Income from operations	937,512	2,345,828	1,772,308	4,521,620
Other miscellaneous income	288,837	218,471	539,545	246,860
Interest and other financing expense	(17,850)	(230,404)	(29,139)	(415,376)
Net income before income taxes	1,208,499	2,333,895	2,282,714	4,083,104
Provision for income taxes	51,497	48,181	250,534	99,606
Income from continuing operations	1,157,002	2,285,714	2,032,180	3,983,498
Income from discontinued operations, net of tax	0	20,382	0	40,083
Net income	$ 1,157,002	$ 2,306,096	$ 2,032,180	$ 4,023,581
Basic earnings per share
Continuing operations	$ 0.09	$ 0.23	$ 0.15	$ 0.4
Discontinued operations	0	0	0	0
Total	0.09	0.23	0.15	0.4
Diluted earnings per share
Continuing operations	0.09	0.23	0.15	0.4
Discontinued operations	0	0	0	0
Total	$ 0.09	$ 0.23	$ 0.15	$ 0.4
Weighted average shares outstanding
Basic	13,547,950	9,939,668	13,540,599	9,939,668
Diluted	13,549,727	9,939,668	13,542,758	9,939,668
Franchise Royalties
Revenue	$ 2,639,287	$ 2,981,420	$ 6,344,529	$ 6,137,556
Service Revenue
Revenue	$ 261,703	$ 257,245	$ 676,441	$ 573,359

Consolidated Statements of Chan

Consolidated Statements of Changes in Shareholders' Equity - USD ($)	Common Stock	Additional Paid-in Capital	Retained Earnings	Total
Beginning balance, shares at Dec. 31, 2018	9,939,668
Beginning balance at Dec. 31, 2018	$ 9,940	$ 6,938,953	$ 3,973,933	$ 10,922,826
Net distributions		(1,785,833)		(1,785,833)
Net income			4,023,581	4,023,581
Ending balance, shares at Jun. 30, 2019	9,939,668
Ending balance at Jun. 30, 2019	$ 9,940	5,153,120	7,997,514	3,160,574
Beginning balance, shares at Mar. 31, 2019	9,939,668
Beginning balance at Mar. 31, 2019	$ 9,940	5,903,146	5,691,418	11,604,504
Net distributions		(750,026)		(750,026)
Net income			2,306,096	2,306,096
Ending balance, shares at Jun. 30, 2019	9,939,668
Ending balance at Jun. 30, 2019	$ 9,940	5,153,120	7,997,514	3,160,574
Beginning balance, shares at Dec. 31, 2019	13,518,036
Beginning balance at Dec. 31, 2019	$ 13,518	27,584,610	3,683,954	31,282,082
Net distributions				0
Stock-based compensation		565,057		565,057
Restricted common stock granted for services, shares	57,087
Restricted common stock granted for services	$ 57			57
Net income			2,032,180	2,032,180
Ending balance, shares at Jun. 30, 2020	13,575,123
Ending balance at Jun. 30, 2020	$ 13,575	28,149,667	5,716,134	33,879,376
Beginning balance, shares at Mar. 31, 2020	13,536,742
Beginning balance at Mar. 31, 2020	$ 13,537	27,907,344	4,559,132	32,480,013
Stock-based compensation		242,323		242,323
Restricted common stock granted for services, shares	38,381
Restricted common stock granted for services	$ 38			38
Net income			1,157,002	1,157,002
Ending balance, shares at Jun. 30, 2020	13,575,123
Ending balance at Jun. 30, 2020	$ 13,575	$ 28,149,667	$ 5,716,134	$ 33,879,376

Condensed Consolidated Statemen

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Cash flows from operating activities
Net income	$ 2,032,180	$ 4,023,581
Loss from discontinued operations	0	(40,083)
Net income from continuing operations	2,032,180	3,983,497
Adjustments to reconcile net income to net cash used in operations:
Depreciation and amortization	64,215	35,430
Allowance for losses on notes receivable	1,598,673	0
Stock based compensation	565,114	0
Deferred taxes	(1,070,070)	0
Gain on disposition of property and equipment	0	(189,591)
Changes in operating assets and liabilities:
Accounts receivable	8,554,362	199,059
Prepaid expenses, deposits and other assets	(908,839)	(24,693)
Prepaid workers' compensation	(1,076,961)	(758,410)
Accounts payable	(168,486)	(35,752)
Risk management incentive program liability	209,688	361,202
Other current liabilities	(787,765)	89,162
Accrued benefits and payroll taxes	406,773	356,425
Due to franchisees	(866,009)	1,442,586
Workers' compensation claims liability	911,611	0
Net cash provided by operating activities - continuing operations	9,464,486	5,458,915
Net cash provided by operating activities - discontinued operations	201,440	(3,911,066)
Net cash provided by operating activities	9,665,926	1,547,849
Cash flows from investing activities
Purchase of property and equipment	(952,212)	(261,064)
Proceeds from the sale of property and equipment	0	563,795
Purchase of intangible assets	(23,978)	0
Proceeds from payments on notes receivable	1,002,858	0
Cash issued for notes receivable	(182,101)	(24,505)
Net change in franchisee deposits	10,711	704,800
Net cash provided by investing activities	(144,722)	983,026
Cash flows from financing activities:
Payments to affiliates	0	(2,025,062)
Proceeds from affiliates	37,791	0
Net distributions to Legacy HQ members	0	(1,785,833)
Net cash provided by (used in) financing activities	37,791	(3,810,895)
Net increase (decrease) in cash	9,558,995	(1,280,020)
Cash, beginning of period	4,187,450	1,291,317
Cash, end of period	13,746,445	11,297
Supplemental disclosure of cash flow information
Interest paid	29,139	415,376
Income taxes paid	$ 1,665,099	$ 0

1. Basis of Presentation and Su

1. Basis of Presentation and Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2020
Accounting Policies [Abstract]
Basis of Presentation and Summary of Significant Accounting Policies	HireQuest, Inc. (“HQI,” the “Company,” “we,” us,” or “our”) is a nationwide franchisor of on-demand labor solution providers in the light industrial and blue-collar segments of the staffing industry. Through our franchisees, we provide various types of temporary personnel via two business models operating under the trade names “HireQuest Direct” and “HireQuest.” HireQuest Direct specializes primarily in unskilled and semi-skilled industrial and construction personnel. HireQuest specializes primarily in skilled and semi-skilled industrial personnel as well as clerical and administrative personnel. 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”) for interim financial reporting and rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the periods presented. 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-K for the year ended December 31, 2019. Results for the interim periods presented are not necessarily indicative of the results expected for the full year or for any other period. HQI is the product of a merger between Command Center, Inc. (“Command Center”) and Hire Quest Holdings, LLC (“Hire Quest Holdings”). We refer to Hire Quest Holdings collectively with its wholly owned subsidiary, Hire Quest, LLC, as “Legacy HQ.” We refer to this merger, which closed on July 15, 2019, as the “Merger.” Upon the closing of the Merger, all of the ownership interests in Legacy HQ were converted into the right to receive an aggregate number of shares representing 68% of the total shares of the Company’s common stock outstanding immediately after the Merger. Because the Legacy HQ security holders received a majority of the equity securities and voting rights of the combined company upon the closing of the Merger, Legacy HQ is considered to be the accounting acquirer. This means that Legacy HQ will allocate the purchase price to the fair value of Command Center’s assets acquired and liabilities assumed on the acquisition date. This also means that Legacy HQ’s historical financial statements replace Command Center’s historical financial statements following the completion of the Merger, and the results of operations of both companies are included in our financial statements for all periods subsequent to the Merger. For additional information related to the Merger, see Note 2 – Acquisitions 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 the primary beneficiary of any of these entities. Accordingly, these entities have not been consolidated. COVID-19 Pandemic In December 2019, a novel strain of coronavirus disease ("COVID-19") was first reported in Wuhan, China. Less than four months later, on March 11, 2020, the World Health Organization declared COVID-19 a pandemic. The extent of COVID-19's effect on our operational and financial performance and the collectability of our notes receivable will depend on future developments, including the duration, spread, and intensity of the pandemic, all of which are uncertain and difficult to predict. As a result, it is not currently possible to ascertain the overall impact of COVID-19 on our business. However, the pandemic has had a material adverse effect on our business and results of operations. If the pandemic continues to be a severe worldwide health crisis, the disease could have a material adverse effect on our future business, results of operations, financial condition, and cash flows. 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 accrual, our deferred taxes, the reserve for losses on notes receivable, and the estimated fair value of assets acquired and liabilities assumed. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable consist of amounts due for labor services from customers of franchisees and of previously company-owned offices. At June 30, 2020 and December 31, 2019, substantially all of our accounts receivable were due from customers of franchisees. We own the accounts receivable from labor services provided by our franchisees until they age beyond 84 days. When accounts receivable age beyond 84 days, they are charged back to our franchisees. Accordingly, we do not record an allowance for doubtful accounts on these accounts receivable. For labor services originally 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 probable losses on these accounts receivable, if any. We review the allowance for doubtful accounts periodically and write off past due balances when it is probable that the receivable will not be collected. Our allowance for doubtful accounts on accounts receivable generated by company-owned offices was approximately $129,000 and $168,000 at June 30, 2020 and December 31, 2019, respectively. 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% to 8%. Royalty fees from our HireQuest business line are 4.5% of the payroll we fund plus 18% of the gross margin for the territory. We present revenue on a net basis as agent as opposed to a gross basis as principal. We recognize revenue when we satisfy our performance obligations. Our performance obligations take the form of a franchise license and promised services. Promised services consist primarily of paying temporary employees, completing all payroll related statutory obligations, and providing workers' compensation insurance on behalf of temporary employees. Because these performance obligations are interrelated, we do not consider them to be individually distinct and therefore account for them as a single performance obligation. Below are summaries of our franchise royalties disaggregated by brand: Three months ended Six months ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 HireQuest Direct $ 2,468,581 $ 2,756,048 $ 6,029,984 $ 5,646,762 HireQuest 170,706 225,372 314,545 490,794 Total $ 2,639,287 $ 2,981,420 $ 6,344,529 $ 6,137,556 Service revenue, which forms the other component of our total revenue, consists of interest we charge our franchisees on overdue customer accounts receivable 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. We recognize revenue from optional services as we provide them. Workers’ Compensation Claims Liability We maintain reserves for workers’ compensation claims based on their estimated future cost. These reserves include claims that have been reported but not settled, as well as claims that have been incurred but not reported. Annually, we engage an independent actuary to estimate the future costs of these claims. Quarterly, we use development factors provided by an independent actuary to estimate the future costs of these claims. We make adjustments as necessary on an ongoing basis. If the actual costs of the claims exceed the amount estimated, we may incur additional charges. Workers’ Compensation Risk Management Incentive Program (“RMIP”) Our RMIP is designed to incentivize our franchises to keep our temporary employees safe and control their exposure to large workers’ compensation claims. We accomplish this by refunding our franchisees a portion of the premium they pay for workers’ compensation insurance if they keep their workers’ compensation loss ratios below specified thresholds. Notes Receivable Notes receivable consist primarily of amounts due to us related to the financing of franchised offices. We report notes receivable 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 secured by the assets of each office and the ownership interests in the franchise. We monitor the financial condition of our franchisees and record provisions for estimated losses when we believe it is probable that our franchisees will be unable to make their required payments. Our allowance for losses on notes receivable was approximately $1.6 million and $-0- at June 30, 2020 and December 31, 2019, respectively. Stock-Based Compensation Periodically, we issue restricted common shares or options to purchase our common shares to our officers, directors, or employees. We measure compensation costs for equity awards at their fair value on their grant date and expense these costs over the service period on a straight-line basis. We use the Black-Scholes valuation model to determine the value of option awards. Intangible Assets – Internal Use Software 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-parties for development services and payroll costs for employees' time spent developing the software. We expense costs incurred during the preliminary project stage along with post-implementation stages as we incur them. Capitalized development costs will be amortized on a straight-line basis over the estimated useful life of the software. The capitalization and ongoing assessment of recoverability of development costs requires considerable judgment by management with respect to certain external factors, including, but not limited to, technological and economic feasibility, and estimated economic life. 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. Diluted earnings per share reflect the potential dilution of securities that could share in our earnings through the conversion of common shares issuable via outstanding stock options, except where their inclusion would be anti-dilutive. Outstanding common stock equivalents at June 30, 2020 totaled approximately 29,000. We use the treasury stock method to calculate the diluted common shares outstanding which were as follows: Three months ended Six months ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Weighted average number of common shares used in basic net income per common share 13,547,950 9,939,668 13,540,599 9,939,668 Dilutive effects of stock options 1,777 - 2,159 - Weighted average number of common shares used in diluted net income per common share 13,549,727 9,939,668 13,542,758 9,939,668 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 levels that may be used to measure fair value: Level 1: Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2: Applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3: Applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and all other current liabilities approximate fair values due to their short-term nature. The fair value of notes receivable approximates the outstanding principal balance, net of estimates for losses, and is reviewed for impairment at least annually. Fair value Level June 30, 2020 December 31, 2019 Cash 1 $ 13,746,445 $ 4,187,450 Notes receivable 2 8,990,279 11,409,709 Accounts receivable 2 19,646,917 28,201,279 Discontinued Operations During the third quarter of 2019, we sold substantially all of the offices we acquired in the Merger with Command Center. Accordingly, we present the assets and liabilities, operating results, and cash flows for these previously company-owned offices as discontinued operations separate from our continuing operations for all periods presented in our consolidated financial statements and footnotes, unless indicated otherwise. Recently Adopted Accounting Pronouncements In February 2016, the FASB issued guidance on lease accounting. The new guidance continues to classify leases as either finance or operating, but results in the lessee recognizing most operating leases on the balance sheet as right-of-use assets and lease liabilities. This guidance was effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. In July 2018, the FASB amended the standard to provide transition relief for comparative reporting, allowing companies to adopt the provisions of the new standard using a modified retrospective transition method on the adoption date, with a cumulative-effect adjustment to retained earnings recorded on the date of adoption. We have elected to adopt the standard using the transition relief provided in the July amendment. We have elected the three practical expedients allowed for implementation of the new standard, but have not utilized the hindsight practical expedient. Accordingly, we did not reassess: 1) whether any expired or existing contracts are or contain leases; 2) the lease classification for any expired or existing leases; or 3) initial direct costs for any existing leases. As a result of adopting this guidance, we recognized a right-of-use asset, and corresponding lease liability, of approximately $200,000 adopted as of January 1, 2019. The adoption of this guidance did not have a material impact on expense recognition. The deferred rent liability, which was the difference between the straight-line lease expense and cash paid, reduced the right-of-use asset upon adoption. Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace today's “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. This guidance is effective for annual periods beginning after December 15, 2022, and interim periods therein. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods therein. We are currently evaluating the impact of the new guidance on our consolidated financial statements and related disclosures. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The standard was issued as a means to reduce the complexity of accounting for income taxes for those entities that fall within the scope of the accounting standard. The guidance is to be applied using a prospective method, excluding amendments related to franchise taxes, which should be applied on either a retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. We are currently evaluating the impacts of adoption of the new guidance to our consolidated financial statements. We do not expect other accounting standards that the FASB or other standards-setting bodies have issued to have a material impact on our financial position, results of operations, or cash flows.

2. Acquisitions

2. Acquisitions	6 Months Ended
	Jun. 30, 2020
Business Combinations [Abstract]
Acquisitions	On July 15, 2019, Command Center completed its acquisition of Legacy HQ in accordance with the terms of the Agreement and Plan of Merger dated April 8, 2019. Upon the closing of the Merger, all of the membership interests in Hire Quest Holdings, LLC were converted into the right to receive 68% of the Company’s common stock outstanding immediately after the closing, or 9,939,668 shares. We accounted for the Merger as a reverse acquisition. As such, Legacy HQ is considered the accounting acquirer and Legacy HQ's historical financial statements replace Command Center’s historical financial statements following the completion of the Merger. The results of operations of both companies are included in our financial statements for all periods beginning July 15, 2019. The fair value of the purchase consideration is calculated based on the Company's stock price as it is considered to be more reliable than the fair value of the membership interests of Legacy HQ, a private company. Consideration is calculated based on the Company's closing share price of $5.76 on July 15, 2019. The following table summarizes the estimated fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date: Closing share price on July 15, 2019 $ 5.76 Common stock 4,677,487 Stock consideration $ 26,942,325 Accounts receivable $ 10,480,907 Cash and cash equivalents 5,376,543 Identifiable intangible assets 17,015,857 Other current assets 725,453 Property, plant and equipment, net 281,186 Right-of-use asset 1,642,695 Current liabilities (3,124,081 ) Lease liabilities (1,624,461 ) Deferred tax liability (2,930,947 ) Other liabilities (900,827 ) Purchase price allocation $ 26,942,325

3. Discontinued Operations

3. Discontinued Operations	6 Months Ended
	Jun. 30, 2020
Discontinued Operations and Disposal Groups [Abstract]
Discontinued Operations	Prior to September 2019, we operated a number of company-owned offices. Subsequently, all of these company-owned offices were sold, the vast majority becoming franchisees, and we now no longer operate any company-owned offices. Operating results from company-owned offices are included in our consolidated financial statements as discontinued operations. The income from discontinued operations as reported on our consolidated statements of operations was comprised of the following amounts: Three months ended Six months ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Revenue $ - $ 202,579 $ - $ 382,326 Cost of staffing services - 170,960 - 320,248 Gross profit - 31,619 - 62,078 SG&A - 4,443 - 8,634 Net income before tax - 27,176 - 53,444 Provision for income taxes - 6,794 - 13,361 Net income $ - $ 20,382 $ - $ 40,083 We continue to be involved with the offices we sold through franchise agreements. The term of our franchise agreements is five years, subject to renewal at the end of the current term. Franchise royalties from sold locations that subsequently became franchisees for the three months ended June 30, 2020 and June 30, 2019 were approximately $570,000 and $-0-, respectively. For the six months ended June 30, 2020 and June 30, 2019, these franchise royalties were approximately $1.4 million and $-0-, respectively.

4. Related Party Transactions

4. Related Party Transactions	6 Months Ended
	Jun. 30, 2020
Related Party Transactions [Abstract]
Related Party Transactions	Some significant shareholders of HQI also own portions of Hire Quest Financial, LLC; Hirequest Insurance Company; Brave New World Services, LLC, formerly known as Hire Quest LTS, LLC; Jackson Insurance Agency, Bass Underwriters, Inc; Insurance Technologies, Inc.; and a number of our franchisees. Hire Quest Financial LLC (“HQF”) Richard Hermanns, our CEO, Chairman of our Board, and most significant stockholder, and Edward Jackson, a member of our Board and a significant stockholder, own a majority of HQF, a financial services entity. On July 14, 2019, Legacy HQ conveyed approximately $2.2 million of accounts receivable to HQF. These transfers were used to pay down intercompany debt obligations. The intercompany debt was entirely extinguished prior to the Merger between Legacy HQ and Command Center. At June 30, 2020 and December 31, 2019, HQI was not indebted to HQF for any amount. We do not have any current or planned business dealings with HQF. Hirequest Insurance Company (“HQ Ins.”) Mr. Hermanns, his wife, his adult daughter, a trust established for the benefit of his children, and Mr. Jackson, collectively own a majority of HQ Ins., a North Carolina protected cell captive insurance company. Effective March 1, 2010, Hire Quest, LLC purchased a deductible reimbursement insurance policy from HQ Ins. to cover losses up to the $500,000 per claim deductible on the Hire Quest, LLC high-deductible workers’ compensation policy originally obtained through AIG and, later, through ACE American Insurance Company. Hire Quest, LLC terminated its policy with HQ Ins. on July 15, 2019 upon the closing of the Merger. Premiums invoiced by HQ Ins. to HQI and Legacy HQ for workers compensation deductible reimbursement insurance during the quarters ended June 30, 2020 and June 30, 2019 were $-0- and approximately $1.8 million, respectively. Premiums invoiced by HQ Ins. to HQI and Legacy HQ for workers compensation deductible reimbursement insurance during the two quarters ended June 30, 2020 and June 30, 2019 were $-0- and approximately $3.6 million, respectively. We do not have any current or planned business dealings with HQ Ins. other than cooperating to close Legacy HQ's workers' compensation claims. Brave New World Services, LLC, (“BNW”) formerly known as Hire Quest LTS, LLC Mr. Jackson and Mr. Hermanns' son-in-law collectively own a majority of BNW. Historically, BNW employed the personnel at Legacy HQ headquarters. HQI terminated this relationship on July 15, 2019 upon the closing of the Merger. Amounts invoiced by BNW to HQI and Legacy HQ for payroll services during the three months ended June 30, 2020 and June 30, 2019 were $-0- and approximately $11,000, respectively. Amounts invoiced by BNW to HQI and Legacy HQ for payroll services during the six months ended June 30, 2020 and June 30, 2019 were $-0- and approximately $17,000, respectively. We do not have any current or planned business dealing with BNW. Jackson Insurance Agency ("Jackson Insurance") and Bass Underwriters, Inc. ("Bass") Mr. Jackson owns a majority of Jackson Insurance. An immediate family member, owns the remainder. Mr. Jackson, Mr. Hermanns, and irrevocable trusts set up by each of them, collectively own a majority of Bass, a large managing general agent. Jackson Insurance and Bass brokered Legacy HQ's property, casualty, general liability, and cybersecurity insurance prior to the Merger. Since July 15, 2019, they have continued to broker these same policies for HQI. Jackson Insurance also brokers certain insurance policies on behalf of some of our franchisees, including the franchisees containing significant ownership interests of Mr. Jackson and immediate family members of Mr. Hermanns. Jackson Insurance and Bass did not invoice HQI or Legacy HQ for premiums, taxes, or fees during the quarter ended June 30, 2020 or June 30, 2019. Premiums, taxes, and fees invoiced by Jackson Insurance and Bass to HQI and Legacy HQ for these insurance policies during the six months ended June 30, 2020 and June 30, 2019 were approximately $662,000 and $240,000, respectively. Jackson Insurance and Bass do not retain the majority of the premiums invoiced to HQI and Legacy HQ, but they do retain a commission of approximately 9% - 15% of premiums. Insurance Technologies, Inc. ("Insurance Technologies") Mr. Jackson, Mr. Hermanns, and irrevocable trusts set up by each of them, collectively own a majority of Insurance Technologies, an IT development and security firm. On October 24, 2019, HQI entered into an agreement with Insurance Technologies to add certain cybersecurity protections to our existing information technology systems and to assist in developing future information technology systems within our HQ Webconnect software. This arrangement was reviewed and approved by the Audit Committee of our Board of Directors. During the three months ended June 30, 2020, Insurance Technologies invoiced HQI approximately $50,000 for services provided pursuant to this agreement. Insurance Technologies invoiced HQI approximately $101,000 during the six months ended June 30, 2020. The Worlds Franchisees Mr. Jackson and immediate family members of Mr. Hermanns have significant ownership interests in certain of our franchisees (the “Worlds Franchisees”). There were 20 Worlds Franchisees at June 30, 2020 that operated 48 of our 136 offices. Transactions regarding the Worlds Franchisees are summarized below: Three months ended Six months ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Franchisee royalties $ 1,089,020 $ 1,659,716 $ 2,462,895 $ 3,293,498 Balances regarding the Worlds Franchisees are summarized below: June 30, 2020 December 31, 2019 Due to franchisee $ 773,247 $ 993,495 Risk management incentive program 988,817 1,027,960

5. Line of Credit

5. Line of Credit	6 Months Ended
	Jun. 30, 2020
Debt Disclosure [Abstract]
Line of Credit	In July 2019, we entered into an agreement with Branch Banking and Trust Company, now Truist Bank (“Truist”), for a $30 million line of credit with a $15 million sublimit for letters of credit. At June 30, 2020, $9.1 million was utilized by outstanding letters of credit that secure our obligations to our workers’ compensation insurance carrier and $1.0 million was utilized by a letter of credit that secures our paycard funding account, leaving $19.9 million potentially available under the agreement for additional borrowings . This line of credit is scheduled to mature on May 31, 2024. Outstanding borrowings under the loan agreement currently bear interest at a variable rate equal to the Daily One Month London Interbank Offering Rate (“LIBOR”) plus a margin between 1.25% and 1.75%. The margin is determined based on the value of our net collateral, which is equal to our total collateral plus unrestricted cash less the outstanding balance, if any, under the loan agreement. At June 30, 2020 the effective interest rate was 1.44%. A non-use fee of between 0.125% and 0.250% accrues on the unused portion of the line of credit. As collateral for repayment of any and all obligations under this agreement, we granted Truist a security interest in substantially all of our operating assets and the operating assets of our subsidiaries. This agreement, and other loan documents, contain customary events of default and negative covenants, including but not limited to those governing indebtedness, liens, fundamental changes, transactions with affiliates, and sales of assets. This agreement requires us to comply with a fixed charge coverage ratio of at least 1.10:1.00, which will be tested quarterly, on a rolling four quarter basis, commencing with the four quarters ending September 30, 2020. Our obligations under this agreement are subject to acceleration upon the occurrence of an event of default as defined in the loan agreement.

6. Workers' Compensation Insura

6. Workers' Compensation Insurance and Reserves	6 Months Ended
	Jun. 30, 2020
Insurance [Abstract]
Workers' Compensation Insurance and Reserves	Beginning in March 2014, Legacy HQ obtained its workers’ compensation insurance through Chubb Limited and ACE American Insurance Company (collectively, “ACE”), in all states in which it operated, other than monopolistic jurisdictions. The ACE policy was a high deductible policy pursuant to which Legacy HQ had primary responsibility for all claims with ACE providing insurance for covered losses and expenses in excess of $500,000 per incident. In addition to the ACE policy, Legacy HQ purchased a deductible reimbursement insurance policy from HQ Ins. to cover losses up to the $500,000 deductible with ACE. This resulted in Legacy HQ effectively being fully insured during this time period. Effective July 15, 2019, Legacy HQ terminated its deductible reimbursement policy with HQ Ins. We assumed the primary responsibility for all claims up to the deductible occurring on or after July 15, 2019. The primary responsibility of all claims occurring before July 15, 2019 remains with HQ Ins. We assumed the Legacy HQ policy with ACE. Command Center also obtained its workers’ compensation insurance through ACE. Pursuant to Command Center’s most recent policy, which expired on March 1, 2020, ACE provided insurance for covered losses and expenses in excess of $500,000 per incident. Command Center’s ACE policy included a one-time obligation for the Company to pay any single claim filed under the Command Center policy within a policy year that exceeds $500,000 (if any), but only up to $750,000 for that claim. All other claims within the policy year were subject to the $500,000 deductible. Effective July 15, 2019, in connection with the Merger, we assumed all of the workers’ compensation claims of Command Center. We also assumed Command Center’s workers’ compensation policy with ACE. Under these high deductible programs, we are effectively self-insured. Per our contractual agreements with ACE, we must provide collateral deposits of approximately $9.1 million, which we accomplished by providing a letter of credit under our agreement with Truist. For workers’ compensation claims originating in the monopolistic jurisdictions of Washington, North Dakota, Ohio, and Wyoming, we pay workers’ compensation insurance premiums and obtain full coverage under mandatory state administered programs. Our liability associated with claims in these jurisdictions is limited to premium payments based upon the amount of payroll paid within each jurisdiction. Accordingly, our consolidated financial statements reflect only the mandated workers’ compensation insurance premium liability for workers’ compensation claims in these jurisdictions.

7. Stock Based Compensation

7. Stock Based Compensation	6 Months Ended
	Jun. 30, 2020
Share-based Payment Arrangement, Noncash Expense [Abstract]
Stock Based Compensation	Employee Stock Incentive Plan In November 2016, our stockholders approved a stock incentive plan (the “2016 Plan”) under which we were authorized to grant awards for up to 500,000 shares of our common stock over the 10-year life of the plan. In June 2020, our stockholders approved a new stock incentive plan (the “2019 Plan”) that replaced the 2016 Plan. Under the terms of the 2019 Plan, we are authorized to grant awards for up to 1.5 million shares of our common stock over the 10-year life of the plan. Outstanding awards under the 2016 Plan remain in effect according to the terms of the plan and the award documents. In September 2019, our Board approved a share purchase match program to encourage ownership and further align the interests of key employees and directors with those of our shareholders. Under this program, we will match 20% of any shares of our common stock purchased on the open market by key employees and directors up to $25,000 in aggregate value per individual within any one-year period. These shares vest on the second anniversary of the date on which the matched shares were purchased. During 2020, we issued 19,612 shares valued at approximately $115,000 under this program. During 2019, we issued 1,639 shares valued at approximately $10,000 under this program. In June 2020, we issued 30,000 shares of restricted common stock pursuant to the 2019 Plan valued at approximately $188,000 to non-employee members of our Board of Directors for services. These shares vest equally over the following three months. In April 2020, we issued 8,381 shares of restricted common stock pursuant to the 2016 Plan valued at approximately $53,000 to certain members of our Board of Directors for their services in lieu of cash compensation. Of these 8,381 shares, 6,985 shares vest equally over the following three months, and the remaining 1,396 shares vest on the second anniversary of the date of grant. In January 2020, we issued 10,124 shares of restricted common stock pursuant to the 2016 Plan valued at approximately $70,000 to certain members of our Board of Directors for their services in lieu of cash compensation. Of these 10,124 shares, 8,436 shares vested equally over the following three months, and the remaining 1,688 shares vest on the second anniversary of the grant date. Also in January 2020, we issued 8,582 shares of restricted common stock pursuant to our share purchase match program valued at approximately $59,000. In November 2019, we issued 9,833 shares of restricted common stock pursuant to the 2016 Plan valued at approximately $59,000 to certain members of our Board of Directors for their services in lieu of cash compensation. Of these 9,833 shares, 8,194 shares vested equally over the following three months, and the remaining 1,639 shares vest on the second anniversary of the date of grant. Also in November of 2019, we issued 4,202 shares of restricted common stock pursuant to the 2016 Plan valued at $25,000 to an employee in lieu of cash for a bonus, which vested equally over the following three months. In September 2019, we issued 160,000 shares of restricted common stock to certain key employees pursuant to the 2016 Plan valued at approximately $1.1 million for services, and to encourage retention. These shares vest over four years, with 50% vesting on September 1, 2021, and 6.25% vesting each quarter thereafter for the next eight quarters. Also in September 2019, we issued 90,000 shares of restricted common stock pursuant to the 2016 Plan valued at $648,000 for services to non-employee members of our Board of Directors. These shares vest equally over approximately three years with the first vesting occurring on June 14, 2020, the day before our annual stockholder meeting, and the remainder vesting in equal portions on each of the first two anniversaries of that date. The following table summarizes our restricted stock outstanding at December 31, 2019, and changes during the six months ended June 30, 2020. Shares Weighted average grant date price Non-vested, December 31, 2019 255,634 $ 7.18 Granted 57,087 6.48 Vested (27,705 ) 6.48 Non-vested, June 30, 2020 285,016 7.10 Stock options that were outstanding at Command Center were deemed to be issued on the date of the Merger. Outstanding awards continue to remain in effect according to the terms of the Command Center 2008 Plan, the 2016 Plan, and the corresponding award documents. There were approximately 26,000 and 24,000 stock options vested at June 30, 2020 and December 31, 2019, respectively . The following table summarizes our stock options outstanding at December 31, 2019, and changes during the six months ended June 30, 2020: Number of shares underlying options Weighted average exercise price per share Weighted average grant date fair value Outstanding, December 31, 2019 29,165 $ 7.20 $ 3.76 Granted - - - Forfeited - - - Exercised - - - Outstanding, June 30, 2020 29,165 7.20 3.76 The following table summarizes our non-vested stock options outstanding at December 31, 2019, and changes during the six months ended June 30, 2020: Number of shares underlying options Weighted average exercise price per share Weighted average grant date fair value Non-vested, December 31, 2019 5,416 $ 5.48 $ 3.01 Granted - - - Forfeited - - - Vested (2,187 ) 5.50 3.05 Non-vested, June 30, 2020 3,229 5.47 2.98 The following table summarizes information about our outstanding stock options, and reflects the intrinsic value recalculated based on the closing price of our common stock of $6.19 at June 30, 2020: Number of shares underlying options Weighted average exercise price per share Weighted average remaining contractual life (years) Aggregate intrinsic value Outstanding 29,165 $ 7.20 4.22 $ 26,984 Exercisable 25,936 7.41 3.78 6,997 At June 30, 2020, there was unrecognized stock-based compensation expense totaling approximately $1.1 million relating to non-vested options and restricted stock grants that will be recognized over the next 3.2 years.

8. Commitments and Contingencie

8. Commitments and Contingencies	6 Months Ended
	Jun. 30, 2020
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Franchise Acquisition Indebtedness New franchisees financed the purchase of several offices with promissory notes. In some instances, this financing resulted in certain franchises being considered VIEs. We have determined that we are not required to consolidate these entities because we do not have the power to direct these entities’ daily operations. If these franchises default on these notes, we bear the risk of loss of the outstanding balance on these notes, less what we could recoup from the potential resale of the repossessed office. The balance due from the franchises determined to be VIEs on June 30, 2020 and December 31, 2019 was approximately $2.3 million and $2.5 million, respectively. Legal Proceedings From time to time, we are involved in various legal and administrative proceedings. Based on information currently available to us, we do not expect material uninsured losses to arise from any of these matters. We believe the outcome of these matters, even if determined adversely, will not have a material adverse effect on our business, financial condition or results of operations. There have been no material changes in our legal proceedings as of June 30, 2020.

9. Income Tax

9. Income Tax	6 Months Ended
	Jun. 30, 2020
Income Tax Disclosure [Abstract]
Income Tax	Income tax expense during interim periods is based on applying an estimated annual effective income tax rate to year-to-date income, plus any significant unusual or infrequently occurring items which are recorded in the interim period. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected operating income for the year and changes in tax law and tax rates. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is obtained, additional information becomes known, or the tax environment changes . Our effective tax rate for the three and six months ended June 30, 2020 was 4.5% and 12.3%, respectively. The bulk of the difference between the statutory federal income tax rate of 21.0% and our effective income tax rate results primarily from the federal Work Opportunity Tax Credit. This tax credit is designed to encourage employers to hire workers from certain targeted groups with higher than average unemployment rates. Other differences result from state income taxes, certain non-deductible expenses, and tax effects of stock-based compensation. Our effective tax rate for the three and six months ended June 30, 2019 was 2.1% and 2.5%, respectively. The bulk of the difference between the statutory federal income tax rate of 21.0% and our effective income tax rate results primarily from the Company being a pass-through entity before the Merger on July 15, 2019.

10. Notes Receivable

10. Notes Receivable	6 Months Ended
	Jun. 30, 2020
Accounts and Financing Receivable, after Allowance for Credit Loss [Abstract]
Notes Receivable	Some franchisees, as well as the purchaser of our previously owned California locations, have borrowed funds from us primarily to finance the initial purchase price of office assets. Notes outstanding net of allowance for losses were approximately $9.0 million and $11.4 million as of June 30, 2020 and December 31, 2019, respectively. Notes receivable bear interest at a fixed rate between 6.0% and 10.0%. Notes are generally secured by the assets of each office and the ownership interests in the franchise. We report interest income on notes as other miscellaneous income in our consolidated statements of operations. This interest income was approximately $176,000 and $3,000 during the three months ended June 30, 2020 and June 30, 2019, respectively, and approximately $374,000 and $3,000 in the six months ended June 30, 2020 and June 30, 2019, respectively. We estimate the allowance for losses for franchisees separately from the allowance for losses from non-franchisees because of the level of detailed sales information available to us with respect to the former. There have been no historic losses for either segment. Based on our review of the financial condition of the borrowers, the underlying collateral value, and the potential future impact of COVID-19 on certain borrowers’ economic performance and estimated future cash flows, we have established an allowance of approximately $1.6 million as of June 30, 2020 for potentially uncollectible notes receivable. There were no notes receivable in default as of June 30, 2020. The following table summarizes changes in our notes receivable balance to franchisees: Balance as of December 31, 2019 $ 9,702,471 Notes issued 54,524 Accrued interest 40,793 Payments received (916,074 ) Change in valuation allowance (405,314 ) Balance as of June 30, 2020 $ 8,476,400 The following table summarizes changes in our notes receivable balance to non-franchisees: Balance as of December 31, 2018 $ 1,707,238 Accrued interest 86,785 Payments received (86,785 ) Change in valuation allowance (1,193,359 ) Balance as of June 30, 2020 $ 513,879

11. Subsequent Events

11. Subsequent Events	6 Months Ended
	Jun. 30, 2020
Subsequent Events [Abstract]
Subsequent Events	In July 2020, we issued 8,874 shares of restricted common stock pursuant to the 2019 Plan valued at approximately $55,000 to certain members of our Board of Directors for their services in lieu of cash compensation. Of these 8,874 shares, 7,396 shares vest equally over the following three months, and the remaining 1,478 shares vest on the second anniversary of the date of grant. Also in July 2020, we issued 6,468 shares of restricted common stock pursuant to our share purchase match program valued at approximately $40,000. Effective July 2020, our Board of Directors authorized a one-year repurchase plan for up to 1 million shares of our common stock. Through August 10, 2020, we have repurchased 1,922 shares of common stock at an aggregate price of approximately $12,000, resulting in an average share price of $6.20 per share. These shares will be held in treasury.

1. Basis of Presentation and _2

1. Basis of Presentation and Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2020
Accounting Policies [Abstract]
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”) for interim financial reporting and rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the periods presented. 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-K for the year ended December 31, 2019. Results for the interim periods presented are not necessarily indicative of the results expected for the full year or for any other period. HQI is the product of a merger between Command Center, Inc. (“Command Center”) and Hire Quest Holdings, LLC (“Hire Quest Holdings”). We refer to Hire Quest Holdings collectively with its wholly owned subsidiary, Hire Quest, LLC, as “Legacy HQ.” We refer to this merger, which closed on July 15, 2019, as the “Merger.” Upon the closing of the Merger, all of the ownership interests in Legacy HQ were converted into the right to receive an aggregate number of shares representing 68% of the total shares of the Company’s common stock outstanding immediately after the Merger. Because the Legacy HQ security holders received a majority of the equity securities and voting rights of the combined company upon the closing of the Merger, Legacy HQ is considered to be the accounting acquirer. This means that Legacy HQ will allocate the purchase price to the fair value of Command Center’s assets acquired and liabilities assumed on the acquisition date. This also means that Legacy HQ’s historical financial statements replace Command Center’s historical financial statements following the completion of the Merger, and the results of operations of both companies are included in our financial statements for all periods subsequent to the Merger. For additional information related to the Merger, see Note 2 – Acquisitions
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 the primary beneficiary of any of these entities. Accordingly, these entities have not been consolidated.
COVID-19 Pandemic	In December 2019, a novel strain of coronavirus disease ("COVID-19") was first reported in Wuhan, China. Less than four months later, on March 11, 2020, the World Health Organization declared COVID-19 a pandemic. The extent of COVID-19's effect on our operational and financial performance and the collectability of our notes receivable will depend on future developments, including the duration, spread, and intensity of the pandemic, all of which are uncertain and difficult to predict. As a result, it is not currently possible to ascertain the overall impact of COVID-19 on our business. However, the pandemic has had a material adverse effect on our business and results of operations. If the pandemic continues to be a severe worldwide health crisis, the disease could have a material adverse effect on our future business, results of operations, financial condition, and cash flows.
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 accrual, our deferred taxes, the reserve for losses on notes receivable, and the estimated fair value of assets acquired and liabilities assumed.
Accounts Receivable and Allowance for Doubtful Accounts	Accounts receivable consist of amounts due for labor services from customers of franchisees and of previously company-owned offices. At June 30, 2020 and December 31, 2019, substantially all of our accounts receivable were due from customers of franchisees. We own the accounts receivable from labor services provided by our franchisees until they age beyond 84 days. When accounts receivable age beyond 84 days, they are charged back to our franchisees. Accordingly, we do not record an allowance for doubtful accounts on these accounts receivable. For labor services originally 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 probable losses on these accounts receivable, if any. We review the allowance for doubtful accounts periodically and write off past due balances when it is probable that the receivable will not be collected. Our allowance for doubtful accounts on accounts receivable generated by company-owned offices was approximately $129,000 and $168,000 at June 30, 2020 and December 31, 2019, respectively.
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% to 8%. Royalty fees from our HireQuest business line are 4.5% of the payroll we fund plus 18% of the gross margin for the territory. We present revenue on a net basis as agent as opposed to a gross basis as principal. We recognize revenue when we satisfy our performance obligations. Our performance obligations take the form of a franchise license and promised services. Promised services consist primarily of paying temporary employees, completing all payroll related statutory obligations, and providing workers' compensation insurance on behalf of temporary employees. Because these performance obligations are interrelated, we do not consider them to be individually distinct and therefore account for them as a single performance obligation. Below are summaries of our franchise royalties disaggregated by brand: Three months ended Six months ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 HireQuest Direct $ 2,468,581 $ 2,756,048 $ 6,029,984 $ 5,646,762 HireQuest 170,706 225,372 314,545 490,794 Total $ 2,639,287 $ 2,981,420 $ 6,344,529 $ 6,137,556 Service revenue, which forms the other component of our total revenue, consists of interest we charge our franchisees on overdue customer accounts receivable 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. We recognize revenue from optional services as we provide them.
Workers' Compensation Claims Liability	We maintain reserves for workers’ compensation claims based on their estimated future cost. These reserves include claims that have been reported but not settled, as well as claims that have been incurred but not reported. Annually, we engage an independent actuary to estimate the future costs of these claims. Quarterly, we use development factors provided by an independent actuary to estimate the future costs of these claims. We make adjustments as necessary on an ongoing basis. If the actual costs of the claims exceed the amount estimated, we may incur additional charges.
Workers' Compensation Risk Management Incentive Program	Our RMIP is designed to incentivize our franchises to keep our temporary employees safe and control their exposure to large workers’ compensation claims. We accomplish this by refunding our franchisees a portion of the premium they pay for workers’ compensation insurance if they keep their workers’ compensation loss ratios below specified thresholds.
Notes Receivable	Notes receivable consist primarily of amounts due to us related to the financing of franchised offices. We report notes receivable 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 secured by the assets of each office and the ownership interests in the franchise. We monitor the financial condition of our franchisees and record provisions for estimated losses when we believe it is probable that our franchisees will be unable to make their required payments. Our allowance for losses on notes receivable was approximately $1.6 million and $-0- at June 30, 2020 and December 31, 2019, respectively.
Stock-Based Compensation	Periodically, we issue restricted common shares or options to purchase our common shares to our officers, directors, or employees. We measure compensation costs for equity awards at their fair value on their grant date and expense these costs over the service period on a straight-line basis. We use the Black-Scholes valuation model to determine the value of option awards.
Intangible Assets - Internal Use Software	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-parties for development services and payroll costs for employees' time spent developing the software. We expense costs incurred during the preliminary project stage along with post-implementation stages as we incur them. Capitalized development costs will be amortized on a straight-line basis over the estimated useful life of the software. The capitalization and ongoing assessment of recoverability of development costs requires considerable judgment by management with respect to certain external factors, including, but not limited to, technological and economic feasibility, and estimated economic life.
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. Diluted earnings per share reflect the potential dilution of securities that could share in our earnings through the conversion of common shares issuable via outstanding stock options, except where their inclusion would be anti-dilutive. Outstanding common stock equivalents at June 30, 2020 totaled approximately 29,000. We use the treasury stock method to calculate the diluted common shares outstanding which were as follows: Three months ended Six months ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Weighted average number of common shares used in basic net income per common share 13,547,950 9,939,668 13,540,599 9,939,668 Dilutive effects of stock options 1,777 - 2,159 - Weighted average number of common shares used in diluted net income per common share 13,549,727 9,939,668 13,542,758 9,939,668
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 levels that may be used to measure fair value: Level 1: Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2: Applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3: Applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and all other current liabilities approximate fair values due to their short-term nature. The fair value of notes receivable approximates the outstanding principal balance, net of estimates for losses, and is reviewed for impairment at least annually. Fair value Level June 30, 2020 December 31, 2019 Cash 1 $ 13,746,445 $ 4,187,450 Notes receivable 2 8,990,279 11,409,709 Accounts receivable 2 19,646,917 28,201,279
Discontinued Operations	During the third quarter of 2019, we sold substantially all of the offices we acquired in the Merger with Command Center. Accordingly, we present the assets and liabilities, operating results, and cash flows for these previously company-owned offices as discontinued operations separate from our continuing operations for all periods presented in our consolidated financial statements and footnotes, unless indicated otherwise.
Recent Accounting Pronouncements	In February 2016, the FASB issued guidance on lease accounting. The new guidance continues to classify leases as either finance or operating, but results in the lessee recognizing most operating leases on the balance sheet as right-of-use assets and lease liabilities. This guidance was effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. In July 2018, the FASB amended the standard to provide transition relief for comparative reporting, allowing companies to adopt the provisions of the new standard using a modified retrospective transition method on the adoption date, with a cumulative-effect adjustment to retained earnings recorded on the date of adoption. We have elected to adopt the standard using the transition relief provided in the July amendment. We have elected the three practical expedients allowed for implementation of the new standard, but have not utilized the hindsight practical expedient. Accordingly, we did not reassess: 1) whether any expired or existing contracts are or contain leases; 2) the lease classification for any expired or existing leases; or 3) initial direct costs for any existing leases. As a result of adopting this guidance, we recognized a right-of-use asset, and corresponding lease liability, of approximately $200,000 adopted as of January 1, 2019. The adoption of this guidance did not have a material impact on expense recognition. The deferred rent liability, which was the difference between the straight-line lease expense and cash paid, reduced the right-of-use asset upon adoption. Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace today's “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. This guidance is effective for annual periods beginning after December 15, 2022, and interim periods therein. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods therein. We are currently evaluating the impact of the new guidance on our consolidated financial statements and related disclosures. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The standard was issued as a means to reduce the complexity of accounting for income taxes for those entities that fall within the scope of the accounting standard. The guidance is to be applied using a prospective method, excluding amendments related to franchise taxes, which should be applied on either a retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. We are currently evaluating the impacts of adoption of the new guidance to our consolidated financial statements. We do not expect other accounting standards that the FASB or other standards-setting bodies have issued to have a material impact on our financial position, results of operations, or cash flows.

1. Basis of Presentation and _3

1. Basis of Presentation and Summary of Significant Accounting Policies (Tables)	6 Months Ended
	Jun. 30, 2020
Accounting Policies [Abstract]
Disaggregation of revenue	Three months ended Six months ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 HireQuest Direct $ 2,468,581 $ 2,756,048 $ 6,029,984 $ 5,646,762 HireQuest 170,706 225,372 314,545 490,794 Total $ 2,639,287 $ 2,981,420 $ 6,344,529 $ 6,137,556
Diluted common shares outstanding	Three months ended Six months ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Weighted average number of common shares used in basic net income per common share 13,547,950 9,939,668 13,540,599 9,939,668 Dilutive effects of stock options 1,777 - 2,159 - Weighted average number of common shares used in diluted net income per common share 13,549,727 9,939,668 13,542,758 9,939,668
Fair value of cash, notes receivable and accounts receivable	Fair value Level June 30, 2020 December 31, 2019 Cash 1 $ 13,746,445 $ 4,187,450 Notes receivable 2 8,990,279 11,409,709 Accounts receivable 2 19,646,917 28,201,279

2. Acquisitions (Tables)

2. Acquisitions (Tables)	6 Months Ended
	Jun. 30, 2020
Business Combinations [Abstract]
Identifiable assets acquired and liabilities assumed	Closing share price on July 15, 2019 $ 5.76 Common stock 4,677,487 Stock consideration $ 26,942,325 Accounts receivable $ 10,480,907 Cash and cash equivalents 5,376,543 Identifiable intangible assets 17,015,857 Other current assets 725,453 Property, plant and equipment, net 281,186 Right-of-use asset 1,642,695 Current liabilities (3,124,081 ) Lease liabilities (1,624,461 ) Deferred tax liability (2,930,947 ) Other liabilities (900,827 ) Purchase price allocation $ 26,942,325

3. Discontinued Operations (Tab

3. Discontinued Operations (Tables)	6 Months Ended
	Jun. 30, 2020
Discontinued Operations and Disposal Groups [Abstract]
Discontinued operations	Three months ended Six months ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Revenue $ - $ 202,579 $ - $ 382,326 Cost of staffing services - 170,960 - 320,248 Gross profit - 31,619 - 62,078 SG&A - 4,443 - 8,634 Net income before tax - 27,176 - 53,444 Provision for income taxes - 6,794 - 13,361 Net income $ - $ 20,382 $ - $ 40,083

4. Related Party Transactions (

4. Related Party Transactions (Tables)	6 Months Ended
	Jun. 30, 2020
Related Party Transactions [Abstract]
Related party balances	Three months ended Six months ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Franchisee royalties $ 1,089,020 $ 1,659,716 $ 2,462,895 $ 3,293,498 Balances regarding the Worlds Franchisees are summarized below: June 30, 2020 December 31, 2019 Due to franchisee $ 773,247 $ 993,495 Risk management incentive program 988,817 1,027,960

7. Stock Based Compensation (Ta

7. Stock Based Compensation (Tables)	6 Months Ended
	Jun. 30, 2020
Share-based Payment Arrangement, Noncash Expense [Abstract]
Restricted stock outstanding	Shares Weighted average grant date price Non-vested, December 31, 2019 255,634 $ 7.18 Granted 57,087 6.48 Vested (27,705 ) 6.48 Non-vested, June 30, 2020 285,016 7.10
Stock options outstanding	Number of shares underlying options Weighted average exercise price per share Weighted average grant date fair value Outstanding, December 31, 2019 29,165 $ 7.20 $ 3.76 Granted - - - Forfeited - - - Exercised - - - Outstanding, June 30, 2020 29,165 7.20 3.76
Nonvested stock options outstanding	Number of shares underlying options Weighted average exercise price per share Weighted average grant date fair value Non-vested, December 31, 2019 5,416 $ 5.48 $ 3.01 Granted - - - Forfeited - - - Vested (2,187 ) 5.50 3.05 Non-vested, June 30, 2020 3,229 5.47 2.98
Intrinsic value	Number of shares underlying options Weighted average exercise price per share Weighted average remaining contractual life (years) Aggregate intrinsic value Outstanding 29,165 $ 7.20 4.22 $ 26,984 Exercisable 25,936 7.41 3.78 6,997

10. Notes Receivable (Tables)

10. Notes Receivable (Tables)	6 Months Ended
	Jun. 30, 2020
Accounts and Financing Receivable, after Allowance for Credit Loss [Abstract]
Changes in notes receivable	The following table summarizes changes in our notes receivable balance to franchisees: Balance as of December 31, 2019 $ 9,702,471 Notes issued 54,524 Accrued interest 40,793 Payments received (916,074 ) Change in valuation allowance (405,314 ) Balance as of June 30, 2020 $ 8,476,400 The following table summarizes changes in our notes receivable balance to non-franchisees: Balance as of December 31, 2018 $ 1,707,238 Accrued interest 86,785 Payments received (86,785 ) Change in valuation allowance (1,193,359 ) Balance as of June 30, 2020 $ 513,879

1. Basis of Presentation and _4

1. Basis of Presentation and Summary of Significant Accounting Policies (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Revenue	$ 2,639,287	$ 2,981,420	$ 6,344,529	$ 6,137,556
HireQuest Direct
Revenue	2,468,581	2,756,048	6,029,984	5,646,762
HireQuest
Revenue	$ 170,706	$ 225,372	$ 314,545	$ 490,794

1. Basis of Presentation and _5

1. Basis of Presentation and Summary of Significant Accounting Policies (Details 1) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Earnings Per Share [Abstract]
Weighted average number of common shares used in basic net income per common share	13,547,950	9,939,668	13,540,599	9,939,668
Dilutive effects of stock options	1,777	0	2,159	0
Weighted average number of common shares used in diluted net income per common share	13,549,727	9,939,668	13,542,758	9,939,668

1. Basis of Presentation and _6

1. Basis of Presentation and Summary of Significant Accounting Policies (Details 2) - USD ($)	Jun. 30, 2020	Dec. 31, 2019	Jun. 30, 2019	Dec. 31, 2018
Cash	$ 13,746,445	$ 4,187,450	$ 11,297	$ 1,291,317
Notes receivable	9,000,000	11,400,000
Level 1
Cash	13,746,445	4,187,450
Level 2
Notes receivable	8,990,279	11,409,709
Accounts receivable	$ 19,646,917	$ 28,201,279

1. Basis of Presentation and _7

1. Basis of Presentation and Summary of Significant Accounting Policies (Details Narrative) - USD ($)	6 Months Ended		12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Accounting Policies [Abstract]
Allowance for doubtful accounts on receivables	$ 129,000		$ 168,000
Allowance for losses on notes receivable	$ 1,598,673	$ 0
Outstanding common stock equivalents	29,000		29,000

2. Acquisitions (Details)

2. Acquisitions (Details)	6 Months Ended
	Jun. 30, 2020USD ($)$ / shares
Closing share price on July 15, 2019 | $ / shares	$ 6.19
Legacy HQ
Closing share price on July 15, 2019 | $ / shares	$ 5.76
Stock issued	$ 4,677,487
Stock consideration	26,942,325
Accounts receivable	10,480,907
Cash and cash equivalents	5,376,543
Identifiable intangible assets	17,015,857
Other current assets	725,453
Property, plant and equipment, net	281,186
Right-of-use asset	1,642,695
Current liabilities	(3,124,081)
Lease liabilities	(1,624,461)
Deferred tax liability	(2,930,947)
Other liabilities	(900,827)
Purchase price allocatiob	$ 26,942,325

3. Discontinued Operations (Det

3. Discontinued Operations (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Net income	$ 0	$ 20,382	$ 0	$ 40,083
Command Center
Revenue	0	202,579	0	382,326
Cost of staffing services	0	170,960	0	320,248
Gross profit	0	31,619	0	62,078
Gain on sale	0	4,443	0	8,634
SG&A	0	27,176	0	53,444
Net income before tax	0	6,794	0	13,361
Provision (benefit) for income taxes	$ 0	$ 20,382	$ 0	$ 40,083

4. Related Party Transactions_2

4. Related Party Transactions (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Related Party Transactions [Abstract]
Due to franchisees	$ 773,247		$ 773,247		$ 993,495
Risk management incentive program liability	988,817		988,817		$ 1,027,960
Franchise royalties	$ 1,089,020	$ 1,659,716	$ 2,462,895	$ 3,293,498

4. Related Party Transactions_3

4. Related Party Transactions (Details Narrative)	3 Months Ended		6 Months Ended
	Jun. 30, 2020USD ($)Locations	Jun. 30, 2019USD ($)	Jun. 30, 2020USD ($)Locations	Jun. 30, 2019USD ($)	Dec. 31, 2019USD ($)
Hire Quest Financial LLC
Debt	$ 0		$ 0		$ 0
Hire Quest Insurance
Related party transaction expenses	0	$ 1,800,000	0	$ 3,600,000
Brave New World Services, LLC
Related party transaction expenses	$ 0	11,000	$ 0	$ 17,000
Worlds Franchisees
Franchised and owned branch locations | Locations	20		20
Jackson Insurance
Related party transaction expenses		$ 240,000	$ 662,000

7. Stock Based Compensation (De

7. Stock Based Compensation (Details)	6 Months Ended
	Jun. 30, 2020$ / sharesshares
Share-based Payment Arrangement, Noncash Expense [Abstract]
Non-vested, beginning | shares	255,634
Granted | shares	57,087
Vested | shares	(27,705)
Non-vested, ending | shares	285,016
Weighted average grant date price, beginning | $ / shares	$ 7.18
Granted | $ / shares	6.48
Vested | $ / shares	6.48
Weighted average grant date price, ending | $ / shares	$ 7.10

7. Stock Based Compensation (_2

7. Stock Based Compensation (Details 1)	6 Months Ended
	Jun. 30, 2020$ / sharesshares
Share-based Payment Arrangement, Noncash Expense [Abstract]
Number of options outstanding, beginning | shares	29,165
Granted | shares	0
Forfeited | shares	0
Exercised | shares	0
Number of options outstanding, ending | shares	29,165
Weighted Average Exercise Price Per Share
Outstanding, beginning	$ 7.20
Granted	0
Forfeited	0
Exercised	0
Outstanding, ending	7.20
Weighted Average Grant Date Fair Value Per Share
Outstanding, beginning	3.76
Granted	0
Forfeited	0
Exercised	0
Outstanding, ending	$ 3.76

7. Stock Based Compensation (_3

7. Stock Based Compensation (Details 2)	6 Months Ended
	Jun. 30, 2020$ / sharesshares
Share-based Payment Arrangement, Noncash Expense [Abstract]
Number of nonvested options outstanding, beginning | shares	5,416
Granted | shares	0
Forfeited | shares	0
Vested | shares	(2,187)
Number of nonvested options outstanding, ending | shares	3,229
Weighted Average Exercise Price Per share
Outstanding, beginning	$ 5.48
Granted	.00
Forfeited	.00
Vested	5.50
Outstanding, ending	5.47
Outstanding, beginning	3.01
Granted	.00
Forfeited	.00
Vested	3.05
Outstanding, ending	$ 2.98

7. Stock Based Compensation (_4

7. Stock Based Compensation (Details 3) - USD ($)	6 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Share-based Payment Arrangement, Noncash Expense [Abstract]
Number of options, outstanding	29,165	29,165
Weighted average exercise price per share, outstanding	$ 7.20	$ 7.20
Weighted average remaining contractual life (years), outstanding	4 years 2 months 19 days
Aggregate intrinsic value, outstanding	$ 26,984
Number of options, exercisable	25,936
Weighted average exercise price per share, exercisable	$ 7.41
Weighted average remaining contractual life (years), exercisable	3 years 9 months 11 days
Aggregate intrinsic value, exercisable	$ 6,997

7. Stock Based Compensation (_5

7. Stock Based Compensation (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Options vested	2,187
Closing price of common stock	$ 6.19
Unrecognized share-based compensation expense	$ 1,100,000
Unrecognized share-based compensation expense period of recogntion	3 years 2 months 12 days
2016 Stock Incentive Plan
Options vested	26,000	24,000

9. Income Tax (Details Narrativ

9. Income Tax (Details Narrative)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Tax Disclosure [Abstract]
Effective tax rate	4.50%	2.10%	12.30%	2.50%

10. Notes Receivable (Details)

10. Notes Receivable (Details)	6 Months Ended
	Jun. 30, 2020USD ($)
Notes receivable, beginning	$ 11,400,000
Notes receivable, ending	9,000,000
Franchisees
Notes receivable, beginning	9,702,471
Notes issued	54,524
Accrued interest	40,793
Payments received	(916,074)
Change in valuation allowance	(405,314)
Notes receivable, ending	8,476,400
Non-franchisees
Notes receivable, beginning	1,707,238
Notes issued	0
Accrued interest	86,785
Payments received	(86,785)
Change in valuation allowance	(1,193,359)
Notes receivable, ending	$ 513,879

10. Notes Receivable (Details N

10. Notes Receivable (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Accounts and Financing Receivable, after Allowance for Credit Loss [Abstract]
Notes receivable	$ 9,000,000		$ 9,000,000		$ 11,400,000
Interest income on franchisee notes	$ 176,000	$ 3,000	$ 374,000	$ 3,000