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HireQuest, Inc. – ‘10-K’ for 12/31/20 – ‘EX-101.INS’

On:  Thursday, 3/25/21, at 4:52pm ET   ·   For:  12/31/20   ·   Accession #:  1654954-21-3300   ·   File #:  1-38513

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 3/25/21  HireQuest, Inc.                   10-K       12/31/20   84:4.6M                                   Blueprint/FA

Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                       HTML    527K 
 2: EX-4.1      Instruments Defining the Rights of Security         HTML     31K 
                Holders, Including Indentures Instruments Defining               
                the Rights of Security Holders, Including                        
                Indentures                                                       
 3: EX-4.2      Instruments Defining the Rights of Security         HTML     37K 
                Holders, Including Indentures Instruments Defining               
                the Rights of Security Holders, Including                        
                Indentures                                                       
 4: EX-21.1     Subsidiaries of the Registrant                      HTML     24K 
 5: EX-23.1     Consents of Experts and Counsel                     HTML     23K 
 6: EX-31.1     Certification Pursuant to Rule 13A-14(A)/15D-14(A)  HTML     27K 
                Certifications Section 302 of the Sarbanes-Oxly                  
                Act of 2002                                                      
 7: EX-31.2     Certification Pursuant to Rule 13A-14(A)/15D-14(A)  HTML     27K 
                Certifications Section 302 of the Sarbanes-Oxly                  
                Act of 2002                                                      
 8: EX-32.1     Certificate Pursuant to Section 18 U.S.C. Pursuant  HTML     26K 
                to Section 906 of the Sarbanes-Oxley Act of 2002                 
15: R1          Document and Entity Information                     HTML     61K 
16: R2          Statement - Consolidated Condensed Balance Sheets   HTML    119K 
                (Unaudited)                                                      
17: R3          Statement - Consolidated Condensed Balance Sheets   HTML     40K 
                (Parenthetical)                                                  
18: R4          Consolidated Condensed Statements of Income         HTML    114K 
                (Operations) (Unaudited)                                         
19: R5          Consolidated Statements of Changes in               HTML     79K 
                Shareholders' Equity                                             
20: R6          Condensed Consolidated Statements of Cash Flows     HTML    137K 
                (Unaudited)                                                      
21: R7          1. Overview and Summary of Significant Accounting   HTML     65K 
                Policies                                                         
22: R8          2. Acquisitions                                     HTML     41K 
23: R9          3. Discontinued Operations                          HTML     35K 
24: R10         4. Related Party Transactions                       HTML     37K 
25: R11         5. Line of Credit                                   HTML     27K 
26: R12         6. Workers' Compensation Insurance and Reserves     HTML     31K 
27: R13         7. Analysis of Franchised and Company-Owned         HTML     26K 
                Offices                                                          
28: R14         8. Stockholders' Equity                             HTML     32K 
29: R15         9. Stock Based Compensation                         HTML     52K 
30: R16         10. Property and Equipment                          HTML     30K 
31: R17         11. Intangible Assets                               HTML     28K 
32: R18         12. Commitments and Contingencies                   HTML     29K 
33: R19         13. Income Tax                                      HTML     43K 
34: R20         14. Notes Receivable                                HTML     33K 
35: R21         15. Unaudited Quarterly Results of Operations       HTML     37K 
36: R22         16. Subsequent Events                               HTML     29K 
37: R23         1. Overview and Summary of Significant Accounting   HTML    113K 
                Policies (Policies)                                              
38: R24         1. Overview and Summary of Significant Accounting   HTML     39K 
                Policies (Tables)                                                
39: R25         2. Acquisitions (Tables)                            HTML     41K 
40: R26         3. Discontinued Operations (Tables)                 HTML     37K 
41: R27         4. Related Party Transactions (Tables)              HTML     28K 
42: R28         6. Workers' Compensation Insurance and Reserves     HTML     27K 
                (Tables)                                                         
43: R29         7. Analysis of Franchise Locations (Tables)         HTML     26K 
44: R30         8. Stockholders' Equity (Tables)                    HTML     29K 
45: R31         9. Stock Based Compensation (Tables)                HTML     54K 
46: R32         10. Property and Equipment (Tables)                 HTML     29K 
47: R33         11. Intangible Assets (Tables)                      HTML     28K 
48: R34         13. Income Tax (Tables)                             HTML     45K 
49: R35         14. Notes Receivable (Tables)                       HTML     30K 
50: R36         15. Unaudited Quarterly Results of Operations       HTML     37K 
                (Tables)                                                         
51: R37         1. Overview and Summary of Significant Accounting   HTML     30K 
                Policies (Details)                                               
52: R38         1. Overview and Summary of Significant Accounting   HTML     31K 
                Policies (Details 1)                                             
53: R39         1. Overview and Summary of Significant Accounting   HTML     36K 
                Policies (Details 2)                                             
54: R40         1. Overview and Summary of Significant Accounting   HTML     39K 
                Policies (Details Narrative)                                     
55: R41         2. Acquisitions (Details)                           HTML     53K 
56: R42         2. Acquisitions (Details 1)                         HTML     36K 
57: R43         3. Discontinued Operations (Details)                HTML     42K 
58: R44         3. Discontinued Operations (Details 1)              HTML     46K 
59: R45         4. Related Party Transactions (Details)             HTML     29K 
60: R46         4. Related Party Transactions (Details Narrative)   HTML     37K 
61: R47         5. Line of Credit (Details Narrative)               HTML     24K 
62: R48         6. Workers' Compensation Insurance and Reserves     HTML     29K 
                (Details)                                                        
63: R49         7. Analysis of Franchise Locations (Details)        HTML     27K 
64: R50         8. Stockholders' Equity (Details)                   HTML     32K 
65: R51         9. Stock Based Compensation (Details)               HTML     43K 
66: R52         9. Stock Based Compensation (Details 1)             HTML     37K 
67: R53         9. Stock Based Compensation (Details 2)             HTML     53K 
68: R54         9. Stock Based Compensation (Details 3)             HTML     48K 
69: R55         9. Stock Based Compensation (Details 4)             HTML     43K 
70: R56         9. Stock Based Compensation (Details Narrative)     HTML     31K 
71: R57         10. Property and Equipment (Details)                HTML     36K 
72: R58         10. Property and Equipment (Details Narrative)      HTML     25K 
73: R59         11. Intangible Assets (Details)                     HTML     30K 
74: R60         11. Intangible Assets (Details Narrative)           HTML     25K 
75: R61         12. Commitments and Contingencies (Details          HTML     26K 
                Narrative)                                                       
76: R62         13. Income Tax (Details)                            HTML     42K 
77: R63         13. Income Tax (Details 1)                          HTML     39K 
78: R64         13. Income Tax (Details 2)                          HTML     56K 
79: R65         14. Notes Receivable (Details)                      HTML     32K 
80: R66         14. Notes Receivable (Details Narrative)            HTML     28K 
81: R67         15. Unaudited Quarterly Results of Operations       HTML    107K 
                (Details)                                                        
83: XML         IDEA XML File -- Filing Summary                      XML    150K 
82: EXCEL       IDEA Workbook of Financial Reports                  XLSX     95K 
 9: EX-101.INS  XBRL Instance -- hqi-20201231                        XML    950K 
11: EX-101.CAL  XBRL Calculations -- hqi-20201231_cal                XML    165K 
12: EX-101.DEF  XBRL Definitions -- hqi-20201231_def                 XML    364K 
13: EX-101.LAB  XBRL Labels -- hqi-20201231_lab                      XML    870K 
14: EX-101.PRE  XBRL Presentations -- hqi-20201231_pre               XML    700K 
10: EX-101.SCH  XBRL Schema -- hqi-20201231                          XSD    164K 
84: ZIP         XBRL Zipped Folder -- 0001654954-21-003300-xbrl      Zip    112K

‘EX-101.INS’   —   XBRL Instance — hqi-20201231

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<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Nature of Business</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">HireQuest, Inc. (“HQI,” the “Company,” “we,” us,” or “our”) is a nationwide franchisor of offices providing on-demand labor solutions in the light industrial and blue-collar segments of the staffing industry. Our franchisees provide various types of temporary personnel through two business models operating under the trade names “HireQuest Direct,” previously known as “Trojan Labor,” and “HireQuest,” previously known as “Acrux Staffing.” 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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of December 31, 2020 we had 139 franchisee-owned offices in 31 states and the District of Columbia. We are the employer of record to approximately 57,000 employees annually, who in turn provide services for thousands of clients in various industries including construction, recycling, warehousing, logistics, auctioneering, manufacturing, hospitality, landscaping, and retail. We provide staffing, marketing, funding, software, and administrative services to our franchisees. On September 29, 2019, we finalized the conversion of the last of our company-owned offices to franchise-owned offices. Between July 15, 2019 and that date, we also owned and operated offices.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 <i>Note 2 – Acquisitions</i>.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Basis of Presentation</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We have prepared the accompanying consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). 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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Consolidation</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The consolidated financial statements include the accounts of HQI and all of its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">U.S. GAAP requires the primary beneficiary of a variable interest entity (a “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 it. We provide acquisition financing to some of our franchisees that results in some of them being considered a VIE. We have reviewed these franchisees and determined that we are not the primary beneficiary of any of these entities, and accordingly, these entities have not been consolidated.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>COVID-19 Pandemic</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 ultimate 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, and the efficacy, availability and distribution of vaccines, 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 so far had a material adverse effect on our business and results of operations. If the pandemic continues to be a severe worldwide health crisis, it could continue to have a material adverse effect on our future business, results of operations, financial condition, and cash flows.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Use of Estimates</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Significant estimates and assumptions underlie our workers’ compensation claim liabilities, our workers’ compensation Risk Management Incentive Program, our deferred taxes, and estimated fair value of assets and liabilities acquired.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Revenue Recognition</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Our primary source of revenue comes from royalty fees based on the operation of our franchised offices. Royalty fees from our HireQuest Direct business line are based on a percentage of sales for services our franchisees provide to customers and usually range from 5% 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. Revenue is presented on a net basis as agent as opposed to a gross basis as principal, and recognized 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. <font style="background-color: white">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.</font> Because our franchisees receive and consume the benefits of our services simultaneously, our performance obligations are satisfied when our services are provided. Franchise royalties are billed on a weekly basis. We also offer various incentive programs for franchisees including royalty incentives and other support initiatives. Royalty fees are reduced to reflect any royalty incentives earned or granted under these programs. Additionally, we provide franchise royalty credits and incentives. These credits and incentives are provided to drive new location development, organic growth, and to limit workers' compensation exposure. Franchise royalty fees are presented net of these credits and incentives.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Service revenue consists of interest we charge our franchisees on overdue customer accounts receivable and other miscellaneous fees for optional services we provide. Interest income is recognized based on the effective interest rate applied to the outstanding principal balance. Revenue for optional services is recognized as services are provided.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Below are summaries of our revenue disaggregated by brand:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Year ended</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2020</b></p></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 75%"><font style="font-size: 8pt">HireQuest Direct</font></td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">12,063,963</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">13,644,786</font></td> <td style="width: 2%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">HireQuest</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">728,829</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">1,028,850</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 0.25in"><font style="font-size: 8pt">Total</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">12,792,792</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">14,673,636</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Workers’ Compensation Claims Liability</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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. If the actual costs of the claims exceed the amount estimated, we may incur additional charges.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Workers’ compensation Risk Management Incentive Program (“RMIP”)</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Our RMIP is designed to incentivize our franchises to keep our temporary employees safe and control exposure to large workers’ compensation claims. We accomplish this by paying our franchisees an amount equivalent to a percentage of the amount they pay for workers’ compensation insurance if they keep their workers’ compensation loss ratios below specified thresholds.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Notes Receivable</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Notes receivable consist primarily of amounts due to us related to the financing of franchised locations. We report notes receivable at the principal balance outstanding less an allowance for losses.<font style="color: #212529; background-color: white">  We charge interest at a fixed rate and interest income is</font> calculated by applying the effective rate to the outstanding principal balance. 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 franchisees and record provisions for estimated losses when we believe it is probable that our franchisees will be unable to make their required payments. We 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 be recoverable. When a note receivable is deemed impaired, we discontinue accruing interest and only recognize interest income when payment is received. <font style="color: #212529; background-color: white">O</font><font style="background-color: white">ur allowance for losses on notes receivable was approximately $1.6 million and $-0- at December 31, 2020 and December 31, 2019, respectively.<font style="color: #212529">  </font></font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Stock-Based Compensation </i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="background-color: white">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.</font> The fair value of stock awards is based on the quoted price of our common stock on the grant date. T<font style="background-color: white">he fair value of option awards is determined using the Black-Scholes valuation model.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Intangible Assets – Internal Use Software</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 when incurred during the preliminary project stage and the post-implementation stage.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Provision for Income Taxes</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="background-color: white">We account for provision (benefit) for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which we expect to recover or settle those deferred amounts. We record valuation allowances for deferred tax assets that more likely than not will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="background-color: white">We have analyzed our filing positions in all jurisdictions where we are required to file returns and found no positions th</font>at would require a liability for unrecognized income tax positions to be recognized. If we are assessed penalties and/or interest, penalties will be charged to selling, general, and administrative expense and interest will be charged to interest expense.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Work Opportunity Tax Credit (“WOTC”) is a source of fluctuation in our effective income tax rate. The WOTC is designed to encourage the hiring of workers from certain disadvantaged targeted categories and is generally calculated as a percentage of wages over a twelve month period up to worker maximum by targeted category. We estimate the amount of WOTC we expect to receive based on wages certified in the current period.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Business Combinations</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We account for business acquisitions under the acquisition method of accounting by recognizing identifiable tangible and intangible assets acquired, liabilities assumed, and non-controlling interests in the acquired business at their fair values. We record the portion of the purchase price that exceeds the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed as goodwill. We expense acquisition related costs as we incur them.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Earnings per Share</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We calculate basic earnings (loss) per share by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding. We do not include the impact of any potentially dilutive common stock equivalents in our basic earnings (loss) per share calculations. 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 and unvested restricted shares, except where their inclusion would be anti-dilutive. Outstanding common stock equivalents at December 31, 2020 and December 31, 2019 totaled approximately 308,000 and 244,000, respectively.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Diluted common shares outstanding were calculated using the treasury stock method and are as follows:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Year ended</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2020</b></p></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 75%"><font style="font-size: 8pt">Weighted average number of common shares used in basic net income per common share</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">13,542,403</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">11,588,776</font></td> <td style="width: 2%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Dilutive effects of stock options and unvested restricted stock</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">111,725</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Weighted average number of common shares used in diluted net income per common share</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">13,654,128</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">11,588,776</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Property and Equipment</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We record property and equipment at cost. We compute depreciation using the straight-line method over the estimated useful lives. Land is not depreciated. Repairs and maintenance are expensed as incurred. When assets are sold or retired, we eliminate cost and accumulated depreciation from the consolidated balance sheet and reflect a gain or loss in the consolidated statement of income. The estimated useful lives of property and equipment are as follows:</p> <table cellspacing="3" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr> <td style="vertical-align: top; width: 48px; padding-left: 0.25in"><font style="font-size: 8pt">●</font></td> <td style="padding: 0.75pt; text-align: justify"><font style="font-size: 8pt">Buildings – 40 years</font></td></tr> </table> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p> <table cellspacing="3" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr> <td style="vertical-align: top; width: 48px; padding-left: 0.25in"><font style="font-size: 8pt">●</font></td> <td style="padding: 0.75pt; text-align: justify"><font style="font-size: 8pt">Building improvements – 15 years</font></td></tr> </table> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p> <table cellspacing="3" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr> <td style="vertical-align: top; width: 48px; padding-left: 0.25in"><font style="font-size: 8pt">●</font></td> <td style="padding: 0.75pt; text-align: justify"><font style="font-size: 8pt">Computers, furniture, and equipment – 5 to 7 years.</font></td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Accounts Receivable and Allowance for Doubtful Accounts</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Accounts receivable consist of amounts due for labor services from customers of franchises and of previously company-owned offices. At December 31, 2020 and December 31, 2019, substantially all of our accounts receivable were due from franchises.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We own the accounts receivable from labor services provided by our franchises. Accounts receivable that age beyond 84 days are charged back to our franchises. Accordingly, we do not record an allowance for doubtful accounts on these accounts receivable.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">For labor services provided by previously 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 $77,000 and $168,000 at December 31, 2020 and December 31, 2019, respectively.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Advertising and Marketing Costs</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We expense advertising and marketing costs as we incur them. These costs were $33,000 and $449,000 in 2020, and 2019, respectively. The expense in 2019 included rebranding expenses incurred in relation to the Merger. These costs are included in general and administrative expenses.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i> </i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Fair Value Measures</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0">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:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Level 1: Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 and are reviewed for impairment at least annually. The fair value of impaired notes receivable are determined based on estimated future payments discounted back to present value using the notes effective interest rate.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="text-align: center"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Fair value</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2020</b></p></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 63%"><font style="font-size: 8pt"> Cash</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: center"><font style="font-size: 8pt">1</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">13,667,434</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">4,187,450</font></td> <td style="width: 2%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> Notes receivable</font></td> <td> </td> <td> </td> <td style="text-align: center"><font style="font-size: 8pt">2</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">7,618,494</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">11,409,709</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> Notes receivable - impaired</font></td> <td> </td> <td> </td> <td style="text-align: center"><font style="font-size: 8pt">3</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">447,034</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> Accounts receivable</font></td> <td> </td> <td> </td> <td style="text-align: center"><font style="font-size: 8pt">2</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">21,344,499</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">28,201,279</font></td> <td> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Discontinued Operations</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the quarter ended September 29, 2019, we sold substantially all of the offices acquired in the Merger. Accordingly, the assets and liabilities, operating results, and cash flows for these businesses are presented as discontinued operations, separate from our continuing operations, for all periods presented in our consolidated financial statements and footnotes, unless indicated otherwise.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Savings Plan</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="background-color: white">We have a savings plan that qualifies under Section 401(k) of the Internal Revenue Code. Under our 401(k) plan, eligible employees may contribute a portion of their pre-tax earnings, subject to certain limitations. As a benefit, we match 100% of each employee’s first 3% of contributions, then 50% of each employee’s contribution beyond 3%, up to a maximum match of 4% of the employee’s eligible earnings.</font> Matching expense related to our savings plan totaled approximately $23,000 and $-0- during the years ended December 31, 2020 and December 31, 2019, respectively<font style="background-color: white"> </font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Recently Adopted Accounting Pronouncements</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">There were no new accounting pronouncements, issued or effective during the year, adopted during the year.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Recently Issued Accounting Pronouncements</i></b>  </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
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<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On July 15, 2019, Command Center completed its acquisition of  Legacy HQ . 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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 the combined company are included in our financial statements for all periods beginning July 15, 2019.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The fair value of the purchase consideration is calculated based on the Company's stock price on the NASDAQ exchange as it is considered to be more reliable than the fair value of the membership interests a private company, Legacy HQ. Consideration is calculated based on the Company's closing share price of $5.76 on July 15, 2019.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table summarizes the estimated fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td style="width: 88%"><font style="font-size: 8pt">Closing share price on July 15, 2019</font></td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">5.76</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Common stock</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">4,677,487</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Stock consideration</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">26,942,325</font></td> <td style="border-bottom: black 1pt double"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Accounts receivable</font></td> <td> </td> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">10,480,907</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Cash and cash equivalents</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">5,376,543</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Identifiable intangible assets</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">17,015,857</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Other current assets</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">725,453</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Property, plant and equipment, net</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">281,186</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Right-of-use asset</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">1,642,695</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Current liabilities</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(3,124,081</font></td> <td><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Lease liabilities     </font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(1,624,461</font></td> <td><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Deferred tax liability</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(2,930,947</font></td> <td><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Other liabilities</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(900,827</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Purchase price allocation</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">26,942,325</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table presents the unaudited pro forma information assuming the Merger occurred on January 1, 2018. The unaudited pro forma information is not necessarily indicative of the results of operations that would have been achieved if the acquisition had taken place on that date. </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%"> <tr style="vertical-align: bottom"> <td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="padding-bottom: 1pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td colspan="7" style="border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom"><p><font style="font: 8pt Times New Roman, Times, Serif; color: #000000; vertical-align: bottom; padding-bottom: 2px"><b>Year ended</b></font></p></td></tr> <tr style="vertical-align: bottom"> <td style="font: 13px Times New Roman, Times, Serif; text-align: center; vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="text-align: center; padding-bottom: 1pt; vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td colspan="3" style="border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom"><p><font style="font: 8pt Times New Roman, Times, Serif; vertical-align: bottom; padding-bottom: 2px"><b>December 31, 2020</b></font></p></td><td style="text-align: center; padding-bottom: 1pt; vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td colspan="3" style="border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom"><p><font style="font: 8pt Times New Roman, Times, Serif; vertical-align: bottom; padding-bottom: 2px"><b>December 31, 2019</b></font></p></td></tr> <tr style="vertical-align: bottom"> <td style="font: 13px Times New Roman, Times, Serif; width: 56%; color: #000000; text-align: left; text-indent: 0px"><font style="font: 8pt Times New Roman, Times, Serif">Royalty revenue</font></td><td style="font: 13px Times New Roman, Times, Serif; width: 8%; color: #000000"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td style="font: 13px Times New Roman, Times, Serif; width: 1%; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td><td style="font: 13px Times New Roman, Times, Serif; width: 12%; color: #000000; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">12,792,793</font></td><td style="font: 13px Times New Roman, Times, Serif; width: 1%; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="font: 13px Times New Roman, Times, Serif; width: 8%; color: #000000"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td style="font: 13px Times New Roman, Times, Serif; width: 1%; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td><td style="font: 13px Times New Roman, Times, Serif; width: 12%; color: #000000; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">16,176,219</font></td><td style="font: 13px Times New Roman, Times, Serif; width: 1%; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom"> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left; text-indent: 0px"><font style="font: 8pt Times New Roman, Times, Serif">Net income</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">5,359,414</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">5,090,045</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom"> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-indent: 0px"><font style="font: 8pt Times New Roman, Times, Serif">Basic earnings per share</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.40</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.38</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom"> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-indent: 0px"><font style="font: 8pt Times New Roman, Times, Serif">Basic weighted average shares outstanding</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">13,542,403</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">13,294,201</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom"> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-indent: 0px"><font style="font: 8pt Times New Roman, Times, Serif">Diluted earnings per share</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.39</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.38</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom"> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-indent: 0px"><font style="font: 8pt Times New Roman, Times, Serif">Diluted weighted average shares outstanding</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">13,654,128</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">13,294,736</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr> </table> <p style="font: 13px Times New Roman, Times, Serif; text-indent: 0px; margin-right: 0; margin-left: 0"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:MergersAcquisitionsAndDispositionsDisclosuresTextBlock>
<us-gaap:DisposalGroupsIncludingDiscontinuedOperationsDisclosureTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Prior to October 2019, we operated a number of company-owned offices which were acquired in the Merger with Command Center. All of these company-owned offices were sold in the third quarter of 2019, the vast majority becoming franchisees, and we now no longer operate any company-owned offices. We also made the strategic decision to sell the assets of Command Center’s four California offices outside of our franchise system to an unaffiliated third party, and we no longer conduct business in the state of California. A summary of total consideration received, and assets sold is as follows:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td style="width: 88%"><font style="font-size: 8pt">Notes receivable</font></td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">14,884,620</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Accounts receivable</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">2,204,286</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Cash</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">221,845</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Consideration received</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">17,310,751</font></td> <td style="border-bottom: black 1pt double"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Customer lists</font></td> <td> </td> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">17,015,857</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Lease and utility deposits</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">100,009</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Fixed assets</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">57,448</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Gain</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">137,437</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Sale price allocation</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">17,310,751</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Year ended</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2020</b></p></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 75%"><font style="font-size: 8pt">Revenue</font></td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">13,932,769</font></td> <td style="width: 2%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Cost of staffing services</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">9,946,836</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 27pt"><font style="font-size: 8pt">Gross profit</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">3,985,933</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Gain on sale</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">137,437</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Selling, general and administrative expense</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(3,836,045</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Net income before tax</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">287,325</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Provision for income taxes</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">71,831</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 27pt"><font style="font-size: 8pt">Net income</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">215,494</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We continue to be involved with the offices we sold through franchise agreements. The term of our franchise agreement is five years, subject to renewal at the end of the current term. Franchise royalties from sold locations that subsequently became franchisees were approximately $3.0 million and $1.4 million, for the years ended December 31, 2020 and December 31, 2019, respectively.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:DisposalGroupsIncludingDiscontinuedOperationsDisclosureTextBlock>
<us-gaap:RelatedPartyTransactionsDisclosureTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Hire Quest Financial LLC (“HQF”)</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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. At December 31, 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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Hirequest Insurance Company (“HQ Ins.”)</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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. Hire Quest, LLC terminated its policy with HQ Ins. on July 15, 2019 upon the closing of the Merger.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Premiums invoiced by HQ Ins. to HQI and Legacy HQ for workers compensation deductible reimbursement insurance during the years ended December 31, 2020 and December 31, 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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Brave New World Services, LLC, formerly known as Hire Quest LTS (“HQ LTS”)</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Mr. Jackson and an immediate family member of Mr. Hermanns collectively own a majority of HQ LTS.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 during the years ended December 31, 2020 and December 31, 2019 were approximately $-0- and $19,000, respectively. We do not have any current or planned business dealings with BNW which now serves as a management company for the Worlds Franchisees (defined below).</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Jackson Insurance Agency and Bass Underwriters, Inc. (collectively, “Bass”)</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 Worlds Franchisees (defined below).</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Premiums, taxes, and fees invoiced by Jackson Insurance and Bass to HQI and Legacy HQ for these insurance policies during the years ended December 31, 2020 and December 31, 2019 were approximately $726,000 and $613,000, 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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Insurance Technologies, Inc. ("Insurance Technologies")</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 and is monitored by the Audit committee on an ongoing basis.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the years ended December 31, 2020 and December 31, 2019, Insurance Technologies invoiced HQI approximately $188,000 and $60,000 for services provided pursuant to this agreement, respectively.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i> </i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>The Worlds Franchisees</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Mr. Hermanns and Mr. Jackson have direct or indirect ownership interests in certain of our franchisees (the “Worlds Franchisees”). There were 21 Worlds Franchisees at December 31, 2020 that operated 49 of our 139 offices. There were 20 Worlds Franchisees that operated 57 of our 147 offices at December 31, 2019.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Balances regarding the Worlds Franchisees are summarized below:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2020</b></p></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 76%"><font style="font-size: 8pt">Due to franchisee</font></td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">435,072</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">993,495</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Risk management incentive program liability</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">499,199</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">1,027,960</font></td> <td> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Transactions regarding the Worlds Franchisees are summarized below:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Year ended</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2020</b></p></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 75%"><font style="font-size: 8pt">Franchisee royalties</font></td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">4,897,445</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">6,964,690</font></td> <td style="width: 2%"> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:RelatedPartyTransactionsDisclosureTextBlock>
<us-gaap:DebtDisclosureTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In July 2019, we entered into an agreement with Truist, for a $30 million line of credit with a $15 million sublimit for letters of credit. At December 31, 2020, approximately $9.1 million was utilized by outstanding letters of credit that secure our obligations to our workers’ compensation insurance carrier, $500,000 was utilized by a letter of credit that secures our paycard funding account, leaving $20.4 million available under the agreement for potential additional borrowings. For additional information related to the letter of credit securing our workers’ compensation obligations see <i>Note 6 – Workers’ Compensation Insurance and Reserves.</i></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">This line of credit is scheduled to mature on May 31, 2024. The current agreement bears interest at a variable rate equal to the Daily One Month London Interbank Offering Rate, or 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 December 31, 20 the effective interest rate was 1.6%. A non-use fee of between 0.125% and 0.250% will accrue 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, tested quarterly on a rolling four quarter basis. At December 31, 2020 we were in compliance with this covenant. Our obligations under this agreement are subject to acceleration upon the occurrence of an event of default as defined in the loan agreement.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:DebtDisclosureTextBlock>
<HQI:WorkersCompensationInsuranceAndReservesDisclosureTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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, we terminated our deductible reimbursement policy with HQ Ins. and have 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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Command Center also obtained its workers’ compensation insurance through ACE. Pursuant to Command Center’s policy, ACE provides insurance for covered losses and expenses in excess of $500,000 per incident. Command Center’s ACE policy in effect as of the date of the Merger includes 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 are 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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Under these high deductible programs, HQI is effectively self-insured. Per our contractual agreements with ACE, we must provide collateral deposits of approximately $9.1 million, which we accomplished by providing letters of credit under our agreement with Truist.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table reflects the changes in our workers' compensation claims liability:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2020</b></p></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 76%"><font style="font-size: 8pt">Estimated future claims liabilities at the beginning of the period</font></td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">3,844,501</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Claims paid during the period</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(3,779,286</font></td> <td><font style="font-size: 8pt">)</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(1,237,977</font></td> <td><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Additional future claims liabilities recorded during the period</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">4,518,853</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">5,082,478</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Estimated future claims liabilities at the end of the period</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">4,584,068</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">3,844,501</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</HQI:WorkersCompensationInsuranceAndReservesDisclosureTextBlock>
<HQI:AnalysisOfFranchiseLocationsDisclosureTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Below is a summary of changes in the number of offices:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td style="width: 88%"><font style="font-size: 8pt">Franchised offices, December 31, 2018</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">97</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Closed in 2019</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(10</font></td> <td><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Opened in 2019</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">60</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Franchised offices, December 31, 2019</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">147</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Closed in 2020</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(13</font></td> <td><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Opened in 2020</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">5</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Franchised offices, December 31, 2020</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">139</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</HQI:AnalysisOfFranchiseLocationsDisclosureTextBlock>
<us-gaap:StockholdersEquityNoteDisclosureTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Dividend</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On September 15, 2020 we declared and paid a $0.05 per common share dividend to shareholders of record as of the close of business on September 1, 2020 which amounted to an aggregate cash payment of approximately $678,000. Then, on December 15, 2020 we declared and paid a $0.05 per common share dividend to shareholders of record as of the close of business on December 1, 2020 which amounted to an aggregate cash payment of approximately $680,000. We intend to continue to pay this dividend on a quarterly basis, based on our business results and financial position.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Treasury Stock</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Effective July 2020, our Board of Directors authorized a one-year repurchase plan for up to 1 million shares of our common stock at a cost not to exceed $100,000 per month. During the year ended December 31, 2020, we purchased 23,638 shares of our common stock at an aggregate cost of approximately $146,000 resulting in an average price of $6.20 per share. These shares are held in treasury. The table below summarized our common stock purchased during 2020 in more detail:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total shares purchased</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Average price per share</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total number of shares purchased as part of publicly announced plan</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Approximate dollar value of shares that may be purchased under the plan</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 52%"><font style="font-size: 8pt">July, 2020</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">675</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">6.21</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">675</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">1,200,000</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">August, 2020</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">22,963</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">6.20</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">23,638</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">1,000,000</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 27pt"><font style="font-size: 8pt">Total</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">23,638</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"> </td> <td style="border-bottom: black 1pt double"> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Additionally, there were 9,454 restricted shares that did not meet the vesting criteria. These shares are also held in treasury.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Issuance of Common Stock</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In October 2019, we issued 8,750 shares of stock pursuant to the exercise of 8,750 common stock options with a strike price of $5.50 for a total purchase price of $48,125. In December 2019, we issued 22,917 shares of stock pursuant to the exercise of 22,917 common stock options with weighted average strike price of $4.96 for a total purchase price of $113,752. </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Tender Offer</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In June 2019, we commenced an issuer tender offer to purchase up to 1,500,000 shares of our common stock at a fixed price of $6.00 per share. This tender offer expired on July 25, 2019, and we accepted for purchase approximately 1.4 million shares for an aggregate cost of approximately $8.4 million, excluding fees and expenses. </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:StockholdersEquityNoteDisclosureTextBlock>
<us-gaap:DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Employee Stock Incentive Plan</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Our 2008 Stock Incentive Plan (the “2008 Plan”), which permitted the grant of up to 533,333 equity awards, expired in January 2016. In November 2016, our stockholders approved a new stock incentive plan, the 2016 Plan, under which were authorized to grant awards for up to 500,000 shares of our common stock over the 10 year life of the plan.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In 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 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. One third of these shares vested on June 14, 2020, and the remainder will vest in equal proportions on the first two anniversaries of that date. Also in 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, 8,194 shares vested equally over the following three months. The remaining 1,639 shares were issued pursuant to our share purchase match program (described below). Also in 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. </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 or granted in lieu of cash compensation by key employees and directors up to $25,000 in aggregate value per individual within any calendar year. These shares vest on the second anniversary of the date on which the matched shares were purchased if the individual is still with the Company. During 2020, we issued approximately 22,000 shares valued at approximately $147,000 under this program. During 2019, we issued approximately 2,000 shares valued at approximately $10,000 under this program.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In December 2019, our Board approved the 2019 HireQuest, Inc. Equity Incentive Plan (the “2019 Plan”), intended to replace the 2016 Plan with respect to future grants. Subject to adjustment in accordance with the terms of the 2019 Plan, no more than 1,500,000 shares of common stock are available in the aggregate for the grant of awards under the 2019 Plan. No more than 1,000,000 shares may be issued in the aggregate pursuant to the exercise of incentive stock options. In addition, no more than 250,000 shares may be issued in the aggregate to any employee or consultant, and no more than 50,000 shares may be issued in the aggregate to any non-employee director in any twelve-month period.<b> </b>Shares of common stock available for distribution under the Plan may consist, in whole or in part, of authorized and unissued shares, treasury shares or shares reacquired by the Company in any manner.  The 2019 Plan was approved by our shareholders in June 2020 and became effective as of that date. Pursuant to the terms of the 2019 Plan, any award already granted under the 2016 Plan as of June 15, 2020 remained in full force and effect, as if the 2016 Plan had not been amended or terminated.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In 2020, we issued 83,283 shares of restricted common stock pursuant to the 2019 Plan valued at approximately $547,000 to members of our Board of Directors for their services in lieu of cash compensation. Of these, 61,868 shares vested equally over the following three months. The remaining 21,415 shares were issued pursuant to our share purchase match program.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Also in 2020, we issued 25,000 shares of restricted common stock to an employee pursuant to the 2019 Plan valued at approximately $179,000 for services, and to encourage retention. These shares vest over four years, with 50% vesting on September 11, 2021, and 6.25% vesting each quarter thereafter for the next eight quarters. Also in 2020, we issued 402 shares of restricted common stock to certain employees pursuant to our share purchase match program valued at approximately $3,000.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table summarizes our restricted stock outstanding at December 31, 2018, and changes during the years ended December 31, 2019 and December 31, 2020.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Shares</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted average grant date price</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 76%"><font style="font-size: 8pt">Non-vested, December 31, 2018</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 0.25in"><font style="font-size: 8pt">Granted</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">264,035</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 0.25in"><font style="font-size: 8pt">Vested</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(8,401</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">6.19</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Non-vested, December 31, 2019</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">255,634</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">7.18</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 0.25in"><font style="font-size: 8pt">Granted</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">110,639</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">6.71</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 0.25in"><font style="font-size: 8pt">Forfeited</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(9,454</font></td> <td><font style="font-size: 8pt">)</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">7.14</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 0.25in"><font style="font-size: 8pt">Vested</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(73,500</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">6.56</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Non-vested, December 31, 2020</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">283,456</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">7.19</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 2008 Plan, the 2016 Plan, and the corresponding award documents. There were approximately 15,000 and 24,000 stock options vested at December 31, 2020 and December 31, 2019, respectively.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The estimated fair value of each option granted is calculated using the Black-Scholes option-pricing model. Expected volatilities are based on the Company’s historical data and implied volatility. The Company uses historical data to estimate expected employee forfeitures of stock options. The expected life of options granted is management’s best estimate using recent and expected transactions. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. There were no options granted in 2020. The weighted-average assumptions used in the model were as follows:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2019</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 88%"><font style="font-size: 8pt">Expected term (years)</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">2.3 - 8.9</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Expected volatility</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">46.8% - 63.1</font></td> <td><font style="font-size: 8pt">%</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Dividend yield</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">0.0</font></td> <td><font style="font-size: 8pt">%</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Risk-free rate</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">1.7% - 2.4</font></td> <td><font style="font-size: 8pt">%</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Weighted average grant date fair value</font></td> <td> </td> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">3.18</font></td> <td> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table summarizes our stock options outstanding at December 31, 2018, and changes during the years ended December 31, 2020 and December 31, 2019.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Number of shares underlying options</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted average exercise price per share</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted average grant date fair value</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 64%"><font style="font-size: 8pt">Outstanding, December 31, 2018</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Granted</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">160,831</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">5.86</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">3.18</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Forfeited</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(100,000</font></td> <td><font style="font-size: 8pt">)</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">5.70</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">3.16</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Exercised</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(31,666</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">5.11</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2.71</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Outstanding, December 31, 2019</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">29,165</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">7.20</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">3.76</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Forfeited</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(12,083</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">8.76</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">4.34</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Outstanding, December 31, 2020</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">17,082</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">6.10</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">3.36</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table summarizes our non-vested stock options outstanding at December 31, 2018, and changes during the years December 31, 2020 and December 31, 2019:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Number of shares underlying options</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted average exercise price per share</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted average grant date fair value</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 64%"><font style="font-size: 8pt">Non-vested, December 31, 2018</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Granted</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">84,523</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">5.56</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">3.05</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Forfeited</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(57,857</font></td> <td><font style="font-size: 8pt">)</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">5.70</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">3.16</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Vested</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(21,250</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">5.21</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2.73</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Non-vested, December 31, 2019</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">5,417</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">5.48</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">3.01</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Vested</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(3,229</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">5.47</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2.98</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Non-vested, December 31, 2020</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">2,188</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">5.50</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">3.05</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 $10.22 on December 31, 2020:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Number of shares underlying options</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b> Weighted average exercise price per share</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b> Weighted average remaining contractual life (years)</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b> Aggregate intrinsic value</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 52%"><font style="font-size: 8pt">Outstanding</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">17,082</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">6.10</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">5.67</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">82,496</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Exercisable</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">14,894</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">6.18</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">5.41</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">60,135</font></td> <td> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At December 31, 2020, there was unrecognized stock-based compensation expense totaling approximately $845,000 relating to non-vested options and restricted stock grants that will be recognized over the next 2.7 years.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
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<us-gaap:PropertyPlantAndEquipmentDisclosureTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table summarizes the book value of our assets and accumulated depreciation.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2020</b></p></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 76%"><font style="font-size: 8pt">Land</font></td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">472,492</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">472,492</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Buildings and improvements</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">1,027,631</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">1,023,231</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Furniture and fixtures</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">599,901</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">598,417</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Construction in progress</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">1,648,640</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">270,828</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Accumulated depreciation</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(555,285</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(464,282</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Total property and equipment, net</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">3,193,379</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">1,900,686</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Construction in progress consists primarily of capitalized costs related to an addition to our corporate headquarters.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Depreciation expense related to property and equipment totaled approximately $129,000 and $400,000 during the years ended December 31, 2020 and December 31, 2019, respectively.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:PropertyPlantAndEquipmentDisclosureTextBlock>
<us-gaap:IntangibleAssetsDisclosureTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table reflects our finite-lived intangible assets.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="10" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2020</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Gross</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Accumulated amortization</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Net</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Finite-lived intangible assets:</font></td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 62%; text-indent: 27pt"><font style="font-size: 8pt">Internal-use software development</font></td> <td style="width: 1%; padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid; width: 1%"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt solid; width: 9%; text-align: right"><font style="font-size: 8pt">342,697</font></td> <td style="border-bottom: black 1pt solid; width: 1%"> </td> <td style="width: 1%; padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid; width: 1%"> </td> <td style="border-bottom: black 1pt solid; width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="border-bottom: black 1pt solid; width: 1%"> </td> <td style="width: 1%; padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid; width: 1%"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt solid; width: 9%; text-align: right"><font style="font-size: 8pt">342,697</font></td> <td style="border-bottom: black 1pt solid; width: 3%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Total finite-lived intangible assets</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">342,697</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">342,697</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We did not recognize any amortization expense related to intangible assets during the year ended December 31, 2020 as we are still in the development stage.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:IntangibleAssetsDisclosureTextBlock>
<us-gaap:CommitmentsAndContingenciesDisclosureTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Consulting Agreement</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As contemplated by the Merger Agreement, on July 15, 2019, we entered into a consulting arrangement with Dock Square. Pursuant to this consulting arrangement, Dock Square introduces prospective customers and expands relationships with our existing customers for which in return it is eligible to receive unregistered shares of our common stock, subject to certain performance metrics and vesting terms. The grant of any such shares by us would be based on our gross revenue generated from the services of Dock Square as measured over a 12 month period. Upon the grant of any such shares, 50% of such granted shares would vest immediately, and the remaining 50% of such granted shares would be subject to a vesting requirement linked to the gross revenue generated from the services of Dock Square measured over a 3 year period. We refer to any such shares as the “Performance Shares.” We anticipate the maximum aggregate number of Performance Shares issuable under the consulting arrangement would not exceed 1.6 million shares. Any Performance Shares would be in addition to the pro rata portion of the shares of our common stock that Dock Square’s members received as merger consideration at the closing of the Merger, along with the other investors in Legacy HQ. Dock Square would receive any declared and paid dividends on issued Performance Shares, including the unvested portion of such shares during the 3-year vesting measurement period, and the issued but unvested Performance Shares would vest upon a change of control. In addition, Dock Square received piggy-back registration rights with respect to its Performance Shares issued and vested at the time of such registration. To date, no shares have been issued to Dock Square as performance targets have not been met.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Franchise Acquisition Indebtedness</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We financed the purchase of several offices by new franchises with notes receivable. In some instances, this financing resulted in certain franchises being considered VIE’s. 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 VIE’s on December 31, 2020 and December 31, 2019 was approximately $2.1 million and $2.5 million, respectively.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Legal Proceedings</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 December 31, 2020.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:CommitmentsAndContingenciesDisclosureTextBlock>
<us-gaap:IncomeTaxDisclosureTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The provision for income taxes is comprised of the following:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2020</b></p></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Current</font></td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 76%; text-indent: 27pt"><font style="font-size: 8pt">Federal</font></td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">1,812,710</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">3,551,418</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 27pt"><font style="font-size: 8pt">State</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">696,154</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">996,510</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Deferred</font></td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 27pt"><font style="font-size: 8pt">Federal</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(1,246,828</font></td> <td><font style="font-size: 8pt">)</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(1,113,042</font></td> <td><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 27pt"><font style="font-size: 8pt">State</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(520,999</font></td> <td><font style="font-size: 8pt">)</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">46,110</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Change in valuation allowance</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 45pt"><font style="font-size: 8pt">Provision for income taxes</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">741,038</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">3,480,996</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred taxes are as follows:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2020</b></p></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"><b>Deferred Tax Assets and Liabilities</b></font></td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 76%"><font style="font-size: 8pt">Workers' compensation claims liability</font></td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">1,131,695</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">947,023</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Depreciation/amortization</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">205,987</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">279,990</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Bad debt reserve</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">18,984</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">41,436</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Accrued vacation</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">33,956</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">37,771</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Cash to Accrual - 481 Adjustment</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(1,888,302</font></td> <td><font style="font-size: 8pt">)</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(3,000,216</font></td> <td><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Impairment of notes receivable</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">394,674</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Stock based compensation</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">182,385</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">5,550</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 0.25in"><font style="font-size: 8pt">Total deferred tax asset</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">79,379</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">(1,688,446</font></td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">)</font></td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Management estimates that our effective tax rates was approximately 12.1% for 2020. The items accounting for the difference between income taxes computed at the statutory federal income tax rate and the income taxes reported on the statements of income are as follows:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2020</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2019</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 50%"><font style="font-size: 8pt">Income tax expense based on statutory rate</font></td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">1,281,095</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">21.0</font></td> <td style="width: 2%"><font style="font-size: 8pt">%</font></td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">624,860</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">21.0</font></td> <td style="width: 2%"><font style="font-size: 8pt">%</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Permanent differences</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">4,233</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">0.1</font></td> <td><font style="font-size: 8pt">%</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(789,810</font></td> <td><font style="font-size: 8pt">)</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(26.5</font></td> <td><font style="font-size: 8pt">)%</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">State income taxes expense net of federal taxes</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">138,375</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">2.3</font></td> <td><font style="font-size: 8pt">%</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">820,698</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">27.6</font></td> <td><font style="font-size: 8pt">%</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">WOTC</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(712,891</font></td> <td><font style="font-size: 8pt">)</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(11.7</font></td> <td><font style="font-size: 8pt">)%</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(498,000</font></td> <td><font style="font-size: 8pt">)</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(16.7</font></td> <td><font style="font-size: 8pt">)%</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">HQ Conversion to C Corp</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">0.0</font></td> <td><font style="font-size: 8pt">%</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">3,320,594</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">111.6</font></td> <td><font style="font-size: 8pt">%</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Other</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">30,226</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">0.5</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">%</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2,654</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">0.1</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">%</font></td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 27pt"><font style="font-size: 8pt">Total taxes on income</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">741,038</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">12.1</font></td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">%</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">3,480,996</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">117.0</font></td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">%</font></td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:IncomeTaxDisclosureTextBlock>
<us-gaap:LoansNotesTradeAndOtherReceivablesDisclosureTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 $8.1 million and $11.4 million as of December 31, 2020 and December 31, 2019, respectively.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Notes receivable bear interest at a fixed rate between 6.0% and 10.0%. Notes are generally secured by the assets of each location and the ownership interests in the franchisee. Interest income on franchisee notes is reported in other miscellaneous income in our consolidated statements of operations and was approximately $712,000 and $280,000 in the years ended December 31, 2020 and December 31, 2019, respectively.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> <br />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 $1.6 million as of December 31, 2020 for potentially uncollectible notes receivable.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table summarizes changes in our notes receivable balance to franchisees:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td style="text-align: center"> </td> <td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>December 31, 2020</b></font></td> <td style="text-align: center"> </td> <td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>December 31, 2019</b></font></td></tr> <tr style="vertical-align: bottom"> <td style="width: 58%"><font style="font: 8pt Times New Roman, Times, Serif">Note receivable</font></td> <td style="width: 8%"> </td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 11%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">8,023,807</font></td> <td style="width: 1%"> </td> <td style="width: 8%"> </td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 11%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">9,702,471</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font: 8pt Times New Roman, Times, Serif">Allowance for losses</font></td> <td> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(405,313</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font: 8pt Times New Roman, Times, Serif">Notes receivable, net</font></td> <td> </td> <td style="border-bottom: black 1pt solid"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7,618,494</font></td> <td> </td> <td> </td> <td style="border-bottom: black 1pt solid"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">9,702,471</font></td> <td> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During 2019, one of our note holders experienced significant economic hardships due to the impacts of COVID-19. As a result, we restructured one note receivable in an effort to increase the probability of repayment. We granted near-term payment concessions to help the debtor attempt to improve its financial condition so it may eventually be able to repay the amount due. We received recognized interest income of approximately $174,000 and $46,000 during the years ended December 31, 2020 and December 31, 2019, respectively.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table summarizes changes in our notes receivable balance that have been deemed impaired: </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="3" style="border-bottom: black 1pt solid"><font style="font: 8pt Times New Roman, Times, Serif"><b>December 31, 2020</b></font></td> <td> </td> <td colspan="3" style="border-bottom: black 1pt solid"><font style="font: 8pt Times New Roman, Times, Serif"><b>December 31, 2019</b></font></td></tr> <tr style="vertical-align: bottom"> <td style="width: 58%"><font style="font: 8pt Times New Roman, Times, Serif">Note receivable</font></td> <td style="width: 8%"> </td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 11%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,640,393</font></td> <td style="width: 1%"> </td> <td style="width: 8%"> </td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 11%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,707,238</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font: 8pt Times New Roman, Times, Serif">Allowance for losses</font></td> <td> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,193,359</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font: 8pt Times New Roman, Times, Serif">Notes receivable, net</font></td> <td> </td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">447,034</font></td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,707,238</font></td> <td> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 11pt Calibri, Helvetica, Sans-Serif; margin: 0"> </p>
</us-gaap:LoansNotesTradeAndOtherReceivablesDisclosureTextBlock>
<us-gaap:QuarterlyFinancialInformationTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table displays our unaudited consolidated statement of operations for the fourth quarter ended December 31, 2020 and December 31, 2019:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Three months ended</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2020</b></p></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 75%"><font style="font-size: 8pt">Franchise royalties</font></td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">3,229,658</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">5,396,922</font></td> <td style="width: 2%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Service revenue</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">175,817</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">475,748</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 27pt"><font style="font-size: 8pt">Total revenue</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">3,405,475</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">5,872,670</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Selling, general and administrative expenses</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">2,158,276</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">3,131,312</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Depreciation and amortization</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">32,528</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">324,502</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 27pt"><font style="font-size: 8pt">Income (loss) from operations</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">1,214,671</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">2,416,856</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Other miscellaneous income</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">238,365</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(616</font></td> <td><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Interest and other financing expense</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(10,490</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(37,748</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Net income before income taxes</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">1,442,546</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">2,378,492</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Provision (benefit) for income taxes</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">86,446</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(1,399,406</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 27pt"><font style="font-size: 8pt">Income (loss) from continuing operations</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">1,356,100</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">3,777,898</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Income from discontinued operations, net of tax</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(315,067</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 27pt"><font style="font-size: 8pt">Net income (loss)</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">1,356,100</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">3,462,831</font></td> <td style="border-bottom: black 1pt double"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"><b>Basic earnings per share</b></font></td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Continuing operations</font></td> <td> </td> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">0.10</font></td> <td> </td> <td> </td> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">0.28</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Discontinued operations</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(0.02</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 27pt"><font style="font-size: 8pt">Total</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">0.10</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">0.26</font></td> <td style="border-bottom: black 1pt double"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"><b>Diluted earnings per share</b></font></td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Continuing operations</font></td> <td> </td> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">0.10</font></td> <td> </td> <td> </td> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">0.28</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Discontinued operations</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(0.02</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 27pt"><font style="font-size: 8pt">Total</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">0.10</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">0.26</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:QuarterlyFinancialInformationTextBlock>
<us-gaap:SubsequentEventsTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Link Staffing Acquisition</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On February 12, 2021, HQ Link Corporation (“HQ Link”), our wholly-owned subsidiary, entered into a definitive Asset Purchase Agreement (the “Link Agreement”) with Link Staffing Services Corporation, Franlink, Inc., and Stafflink, Inc. Pursuant to the Link Agreement, HQ Link will acquire sellers’ franchise relationships and certain other assets and will assume certain liabilities of the sellers for a purchase price of approximately $11.1 million.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Consummation of the transactions contemplated by the Link Agreement is subject to the satisfaction or waiver of customary closing conditions. The transaction will be financed with cash-on-hand and HireQuest, Inc.’s credit facility with Truist Bank and is not subject to any financing condition. Subject to the satisfaction or waiver of the conditions, the closing is expected to occur by March 31, 2021.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Link Agreement contains customary representations, warranties, covenants, and termination rights. Upon signing, HQ Link placed $1.5 million in escrow which will be credited against the purchase price at closing or paid to the sellers if terminate pursuant to certain provisions. The parties have agreed to customary indemnification rights subject to certain deductibles and caps.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Snelling Staffing Acquisition</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On March 1, 2021, we completed our acquisition of certain assets of Snelling Staffing in accordance with the terms of the Asset Purchase Agreement dated January 29, 2021 (the “Snelling Agreement”). Snelling Staffing is a 67-year-old staffing company headquartered in Richardson, TX. Pursuant to the Snelling Agreement, HQ Snelling Corporation (“HQ Snelling”), our wholly-owned subsidiary, acquired substantially all of the operating assets and assumed certain liabilities of the sellers for a purchase price of $17.3 million, subject to customary adjustments for net working capital plus further adjustment in an amount equal to the collateral released to the sellers by their workers' compensation insurer which Hire Quest, LLC will replace with the insurer. Also on March 1, 2021, HQ Snelling entered into the First Amendment to the Purchase Agreement, pursuant to which HireQuest, Inc. agreed to advance $2.1 million to be paid to the sellers at closing to be used to pay accrued payroll liabilities that HQ Snelling assumed pursuant to the Snelling Agreement.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We funded this acquisition with existing cash on hand and a draw on our existing line of credit with Truist.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Note Purchase Agreement</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On March 1, 2021, HQ Financial Corporation (“HQ Financial”), a wholly-owned subsidiary of HireQuest, Inc., entered into a definitive note purchase agreement (the “Note Purchase Agreement”) with Bass Underwriters, Inc. (“Bass”), whereby HQ Financial sold and conveyed existing notes receivable due from franchisees to Bass for their current principal value of approximately $5.3 million. Bass is a related party to HireQuest, Inc., owned in part by Richard Hermanns, Edward Jackson, and trusts they have established. The transaction was reviewed and approved unanimously by all of the disinterested members of the board of directors of HireQuest, Inc. The Note Purchase Agreement provides that Bass will have no recourse against HQ Financial in the event of a default under any of the notes subject to the agreement.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:SubsequentEventsTextBlock>
<us-gaap:NatureOfOperations contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">HireQuest, Inc. (“HQI,” the “Company,” “we,” us,” or “our”) is a nationwide franchisor of offices providing on-demand labor solutions in the light industrial and blue-collar segments of the staffing industry. Our franchisees provide various types of temporary personnel through two business models operating under the trade names “HireQuest Direct,” previously known as “Trojan Labor,” and “HireQuest,” previously known as “Acrux Staffing.” 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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of December 31, 2020 we had 139 franchisee-owned offices in 31 states and the District of Columbia. We are the employer of record to approximately 57,000 employees annually, who in turn provide services for thousands of clients in various industries including construction, recycling, warehousing, logistics, auctioneering, manufacturing, hospitality, landscaping, and retail. We provide staffing, marketing, funding, software, and administrative services to our franchisees. On September 29, 2019, we finalized the conversion of the last of our company-owned offices to franchise-owned offices. Between July 15, 2019 and that date, we also owned and operated offices.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 <i>Note 2 – Acquisitions</i>.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:NatureOfOperations>
<us-gaap:BasisOfAccountingPolicyPolicyTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We have prepared the accompanying consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). 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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:BasisOfAccountingPolicyPolicyTextBlock>
<us-gaap:ConsolidationPolicyTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The consolidated financial statements include the accounts of HQI and all of its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">U.S. GAAP requires the primary beneficiary of a variable interest entity (a “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 it. We provide acquisition financing to some of our franchisees that results in some of them being considered a VIE. We have reviewed these franchisees and determined that we are not the primary beneficiary of any of these entities, and accordingly, these entities have not been consolidated.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:ConsolidationPolicyTextBlock>
<HQI:COVID19PandemicPolicyTectBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 ultimate 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, and the efficacy, availability and distribution of vaccines, 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 so far had a material adverse effect on our business and results of operations. If the pandemic continues to be a severe worldwide health crisis, it could continue to have a material adverse effect on our future business, results of operations, financial condition, and cash flows.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</HQI:COVID19PandemicPolicyTectBlock>
<us-gaap:UseOfEstimates contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Significant estimates and assumptions underlie our workers’ compensation claim liabilities, our workers’ compensation Risk Management Incentive Program, our deferred taxes, and estimated fair value of assets and liabilities acquired.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:UseOfEstimates>
<us-gaap:RevenueRecognitionPolicyTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Our primary source of revenue comes from royalty fees based on the operation of our franchised offices. Royalty fees from our HireQuest Direct business line are based on a percentage of sales for services our franchisees provide to customers and usually range from 5% 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. Revenue is presented on a net basis as agent as opposed to a gross basis as principal, and recognized 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. <font style="background-color: white">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.</font> Because our franchisees receive and consume the benefits of our services simultaneously, our performance obligations are satisfied when our services are provided. Franchise royalties are billed on a weekly basis. We also offer various incentive programs for franchisees including royalty incentives and other support initiatives. Royalty fees are reduced to reflect any royalty incentives earned or granted under these programs. Additionally, we provide franchise royalty credits and incentives. These credits and incentives are provided to drive new location development, organic growth, and to limit workers' compensation exposure. Franchise royalty fees are presented net of these credits and incentives.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Service revenue consists of interest we charge our franchisees on overdue customer accounts receivable and other miscellaneous fees for optional services we provide. Interest income is recognized based on the effective interest rate applied to the outstanding principal balance. Revenue for optional services is recognized as services are provided.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Below are summaries of our revenue disaggregated by brand:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Year ended</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2020</b></p></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 75%"><font style="font-size: 8pt">HireQuest Direct</font></td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">12,063,963</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">13,644,786</font></td> <td style="width: 2%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">HireQuest</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">728,829</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">1,028,850</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 0.25in"><font style="font-size: 8pt">Total</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">12,792,792</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">14,673,636</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:RevenueRecognitionPolicyTextBlock>
<HQI:WorkersCompensationClaimsLiabilityPolicyTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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. If the actual costs of the claims exceed the amount estimated, we may incur additional charges.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</HQI:WorkersCompensationClaimsLiabilityPolicyTextBlock>
<HQI:WorkersCompensationRiskManagementIncentiveProgramPolicyTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Our RMIP is designed to incentivize our franchises to keep our temporary employees safe and control exposure to large workers’ compensation claims. We accomplish this by paying our franchisees an amount equivalent to a percentage of the amount they pay for workers’ compensation insurance if they keep their workers’ compensation loss ratios below specified thresholds.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</HQI:WorkersCompensationRiskManagementIncentiveProgramPolicyTextBlock>
<HQI:NotesReceivablesPolicyTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Notes receivable consist primarily of amounts due to us related to the financing of franchised locations. We report notes receivable at the principal balance outstanding less an allowance for losses.<font style="color: #212529; background-color: white">  We charge interest at a fixed rate and interest income is</font> calculated by applying the effective rate to the outstanding principal balance. 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 franchisees and record provisions for estimated losses when we believe it is probable that our franchisees will be unable to make their required payments. We 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 be recoverable. When a note receivable is deemed impaired, we discontinue accruing interest and only recognize interest income when payment is received. <font style="color: #212529; background-color: white">O</font><font style="background-color: white">ur allowance for losses on notes receivable was approximately $1.6 million and $-0- at December 31, 2020 and December 31, 2019, respectively.<font style="color: #212529">  </font></font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</HQI:NotesReceivablesPolicyTextBlock>
<us-gaap:ShareBasedCompensationOptionAndIncentivePlansPolicy contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="background-color: white">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.</font> The fair value of stock awards is based on the quoted price of our common stock on the grant date. T<font style="background-color: white">he fair value of option awards is determined using the Black-Scholes valuation model.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:ShareBasedCompensationOptionAndIncentivePlansPolicy>
<us-gaap:GoodwillAndIntangibleAssetsPolicyTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 when incurred during the preliminary project stage and the post-implementation stage.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:GoodwillAndIntangibleAssetsPolicyTextBlock>
<us-gaap:IncomeTaxPolicyTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="background-color: white">We account for provision (benefit) for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which we expect to recover or settle those deferred amounts. We record valuation allowances for deferred tax assets that more likely than not will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.</font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="background-color: white">We have analyzed our filing positions in all jurisdictions where we are required to file returns and found no positions th</font>at would require a liability for unrecognized income tax positions to be recognized. If we are assessed penalties and/or interest, penalties will be charged to selling, general, and administrative expense and interest will be charged to interest expense.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Work Opportunity Tax Credit (“WOTC”) is a source of fluctuation in our effective income tax rate. The WOTC is designed to encourage the hiring of workers from certain disadvantaged targeted categories and is generally calculated as a percentage of wages over a twelve month period up to worker maximum by targeted category. We estimate the amount of WOTC we expect to receive based on wages certified in the current period.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:IncomeTaxPolicyTextBlock>
<us-gaap:BusinessCombinationsPolicy contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We account for business acquisitions under the acquisition method of accounting by recognizing identifiable tangible and intangible assets acquired, liabilities assumed, and non-controlling interests in the acquired business at their fair values. We record the portion of the purchase price that exceeds the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed as goodwill. We expense acquisition related costs as we incur them.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:BusinessCombinationsPolicy>
<us-gaap:EarningsPerSharePolicyTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We calculate basic earnings (loss) per share by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding. We do not include the impact of any potentially dilutive common stock equivalents in our basic earnings (loss) per share calculations. 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 and unvested restricted shares, except where their inclusion would be anti-dilutive. Outstanding common stock equivalents at December 31, 2020 and December 31, 2019 totaled approximately 308,000 and 244,000, respectively.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Diluted common shares outstanding were calculated using the treasury stock method and are as follows:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Year ended</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2020</b></p></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 75%"><font style="font-size: 8pt">Weighted average number of common shares used in basic net income per common share</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">13,542,403</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">11,588,776</font></td> <td style="width: 2%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Dilutive effects of stock options and unvested restricted stock</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">111,725</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Weighted average number of common shares used in diluted net income per common share</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">13,654,128</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">11,588,776</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:EarningsPerSharePolicyTextBlock>
<us-gaap:PropertyPlantAndEquipmentPolicyTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We record property and equipment at cost. We compute depreciation using the straight-line method over the estimated useful lives. Land is not depreciated. Repairs and maintenance are expensed as incurred. When assets are sold or retired, we eliminate cost and accumulated depreciation from the consolidated balance sheet and reflect a gain or loss in the consolidated statement of income. The estimated useful lives of property and equipment are as follows:</p> <table cellspacing="3" cellpadding="0" style="width: 100%"> <tr> <td style="font: 12pt Times New Roman, Times, Serif; vertical-align: top; width: 48px; padding-left: 0.25in"><font style="font-size: 8pt">●</font></td> <td style="font: 12pt Times New Roman, Times, Serif; padding: 0.75pt; text-align: justify"><font style="font-size: 8pt">Buildings – 40 years</font></td></tr> </table> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p> <table cellspacing="3" cellpadding="0" style="width: 100%"> <tr> <td style="font: 12pt Times New Roman, Times, Serif; vertical-align: top; width: 48px; padding-left: 0.25in"><font style="font-size: 8pt">●</font></td> <td style="font: 12pt Times New Roman, Times, Serif; padding: 0.75pt; text-align: justify"><font style="font-size: 8pt">Building improvements – 15 years</font></td></tr> </table> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p> <table cellspacing="3" cellpadding="0" style="width: 100%"> <tr> <td style="font: 12pt Times New Roman, Times, Serif; vertical-align: top; width: 48px; padding-left: 0.25in"><font style="font-size: 8pt">●</font></td> <td style="font: 12pt Times New Roman, Times, Serif; padding: 0.75pt; text-align: justify"><font style="font-size: 8pt">Computers, furniture, and equipment – 5 to 7 years.</font></td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:PropertyPlantAndEquipmentPolicyTextBlock>
<us-gaap:ReceivablesPolicyTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Accounts receivable consist of amounts due for labor services from customers of franchises and of previously company-owned offices. At December 31, 2020 and December 31, 2019, substantially all of our accounts receivable were due from franchises.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We own the accounts receivable from labor services provided by our franchises. Accounts receivable that age beyond 84 days are charged back to our franchises. Accordingly, we do not record an allowance for doubtful accounts on these accounts receivable.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">For labor services provided by previously 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 $77,000 and $168,000 at December 31, 2020 and December 31, 2019, respectively.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:ReceivablesPolicyTextBlock>
<us-gaap:AdvertisingCostsPolicyTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We expense advertising and marketing costs as we incur them. These costs were $33,000 and $449,000 in 2020, and 2019, respectively. The expense in 2019 included rebranding expenses incurred in relation to the Merger. These costs are included in general and administrative expenses.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i> </i></b></p>
</us-gaap:AdvertisingCostsPolicyTextBlock>
<us-gaap:DiscontinuedOperationsPolicyTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the quarter ended September 29, 2019, we sold substantially all of the offices acquired in the Merger. Accordingly, the assets and liabilities, operating results, and cash flows for these businesses are presented as discontinued operations, separate from our continuing operations, for all periods presented in our consolidated financial statements and footnotes, unless indicated otherwise.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:DiscontinuedOperationsPolicyTextBlock>
<us-gaap:PostemploymentBenefitPlansPolicy contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="background-color: white">We have a savings plan that qualifies under Section 401(k) of the Internal Revenue Code. Under our 401(k) plan, eligible employees may contribute a portion of their pre-tax earnings, subject to certain limitations. As a benefit, we match 100% of each employee’s first 3% of contributions, then 50% of each employee’s contribution beyond 3%, up to a maximum match of 4% of the employee’s eligible earnings.</font> Matching expense related to our savings plan totaled approximately $23,000 and $-0- during the years ended December 31, 2020 and December 31, 2019, respectively<font style="background-color: white"> </font></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:PostemploymentBenefitPlansPolicy>
<us-gaap:NewAccountingPronouncementsPolicyPolicyTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Recently Adopted Accounting Pronouncements</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">There were no new accounting pronouncements, issued or effective during the year, adopted during the year.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Recently Issued Accounting Pronouncements</i></b>  </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:NewAccountingPronouncementsPolicyPolicyTextBlock>
<us-gaap:DisaggregationOfRevenueTableTextBlock contextRef="From2020-01-01to2020-12-31">
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Year ended</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2020</b></p></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 75%"><font style="font-size: 8pt">HireQuest Direct</font></td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">12,063,963</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">13,644,786</font></td> <td style="width: 2%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">HireQuest</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">728,829</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">1,028,850</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 0.25in"><font style="font-size: 8pt">Total</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">12,792,792</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">14,673,636</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table>
</us-gaap:DisaggregationOfRevenueTableTextBlock>
<us-gaap:ScheduleOfEarningsPerShareDilutedByCommonClassTextBlock contextRef="From2020-01-01to2020-12-31">
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Year ended</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2020</b></p></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 75%"><font style="font-size: 8pt">Weighted average number of common shares used in basic net income per common share</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">13,542,403</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">11,588,776</font></td> <td style="width: 2%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Dilutive effects of stock options and unvested restricted stock</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">111,725</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Weighted average number of common shares used in diluted net income per common share</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">13,654,128</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">11,588,776</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table>
</us-gaap:ScheduleOfEarningsPerShareDilutedByCommonClassTextBlock>
<us-gaap:ScheduleOfRecognizedIdentifiedAssetsAcquiredAndLiabilitiesAssumedTableTextBlock contextRef="From2020-01-01to2020-12-31">
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td style="width: 88%"><font style="font-size: 8pt">Closing share price on July 15, 2019</font></td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">5.76</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Common stock</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">4,677,487</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Stock consideration</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">26,942,325</font></td> <td style="border-bottom: black 1pt double"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Accounts receivable</font></td> <td> </td> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">10,480,907</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Cash and cash equivalents</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">5,376,543</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Identifiable intangible assets</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">17,015,857</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Other current assets</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">725,453</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Property, plant and equipment, net</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">281,186</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Right-of-use asset</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">1,642,695</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Current liabilities</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(3,124,081</font></td> <td><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Lease liabilities     </font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(1,624,461</font></td> <td><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Deferred tax liability</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(2,930,947</font></td> <td><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Other liabilities</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(900,827</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Purchase price allocation</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">26,942,325</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table>
</us-gaap:ScheduleOfRecognizedIdentifiedAssetsAcquiredAndLiabilitiesAssumedTableTextBlock>
<us-gaap:ScheduleOfDisposalGroupsIncludingDiscontinuedOperationsIncomeStatementBalanceSheetAndAdditionalDisclosuresTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">A summary of total consideration received, and assets sold is as follows:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td style="width: 88%"><font style="font-size: 8pt">Notes receivable</font></td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">14,884,620</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Accounts receivable</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">2,204,286</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Cash</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">221,845</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Consideration received</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">17,310,751</font></td> <td style="border-bottom: black 1pt double"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Customer lists</font></td> <td> </td> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">17,015,857</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Lease and utility deposits</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">100,009</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Fixed assets</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">57,448</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Gain</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">137,437</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Sale price allocation</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">17,310,751</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Year ended</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2020</b></p></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 75%"><font style="font-size: 8pt">Revenue</font></td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">13,932,769</font></td> <td style="width: 2%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Cost of staffing services</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">9,946,836</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 27pt"><font style="font-size: 8pt">Gross profit</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">3,985,933</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Gain on sale</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">137,437</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Selling, general and administrative expense</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(3,836,045</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Net income before tax</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">287,325</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Provision for income taxes</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">71,831</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 27pt"><font style="font-size: 8pt">Net income</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">215,494</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:ScheduleOfDisposalGroupsIncludingDiscontinuedOperationsIncomeStatementBalanceSheetAndAdditionalDisclosuresTextBlock>
<us-gaap:ScheduleOfRelatedPartyTransactionsTableTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Balances regarding the Worlds Franchisees are summarized below:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2020</b></p></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 76%"><font style="font-size: 8pt">Due to franchisee</font></td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">435,072</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">993,495</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Risk management incentive program liability</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">499,199</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">1,027,960</font></td> <td> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Transactions regarding the Worlds Franchisees are summarized below:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Year ended</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2020</b></p></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 75%"><font style="font-size: 8pt">Franchisee royalties</font></td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">4,897,445</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">6,964,690</font></td> <td style="width: 2%"> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:ScheduleOfRelatedPartyTransactionsTableTextBlock>
<HQI:ChangesInWorkersCompensationClaimsLiabilityTableTextBlock contextRef="From2020-01-01to2020-12-31">
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2020</b></p></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 76%"><font style="font-size: 8pt">Estimated future claims liabilities at the beginning of the period</font></td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">3,844,501</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Claims paid during the period</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(3,779,286</font></td> <td><font style="font-size: 8pt">)</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(1,237,977</font></td> <td><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Additional future claims liabilities recorded during the period</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">4,518,853</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">5,082,478</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Estimated future claims liabilities at the end of the period</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">4,584,068</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">3,844,501</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table>
</HQI:ChangesInWorkersCompensationClaimsLiabilityTableTextBlock>
<HQI:SummaryOfFranchisedAndOwnedBranchLocationsTableTextBlock contextRef="From2020-01-01to2020-12-31">
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td style="width: 88%"><font style="font-size: 8pt">Franchised offices, December 31, 2018</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">97</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Closed in 2019</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(10</font></td> <td><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Opened in 2019</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">60</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Franchised offices, December 31, 2019</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">147</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Closed in 2020</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(13</font></td> <td><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Opened in 2020</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">5</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Franchised offices, December 31, 2020</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">139</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table>
</HQI:SummaryOfFranchisedAndOwnedBranchLocationsTableTextBlock>
<us-gaap:ScheduleOfTreasuryStockByClassTextBlock contextRef="From2020-01-01to2020-12-31">
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total shares purchased</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Average price per share</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total number of shares purchased as part of publicly announced plan</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Approximate dollar value of shares that may be purchased under the plan</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 52%"><font style="font-size: 8pt">July, 2020</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">675</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">6.21</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">675</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">1,200,000</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">August, 2020</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">22,963</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">6.20</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">23,638</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">1,000,000</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 27pt"><font style="font-size: 8pt">Total</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">23,638</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"> </td> <td style="border-bottom: black 1pt double"> </td></tr> </table>
</us-gaap:ScheduleOfTreasuryStockByClassTextBlock>
<us-gaap:NonvestedRestrictedStockSharesActivityTableTextBlock contextRef="From2020-01-01to2020-12-31">
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Shares</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted average grant date price</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 76%"><font style="font-size: 8pt">Non-vested, December 31, 2018</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 0.25in"><font style="font-size: 8pt">Granted</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">264,035</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 0.25in"><font style="font-size: 8pt">Vested</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(8,401</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">6.19</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Non-vested, December 31, 2019</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">255,634</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">7.18</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 0.25in"><font style="font-size: 8pt">Granted</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">110,639</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">6.71</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 0.25in"><font style="font-size: 8pt">Forfeited</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(9,454</font></td> <td><font style="font-size: 8pt">)</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">7.14</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 0.25in"><font style="font-size: 8pt">Vested</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(73,500</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">6.56</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Non-vested, December 31, 2020</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">283,456</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">7.19</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table>
</us-gaap:NonvestedRestrictedStockSharesActivityTableTextBlock>
<us-gaap:ScheduleOfShareBasedPaymentAwardStockOptionsValuationAssumptionsTableTextBlock contextRef="From2020-01-01to2020-12-31">
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2019</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 88%"><font style="font-size: 8pt">Expected term (years)</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">2.3 - 8.9</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Expected volatility</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">46.8% - 63.1</font></td> <td><font style="font-size: 8pt">%</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Dividend yield</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">0.0</font></td> <td><font style="font-size: 8pt">%</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Risk-free rate</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">1.7% - 2.4</font></td> <td><font style="font-size: 8pt">%</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Weighted average grant date fair value</font></td> <td> </td> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">3.18</font></td> <td> </td></tr> </table>
</us-gaap:ScheduleOfShareBasedPaymentAwardStockOptionsValuationAssumptionsTableTextBlock>
<us-gaap:ScheduleOfShareBasedCompensationStockOptionsActivityTableTextBlock contextRef="From2020-01-01to2020-12-31">
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Number of shares underlying options</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted average exercise price per share</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted average grant date fair value</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 64%"><font style="font-size: 8pt">Outstanding, December 31, 2018</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Granted</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">160,831</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">5.86</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">3.18</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Forfeited</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(100,000</font></td> <td><font style="font-size: 8pt">)</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">5.70</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">3.16</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Exercised</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(31,666</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">5.11</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2.71</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Outstanding, December 31, 2019</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">29,165</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">7.20</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">3.76</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Forfeited</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(12,083</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">8.76</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">4.34</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Outstanding, December 31, 2020</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">17,082</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">6.10</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">3.36</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table>
</us-gaap:ScheduleOfShareBasedCompensationStockOptionsActivityTableTextBlock>
<us-gaap:ScheduleOfNonvestedShareActivityTableTextBlock contextRef="From2020-01-01to2020-12-31">
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Number of shares underlying options</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted average exercise price per share</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted average grant date fair value</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 64%"><font style="font-size: 8pt">Non-vested, December 31, 2018</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Granted</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">84,523</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">5.56</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">3.05</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Forfeited</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(57,857</font></td> <td><font style="font-size: 8pt">)</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">5.70</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">3.16</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Vested</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(21,250</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">5.21</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2.73</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Non-vested, December 31, 2019</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">5,417</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">5.48</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">3.01</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Vested</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(3,229</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">5.47</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2.98</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Non-vested, December 31, 2020</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">2,188</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">5.50</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">3.05</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table>
</us-gaap:ScheduleOfNonvestedShareActivityTableTextBlock>
<us-gaap:ScheduleOfShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGrantDateIntrinsicValueTableTextBlock contextRef="From2020-01-01to2020-12-31">
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Number of shares underlying options</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b> Weighted average exercise price per share</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b> Weighted average remaining contractual life (years)</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b> Aggregate intrinsic value</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 52%"><font style="font-size: 8pt">Outstanding</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">17,082</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">6.10</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">5.67</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">82,496</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Exercisable</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">14,894</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">6.18</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">5.41</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">60,135</font></td> <td> </td></tr> </table>
</us-gaap:ScheduleOfShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGrantDateIntrinsicValueTableTextBlock>
<us-gaap:PropertyPlantAndEquipmentTextBlock contextRef="From2020-01-01to2020-12-31">
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2020</b></p></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 76%"><font style="font-size: 8pt">Land</font></td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">472,492</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">472,492</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Buildings and improvements</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">1,027,631</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">1,023,231</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Furniture and fixtures</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">599,901</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">598,417</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Construction in progress</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">1,648,640</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">270,828</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Accumulated depreciation</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(555,285</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(464,282</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Total property and equipment, net</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">3,193,379</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">1,900,686</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table>
</us-gaap:PropertyPlantAndEquipmentTextBlock>
<us-gaap:ScheduleOfFiniteLivedIntangibleAssetsTableTextBlock contextRef="From2020-01-01to2020-12-31">
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="10" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2020</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Gross</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Accumulated amortization</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Net</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Finite-lived intangible assets:</font></td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 62%; text-indent: 27pt"><font style="font-size: 8pt">Internal-use software development</font></td> <td style="width: 1%; padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid; width: 1%"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt solid; width: 9%; text-align: right"><font style="font-size: 8pt">342,697</font></td> <td style="border-bottom: black 1pt solid; width: 1%"> </td> <td style="width: 1%; padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid; width: 1%"> </td> <td style="border-bottom: black 1pt solid; width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="border-bottom: black 1pt solid; width: 1%"> </td> <td style="width: 1%; padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid; width: 1%"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt solid; width: 9%; text-align: right"><font style="font-size: 8pt">342,697</font></td> <td style="border-bottom: black 1pt solid; width: 3%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Total finite-lived intangible assets</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">342,697</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">342,697</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table>
</us-gaap:ScheduleOfFiniteLivedIntangibleAssetsTableTextBlock>
<us-gaap:ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock contextRef="From2020-01-01to2020-12-31">
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2020</b></p></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Current</font></td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 76%; text-indent: 27pt"><font style="font-size: 8pt">Federal</font></td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">1,812,710</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">3,551,418</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 27pt"><font style="font-size: 8pt">State</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">696,154</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">996,510</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Deferred</font></td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 27pt"><font style="font-size: 8pt">Federal</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(1,246,828</font></td> <td><font style="font-size: 8pt">)</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(1,113,042</font></td> <td><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 27pt"><font style="font-size: 8pt">State</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(520,999</font></td> <td><font style="font-size: 8pt">)</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">46,110</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Change in valuation allowance</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 45pt"><font style="font-size: 8pt">Provision for income taxes</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">741,038</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">3,480,996</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table>
</us-gaap:ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock>
<us-gaap:ScheduleOfDeferredTaxAssetsAndLiabilitiesTableTextBlock contextRef="From2020-01-01to2020-12-31">
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2020</b></p></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"><b>Deferred Tax Assets and Liabilities</b></font></td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 76%"><font style="font-size: 8pt">Workers' compensation claims liability</font></td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">1,131,695</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">947,023</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Depreciation/amortization</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">205,987</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">279,990</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Bad debt reserve</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">18,984</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">41,436</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Accrued vacation</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">33,956</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">37,771</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Cash to Accrual - 481 Adjustment</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(1,888,302</font></td> <td><font style="font-size: 8pt">)</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(3,000,216</font></td> <td><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Impairment of notes receivable</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">394,674</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Stock based compensation</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">182,385</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">5,550</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 0.25in"><font style="font-size: 8pt">Total deferred tax asset</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">79,379</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">(1,688,446</font></td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">)</font></td></tr> </table>
</us-gaap:ScheduleOfDeferredTaxAssetsAndLiabilitiesTableTextBlock>
<us-gaap:ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock contextRef="From2020-01-01to2020-12-31">
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2020</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2019</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 50%"><font style="font-size: 8pt">Income tax expense based on statutory rate</font></td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">1,281,095</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">21.0</font></td> <td style="width: 2%"><font style="font-size: 8pt">%</font></td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">624,860</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">21.0</font></td> <td style="width: 2%"><font style="font-size: 8pt">%</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Permanent differences</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">4,233</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">0.1</font></td> <td><font style="font-size: 8pt">%</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(789,810</font></td> <td><font style="font-size: 8pt">)</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(26.5</font></td> <td><font style="font-size: 8pt">)%</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">State income taxes expense net of federal taxes</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">138,375</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">2.3</font></td> <td><font style="font-size: 8pt">%</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">820,698</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">27.6</font></td> <td><font style="font-size: 8pt">%</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">WOTC</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(712,891</font></td> <td><font style="font-size: 8pt">)</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(11.7</font></td> <td><font style="font-size: 8pt">)%</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(498,000</font></td> <td><font style="font-size: 8pt">)</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(16.7</font></td> <td><font style="font-size: 8pt">)%</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">HQ Conversion to C Corp</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">0.0</font></td> <td><font style="font-size: 8pt">%</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">3,320,594</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">111.6</font></td> <td><font style="font-size: 8pt">%</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Other</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">30,226</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">0.5</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">%</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2,654</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">0.1</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">%</font></td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 27pt"><font style="font-size: 8pt">Total taxes on income</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">741,038</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">12.1</font></td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">%</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">3,480,996</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"> </td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">117.0</font></td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">%</font></td></tr> </table>
</us-gaap:ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock>
<us-gaap:ScheduleOfQuarterlyFinancialInformationTableTextBlock contextRef="From2020-01-01to2020-12-31">
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Three months ended</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2020</b></p></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 75%"><font style="font-size: 8pt">Franchise royalties</font></td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">3,229,658</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">5,396,922</font></td> <td style="width: 2%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Service revenue</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">175,817</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">475,748</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 27pt"><font style="font-size: 8pt">Total revenue</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">3,405,475</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">5,872,670</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Selling, general and administrative expenses</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">2,158,276</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">3,131,312</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Depreciation and amortization</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">32,528</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">324,502</font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 27pt"><font style="font-size: 8pt">Income (loss) from operations</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">1,214,671</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">2,416,856</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Other miscellaneous income</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">238,365</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">(616</font></td> <td><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Interest and other financing expense</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(10,490</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(37,748</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Net income before income taxes</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">1,442,546</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">2,378,492</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Provision (benefit) for income taxes</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">86,446</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(1,399,406</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 27pt"><font style="font-size: 8pt">Income (loss) from continuing operations</font></td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">1,356,100</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">3,777,898</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Income from discontinued operations, net of tax</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(315,067</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 27pt"><font style="font-size: 8pt">Net income (loss)</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">1,356,100</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">3,462,831</font></td> <td style="border-bottom: black 1pt double"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"><b>Basic earnings per share</b></font></td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Continuing operations</font></td> <td> </td> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">0.10</font></td> <td> </td> <td> </td> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">0.28</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Discontinued operations</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(0.02</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 27pt"><font style="font-size: 8pt">Total</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">0.10</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">0.26</font></td> <td style="border-bottom: black 1pt double"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"><b>Diluted earnings per share</b></font></td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Continuing operations</font></td> <td> </td> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">0.10</font></td> <td> </td> <td> </td> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">0.28</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt">Discontinued operations</font></td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(0.02</font></td> <td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom"> <td style="text-indent: 27pt"><font style="font-size: 8pt">Total</font></td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">0.10</font></td> <td style="border-bottom: black 1pt double"> </td> <td style="padding-bottom: 3pt"> </td> <td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">0.26</font></td> <td style="border-bottom: black 1pt double"> </td></tr> </table>
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<HQI:ImpairedNotesReceivableNet contextRef="AsOf2019-12-31_us-gaap_FairValueInputsLevel3Member" unitRef="USD" decimals="0"> 0 </HQI:ImpairedNotesReceivableNet>
<us-gaap:PropertyPlantAndEquipmentEstimatedUsefulLives contextRef="From2020-01-01to2020-12-31_us-gaap_BuildingMember"> 40 years </us-gaap:PropertyPlantAndEquipmentEstimatedUsefulLives>
<us-gaap:PropertyPlantAndEquipmentEstimatedUsefulLives contextRef="From2020-01-01to2020-12-31_us-gaap_BuildingImprovementsMember"> 15 years </us-gaap:PropertyPlantAndEquipmentEstimatedUsefulLives>
<us-gaap:PropertyPlantAndEquipmentEstimatedUsefulLives contextRef="From2020-01-01to2020-12-31_us-gaap_EquipmentMember"> 5 to 7 years </us-gaap:PropertyPlantAndEquipmentEstimatedUsefulLives>
<us-gaap:AllowanceForDoubtfulAccountsPremiumsAndOtherReceivables contextRef="AsOf2019-12-31" unitRef="USD" decimals="0"> 168000 </us-gaap:AllowanceForDoubtfulAccountsPremiumsAndOtherReceivables>
<us-gaap:AllowanceForDoubtfulAccountsPremiumsAndOtherReceivables contextRef="AsOf2020-12-31" unitRef="USD" decimals="0"> 77000 </us-gaap:AllowanceForDoubtfulAccountsPremiumsAndOtherReceivables>
<us-gaap:DefinedBenefitPlanContributionsByEmployer contextRef="From2020-01-01to2020-12-31" unitRef="USD" decimals="0"> 23000 </us-gaap:DefinedBenefitPlanContributionsByEmployer>
<us-gaap:DefinedBenefitPlanContributionsByEmployer contextRef="From2019-01-01to2019-12-31" unitRef="USD" decimals="0"> 0 </us-gaap:DefinedBenefitPlanContributionsByEmployer>
<us-gaap:BusinessCombinationConsiderationTransferredEquityInterestsIssuedAndIssuable contextRef="From2020-01-01to2020-12-31_custom_LegacyHQMember" unitRef="USD" decimals="0"> 4677487 </us-gaap:BusinessCombinationConsiderationTransferredEquityInterestsIssuedAndIssuable>
<HQI:DisposalGroupIncludingDiscontinuedOperationNotesReceivableNet contextRef="AsOf2020-12-31_custom_CommandCenterMember" unitRef="USD" decimals="0"> 14884620 </HQI:DisposalGroupIncludingDiscontinuedOperationNotesReceivableNet>
<us-gaap:DisposalGroupIncludingDiscontinuedOperationAccountsNotesAndLoansReceivableNet contextRef="AsOf2020-12-31_custom_CommandCenterMember" unitRef="USD" decimals="0"> 2204286 </us-gaap:DisposalGroupIncludingDiscontinuedOperationAccountsNotesAndLoansReceivableNet>
<us-gaap:DisposalGroupIncludingDiscontinuedOperationCashAndCashEquivalents contextRef="AsOf2020-12-31_custom_CommandCenterMember" unitRef="USD" decimals="0"> 221845 </us-gaap:DisposalGroupIncludingDiscontinuedOperationCashAndCashEquivalents>
<us-gaap:DisposalGroupIncludingDiscontinuedOperationConsideration contextRef="AsOf2020-12-31_custom_CommandCenterMember" unitRef="USD" decimals="0"> 17310751 </us-gaap:DisposalGroupIncludingDiscontinuedOperationConsideration>
<us-gaap:DisposalGroupIncludingDiscontinuedOperationIntangibleAssets contextRef="AsOf2020-12-31_custom_CommandCenterMember" unitRef="USD" decimals="0"> 17015857 </us-gaap:DisposalGroupIncludingDiscontinuedOperationIntangibleAssets>
<HQI:DisposalGroupIncludingDiscontinuedOperationLeaseAndUtilityDeposits contextRef="AsOf2020-12-31_custom_CommandCenterMember" unitRef="USD" decimals="0"> 100009 </HQI:DisposalGroupIncludingDiscontinuedOperationLeaseAndUtilityDeposits>
<us-gaap:DisposalGroupIncludingDiscontinuedOperationPropertyPlantAndEquipment contextRef="AsOf2020-12-31_custom_CommandCenterMember" unitRef="USD" decimals="0"> 57448 </us-gaap:DisposalGroupIncludingDiscontinuedOperationPropertyPlantAndEquipment>
<us-gaap:DiscontinuedOperationGainLossOnDisposalOfDiscontinuedOperationNetOfTax contextRef="From2020-01-01to2020-12-31_custom_CommandCenterMember" unitRef="USD" decimals="0"> 137437 </us-gaap:DiscontinuedOperationGainLossOnDisposalOfDiscontinuedOperationNetOfTax>
<HQI:IntercompanyDebt contextRef="AsOf2020-12-31_custom_HireQuestFinancialLLCMember" unitRef="USD" decimals="0"> 0 </HQI:IntercompanyDebt>
<HQI:IntercompanyDebt contextRef="AsOf2019-12-31_custom_HireQuestFinancialLLCMember" unitRef="USD" decimals="0"> 0 </HQI:IntercompanyDebt>
<us-gaap:LettersOfCreditOutstandingAmount contextRef="AsOf2020-12-31" unitRef="USD" decimals="0"> 9100000 </us-gaap:LettersOfCreditOutstandingAmount>
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<us-gaap:TreasuryStockSharesAcquired contextRef="From2020-01-01to2020-12-31_custom_July2020Member" unitRef="Shares" decimals="INF"> 675 </us-gaap:TreasuryStockSharesAcquired>
<us-gaap:TreasuryStockSharesAcquired contextRef="From2020-01-01to2020-12-31_custom_August2020Member" unitRef="Shares" decimals="INF"> 22963 </us-gaap:TreasuryStockSharesAcquired>
<us-gaap:TreasuryStockAcquiredAverageCostPerShare contextRef="From2020-01-01to2020-12-31_custom_July2020Member" unitRef="USDPShares" decimals="INF"> 6.21 </us-gaap:TreasuryStockAcquiredAverageCostPerShare>
<us-gaap:TreasuryStockAcquiredAverageCostPerShare contextRef="From2020-01-01to2020-12-31_custom_August2020Member" unitRef="USDPShares" decimals="INF"> 6.20 </us-gaap:TreasuryStockAcquiredAverageCostPerShare>
<us-gaap:StockRepurchaseProgramAuthorizedAmount1 contextRef="AsOf2020-12-31_custom_July2020Member" unitRef="USD" decimals="0"> 1200000 </us-gaap:StockRepurchaseProgramAuthorizedAmount1>
<us-gaap:StockRepurchaseProgramAuthorizedAmount1 contextRef="AsOf2020-12-31_custom_August2020Member" unitRef="USD" decimals="0"> 1000000 </us-gaap:StockRepurchaseProgramAuthorizedAmount1>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsNonvestedNumber contextRef="AsOf2019-12-31" unitRef="Shares" decimals="INF"> 255634 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsNonvestedNumber>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsNonvestedNumber contextRef="AsOf2020-12-31" unitRef="Shares" decimals="INF"> 283456 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsNonvestedNumber>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsNonvestedNumber contextRef="AsOf2018-12-31" unitRef="Shares" decimals="INF"> 0 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsNonvestedNumber>
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<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsGrantsInPeriod contextRef="From2019-01-01to2019-12-31" unitRef="Shares" decimals="INF"> 264035 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsGrantsInPeriod>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsVestedInPeriod contextRef="From2020-01-01to2020-12-31" unitRef="Shares" decimals="INF"> 73500 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsVestedInPeriod>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsVestedInPeriod contextRef="From2019-01-01to2019-12-31" unitRef="Shares" decimals="INF"> 8401 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsVestedInPeriod>
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<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsNonvestedWeightedAverageGrantDateFairValue contextRef="AsOf2020-12-31" unitRef="USDPShares" decimals="INF"> 7.19 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsNonvestedWeightedAverageGrantDateFairValue>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsNonvestedWeightedAverageGrantDateFairValue contextRef="AsOf2018-12-31" unitRef="USDPShares" decimals="INF"> .00 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsNonvestedWeightedAverageGrantDateFairValue>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsGrantsInPeriodWeightedAverageGrantDateFairValue contextRef="From2020-01-01to2020-12-31" unitRef="USDPShares" decimals="INF"> 6.71 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsGrantsInPeriodWeightedAverageGrantDateFairValue>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsGrantsInPeriodWeightedAverageGrantDateFairValue contextRef="From2019-01-01to2019-12-31" unitRef="USDPShares" decimals="INF"> .00 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsGrantsInPeriodWeightedAverageGrantDateFairValue>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsVestedInPeriodWeightedAverageGrantDateFairValue contextRef="From2020-01-01to2020-12-31" unitRef="USDPShares" decimals="INF"> 6.56 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsVestedInPeriodWeightedAverageGrantDateFairValue>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsVestedInPeriodWeightedAverageGrantDateFairValue contextRef="From2019-01-01to2019-12-31" unitRef="USDPShares" decimals="INF"> 6.19 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsVestedInPeriodWeightedAverageGrantDateFairValue>
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<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber contextRef="AsOf2020-12-31" unitRef="Shares" decimals="INF"> 17082 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber contextRef="AsOf2018-12-31" unitRef="Shares" decimals="INF"> 0 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber>
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<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice contextRef="AsOf2020-12-31" unitRef="USDPShares" decimals="INF"> 6.10 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice>
<us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice contextRef="AsOf2018-12-31" unitRef="USDPShares" decimals="INF"> 0.00 </us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice>
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<us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsForfeituresInPeriodWeightedAverageExercisePrice contextRef="From2020-01-01to2020-12-31" unitRef="USDPShares" decimals="INF"> 8.76 </us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsForfeituresInPeriodWeightedAverageExercisePrice>
<us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsForfeituresInPeriodWeightedAverageExercisePrice contextRef="From2019-01-01to2019-12-31" unitRef="USDPShares" decimals="INF"> 5.70 </us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsForfeituresInPeriodWeightedAverageExercisePrice>
<HQI:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsExericsesInPeriodWeightedAverageExercisePrice contextRef="From2019-01-01to2019-12-31" unitRef="USDPShares" decimals="INF"> 5.11 </HQI:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsExericsesInPeriodWeightedAverageExercisePrice>
<HQI:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageFairValue contextRef="AsOf2019-12-31" unitRef="USDPShares" decimals="INF"> 3.76 </HQI:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageFairValue>
<HQI:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageFairValue contextRef="AsOf2020-12-31" unitRef="USDPShares" decimals="INF"> 3.36 </HQI:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageFairValue>
<HQI:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageFairValue contextRef="AsOf2018-12-31" unitRef="USDPShares" decimals="INF"> 0.00 </HQI:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageFairValue>
<HQI:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsForfeituresInPeriodWeightedAverageFairValue contextRef="From2020-01-01to2020-12-31" unitRef="USDPShares" decimals="INF"> 4.34 </HQI:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsForfeituresInPeriodWeightedAverageFairValue>
<HQI:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsForfeituresInPeriodWeightedAverageFairValue contextRef="From2019-01-01to2019-12-31" unitRef="USDPShares" decimals="INF"> 3.16 </HQI:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsForfeituresInPeriodWeightedAverageFairValue>
<HQI:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsExercisesInPeriodWeightedAverageFairValue contextRef="From2019-01-01to2019-12-31" unitRef="USDPShares" decimals="INF"> 2.71 </HQI:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsExercisesInPeriodWeightedAverageFairValue>
<us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedNumberOfShares contextRef="AsOf2019-12-31" unitRef="Shares" decimals="INF"> 5417 </us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedNumberOfShares>
<us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedNumberOfShares contextRef="AsOf2020-12-31" unitRef="Shares" decimals="INF"> 2118 </us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedNumberOfShares>
<us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedNumberOfShares contextRef="AsOf2018-12-31" unitRef="Shares" decimals="INF"> 0 </us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedNumberOfShares>
<HQI:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedNumberOfSharesGranted contextRef="From2019-01-01to2019-12-31" unitRef="Shares" decimals="INF"> 84523 </HQI:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedNumberOfSharesGranted>
<HQI:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedNumberOfSharesForfeited contextRef="From2019-01-01to2019-12-31" unitRef="Shares" decimals="INF"> -57857 </HQI:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedNumberOfSharesForfeited>
<HQI:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedWeightedAverageExercisePrice contextRef="AsOf2019-12-31" unitRef="USDPShares" decimals="INF"> 5.48 </HQI:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedWeightedAverageExercisePrice>
<HQI:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedWeightedAverageExercisePrice contextRef="AsOf2020-12-31" unitRef="USDPShares" decimals="INF"> 5.50 </HQI:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedWeightedAverageExercisePrice>
<HQI:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedWeightedAverageExercisePrice contextRef="AsOf2018-12-31" unitRef="USDPShares" decimals="INF"> 0.00 </HQI:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedWeightedAverageExercisePrice>
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<us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsOtherShareIncreaseDecreaseInPeriodWeightedAverageExercisePrice contextRef="From2019-01-01to2019-12-31" unitRef="USDPShares" decimals="INF"> 5.21 </us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsOtherShareIncreaseDecreaseInPeriodWeightedAverageExercisePrice>
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<HQI:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedWeightedAverageGrantDateFairValueGranted contextRef="From2019-01-01to2019-12-31" unitRef="USDPShares" decimals="INF"> 3.05 </HQI:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedWeightedAverageGrantDateFairValueGranted>
<HQI:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedWeightedAverageGrantDateFairValueForfeited contextRef="From2019-01-01to2019-12-31" unitRef="USDPShares" decimals="INF"> 3.16 </HQI:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedWeightedAverageGrantDateFairValueForfeited>
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<us-gaap:DueFromAffiliates contextRef="AsOf2020-12-31" unitRef="USD" decimals="0"> 2100000 </us-gaap:DueFromAffiliates>
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<HQI:DeferredTaxLiabilitiesCashToAccrualAdjustment contextRef="AsOf2020-12-31" unitRef="USD" decimals="0"> 1888302 </HQI:DeferredTaxLiabilitiesCashToAccrualAdjustment>
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<us-gaap:DeferredTaxAssetsLiabilitiesNet contextRef="AsOf2019-12-31" unitRef="USD" decimals="0"> -1688446 </us-gaap:DeferredTaxAssetsLiabilitiesNet>
<us-gaap:DeferredTaxAssetsLiabilitiesNet contextRef="AsOf2020-12-31" unitRef="USD" decimals="0"> 79379 </us-gaap:DeferredTaxAssetsLiabilitiesNet>
<dei:EntityPublicFloat contextRef="AsOf2020-06-30" unitRef="USD" decimals="0"> 29514000 </dei:EntityPublicFloat>
<us-gaap:FairValueMeasurementPolicyPolicyTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">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:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Level 1: Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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 and are reviewed for impairment at least annually. The fair value of impaired notes receivable are determined based on estimated future payments discounted back to present value using the notes effective interest rate.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="text-align: center"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Fair value</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2020</b></p></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 63%"><font style="font-size: 8pt"> Cash</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: center"><font style="font-size: 8pt">1</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">13,667,434</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">4,187,450</font></td> <td style="width: 2%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> Notes receivable</font></td> <td> </td> <td> </td> <td style="text-align: center"><font style="font-size: 8pt">2</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">7,618,494</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">11,409,709</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> Notes receivable - impaired</font></td> <td> </td> <td> </td> <td style="text-align: center"><font style="font-size: 8pt">3</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">447,034</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> Accounts receivable</font></td> <td> </td> <td> </td> <td style="text-align: center"><font style="font-size: 8pt">2</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">21,344,499</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">28,201,279</font></td> <td> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
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<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="text-align: center"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Fair value</b></font></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level</b></font></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2020</b></p></td> <td style="border-bottom: black 1pt solid"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1pt solid"> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td> <td style="border-bottom: black 1pt solid"> </td></tr> <tr style="vertical-align: bottom"> <td style="width: 63%"><font style="font-size: 8pt"> Cash</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: center"><font style="font-size: 8pt">1</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">13,667,434</font></td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">4,187,450</font></td> <td style="width: 2%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> Notes receivable</font></td> <td> </td> <td> </td> <td style="text-align: center"><font style="font-size: 8pt">2</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">7,618,494</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">11,409,709</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> Notes receivable - impaired</font></td> <td> </td> <td> </td> <td style="text-align: center"><font style="font-size: 8pt">3</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">447,034</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font-size: 8pt"> Accounts receivable</font></td> <td> </td> <td> </td> <td style="text-align: center"><font style="font-size: 8pt">2</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">21,344,499</font></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"><font style="font-size: 8pt">28,201,279</font></td> <td> </td></tr> </table>
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<us-gaap:BusinessAcquisitionProFormaInformationTextBlock contextRef="From2020-01-01to2020-12-31">
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%"> <tr style="vertical-align: bottom"> <td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="padding-bottom: 1pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td colspan="7" style="border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom"><p><font style="font: 8pt Times New Roman, Times, Serif; color: #000000; vertical-align: bottom; padding-bottom: 2px"><b>Year ended</b></font></p></td></tr> <tr style="vertical-align: bottom"> <td style="font: 13px Times New Roman, Times, Serif; text-align: center; vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="text-align: center; padding-bottom: 1pt; vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td colspan="3" style="border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom"><p><font style="font: 8pt Times New Roman, Times, Serif; vertical-align: bottom; padding-bottom: 2px"><b>December 31, 2020</b></font></p></td><td style="text-align: center; padding-bottom: 1pt; vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td colspan="3" style="border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom"><p><font style="font: 8pt Times New Roman, Times, Serif; vertical-align: bottom; padding-bottom: 2px"><b>December 31, 2019</b></font></p></td></tr> <tr style="vertical-align: bottom"> <td style="font: 13px Times New Roman, Times, Serif; width: 56%; color: #000000; text-align: left; text-indent: 0px"><font style="font: 8pt Times New Roman, Times, Serif">Royalty revenue</font></td><td style="font: 13px Times New Roman, Times, Serif; width: 8%; color: #000000"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td style="font: 13px Times New Roman, Times, Serif; width: 1%; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td><td style="font: 13px Times New Roman, Times, Serif; width: 12%; color: #000000; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">12,792,793</font></td><td style="font: 13px Times New Roman, Times, Serif; width: 1%; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="font: 13px Times New Roman, Times, Serif; width: 8%; color: #000000"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td style="font: 13px Times New Roman, Times, Serif; width: 1%; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td><td style="font: 13px Times New Roman, Times, Serif; width: 12%; color: #000000; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">16,176,219</font></td><td style="font: 13px Times New Roman, Times, Serif; width: 1%; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom"> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left; text-indent: 0px"><font style="font: 8pt Times New Roman, Times, Serif">Net income</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">5,359,414</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">5,090,045</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom"> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-indent: 0px"><font style="font: 8pt Times New Roman, Times, Serif">Basic earnings per share</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.40</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.38</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom"> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-indent: 0px"><font style="font: 8pt Times New Roman, Times, Serif">Basic weighted average shares outstanding</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">13,542,403</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">13,294,201</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom"> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-indent: 0px"><font style="font: 8pt Times New Roman, Times, Serif">Diluted earnings per share</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.39</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.38</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr> <tr style="vertical-align: bottom"> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-indent: 0px"><font style="font: 8pt Times New Roman, Times, Serif">Diluted weighted average shares outstanding</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">13,654,128</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td> <td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">13,294,736</font></td><td style="font: 13px Times New Roman, Times, Serif; color: #000000; text-align: left"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr> </table>
</us-gaap:BusinessAcquisitionProFormaInformationTextBlock>
<us-gaap:BusinessAcquisitionsProFormaRevenue contextRef="From2020-01-01to2020-12-31_custom_LegacyHQMember" unitRef="USD" decimals="0"> 12792793 </us-gaap:BusinessAcquisitionsProFormaRevenue>
<us-gaap:BusinessAcquisitionsProFormaRevenue contextRef="From2019-01-01to2019-12-31_custom_LegacyHQMember" unitRef="USD" decimals="0"> 16176219 </us-gaap:BusinessAcquisitionsProFormaRevenue>
<us-gaap:BusinessAcquisitionsProFormaNetIncomeLoss contextRef="From2020-01-01to2020-12-31_custom_LegacyHQMember" unitRef="USD" decimals="0"> 5359414 </us-gaap:BusinessAcquisitionsProFormaNetIncomeLoss>
<us-gaap:BusinessAcquisitionsProFormaNetIncomeLoss contextRef="From2019-01-01to2019-12-31_custom_LegacyHQMember" unitRef="USD" decimals="0"> 5090045 </us-gaap:BusinessAcquisitionsProFormaNetIncomeLoss>
<us-gaap:BusinessAcquisitionProFormaEarningsPerShareBasic contextRef="From2020-01-01to2020-12-31_custom_LegacyHQMember" unitRef="USDPShares" decimals="INF"> 0.40 </us-gaap:BusinessAcquisitionProFormaEarningsPerShareBasic>
<us-gaap:BusinessAcquisitionProFormaEarningsPerShareBasic contextRef="From2019-01-01to2019-12-31_custom_LegacyHQMember" unitRef="USDPShares" decimals="INF"> 0.38 </us-gaap:BusinessAcquisitionProFormaEarningsPerShareBasic>
<us-gaap:WeightedAverageBasicSharesOutstandingProForma contextRef="From2020-01-01to2020-12-31_custom_LegacyHQMember" unitRef="Shares" decimals="INF"> 13542403 </us-gaap:WeightedAverageBasicSharesOutstandingProForma>
<us-gaap:WeightedAverageBasicSharesOutstandingProForma contextRef="From2019-01-01to2019-12-31_custom_LegacyHQMember" unitRef="Shares" decimals="INF"> 13294201 </us-gaap:WeightedAverageBasicSharesOutstandingProForma>
<us-gaap:BusinessAcquisitionProFormaEarningsPerShareDiluted contextRef="From2020-01-01to2020-12-31_custom_LegacyHQMember" unitRef="USDPShares" decimals="INF"> 0.39 </us-gaap:BusinessAcquisitionProFormaEarningsPerShareDiluted>
<us-gaap:BusinessAcquisitionProFormaEarningsPerShareDiluted contextRef="From2019-01-01to2019-12-31_custom_LegacyHQMember" unitRef="USDPShares" decimals="INF"> 0.38 </us-gaap:BusinessAcquisitionProFormaEarningsPerShareDiluted>
<us-gaap:ProFormaWeightedAverageSharesOutstandingDiluted contextRef="From2020-01-01to2020-12-31_custom_LegacyHQMember" unitRef="Shares" decimals="INF"> 13654128 </us-gaap:ProFormaWeightedAverageSharesOutstandingDiluted>
<us-gaap:ProFormaWeightedAverageSharesOutstandingDiluted contextRef="From2019-01-01to2019-12-31_custom_LegacyHQMember" unitRef="Shares" decimals="INF"> 13294736 </us-gaap:ProFormaWeightedAverageSharesOutstandingDiluted>
<us-gaap:ScheduleOfAccountsNotesLoansAndFinancingReceivableTextBlock contextRef="From2020-01-01to2020-12-31">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table summarizes changes in our notes receivable balance to franchisees:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td style="text-align: center"> </td> <td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>December 31, 2020</b></font></td> <td style="text-align: center"> </td> <td colspan="3" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>December 31, 2019</b></font></td></tr> <tr style="vertical-align: bottom"> <td style="width: 58%"><font style="font: 8pt Times New Roman, Times, Serif">Note receivable</font></td> <td style="width: 8%"> </td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 11%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">8,023,807</font></td> <td style="width: 1%"> </td> <td style="width: 8%"> </td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 11%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">9,702,471</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font: 8pt Times New Roman, Times, Serif">Allowance for losses</font></td> <td> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(405,313</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font: 8pt Times New Roman, Times, Serif">Notes receivable, net</font></td> <td> </td> <td style="border-bottom: black 1pt solid"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7,618,494</font></td> <td> </td> <td> </td> <td style="border-bottom: black 1pt solid"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">9,702,471</font></td> <td> </td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0">The <font style="color: #000000">following table summarizes changes in our notes receivable balance that have been deemed impaired:</font> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p> <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="3" style="border-bottom: black 1pt solid"><font style="font: 8pt Times New Roman, Times, Serif"><b>December 31, 2020</b></font></td> <td> </td> <td colspan="3" style="border-bottom: black 1pt solid"><font style="font: 8pt Times New Roman, Times, Serif"><b>December 31, 2019</b></font></td></tr> <tr style="vertical-align: bottom"> <td style="width: 58%"><font style="font: 8pt Times New Roman, Times, Serif">Note receivable</font></td> <td style="width: 8%"> </td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 11%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,640,393</font></td> <td style="width: 1%"> </td> <td style="width: 8%"> </td> <td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="width: 11%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,707,238</font></td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font: 8pt Times New Roman, Times, Serif">Allowance for losses</font></td> <td> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(1,193,359</font></td> <td><font style="font: 8pt Times New Roman, Times, Serif">)</font></td> <td> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td> <td> </td></tr> <tr style="vertical-align: bottom"> <td><font style="font: 8pt Times New Roman, Times, Serif">Notes receivable, net</font></td> <td> </td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">447,034</font></td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,707,238</font></td> <td> </td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
</us-gaap:ScheduleOfAccountsNotesLoansAndFinancingReceivableTextBlock>
<us-gaap:NotesReceivableGross contextRef="AsOf2019-12-31" unitRef="USD" decimals="0"> 9702471 </us-gaap:NotesReceivableGross>
<us-gaap:NotesReceivableGross contextRef="AsOf2020-12-31" unitRef="USD" decimals="0"> 8023807 </us-gaap:NotesReceivableGross>
<us-gaap:NotesReceivableGross contextRef="AsOf2019-12-31_custom_ImpairedMember" unitRef="USD" decimals="0"> 1707238 </us-gaap:NotesReceivableGross>
<us-gaap:NotesReceivableGross contextRef="AsOf2020-12-31_custom_ImpairedMember" unitRef="USD" decimals="0"> 1640393 </us-gaap:NotesReceivableGross>
<us-gaap:FinancingReceivableAllowanceForCreditLosses contextRef="AsOf2019-12-31" unitRef="USD" decimals="0"> 0 </us-gaap:FinancingReceivableAllowanceForCreditLosses>
<us-gaap:FinancingReceivableAllowanceForCreditLosses contextRef="AsOf2020-12-31" unitRef="USD" decimals="0"> 405313 </us-gaap:FinancingReceivableAllowanceForCreditLosses>
<us-gaap:FinancingReceivableAllowanceForCreditLosses contextRef="AsOf2019-12-31_custom_ImpairedMember" unitRef="USD" decimals="0"> 0 </us-gaap:FinancingReceivableAllowanceForCreditLosses>
<us-gaap:FinancingReceivableAllowanceForCreditLosses contextRef="AsOf2020-12-31_custom_ImpairedMember" unitRef="USD" decimals="0"> 1193359 </us-gaap:FinancingReceivableAllowanceForCreditLosses>
</xbrli:xbrl>

4 Subsequent Filings that Reference this Filing

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 3/21/24  HireQuest, Inc.                   10-K       12/31/23   89:9.1M                                   RDG Filings/FA
 3/21/23  HireQuest, Inc.                   10-K       12/31/22   91:10M                                    RDG Filings/FA
 5/25/22  HireQuest, Inc.                   S-3                    4:389K                                   RDG Filings/FA
 3/15/22  HireQuest, Inc.                   10-K       12/31/21   85:8M                                     RDG Filings/FA

9 Previous Filings that this Filing References

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 6/15/20  HireQuest, Inc.                   S-8         6/15/20    4:160K                                   Blueprint/FA
 4/29/20  HireQuest, Inc.                   DEF 14A     4/15/20    1:784K                                   Blueprint/FA
11/13/19  HireQuest, Inc.                   10-Q        9/29/19   57:2.9M                                   Blueprint/FA
 9/26/19  HireQuest, Inc.                   8-K:5,7,9   9/23/19    6:4.7M                                   E-Data Systems, Inc./FA
 9/09/19  HireQuest, Inc.                   8-K:1,3,5,8 9/09/19    8:656K                                   E-Data Systems, Inc./FA
 9/04/19  HireQuest, Inc.                   8-K:5,9     8/06/19    2:91K                                    E-Data Systems, Inc./FA
 7/17/19  HireQuest, Inc.                   8-K:1,2,3,5 7/11/19    4:614K                                   E-Data Systems, Inc./FA
 6/10/19  HireQuest, Inc.                   8-K:5,9     6/05/19    2:105K                                   Olshan Frome Wolosky LLP
10/11/16  HireQuest, Inc.                   DEF 14A    11/17/16    1:939K                                   Blueprint/FA
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