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What changed in HireQuest, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of HireQuest, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+149 added−156 removedSource: 10-K (2026-03-31) vs 10-K (2025-03-27)

Top changes in HireQuest, Inc.'s 2025 10-K

149 paragraphs added · 156 removed · 115 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

47 edited+14 added−30 removed66 unchanged
Biggest changeOur revenue tends to increase as the economy expands, and conversely, our revenue tends to decrease when the economy contracts. 11 Table of Contents Some of the industries in which we operate are subject to seasonal fluctuation. Many of the jobs filled by temporary employees are outdoors and generally performed during the warmer months of the year.
Biggest changeSome of the industries in which we operate are subject to seasonal fluctuation. Many of the jobs filled by temporary employees are outdoors and generally performed during the warmer months of the year. As a result, activity increases in the spring and continues at higher levels through the summer, then begins to taper off during fall and through winter.
Hire Quest, LLC, DriverQuest 2, LLC, and HQ Medical, LLC, our wholly-owned subsidiaries, are the employer of record of all temporary employees of the HireQuest Direct, Snelling, HireQuest, DriverQuest, HireQuest Health, and Northbound brands. All temporary employees employed via contract staffing in the MRI brand are employed through People 2.0.
Hire Quest, LLC, DriverQuest 2, LLC, and HQ Medical, LLC, our wholly-owned subsidiaries, are the employer of record of all temporary employees of the HireQuest Direct, Snelling, DriverQuest, HireQuest Health, and Northbound brands. All temporary employees employed via contract staffing in the MRI brand are employed through People 2.0.
We immediately entered into three franchise agreements with existing franchisees and sold the operating assets we acquired. 2024 Acquisitions The RTS Acquisition On December 30, 2024 we completed our acquisition of one location of Ready Temporary Services ("RTS") in Denver, Colorado in accordance with the terms of an Asset Purchase Agreement dated December 13, 2024 for $1.4 million.
We immediately entered into three franchise agreements with existing franchisees and sold the operating assets we acquired. 2024 Acquisition The RTS Acquisition On December 30, 2024 we completed our acquisition of one location of Ready Temporary Services ("RTS") in Denver, Colorado in accordance with the terms of an Asset Purchase Agreement dated December 13, 2024 for $1.4 million.
As of December 31, 2024, HireQuest, Inc. was the corporate parent of a series of wholly-owned subsidiaries, all of which are listed on Exhibit 21.1 filed herewith and incorporated herein by reference. Our Securities Exchange Act Reports We maintain a website at the following address: www.hirequest.com .
As of December 31, 2025, HireQuest, Inc. was the corporate parent of a series of wholly-owned subsidiaries, all of which are listed on Exhibit 21.1 filed herewith and incorporated herein by reference. Our Securities Exchange Act Reports We maintain a website at the following address: www.hirequest.com .
We thereby eliminate two of the largest barriers to entry for our franchisees: financing and workers’ compensation and enable potentially higher operating margins at the office level. 8 Table of Contents Franchise Agreements - Temporary Staffing Our temporary staffing franchise agreements contain standard terms and conditions.
We thereby eliminate two of the largest barriers to entry for our franchisees: financing and workers’ compensation and enable potentially higher operating margins at the office level. 6 Table of Contents Franchise Agreements Our temporary staffing franchise agreements contain standard terms and conditions.
We make this information available on our website free of charge as soon as reasonably practicable after we or they electronically file the information with, or furnish it to, the SEC. 12 Table of Contents
We make this information available on our website free of charge as soon as reasonably practicable after we or they electronically file the information with, or furnish it to, the SEC. 9 Table of Contents
Northbound, MRI, and Sales Consultants focus on executive, managerial, and professional recruitment services, although many franchisees also offer short-term consultant and contract staffing services. Our revenue, which is primarily comprised of ro yalty fees generated by the operations of our franchised offices, license fees, and interest charged to our franchisees on overdue accounts receivable, was $34.6 million in 2024.
Northbound, MRI, and Sales Consultants focus on executive, managerial, and professional recruitment services, although many franchisees also offer short-term consultant and contract staffing services. Our revenue, which is primarily comprised of ro yalty fees generated by the operations of our franchised offices, license fees, and interest charged to our franchisees on overdue accounts receivable, was $30.6 million in 2025.
Executives of the company set this tone at the top, and we routinely have Company functions designed to engage and integrate our employees into our culture. Through our wholly-owned subsidiary HQ LTS Corporation, we employed 92 full-time employees at December 31, 2024. Most of these individuals are employed at our corporate headquarters in Goose Creek, SC.
Executives of the company set this tone at the top, and we routinely have Company functions designed to engage and integrate our employees into our culture. Through our wholly-owned subsidiary HQ LTS Corporation, we employed 88 full-time employees at December 31, 2025. Most of these individuals are employed at our corporate headquarters in Goose Creek, SC.
We largely avoid this expense because our franchisees are independent business owners responsible for their own financial well-being, and in doing so increase our store level economics. 6 Table of Contents ● A franchise system with expansion capabilities. We incentivize our franchisees to expand their own businesses through our Franchise Expansion Incentive Program.
We largely avoid this expense because our franchisees are independent business owners responsible for their own financial well-being, and in doing so increase our store level economics. ● A franchise system with expansion capabilities. We incentivize our franchisees to expand their own businesses through our Franchise Expansion Incentive Program.
When combined with the back-office support that we provide franchisees, we believe we are poised to expand into unserved or underserved markets. ● Capitalize on our national footprint to grow same store and system-wide sales .
When combined with the back-office support that we provide franchisees, we believe we are poised to expand into unserved or underserved markets. 5 Table of Contents ● Capitalize on our national footprint to grow same store and system-wide sales .
As of December 31, 2024, our temporary staffing franchisees operated under 169 executed franchise agreements. For our HireQuest Direct brand we charge a royalty fee of between 6% and 8% of gross temporary labor sales, depending on sales volume.
As of December 31, 2025, our temporary staffing franchisees operated under 155 executed franchise agreements. For our HireQuest Direct brand we charge a royalty fee of between 6% and 8% of gross temporary labor sales, depending on sales volume.
These concentrations also allow us to better recognize local and regional market trends. International: As of December 31, 2024 we had 19 non-US offices located in 13 co untries in North and South America, Europe, Asia, and Africa. International operations transact with us using US dollars, and currently only placement services are provided outside of the United States.
These concentrations also allow us to better recognize local and regional market trends. International: As of December 31, 2025 we had 21 non-US offices located in 14 co untries in North and South America, Europe, Asia, and Africa. International operations transact with us using US dollars, and currently only placement services are provided outside of the United States.
This does not include revenue from locations currently owned by us as those are classified as held-for-sale and reported as discontinued operations. Our system-wide sales, which we define as sales at all offices, whether owned and operated by us or by our franchisees, were $ 563.6 million in 2024. Nearly all system-wide sales originated from franchisee-owned offices.
This does not include revenue from locations currently owned by us as those are classified as held-for-sale and reported as discontinued operations. Our system-wide sales, which we define as sales at all offices, whether owned and operated by us or by our franchisees, were $500.2 million in 2025. Nearly all system-wide sales originated from franchisee-owned offices.
Our competitors range in size from small, local or regional operators with five or fewer offices to large, multi-national companies with hundreds or thousands of offices around the world. Some of our competitors are publicly traded corporations that have the same access to capital as we do.
No single staffing company dominates the industry. Our competitors range in size from small, local or regional operators with five or fewer offices to large, multi-national companies with hundreds or thousands of offices around the world. Some of our competitors are publicly traded corporations that have the same access to capital as we do.
Our Cyclicality and Seasonality The temporary staffing industry has historically been cyclical. Success tends to track the economy. When our franchisees’ customers expect to have long-term permanent needs, they tend to increase their use of temporary employees.
Our Cyclicality and Seasonality The temporary staffing industry has historically been cyclical. Success tends to track the economy. When our franchisees’ customers expect to have long-term permanent needs, they tend to increase their use of temporary employees. Our revenue tends to increase as the economy expands, and conversely, our revenue tends to decrease when the economy contracts.
Crane 68 Chief Financial Officer John D. McAnnar 42 Chief Legal Officer, Vice President of Professional Services, and Secretary Richard Hermanns is the President and Chief Executive Officer, as well as Chairman of the Board of Directors, of HireQuest, Inc. Mr. Hermanns has more than thirty-five years of experience in the temporary staffing industry.
McAnnar 43 Chief Legal Officer, Vice President of Professional Services, and Secretary Richard Hermanns is the President and Chief Executive Officer, as well as Chairman of the Board of Directors, of HireQuest, Inc. Mr. Hermanns has more than thirty-five years of experience in the temporary staffing industry.
Number of Offices By State December 31, 2024 We have a strong concentration of offices in established and emerging regions such as the Southeast, Florida, Texas, the upper Midwest, Colorado, and Washington. These regional office concentrations contribute to greater brand recognition while we continue to add offices in unserved and underserved regions.
The map below provides the number of offices we had in each state. We have a strong concentration of offices in established and emerging regions such as the Southeast, Florida, Texas, the upper Midwest, Colorado, and Washington. These regional office concentrations contribute to greater brand recognition while we continue to add offices in unserved and underserved regions.
Given the nature of temporary employment, it is difficult for us to determine the exact number of full-time employees on a given day, however, approxi mately 841 temporary employees worked at least 1,800 hours in 2024. 9 Table of Contents These temporary employees served thousands of customers, primarily in the construction, industrial/manufacturing, warehousing, hospitality, recycling/waste management, and disaster recovery industries.
Given the nature of temporary employment, it is difficult for us to determine the exact number of full-time employees on a given day, however, approximately 810 temporary employees worked at least 1,800 h ours in 2025. These temporary employees served thousands of customers, primarily in the construction, industrial/manufacturing, warehousing, hospitality, recycling/waste management, and disaster recovery industries.
With our collaborative inter-office and inter-brand culture, franchisees have vast resources to draw up on to grow and scale their businesses. 5 Table of Contents Our Industry Temporary Staffing and Permanent Recruiting According to the American Staffing Association (ASA), the staffing and recruiting industry in the United States generated record annual revenue of approximately $220 billion in 2023.
With our collaborative inter-office and inter-brand culture, franchisees have vast resources to draw upon to grow and scale their businesses. Our Industry Temporary Staffing and Permanent Recruiting According to the American Staffing Association ("ASA"), the staffing and recruiting industry in the United States generated record annual revenue of between approximately $190 to $225 billion in 2025.
Snelling and HireQuest focus on longer-term staffing positions in the light industrial and administrative arenas. TradeCorp focuses on jobs primarily for construction site skilled trades. DriverQuest specializes in both commercial and non-CDL drivers serving a variety of industries and applications. HireQuest Health specializes in skilled personnel in the healthcare and dental industries.
TradeCorp focuses on jobs primarily for construction site skilled trades. DriverQuest specializes in both commercial and non-CDL drivers serving a variety of industries and applications. HireQuest Health specializes in skilled personnel in the healthcare and dental industries.
Our principal executive office is located at 111 Springhall Drive, Goose Creek, SC, 29445 and the telephone number is (843) 723-7400. More information about us may be found at www.hirequest.com.
Our principal executive office is located at 111 Springhall Drive, Goose Creek, SC, 29445 and the telephone number is (843) 723-7400. More information about us may be found at www.hirequest.com. The information on our website is not incorporated by reference in this Annual Report on Form 10-K.
We funded this acquisition with existing cash on hand, and a draw on our existing line of credit with Truist. 2023 Acquisitions The TEC Acquisition On December 4, 2023 we completed our acquisition of ten locations of TEC Staffing Services ("TEC") in Arkansas in accordance with the terms of an Asset Purchase Agreement dated October 23, 2023 for approximately $9.8 million.
Recent Developments 2023 Acquisition The TEC Acquisition On December 4, 2023 we completed our acquisition of ten locations of TEC Staffing Services ("TEC") in Arkansas in accordance with the terms of an Asset Purchase Agreement dated October 23, 2023 for approximately $9.8 million.
In 2024, we employed approximately 65 thousand temporary employees and contracted with 173 independent contractors. Our systems generated approximately1.3 m illion paychecks. Most of these payments were made via electronic transfer or paycard.
In 2025, we employed approximately 75 thousand temporary employees and contracted with 85 independent contractors. Our systems generated approximately 1.1 million paychecks. Most of these payments were made via electronic transfer or paycard.
The vast majority of these employees are full-time. These employees provide back-office support, including financing, insurance, accounting, operations, national sales, information technology, legal, and human resources services to our franchisees and temporary employees. Executive Officers Information about our executive officers follows: Name Age Position Richard Hermanns 61 President, Chief Executive Officer, and Chairman of the Board Steven G.
The vast majority of these employees are full-time. These employees provide back-office support, including financing, insurance, accounting, operations, national sales, information technology, legal, and human resources services to our franchisees and temporary employees.
The table below displays the number of MRI, SearchPath, and Northbound franchise agreements scheduled to renew each year: Year Renewals 2025 56 2026 31 2027 28 2028 17 2029 8 After 2029 (1) 57 1. Excludes franchise agreements that renew between 2025 and 2029 which will be up for renewal again after 2029.
Excludes franchise agreements that renew between 2026 and 2030 which will be up for renewal again after 2030. The table below displays the number of MRI franchise agreements scheduled to renew each year.
One of them is the Higher Quest Foundation, a non-profit organization dedicated to fighting global hunger in a sustainable way. Steven G. Crane is the Chief Financial Officer of HireQuest, Inc. and has served as the Chief Financial Officer since November 2023. Mr. Crane has more than 20 years of financial management and leadership experience.
One of them is the Higher Quest Foundation, a non-profit organization dedicated to fighting global hunger in a sustainable way. David Hartley is the Chief Financial Officer of HireQuest, Inc. and has served as the Chief Financial Officer since June 2025.
In addition, our Risk Management Incentive Program lowers the effective cost of workers’ compensation insurance at the franchisee level – a significant expense for many of our competitors.
This is a relatively inexpensive source of capital for our franchisees and allows them to expand more freely. In addition, our Risk Management Incentive Program lowers the effective cost of workers’ compensation insurance at the franchisee level – a significant expense for many of our competitors.
We provide support personnel on an as-needed basis to our franchisees. We have a comprehensive brand standards manual which explains our policies on key operational, financial, and regulatory compliance issues. Under the franchise agreement, beneficial owners of our franchisees guaranty all debts and obligations of the franchise to us.
We have a comprehensive brand standards manual which explains our policies on key operational, financial, and regulatory compliance issues. Under the franchise agreement, beneficial owners of our franchisees guaranty all debts and obligations of the franchise to us. Still, we have substantially less control over a franchisee’s operations than we would if we owned and operated an office ourselves.
In 2024, our franchisees operated under the trade names “HireQuest Direct,” “Snelling,” “HireQuest,” “DriverQuest,” “HireQuest Health,” "Northbound Executive Search," "Management Recruiters International," "TradeCorp" and "Sales Consultants." Many of the MRI franchises also operate under other brands specific to a locality. HireQuest Direct focuses on daily-work/daily-pay jobs primarily for construction and light industrial customers.
In 2025, our franchisees operated under the trade names “HireQuest Direct,” “Snelling,” “DriverQuest,” “HireQuest Health,” "Northbound Executive Search," "Management Recruiters International," "TradeCorp" and "Sales Consultants." HireQuest Direct focuses on daily-work/daily-pay jobs primarily for construction and light industrial customers. Snelling and HireQuest focus on longer-term staffing positions in the light industrial and administrative arenas.
We immediately entered into a franchise agreement and sold the non-working capital assets we acquired. 4 Table of Contents Our Model We are a nationwide franchisor of temporary staffing offices providing direct-dispatch and commercial staffing solutions in the light industrial and blue-collar industries, and professional recruitment offices providing permanent placement services in the executive, managerial and administrative fields.
Our Model We are a nationwide franchisor of temporary staffing offices providing direct-dispatch and commercial staffing solutions in the light industrial and blue-collar industries, and professional recruitment offices providing permanent placement services in the executive, managerial and administrative fields. Following the Merger, we began with a strong direct-dispatch program.
Approximately 85% of industry revenue is generated by temporary and contract employee staffing services, with the remainder coming from executive recruiting and permanent placement, outsourcing / outplacement, and human resource consulting.
Approximately 75% to 90% of industry revenue is generated by temporary and contract employee staffing services, with the remainder coming from executive recruiting and permanent placement, outsourcing / outplacement, and human resource consulting. 4 Table of Contents The direct-dispatch and commercial staffing industry has developed based on a business need for flexible staffing solutions.
As we continue to develop new markets and to serve our existing markets, we expect our brands to become more recognizable and a greater asset to us in driving repeat customers, encouraging customers to expand their use of our services across multiple markets, and increasing new customer development. 7 Table of Contents Our Offices Domestic: We had approximately 425 franchisee owned offices and one company owned office located in 44 states, the District of Columbia, and 13 countries outside the United States as of December 31, 2024.
As we continue to develop new markets and to serve our existing markets, we expect our brands to become more recognizable and a greater asset to us in driving repeat customers, encouraging customers to expand their use of our services across multiple markets, and increasing new customer development.
Our exposure to seasonality is mitigated, in part, by our strong presence in the Southern United States where seasonal fluctuations are typically less pronounced. In addition, we have noticed that our seasonality has been mitigated by the addition of Snelling, which focuses on weekly-paid employees.
In addition, we have noticed that our seasonality has been mitigated by the addition of Snelling, which focuses on weekly-paid employees.
Our Human Capital Resources Temporary Employees Our temporary employees are a key component of our success. We consider them one of our most valuable assets as they perform the services our franchises provide.
Excludes franchise agreements that renew between 2026 and 2030 which will be up for renewal again after 2030. 7 Table of Contents Our Human Capital Resources Temporary Employees Our temporary employees are a key component of our success. We consider them one of our most valuable assets as they perform the services our franchises provide.
We provide incentives to our existing franchisees, including assistance with start-up funding and acquisition costs, to encourage them to expand into new markets and industries. While staffing industry growth has outpaced overall economic and employment growth, the industry still employs only a small percentage of the United States’ non-farm work force.
While staffing industry growth has outpaced overall economic and employment growth, the industry still employs only a small percentage of the United States’ non-farm work force.
He has also been an adjunct professor at the Charleston School of Law. Our Competition The staffing industry is highly fragmented and highly competitive, with relatively low barriers to entry aside from payroll funding, workers’ compensation premiums, and startup costs. No single staffing company dominates the industry.
McAnnar holds a Bachelor of Arts degree from the University of Pittsburgh and a juris doctorate degree from St. Louis University School of Law. 8 Table of Contents Our Competition The staffing industry is highly fragmented and highly competitive, with relatively low barriers to entry aside from payroll funding, workers’ compensation premiums, and startup costs.
We have developed and own our proprietary software to handle most aspects of operations, including temporary employee dispatch and payroll, invoicing, and accounts receivable. Our software system also allows us to produce internal reports necessary to track and manage financial performance of franchisees, customer trends, detect potential fraud, and to examine other key performance indicators.
Our software system also allows us to produce internal reports necessary to track and manage financial performance of franchisees, customer trends, detect potential fraud, and to examine other key performance indicators. We believe that our software facilitates efficient customer interaction, allowing for online bill payment, invoice review, and other important functions.
We believe that our software facilitates efficient customer interaction, allowing for online bill payment, invoice review, and other important functions. Because HQ WebConnect© is a proprietary system, we maintain a dedicated IT development staff, who continually refine our software in response to feedback from franchisees, customers, and employees.
Because HQ WebConnect is a proprietary system, we maintain a dedicated IT development staff, who continually refine our software in response to feedback from franchisees, customers, and employees. They are in the process of integrating AI technology into all of our systems which, we believe, will allow our franchisees to better reach potential customers and temporary employees.
On a net basis, we closed 2 offices in 2024 (acquiring or adding 30 and closing 32). We also licensed our tradenames to approximately 6 locations in California. In addition, there were 12 MRI locations that provided contract staffing services only.
On a net basis, we closed 12 offices in 2025 (acquiring or adding 7 and closing 19) . In addition, there were 16 MRI locations that provided contract staffing services only. We provide incentives to our existing franchisees, including assistance with start-up funding and acquisition costs, to encourage them to expand into new markets and industries.
The table below displays the number of HireQuest Direct, Snelling, and TradeCorp franchise agreements scheduled to renew at the end of each year: Year Renewals 2025 10 2026 39 2027 28 2028 25 2029 54 After 2029 (1) 13 1. Excludes franchise agreements that renew between 2025 and 2029 which will be up for renewal again after 2029.
Franchisees are not required to provide full financial statements or other information that is outside of the royalty base. The table below displays the number of HireQuest Direct, Snelling, and TradeCorp franchise agreements scheduled to renew at the end of each year: Year Renewals 2026 37 2027 24 2028 23 2029 46 2030 13 After 2030 (1) 12 1.
We also h ad 35 franchisees that share common ownership with significant stockholders, directors, and officers of the Company. We refer to these as the "Worlds Franchisees." These 35 W orlds Franchisees operated 69 offices as of December 31, 2024. Our approach to the franchise model creates what we believe to be superior office-level economics.
We refer to these as the "Worlds Franchisees." These 34 Worlds Franchisees operated 67 offices as of December 31, 2025. Our approach to the franchise model creates what we believe to be superior office-level economics. We finance the initial working capital needs of our franchisees through our ownership of franchisee accounts receivable which we acquire through our franchise agreements.
Additionally, in states that do not require participation in a state-run program, our franchisees gain access to our "A++" rated workers’ compensation insurance coverage. Franchise Agreements - Permanent Placement We assumed most of our permanent placement franchise agreements from MRI in December 2022. There are a significant number of variations among the agreements.
Additionally, in states that do not require participation in a state-run program, our franchisees gain access to our "A++" rated workers’ compensation insurance coverage. All franchisees receive initial and ongoing training in our technology and methods of operation. We provide support personnel on an as-needed basis to our franchisees.
Franchising Strategy As of December 31, 2024, there were approximately 425 franchised Snelling, HireQuest, HireQuest Direct, and MRI offices operated by 329 franchisees. Approximately 15% of our franchisees owned multiple offices. Our largest franchisee owned 12 offices, and about 4% of our franchisees owned 4 or more offices. One individual owned significant interest in 8 franchisees that operated 31 offices.
Franchising Strategy As of December 31, 2025, there were 413 franchised Snelling, HireQuest Direct, and MRI offices operated by 327 franchisees. 197 of those offices operated by 177 franchisees were MRI offices which were divested to MRINetwork Operations, LLC on January 1, 2026. Approximately 15% of our franchisees owned multiple offices.
McAnnar served in the litigation departments of Carmody MacDonald, P.C., and Armstrong Teasdale, LLP, an Am Law 200 firm, where he focused on complex commercial litigation, corporate, and employment law. Beginning in July 2023 and until it was acquired, he served on the Board of Directors and the Audit, Compensation, and Nominations and Governance Committees of Scott's Liquid Gold, Inc.
Beginning in July 2023 and until it was acquired, he served on the Board of Directors and the Audit, Compensation, and Nominations and Governance Committees of Scott's Liquid Gold, Inc. (OTC:SLGD). He is the co-founder of ArchCity Defenders, a non-profit organization in St. Louis, Missouri. Mr.
He has fulfilled the General Counsel or Chief Legal Officer role for both HQI, and its predecessor, HireQuest, LLC, since 2014. His work with HireQuest involves a range of legal, operational, and risk management affairs in different realms, including mergers and acquisitions, securities, employment, insurance and finance, workers’ compensation, litigation, and intellectual property. Previously, Mr.
McAnnar is the Chief Legal Officer, Vice President of Professional Services, and Secretary of HireQuest, Inc. He has fulfilled the General Counsel or Chief Legal Officer role for both HQI, and its predecessor, HireQuest, LLC, since 2014. Previously, Mr. McAnnar served in the litigation departments of Carmody MacDonald, P.C., and Armstrong Teasdale, LLP.
As a result, activity increases in the spring and continues at higher levels through the summer, then begins to taper off during fall and through winter. In addition, demand by industrial customers tends to slow after the holiday season and pick up again in the third and fourth quarters – peaking in the third quarter.
In addition, demand by industrial customers tends to slow after the holiday season and pick up again in the third and fourth quarters – peaking in the third quarter. Our exposure to seasonality is mitigated, in part, by our strong presence in the Southern United States where seasonal fluctuations are typically less pronounced.
We employed approximately 65 thousand temporary employees and contracted with 173 independent contractors during 2024. At December 31, 2024, we had approximately 425 franchisee-owned offices and one company owned office operating in 44 states, the District of Columbia, and 13 countries outside the United States.
At December 31, 2025, we had 413 franchisee-owned offices and one company-owned office operating in 43 states, the District of Columbia, and 14 countries outside the United States. 197 of those offices operated by 177 franchisees were MRI offices which were divested to MRINetwork Operations, LLC on January 1, 2026.
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The information on our website is not incorporated by reference in this Annual Report on Form 10-K. 3 Table of Contents Recent Developments 2022 Acquisitions The Temporary Alternatives Acquisition On January 24, 2022 we completed our acquisition of certain assets of Temporary Alternatives in accordance with the terms of an Asset Purchase Agreement dated January 10, 2022, including three locations in West Texas and New Mexico, for approximately $7.0 million, inclusive of a prescribed amount of working capital.
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We immediately entered into a franchise agreement and sold the non-working capital assets we acquired. 3 Table of Contents 2025 Divestiture The MRI Divestiture On December 1, 2025, HQ MRI Corporation ("HQ MRI"), a wholly-owned subsidiary of the Company entered into a contribution agreement (the "Contribution Agreement") with MRINetwork Operations, LLC ("MRI Operations") with an effective date of January 1, 2026 (the "Effective Date").
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Temporary Alternatives is a staffing division of dmDickason Personnel Services, a family-owned company based in El Paso, TX. We immediately entered into a franchise agreement and sold the non-working capital assets acquired. We funded this acquisition with existing cash on hand and a draw on our existing line of credit with Truist.
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Pursuant to the Contribution Agreement, HQ MRI agreed to transfer, and MRI Operations agreed to accept, certain assets and liabilities associated with the MRINetwork as of the Effective Date in exchange for MRI Operations issuing to HQ MRI 40% of the ownership units of MRI Operations.
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The Dubin Acquisition On February 21, 2022 we completed our acquisition of the staffing operations of The Dubin Group, Inc., and Dubin Workforce Solutions, Inc. (collectively “Dubin”) in accordance with the terms of an Asset Purchase Agreement dated January 19, 2022 for approximately $2.5 million, inclusive of a prescribed amount of working capital.
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HQ MRI contributed the non-contract staffing assets of MRINetwork necessary to carry on its day-to-day activities, the franchise agreements with franchisees of the MRINetwork, contracts with vendors and service providers, all claims against third parties related to the contributed assets, warranty, indemnity, and other similar rights related to the contributed assets, contracts with employees of HQ MRI, and other ancillary assets.
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Dubin provides executive placement services and commercial staffing in the Philadelphia, PA metropolitan area. We funded this acquisition with existing cash on hand, deferred purchase payments, and a draw on our existing line of credit with Truist. We divided Dubin into separate businesses and sold certain customer related assets of one of the acquired locations to a new franchisee.
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MRI Operations also assumed accrued but unpaid payroll and benefits for employees of the network, all liabilities arising from the day-to-day activities of the network including accounts payable, and all liabilities relating to the contributed assets. The remaining 60% of MRI Operations is owned by an individual and four current franchisees of the MRINetwork.
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The remaining assets related to the operations of the other acquired locations have not been sold as of December 31, 2024 and are classified as held-for-sale. In the meantime, we operate the Philadelphia franchise as company-owned.
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This transaction closed on January 1, 2026. The contract-staffing assets of the MRINetwork were not transferred as part of the transaction and were wholly retained by HQ MRI.
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The Northbound Acquisition On February 28, 2022 we completed our acquisition of certain assets of Northbound Executive Search, LTD (“Northbound”) in accordance with the terms of an Asset Purchase Agreement dated January 25, 2022, for approximately $11.4 million, inclusive of a $1.5 million note payable and a prescribed amount of working capital.
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With the Snelling Acquisition and the LINK Acquisition, we significantly expanded our traditional commercial staffing solutions. Smaller acquisitions have helped us fill our footprint and provide our franchisees and customers with one targeted offerings. These tuck in acquisitions have also served to bolster our existing services in certain geographic regions.
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Northbound provides executive placement and short-term consultant services primarily to blue chip clients in the financial services industry. We immediately entered into a franchise agreement and sold the customer-related assets acquired. We funded this acquisition with existing cash on hand, seller financing of $1.5 million, and a draw on our existing line of credit with Truist.
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We employed approximately 75 thousand temporary employees and contracted with 85 independent contractors during 2025.
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The MRINetwork Acquisition On December 12, 2022 we completed our acquisition of certain assets of MRINetwork (“MRI”) in accordance with the terms of an Asset Purchase Agreement dated November 16, 2022, for approximately $13.3 million.
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Our Offices Domestic: We had 413 franchisee owned offices and one company-owned office located in 43 states, the District of Columbia, and 14 c ountries outside the United States as of December 31, 2025. In addition, there were 16 MRI locations that provi ded contract staffing services only.
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MRI has been a leader in the recruitment industry since 1965 and has grown into one of the largest franchised executive search and recruitment organizations in the world. As of December 31, 2022 there were approximately 210 active MRI franchises performing executive, managerial, and professional recruitment services.
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Our largest franchisee owned 19 offices, and about 4% of our franchisees owned 4 or more offices. One individual owned significant interest in 6 franchisees that operated 19 offices. We also h ad 34 franchisees that share common ownership with significant stockholders, directors, and officers of the Company.
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MRI also has a robust temporary / contract labor division with over $50 million in annual billings.
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These agreements were divested to MRINetwork Operations, LLC on January 1, 2026: Year Renewals 2026 55 2027 32 2028 22 2029 10 2030 6 After 2030 (1) 52 1.
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Following the Merger, we began with a strong direct-dispatch program. With the Snelling Acquisition and the LINK Acquisition, we significantly expanded our traditional commercial staffing solutions. With the MRI Acquisition, we have added a third service offering and have firmly established ourselves as one of the top permanent placement firms in the United States.
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Information about our Executive Officers Information about our executive officers follows: Name Age Position Richard Hermanns 61 President, Chief Executive Officer, and Chairman of the Board David Hartley 44 Chief Financial Officer John D.
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We are now able to offer total talent access to our clients and partners. Smaller acquisitions have helped us fill our footprint and provide our franchisees and customers with ore targeted offerings. In 2022, the Temporary Alternatives and Dubin acquisitions filled gaps in our geography.
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Prior to his current role, he served as the Company’s Vice President of Operational Finance and Corporate Development, having joined HireQuest in 2020 to lead its acquisitions function. Before joining HireQuest, Mr. Hartley spent eight years in investment banking, most recently at D.A.
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The Northbound acquisition did the same for New York City but also brought a high-class executive placement offering that we hope to leverage into other markets. Subsequent tuck in acquisitions in 2023 and 2024 served to bolster our existing services in certain geographic regions.
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Davidson & Co., where he focused on mergers and acquisitions, as well as debt and equity capital markets transactions for public and private companies. Mr. Hartley holds a Bachelor of Arts from Johns Hopkins University and a Master of Business Administration from New York University’s Stern School of Business. John D.
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Following the acquisitions completed and business lines started in 2022, 2023, and 2024, we are expanding into or increasing our presence in several of the remaining segments of the staffing industry including permanent placement, health care, clerical and administrative, and professional. The direct-dispatch and commercial staffing industry has developed based on a business need for flexible staffing solutions.
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We license the use of MRI, Management Recruiters, and Sales Consultants to MRINetwork Operations, LLC and allow that entity to sublicense the use of those trademarks to franchisees. We have developed and own our proprietary software to handle most aspects of operations, including temporary employee dispatch and payroll, invoicing, and accounts receivable.
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Our permanent placement franchisees help businesses eliminate the costs and efforts that are required for sourcing and recruiting permanent employees. We have found that, particularly in times of low unemployment, permanent placement franchisees can assist customers in finding the right candidate for a specific role.
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Finally, we licensed our trademarks for use in 6 locations in California. In addition, there were 12 MRI locations that provi ded contract staffing services only. The map below provides the number of offices we had in each state.
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We finance the initial working capital needs of our franchisees through our ownership of franchisee accounts receivable which we acquire through our franchise agreements. This is a relatively inexpensive source of capital for our franchisees and allows them to expand more freely.
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Most franchisees are not granted any exclusive territory. Historically, the franchisees have been encouraged to focus on a particular demographic, industry, or geography. As of December 31, 2024 our MRI franchisees operated under 197 e xecuted franchise agreements.
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We charge a royalty fee on permanent placement business of between 1.0% to 9.0% of total cash received with minimum annual royalties applying in many circumstances. The MRI franchises with a lower percentage royalty also generally pay a flat annual fee.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAs previously reported, we identified a material weakness in our internal control over financial reporting as we did not have sufficient accounting resources available to handle the volume of technical accounting issues and provide adequate review systems or segregation of certain duties.
Biggest changeAs previously reported, we identified a material weakness in our internal control over financial reporting related to insufficient accounting resources to handle the volume and complexity of technical accounting matters and to maintain adequate review procedures and segregation of duties.
Further information on this material weakness, which has not been resolved as of December 31, 2024, is included in “
Further information regarding this material weakness and its remediation is included in “
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We have since remediated this material weakness and have concluded that the material weakness was effectively remediated as of December 31, 2025. However, there can be no assurance that we will not identify additional material weaknesses or significant deficiencies in the future, particularly as we continues to grow through acquisitions.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeSee the "Liquidity and Capital Resources" section for more information. 22 Table of Contents
Biggest changeSee the "Liquidity and Capital Resources" section for more information.
At December 31, 2024, we leased approximately 5 thousand square feet of office space in our headquarters to an unaffiliated company. This lease was at the market rate. We are unaware of any material liens or other encumbrances on our real property, other than as general collateral for our revolving line of credit.
At December 31, 2025, we leased approximately 5 thousand square feet of office space in our headquarters to an unaffiliated company. This lease was at the market rate. We are unaware of any material liens or other encumbrances on our real property, other than as general collateral for our revolving line of credit.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe federal government requires us to list any "Reportable Transactions", which include abusive transactions and transactions having a significant tax avoidance purpose. We do not have any Reportable Transactions, and have not been assessed or paid any tax penalties with respect to Reportable Transactions. Item 4. Mine Safety Disclosure Not applicable. PART II
Biggest changeThe federal government requires us to list any "Reportable Transactions", which include abusive transactions and transactions having a significant tax avoidance purpose. We do not have any Reportable Transactions, and have not been assessed or paid any tax penalties with respect to Reportable Transactions. 17 Table of Contents Item 4. Mine Safety Disclosure Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeTransfer Agent and Registrar Our transfer agent is Continental Stock Transfer & Trust Company located at 17 Battery Street, 8th Floor, New York, New York, 10004. 23 Table of Contents Item 6. Reserved
Biggest change(in thousands except per share data) Total shares purchased Average price per share Total number of shares purchased as part of publicly announced plan Approximate dollar value of shares that may yet be purchased under the plan December 38 $ 10.04 38 $ 19,623 Total 38 10.04 Transfer Agent and Registrar Our transfer agent is Continental Stock Transfer & Trust Company located at 17 Battery Street, 8th Floor, New York, New York, 10004.
Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market Information for our Common Stock Our common stock is listed on the Nasdaq Capital Market under the symbol “HQI.” Holders of Our Common Stock As of March 19, 2025, we had approximately 73 holders of record of our common stock.
Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market Information for our Common Stock Our common stock is listed on the Nasdaq Capital Market under the symbol “HQI.” Holders of Our Common Stock As of March 19, 2025, we had approximately 70 holders of record of our common stock.
Issuer Purchases of Equity Securities There were no purchases made by or on behalf of the Company or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) of its common stock under the Exchange Act) during the three months ended December 31, 2024.
The table below sets forth information with respect to purchases made by or on behalf of the Company or any "affiliated person" (as defined in Rule 10b-18(a)(3) under the Exchange Act) of our common stock during the three months ended December 31, 2025.
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Issuer Purchases of Equity Securities In December 2025, our Board of Directors authorized a one-year repurchase plan with no maximum number of shares that can be repurchased, up to a maximum plan cost of $20 million.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeIncome from operations declined from $10.6 million in 2023 to $4.4 million in 2024 due to the 6.9% decline in system-wide sales and a $6.0 million goodwill and intangible asset charge associated with the MRI acquisition. 24 Table of Contents Results of Operations The following table displays our consolidated statements of operations for the years ended December 31, 2024 and December 31, 2023 (in thousands, except percentages): Year ended December 31, 2024 December 31, 2023 Franchise royalties $ 32,673 94.4 % $ 35,813 94.5 % Service revenue 1,925 5.6 % 2,069 5.5 % Total revenue 34,598 100.0 % 37,882 100.0 % Selling, general and administrative expenses 21,406 61.9 % 24,448 64.5 % Goodwill and intangible asset impairment charge 6,035 17.4 % - — % Depreciation and amortization 2,789 8.1 % 2,793 7.4 % Income from operations 4,368 12.6 % 10,641 28.1 % Other miscellaneous income (expense) 145 0.4 % (1,738 ) (4.6 )% Interest income 556 1.6 % 263 0.7 % Interest and other financing expense (923 ) (2.7 )% (1,386 ) (3.7 )% Net income before income taxes 4,146 12.0 % 7,780 20.5 % Provision for income taxes 221 0.6 % 1,345 3.6 % Net income from continuing operations 3,925 11.3 % 6,435 17.0 % Net loss from discontinued operations, net of tax (253 ) (0.7 )% (300 ) (0.8 )% Net income $ 3,672 10.6 % $ 6,135 16.2 % Non-GAAP data Adjusted EBITDA $ 16,129 46.6 % $ 16,487 43.5 % 1.
Biggest changeResults of Operations The following table displays our consolidated statements of operations for the years ended December 31, 2025 and December 31, 2024 (in thousands, except percentages): Year ended December 31, 2025 December 31, 2024 Franchise royalties $ 28,995 94.6 % $ 32,673 94.4 % Service revenue 1,645 5.4 % 1,925 5.6 % Total revenue 30,640 100.0 % 34,598 100.0 % Selling, general and administrative expenses 20,676 67.5 % 21,406 61.9 % Goodwill and intangible asset impairment charge 674 2.2 % 6,035 17.4 % Depreciation and amortization 3,008 9.8 % 2,789 8.1 % Income from operations 6,282 20.5 % 4,368 12.6 % Other miscellaneous income 223 0.7 % 145 0.4 % Interest income 511 1.7 % 556 1.6 % Interest and other financing expense (307 ) (1.0 )% (923 ) (2.7 )% Net income before income taxes 6,709 21.9 % 4,146 12.0 % Provision for income taxes 100 0.3 % 221 0.6 % Net income from continuing operations 6,609 21.6 % 3,925 11.3 % Net loss from discontinued operations, net of tax (279 ) (0.9 )% (253 ) (0.7 )% Net income $ 6,330 20.7 % $ 3,672 10.6 % Non-GAAP data Adjusted EBITDA $ 14,087 46.0 % $ 16,190 46.8 % 1.
Our franchisees provide various types of temporary personnel, permanent placements, and recruitment services through multiple business models under the trade names “HireQuest Direct,” “Snelling,” “HireQuest,” "TradeCorp," “DriverQuest,” “HireQuest Health,” "Northbound Executive Search," "Management Recruiters International," "MRI," and "Sales Consultants." Some of the MRI franchises also operate under other brands specific to them. ● HireQuest Direct focuses on daily-work/daily-pay jobs primarily for construction and light industrial customers. ● Snelling and HireQuest focus on longer-term staffing positions in the light industrial and administrative arenas. ● DriverQuest specializes in both commercial and non-CDL drivers serving a variety of industries and applications. ● HireQuest Health specializes in skilled personnel in the healthcare and dental industries. ● TradeCorp focuses on short-term skilled construction jobs. ● Northbound, MRI, SearchPath, and Sales Consultants focus on executive, managerial, and professional recruitment services, although they also offer short-term consultant services.
Our franchisees provide various types of temporary personnel, permanent placements, and recruitment services through multiple business models under the trade names “HireQuest Direct,” “Snelling,” “HireQuest,” "TradeCorp," “DriverQuest,” “HireQuest Health,” "Northbound Executive Search," "Management Recruiters International," "MRI," and "Sales Consultants." Some of the MRI franchises also operate under other brands specific to them. ● HireQuest Direct focuses on daily-work/daily-pay jobs primarily for construction and light industrial customers. ● Snelling and HireQuest focus on longer-term staffing positions in the light industrial and administrative arenas. ● DriverQuest specializes in both commercial and non-CDL drivers serving a variety of industries and applications. ● HireQuest Health specializes in skilled personnel in the healthcare and dental industries. ● TradeCorp focuses on short-term skilled construction jobs. ● Northbound and SearchPath focus on executive, managerial, and professional recruitment services, although they also offer short-term consultant services.
Contingent consideration is remeasured at fair value each reporting period with subsequent changes in the fair value of the contingent consideration recognized during the period.
Contingent consideration is remeasured at fair value each reporting period with subsequent changes in the fair value of the contingent consideration recognized during the period.
For the HireQuest, Snelling, DriverQuest, HQ Medical, and TradeCorp model, our royalty fee is 4.5% of the temporary payroll we fund plus 18% of the gross margin for the territory. Most franchise agreements provide for a royalty of 5% to 7% of direct placement sales.
For the Snelling, DriverQuest, HQ Medical, and TradeCorp model, our royalty fee is 4.5% of the temporary payroll we fund plus 18% of the gross margin for the territory. Most franchise agreements provide for a royalty of 5% to 7% of direct placement sales.
The assets and liabilities of a discontinued operation held-for-sale are measured at the lower of the carrying value or fair value less cost to sell. As of December 31, 2024 and 2023 there was 1 company-owned location reported as discontinued operations: ● Certain assets acquired in the Dubin Agreement related to the operations of the Philadelphia franchise.
The assets and liabilities of a discontinued operation held-for-sale are measured at the lower of the carrying value or fair value less cost to sell. As of December 31, 2025 and 2024 there was 1 company-owned location reported as discontinued operations: ● Certain assets acquired in the Dubin Agreement related to the operations of the Philadelphia franchise.
“Risk Factors” for a discussion of uncertainties and assumptions that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. This section of this Annual Report on Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
“Risk Factors” for a discussion of uncertainties and assumptions that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. This section of this Annual Report on Form 10-K generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024.
Note 1, “ Overview and Summary of Significant Accounting Policies ”, to the Consolidated Financial Statements describes the significant accounting policies used to prepare the Consolidated Financial Statements and recently issued accounting guidance.
Note 1 - Overview and Summary of Significant Accounting Policies to the Consolidated Financial Statements describes the significant accounting policies used to prepare the Consolidated Financial Statements and recently issued accounting guidance.
We will perform our next annual goodwill impairment tests as of August 31, 2025; or earlier, if adverse changes in circumstances result in our assessment that a triggering event has occurred at any of our reporting units and an interim test is required.
We will perform our next annual goodwill impairment tests as of August 31, 2026; or earlier, if adverse changes in circumstances result in our assessment that a triggering event has occurred at any of our reporting units and an interim test is required.
Management uses system-wide sales to benchmark current operating levels to historic operating levels. System-wide sales should not be considered as an alternative to revenue. During 2024, all of our offices were franchised with the only exception being the Philadelphia office acquired in February 2022.
Management uses system-wide sales to benchmark current operating levels to historic operating levels. System-wide sales should not be considered as an alternative to revenue. During 2025, all of our offices were franchised with the only exception being the Philadelphia office acquired in February 2022.
See the definition and reconciliation of Adjusted EBITDA within the immediately following section titled “Use of Non-GAAP Financial Measures: Adjusted EBITDA.” Use of Non-GAAP Financial Measures: Adjusted EBITDA Earnings before interest, taxes, depreciation and amortization, and non-cash compensation, or adjusted EBITDA, is a non-GAAP measure that represents our net income before interest expense, income tax expense, depreciation and amortization, non-cash compensation, costs related to the work opportunity tax credit (“WOTC”) and other charges and gains we consider non-recurring.
See the definition and reconciliation of Adjusted EBITDA within the immediately following section titled “Use of Non-GAAP Financial Measures: Adjusted EBITDA.” 19 Table of Contents Use of Non-GAAP Financial Measures: Adjusted EBITDA Earnings before interest, taxes, depreciation and amortization, and non-cash compensation, or adjusted EBITDA, is a non-GAAP measure that represents our net income before interest expense, income tax expense, depreciation and amortization, non-cash compensation, costs related to the work opportunity tax credit (“WOTC”) and other charges and gains we consider non-recurring.
Subsequent changes in the recorded amount of contingent consideration are recognized during period in which the change was recognized. 31 Table of Contents Goodwill and Other Intangible Assets Goodwill represents the excess of the purchase price over the estimated fair value of the net assets of acquired businesses.
Subsequent changes in the recorded amount of contingent consideration are recognized during period in which the change was recognized. 24 Table of Contents Goodwill and Other Intangible Assets Goodwill represents the excess of the purchase price over the estimated fair value of the net assets of acquired businesses.
For important information regarding the use of the key performance indicator, see the section titled “ Key Performance Indicator: System-Wide Sales ” below. Overview We are a nationwide franchisor of offices providing direct-dispatch, executive search, commercial staffing, and permanent placement solutions primarily in the light industrial, blue-collar, executive, managerial, and administrative segments of the staffing industry.
For important information regarding the use of the key performance indicator, see the section titled “ Key Performance Indicator: System-Wide Sales ” below. 18 Table of Contents Overview We are a nationwide franchisor of offices providing direct-dispatch, executive search, commercial staffing, and permanent placement solutions primarily in the light industrial, blue-collar, executive, managerial, and administrative segments of the staffing industry.
Other factors impacting our effective rate include windfall tax deductions related to stock-based compensation, and deduction limits on overall compensation. 27 Table of Contents Loss from discontinued operations, net of tax Company-owned offices that have been disposed of by sale, disposed of other than by sale, or are classified as held-for-sale are reported separately as discontinued operations.
Other factors impacting our effective rate include windfall tax deductions related to stock based compensation, and deduction limits on overall compensation. Loss from discontinued operations, net of tax Company-owned offices that have been disposed of by sale, disposed of other than by sale, or are classified as held-for-sale are reported separately as discontinued operations.
Discussions of 2023 items and year-to-year comparisons between 2023 and 2022 that are not included in this Annual Report on Form 10-K can be found in "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 which we filed with the SEC on March 21, 2024.
Discussions of 2024 items and year-to-year comparisons between 2024 and 2023 that are not included in this Annual Report on Form 10-K can be found in "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 which we filed with the SEC on March 27, 2025.
Workers ’ Compensation Claims Liability We maintain reserves for workers’ compensation claims based on their estimated future cost. These reserves include claims that have been reported but not settled, as well as claims that have been incurred but not reported. Our estimated workers’ compensation claims liability was $6.3 million at December 31, 2024, versus $6.6 million at December 31, 2023.
Workers ’ Compensation Claims Liability We maintain reserves for workers’ compensation claims based on their estimated future cost. These reserves include claims that have been reported but not settled, as well as claims that have been incurred but not reported. Our estimated workers’ compensation claims liability was $5.2 million at December 31, 2025, versus $6.3 million at December 31, 2024.
Other current liabilities include approximately $7.6 million due to our franchisees, $2.6 million of accrued wages, benefits and payroll taxes, and $3.6 million related to our workers’ compensation claims liability. Our working capital requirements are driven largely by temporary employee payroll, which is typically paid daily or weekly, and weekly cash settlements with our franchises.
Other current liabilities include approximately $7.0 million due to our franchisees, $1.8 million of accrued wages, benefits and payroll taxes, and $2.9 million related to our workers’ compensation claims liability. Our working capital requirements are driven largely by temporary employee payroll, which is typically paid daily or weekly, and weekly cash settlements with our franchises.
Our allowance for credit losses on notes receivable was approximately $773 thousand and $623 thousand at D ecember 31, 2024 and December 31, 2023, respectively. Some of our notes receivable have contingent consideration based on a percentage of specified system-wide sales that exceed certain thresholds. Notes with contingent consideration are recorded at fair value when originated.
Our allowance for credit losses on notes receivable was approximately $1.2 million and $773 thousand at D ecember 31, 2025 and December 31, 2024, respectively. Some of our notes receivable have contingent consideration based on a percentage of specified system-wide sales that exceed certain thresholds. Notes with contingent consideration are recorded at fair value when originated.
Our current assets included approximately $2.2 million of cash and $ 42.3 million of accounts receivable, which our franchisees have billed to customers and which we own in accordance with our franchise agreements.
Our current assets included approximately $3.9 million of cash and $ 39.3 million of accounts receivable, which our franchisees have billed to customers and which we own in accordance with our franchise agreements.
We also receive principal and interest payments on notes receivable that we issued in connection with the conversion of company-owned offices to franchised offices. At December 31, 2024 our current assets exceeded our current liabilities by approximately $25.1 million.
We also receive principal and interest payments on notes receivable that we issued in connection with the conversion of company-owned offices to franchised offices. At December 31, 2025 our current assets exceeded our current liabilities by approximately $33.0 million.
We cannot provide assurances that we will have future access to the capital or credit markets on acceptable terms. 28 Table of Contents Cash Flows Operating Activities During 2024 net cash generated by operating activities was approximately $12.3 million.
We cannot provide assurances that we will have future access to the capital or credit markets on acceptable terms. 22 Table of Contents Cash Flows Operating Activities During 2025 net cash generated by operating activities was approximately $12.1 million.
At December 31, 2024, availability under the Senior Credit Facility was approximately $33.6 million based on eligible collateral, less letter of credit reserves, bank product reserves and current advances assuming continued covenant compliance.
At December 31, 2025, availability under the Senior Credit Facility was approximately $40.3 million based on eligible collateral, less letter of credit reserves, bank product reserves and current advances assuming continued covenant compliance.
Financing Activities During 2024, net cash used in financing activities was approximately $11.2 million which was primarily due to a net payback on our revolving credit of $7.3 million, and by the payment of dividends of approximately $3.4 million.
Financing Activities During 2025, net cash used in financing activities was approximately $10.7 million which was primarily due to a net payback on our revolving credit of $6.8 million, and by the payment of dividends of approximately $3.4 million.
The blended effective royalty rate for 2024 and 2023 was 5.8% and 5.9%, respectively. Service Revenue Service revenue consists of revenue generated from franchisees that are outside of our core services such as license fees, franchise fees related to our advertising fund, and miscellaneous income.
The blended effective royalty rate for 2025 and 2024 was the same at 5.8%. 20 Table of Contents Service Revenue Service revenue consists of revenue generated from franchisees that are outside of our core services such as license fees, franchise fees related to our advertising fund, and miscellaneous income.
The loss from discontinued operations amounts as reported on our consolidated statements of income was comprised of the following amounts: Year ended December 31, December 31, (in thousands) 2024 2023 Revenue $ 759 $ 1,777 Cost of staffing services 251 1,145 Gross profit 508 632 Selling, general and administrative expense (772 ) (713 ) (Loss) gain on sale of intangible assets (11 ) 197 Interest expense (60 ) - Impairment of intangible asset - (514 ) Net loss before income taxes (335 ) (398 ) Benefit for income taxes (82 ) (98 ) Net loss $ (253 ) $ (300 ) Liquidity and Capital Resources Overview Our major source of liquidity and capital is cash generated from our ongoing operations consisting of royalty revenue, service revenue and staffing revenue from franchisee-owned locations.
The loss from discontinued operations amounts as reported on our consolidated statements of income was comprised of the following amounts: Year ended December 31, December 31, (in thousands) 2025 2024 Revenue $ 634 $ 759 Cost of staffing services 300 251 Gross profit 334 508 Selling, general and administrative expense (484 ) (772 ) Loss on sale of intangible assets - (11 ) Interest expense - (60 ) Impairment of intangible asset (219 ) - Net loss before income taxes (369 ) (335 ) Benefit for income taxes (90 ) (82 ) Net loss $ (279 ) $ (253 ) Liquidity and Capital Resources Overview Our major source of liquidity and capital is cash generated from our ongoing operations consisting of royalty revenue, service revenue and staffing revenue from franchisee-owned locations.
As of December 31, 2024, the outstanding balance under our line of credit with Bank of America was $6.8 million, with approximately another $9.7 million utilized for the issuance of Letters of Credit, leaving approximately $33.4 million available for additional borrowing under the line as of such date, assuming compliance with necessary conditions.
As of December 31, 2025, the outstanding balance under our line of credit with Bank of America was $0, with approximately another $9.7 million utilized for the issuance of Letters of Credit, leaving approximately $40.3 million available for additional borrowing under the line as of such date, assuming compliance with necessary conditions.
The effective tax rate is primarily driven by the federal Work Opportunity Tax Credit, which reduced our effec tive tax rate by 21% and 12% for the years en ded December 31, 2024 and December 31, 2023, respectively, and is included as part of income tax expense because it can be claimed only on the income tax return and can be realized only through the existence of taxable income.
The effective tax rate is primarily driven by hiring tax credits, which reduced our effective tax rate by 28% and 21% for the years en ded December 31, 2025 and December 31, 2024, respectively, and is included as part of income tax expense because it can be claimed only on the income tax return and can be realized only through the existence of taxable income.
The decrease in system-wide sales is primarily related to a decrease in demand in the staffing and recruiting industry during the year which particularly affected MRI where system-wide sales decreased 18.6% or $31 million in 2024 when compared to 2023.
The decrease in system-wide sales is primarily related to a decrease in demand in the staffing and recruiting industry during the year which particularly affected MRI where system-wide sales decreased 23.7% or $36.1 million in 2025 when compared to 2024.
Our liquidity position stayed strong in 2024 with Current Assets at December 31, 2024 of $49.2 million compared to $51.5 million at December 31, 2023.
Our liquidity position stayed strong in 2025 with Current Assets at December 31, 2025 of $48.3 million compared to $49.2 million at December 31, 2024.
Fees collected related to our advertising fund decreased by approximately $126 thousand from $515 thousand in 2023 to $389 thousand in 2023 and is related to the decline in MRI system-wide sales.
Fees collected related to our advertising fund decreased by approximately $128 thousand from $389 thousand in 2024 to $261 thousand in 2025 and is related to the decline in MRI system-wide sales.
Under the HireQuest Direct model, the royalty fee charged ranges from 6% to 8% of gross billings, depending on volume. Royalty fees are charged at 8% for the first $1 million of billing with the royalty fee dropping 0.5% for every $1 million of billing thereafter until the royalty fee is 6% (once gross billings reach $4 million annually).
Royalty fees are charged at 8% for the first $1 million of billing with the royalty fee dropping 0.5% for every $1 million of billing thereafter until the royalty fee is 6% (once gross billings reach $4 million annually).
Business Combinations 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.
The balance for goodwill was approximately $1.6 million at December 31, 2025 and December 31, 2024. Business Combinations 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.
Workers compensation rating is typically based on job classification, and our workers typically fall into hundreds of different classifications. Annually, we use third-party actuaries to ensure that the overall ratings are sound, that individual insurer rates are adequate, and that individual risks receive a fair rate that reflects both the characteristics of the job classification and the Company's risk experience.
Annually, we use third-party actuaries to ensure that the overall ratings are sound, that individual insurer rates are adequate, and that individual risks receive a fair rate that reflects both the characteristics of the job classification and the Company's risk experience.
For additional information rel ated to the letter of credit securing our workers’ compensation obligations see Note 5 - Workers’ Compensation Insurance and Reserves. 29 Table of Contents Key Performance Indicator: System-Wide Sales We refer to total sales generated by our franchisees as “franchise sales.” For any period prior to their conversion to franchises, we refer to sales at company-owned and operated offices as “company-owned sales.” In turn, we refer to the sum of franchise sales and company-owned sales as “system-wide sales.” In other words, system-wide sales include sales at all offices, whether owned and operated by us or by our franchisees.
Key Performance Indicator: System-Wide Sales We refer to total sales generated by our franchisees as “franchise sales.” For any period prior to their conversion to franchises, we refer to sales at company-owned and operated offices as “company-owned sales.” In turn, we refer to the sum of franchise sales and company-owned sales as “system-wide sales.” In other words, system-wide sales include sales at all offices, whether owned and operated by us or by our franchisees.
Service revenue for the year ended December 31, 2024 was approximately $1.9 m illion which decreased when compared to $2.1 million for the year ended December 31, 2023. Interest on overdue accounts decreased approximately $62 thousand from $850 thousand for the year ended December 31, 2023 to $788 thousand for the year ended at December 31, 2024.
Service revenue for the year ended December 31, 2025 was approximately $1.6 million which decreased when compared to $1.9 million for the year ended December 31, 2024. Interest on overdue accounts increased approximately $116 thousand from $788 thousand for the year ended December 31, 2024 to $904 thousand for the year ended at December 31, 2025.
Once a company-owned office is sold, disposed of, or otherwise classified as held-for-sale, it would not be reflected in revenue and instead reported as “Income from discontinued operations, net of tax.” For a description of our revenue recognition practices, please refer to “ Note 1 – Overview and Summary of Significant Accounting Policies – Revenue Recognition, ” which disclosure is incorporated herein by reference. 25 Table of Contents Total revenue for the year ended December 31, 2024 was approximately $34.6 million compared to $37.9 million for the year ended December 31, 2023, a decrease of 8.7%.
Once a company-owned office is sold, disposed of, or otherwise classified as held-for-sale, it would not be reflected in revenue and instead reported as “Income from discontinued operations, net of tax.” For a description of our revenue recognition practices, please refer to “ Note 1 – Overview and Summary of Significant Accounting Policies – Revenue Recognition, ” which disclosure is incorporated herein by reference.
The balance for the trade name related to MRI was approximately $940 thousand and $2.2 million at December 31, 2024 and December 31, 2023, respectively. The combined impairment charge of approximately $6.0 million is reflected in the line item, "Goodwill and intangible asset impairment charge," in our Consolidated Statements of Income for the twelve months ended December 31, 2024.
The combined impairment charge of approximately $674 thousand and $6.0 million is reflected in the line item, "Goodwill and intangible asset impairment charge," in our Consolidated Statements of Income for the twelve months ended December 31, 2025 and December 31, 2024, respectively.
Some of the industries in which we operate are subject to seasonal fluctuation. Many of the jobs filled by employees are outdoor jobs that are generally performed during the warmer months of the year.
Seasonality Our revenue fluctuates quarterly and is generally higher in the second and third quarters of our year. Some of the industries in which we operate are subject to seasonal fluctuation. Many of the jobs filled by employees are outdoor jobs that are generally performed during the warmer months of the year.
Depreciation and Amortization Depreciation and amortization for the year ended December 31, 2024 was approximately $2.8 million compared to $2.8 million for the year ended December 31, 2023. Other Miscellaneous Income and Expense Other miscellaneous income and expense includes all non-operating income and expense other than interest and taxes.
Other Miscellaneous Income Other miscellaneous income includes all non-operating income and expense other than interest and taxes. For the year ended December 31, 2025, other miscellaneous income was approximately $223 thousand, compared to $145 thousand for the year ended December 31, 2024.
We provide employment for an estimated 65 thousand temporary employees annually working for thousands of clients in many industries including construction, healthcare, recycling, warehousing, logistics, auctioneering, manufacturing, hospitality, landscaping, and retail. We finished 2024 with a strong balance sheet. Our assets exceeded liabilities by over $64.8 million.
In addition, there were 18 MRI locations that provided contract staffing services only. We provide employment for an estimated 75 thousand temporary employees annually working for thousands of clients in many industries including construction, healthcare, recycling, warehousing, logistics, auctioneering, manufacturing, hospitality, landscaping, and retail. We finished 2025 with a strong balance sheet. Our assets exceeded liabilities by over $68.3 million.
Franchise royalties for the year ended December 31, 2024 were approximately $32.7 million compared to $35.8 million for the year ended December 31, 2023, a decrease of 8.8%, driven predominantly by a decline in total system-wide sales of $41.5 million from $605.1 million in 2023 to $563.6 million in 2024 .
Franchise royalties for the year ended December 31, 2025 were approximately $29.0 million compared to $32.7 million for the year ended December 31, 2024, a decrease of 11.3%, driven predominantly by a decline in total system-wide sales of $63.4 million from $563.6 million in 2024 to $500.2 million in 2025 .
Year ended December 31, 2024 December 31, 2023 Net income $ 3,672 10.6 % $ 6,135 16.2 % Interest and other financing expense 923 2.7 % 1,386 3.7 % Provision for income taxes 221 0.6 % 1,345 3.6 % Depreciation and amortization 2,789 8.1 % 2,793 7.4 % EBITDA 7,605 22.0 % 11,659 30.8 % WOTC related costs 483 1.4 % 461 1.2 % Non-cash compensation 1,759 5.1 % 1,483 3.9 % Goodwill and intangible asset impairment 6,035 17.4 % - — % Acquisition related charges (28 ) (0.1 )% 2,344 6.2 % Impairment of notes receivable 275 0.8 % 540 1.4 % Adjusted EBITDA $ 16,129 46.6 % $ 16,487 43.5 % Revenue Our total revenue consists of franchise royalties, and service revenue we receive from our franchises.
Year ended December 31, 2025 December 31, 2024 Net income $ 6,330 20.7 % $ 3,672 10.6 % Interest and other financing expense 307 1.0 % 983 2.8 % Provision for income taxes 100 0.3 % 221 0.6 % Depreciation and amortization 3,008 9.8 % 2,789 8.1 % EBITDA 9,745 31.8 % 7,665 22.2 % WOTC related costs 692 2.3 % 483 1.4 % Non-cash compensation 936 3.1 % 1,759 5.1 % Goodwill and intangible asset impairment 892 2.9 % 6,035 17.4 % Acquisition related charges 1,240 4.0 % (27 ) (0.1 )% Impairment of notes receivable 582 1.9 % 275 0.8 % Adjusted EBITDA $ 14,087 46.0 % $ 16,190 46.8 % Revenue Our total revenue consists of franchise royalties, and service revenue we receive from our franchises.
The following table reflects our system-wide sales broken into its components for the periods indicated (in thousands): Year ended December 31, December 31, 2024 2023 System-wide sales from HireQuest Direct $ 235,278 $ 246,193 System-wide sales from Snelling and HireQuest 155,443 157,404 System-wide sales from DriverQuest and TradeCorp 13,687 5,824 System-wide sales from HireQuest Health 6,033 6,700 System-wide sales from Northbound, MRI, and SearchPath 152,423 187,244 System-wide sales from discontinued operations 759 1,777 System-wide sales $ 563,623 $ 605,142 System-wide sales were $563.6 million in 2024, a decrease of 6.9%, from $605.1 million in 2023.
The following table reflects our system-wide sales broken into its components for the periods indicated (in thousands): Year ended December 31, December 31, 2025 2024 System-wide sales from HireQuest Direct $ 217,753 $ 235,278 System-wide sales from Snelling and HireQuest 147,257 155,443 System-wide sales from DriverQuest and TradeCorp 14,180 13,687 System-wide sales from HireQuest Health 4,078 6,033 System-wide sales from Northbound, MRI, and SearchPath 116,286 152,423 System-wide sales from discontinued operations 633 759 System-wide sales $ 500,187 $ 563,623 System-wide sales were $500.2 million in 2025, a decrease of 11.3%, from $563.6 million in 2024.
Our workers' compensation reserves provide benefits following a workplace injury. Benefits are usually statutory in nature and are generally provided in partial or complete replacement of the injured worker’s recourse to the liability system. Payments may include medical treatment, rehabilitation, lost wages, and survivor benefits.
Benefits are usually statutory in nature and are generally provided in partial or complete replacement of the injured worker’s recourse to the liability system. Payments may include medical treatment, rehabilitation, lost wages, and survivor benefits. Workers compensation rating is typically based on job classification, and our workers typically fall into hundreds of different classifications.
The increase in Other Operating expense primarily relates to a $6.0 million intangible asset and goodwill impairment charge related to MRI partially offset by a $1.2 million decrease in salaries, bonuses and stock based compensation.
The decrease in Other Operating expense primarily relates to a $6.0 million goodwill and intangible asset charge in 2024 compared to only $674 thousand in 2025, as well as a decrease of approximately $828 thousand in salaries, bonuses and stock based compensation. These decreases were partially offset by $1.2 million in transaction related expenses in 2025.
Generally workers' compensation expense or benefit will fluctuate based on the mix of classifications, the level of payroll, recent claims resolution and cumulative experience.
Generally workers' compensation expense or benefit will fluctuate based on the mix of classifications, the level of payroll, recent claims resolution and cumulative experience. We cannot accurately predict the effects of workers' compensation in future periods, and historical trends may not be indicative of future results.
Operating Expenses Operating expenses for the year ended December 31, 2024 were approximately $30.2 million compared to $27.2 million for the year ended December 31, 2023, an increase of $3.0 million.
Other Operating Expenses Other Operating Expenses for the year ended December 31, 2025 were approximately $21.3 million compared to $25.5 million for the year ended December 31, 2024, a decrease of $4.2 million.
Workers' Compensation Workers' compensation expense was approximately $2.0 million for the year ended December 31, 2024, versus an expense of approximately $3.7 million for the year ended December 31, 2023 a decrease of $1.7 million. This decrease is primarily due to a decreased number of medical claims relative to comparison periods.
Workers' Compensation Workers' compensation expense was approximately $89 thousand for the year ended December 31, 2025, versus an expense of approximately $2.0 million for the year ended December 31, 2024, a decrease of $1.9 million.
This decrease follows the overall decrease in accounts receivable. We pride ourselves on maintaining quality, creditworthy customers who pay timely, and the Company does not strive to increase interest on aged accounts receivable.
This increase is related to an increase in accounts that were paid between 42 and 84 days outstanding. We pride ourselves on maintaining quality, creditworthy customers who pay timely, and the Company does not strive to increase interest on aged accounts receivable. Net insurance fees decreased by approximately $236 thousand to $94 thousand in 2025 from $330 thousand in 2024.
This increase was primarily driven by a $6.0 million goodwill and intangible asset charge in 2024 associated with MRI partially offset by a $1.2 million decrease in salaries, bonuses and stock based compensation and a $1.7 million reduction in net workers' compensation expense.
The goodwill and intangible asset charge in both 2024 and 2025 were associated with MRI. Salaries, bonuses and stock based compensation also decreased approximately $828 thousand and net workers' compensation expense decreased $1.9 million. These decreases were partially offset by $1.2 million in transaction related expenses in 2025.
As a result of this review we concluded the carrying value of the trade name related to MRI exceeded its estimated fair value resulting in an impairment charge of approximately $1.2 million. The related impairment was primarily attributable to industry and market conditions effecting the overall financial performance of the reporting unit.
Also as a result of this review we concluded the carrying amount of the MRI trade name exceeded its estimated fair value resulting in an impairment charge of $150 thousand. These related impairments were attributable to decreased cash flows resulting from the contribution agreement.
This decrease is roughly consistent with the decrease in underlying system-wide sales which decreased 6.9% from $605.1 million in 2023 to $563.6 million in 2024. Revenue does not include any company-owned offices, as the office that we own is classified as held-for-sale. Franchise Royalties We charge our franchisees a royalty fee on the basis of one of several models.
The office that we own is classified as held-for-sale and is not included in revenue. Franchise Royalties We charge our franchisees a royalty fee on the basis of one of several models. Under the HireQuest Direct model, the royalty fee charged ranges from 6% to 8% of gross billings, depending on volume.
Interest income represents interest related to the financing of franchised locations. The increase is primarily driven by the disposition of the TEC assets. Interest and other financing expense relates primarily to our revolving credit facility.
Interest income Interest income for the year ended December 31, 2025 was approximately $511 thousand compared to $556 thousand for the year ended December 31, 2024. Interest income represents interest related to the financing of franchised locations. 21 Table of Contents Interest and other financing expense Interest and other financing expense relates primarily to our revolving credit facility.
Net cash generated by operating activities for the year included net income of approximately $3.9 million and a change of working capital of $0.9 million as a use of cash which was partially offset by significant non-cash expenses in 2024, including approximately $6.0 million in an intangible asset and goodwill impairment charge, $1.8 million in stock-based compensation, and $2.8 million in depreciation and amortization.
Non-cash expenses in 2025 included approximately $674 thousand in an intangible asset and goodwill impairment charge, $936 thousand in stock based compensation, and $3.0 million in depreciation and amortization. Investing Activities During 2025, net cash generated from investing activities was approximately $296 thousand and included proceeds from payments on notes receivable of approximately $1.2 million.
O ur average borrowing rate for the year ended December 31, 202 4 was 6. 5 % and is repriced daily.
O ur average borrowing rate for the year ended December 31, 2025 was 3.7% and is repriced daily. For additional information related to the letter of credit securing our workers’ compensation obligations see Note 5 - Workers’ Compensation Insurance and Reserves .
On a year-over-year basis, we saw a 6.9% decrease in our system-wide sales from $605.1 million in 2023 to $563.6 million in 2024 as the overall staffing and recruiting industry softened during the year which particularly affected MRI where system-wide sales decreased 18.6% or $31 million in 2024 when compared to 2023.
On a year-over-year basis, we saw a 11.3% decrease in our system-wide sales from $563.6 million in 2024 to $500.2 million in 2025 as the overall staffing and recruiting industry remained soft during the year due to overall economic factors including inflation and lack of investment in economic expansion given global uncertainty.
Number of Offices We track the number of offices we open and close every year as the number of offices is usually directly tied to the amount of royalty and service revenue we earn. In 2024, we decreased our office count by 2 offices on a net basis by opening or acquiring 30 and closing 32.
In 2025, we decreased our office count by 12 offices on a net basis by opening or acquiring 7 and closing 19. The following table accounts for the number of offices opened and closed in 2025 and 2024.
Interest and other financing expense decreased approximately $0.4 million to $1.0 million in the year ended December 31, 2024 when compared to the $1.4 million for the year ended December 31, 2023. This decrease was due primarily to lower average borrowings during the year . In 2024 our average borrowings were $13.3 million versus $16.5 million in 2023.
Interest and other financing expense decreased approximately $616 thousand to $307 thousand in the year ended December 31, 2025 when compared to the $923 thousand for the year ended December 31, 2024.
Interest and other financing expense will fluctuate as we utilize the line of credit for acquisitions or other short-term liquidity needs. Provision for income tax Income tax expense was approximately $0.2 million in 2024 and $1.3 million in 2023. The effective tax rates for 2024 and 2023 were 5.3% and 17.3%, respectively.
Provision for income tax Income tax expense was approximately $100 thousand in 2025 and $221 thousand in 2024. The effective tax rates for 2025 and 2024 were 1.5% and 5.3%, respectively.
As a result of this review, we concluded that the carrying value of our MRI reporting unit exceeded its estimated fair value resulting in an impairment charge of approximately $4.8 million. The goodwill impairment was primarily attributable to industry and market conditions affecting the overall financial performance of the reporting unit.
Management deemed this a triggering event that led us to review the carrying value of intangible assets related to MRI. As a result of this review we concluded that the carrying amount of franchise agreements acquired in the MRI acquisition exceeded their estimated fair value resulting in an impairment charge of approximately $294 thousand.
As of December 31, 2024 we had approximately 425 franchisee-owned offices and 1 company-owned office in 44 states, the District of Columbia, and 13 countries outside of the United States. We licensed our tradenames to approximately 6 offices in California. In addition, there were 12 MRI locations that provided contract staffing services only.
As of December 31, 2025 we had 413 franchisee-owned offices and 1 company-owned office in 43 states, the District of Columbia, and 14 countries outside of the United States. 197 of those offices operated by 177 franchisees were MRI offices which were divested to MRINetwork Operations, LLC on January 1, 2026.
Removed
We recorded an 8.7% decrease in total revenue from $37.9 million in 2023 to $34.6 million in 2024.
Added
MRI, in particular, along with other professional recruiting and staffing brands, was impacted by the continued uncertainty in the overall economy which may have led to less hiring. System-wide sales for MRI and the other professional recruiting and staffing brands decreased 26.6%, or $36.1 million in 2025 when compared to 2024.
Removed
We cannot accurately predict the effects of workers' compensation in future periods, and historical trends may not be indicative of future results. 26 Table of Contents Other Operating Expenses Other Operating Expenses for the year ended December 31, 2024 was approximately $25.4 million compared to $20.7 million for the year ended December 31, 2023, an increase of $4.7 million.
Added
We recorded an 11.4% decrease in total revenue from $34.6 million in 2024 to $30.6 million in 2025. Income from operations increased to $6.3 million in 2025 from $4.4 million in 2024 due to the $6.0 million goodwill and intangible asset charge associated with the MRI acquisition in 2024, partially offset by a decline in system-wide sales and associated revenues.
Removed
For the year ended December 31, 2024, other miscellaneous income was approximately $144 thousand, compared to $1.7 million of other miscellaneous expense for the year ended December 31, 2023. In 2023 the largest component of this loss is related to the loss of $2.1 million on disposition of the TEC assets.
Added
Total revenue for the year ended December 31, 2025 was approximately $30.6 million compared to $34.6 million for the year ended December 31, 2024, a decrease of 11.4%. This decrease is roughly consistent with the decrease in underlying system-wide sales which decreased 11.3% from $563.6 million in 2024 to $500.2 million in 2025.
Removed
This was partially offset by $187 thousand in rental income from leasing of excess space at market rates at our Corporate Headquarters and $102 thousand of miscellaneous other income. Interest income and expense Interest income for the year ended December 31, 2024 was approximately $556 thousand compared to $263 thousand for the year ended December 31, 2023.
Added
The decrease in net insurance fees was primarily related to increased insurance costs to HireQuest as well as a decline in payroll in both our HireQuest Direct and Snelling offerings.
Removed
Investing Activities During 2024, net cash generated from investing activities was approximately $44 thousand and included cash proceeds from the conversion of acquired offices into franchisees of approximately $717 thousand and proceeds from payments on notes receivable of approximately $1.6 million. These proceeds were offset by cash paid paid for acquisitions of $1.7 million.
Added
Operating Expenses Operating expenses for the year ended December 31, 2025 were approximately $24.4 million compared to $30.2 million for the year ended December 31, 2024, a decrease of $5.8 million. This decrease was primarily driven by a $6.0 million goodwill and intangible asset charge in 2024 compared to only $674 thousand in 2025.
Removed
The Senior Credit Facility will mature on February 28, 2028. As part of this refinancing we recorded a loss on debt extinguishment of approximately $310 thousand, which is reflected on the line item, "Interest and other financing expense," in our consolidated statement of income for 2023.
Added
This decrease is primarily due to a decreased number of medical claims relative to the prior year along with an appropriate adjustment to amounts collected versus paid on such claims. Our workers' compensation reserves provide benefits following a workplace injury.
Removed
The following table accounts for the number of offices opened and closed in 2024 and 2023.
Added
Depreciation and Amortization Depreciation and amortization for the year ended December 31, 2025 was approximately $3.0 million compared to $2.8 million for the year ended December 31, 2024. This increase is primarily the result of an IT project being placed in service causing amortization to begin.
Removed
Franchised offices, December 31, 2022 435 Purchased in 2023 7 Opened in 2023 14 Closed in 2023 (29 ) Franchised offices, December 31, 2023 427 Purchased in 2024 - Opened in 2024 30 Closed in 2024 (32 ) Franchised offices, December 31, 2024 425 30 Table of Contents Seasonality Our revenue fluctuates quarterly and is generally higher in the second and third quarters of our year.
Added
This decrease was due primarily to lower average borrowings during the year as we reduced borrowings on the line of credit with Bank of America to $0 as of December 31, 2025 . Interest and other financing expense will fluctuate as we utilize the line of credit for acquisitions or other short-term liquidity needs.
Removed
The decrease is due to our having now fully reserved claims from prior years which developed at a higher rate than historical norms. 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.
Added
Net cash generated by operating activities for the year included net income from continuing operations of approximately $6.6 million and a change of working capital of approximately $160 thousand as a source of cash.
Removed
During the third quarter of 2024, we completed our annual review of goodwill for potential impairment using a quantitative assessment for all of our reporting units. The fair value of each reporting unit was estimated using a weighting of a discounted cash flow model and values of comparable businesses.
Added
These proceeds were primarily offset by cash issued for notes receivable of $537 thousand and purchase of deferred compensation plan investments of $248 thousand.

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