8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): September 27, 2019

HIREQUEST, INC.

(Exact name of registrant as specified in its Charter)

Delaware	000-53088	91-2079472
(State or Other Jurisdiction of Incorporation or Organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

111 Springhall Drive, Goose Creek, SC	29445
(Address of Principal Executive Offices)	(Zip Code)

(843) 723-7400

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $0.001 par value	HQI	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.01. Completion of Acquisition or Disposition of Assets.

The Franchise Purchase Agreements

On September 29, 2019, to finalize effecting the transition of the Company’s branches from being Company-owned to being franchisee-owned, the Company entered into Asset Purchase Agreements (“Purchase Agreements”) with a new franchisee (the “Buyer”) for the sale of certain assets related to the operations of the Company’s branches in Coeur D’Alene, ID; Griffith, IN; Bloomington, Brooklyn Park, Cambridge, Hopkins, St. Paul, and Wilmar, MN; Bismark, Dickinson, Fargo, Grand Forks, Minot, and Watford City, ND; Bellevue and Omaha, NE; Hillsboro, OR; Sioux Falls, SD; and Bellingham, Everett, Kent, Mt. Vernon, Seattle, Spokane, Tacoma, and Vancouver, WA (collectively, the “Franchise Assets”).

The closings under such agreements occurred on September 29, 2019. The aggregate purchase price for the Franchise Assets consisted of approximately $9.7 million paid in the form of five-year promissory notes accruing interest at an annual rate of 6% issued by the Buyer to the Company.

The Purchase Agreements contain negotiated representations, warranties, covenants, and indemnification provisions by the parties which are believed to be customary for transactions of this type. The Company simultaneously entered into franchise agreements with subsidiaries of the Buyer, pursuant to which the subsidiaries will operate such branches as franchisees.

The California Purchase Agreement

On September 27, 2019, the Company closed on an Asset Purchase Agreement (“California Purchase Agreement”) with Resolute Enterprises, LLC, a Florida limited liability company (“Resolute”), for the sale of certain assets related to the operations of the Company’s branches in Corona, Hayward, Sacramento, and Fresno, CA (collectively, the “California Assets”).

The aggregate purchase price for the California Assets consisted of $1.8 million paid in the form of a four-year promissory note accruing interest at an annual rate of 10% issued by Resolute to the Company. The promissory note is secured by the California Assets. In conjunction with the closing, and as agreed to by the parties, the $150,000 Resolute had deposited in escrow as a breakup fee was returned to Resolute.

The California Purchase Agreement contained negotiated representations, warranties, covenants, and indemnification provisions by the parties, which are believed to be customary for transactions of this type.

Item 8.01. Other Events.

On October 1, 2019, the Company issued a press release announcing the consummation of the transactions contemplated by the Franchise Purchase Agreements and the California Purchase Agreement, a copy of which is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

99.1 Press Release dated October 1, 2019

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized.

	HIREQUEST, INC.
	(Registrant)
Date: October 1, 2019		/s/ John McAnnar
		John McAnnar
		Vice President and General Counsel

EX-99.1

 

HireQuest Announces Rapid Progress on Strategic Initiatives

Closes Sale of Four California Locations;

Completes Conversion of All Remaining Branches to Franchise Model

GOOSE CREEK, South Carolina – October 1, 2019 – HireQuest, Inc. (Nasdaq: HQI), a national provider of back-office and operational support for franchised operators of on-demand and temporary staffing service providers across the United States, today reported that it has completed the sale of its four locations in California and the conversion of its remaining branches to its franchise business model.

“Our team worked expeditiously to gain state regulatory approvals and convert the acquired Command Center branches to our franchise business model within 10 weeks following our merger,” commented Rick Hermanns, HireQuest’s President and Chief Executive Officer. “We believe that this move lowers operational risk. We expect our franchise owners and operators will also benefit from the unique financing and risk management structures we provide. We also believe that both HireQuest and its franchisees will see enhanced growth rates at our newly franchised locations due to the financial incentives inherent in our model. Integration and rationalization of expenses is on-going as we continue to identify opportunities for long-term growth and increased profitability across our platform. Integration expenses and non-recurring charges related to these activities are expected in the coming periods.”

In addition, the Company announced that it has completed the sale of its four locations in California to Resolute Enterprises, LLC for $1.8 million. Under the terms of the sale agreement, HireQuest is providing seller financing and has received a four-year promissory note with a face value of $1.8 million at 10% interest per annum.

“We believe that we are now positioned to grow, by expanding our national footprint, through select, accretive acquisitions and by broadening our participation with national accounts,” added Mr. Hermanns.

About HireQuest 

HireQuest, Inc. provides back-office and operational support for HireQuest Direct and HireQuest franchised branch locations across the United States. Through its nationwide network of more than 140 franchised offices in 30 states and the District of Columbia, the Company provides employment annually for approximately 85,000 field team members working for thousands of customers, primarily in the areas of construction, light industrial, manufacturing, hospitality, and event services.  For more information, visit www.hirequestllc.com. 

Important Cautions Regarding Forward-Looking Statements 

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995.  Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are not statements of historical facts, including statements on HireQuest’s strategy (including with respect to acquisitions, geographic expansion and broadening participation with national accounts), and on expected growth, reduction of operational risk, and benefits for its franchisees.  Generally, the words “intend,” “expect,” “anticipate,” “estimate,” “continue,” “will,” “could,” “may” and similar expressions identify forward-looking statements.  These statements are subject to uncertainties and risks, including, but not limited to, national, regional and local economic conditions, the availability of workers’ compensation insurance coverage, the availability of capital and suitable financing for the Company’s activities, our franchisees’ ability to attract, develop and retain qualified store managers and other personnel, product and service demand and acceptance, changes in technology, the impact of competition and pricing, government regulation, and other risks set forth in our most recent reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission, copies of which are available on our website at www.hirequestllc.com and the SEC website at www.sec.gov.  All such forward-looking statements, whether written or oral, and whether made by or on behalf of the Company, are expressly qualified by these cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof, except as required by law. 

Company Contact:	Investor Relations Contact:
HireQuest, Inc.	Hayden IR
Cory Smith, CFO	Brett Maas
(866) 464-5844	(646) 536-7331
Email: cory.smith@commandonline.com	Email: brett@haydenir.com