HireQuest (HQI) is a franchisor of staffing offices with a capital-light model: it owns accounts receivable billed by franchisees, collects royalties, and carries intangible assets from franchise agreement acquisitions. Under the liquidation lens, the MFFAIS-computed cash liquidation value is negative at approximately -$17.2M, while the liquid liquidation value is positive at roughly $27.4M, reflecting that the dominant liquidation asset is net accounts receivable of $44.7M (recoverable at 90-95% haircut). The asset side of the balance sheet is weighted heavily toward intangibles — finite-lived intangibles net $19.3M (franchise agreements $16.8M, software $2.5M), indefinite-lived intangibles net $4.2M (domain names and trade names), and goodwill net $1.6M on gross of $6.4M with $4.8M of accumulated impairment. Under the 0% intangible recovery rule, all intangible and goodwill book value is zeroed, eliminating approximately $25.1M of reported assets. PP&E net of $4.0M recovers at 50-70%, yielding approximately $2.0-2.8M. The notes receivable portfolio of $6.9M net (gross $8.1M, allowance $1.2M) represents franchisee financing collateralized by franchise office assets; recovery in liquidation is uncertain and likely below book given the counterparty is the distressed franchise base — a 60-70% haircut is reasonable, yielding approximately $4.1-4.8M. On the liability side, total liabilities at face are $23.8M, dominated by the $10.5M due-to-franchisees on settlement statements (current), $2.9M workers' compensation current, $2.2M workers' compensation non-current, and smaller items. Importantly, the Bank of America $50M revolving facility shows $0 outstanding at 3/31/2026 per the zero tag on ProceedsFromRepaymentsOfLinesOfCredit and the near-zero InterestExpense of $8K versus $144K in Q1 2025, confirming full paydown. This is a material improvement from the prior year-end 10-K where the line was being used for acquisitions. The MRINetwork divestiture effective January 1, 2026 contributed 156 offices leaving the franchise count (413 to 257), reduced intangible base exposure, generated a $248K gain, and removed $699K/quarter in operating costs. The Dubin held-for-sale operation carries a $672K intangible customer list that has been impaired; its balance-sheet assets are reported separately but are immaterial to liquidation math. Workers' compensation reserves (current $2.9M + non-current $2.2M = $5.1M total) are an ongoing actuarial liability that does not extinguish on liquidation and must be settled at face. Equity stands at $67.3M book, which collapses significantly under liquidation haircuts given the intangible-heavy asset base. Filing discusses workers' compensation reserve adequacy and VIE exposure on franchisee notes ($6.4M subset of notes receivable are VIE-related) in MD&A but does not separately XBRL-tag the VIE note balance as a distinct line item.
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