HireQuest, Inc.

Previous wording

This Quarterly Report on Form 10-Q and other documents incorporated herein by reference include, and our officers and other representatives may sometimes make or provide, certain estimates and other forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Exchange Act, including, among others, statements with respect to future revenue; franchise sales and system-wide sales; net income and Adjusted EBITDA (a non-GAAP Financial Measure); operating results; dividends and shareholder returns; anticipated benefits and synergies of any proposed transaction and future opportunities, including statements regarding value, profitability or growth prospects; cost synergies of any mergers or acquisitions including those we have completed in 2023 and 2024; intended office openings or closings; expectations of the effect on our financial condition of claims and litigation; strategies for customer retention and growth; strategies for risk management; and all other statements that are not purely historical and that may constitute statements of future expectations. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will,” and similar references to future periods.

Current wording

This Quarterly Report on Form 10-Q and other documents incorporated herein by reference include, and our officers and other representatives may sometimes make or provide, certain estimates and other forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Exchange Act, including, among others, statements with respect to future revenue; franchise sales and system-wide sales; net income and Adjusted EBITDA (a non-GAAP Financial Measure); operating results; dividends and shareholder returns; anticipated benefits and synergies of any proposed transaction and future opportunities, including statements regarding value, profitability or growth prospects; cost synergies of any mergers or acquisitions including those we have completed in 2023 and 2024; expected impact of the MRINO transaction; intended office openings or closings; expectations with respect to discontinued operations; expectations of the effect on our financial condition of claims and litigation; strategies for customer retention and growth; strategies for risk management; and all other statements that are not purely historical and that may constitute statements of future expectations. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will,” and similar references to future periods.

Previous wording

While we believe these statements are accurate, forward-looking statements are not historical facts and are inherently uncertain. They are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. We cannot assure you that these expectations will materialize, and our actual results may be significantly different. Therefore, you should not place undue reliance on these forward-looking statements. Important factors that may cause actual results to differ materially from those contemplated in any forward-looking statements made by us include the following: the level of demand for and financial performance of the temporary staffing and permanent placement industry; the financial performance of our franchisees; our franchisees’ and our customers’ ability to navigate successfully the challenges posed by instability in the financial and capital markets and the overall economic environment including increases in the price of oil and gas and any potential recession; changes in customer demand; the extent to which we are successful in gaining new long-term relationships with customers or retaining existing ones, and the level of service failures that could lead customers to use competitors’ services; workers’ compensation expenses that fluctuate from period to period based on the mix of classifications, the level of payroll, recent claims resolution, and cumulative experience; significant investigative or legal proceedings including, without limitation, those brought about by the existing regulatory environment or changes in the regulations governing the temporary staffing and permanent placement industry and those arising from the action or inaction of our franchisees and temporary employees; strategic actions, including acquisitions and dispositions and our success in integrating acquired businesses including, without limitation, successful integration following the acquisitions of Ready Temporary Staffing, TEC Staffing Services, MRINetwork, Snelling Staffing, LINK Staffing, Recruit Media, Inc., Dental Power Staffing, Temporary Alternatives, Inc., and subsequent or smaller acquisitions; the possibility that any strategic target will not agree to consummate a transaction or that any such transaction is consummated on different terms than currently anticipated; the possibility that conditions to the completion of a proposed transaction, including the receipt of any required shareholder approvals and any required regulatory approvals, will not be met; the possibility that we may be unable to achieve expected synergies and operating efficiencies within an expected time frame or at all and to successfully integrate any acquired operations with ours; the possibility that such integration may be more difficult, time-consuming, or costly than expected, or that operating costs, customer loss and business d…

Excerpt shortened here; the source contains the full paragraph.

Current wording

While we believe these statements are accurate, forward-looking statements are not historical facts and are inherently uncertain. They are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. We cannot assure you that these expectations will materialize, and our actual results may be significantly different. Therefore, you should not place undue reliance on these forward-looking statements. Important factors that may cause actual results to differ materially from those contemplated in any forward-looking statements made by us include the following: the level of demand for and financial performance of the temporary staffing and permanent placement industry; effects of continued geopolitical unrest and regional conflicts, including conflicts in the Middle East; the financial performance of our franchisees; our franchisees’ and our customers’ ability to navigate successfully the challenges posed by instability in the financial and capital markets and the overall economic environment including the impact of increases in the price of oil and gas and any potential recession; changes in customer demand; the extent to which we are successful in gaining new long-term relationships with customers or retaining existing ones, and the level of service failures that could lead customers to use competitors’ services; workers’ compensation expenses that fluctuate from period to period based on the mix of classifications, the level of payroll, recent claims resolution, and cumulative experience; significant investigative or legal proceedings including, without limitation, those brought about by the existing regulatory environment or changes in the regulations governing the temporary staffing and permanent placement industry and those arising from the action or inaction of our franchisees and temporary employees; strategic actions, including acquisitions and dispositions and our success in integrating acquired businesses including, without limitation, successful integration following the acquisitions of Ready Temporary Staffing, TEC Staffing Services, MRINetwork, Snelling Staffing, LINK Staffing, Recruit Media, Inc., Dental Power Staffing, Temporary Alternatives, Inc., and subsequent or smaller acquisitions; the possibility that any strategic target will not agree to consummate a transaction or that any such transaction is consummated on different terms than currently anticipated; the possibility that conditions to the completion of a proposed transaction, including the receipt of any required shareholder approvals and any required regulatory approvals, will not be met; the possibility that we may be unable to achieve expected synergies and operating efficiencies within an expected time frame or at all and to successfully integrate any acquired operations with ours; the possibility that such integratio…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

As of March 31, 2026, we had 257 franchisee-owned offices and 1 company-owned office in 39 states, the District of Columbia, and 1 country outside of the United States. 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, retail, and dental.

Current wording

As of June 30, 2026, we had 251 franchisee-owned offices and 1 company-owned office in 39 states, the District of Columbia, and 1 country outside of the United States. 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, retail, and dental.

Previous wording

The following table displays our Consolidated Statements of Income for three months ended March 31, 2026 and March 31, 2025. Percentages reflect the line item as a percentage of total revenue.

Current wording

The following table displays our Consolidated Statements of Income for the three and six months ended June 30, 2026 and June 30, 2025. Percentages reflect the line item as a percentage of total revenue.

Previous wording

Franchise royalties for the three months ended March 31, 2026 were approximately $6.1 million, a decrease of approximately 12.9% from $7.0 million for the three months ended March 31, 2025. The decrease in royalties was largely due to the loss of $506 thousand in royalties related to the MRINetwork assets divestiture, and a decrease in HireQuest Direct royalties that approximates the decrease in system-wide-sales. A summary of franchise royalties by brand for the three months ended March 31, 2026 and March 31, 2025 follows:

Current wording

Franchise royalties for the three months ended June 30, 2026 were approximately $7.6 million, an increase of approximately 4.1% from $7.3 million for the three months ended June 30, 2025. The increase in royalties was largely due to increased royalties in both HireQuest Direct and Snelling that approximate the increase in system-wide-sales, partially offset by the loss of $620 thousand in royalties as a result of the MRINetwork Assets Divestiture. A summary of franchise royalties by brand for the three months ended June 30, 2026 and June 30, 2025 follows:

Previous wording

Service revenue consists of interest we charge our franchisees on overdue customer accounts receivable and other miscellaneous fees for optional services we provide. Direct costs to provide certain services are reflected as a reduction in service revenue. As accounts receivable age over 42 days, our franchisees pay us interest on these accounts equal to 0.5% of the amount of the uncollected receivable each 14-day period. All accounts that age beyond 84 days are charged back to the franchisee and no longer incur interest, although some of our franchisees elect to charge back accounts that age over 42 days in order to avoid the interest charge. Fees related to the MRINetwork national advertising fund are also included in service revenue. We do not profit from this fee as it represents pass-though items. As of January 1, 2026, all franchisees that had franchise agreements with the MRINetwork national advertising fund fee were divested to a new entity so going forward service revenue will no longer include such fees as a component. MRINetwork national advertising fund fees were $0 for the three months ended March 31, 2026, compared to $74 thousand for the three months ended March 31, 2025. Service revenue also includes amounts charged for various optional services and cost-sharing arrangements such as bulk vendor programs or IT license blocks. Generally, we do not profit from these arrangements as they represent pass-through items, although there may be timing differences. In addition, there are occasionally classification differences where the cost is embedded in selling, general and administrative expenses.

Current wording

Service revenue consists of interest we charge our franchisees on overdue customer accounts receivable and other miscellaneous fees for optional services we provide. Direct costs to provide certain services are reflected as a reduction in service revenue. As accounts receivable age over 42 days, our franchisees pay us interest on these accounts equal to 0.5% of the amount of the uncollected receivable each 14-day period. All accounts that age beyond 84 days are charged back to the franchisee and no longer incur interest, although some of our franchisees elect to charge back accounts that age over 42 days in order to avoid the interest charge. Fees related to the MRINetwork national advertising fund are also included in service revenue. We do not profit from this fee as it represents pass-though items. As of January 1, 2026, all franchisees that had franchise agreements with the MRINetwork national advertising fund fee were divested to a new entity so going forward service revenue will no longer include such fees as a component. MRINetwork national advertising fund fees were $0 for the three months ended June 30, 2026, compared to $70 thousand for the three months ended June 30, 2025. Service revenue also includes amounts charged for various optional services and cost-sharing arrangements such as bulk vendor programs or IT license blocks. Generally, we do not profit from these arrangements as they represent pass-through items, although there may be timing differences. In addition, there are occasionally classification differences where the cost is embedded in selling, general and administrative expenses.

Previous wording

Service revenue for the three months ended March 31, 2026 was approximately $462 thousand, a decrease of $50 thousand from the three months ended March 31, 2025, when service revenue was approximately $512 thousand. Interest income on overdue customer accounts receivable, which is included in service revenue was $203 thousand for the three months ended March 31, 2026 and $240 thousand for the three months ended March 31, 2025. Fluctuations in interest generally follow the mix of aged accounts in our accounts receivable, although relatively few age over 42 days and result in service revenue for us. Many of our franchisees have elected tocharge back accounts early in order to avoid or reduce the interest charge. Therefore, there will not be a proportionally large increase in service revenue even when there is a large increase in accounts receivable. We pride ourselves on maintaining quality, creditworthy customers who pay timely. We view the imposition of higher interest rates on aged accounts receivable to serve as an incentive for our franchisees to select credit-worthy customers. Service revenue is expected to fluctuate from quarter-to-quarter.

Current wording

Service revenue for the three months ended June 30, 2026 was approximately $513 thousand, an increase of $159 thousand from the three months ended June 30, 2025, when service revenue was approximately $354 thousand, primarily due to an increase of $198 thousand related to liability insurance, partially offset by the loss of MRINetwork national advertising fund fees of $70 thousand as a result of the MRINetwork Assets Divestiture. Interest income on overdue customer accounts receivable, which is included in service revenue was $253 thousand for the three months ended June 30, 2026 and $215 thousand for the three months ended June 30, 2025. Fluctuations in interest income generally follows the mix of aged accounts in our accounts receivable, although relatively few age over 42 days and result in service revenue for us. Many of our franchisees have elected tocharge back accounts early in order to avoid or reduce the interest charge. Therefore, there will not be a proportionally large increase in service revenue even when there is a large increase in accounts receivable. We pride ourselves on maintaining quality, creditworthy customers who pay timely. We view the imposition of higher interest rates on aged accounts receivable to serve as an incentive for our franchisees to select credit-worthy customers. Service revenue is expected to fluctuate from quarter-to-quarter.

Previous wording

Total Operating expenses for the three months ended March 31, 2026 were approximately $4.3 million compared to $5.3 million for the three months ended March 31, 2025. The decrease of $1.0 million was primarily driven by a decrease of $699 thousand in expenses related to the MRINetwork assets divestiture.

Current wording

Total operating expenses for the three months ended June 30, 2026 were approximately $4.8 million compared to $6.6 million for the three months ended June 30, 2025. The decrease of $1.8 million was primarily driven by a decrease of $633 thousand in expenses as a result of the MRINetwork Assets Divestiture and $929 thousand in acquisition related charges incurred in the three months ended June 30, 2025.

Previous wording

Net workers' compensationexpensewas approximately $39 thousand for the three months ended March 31, 2026, compared to $28 thousand recorded in the three months ended March 31, 2025. 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. Workers compensation rating is typically based on job classification, and our workers fall in hundreds of 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. The company pays premiums, actual claims, and establishes reserves for future claims. In turn we charge our franchises a percentage of payroll as determined by our workers' compensation carrier, plus or minus certain incentives and charges we provide for good or bad workers' compensation claims history. The overall charge is an estimate of the fully developed future costs and may not always coincide with the actual costs we incur resulting in expense or benefit in a given period. Over the long-term, our workers' compensation expense should equal the amounts we collect from franchisees and essentially be a pass-through cost. In the short-term, we cannot accurately predict the effects of workers' compensation in specific future periods, and historical trends are not indicative of future results.

Current wording

Net workers' compensationexpensewas approximately $39 thousand for the three months ended June 30, 2026, compared to $127 thousand recorded in the three months ended June 30, 2025. 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. Workers' compensation rating is typically based on job classification, and our workers fall in hundreds of 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. The Company pays premiums, actual claims, and establishes reserves for future claims. In turn we charge our franchises a percentage of payroll as determined by our workers' compensation carrier, plus or minus certain incentives and charges we provide for good or bad workers' compensation claims history. The overall charge is an estimate of the fully developed future costs and may not always coincide with the actual costs we incur resulting in expense or benefit in a given period. Over the long-term, our workers' compensation expense should equal the amounts we collect from franchisees and essentially be a pass-through cost. In the short-term, we cannot accurately predict the effects of workers' compensation in specific future periods, and historical trends are not indicative of future results.

Previous wording

Depreciation and amortization for the three months ended March 31, 2026 was approximately $778 thousand compared to $734 thousand for the three months ended March 31, 2025. This increase is primarily the result of increased amortization related to shortening the estimated useful life of the MRI franchise agreements.

Current wording

Depreciation and amortization for the three months ended June 30, 2026 was approximately $762 thousand compared to $734 thousand for the three months ended June 30, 2025. This increase is primarily the result of increased amortization related to shortening the estimated useful life of the MRI franchise agreements.

Previous wording

Other income and expense consists of interest income on notes receivable, rent received from sub-tenants, and other non-operating income and expense.

Current wording

Other income and expense consists of interest income on notes receivable, equity in income or loss of unconsolidated affiliate, rent received from sub-tenants, and other non-operating income and expense.

Previous wording

Interest income for the three months ended March 31, 2026 was approximately $101 thousand compared to $134 thousand for the three months ended March 31, 2025. Interest income represents interest related to the financing of franchised locations.

Current wording

Interest income for the three months ended June 30, 2026 was approximately $118 thousand compared to $129 thousand for the three months ended June 30, 2025. Interest income represents interest related to the financing of franchised locations.

Previous wording

Interest and other financing expense relates primarily to the Credit Agreement. Interest and other financing expense decreased from $144 thousand for the three months ended March 31, 2025 to $8 thousand for the three months ended March 31, 2026. Interest and other financing expense will fluctuate as we utilize the line of credit for acquisitions or other short-term liquidity needs. The decrease in interest expense is consistent with the decrease in the outstanding line of credit balance.

Current wording

Interest and other financing expense relates primarily to the Credit Agreement. Interest and other financing expense decreased from $71 thousand for the three months ended June 30, 2025 to $30 thousand for the three months ended June 30, 2026. Interest and other financing expense will fluctuate as we utilize the line of credit for acquisitions or other short-term liquidity needs. The decrease in interest expense is consistent with the decrease in the outstanding line of credit balance.

Previous wording

Income tax expense was approximately $264 thousand for the three months ended March 31, 2026. Our net ETR for the three months ended March 31, 2026 was 14.4%. We estimate an annual projected effective tax rate ("ETR") for the year to determine income tax expense or benefit in the interim periods. The estimated annual ETR does not include tax effects from significant unusual or infrequently occurring items. Such items are accounted for discretely during the period in which they occur. The ETR is primarily driven by federal hiring credits, which 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. Other significant items affecting our tax rate result from state income taxes, certain non-deductible expenses, and tax effects of stock-based compensation.

Current wording

Income tax expense was approximately $684 thousand for the three months ended June 30, 2026. Our net ETR for the three months ended June 30, 2026 was 19.9%. We estimate an annual projected effective tax rate ("ETR") for the year to determine income tax expense or benefit in the interim periods. The estimated annual ETR does not include tax effects from significant unusual or infrequently occurring items. Such items are accounted for discretely during the period in which they occur. The ETR is primarily driven by federal hiring credits, which 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. Other significant items affecting our tax rate result from state income taxes, certain non-deductible expenses, and tax effects of stock-based compensation.

Previous wording

Income tax expense for the three months ended March 31, 2025 was approximately $169 thousand. Our net ETR for the three months ended March 31, 2025 was 10.5%. The increase in the net ETR was driven by the level of hiring credits applied during the three months ended March 31, 2025.

Current wording

Income tax expense for the three months ended June 30, 2025 was approximately $56 thousand. Our net ETR for the three months ended June 30, 2025 was 5.0%. The increase in the net ETR was driven by the a higher level of hiring credits applied during the three months ended June 30, 2025.

Previous wording

Total revenue for the three months ended March 31, 2026 was approximately $6.5 million compared to $7.5 million for the three months ended March 31, 2025, a decrease of approximately 12.7%. The decrease in revenue was largely due to the loss of approximately $500 thousand of total revenue in the quarter ended March 31, 2025 related to the MRINetwork assets divestiture and a decline in royalties from the retained Northbound, MRI, and SearchPath franchisees of approximately $360 thousand in the current period. For the three months ended March 31, 2026, there was a $15.8 million or 13.4% decrease in underlying system-wide sales from $118.4 million for the three months ended March 31, 2025 to $102.6 million for the three months ended March 31, 2026. The decrease in system-wide sales was primarily driven by $16.0 million in system-wide sales related to MRINetwork assets divested on January 1, 2026 and a decline in HireQuest Direct of $2.3 million, partially offset by a $1.9 million increase in Snelling/HireQuest.

Current wording

Total revenue for the six months ended June 30, 2026 was approximately $14.6 million compared to $15.1 million for the six months ended June 30, 2025, a decrease of approximately 3.2%. The decrease in revenue was largely due to the loss, in 2026, of approximately $1.3 million of total revenue for the six months ended June 30, 2025 as a result of the MRINetwork Assets Divestiture, partially offset by increases of $249 thousand and $421 thousand in royalties from HireQuest Direct and Snelling respectively. There was a $23.9 million or 9.8% decrease in underlying system-wide sales from $244.3 million for the six months ended June 30, 2025 to $220.4 million for the six months ended June 30, 2026. The decrease in system-wide sales was primarily driven by $33.7 million in system-wide sales as a result of the MRINetwork Assets Divesture, partially offset by increased system-wide sales for Senlling and HireQuest Direct of $7.1 million and $2.8 million, respectively.

Previous wording

Compensation-related expenses include wages, payroll taxes, benefits, and stock-based compensation. Compensation and benefits for the three months ended March 31, 2026 were approximately $2.3 million, a decrease of $535 thousand when compared to $2.9 million for the three months ended March 31, 2025. The decrease in compensation and benefits was primarily driven by the elimination of expenses related to the MRINetwork assets divestiture for the three months ended March 31, 2026, which accounted for $365 thousand in three months ended March 31, 2025.

Current wording

Compensation-related expenses include wages, payroll taxes, benefits, and stock-based compensation. Compensation and benefits for the six months ended June 30, 2026 were approximately $4.8 million, a decrease of $756 thousand when compared to $5.5 million for the six months ended June 30, 2025. The decrease in compensation and benefits was primarily driven by the elimination of expenses as a result of the MRINetwork Assets Divestiture for the six months ended June 30, 2026, which accounted for $648 thousand in the six months ended June 30, 2025.

Previous wording

For the three months ended March 31, 2026, other miscellaneous* income* was approximately $16 thousand, compared to other miscellaneousincome of $131 thousand for the three months ended March 31, 2025. During the period ended March 31, 2025, we recognized a gain on the disposal of a franchise business we took control of and then sold to another franchisee in the same period.

Current wording

For the six months ended June 30, 2026, other miscellaneous* *income was approximately $22 thousand, compared to $159 thousand for the six months ended June 30, 2025. During the period ended June 30, 2025, we recognized a gain on the disposal of a franchise business we took control of and then sold to another franchisee in the same period.

Previous wording

For the three months ended March 31, 2026, we recognized a $251 thousand gain related to the divestiture of assets related to MRINetwork.

Current wording

For the six months ended June 30, 2026, we recognized a $248 thousand gain as a result of the MRINetwork Assets Divestiture.

Previous wording

The assets and liabilities of our discontinued operations are presented separately in the asset and liability sections, respectively, of the balance sheet for all periods presented. Similarly, cash flows and the results of operations are also removed from continuing operations in the respective financial statements. In general, assets held-for-sale are not amortized or depreciated, and are measured at the lower of carrying amount or fair value less costs to sell.

Current wording

The assets and liabilities of our discontinued operations are presented separately under assets and liabilities , respectively, in our Consolidated Balance Sheets for all periods presented. Similarly, cash flows and the results of operations are also removed from continuing operations in the respective financial statements. In general, assets held-for-sale are not amortized or depreciated, and are measured at the lower of carrying amount or fair value less costs to sell.

Previous wording

At March 31, 2026, our current assets exceeded our current liabilities by approximately $32.5 million. Our current assets included approximately $1.0 million of cash and $44.7 million of net accounts receivable, which our franchisees have billed to customers and which we own in accordance with our franchise agreements. Our largest current liabilities as of March 31, 2026 included approximately $10.5 million due to our franchisees on pending settlement statements and $2.9 million related to our workers’ compensation claims liability.

Current wording

At June 30, 2026, our current assets exceeded our current liabilities by approximately $35.1 million. Our current assets include approximately $1.6 million of cash and $48.9 million of net accounts receivable, which our franchisees have billed to customers and which we own in accordance with our franchise agreements. Our largest current liabilities as of June 30, 2026 included approximately $11.6 million due to our franchisees on pending settlement statements and $2.7 million related to our workers’ compensation claims liability.

Previous wording

During the three months ended March 31, 2026, cash provided by continuing operations was approximately $259 thousand and included net income from continuing operations of approximately $1.6 million, adjusted by non-cash items (primarily depreciation, gain of divestiture of business, and stock-based compensation) of approximately $587 thousand. These provisions were offset by changes in operating assets and liabilities requiring cash (primarily accounts receivable) of approximately $1.9 million. During the three months ended March 31, 2025, cash provided by continuing operating activities was approximately $1.9 million and included net income from continuing operations of approximately $1.4 million, adjusted by non-cash items of approximately $1.3 million (depreciation, deferred taxes. and stock-based compensation). These provisions were partially offset by changes in operating assets and liabilities requiring cash (primarily prepaid expenses) of approximately $770 thousand.

Current wording

During the six months ended June 30, 2026, cash provided by continuing operations was approximately $1.9 million and included net income from continuing operations of approximately $4.3 million, adjusted by non-cash items (primarily depreciation, gain of divestiture of business, deferred taxes, and stock-based compensation) of approximately $2.2 million. These provisions were offset by changes in operating assets and liabilities requiring cash (primarily accounts receivable) of approximately $4.6 million. During the six months ended June 30, 2025, cash provided by continuing operating activities was approximately $4.5 million and included net income from continuing operations of approximately $2.5 million, adjusted by non-cash items of approximately $2.3 million (depreciation, deferred taxes. and stock-based compensation). These provisions were partially offset by changes in operating assets and liabilities requiring cash (primarily prepaid expenses) of approximately $305 thousand.

Previous wording

During the three months ended March 31, 2026, cash used by investing activities was approximately $435 thousand, primarily from cash issued for notes receivable of approximately $398 thousand, and capital contribution to unconsolidated affiliate of approximately $192 thousand. These provisions were offset by cash received from payments on notes receivable of approximately $148 thousand. During thethree months ended March 31, 2025, cash provided by investing activities was approximately $316 thousand, primarily from payments on notes receivable of approximately $362 thousand.

Current wording

During the six months ended June 30, 2026, cash used by investing activities was approximately $28 thousand, primarily from cash issued for notes receivable of approximately $399 thousand, and capital contribution to unconsolidated affiliate of approximately $192 thousand. These provisions were offset by cash received from payments on notes receivable of approximately $754 thousand. During thesix months ended June 30, 2025, cash provided by investing activities was approximately $313 thousand, primarily from payments on notes receivable of approximately $673 thousand, net of cash issued for notes receivable of approximately $304 thousand.

Previous wording

During the three months ended March 31, 2026, cash used by financing activities was approximately $2.7 million and included purchase of treasury stockof approximately $1.9 million and the payment of approximately $838 thousand in dividends. During the three months ended March 31, 2025, cash used by financing activities was approximately $2.3 million and included the payment of dividends totaling approximately $842 thousand andnet payments on our revolving line of credit of approximately $1.4 million.

Current wording

During the six months ended June 30, 2026, cash used by financing activities was approximately $4.1 million and included repurchase of sharesof approximately $2.4 million and the payment of approximately $1.7 million in dividends. During the six months ended June 30, 2025, cash used by financing activities was approximately $4.3 million and included the payment of dividends totaling approximately $1.7 million andnet payments on our revolving line of credit of approximately $2.5 million.

Previous wording

At March 31, 2026, 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. Our all-in-rate of borrowing was 4.7% and is repriced daily.

Current wording

At June 30, 2026, availability under the Senior Credit Facility was approximately$41.0 million based on eligible collateral, less letter of credit reserves, bank product reserves, and current advances, assuming continued covenant compliance. Our all-in-rate of borrowing was 4.7% and is repriced daily.

Previous wording

For the three months ended March 31, 2026, nearly all of our offices were franchised with the only exceptions being a portion of the Dubin operations acquired in the first quarter of 2022. The following table reflects our system-wide sales broken into its components for each period indicated. The Dubin operations are presented in the consolidated financial statements as discontinued operations because they are considered held-for-sale, but their system-wide sales are reflected along with all other offices in the table below. Percentages indicate the change in system-wide sales relative to the comparable prior period.

Current wording

For the six months ended June 30, 2026, nearly all of our offices were franchised with the only exceptions being a portion of the Dubin operations acquired in the first quarter of 2022. The following table reflects our system-wide sales broken into its components for each period indicated. The Dubin operations are presented in the consolidated financial statements as discontinued operations because they are considered held-for-sale, but their system-wide sales are reflected along with all other offices in the table below. Percentages indicate the change in system-wide sales relative to the comparable prior period.

Previous wording

For the three months ended March 31, 2025, system-wide sales from Northbound, MRI, and SearchPath includes $16.0 million related to MRINetwork assets divested on January 1, 2026.

Current wording

For the six months ended June 30, 2026, system-wide sales from Northbound, MRI, and SearchPath included $33.7 million related to the MRINetwork Assets Divestiture.

Previous wording

The following table accounts for the number of offices opened and closed or consolidated during the three months ended March 31, 2026:

Current wording

The following table accounts for the number of offices opened and closed or consolidated during the six months ended June 30, 2026: