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QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
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Washington
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91-2079472
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(State
or other jurisdiction of incorporation or organization)
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(IRS
Employer Identification Number)
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Large
accelerated filer o
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Accelerated
filer o
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Non-accelerated
filer o
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Smaller
reporting company x
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Page
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PART
I
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Item
1. Financial Statements (unaudited)
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Management
Statement
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10-Q
Page 3
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Balance
Sheet at March 28, 2008 and December 28, 2007
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10-Q
Page 4
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Statements
of Operations for the thirteen week periods ended March 28, 2008
and March
30, 2007
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10-Q
Page 5
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Statements
of Cash Flows for the thirteen week periods ended March 28, 2008
and March
30, 2007
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10-Q
Page 6
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Notes
to Financial Statements
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10-Q
Page 7
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Item
2. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
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10-Q
Page 13
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Item
3. Quantitative and Qualitative Disclosures about Market Risk
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10-Q
Page 17
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Item
4. Controls and Procedures
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10-Q
Page 17
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Part
II
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Item
2 Unregistered Sales of Equity Securities
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10-Q
Page 19
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Item
6. Exhibits and Reports on Form 8-K
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10-Q
Page 19
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Signatures
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10-Q
Page 20
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Certifications
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10-Q Page 21 – 24
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March
28, 2008
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December
28, 2007
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||||||
Unaudited
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|||||||
Assets
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|||||||
CURRENT
ASSETS:
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|||||||
Cash
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$
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1,390,903
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$
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580,918
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|||
Accounts
receivable - trade, net of allowance for bad debts of $500,000 at
March
28, 2008 and December 28, 2007
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8,338,928
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9,079,222
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|||||
Notes
and subscriptions receivable - current
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-
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1,953,882
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|||||
Prepaid
expenses, deposits, and other
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1,119,429
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1,610,913
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|||||
Current
portion of workers’ compensation risk pool deposits
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1,331,950
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1,150,375
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|||||
Total
current assets
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12,181,210
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14,375,310
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|||||
PROPERTY
AND EQUIPMENT, NET
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3,114,450
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3,245,506
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|||||
OTHER
ASSETS:
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|||||||
Note
receivable - non-current
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17,155
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17,155
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|||||
Workers’
compensation risk pool deposits
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2,012,143
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2,833,127
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|||||
Goodwill
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14,257,929
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14,257,929
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|||||
Intangible
assets - net
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638,358
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683,275
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|||||
Total
other assets
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16,925,585
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17,791,486
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|||||
$
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32,221,245
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$
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35,412,302
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||||
Liabilities
and Stockholders’ Equity
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|||||||
CURRENT
LIABILITIES:
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|||||||
Accounts
payable
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$
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809,968
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$
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863,373
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|||
Line
of credit facility
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4,533,261
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4,686,156
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|||||
Accrued
wages and benefits
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1,183,298
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1,553,536
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|||||
Advances
payable
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100,000
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100,000
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|||||
Current
portion of note payable
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92,430
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8,967
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|||||
Other
current liabilities
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296,664
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817,368
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|||||
Current
portion of workers’ compensation claims liability
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1,331,950
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1,150,375
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|||||
Total
current liabilities
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8,347,571
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9,179,775
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|||||
LONG-TERM
LIABILITIES:
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|||||||
Note
payable, less current portion
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-
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85,655
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|||||
Finance
obligation
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1,125,000
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1,125,000
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|||||
Workers’
compensation claims liability, less current portion
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2,526,793
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2,219,642
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|||||
Total
long-term liabilities
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3,651,793
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3,430,297
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|||||
STOCKHOLDERS’
EQUITY:
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|||||||
Preferred
stock - 5,000,000 shares, $0.001 par value, authorized; no shares
issued
and outstanding
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-
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||||||
Common
stock - 100,000,000 shares, $0.001 par value, authorized; 36,096,720
and
35,725,050 shares issued and outstanding, respectively
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36,097
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35,725
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|||||
Additional
paid-in capital
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51,011,211
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51,005,159
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|||||
Accumulated
deficit
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(30,825,427
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)
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(28,238,654
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)
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Total
stockholders’ equity
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20,221,881
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22,802,230
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|||||
$
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32,221,245
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$
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35,412,302
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Thirteen
Weeks Ended
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|||||||
March
28,
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March
30,
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||||||
2008
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2007
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||||||
REVENUE:
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|||||||
Revenue
from services
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$
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19,835,399
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$ |
22,854,400
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|||
Other
income
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101,690
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65,452
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|||||
19,937,089
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22,919,852
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||||||
COST
OF SERVICES:
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|||||||
Temporary
worker costs
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13,023,601
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15,579,641
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|||||
Workers’
compensation costs
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1,753,694
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1,580,284
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|||||
Other
direct costs of services
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291,241
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128,585
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|||||
15,068,536
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17,288,510
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||||||
GROSS
PROFIT
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4,868,553
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5,631,342
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|||||
SELLING,
GENERAL, AND ADMINISTRATIVE EXPENSES:
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|||||||
Personnel
costs
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4,013,935
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4,581,518
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|||||
Selling
and marketing expenses
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306,025
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490,678
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|||||
Transportation
and travel
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408,212
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543,805
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|||||
Office
expenses
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259,672
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296,194
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|||||
Legal,
professional and consulting
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411,765
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535,288
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|||||
Depreciation
and amortization
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213,796
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196,273
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|||||
Rents
and leases
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601,917
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586,407
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|||||
Other
expenses
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1,095,123
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1,290,538
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|||||
7,310,445
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8,520,701
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||||||
LOSS
FROM OPERATIONS
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(2,441,892
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)
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(2,889,359
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)
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OTHER
INCOME (EXPENSE):
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|||||||
Interest
expense
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(150,815
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)
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(198,758
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)
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Interest
and other income
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5,933
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7,351
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|||||
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(144,882
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)
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(191,407
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)
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BASIC
AND DILUTED NET LOSS
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$
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(2,586,774
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)
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$ |
(3,080,766
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) | |
BASIC
AND DILUTED LOSS PER SHARE
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$
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(0.07
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)
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$ |
(0.13
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) | |
WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING
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35,729,137
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23,596,415
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Thirteen
Weeks Ended
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|||||||
March
28,
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March
30,
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||||||
2008
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2007
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||||||
Increase
(Decrease) in Cash
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|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
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|||||||
Net
loss
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$
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(2,586,774
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)
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$
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(3,080,766
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)
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Adjustments
to reconcile net loss to net cash used by operating
activities:
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|||||||
Depreciation
and amortization
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213,796
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196,273
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|||||
Allowance
for bad debts
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-
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9,137
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|||||
Amortization
of note discount
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-
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6,000
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|||||
Common
stock issued for compensation and consulting
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195,553
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104,917
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|||||
Changes
in assets and liabilities
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|||||||
Accounts
receivable - trade
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740,294
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(449,312
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)
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||||
Accounts
receivable affiliates
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(173,393
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)
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-
|
||||
Prepaid
expenses, deposits and other
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593,997
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505,704
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|||||
Workers'
compensation risk pool deposits
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639,409
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414,404
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|||||
Accounts
payable
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(649,708
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)
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1,122,439
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||||
Accrued
expenses
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(370,238
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)
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(348,024
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)
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|||
Workers'
compensation insurance payable
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-
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(610,572
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)
|
||||
Workers'
compensation claims liability
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488,726
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453,501
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|||||
Net
cash used by operating activities
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(908,338
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)
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(1,676,299
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)
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CASH
FLOWS FROM INVESTING ACTIVITIES:
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|||||||
Purchases
of property and equipment
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(37,823
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)
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(318,617
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)
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Collections
on note receivable
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1,952,209
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88,779
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|||||
Cash
paid for acquisition
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-
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(247,500
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)
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||||
Net
cash provided (used) by investing activities
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1,914,386
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(477,338
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)
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CASH
FLOWS FROM FINANCING ACTIVITIES:
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|||||||
Change
in checks issued and outstanding
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-
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364,956
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|||||
Advances
(payments) on line of credit facility, net
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(152,895
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)
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222,843
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||||
Related
party advances payable
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-
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494,872
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|||||
Sales
of common stock
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-
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30,000
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|||||
Costs
of common stock offering and registration
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(116,576
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)
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-
|
||||
Preferred
stock subscribed
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-
|
500,000
|
|||||
Principal
payments on notes payable
|
73,408
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(2,076
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)
|
||||
Net
cash provided (used) by financing activities
|
(196,063
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)
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1,610,595
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||||
NET
INCREASE (DECREASE) IN CASH
|
809,985
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(543,042
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)
|
||||
CASH,
BEGINNING OF PERIOD
|
580,918
|
1,390,867
|
|||||
CASH,
END OF PERIOD
|
$
|
1,390,903
|
$
|
847,825
|
Level 1: |
Quoted
prices in active markets for identical assets and liabilities that
the
reporting entity has the ability to access at the measurement date;
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Level2: |
Inputs
other than quoted prices included within Level 1 that are observable
for
the asset or liability, either directly or indirectly; or
|
Level 3: |
Unobservable
inputs.
|
Remainder
of 2008
|
$
|
1,313,474
|
||
2009
|
911,326
|
|||
2010
|
548,914
|
|||
2011
|
155,181
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|||
2012
|
11,647
|
· |
100,000
as an equity bonus to an employee for bringing in a niche market
opportunity in the flagging industry. The shares were valued at $0.60
per
share or $60,000 in the aggregate.
|
· |
105,000
shares issued to current and former employees as compensation. The
shares
issued to employees were valued at $0.60 per share or $63,000 in
the
aggregate.
|
· |
166,667
shares were issued to a former officer and director. In 2007, John
Coghlan
loaned the Company $500,000 and on June 30, 2007, agreed to convert
the
loan into common stock at $1.50 per share which was the anticipated
price
of a private equity financing the company was pursuing at that time.
The
private equity financing closed in late November, 2007 at $1.00 per
share.
The additional shares reduced the issuance price of the shares issued
to
Mr. Coghlan on the note conversion to $1.00 to keep his investment
on the
same footing as others that converted debt in the private equity
financing.
|
Same
Store SalesComparison
|
|||||||||||||
(Stores
Open One Year or More)
|
|||||||||||||
# of Stores
|
Sales Q1 - 2008
|
Sales Q1 - 2007
|
Change
|
Change %
|
|||||||||
74
|
$
|
18,905,943
|
$ |
22,093,724
|
(3,187,781
|
)
|
-14.4
|
%
|
· |
As
a young Company, we continue to face challenges with hiring and retaining
qualified personnel in the finance department. Limitations in both
the
number of personnel currently staffing the finance department, and
in the
skill sets employed by such persons, create difficulties in the
segregation of duties essential for sound internal controls.
|
· |
Documentation
of proper accounting procedures is not yet complete and some of the
documentation that exists has not yet been reviewed or approved by
management, or has not been properly communicated and made available
to
employees responsible for portions of the internal control
system.
|
· |
100,000
as an equity bonus to an employee for bringing in a niche market
opportunity in the flagging industry. The shares were valued at $0.60
per
share or $60,000 in the aggregate.
|
· |
105,000
shares issued to current and former employees as compensation. The
shares
issued to employees were valued at $0.60 per share or $63,000 in
the
aggregate.
|
· |
166,667
shares were issued to a former officer and director.
In
2007, John Coghlan loaned the Company $500,000 and on June 30, 2007,
agreed to convert the loan into common stock at $1.50 per share which
was
the anticipated price of a private equity financing the company was
pursuing at that time. The private equity financing closed in late
November, 2007 at $1.00 per share. The additional shares reduced
the
issuance price of the shares issued to Mr. Coghlan on the note conversion
to $1.00 to keep his investment on the same footing as others that
converted debt in the private equity financing.
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Exhibit
No.
|
Description
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Page
#
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31.1
|
Certification
of Glenn Welstad, Chief Executive Officer of Command Center, Inc.
pursuant
to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
10-Q, Page 20
|
||
31.2
|
Certification
of Brad E. Herr, Chief Financial Officer of Command Center, Inc.
pursuant
to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
10-Q,
Page 21
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||
32.1
|
Certification
of Glenn Welstad, Chief Executive Officer of Command Center, Inc.
pursuant
to 18 U.S.C. Section 1350, as adopted in Section 906 of the Sarbanes-Oxley
Act of 2002.
|
10-Q,
Page 22
|
||
32.1
|
Certification
of Brad E. Herr, Chief Financial Officer of Command Center, Inc.
pursuant
to 18 U.S.C. Section 1350, as adopted in Section 906 of the Sarbanes-Oxley
Act of 2002.
|
10-Q,
Page 23
|
/s/Glenn
Welstad
|
President
and CEO
|
Glenn
Welstad
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May
12, 2008
|
Signature
|
Title
|
Printed
Name
|
Date
|
/s/Brad
E. Herr
|
CFO,
Principal Financial Officer
|
Brad
E. Herr
|
May
12, 2008
|
Signature
|
Title
|
Printed
Name
|
Date
|