x
|
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF
1934
|
¨
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
|
Washington
|
91-2079472
|
(State
or other jurisdiction of incorporation or organization)
|
(IRS
Employer Identification Number)
|
Large
accelerated filer ¨
|
Accelerated
filer ¨
|
Non-accelerated
filer ¨
|
Smaller
reporting company x
|
FORM
10-Q
|
|
|
Page
|
PART
I
|
|
Item
1. Financial Statements (unaudited)
|
|
Management
Statement
|
10-Q
Page 3
|
Balance
Sheets at September 26, 2008 and December 28, 2007
|
10-Q
Page 4
|
Statements
of Operations for the thirteen and thirty-nine week periods ended
September 26, 2008 and September 28, 2007
|
10-Q
Page 5
|
Statements
of Cash Flows for the thirty-nine week periods ended September
26, 2008
and September 28, 2007
|
10-Q
Page 6
|
Notes
to Financial Statements
|
10-Q
Page 7
|
Item
2. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
10-Q
Page 13
|
Item
3. Quantitative and Qualitative Disclosures about Market
Risk
|
10-Q
Page 20
|
Item
4. Controls and Procedures
|
10-Q
Page 20
|
PART II
|
|
Item
2. Unregistered Sales of Equity Securities
|
10-Q
Page 22
|
Item
6. Exhibits and Reports on Form 8-K
|
10-Q
Page 22
|
Signatures
|
10-Q
Page 23
|
Certifications
|
10-Q Page 24 – 27
|
September 26, 2008
|
|
December 28, 2007
|
|||||
(Unaudited)
|
|||||||
Assets
|
|||||||
CURRENT
ASSETS:
|
|||||||
Cash
|
$
|
1,387,859
|
$
|
580,918
|
|||
Accounts
receivable, net of allowance for bad debts of $500,000 at September
26,
2008 and December 28, 2007
|
9,473,062
|
9,079,222
|
|||||
Notes
from affiliates, subscriptions receivable, and other receivables
-
current
|
363,516
|
1,953,882
|
|||||
Prepaid
expenses, deposits, and other
|
1,591,679
|
1,610,913
|
|||||
Current
portion of workers' compensation risk pool deposits
|
1,500,000
|
1,150,375
|
|||||
Total
current assets
|
14,316,116
|
14,375,310
|
|||||
PROPERTY
AND EQUIPMENT, NET
|
2,844,473
|
3,245,506
|
|||||
OTHER
ASSETS:
|
|||||||
Note
receivable, less current portion
|
17,155
|
17,155
|
|||||
Workers'
compensation risk pool deposits, less current portion
|
3,691,302
|
2,833,127
|
|||||
Goodwill
|
14,257,929
|
14,257,929
|
|||||
Intangible
assets - net
|
548,398
|
683,275
|
|||||
Total
other assets
|
18,514,784
|
17,791,486
|
|||||
$
|
35,675,373
|
$
|
35,412,302
|
||||
Liabilities
and Stockholders' Equity
|
|||||||
CURRENT
LIABILITIES:
|
|||||||
Accounts
payable
|
$
|
1,125,459
|
$
|
1,459,676
|
|||
Line
of credit facility
|
5,110,030
|
4,686,156
|
|||||
Accrued
wages and benefits
|
1,073,013
|
1,553,536
|
|||||
Advances
payable
|
-
|
100,000
|
|||||
Current
portion of notes payable, net of discount
|
1,980,476
|
230,032
|
|||||
Workers'
compensation insurance and risk pool deposits payable
|
1,527,251
|
-
|
|||||
Current
portion of workers' compensation claims liability
|
1,500,000
|
1,150,375
|
|||||
Total
current liabilities
|
12,316,229
|
9,179,775
|
|||||
LONG-TERM
LIABILITIES:
|
|||||||
Note
payable, less current portion
|
-
|
85,655
|
|||||
Finance
obligation
|
1,125,000
|
1,125,000
|
|||||
Workers'
compensation claims liability, less current portion
|
3,182,128
|
2,219,642
|
|||||
Total
long-term liabilities
|
4,307,128
|
3,430,297
|
|||||
COMMITMENTS
AND CONTINGENCIES (Notes 7 and 8)
|
|||||||
STOCKHOLDERS'
EQUITY:
|
|||||||
Preferred
stock - 5,000,000 shares, $0.001 par value, authorized; no shares
issued
and outstanding
|
|||||||
Common
stock - 100,000,000 shares, $0.001 par value, authorized; 36,230,053
and
35,725,053 shares issued and outstanding, respectively
|
36,230
|
35,725
|
|||||
Additional
paid-in capital
|
51,359,488
|
51,005,159
|
|||||
Accumulated
deficit
|
(32,343,702
|
)
|
(28,238,654
|
)
|
|||
Total
stockholders' equity
|
19,052,016
|
22,802,230
|
|||||
$
|
35,675,373
|
$
|
35,412,302
|
Thirteen Weeks Ended
|
Thirty-nine Weeks Ended
|
||||||||||||
September 26, 2008
|
September 28, 2007
|
September 26, 2008
|
September 28, 2007
|
||||||||||
REVENUE:
|
|||||||||||||
Staffing
services revenue
|
$
|
21,747,587
|
$
|
26,242,962
|
$
|
62,675,317
|
$
|
74,158,370
|
|||||
Other
income
|
122,928
|
136,832
|
378,662
|
262,684
|
|||||||||
Total
revenue
|
21,870,515
|
26,379,794
|
63,053,979
|
74,421,054
|
|||||||||
COST
OF STAFFING SERVICES
|
16,087,350
|
18,473,276
|
47,452,008
|
53,661,722
|
|||||||||
GROSS
PROFIT
|
5,783,165
|
7,906,518
|
15,601,971
|
20,759,332
|
|||||||||
OPERATING
EXPENSES:
|
|||||||||||||
Compensation
and related expenses
|
2,961,797
|
3,887,965
|
10,263,983
|
13,102,565
|
|||||||||
Selling
and marketing expenses
|
74,204
|
42,184
|
598,302
|
428,890
|
|||||||||
Professional
expenses
|
247,000
|
383,756
|
795,425
|
1,324,841
|
|||||||||
Depreciation
and amortization
|
214,630
|
214,600
|
643,456
|
622,009
|
|||||||||
Rent
|
623,747
|
638,242
|
1,916,955
|
1,868,944
|
|||||||||
Other
expenses
|
1,467,310
|
1,759,732
|
4,887,189
|
6,259,218
|
|||||||||
Total
operating expenses
|
5,588,688
|
6,926,479
|
19,105,310
|
23,606,467
|
|||||||||
INCOME
(LOSS) FROM OPERATIONS
|
194,477
|
980,039
|
(3,503,339
|
)
|
(2,847,135
|
)
|
|||||||
OTHER
INCOME (EXPENSE):
|
|||||||||||||
Interest
expense
|
(286,285
|
)
|
(535,697
|
)
|
(578,354
|
)
|
(1,108,957
|
)
|
|||||
Other
income (expense)
|
(24,011
|
)
|
-
|
(23,355
|
)
|
-
|
|||||||
Total
other income (expense)
|
(310,296
|
)
|
(535,697
|
)
|
(601,709
|
)
|
(1,108,957
|
)
|
|||||
NET
INCOME (LOSS)
|
$
|
(115,819
|
)
|
$
|
444,342
|
$
|
(4,105,048
|
)
|
$
|
(3,956,092
|
)
|
||
INCOME
(LOSS) PER SHARE - BASIC
|
$
|
(0.00
|
)
|
$
|
0.02
|
$
|
(0.11
|
)
|
$
|
(0.16
|
)
|
||
WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING
|
36,157,965
|
24,612,054
|
35,993,368
|
24,019,256
|
Thirty-nine Weeks Ended
|
|||||||
September 26, 2008
|
September 28, 2007
|
||||||
Increase
(Decrease) in Cash
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
Net
loss
|
$
|
(4,105,048
|
)
|
$
|
(3,956,092
|
)
|
|
Adjustments
to reconcile net loss to net cash used by operating
activities:
|
|||||||
Depreciation
and amortization
|
643,456
|
622,009
|
|||||
Allowance
for bad debts
|
-
|
39,137
|
|||||
Stock
issued for interest and compensation
|
158,000
|
180,640
|
|||||
Amortization
of note payable discount
|
65,534
|
153,500
|
|||||
Changes
in assets and liabilities
|
|||||||
Accounts
receivable
|
(393,840
|
)
|
(1,417,622
|
)
|
|||
Notes
due from affiliates
|
(139,020
|
)
|
-
|
||||
Prepaid
expenses, deposits and other
|
(203,589
|
)
|
(1,290,247
|
)
|
|||
Workers'
compensation risk pool deposits
|
(1,207,800
|
)
|
(2,592,290
|
)
|
|||
Accounts
payable
|
(334,217
|
)
|
417,159
|
||||
Amounts
due to affiliates
|
-
|
(782,184
|
)
|
||||
Accrued
wages and benefits
|
(480,523
|
)
|
1,494,601
|
||||
Workers'
compensation insurance and risk pool deposits payable
|
1,527,251
|
1,207,045
|
|||||
Workers'
compensation claims liability
|
1,312,111
|
927,291
|
|||||
Total
adjustments
|
947,363
|
(1,040,961
|
)
|
||||
Net
cash used by operating activities
|
(3,157,685
|
)
|
(4,997,053
|
)
|
|||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Purchases
of property and equipment
|
(107,546
|
)
|
(439,294
|
)
|
|||
Purchase
of Anytime Labor
|
-
|
(247,500
|
)
|
||||
Collections
on note receivable
|
74,209
|
118,384
|
|||||
Net
cash used by investing activities
|
(33,337
|
)
|
(568,410
|
)
|
|||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Net
advances on line of credit facility
|
423,874
|
993,433
|
|||||
Change
in checks issued and outstanding
|
-
|
311,048
|
|||||
Proceeds
received from short-term note
|
1,740,000
|
2,111,210
|
|||||
Proceeds
allocated to warrants issued in connection with short-term
note
|
260,000
|
380,000
|
|||||
Collections
of common stock subscribed
|
1,878,000
|
-
|
|||||
Sale
of common stock
|
-
|
730,000
|
|||||
Principal
payments on notes payable
|
(140,745
|
)
|
-
|
||||
Costs
of common stock offering and registration
|
(163,166
|
)
|
-
|
||||
Payment
made for note payable financing fee
|
-
|
(100,000
|
)
|
||||
Net
cash provided by financing activities
|
3,997,963
|
4,425,691
|
|||||
NET
INCREASE (DECREASE) IN CASH
|
8
06,941
|
(1,139,772
|
)
|
||||
CASH,
BEGINNING OF PERIOD
|
5
80,918
|
1,390,867
|
|||||
CASH,
END OF PERIOD
|
$
|
1
,387,859
|
$
|
2
51,095
|
|||
NON-CASH
INVESTING AND FINANCING ACTIVITIES
|
|||||||
Common
stock issued for acquisition of:
|
|||||||
Prepaid
expenses
|
-
|
390,860
|
|||||
Assets
acquired in Anytime Labor purcahse
|
-
|
912,000
|
|||||
Total
|
$
|
-
|
$
|
1,302,860
|
|||
Debt
assumed in Anytime Labor purchase
|
$
|
-
|
$
|
252,500
|
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;
|
|
Level 2:
|
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
|
$
|
530,699
|
||
2009
|
1,125,782
|
|||
2010
|
537,641
|
|||
2011
|
156,209
|
|||
2012
|
11,647
|
Comparative
Statements of
Operations
|
Thirteen Weeks Ended
|
|||||||
September 26, 2008
|
September 28, 2007
|
||||||
REVENUE:
|
|||||||
Staffing
services revenue
|
99.4
|
%
|
99.5
|
%
|
|||
Other
income
|
0.6
|
%
|
0.5
|
%
|
|||
Total
revenue
|
100.0
|
%
|
100.0
|
%
|
|||
COST
OF STAFFING SERVICES
|
|||||||
Wages
|
59.5
|
%
|
58.6
|
%
|
|||
Workers’
Compensation
|
5.2
|
%
|
4.3
|
%
|
|||
Transportation
|
1.7
|
%
|
0.8
|
%
|
|||
Other
|
7.2
|
%
|
6.3
|
%
|
|||
73.6
|
%
|
70.0
|
%
|
||||
GROSS
PROFIT
|
26.4
|
%
|
30.0
|
%
|
|||
OPERATING
EXPENSES:
|
|||||||
Compensation
and related expenses
|
13.5
|
%
|
14.7
|
%
|
|||
Selling
and marketing expenses
|
0.3
|
%
|
0.2
|
%
|
|||
Professional
expenses
|
1.1
|
%
|
1.5
|
%
|
|||
Depreciation
and amortization
|
1.0
|
%
|
0.8
|
%
|
|||
Rent
|
2.9
|
%
|
2.4
|
%
|
|||
Other
expenses
|
6.7
|
%
|
6.7
|
%
|
|||
Total
operating expenses
|
25.6
|
%
|
26.3
|
%
|
|||
INCOME
(LOSS) FROM OPERATIONS
|
0.9
|
%
|
3.7
|
%
|
|||
OTHER
INCOME (EXPENSE):
|
|||||||
Interest
expense
|
-1.3
|
%
|
-2.0
|
%
|
|||
Other
income (expense)
|
-0.1
|
%
|
0.0
|
%
|
|||
Total
other income (expense)
|
-1.4
|
%
|
-2.0
|
%
|
|||
NET
INCOME (LOSS)
|
-0.5
|
%
|
1.7
|
%
|
Q3-2008
|
Q3-2007
|
Change
|
||||||||
Gross Revenue
|
$
|
19,301,247
|
$
|
21,925,725
|
12.0
|
%
|
Thirty-nine Weeks -2008
|
Thirty-nine Weeks - 2007
|
Change
|
||||||||
Gross
Revenue
|
$
|
54,418,302
|
$
|
60,035,325
|
-9.4
|
%
|
·
|
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.
|
Exhibit No.
|
Description
|
Page #
|
||
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 24
|
||
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 25
|
||
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 26
|
||
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 27
|
/s/Glenn Welstad
|
President and CEO
|
Glenn Welstad
|
November 10, 2008
|
|||
Signature
|
Title
|
Printed Name
|
Date
|
|||
/s/Brad E. Herr
|
CFO, Principal Financial Officer
|
Brad E. Herr
|
November 10, 2008
|
|||
Signature
|
Title
|
Printed Name
|
Date
|