UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/ AMENDMENT NO. 1

(Mark One)
 
x
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2006

o
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 
For the transition period from _____________ to ___________.

Commission File Number: 333-60326

COMMAND CENTER, INC.
(Exact name of small business issuer as specified in its charter)

Washington
91-2079472
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification Number)

3773 West Fifth Avenue, Post Falls, Idaho 83854
(Address of principal executive offices)

(208) 773-7450
(Issuer’s telephone number)

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

Indicate by check mark whether the registrant: (1) has filed all documents and reports required to be filed by Section 13, or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period as the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety days. 
Yes x  No o
 
The number of shares of common stock outstanding on August 11, 2006 was: 22,963,476

Transitional Small Business Disclosure Format.  Yes o  No x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12(b)-2 of the Exchange Act). 
Yes o  No x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12(b)-2 of the Exchange Act).
Yes o  No x
 
 
 
 
 
Command Center, Inc.
 
Contents
 
FORM 10-QSB/A1

   
Page
PART I FINANCIAL INFORMATION
  
     
Item 1.
Financial Statements (unaudited)
  
 
Management Statement
Page 3
 
Balance Sheet at June 30, 2006
Page 4
 
Statements of Operations for the three and six month periods ended June 30, 2006 and 2005
Page 5
 
Statements of Cash Flows for the six month periods ended June 30, 2006 and 2005
Page 6
 
Notes to Financial Statements
Page 7
     
Item 2.
Management’s Discussion and Analysis of Financial Condition And Results of Operations
Page 16
     
Item 3.
Controls and Procedures
Page 19
     
Part II OTHER INFORMATION
  
     
Item 6.
Exhibits and Reports on Form 8-K
Page 20
     
Signatures
Page 20
     
Certifications
 
 
 
Page 2
 
 
PART I

Item 1. Financial Statements.
MANAGEMENT STATEMENT

The accompanying balance sheet of Command Center, Inc. as of June 30, 2006 (unaudited) and the related statements of operations for the three and six month periods ended June 30, 2006 and 2005, and the related statements of cash flows for the six month periods ended June 30, 2006 and 2005 were prepared by Management of the Company.

The accompanying financial statements should be read in conjunction with the audited financial statements of Command Center, Inc. (the “Company”) as of and for the year ended December 31, 2005, as restated, and the notes thereto contained in the Company’s annual report on Form 10-KSB/Amendment No. 1, for the year ended December 31, 2005, filed with the Securities and Exchange Commission.

Management
Command Center, Inc.
August 13, 2007

 
Page 3
 
 
Command Center, Inc.
 
Balance Sheet (Unaudited) 

   
Restated
  
 
June 30, 2006
  
Assets
      
CURRENT ASSETS:
      
Acquisition accounts receivable - affiliates
  
$
526,913
  
Accounts receivable - trade, net of allowance for
        
bad debts of $879,602 and $37,000, respectively 
    
9,510,412
 
Notes receivable
    
183,688
 
Prepaid expenses, deposits, and other
    
1,855,912
 
Workers' compensation risk pool deposits - current
    
89,083
 
 Total current assets
    
12,166,008
 
         
PROPERTY AND EQUIPMENT, NET
    
2,473,748
 
         
OTHER ASSETS:
        
Workers' compensation risk pool deposits - non-current
    
2,315,917
 
Goodwill
    
30,832,324
 
Amortizable intangibles - net
    
777,000
 
 Total other assets
    
33,925,241
 
   
$
48,564,997
  
Liabilities and Stockholders' Equity
        
CURRENT LIABILITIES:
        
Accounts payable - trade
    
838,787
 
Checks issued and outstanding
    
369,609
 
Acquisition accounts payable - affiliates
    
754,310
 
Accrued payroll, benefits and taxes
    
864,145
 
Receivable factoring payable
    
5,086,942
 
Advances payable
    
1,200,440
 
Workers' compensation inusrance and reserves payable
    
3,441,087
 
Workers' compensation claims liability - current
    
89,083
 
Total current liabilities 
    
12,644,403
 
         
LONG-TERM LIABILITIES
        
Finance obligation
    
1,125,000
 
Workers' compensation claims liability - non-current
    
133,626
 
Total long term liabilities 
    
1,258,626
 
         
STOCKHOLDERS' EQUITY:
        
Preferred stock - 5,000,000 shares, $0.001 par value,
        
authorized; 4,700 shares issued and outstanding 
    
5
 
Common stock - 100,000,000 shares, $0.001 par value, authorized
        
22,963,476 shares issued and outstanding 
    
22,963
 
Additional paid-in capital
    
36,026,252
 
Accumulated deficit
    
(1,387,252
)
Total stockholders' equity 
    
34,661,968
 
   
$
48,564,997
  
 
See accompanying notes to unaudited financial statements.
 
 
Page 4
 
 
Command Center, Inc.
 
Statements of Operations (Unaudited) 

   
Restated
      
Restated
      
   
Three Months Ended June 30,
 
Six Months Ended June 30,
  
   
2006
 
2005
 
2006
 
2005
  
REVENUE:
                  
Staffing services revenue
  
$
17,684,161
  
$
-
  
$
17,684,161
  
$
-
  
Franchise fee revenues
    
122,396
   
-
   
535,745
   
-
 
Other income
    
-
   
16,909
   
14,676
   
28,497
 
Total revenue 
    
17,806,557
   
16,909
   
18,234,582
   
28,497
 
                           
COST OF STAFFING SERVICES
    
13,088,445
   
-
   
13,094,992
   
-
 
                           
GROSS PROFIT
    
4,718,112
   
16,909
   
5,139,590
   
28,497
 
                           
OPERATING EXPENSES:
                          
Compensation and related expenses
    
3,442,598
   
-
   
3,794,447
   
-
 
Selling and marketing expenses
    
90,082
   
-
   
228,596
   
-
 
Professional expenses
    
359,968
   
-
   
419,522
   
-
 
Depreciation and amortization
    
74,718
   
-
   
104,032
   
-
 
Rent
    
485,339
   
-
   
485,339
   
-
 
Other expenses
    
1,125,816
   
18,859
   
1,667,864
   
36,938
 
     
5,578,521
   
18,859
   
6,699,800
   
36,938
 
LOSS FROM OPERATIONS
    
(860,409
)
  
(1,950
)
  
(1,560,210
)
  
(8,441
)
                           
OTHER INCOME/EXPENSE
                          
Interest expense
    
(79,468
)
  
-
   
(79,468
)
  
-
 
Interest and dividend income
    
7,834
   
-
   
35,332
   
-
 
Total other income/expense 
    
(71,634
)
  
-
   
(44,136
)
  
-
 
                           
NET LOSS
  
$
(932,043
)
$
(1,950
)
$
(1,604,346
)
$
(8,441
)
                           
BASIC LOSS PER SHARE
  
$
(0.06
)
$
nil
  
$
(0.12
)
$
(0.01
)
                           
WEIGHTED AVERAGE COMMON
                          
SHARES OUTSTANDING
    
16,366,678
   
702,280
   
13,233,751
   
702,280
 

See accompanying notes to unaudited financial statements.
 
 
Page 5
 

Command Center, Inc.
 
Statements of Cash Flows (Unaudited) 

   
Restated
      
   
Six Months Ended June 30,
  
Increase (Decrease) in Cash
  
2006
 
2005
  
CASH FLOWS FROM OPERATING ACTIVITIES:
          
Net loss
  
$
(1,604,346
)
$
(8,441
)
Adjustments to reconcile net loss to net cash
              
used by operating activities:
              
Depreciation and amortization 
    
127,032
   
-
 
Amortization of note receivable discount 
    
9,948
   
-
 
Changes in assets and liabilities
              
Accounts receivable - trade, net 
    
(2,466,769
)
  
(10,000
)
Due from affiliates 
    
149,188
       
Prepaid expenses 
    
(1,808,698
)
  
-
 
Workers' compensation risk pool deposits 
    
(2,405,000
)
  
-
 
Accounts payable - trade 
    
703,110
   
241
 
Amounts due to affiliates 
    
(122,366
)
  
-
 
Accrued expenses 
    
759,145
   
-
 
Workers' compensation insurance and risk pool deposits payable 
    
3,441,087
   
-
 
Workers' compensation claims liability 
    
222,709
   
-
 
 Total adjustments
    
(1,390,614
)
  
(9,759
)
 Net cash used by operating activities
    
(2,994,960
)
  
(18,200
)
               
CASH FLOWS FROM INVESTING ACTIVITIES:
              
Purchases of property and equipment
    
(385,343
)
  
-
 
Collections on note receivable
    
89,871
   
-
 
Purchase of real estate receivable contracts, net
    
-
   
(527,086
)
Purchase of investments
    
-
   
(505,000
)
Sale of investments
    
404,000
   
-
 
 Net cash used by investing activities
    
108,528
   
(1,032,086
)
               
CASH FLOWS FROM FINANCING ACTIVITIES:
              
Advances on line of credit facility
    
828,064
   
-
 
Checks issued and outstanding
    
369,609
   
-
 
Advances payable
    
848,915
   
-
 
Sale of preferred stock for cash
    
470,000
   
-
 
 Net cash provided by financing activities
    
2,516,588
   
-
 
               
NET INCREASE (DECREASE) IN CASH
    
(369,844
)
  
(1,050,286
)
CASH, BEGINNING OF PERIOD
    
369,844
   
1,653,276
 
CASH, END OF PERIOD
  
$
-
  
$
602,990
  
               
NON-CASH INVESTING AND FINANCING ACTIVITIES
              
Common stock issued for acquisition of:
              
Accounts receivable, net
  
$
6,687,276
        
Property, plant and equipment
    
603,184
       
Financing liability assumed
    
(4,258,878
)
      
Payables assumed in acquisitons
    
(876,676
)
      
Goodwill and intangible assets
    
30,088,752
       
Total 
  
$
32,243,658
        
 
See accompanying notes to unaudited financial statements.
 
 
Page 6
 

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS OF COMMAND CENTER, INC.

NOTE 1 — BASIS OF PRESENTATION:

The accompanying unaudited financial statements have been prepared in conformity with generally accepted accounting principles and reflect all normal recurring adjustments which, in the opinion of Management of the Company, are necessary to a fair presentation of the results for the periods presented. The results of operations for such periods are not necessarily indicative of the results expected for the full fiscal year or any future period. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ significantly from these estimates.
     
The accompanying unaudited financial statements should be read in conjunction with the audited financial statements of the Company as of and for the year ended December 31, 2005, and the notes thereto contained in the Company’s annual report on Form 10-KSB for the year ended December 31, 2005, filed with the Securities and Exchange Commission. In 2005 we changed our business from that of a financing company to a franchisor of temporary labor businesses (See Part I, Item 2). In May, 2006, we changed our business from a franchisor of temporary labor businesses to operators of temporary labor businesses. Accordingly, comparable information presented for the period ended June 30, 2005 is not relevant to our current business activities. Certain items previously reported in specific financial statement captions have been reclassified to conform to the 2006 presentation.

Commencing with the acquisition of the operating assets of 48 temporary staffing stores and intangible rights to eight additional temporary staffing stores on May 12, 2006, the Company has elected to report its financial results of operations on a 52/53 week fiscal year ending on the last Friday in December. Our 2006 fiscal year will end on December 29, 2006. Prior to May 12, 2006, we reported our financial results on a calendar year basis with our year ending on December 31 of each year. The change to a 52/53 week fiscal year did not affect the comparability of results between the three and six month periods ended June 30, 2006. The acquisition of temporary staffing stores on May 12, 2006 and the conversion of the business from the finance industry to the temporary labor industry on November 9, 2005, affect the comparability of our financial results for the three and six months ended June 30, 2006 versus the same periods in 2005.

Restatements

The Company’s financial statements have been restated from those previously reported. The Restatement corrects an error in the Company’s presentation of the recapitalization transaction that took place November 9, 2005, a real estate financing transaction, and various accounting misstatements that occurred in connection with the acquisition transactions which were completed on May 12, 2006. Details of each restatement category follow.

 
Page 7
 

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS OF COMMAND CENTER, INC.

Recapitalization transaction

For the quarter ended June 30, 2006, the Company presented balance sheet information reflecting the acquisitions of Command Staffing LLC (“Command Staffing”) and Harborview Software, Inc. (“Harborview”) by Temporary Financial Services, Inc. (“TFS”) which occurred on November 9, 2005.

Upon our review of the accounting guidance and consultation with other experts we determined that Command Staffing was the accounting acquirer in the transaction. The balance sheet of Command Center, Inc. has been restated to include the purchase of the 50% interest in Harborview not owned by Glenn Welstad. This purchase was recorded as an increase in goodwill in the period ended December 31, 2005 and flows through to the current quarter.

Real estate financing transaction

In November 2005, the Company purchased a building for $1,125,000 in Post Falls, Idaho to serve as its corporate headquarters. In December 2005, the Company entered into transaction in which it sold the building to John Coghlan, a director and major shareholder for $1,125,000 and leased the property back for a period of three years with an option to renew for an additional two year term. The transaction was originally accounted for as a lease. Upon further review of the applicable accounting guidance related to the sale, management concluded that the transaction should have been properly accounted for as a financing transaction because of the Company’s option to purchase the building back from Mr. Coghlan. Accordingly, the Company has restated its 2005 financial statements to reflect the building and a corresponding finance obligation. The restatement has no affect on net income as previously reported. The financing transaction was recorded in the year ended December 31, 2005 and flows through to the current quarter.

Accounting Misstatements

In connection with the acquisitions of the operating assets of 48 temporary staffing stores and intangible rights to eight additional temporary staffing stores on May 12, 2006, the company recorded operating assets and liabilities, and began operating as a temporary staffing store. In the course of reorganizing, certain accounting misstatements and errors occurred that resulted in inaccurate financial information. Upon review of theses transactions and consultation with other experts, we determined that two categories of errors had occurred that required restatement. These errors were the result of material weaknesses in internal controls over financial reporting that were discovered in connection with the audit as of and for the year ended December 29, 2006.

First, the assets acquired in the acquisition transaction were not properly recorded. This category of errors resulted from timing differences between the asset valuation dates and the dates on which the assets were actually acquired.

Second, the company did not properly account for its workers’ compensation insurance policy obtained on May 12, 2006. The workers compensation policy included substantial deposits and required an analysis of incurred but not reported claims during the policy period.
 
 
Page 8
 

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS OF COMMAND CENTER, INC.

The following is the summary of the effects of the above corrections:

   
As
          
   
Originally
  
As
      
June 30, 2006
  
Filed
 
Restated
 
Change
  
Financial position
              
Accounts receivable 
  
$
10,087,389
  
$
10,390,014
  
$
302,625
  
Allowance for bad debts 
  
$
(1,055,696
)
$
(879,602
)
$
176,094
  
 Accounts receivable, net
  
$
9,031,693
  
$
9,510,412
  
$
478,719
  
Prepaid expenses and deposits 
  
$
417,989
  
$
1,855,912
  
$
1,437,923
  
Workers' compensation risk pool deposits - current 
  
$
-
  
$
2,405,000
  
$
2,405,000
  
Property and equipment 
  
$
1,089,248
  
$
2,473,748
  
$
1,384,500
  
Goodwill 
  
$
31,260,214
  
$
30,832,324
  
$
(427,890
)
Amortizable intangibles, net 
  
$
-
  
$
777,000
  
$
777,000
  
Total assets 
  
$
42,509,745
  
$
48,564,997
  
$
6,055,252
  
                     
Checks issued and outstanding 
  
$
(379,609
)
$
(369,609
)
$
10,000
  
Line of credit facility 
  
$
(5,684,862
)
$
(5,086,942
)
$
597,920
  
Accrued liabilities 
  
$
(784,145
)
$
(864,145
)
$
(80,000
)
Workers' compensation insurance and reserves payable 
  
$
-
  
$
(3,441,087
)
$
(3,441,087
)
Workers' compensation claims liability - current 
  
$
-
  
$
(89,083
)
$
(89,083
)
Total current liabilities 
  
$
(9,642,153
)
$
(12,644,403
)
$
(3,002,250
)
Workers' compensation claims liability - long-term 
  
$
-
  
$
(133,626
)
$
(133,626
)
Finance obligation 
  
$
-
  
$
(1,125,000
)
$
(1,125,000
)
Total long-term liabilities 
  
$
-
  
$
(1,258,626
)
$
(1,258,626
)
Total stockholders’ equity 
  
$
(32,867,592
)
$
(34,661,968
)
$
(1,794,376
)
Total liabilities and equity 
  
$
42,509,745
  
$
48,564,997
  
$
6,055,252
  
Operating Results
                    
Revenue 
  
$
(18,228,051
)
$
(18,234,582
)
$
(6,531
)
Cost of services 
  
$
13,284,119
  
$
13,094,992
  
$
(189,127
)
Operating expenses 
  
$
6,834,414
  
$
6,699,800
  
$
(134,614
)
Interest expense 
  
$
(35,332
)
$
44,136
  
$
79,468
  
Net loss 
  
$
1,855,150
  
$
1,604,346
  
$
(250,804
)
 
 
 
Page 9
 

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS OF COMMAND CENTER, INC.

NOTE 2 —AQUISITIONS:

In the quarter ended June 30, 2006, the Company acquired the operating assets of a number of temporary staffing stores located throughout the United States. These store acquisitions were undertaken pursuant to an Asset Purchase Agreement dated November 9, 2005 (the “APA”) between the Company, Command Staffing, LLC (Command Staffing), Harborview Software, Inc. (Harborview), and 45 companies (collectively the “Operations Entities”) collectively owning approximately 70 temporary staffing stores. The transactions contemplated by the Asset Purchase Agreement are collectively referred to as the “Command Transaction.” The Command Transaction was undertaken in two phases. Phase I involved the acquisition of Command Staffing and Harborview and was completed on November 9, 2005. The shareholders of Command Staffing and Harborview after the Phase I Closing controlled the Company following the acquisition and this Phase was accounted for as a recapitalization.

On May 12, 2006 we acquired the operating assets and certain liabilities of 48 temporary staffing stores and intangible rights to eight additional temporary staffing stores from 35 operations entities. On June 30, 2006, we acquired the operating assets and certain liabilities of an additional 9 temporary staffing stores from 4 operations entities. The acquisitions were in exchange for an aggregate of 12,897,463 shares of restricted common stock. These acquisitions were accounted for using the purchase method of accounting. Under the purchase method of accounting, the total estimated purchase price is allocated to the net tangible and intangible assets of the acquired entity based on their estimated fair values as of the completion of the transaction. To the extent that the consideration given exceeded the fair value of the assets acquired, the difference was recorded as goodwill. As of the Closing dates of the acquisitions, management estimated that the fair value of the restricted stock given in the purchases at $2.50 per share. After deducting the fair value of the tangible and intangible assets acquired, management has estimated that the goodwill in the acquisitions amounted to $29,288,752. The acquisitions were principally between and among related parties with pre-existing relationships (see Note 6).

As a result of the acquisitions and the opening of 17 temporary staffing stores as company owned, the Company now operates 74 temporary staffing stores located in 21 states.

NOTE 3 —STOCK BASED COMPENSATION:

On January 1, 2006, the Company adopted the fair value recognition provisions of Statement of Financial Accounting Standards No. 123(R), “Share-Based Payments” (“SFAS 123R”), using the modified prospective transition method. In accordance with the modified prospective transition method, the Company will recognize compensation expense for all share-based awards granted after January 1, 2006, plus unvested awards granted prior to January 1, 2006. Under this method of implementation, no restatement of prior periods has been made. The cumulative effect of adopting SFAS 123R does not affect the Company.

 
Page 10
 

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS OF COMMAND CENTER, INC.

NOTE 4 —EARNINGS PER SHARE:

Statement of Financial Accounting Standards No. 128, “Earnings per Share,” requires dual presentation of basic earnings per share (“EPS”) and diluted EPS on the face of all income statements issued after December 15, 1997, for all entities with complex capital structures. Basic EPS is computed as net income divided by the weighted average number of common shares outstanding for the period.  Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options, warrants, and other convertible securities.  The Company has 4,700 shares of issued and outstanding Series A Preferred Stock that is convertible into common stock at an equivalent common stock price of $5.00 per share. If all of the Series A Preferred Shares were converted into common stock, the conversion would result in issuance of 94,000 shares of the Company’s common stock. At June 30, 2006, the effect of the Company’s outstanding preferred stock would have been anti-dilutive. Accordingly, only basic EPS is presented.  

NOTE 5 - FINANCING ARRANGEMENTS:

On May 12, 2006, the Company entered into an agreement with its principal lender for the factoring of eligible accounts receivable. Eligible accounts receivable are generally defined to include accounts that are not more than sixty days past due. The loan agreement also includes limitations on customer concentrations, accounts receivable with affiliated parties, accounts receivable from governmental agencies in excess of 5% of the Company’s accounts receivable balance, and where a customer’s aggregate past due accounts exceed 50% of that customer’s aggregate balance due. The lender will advance 85% of the invoiced amount. The credit facility includes a 1% facility fee payable annually, and a $1,500 monthly administrative fee. The financing bears interest at the greater of the prime rate plus three percent (prime +3%) or 6.25% per annum. Prime is defined by the Wall Street Journal, Money Rates Section, and the rate is adjusted to the rate applicable on the last day of each month. The loan agreement further provides that interest is due at the applicable rate on the greater of the outstanding balance or $2,000,000. The maximum credit facility is $7,000,000.

NOTE 6 — RELATED-PARTY TRANSACTIONS:

New store surcharge fee. As part of the acquisition of the franchise operations of Command Staffing and Harborview, the Board agreed to assume an obligation of Command Staffing to pay Glenn Welstad, the CEO and Chairman, $5,000 per each additional temporary staffing store opened on behalf of the Company. Included in the Company’s accounts at June 30, 2006 is $105,000 payable to Mr. Welstad in new store surcharge fees.

In connection with the acquisitions of franchised temporary staffing stores, groups of operating entities were acquired for stock. The groups of operating entities listed below were categorized by common ownership and control.

The shares issued in each acquisition were restricted securities valued at $2.50 per share, which management determined to be the fair value of the shares as of the dates of the acquisitions. Assets were valued at fair value and liabilities were recorded at the amounts due. The Asset Purchase Agreement required that each store acquired provide net working capital of $25,000. In some instances, the net working capital requirement resulted in a balance due to the Company from the acquired entity, and in some instances a balance due to the acquired entity from the Company. These amounts are reflected in the above table as working capital due from (due to) balances.
 
 
Page 11
 

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS OF COMMAND CENTER, INC.

Viken Management, Inc. (“Viken”). On May 12, 2006, the Company acquired the operating assets of 22 temporary staffing stores from entities managed and operated by Viken in exchange for 4,414,841 shares of common stock. The Viken managed operations entities were controlled by Glenn Welstad. Mr. Welstad is president and a director of the Company.

At June 30, 2005, Viken owed the Company $119,460 in acquisition related amounts. These items consist of the working capital due to or due from balance from the purchase accounting and funds and in-kind amounts advanced from the Company to Viken during the acquisition process that exceeded the consideration called for under the Asset Purchase Agreement. The net amount is classified as acquisition accounts receivable - affiliates.

The Enget Command Center Group (“Enget Group”). On May 12, 2006, the Company acquired 10 temporary staffing stores from the Enget Group in exchange for 2,219,851 shares of common stock. The Enget Group operations entities were controlled by Dwight Enget. Mr. Enget is an employee and director of the Company.

At June 30, 2005, the Company owed the Enget Group $275,989 in acquisition related amounts. The net amount is classified as acquisition accounts payable - affiliates.

Central Texas Staffing Ltd. (“Central Texas”). On May 12, 2006, the Company acquired one temporary staffing store from Central Texas in exchange for 267,255 shares of common stock. Central Texas was controlled by Nelson Cardwell. Mr. Cardwell became a shareholder and employee of the Company following the acquisition.

At June 30, 2005, the Company owed Central Texas $32,451 in acquisition related amounts. These items consist of the working capital due to or due from balance from the purchase accounting and funds and in-kind amounts advanced by Central Texas during the acquisition process that exceeded amounts required under the Asset Purchase Agreement. The net amount is classified as acquisition accounts payable - affiliates.
 
Rocky Mountain Temporary Services, Inc. (“Rocky Mountain”). On May 12, 2006, the Company acquired 2 temporary staffing stores from Rocky Mountain in exchange for 394,250 shares of common stock. The Rocky Mountain operations entities were controlled by Thomas Gilbert. Mr. Gilbert is Chief Operations Officer and a director of the Company.

At June 30, 2005, the Company owed Rocky Mountain $60,306 in acquisition related amounts. The net amount is classified as acquisition accounts payable - affiliates.
 
Labor Force of Minnesota, Inc. (“Labor Force”). On May 12, 2006, the Company acquired 8 temporary staffing stores from Labor Force in exchange for 1,707,226 shares of common stock. In addition, the Company acquired the franchise rights and other intangibles of eight additional temporary staffing stores located in Minnesota in exchange for 1,770,400 shares of common stock. The Labor Force operations entities were controlled by Myron Thompson and Kevin Semerad. Mr. Thompson a significant shareholder of the Company and Mr. Semerad is an employee and director of the Company.
 
 
Page 12
 

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS OF COMMAND CENTER, INC.

At June 30, 2005, Labor Force owed the Company $323,147 in acquisition related amounts. The net amount is classified as acquisition accounts receivable - affiliates.

Everyday Staffing (“Everyday”). At the close of business on June 30, 2006, the Company acquired nine temporary staffing stores from Everyday in exchange for 1,459,411 shares of common stock. The Everyday operations entities were controlled by Glenn Welstad, Dwight Enget, and Michael Moothart. Mr. Welstad and Mr. Enget are employees and directors of the Company. Mr. Moothart is an employee and shareholder of the Company following the acquisition. No operations on these stores are reflected in the current quarter because the acquisition occurred after the close of business on the last day of the quarter. The results of operations of the Everyday stores will be included in future periods.

At June 30, 2005, the Company owed Everyday $214,735 in acquisition related amounts. The net amount is classified as acquisition accounts payable - affiliates.

Other. The “Other” column in the above tables includes five additional stores not included in the other listed groups listed and other miscellaneous balances that arose during the acquisition process.

Finance Lease Transactions. During 2005, we purchased a building in Post Falls, Idaho to serve as the corporate headquarters for the Company. The purchase price of the building was $1,125,000 and the amount was paid in $525,000 of the Company’s funds plus $600,000 advanced from John Coghlan, a director and major shareholder. Subsequently, the Company’s Board of Directors received an offer from Mr. Coghlan to purchase the building from us subject to a finance lease arrangement. The Board accepted Mr. Coghlan’s offer and sold the building to him at the original purchase price and immediately leased the building back on terms that the Board considered to be in the Company’s best interests. In connection with the sale to Mr. Coghlan, the $600,000 advance was extinguished and at December 31, 2005, the Company had recognized a receivable from Mr. Coghlan of $523,849 relating to his purchase. The receivable was paid in full in February of 2006.
 
Concentrations. In the quarter ended June 30, 2006, substantially all of the Company’s royalty income was earned from affiliates. Royalty income consists of franchise fees and software license and support fees derived from temporary staffing stores owned by the Company’s franchisees. The franchisees were owned in whole or in part by various officers and directors of the Company. As a result, the Company’s franchise business was concentrated among a small number of affiliated parties and was subject to business concentration risks. On May 12, 2006, the Company acquired a substantial majority of the franchisees’ operations, and on June 30, 2006, acquired the remaining franchisee operations. In future periods, the Company does not expect to generate any revenues from royalty income. Instead, future revenues will be derived from temporary staffing store operations and franchisee concentration risk will be substantially eliminated.
 
 
Page 13
 

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS OF COMMAND CENTER, INC.
 
NOTE 7 - PRO FORMA FINANCIAL INFORMATION:

The following summary, prepared on a pro forma basis, combines the consolidated results of operations of the Company with those of the acquired businesses for the six months ended June 30, 2006 and June 30, 2005, as if the acquisitions took place on January 1, 2005. The pro forma results of operations include the impact of certain adjustments, including elimination of inter company balances for franchise fees. Pro forma weighted average shares outstanding were calculated as if the shares issued in the acquisition were issued and outstanding as of January 1, 2005, and include the effect of conversion of all shares of Series A Preferred Stock that were issued in the quarter ended June 30, 2006.

   
Revenues
  
Net Income (Loss)
  
Entity Description
  
2006
  
2005
  
2006
  
2005
  
Viken
  
$
18,578,104
  
$
13,892,555
  
$
1,594,381
    
(1,262,223
)
Labor Force
    
11,171,430
    
12,033,285
    
(221,044
)
  
(152,155
)
Enget Group
    
6,899,424
    
7,161,584
    
239,290
    
(594,078
)
Rocky Mountain
    
520,201
    
866,567
    
(56,876
)
  
(31,403
)
Central Texas
    
1,160,397
    
1,003,676
    
140,660
    
5,432
  
Everyday
    
5,160,341
    
4,386,667
    
(259,703
)
  
47,394
  
Command Center, Inc.
    
3,079,121
    
949,859
    
454,528
    
(168,461
)
Adjustments and eliminations
    
(535,745
)
  
(915,202
)
  
—
    
169,983
  
Combined operations
  
$
46,033,273
  
$
39,378,991
  
$
1,891,236
  
$
(1,985,511
)
Earnings per share
$
0.08
  
$
(0.09
)
Pro forma weighted average shares outstanding
  
23,010,992
    
22,963,476
  
 
 
Page 14
 

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS OF COMMAND CENTER, INC.
 
NOTE 8 - SEGMENT REPORTING:

During the six months ended June 30, 2006, the Company operated a franchise business and operated and acquired a number of temporary staffing stores. Financial information on each segment is summarized below. On June 30, 2006, the Company completed acquisition of the remaining franchised temporary staffing stores and is no longer operating as a franchisor. The Company expects that new stores will be operated as company owned, although the Company will continue to evaluate qualified franchisees on a case by case basis as opportunities are presented.

   
Franchise Business
 
Store Operations
 
Combined
  
Revenue
  
$
535,745
  
$
17,698,837
  
$
18,234,582
  
Cost of sales
    
—
    
13,094,992
    
13,094,992
  
Gross profit
    
535,745
    
4,603,845
    
5,139,590
  
Operating expenses
    
205,032
    
6,494,768
    
6,834,414
  
Income (Loss) from operations
  
$
330,713
  
$
(1,890,923
)
  
(1,560,210
)
Interest expense
    
—
    
(79,468
)
  
(79,468
)
Other income
    
—
    
35,332
    
35,332
  
Net income (loss)
  
$
330,713
  
$
(1,935,059
)
$
(1,604,346
)

Net assets of $32,243,659 were added during the six months ended June 30, 2006 in connection with the acquisition of temporary staffing stores (See Note 2).

NOTE 9 - SUBSEQUENT EVENTS:

On July 5, 2006, the Company commenced a private offering of 2,000,000 shares of common stock at $3.00 per share. As part of this offering, the Company also offered the holders of Series A Preferred Stock an opportunity to exchange their Series A shares for Common Stock at an exchange ratio equivalent to $3.00 per common share. The Company anticipates that all of the Series A Preferred Shares will exchange their shares for common stock under this program and that all Series A Preferred Stock will be retired in the third quarter of 2006.

 
Page 15
 

FORM 10-QSB/A1

Part I, Item 2.  Management’s Discussion and Analysis or Plan of Operations.

The Company

We were incorporated on October 11, 2000 as Temporary Financial Services, Inc. (“TFS”) under the laws of the State of Washington. We were originally organized to provide accounts receivable financing to temporary labor businesses. We commenced our lending activities in 2001 and continued providing accounts receivable financing to temporary labor businesses through 2004. In 2004, we reassessed our lending activities and elected to change our business focus. As a result, we considered other lending operations, provided financing to an affiliated financial services firm, and also began looking for other business opportunities.

On October 6, 2005, TFS entered into a letter of intent to acquire the assets of Command Staffing, LLC (“Command Staffing”), Harborview Software, Inc. (“Harborview”), and 45 companies (collectively, the “Operations Entities”) that collectively owned approximately 70 temporary staffing stores then operating as either Command Staffing franchisees or independently owned businesses located throughout the United States. The acquisitions of Command Staffing, Harborview, and the Operations Entities pursuant to that certain Asset Purchase Agreement, dated as of November 9, 2005, by and among TFS, Command Staffing, Harborview, and the Operations Entities (the “Purchase Agreement”) are collectively referred to herein as the “Command Transaction.”

The Command Transaction has now been completed. The acquisition of Command Staffing and Harborview was completed in Phase I of the Command Transaction on November 9, 2005. At that time, we amended our articles of incorporation to change our name from Temporary Financial Services, Inc. to Command Center, Inc. effective as of November 14, 2005. The acquisition of the Operations Entities was completed in two stages of Phase II of the Command Transaction with closings on May 12, 2006 and June 30, 2006.

We now own and operate 74 temporary staffing stores located in 21 states. We acquired the operating assets of 48 stores and intangible rights to eight additional stores acquired from 35 Operations Entities on May 12, 2006. We acquired 9 additional stores from four Operations Entities on June 30, 2006, and we have opened 17 company owned stores (including eight stores opened after acquiring intangible rights from the prior franchisees) since November 9, 2005. We plan to open a small number of new company owned stores in 2006 and we are pursuing additional expansion through acquisitions from unaffiliated operators. We intend to operate our temporary staffing stores as company owned although we will evaluate franchising opportunities on a case by case basis should we be approached by a qualified franchisee.

Our principal offices are located at 3773 West Fifth Avenue, Post Falls, Idaho, 83854 and our telephone number is (208) 773-7450. Our web site is located at www.commandonline.com. Information contained on our web site is not part of this Memorandum.

 
Page 16
 

Results of Operations.
 
Three and six months ended June 30, 2006 compared to 2005.

Revenues. As described above, the Company acquired a number of temporary staffing stores in the three months ended June 30, 2006. For the three and six month periods ended June 30, 2006 revenues rose to $17,806,557 and $18,234,582, respectively, up from 2005 revenues of $16,909 and $28,497, respectively in the year earlier periods. In 2005, the Company was minimally involved in financing operations and was actively looking at other opportunities. In the first quarter of 2006, the Company operated as a franchisor of temporary staffing stores, and also operated a small number of company owned stores. In the second quarter of 2006, we acquired the operating assets and/or intangible rights to 65 temporary staffing stores and are now actively operating temporary staffing stores and generating revenue from the placement of temporary personnel with customers. The revenue models of the business from 2005 to 2006 and from the first quarter of 2006 to the second quarter of 2006 are substantially different and the results of operations are not comparable.

The staffing services revenues for the second quarter are not indicative of the revenues the Company expects to generate in future periods. The Company acquired the operating assets of 48 stores and intangible rights to eight additional stores on May 12, 2006, nine additional stores on June 30, and we have opened 17 new company owned stores (including eight stores opened after acquiring intangible rights from the prior franchisees) since November 9, 2005. As of June 30, 2006, we are operating 74 temporary staffing stores located in 21 states.

Revenues for the second quarter 2006 are consistent with expectations of management taking into account the acquisitions that occurred during the period. Now that the acquisitions have been completed, the Company will report aggregated results from all 74 stores in future periods. Management intends to focus on store operations and growth in future periods and anticipates that the rate of acquisitions will slow considerably.

Cost of Staffing Services. In three and six month periods ended June 30, 2006, the company incurred staffing services costs of $13,088,445 and $13,094,992, respectively. The amounts represent 73.5% and 71.8% of revenues for the three and six month periods respectively, resulting gross profit of 26.5% and 28.2% respectively. With the completion of the acquisitions in the second quarter, management intends to focus on the operations side of the business and expects that cost of staffing services as a percentage of revenues will decrease in the coming periods. The Company is also focused on bringing in higher margin business which will also increase gross profit in future periods if successful.

In the three and six month periods ended June 30, 2005, the Company was not yet involved in the operations of temporary staffing stores and did not incur any costs of staffing services.

Operating Expenses. Operating expenses in the three and six month periods ending June 30, 2006 were $5,578,521 and $6,699,800, respectively. Acquisition of the operations and/or intangible rights of 65 temporary staffing stores in the second quarter required significant investment in personnel, facilities, and infrastructure. The Company entered into the agreement for acquisition of the temporary staffing stores on November 9, 2006 and since that date management has been focused on establishing the corporate administrative functions that would be needed when the store acquisitions were completed. The corporate infrastructure now in place is considered adequate for current operational levels. Management will continue to monitor operating expenses as a percentage of revenues with the continuing objective of profitable operations as a guiding principle.
 
 
Page 17
 

Operating expenses in the three and six month periods ended June 30, 3005 were $18,589 and $36,938, respectively. These amounts do not reflect operations as either a franchisor or operator of temporary staffing stores and are not comparable to the current periods.

Loss from Operations. The Company incurred losses from operations of $860,409 and $1,560,210 in the three and six month periods ended June 30, 2006. These losses are largely attributable to the Company’s efforts to build corporate infrastructure in anticipation of acquisitions of a number of temporary staffing stores, and the expenses of acquisition, including professional and accounting fees. In future periods, management expects that operating expenses will normalize and operating margins will yield profitable results in the near term.

Other Income and Expense. In the three and six months ended June 30, 2006, interest expense totaled $79,468 and interest and dividend income totaled $7,834 and $35,332, respectively, for net expenses of $71,634 and $44,136, respectively.

In the aggregate, our net losses totaled $932,043 and $1,604,346, respectively, for the three and six month periods ended June 30, 2006. We expect to see increases in interest expense related to financing of accounts receivable in coming periods.

Losses in the three and six months ended June 30, 2005 amounted to $1,680 and $8,441, respectively. 2005 operations are not comparable to current operations and the losses are not material.

Liquidity and Capital Resources

At June 30, 2006, we had minimal cash and approximately $1,300,000 available for accounts receivable funding under the Company’s primary credit facility. The temporary staffing business is capital intensive. Management must proactively manage cash flows, particularly in periods when seasonal business is peaking and accounts receivable balances are rising. Late summer and early fall are peak business periods and management expects that its available sources of financing will be fully utilized. This is likely to leave little cushion for unexpected occurrences.

During the quarter ended June 30, 2006, the Company commenced an offering of Series A Preferred Stock and raised an aggregate of $470,000 from the Series A Preferred Offering prior to the end of the quarter. Several individuals also advanced funds to the Company in contemplation of an investment in the Series A Preferred offering, but as of the end of the quarter, had not committed to the investment. The uncommitted amounts received have been recorded as advances payable. If the individuals making the advances do not decide to invest in the Company, these amounts will have to be repaid
 
 
Page 18
 

In order to improve liquidity and reduce the risk of unexpected cash requirements, the Company is currently pursuing a private offering of 2,000,000 shares of common stock at $3.00 per share. The common stock offering is available to the individuals that advanced funds to the Company in the second quarter but did not commit to a particular form of investment, and is also being offered in exchange for the Series A Preferred Stock. The Company is also looking at several alternative funding sources for back-up financing availability. In the meantime, management will maintain a close watch on available resources and cash requirements. As the Company moves from periods of peak activity to slower periods in the late fall and winter, accounts receivable collections are expected to outpace the requirement for payments to temporary personnel and other operating expenses, and our cash position and liquidity is expected to improve.

In future periods, management intends to pursue other sources of liquidity to assure that growth prospects are not hampered by availability of funds.

No assurances can be given at this time that adequate funding sources will be available as needed or that the terms of any funding arrangements will be acceptable to the Company. To the extent that funding sources are not available to meet our needs, we may be forced to scale back operations.

Item 3.  Controls and Procedures.

An evaluation was performed by the Company’s president and principal financial officer of the effectiveness of the design and operation of disclosure controls and procedures. On the basis of that evaluation, the Company’s president and principal financial officer concluded that disclosure controls and procedures were effective as of June 30, 2006 ensuring that all material information required to be filed in this quarterly report was made known to them in a timely fashion.

In the process of reviewing our disclosure controls and procedures, we identified areas of internal control weaknesses that are currently being addressed. We have made progress on procedures designed to assure the accurate and complete transfer of data from our temporary staffing store management software into our accounting system. We are also in the process of hiring additional professional accounting staff to strengthen the depth of accounting knowledge within the finance department. We continue to assess the internal control weaknesses on a monthly basis and are focused on resolving any remaining internal control deficiencies by the end of 2007.

During 2007, we also plan to conduct an assessment of our controls over financial reporting using criteria established in “Internal Control - Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In connection with the assessment, we will document all significant accounting procedures and determine whether they are designed effectively and are operating as designed.
 
 
Page 19
 

Except as noted above, there have been no changes in our internal controls over financial reporting during the quarter ended June 29, 2006 that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.

PART II

Item 6. Exhibits and Reports on Form 8-K.

During the quarter ended June 30, 2006, the Company filed the following Current Reports on Form 8-K.
 
·  
Current report on Form 8-K dated April 5, 2006 reporting information under Items 3.02 (Unregistered Sales of Equity Securities) and Item 3.03 (Material Modification to Rights of Security Holders). This Form 8-K described the private placement of up to 40,000 shares of Series A preferred stock. 
   
·  
Current report on Form 8-K dated April 11, 2006 reporting information under Item 7.01 (Regulation FD Disclosure); Item 8.01 (Other Events); and Item 9.01 (Financial Statements and Exhibits). This Form 8-K described the assumption of management and financial control of 41 franchise locations.
   
·  
Current report on Form 8-K dated May 16, 2006 reporting information under Items 1.01 (Definitive Agreement), 2.01 (Acquisition of Assets), 3.02 (Unregistered Sale of Equity Securities), 7.01 (Regulation FD Disclosure); and Item 9.01 (Financial Statements and Exhibits). This Form 8-K described the acquisitions of operating stores in the first stage of the Phase II Closing of the Command Transaction.
   
·  
Current report on Form 8-K dated July 1, 2006 reporting information under Items 1.01 (Definitive Agreement), 2.01 (Acquisition of Assets), 3.02 (Unregistered Sale of Equity Securities), 7.01 (Regulation FD Disclosure); and Item 9.01 (Financial Statements and Exhibits). This Form 8-K described the acquisitions of operating stores in the second stage of the Phase II Closing of the Command Transaction.

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, thereunto duly authorized.

COMMAND CENTER, INC.


/s/Glenn Welstad
  
President and CEO
  
Glenn Welstad
  
August 13, 2007
Signature
  
Title
  
Printed Name
  
Date
             
             
/s/Brad E. Herr
  
CFO, Principal Financial Officer
  
Brad E. Herr
  
August 13, 2007
Signature
  
Title
  
Printed Name
  
Date
 
 
 
Page 20