Filed pursuant to Rule 424(b)(1)
Registration No. 333-148658

 

 

 

TABLE OF CONTENTS

		Page
PROSPECTUS SUMMARY			4
RISK FACTORS			6
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION			12
USE OF PROCEEDS			12
DETERMINATION OF OFFERING PRICE			13
DIVIDEND POLICY			13
MARKET FOR OUR COMMON STOCK			13
SELECTED FINANCIAL INFORMATION			14
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			16
BUSINESS			22
MANAGEMENT			28
EXECUTIVE COMPENSATION			31
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS			34
PRINCIPAL SHAREHOLDERS			36
SELLING SHAREHOLDERS			37
PLAN OF DISTRIBUTION			39
DESCRIPTION OF SECURITIES			40
LEGAL MATTERS			42
EXPERTS			43
WHERE YOU CAN FIND MORE INFORMATION			43
INDEX TO FINANCIAL STATEMENTS			F-1

     We have not authorized any person to give you any supplemental information or to make any representations for us. You should not rely upon any information about us that is not contained in this prospectus or in one of our public reports filed with the Securities and Exchange Commission (“SEC”) and incorporated into this prospectus. Information contained in this prospectus or in our public reports may become stale. You should not assume that the information contained in this prospectus, any prospectus supplement or the documents incorporated by reference are accurate as of any date other than their respective dates, regardless of the time of delivery of this prospectus or of any sale of the shares. Our business, financial condition, results of operations and prospects may have changed since those dates. The selling shareholders are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted.

     In this prospectus the “company,” “we,” “us,” and “our” refer to Command Center, Inc., a Washington corporation.

PROSPECTUS SUMMARY

This summary highlights key aspects of our business and the Company that are described in more detail elsewhere in this prospectus. This summary does not contain all of the information that you should consider before making an investment decision with respect to our securities. You should read this entire prospectus carefully, including the “Risk Factors,” the audited financial statements and the notes thereto included elsewhere in this prospectus.

Our Business

     We provide temporary workers to our customers primarily in the industrial sector of the temporary staffing industry. We currently operate 79 temporary staffing stores in 22 states.

     We were organized as Command Staffing LLC on December 26, 2002. We commenced operations in 2003 as a franchisor of temporary staffing businesses. On November 9, 2005, the assets of Command Staffing LLC and Harborview Software, Inc. (“Harborview”), an affiliated company that owned the software used in the operation of our temporary staffing stores, were acquired by Temporary Financial Services, Inc., a public company (“TFS”) and our corporate predecessor. The transaction was accounted for as if Command Staffing LLC was the accounting acquirer. On November 16, 2005, we changed our name to Command Center, Inc. Prior to April 2006, we generated revenues primarily from franchise fees. On May 12, 2006, we acquired 48 temporary staffing stores from certain former franchisees, and shifted our business focus from franchisor to operator. We ceased our franchise operations in the second quarter of 2006 and currently generate all of our revenue from temporary staffing store operations and related activities. See “Business.”

     On November 30, 2007, we raised $10,296,885 in gross proceeds through the private placement of 10,296,885 shares of common stock (at $1.00 per share), and warrants to purchase up to 6,312,803 shares. The warrants have an exercise price of $1.25 per share, and are exercisable commencing on May 29, 2008, as to 6,031,943 shares and June 27, 2008, as to 280,860 shares, and for a period of up to five years thereafter. See “Description of Securities — Warrants and Options.”

     We are using the proceeds from the private placement to expand our operations in 2008 and beyond by opening new temporary staffing stores and to provide working capital.

Risk Factors

     We are an early stage company with a limited operating history under our new business model and no history of profitable operations. We operate in an extremely competitive environment. Our business is dependent upon our ability to obtain workers compensation and other insurance on commercially reasonable terms, which is subject to numerous uncertainties. Our operations expose us to employment claims and other significant litigation risks. Any significant economic downturn could adversely affect our business. The cost of compliance with laws and regulations affecting our business is significant and we are continually subject to the risk of new regulation. We face a formidable challenge in scaling up our corporate infrastructure to accommodate our growth. We require significant working capital to operate and grow our business and our ability to grow is dependent upon obtaining new and increased sources of working capital. The loss of any of our key personnel could harm our business. Our common stock is thinly traded and subject to significant price volatility. Sales of the 16,609,688 shares of common stock eligible for sale to the public by the selling shareholders under this prospectus may depress the market price of our common stock as such sales occur. See “Risk Factors” beginning at page 6.

Principal Executive Office

     Our offices are located at 3773 West Fifth Avenue, Post Falls, ID 83854. Our telephone number is 208.773.7450.

Competitive Strength

     A highly accomplished team of temporary labor industry professionals. Our management team includes members who were instrumental in building Labor Ready. Glenn Welstad, our Chief Executive Officer and Chairman, was a founder and chief executive officer of True Blue, Inc. (doing business as “Labor Ready”) from 1989 through 2000. Tom Gilbert, our Chief Operating Officer, was regional vice president of Labor Ready from 1998 through 2001, responsible for managing 400 temporary staffing offices in 23 states and five Canadian provinces. Todd Welstad, our Chief Information Officer, was chief information officer for Labor Ready from 1993 through 2003. Ronald L. Junck, our General Counsel, was executive vice president and general counsel for Labor Ready from 1998 through 2001. Dwight Enget, our Vice President of Real Estate, worked for Labor Ready from 1989 through 1998, rising to the position of Western U.S. director of operations. Kevin Semerad, our Regional Vice President, managed a labor ready franchise from 1989 through 2002 and grew the franchised operations from 5 to 18 temporary staffing offices.

The Offering

     This offering relates to the offer and sale from time to time of up to 16,609,688 shares (including up to 6,312,803 shares issuable on exercise of warrants) of our common stock by the selling shareholders identified in this prospectus. The selling shareholders will sell up to 10,296,885 shares for their own account and we will not receive any proceeds from the sale of these shares by the selling shareholders. The selling shareholders may also sell up to 6,312,803 shares acquired from exercise of the warrants. We will receive proceeds if some or all of the warrants are exercised unless some or all of the warrants are exercised on a cashless basis. The number of shares of our common stock outstanding as of February 7, 2008, not including up to 6,312,803 shares issuable upon exercise of warrants, was 35,665,053, of which 3,811,425 represented our “public float” of shares, 11,120,986 are held or controlled by our officers and directors, 10,435,757 are other restricted securities, and 10,296,885 are eligible for public sale for the first time pursuant to this prospectus.

Financial Information

     See “Selected Financial Information,” beginning on page 14.

RISK FACTORS

     An investment in our common stock is speculative and involves a high degree of risk. You should carefully consider the risks described below and the other information in this prospectus before purchasing any shares of our common stock. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties may also adversely impair our business operations or affect the market price of our common stock. If any of the events described in the risk factors below actually occur, our business, financial condition or results of operations could suffer significantly. In such case, the value of your investment could decline and you may lose all or part of the money you paid to buy our common stock.

Business Risks

     We have a history of net losses, and we anticipate additional losses. We incurred net losses in each fiscal year since our inception other than the fiscal year ended December 31, 2005. For the fiscal year ended December 29, 2006, we incurred a net loss of approximately $2.4 million and for the nine months ended September 30, 2007, we incurred a net loss of approximately $4 million. Our losses have resulted primarily from the costs of consolidation of the franchisees, time needed to change the culture of our former franchisees from independent operators to a centralized command and control structure, and from the scale of our corporate infrastructure. We have focused our efforts to date on building a support structure able to meet the needs of 100 or more stores. We currently operate 79 stores in 22 states and the revenue flow from our existing base of operations has not been sufficient to fully offset the corporate infrastructure costs. We may continue to incur additional operating losses through fiscal 2008 as we continue to expand our sales and marketing activities and open additional stores. We cannot assure you that our revenue will increase or that we will be profitable in any future period.

     Our historical financial information is of limited utility as a basis for your evaluation of our business. We were incorporated in December 2002, began operations in 2003, and operated as a franchisor until April 1, 2006, when we changed our business model to operator of temporary staffing stores. Our financial statements for periods prior to April 1, 2006, are not comparable to our financial statements for later periods. As a result, we have a limited operating history and limited financial results that you can use to evaluate our business and prospects. Although we have experienced significant growth in recent periods, the growth to date has not been profitable and we may not be able to sustain this growth. Because we have limited historical financial data upon which to base planned operating expenses and forecast operating results, we cannot be certain that our revenue will grow at rates that will allow us to achieve or maintain profitability. You must consider our prospects in light of the risks, expenses and difficulties we face as an early stage company with a limited operating history.

     Changes in our business model and strategy may be difficult to manage. During 2006, we changed our business model from franchisor to temporary staffing store operator, acquired 57 temporary staffing stores and opened an additional 20 stores. This shift in focus and rapid growth required additional personnel, software capabilities, and infrastructure. We intend to continue to increase the number of stores we operate. If management is unable to successfully manage these significant changes, our business, financial condition and results of operations could be negatively impacted.

     We have a limited operating history under our new business model. We have been operating under our new business model for less than two years. In light of our limited operating experience, we have not proven the essential elements of stabilized long-term operations and we cannot assure that we will be successful in achieving such operations. Moreover, we have not demonstrated that our business can be operated on a profitable basis. Until we establish and maintain profitable operations, we cannot assure you that we can make a profit on a long-term basis.

     We will require significant additional working capital to implement our current and future business plans. We will require more working capital to fund customer accounts receivable to continue to expand our operations. We may require more capital in 2008 to open new stores, expand our sales force, and refine and improve the efficiency of our business systems and processes. In future years, we will need more capital to increase our marketing efforts and expand our network of stores through acquisition and opening of new stores. We cannot assure that such additional capital will be available when we need it on terms acceptable to us, or at all. If capital

needed in the future is unavailable or delayed, our ability to respond to competition or changes in the marketplace or to exploit opportunities will be impaired. If we are unsuccessful in securing needed capital in the future, our business may be materially and adversely affected. Furthermore, the sale of additional equity or debt securities may result in dilution to existing shareholders, and incurring debt may hinder our operational flexibility. If sufficient additional funds are not available, we may be required to delay, reduce the scope of or eliminate material parts of our business strategy.

     We are operating under a waiver of certain financial covenants. We have obtained a credit facility that is collateralized by eligible accounts receivable, which are generally defined to include accounts that are not more than sixty days past due. Under this facility, our lender will advance 85% of amounts invoiced for eligible receivables. This credit facility contains strict financial covenants, which include, among other things, the following requirements: (i) that we maintain a working capital ratio of 1:1; (ii) that we maintain positive cash flow; (iii) that we maintain a tangible net worth of $3,500,000; and (iv) that we achieve operating results within a range of projected earnings before interest, taxes, depreciation and amortization. As of September 28, 2007 (the last measurement date for which compliance was required to be reported to Capital pursuant to our agreement with Capital) we were not in compliance with any of these covenants and, on November 13, 2007, our lender waived compliance with these covenants for the period ended September 28, 2007. We will not know if we are in compliance with the financial statement covenants at December 28, 2007 until we have issued our financial statements as of and for the fifty-two weeks then ended. The balance due to our lender at September 28, 2007, was $6,718,579. In connection with this credit facility, our lender has placed a lien on all of our assets. We cannot assure you that our lender will consent to future waivers or continue to finance our activities if we cannot satisfy these covenants in the future. If we do not comply with the covenants and the lender does not waive them, we will be in default of our credit facility, which could subject us to termination of our credit facility. We are not in a position to operate without a source of accounts receivable financing. In such circumstances, we could be required to seek other or additional sources of capital to satisfy our liquidity needs. We cannot assure that other sources of financing would be available at all or on terms that we consider to be commercially reasonable.

     Our goodwill may become impaired, which could result in a material non-cash charge to our results of operations. We have a substantial amount of goodwill resulting from our acquisitions, including the acquisitions of Harborview Software in 2005 and 57 temporary staffing stores in 2006. When we divest a business, but at least annually, we evaluate this goodwill for impairment based on the fair value of each reporting unit, as required by generally accepted accounting principles in the United States (GAAP). This estimated fair value could change if there are future changes in our capital structure, cost of debt, interest rates, capital expenditure levels, ability to perform at levels that were forecasted or a permanent change to the market capitalization of our company. These changes could result in an impairment that could require a material non-cash charge to our results of operations. Such a charge would have the effect of reducing goodwill with a corresponding impairment expense. The additional expense may reduce our reported profitability or increase our reported losses in future periods and could negatively impact the market for our securities, our ability to obtain other sources of capital, and may generally have a negative effect on our future operations.

     The rapid addition of company owned stores could overwhelm our corporate infrastructure. Our growth plans are subject to numerous and substantial risks. We currently operate 79 temporary staffing stores and plan to acquire or open 20 or more new locations in 2008. If management is unable to implement internal controls and monitoring methods adequate for 100 or more temporary staffing stores, our results of operations could suffer. Our failure to manage growth effectively could have a material adverse effect on our operating results and financial condition and on our ability to execute our expansion plans.

     Loss of key personnel could negatively impact our business. Our success depends to a significant extent upon the continued services of Glenn A. Welstad, president, chief executive officer, and director, and other members of the Company’s executive management, including Brad Herr — Chief Financial Officer, Tom Gilbert — Chief Operating Officer, Todd Welstad — Chief Information Officer, and Ron Junck — General Counsel. Should any of these persons or other key employees be unable or unwilling to continue in our employ, our ability to execute our business strategy may be adversely affected. The loss of any key executive could have a material adverse effect on our business, financial condition, and results of operations. Our future performance also depends on our ability to identify, recruit, motivate, and retain key management personnel including store managers, area vice presidents, and

other personnel. The failure to attract and retain key management personnel could have a material adverse effect on our business, financial condition, and results of operations.

     Our inability to attract, develop and retain qualified store managers may negatively impact our business. We rely significantly on the performance and productivity of our store managers. Each store manager has primary responsibility for managing the operations of the individual temporary staffing store, including recruiting workers, daily dispatch of personnel, and collection of accounts receivable. In addition, each store manager has responsibility for customer service. The available pool of qualified candidates for positions with new temporary staffing stores is limited. To combat a typically high turnover rate for store managers in the temporary staffing industry, we are developing training and compensation plans directed at employee retention. There can be no assurance that our training and compensation plans will reduce turnover in this position.

     Our inability to attract, develop and retain qualified business development specialists will negatively impact our business. In 2008, we will be relying on our staff of business development specialists to help drive new business to our growing number of stores. The available pool of qualified candidates for these sales positions is limited. We are working with a sales training company to develop sales programs that are expected to produce positive results and improve employee retention, but the program is new so we have no results to measure the success of these efforts. If our business development specialists are not successful, our operating results will suffer.

     Increased employee costs and workers’ compensation expenses could adversely impact our operations. We are required to comply with all applicable federal and state laws and regulations relating to employment, including occupational safety and health provisions, wage and hour requirements, and workers’ compensation and employment insurance. Costs and expenses related to these requirements are one of our largest operating expenses and may increase as a result of, among other things, changes in federal or state laws or regulations requiring employers to provide specified benefits to employees (such as medical insurance), increases in the minimum wage or the level of existing benefits, or the lengthening of periods for which unemployment benefits are available. Furthermore, workers’ compensation expenses and the related liability accrual are based on our actual claims experience. We maintain a ‘large deductible’ workers’ compensation insurance policy with deductible limits of $250,000 per occurrence. As a result, we are substantially self insured. Our management training and safety programs attempt to minimize workers’ compensation claims but significant claims could require payment of substantial benefits. We cannot assure that we will be able to increase fees charged to our customers to offset any increased costs and expenses, and higher costs will have a material adverse effect on our business, financial condition, and results of operations.

     If we do not manage our workers’ compensation claims history well, high experience ratings and increased premiums could negatively impact operating results. We maintain workers’ compensation insurance as required by state laws. We are required to pay premiums or contributions based on our business classification, specific job classifications, and actual workers’ compensation claims experience over time. In those states where private insurance is not allowed or not available, we purchase our insurance through state workers’ compensation funds. In all other states we provide coverage through a private insurance company licensed to do business in those states. In either case, we do not control insurance rates, and we cannot assure that our premiums will not increase substantially.

     We face competition from companies that have greater resources than we do and we may not be able to effectively compete against these companies. The temporary services industry is highly fragmented and highly competitive, with limited barriers to entry. A large percentage of temporary staffing companies are local operations with fewer than five stores. Within local or regional markets, these companies actively compete with us for customers and temporary personnel. There are also several very large full-service and specialized temporary labor companies competing in national, regional and local markets. Many of these competitors have substantially greater financial and marketing resources than we have. Price competition in the staffing industry is intense, and pricing pressure is increasing. We expect that the level of competition will remain high and increase in the future. Competition, particularly from companies with greater financial and marketing resources than ours, could have a material adverse effect on our business, financial condition, and results of operations. There also is a risk that competitors, perceiving our lack of capital resources, may undercut our prices or increase promotional expenditures in our strongest markets in an effort to force us out of business.

     We may not be able to increase customer pricing to offset increased costs, and may lose volume as a result of price increases we are able to implement. We expect to raise prices for our services in amounts sufficient to offset increased costs of services, operating costs and cost increases due to inflation and to improve our return on invested capital. However, competitive factors may require us to absorb cost increases, which would have a negative impact on our operating margins. Even if we are able to increase costs as desired, we may lose volume to competitors willing to service customers at a lower price.

     Failure to adequately back-up, store and protect electronic information systems could negatively impact future operations. Our business depends on our ability to store, retrieve, process, and manage significant amounts of information. Interruption, impairment of data integrity, loss of stored data, breakdown or malfunction of our information processing systems or other events could have a material adverse effect on our reputation as well as our business, financial condition, and results of operations. Breakdowns of information systems may be caused by telecommunications failures, data conversion difficulties, undetected data input and transfer errors, unauthorized access, viruses, natural disasters, electrical power disruptions, and other similar occurrences which may be beyond our control. Our failure to establish adequate internal controls and disaster recovery plans could negatively impact operations.

     We may be held responsible for the actions of our customers as well as for the actions of our temporary personnel. Because we employ and place people in our customers’ workplaces, we are at risk for actions taken by customers with respect to temporary personnel (such as claims of discrimination and harassment, violations of occupational, health and safety, or wage and hour laws and regulations), and for actions taken by temporary personnel (such as claims relating to immigration status, misappropriation of funds or property, violation of environmental laws, or criminal activity). Significant instances of these types of issues will impact customer perception of our Company and may have a negative effect on our results of operations. The risk is heightened because we do not have control over our customers’ workplace or direct supervision of our temporary personnel. If we are found liable for the actions or omissions of our temporary personnel or our customers, and adequate insurance coverage is not available, our business, financial condition and results of operations could be materially and adversely affected.

     We may face potential undisclosed liabilities associated with acquisitions. Although we investigate companies that we acquire, we may fail or be unable to discover liabilities that arose prior to our acquisition of the business for which we may be responsible. Such undisclosed liabilities may include, among other things, uninsured workers’ compensation costs, uninsured liabilities relating to the employment of temporary personnel and/or acts, errors or omissions of temporary personnel (including liabilities arising from non-compliance with environmental laws), unpaid payroll tax liabilities, and other liabilities. If we encounter any such undiscovered liabilities, they could negatively impact our operating results.

     The company may become obligated to pay tax liabilities of acquired entities. On May 12 and June 30, 2006, the Company acquired the assets of a number of temporary staffing stores from its franchisees at that time. The acquisitions were part of the Company’s shift from franchisor to operator of temporary staffing stores. We have determined that a number of the entities that owned the acquired assets have outstanding tax obligations to various states and the internal revenue service. Under theories of successor liability, the taxing authorities may claim that the Company is obligated to pay amounts owed by the entities from whom we acquired the assets. We believe that the responsible parties are working to resolve their obligations with the taxing authorities, but if the taxes are not paid by the responsible parties, Command Center may be required to pay the outstanding tax balances. Command Center has received representations, warranties, and indemnification from each entity from whom we acquired assets and will pursue reimbursement if we become obligated to pay any such tax balances. Payments, if made, will deplete our capital earmarked for growth and could have a negative impact on our ability to execute the business plan as described elsewhere in this Prospectus.

     Economic slowdowns and other factors beyond our control could reduce demand for temporary personnel which could result in lower revenues. Demand for our services is significantly affected by the general level of economic activity and unemployment in the United States. As economic activity slows, many companies reduce their use of temporary employees before laying off regular employees. Use of temporary employees also is affected by other factors beyond our control that may increase the cost of temporary personnel, such as increases in mandated levels of benefits and wages payable to temporary employees. These economic and other factors could reduce demand for our services and lead to lower revenues.

     We may incur additional costs and regulatory risks relating to new laws regulating the hiring of undocumented workers. We operate seven temporary staffing stores in Arizona. A new Arizona law requires that employers check the legal status of every new hire using a system operated by the Department of Homeland Security, and penalizes employers that hire undocumented workers. Penalties include suspension or revocation of all business licenses held by the employer in Arizona necessary to the conduct of its business. These laws became operative January 1, 2008. We have implemented procedures intended to bring our operations into compliance. We have no practical experience with the system and although we believe we will be able to implement appropriate procedures, we cannot assure that implementation will not be flawed or delayed because of the large number of temporary personnel that we employ. If we are not able to implement and maintain appropriate compliance procedures, our operations would be materially and adversely affected. If other states adopt similar laws, it could increase our operating costs and materially impact our operating results.

     We are exposed to substantial credit risk due to the delay between the time we pay our temporary workers and the time we collect our receivables from our customers. Temporary personnel are typically paid on the same day the services are performed, while customers are generally billed on a weekly basis. This requires that we manage the resulting credit risk. The magnitude of the risk varies with general economic conditions. We believe that write-offs for doubtful accounts can be maintained at commercially acceptable levels without the need to resort to credit management practices that are unduly intrusive for our customers and interfere with customer acquisition and retention. Nevertheless, there can be no assurance that our ability to achieve and sustain profitable operations will not be adversely affected by losses from doubtful accounts or customer relations problems arising from our efforts to manage credit risk.

     If we are unable to find a reliable pool of temporary personnel, we may be unable to meet customer demand and our business may be adversely affected. All temporary staffing companies must continually attract reliable temporary workers to meet customer needs. We compete for such workers with other temporary labor businesses, as well as actual and potential customers, some of which seek to fill positions directly with either regular or temporary employees. In addition, our temporary workers sometimes become regular employees of our customers. From time to time, during peak periods, we experience shortages of available temporary workers. Unavailability of reliable temporary workers will have a negative impact on our results of operations.

     Seasonal fluctuations in demand for the services of our temporary workers in certain markets will adversely affect our revenue and financial performance in the fall and winter months. Revenues generated from stores in markets subject to seasonal fluctuations will be less stable and may be lower than in other markets. Locating stores in highly seasonal markets involves higher risks. We intend to select store locations with a view to maximizing total long-term return on our investment in stores, personnel, marketing and other fixed and sunk costs. However, there can be no assurance that our profitability will not be adversely impacted by low returns on investment in certain highly seasonal markets.

     We depend on the construction industry for a significant portion of our business and reduced demand from this industry would reduce our profitability. We derive a significant percentage of our revenues from placement of temporary personnel in construction and other industrial segments. These industries are cyclical, and construction in particular is subject to current recessionary concerns. Downturns in demand from the building and construction industry, or any of the other industries we serve, or a decrease in the prices that we can realize from sales of our services to customers in any of these industries, would reduce our profitability and cash flows.

     We likely will be a party, from time to time, to various legal proceedings, lawsuits and other claims arising in the ordinary course of our business. We anticipate that, based upon our business plan, disputes will arise in the future relating to contract, employment, labor relations, and other matters that could result in litigation or require arbitration to resolve, which could divert the attention of our management team and could result in costly or unfavorable outcomes for our company. Any such litigation could result in substantial expense, and could reduce our profits, and could harm our reputation. These expenses and diversion of managerial resources could have a material adverse effect on our business, prospects, financial condition, and results of operations. See “Business — Litigation” at page 27.

     We have determined that there are material weaknesses affecting our internal control over financial reporting. To the extent that these material weaknesses continue and are not remedied, our financial reporting systems and processes may be inadequate to produce accurate and timely financial information. Lack of accurate and timely financial information could impact our ability to manage our business, our ability to obtain future operating capital, and could have an adverse impact on financial condition or results of operations.

Risks Related to Our Securities

     Your investment may be substantially diluted and the market price of our common stock may be affected if we issue additional shares of our capital stock. We are authorized to issue up to 100,000,000 shares of common stock and up to 5,000,000 shares of blank check preferred stock, 40,000 shares of which have been designated Series

A Preferred Stock. We may in the future sell additional shares of our common stock or preferred stock or other equity securities to raise additional capital. We may also issue securities to employees under stock option or similar plans that we intend to implement. When we issue or sell additional shares or equity securities, the relative equity ownership of our existing investors will be diluted and our new investors could obtain terms more favorable than previous investors.

     If we do not comply with our agreements with the selling shareholders, we may be subject to significant penalties and other costs. Under the Stock Purchase and Registration Rights Agreement dated November 30, 2007, between the Company and the selling shareholders, we are obligated to register the stock covered by this prospectus for sale on a delayed or continuous basis and to maintain that listing for a period of two years, or until all of the common stock covered by this prospectus has been publicly sold by the selling shareholders.

     Our common stock is thinly traded and subject to significant price fluctuations. Our common stock is traded on the OTC Bulletin Board. The price of our common stock has fluctuated substantially in recent periods, and is likely to continue to be highly volatile. Future announcements concerning us or our competitors, quarterly variations in operating results, introduction or changes in pricing policies by us or our competitors, changes in market demand, or changes in sales growth or earnings estimates by us or analysts could cause the market price of our common stock to fluctuate substantially. These price fluctuations may impact our ability to raise capital through the public equity markets which could have a material adverse effect on our business, financial condition, and results of operations. Limited trading volume also affects liquidity for shareholders holding our shares and may impact their ability to sell their shares or the price at which such sales may be made in the future.

     Our directors, officers and current principal shareholders own a large percentage of our common stock and could limit your influence over corporate decisions. After this offering, our directors, officers and current shareholders holding more than 5% of our common stock collectively will beneficially own, in the aggregate, approximately 46.2% of our outstanding common stock. As a result, these shareholders, if they act together, would be able to control most matters requiring shareholder approval, including the election of directors and approval of mergers or other significant corporate transactions. This concentration of ownership may have the effect of delaying or preventing a change in control. The interests of these shareholders may not always coincide with our corporate interests or the interests of our other shareholders, and they may act in a manner with which you may not agree or that may not be in the best interests of our other shareholders. The concentration of ownership held by these shareholders may increase in the future in the event we adopt a stock option or other equity incentive plan and grant options thereunder.

     We are not likely to pay dividends for the foreseeable future. We have never paid dividends on our common stock. We anticipate that for the foreseeable future, we will continue to retain our earnings for the operation and expansion of our business, and that we will not pay dividends on our common stock in the foreseeable future.

     The market price for our common stock may be affected by significant selling pressure from current shareholders, including the selling shareholders. Sales of substantial amounts of shares of common stock in the public market could have a material adverse impact on the market price of our common stock. We have 35,665,053 shares of common stock outstanding as of February 7, 2008, of which 3,811,425 shares represented our “public float” of shares. Sales of the 16.6 million shares of common stock eligible for sale to the public under this prospectus may depress the market price of our stock as such sales occur. A substantial number of our outstanding shares are currently restricted securities and may not be resold unless registered or exempt from registration. Pursuant to Rule 144 adopted under the Securities Act of 1933, as amended, restricted securities held by non-affiliates generally may be resold after satisfying a one-year holding period and satisfying certain volume limitations. Even with the volume limitations, if shareholders holding these restricted securities choose to sell after satisfying the one-year holding period, the price of our common stock could be negatively affected.

     Failure to comply with the provisions of Sarbanes-Oxley legislation could have a material adverse impact on our results of operations and financial condition. Legislation commonly referred to as the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) requires public companies to develop internal control policies and procedures and to undergo an audit of those internal control policies and procedures on an annual basis. This legislation is relatively new and the United States Securities and Exchange Commission (the “Commission”) is still developing rules and guidance for public companies concerning the manner in which compliance with Sarbanes-Oxley will be determined. We currently are a small business and do not meet the accelerated filer requirements of Sarbanes-Oxley. Recently, the Commission extended the date for compliance with the internal control audit requirements of Sarbanes-Oxley for small businesses not meeting the accelerated filer requirements, and as a result, we do not expect that we will be required to undergo an audit of internal controls until our fiscal year ending 2008. We anticipate that we will continue to prepare our internal control compliance manual and will undertake a preliminary review and assessment of internal controls in early 2008 for our fiscal year ended December 28, 2007. No assurances can be given that this extension of time will continue or that we will not cease to be a small business or will not become an accelerated filer prior to 2009. If we become subject to the internal control audit requirement before we are in a position to comply, the effect on our operations and financial condition could be significant.

     We have made various assumptions regarding our future performance that may not prove to be accurate. We have made certain assumptions about future events that we believe to be reasonable; however, these assumptions relate to future economic, competitive and market conditions, and other events that are impossible to predict. For example, we have assumed that we will be able to: (i) obtain and maintain customer acceptance of our services, (ii) stabilize, refine and improve the efficiency of our operations and business processes, (iii) develop and maintain an effective sales network, (iv) expand our network of stores and effectively penetrate, establish and stabilize operations in new markets, (v) increase demand for our services and correspondingly grow revenue, (vi) establish a reputation for cost-effective, quality and efficient service and brand recognition on a national basis, (vii) maintain pricing and profit margins, and (viii) secure the capital required to execute our plans and grow the company. These assumptions are in turn based on assumptions relating to overall economic conditions, including that: (a) economic conditions (including financial, credit, monetary and labor markets) will remain relatively stable, (b) demand for unskilled and semi-skilled temporary workers will continue in accordance with historic trends, and (c) there will be no material adverse changes in governmental regulations, policies and administrative practices (including immigration, employee wage and benefits laws, etc.) affecting our business. Because they relate to future events, assumptions are inherently subject to uncertainty. Our ability to implement our business plan would suffer materially if any of our assumptions prove inaccurate.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION

     This prospectus contains forward-looking statements. In addition, from time to time, we or our representatives may make forward-looking statements orally or in writing. We base these forward-looking statements on our expectations and projections about future events, which we derive from the information currently available to us. Such forward-looking statements relate to future events or our future performance. You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as “may,” “will,” “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,” “potential” or “continue” or the negative of these or similar terms. In evaluating these forward-looking statements, you should consider various factors, including those described in this prospectus under the heading “Risk Factors” beginning on page 6. These and other factors may cause our actual results to differ materially from any forward-looking statement. Forward-looking statements are only predictions. The forward-looking events discussed in this prospectus, the documents to which we refer you and other statements made from time to time by us or our representatives, may not occur, and actual events and results may differ materially and are subject to risks, uncertainties and assumptions about us.

     We believe the discussions of forward-looking information contained in this document are useful because they provide a framework for you to assess the assumptions and related risks that could affect our business and the value of our securities. However, you should not rely on any forward-looking statement that we have made as any form of representation or guarantee that our objectives or plans will be achieved.

     Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We caution you not to place undue reliance on these statements, which speak only as of the date of this prospectus. We are under no duty to update any of the forward-looking statements after the date of this prospectus to conform such statements to actual results.

USE OF PROCEEDS

     We will not receive any proceeds from the sale by the selling shareholders of the shares of common stock covered by this prospectus. To the extent that warrants covering warrant shares included in this registration statement are exercised for cash, we will receive additional proceeds that will be used for general corporate purposes and working capital. If all of the warrants are exercised for cash by the selling shareholders, resulting in the purchase by the selling shareholders of 6,312,803 shares of our common stock at $1.25 per share, the gross proceeds to us will be $7,891,000. To the extent selling shareholders exercise warrants on a “cashless exercise” basis, both the number of shares issued upon exercise of the warrants and the resulting cash proceeds to the Company will be reduced.

DETERMINATION OF OFFERING PRICE

     The selling shareholders will determine at what price they may sell the offered shares, and such sales may be made at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale or at negotiated prices.

DIVIDEND POLICY

     We have not declared or paid any dividends on our common stock during our last five fiscal years. The payment of dividends on our common stock in the future will depend on our earnings, capital requirements, and operating and financial condition and on such other factors as our board of directors may consider appropriate. We currently expect to use all available funds to finance the future development and expansion of our business and for working capital and do not anticipate paying dividends on our common stock in the foreseeable future.

MARKET FOR OUR COMMON STOCK

     Our common stock trades on the OTC Bulletin Board under the symbol “CCNI.OB.”

     The OTC Bulletin Board is an inter-dealer, over-the-counter market that provides significantly less liquidity than NASDAQ and quotes for stocks included on the OTC Bulletin Board are not listed in the financial sections of newspapers, as are those for the NASDAQ Stock Market.

     Transactions in our common stock have been sporadic and do not constitute an active market. On February 6, 2008, the closing price was $1.02 as reported on the OTC Bulletin Board.

SELECTED FINANCIAL INFORMATION

     Comment regarding our fiscal year end: Prior to April 1, 2006 we presented our financial statements on a calendar year basis. Effective April 1, 2006 and for fiscal 2006, we changed our fiscal year from a calendar year basis to a 52/53-week fiscal year end basis, with the fiscal year ending on the last Friday in December. Our financial statements will continue to be presented on a 52/53-week fiscal year end basis. In fiscal years consisting of 53 weeks, the final quarter will consist of 14 weeks while in 52-week years all quarters will consist of 13 weeks. Fiscal years 2007 and 2006 were 52-week years ending on December 28, 2007 and December 29, 2006, respectively. Fiscal 2008 began on December 29, 2007 and will end on December 26, 2008, and fiscal 2009 will begin on December 27, 2008 and will end on December 27, 2009 (both consisting of 52 weeks). Management believes that presentation of the financial statements on a 52/53-week fiscal year end basis improves comparability of fiscal years.

     We were organized as Command Staffing LLC, on December 26, 2002, and commenced operations in 2003 as a franchisor of temporary staffing businesses. On November 9, 2005, TFS acquired the assets of Command Staffing LLC and Harborview. The transaction was accounted for as if Command Staffing LLC was the acquirer. On November 14, 2005, we changed our name to Command Center, Inc. At that time, our business continued to be primarily focused on acting as a franchisor of temporary staffing businesses across the United States. Under that business model, we generated revenues primarily from franchise fees.

     On May 12, 2006, we shifted our business focus from franchisor to operator of temporary staffing stores by acquiring 48 temporary staffing stores from certain of our former franchisees. An additional nine franchised stores were acquired on June 30, 2006. In the second quarter of 2006, we ceased our franchise operations and began generating virtually all of our revenue from operating temporary staffing stores and related activities. Financial results for periods since April 1, 2006, when we began operating under our current business model (operating company-owned temporary staffing stores) are not comparable to periods prior to April 1, 2006, when we operated as a franchisor.

     The following table presents our selected historical financial data. The statement of operations data for the years ended December 31, 2003, 2004, 2005 and for the 52 weeks ended December 29, 2006, and the balance sheet data as of December 31, 2003, 2004, 2005 and December 29, 2006, are derived from our audited financial statements included elsewhere in this prospectus. The statement of operations data for the thirty-nine week periods ended September 28, 2007, and September 29, 2006, and the balance sheet data as of September 28, 2007, and September 29, 2006, are derived from our unaudited interim financial statements included elsewhere in this prospectus. The results included below and elsewhere are not necessarily indicative of our future performance. You should read this information together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes included elsewhere in this prospectus.

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																		(Unaudited)				(Unaudited)
														Fifty-two weeks				Thirty-Nine Weeks				Thirty-Nine Weeks
		Year Ended				Year Ended				Year Ended				Ended				Ended				Ended
Statements of Operations		December 31, 2003				December 31, 2004				December 31, 2005				December 29, 2006				September 29, 2006				September 28, 2007
Revenue from services			—				—				—				70,622,505				45,431,317				74,158,370
Franchise revenues			425,789				988,042				1,749,381				535,745				535,745				—
Other income			5,792				58,993				440,878				113,376				30,343				262,684
Total revenues			431,581				1,047,035				2,190,259				71,271,626				45,997,405				74,421,054
Cost of services			—				—				—				51,054,838				32,719,116				53,661,722
Gross profit			431,581				1,047,035				2,190,259				20,216,788				13,278,289				20,759,332
Selling, general and administrative expenses			629,251				1,184,698				1,833,280				22,020,314				13,866,027				23,606,467
Operating Income (loss)			(197,670	)			(137,663	)			356,979				(1,803,526	)			(587,738	)			(2,847,135	)
Interest			(11,789	)			—				(2,221	)			(615,622	)			(321,564	)			(1,108,957	)
Net income (loss)			(209,459	)			(137,663	)			354,758				(2,419,148	)			(909,302	)			(3,956,092	)

Balance Sheets		December 31, 2003				December 31, 2004				December 31, 2005				December 29, 2006				September 29, 2006				September 28, 2007
Assets
Current assets			230,061				117,250				2,045,373				12,475,943				13,926,747				14,814,741
Property and equipment, net			67,193				129,147				1,589,253				3,390,696				2,796,761				3,348,636
Other assets			62,085				130,045				1,635,232				33,493,356				34,038,737				36,844,629
Total assets			359,339				376,442				5,269,858				49,359,995				50,762,245				55,008,006
Liabilities
Current liabilities			128,608				110,564				592,201				12,303,901				13,014,825				18,291,495
Long-term liabilities			106,190				—				1,125,000				2,062,928				1,715,407				2,507,791
Total liabilities			234,798				110,564				1,717,201				14,366,829				14,730,232				20,799,286
Equity			124,541				265,878				3,552,657				34,993,166				36,032,013				34,208,720
Total liabilities and stockholders’ equity			359,339				376,442				5,269,858				49,359,995				50,762,245				55,008,006

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

     You should read the following discussion in conjunction with our financial statements and the notes appearing elsewhere in this prospectus. The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of various factors, including those discussed in “Risk Factors” and elsewhere in this prospectus. We maintain our financial records and prepare our financial statements based upon a 52/53-week fiscal year. Prior to 2006, we reported our financial results on a calendar year basis. We changed our business model from financial services to franchisor on November 9, 2005, and from franchisor to operator of company-owned temporary staffing stores on April 1, 2007. For these reasons, the results of operations for 2005, 2006 and the nine months ended September 28, 2007, are not comparable. See explanatory note under “Selected Consolidated Financial Information.”

     Executive Overview.

     We provide temporary unskilled and semi-skilled employees to the light industrial, construction, warehousing, transportation and material-handling industries. Generally, we pay our workers the same day they perform the job.

     We were organized as Command Staffing LLC on December 26, 2002. Command Staffing LLC is our accounting predecessor. We commenced operations in 2003 as a franchisor of temporary staffing businesses. On November 9, 2005, our corporate predecessor, Temporary Financial Services, Inc., a public company, acquired the assets of Command Staffing LLC and Harborview Software, Inc., Command Staffing’s affiliate that owned the software used in the operation of our temporary staffing stores. The acquisition was accounted for as an asset purchase as if Command Staffing LLC were the accounting acquirer. On November 16, 2005, we changed our name to Command Center, Inc.

     Prior to April 2006, we generated revenues primarily from franchise fees. On May 12, 2006, we acquired 48 temporary staffing stores from certain former franchisees, and shifted our business focus from franchisor to operator. We ceased our franchise operations in the second quarter 2006 and currently generate all of our revenue from temporary staffing store operations and related activities.

     Our vision is to be the preferred partner of choice for all staffing and employment solutions by placing the right people in the right jobs every time. With the acquisition of the temporary staffing stores, we have consolidated operations, established and implemented corporate operating policies and procedures, and are currently pursuing a unified branding strategy for all of our stores.

     Temporary Staffing Store Operations. We currently operate 79 temporary staffing stores serving thousands of customers and employing tens of thousands of temporary employees. In the months following the roll-up we focused on continuity of operations, reporting, and record keeping. Significant management attention has been devoted to assuring that the stores are seamlessly integrated into our corporate environment and culture. During 2007, we focused our efforts on consolidating and refining our existing store operations, proving our business model, and operating our business in an efficient manner.

     During 2008, we will work for organic growth to increase our per-store revenue and profitability through directed selling activities and system-wide initiatives to improve the efficiency of our business processes. We may also seek growth from limited new store openings and growth through acquisition of existing locations from third party operators when such opportunities arise.

     We manage our field operations using in-store personnel, store managers, area managers, and corporate management personnel. We have established a sales team to assist in driving business to our stores. Our compensation plans for store managers, area managers, and business development specialists have been designed to aid in securing the qualified personnel needed to meet our business, financial and growth objectives. Our human

resources practices are designed to support the need for attracting, screening, hiring, training, supporting and retaining qualified personnel at all levels of our business.

     During the thirty-nine weeks ended September 28, 2007, we made additional changes in our business model and strategy. We began the year with a newly established sales force and the expectation that the sales force would drive increasing revenue to our existing stores. As we progressed through the period, we reorganized our management structure to provide the direction and supervision needed to implement our strategic plan. We have now consolidated field supervision in the corporate office and we are beginning to see the results of these steps through rising activity levels, improving margins and new customer generation. We have also reorganized our sales force to tighten control and accountability for results.

     As described below, the changes to our business in the first nine months of 2007 came at a significant cost. We expect that our investment in infrastructure and personnel will result in strong momentum heading into 2008.

Results of Operations

Thirty-nine Weeks Ended September 28, 2007 Compared to the Thirty-nine Weeks Ended September 29, 2006

     The following table provides a side by side comparison of the thirty-nine week period results for 2007, and 2006. The thirty-nine week period ended September 28, 2007, is not comparable to the thirty-nine week period ended September 29, 2006. We operated as a franchisor in the first quarter of 2006 and did not begin active temporary staffing store operations until April 1, 2006. We terminated franchise operations at the end of the second quarter of 2006. The temporary staffing store operations model generates significantly more revenue and expense than the franchisor business model.

		Thirty-nine Weeks Ended
		September 28, 2007				% of Revenue				September 29, 2006				% of Revenue				% Change
Revenue		$	74,421,054							$	45,997,405								62	%
Cost of staffing services			53,661,722				72.1	%			32,719,116				71.1	%			64	%
Gross profit			20,759,332				27.9	%			13,278,289				28.9	%			56	%
Selling, general and administrative services			22,984,458				30.9	%			13,650,147				29.7	%			68	%
Depreciation and amortization			622,009				0.8	%			215,880				0.5	%			188	%
Interest expense			1,108,957				1.5	%			365,994				0.8	%			203	%
Interest and other income			—				0.0	%			(44,430	)			-0.1	%			—
Net loss		$	(3,956,092	)			-5.3	%		$	(909,302	)			-2.0	%			335	%

          Revenues. Revenues increased to $74,421,054 for the thirty-nine weeks ended September 28, 2007, compared to $45,997,405 for the thirty-nine weeks ended September 29, 2006, primarily due to the change in our business model. In 2007, we operated as a temporary staffing store business for all thirty-nine weeks, compared to only twenty-six weeks in 2006.

          Cost of Staffing Services. As a percentage of revenue, cost of staffing services increased to 72.1% in the thirty-nine weeks ended September 28, 2007, compared to 71.1% for the thirty-nine weeks ended September 29, 2006. As noted, we generated revenue from franchise operations in the first quarter of 2006 and franchise revenues did not include a cost of services component. This had the effect of decreasing cost of staffing services as a percentage of revenue. For the thirty-nine weeks ended September 28, 2007, our cost of services was above expectations, partially as a result of higher than expected workers’ compensation costs. During the first quarter 2007, we experienced an unusual increase in workers’ compensation claims that caused a spike in our compensation claims paid. Our loss history normalized in the second quarter and declined in the third quarter. Margins were also impacted in the first half of 2007 by the hang over of lower margin business acquired with franchise locations.

          Selling, General and Administrative Expenses. As a percentage of revenue, selling, general and administrative expenses increased to 30.9% in the thirty-nine weeks ended September 28, 2007, compared to 29.7% in the thirty-nine weeks ended September 29, 2006. During the first quarter of 2006, we operated as a franchisor.

The cost structure for selling, general and administrative expenses of a franchisor is lower than for an operator of temporary staffing stores. The first quarter 2006 difference in cost structure had the effect of causing the selling, general and administrative expenses for the thirty-nine weeks ended September 29, 2006, to appear lower when compared to 2007.

     Depreciation and Amortization Expenses. Depreciation and amortization expenses increased in the thirty-nine weeks ended September 28, 2007, to 0.8% of revenue compared to 0.5% of revenue for the thirty-nine weeks ended September 29, 2006. This increase is the result of acquisition of additional assets and customer lists between periods.

     Interest Expense. Interest expense increased to 1.5% of revenue in the thirty-nine weeks ended September 28, 2007, compared to 0.8% of revenue in the comparable period in 2006. The increase is a result of additional borrowing in thirty-nine weeks ended September 28, 2007, and the amortization of discount on notes payable in connection with issuance of notes with warrants. The increase in interest expense in 2007 over 2006 also reflects an increase in short-term borrowings which contributed to an increase in average interest rates.

     Net Loss. Our net loss increased to $3,956,092 (5.3% of revenue) in the thirty-nine weeks ended September 28, 2007, compared to $909,302 (2.0% of revenue) in the thirty-nine weeks ended September 29, 2006. The increase was driven by increases in selling general and administrative costs, depreciation and interest and by a decline in gross margins as a percentage of revenues.

Subsequent Events

     On November 30, 2007 and December 27, 2007, the Company entered into Securities Purchase and Registration Rights Agreements (collectively the “Purchase Agreement”) and sold to investors an aggregate of 10,296,885 units (the “Offering”). Each unit consisted of one share of common stock and a warrant to purchase 0.50 share of common stock for an aggregate of 10,296,885 shares of common stock and warrants to purchase an aggregate of up to 5,264,878 shares of common stock. The units were sold for a per unit price of $1.00, and an aggregate purchase price of $10,296,885. The warrants issued by the Company as part of the units entitle the investors to purchase shares of common stock at an exercise price of $1.25 per share.

     As a part of the Offering, MDB Capital Group, LLC (the “Placement Agent”), converted a $500,000 note issued by the Company in connection with an August 2007 bridge loan from the Placement Agent, into units at a conversion price of $1.00 per Unit. The Placement Agent also accepted $593,885 out of the $611,289 cash portion of its placement agent fee in units at a price of $1.00 per Unit. These amounts are included in the $10,296,885 aggregate purchase price.

     Warrants to purchase an additional 1,047,925 shares of Common Stock at $1.25 per share were issued to the Placement Agent and its assigns as additional placement agent compensation.

     The Company expects to use the proceeds of the Offering for expansion and working capital.

     The Company is obligated under the Purchase Agreement to prepare and file with the Commission, within 45 days of the closing of the Offering, a registration statement covering the resale of the common shares, the warrant shares, the Placement Agent shares and the Placement Agent warrant shares. The Company is obligated to cause the registration statement to become effective within 120 days of the closing of the Offering. The registration statement will provide for an offering to be made on a continuous basis pursuant to Rule 415 under the Securities Act. The Company must also use its reasonable best efforts to keep the registration statement continuously effective under the Securities Act until the earlier of the date that all common shares, warrant shares, Placement Agent shares and Placement Agent warrant Shares issued or issuable under the Purchase Agreement have been sold or can be sold publicly under Rule 144(k), or two years after the registration statement becomes effective. The Company is obligated to pay the costs and expenses of such registration.

     After giving effect to this Offering, the Company has 35,665,053 Common Shares outstanding, not including Common Shares (Warrant Shares) issuable upon exercise of the Warrants issued in the Offering.

     Following completion of the private placement described above, the Company paid off $2,500,000 in short term borrowings and paid all Company owed outstanding tax obligations to various local and state taxing authorities.

52 Weeks Ended December 29, 2006

     During the 52 weeks ended December 29, 2006, we made significant changes in our business model and strategy. We began the year as a franchise company with our primary source of revenue consisting of franchise and licensing fees. We ended the year having acquired the operations of all of our franchisees and deriving all of our revenues from temporary staffing store operations. In the course of this change, we added significant personnel and infrastructure to support the increased transaction load. We also incurred significant professional fees and other non-recurring costs to complete the roll-up of the franchisee operations.

     As a result of the change in character of the business in 2006, our operating results are not comparable to the results of operations in 2005. Year over year comparisons do not aid in understanding our current business model and are not provided.

     Revenues. Revenues were $71,271,626 in the 52 weeks ended December 29, 2006. Revenues included $70,622,505 from the provision of temporary staffing services, $535,745 from franchise revenues, and $113,376 from other income. First quarter revenues of $428,025 were derived almost entirely from franchise fees. On April 1, 2006, we began operating temporary staffing stores and in the remainder of the year we generated $70,843,601 in revenues, almost all of which came from providing staffing services. We discontinued our franchise operations in 2006 and will derive future revenues solely from temporary staffing store operations.

     At December 29, 2006, we operated 77 temporary staffing stores in 21 states. Pro forma information reflecting the revenues and earnings of the acquired franchisee operations as if acquired on January 1, 2005, are presented in Footnote 3 to the Financial Statements included elsewhere in this Prospectus. Our temporary staffing store operations were new in 2006 and we cannot provide meaningful comparative information on a store level basis with store operations from prior periods. Information available on individual stores operated as franchisees prior to the acquisitions were reported as stand alone businesses and are not indicative of the results of those same stores operated under our new model as company owned stores.

     Cost of Services. Total cost of services in the 52 weeks ended December 29, 2006, were $51,054,838 or 72.3% of revenue from services. Cost of services is comprised of the costs of providing temporary personnel, including wages, payroll taxes and employee benefits, workers’ compensation costs, and other direct costs relating to our temporary workers, and transportation, travel costs, safety equipment and other costs of services. Our temporary workers’ compensation costs represent a significant expense of providing temporary staffing services. In May, 2006, we negotiated a workers’ compensation plan through AIG that has streamlined our workers’ compensation plan and allowed us to better control workers’ compensation costs. Aggregate workers’ compensation

costs for the year totaled $3,773,246 or 5.3% of revenue from services. Other direct costs of services amounted to $287,327.

     Our gross margin of 28.4% was in line with expectations for 2006. When we rolled up the franchisees, we obtained an existing book of business with a blended average gross margin below the level of business we are currently pursuing.

     Operating Expenses. Operating expenses totaled $22,020,314 in 2006. Personnel costs accounted for $12,580,971. (As reflected on our Statement of Operations, “Personnel costs,” which is part of our “Selling, General and Administrative Expenses,” represents costs relating to our internal company employees as distinguished from similar employment costs relating to our temporary workers, which appear under “Cost of Services.”) We also incurred selling and marketing expenses of $1,260,426, transportation and travel costs of $1,064,174, office expenses of $1,398,727, rent and lease costs of $1,468,039, and legal, professional and consulting services costs of $902,315. Total selling, general and administrative costs amounted to 31% of total revenue resulting in a loss for the year. These expenses reflect the significant costs incurred to add personnel and build the infrastructure necessary to shift our business model from franchisor with approximately 75 franchised stores to an operating temporary staffing business with thousands of customers, hundreds of internal staff and many thousands of temporary workers. We also incurred approximately $350,000 in litigation costs in 2006 resulting from a lawsuit filed by a competitor. See “Business — Litigation” at page 27.

     We may incur significant costs to establish a national sales force in the future. We expect dedicated selling efforts to increase the revenue per store when compared to the store sales model and will be monitoring this process closely.

     Losses from Operations. We incurred losses from operations of $1,803,526 in the 52 weeks ended December 29, 2006. The losses are primarily attributable to the costs of the roll up transaction where we acquired the assets of our franchisees and the legal costs of defending the litigation mentioned under operating costs above. We do not anticipate significant acquisition related expenses in 2007 and expect the litigation costs to moderate in future periods. The costs to establish a sales force are expected to generate losses in the first quarter of 2007 with the losses moderating as sales increase from the directed selling activities. We are also focused on increasing margins in 2007 and, if this is realized, it will have a positive effect on operating results.

     Net Loss. Interest expense amounting to $703,513 was partially offset by interest and other income of $87,891 resulting in aggregate net losses of $2,419,148 or a loss of $0.13 per share.

Year Ended December 31, 2005

     Revenues. In 2005, we generated revenues of $2,190,259, an increase of $1,143,224 or 109% from the year ended December 31, 2004.

     Franchise and license fee income grew to $1,749,381 in 2005 from $957,002 in 2004, an increase of 83%. The increase was attributable to growth in the number of franchisees and growth in franchisee revenues generated during the period. As noted elsewhere, we have acquired our franchisees and converted our business from that of a franchisor to an operator of temporary staffing stores. We no longer generate revenues from franchising or software licensing.

     Interest and investment income and other income increased to $440,878 in 2005 from $90,033 in 2004. The increase in other income was primarily due to the settlement of litigation with a former franchise owner. The settlement of litigation was a one time event and is not expected to recur in future periods.

     Operating Expenses. Operating expenses increased to $1,833,280 in 2005 compared to $1,184,698 in 2004. This represents nearly a 55% increase and is the direct result of the growth in the number of franchisees and the growth in infrastructure required by the anticipated acquisition of the franchisees and conversion of the company to a temporary staffing store operator.

     We continued to incur operating expenses from franchise operations until the franchisees were acquired in the second quarter of 2006.

     Income from Operations. For the year ended December 31, 2005, we generated net income of $354,758 compared to a $137,663 loss from operations in 2004. The change is consistent with the growth in the number of franchisees and the increasing revenue they generated in the period against which our income is computed.

Year Ended December 31, 2004

     Results in 2004 reflect our operations as a franchisor. We began offering franchises in 2003 and awarded our first franchise on August 19, 2003.

     Revenues. We generated gross revenues of $1,047,035 in 2004. Franchise and license fee income comprised the majority of our revenues for the year. Revenues were in line with our expectations as a new franchisor of temporary staffing stores. We also generated $90,033 in other income during the year.

     Operating Expenses. Operating expenses were $1,835,501 in 2004. This amount is consistent with our operations and revenue levels as a start-up franchisor. Our business focus in 2004 was on building the franchisor business model. We incurred $301,908 in compensation costs, $160,416 in sub-contract fees to enhance the software offered to franchisees, $118,131 in software and communications expenses, and $117,308 in legal fees relating to franchise offering compliance and other legal matters. Other expenses of a normal and recurring nature amounted to $486,935.

     Loss from Operations. In the aggregate, we reported a loss from operations of $137,663 in 2004. Net operating loss carryforwards from current and prior years may be used to offset future net income.

Liquidity and Capital Resources

     At September 28, 2007, we had cash of $251,095, total current assets of $14,814,741, and total current liabilities of $18,291,495. Our trade accounts receivable totaled $10,706,633 net of the allowance for doubtful accounts of $430,000.

     Weighted average aging of our trade accounts receivable was 37.35 days at September 28, 2007, representing a slight improvement over the weighted average aging of 38 days at September 29, 2006. Actual bad debt write-off expense as a percentage of total customer invoices during the thirty-nine weeks ended September 28, 2007 was 0.5%, which is consistent with our expectations. Our accounts receivable are recorded at the invoiced amount. We regularly review our accounts receivable for collectibility. The allowance for doubtful accounts is determined based on historical write-off experience and current economic data and represents our best estimate of the amount of probable losses on our accounts receivable. The allowance for doubtful accounts is reviewed quarterly. We typically refer overdue balances to a collection agency at ninety days and the collection agent pursues collection for another thirty days. Most balances over 120 days past due are written off when it is probable the receivable will not be collected. As our business matures, we will continue to monitor and seek to improve our historical collection ratio and aging experience with respect to trade accounts receivable.

     On November 30, 2007, we raised approximately $10,000,000 in gross proceeds through the private placement of approximately 10,000,000 shares of common stock (at $1.00 per share), and warrants to purchase up to approximately 6.1 million shares. The warrants have an exercise price of $1.25 per share.

     We currently operate under a $9,950,000 line of credit facility with our principal lender for accounts receivable financing. The credit facility is collateralized with accounts receivable and other assets and entitles us to borrow up to 85% of the value of eligible receivables. Eligible accounts receivable are generally defined to include accounts that are not more than sixty days past due. The loan agreement includes limitations on customer concentrations, accounts receivable with affiliated parties, accounts receivable from governmental agencies in excess of 5% of our total accounts receivable balance, and when a customer’s aggregate past due account exceeds 50% of that customer’s aggregate balance due. 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 two and one half percent (prime +2.5%) or 6.25% per annum. Our line of credit interest rate at September 28, 2007 was 10.75%. The loan agreement further provides that interest is due at the applicable rate on the greater of the outstanding balance or $5,000,000. The credit facility expires on April 7, 2009. The balance due our lender at September 28, 2007 was $6,718,579.

     The line of credit facility agreement includes certain financial covenants including a requirement that we maintain a working capital ratio of 1:1, that we maintain positive cash flow, that we maintain a tangible net worth of $3,500,000, and that we achieve operating results within a range of projected EBITDA. At September 28, 2007, we were not in compliance with these loan covenants. Our lender has waived compliance with these loan covenants for the period ended September 28, 2007. The next measurement period for determining compliance with the loan covenants ended on December 28, 2007. We will recalculate our compliance with the loan covenants prior to submission of our next Annual Report on Form 10-K, which is due on March 27, 2008. We expect to be in compliance with our loan covenants as of December 28, 2007. See “Risk Factors — We are operating under a waiver of certain financial covenants,” on Page 7.

     As we grow, we will require significant new sources of working capital to fund continuing operations and finance the growth of operating store accounts receivable. We are now pursuing several alternatives to generate growth capital, either through debt or equity, to relieve continued negative cash flow.

     No assurances can be given that we will be able to find additional capital on acceptable terms. If additional capital is not available, we may be forced to scale back operations, lay off personnel, slow planned growth initiatives, and take other actions to reduce our capital requirements, all of which will impact our profitability and long term viability.

Off-Balance Sheet Arrangements

     We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that would be material to you.

Critical Accounting Policies and Estimates

     Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States, which requires us to make judgments, estimates and assumptions that affect (1) the reported amounts of our assets and liabilities, (2) the disclosure of our contingent assets and liabilities at the end of each fiscal period, (3) the amounts of expected future liabilities from workers’ compensation claims, (4) the allowance for doubtful accounts, and (5) the reported amounts of revenues and expenses during each fiscal period. We continually evaluate these estimates based on our own historical experience, knowledge and assessment of current business and other conditions, our expectations regarding the future based on available information and reasonable assumptions, which together form our basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application.

     When reviewing our financial statements, you should consider (1) our selection of critical accounting policies, (2) the judgment and other uncertainties affecting the application of those policies, and (3) the sensitivity of reported results to changes in conditions and assumptions.

Goodwill and Intangible Assets

     Goodwill represents the excess of the purchase price over the fair value of identifiable assets acquired and liabilities assumed in business combinations accounted for under the purchase method. Purchase price is assigned to the acquired assets and liabilities based on their estimated fair value as determined by management.

     Intangible assets other than goodwill are carried at cost less accumulated amortization. Intangible assets are generally amortized on a straight-line basis over the useful lives of the respective assets, generally three to five years. Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

     We apply the provisions of the Financial Accounting Standards Board’s, or FASB, SFAS No. 142, Goodwill and Other Intangible Assets. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but instead are tested for impairment on a reporting unit basis in accordance with the provisions of SFAS No. 142.

     We perform impairment tests of goodwill assigned to reporting units on an annual basis or when facts and circumstances indicate to management that impairment may exist. Impairment tests are based on a comparison of the fair value of the reporting unit to the carrying value of the assets assigned to that reporting unit. In instances where impairment exists, goodwill is written down to fair value.

     We review long-lived assets when facts and circumstances indicate to management that the carrying value of those assets may not be fully realizable over the remainder of their useful lives. If impairment exists, we compare the fair value of the asset, based on a discounted cash flow projection or other method as deemed appropriate by management, to the carrying value. If fair value is determined to be less than the carrying value, we record an impairment charge to reduce the carrying value to fair value.

BUSINESS

Introduction and General Background

     We were organized as Command Staffing LLC on December 26, 2002. We commenced operations in 2003 as a franchisor of temporary staffing businesses. On November 9, 2005, the assets of Command Staffing, LLC and Harborview Software, Inc., an affiliated company that owned the software used in the operation of our temporary staffing stores, were acquired by Temporary Financial Services, Inc., a public company. The transaction was accounted for as if Command Staffing LLC was the acquirer. On November 16, 2005, we changed our name to Command Center, Inc.

     Prior to April 2006, we generated revenues primarily from franchise fees. On May 12, 2006, we acquired 48 temporary staffing stores from certain former franchisees, and shifted our business focus from franchisor to operator. On June 30, 2006, we acquired an additional 9 temporary staffing stores from our franchisees. We also opened 20 additional stores during the year (including 8 new stores opened to replace the franchised locations we bought out and closed in the May 12 transaction). All of our former franchised stores have either been acquired or ceased operation and we currently generate all of our revenue from temporary staffing store operations and related activities. At February 6, 2008, we owned and operated 79 temporary staffing stores located in 22 states. We are in the process of preparing 8 additional stores for opening in the first quarter of 2008 and anticipate that we will open approximately 20 new stores in 2008.

     Our principal executive offices are located at 3733 West Fifth Avenue, Post Falls, Idaho 83854, and our telephone number is (208) 773-7450. We maintain an Internet website at www.commandonline.com. The information contained on our website is not included as a part of, or incorporated by reference into, this prospectus.

The Temporary Staffing Industry

     The temporary staffing industry grew out of a desire on the part of businesses to improve earnings by reducing fixed personnel costs. Many businesses operate in a cyclical environment and staffing for peak production periods meant overstaffing in slower times. Companies also sought a way to temporarily replace full-time

employees when absent due to illness, vacation, or abrupt termination. Temporary staffing offers a way for businesses to immediately increase staff when needed without the ongoing cost of maintaining employees in slower times. Personnel administration costs may also be reduced by shifting these activities, in whole or in part, to a temporary staffing provider.

     The temporary staffing industry consists of a number of markets segregated by the diverse needs of the businesses utilizing the temporary staffing providers. These needs vary widely in the duration of assignment as well as the level of technical specialization required of the temporary personnel. We operate primarily within the short-term, unskilled and semi-skilled segments of the temporary staffing industry. Management believes these sectors are highly fragmented and present opportunities for consolidation. Operating multiple locations within the framework of a single corporate infrastructure may improve efficiencies and economies of scale by offering common management, systems, procedures and capitalization.

Business

     Our vision is to be the preferred partner of choice for staffing and employment solutions by placing the right people in the right jobs every time. With the acquisition of the temporary staffing stores, we have consolidated operations, established and implemented corporate operating policies and procedures, and are currently pursuing a unified branding strategy for all of our stores. By acquiring stores formerly owned and operated by our franchisees we have transitioned our business model from franchisor to owner-operator of temporary staffing stores.

     We intend to build a national network of temporary staffing stores under a unified corporate structure to achieve economic efficiencies. Within a corporate framework we can combine multiple accounts receivable, accounts payable, supplies purchasing and marketing activities into single departments, thereby improving efficiency and gaining economies of scale. As the size of our business grows and brand recognition builds, we also hope to attain additional efficiencies in advertising, printing, safety equipment, and facilities costs.

     Temporary Staffing Store Operations. We currently operate 79 temporary staffing stores serving thousands of customers and employing thousands of temporary employees. Our stores are located in 22 states, with approximately 63 stores located in urban industrial locations and 15 stores located in suburban areas with proximity to concentrated commercial and industrial areas. We are developing a standardized store operations model that will be used for future new store openings, gradually refined and applied system wide. We are targeting new store openings in locations with attractive demographics and in areas where the demand for temporary staffing personnel is sufficient to justify the investment. In general, we will focus on larger metropolitan areas that are able to support multiple locations as the initial growth targets. Multiple openings in metropolitan areas allow us to minimize opening costs and maximize customer exposure within a target metropolitan market. We prefer to locate our stores in reasonably close proximity to our workforce and public transportation.

     The transactional volume we experience as an operator of temporary staffing stores is dramatically larger than we experienced as a franchisor. Therefore, in the months following the acquisition of the stores, we devoted a significant amount of time to assure that the stores are and remain seamlessly integrated into our corporate environment and culture. We developed a comprehensive and integrated set of software tools and information technology systems.

     We manage our field operations using in-store personnel, store managers, area managers, and corporate management personnel. We are also currently building a sales team to help drive business to our stores. Our compensation plans for store managers, area managers, and business development specialists have been designed to aid in securing the qualified personnel needed to meet our business, financial and growth objectives. Our human resources practices are designed to support the need for attracting, screening, hiring, training, supporting and retaining qualified personnel at all levels of our business.

     In 2008, by implementing the strategy outlined below we intend to open 20 or more new stores and expect to end the year with at least 100 stores in operation.

     Temporary Staff. Each store maintains an identified and pre-qualified pool of available temporary staff personnel who are familiar with our operations and can perform the jobs requested by our customers. We believe the

pool is of sufficient size to meet customer requirements at our current level of operations. As our business grows, we will seek additional temporary workers through newspaper advertisements, printed flyers, store displays, and word of mouth. We locate our stores in places convenient to our temporary work force and, when available, on or near public transportation routes. To attract and retain qualified and competent workers, we have instituted or are in the process of instituting a number of temporary worker benefit programs. These include payment of a longevity bonus, a safety points awards program, availability of an employee paid health insurance program, employer ratings of temporary employees, and creation of an advantage team program. All of these programs are designed to keep our best workers by offering benefits not widely available in our industry, and to reward our temporary workers for providing excellent service to our customers.

     Our Customers. Currently, we have approximately 1,700 customers operating in a wide range of industries. The top five industries we service are construction, manufacturing, transportation, warehousing and wholesale trades. Our customers tend to be small and medium sized businesses. Our ten largest customers accounted for approximately 8% our revenue for the fifty-two weeks ended December 28, 2007.

     Marketing Strategy. To accomplish our growth objectives, we intend to undertake the following activities during 2008:

	•		Increase the level of direct selling activities at each existing store;
	•		Implement direct mail campaigns, radio and billboard advertising, limited yellow-page advertising and word of mouth; and
	•		Develop national accounts with large corporate customers.

     In implementing our growth strategy, we will face several challenges, including meeting our rapidly growing requirement for working capital, managing credit risk and workers’ compensation insurance costs.

     As a developer, owner and operator of temporary staffing stores, we require significant working capital because we typically pay our temporary personnel on the same day they perform the services, but bill our customers on a weekly or monthly basis. As a result, we must maintain sufficient working capital through borrowing arrangements or other sources, to enable us to continue paying our temporary workers until we invoice and collect from our customers.

     The delay between payment of compensation to our temporary workers and collection of receivables from our customers requires that we manage the related credit risk. This entails screening of our potential customers. We maintain a database of pay rates and customer rates for most job categories. Therefore, when we enter a new customer into our system, we already have established temporary worker pay rates and customer billing rates for the job categories requested. The customer information is entered into our system and forwarded to the credit department at our corporate office for review of the workers’ compensation rate categories and approval of customer credit levels if the customer has requested credit in excess of the store limit. The credit department obtains credit reports and/or credit references on new customers and uses all available information to establish a credit limit. We also monitor our existing customer base to keep our credit risk within acceptable limits. Monitoring includes review of accounts receivable aging, payment history, customer communications, and feedback from our field staff. Currently, our average days outstanding on open invoices is approximately 37.9 days, and our bad debt experience for 2007 was approximately 0.5% of sales.

     We are required to provide our temporary and permanent workers with workers’ compensation insurance. Currently, we maintain a large deductible workers compensation insurance policy through American International Group, Inc. (“AIG”). The policy covers the premium year from May 13, 2007 through May 12, 2008. While we have primary responsibility for all claims, our insurance coverage provides reimbursement for covered losses and expenses in excess of our deductible. For workers’ compensation claims arising in self-insured states, our workers’ compensation policy covers any claim in excess of $250,000 on a “per occurrence” basis. This results in our being substantially self-insured.

     Since the current policy inception, we have made payments to cover anticipated claims within our self-insured layer. As of December 28, 2007, we had approximately $4.0 million on deposit with AIG to cover our share of each loss up to $250,000. We believe that this amount will be adequate to meet any expected losses that may be incurred or become due and payable for injuries during the policy term.

     For workers’ compensation claims originating in Washington and North Dakota (our “monopolistic jurisdictions”) we pay workers’ compensation insurance premiums and obtain full coverage under government administered programs. We are not the primary obligor on claims in these jurisdictions.

     Workers’ compensation expense is recorded as a component of our cost of services. Workers’ compensation expense in 2007 was 5.4% of our revenue from services. As we grow in future periods, we expect workers’ compensation costs to be a significant and growing cost. It will be critical in future periods that we monitor and control such costs. Prior to 2006, we operated as a franchisor of temporary staffing businesses and workers’ compensation costs were not a significant component of operating costs.

     Safety Program. To protect our workforce and help control workers’ compensation insurance rates, we have also implemented a company-wide safety program aimed at increasing awareness of safety issues. Safety training is accomplished through bulletin boards, newsletters, training meetings, videos, and employee manuals. Managers conduct unannounced job site visits to assure that customers utilizing our temporary staff are doing so in a safe environment. We also encourage our workers to report unsafe working conditions.

Seasonality

     The short-term manual labor sector of the temporary staffing business is subject to seasonal fluctuation. Many of the jobs filled by our temporary staff are outdoor jobs that are generally performed during the warmer months of the year. As a result, activity increases in the spring and continues at higher levels through the summer and then begins to taper off during the fall and through the winter. Seasonal fluctuations may be less in the western and southwestern parts of the United States where many of our stores are located. These fluctuations in seasonal business will impact financial performance from period to period.

Competition

     The short-term manual labor sector of the temporary staffing industry is highly competitive with low barriers to entry. Many of the companies operating in this sector are small local or regional operators with five or fewer locations. Within their markets, these small local or regional firms compete with us for the available business. The primary competitive factors in our market segment include price, service and the ability to provide the requested workers when needed. Secondary factors include worker quality and performance standards, efficiency, ability to meet the business-to-business vendor requirements for national accounts, name recognition and established reputation. While barriers to entry are low, businesses operating in this sector of the temporary staffing industry do require access to significant working capital, particularly in the spring and summer when seasonal staffing requirements are higher. Lack of working capital can be a significant impediment to growth for small local and regional temporary staffing providers.

     In addition, we face competition from a small number of larger, better capitalized operators. Our larger competitors include True Blue, Inc. (doing business as “Labor Ready”), Adecco, Kelly Services, Inc., Manpower, Inc., SOS Staffing Services, Inc., and Vedior, Inc. Labor Ready operates primarily in our markets. The other large competitors have divisions that operate in the light industrial or construction segments of our industry but are primarily focused more on skilled trades and professional placements. The presence of these larger competitors in our markets may provide significant pricing pressure and could impact our ability to price our temporary staffing services at profitable levels.

     Our largest competitor in the short-term manual labor sector of the temporary staffing industry is Labor Ready with 912 branch offices in all 50 of the United States, Puerto Rico, Canada and the United Kingdom. Labor Ready estimates the on-demand labor market at between $6 and $7 billion per annum giving Labor Ready a 19% to 22% market share. Our management team includes members who were instrumental in building Labor Ready. We currently hold approximately a 1% market share.

     In addition to the large competitors listed above, we also face competition from smaller regional firms like Ablest, Inc. that are much like us in terms of size and market focus. As we attempt to grow, we will face increasing competition from other regional firms that are already established in the areas we have targeted for expansion. We are also likely to garner increasing attention from Labor Ready as we attempt to increase our market share.

Government Regulation

     We are subject to a number of government regulations, including those pertaining to wage and hours laws, equal opportunity, workplace safety, maintenance of workers’ compensation coverage for employees, legal work authorization, and immigration laws. With national attention on immigration and related security issues, we anticipate increased regulatory impact on our operations. For example, Arizona recently adopted legislation requiring employers to check the legal status of every new hire using a system operated by the Department of Homeland Security, and penalizing employers that hire undocumented workers. Penalties include suspension or revocation of all business licenses held by the employer in Arizona necessary to the conduct of its business. These laws became effective January 1, 2008, and we have implemented procedures intended to bring our operations into compliance. If other states adopt similar laws, it could increase our operating costs and regulatory risks.

Trademarks and Trade Names; Intellectual Property

     The Company has registered “Command,” “Command Center,” “Command Staffing,” “Command Labor,” “Apply Today, Daily Pay,” “A Different Kind of Labor Place” and “Labor Commander” as service marks with the U.S. Patent and Trademark Office. Other applications for registration are pending. Several registrations have also been granted in Australia, Canada, and the European Economic Community.

     We have in place software systems to handle most aspects of our operations, including temporary staff dispatch activities, invoicing, accounts receivable, accounts payable and payroll. Our software systems also provide internal control over our operations, as well as producing internal management reports necessary to track the financial performance of individual stores. We utilize a dashboard-type system to provide management with critical information, and we refine our systems and processes by focusing on what actually works in the real world. We take best practices information from our higher performing stores and propagate this information across all operating groups to produce consistent execution and improvements in company-wide performance averages.

Real Property

     We own a beneficial interest in one parcel of real estate located in Yuma, Arizona, that houses one of our temporary staffing locations. We also assumed a mortgage on the Yuma property. The balance due on the mortgage is approximately $95,000. Our monthly payment is $1,485, with a remaining term of 80 months. The mortgage is secured by the real property, which is carried on our books at $149,000.

     We presently lease office space for our corporate headquarters in Post Falls, Idaho, and have a three-year option to purchase the land and building for $1,125,000 pursuant to the terms of a Sale and Leaseback Agreement. We currently pay $10,000 per month for use of the building, which contains approximately 18,500 square feet of space.

     We also lease the facilities of all of our store locations (except for the Yuma location). All of these facilities are leased at market rates that vary depending on location. Each store is between 1,000 and 5,000 square feet, depending on location and market conditions and all current facilities are considered adequate for their intended uses.

Employees

     We currently employ 43 personnel at our headquarters office in Post Falls, Idaho. The number of employees at the corporate headquarters is expected to increase as we continue to grow. We also employ approximately 250 people on our field operations staff located in the various temporary staffing stores, and area and regional operations centers. As we add more stores in 2008, this number is expected to grow.

Litigation

     We are party to the following material litigation.

     ProTrades v. Command Center, Inc., et al.: California Superior Court, Santa Clara County, Case No. 105CV055572. On December 31, 2005, ProTrades Connection, Inc., a competitor, filed a lawsuit against Command Staffing, LLC, and certain individuals. Command Center, Inc. was later added as an additional defendant. The individual defendants are current employees of our company and were formerly employed by ProTrades. In the lawsuit, ProTrades alleges that the individual defendants breached written covenants against the solicitation of ProTrades employees. In September 2007, the court granted our motion for summary judgment, dismissed all claims of ProTrades, and awarded to us $53,651 for costs. ProTrades has appealed the ruling, and the appeal is pending. We incurred approximately $350,000 in litigation costs in 2006 and approximately $400,000 in litigation costs in 2007 resulting from this litigation.

MANAGEMENT

Directors and Executive Officers

     The names and ages and positions of the directors and executive officers of the Company are listed below along with their business experience during the past five years. The business address of all executive officers of the Company is 3773 West Fifth Avenue, Post Falls, Idaho 83854. All of these individuals are citizens of the United States. Our Board of Directors currently consists of five directors. Directors are elected at the annual meeting of shareholders to serve until they resign or are removed, or are otherwise disqualified to serve, or until their successors are elected and qualified. The term of each of our directors expires in 2008. Executive officers are appointed at the Board’s first meeting after each annual meeting of the shareholders. No family relationships exist among any of the directors or executive officers of the Company, except that Todd Welstad is the son of Glenn Welstad.

Glenn Welstad, age 64		Chairman of the Board, Chief Executive Officer, and President
Brad E. Herr, age 53		Director, Chief Financial Officer and Secretary
Todd Welstad, age 39		Director, Executive Vice President and Chief Information Officer
Tom Gilbert, age 52		Director and Chief Operating Officer
Ralph E. Peterson, age 73		Director
Ronald L. Junck, age 59		Executive Vice President and General Counsel

     Glenn Welstad, founded Command Staffing, LLC, and Harborview Software, Inc., and has been our President, Chief Executive Officer and a director since 2003. Glenn Welstad was a founder of Labor Ready and served as its Chief Executive Officer and President, until his retirement in 2000. Prior to founding Labor Ready, Glenn Welstad was a successful restaurateur and owned a number of Hardees and Village Inn franchises. Glenn Welstad is the father of Todd Welstad.

     Brad E. Herr, has served as our Chief Financial Officer, Secretary and a director since December 1, 2006. From 1993 through 1996, and from June 2001 through March 2002, Mr. Herr practiced law in the firm of Brad E. Herr, P.S. From June 1996 through June 2001, and from January 1, 2004 through December 1, 2006, Mr. Herr was employed at AC Data Systems, Inc. (AC Data) in Post Falls, Idaho, where he was Director of Finance (1996 through 1998), Vice-President — Business Development (1998 through June 2001), and President (2004 through 2006). AC Data is a privately held manufacturing business engaged in the design, manufacture and sale of surge suppression products marketed primarily to the telecommunications industry. Mr. Herr graduated from the University of Montana with a Bachelor of Science Degree in Business Accounting in 1977, and a Juris Doctorate in 1983. In May 2005, Mr. Herr received a Masters Degree in Business Administration from Gonzaga University.

Mr. Herr is licensed as a Certified Public Accountant in the State of Montana. Mr. Herr also maintains inactive status as a lawyer in the states of Washington and Montana. Mr. Herr serves as a Director of Genesis Financial, Inc., a publicly traded financial services business located in Spokane, Washington.

     Todd Welstad, is Executive Vice President, Chief Information Officer, and a director, and has served in those capacities since 2003. Mr. Welstad served as Chief Information Officer of Labor Ready, Inc. from August 1993 through 2001. Before joining us, Mr. Welstad worked in the temporary labor industry as owner/operator and was employed by Harborview Software, Inc., as Vice President in the development of the software used in temporary labor store operations. Todd Welstad is the son of Glenn Welstad.

     Tom Gilbert, has served as our Chief Operating Officer and a Director since November 9, 2005. Before joining our Company, Mr. Gilbert owned and operated Anytime Labor, a Colorado corporation. From July 1998 through December 2001, Mr. Gilbert, as Regional Vice President for Labor Ready was responsible for the management of up to 400 temporary labor offices located in 23 states and 5 Canadian provinces.

     Ralph E. Peterson, was appointed to the Board as an independent director in November 2007 , and will chair the board’s Audit Committee. From 2002 until 2006, Mr. Peterson was a partner with a mid-sized venture capital firm. Previously, Mr. Peterson held leadership roles with Labor Ready, a publicly traded staffing company, where he was a member of its Board of Directors and served as its Chief Financial Officer and Executive Vice President of Corporate and Business Development. He also spent more than 20 years in the restaurant industry, first as an officer

of Hardee’s Food Systems, Inc., a $4 Billion diversified food company, operating 1,000 Company owned and 3,000 franchised fast food restaurants, and subsequently as the Chief Financial Officer of Rax Restaurants, Inc., a restaurant chain operating 100 Company owned and 250 franchised restaurants. Mr. Peterson received his MBA from the University of North Carolina’s MBA Program, as well as a MS in Finance and Management and a BS in Accounting from Northern Illinois University.

     Ron Junck, has been our General Counsel since 2003. From 1974 until 1998, Mr. Junck practiced law in Phoenix, Arizona, specializing in business law and commercial transactions. From 1998 through 2001, Mr. Junck served as Executive Vice President and General Counsel of Labor Ready, and for several years served as a director of that company. In 2001, Mr. Junck returned to the private practice of law.

Nominees for Election or Appointment to the Board of Directors

     On February 6, 2007, our Board of Directors nominated John M. Schneller and Aaron A. Grunfeld for election or appointment to the Board. We anticipate that the two nominee directors will be appointed to fill vacancies that will occur upon the resignation of Todd Welstad and Tom Gilbert from the Board in the near future. The new directors will serve the balance of the terms of the directors they replace, or until their successors are duly elected and qualified.

     John M. Schneller, age 42, is a nominee for election or appointment to the Board. Mr. Schneller is Managing Partner of Icarus Group, LLC, a value discipline, long-short hedge fund with a focus on intellectual property. Prior to founding Icarus Group, from 2002 to 2007 Mr. Schneller was an investment analyst with Knott Partners, a multi-billion dollar New York hedge fund. From 2000 to 2001, Mr. Schneller was an Executive Director and Senior Research Analyst leading the IT and business services research practices for CIBC. From 1997 to 2000, Mr. Schneller was a Vice President and Senior Research Analyst at Stephens Inc. Mr. Schneller received a B.A. in History from the University of Massachusetts at Amherst, a Masters degree in Public Administration from Suffolk University in Boston and a Masters degree in Business Administration from the Johnson Graduate School of Management at Cornell University.

     Aaron A. Grunfeld, age 62, is a nominee for election or appointment to the Board. Mr. Grunfeld’s nomination was approved as acceptable to MDB Capital Group, Inc., pursuant to an agreement between the Company and MDB. Mr. Grunfeld has been engaged in the practice of law since 1971, with an emphasis on securities and corporate matters. Since August 2006 he has practiced law as a principal of Law Offices of Aaron A. Grunfeld and Associates, Los Angeles, California. Mr. Grunfeld is currently the acting and interim President, CFO and Secretary of Longfoot Communications Corp., a public company, and CEO of its sole subsidiary, Village Broadcasting Corp. He also serves as a director of FastFunds Financial Corporation, a public company. In December 2005, Mr. Grunfeld was appointed by Los Angeles, California Mayor Antonio R. Villaraigosa to the Metropolitan Water District Board of Directors. The Metropolitan Water District serves approximately 18 million residents in Southern California. Mr. Grunfeld received an A.B. in Political Science from UCLA in 1968 and a J.D. from Columbia University in 1971. He is a member of the California Bar Association.

Shareholders Meetings

     We intend to hold a shareholders meeting during the second quarter of 2008, at which all of the directors will stand for reelection. Our last shareholders meeting for the election of directors was held July 12, 2005.

Committees of the Board of Directors

      During the first quarter of 2008, we anticipate that our board of directors will establish an audit committee, a compensation committee and a nominating and corporate governance committee. The composition and function of each of our committees will comply with the rules of the SEC that will be applicable to us, and we intend to comply with additional requirements to the extent that they become applicable to us.

The committees are described below.

     Executive Committee. The Executive Committee consists of Glenn Welstad — Chief Executive Officer; Thomas Gilbert — Chief Operations Officer; and Todd Welstad — Chief Information Officer, and Brad E. Herr, Chief Financial Officer. Executive Committee meetings are also attended by Ronald L. Junck, General Counsel, and such other officers as may be determined from time-to-time by the Committee. The Executive Committee met at least once per week in 2007 to discuss operational and financial matters.

     Audit Committee. Ralph Peterson currently serves on the audit committee. Until additional directors are appointed (which is expected to occur during the first quarter of 2008), Mr. Peterson is the sole member of our audit committee. The audit committee’s responsibilities include:

	•		appointing, approving the compensation of, and assessing the independence of our independent registered public accounting firm;
	•		reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures;
	•		pre-approving auditing and permissible non-audit services, and the terms of such services, to be provided by our independent registered public accounting firm;
	•		coordinating the oversight and reviewing the adequacy of our internal control over financial reporting;
	•		establishing policies and procedures for the receipt and retention of accounting related complaints and concerns; and
	•		preparing the audit committee report required by Securities and Exchange Commission rules to be included in our annual proxy statement.

     Our board of directors has determined that Mr. Peterson qualifies as an “audit committee financial expert” as defined under the Securities Exchange Act of 1934.

     Compensation Committee. We intend to appoint a compensation committee during the first quarter of 2008. The compensation committee’s responsibilities include, but are not limited to:

•

annually reviewing and approving corporate goals and objectives relevant to compensation of our chief executive officer;

	•		evaluating the performance of our chief executive officer in light of such corporate goals and objectives and determining the compensation of our chief executive officer;
	•		reviewing and approving the compensation of our other executive officers;
	•		overseeing and administering our compensation, welfare, benefit and pension plans and similar plans; and
	•		reviewing and making recommendations to the board with respect to director compensation.

     Nominating and Corporate Governance Committee. We intend to appoint members of the nominating and corporate governance committee during the first quarter of 2008. The nominating and corporate governance committee’s responsibilities include, but are not limited to:

	•		developing and recommending to the board criteria for board and committee membership;
	•		establishing procedures for identifying and evaluating director candidates including nominees recommended by shareholders;
	•		identifying individuals qualified to become board members;
	•		recommending to the board the persons to be nominated for election as directors and to each of the board’s committees;
	•		developing and recommending to the board a code of business conduct and ethics and a set of corporate governance guidelines; and
	•		overseeing the evaluation of the board and management.

Executive Officers

     Each of our executive officers has been elected by our board of directors and serves until his or her successor is duly elected and qualified.

Indemnification of Directors and Officers

     The Washington Business Corporation Act provides that a company may indemnify its directors and officers as to certain liabilities. Our Articles of Incorporation (as amended) and Bylaws authorize our company to indemnify our directors and officers to the fullest extent permitted by law. The effect of such provisions is to authorize the company to indemnify the directors and officers of our company against all costs, expenses and liabilities incurred by them in connection with any action, suit or proceeding in which they are involved by reason of their affiliation with our company, to the fullest extent permitted by law. Such indemnification provisions are expressed in terms sufficiently broad to permit such indemnification under certain circumstances for liabilities (including reimbursement expenses incurred) arising under the Securities Act of 1933.

     Our Bylaws require us to indemnify each of our directors and officers, so long as such director acted in good faith and, generally, believed that an action was in the best interests of our company. Our directors and officers, however, are not entitled to such indemnification (i) if such director or officer is adjudged liable to our company, or (ii) if such director or officer is adjudged liable on the basis that personal benefit was improperly received by such officer or director.

     We presently maintain directors and officers liability insurance, which provides for an aggregate limit of $5,000,000.

     Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the company pursuant to the foregoing provisions, we have been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is therefore unenforceable.

Director Independence

     We undertook a review of the independence of our directors and, using the definitions and independence standards for directors provided in the rules of The NASDAQ Stock Market, considered whether any director has a material relationship with us that could interfere with his ability to exercise independent judgment in carrying out his responsibilities. As a result of this review, we determined that Ralph Peterson is an independent director, and that Glenn Welstad, Brad Herr, Todd Welstad, Ron Junck and Tom Gilbert are not independent directors.

Director Compensation

     The Company historically has not paid compensation to directors for their services performed as directors. We expect to compensate independent directors for their services beginning early in 2008. The amount of such compensation has not yet been determined. Our employee directors receive no compensation for attendance at Board meetings or meetings of Board committees. Directors who are not also executive officers of the company are reimbursed for usual and ordinary expenses of meeting attendance.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

     The Board of Directors’ responsibilities relating to the compensation of our company’s CEO and other executives and directors includes (a) reviewing and reporting on the continuity of executive leadership for our company; (b) approving the compensation structure for our CEO; and (c) reviewing the compensation structure for each of our other Named Executive Officers (“NEOs”) as listed under Executive Compensation — Summary Compensation Table.”

     Commencing in 2008, responsibility for discharging these responsibilities on behalf of the Board, and for establishing, maintaining, overseeing, evaluating and reporting upon our executive compensation plans and programs, will be undertaken by the Compensation Committee. The Compensation Committee will also review and coordinate annually with the Executive Committee of our Board of Directors with respect to compensation for any directors who are not also NEOs.

Objectives of Our Compensation Program

     In general, our objectives in structuring compensation programs for our NEOs is to attract, retain, incentivize, and reward talented executives who can contribute to our company’s growth and success and thereby build value for our shareholders over the long term. In the past, we have focused on cash compensation in the form of base salary as the primary element of our compensation program for NEOs.

     In past years, we did not have any executive compensation policies in place and our board of directors was responsible for annually evaluating individual executive performance. Historically, our board of directors reviewed and approved all of our compensation packages, and determined the appropriate level of each compensation component for each executive officer based upon compensation data and information gleaned from other sources as to salary levels at comparable companies. Our board of directors has also relied on its members’ business judgment and collective experience in our industry. Although it did not benchmark our executive compensation program and practices, our board of directors has historically aimed to set our executive compensation at levels it believes are comparable with executives in other companies of similar size and stage of development in similar industries and location while taking into account our relative performance and our own strategic goals.

     During 2008, we intend to expand the elements of our executive compensation program to include the following:

	•		Cash compensation in the form of base salary and incentive compensation (performance-based bonuses);
	•		Equity-based awards;
	•		Deferred compensation plans; and
	•		Other components of compensation.

     In addition, the employment agreements with each of our executive officers provide for certain retirement benefits and potential payments upon termination of employment for a variety of reasons, including a change in control of our company. See “Summary of Employment Agreements,” below.

Elements of Compensation

Base Salary

     The compensation received by our executive officers consists of a base salary. Base salaries for our executives are established based on the scope of their responsibilities and individual experience. Subject to any applicable employment agreements, base salaries will be reviewed annually, and adjusted from time to time to realign salaries with market levels after taking into account individual responsibilities, performance and experience.

Discretionary Annual Bonus

     In addition to base salaries, we have the ability to award discretionary annual bonuses to our executive officers. We have not yet formulated the bases upon which we may grant discretionary bonuses to our executive officers. We may increase the annual bonus paid to our executive officers at our discretion.

Equity and Other Compensation

     We do not have any equity compensation plans or any outstanding options. We intend to adopt one or more equity compensation plans in 2008. We offer $20,000 of company paid life insurance to each employee, including officers and directors. We are also currently evaluating other employee benefits programs including a 401(k) plan.

Compliance with Internal Revenue Code Section 162(m)

     Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to a public company for compensation over $1 million paid to its chief executive officer and its four other most highly compensated executive officers. However, if certain performance-based requirements are met, qualifying compensation will not be subject to this deduction limit. Although the limitations of Section 162(m) generally have not been of concern to us while we were a shell corporation, we intend to consider the requirements of Section 162(m) in developing our compensation policies now that we are an operating company.

Role of Executive Officers in Executive Compensation

     During our most recently completed year, we did not have a compensation committee or another committee of our board of directors performing equivalent functions. Instead, the entire board of directors performed the function of a compensation committee and our board of directors will continue to serve in such role. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on the board of directors or compensation committee.

Summary Compensation Table

     The following table provides summary information about compensation expensed or accrued by our company during the fiscal years ended December 28, 2007, and December 29, 2006, for (a) our Chief Executive Officer, (b) our Chief Financial Officer, (c) the two other executive officers other than our CEO and CFO serving at the end of the fiscal years; and (d) one additional individual for whom disclosure would have been provided but for the fact that he was not serving as an executive officer at the end of fiscal 2006 (collectively, the “Named Executive Officers” or “NEOs. During the fiscal year ended December 31, 2005, the Company did not have any executive officers that received in excess of $100,000 in compensation and the Principal Executive Officer of the Company received no compensation in that year.

										All Other
Name and Principal Position		Year				Salary				Compensation				Total
Glenn Welstad			2007			$	180,000							$	180,000
Director and Chief Executive Officer			2006			$	180,000							$	180,000
Thomas Gilbert			2007			$	120,000							$	120,000
Director and Chief Operating Officer			2006			$	120,000							$	120,000
Todd Welstad			2007			$	120,000							$	120,000
Director and Chief Information Officer			2006			$	120,000							$	120,000
Brad E. Herr			2007			$	120,000							$	120,000
Director, Chief Financial Officer			2006			$	27,692			$	20,770			$	48,462
C. Eugene Olsen			2006			$	110,769							$	110,769
Former Chief Financial Officer (3)

Equity Compensation Plans

     The Company has no equity compensation plans and had awarded no equity compensation to executive officers or directors as of December 28, 2007. Management intends to adopt equity compensation plans in 2008. These plans may include a flexible stock incentive plan and an employee stock purchase plan. It is anticipated that the numbers of shares to be reserved for the two plans will represent, as a percentage of the outstanding stock, up to 18% for the stock incentive plan and up to three percent for the employee stock purchase plan.

Summary of Executive Employment Agreements

     The terms of the executive employment agreements for Glenn Welstad, Chief Executive Officer, Todd Welstad, Chief Information Officer, and Thomas Gilbert, Chief Operating Officer, are substantially identical except for the differences noted below. Each agreement is for a three-year initial term commencing January 1, 2006. At the end of the initial three-year term, each agreement automatically renews for successive one-year terms, unless and until terminated by either party giving written notice to the other not less than 30 days prior to the end of the current term, or as otherwise set forth in such agreement. Employment may be terminated by the Company without cause on sixty days notice. If termination is without cause and occurs within the initial three year term of the agreement, the executive will receive his base salary for one year. If termination without cause occurs after the initial three year term, the executive will receive base salary for the remainder of the year in which termination occurs. The agreement may also be terminated for cause on 15 days written notice, and in the events of death, disability or a change in control. Upon termination due to a change in control, the executive will continue to receive his or her base salary for twelve months. Change in control is defined to include instances where there has been a significant turnover in the board of directors, upon a tender offer for more than 20% of the voting power of the company’s outstanding securities, upon a merger or consolidation , or upon liquidation or sale of a substantial portion of the company’s assets. The agreements contain non-competition and confidentiality provisions.

     Mr. Glenn Welstad receives a base salary of $180,000 per year and is entitled to performance based compensation in an amount set by the Company’s Board of Directors. Mr. Glenn Welstad’s agreement also provides for reimbursement of expenses for his spouse if she travels with him. No such spousal travel reimbursements were made to Mr. Welstad in 2007 or 2006. The agreements for Mr. Todd Welstad and Mr. Gilbert provide for base salaries of $120,000 per year and performance based compensation as set by the Board. All three agreements provide for expense reimbursement for business travel and participation in employee benefits programs made available to the executive during the term of employment.

     We presently do not compensate our directors. We anticipate that we will implement a policy relating to the compensation of our directors in 2008.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     In July and August 2007, certain notes payable to affiliates of our company were cancelled and converted into shares of our common stock. These conversions are described below:

Glenn Welstad(1)		$	360,654
Dwight Enget(2)			94,091
Tom Gilbert(2)			60,306
Tom Hancock(2)			27,659
Ronald L. Junck(2)			2,714
Todd Welstad(2)			814
Dave Wallace (3)			31,909
		$	578,147

     These notes payable were converted into shares of our common stock at a conversion price of $1.50 per share. The market price of our common stock during the period the notes were converted ranged from a low of $1.01 to a high of $2.35. An aggregate of 385,431 shares of our common stock were issued in the note conversions.

     New store surcharge fee. As part of the November 9, 2005 acquisition, we assumed an obligation to pay Glenn Welstad, our Chief Executive Officer and a director, $5,000 for each new temporary staffing store opened by us. Between November 2005 and September 2007, we opened 14 stores and would have required a payment to Mr. Welstad of $70,000. In lieu of a cash payment, we satisfied this obligation by issuing 50,000 shares of our common stock to Mr. Welstad. To fulfill all present and future obligations under this agreement, on November 14, 2007, we issued an additional 550,000 shares of our common stock to Mr. Welstad under this agreement. With the issuance of these shares, we have no further obligations under the new store surcharge agreement.

     Mr. Welstad owns Alligator LLC (“Alligator”), an automobile leasing company. Alligator provides approximately 16 vans and van drivers to us for use in transporting temporary workers to job sites at various locations within our sphere of operations. We provide fuel for the vehicles and pay Alligator a lease payment for use of the vans (average of $1,000 per van per month), plus reimbursement for the cost of the drivers (approximately $2,500 per driver per month). As of December 28, 2007, we are current on balances owed to Alligator for van

leases and drivers. We are in the process of unwinding our relationship with Alligator and expect to terminate the van leasing arrangement in the first quarter of 2008.

     In 2005, we purchased a parcel of real estate in Post Falls, Idaho, which served as our corporate headquarters. The purchase price for the real estate and the applicable building was $1,125,000, which was paid $525,000 in cash and $600,000 advanced from John Coghlan, a former director and one of our major shareholders. On December 29, 2005, we sold the real estate and the building back to Mr. Coghlan at the original purchase price pursuant to a Sale and Leaseback Agreement. Under this Agreement, we immediately leased the building back from Mr. Coghlan and obtained a three year option to purchase the building for $1,125,000.

     We have advanced funds to Viken Management, a company controlled by Glenn Welstad, to pay obligations of Viken that were incurred prior to the roll-up of the franchisees. As of November 5, 2007, Mr. Welstad owed the Company $290,000. On November 14, 2007, the Company and Mr. Welstad agreed to offset the balance due Alligator for van lease costs and services through December 28, 2007 against the balance owed by Viken to the Company. Under this arrangement, the payable and receivable net to zero.

     Additional related party transactions from prior years are disclosed in our annual report filings with the Securities and Exchange Commission on Form 10-KSB for the year in question.

     Our audit committee will review and report to our board of directors on any related party transaction. From time to time, the independent members of our board of directors also may form an ad hoc committee to consider transactions and agreements in which a director or executive officer of our company has a material interest. In considering related party transactions, the members of our audit committee are guided by their fiduciary duties to our shareholders. Our audit committee does not have any written or oral policies or procedures regarding the review, approval and ratification of transactions with related parties.

Compensation Committee Interlocks and Insider Participation

     None of our executive officers serves as a member of the board of directors or compensation committee, or other committee serving an equivalent function, of any other entity that has one or more of its executive officers serving as a member of our board of directors or compensation committee. None of the current members of our compensation committee, nor any of their family members, has ever been one of our employees.

Promoters and Certain Control Persons

     We did not have any promoters at any time during the past five fiscal years.

PRINCIPAL SHAREHOLDERS

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

     The following tables set forth information regarding (a) the ownership of any non-management person known to us to own more than five percent of any class of our voting Shares, and (b) the number and percentage of our Shares of Common Stock held by each director, each of the named executive officers and directors and officers as a group. Percentages of ownership have been calculated based upon 35,665,053 shares of Common Stock issued and outstanding as of February 7, 2008.

Security Ownership of Non-Management Owners

     The Company has three non-management shareholders that own 5% or more of the total outstanding shares of Common Stock.

Name and Address of Beneficial Owner		Common Stock				Percent of Class
Myron Thompson (1) P.O. Box 969 Minot, ND 58702			3,811,631				10.69	%
Kevin Semerad (1) 8528 Carriage Hill Circle Savage, MN 55378			3,588,961				10.06	%
John R. Coghlan (2) 1307 N. King James Lane Liberty Lake, WA 99019			2,036,168				5.71	%

Security Ownership of Management

										Total
		Individual				Shared				Beneficial				Percent of
Name of Beneficial Owner		Ownership				Ownership				Ownership				Class
Tom Gilbert (3, 4)			601,879				—				601,879				1.69	%
Brad E. Herr (5)			240,000				—				240,000				0.67	%
Ronald L. Junck (3)			419,054				2,553,311				2,972,365				8.33	%
Glenn Welstad (3)			5,523,453				4,316,646				9,840,099				27.59	%
Todd Welstad (3)			19,864				343,522				363,386				1.02	%
All Officers and Directors as a Group			6,804,250				7,213,479				14,017,729				39.30	%

Equity Compensation Plans

     The Company has no equity compensation plans and has awarded no equity compensation to executive officers or directors as of February 7, 2008. Management intends to adopt an equity compensation plan in 2008.

SELLING SHAREHOLDERS

     This prospectus relates to the offering and sale, from time to time, of up to 16,609,688 shares of our common stock held by the shareholders named in the table below. This amount includes common shares issuable upon the exercise of warrants held by the selling shareholders. The selling shareholders may exercise their warrants at any time after May 30, 2008 for investors that purchased on November 30, 2007 (6,031,943 Warrants) and at any time after June 27, 2008 for investors that purchased on December 27, 2007 (280,860 warrants) in their sole discretion subject to certain limitations.

     Set forth below is information, to the extent known to us, setting forth the name of each selling shareholder and the amount and percentage of common stock owned by each (including shares that can be acquired on the exercise of outstanding warrants) prior to the offering, the shares to be sold in the offering, and the amount and percentage of common stock to be owned by each (including shares that can be acquired on the exercise of outstanding warrants) after the offering assuming all shares registered herein are sold.

     Beneficial ownership is determined in accordance with Rule 13d-3 promulgated by the SEC, and generally includes voting or investment power with respect to securities. Except as indicated in the footnotes to the table, we believe, based on information by each selling shareholder, that each selling shareholder possesses sole voting and investment power with respect to all of the shares of common stock owned by that selling shareholder. In computing the number of shares beneficially owned by a shareholder and the percentage ownership of that shareholder, shares of common stock subject to options or warrants held by that shareholder that are currently exercisable or are exercisable within 60 days after the date of the table are deemed outstanding. Those shares, however, are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person or group.

     The selling shareholders may sell all or some of the shares of common stock they are offering, and may sell shares of our common stock otherwise than pursuant to this prospectus. The table below assumes that each selling shareholder exercises all of its warrants and sells all of the shares issued upon exercise thereof, and that each selling shareholder sells all of the shares offered by it in offerings pursuant to this prospectus, and does not acquire any additional shares. We are unable to determine the exact number of shares that will actually be sold or when or if these sales will occur. See “Plan of Distribution.”

																						Ownership
		BENEFICIAL OWNERSHIP												Percentage				Number				After
Shareholder		Shares				Warrants				Total				of Total (1)				Offered				Offering
Andrew Garret, Inc., Attention Guy G. Clemente, Managing Director			17,404				48,482				65,886				0.16	%			65,866				—
BCWOD, JV			75,000				37,500				112,500				0.27	%			112,500				—
Edwin Bertolas Revocable Living Trust			100,000				50,000				150,000				0.36	%			150,000				—
Thomas Berton			25,000				12,500				37,500				0.09	%			37,500				—
Bleu Ridge Consultants, Inc. Profit Sharing Plan and Trust			25,000				12,500				37,500				0.09	%			37,500				—
Susan A. Brasel			10,000				5,000				15,000				0.04	%			15,000				—
Charitable Remainder Trust of Tmothy J. Brasel			30,000				15,000				45,000				0.11	%			45,000				—
John Thomas Bridge and Opportunity Fund LP			250,000				125,000				375,000				0.89	%			375,000				—
Sam Buck			200,000				100,000				300,000				0.71	%			300,000				—
Chestnut Ridge Partners, LP			400,000				200,000				600,000				1.43	%			600,000				—
Richard Duane Clarkson			100,000				50,000				150,000				0.36	%			150,000				—
Lesa Ann Clarkson			50,000				25,000				75,000				0.18	%			75,000				—
Richard L. Clarkson, TTEE			100,000				50,000				150,000				0.36	%			150,000				—
David Clarkson			40,000				20,000				60,000				0.14	%			60,000				—
Lucille S. Ball IRRVOC TR Dated 9/10/1991, Richard L. Clarkson, TTEE			200,000				100,000				300,000				0.71	%			300,000				—
John Coghlan			100,000				50,000				150,000				0.36	%			150,000				—
Michael Cullen			457				1,055				1,512				0.00	%			1,512				—
Anthony DaCosta			41,169				213,404				254,573				0.61	%			254,573				—
Glen S. Davis			30,000				15,000				45,000				0.11	%			45,000				—
Del Rey Management LP			75,000				37,500				112,500				0.27	%			112,500				—
Anthony Di Benedetto			50,000				25,000				75,000				0.18	%			75,000				—
Anthony DiGiandomenico			511,169				447,614				958,783				2.28	%			958,783				—
Jane DiGian			50,000				25,000				75,000				0.18	%			75,000				—
Warren Feldman			50,000				25,000				75,000				0.18	%			75,000				—
Firebird Global Master Fund, Ltd., c/o Trident Company (Cayman) Limited			1,500,000				750,000				2,250,000				5.36	%			2,250,000				—
Genesis Financial, Inc.			100,000				50,000				150,000				0.36	%			150,000				—
Aaron A. Grunfeld			100,000				50,000				150,000				0.36	%			150,000				—
Heller Capital			750,000				375,000				1,125,000				2.68	%			1,125,000				—
Iroquois Master Fund Ltd.			100,000				50,000				150,000				0.36	%			150,000				—
Raymond Kim			25,152				12,851				38,003				0.09	%			38,003				—
David Kincheloe			30,000				15,000				45,000				0.11	%			45,000				—
John G. Korman			50,000				25,000				75,000				0.18	%			75,000				—
Scott L. Landt			5,000				2,500				7,500				0.02	%			7,500				—
London Family Trust			300,000				150,000				450,000				1.07	%			450,000				—
David Carl Lustig, III			50,000				25,000				75,000				0.18	%			75,000				—
Chris Marlett			10,427				24,077				34,504				0.08	%			34,504				—
Raymond Marlett			30,000				15,000				45,000				0.11	%			45,000				—
MDB Capital Group, LLC, Attention Anthony DiGiandomenico			913,107				1,059,885				1,972,992				4.70	%			1,972,992				—
RBC Dain Raucher CUST FBO Jonathan Meyers			100,000				50,000				150,000				0.36	%			150,000				—
Christine A. Mittman			50,000				25,000				75,000				0.18	%			75,000				—
Henri Nurminen			8,000				4,000				12,000				0.03	%			12,000				—
Michael Palin and Dean Palin, JTWROS			100,000				50,000				150,000				0.36	%			150,000				—
J. J. Peirce			10,000				5,000				15,000				0.04	%			15,000				—
Pleiades Investment Partners — R, LP, c/o Potomac Capital Management			449,018				224,509				673,527				1.60	%			673,527				—
Potomac Capital International Ltd., c/o Potomac Capital Management			411,613				208,806				617,419				1.47	%			617,419				—
Potomac Capital Partners LP, c/o Potomac Capital Management			614,369				307,185				921,554				2.20	%			921,554				—
Angela A. Rouse			30,000				15,000				45,000				0.11	%			45,000				—
Sachs Investing Company			130,000				65,000				195,000				0.46	%			195,000				—
Philip S. Sassower 1996 Charitable Remainder Annuity Trust			100,000				50,000				150,000				0.36	%			150,000				—
John Schneller			—				116,435				116,435				0.28	%			116,435				—
Sonoran Pacific Resources, LLP			1,200,000				600,000				1,800,000				4.29	%			1,800,000				—
James P. Tierney			100,000				50,000				150,000				0.36	%			150,000				—
M. Stephen Walker			500,000				250,000				750,000				1.79	%			750,000				—
Totals			10,296,885				6,312,803				16,609,688				39.58	%			16,609,688				—

(1)		The “Total” and “Percentage of Total” columns include shares issuable on exercise of the Warrants. For purposes of this Table, all warrants are deemed exercised.
(2)		The “Ownership After Offering” column assumes that all selling shareholders sell 100% of their ownership in this offering.

PLAN OF DISTRIBUTION

     The selling shareholders may, from time to time, sell any or all of their shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The selling shareholders may use any one or more of the following methods when selling shares:

•		ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
•		block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
•		purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
•		an exchange distribution in accordance with the rules of the applicable exchange;
•		privately negotiated transactions;
•		short sales;
•		broker-dealers may agree with the selling shareholders to sell a specified number of such shares at a stipulated price per share;
•		a combination of any such methods of sale; and
•		any other method permitted pursuant to applicable law.

     The selling shareholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.

     Broker-dealers engaged by the selling shareholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling shareholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The selling shareholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved. Any profits on the resale of shares of common stock by a broker-dealer acting as principal might be deemed to be underwriting discounts or commissions under the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, attributable to the sale of shares will be borne by a selling shareholder. The selling shareholders may agree to indemnify any agent, dealer or broker-dealer that participates in transactions involving sales of the shares if liabilities are imposed on that person under the Securities Act.

     The selling shareholders may from time to time pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time under this prospectus after we have filed a supplement to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 supplementing or amending the list of selling shareholders to include the pledgee, transferee or other successors in interest as selling shareholders under this prospectus.

     The selling shareholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this

prospectus and may sell the shares of common stock from time to time under this prospectus after we have filed a supplement to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 supplementing or amending the list of selling shareholders to include the pledgee, transferee or other successors in interest as selling shareholders under this prospectus.

     The selling shareholders and any broker-dealers or agents that are involved in selling the shares of common stock may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares of common stock purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.

     We are required to pay all fees and expenses incident to the registration of the shares of common stock. We have agreed to indemnify the selling shareholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

     The selling shareholders have advised us that they have not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of their shares of common stock, nor is there an underwriter or coordinating broker acting in connection with a proposed sale of shares of common stock by any selling shareholder. If we are notified by any selling shareholder that any material arrangement has been entered into with a broker-dealer for the sale of shares of common stock, if required, we will file a supplement to this prospectus. If the selling shareholders use this prospectus for any sale of the shares of common stock, they will be subject to the prospectus delivery requirements of the Securities Act.

     The anti-manipulation rules of Regulation M under the Securities Exchange Act of 1934 may apply to sales of our common stock and activities of the selling shareholders

DESCRIPTION OF SECURITIES

Common Stock

     We are presently authorized to issue 100,000,000 shares of common stock, par value of $0.001 per share. The holders of our common stock are entitled to equal dividends and distributions, per share, with respect to the common stock when, as and if declared by our board of directors from funds legally available therefor. No holder of any shares of our common stock has a preemptive right to acquire additional shares issued by our company, or securities convertible into, or evidencing any rights or options to purchase any shares. Upon our liquidation, dissolution or winding up, and after payment of creditors and preferred shareholders, if any, the assets will be divided pro-rata on a share-for-share basis among the holders of the shares of common stock. All shares of common stock now outstanding are fully paid, validly issued and non-assessable. Each share of common stock is entitled to one vote with respect to the election of any director or any other matter upon which shareholders are required or permitted to vote. Holders of our common stock do not have cumulative voting rights, so that the holders of more than 50% of the combined shares voting for the election of directors may elect all of the directors, if they choose to do so and, in that event, the holders of the remaining shares will not be able to elect any members to our board of directors.

Preferred Stock

     We are presently authorized to issue 5,000,000 shares of preferred stock, par value $0.001 per share, of which 40,000 shares are designated Series A Preferred Stock. No shares of our preferred stock are issued or outstanding.

     Under our Articles of Incorporation, as amended, our board of directors has the power, without further action by the holders of common stock, to designate the relative rights and preferences of the preferred stock, and issue the preferred stock in one or more series as designated by our board of directors. The designation of rights and preferences could include preferences as to liquidation, redemption and conversion rights, voting rights, dividends or other preferences, any of which may be dilutive of the interest of the holders of shares of our common stock or the preferred stock of any other series. The issuance of preferred stock may have the effect of delaying or preventing a

change in control without further shareholder action and may adversely affect the rights and powers, including voting rights, of the holders of shares of our common stock. In certain circumstances, the issuance of preferred stock could depress the market price of shares of our common stock. Our board of directors effects a designation of each series of preferred stock by filing with the Washington Secretary of State articles of amendment to our articles of incorporation defining the rights and preferences of each such series. Documents so filed are matters of public record and may be examined in accordance with procedures of the Washington Secretary of State, or copies thereof may be obtained from us.

Series A Preferred Stock

     We are presently authorized to issue 40,000 shares of Series A Preferred Stock, par value $0.001 per share. No shares of Series A Preferred Stock are issued or outstanding. Each share of Series A Preferred Stock is convertible, at the option of the holder, at any time, into shares of our common stock at a conversion ratio of 20 shares of common stock for each share of Series A Preferred Stock for the first 12 months following the purchase date. Thereafter, the conversion ratio will be reduced by 3.0% per year. Shares of our Series A Preferred Stock are entitled to one vote per share and, in matters requiring class voting, shall vote together as a class. The Series A Preferred Stock ranks senior to shares of our common stock with respect to any amounts payable upon our liquidation, dissolution, or winding up. This liquidation preference will entitle the holders of the Series A Preferred Stock to receive the price paid for the stock and all accrued, but unpaid dividends on such shares. The Series A Preferred Stock rank junior to all debt of our company. The conversion price of the Series A Preferred Stock will be adjusted for any subsequent issuances of our common stock at a per-share issue price below $5.00 for the first year after purchase. Thereafter, the conversion ratio of the Series A Preferred Stock will be adjusted for subsequent issuances of our common stock at a per-share issue price below an amount equal to $5.00 plus a 3.0% increase each year. The anti-dilution protection will not apply to securities issued (i) as a dividend or distribution on shares of our Series A Preferred Stock, (ii) to employees or directors of, or consultants or advisors to, our Company or any of its subsidiaries pursuant to an arrangement or plan approved by our Board of Directors, (iii) upon the exercise of options or the conversion or exchange of our convertible securities, (iv) to banks, equipment lessors, or other financial institutions, or to real property lessors, pursuant to debt financing, equipment leasing, or real property leasing transactions approved by our Board of Directors, (v) pursuant to a sale by our Company of shares of our common stock in an underwritten public offering under the Securities Act with the public offering price being not less than $12,000,000 in the aggregate, or (vi) pursuant to the exercise of warrants or rights granted to underwriters in connection with a public offering referenced in (v). No adjustment to the conversion ratio of the Series A Preferred Stock shall be made if we receive written notice from the holders of at least a majority of the then outstanding shares of Series A Preferred Stock waiving such adjustment right. We may redeem the Series A Preferred Stock at any time at the price paid per share plus accrued but unpaid dividends thereon. Upon our call for redemption, each holder of Series A Preferred Stock has 30 days to elect to convert such shares into shares of our common stock. From and after the date of issuance, shares of our Series A Preferred Stock shall accrue a cumulative dividend of $5.00 per share per annum, subject to adjustment in the event stock dividends, stock splits, combinations, or other similar recapitalization transactions. Cumulative dividends on all outstanding shares of our Series A Preferred Stock will accrue at a rate of $5.00 per share per annum (subject to adjustments in the event of stock dividends, stock splits, combinations, or other similar recapitalization transactions). However, we are under no obligation to pay such dividends. We cannot declare, set aside, or pay any dividends on any of our shares unless the holders of the Series A Preferred Stock receive a dividend per share equal to all accrued but unpaid dividends on each share of Series A Preferred Stock and all other dividend amounts required under our Articles of Incorporation. The Series A Preferred Stock have no registration rights.

Warrants and Options

     The only outstanding warrants and/or options to purchase shares of our capital stock are as follows:

•

Warrants to purchase up to 6,031,943 shares of our common stock, exercisable at $1.25 per share (subject to certain adjustments), with a five year term expiring on November 30, 2012. This warrant includes a full ratchet anti-dilution provision. See “Adjustments and Other Terms in the Warrants” below.

	•		Warrants to purchase up to 280,860 shares of our common stock, exercisable at $1.25 per share (subject to certain adjustments), with a five year term expiring on December 27, 2012. This warrant includes a full ratchet anti-dilution provision. See “Adjustments and Other Terms in the Warrants” below.
	•		Warrant to purchase up to 200,000 shares of our common stock, exercisable at $3.00 per share (subject to adjustment to reflect stock dividends, stock splits, combinations or exchanges of shares, or other capital changes), with a two year term expiring on March 31, 2009. This warrant includes a full ratchet anti-dilution provision for issuances of our securities at a per share issue price below $3.00.
	•		Warrant to purchase up to 250,000 shares of our common stock, exercisable at $1.50 per share, with a five year term expiring on August 14, 2012. This warrant includes certain adjustments and other specific terms. See “Adjustments and other Terms in the Warrants” below.

Adjustments and Other Terms in the Warrants

     With respect to all of the five year Warrants listed above, if certain changes occur to our capitalization, such as a stock split, reverse stock split, stock dividend, consolidation, or combination or reclassification of our common stock, then the number of shares issuable upon exercise of the Warrants will be adjusted appropriately.

     With respect to the five year Warrants listed above that have an exercise price of $1.25, in the event that our Company merges, consolidates, or sells substantially all of its assets (a “Fundamental Transaction”), the holder of each Warrant shall have the right to receive, in lieu of the shares issuable upon exercise of their Warrants, stock, securities, or assets as would have been issuable or payable with respect to or in exchange for a number of shares equal to the number of shares immediately exercisable before such transaction took place. We cannot effect any Fundamental Transaction unless the third party delivers to the holders of the Warrants a document verifying its obligation to deliver to the holders of the Warrants the stock, securities, or assets as discussed above. Further, if we declare or make any dividend or other distribution of our assets to holders of our common stock, then the exercise price of the Warrants shall be reduced according to certain calculations set forth in the Warrants.

     With respect to the five year warrant listed above that has an exercise price of $1.50, in the event that our Company effectuates a Fundamental Transaction, the holder of the Warrant shall have the right to receive, shares issuable upon exercise of their Warrant, the right to receive (i) a proportionate number of shares of common stock of the successor company, or (ii) cash equal to the value of the Warrant if the sale is an all cash sale.

Dividends

     We have never declared or paid dividends on any of our shares of capital stock. We intend to retain earnings, if any, to support the development of our business and therefore do not anticipate paying cash dividends for the foreseeable future. Payment of future dividends, if any, will be at the discretion of our Board of Directors after taking into account various factors, including our financial condition and results of operations, capital requirements, contractual restrictions, business prospects, and other factors that the Board of Directors considers relevant.

Transfer Agent

     The transfer agent for our common stock is Columbia Stock Transfer Company, 601 E. Seltice Way, Suite 202, Post Falls, ID, 83854. Their telephone number is 208.664.3544.

LEGAL MATTERS

     Certain legal matters with respect to the shares of common stock offered hereby will be passed upon for us by Rogers & Hool LLP.

EXPERTS

     The financial statements as of December 29, 2006 and December 31, 2005 and for the fiscal years ended December 29, 2006, December 31, 2005 and December 31, 2004 included in this prospectus have been audited by DeCoria, Maichel and Teague, P.S., independent auditors, as stated in its report appearing in this prospectus and elsewhere in the registration statement of which this prospectus forms a part, and have been so included in reliance upon the reports of such firm given upon its authority as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

     We are subject to the informational requirements of the Securities Exchange Act of 1934 and, in accordance therewith, file reports and other information with the SEC. Our reports and other information filed pursuant to the Securities Exchange Act of 1934 may be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. Copies of such material can also be obtained from the Public Reference Room of the SEC at J100 F Street, N.E., Washington, D.C. 20549, at prescribed rates. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a Web site that contains reports and other information regarding registrants that file electronically with the SEC. The address of the SEC’s Web site is http://www.sec.gov.

     We have filed with the SEC a registration statement on Form S-1 under the Securities Act of 1933 with respect to the common stock offered hereby. As permitted by the rules and regulations of the SEC, this prospectus, which is part of the registration statement, omits certain information, exhibits, schedules and undertakings set forth in the registration statement. Copies of the registration statement and the exhibits are on file with the SEC and may be obtained from the SEC’s Web site or upon payment of the fee prescribed by the SEC, or may be examined, without charge, at the offices of the SEC set forth above. For further information, reference is made to the registration statement and its exhibits.

Command Center, Inc.

Index to Financial Statements

Interim Unaudited Financial Statements — September 28, 2007 and September 29, 2006			F-2
Balance sheet			F -3
Statements of operations			F -4
Statements of cash flows			F -5
Notes to financial statements			F-6 through F-14
Financial Statements and Report of Independent Registered Public Accounting Firm — December 29, 2006 and December 31, 2005			F-15
Report of Independent Registered Public Accounting Firm			F-16
Balance sheets			F-17
Statements of operations			F -18
Statements of stockholders’ equity			F-19
Statements of cash flows			F-20
Notes to financial statements			F-21 through F-38
Financial Statements and Report of Independent Registered Public Accounting Firm — December 31, 2005 and December 31, 2004			F-39
Report of Independent Registered Public Accounting Firm			F-40
Balance sheets			F-41
Statements of operations			F -42
Statements of stockholders’ equity			F -43
Statements of cash flows			F- 44
Notes to financial statements			F-45 through F-53

COMMAND CENTER, INC.

Unaudited Interim Financial Statements

September 28, 2007 and September 29, 2006

Command Center, Inc.
Balance Sheet (Unaudited)

		September 28, 2007
Assets
CURRENT ASSETS:
Cash and cash equivalents		$	251,095
Accounts receivable — trade, net of allowance for bad debts of $430,000			10,706,633
Prepaid expenses, deposits, and other			1,472,123
Prepaid workers’ compensation insurance			1,320,890
Workers’ compensation risk pool deposits — current			1,064,000
Total current assets			14,814,741
PROPERTY AND EQUIPMENT, NET			3,348,636
OTHER ASSETS:
Workers’ compensation risk pool deposits — non-current			3,581,000
Goodwill			32,481,129
Amortizable intangibles — net			740,345
Other assets			42,155
Total other assets			36,844,629
		$	55,008,006
Liabilities and Stockholders’ Equity
CURRENT LIABILITIES:
Accounts payable			1,615,078
Checks issued and outstanding			1,160,444
Accrued payroll, benefits and taxes			3,052,465
Line of credit facility			6,718,579
Notes payable			2,664,219
Workers’ compensation insurance and reserves payable			2,016,710
Workers’ compensation claims liability — current			1,064,000
Total current liabilities			18,291,495
LONG-TERM LIABILITIES
Notes payable net of current portion			96,791
Finance obligation			1,125,000
Workers’ compensation claims liability — non-current			1,286,000
Total long term liabilities			2,507,791
Total liabilities			20,799,286
COMMITMENTS AND CONTINGENCIES
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 24,736,465 shares issued and outstanding			24,735
Additional paid-in capital			40,342,130
Accumulated deficit			(6,158,145	)
Total stockholders’ equity			34,208,720
		$	55,008,006

See accompanying notes to unaudited financial statements.

Command Center, Inc.
Statements of Operations (Unaudited)

		Thirteen Weeks Ended								Thirty-nine Weeks Ended
		September 28, 2007				September 29, 2006				September 28, 2007				September 29, 2006
REVENUE:
Staffing services revenue		$	26,242,962			$	27,747,156			$	74,158,370			$	45,431,317
Franchise fee revenues			—				—				—				535,745
Other income			136,832				15,667				262,684				30,343
Total revenue			26,379,794				27,762,823				74,421,054				45,997,405
COST OF STAFFING SERVICES			18,473,276				19,624,124				53,661,722				32,719,116
GROSS PROFIT			7,906,518				8,138,699				20,759,332				13,278,289
OPERATING EXPENSES:
Compensation and related expenses			3,887,965				3,348,914				13,102,565				7,143,361
Selling and marketing expenses			42,184				219,247				428,890				447,843
Professional expenses			383,756				143,998				1,324,841				563,520
Depreciation and amortization			214,600				111,848				622,009				215,880
Rents			638,242				547,335				1,868,944				1,032,674
Travel and transportation			480,361				98,398				1,886,071				348,796
Utilities and communications			305,569				194,900				909,690				353,950
Insurance			178,377				198,472				571,212				293,651
Bank fees			159,106				93,142				528,120				124,504
Other expenses			636,319				2,209,973				2,364,125				3,341,848
			6,926,479				7,166,227				23,606,467				13,866,027
INCOME (LOSS) FROM OPERATIONS			980,039				972,472				(2,847,135	)			(587,738	)
OTHER INCOME (EXPENSE)
Interest expense			(535,697	)			(286,526	)			(1,108,957	)			(365,994	)
Interest and dividend income			—				9,098				—				44,430
Total other income/(expense)			(535,697	)			(277,428	)			(1,108,957	)			(321,564	)
NET INCOME (LOSS)		$	444,342			$	695,044			$	(3,956,092	)		$	(909,302	)
INCOME (LOSS) PER SHARE — BASIC		$	0.02			$	0.03			$	(0.16	)		$	(0.05	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING			24,612,054				23,048,555				24,019,256				16,541,304

See accompanying notes to unaudited financial statements.

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

		Thirty-nine Weeks Ended
Increase (Decrease) in Cash		September 28, 2007				September 29, 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(3,956,092	)		$	(909,302	)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization			622,009				275,883
Allowance for bad debts			39,137				—
Stock issued for interest and compensation			180,640				90,000
Amortization of note payable discount			153,500				—
Changes in assets and liabilities
Accounts receivable — trade, net			(1,417,622	)			(4,472,497	)
Due from affiliates			—				123,418
Prepaid expenses			(1,290,247	)			(1,553,880	)
Workers’ compensation risk pool deposits			(2,592,290	)			(2,305,000	)
Accounts payable			417,159				1,126,974
Amounts due to affiliates			(782,184	)			55,564
Accrued expenses			1,494,601				1,216,410
Workers’ compensation insurance and risk pool deposits payable			1,207,045				2,024,167
Workers’ compensation claims liability			927,291				822,709
Total adjustments			(1,040,961	)			(2,596,252	)
Net cash used by operating activities			(4,997,053	)			(3,505,554	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment			(439,294	)			(820,204	)
Purchase of Anytime Labor			(247,500	)			—
Collections on note receivable			118,384				131,586
Proceeds from sale of investments			—				404,000
Net cash provided by (used by) investing activities			(568,410	)			(284,618	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net advances on line of credit facility			993,433				1,195,684
Change in checks issued and outstanding			311,048				495,729
Advances payable			—				673,915
Sale of common stock			730,000				585,000
Sale of preferred stock			—				470,000
Proceeds received from notes payable			2,111,210				—
Proceeds received from issue of warrants in connection with notes payable			380,000				—
Payment made for note payable financing fee			(100,000	)			—
Net cash provided by financing activities			4,425,691				3,420,328
NET INCREASE (DECREASE) IN CASH			(1,139,772	)			(369,844	)
CASH, BEGINNING OF PERIOD			1,390,867				369,844
CASH, END OF PERIOD		$	251,095			$	—
NON-CASH INVESTING AND FINANCING ACTIVITIES
Common stock issued on conversion of preferred stock		$	—			$	470,000
Common stock issued on conversion of amounts due affiliates		$	578,147			$	—
Common stock issued for acquisition of:
Accounts receivable, net		$	—			$	6,477,104
Property, plant and equipment			—				603,184
Prepaid expenses			390,860				—
Financing liability assumed			—				(4,767,262	)
Amounts due to affiliates							(529,516	)
Payables assumed in acquisitons			—				(105,101	)
Goodwill and intangible assets			—				30,565,248
Assets acquired in Anytime Labor purcahse			912,000				—
Total		$	1,302,860			$	32,243,657
Debt assumed in Anytime Labor purchase		$	252,500			$	—

See accompanying notes to unaudited financial statements.

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 for 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 52 weeks ended December 29, 2006, and the notes thereto contained in this Prospectus. Certain items previously reported in specific financial statement captions have been reclassified to conform to the 2007 presentation.

NOTE 2 — RECENT ACCOUNTING PRONOUNCEMENTS:

On January 1, 2007, we adopted Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Tax Positions (“FIN48”). FIN48 prescribes a recognition threshold and measurement attribute for the recognition and measurement of tax positions taken or expected to be taken in income tax returns. FIN48 also provides guidance on de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, and accounting for interest and penalties associated with tax positions.

In the course of our assessment, we determined that we were subject to examination of our income tax filings in the United States and various state jurisdictions for the 2003 — 2006 tax years. Within each of these jurisdictions we examined our material tax positions to determine whether we believed they would be sustained under the more-likely-than-not guidance provided by FIN48. If interest and penalties were to be assessed, we would charge interest to interest expense, and penalties to other operating expense.

As a result of our assessment, we have concluded that the adoption of FIN48 had no significant impact on the Company’s results of operations or balance sheet for the thirty-nine weeks ended September 28, 2007, and required no adjustment to opening balance sheet accounts as of December 30, 2006.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” (“SFAS 157”), which will become effective in our 2008 financial statements. SFAS 157 establishes a framework for measuring fair value and expands disclosure about fair value measurements, but does not require any new fair value measurements. We have not yet determined the effect that adoption of SFAS 157 may have on our results of operations or financial position.

The FASB issued Statement No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — including an amendment of FASB Statement No. 115,” in the first quarter 2007. The statement allows entities to value financial instruments and certain other items at fair value. The statement provides guidance over the election of the fair value option, including the timing of the election and specific items eligible for the fair value accounting. Changes in fair values would be recorded in earnings. The statement is effective for fiscal years beginning after November 15, 2007. The Company is evaluating the impact the adoption of this statement will have, if any, on its financial statements.

NOTE 3 — EARNINGS PER SHARE:

Basic earnings (loss) per share (“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. At September 28, 2007, the Company had 450,000 warrants outstanding in two blocks. One block of warrants entitles the holder to purchase 200,000 shares of common stock at $3.00 per share expiring on April 1, 2009. The second block of warrants entitles the holder to purchase 250,000 shares of common stock at $1.50 per share, expiring on August 14, 2012. In addition, the Company issued a convertible note in the amount of $500,000 to our investment banker in a bridge funding transaction on August 14, 2007. The note is convertible into the securities offered in the next equity funding undertaken by the Company. The type of securities and the number of shares that may be issuable pursuant to the conversion feature cannot be determined at this time. Diluted EPS is not presented for the thirteen and thirty-nine week periods ended September 28, 2007. The dilutive effect of the warrants is not material.

NOTE 4 — BUSINESS COMBINATIONS:

On January 1, 2007, we agreed to acquire certain assets and liabilities of Anytime Labor, Inc. for $247,500 in cash and 200,000 shares of our common stock having an estimated value of $4.56 per share. The acquired assets represent three temporary staffing stores. Two of the acquired stores are in Oregon and one is in Washington. We closed the transaction on February 19, 2007. From January 1, 2007 through the closing date of the transaction, we operated the stores under the Command Center name pursuant to the acquisition agreement, and operations from these stores are reflected in our financial statements for the thirteen and thirty-nine week periods ended September 28, 2007.

The following represents management’s estimate of the fair value of the assets acquired and liabilities assumed in the acquisitions.

Cash consideration		$	247,500
Liabilities assumed			252,500
Common stock			912,000
Total consideration		$	1,412,000
Accounts receivable		$	0
Furniture and fixtures and equipment			25,000
Intangible assets (customer relationships)			125,000
Goodwill (estimated)			1,262,000
Total assets acquired		$	1,412,000

Prior to closing the acquisitions, Glenn Welstad, our CEO, loaned Anytime Labor $252,500 to allow Anytime Labor to payoff an existing contractual obligation. Upon completion of the acquisitions, the Company assumed the obligation due Mr. Welstad. This amount was repaid to Mr. Welstad in the second quarter.

The Company also assumed certain obligations on existing operating leases and other contractual rights in conjunction with the purchase. Management has estimated that the fair value of these obligations and the contractual rights is immaterial and has not assigned any separately identifiable value to these items. Management has estimated the fair value of Anytime Labor’s customer list and recorded it as an intangible asset that will be amortized over a three year period. Goodwill has been recorded based on the excess of the consideration paid over the net identifiable assets and liabilities acquired.

The acquisitions were undertaken as an ongoing part of our growth strategy.

NOTE 5 — RELATED-PARTY TRANSACTIONS:

The Company has had the following transactions with related parties:

New store surcharge fee. As part of the acquisition of the franchise operations of Command Staffing and Harborview in November 2005, the Company assumed the obligation of Command Staffing to pay Glenn Welstad, our CEO and Chairman, $5,000 for each new temporary staffing store opened by the Company. Amounts owed to Mr. Welstad pursuant to the new store surcharge agreement were paid in 50,000 shares of common stock in the thirteen weeks ended September 28, 2007. In order to minimize the cash flow impact of the new store surcharge agreement, any amounts due for future store openings will be paid in stock at the rate of 2,200 shares per store at the time the new stores are opened. This obligation will end at the earlier of December 31, 2001 of the opening of 250 new stores.

Mr. Welstad also owns Alligator LLC (Alligator), an automobile leasing company. Alligator provides approximately 20 vans and van drivers to the Company for use in transporting temoporary workers to job sites at various locations within our sphere of operations. The Company provides fuel for the vehicles and pays Alligator a lease payment for use of the vans plus reimbursement for the cost of the drivers. As of September 28, 2007, the Company owed Alligator $159,755 under this arrangement.

The Company has also advanced funds to Viken Management, a company controlled by Mr. Welstad, to pay obligations of Viken that were incurred prior to the roll-up of the franchisee operations. As of September 28, 2007, Mr. Welstad owed the Company $229,000. With the agreement of Mr. Welstad, this receivable balance will be offset against the balance due Alligator in the fourth quarter. Any balance remaining after the offset will be repaid or subject to additional offsets prior to year end.

NOTE 6 — LINE OF CREDIT FACILITY:

On May 12, 2006, we entered into an agreement with our principal lender for a financing arrangement collateralized by eligible accounts receivable. Eligible accounts receivable are generally defined to include accounts that are not more than sixty days past due. The loan agreement 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 when a customer’s aggregate past due account exceeds 50% of that customer’s aggregate balance due. The lender will advance 85% of the invoiced amount for eligible receivables. 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 two and one half percent (prime +2.5%) or 6.25% per annum. Our line of credit interest rate at September 28, 2007 was 10.75%. The loan agreement further provides that interest is due at the applicable rate on the greater of the outstanding balance or $5,000,000. The credit facility expires on April 7, 2009. In December 2006, the Company negotiated an increase in the maximum credit facility to $9,950,000. The loan agreement includes certain financial covenants including a requirement that we maintain a working capital ratio of 1:1, that we maintain positive cash flow, that we maintain a tangible net worth of $3,500,000, and that we achieve operating results within a range of projected EBITDA. At September 28, 2007, we were not in compliance with these loan covenants. Our lender has waived compliance with the covenants as of September 28, 2007. The balance due our lender at September 28, 2007 was $6,718,579.

NOTE 7 — NOTES PAYABLE TO AFFILIATES:

During the thirteen weeks ended September 28, 2007, the Company settled certain notes payable to affiliates for stock. These conversions are described below:

Glenn Welstad(1)		$	360,654
Dwight Enget(2)			94,091
Tom Gilbert(2)			60,306
Tom Hancock(2)			27,659
Ronald L. Junck(2)			2,714
Todd Welstad(2)			814
Dave Wallace (3)			31,909
		$	578,147

The notes were converted into common stock at a conversion price of $1.50 per share. An aggregate of 385,431 shares of common stock were issued in the note conversions.

NOTE 8 — NOTES PAYABLE

In the thirty-nine months ended September 28, 2007, we borrowed $2,000,000 on a short-term note payable to an unrelated third party for supplemental working capital. We also borrowed $500,000 from our investment banker on a short-term bridge loan to be repaid or converted upon completion of an equity funding.

The $2,000,000 loan funds were received in April and were used for working capital. The Note was originally due on July 1, 2007 but has been extended through November 30, 2007. The Note includes interest payable at 18% per annum through the original due date and 24% per annum from July 1, 2007 until paid in full. The note holder was also granted warrants to purchase up to 200,000 shares of common stock at $3.00 per share at any time before April 1, 2009. The warrants include a provision for adjustment of the warrant exercise price in the event of stock splits, dividends, combinations or exchanges or other changes in capital structure. The warrants also include a provision to adjust the exercise price if the Company sells other shares of common stock for less than $3.00 per share. Interest on this note is accrued monthly.

In the Company’s estimation, approximately $167,000 of the $2,000,000 note related to the value of the warrants, resulting in a note discount of $167,000. In accordance with EITF 00-27, the note discount is being amortized to interest expense over the life of the Note. In the thirteen weeks ended September 28, 2007, $125,250 of the note discount was amortized to interest expense. The balance of the note discount will be amortized to expense in the thirteen weeks ended December 28, 2007.

On August 14, 2007, the company also received $500,000 on a short-term Promissory Note from our investment banker. The Note does not bear interest during the term and matures on the earlier of the next equity funding or February 14, 2008. After maturity, the Note bears interest at the rate of 12% per annum until paid. The Note is convertible into securities at the time of the next equity funding undertaken by the Company. Terms of conversion will be the same as the terms of the next equity funding, and are not yet defined. We also granted our investment banker warrants to purchase up to 250,000 shares of our common stock at an exercise price of $1.50 per share. The warrants are exercisable immediately and expire on August 14, 2012 (five years after issuance).

In the Company’s estimation, approximately $213,000 of the $500,000 note related to the value of the warrants, resulting in a note discount of $213,000. In accordance with APB 14, the note discount is being amortized to interest expense over the life of the Note. In the thirteen weeks ended September 28, 2007, $53,250 of the note discount was amortized to interest expense. In the event the note is converted into common stock, the remaining balance of the note discount at

the time of conversion will immediately be recognized as interest expense. Upon conversion, the conversion feature of the note will also be separately valued and may result in additional interest expense at the date of conversion. The amount of additional interest expense will depend on the terms of the next equity funding and the amount of additional interest cannot be determined as of September 28, 2007.

The Company is pursuing an equity funding with the assistance of our investment banker. We expect to utilize a portion of the funds from an equity funding, if successful, to repay the balances due on these notes if not converted into securities in conjunction with the equity funding.

NOTE 9 — WORKERS’ COMPENSATION INSURANCE AND RESERVES:

We provide our temporary and permanent workers with workers’ compensation insurance. Currently, we maintain a large deductible workers’ compensation insurance policy through American International Group, Inc. (“AIG”). The policy covers the premium year from May 13, 2007 through May 12, 2008. While we have primary responsibility for all claims, our insurance coverage provides reimbursement for covered losses and expenses in excess of our deductible. For workers’ compensation claims arising in self-insured states, our workers’ compensation policy covers any claim in excess of the $250,000 deductible on a “per occurrence” basis. This results in our being substantially self-insured.

We obtained our current policy in May 2007 and since the policy inception, we have made payments into a risk pool fund to cover claims within our self-insured layer. Our payments into the fund for the premium year will total $3,920,000 based on estimates of expected losses calculated at inception of the policy. If our payments into the fund exceed our actual losses over the life of the claims, we may receive a refund of the excess risk pool payments. Correspondingly, if our workers’ compensation reserve risk pool deposits are less than the expected losses for any given policy period, we may be obligated to contribute additional funds to the risk pool fund. Our maximum exposure under the policy is capped at the greater of $7,500,000 or 10.1% of payroll expenses incurred during the premium year.

The workers’ compensation risk pool deposits totaled $4,645,000 as of September 28, 2007, and were classified as current and non current assets based upon management’s estimate of when the related claims liabilities will be paid. The deposits have not been discounted to present value in the accompanying financial statements.

We have discounted the expected liability for future losses to present value using a discount rate of 4.5%, which approximates the risk free rate on US Treasury instruments. Our expected future liabilities will be evaluated on a quarterly basis and adjustments to these calculations will be made as warranted.

Expected losses will extend over the life of longest lived claim which may be outstanding for many years. As a new temporary staffing company, we have limited experience with which to estimate the average length of time during which claims will be open. As a result, our current actuarial analysis is based largely on industry averages which may not be applicable to our

business. If our average claims period is longer than industry average, our actual claims losses could exceed our current estimates. Conversely, if our average claims period is shorter than industry average, our actual claims could be less than current reserves.

For workers’ compensation claims originating in Washington and North Dakota (our “monopolistic jurisdictions”) we pay workers’ compensation insurance premiums and obtain full coverage under government administered programs. We are not the primary obligor on claims in these jurisdictions. Accordingly, our financial statements do not reflect liability for workers’ compensation claims in these jurisdictions.

Workers’ compensation expense is recorded as a component of our cost of services and consists of the following components: self-insurance reserves net of the discount, insurance premiums, and premiums paid in monopolistic jurisdictions. Workers’ compensation expense for our temporary workers totaled $4,071,003 in the thirty-nine weeks ended September 28, 2007. Prior to April 1, 2006, the Company operated as a franchisor of temporary staffing businesses and workers’ compensation costs were not a materially significant component of operating costs.

NOTE 10 — COMMITMENTS AND CONTINGENCIES:

Finance obligation. Our finance obligation consists of debt owed to a related party upon the purchase of the Company’s headquarters. The terms of the agreement call for lease payments of $10,000 per month commencing on January 1, 2006 for a period of three years. The Company has the option anytime after January 1, 2008 to purchase the building for $1,125,000 or continue to make payments of $10,000 per month for another two years under the same terms. The Company accounts for the lease payments as interest expense. The building is being depreciated over 30 years.

New store surcharge. The Company has an obligation to pay Glenn Welstad, our CEO, 2200 shares of common stock for each new store opened. This obligation lasts until the earlier to occur of 250 new stores or December 31, 2011.

Contingent payroll and other tax liabilities. In May and June 2006, we acquired operating assets for a number of temporary staffing stores. The entities that owned and operated these stores received stock in consideration of the transaction. As operating businesses prior to our acquisition, each entity incurred obligations for payroll withholding taxes, workers’ compensation insurance fund taxes, and other liabilities. We structured the acquisition as an asset purchase and agreed to assume only the liability for each entity’s accounts receivable financing line of credit. We also obtained representations that liabilities for payroll taxes and other liabilities not assumed by the Company would be paid by the entities.

Since the acquisitions, it has come to our attention that certain tax obligations incurred on operations prior to our acquisitions have not been paid. The entities that sold us the assets (the “selling entities”) are primarily liable for these obligations. The owners of the entities may also be liable. In most cases, the entities were owned or controlled by Glenn Welstad, our CEO.

Based on the information currently available, we estimate that the total state payroll and other tax liabilities owed by the selling entities is between $300,000 and $500,000 and that total payroll taxes due to the Internal Revenue Service is between $900,000 and $1,500,000. Our outside legal counsel has advised us that the potential for successor liability on the IRS claims is remote.

We have not accrued any amounts for these contingent payroll and other tax liabilities at September 28, 2007. We have obtained indemnification agreements from the selling entities and their principal members for any liabilities or claims we incur as a result of these predecessor tax liabilities. We have also secured the indemnification agreement with pledges of our common stock legally or beneficially owned by the selling entities or their members. We believe the selling entities and their principals have adequate resources to meet these obligations and have indicated through their actions to date that they fully intend to pay the amounts due.

We understand that the responsible parties have entered into payment agreements on the substantial majority of the tax obligations and expect to resolve these debts in full within the next twelve months. To the best of our knowledge, no new payroll tax obligations of acquired entities have been raised since December 29, 2006.

Operating leases. The Company leases store facilities, vehicles and equipment. Most of our store leases have terms that extend over three to five years. Some of the leases have cancellation provisions that allow us to cancel on ninety day notice, and some of the leases have been in existence long enough that the term has expired and we are currently occupying the premises on month-to-month tenancies. Lease obligations for the next five years as of June 29, 2006 are:

Remainder of 2007		$	328,000
2008			1,166,000
2009			918,000
2010			543,000
2011			155,000

Litigation. On December 31, 2005, ProTrades Connection, Inc. filed a lawsuit against Command Staffing, LLC and seven individuals in the Superior Court for the State of California, Santa Clara County. The individual defendants are employees of Command Center, Inc. and were formerly employed by ProTrades. In the lawsuit, the plaintiff alleges that the individual defendants breached written covenants against the solicitation of ProTrades employees. Subsequently, the plaintiff has amended the Complaint to bring in as defendants other entities, including Command Center, Inc. and other individuals. In September 2007, following briefing and argument of our motion for summary judgment, the Judge granted our motion and dismissed all claims of ProTrades. ProTrades has now appealed the granting of our motion and the appeal is pending.

Command Center and the remaining defendants intend to continue their vigorous defense of this case. The Company has not established a contingent loss reserve as the outcome of the litigation is uncertain at this point in time.

Payroll Tax Penalties and Interest. As of September 28, 2007, the Company was delinquent in the payment of various payroll tax obligations totaling approximately $850,000. We have communicated with each of the various taxing authorities and now have deferred payment

arrangements in place on substantially all of the delinquent balances. Accrued taxes recorded on the balance sheet as of September 28, 2007 adequately reflect the delinquencies and the known penalties and interest. We anticipate that additional penalties and interest may be incurred in connection with these delinquencies, but do not expect the amounts to be significant. If substantial additional penalties and interest are assessed, the company’s financial condition could be adversely affected.

NOTE 11 — STOCKHOLDERS’ EQUITY:

In the thirty-nine week period ended on September 28, 2007, the Company issued an aggregate of 1,244,603 shares of Common Stock. The shares of Common Stock were issued for asset acquisitions, payment of consulting fees, as severance pay to terminated employees, for new investment in private placements of 10,000 and 466,666 shares, and for conversion of notes payable to affiliates.

	•		10,000 shares were sold in the first quarter at $3.00 per share.
	•		466,666 were sold in the second quarter at $1.50 per share.
	•		200,000 shares were issued as partial consideration for the acquisition of temporary staffing store assets from Anytime Labor, Inc. Management estimated the value of the shares issued in the Anytime Labor asset acquisition at $4.56 per share as provided in the acquisition agreement (See Note 4).
	•		We issued 98,951 shares of common stock for prepaid sales force training services. Management estimated the value of these shares at $3.96 per share in accordance with the consulting services agreement.
	•		We issued 66,000 shares to terminated employees as severance pay. Management estimated the value of the severance pay shares on the dates of issuance and recorded an aggregate of $130,640 as compensation expense in the period.
	•		We issued 17,555 shares as payment of interest relating to the lease agreement on our Post Falls corporate headquarters building. (See Notes 5 and 10).
	•		We issued 385,431 shares on conversion of $578,147 of notes payable to affiliates. (See Note 7).

COMMAND CENTER, INC.

Financial Statements and
Report of Independent Registered
Public Accounting Firm

December 29, 2006 and December 31, 2005

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Command Center, Inc.

We have audited the accompanying balance sheets of Command Center, Inc. (“the Company”) as of December 31, 2006 and 2005, and the related statements of operations, stockholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Command Center, Inc. as of December 31, 2006 and 2005, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the financial statements the Company has restated its 2005 financial statements.

March 20, 2007

Spokane, Washington

COMMAND CENTER, INC.
Balance Sheets

						As Restated
		December 29,				December 31,
		2006				2005
Assets
CURRENT ASSETS:
Cash		$	1,390,867			$	369,844
Accounts receivable trade, net of allowance for bad debts of $390,863 and $37,000 at December 29, 2006 and December 31, 2005			9,328,148				356,367
Amounts due from affiliates			—				676,101
Note receivable — current			65,609				191,847
Prepaid expenses and deposits			1,111,906				47,214
Current portion of workers’ compensation risk pool deposits			579,413				—
Investment in securities			—				404,000
Total current assets			12,475,943				2,045,373
PROPERTY AND EQUIPMENT — NET			3,390,696				1,589,253
OTHER ASSETS:
Note receivable — non-current			69,930				91,660
Workers’ compensation risk pool deposits			1,473,297				—
Goodwill			31,219,129				1,543,572
Intangible assets — net			731,000				—
Total other assets			33,493,356				1,635,232
TOTAL ASSETS		$	49,359,995			$	5,269,858
Liabilities and Stockholders’ Equity
CURRENT LIABILITIES:
Accounts payable trade			797,606				135,676
Checks issued and outstanding			849,396
Line of credit facility			5,725,146				—
Advances payable			300,000				—
Amounts due to affiliates			1,276,053				456,525
Accrued wages and benefits			1,557,864				—
Other current liabilities			400,313				—
Current portion of note payable			8,445				—
Workers’ compensation insurance and risk pool deposits payable			809,665				—
Current portion of workers’ compensation claims liability			579,413				—
Total current liabilities			12,303,901				592,201
LONG-TERM LIABILITIES
Note payable, less current portion			94,632				—
Workers’ compensation claims liability, less current portion			843,296				—
Finance obligation			1,125,000				1,125,000
Total long-term liabilities			2,062,928				1,125,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Preferred stock - 5,000,000 shares, $0.001 par value, authorized; none issued			—				—
Common stock - 100,000,000 shares, $0.001 par value, authorized; 23,491,862 and 10,066,013 issued and outstanding, respectively			23,492				10,066
Additional paid-in capital			37,171,727				3,325,496
Retained earnings (deficit)			(2,202,053	)			217,095
Total stockholders’ equity			34,993,166				3,552,657
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	49,359,995			$	5,269,858