UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549


FORM
      10-Q





x
            QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934




For
      the
      quarterly period ended **June
      27, 2008**





 ̈
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
                ACT




For
      the
      transition period from _____________ to ___________.





Commission
      File Number: **000-53088**





**COMMAND
      CENTER, INC.**


(Exact
      name of issuer as specified in its charter)





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





3773
      West
      Fifth Avenue, Post Falls, Idaho 83854





(Address
      of principal executive offices)





(208)
      773-7450





(Issuer’s
      telephone number)





N.A.





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





Indicate
      by check mark whether the registrant: (1) has filed all reports required to
      be
      filed by Section 13, or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding twelve months, and (2) has been subject to such filing requirements
      for the past ninety days.


Yes x No  ̈





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company.
      See
      definition of “large accelerated filer,” “accelerated filer,” and smaller
      reporting company in Rule 12b-2 of the Exchange Act. (Check one):





Large
                accelerated filer  ̈
            Accelerated
                filer ̈Non-accelerated
                filer  ̈
            Smaller
                reporting companyx(Do
                not check if smaller reporting company)





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yes  ̈ No x





The
      number of shares of common stock outstanding on August 8, 2008 was 36,130,053
      shares.










**Command
      Center, Inc.**








**Contents**





**FORM
      10-Q**




Page**PART
                I**Item
                1. Financial Statements (unaudited)Management
                Statement
            
            10-Q
                Page 3Balance
                Sheet at June 27, 2008 and December 28, 2007
            
            10-Q
                Page 4Statements
                of Operations for the thirteen and twenty-six week periods ended
                June 27,
                2008 and June 29, 2007
            
            10-Q
                Page 5Statements
                of Cash Flows for the twenty-six week periods ended June 27, 2008
                and June
                29, 2007
            
            10-Q
                Page 6Notes
                to Financial Statements
            
            10-Q
                Page 7Item
                2. Management’s Discussion and Analysis of Financial Condition and Results
                of Operations
            
            10-Q
                Page 13Item
                3. Quantitative and Qualitative Disclosures about Market Risk
            
            10-Q
                Page 19Item
                4. Controls and Procedures
            
            10-Q
                Page 20**Part
                II**Item
                2 Unregistered Sales of Equity Securities
            
            10-Q
                Page 21Item
                6. Exhibits and Reports on Form 8-K
            
            10-Q
                Page 22**Signatures**
            
            10-Q
                Page 22**Certifications**





10-Q
          Page
          2


PART
      I





Item
      1.  Financial
      Statements.





MANAGEMENT
      STATEMENT





The
      accompanying balance sheets of Command Center, Inc. as of June 27, 2008
      (unaudited) and December 28, 2007, and the related statements of operations
      and
      cash flows for the thirteen and twenty-six week periods ended June 27, 2008
      and
      June 29, 2007 were prepared by Management of the Company.





The
      accompanying financial statements should be read in conjunction with the audited
      financial statements of Command Center, Inc. (the “Company”) as of and for the
      52 weeks ended December 28, 2007, and the notes thereto contained in the
      Company’s annual report on Form 10-KSB for the 52 weeks ended December 28, 2007,
      filed with the Securities and Exchange Commission.





Management


Command
      Center, Inc.


August
      13, 2008





10-Q
          Page
          3


**Command
      Center, Inc.**





**Balance
      Sheet**





June 27, 2008
            
            December 28, 2007Unaudited***Assets****CURRENT
                ASSETS:*Cash
            
            $
            2,507,985
            
            $
            580,918Accounts
                receivable, net of allowance for bad debts of $500,000 at June 27,
                2008
                and December 28, 2007
            
            
            8,657,753
            
            
            9,079,222Notes
                and subscriptions receivable - current
            
            
            173,313
            
            
            1,953,882Prepaid
                expenses, deposits, and other
            
            
            2,235,057
            
            
            1,610,913Current
                portion of workers' compensation risk pool deposits
            
            
            1,500,000
            
            
            1,150,375Total
                current assets
            
            
            15,074,108
            
            
            14,375,310*PROPERTY
                AND EQUIPMENT, NET*
            
            
            2,980,111
            
            
            3,245,506*OTHER
                ASSETS:*Note
                receivable - non-current
            
            
            17,155
            
            
            17,155Workers'
                compensation risk pool deposits
            
            
            4,297,650
            
            
            2,833,127Goodwill
            
            
            14,257,929
            
            
            14,257,929Intangible
                assets - net
            
            
            593,559
            
            
            683,275Total
                other assets
            
            
            19,166,293
            
            
            17,791,486$
            37,220,512
            
            $
            35,412,302***Liabilities
                and Stockholders' Equity****CURRENT
                LIABILITIES:*Accounts
                payable
            
            $
            1,449,472
            
            $
            1,459,676Line
                of credit facility
            
            
            4,474,871
            
            
            4,686,156Accrued
                wages and benefits
            
            
            1,324,947
            
            
            1,553,536Advances
                payable
            
            
            -
            
            
            100,000Current
                portion of notes payable, net of discount
            
            
            1,916,944
            
            
            230,032Workers'
                compensation insurance and risk pool deposits payable
            
            
            3,046,443
            
            
            -Current
                portion of workers' compensation claims liability
            
            
            1,500,000
            
            
            1,150,375Total
                current liabilities
            
            
            13,712,677
            
            
            9,179,775*LONG-TERM
                LIABILITIES:*Note
                payable, less current portion
            
            
            -
            
            
            85,655Finance
                obligation
            
            
            1,125,000
            
            
            1,125,000Workers'
                compensation claims liability, less current portion
            
            
            3,250,000
            
            
            2,219,642Total
                long-term liabilities
            
            
            4,375,000
            
            
            3,430,297*COMMITMENTS
                AND CONTINGENCIES (Notes 7 and 8)**STOCKHOLDERS'
                EQUITY:*Preferred
                stock - 5,000,000 shares, $0.001 par value, authorized; no shares
                issued
                and outstandingCommon
                stock - 100,000,000 shares, $0.001 par value, authorized; 36,130,053
                and
                35,725,050 shares issued and outstanding, respectively
            
            
            36,130
            
            
            35,725Additional
                paid-in capital
            
            
            51,324,588
            
            
            51,005,159Accumulated
                deficit
            
            
            (32,227,883
            )
            
            (28,238,654
            )Total
                stockholders' equity
            
            
            19,132,835
            
            
            22,802,230$
            37,220,512
            
            $
            35,412,302





See
      accompanying notes to unaudited financial statements.





10-Q
          Page
          4


**Command
      Center, Inc.**





**Statements
      of Operations (Unaudited)**





Thirteen Weeks Ended
            
            Twenty-six Weeks EndedJune 27, 2008
            
            June 29, 2007
            
            June 27, 2008
            
            June 29, 2007*REVENUE:*Staffing
                services revenue
            
            $
            21,092,331
            
            $
            25,061,008
            
            $
            40,927,729
            
            $
            47,915,408Other
                income
            
            
            154,045
            
            
            60,400
            
            
            255,735
            
            
            125,852Total
                revenue
            
            
            21,246,376
            
            
            25,121,408
            
            
            41,183,464
            
            
            48,041,260*COST
                OF STAFFING SERVICES*
            
            
            16,296,123
            
            
            17,899,936
            
            
            31,364,658
            
            
            35,188,446*GROSS
                PROFIT*
            
            
            4,950,253
            
            
            7,221,472
            
            
            9,818,806
            
            
            12,852,814*OPERATING
                EXPENSES:*Compensation
                and related expenses
            
            
            3,288,251
            
            
            4,633,082
            
            
            7,302,186
            
            
            9,214,599Selling
                and marketing expenses
            
            
            218,073
            
            
            354,043
            
            
            524,098
            
            
            844,721Professional
                expenses
            
            
            136,660
            
            
            405,797
            
            
            548,425
            
            
            941,085Depreciation
                and amortization
            
            
            215,030
            
            
            211,135
            
            
            428,826
            
            
            407,408Rent
            
            
            691,291
            
            
            644,295
            
            
            1,293,207
            
            
            1,230,702Other
                expenses
            
            
            1,656,871
            
            
            1,910,935
            
            
            3,419,880
            
            
            4,041,473Total
                operating expenses
            
            
            6,206,176
            
            
            8,159,287
            
            
            13,516,622
            
            
            16,679,988*LOSS
                FROM OPERATIONS*
            
            
            (1,255,923
            )
            
            (937,815
            )
            
            (3,697,816
            )
            
            (3,827,174
            )*OTHER
                INCOME (EXPENSE):*Interest
                expense
            
            
            (141,254
            )
            
            (384,154
            )
            
            (292,069
            )
            
            (582,912
            )Other
                income (expense)
            
            
            (5,278
            )
            
            2,301
            
            
            656
            
            
            9,652Total
                other income (expense)
            
            
            (146,532
            )
            
            (381,853
            )
            
            (291,413
            )
            
            (573,260
            )*NET
                LOSS*
            
            $
            (1,402,455
            )
            $
            (1,319,668
            )
            $
            (3,989,229
            )
            $
            (4,400,434
            )*LOSS
                PER SHARE - BASIC*
            
            $
            (0.04
            )
            $
            (0.06
            )
            $
            (0.11
            )
            $
            (0.19
            )*WEIGHTED
                AVERAGE COMMON SHARES OUTSTANDING*
            
            
            36,097,086
            
            
            23,844,680
            
            
            35,911,070
            
            
            23,724,395





See
      accompanying notes to unaudited financial statements.





10-Q
          Page
          5





**Command
      Center, Inc.**





**Statements
      of Cash Flows (Unaudited)**





Twenty-six
                Weeks EndedJune 27, 2008
            
            June 29, 2007***Increase
                (Decrease) in Cash****CASH
                FLOWS FROM OPERATING ACTIVITIES:*Net
                loss
            
            $
            (3,989,229
            )
            $
            (4,400,434
            )Adjustments
                to reconcile net loss to net cash used by operating
                activities:Depreciation
                and amortization
            
            
            429,538
            
            
            407,408Allowance
                for bad debts
            
            
            -
            
            
            30,000Stock
                issued for interest and compensation
            
            
            123,000
            
            
            180,640Changes
                in assets and liabilitiesAccounts
                receivable, net
            
            
            421,469
            
            
            (256,664
            )Due
                from affiliates
            
            
            (171,640
            )
            
            -Prepaid
                expenses, deposits and other
            
            
            (624,144
            )
            
            (1,705,096
            )Workers'
                compensation risk pool deposits
            
            
            (1,814,148
            )
            
            (3,162,607
            )Accounts
                payable - trade
            
            
            (10,204
            )
            
            481,180Amounts
                due to affiliates
            
            
            -
            
            
            (982,315
            )Accrued
                wages and benefits
            
            
            (228,589
            )
            
            2,096,807Workers'
                compensation insurance and risk pool deposits payable
            
            
            3,046,443
            
            
            3,351,815Workers'
                compensation claims liability
            
            
            1,379,983
            
            
            923,270Total
                adjustments
            
            
            2,551,708
            
            
            1,364,438Net
                cash used by operating activities
            
            
            (1,437,521
            )
            
            (3,035,996
            )*CASH
                FLOWS FROM INVESTING ACTIVITIES:*Purchases
                of property and equipment
            
            
            (73,715
            )
            
            (406,559
            )Purchase
                of Anytime Labor
            
            
            -
            
            
            (247,500
            )Collections
                on note receivable
            
            
            74,209
            
            
            118,384Net
                cash provided by (used by) investing activities
            
            
            494
            
            
            (535,675
            )*CASH
                FLOWS FROM FINANCING ACTIVITIES:*Net
                advances (payments) on line of credit facility
            
            
            (211,285
            )
            
            286,414Change
                in checks issued and outstanding
            
            
            -
            
            
            (849,396
            )Proceeds
                received from short-term note
            
            
            1,740,000
            
            
            2,115,279Proceeds
                allocated to warrants issued in connection with short-term
                note
            
            
            260,000Collections
                of common stock subscriptions
            
            
            1,878,000Sale
                of common stock
            
            
            -
            
            
            730,000Principal
                payments on notes payable
            
            
            (139,455
            )
            
            -Costs
                of common stock offering and registration
            
            
            (163,166
            )
            
            -Net
                cash provided by financing activities
            
            
            3,364,094
            
            
            2,282,297*NET
                INCREASE (DECREASE) IN CASH*
            
            
            1,927,067
            
            
            (1,289,374
            )*CASH,
                BEGINNING OF PERIOD*
            
            
            580,918
            
            
            1,390,867*CASH,
                END OF PERIOD*
            
            $
            2,507,985
            
            $
            101,493*NON-CASH
                INVESTING AND FINANCING ACTIVITIES*Common
                stock issued for acquisition of:Prepaid
                expenses
            
            
            -
            
            
            390,860Assets
                acquired in Anytime Labor purcahse
            
            
            -
            
            
            912,000Total
            
            $
            -
            
            $
            1,302,860Debt
                assumed in Anytime Labor purchase
            
            $
            -
            
            $
            252,500





See
      accompanying notes to unaudited financial statements.





10-Q
          Page
          6


***NOTE
      1 — BASIS OF PRESENTATION:***





The
      accompanying unaudited financial statements have been prepared in conformity
      with generally accepted accounting principles in the United States of America
      and reflect all normal recurring adjustments which, in the opinion of Management
      of the Company, are necessary to a fair presentation of the results for the
      periods presented. The results of operations for such periods are not
      necessarily indicative of the results expected for the full fiscal year or
      any
      future period. The preparation of financial statements in conformity with
      accounting principles generally accepted in the United States of America
      requires management to make estimates and assumptions that affect the reported
      amounts of assets and liabilities at the date of the financial statements and
      the reported amounts of revenues and expenses during the reporting periods.
      Actual results could differ significantly from these estimates.





The
      accompanying unaudited financial statements should be read in conjunction with
      the audited financial statements of the Company as of and for the 52 weeks
      ended
      December 28, 2007, and the notes thereto contained in the Company’s annual
      report on Form 10-KSB for the 52 weeks ended December 28, 2007, filed with
      the
      Securities and Exchange Commission. Certain items previously reported in
      specific financial statement captions have been reclassified to conform to
      the
      2008 presentation.





***NOTE
      2 — RECENT ACCOUNTING PRONOUNCEMENTS:***





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” or SFAS
      No. 157. SFAS No. 157 defines fair value, establishes a framework for
      measuring fair value in generally accepted accounting principles, and expands
      disclosures about fair value measurements. The standard is effective for
      financial statements issued for fiscal years beginning after November 15,
      2007 and interim periods within those fiscal years. The Company adopted SFAS
      No. 157 for financial assets and liabilities effective December 29, 2007.
      There was no impact to the Company’s financial statements upon adoption.





The
      statement requires that fair value measurements be classified and disclosed
      in
      one of the three categories:





Level
              1:
            Quoted
                prices in active markets for identical assets and liabilities that
                the
                reporting entity has the ability to access at the measurement date;





Level
              2:
            Inputs
                other than quoted prices included within Level 1 that are observable
                for
                the asset or liability, either directly or indirectly; or





Level
              3:
            Unobservable
                inputs.





On
      February 12, 2008, the FASB issued FASB Staff Position (FSP) FAS
      No. 157-2. This FSP permits a delay in the effective date of SFAS
      No. 157 to fiscal years beginning after November 15, 2008 for
      nonfinancial assets and nonfinancial liabilities, except for items that are
      recognized or disclosed at fair value in the financial statements on a recurring
      basis, at least annually. The Company does not believe that adoption of the
      FSP
      will have a material impact on the Company’s financial statements.





We
      also
      adopted the provisions of SFAS No. 159, “The Fair Value Option for Financial
      Liabilities,” effective December 29, 2007. SFAS No. 159 permits entities to
      choose to measure many financial assets and financial liabilities at fair value.
      The adoption of SFAS No. 159 has not had a material effect on our financial
      position or results of operations as of and for the thirteen weeks ended June
      27, 2008.





10-Q
          Page
          7





In
      December 2007, the FASB issued SFAS No. 141 (R), “Business Combinations.”
 SFAS No. 141 (R) requires an acquirer to measure the
      identifiable assets acquired, the liabilities assumed and any noncontrolling
      interest in the acquiree at their fair values on the acquisition date, with
      goodwill being the excess value over the net identifiable assets acquired.
       It is effective for financial statements issued for fiscal years beginning
      after December 15, 2008 and early adoption is prohibited. The Company has
      not yet determined the effect on our financial statements, if any, upon adoption
      of SFAS No. 141 (R).





On
      March
      19, 2008 the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
      and Hedging Activities” (“SFAS 161”). SFAS 161 requires disclosures of the fair
      value of derivative instruments and their gains and losses in a tabular format,
      provides for enhanced disclosure of an entity’s liquidity by requiring
      disclosure of derivative features that are credit-risk related, and requires
      cross-referencing within footnotes to enable financial statement users to locate
      information about derivative instruments. This statement is effective for fiscal
      years and interim periods beginning after November 15, 2008.





***NOTE
      3 — EARNINGS PER SHARE:***





The
      Company accounts for its income (loss) per common share according to Statement
      of Financial Accounting Standard No. 128, “Earnings Per Share” (“SFAS 128”).
      Basic earnings per share is calculated by dividing net income or loss available
      to common stockholders by the weighted average number of common shares
      outstanding, and does not include the impact of any potentially dilutive common
      stock equivalents. The Company had warrants and options for 7,762,803 shares
      of
      common stock outstanding at June 27, 2008. The company incurred a loss in the
      twenty-six week period ended June 27, 2008. Accordingly, the warrant shares
      are
      anti-dilutive and only basic earnings per share is reported at June 27,
      2008.





***NOTE
      4 — 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 June 27, 2008
      was
      7.5%. 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 June 27, 2008, we were not in
      compliance with the EBITDA and tangible net worth covenants. Our lender has
      waived compliance with the EBITDA and tangible net worth covenants as of June
      27, 2008. The balance due our lender at June 27, 2008 was
      $4,474,871.




10-Q
          Page
          8




***NOTE
      5 — WORKERS’ COMPENSATION INSURANCE AND RESERVES:***





We
      provide our temporary and permanent workers with workers’ compensation
      insurance. Currently, we maintain large deductible workers’ compensation
      insurance policies through AMS Staff Leasing II (“AMS”) and Arch Insurance
      Group. The Arch Policy covers our workers in the State of California for the
      period from June 27, 2008 through June 27, 2009. The AMS policy covers all
      other
      states (except the monopolistic states of Washington and North Dakota) for
      the
      premium year from May 13, 2008 through May 12, 2009. While we have primary
      responsibility for all claims in non-monopolistic states, 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. Prior to the inception of the AMS and Arch policies, we were
      insured by American International Group (“AIG”).





Under
      the
      policies, we make payments into a risk pool fund to cover claims within our
      self-insured layer. 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.





The
      workers’ compensation risk pool deposits totaled $5,797,650 as of June 27, 2008,
      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.
      Corresponding claims liabilities at June 27, 2008 amounted to
      $4,750,000.





We
      have
      discounted the expected liability for future losses to present value using
      a
      discount rate of 3.5%, 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 the 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 $3,768,923 in
      the twenty-six weeks ended June 27, 2008. Workers’ compensation expense in the
      first two quarters of, 2008 was impacted significantly by claims relating to
      the
      policy year from May 12, 2006 through May 12, 2007. Our insurer has assigned
      higher than anticipated future claims liabilities in connection with these
      claims. We anticipate that expected future claims liabilities will moderate
      over
      time as we gain additional historical data regarding our settlements of these
      claims.




10-Q
          Page
          9




***NOTE
      6 – SHORT-TERM DEBT:***





On
      June
      24, 2008, the Company entered into an agreement with Sonoran Pacific Resources,
      LLP to borrow $2,000,000 against a Promissory Note. The Note bears interest
      at
      15% per annum with interest only payments through January, 2009. The Note calls
      for monthly payments of $400,000 plus accrued interest commencing on February
      1,
      2009. The note holder also received a warrant to purchase 1,000,000 shares
      of
      common stock at $0.45 per share. The warrant was valued at $260,000 using the
      Black-Sholes pricing model based on assumptions about volatility, the risk
      free
      rate of return and the term of the warrants as set out in the agreement. The
      warrant value, was recorded as note discount, and the note discount will be
      amortized to interest expense over the life of the note. The warrant expires
      on
      July 1, 2011.





***NOTE
      7 —EVERYDAY STAFFING LLC TAX LIABILITIES:***





On
      June
      30, 2006, the Company acquired three locations from Everyday Staffing LLC
      (“Everyday Staffing”) in exchange for 1,459,441 shares of Command Center, Inc.
      common stock. At the time of the acquisitions, Michael Moothart, controlling
      member of the LLC represented that all tax liabilities of Everyday Staffing
      had
      been paid. As a result of the acquisitions, the Company booked a note payable
      to
      Everyday Staffing in the amount of $113,349. In early 2008, the Company received
      notice from the State of Washington that Everyday Staffing owed certain tax
      obligations to the State that that arose prior to the acquisition date of June
      30, 2006. The State requested that the Company pay the amounts due under a
      theory of successor liability. Subsequently, a second claim for successor
      liability was received by the Company. These two claims are described below.





The
      first
      claim relates to business and occupations and excise tax obligations in the
      approximate amount of $250,000. Upon receipt of the notice, the Company
      contacted Mr. Moothart and demanded that he resolve the tax obligations. Mr.
      Moothart indicated that the amount was in dispute and that his legal counsel
      was
      working on the matter. While Mr. Moothart was pursuing the matter through his
      counsel, and in order to forestall a tax lien filing against Command, the
      Company agreed to make payments on the debt with a corresponding offset to
      the
      Everyday Staffing note payable amount. The Company had discussions with Mr.
      Moothart and Everyday Staffing and based on those discussions expected that
      Everyday Staffing would be responsible for the tax obligation in excess of
      the
      amounts due Everyday Staffing under the note payable. In the thirteen weeks
      ended June 27, 2008, the Company made payments on the business and occupations
      and excise tax obligations totaling approximately $168,000. During this time,
      the Company learned that Everyday was ignoring its obligations to the Company
      and the State of Washington. At June 27, 2008, the total amount remaining due
      to
      the State of Washington for business and occupation and excise taxes was $84,185
      and the receivable due from Everyday Staffing was $55,021. The Company has
      recorded a liability for $84,185 and a receivable for $55,021 as of June 27,
      2008 relating to this matter.




10-Q
          Page
          10


The
        second claim relates to Everyday Staffing liabilities for industrial insurance
        premiums that the State of Washington asserts were never paid by Everyday
        Staffing. The claims against the Company are based on the theory of
        successor liability. The Department of Labor and Industries has estimated
        the
        amount of the unpaid industrial insurance premiums at $1,203,948. The Company
        and Everyday Staffing have disputed the amount due and the Company has referred
        the matter to counsel. The amount claimed by the State is based on an audit
        of
        Everyday in which the auditor appears to have made arbitrary assignments
        of
        workers compensation job codes and other estimates of amounts due. The Company’s
        review of Everyday Staffing financial records indicates that payments made
        to
        the State of Washington approximate the amounts that Everyday Staffing indicates
        were owed for industrial insurance. This review is continuing. At this time,
        the
        amount of the claims and the Company’s responsibility for such claims remain in
        dispute. Management intends to vigorously contest these claims and believes
        that
        the potential liability, if any, is not reasonably estimable at this time.
        Accordingly, no liability has been established on the books of the Company
        for
        the amount claimed. Should the State of Washington prevail on its claims,
        Management believes that the resulting liability will not have a material
        adverse impact on the Company’s financial position, results of operations or
        cash flows in future periods.




In
      response to the state claims for payment of Everyday Staffing liabilities,
      the
      Company has recently filed a lawsuit against Everyday Staffing seeking
      indemnification and monetary damages. The members of Everyday Staffing own
      approximately 1,400,000 shares of Command Center, Inc. common stock which may
      be
      used to satisfy the Everyday Staffing tax obligations and/or the obligations
      to
      the Company. The Company has placed stop transfer instructions with the transfer
      agent to restrict transfer of these shares pending resolution of the
      obligations. Glenn Welstad, our CEO, has a minority interest in Everyday
      Staffing.





***NOTE
      8 –*** ***COMMITMENTS*** ***AND CONTINGENCIES:***





*Finance
      obligation.* Our
      finance obligation consists of debt owed to a former officer and director 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
      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.





*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.




10-Q
          Page
          11




Based
      on
      the information currently available, we estimate that the total state payroll
      and other tax liabilities owed by the selling entities is between $400,000
      and
      $600,000 and that total payroll taxes due to the Internal Revenue Service is
      between $500,000 and $600,000. 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 June 27, 2008, except as described in Note 4. We have obtained
        indemnification agreements from the selling entities for any liabilities
        or
        claims we incur as a result of these predecessor tax liabilities. We have
        also
        secured the indemnification agreement with a pledge of our common stock.
        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 many of the tax obligations
        and expect to resolve these debts in full within the next twelve
        months.
  *Pending
        litigation* .
        The
        Company’s former Chief Financial Officer has filed a lawsuit against the Company
        for breach of his executive employment contract claiming that he was terminated
        without cause and seeking damages of one year salary, attorney fees and certain
        other relief. The matter is currently in the discovery phase. Management
        of the
        Company asserts that the former CFO was terminated for cause and is entitled
        to
        nothing under his executive employment agreement. Management intends to
        vigorously defend this action and believes the loss, if any resulting from
        the
        suit will not have a material adverse impact on the Company’s financial
        position, results of operations or cash flows in future periods. Accordingly,
        no
        liability or reserve has been established for this matter. Quarterly reviews
        of
        the case will be conducted and if it appears probable or reasonably possible
        that the Company will incur liability on the former CFO’s claims, and the amount
        is reasonably estimable, a liability reserve will be established.


*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 27, 2008 are:





Remainder
                of 2008
            
            $
            754,6032009
            
            
            1,013,3592010
            
            
            683,9552011
            
            
            297,4172012
            
            
            148,219





***NOTE
      9 – STOCKHOLDERS’ EQUITY:***





During
      the thirteen week period ended on June 27, 2008, the Company issued warrants
      for
      1,000,000 shares of common stock in conjunction with a short term loan agreement
      where the Company borrowed $2,000,000 (see Note 6). We also issued 33,333 shares
      of Common Stock relating to a stock subscription payable at $3.00 per share
      that
      was placed in 2006.




10-Q
          Page
          12


**FORM
      10-Q**





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





***Thirteen
      Weeks Ended June 27, 2008 Compared to the Thirteen Weeks Ended June 29,
      2007.***





**Revenue.** In the
      thirteen weeks ended June 27, 2008, revenues were $21.2 million compared with
      revenues of $25.1 million in the thirteen weeks ended June 29,
      2007.





The
      second quarter of 2008 continued to present a challenging business climate.
      The
      economic downturn in 2008 resulted in a broad based slowdown in our business
      when compared to 2007. As a result of the worsening economic picture beginning
      early in 2008, we took action to close a number of stores located in the hardest
      hit areas and slowed our new store opening plan while we waited for the business
      climate to improve. Store closures impacted top line revenue. We operated 62
      store locations on June 27, 2008 compared to 74 locations at June 29, 2007.





We
      operate in a market where we expect to see declines when the economy slows,
      but
      our experience indicates that the declines are typically short lived. As our
      customers are faced with continuing orders, they turn to on-demand labor to
      keep
      deliveries on track, and our business typically rebounds. The 2008, the downturn
      has been unusually severe and the expected rebound has taken longer to
      occur.





Second
      quarter improvement in activity levels at the store operations level is expected
      to translate to continuing revenue growth in the remainder of 2008. Revenue
      grew
      to $21.2 million in the thirteen weeks ended June 27, 2008 compared to $19.9
      million in the thirteen weeks ended March 28, 2008, an increase of 6.5%. We
      spent the first two quarters of 2008 focusing on sales training, staffing
      consolidation and reductions, and customer service and retention in order to
      take advantage of available opportunities in a difficult economy and to be
      well
      positioned to take capitalize opportunities when the economy
      recovers.





**Industry
      Mix.** The
      broad based pullback in our business affected most industry sectors. As a
      percentage of total revenue, comparing the thirteen weeks ended June 27, 2008
      to
      the thirteen weeks ended June 29, 2007, we saw increases in construction,
      manufacturing, and services with decreases in transportation and other sectors.
      In real dollar terms, however, we saw declines in gross revenues from
      construction, manufacturing, services and transportation. Our size as a regional
      provider of on-demand labor also impacted our business in areas that were hard
      hit by the economic downturn.





**Same
      Store Sales.** Same
      store sales in the thirteen weeks ended June 27, 2008 declined 9.9% compared
      to
      the thirteen weeks ended June 29, 2007. The following table reflects the quarter
      over quarter comparison. The revenue totals do not include stores that were
      not
      open in both quarters.


Q2-2008
              
              Q2-2007
              
              ChangeGross
                  Revenue
              
              $
              18,925,094
              
              $
              21,002,472
              
              
              -9.9
              %




10-Q
          Page
          13




As
      noted
      above, the decline in same store sales in the current quarter compared to the
      year earlier period is attributable primarily to economic factors and fuel
      costs
      that caused our customers to take a conservative approach to staffing their
      operations in the second quarter of 2008. Compared to the first quarter of
      2008
      which saw an 8.8% decline, we saw further erosion of sales in the second
      quarter. We expect improvement in the third quarter as we enter our high season.
      While the economic slowdown is a concern, we are targeting current sales efforts
      on industries and geographic areas that are still strong and we expect our
      business to improve in spite of a continuing slow down of the overall economy.





**Store
      Development.** We
      opened one store and closed fourteen stores in the thirteen weeks ended June
      27,
      2008. We also closed six additional locations in July. We currently operate
      62
      stores in twenty states. Store closures are the result of the weak economy.
      Closed stores were located in areas that were hardest hit by the economic
      downturn or were located in areas with multiple locations where we were able
      to
      reduce costs while continuing to service our customers through our other
      location(s) in that area. We are currently evaluating new store openings in
      areas where we have existing customer demand. We are also focused on increasing
      revenues in our remaining stores with sales and customer service training
      programs.





We
      expect
      new stores to generate $800,000 in revenue in the first year of operations.
      Our
      normal new store ramp up expectation reflects a breakeven point at six
      months.





Near
      the
      end of 2007, we prepared a business plan which provided for an aggressive store
      opening schedule in anticipation of revenue growth in our existing stores
      beginning early in 2008. Capital for new store growth was available from our
      recently completed private offering which closed in November and December,
      2007,
      and we anticipated continuing growth in our business. As reflected above, our
      business in the first half of 2008 has been significantly impacted by the
      economic downturn. Our cash position was also impacted by collateral demands
      by
      our workers’ compensation insurance carrier relating to claims filed against the
      first policy period from May 13, 2006 through May 12, 2007. These factors
      combined to force a reassessment of our growth plans. In order to conserve
      cash,
      we embarked on an aggressive cost cutting program, closed a number of
      non-performing stores, and froze our store opening plan.





Our
      workers’ compensation costs remained high in the second quarter due to claims
      filed in the first policy year from May 2006 through May 2007. We expect that
      workers’ compensation costs will moderate in the third quarter and lower
      workers’ compensation costs will translate into improved margins in the last
      half of the year. Once we are consistently profitable, we will reevaluate the
      store opening plan with a target of top line growth that produces bottom line
      profitability. The high level of uncertainty in our markets will also factor
      into our future business plans.





**Cost
      of Sales and Margins.** For the
      thirteen weeks ended June 27, 2008, cost of sales totaled $16.3 million or
      76.7%
      of revenue generating margins of $5.0 million or 23.3% of revenue compared
      to
      cost of sales of $17.9 million or 71.3% of revenue and margins of $7.2 million
      or 28.7% of revenue in the year earlier period. On-demand worker wages were
      59.1%, and workers’ compensation expense was 9.5% of the total cost of sales
      compared to 58.6% and 5.4%, respectively for the thirteen weeks ended June
      29,
      2007. Worker wages are in line with expectations for the period.




10-Q
          Page
          14


Workers
      compensation is 4.1% above our target as a result of claims activity on the
      remaining open claims from the policy year ending May 12, 2007 (the 2006/2007
      Policy) and high reserve deposits levels established by our insurance carrier.
      The Company has 35 open claims on the 2006/2007 Policy. Our insurer has
      established reserves in the amount of approximately $2,000,000 to cover these
      potential future claims liabilities. Our assessment of the prospective future
      liability on these claims is substantially less than the reserves established
      by
      our insurer. Our workers compensation program has been in effect for two years
      and our limited operating history impacts the current estimate of future claims
      liabilities. Limited claims history results in application of industry wide
      standard loss development factors that are higher than we expect over the long
      term in our industry niche. We continue to monitor claims history and company
      wide experience in workers’ compensation. Incident rates have been trending down
      in the second and third policy periods. As we develop additional experience,
      we
      expect to see reduced workers compensation costs in future periods.





**SG&A
      Expenses.** SG&A
      expenses totaled $6.2 million or 29.2% of revenue compared to $8.2 million
      or
      32.5% of revenue in the year earlier period. The reduction in SG&A expenses
      was driven primarily by reduced staffing costs and lower professional fees.
      Staffing costs were 15.5% in the thirteen weeks ended June 27, 2008 compared
      to
      18.4% in the thirteen weeks ended June 29, 2007. Professional fees were 0.6%
      in
      the thirteen weeks ended June 27, 2008 compared to 1.6% in the thirteen weeks
      ended June 29, 2007





**Interest
      and Other Expenses.** In the
      thirteen weeks ended June 27, 2008, interest and other expenses decreased to
      $146,532 or 0.7% of revenue compared to $381,853 or 1.5% of revenue in the
      year
      earlier period. The decrease is primarily the result of less borrowing against
      the line of credit facility in 2008, and less reliance on other high interest
      forms of borrowing.





**Net
      Loss.** In the
      thirteen weeks ended June 27, 2008, the net loss was $1.4 million (6.6%)
      compared to $1.3 million (5.3%) in the thirteen weeks ended June 29, 2007.
      The
      current period loss was impacted significantly additional reserve requirements
      of our insurance carrier for workers’ compensation claims relating to the May
      2006 to May 2007 policy period. Progress was made in the current period on
      further cost reductions that we expect will translate into improved operating
      results in the third quarter.





***Twenty-six
      Weeks Ended June 27, 2008 Compared to the Twenty-six Weeks Ended June 29,
      2007.***





**Revenue.** In the
      twenty-six weeks ended June 27, 2008, revenues were $41.2 million compared
      with
      revenues of $48.0 million in the twenty-six weeks ended June 29,
      2007.




10-Q
          Page
          15


The
      first
      half of 2008 continued to present a challenging business climate. The economic
      downturn and higher fuel costs in 2008 resulted in a broad based slowdown in
      our
      business when compared to 2007. As a result of the worsening economic picture
      beginning early in 2008, we took action to close a number of stores located
      in
      the hardest hit areas and slowed our new store opening plan while we waited
      for
      the business climate to improve. Store closures impacted top line revenue.
      We
      operated 62 store locations on June 27, 2008 compared to 74 locations at June
      29, 2007.





**Industry
      Mix.** The
      broad based pullback in our business affected most industry sectors. As a
      percentage of total revenue, comparing the twenty-six weeks ended June 27,
      2008
      to the twenty-six weeks ended June 29, 2007, we saw increases in construction,
      manufacturing, and services with decreases in transportation and other sectors.
      In real dollar terms, however, we saw declines in gross revenues from all
      markets. Our size as a regional provider of on-demand labor also impacted our
      business in areas that were hard hit by the economic downturn.





**Same
      Store Sales.** Same
      store sales in the twenty-six weeks ended June 27, 2008 declined 9.4% compared
      to the twenty-six weeks ended June 29, 2007. The following table reflects the
      quarter over quarter comparison. The revenue totals do not include stores that
      were not open in both quarters.


Twenty-six
                  Weeks -2008
              
              Twenty-six
                  Weeks - 2007
              
              ChangeGross
                  Revenue
              
              $
              35,919,216
              
              $
              39,640,373
              
              
              -9.4
              %




As
      noted
      above, the decline in same store sales in the current quarter compared to the
      year earlier period is attributable primarily to economic factors and fuel
      costs
      that caused our customers to take a conservative approach to staffing their
      operations in the second quarter of 2008. Compared to the first quarter of
      2008
      which saw a 9.4% decline, we saw marginal improvement in the second quarter.
      We
      expect continuing improvement in the third quarter as we enter our high season.
      While the economic slowdown is a concern, we are targeting current sales efforts
      on industries and geographic areas that are still strong and we expect our
      business to improve in spite of a continuing slow down of the overall economy.





**Store
      Development.** We
      opened seven stores and closed twenty-three stores in the twenty-six weeks
      ended
      June 27, 2008. We also closed six additional locations in July. We currently
      operate sixty-two stores in twenty states. Store closures are the result of
      the
      weak economy. Closed stores were located in areas that were hardest hit by
      the
      economic downturn or were located in areas with multiple locations where we
      were
      able to reduce costs while continuing to service our customers through our
      other
      location(s) in that area. We are currently evaluating new store openings in
      areas where we have existing customer demand. We are also focused on increasing
      revenues in our remaining stores with sales and customer service training
      programs.





We
      expect
      new stores to generate $800,000 in revenue in the first year of operations.
      Our
      normal new store ramp up expectation reflects a breakeven point at six months.





**Cost
      of Sales and Margins.** For the
      twenty-six weeks ended June 27, 2008, cost of sales totaled $31.4 million or
      76.2% of revenue generating margins of $9.8 million or 23.8% of revenue compared
      to cost of sales of $35.2 million or 73.2% of revenue and margins of $12.9
      million or 26.8% of revenue in the year earlier period. On-demand worker wages
      were 58.4%, and workers’ compensation expense was 9.2% of the total cost of
      sales compared to 58.6% and 5.4%, respectively for the twenty-six weeks ended
      June 29, 2007. Worker wages are in line with expectations for the period.




10-Q
          Page
          16




Workers
      compensation is 3.7% above our target as a result of claims activity on the
      remaining open claims from the policy year ending May 12, 2007 (the 2006/2007
      Policy) and high reserve deposits levels established by our insurance carrier.
      The Company has 35 open claims on the 2006/2007 Policy. Our insurer has
      established reserves in the amount of approximately $2,000,000 to cover these
      potential future claims liabilities. Our assessment of the prospective future
      liability on these claims is substantially less than the reserves established
      by
      our insurer. Our workers compensation program has been in effect for two years
      and our limited operating history impacts the current estimate of future claims
      liabilities. Limited claims history results in application of industry wide
      standard loss development factors that are higher than we expect over the long
      term in our industry niche. We continue to monitor claims history and company
      wide experience in workers’ compensation and are seeing incident rates trending
      down and loss experience on the second and third policy periods. As we develop
      additional experience, we expect to see reduced workers compensation costs
      in
      future periods.





**SG&A
      Expenses.** SG&A
      expenses totaled $13.5 million or 32.8% of revenue compared to $16.7 million
      or
      34.7% of revenue in the year earlier period. The reduction in SG&A expenses
      was driven primarily by reduced staffing costs and lower professional fees.
      Staffing costs were 17.73% in the twenty-six weeks ended June 27, 2008 compared
      to 19.2% in the twenty-six weeks ended June 29, 2007. Professional fees were
      1.3% in the twenty-six weeks ended June 27, 2008 compared to 2.0% in the
      twenty-six weeks ended June 29, 2007





**Interest
      and Other Expenses.** In the
      twenty-six weeks ended June 27, 2008, interest and other expenses decreased
      to
      $291,413 or 0.7% of revenue compared to $573,260 or 1.2% of revenue in the
      year
      earlier period. The decrease is primarily the result of less borrowing against
      the line of credit facility in 2008, and less reliance on other high interest
      forms of borrowing.





**Net
      Loss.** In the
      twenty-six weeks ended June 27, 2008, the net loss was $4.0 million (9.7%)
      compared to $4.4 million (9.2%) in the twenty-six weeks ended June 29, 2007.
      The
      current period loss was impacted significantly by the unusual activity in
      workers’ compensation claims relating to the May 2006 to May 2007 policy period.
      Progress was made in the current period on further cost reductions that we
      expect will translate into improved operating results in the third quarter.





**Cash
      Flow from Operations.** In the
      twenty-six weeks ended June 27, 2008, we used approximately $1.4 million in
      operations. In the same period of 2007, we used approximately $3.0 million
      in
      our operations. The reduction in cash used in operations is primarily
      attributable to our cost reduction efforts and right sizing of our field
      operations and operations support teams to match our revenue during the current
      economic downturn.




10-Q
          Page
          17


**Liquidity
      and Capital Resources**





At
      June
      27, 2008, we had total current assets of $15.1 million and $13.7 million in
      current liabilities. We had cash of $2.5 million and approximately $330,000
      available under our line of credit facility.





Days
      sales outstanding on our trade accounts receivable at June 27, 2008, was 38.8
      days; actual bad debt write-off expense as a percentage of total customer
      invoices during the twenty-six weeks ended June 27, 2008 was 0.1%. Our accounts
      receivable are recorded at the invoiced amounts. 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. As we grow our historical collection ratio and aging
      experience with respect to trade accounts receivable will continue to be
      important factors affecting our liquidity.





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 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 line of credit
      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 exceed 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.
      Prime
      is defined by the Wall Street Journal, Money Rates Section. Our line of credit
      interest rate at June 27, 2008 was 7.5%. 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 June 27, 2008 was $4,474,871.





The
      line
      of credit facility agreement contains 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 maintain a rolling average EBITDA of 75% of our projections. At June
      27,
      2008, we were not in compliance with the EBITDA requirement. Our lender waived
      compliance with the EBITDA covenants and the line of credit was in good standing
      as of June 27, 2008.




10-Q
          Page
          18




As
      discussed elsewhere in this Quarterly Report, we acquired operating assets
      in
      2006 from a number of entities that were previously our franchisees. We have
      been notified of the existence of payroll tax liabilities owed by the
      franchisees and have included footnote disclosure in our financial statements
      of
      the potential contingent liability that may exist. Based on the information
      currently available, we estimate that the total state payroll and other tax
      liabilities owed by the selling entities is between $400,000 and $600,000 and
      that total payroll taxes due to the Internal Revenue Service is between $500,000
      and $600,000. 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 June 27, 2008, except for the balance owed by Everyday Staffing LLC in excess
      of amounts we owed Everyday as described in Note 7 to the Financial Statements
      appearing in this quarterly report. We have obtained indemnification agreements
      from the selling entities for any liabilities or claims we incur as a result
      of
      these predecessor tax liabilities. We have also secured the indemnification
      agreement with a pledge of our Common Stock. We believe the selling entities
      and
      their principal members 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 for many of the tax obligations and expect to resolve these
      debts in full within the next twelve months.





Our
      current liquidity could be impacted if we are considered to be a successor
      to
      these payroll tax obligations. Liability as a successor on these payroll tax
      obligations may also constitute a default under our line of credit facility
      agreement with our principal lender creating a further negative impact on our
      liquidity.





We
      may
      require additional capital to fund operations during fiscal year 2008. Our
      capital needs will depend on the number of new stores we elect to open during
      the year, capital requirements to fund our workers compensation insurance,
      store
      operating performance, our ability to control costs while we execute our growth
      plans, and the impact on our business from a general economic slowdown and/or
      recovery cycle. We currently have approximately 7.7 million warrants outstanding
      which may offer a source of additional capital at a future date upon exercise.
      Management will continue to evaluate capital needs and sources of capital as
      we
      execute our business plan in 2008.





If
      we
      require additional capital in 2008 or thereafter, 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.





**Item
      3. Quantitative and Qualitative Disclosures about Market
      Risk.**





We
      do not
      believe that our business is currently subject to material exposure from the
      fluctuation in interest rates.




10-Q
          Page
          19




**Item
      4. Controls and Procedures.**





Management
      conducted an evaluation of the effectiveness of our internal control over
      financial reporting based on a general framework developed by management with
      reference to general business, accounting and financial reporting
      principles.





Based
      upon this evaluation, we determined that there were no material weaknesses
      affecting our internal controls over financial reporting but that there were
      deficiencies in our disclosure controls and procedures as of June 27, 2008.
      The
      deficiencies noted below are being addressed through our remediation initiatives
      which are also described below. We believe that our financial information,
      notwithstanding the internal control deficiencies noted, accurately and fairly
      presents our financial condition and results of operations for the periods
      presented.





·
            As
                a young Company, we continue to face challenges with hiring and retaining
                qualified personnel in the finance department. Limitations in both
                the
                number of personnel currently staffing the finance department, and
                in the
                skill sets employed by such persons, create difficulties in the
                segregation of duties essential for sound internal controls.





·
            Documentation
                of proper accounting procedures is not yet complete and some of the
                documentation that exists has not yet been reviewed or approved by
                management, or has not been properly communicated and made available
                to
                employees responsible for portions of the internal control
                system.





***Management’s
      Remediation Initiatives*** ****





We
      made
      substantial progress on our internal control processes during 2007 and through
      the first two quarters of 2008. We have implemented new reconciliation
      procedures to ensure that information is properly transferred to the accounting
      system. We have retained experts when necessary to address complex transactions.
      Management believes that actions taken and the follow-up that will occur during
      2008 collectively will effectively eliminate the above
      deficiencies.





During
      the remainder of 2008, we plan to conduct quarterly assessments of our controls
      over financial reporting using criteria established in “Internal
      Control-Integrated Framework” issued by the Committee of Sponsoring
      Organizations of the Treadway Commission (“COSO”). In connection with these
      assessments, we will document all significant accounting procedures and
      determine whether they are designed effectively and are operating as designed.
      Our assessment of internal controls over financial reporting will be subject
      to
      audit for the fifty-two week period ending December 25, 2009.




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          Page
          20




Our
      management and Board of Directors does not expect that our disclosure
      controls and procedures or internal control over financial reporting will
      prevent all errors or all instances of fraud. A control system, no matter how
      well designed and operated, can provide only reasonable, not absolute, assurance
      that the control system’s objectives will be met. Further, the design of a
      control system must reflect the fact that there are resource constraints, and
      the benefits of controls must be considered relative to their costs. Because
      of
      the inherent limitations in all control systems, no evaluation of controls
      can
      provide absolute assurance that all control gaps and instances of fraud have
      been detected. These inherent limitations include the realities that judgments
      in decision-making can be faulty, and that breakdowns can occur because of
      simple errors or mistakes. Controls can also be circumvented by the individual
      acts of some persons, by collusion of two or more people, or by management
      override of the controls. The design of any system of controls is based in
      part
      upon certain assumptions about the likelihood of future events, and any design
      may not succeed in achieving its stated goals under all potential future
      conditions.




***Changes
      in internal control over financial reporting*** **.**




Except
      as
      noted above, there have been no changes during the thirteen weeks ended June
      27,
      2008 in the Company’s internal controls over financial reporting that have
      materially affected, or are reasonably likely to materially affect, internal
      controls over financial reporting.





**PART
      II**





**Item
      2. Unregistered Sales of Equity Securities.**





In
      the
      thirteen week period ended on June 27, 2008, the Company issued an aggregate
      of
      33,333 shares of Common Stock. The shares of Common Stock were issued for an
      investment in a private offering that occurred in 2006. The investment proceeds
      were received in 2006 but the paper work associated with the investment was
      not
      processed until the Company was contacted by the investor. The sale of
      unregistered securities was made in reliance on exemptions from registration
      afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”),
      Rule 506 of Regulation D adopted under the Act, and various state blue sky
      exemptions. The investor acquired the securities for investment purposes only
      and not with a view to resale. The certificates representing the shares bear
      a
      restrictive stock legend and were sold in private transactions without the
      use
      of advertising or other form of public solicitation.




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          Page
          21




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


**a.**  **Exhibit
        Index**




Exhibit No.
            
            Description
            
            Page
                #31.1
            
            Certification
                of Glenn Welstad, Chief Executive Officer of Command Center, Inc.
                pursuant
                to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002.31.2
            
            Certification
                of Brad E. Herr, Chief Financial Officer of Command Center, Inc.
                pursuant
                to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002.32.1
            
            Certification
                of Glenn Welstad, Chief Executive Officer of Command Center, Inc.
                pursuant
                to 18 U.S.C. Section 1350, as adopted in Section 906 of the Sarbanes-Oxley
                Act of 2002.32.1
            
            Certification
                of Brad E. Herr, Chief Financial Officer of Command Center, Inc.
                pursuant
                to 18 U.S.C. Section 1350, as adopted in Section 906 of the Sarbanes-Oxley
                Act of 2002.





**b.**  **Reports
      on Form 8-K**





During
      the quarter ended June 27, 2008, the Company filed the following reports on
      Form
      8-K:





Report
      on
      Form 8-K dated June 24, 2008 reporting information under Items 1.01, 2.03,
      7.01
      and 9.01 relating to an agreement to borrow $2,000,000 on a short-term
      note.





Report
      on
      Form 8-K dated June 23, 2008 reporting information under Items 5.02, 7.01 and
      9.01 relating to the resignation of Thomas E. Gilbert as a director and the
      appointment of John Schneller to fill the vacancy created by Mr. Gilbert’s
      resignation..





**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned, thereunto
      duly authorized.





COMMAND
      CENTER, INC.





/s/Glenn
                Welstad
            President
                and CEO
            Glenn
                Welstad
            August
                13, 2008Signature
            Title
            Printed
                Name
            Date/s/Brad
                E. Herr
            CFO,
                Principal Financial Officer
            Brad
                E. Herr
            August
                13, 2008Signature
            Title
            Printed
                Name
            Date




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          Page
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