**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 **September
        26, 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 November 10, 2008 was 36,230,053
        shares.
   
 
 
   **Command
        Center, Inc.**
 
  **Contents**
  **FORM
                  10-Q**Page
 **PART
                  I**Item
                  1. Financial Statements (unaudited)Management
                  Statement
              10-Q
                  Page 3Balance
                  Sheets at September 26, 2008 and December 28, 2007
              10-Q
                  Page 4Statements
                  of Operations for the thirteen and thirty-nine week periods ended
                  September 26, 2008 and September 28, 2007
              10-Q
                  Page 5Statements
                  of Cash Flows for the thirty-nine week periods ended September
                  26, 2008
                  and September 28, 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 20Item
                  4. Controls and Procedures
              10-Q
                  Page 20**PART II**Item
                  2. Unregistered Sales of Equity Securities
              10-Q
                  Page 22Item
                  6. Exhibits and Reports on Form 8-K
              10-Q
                  Page 22**Signatures**
              10-Q
                  Page 23**Certifications**
              10-Q Page 24 – 27
  10-Q
 Page
              2
  PART
        I
 
 Item
        1.  Financial
        Statements.
 
 MANAGEMENT
        STATEMENT
 
 The
        accompanying balance sheets of Command Center, Inc. as of September 26, 2008
        (unaudited) and December 28, 2007, the related statements of operations for
        the
        thirteen and thirty-nine week periods ended September 26, 2008 and September
        28,
        2007, and the statements of cash flows for the thirty-nine week periods ended
        September 26, 2008 and September 28, 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.
 November
        10, 2008
  10-Q
 Page
              3
  **Command
          Center, Inc.**
 **Balance
          Sheets**
 
 September 26, 2008
                
                December 28, 2007(Unaudited)***Assets****CURRENT
                    ASSETS:*Cash
                
                $
                1,387,859
                
                $
                580,918Accounts
                    receivable, net of allowance for bad debts of $500,000 at September
                    26,
                    2008 and December 28, 2007
                
                
                9,473,062
                
                
                9,079,222Notes
                    from affiliates, subscriptions receivable, and other receivables
                    -
                    current
                
                
                363,516
                
                
                1,953,882Prepaid
                    expenses, deposits, and other
                
                
                1,591,679
                
                
                1,610,913Current
                    portion of workers' compensation risk pool deposits
                
                
                1,500,000
                
                
                1,150,375Total
                    current assets
                
                
                14,316,116
                
                
                14,375,310*PROPERTY
                    AND EQUIPMENT, NET*
                
                
                2,844,473
                
                
                3,245,506*OTHER
                    ASSETS:*Note
                    receivable, less current portion
                
                
                17,155
                
                
                17,155Workers'
                    compensation risk pool deposits, less current portion
                
                
                3,691,302
                
                
                2,833,127Goodwill
                
                
                14,257,929
                
                
                14,257,929Intangible
                    assets - net
                
                
                548,398
                
                
                683,275Total
                    other assets
                
                
                18,514,784
                
                
                17,791,486$
                35,675,373
                
                $
                35,412,302***Liabilities
                    and Stockholders' Equity****CURRENT
                    LIABILITIES:*Accounts
                    payable
                
                $
                1,125,459
                
                $
                1,459,676Line
                    of credit facility
                
                
                5,110,030
                
                
                4,686,156Accrued
                    wages and benefits
                
                
                1,073,013
                
                
                1,553,536Advances
                    payable
                
                
                -
                
                
                100,000Current
                    portion of notes payable, net of discount
                
                
                1,980,476
                
                
                230,032Workers'
                    compensation insurance and risk pool deposits payable
                
                
                1,527,251
                
                
                -Current
                    portion of workers' compensation claims liability
                
                
                1,500,000
                
                
                1,150,375Total
                    current liabilities
                
                
                12,316,229
                
                
                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
                
                
                3,182,128
                
                
                2,219,642Total
                    long-term liabilities
                
                
                4,307,128
                
                
                3,430,297*COMMITMENTS
                    AND CONTINGENCIES (Notes 7 and 8)**STOCKHOLDERS'
                    EQUITY:*Preferred
                    stock - 5,000,000 shares, $0.001 par value, authorized; no shares
                    issued
                    and outstandingCommon
                    stock - 100,000,000 shares, $0.001 par value, authorized; 36,230,053
                    and
                    35,725,053 shares issued and outstanding, respectively
                
                
                36,230
                
                
                35,725Additional
                    paid-in capital
                
                
                51,359,488
                
                
                51,005,159Accumulated
                    deficit
                
                
                (32,343,702
                )
                
                (28,238,654
                )Total
                    stockholders' equity
                
                
                19,052,016
                
                
                22,802,230$
                35,675,373
                
                $
                35,412,302
 
 See
          accompanying notes to unaudited financial statements.
  10-Q
 Page
              4
  **Command
          Center, Inc.**
 **Statements
          of Operations (Unaudited)**
 
 Thirteen Weeks Ended
                
                Thirty-nine Weeks EndedSeptember 26, 2008
                
                September 28, 2007
                
                September 26, 2008
                
                September 28, 2007*REVENUE:*Staffing
                    services revenue
                
                $
                21,747,587
                
                $
                26,242,962
                
                $
                62,675,317
                
                $
                74,158,370Other
                    income
                
                
                122,928
                
                
                136,832
                
                
                378,662
                
                
                262,684Total
                    revenue
                
                
                21,870,515
                
                
                26,379,794
                
                
                63,053,979
                
                
                74,421,054*COST
                    OF STAFFING SERVICES*
                
                
                16,087,350
                
                
                18,473,276
                
                
                47,452,008
                
                
                53,661,722*GROSS
                    PROFIT*
                
                
                5,783,165
                
                
                7,906,518
                
                
                15,601,971
                
                
                20,759,332*OPERATING
                    EXPENSES:*Compensation
                    and related expenses
                
                
                2,961,797
                
                
                3,887,965
                
                
                10,263,983
                
                
                13,102,565Selling
                    and marketing expenses
                
                
                74,204
                
                
                42,184
                
                
                598,302
                
                
                428,890Professional
                    expenses
                
                
                247,000
                
                
                383,756
                
                
                795,425
                
                
                1,324,841Depreciation
                    and amortization
                
                
                214,630
                
                
                214,600
                
                
                643,456
                
                
                622,009Rent
                
                
                623,747
                
                
                638,242
                
                
                1,916,955
                
                
                1,868,944Other
                    expenses
                
                
                1,467,310
                
                
                1,759,732
                
                
                4,887,189
                
                
                6,259,218Total
                    operating expenses
                
                
                5,588,688
                
                
                6,926,479
                
                
                19,105,310
                
                
                23,606,467*INCOME
                    (LOSS) FROM OPERATIONS*
                
                
                194,477
                
                
                980,039
                
                
                (3,503,339
                )
                
                (2,847,135
                )*OTHER
                    INCOME (EXPENSE):*Interest
                    expense
                
                
                (286,285
                )
                
                (535,697
                )
                
                (578,354
                )
                
                (1,108,957
                )Other
                    income (expense)
                
                
                (24,011
                )
                
                -
                
                
                (23,355
                )
                
                -Total
                    other income (expense)
                
                
                (310,296
                )
                
                (535,697
                )
                
                (601,709
                )
                
                (1,108,957
                )*NET
                    INCOME (LOSS)*
                
                $
                (115,819
                )
                $
                444,342
                
                $
                (4,105,048
                )
                $
                (3,956,092
                )*INCOME
                    (LOSS) PER SHARE - BASIC*
                
                $
                (0.00
                )
                $
                0.02
                
                $
                (0.11
                )
                $
                (0.16
                )*WEIGHTED
                    AVERAGE COMMON SHARES OUTSTANDING*
                
                
                36,157,965
                
                
                24,612,054
                
                
                35,993,368
                
                
                24,019,256
 
 See
          accompanying notes to unaudited financial statements.
  10-Q
 Page
              5
  **Command
          Center, Inc.**
 **Statements
          of Cash Flows (Unaudited)**
 
 Thirty-nine Weeks EndedSeptember 26, 2008
                
                September 28, 2007***Increase
                    (Decrease) in Cash****CASH
                    FLOWS FROM OPERATING ACTIVITIES:*Net
                    loss
                
                $
                (4,105,048
                )
                $
                (3,956,092
                )Adjustments
                    to reconcile net loss to net cash used by operating
                    activities:Depreciation
                    and amortization
                
                
                643,456
                
                
                622,009Allowance
                    for bad debts
                
                
                -
                
                
                39,137Stock
                    issued for interest and compensation
                
                
                158,000
                
                
                180,640Amortization
                    of note payable discount
                
                
                65,534
                
                
                153,500Changes
                    in assets and liabilitiesAccounts
                    receivable
                
                
                (393,840
                )
                
                (1,417,622
                )Notes
                    due from affiliates
                
                
                (139,020
                )
                
                -Prepaid
                    expenses, deposits and other
                
                
                (203,589
                )
                
                (1,290,247
                )Workers'
                    compensation risk pool deposits
                
                
                (1,207,800
                )
                
                (2,592,290
                )Accounts
                    payable
                
                
                (334,217
                )
                
                417,159Amounts
                    due to affiliates
                
                
                -
                
                
                (782,184
                )Accrued
                    wages and benefits
                
                
                (480,523
                )
                
                1,494,601Workers'
                    compensation insurance and risk pool deposits payable
                
                
                1,527,251
                
                
                1,207,045Workers'
                    compensation claims liability
                
                
                1,312,111
                
                
                927,291Total
                    adjustments
                
                
                947,363
                
                
                (1,040,961
                )Net
                    cash used by operating activities
                
                
                (3,157,685
                )
                
                (4,997,053
                )*CASH
                    FLOWS FROM INVESTING ACTIVITIES:*Purchases
                    of property and equipment
                
                
                (107,546
                )
                
                (439,294
                )Purchase
                    of Anytime Labor
                
                
                -
                
                
                (247,500
                )Collections
                    on note receivable
                
                
                74,209
                
                
                118,384Net
                    cash used by investing activities
                
                
                (33,337
                )
                
                (568,410
                )*CASH
                    FLOWS FROM FINANCING ACTIVITIES:*Net
                    advances on line of credit facility
                
                
                423,874
                
                
                993,433Change
                    in checks issued and outstanding
                
                
                -
                
                
                311,048Proceeds
                    received from short-term note
                
                
                1,740,000
                
                
                2,111,210Proceeds
                    allocated to warrants issued in connection with short-term
                    note
                
                
                260,000
                
                
                380,000Collections
                    of common stock subscribed
                
                
                1,878,000
                
                
                -Sale
                    of common stock
                
                
                -
                
                
                730,000Principal
                    payments on notes payable
                
                
                (140,745
                )
                
                -Costs
                    of common stock offering and registration
                
                
                (163,166
                )
                
                -Payment
                    made for note payable financing fee
                
                
                -
                
                
                (100,000
                )Net
                    cash provided by financing activities
                
                
                3,997,963
                
                
                4,425,691*NET
                    INCREASE (DECREASE) IN CASH*
                
                
                8
                    06,941
                
                
                (1,139,772
                )*CASH,
                    BEGINNING OF PERIOD*
                
                
                5
                    80,918
                
                
                1,390,867*CASH,
                    END OF PERIOD*
                
                $
                1
                    ,387,859
                
                $
                2
                    51,095*NON-CASH
                    INVESTING AND FINANCING ACTIVITIES*Common
                    stock issued for acquisition of:Prepaid
                    expenses
                
                
                -
                
                
                390,860Assets
                    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 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; orLevel 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 thirty-nine weeks ended
        September 26, 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. Diluted earnings per share reflects the potential dilution
      that could occur from common shares issuable through stock options, warrants,
      and other convertible securities. The Company had warrants and options for
      7,762,803 shares of common stock outstanding at September 26, 2008. The company
      incurred a loss in the thirty-nine week period ended September 26, 2008.
      Accordingly, the warrant shares are anti-dilutive and only basic earnings per
      share is reported at September 26, 2008.





At
      September 28, 2007, the Company had 450,000 warrants outstanding. 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 could not be determined at September
      28, 2007. Diluted earnings per share is not presented for the thirteen and
      thirty-nine week periods ended September 28, 2007 as the dilutive effect of
      the
      warrants is not material.





***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 September 26,
      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 September 26, 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 September 26, 2008. The balance due our lender at September 26, 2008 was
      $5,110,030.




10-QPage
          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
      (“Arch”). The Arch Policy covers our workers in the State of California and
      South Dakota 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 $5,191,302 as of September 26,
      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 September 26, 2008 amounted
      to
      $4,682,128.





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 $4,898,238 in
      the thirty-nine weeks ended September 26, 2008. Workers’ compensation expense in
      the first three 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-QPage
          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 using a straight line method which approximates
      the interest method over the life of the note. The warrant expires on July
      1,
      2011. Amortization of the note discount amounted to $65,534 in the thirteen
      weeks ended September 26, 2008.





***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 579,277 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 his legal counsel was working on the matter. While
      Mr.
      Moothart was pursuing the matter through his counsel, and in order to forestall
      further action against Command Center, the Company agreed to make payments
      on
      the debt with a corresponding offset to the Everyday Staffing note payable
      amount. In the thirty-nine weeks ended September 26, 2008, the Company paid
      Everyday’s business and occupations and excise tax obligations totaling
      approximately $231,139. During this time, Everyday took no apparent action
      to
      deal with its obligations to the Company and the State of Washington. At
      September 26, 2008, the total amount remaining due from Everyday Staffing to
      the
      State of Washington for business and occupation and excise taxes was $21,046
      and
      the receivable due Command Center from Everyday Staffing was
      $131,943.





The
      second claim relates to Everyday Staffing liabilities for industrial insurance
      taxes 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 plus interest.
      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, hours worked and other estimates
      of amounts due, all of which the Company believes to be grossly misstated.
      The
      Company’s review of Everyday Staffing financial records shows that payments made
      to the State of Washington approximate the amounts that Everyday Staffing
      indicates were owed for industrial insurance.





10-QPage
          10


Based
      upon the theory of successor liability, the Washington Department of Labor
      and
      Industries recently issued two Notices and Orders of Assessment of Industrial
      Insurance Taxes to Command Center. The first Notice claims and assesses taxes
      of
      $57,446 and the second Notice claims and assesses the amount of $900,858. The
      Company strongly disputes both the alleged successor liability and also the
      monetary amount asserted by the Department. The Company is pursuing its
      administrative remedies in order to vigorously contest the assertions of these
      Notices. In strongly disputing the claims of the Department, Management 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. Management believes the liability to the Company, if any,
      from the claims and assessments of the Department of Labor and Industries are
      not reasonably likely to have a material adverse impact on the Company’s
      financial position, results of operations or cash flows in future periods.





The
      Asset
      Purchase Agreement signed in connection with the acquisition of assets from
      Everyday Staffing requires that Everyday Staffing indemnify and hold harmless
      Command Center for liabilities, such as the Washington assessments, that were
      not expressly assumed. In response to the state claims for payment of Everyday
      Staffing liabilities, the Company has filed a lawsuit against Everyday Staffing,
      LLC and Michael J. Moothart, seeking indemnification and monetary damages.
      The
      lawsuit is pending and Everyday Staffing and Moothart have appeared through
      legal counsel. The members of Everyday Staffing own approximately 1,400,000
      shares of Command Center, Inc. common stock. 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.





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.





10-QPage
          11


We
      have
      not accrued any amounts for these contingent payroll and other tax liabilities
      at September 26, 2008, except as described in Note 7. The Asset Purchase
      Agreement governing these transactions requires that the selling entities
      indemnify us for any liabilities or claims we incur as a result of these
      predecessor tax liabilities. We have also secured the indemnification agreement
      of Glenn Welstad 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’s 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
      is vigorously defending 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 September 26, 2008 are:


Remainder
                  of 2008
              
              $
              530,6992009
              
              
              1,125,7822010
              
              
              537,6412011
              
              
              156,2092012
              
              
              11,647





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







During
      the thirteen week period ended on September 26, 2008, the Company issued 20,000
      shares of common stock to our former CFO in satisfaction of a promise to issue
      shares in connection with his employment. The shares were valued at $0.36 per
      share based upon the trading price of the stock on the date of issuance and
      were
      recorded as expense in the current period. In addition, the Company issued
      80,000 shares of common stock to our investor relations firm as partial payment
      of their investor relations fees. The shares were valued at $0.34 per share
      based upon the trading price of the stock on the date of issuance and were
      recorded as an expense in the current period.


10-QPage
          12


**FORM
      10-Q**





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





***Thirteen
      Weeks Ended September 26, 2008 Compared to the Thirteen Weeks Ended September
      28, 2007.***





The
      following comparative statements of operations table sets out the results of
      operations as a percentage of revenue for comparative purposes.


**Comparative
                      Statements of
                      Operations**


Thirteen Weeks EndedSeptember 26, 2008
              
              September 28, 2007*REVENUE:*Staffing
                  services revenue
              
              
              99.4
              %
              
              99.5
              %Other
                  income
              
              
              0.6
              %
              
              0.5
              %Total
                  revenue
              
              
              100.0
              %
              
              100.0
              %*COST
                  OF STAFFING SERVICES*Wages
              
              
              59.5
              %
              
              58.6
              %Workers’
                  Compensation
              
              
              5.2
              %
              
              4.3
              %Transportation
              
              
              1.7
              %
              
              0.8
              %Other
              
              
              7.2
              %
              
              6.3
              %73.6
              %
              
              70.0
              %*GROSS
                  PROFIT*
              
              
              26.4
              %
              
              30.0
              %*OPERATING
                  EXPENSES:*Compensation
                  and related expenses
              
              
              13.5
              %
              
              14.7
              %Selling
                  and marketing expenses
              
              
              0.3
              %
              
              0.2
              %Professional
                  expenses
              
              
              1.1
              %
              
              1.5
              %Depreciation
                  and amortization
              
              
              1.0
              %
              
              0.8
              %Rent
              
              
              2.9
              %
              
              2.4
              %Other
                  expenses
              
              
              6.7
              %
              
              6.7
              %Total
                  operating expenses
              
              
              25.6
              %
              
              26.3
              %*INCOME
                  (LOSS) FROM OPERATIONS*
              
              
              0.9
              %
              
              3.7
              %*OTHER
                  INCOME (EXPENSE):*Interest
                  expense
              
              
              -1.3
              %
              
              -2.0
              %Other
                  income (expense)
              
              
              -0.1
              %
              
              0.0
              %Total
                  other income (expense)
              
              
              -1.4
              %
              
              -2.0
              %*NET
                  INCOME (LOSS)*
              
              
              -0.5
              %
              
              1.7
              %




10-QPage
          13




**Revenue.** In the
      thirteen weeks ended September 26, 2008, revenues were $21.9 million compared
      to
      revenues of $26.4 million in the thirteen weeks ended September 28, 2007, a
      decrease of $4.3 million or 16%.





The
      third
      quarter of 2008 continued to present a challenging business climate. The current
      economic downturn has 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 until the business climate improves.
      Store closures impacted top line revenue. We operated sixty-one store locations
      on September 26, 2008 compared to seventy-eight locations at September 28,
      2007.
      In the aggregate, store count is down 17% in the thirteen weeks ended September
      26, 2008 compared to the same period in 2007.





In
      the
      third quarter, we did see strength in providing workers for disaster recovery
      services as a result of flooding in Iowa, an oil spill in Louisiana, and
      Hurricane Ike which struck the Texas coast in mid September. As a result of
      the
      disaster recovery business, we were able to hold revenue relatively steady
      in
      the third quarter compared to the second quarter despite the economic downturn.
      While the disaster recovery business had a positive impact on the third quarter,
      we do not expect the same level of disaster recovery work in the fourth
      quarter.





We
      operate in a market where we expect to see declines when the economy slows.
      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. As of September 26, 2008, we have not yet seen signs
      of an anticipated recovery.





In
      the
      third quarter we developed and began a wide scale rollout of a new marketing
      program. The new program focuses on selling methodologies and activity levels,
      including regular feedback and performance monitoring. As a result, we are
      beginning to see heightened selling activity levels in the field that we expect
      will bear fruit in coming periods. Revenue grew to $21.9 million in the thirteen
      weeks ended September 26, 2008 compared to $21.2 million in the thirteen weeks
      ended June 27, 2008, an increase of 3% despite the strong headwinds from a
      lagging economy. We expect fourth quarter revenue will decline from third
      quarter revenue due to the continuing negative effects of the economic downturn
      and seasonality. The last half of the fourth quarter and the first half of
      the
      first quarter are typically our slowest periods.





**Industry
      Mix.** The
      broad based pullback in our business was caused by declines in nearly all
      industry sectors. We did see growth in manufacturing (2.4%) and real estate
      (8.3%), but the growth in these sectors was not sufficient to offset the
      declines in retail trade (50%), agriculture (26%), and services (25%). We
      continue to monitor branch activity and are now directing our sales force to
      focus on areas of opportunity at the local level. When we see particular
      industry sectors with relative strength in a market, we focus our selling
      activities more heavily in that sector. We are also pursuing opportunities
      with
      seasonal businesses such as the retail sector during the holiday
      season.





10-QPage
          14


**Same
      Store Sales.** Same
      store sales in the thirteen weeks ended September 26, 2008 declined 12% compared
      to the thirteen weeks ended September 28, 2007. The following table reflects
      the
      quarter over quarter comparison. The revenue totals do not include stores that
      were not open in both quarters.


Q3-2008
              
              Q3-2007
              
              ChangeGross Revenue
              
              $
              19,301,247
              
              $
              21,925,725
              
              
              12.0
              %




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. We saw
      increases in comparable quarter over quarter results from twenty stores,
      indicating that there are areas of the country that have not been hit as hard
      by
      the downturn as others. These areas may offer additional opportunities for
      growth.





**Store
      Development.** We
      opened one store and closed seven stores in the thirteen weeks ended September
      26, 2008. We currently operate sixty-one 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 the 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 through sales and
      customer service training programs.





Near
      the
      end of 2007, we prepared a business plan which provided for an aggressive store
      opening schedule. At the time, we anticipated strong revenue growth in our
      existing stores beginning early in 2008. Capital for new store growth was to
      be
      derived from existing store revenue growth and from a private offering which
      closed in November and December, 2007. As reflected above, our business through
      September 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
      national accounts group has had recent success in generating new business with
      existing customers in areas where we do not have an existing location. When
      we
      have customer demand and an adequate amount of guaranteed business, we will
      open
      new locations to service the customer. We expect to open a small number of
      new
      locations for this purpose in the fourth quarter of 2008.





**Cost
      of Sales and Margins.** For the
      thirteen weeks ended September 26, 2008, cost of sales totaled $16.1 million
      or
      73.6% of revenue generating margins of $5.8 million or 26.4% of revenue compared
      to cost of sales of $18.5 million or 70.0% of revenue and margins of $7.9
      million or 30.0% of revenue in the year earlier period. On-demand worker wages
      were 59.1% of the total cost of sales for the thirteen weeks ended September
      26,
      2008 compared to 58.3% for the thirteen weeks ended September 28, 2007.





10-QPage
          15


Our
      workers’ compensation costs normalized to 5.2% of revenue in the thirteen weeks
      ended September 26, 2008 compared to 4.3% in the thirteen weeks ended September
      28, 2007. We expect workers’ compensation costs to run between 5.0% and 6.0% of
      revenue. Our workers’ compensation costs for the last twelve months have
      exceeded 7.5%, primarily due to losses on claims filed in the first policy
      period from May 2006 through May 2007. In the thirteen weeks ended September
      26,
      2008, most of the remaining claims from the 2006/2007 policy have been closed
      and the impact of the first year policy on later years is diminishing. We expect
      that workers’ compensation costs will continue to moderate in the fourth quarter
      and lower workers’ compensation costs will translate into improved margins in
      future periods.





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 $5.6 million or 25.6% of revenue compared to $6.9 million
      or
      26.3% 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 13.5% in the thirteen weeks ended September 26, 2008
      compared to 14.7% in the thirteen weeks ended September 28, 2007. Professional
      fees were 1.1% in the thirteen weeks ended September 26, 2008 compared to 1.5%
      in the thirteen weeks ended September 28, 2007





**Interest
      and Other Expenses.** In the
      thirteen weeks ended September 26, 2008, interest and other expenses decreased
      to $310,295 or 1.4% of revenue compared to $535,697 or 2.0% 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 September 26, 2008, the net loss was $115,819 (0.5%)
      compared to as net profit of $444,342 (1.7%) in the thirteen weeks ended
      September 28, 2007. Current period operations were impacted by the economic
      downturn and the decline in the number of stores in operation during the period.





***Thirty-nine
      Weeks Ended September 26, 2008 Compared to the Thirty-nine Weeks Ended September
      28, 2007.***





**Revenue.** In the
      thirty-nine weeks ended September 26, 2008, revenues were $63.1 million compared
      with revenues of $74.4 million in the thirty-nine weeks ended September 28,
      2007.





As
      discussed above, the economic climate is having an impact on our business in
      2008. We have closed a number of stores located in the hardest hit areas and
      slowed our new store opening plan while we wait for the business climate to
      improve. Store closures impacted top line revenue. We operated sixty-one store
      locations on September 26, 2008 compared to seventy-eight locations at September
      28, 2007.




10-QPage
          16




**Industry
      Mix.** The
      broad based pullback in our business was caused by declines in most industry
      sectors. As a percentage of total revenue, comparing the thirty-nine weeks
      ended
      September 26, 2008 to the thirty-nine weeks ended September 28, 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.




**Same
      Store Sales.** Same
      store sales in the thirty-nine weeks ended September 26, 2008 declined 9.4%
      compared to the thirty-nine weeks ended September 28, 2007. The following table
      reflects the quarter over quarter comparison. The revenue totals do not include
      stores that were not open in both quarters.


Thirty-nine Weeks -2008
              
              Thirty-nine Weeks - 2007
              
              ChangeGross
                  Revenue
              
              $
              54,418,302
              
              $
              60,035,325
              
              
              -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 that caused
      our customers to take a conservative approach to staffing their operations
      in
      the second quarter of 2008. While the economic slowdown is a concern, we are
      targeting current sales efforts on industries and geographic areas that are
      still relatively strong.





**Store
      Development.** We
      opened eight stores and closed thirty stores in the thirty-nine weeks ended
      September 26, 2008. Two new stores are presently in the pre-opening stage.
      We
      currently operate sixty-one 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.





**Cost
      of Sales and Margins.** For the
      thirty-nine weeks ended September 26, 2008, cost of sales totaled $47.5 million
      or 75.3% of revenue generating margins of $15.6 million or 24.7% of revenue
      compared to cost of sales of $53.7 million or 72.1% of revenue and margins
      of
      $20.8 million or 27.9% of revenue in the year earlier period. On-demand worker
      wages were 58.7%, and workers’ compensation expense was 7.8% of the total cost
      of sales compared to 59.0% and 5.5%, respectively for the thirty-nine weeks
      ended September 28, 2007.





For
      the
      thirty-nine weeks ended September 26, 2008, workers compensation expense remains
      above the expected cost by about 2.6% above our 5.2% 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 twenty open claims on the 2006/2007 Policy.
      Our claims administration program continues to push for closure of these claims.
      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
      improving on the second and third policy periods. As we develop additional
      experience, we expect to see reduced workers compensation costs in future
      periods.





10-QPage
          17


**SG&A
      Expenses.** SG&A
      expenses totaled $19.1 million or 30.3% of revenue compared to $23.6 million
      or
      31.7% of revenue in the year earlier period. The reduction in SG&A expenses
      was driven primarily by reduced staffing costs. Staffing costs were 16.3% in
      the
      thirty-nine weeks ended September 26, 2008 compared to 17.6% in the thirty-nine
      weeks ended September 28, 2007.





**Interest
      and Other Expenses.** In the
      thirty-nine weeks ended September 26, 2008, interest and other expenses
      decreased to $601,709 or 1.0% of revenue compared to $1.1 million 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
      thirty-nine weeks ended September 26, 2008, the net loss was $4.1 million (6.5%)
      compared to $4.0 million (5.3%) in the thirty-nine weeks ended September 28,
      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 which were recorded in the first half of the year.





**Cash
      Flow from Operations.** In the
      thirty-nine weeks ended September 26, 2008, we used approximately $3.2 million
      of cash flows in operations. In the same period of 2007, we used approximately
      $5.0 million in our operations. The reduction in cash used in operations is
      primarily attributable to our cost reduction efforts, the right sizing of our
      field operations and operations support teams to match our revenue during the
      current economic downturn, and the reduced cash outlays required to pre fund
      our
      workers’ compensation claims liability through reserve deposits.





**Liquidity
      and Capital Resources**





At
      September 26, 2008, we had total current assets of $14.3 million and total
      current liabilities of $12.3 million. We had cash of $1.4 million and
      approximately $100,000 available under our line of credit facility.





Days
      sales outstanding on our trade accounts receivable at September 26, 2008, was
      38.7 days; actual bad debt write-off expense as a percentage of total customer
      invoices during the thirty-nine weeks ended September 26, 2008 was 0.3%. 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 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.





10-QPage
          18


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 accounts 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 September 26, 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 September 26, 2008 was $5,110,030.





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
      September 26, 2008, we were not in compliance with the EBITDA and tangible
      net
      worth requirements. Our lender waived compliance with the EBITDA and tangible
      net worth covenants and the line of credit was in good standing as of September
      26, 2008.





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 September 26, 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. The Asset Purchase Agreement
      governing these transactions requires that the selling entities indemnify us
      for
      any liabilities or claims we incur as a result of these predecessor tax
      liabilities. We have also secured the indemnification agreement of Glenn Welstad
      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.





10-QPage
          19


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 the remainder of fiscal
      year 2008 and into 2009. 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 the 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.




**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
      on
      our 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 September 26, 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.


10-QPage
          20




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





We
      made
      substantial progress on our internal control processes during 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 and 2009, 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.





Our
      management and Board of Directors do 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.


10-Q
 Page
            21




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




Except
      as
      noted above, there have been no changes during the thirteen weeks ended
      September 26, 2008 in the Company’s internal controls over financial reporting
      that have materially affected, or are reasonably likely to materially affect
      our
      financial reports.





**PART
      II**





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





In
      the
      thirteen week period ended on September 26, 2008, the Company issued an
      aggregate of 100,000 shares of Common Stock. 20,000 shares were issued to our
      former CFO in connection with his employment by the company. An additional
      80,000 shares were issued to our investor relations firm as partial compensation
      for investor relations services. The sales of unregistered securities were
      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 shares were acquired
      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.




**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.
            
            10-Q,
                Page 2431.2
            
            Certification
                of Brad E. Herr, Chief Financial Officer of Command Center, Inc.
                pursuant
                to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002.
            
            10-Q,
                Page 2532.1
            
            Certification
                of Glenn Welstad, Chief Executive Officer of Command Center, Inc.
                pursuant
                to 18 U.S.C. Section 1350, as adopted in Section 906 of the Sarbanes-Oxley
                Act of 2002.
            
            10-Q,
                Page 2632.1
            
            Certification
                of Brad E. Herr, Chief Financial Officer of Command Center, Inc.
                pursuant
                to 18 U.S.C. Section 1350, as adopted in Section 906 of the Sarbanes-Oxley
                Act of 2002.
            
            10-Q,
                Page 27





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





During
      the thirteen weeks ended September 26, 2008, no reports on Form 8-K were filed
      by the Company.


10-Q
 Page
            22


**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
            
            November 10, 2008Signature
            
            Title
            
            Printed Name
            
            Date/s/Brad E. Herr
            
            CFO, Principal Financial Officer
            
            Brad E. Herr
            
            November 10, 2008Signature
            
            Title
            
            Printed Name
            
            Date


10-Q
 Page
            23