• Filing Date: 2013-11-07
  • Form Type: 10-Q
  • Description: Quarterly report
v2.4.0.8
Document and Entity Information
9 Months Ended
Sep. 27, 2013
Nov. 06, 2013
Document And Entity Information    
Entity Registrant Name Command Center, Inc.  
Entity Central Index Key 0001140102  
Document Type 10-Q  
Document Period End Date Sep. 27, 2013  
Amendment Flag false  
Current Fiscal Year End Date --12-27  
Is Entity a Well-known Seasoned Issuer? No  
Is Entity a Voluntary Filer? No  
Is Entity's Reporting Status Current? Yes  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   59,611,242
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2013  
v2.4.0.8
Statement - Consolidated Condensed Balance Sheets (Unaudited) (USD $) (USD $)
Sep. 27, 2013
Dec. 28, 2012
Current assets    
Cash $ 3,055,799 $ 1,632,993
Restricted cash    21,295
Accounts receivable, net of allowance for doubtful accounts 12,289,792 13,701,396
Prepaid expenses, deposits and other 425,827 409,547
Prepaid workers' compensation 105,803 22,852
Other receivables 21,196 17,618
Current portion of workers' compensation deposits 1,155,000 1,200,000
Total Current Assets 17,053,417 17,005,701
Property and equipment - net 364,464 609,772
Workers' compensation risk pool deposits, less current portion 1,722,002 506,196
Goodwill 3,306,786 3,306,786
Intangible assets - net 419,584 522,535
Total Assets 22,866,253 21,950,990
Current liabilities    
Accounts payable 889,495 722,150
Checks issued and payable 248,575 511,105
Account purchase agreement facility 8,168,500 9,051,999
Other current liabilities 587,152 507,122
Contingent liability    322,874
Accrued wages and benefits 1,504,645 1,713,480
Current portion of workers' compensation premiums and claims liability 1,357,820 2,005,579
Total Current Liabilities 12,756,187 14,834,309
Long-term liabilities    
Warrant liabilities 1,386,168 599,473
Workers compensation claims liability, less current portion 2,569,517 2,510,687
Total liabilities 16,711,872 17,944,469
Commitments and contingencies     
Stockholders equity:    
Preferred stock - $0.001 par value, 5,000,000 shares authorized; none issued    0
Common stock - 100,000,000 shares, $0.001 par value, authorized; 59,611,242 and 59,611,242 shares issued and outstanding, respectively 59,611 59,611
Additional paid-in capital 56,068,515 55,633,377
Accumulated deficit (49,973,745) (51,686,467)
Total Stockholders' Equity 6,154,381 4,006,521
Total Liabilities and Stockholders' Equity $ 22,866,253 $ 21,950,990
v2.4.0.8
Statement - Consolidated Condensed Balance Sheets (USD $) (Parenthetical) (USD $)
Sep. 27, 2013
Dec. 28, 2012
Stockholders equity:    
Preferred stock par value $ 0.001 $ 0.001
Preferred stock shares authorized 5,000,000 5,000,000
Preferred stock shares issued 0 0
Common stock par value $ 0.001 $ 0.001
Common stock shares authorized 100,000,000 100,000,000
Common stock shares issued 59,611,242 59,611,242
Common stock shares outstanding 59,611,242 59,611,242
v2.4.0.8
Consolidated Condensed Statements of Income (Operations) (Unaudited) (USD $)
3 Months Ended 9 Months Ended
Sep. 27, 2013
Sep. 28, 2012
Sep. 27, 2013
Sep. 28, 2012
Income Statement [Abstract]        
Revenue $ 25,910,195 $ 28,384,931 $ 69,109,474 $ 71,748,142
Cost of staffing services 19,226,068 21,047,247 51,323,507 53,755,648
Gross Profit 6,684,127 7,337,684 17,785,967 17,992,494
Selling, general and administrative expenses 4,415,906 6,277,242 14,573,936 15,663,556
Depreciation and amortization 66,812 81,871 283,861 285,271
Income from operations 2,201,409 978,571 2,928,170 2,043,667
Interest expense and other financing expense (89,367) (221,220) (428,753) (560,085)
Change in fair value of derivative liability (884,099) 372,188 (786,695) 217,543
Net income before income taxes 1,227,943 1,129,539 1,712,722 1,701,125
Provision for income taxes    (407,695)    (698,195)
Net Income $ 1,227,943 $ 721,844 $ 1,712,722 $ 1,002,930
Earnings per share:        
Basic $ 0.02 $ 0.01 $ 0.03 $ 0.02
Diluted $ 0.02 $ 0.01 $ 0.03 $ 0.02
Weighted average shares outstanding:        
Basic 59,611,242 59,301,342 59,611,242 59,167,829
Diluted 61,458,761 62,805,231 61,275,207 62,964,574
v2.4.0.8
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
9 Months Ended
Sep. 27, 2013
Sep. 28, 2012
Cash flows from operating activities:    
Net income $ 1,712,722 $ 1,002,930
Adjustments to reconcile net income to net cash used by operations:    
Depreciation and amortization 283,861 285,271
Change in allowance for doubtful accounts 292,184 (5,794)
Change in fair value of derivative liabilities 786,695 (217,543)
Common stock issued for interest and services    36,720
Stock based compensation 112,264 95,306
Change in assets and liabilities:    
Accounts receivable - trade 1,119,420 (5,628,352)
Restricted cash 21,295 (39,956)
Prepaid workers' compensation (82,951) (7,947)
Other receivables (3,578) (4,848)
Prepaid expenses, deposits and other (16,280) (147,789)
Loss on disposition of property and equipment 61,940   
Deferred tax asset    698,195
Workers' compensation risk pool deposits (1,170,806) (828,367)
Accounts payable 167,345 (380,888)
Checks issued and payable (262,530) 235,656
Other current liabilities 80,030 184,577
Accrued wages and benefits (208,834) 1,294,034
Workers' compensation premiums and claims liability (588,929) 1,396,112
Net cash provided (used) by operating activities 2,303,848 (2,032,683)
Cash flows from investing activities:    
Purchases of property and equipment (37,843) (190,429)
Sale of property and equipment 40,300   
Cash paid for acquisition of subsidiary    (150,000)
Net cash provided (used) by investing activities 2,457 (340,429)
Cash flows from financing activities:    
Net proceeds from account purchase agreement facility (883,499) 2,731,103
Payments on notes payable    (150,000)
Net cash (used) provided by financing activities (883,499) 2,581,103
Net increase in cash 1,422,806 207,991
Cash, beginning of period 1,632,993 1,131,296
Cash, end of period 3,055,799 1,339,287
Non-cash investing and financing activities    
Common stock issued for subsidiary    460,539
Contingent consideration recorded in acquisition of subsidiary    851,171
Note payable issued for subsidiary    150,000
Shares to be issued for contingent consideration 322,874   
Supplemental disclosure of cash flow information    
Interest paid 267,543 396,966
Income taxes paid      
v2.4.0.8
Disclosure - 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
9 Months Ended
Sep. 27, 2013
Accounting Policies [Abstract]  
Note 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited consolidated condensed financial statements have been prepared by Command Center, Inc. (“Command,” “us,” “we,” or “our”) in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting, as well as the instructions to Form 10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP may have been condensed or omitted. In the opinion of our management, all adjustments, consisting of only normal recurring accruals, necessary for a fair presentation of the financial position, results of operations, and cash flows for the fiscal periods presented have been included. The information included in this Form 10-Q should be read in conjunction with the audited financial statements and notes to the financial statements included in our Annual Report filed on Form 10-K for the year ended December 28, 2012.

 

Consolidation: The consolidated financial statements include the accounts of Command and all of its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

 

Reclassifications: Certain financial statement amounts for the prior period have been reclassified to conform to the current period presentation. These reclassifications had no effect on the net income or loss, or accumulated deficit as previously reported.

 

Cash and Cash Equivalents: Cash and cash equivalents consists of demand deposits, including interest-bearing accounts with original maturities of three months or less, held in banking institutions and a trust account. These accounts are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per institution. As of September 27, 2013 and December 28, 2012, we held deposits in excess of FDIC insured limits of approximately $2.4 million and $705,000, respectively.

 

Fair Value Measures: Fair value is the price that would be received to sell an asset, or paid to transfer a liability, in the principal or most advantageous market for the asset or liability in an ordinary transaction between market participants on the measurement date. Our policy on fair value measures requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The policy establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The policy prioritizes the inputs into three levels that may be used to measure fair value:

 

Level 1: Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

 

Level 2: Applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

 

Level 3: Applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

 

Our financial instruments consist principally of stock warrants and a contingent liability.

 

The following table sets forth our assets and liabilities measured at fair value, whether recurring or non-recurring, at September 27, 2013 and December 28, 2012, and the fair value calculation input hierarchy level that we have determined applies to each asset and liability category.

 

 

 

   

September 27,

2013

   

December 28,

2012

  Input Hierarchy Level
Recurring:              
Warrant liabilities   $ 1,386,168     $ 599,473   Level 2
Contingent liability   $ -     $ 322,874   Level 2

 

Recent Accounting Pronouncements: Other accounting standards that have been issued by the Financial Accounting Standards Board or other standards-setting bodies are not expected to have a material impact on our financial position, results of operations and cash flows. For period ended September 27, 2013, the adoption of other accounting standards had no material impact on our financial positions, results of operations or cash flows. 

 

v2.4.0.8
2. EARNINGS PER SHARE
9 Months Ended
Sep. 27, 2013
Earnings per share:  
Note 2 - EARNINGS PER SHARE

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 reflect the potential dilution of securities that could share in our earnings through the conversion of common shares issuable via outstanding stock options and stock warrants, except where its inclusion would be anti-dilutive, and contingent shares yet to be issued. Total outstanding common stock equivalents at September 27, 2013 and September 28, 2012 were 8,431,876 and 13,506,303, respectively.

 

Diluted common shares outstanding were calculated as follows:

 

    Thirteen Weeks Ended     Thirty-nine Weeks Ended  
   

September 27,

2013

   

September 28,

2012

   

September 27,

2013

   

September 28,

2012

 
Weighted average number of common shares used in basic net income per common share     59,611,242       59,301,342       59,611,242       59,167,829  
Dilutive effects of vested stock options     559,393       490,845       375,839       597,255  
Dilutive effects of outstanding stock warrants     -       3,013,044       -       3,199,490  
Dilutive effects of contingent shares to be issued     1,288,126       -       1,288,126       -  
Weighted average number of common shares used in diluted net income per common share     61,458,761       62,805,231       61,275,207       62,964,574  

 

v2.4.0.8
3. ACCOUNT PURCHASE AGREEMENT
9 Months Ended
Sep. 27, 2013
Account Purchase Agreement  
Note 3 - ACCOUNT PURCHASE AGREEMENT

We have an account purchase agreement in place which allows us to sell eligible accounts receivable for 90% of the invoiced amount on a full recourse basis up to the facility maximum, $14 million, at September 27, 2013. When the receivable is collected, the remaining 10% is paid to us, less applicable fees and interest. Net outstanding accounts receivable sold pursuant to this agreement at September 27, 2013 were approximately $8.2 million. The term of the agreement is through April 7, 2016. The agreement bears interest at the London Interbank Offered Rate plus 3.0% per annum. At September 27, 2013 the effective interest rate was 3.2%. Interest is payable on the actual amount advanced or $3 million, whichever is greater. Additional charges include an annual facility fee equal to 0.75% of the facility threshold in place and lockbox fees. As collateral for repayment of any and all obligations, we granted Wells Fargo Bank, N.A. a security interest in all of our property including, but not limited to, accounts receivable, intangible assets, contract rights, investment property, deposit accounts, and other such asset.

 

The agreement requires that the sum of the excess available advances, plus our book cash balance at month end, must at all times be greater than accrued payroll and accrued payroll taxes. At September 27, 2013, we were in compliance with this covenant.

v2.4.0.8
4. WORKERS' COMPENSATION INSURANCE AND RESERVES
9 Months Ended
Sep. 27, 2013
Workers Compensation Insurance And Reserves  
Note 4 - WORKERS' COMPENSATION INSURANCE AND RESERVES

On April 1, 2012, we changed our workers’ compensation carrier to Dallas National in all states in which we operate other than Washington, North Dakota and New York. The Dallas National coverage is a large deductible policy where we have primary responsibility for claims under the policy. Dallas National provides insurance for covered losses and expenses in excess of $350,000 per incident. Per our contractual agreements with Dallas National, we will make payments into and maintain a balance of $900,000 in a non-depleting deposit account to cover claims within our self-insured layer for injuries arising during the policy year. For workers' compensation claims originating in Washington, North Dakota and New York, we pay workers’ compensation insurance premiums and obtain full coverage under state government administered programs. Accordingly, in these jurisdictions our consolidated financial statements reflect only the mandated workers' compensation insurance premium liability for workers' compensation claims.

 

As part of our large deductible workers’ compensation programs, our carriers require that we collateralize a portion of our future workers’ compensation obligations in order to secure future payments which become due. This collateral is typically in the form of cash and cash equivalents. At September 27, 2013 and December 28, 2012 we had collateral deposits of approximately $2.9 million and $1.7 million, respectively.

 

Workers' compensation expense for temporary workers is recorded as a component of our cost of staffing services and totaled approximately $3.0 million and $3.1 million for thirty-nine weeks ended September 27, 2013 and September 28, 2012, respectively.

v2.4.0.8
5. STOCKHOLDERS EQUITY
9 Months Ended
Sep. 27, 2013
Stockholders equity:  
Note 5 - STOCKHOLDERS EQUITY

Issuance of Common Stock: There were no shares issued during the thirteen or thirty-nine weeks ended September 27, 2013.

 

There are approximately 1.3 million shares to be issued related to the acquisition of assets of DR Services of Louisiana, LLC as part of a contingent fee calculation. The shares are to be issued to the owners of DR Services of Louisiana, LLC upon final approval by our Board of Directors. Due to the pending issuance, earlier this year we reclassified approximately $323,000 originally recorded as a contingent liability to additional paid-in capital in stockholders' equity, as the contingent fee was fully earned.

 

Stock Warrants: The following warrants for our common stock were issued and outstanding on September 27, 2013 and December 28, 2012, respectively:

 

   

September 27,

2013

   

December 28,

2012

 
Warrants outstanding at beginning of period     11,887,803       12,137,803  
Expired     (6,312,803 )     (250,000 )
Warrants outstanding at end of period     5,575,000       11,887,803  

 

A detail of warrants outstanding September 27, 2013 is as follows:

 

    Number of Warrants   Expiration Date
Exercisable at $0.08 per share     4,200,000   4/1/2014
Exercisable at between $0.50 and $1.00 per share     1,375,000   4/15/14 to 4/15/15
      5,575,000    

 

Of the warrants outstanding, 4.2 million are defined as a derivative instrument and the fair value of these warrants is estimated each period using the Black-Scholes pricing model. Expected volatility is based on historical annualized volatility of our stock. The expected term of warrants issued represents the period of time that warrants issued are expected to be outstanding. The risk-free rate is based upon the U.S. Treasury yield curve in effect at the time of issuance. The assumptions used to calculate the fair value are as follows:

 

   

September 27,

2013

   

December 28,

2012

 
Expected terms (years)     0.5       1.3  
Expected volatility     74.6 %     95.2 %
Dividend yield     0.0 %     0.0 %
Risk-free rate     0.03 %     0.2 %

 

The change in fair value amounted to approximately $(787,000) and $218,000 for the thirty-nine weeks ended September 27, 2013 and September 28, 2012, respectively. These changes are included in the line item Change in fair value of derivative liabilities in our Statement of Income.

v2.4.0.8
6. STOCK BASED COMPENSATION
9 Months Ended
Sep. 27, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Note 6 - STOCK BASED COMPENSATION

We approved an option plan in 2008 permitting the grant of 6.4 million stock options to employees for the purpose of attracting and motivating employees, officers and directors.

 

On February 22, 2013, we awarded our new Chief Executive Officer stock options for 1.5 million shares pursuant to our 2008 Stock Incentive Plan. These options were granted with a term of ten years from the date of grant and vest over a period of four years, with 25% vesting on the first anniversary of the date of grant and 25% vesting each anniversary thereafter for the following three years. The exercise price is $0.20 per share. Pursuant to previous awards, there were 1,568,750 and 1,373,000 options vested at September 27, 2013 and September 28, 2012, respectively.

 

The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. The assumptions used to calculate the fair value are as follows:

 

   

September 27,

2013

   

September 28,

2012

 
Expected term (years)     5.0       5.0  
Expected volatility     111.4 %     116.9 %
Dividend yield     0.0 %     0.0 %
Risk-free rate     0.8 %     0.8 %

 

The following table summarizes our stock options outstanding at December 28, 2012 and changes during the period ended September 27, 2013:

 

    Number of Shares Under Options     Weighted Average Exercise Price per Share     Weighted Average Grant Date Fair Value     Aggregate Intrinsic Value  
Outstanding, December 28, 2012     4,083,000     $ 0.20     $ 0.17     $ 1,774,460  
Granted     1,500,000       0.20       0.16       375,000  
Forfeited     (68,500 )     0.39       0.32       (17,125 )
Expired     (5,000 )     0.17       0.15       (400 )
Outstanding, March 29, 2013     5,509,500       0.26       0.21       2,131,935  
Forfeited     (563,500 )     0.28       0.22       (107,065 )
Expired     (337,000 )     0.18       0.15       (1,740 )
Outstanding, June 28, 2013     4,609,000       0.26       0.21       2,023,130  
Forfeited     (97,250 )     0.37       0.30       (39,873 )
Expired     (126,750 )     0.28       0.22       (16,470 )
Outstanding, September 27, 2013     4,385,000       0.26        0.21     $ 1,966,787  

 

The following table summarizes our nonvested stock options outstanding at December 28, 2012, and changes during the period ended September 27, 2013:

 

    Number of Options     Weighted Average Exercise Price per Share     Weighted Average Grant Date Fair Value     Aggregate Intrinsic Value  
Nonvested, December 28, 2012     2,735,750     $ 0.17     $ 0.15     $ 1,483,612  
Granted     1,500,000       0.20       0.16       375,000  
Forfeited     (68,500 )     0.39       0.32       (17,125 )
Nonvested, March 29, 2013     4,167,250       0.28       0.23       1,841,487  
Vested     (690,250 )     0.30       0.25       (131,148 )
Forfeited     (563,500 )     0.28       0.22       (107,065 )
Nonvested, June 28, 2013     2,913,500       0.28       0.22       1,603,274  
Forfeited     (97,250 )     0.37       0.30       (39,873 )
Nonvested, September 27, 2013     2,816,250       0.27       0.22     $ 1,563,401  

 

The following table summarizes information about our stock options outstanding, and reflects the intrinsic value recalculated based on the closing price of our common stock at September 27, 2013:

 

    Number of Options     Weighted Average Exercise Price Per Share     Weighted Average Remaining Contractual Life (years)     Aggregate Intrinsic Value  
Outstanding     4,385,000     $ 0.26       3.16     $ 798,643  
Exercisable     1,568,750       0.23       1.98       94,580  

 

We recognized share-based compensation expense relating to the vesting of issued stock options of approximately $112,000 and $95,000 for the periods ended September 27, 2013 and September 28, 2012, respectively. As of September 27, 2013, there was unrecognized share-based compensation expense totaling approximately $464,000 relating to non-vested options that will be recognized over the next 3.5 years.

v2.4.0.8
7. COMMITMENTS AND CONTINGENCIES
9 Months Ended
Sep. 27, 2013
Commitments and Contingencies Disclosure [Abstract]  
Note 7 - COMMITMENTS AND CONTINGENCIES

Legal Proceeding: On August 3, 2012, Trident Seafoods Corporation and Liberty Mutual Insurance Co. filed a lawsuit against us in the United States District Court, Western District of Washington, for declaratory judgment, breach of contract and violation of the Washington Consumer Protection Act. This action is the result of a previous decision of the administrative law judge for the U.S. Department of Labor, wherein it was determined that a former temporary worker of ours was, in fact, an employee of Trident Seafoods for purposes of the U.S. Longshore and Harbor Workers' Compensation Act. The administrative law judge ordered Trident Seafoods and its insurer Liberty Mutual to pay workers compensation benefits to the employee following a serious injury sustained while working on Trident’s project and under its direction and control. Trident Seafoods alleges we have a contractual duty to pay the workers’ compensation benefits for the injured “borrowed” employee. We dispute the claims asserted by Trident and we are vigorously defending this case.  Recently, the parties took part in a court-ordered mediation conference.  Although the case has not yet settled, discussions are ongoing. We believe the amounts accrued in our financial statements are adequate in consideration of the probable and estimable liabilities. The resolution of ongoing legal proceedings is not expected to have a material effect on our results of operations or financial condition.

 

 

v2.4.0.8
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
9 Months Ended
Sep. 27, 2013
Accounting Policies [Abstract]  
Basis of Presentation

The accompanying unaudited consolidated condensed financial statements have been prepared by Command Center, Inc. (“Command,” “us,” “we,” or “our”) in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting, as well as the instructions to Form 10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP may have been condensed or omitted. In the opinion of our management, all adjustments, consisting of only normal recurring accruals, necessary for a fair presentation of the financial position, results of operations, and cash flows for the fiscal periods presented have been included. The information included in this Form 10-Q should be read in conjunction with the audited financial statements and notes to the financial statements included in our Annual Report filed on Form 10-K for the year ended December 28, 2012.

Consolidation

Consolidation: The consolidated financial statements include the accounts of Command and all of its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

 

Reclassifications

Reclassifications: Certain financial statement amounts for the prior period have been reclassified to conform to the current period presentation. These reclassifications had no effect on the net income or loss, or accumulated deficit as previously reported.

 

Cash and Cash Equivalents

Cash and Cash Equivalents: Cash and cash equivalents consists of demand deposits, including interest-bearing accounts with original maturities of three months or less, held in banking institutions and a trust account. These accounts are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per institution. As of September 27, 2013 and December 28, 2012, we held deposits in excess of FDIC insured limits of approximately $2.4 million and $705,000, respectively.

Fair Value Measurements

Fair Value Measures: Fair value is the price that would be received to sell an asset, or paid to transfer a liability, in the principal or most advantageous market for the asset or liability in an ordinary transaction between market participants on the measurement date. Our policy on fair value measures requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The policy establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The policy prioritizes the inputs into three levels that may be used to measure fair value:

 

Level 1: Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

 

Level 2: Applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

 

Level 3: Applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

 

Our financial instruments consist principally of stock warrants and a contingent liability.

 

The following table sets forth our assets and liabilities measured at fair value, whether recurring or non-recurring, at September 27, 2013 and December 28, 2012, and the fair value calculation input hierarchy level that we have determined applies to each asset and liability category.

 

 

 

   

September 27,

2013

   

December 28,

2012

  Input Hierarchy Level
Recurring:              
Warrant liabilities   $ 1,386,168     $ 599,473   Level 2
Contingent liability   $ -     $ 322,874   Level 2
Recent Accounting Pronouncements

Recent Accounting Pronouncements: Other accounting standards that have been issued by the Financial Accounting Standards Board or other standards-setting bodies are not expected to have a material impact on our financial position, results of operations and cash flows. For period ended September 27, 2013, the adoption of other accounting standards had no material impact on our financial positions, results of operations or cash flows.

v2.4.0.8
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
9 Months Ended
Sep. 27, 2013
Accounting Policies [Abstract]  
Schedule of fair value of financial instruments
   

September 27,

2013

   

December 28,

2012

  Input Hierarchy Level
Recurring:              
Warrant liabilities   $ 1,386,168     $ 599,473   Level 2
Contingent liability   $ -     $ 322,874   Level 2
v2.4.0.8
2. EARNINGS PER SHARE (Tables)
9 Months Ended
Sep. 27, 2013
Earnings per share:  
Schedule of earnings per share
    Thirteen Weeks Ended     Thirty-nine Weeks Ended  
   

September 27,

2013

   

September 28,

2012

   

September 27,

2013

   

September 28,

2012

 
Weighted average number of common shares used in basic net income per common share     59,611,242       59,301,342       59,611,242       59,167,829  
Dilutive effects of vested stock options     559,393       490,845       375,839       597,255  
Dilutive effects of outstanding stock warrants     -       3,013,044       -       3,199,490  
Dilutive effects of contingent shares to be issued     1,288,126       -       1,288,126       -  
Weighted average number of common shares used in diluted net income per common share     61,458,761       62,805,231       61,275,207       62,964,574  
v2.4.0.8
5. STOCKHOLDERS EQUITY (Tables)
9 Months Ended
Sep. 27, 2013
Stockholders equity:  
Stock Warrants
   

September 27,

2013

   

December 28,

2012

 
Warrants outstanding at beginning of period     11,887,803       12,137,803  
Expired     (6,312,803 )     (250,000 )
Warrants outstanding at end of period     5,575,000       11,887,803  

 

A detail of warrants outstanding September 27, 2013 is as follows:

 

    Number of Warrants   Expiration Date
Exercisable at $0.08 per share     4,200,000   4/1/2014
Exercisable at between $0.50 and $1.00 per share     1,375,000   4/15/14 to 4/15/15
      5,575,000    
Warrant fair value assumptions
   

September 27,

2013

   

December 28,

2012

 
Expected terms (years)     0.5       1.3  
Expected volatility     74.6 %     95.2 %
Dividend yield     0.0 %     0.0 %
Risk-free rate     0.03 %     0.2 %
v2.4.0.8
6. STOCK BASED COMPENSATION (Tables)
9 Months Ended
Sep. 27, 2013
Share-based Compensation [Abstract]  
Fair Value Assumption
   

September 27,

2013

   

September 28,

2012

 
Expected term (years)     5.0       5.0  
Expected volatility     111.4 %     116.9 %
Dividend yield     0.0 %     0.0 %
Risk-free rate     0.8 %     0.8 %
Stock based Compensation
    Number of Shares Under Options     Weighted Average Exercise Price per Share     Weighted Average Grant Date Fair Value     Aggregate Intrinsic Value  
Outstanding, December 28, 2012     4,083,000     $ 0.20     $ 0.17     $ 1,774,460  
Granted     1,500,000       0.20       0.16       375,000  
Forfeited     (68,500 )     0.39       0.32       (17,125 )
Expired     (5,000 )     0.17       0.15       (400 )
Outstanding, March 29, 2013     5,509,500       0.26       0.21       2,131,935  
Forfeited     (563,500 )     0.28       0.22       (107,065 )
Expired     (337,000 )     0.18       0.15       (1,740 )
Outstanding, June 28, 2013     4,609,000       0.26       0.21       2,023,130  
Forfeited     (97,250 )     0.37       0.30       (39,873 )
Expired     (126,750 )     0.28       0.22       (16,470 )
Outstanding, September 27, 2013     4,385,000       0.26       0.21     $ 1,966,787  
Nonvested stock options outstanding
    Number of Options     Weighted Average Exercise Price per Share     Weighted Average Grant Date Fair Value     Aggregate Intrinsic Value  
Nonvested, December 28, 2012     2,735,750     $ 0.17     $ 0.15     $ 1,483,612  
Granted     1,500,000       0.20       0.16       375,000  
Forfeited     (68,500 )     0.39       0.32       (17,125 )
Nonvested, March 29, 2013     4,167,250       0.28       0.23       1,841,487  
Vested     (690,250 )     0.30       0.25       (131,148 )
Forfeited     (563,500 )     0.28       0.22       (107,065 )
Nonvested, June 28, 2013     2,913,500       0.28       0.22       1,603,274  
Forfeited     (97,250 )     0.37       0.30       (39,873 )
Nonvested, September 27, 2013     2,816,250       0.27       0.22     $ 1,563,401  
Intrinsic value
    Number of Options     Weighted Average Exercise Price Per Share     Weighted Average Remaining Contractual Life (years)     Aggregate Intrinsic Value  
Outstanding     4,385,000     $ 0.26       3.16     $ 798,643  
Exercisable     1,568,750       0.23       1.98       94,580  
v2.4.0.8
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (Details) (USD $)
Sep. 27, 2013
Dec. 28, 2012
Basis Of Presentation And Summary Of Significant Accounting Polices Details    
Warrant Liabilities (Level 2) $ 1,386,168 $ 599,473
Contingent liability (Level 2)    $ 322,874
v2.4.0.8
2. EARNINGS PER SHARE (Details)
3 Months Ended 9 Months Ended
Sep. 27, 2013
Sep. 28, 2012
Sep. 27, 2013
Sep. 28, 2012
Earnings per share:        
Weighted average number of common shares used in basic net income (loss) per common share 59,611,242 59,301,342 59,611,242 59,167,829
Dilutive effects of outstanding stock warrants 559,393 490,845 375,839 597,255
Dilutive effects of vested stock options    3,013,044    3,199,490
Dilutive effects of contingent shares to be issued 1,288,126    1,288,126   
Weighted average number of common shares used in diluted net income (loss) per common share 61,458,761 62,805,231 61,275,207 62,964,574
v2.4.0.8
2. EARNINGS PER SHARE (Details Narrative) (USD $)
Sep. 27, 2013
Sep. 28, 2012
Earnings per share:    
Total outstanding common stock equivalents $ 8,431,876 $ 13,506,303
v2.4.0.8
3. ACCOUNT PURCHASE AGREEMENT (Details Narrative) (USD $)
In Millions, unless otherwise specified
Sep. 27, 2013
AccountPurchaseAgreementDetailsNarrativeAbstract  
Current facility Maximum $ 14
Net accounts receivable sold $ 8
Effective interest rate 3.20%
Interest payable Actual amount advanced or $3 million, whichever is greater.
v2.4.0.8
4. WORKERS' COMPENSATION INSURANCE AND RESERVES (Details Narrative) (USD $)
9 Months Ended
Sep. 27, 2013
Sep. 28, 2012
Dec. 28, 2012
Workers Compensation Insurance And Reserves Details Narrative      
Collateral deposits (approximately) $ 2,900,000   $ 1,700,000
Workers' compensation expense for temporary worker $ 3,000,000 $ 3,100,000  
v2.4.0.8
5. STOCKHOLDERS' EQUITY (Details)
Sep. 27, 2013
Dec. 28, 2012
Stockholders equity:    
Warrants outstanding at beginning of period 11,887,803 12,137,803
Expired (6,312,803) (250,000)
Warrants outstanding at end of period 5,575,000 11,887,803
v2.4.0.8
5. STOCKHOLDERS' EQUITY (Details 1)
Sep. 27, 2013
Number of warrants 5,575,000
Exercisable at $0.08 per share [Member]
 
Number of warrants 4,200,000
Expiration Date of waraants 4/1/2014
Exercisable at between $0.50 and $1.00 per share [Member]
 
Number of warrants 1,375,000
Expiration Date of waraants 4/15/14 to 4/15/15
v2.4.0.8
5. STOCKHOLDERS' EQUITY (Details 2)
Sep. 27, 2013
Dec. 28, 2012
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]    
Expected terms (years) 6 months 1 year 3 months 18 days
Expected volatility 74.60% 95.20%
Dividend yield 0.00% 0.00%
Risk-free rate 0.03% 0.20%
v2.4.0.8
5. STOCKHOLDERS EQUITY (Details Narrative) (USD $)
9 Months Ended
Sep. 27, 2013
Sep. 28, 2012
Fair Value Disclosures [Abstract]    
Change in fair value $ (787,000) $ 218,000
v2.4.0.8
6. STOCK BASED COMPENSATION (Details )
9 Months Ended
Sep. 27, 2013
Sep. 28, 2012
Stock Based Compensation Details    
Expected term (years) 5 years 5 years
Expected volatility 111.40% 116.90%
Dividend yield 0.00% 0.00%
Risk-free rate 0.80% 0.80%
v2.4.0.8
6. STOCK BASED COMPENSATION (Details 1) (USD $)
3 Months Ended
Sep. 27, 2013
Jun. 28, 2013
Mar. 29, 2013
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]      
Number of Options Outstanding, Beginning Balance 4,609,000 5,509,500 4,083,000
Granted, option      1,500,000
Forfeited, option (97,250) (563,500) (68,500)
Expired, Option (126,750) (337,000) (5,000)
Number of Options Outstanding, Ending Balance 4,385,000 4,609,000 5,509,500
Weighted Average Exercise Price Per Share, Outstanding, Beginning $ 0.26 $ 0.26 $ 0.20
Granted, Weighted Average Exercise Price Per Share     $ 0.20
Forfeited, Weighted Average Exercise Price Per Share $ 0.37 $ 0.28 $ 0.39
Weighted Average Exercise Price Per Share, Expired $ 0.28 $ 0.18 $ 0.17
Weighted Average Exercise Price Per Share, Outstanding, Ending $ 0.26 $ 0.26 $ 0.26
Weighted Average Fair Value Per Share Outstanding, Beginning $ 0.21 $ 0.21 $ 0.17
Granted, Weighted Average Fair Value Per Share     $ 0.16
Forfeited, Weighted Average Fair Value Per Share $ 0.30 $ 0.22 $ 0.32
Weighted Average Fair Value Per Share, Expired $ 0.22 $ 0.15 $ 0.15
Weighted Average Fair Value Per ShareOutstanding, Ending $ 0.21 $ 0.21 $ 0.21
Aggregate Intrinsic Value, Outstanding, Beginning $ 2,023,130 $ 2,131,935 $ 1,774,460
Granted, Aggregate Intrinsic Value     375,000
Forfeited,Aggregate Intrinsic Value (39,873) (107,065) (17,125)
Aggregate Intrinsic Value, Expired (16,470) (1,740) (400)
Aggregate Intrinsic Value, Outstanding, Ending $ 1,966,787 $ 2,023,130 $ 2,131,935
v2.4.0.8
6. STOCK BASED COMPENSATION (Details 2) (USD $)
3 Months Ended
Sep. 27, 2013
Jun. 28, 2013
Mar. 29, 2013
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]      
Number of Nonvested Options Outstanding, Beginning Balance 2,913,500 4,167,250 2,735,750
Granted, Nonvested     1,500,000
Vested, Nonvested   (690,250)  
Forfeited, Nonvested (97,250) (563,500) (68,500)
Number of Nonvested Options Outstanding, Ending Balance 2,816,250 2,913,500 4,167,250
Weighted Average Exercise Price Per Share, Outstanding, Nonvested, Beginning $ 0.28 $ 0.28 $ 0.17
Granted, Weighted Average Exercise Price Per Share     $ 0.20
Weighted Average Exercise Price Per Share, Vested   $ 0.30  
Forfeited, Weighted Average Exercise Price Per Share $ 0.37 $ 0.28 $ 0.39
Weighted Average Exercise Price Per Share, Outstanding, Nonvested, Ending $ 0.27 $ 0.28 $ 0.28
Weighted Average Fair Value Per Share Outstanding, Nonvested, Beginning $ 0.22 $ 0.23 $ 0.15
Granted, Weighted Average Grant Date Fair Value     $ 0.16
Weighted Average Grant Date Fair Value, Vested   $ 0.25  
Forfeited, Weighted Average Grant Date Fair Value $ 0.30 $ 0.22 $ 0.32
Weighted Average Fair Value Per Share Outstanding, Nonvested, Ending $ 0.22 $ 0.22 $ 0.23
Aggregate Intrinsic Value, Outstanding, Nonvested, Beginning 1,603,274 1,841,487 1,483,612
Granted, Aggregate Intrinsic Value     375,000
Aggregate Intrinsic Value, Vested   (131,147)  
Forfeited,Aggregate Intrinsic Value (39,873) (107,065) (17,125)
Aggregate Intrinsic Value, Outstanding, Nonvested, Ending 1,563,401 1,603,275 1,841,487
v2.4.0.8
6. STOCK BASED COMPENSATION (Details 3) (USD $)
Sep. 27, 2013
Stock Based Compensation Details 3  
Number of Options, outstanding 4,385,000
Weighted Average Exercise Price Per Share, Outstanding $ 0.26
Weighted Average Remaining Contractual Life (years), outstanding 3 years 1 month 28 days
Aggregate Intrinsic Value, outstanding $ 798,643
Number of Options, Exercisable 1,568,750
Weighted Average Exercise Price Per Share, Exercisable $ 0.23
Weighted Average Remaining Contractual Life (years), Exercisable 1 year 11 months 23 days
Aggregate Intrinsic Value, Exercisable $ 94,580
v2.4.0.8
6. STOCK BASED COMPENSATION (Details Narrative) (USD $)
9 Months Ended
Sep. 27, 2013
Sep. 28, 2012
Stock Based Compensation Details Narrative    
Options vested 1,568,750 1,373,000
Share-based compensation expense relating to the vesting of issued stock options $ 112,000 $ 95,000
Unrecognized share-based compensation expense $ 464,000  
Unrecognized share-based compensation expense, period of recognition 3 years 6 months