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EX-32 - EXHIBIT 32 - WESTERN CAPITAL RESOURCES, INC.s107084_ex32.htm
EX-31.2 - EXHIBIT 31.2 - WESTERN CAPITAL RESOURCES, INC.s107084_ex31-2.htm
EX-31.1 - EXHIBIT 31.1 - WESTERN CAPITAL RESOURCES, INC.s107084_ex31-1.htm

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

Form 10-Q

 

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended June 30, 2017

 

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Commission File Number:   000-52015

 

Western Capital Resources, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware   47-0848102
(State or Other Jurisdiction of Incorporation or Organization)   (I.R.S. Employer Identification Number)

 

11550 “I” Street, Suite 150, Omaha, Nebraska 68137

 

(Address of Principal Executive Offices) (Zip Code)

 

Registrant’s telephone number, including area code: (402) 551-8888

 

 

N/A

 

 

 

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

 

 

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

 

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

 

Large accelerated filer  ☐ Accelerated filer  ☐
   
Non-accelerated filer  ☐ Smaller reporting company  ☑
   
  Emerging growth company  ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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

 

Yes ☐ No ☑

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

As of August 14, 2017, the registrant had outstanding 9,390,997 shares of common stock, $0.001 par value per share.

 

 

1

 

 

Western Capital Resources, Inc.

 

Index

 

    Page
PART I. FINANCIAL INFORMATION    
Item 1. Financial Statements   3
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations   13 
     
Item 4. Controls and Procedures   21 
     
PART II. OTHER INFORMATION    
Item 5. Other Information   22
     
Item 6. Exhibits   22
     
SIGNATURES    23

 

2

 

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

WESTERN CAPITAL RESOURCES, INC. AND SUBSIDIARIES

 

CONTENTS

 

  Page
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  
   
Condensed Consolidated Balance Sheets 4
   
Condensed Consolidated Statements of Income 5
   
Condensed Consolidated Statements of Cash Flows 6
   
Notes to Condensed Consolidated Financial Statements 7

 

3

 

 

WESTERN CAPITAL RESOURCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

 

   June 30, 2017   December 31, 2016 
ASSETS        
         
CURRENT ASSETS          
Cash  $10,060,406   $14,159,975 
Loans receivable (less allowance for losses of $729,000 and $1,036,000, respectively)   3,939,432    4,438,276 
Accounts receivable (less allowance for losses of $124,000 and $96,000, respectively)   1,800,686    1,716,867 
Inventory   9,652,531    9,095,460 
Prepaid expenses and other   3,630,208    3,727,284 
TOTAL CURRENT ASSETS   29,083,263    33,137,862 
           
NOTES RECEIVABLE   3,433,856    2,920,112 
           
PROPERTY AND EQUIPMENT, net   10,353,039    9,696,620 
           
GOODWILL   5,796,528    5,796,528 
           
INTANGIBLE ASSETS, net   7,257,050    7,536,945 
           
OTHER   1,310,465    1,122,585 
           
TOTAL ASSETS  $57,234,201   $60,210,652 
           
LIABILITIES AND EQUITY          
           
CURRENT LIABILITIES          
Accounts payable and accrued expenses  $9,054,923   $13,002,381 
Other current liabilities   2,195,895    2,242,372 
Income taxes payable       265,813 
Note payable – short-term   21,064    55,819 
Current portion long-term debt   1,780,000    1,780,000 
Current portion capital lease obligations   45,806    54,020 
Deferred revenue   1,502,252    1,427,358 
TOTAL CURRENT LIABILITIES   14,599,940    18,827,763 
           
LONG-TERM LIABILITIES          
Notes payable, net of current portion   6,732,855    8,681,545 
Capital lease obligations, net of current portion   71,386    94,762 
Deferred income taxes   1,673,000    1,775,000 
Other   177,842    143,080 
TOTAL LONG-TERM LIABILITIES   8,655,083    10,694,387 
           
TOTAL LIABILITIES   23,255,023    29,522,150 
           
COMMITMENTS AND CONTINGENCIES (Note 11)          
           
EQUITY          
           
WESTERN SHAREHOLDERS’ EQUITY          
Common stock, $0.001 par value, 12,500,000 shares authorized, 9,390,997 and 9,497,871 shares issued and outstanding.   939    950 
Additional paid-in capital   29,015,990    28,997,087 
Retained earnings   4,934,644    1,643,996 
TOTAL WESTERN SHAREHOLDERS’ EQUITY   33,951,573    30,642,033 
           
NONCONTROLLING INTERESTS   27,605    46,469 
           
TOTAL EQUITY   33,979,178    30,688,502 
           
TOTAL LIABILITIES AND EQUITY  $57,234,201   $60,210,652 

 

See notes to condensed consolidated financial statements

 

4

 

 

WESTERN CAPITAL RESOURCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

 

   Three months ended   Six months ended 
   June 30, 2017   June 30, 2016   June 30, 2017   June 30, 2016 
REVENUES                
Sales and associated fees  $24,739,956   $19,064,101   $49,299,086   $39,079,643 
Financing fees and interest   2,119,747    2,340,968    4,353,156    4,825,188 
Royalty and franchise fees, net   3,021,402    2,595,614    6,054,028    5,390,370 
Other revenue   5,909,306    3,171,743    11,719,147    6,312,511 
Total Revenues   35,790,411    27,172,426    71,425,417    55,607,712 
                     
COST OF REVENUES                    
Cost of sales   12,753,066    9,377,949    24,811,820    19,815,834 
Provisions for loans receivable losses   250,734    428,613    488,315    731,485 
Other   729,476    603,667    1,377,673    1,157,081 
Total Cost of Revenues   13,733,276    10,410,229    26,677,808    21,704,400 
                     
GROSS PROFIT   22,057,135    16,762,197    44,747,609    33,903,312 
                     
OPERATING EXPENSES                    
Salaries, wages and benefits   10,252,169    6,677,803    20,243,560    13,426,753 
Occupancy   3,172,317    1,897,270    6,126,373    3,871,075 
Advertising, marketing and development   2,294,251    2,266,522    4,303,401    4,217,531 
Depreciation   374,225    295,157    724,513    571,749 
Amortization   139,374    140,873    279,893    281,863 
Other   3,073,413    2,511,751    6,614,080    5,250,977 
Total Operating Expenses   19,305,749    13,789,376    38,291,820    27,619,948 
                     
OPERATING INCOME   2,751,386    2,972,821    6,455,789    6,283,364 
                     
OTHER INCOME (EXPENSES):                    
Interest income   67,564    957    131,639    2,009 
Interest expense   (110,415)   (150,714)   (248,567)   (319,725)
Total Other Income (Expense)   (42,851)   (149,757)   (116,928)   (317,716)
                     
INCOME BEFORE INCOME TAXES   2,708,535    2,823,064    6,338,861    5,965,648 
                     
INCOME TAX EXPENSE   957,000    1,034,000    2,320,000    2,201,000 
                     
NET INCOME   1,751,535    1,789,064    4,018,861    3,764,648 
                     
Less net income attributable to noncontrolling interests   (7,436)   (4,553)   (12,521)   (8,738)
                     
NET INCOME ATTRIBUTABLE TO WESTERN COMMON SHAREHOLDERS  $1,744,099   $1,784,511   $4,006,340   $3,755,910 
                     
EARNINGS PER SHARE ATTRIBUTABLE TO WESTERN COMMON SHAREHOLDERS                    
Basic and diluted  $0.19   $0.19   $0.42   $0.40 
                     
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                    
Basic and diluted   9,390,997    9,497,534    9,431,739    9,497,534 

 

See notes to condensed consolidated financial statements.

 

5

 

 

WESTERN CAPITAL RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 
   Six Months Ended 
   June 30, 2017   June 30, 2016 
OPERATING ACTIVITIES          
Net Income  $4,018,861   $3,764,648 
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation   724,513    571,749 
Amortization   279,893    281,863 
Share based compensation   18,903    35,167 
Deferred income taxes   (102,000)   313,000 
Loss on disposal of property and equipment   24,530    9,953 
Changes in operating assets and liabilities:          
Loans receivable   498,844    459,191 
Accounts receivable   (83,819)   445,254 
Inventory   (557,071)   380,291 
Prepaid expenses and other assets   (90,804)   973,187 
Accounts payable and accrued expenses   (4,213,269)   (3,118,195)
Deferred revenue and other current liabilities   28,417    (390,943)
Accrued liabilities and other – long-term   34,762    22,069 
Net cash provided by operating activities   581,760    3,747,234 
           
INVESTING ACTIVITIES          
Purchases of property and equipment   (1,419,921)   (929,291)
Acquisition of stores, net of cash acquired       (588,241)
Advances on note receivable, net   (513,744)    
Proceeds from disposal of property and equipment   14,459     
Net cash used by investing activities   (1,919,206)   (1,517,532)
           
FINANCING ACTIVITIES          
Payments on notes payable – short-term   (34,755)    
Payments on line of credit, net   (998,426)    
Advances on notes payable – long-term       418,301 
Payments on notes payable – long-term   (950,264)   (1,801,638)
Common stock redemption   (480,928)    
Advances on capital lease       185,318 
Payments on capital lease   (31,590)   (54,542)
Subsidiary dividends to noncontrolling interests   (31,385)    
Dividend paid   (234,775)   (237,467)
Net cash used in financing activities   (2,762,123)   (1,490,028)
           
NET INCREASE (DECREASE) IN CASH   (4,099,569)   739,674 
           
CASH          
Beginning of period   14,159,975    7,847,669 
End of period  $10,060,406   $8,587,343 
           
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION          
           
Income taxes paid  $3,401,436   $1,490,444 
Interest paid  $239,290   $451,271 
           
Non-cash Investing and Financing Activities:          
Long-term debt proceeds used to pay off debt and interest  $   $3,021,699 
Long-term debt proceeds used to pay prepaid financing costs  $   $60,000 

 

See notes to condensed consolidated financial statements.

 

6

 

 

WESTERN CAPITAL RESOURCES, INC. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

1.Basis of Presentation, Nature of Business and Summary of Significant Accounting Policies –

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared according to the instructions to Form 10-Q and Section 210.8-03(b) of Regulation S-X of the Securities and Exchange Commission (“SEC”) and, therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted.

 

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.

 

For further information, refer to the Condensed Consolidated Financial Statements and footnotes thereto included in our Form 10-K for the year ended December 31, 2016. The condensed consolidated balance sheet at December 31, 2016, has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by GAAP.

 

Nature of Business

 

Western Capital Resources, Inc. (WCR) is a parent company owning operating subsidiaries, with percentage owned shown parenthetically, as summarized below.

 

Franchise

oAlphaGraphics, Inc. (AGI) (99.2%) – franchisor of 253 domestic and 25 international AlphaGraphics Business Centers which specialize in the planning, production, and management of visual communications for businesses and individuals throughout the world.

 

Cellular Retail

oPQH Wireless, Inc. (PQH) (100%) – operates cellular retail stores (215 owned and operated plus 53 operated under management agreement as of June 30, 2017), as an exclusive dealer of the Cricket brand.

 

Direct to Consumer

oJ & P Park Acquisitions, Inc. (JPPA) (100%) – an online and direct marketing distribution retailer of live plants, seeds, holiday gifts and garden accessories selling its products under Park Seed, Jackson & Perkins, and Wayside Gardens brand names as well as a wholesaler under the Park Wholesale brand.

 

oRestorers Acquisition, Inc. (RAI) (100%) – an online and direct marketing distribution retailer of home improvement and restoration products operating under Van Dyke’s Restorers.

 

oJ & P Real Estate, LLC (JPRE) (100%) – owns real estate utilized as JPPA’s distribution and warehouse facility and the corporate offices of JPPA and RAI.

 

Consumer Finance

oWyoming Financial Lenders, Inc. (WFL) (100%) – owns and operates “payday” stores (40 as of June 30, 2017) in seven states (Colorado, Iowa, Kansas, Nebraska, North Dakota, Wisconsin and Wyoming) providing sub-prime short-term uncollateralized non-recourse “cash advance” or “payday” loans typically ranging from $100 to $500 with a maturity of generally two to four weeks, sub-prime short-term uncollateralized non-recourse installment loans typically ranging from $300 to $800 with a maturity of six months, check cashing and other money services to individuals.

 

oExpress Pawn, Inc. (EPI) (100%) – owns and operates retail pawn stores (three as of June 30, 2017) in Nebraska and Iowa providing collateralized non-recourse pawn loans and retail sales of primarily used merchandise.

 

References in these financial statement notes to “Company” or “we” refer to Western Capital Resources, Inc. and its subsidiaries. References to specific companies within our enterprise, such “AGI,” “PQH,” “JPPA,” “RAI,” “JPRE,” “WFL” or “EPI” are references only to those companies.

 

7

 

 

Basis of Consolidation

 

The consolidated financial statements include the accounts of the WCR, its wholly owned subsidiaries and other entities in which the Company owns a controlling financial interest. For financial interests in which the Company owns a controlling financial interest, the Company applies the provisions of ASC 810 applicable to reporting the equity and net income or loss attributable to noncontrolling interests. All significant intercompany balances and transactions of the Company have been eliminated in consolidation.

 

Use of Estimates

 

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect certain reported amounts and disclosures in the consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. Significant management estimates relate to the notes and loans receivable allowance, carrying value and impairment of long-lived goodwill and intangible assets, inventory valuation and obsolescence, estimated useful lives of property and equipment, gift certificate and merchandise credits liability and deferred taxes and tax uncertainties.

 

Reclassifications

 

Certain Statements of Income reclassifications have been made in the presentation of our prior financial statements and accompanying notes to conform to the presentation as of and for the three and six month periods ended June 30, 2017.

 

Recent Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board (“FASB”) and the International Accounting Standards Board (“IASB”) jointly issued a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under US GAAP and IFRS. This converged standard is effective for annual and interim periods beginning after December 15, 2017. The Company is currently assessing the potential effects on our financial condition, results of operations and consolidated financial statements.

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) related to recognition of lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This ASU is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that annual period, with early adoption permitted and to be applied using a modified retrospective approach. The Company is currently evaluating the impact the ASU will have on our financial condition, results of operations and consolidated financial statements.

 

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) related to the measurement of credit losses on financial instruments. The standard requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. This ASU is effective for annual reporting periods beginning after December 15, 2018 and interim periods within that annual period, with early adoption permitted and the standard to be applied using a modified retrospective approach. The Company is currently evaluating the impact the ASU will have on our financial condition, results of operations and consolidated financial statements.

 

No other new accounting pronouncements issued or effective during the fiscal year have had or are expected to have a material impact on the consolidated financial statements.

 

2.Risks Inherent in the Operating Environment –

 

Regulatory

 

The Company’s Consumer Finance segment activities are highly regulated under numerous local, state, and federal laws, regulations and rules, which are subject to change. New laws, regulations or rules could be enacted or issued, interpretations of existing laws, regulations or rules may change and enforcement action by regulatory agencies may intensify. Over the past several years, consumer advocacy groups and certain media reports have advocated governmental action to prohibit or severely restrict sub-prime lending activities of the kind conducted by the Company. The federal Consumer Financial Protection Bureau has indicated that it will use its authority to further regulate the payday industry and has been actively involved in the enforcement of existing consumer-protection laws applicable to the payday industry.

 

Any adverse change in present local, state, and federal laws or regulations that govern or otherwise affect lending could result in the Consumer Finance segment’s curtailment or cessation of operations in certain or all jurisdictions or locations. Furthermore, any failure to comply with any applicable local, state or federal laws or regulations could result in fines, litigation, store location closure or negative publicity. Any such change or failure would have a corresponding impact on the Company’s and segment’s results of operations and financial condition, primarily through a decrease in revenues resulting from the cessation or curtailment of operations, decrease in operating income through increased legal expenditures or fines, and could also negatively affect the Company’s general business prospects due to lost or decreased operating income or if negative publicity effects its ability to obtain additional financing as needed.

 

8

 

 

In addition, the passage of federal or state laws and regulations or changes in interpretations of them could, at any point, essentially prohibit the business we conduct in the Consumer Finance segment from conducting its lending business in its current form. Any such legal or regulatory change would certainly have a material and adverse effect on the Company, its operating results, financial condition and prospects, and perhaps even the viability of the business we conduct in the Consumer Finance segment.

 

3.Loans Receivable –

 

The Consumer Finance segment’s outstanding loans receivable aging was as follows:

 

June 30, 2017
   Payday   Installment   Pawn &
Title
   Total 
Current  $3,266,323   $224,554   $302,681   $3,793,558 
1-30   250,525    35,028        285,553 
31-60   152,745    16,978        169,723 
61-90   104,203    10,381        114,584 
91-120   94,127    7,164        101,291 
121-150   77,661    4,855        82,516 
151-180   117,909    3,298        121,207 
    4,063,493    302,258    302,681    4,668,432 
Less Allowance   (652,000)   (77,000)       (729,000)
   $3,411,493   $225,258   $302,681   $3,939,432 

 

December 31, 2016
   Payday   Installment   Pawn &
Title
   Total 
Current  $3,683,603   $272,703   $284,460   $4,240,766 
1-30   253,297    44,433        297,730 
31-60   201,375    27,905        229,280 
61-90   185,072    18,747        203,819 
91-120   159,435    15,737        175,172 
121-150   176,625    8,889        185,514 
151-180   134,171    7,824        141,995 
    4,793,578    396,238    284,460    5,474,276 
Less Allowance   (953,000)   (83,000)       (1,036,000)
   $3,840,578   $313,238   $284,460   $4,438,276 

 

4.Loans Receivable Allowance –

 

A rollforward of the Consumer Finance segment’s loans receivable allowance is as follows:

 

  

Six Months Ended

June 30, 2017

  

Year Ended

December 31, 2016

 
Loans receivable allowance, beginning of period  $1,036,000   $1,177,000 
Provision for loan losses charged to expense   488,315    1,605,867 
Charge-offs, net   (795,315)   (1,746,867)
Loans receivable allowance, end of period  $729,000   $1,036,000 

 

5.Accounts Receivable –

 

A breakdown of accounts receivables by segment are as follows:

 

June 30, 2017
   Franchise   Cellular
Retail
   Direct to Consumer   Consumer Finance   Total 
Accounts receivable  $1,427,065   $267,494   $224,139   $5,988   $1,924,686 
Less allowance   (100,000)       (24,000)       (124,000)
Net account receivable  $1,327,065   $267,494   $200,139   $5,988   $1,800,686 

 

9

 

 

December 31, 2016
   Franchise   Cellular
Retail
   Direct to Consumer   Consumer Finance   Total 
Accounts receivable  $1,103,210   $333,800   $363,426   $12,431   $1,812,867 
Less allowance   (83,000)       (13,000)       (96,000)
Net account receivable  $1,020,210   $333,800   $350,426   $12,431   $1,716,867 

 

6.Notes Payable – Long Term –

 

   June 30, 2017   December 31, 2016 
Revolving credit facility (with a credit limit of $3,000,000) to a financial institution with monthly payments of interest only at LIBOR plus 3.5% (4.625% at June 30, 2017), secured by substantially all assets of the Company with stated guarantee amounts by subsidiaries, maturing April 21, 2018  $   $998,426 
Note payable to a financial institution with monthly principal payment of $58,333 plus interest at LIBOR plus 3.5% (4.625% at June 30, 2017), secured by substantially all assets of the Company with stated guarantee amounts by subsidiaries, maturing April 21, 2021   2,741,667    3,091,667 
Note payable to a financial institution with monthly principal payment of $56,667 plus interest at LIBOR plus 3.5% (4.625% at June 30, 2017), secured by substantially all assets of the Company with stated guarantee amounts by subsidiaries, maturing December 1, 2021   2,999,740    3,400,000 
Subsidiary note payable to a financial institution with monthly principal payment of $33,334 plus annual paydowns equal to JPRE’s net cash flow from operations due within 120 days of the calendar year end plus interest at LIBOR plus 3.5% (4.625% at June 30, 2017), secured by JPRE assets, maturing June 5, 2019 when remaining principal balance is due   2,771,448    2,971,452 
Total   8,512,855    10,461,545 
Less current maturities   (1,780,000)   (1,780,000)
   $6,732,855   $8,681,545 

 

At June 30, 2017 and December 31, 2016, approximately $6,259,000 and $4,510,000 of credit was available under the credit facilities, respectively.

 

7.Equity –

 

In March 2017, the Company redeemed 106,874 shares of common stock for $480,928 in a private and unsolicited transaction.

 

8.Cash Dividends –

 

Date declared  February 24, 2017 
Record date  March 17, 2017 
Date paid  March 24, 2017 
Dividend per share of common stock  $0.025 

 

Date declared  May 12, 2017 
Record date  July 14, 2017 
Date paid  July 24, 2017 
Dividend per share of common stock  $0.025 

 

10

 

 

9.Other Operating Expense –

 

A breakout of other expense is as follows:

 

   Three Months Ended 
June 30,
   Six Months Ended
June 30,
 
   2017   2016   2017   2016 
Bank fees  $594,390   $497,084   $1,144,739   $935,118 
Collection costs   91,528    109,963    181,422    226,151 
Conference expense   26    29,151    289,232    294,556 
Insurance   265,791    173,326    515,799    344,889 
Management and advisory fees   201,662    203,504    425,143    424,529 
Professional and consulting fees   596,460    447,735    1,407,590    1,042,945 
Supplies   420,672    176,650    752,744    359,924 
Other   902,884    874,338    1,897,411    1,622,865 
   $3,073,413   $2,511,751   $6,614,080   $5,250,977 
                     

 

10.Segment Information –

 

Segment information related to the three and six month periods ended June 30, 2017 and 2016 is presented below:

 

Three Months Ended June 30, 2017

(in thousands)

 

   Franchise  

 

Cellular
Retail

   Direct to
Consumer
   Consumer
Finance
   Corporate   Total 
                         
Revenue from external customers  $4,033   $17,087   $12,127   $2,543   $   $35,790 
Net income (loss)  $930   $(331)  $1,103   $201   $(151)  $1,752 
Expenditures for segmented assets  $13   $531   $122   $   $   $666 

 

Three Months Ended June 30, 2016

(in thousands)

 

   Franchise  

 

Cellular
Retail

   Direct to
Consumer
   Consumer
Finance
   Corporate   Total 
                         
Revenue from external customers  $3,562   $8,083   $12,689   $2,838   $   $27,172 
Net income (loss)  $568   $74   $1,103   $262   $(218)  $1,789 
Expenditures for segment assets  $7   $580   $24   $7   $   $618 

 

Six Months Ended June 30, 2017

(in thousands)

 

   Franchise  

 

Cellular
Retail

   Direct to
Consumer
   Consumer
Finance
   Corporate   Total 
                         
Revenue from external customers  $7,977   $34,131   $24,031   $5,286   $   $71,425 
Net income (loss)  $1,565   $289   $1,968   $455   $(258)  $4,019 
Total segmented assets  $8,729   $23,338   $12,520   $8,684   $3,963   $57,234 
Expenditures for segment assets  $13   $1,204   $203   $   $   $1,420 

 

11

 

 

Six Months Ended June 30, 2016 (in thousands)  

 

 

                         
   Franchise  

Cellular Retail

   Direct to Consumer   Consumer Finance   Corporate   Total 
                         
Revenue from external customers  $7,174   $17,858   $24,754   $5,822   $   $55,608 
Net income (loss)  $1,083   $454   $2,007   $574   $(353)  $3,765 
Total segment assets  $9,681   $14,779   $14,393   $15,531   $374   $54,758 
Expenditures for segment assets  $15   $1,447   $38   $18   $   $1,518 

 

11.       Commitments and Contingencies –

 

Pursuant to the Company’s numerous employment agreements, bonuses of approximately $112,000 and $443,000 were accrued for the three and six month periods ended June 30, 2017, respectively.

 

12.       Subsequent Events –

 

We evaluated all events or transactions that occurred after June 30, 2017 up through the date we issued these financial statements. During this period we did not have any material subsequent events that impacted our financial statements other than those listed below.

 

Asset Purchase Agreement

 

In 2016, PQH entered into an agreement to acquire 20 Cricket Wireless retail locations, with an option to purchase an additional 33 locations. The aggregate purchase price for all 53 locations was $7,200,000, subject to reduction in the event that the seller exercised an option to retain a 30% ownership in the acquired business. From November 22, 2016 through June 30, 2017, PQH operated the store locations under a management agreement. Effective July 1, 2017, we consummated the acquisition transaction by acquiring all 53 locations through a subsidiary of PQH, and the seller exercised its option to retain a 30% ownership interest in the acquired business. As a result, PQH owns 70% of the newly formed subsidiary and the seller owns the remaining 30% of that subsidiary.

 

Credit Facility

 

In July 2017, the Company made a $1 million payment to pay down the outstanding balance of the term debt which matures April 21, 2021 (see Note 6 for further information).

 

12

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Forward-Looking Statements

 

Some of the statements made in this report are “forward-looking statements,” as that term is defined under Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based upon our current expectations and projections about future events. Whenever used in this report, the words “believe,” “anticipate,” “intend,” “estimate,” “expect” and similar expressions, or the negative of such words and expressions, are intended to identify forward-looking statements, although not all forward-looking statements contain such words or expressions. The forward-looking statements in this report are primarily located in the material set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (Part I, Item 2), but may be found in other parts of this report as well. These forward-looking statements generally relate to our plans, objectives and expectations for future operations and are based upon management’s current estimates and projections of future results or trends. Although we believe that our plans and objectives reflected in or suggested by these forward-looking statements are reasonable, we may not achieve these plans or objectives. You should read this report completely and with the understanding that actual future results may be materially different from what we expect. We will not necessarily update forward-looking statements even though our situation may change in the future.

 

Specific factors that might cause actual results to differ from our expectations embodied in our forward-looking statements, or that might affect the value of the common stock, include but are not limited to:

 

a significant portion of pre-tax net income contributed by the Direct to Consumer segment is seasonal in nature and is earned during the months of March through May and December, and consequently the third quarter of each year typically results in a net loss;

 

the success of new stores related to our expansion plans in the Cellular Retail segment;

 

changes in local, state or federal laws and regulations governing lending practices, or changes in the interpretation of such laws and regulations, affecting our Consumer Finance segment;

 

litigation and regulatory actions directed toward us or the industries in which we operate, particularly in certain key states or nationally;

 

our need for additional financing;

 

unpredictability or uncertainty in financing markets, which could impair our ability to grow our business through acquisitions;

 

changes in Cricket dealer compensation;

 

failure of or disruption caused by a significant vendor;

 

outside factors that affect our ability to obtain product and fulfill orders; and

 

our ability to successfully operate or integrate recent or future business acquisitions.

 

Other factors that could cause actual results to differ from those implied by the forward-looking statements in this report are more fully described in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

 

Industry data and other statistical information used in this report are based on independent publications, government publications, reports by market research firms or other published independent sources. Some data are also based on our good faith estimates, derived from our review of internal surveys and the independent sources listed above. Although we believe these sources are reliable, we have not independently verified the information.

 

13

 

 

OVERVIEW

 

Western Capital Resources, Inc. (“WCR” or “Western Capital”) is a holding company with a controlling interest in subsidiaries operating in the following industries and operating segments:

 

 

 

Our “Franchise” segment is comprised of AlphaGraphics, Inc. (99.2% owned), the franchisor of AlphaGraphics® customized print and marketing solutions. Our “Cellular Retail” segment is comprised of an authorized Cricket Wireless dealer and involves the retail sale of cellular phones and accessories to consumers through our wholly owned subsidiary PQH Wireless, Inc. and its subsidiaries. Our “Direct to Consumer” segment consists of (1) a wholly owned online and direct marketing distribution retailer of live plants, seeds, holiday gifts and garden accessories selling its products under Park Seed, Jackson & Perkins and Wayside Gardens brand names as well as a wholesaler under the Park Wholesale brand, and (2) a wholly owned online and direct marketing distribution retailer of home improvement and restoration products operating as Van Dyke’s Restorers. Our “Consumer Finance” segment consists of retail financial services conducted through our wholly owned subsidiaries Wyoming Financial Lenders, Inc. and Express Pawn, Inc. Throughout this report, we collectively refer to WCR and its consolidated subsidiaries as “we,” the “Company,” and “us.”

 

Following is key financial data for the three and six month periods ended June 30, 2017 and 2016:

 

 

 

Discussion of Critical Accounting Policies

 

Our condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America applied on a consistent basis. The preparation of these financial statements requires us to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. We evaluate these estimates and assumptions on an ongoing basis. We base these estimates on the information currently available to us and on various other assumptions that we believe are reasonable under the circumstances. Actual results could vary materially from these estimates under different assumptions or conditions.

 

Our significant accounting policies are discussed in Note 1, “Basis of Presentation, Nature of Business and Summary of Significant Accounting Policies,” of the notes to our condensed consolidated financial statements included in this report. We believe that the following critical accounting policies affect the more significant estimates and assumptions used in the preparation of our condensed consolidated financial statements.

 

Loan Loss Allowance

 

Included in loans receivable are unpaid principal, interest and fee balances of payday, installment, pawn and title loans that have not reached their maturity date, and “late” payday loans that have reached maturity within the last 180 days and have remaining outstanding balances. Late payday loans generally are unpaid loans where a customer’s personal check has been deposited and the check has been returned due to non-sufficient funds in the customer’s account, a closed account, or other reasons. All returned items are charged-off after 180 days, as collections after that date have not been significant. Loans are carried at cost plus accrued interest or fees through maturity date, less payments made and a loans receivable allowance.

 

14

 

 

We do not specifically reserve for any individual payday, installment or title loan. We aggregate loan types for purposes of estimating the loss allowance using a methodology that analyzes historical portfolio statistics and management’s judgment regarding recent trends noted in the portfolio. This methodology takes into account several factors, including (1) the amount of loan principal, interest and fee outstanding, (2) historical charge offs from loans that originated during the last 24 months, (3) current and expected collection patterns and (4) current economic trends. We utilize a software program to assist with the tracking of its historical portfolio statistics. A loan loss allowance is maintained for anticipated losses for payday and installment loans based primarily on our historical percentages by loan type of net charge offs, applied against the applicable balance of loan principal, interest and fees outstanding. We also periodically perform a look-back analysis on its loan loss allowance to verify the historical allowance established tracks with the actual subsequent loan write-offs and recoveries. We are aware that as conditions change, it may also need to make additional allowances in future periods. Loan losses or charge-offs of pawn or title loans are not recorded because the value of the collateral exceeds the loan amount. See Note 4 to our condensed consolidated financial statements included in this report for a rollforward of our loans receivable allowance.

 

Valuation of Long-lived and Intangible Assets

 

We assess the possibility of impairment of long-lived and intangible assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors that could trigger an impairment review include significant underperformance relative to expected historical or projected future cash flows, significant changes in the manner of use of acquired assets or the strategy for the overall business, and significant negative industry events or trends. In addition, we conduct an annual goodwill impairment test as of October 1 each year. We assess our goodwill for impairment at the reporting unit level by applying a fair value test. This fair value test involves a two-step process. The first step is to compare the carrying value of our net assets to our fair value. If the fair value is determined to be less than the carrying value, a second step is performed to measure the amount of the impairment, if any.

 

Results of Operations – Three Months Ended June 30, 2017 Compared to Three Months Ended June 30, 2016

 

Net income attributable to our common shareholders was $1.74 million, or $0.19 per share (basic and diluted), for the quarter ended June 30, 2017, compared to $1.78 million, or $0.19 per share (basic and diluted), for the quarter ended June 30, 2016.

 

We expect segment operating results and earnings per share to change throughout 2017 due, at least in part, to the seasonality of the Direct to Consumer and Cellular Retail segments, growth in the Cellular Retail segment, and potential mergers and acquisitions activity.

 

Following is a discussion of operating results by segment.

  

15

 

 

The following table provides quarter-over-quarter revenues and net income attributable to WCR common shareholders by operating segment (in thousands):

 

   Franchise   Cellular
Retail
   Direct to
Consumer
   Consumer
Finance
   Corporate   Total 
Three Months Ended June 30, 2017                              
Revenues  $4,033   $17,087   $12,127   $2,543   $   $35,790 
% of total revenue   11.3%   47.7%   33.9%   7.1%   %   100.0%
Net income (loss)  $930   $(331)  $1,103   $201   $(151)  $1,752 
Net income (loss) attributable to WCR common shareholders  $922   $(331)  $1,103   $201   $(151)  $1,744 
                               
Three Months Ended June 30, 2016                              
Revenues  $3,562   $8,083   $12,689   $2,838   $   $27,172 
% of total revenue   13.1%   29.8%   46.7%   10.4%   %   100.0%
Net income (loss)  $568   $74   $1,103   $262   $(218)  $1,789 
Net income (loss) attributable to WCR common shareholders  $564   $74   $1,103   $262   $(218)  $1,785 

  

16

 

 

Franchise

 

The table below summarizes the number of AlphaGraphics business centers owned and operated by franchisees during the quarter ended June 30, 2017 and 2016:

 

   Beginning   New   Closed   Ending 
2017                    
US Centers   253    2    (2)   253 
International Centers   25            25 
Total   278    2    (2)   278 
                     
2016                    
US Centers   257    2    (1)   258 
International Centers   25            25 
Total   282    2    (1)   283 

 

Our U.S. franchisees reported approximate center sales for the quarters ended June 30, 2017 and 2016 as follows:

 

   2017   2016 
Total gross U.S. network-wide center sales  $68,421,000   $70,875,000 

 

Our revenues in the Franchise segment for the quarter ended June 30, 2017 and 2016 were $4.03 million versus $3.56 million, an increase of 13.2%. The fiscal period on which franchisees pay royalties was changed to a calendar year effective January 1, 2017. Because most franchisees pay royalties on a decreasing scale, revenue is higher at the beginning of the calculation period, decreasing throughout the year. In the current quarter, franchisees are in the second quarter of the calculation period compared to the fourth quarter of the calculation period in the quarter ended June 30, 2016, thus accounting for the period over period increase. Segment net income period over period increased 63.2% to $0.93 million from $0.57 million in the prior year period, an increase of 63.7%.

 

Cellular Retail

 

A summary table of the number of Cricket cellular retail stores we operated during the quarter ended June 30, 2017 and 2016 follows:

 

   2017   2016 
Beginning   244    111 
Acquired/ Launched   32    9 
Closed   (8)   (4)
Ending   268    116 

 

The Cellular Retail segment revenues increase period over period is a result of operating significantly more stores in the current quarter. Included in the growth in the number of locations are 53 mature stores we operated under a store operating agreement beginning in November 2016. In addition to operating these additional mature locations, we also operated another 80 locations, most of which were launched within the fourth quarter of 2016 and first quarter of 2017. While the launching of the new locations contributed to revenue growth, it also contributed to the decline in segment net income period over period. 

 

Direct to Consumer

 

The Direct to Consumer segment has seasonal sources of revenue and historically experiences a greater proportion of annual revenue and net income in the months of March through May and December due to the seasonal products it sells. For the current quarter and comparable prior year period, the Direct to Consumer segment had net income of $1.10 million. Revenues for the three month period ended June 30, 2017 were $12.13 million compared to the comparable period in 2016 of $12.69 million.

 

Consumer Finance

 

A summary table of the number of consumer finance locations we operated during the quarters ended June 30, 2017 and 2016 follows:

 

   2017   2016 
Beginning   41    47 
Acquired/ Launched        
Closed       (1)
Ending   41    46 

 

17

 

 

Our Consumer Finance segment revenues decreased for the quarter ended June 30, 2017 compared to the quarter ended June 30, 2016 due to the closing of five locations in South Dakota at the end of 2016. Revenue decreased 10.4% period over period while net income decreased 23.3%.

 

Corporate

 

Costs related to our Corporate segment were $0.15 million for the quarter ended June 30, 2017 compared to $0.22 million for the quarter ended June 30, 2016.

 

Results of Operations – Six Months Ended June 30, 2017 Compared to Six Months Ended June 30, 2016

 

Net income attributable to our common shareholders was $4.01 million, or $0.42 per share (basic and diluted), for the six month period ended June 30, 2017, compared to $3.76 million, or $0.40 per share (basic and diluted), for the six month period ended June 30, 2016.

 

We expect segment operating results and earnings per share to change throughout 2017 due, at least in part, to the seasonality of the Direct to Consumer and Cellular Retail segments, growth in the Cellular Retail segment, and potential mergers and acquisitions activity.

 

Following is a discussion of operating results by segment.

 

18

 

 

The following table provides period over period revenues and net income attributable to WCR common shareholders by operating segment (in thousands):

 

   Franchise   Cellular Retail   Direct to Consumer   Consumer Finance   Corporate   Total 
Six Months Ended June 30, 2017                              
Revenues  $7,977   $34,131   $24,031   $5,286   $   $71,425 
% of total revenue   11.2%   47.8%   33.6%   7.4%       100.0%
Net income (loss)  $1,565   $289   $1,968   $455   $(258)  $4,019 
Net income (loss) attributable to WCR common shareholders  $1,552   $289   $1,968   $455   $(258)  $4,006 
                               
Six Months Ended June 30, 2016                              
Revenues  $7,174   $17,858   $24,754   $5,822   $   $55,608 
% of total revenue   12.9%   32.1%   44.5%   10.5%   %   100.0%
Net income (loss)  $1,083   $454   $2,007   $574   $(353)  $3,765 
Net income (loss) attributable to WCR common shareholders  $1,074   $454   $2,007   $574   $(353)  $3,756 

 

19

 

 

Franchise

 

The table below summarizes the number of AlphaGraphics business centers owned and operated by franchisees during the six month periods ended June 30, 2017 and 2016:

 

   Beginning   New   Closed   Ending 
2017                    
US Centers   256    2    (5)   253 
International Centers   25            25 
Total   281    2    (5)   278 
                     
2016                    
US Centers   254    6    (2)   258 
International Centers   25            25 
Total   279    6    (2)   283 

 

Our U.S. franchisees reported approximate center sales for the six month periods ended June 30, 2017 and 2016 as follows:

 

   2017   2016 
Total gross U.S. network-wide center sales  $137,505,000   $138,661,000 

 

Our revenues in the Franchise segment for the six month periods ended June 30, 2017 and 2016 were $7.98 million versus $7.17 million, an increase of 11.3%. As discussed in the quarter over quarter analysis, the change in the royalty calculation fiscal year is the primary driver for the period over period increase. Segment net income period over period increased 45.4% to $1.57 million from $1.08 million in the prior year period.

 

Cellular Retail

 

A summary table of the number of Cricket cellular retail stores we operated during the six month periods ended June 30, 2017 and 2016 follows:

 

   2017   2016 
Beginning   198    99 
Acquired/ Launched   78    23 
Closed   (8)   (6)
Ending   268    116 

 

The increase in Cellular Retail segment revenues in the current six month period compared to the same period in the prior year is due to the 53 additional mature stores that we are operating under a store operating agreement which began in November 2016 plus operating approximately 100 additional locations which we have launched or taken over since the end of the prior year period. Effective July 1, 2017, we acquired a 70% ownership interest in the 53 locations under the management agreement, with seller retaining the remaining 30% percent interest.

 

Direct to Consumer

 

The Direct to Consumer segment has seasonal sources of revenue and historically experiences a greater proportion of annual revenue and net income in the months of March through May and December due to the seasonal products it sells. Revenues for the six month period ended June 30, 2017 were $24.03 million compares to $24.8 million for the comparable period in 2016.

 

Consumer Finance

 

A summary table of the number of consumer finance locations we operated during the six month periods ended June 30, 2017 and 2016 follows:

 

   2017   2016 
Beginning   41    47 
Acquired/ Launched        
Closed       (1)
Ending   41    46 

 

20

 

 

Our Consumer Finance segment revenues decreased for the six month period ended June 30, 2017 compared to the six month period ended June 30, 2016 as a result of the store closings in South Dakota at the end of 2016. Revenue decreased 9.21% period over period while net income decreased 20.7%.

 

Corporate

 

Costs related to our Corporate segment were $0.26 million for the six month period ended June 30, 2017 compared to $0.35 million for the six month period ended June 30, 2016.

 

Liquidity and Capital Resources

 

Summary cash flow data is as follows:

 

   Six Months Ended June 30, 
   2017   2016 
Cash flows provided (used) by:          
Operating activities  $581,760   $3,747,234 
Investing activities   (1,919,206)   (1,517,532)
Financing activities   (2,762,123)   (1,490,028)
Net decrease in cash   (4,099,569)   739,674 
Cash, beginning of period   14,159,975    7,847,669 
Cash, end of period  $10,060,406   $8,587,343 

 

At June 30, 2017, we had cash of $10.06 million compared to cash of $8.59 million on June 30, 2016. Both comparable periods include cash flows utilized for growth in our Cellular Retail segment. In July of 2017, we reduced our outstanding credit facility balance by $1 million. We believe that our available cash, combined with expected cash flows from operations and available financing under credit facilities of approximately $6.26 million, will be sufficient to fund our scheduled debt repayments and the Cellular Retail segment anticipated capital expenditures through June 30, 2018.

 

Off-Balance Sheet Arrangements

 

We had no off-balance sheet arrangements as of June 30, 2017.

 

 Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in our reports filed pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance the objectives of the control system are met.

 

We utilize the Committee of Sponsoring Organization’s Internal Control – Integrated Framework, 2013 version, for the design, implementation and assessment of the effectiveness of our disclosure controls and procedures and internal control over financial reporting.

 

As of June 30, 2017, our Chief Executive Officer and Chief Financial Officer carried out an assessment of the effectiveness of our disclosure controls and procedures as such term is defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934. Based on this assessment, our Chief Executive Officer and Chief Financial Officer concluded our disclosure controls and procedures are effective as of June 30, 2017.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

21

 

 

PART II. OTHER INFORMATION

 

Item 5. Other Information

 

Western Capital has entered into an Amended and Restated Employment Agreement with Angel Donchev, to be effective as of August 16, 2017, and under which Mr. Donchev will become the Company’s Chief Financial Officer. Mr. Donchev will also retain his current title and responsibilities as the Company’s Chief Investment Officer, a position he has held since February 2015. Also on August 16, 2017, Mr. Stephen Irlbeck will resign and relinquish his title as Chief Financial Officer and become the corporate Secretary of Western Capital and will continue to serve as the Chief Financial Officer of certain of Western Capital’s subsidiary entities.

 

Under the terms of the Amended and Restated Employment Agreement, Mr. Donchev will be paid an annual base salary of $300,000 and will be eligible to receive an annual performance-based cash bonus targeted to an amount of $135,000. In addition, Western Capital has agreed to accelerate the vesting of an issued and outstanding stock option held by Mr. Donchev and entitling him to purchase up to 65,000 shares of common stock at the per-share price of $6.00 through March 31, 2025. The Amended and Restated Employment Agreement contains other customary provisions, including a non-disclosure covenant binding Mr. Donchev, and a Company obligation to pay Mr. Donchev 12 months of base salary, as severance, in the event that the Company were to terminate Mr. Donchev’s employment without cause.

 

Prior to February 2015, Mr. Donchev had been employed by Blackstreet Capital Management, LLC, a Delaware limited liability company principally engaged in the management of private investments. Mr. Donchev joined Blackstreet Capital Management in 2005. Blackstreet Capital Management became an affiliate of Western Capital at the close of business on March 31, 2010 through the private purchase of a controlling interest in the capital stock of the Company.

 

Mr. Donchev currently serves as a director of AlphaGraphics, Inc. (a subsidiary of Western Capital). Prior to his experience with Blackstreet Capital Management, Mr. Donchev worked as a generalist in the Corporate Finance division of Stephens Inc., a middle-market investment bank, where he gained experience in a variety of M&A and public offering transactions. Mr. Donchev is a Harvard Business School alumnus and has a BBA in Business Honors and Finance from the McCombs School of Business at the University of Texas at Austin, where he graduated summa cum laude.

 

From March 2010 until September 2014, Mr. Donchev served as a director of Western Capital, having been appointed to that position in connection with the acquisition of voting control of the Company by WCR, LLC, an affiliate of Blackstreet Capital Management.

 

Item 6. Exhibits

 

Exhibit   Description
     
31.1   Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
     
31.2   Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
     
32  

Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

     
101.INS   XBRL Instance Document (filed herewith).
     
101.SCH   XBRL Schema Document (filed herewith).
     
101.CAL   XBRL Calculation Linkbase Document (filed herewith).
     
101.DEF   XBRL Definition Linkbase Document (filed herewith).
     
101.LAB   XBRL Label Linkbase Document (filed herewith).
     
101.PRE   XBRL Presentation Linkbase Document (filed herewith).

 

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SIGNATURES

 

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

 

Dated: August 14, 2017 Western Capital Resources, Inc.
  (Registrant)
   
  By:  /s/ John Quandahl
    John Quandahl
    Chief Executive Officer and Chief Operating Officer
     
  By:  /s/ Stephen Irlbeck
    Stephen Irlbeck
    Chief Financial Officer

 

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