Attached files

file filename
EX-32.1 - EXHIBIT 32-1 - WESTERN CAPITAL RESOURCES, INC.s109994_ex32-1.htm
EX-31.2 - EXHIBIT 31-2 - WESTERN CAPITAL RESOURCES, INC.s109994_ex31-2.htm
EX-31.1 - EXHIBIT 31-1 - WESTERN CAPITAL RESOURCES, INC.s109994_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 March 31, 2018

 

☐   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)  

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 May 15, 2018, 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   15
     
Item 4. Controls and Procedures   20
     
PART II. OTHER INFORMATION    
Item 6. Exhibits   21
     
SIGNATURES   22

 

 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 Operations 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

 
    March 31, 2018   December 31, 2017  
    (Unaudited)      
ASSETS          
           
CURRENT ASSETS          
Cash and cash equivalents   $ 9,125,283   $ 21,295,819  
Short-term investments     44,386,857     32,292,902  
Loans receivable (net of allowance for losses of $698,000 and $833,000, respectively)     3,362,498     4,310,003  
Accounts receivable (net of allowance for losses of $57,000 and $16,000, respectively)     2,191,743     764,071  
Inventory (net of allowance of $577,000 and $576,000, respectively)     10,010,703     9,130,842  
Prepaid expenses and other     3,691,137     3,762,974  
Escrow and other receivables     3,285,231     3,482,770  
TOTAL CURRENT ASSETS     76,053,452     75,039,381  
               
INVESTMENTS     2,000,000     3,000,000  
               
PROPERTY AND EQUIPMENT, net     11,116,899     11,347,234  
               
GOODWILL     5,796,528     5,796,528  
               
INTANGIBLE ASSETS, net     4,819,669     4,987,769  
               
ESCROW FUNDS RECEIVABLE     3,250,000     3,250,000  
               
OTHER     668,807     823,244  
               
TOTAL ASSETS   $ 103,705,355   $ 104,244,156  
               
LIABILITIES AND EQUITY              
               
CURRENT LIABILITIES              
Accounts payable and accrued expenses   $ 11,996,557   $ 11,897,968  
Other current liabilities     1,198,493     1,354,558  
Income taxes payable     18,725,244     18,730,647  
Note payable – short-term     29,250     51,992  
Current portion capital lease obligations     47,858     47,174  
Deferred revenue     1,164,450     1,073,600  
TOTAL CURRENT LIABILITIES     33,161,852     33,155,939  
               
LONG-TERM LIABILITIES              
Notes payable, net of current portion     789,216     789,216  
Capital lease obligations, net of current portion     38,934     51,172  
Deferred income taxes     1,379,000     1,456,000  
Other     98,259     98,259  
TOTAL LONG-TERM LIABILITIES     2,305,409     2,394,647  
               
TOTAL LIABILITIES     35,467,261     35,550,586  
               
COMMITMENTS AND CONTINGENCIES (Note 14)              
               
EQUITY              
               
WESTERN SHAREHOLDERS’ EQUITY              
Common stock, $0.001 par value, 12,500,000 shares authorized, 9,390,997 shares issued and outstanding.     939     939  
Additional paid-in capital     29,031,741     29,031,741  
Retained earnings     37,262,637     37,903,204  
TOTAL WESTERN SHAREHOLDERS’ EQUITY     66,295,317     66,935,884  
               
NONCONTROLLING INTERESTS     1,942,777     1,757,686  
               
TOTAL EQUITY     68,238,094     68,693,570  
               
TOTAL LIABILITIES AND EQUITY   $ 103,705,355   $ 104,244,156  
 

See notes to condensed consolidated financial statements

 

 4

 

 

WESTERN CAPITAL RESOURCES, INC. AND SUBSIDIARIES 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

 

   Three Months Ended March 31, 
   2018   2017 
REVENUES        
Sales and associated fees  $23,817,194   $24,559,130 
Financing fees and interest   2,174,546    2,233,409 
Other revenue   4,467,019    4,899,158 
    30,458,759    31,691,697 
           
COST OF REVENUES          
Cost of sales   12,166,033    12,067,936 
Provisions for loans receivable losses   200,202    237,581 
    12,366,235    12,305,517 
           
GROSS PROFIT   18,092,524    19,386,180 
           
OPERATING EXPENSES          
Salaries, wages and benefits   9,317,793    8,892,652 
Occupancy   3,422,218    2,911,292 
Advertising, marketing and development   2,029,315    1,906,553 
Depreciation   558,989    326,196 
Amortization   214,808    54,401 
Other   2,695,240    2,741,787 
    18,238,363    16,832,881 
           
OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS   (145,839)   2,553,299 
           
OTHER INCOME (EXPENSES):          
Interest and dividend income   167,511    64,075 
Interest expense   (87,598)   (57,371)
    79,913    6,704 
           
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES   (65,926)   2,560,003 
           
PROVISION FOR INCOME TAX EXPENSE (BENEFIT) FOR CONTINUING OPERATIONS   (80,000)   951,000 
           
           
NET INCOME FROM CONTINUING OPERATIONS   14,074    1,609,003 
           
LESS NET INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO NONCONTROLLING INTEREST   (185,091)    
           
NET INCOME (LOSS) FROM CONTINUING OPERATIONS ATTRIBUTABLE TO WESTERN COMMON SHAREHOLDERS   (171,017)   1,609,003 
           
DISCONTINUED OPERATIONS          
Income from operations of discontinued operations       1,070,321 
Less provision for income taxes for discontinued operations       (412,000)
Net income from discontinued operations       658,321 
Less net income from discontinued operations attributable to noncontrolling interests       (5,085)
Net income from discontinued operations attributable to Western common shareholders       653,236 
NET INCOME (LOSS) ATTRIBUTABLE TO WESTERN COMMON SHAREHOLDERS  $(171,017)  $2,262,239 
           
EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO WESTERN COMMON SHAREHOLDERS          
FROM CONTINUING OPERATIONS - Basic and diluted  $(0.02)  $0.17 
FROM DISCONTINUED OPERATIONS - Basic and diluted  $   $0.07 
FROM CONTINUING AND DISCONTINUED OPERATIONS - Basic and diluted  $(0.02)  $0.24 
           
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING          
Basic and diluted   9,390,997    9,472,934 


See notes to condensed consolidated financial statements

 5

 

 

 

WESTERN CAPITAL RESOURCES, INC. AND SUBSIDIARIES 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 

   Three Months Ended 
   March 31, 2018   March 31, 2017 
OPERATING ACTIVITIES          
Net income from continuing operations  $14,074   $1,609,003 
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation   558,989    326,196 
Amortization   214,808    54,401 
Share based compensation       8,899 
Deferred income taxes   (77,000)   66,000 
Investments discount amortization   (99,991)    
Loss (gain) on disposal of property and equipment   170,448    (270)
Changes in operating assets and liabilities:          
Loans receivable   947,505    908,337 
Accounts receivable   (1,427,672)   (1,085,312)
Inventory   (960,909)   (1,246,831)
Prepaid expenses and other assets   157,752    (831,683)
Accounts payable and accrued expenses   93,186    298,300 
Deferred revenue and other current liabilities   (65,215)   (15,825)
Operating cash flows from discontinued operations       354,253 
Net cash and cash equivalents provided by (used in) operating activities   (474,025)   445,468 
           
INVESTING ACTIVITIES          
Purchases of investments   (11,961,900)    
Proceeds from held-to-maturity investments   1,000,000     
Purchase of property and equipment   (350,021)   (754,130)
Acquisition of stores, net of cash acquired   (76,707)    
Advances on note receivable, net       (517,844)
Proceeds from installment sale receivable   185,963     
Proceeds from the disposal of property, plant and equipment   10,000    14,459 
Cash received from discontinued operations       3,147,493 
Net cash and cash equivalents provided by (used in) investing activities   (11,192,665)   1,889,978 
           
FINANCING ACTIVITIES          
Payments on notes payable – short-term, net   (22,742)   (25,799)
Payments on line of credit, net       (853,544)
Payments on notes payable – long-term       (501,669)
Common stock redemption       (480,928)
Payments on capital leases   (11,554)   (11,960)
Payment of dividends   (469,550)   (234,775)
Financing activities of discontinued operations       (3,178,348)
Net cash and cash equivalents used in financing activities   (503,846)   (5,287,023)
           
NET DECREASE IN CASH AND CASH EQUIVALENTS   (12,170,536)   (2,951,577)
           
CASH AND CASH EQUIVALENTS          
Beginning of period   21,295,819    14,159,975 
End of period  $9,125,283   $11,208,398 
           
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION          
           
Income taxes paid  $2,403   $7,169 
Interest paid  $20,869   $135,686 

   

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 month period ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018.

 

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, 2017. The condensed consolidated balance sheet at December 31, 2017, 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.

 

Cellular Retail

PQH Wireless, Inc. (PQH) (100%) – operates 236 cellular retail stores as of March 31, 2018 (179 100% owned plus 57 through a 70% owned subsidiary), as an exclusive dealer of the Cricket brand.

 

Direct to Consumer

J & P Park Acquisitions, Inc. (JPPA) (100%) – an online and direct marketing distribution retailer of 1) live plants, seeds, holiday gifts and garden accessories selling its products under Park Seed, Jackson & Perkins, and Wayside Gardens brand names and 2) home improvement and restoration products operating under the Van Dyke’s Restorers brand, as well as a seed wholesaler under the Park Wholesale brand.

 

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

 

Consumer Finance

Wyoming Financial Lenders, Inc. (WFL) (100%) – owns and operates “payday” stores (40 as of March 31, 2018) 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.

 

Express Pawn, Inc. (EPI) (100%) – owns and operates retail pawn stores (three as of March 31, 2018) in Nebraska and Iowa providing collateralized non-recourse pawn loans and retail sales of merchandise obtained from forfeited pawn loans or purchased from customers.

 

Discontinued Operations 2017 - Franchise

AlphaGraphics, Inc. (AGI) – franchisor of domestic and international AlphaGraphics Business Centers which specialize in the planning, production, and management of visual communications for businesses and individuals throughout the world. AGI was sold on October 2, 2017.

 

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 as” “PQH,” “JPPA,” “JPRE,” “WFL,” “EPI” or “AGI” 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 Financial Accounting Standards Board Accounting Standards Codification (ASC) 810, “Consolidation” 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, with the exception of the presentation of dividends received from discontinued subsidiary operations in the Condensed Consolidated Statement of Cash Flows.

 

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 loans and accounts 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 and Statements of Cash Flows 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 months ended March 31, 2018.

 

In accordance with ASC 205-20-45-6, interest on debt required to be paid as a result of our Franchise segment disposal transaction has been allocated to discontinued operations and, in accordance with ASC 205-20-45-9, general corporate overhead has not been allocated to discontinued operations. These re-allocations and related income tax have been made in the presentation of our prior financial statements and accompanying notes.

 

Recent Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board (FASB) issued a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under US GAAP. This standard is effective for annual and interim periods beginning after December 15, 2017. The Company has adopted this standard as of January 1, 2018 applying it on a retrospective basis as of the date adopted and determined it had no impact 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. The 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 and expects its adoption to have a material impact on our financial condition due to a material addition of operating lease assets and liabilities in accordance with the ASU.

 

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 federal, state, and local 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 and regulatory action to prohibit or severely restrict sub-prime lending activities of the kind conducted by the Company. After several years of research, debate, and public hearings, in October 2017 the U.S. Consumer Financial Protection Bureau (CFPB) issued new rules for payday lending. The proposed rules, scheduled to go into effect in August 2019, would impose significant restrictions on the industry, and it is expected that a large number of lenders would be forced to close their stores. The CFPB’s studies projected a reduction in the number of lenders by 50%, while industry studies forecast a much higher attrition rate. At this time it is uncertain whether the rule will be implemented as announced, rewritten with more favorable terms for the industry, or thrown out altogether. If the rule is implemented as written, it could have a significant and negative impact on business conducted within our Consumer Finance segment.

 

 8

 

 

The above rule or any other adverse change in present federal, state, or local 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 federal, state or local laws or regulations could result in fines, litigation, closure of one or more store locations 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 affects its ability to obtain additional financing as needed.

 

In addition, the passage of federal, state or local laws and regulations or changes in interpretations of them could, at any point, essentially prohibit 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 Consumer Finance segment.

 

3.Cash Equivalents and Investments –

 

The following table shows the Company’s cash equivalents and held-to-maturity investments, by significant investment category, recorded as cash equivalents or short- and long-term investments as of March 31, 2018 and December 31, 2017:

 

   March 31, 2018   December 31, 2017 
Cash and cash equivalents          
Operating accounts  $8,778,235   $10,524,923 
Certificates of deposit       750,000 
Money Market Mutual Funds - U.S. Treasury obligations   347,048    10,020,896 
Subtotal   9,125,283    21,295,819 
           
Held to Maturity Investments          
Certificates of deposit   14,297,734    13,250,000 
T-Bill Zero CPN   32,089,123    22,042,902 
Subtotal   46,386,857    35,292,902 
           
TOTAL  $55,512,140   $56,588,721 

 

As of March 31, 2018, held to maturity securities consisted of the following:

 

   Cost   Accrued
Interest
   Amortized Discount   Amortized
Cost
   Unrealized Gain (Loss)   Estimated Fair Value 
                         
Certificates of Deposit  $14,250,000   $47,734   $   $14,297,734   $(87,544)  $14,210,190 
Treasury Bills  $31,961,012   $   $128,111   $32,089,123   $(1,897)  $32,087,226 

 

4.Loans Receivable –

 

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

 

March 31, 2018
   Payday   Installment   Pawn &
Title
   Total 
Current  $2,773,711   $190,525   $263,650   $3,227,886 
1-30   166,548    38,121        204,669 
31-60   108,590    23,535        132,125 
61-90   145,640    15,484        161,124 
91-120   97,171    9,294        106,465 
121-150   112,903    3,299        116,202 
151-180   110,344    1,683        112,027 
    3,514,907    281,941    263,650    4,060,498 
Less Allowance   (627,000)   (71,000)       (698,000)
   $2,887,907   $210,941   $263,650   $3,362,498 

 

 9

 

 

 

December 31, 2017
   Payday   Installment   Pawn &
Title
   Total 
Current  $3,550,077   $271,926   $318,361   $4,140,364 
1-30   216,376    47,356        263,732 
31-60   187,916    27,766        215,682 
61-90   150,278    17,976        168,254 
91-120   110,943    11,870        122,813 
121-150   131,171    4,748        135,919 
151-180   93,222    3,017        96,239 
    4,439,983    384,659    318,361    5,143,003 
Less Allowance   (745,000)   (88,000)       (833,000)
   $3,694,983   $296,659   $318,361   $4,310,003 

 

5.Loans Receivable Allowance –

 

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

 

  

Three Months Ended

March 31, 2018 

  

Year Ended 

December 31, 2017 

 
Loans receivable allowance, beginning of period  $833,000   $1,036,000 
Provision for loan losses charged to expense   200,202    1,122,144 
Charge-offs, net   (335,202)   (1,325,144)
Loans receivable allowance, end of period  $698,000   $833,000 

 

6.Accounts Receivable –

 

A breakdown of accounts receivables by segment as of March 31, 2018 and December 31, 2017 are as follows:

 

March 31, 2018
   Cellular
Retail
   Direct to Consumer   Consumer Finance   Total 
Accounts receivable  $315,549   $1,920,585   $12,609   $2,248,743 
Less allowance       (57,000)       (57,000)
Net account receivable  $315,549   $1,863,585   $12,609   $2,191,743 

 

December 31, 2017
   Cellular
Retail
   Direct to Consumer   Consumer Finance   Total 
Accounts receivable  $399,459   $365,476   $15,136   $780,071 
Less allowance       (16,000)       (16,000)
Net account receivable  $399,459   $349,476   $15,136   $764,071 

 

7.Inventory –

 

Finished goods inventory, net of allowance, by segment consists of the following:

 

  

Three Months Ended

March 31, 2018 

  

Year Ended 

December 31, 2017 

 
Cellular Retail  $5,742,969   $5,287,932 
Direct to Consumer   3,457,377    2,988,052 
Consumer Finance   810,357    854,858 
   $10,010,703   $9,130,842 

 

 10

 

 

8.Notes Payable – Long Term –

 

   March 31, 2018   December 31, 2017 
Subsidiary subordinated note payable to seller with monthly interest only payments at 6%, guaranteed by PQH, maturing August 5, 2022 when the principal balance is due.   789,216    789,216 
Total   789,216    789,216 
Less current maturities        
   $789,216   $789,216 

 

The Company is party to a Credit Agreement with a financial institution entered into on April 22, 2016 and subject to subsequent amendments. The Credit Agreement provides the Company with a revolving line of credit facility in an aggregate amount up to $3,000,000, having a maturity date of April 21, 2018 and an acquisition loan facility in an aggregate amount of up to $9,000,000, having a maturity date of April 21, 2018. The revolver and the acquisition loan facility bear interest at a floating per annum rate equal to one-month LIBOR plus 3.50%, adjusted on a monthly basis. Funds advanced under the acquisition loan facility mature five years from the date of advance. At March 31, 2018, the entire $12,000,000 of credit was available under the credit facilities. See Notes 14 and 15 for additional terms, conditions and amendment related to the Credit Agreement.

 

9.Income Taxes –

 

The provision for income taxes for continuing operations is 121.3% and 37.1% of income before the provision for income taxes for the three month period ended March 31, 2018 and 2017, respectively. The significant difference in rate is the result of the 2018 net income attributable to noncontrolling interests not being subjected to income tax at the corporate level. Rather the “passthrough” taxable income is taxed to the noncontrolling interests at an individual level.

 

10.Cash Dividends –

 

Date declared  January 18, 2018 
Record date  February 9, 2018 
Date paid  February 14, 2018 
Dividend per share of common stock  $0.05 

 

11.Other Operating Expense –

 

A breakout of other expense is as follows:

 

   For The Three Months Ended March 31, 
   2018   2017 
Bank fees  $502,564   $532,175 
Collection costs   84,605    89,894 
Insurance   205,295    240,740 
Management and advisory fees   193,710    153,481 
Professional and consulting fees   543,096    662,089 
Supplies   217,436    324,136 
Other   948,534    739,272 
   $2,695,240   $2,741,787 

 

12.Discontinued Operations –

 

As more fully disclosed in Note 19 of the Notes to Consolidated Financial Statements for the year ended December 31, 2017, on October 3, 2017 the Company closed on the sale of its franchise segment.

 

 11

 

 

In accordance with the provisions of ASC 205-20, the Company has not included the results of operations of the Franchise segment in the results from continuing operations. The results of operations for this business have been reflected as discontinued operations in the unaudited Condensed Consolidated Statements of Operations for the three month periods ended March 31, 2017, and consist of the following:

  

   Three Months Ended 
   March 31, 2017 
REVENUES OF DISCONTINUED OPERATIONS  $3,943,309 
      
COST OF REVENUES OF DISCONTINUED OPERATIONS   648,197 
      
GROSS PROFIT OF DISCONTINUED OPERATIONS   3,295,112 
      
OPERATING EXPENSES OF DISCONTINUED OPERATIONS:     
Salaries, wages and benefits   1,098,739 
Occupancy   42,764 
Advertising, marketing and development   102,597 
Depreciation   24,092 
Amortization   86,118 
Other   789,700 
    2,144,010 
      
OPERATING INCOME OF DISCONTINUED OPERATIONS   1,151,102 
      
OTHER INCOME (EXPENSE) OF DISCONTINUED OPERATIONS     
Interest expense   (80,781)
      
INCOME BEFORE INCOME TAXES OF DISCONTINUED OPERATIONS   1,070,321 
      
PROVISION FOR INCOME TAXES OF DISCONTINUED OPERATIONS   412,000 
      
NET INCOME OF DISCONTINUED OPERATIONS   658,321 
      
Less net income of discontinued operations attributable to noncontrolling interests   (5,085)
      
NET INCOME OF DISCONTINUED OPERATIONS ATTRIBUTABLE TO WESTERN COMMON SHAREHOLDERS  $653,236 

 

 12

 

 

In accordance with the provisions of ASC 205-20, the Company has separately reported the cash flow activity of the discontinued operations of the Franchise segment in the Consolidated Statements of Cash Flows. The cash flow activity from discontinued operations have been reflected as discontinued operations in the Consolidated Statements of Cash Flows for the three month period ended March, 2017, and consist of the following:

 

   Three Months Ended 
   March 31, 2017 
DISCONTINUED OPERATING ACTIVITIES     
Net income of discontinued operations  $658,321 
Adjustments to reconcile net income of discontinued operations to net cash provided by operating activities of discontinued operations:     
Depreciation   24,092 
Amortization   86,118 
Share based compensation   2,243 
Deferred income taxes   (29,000)
Changes in operating assets and liabilities:     
Accounts receivable   (606,126)
Prepaid expenses and other assets   114,753 
Accounts payable and accrued expenses   (597,356)
Deferred revenue and other current liabilities   682,016 
Other liabilities – long-term   19,192 
Net cash provided by operating activities of discontinued operations  $354,253 
      
FINANCING ACTIVITIES OF DISCONTINUED OPERATIONS     
Principal payments on capital lease obligations  $(7,620)
Dividends to shareholders   (3,170,728)
Net cash used in financing activities of discontinued operations  $(3,178,348)

 

13.Segment Information –

 

Segment information related to the three month periods ended March 31, 2018 and 2017 for continuing operations is presented below:

 

Three Months Ended March 31, 2018 

(in thousands)

 

  

Cellular
Retail 

   Direct to
Consumer
   Consumer
Finance
   Corporate   Total 
                     
Revenue from external customers  $17,107   $10,681   $2,671   $   $30,459 
Net income (loss)  $(375)  $329   $331   $(271)  $14 
Total segment assets  $27,567   $15,092   $7,003   $54,043   $103,705 
Expenditures for segmented assets  $117   $310   $   $   $427 

 

Three Months Ended March 31, 2017 

(in thousands)

 

  

Cellular
Retail 

   Direct to
Consumer
   Consumer
Finance
   Corporate  

Discontinued 

Operations 

   Total 
                         
Revenue from external customers  $17,045   $11,904   $2,743   $   $   $31,692 
Net income (loss)  $669   $866   $254   $(180)  $   $1,609 
Total segment assets  $24,794   $15,429   $8,047   $4,076   $8,879   $61,225 
Expenditures for segmented assets  $673   $81   $   $   $   $754 

 

14.Commitments and Contingencies –

 

Employment Agreements

 

Pursuant to the Company’s numerous employment agreements, bonuses for continuing operation of approximately $73,000 and $256,000 were accrued for the three month periods ended March 31, 2018 and 2017, respectively.

 

 13

 

 

Credit Facility

 

The Company is party to a Credit Agreement with a financial institution. Certain Company subsidiaries are guarantors of the borrowings and obligations under the Credit Agreement. All borrowings under the Credit Agreement are secured by substantially all assets of WCR and the guarantor subsidiaries.

 

The Credit Agreement requires WCR to meet certain financial tests, including a leverage ratio and a fixed charge coverage ratio, as defined in the Credit Agreement. Subject to certain exceptions, the Credit Agreement contains covenants limiting the Company’s ability to (or to permit the guarantor subsidiaries to) merge or consolidate with, or engage in a sale of substantially all assets to, any party, but WCR or any guarantor subsidiary generally may nonetheless merge with another party if (i) WCR or guarantor subsidiary is the entity surviving such merger, and (ii) immediately after giving effect to such merger, no default shall have occurred and be continuing under the Credit Agreement. Subject to certain exceptions, the Credit Agreement also contains covenants limiting WCR’s ability to (or to permit the guarantor subsidiaries to) create liens on assets, incur additional indebtedness, make certain types of investments, and pay dividends or make certain other types of restricted payments, but WCR may nonetheless pay dividends to its shareholders if (a) there are no outstanding loans or unpaid interest under the revolving credit facility, and (b) no default shall have occurred and be continuing under the Credit Agreement. Some covenant waivers were granted by the financial institution during the period ended March 31, 2018.

 

Assigned Leases

 

The Company’s Cellular Retail segment has transferred operations of 37 locations to other dealers. Minimum lease payments of assigned or assumed non-cancelable operating leases related to transferred locations in which a release has not been obtained from the lessor are approximately $3,000,000 as of March 31, 2018.  

 

15.Subsequent Events –

 

Credit Facility

 

On April 26, 2018 the Company entered into a Fourth Loan Modification Agreement related to the Credit Agreement with a financial institution, pursuant to which, among other things, the maturity date of the Credit Agreement was extended to April 21, 2020 and the financial covenants were modified by removing the consolidated leverage ratio and consolidated fixed charge coverage ratio covenants and adding a minimum liquidity covenant.

 

Dividend Declared

 

Our Board of Directors declared the following dividend:

 

Date declared  May 2, 2018 
Record date  May 17, 2018 
Date paid  May 24, 2018 
Dividend per share of common stock  $0.05 

 

We evaluated all events or transactions that occurred after March 31, 2018 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.

 

 14

 

 

 

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:

 

the seasonal nature of the products sold in our Direct to Consumer segment - a significant portion of pre-tax net income contributed by the segment is earned during the months of March through May and December, 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 federal, state or local laws and regulations governing lending practices, or changes in the interpretation of such laws and regulations;

 

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, 2017.

 

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 is 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.

 

 15

 

 

OVERVIEW

 

Western Capital Resources, Inc. (WCR or Western Capital), a Delaware corporation originally incorporated in Minnesota in 2001 and reincorporated in Delaware in 2016, is a holding company having a controlling interest in subsidiaries operating in the following industries and operating segments:

 

(FLOW CHART)

 

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, one of which is 70% owned. Our “Direct to Consumer” segment consists of 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 and home improvement and restoration products operating as Van Dyke’s Restorers as well as a wholesaler under the Park Wholesale brand. 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.”

 

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.

 

The Company does not specifically reserve for any individual payday, installment or title loan.  The Company aggregates 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. The Company utilizes 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. The Company also periodically performs 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. The Company is 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 5 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 assets, other than goodwill, 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.

 

 16

 

 

Goodwill

 

Goodwill represents the excess of acquisition cost over the fair value of identifiable finite lived net assets acquired and is not amortized. Goodwill is tested for impairment annually as of October 1, or more frequently if events or changes in circumstances indicate potential impairment. We test for goodwill impairment at the reporting unit level, which aligns with the Company’s segments. We perform a qualitative assessment to determine if a quantitative impairment test is necessary. If quantitative testing is necessary based on a qualitative assessment, we apply 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 March 31, 2018 Compared to Three Months Ended March 31, 2017

 

Net income (loss) for continuing operations attributable to our common shareholders was $(0.17) million, or ($0.02) per share (basic and diluted), for the quarter ended March 31, 2018, compared to $1.61 million, or $0.17 per share (basic and diluted), for the quarter ended March 31, 2017.

 

We expect segment operating results and earnings per share to change throughout 2018 due, at least in part, to the seasonality of the Direct to Consumer and Cellular Retail segments, retraction in the Cellular Retail segment, and potential mergers and acquisitions activity.

 

 17

 

 

Following is a discussion of operating results by segment.

 

The following table provides revenues and net income attributable to WCR common shareholders by continuing operating segment for the quarters ended March 31, 2018 and March 31, 2017 (in thousands):

 

   Cellular Retail   Direct to Consumer   Consumer Finance   Corporate   Total 
Three Months Ended March 31, 2018                         
Revenue  $17,107   $10,681   $2,671   $   $30,459 
% of total revenue   56.1%   35.1%   8.8%   %   100.0%
Net income (loss)  $(375)  $329   $331   $(271)  $14 
Net income (loss) attributable to noncontrolling interests  $185   $   $   $   $185 
Net income (loss) attributable to WCR common shareholders  $(560)  $329   $331   $(271)  $(171)
                          
Three Months Ended March 31, 2017                         
Revenue  $17,045   $11,904   $2,743   $   $31,692 
% of total revenue   53.8%   37.5%   8.7%   %   100.0%
Net income (loss)  $669   $866   $254   $(180)  $1,609 
Net income (loss) attributable to noncontrolling interests  $   $   $   $   $ 
Net income (loss) attributable to WCR common shareholders  $669   $866   $254   $(180)  $1,609 

 

 18

 

 

Cellular Retail

 

A summary table of the number of Cricket cellular retail stores we operated during the quarter ended March 31, 2018 and 2017 follows:

 

   2018   2017 
Beginning   278    198 
Acquired/ Launched   1    46 
Closed/Transferred   (43)    
Ending   236    244 

 

The Cellular Retail segment has achieved substantial growth in location count since the beginning of 2017 as a result of our expansion initiative. While some newly launched locations are performing well, others have been slow to ramp up. Due to the underperformance, as is evident in the number of locations closed or transferred to other Cricket dealers thus far in 2018, we have accelerated store count reductions that we had anticipated occurring at a later date. Because the growth initiative included leased properties with three to five year terms, there will be additional costs incurred to terminate leases or sublet leased properties of closed locations.

 

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, the Direct to Consumer segment had net income of $0.33 million compared to net income of $0.87 million for the comparable prior year period. Revenues for the three month period ended March 31, 2018 were $10.68 million compared to $11.90 million for the comparable period in 2017. In 2018 we have experienced some delays in sales due to weather conditions and shipping zones not opening up as early as 2017. In the quarter ended March 31, 2018 we incurred approximately $222,000 of nonrecurring expenses to relocate distribution for our Van Dyke’s Restorers brand. Distribution services previously provided by an outsourced 3PL will now be performed in-house from our South Carolina facility.

 

Consumer Finance

 

A summary table of the number of consumer finance locations we operated during the quarters ended March 31, 2018 and 2017 follows:

 

   2018   2017 
Beginning   41    41 
Acquired/ Launched        
Closed        
Ending   41    41 

 

Our Consumer Finance segment revenues decreased $0.72 million, or 2.6%, for the quarter ended March 31, 2018 compared to the quarter ended March 31, 2017. Our net income for the same period increased 30.3% over the same period of the prior year largely due to reduction of ongoing expenses and income tax expense.

 

Corporate

 

Costs related to our Corporate segment were $0.27 million for the quarter ended March 31, 2018 compared to $0.18 million for the quarter ended March 31, 2017. The period over period increase is primarily due to interest expense. Because we have no outstanding balances on the parent level credit facility and no operating segment is receiving direct benefit from it, current period unused line fees and amortization of loan costs have been treated as a corporate expense.

 

Consolidated Income Tax Expense

 

Provision for income tax benefit for continuing operations for the quarter ended March 31, 2018 was ($0.08) million compared to income tax expense of $0.95 million for the quarter ended March 31, 2017 for an effective rate of 121.30% and 37.10%, respectively. 

The significant difference in rate is the result of the 2018 net income attributable to noncontrolling interests not being subjected to income tax at the corporate level. Rather the “passthrough” taxable income is taxed to the noncontrolling interests at an individual level.

 

 19

 

 

Liquidity and Capital Resources

 

Summary cash flow data is as follows:

 

   Three Months Ended March 31, 
   2018   2017 
Cash flows provided (used) by:          
Operating activities  $(474,025)  $445,468 
Investing activities   (11,192,665)   1,889,978 
Financing activities   (503,846)   (5,287,023)
Net decrease in cash   (12,170,536)   (2,951,577)
Cash, beginning of period   21,295,819    14,159,975 
Cash, end of period  $9,125,283   $11,208,398 

 

At March 31, 2018, we had cash and cash equivalents of $9.13 million and highly liquid investments of $46.4 million compared to cash and cash equivalents of $11.21 million on March 31, 2017. For 2018, we believe that our available cash, combined with expected cash flows from operations and our held-to-maturity investments, will be sufficient to fund our liquidity and capital expenditure requirements through March of 2019. We also have a $3,000,000 revolving credit facility and a $9,000,000 acquisition credit facility available to us. Our expected short-term uses of available cash include the funding of operating activities, payment of income tax liabilities related to our sale of the Franchise segment and the payment of dividends.

 

Off-Balance Sheet Arrangements

 

We had no off-balance sheet arrangements as of March 31, 2018.

 

 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 March 31, 2018, 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 March 31, 2018.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 20

 

 

PART II. OTHER INFORMATION

 

Item 6. Exhibits

 

Exhibit   Description
     
10.1   Consent and Fourth Amendment Agreement, dated April 26, 2018, by and among the Company, certain subsidiaries named therein and Fifth Third Bank (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K filed on May 2, 2018).
     
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).

 

 21

 

 

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: May 15, 2018 Western Capital Resources, Inc.
  (Registrant)
   
  By: /s/ John Quandahl
    John Quandahl
    Chief Executive Officer and Chief Operating Officer
     
  By: /s/ Angel Donchev
    Angel Donchev
    Chief Financial Officer

 

22