10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the quarterly period ended September 30, 2016 

o   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 þ No o

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 þ No o

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

Large accelerated filer  o	Accelerated filer  o
Non-accelerated filer  o	Smaller reporting company  þ

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

Yes o No þ

APPLICABLE ONLY TO CORPORATE ISSUERS

As of November 14, 2016, the registrant had outstanding 9,497,860 shares of common stock, $0.001 par value per share.

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	16
Item 4. Controls and Procedures	25
PART II. OTHER INFORMATION
Item 6. Exhibits	26
SIGNATURES	27

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)

	September 30, 2016		December 31, 2015
ASSETS
CURRENT ASSETS
Cash	$	7,895,897	$	7,847,669
Loans receivable (less allowance for losses of $993,000 and $1,177,000, respectively)		4,411,062		4,884,438
Accounts receivable (less allowance for losses of $166,000 and $272,000, respectively)		2,260,911		1,963,192
Inventory		8,856,267		7,617,850
Prepaid expenses and other		2,805,092		2,589,749
TOTAL CURRENT ASSETS		26,229,229		24,902,898
PROPERTY AND EQUIPMENT, net		9,314,175		8,561,321
GOODWILL		13,355,592		13,355,591
INTANGIBLE ASSETS, net		7,677,512		8,018,616
OTHER		877,494		783,907
TOTAL ASSETS	$	57,454,002	$	55,622,333
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable	$	3,836,177	$	4,577,118
Accrued expenses and other liabilities		5,486,943		6,232,267
Income taxes payable		151,869		1,135,031
Note payable – short-term		84,009		-
Current portion long-term debt		1,100,000		4,900,008
Current portion capital lease obligations		60,464		23,860
Deferred revenue and other		1,226,142		1,796,338
TOTAL CURRENT LIABILITIES		11,945,604		18,664,622
LONG-TERM LIABILITIES
Notes payable, net of current portion		6,776,829		3,096,452
Capital lease obligations, net of current portion		106,167		33,347
Deferred income taxes		4,521,000		3,889,000
Other		120,539		80,403
TOTAL LONG-TERM LIABILITIES		11,524,535		7,099,202
TOTAL LIABILITIES		23,470,139		25,763,824
COMMITMENTS AND CONTINGENCIES (Note 13)
EQUITY
WESTERN SHAREHOLDERS’ EQUITY
Common stock, $0.001 and no par value, 12,500,000 shares authorized, 9,497,860 and 9,497,534 issued and outstanding. (Note 8)		950		-
Additional paid-in capital		28,982,705		28,934,392
Retained earnings		4,959,387		898,038
TOTAL WESTERN SHAREHOLDERS’ EQUITY		33,943,042		29,832,430
NONCONTROLLING INTERESTS		40,821		26,079
TOTAL EQUITY		33,983,863		29,858,509
TOTAL LIABILITIES AND EQUITY	$	57,454,002	$	55,622,333

See notes to condensed consolidated financial statements

4 

WESTERN CAPITAL RESOURCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

	Three months ended						Nine months ended
	September 30, 2016			September 30, 2015			September 30, 2016			September 30, 2015
REVENUES
Sales and associated fees	$	13,066,705		$	13,403,791		$	52,146,348		$	27,039,059
Financing fees and interest		2,562,569			2,865,842			7,387,757			8,007,438
Royalty and franchise fees, net		3,056,046			2,803,405			8,446,416			7,883,214
Other revenue		3,840,147			2,878,430			10,152,658			6,259,541
Total Revenues		22,525,467			21,951,468			78,133,179			49,189,252
COST OF REVENUES
Cost of sales		6,544,212			7,324,815			26,360,046			15,329,353
Provisions for loans receivable losses		444,689			572,959			1,176,174			1,351,427
Other		662,410			200,303			1,819,491			730,143
Total Cost of Revenues		7,651,311			8,098,077			29,355,711			17,410,923
GROSS PROFIT		14,874,156			13,853,391			48,777,468			31,778,329
OPERATING EXPENSES
Salaries, wages and benefits		7,040,838			6,236,073			20,467,591			14,733,576
Occupancy		2,081,592			2,016,406			5,949,389			4,729,718
Advertising, marketing and development		1,076,102			1,142,751			5,293,633			1,513,578
Depreciation		309,584			234,122			881,333			444,814
Amortization		140,647			141,783			422,510			359,133
Other		2,795,326			2,280,809			8,049,581			5,754,519
Total Operating Expense		13,444,089			12,051,944			41,064,037			27,535,338
OPERATING INCOME		1,430,067			1,801,447			7,713,431			4,242,991
OTHER INCOME (EXPENSES):
Interest income		955			995			2,964			3,065
Interest expense		(93,665	)		(198,048	)		(413,390	)		(401,299	)
Total Other Income (Expenses)		(92,710	)		(197,053	)		(410,426	)		(398,234	)
INCOME BEFORE INCOME TAXES		1,337,357			1,604,394			7,303,005			3,844,757
INCOME TAX EXPENSE		551,000			724,293			2,752,000			1,696,813
NET INCOME		786,357			880,101			4,551,005			2,147,944
Less net income attributable to noncontrolling interests		(6,004	)		(6,498	)		(14,742	)		(12,485	)
NET INCOME ATTRIBUTABLE TO WESTERN COMMON SHAREHOLDERS	$	780,353		$	873,603		$	4,536,263		$	2,135,459
EARNINGS PER SHARE ATTRIBUTABLE TO WESTERN COMMON SHAREHOLDERS
Basic and diluted	$	0.08		$	0.09		$	0.48		$	0.30
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic and diluted		9,497,608			9,497,689			9,497,559			7,177,176

See notes to condensed consolidated financial statements.

5 

WESTERN CAPITAL RESOURCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Nine Months Ended
	September 30, 2016			September 30, 2015
OPERATING ACTIVITIES
Net Income	$	4,551,005		$	2,147,944
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		881,333			444,814
Amortization		422,510			359,133
Share based compensation		49,263			76,538
Deferred income taxes		632,000			390,000
Loss on disposal of property and equipment		8,014			-
Changes in operating assets and liabilities:
Loans receivable		473,376			233,848
Accounts receivable		(297,719	)		(492,684	)
Inventory		(1,238,417	)		(1,645,395	)
Prepaid expenses and other assets		(224,921	)		(612,532	)
Accounts payable and accrued liabilities		(2,469,429	)		(468,720	)
Deferred revenue and other current liabilities		(570,196	)		(137,896	)
Accrued liabilities and other		40,136			(21,252	)
Net cash provided by operating activities		2,256,955			273,798
INVESTING ACTIVITIES
Purchases of property and equipment		(1,244,715	)		(507,075	)
Acquisition of stores, net of cash acquired		(588,241	)		(2,608,500	)
Cash received through acquisitions		-			2,470,930
Proceeds from sale of property and equipment		109,350			-
Net cash used by investing activities		(1,723,606	)		(644,645	)
FINANCING ACTIVITIES
Payments on notes payable – short-term		-			(120,000	)
Advances on line of credit, net		1,538,708			-
Advances on note payable – long-term		418,301			-
Payments on notes payable – long-term, net		(2,076,640	)		(191,668	)
Advances (payments) on capital leases, net		109,424			(42,107	)
Dividend paid		(474,914	)		-
Net cash used in financing activities		(485,121	)		(353,775	)
NET INCREASE (DECREASE) IN CASH		48,228			(724,622	)
CASH
Beginning of period		7,847,669			4,273,350
End of period	$	7,895,897		$	3,548,728
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Income taxes paid	$	3,103,162		$	1,759,171
Interest paid	$	550,231		$	392,751
Noncash investing and financing activities:
Net assets acquired in JPPA/RAI/JPRE acquisition	$	-		$	6,123,398
Deposit applied to purchase of intangibles	$	-		$	50,000
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 nine month period ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

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, 2015. The condensed consolidated balance sheet at December 31, 2015, 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

o AlphaGraphics, Inc. (“AGI”) (99.2%) – franchisor of 258 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

o PQH Wireless, Inc. and subsidiaries (“PQH”) (100%) – owns and operates 126 cellular retail stores as an exclusive dealer of the Cricket brand.

· Direct to Consumer

o J & P Park Acquisitions, Inc. (“JPPA”) (100% – Acquired July 1, 2015) – 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.

o Restorers Acquisition, Inc. (“RAI”) (100% – Acquired July 1, 2015) – an online and direct marketing distribution retailer of home improvement and restoration products operating under Van Dyke’s Restorers.

o J & P Real Estate, LLC (“JPRE”) (100% – Acquired July 1, 2015) – owns real estate utilized as JPPA’s distribution and warehouse facility and the corporate offices of JPPA and RAI.

· Consumer Finance

o Wyoming Financial Lenders, Inc. (“WFL”) (100%) – owns and operates 45 “payday” stores in eight states (Colorado, Iowa, Kansas, Nebraska, North Dakota, South 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.

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

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 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 condensed 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 condensed 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 customer 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 nine months ended September 30, 2016.

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, including subsequent updates, 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 November 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”). The standard requires that deferred tax assets and liabilities be classified as noncurrent on the balance sheet rather than being separated into current and noncurrent. ASU 2015-17 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is permitted and the standard may be applied either retrospectively or on a prospective basis to all deferred tax assets and liabilities. The Company early adopted ASU 2015-17 during our first quarter of fiscal year 2016 on a retrospective basis. Accordingly, we reclassified the current deferred taxes to noncurrent on our December 31, 2015 Condensed Consolidated Balance Sheet, which decreased current deferred tax assets by $0.56 million and decreased noncurrent deferred tax liabilities by $0.56 million.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The standard requires recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted and the standard is to be applied using a modified retrospectively approach. The Company is currently evaluating the impact that ASU 2016-02 will have on our financial condition, results of operations and consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). 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. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years and the standard is to be applied using a modified retrospectively approach. The Company is currently evaluating the impact that ASU 2016-13 will have on our financial condition, results of operations and consolidated financial statements.

No other accounting pronouncements issued or effective during the fiscal quarter have had or are expected to have a material impact on our condensed 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 and regulatory 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 enforcing existing regulations within its jurisdiction.

8 

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, 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, 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.

In addition, the passage of federal or state 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. Loans Receivable –

At September 30, 2016 and December 31, 2015, the Consumer Finance segment’s outstanding loans receivable aging was as follows:

September 30, 2016
	Payday			Installment			Pawn & Title		Total
Current	$	3,645,540		$	248,820		$	282,212	$	4,176,572
1-30		290,044			46,460			-		336,504
31-60		249,995			23,836			-		273,831
61-90		175,254			15,287			-		190,541
91-120		150,320			10,087			-		160,407
121-150		131,000			3,684			-		134,684
151-180		129,724			1,799			-		131,523
		4,771,877			349,973			282,212		5,404,062
Less Allowance		(920,000	)		(73,000	)		-		(993,000	)
	$	3,851,877		$	276,973		$	282,212	$	4,411,062

December 31, 2015
	Payday			Installment			Pawn & Title		Total
Current	$	4,065,706		$	291,947		$	286,514	$	4,644,167
1-30		332,217			43,179			-		375,396
31-60		263,486			24,233			-		287,719
61-90		199,526			16,293			-		215,819
91-120		196,123			9,417			-		205,540
121-150		160,386			4,985			-		165,371
151-180		165,237			2,189			-		167,426
		5,382,681			392,243			286,514		6,061,438
Less Allowance		(1,081,000	)		(96,000	)		-		(1,177,000	)
	$	4,301,681		$	296,243		$	286,514	$	4,884,438

4. Loans Receivable Allowance –

As a result of the Consumer Finance segment’s collection efforts, it historically writes off approximately 43% of returned payday items.  Based on days past the check return date, write-offs of payday returned items historically have tracked at the following approximate percentages: 1 to 30 days – 43%; 31 to 60 days – 65%; 61 to 90 days – 83%; 91 to 120 days – 89%; 121 to 150 days – 91%; and 151 + days – 93%.

9 

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

	Nine Months Ended September 30, 2016			Year Ended December 31, 2015
Loans receivable allowance, beginning of period	$	1,177,000		$	1,219,000
Provision for loan losses charged to expense		1,176,174			1,904,893
Charge-offs, net		(1,360,174	)		(1,946,893	)
Loans receivable allowance, end of period	$	993,000		$	1,177,000

5. Accounts Receivable –

A breakdown of accounts receivables by segment as of September 30, 2016 and December 31, 2015 are as follows:

September 30, 2016
	Franchise			Cellular Retail		Direct to Consumer			Consumer Finance		Total
Accounts receivable	$	1,624,351		$	172,813	$	619,568		$	10,179	$	2,426,911
Less allowance		(149,000	)		-		(17,000	)		-		(166,000	)
Net account receivable	$	1,475,351		$	172,813	$	602,568			10,179	$	2,260,911

December 31, 2015
	Franchise			Cellular Retail		Direct to Consumer			Consumer Finance		Total
Accounts receivable	$	1,332,446		$	148,346	$	754,400		$	-	$	2,235,192
Less allowance		(183,000	)		-		(89,000	)		-		(272,000	)
Net account receivable	$	1,149,446		$	148,346	$	665,400			-	$	1,963,192

6. Deferred Revenue and Other Liabilities –

Deferred revenue and other liabilities consist of the following:

	September 30, 2016		December 31, 2015
Deferred financing fees	$	265,779	$	285,452
Deferred franchise development and service fees		130,500		264,000
Merchandise credits and gift card liability		694,302		1,127,470
Other		135,561		119,416
Total	$	1,226,142	$	1,796,338

10 

7. Notes Payable – Long Term

	September 30, 2016			December 31, 2015
Note payable (with a credit limit of $3,000,000) to River City Equity, Inc., a related party, with interest payable monthly at 12% due June 30, 2016 and upon certain events can be collateralized by substantially all assets of WCR, excluding any equity interest in AGI (terminated May 2016)	$			$	3,000,000
Note payable to a financial institution with monthly principal payment of $58,333 plus interest at LIBOR plus 3.5% (4.125% at September 30, 2016), secured by substantially all assets of the Company with stated guarantee amounts by subsidiaries, maturing April 21, 2021		3,266,667			-
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% (4.125% at September 30, 2016), secured by substantially all assets of the Company with stated guarantee amounts by subsidiaries, maturing April 21, 2018		1,538,708			-
Subsidiary note payable to a financial institution with quarterly principal payments of $375,000 plus interest at prime rate plus 2.5%, secured by the AGI’s assets, maturing March 2017 (terminated May 2016)		-			1,625,000
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% (4.125% at September 30, 2016), secured by JPRE assets, maturing June 5, 2019 when remaining principal balance is due		3,071,454			3,371,460
Total		7,876,829			7,996,460
Less current maturities		(1,100,000	)		(4,900,008	)
	$	6,776,829		$	3,096,452

Future minimum long-term principal payments are as follows:

Year	Amount
1	$	1,100,000
2		2,638,716
3		2,971,446
4		700,000
5		466,667
Thereafter		-
	$	7,876,829

On April 22, 2016, WCR entered into a Credit Agreement with a financial institution. The Credit Agreement provides the Company with an acquisition loan facility in an aggregate amount of up to $9,000,000, having a commitment maturity date of April 21, 2018. Funds advanced under 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, and mature five years from the date of advance. At closing, $3,500,000 was advanced under the acquisition loan replacing the $3,000,000 River City Equity debt and $500,000 of other term debt. At September 30, 2016 approximately $7,195,000 of credit was available under the acquisition and revolving credit facilities.

See Note 13 for additional terms and conditions related to the Credit Agreement.

8. Reincorporation –

On January 20, 2016, our shareholders approved a plan to reincorporate Western Capital Resources, Inc. in Delaware at a special meeting of the shareholders called for that purpose. The reincorporation was completed May 11, 2016.

11 

9. Cash Dividends –

Date declared		May 24, 2016		August 11, 2016
Record date		June 6, 2016		September 14, 2016
Date paid		June 15, 2016		September 21, 2016
Dividend per share of common stock	$	0.025	$	0.025

10. Other Operating Expense –

A breakout of other expense is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Bank fees	$	337,939	$	310,419	$	1,273,057	$	595,164
Collection costs		85,306		99,587		311,457		319,890
Conference expense		468,124		460,602		762,680		671,287
Insurance		184,106		110,788		528,995		286,783
Management and advisory fees		195,425		125,754		619,954		400,057
Professional and consulting fees		488,978		483,575		1,531,923		1,401,683
Supplies		231,995		167,480		591,919		496,116
Other		803,453		522,604		2,429,596		1,583,539
	$	2,795,326	$	2,280,809	$	8,049,581	$	5,754,519

11. Pro Forma Information –

Effective June 1, 2015, PQH purchased with cash all outstanding membership interests in four separate limited liability companies (Green Communications, LLC, an Arizona LLC, Green Communications, LLC, an Oregon LLC, Green Communications, LLC, a Washington LLC and Go Green, LLC an Arizona LLC). Effective July 1, 2015, the Company acquired a 100% interest in the businesses of RAI, JPPA, and JPRE, by completing a merger and contribution transaction.

The results of the operations for the acquired business have been included in the consolidated financial statements since the dates of the acquisition. The following table presents the unaudited results of operations for the three and nine months ended September 30, 2016 and the unaudited pro forma results of operations for the three and nine months ended September 30, 2015 (in thousands, except for per share data) as if the acquisitions had been consummated at the beginning of 2015. The pro forma net income below excludes the expense of the transactions. The pro forma results of operations are prepared for comparative purposes only and do not necessarily reflect the results that would have occurred had the acquisition occurred at the beginning of the 2015 or the results which may occur in the future.

12 

	Franchise			Cellular Retail			Direct to Consumer			Consumer Finance			Corporate			Total
Three Months Ended September 30, 2016
Revenue	$	4,278		$	9,294		$	5,944		$	3,009		$	-		$	22,525
% of total revenue		19.0	%		41.2	%		26.4	%		13.4	%		-%			100.0	%
Net income (loss)	$	749		$	73		$	(325	)	$	391		$	(102	)	$	786
Net income attributable to noncontrolling interests	$	6		$	-		$	-		$	-		$	-		$	6
Net income (loss) attributable to WCR common shareholders	$	743		$	73		$	(325	)	$	391		$	(102	)	$	780
Earnings (loss) per share attributable to WCR common shareholders – basic and diluted	$	0.078		$	0.008		$	(0.034	)	$	0.041		$	(0.011	)	$	0.082
Three Months Ended September 30, 2015
Pro forma revenue	$	3,675		$	9,537		$	5,442		$	3,297		$	-		$	21,951
% of total pro forma revenue		16.7	%		43.5	%		24.8	%		15.0	%		-%			100.0	%
Pro forma net income (loss)	$	829		$	443		$	(569	)	$	390		$	(167	)	$	926
Pro forma net income attributable to noncontrolling interests	$	6		$	-		$	-		$	-		$	-		$	6
Pro forma net income (loss) attributable to WCR common shareholders	$	823		$	443		$	(569	)	$	390		$	(167	)	$	920
Pro forma earnings (loss) per share attributable to WCR common shareholders – basic and diluted	$	0.087		$	0.047		$	(0.060	)	$	0.041		$	(0.018	)	$	0.097

	Franchise			Cellular Retail			Direct to Consumer			Consumer Finance			Corporate			Total
Nine Months Ended September 30, 2016
Revenue	$	11,452		$	27,152		$	30,699		$	8,830		$	-		$	78,133
% of total revenue		14.6	%		34.8	%		39.3	%		11.3	%		-%			100.0	%
Net income (loss)	$	1,834		$	526		$	1,682		$	964		$	(455	)	$	4,551
Net income attributable to noncontrolling interests	$	15		$	-		$	-		$	-		$	-		$	15
Net income (loss) attributable to WCR common shareholders	$	1,819		$	526		$	1,682		$	964		$	(455	)	$	4,536
Earnings (loss) per share attributable to WCR common shareholders – basic and diluted	$	0.192		$	0.055		$	0.177		$	0.102		$	(0.048	)	$	0.478
Nine Months Ended September 30, 2015
Pro forma revenue	$	9,641		$	29,632		$	30,296		$	9,451		$	-		$	79,020
% of total pro forma revenue		12.2	%		37.5	%		38.3	%		12.0	%		-%			100.0	%
Pro forma net income (loss)	$	1,585		$	967		$	1,365		$	932		$	(408	)	$	4,441
Pro forma net income attributable to noncontrolling interests	$	13		$	-		$	-		$	-		$	-		$	13
Pro forma net income (loss) attributable to WCR common shareholders	$	1,572		$	967		$	1,365		$	932		$	(408	)	$	4,428
Pro forma earnings (loss) per share attributable to WCR common shareholders – basic and diluted	$	0.165		$	0.102		$	0.144		$	0.098		$	(0.043	)	$	0.466

13 

12.	Segment Information –
	Segment information related to the three and nine month periods ended September 30, 2016 and 2015 is presented below:

Three Months Ended September 30, 2016

(in thousands)

	Franchise		Cellular Retail		Direct to Consumer			Consumer Finance		Corporate			Total
Revenue from external customers	$	4,278	$	9,294	$	5,944		$	3,009	$	-		$	22,525
Net income (loss)	$	749	$	73	$	(325	)	$	391	$	(102	)	$	786
Expenditures for segmented assets	$	3	$	241	$	50		$	21	$	-		$	315

Three Months Ended September 30, 2015

(in thousands)

	Franchise		Cellular Retail		Direct to Consumer			Consumer Finance		Corporate			Total
Revenue from external customers	$	3,675	$	9,537	$	5,442		$	3,297	$	-		$	21,951
Net income (loss)	$	829	$	443	$	(569	)	$	390	$	(213	)	$	880
Expenditures for segmented assets	$	-	$	-	$	186		$	29	$	-		$	215

Nine Months Ended September 30, 2016

(in thousands)

	Franchise		Cellular Retail		Direct to Consumer		Consumer Finance		Corporate			Total
Revenue from external customers	$	11,452	$	27,152	$	30,699	$	8,830	$	-		$	78,133
Net income (loss)	$	1,834	$	526	$	1,682	$	964	$	(455	)	$	4,551
Total segment assets	$	10,111	$	16,472	$	14,723	$	15,735	$	413		$	57,454
Expenditures for segmented assets	$	19	$	1,688	$	89	$	39	$	-		$	1,835

Nine Months Ended September 30, 2015

(in thousands)

	Franchise		Cellular Retail		Direct to Consumer			Consumer Finance		Corporate			Total
Revenue from external customers	$	9,641	$	24,655	$	5,442		$	9,451	$	-		$	49,189
Net income (loss)	$	1,585	$	910	$	(569	)	$	932	$	(710	)	$	2,148
Total segment assets	$	9,379	$	12,823	$	13,568		$	16,299	$	544		$	52,613
Expenditures for segmented assets	$	91	$	3,656	$	186		$	45	$	14		$	3,992

13. Commitments and Contingencies –

Employment Agreements

The Company is party to an Amended and Restated Employment Agreement with its Chief Executive Officer, Mr. John Quandahl. Among other things, this agreement contains provisions for an annual performance-based cash bonus pool for management. The agreement was amended April 1, 2016 to extend the term through March 2019.

Pursuant to the Company’s numerous employment agreements, bonuses of approximately $390,000 and $1,083,000 were accrued for the three and nine month periods ended September 30, 2016, respectively.

14 

Credit Facility

On April 22, 2016, WCR entered into 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 three months ended September 30, 2016.

Cellular Retail Growth Commitment

Effective June 6, 2016, PQH entered into a Cricket Wireless Exclusive Dealer Agreement Amendment for Retail Expansion. Per the agreement, PQH commits to open at least 150 locations by December 31, 2017, including 50 locations by December 31, 2016. Also effective June 6, 2016, Cricket Wireless, LLC has increased certain compensation arrangements in the existing dealer agreement and will provide a subsidy for each location opened during the term of the agreement.

14. Subsequent Events –

Wireless Retail Transaction

PQH entered into an Asset Purchase Agreement for the acquisition of 20 Cricket Wireless retail locations for $2,050,000 and an option to purchase an additional 33 locations for an aggregate purchase price of $7,200,000. In addition, if PQH exercised its option, seller has an option to retain a 30% ownership in the 53 store transaction, with a corresponding adjustment to the purchase price. It is anticipated that the transaction will close in November 2016.

Consumer Finance Segment Law Change

On November 8, 2016, South Dakota voters approved a measure effectively banning payday lending in South Dakota. Unless delayed, the effective date of the measure will be November 16, 2016. Revenue generated in South Dakota is approximately 5% of Consumer Finance segment year to date revenue through September 30, 2016.

The Company evaluated all other events or transactions that occurred after September 30, 2016 up through November 14, 2016, the date we issued these financial statements. During this period we did not have any additional material subsequent events that impacted our financial statements.

15 

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 Retail Wireless segment;

· changes in local, state or federal 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;

· the impact on us, as a Cricket dealer, of the AT&T acquisition of the Cricket Wireless business;

· 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, 2015.

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.

16 

OVERVIEW

Western Capital Resources, Inc. (“WCR” or “Western Capital”) is a holding company having 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 retailer and distributor of live plants, seeds, holiday gifts and garden accessories operating in the retail market under the Park Seed, Jackson & Perkins and Wayside Gardens trade names, and in the wholesale market under the Park Wholesale trade name, 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 are actual and pro forma revenues by operating segment for the three and nine month periods ended September 30, 2016 and 2015:

17 

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 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 September 30, 2016 Compared to Three Months Ended September 30, 2015

Net income attributable to our common shareholders was $0.78 million, or $0.08 per share (basic and diluted), for the quarter ended September 30, 2016, compared to $0.87 million, or $0.09 per share (basic and diluted), for the quarter ended September 30, 2015.

We expect segment operating results and earnings per share to change throughout 2016 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 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 September 30, 2016
Revenues	$	4,278		$	9,294		$	5,944		$	3,009		$	-		$	22,525
% of total revenue		19.0	%		41.2	%		26.4	%		13.4	%		-%			100.0	%
Net income (loss)	$	749		$	73		$	(325	)	$	391		$	(102	)	$	786
Net income (loss) attributable to WCR common shareholders	$	743		$	73		$	(325	)	$	391		$	(102	)	$	780
Three Months Ended September 30, 2015
Revenues	$	3,675		$	9,537		$	5,442		$	3,297		$	-		$	21,951
% of total revenue		16.7	%		43.5	%		24.8	%		15.0	%		-%			100.0	%
Net income (loss)	$	829		$	443		$	(569	)	$	390		$	(213	)	$	880
Net income (loss) attributable to WCR common shareholders	$	823		$	443		$	(569	)	$	390		$	(213	)	$	874

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Franchise

The table below summarizes the number of AlphaGraphics business centers owned and operated by franchisees during the quarters ended September 30, 2016 and 2015:

	Beginning		New		Closed			Ending
2016
US Centers		258		1		(1	)		258
International Centers		25		-		-			25
Total		283		1		(1	)		283
2015
US Centers		250		4		(2	)		252
International Centers		26		-		-			26
Total		276		4		(2	)		278

Our U.S. franchisees reported approximate center sales for the quarters ended September 30 as follows:

	2016		2015
Total gross U.S. network-wide center sales	$	69,849,000	$	67,193,000

Revenues and net income for the quarters ended September 30, 2016 and 2015 were $4.28 million versus $3.68 million and $0.75 million versus $0.83 million, respectively. Contributing to the revenue growth of 16.40% was a 9.01% increase in royalty and franchise development fee revenue and a 150.78% increase in services revenue which includes revenue from new low margin services added in 2016. The revenue growth of 3.89% was offset with the increase direct cost of services provided and a 13.61% increase in operating costs, resulting in the segment net income decrease to $0.75 million from $0.83 million in the prior year comparable quarter.

Cellular Retail

A summary table of the number of Cricket cellular retail stores we operated during the quarters ended September 30, 2016 and 2015 follows:

	2016		2015
Beginning		116		110
Acquired/ Launched		10		-
Closed		-		(8	)
Ending		126		102

The Cellular Retail division revenues and contribution to net income each decreased period over period. A significant portion of revenue is from phone sales and there are two factors that have influenced a decline in phone revenue period over period. Prior year comparable quarter volume was positively influenced by customer migrations to Cricket Wireless’ new GSM network, so a volume decrease was anticipated. Discounting of phones is also a significant factor affecting revenue and discounts increased approximately $1.35 million period over period. These discounts also reduce cost of phones and do not impact gross profit or net income. While phone sales revenue decreased period over period, dealer compensation and customer fees increased 17.9%. Other factors contributing to the decline in net income are growth related and include increased marketing and development costs, infrastructure costs and depreciation expense.

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 loss of ($0.33) million compared to a net loss of ($0.57) million for the comparable prior year period. Revenues for the three month period ended September 30, 2016 were $5.94 million compared to pro forma revenues for the comparable period in 2015 of $5.44 million, an increase in of 9.2%

20 

Consumer Finance

A summary table of the number of consumer finance locations we operated during the quarters ended September 30, 2016 and 2015 follows:

	2016			2015
Beginning		46			51
Acquired/ Launched		-			-
Closed		(1	)		-
Ending		45			51

Our Consumer Finance segment revenues decreased 8.7% for the quarter ended September 30, 2016 compared to the quarter ended September 30, 2015. We sold or closed 6 underperforming store locations between the comparable periods and regional economic downturns in the Midwest, primarily Wyoming, North Dakota and South Dakota, continue to contribute to revenue declines. Reductions in net bad debt and operating costs have helped to keep the net income flat quarter over quarter.

Corporate

Costs related to our Corporate segment were $0.10 million for the quarter ended September 30, 2016 compared to $0.21 million for the quarter ended September 30, 2015.

Results of Operations – Nine Months Ended September 30, 2016 Compared to Nine Months Ended September 30, 2015

Net income attributable to our common shareholders was $4.54 million, or $0.48 per share (basic and diluted), for the nine months ended September 30, 2016, compared to $2.14 million, or $0.30 per share (basic and diluted), for the comparable period in 2015 and compared to pro forma net income for the prior comparable period of $4.43 million or $0.47 per share (basic and diluted). As further discussed below, The Franchise, Direct to Consumer and Consumer Finance operating segments each contributed to the increase in net income for the year over year period, while the Retail Wireless segment decreased.

As previously noted, we expect segment operating results and earnings per share to change throughout 2016 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.

21 

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
Nine Months Ended September 30, 2016
Revenues	$	11,452		$	27,152		$	30,699		$	8,830		$	-		$	78,133
% of total revenue		14.6	%		34.8	%		39.3	%		11.3	%		-%			100.0	%
Net income (loss)	$	1,834		$	526		$	1,682		$	964		$	(455	)	$	4,551
Net income (loss) attributable to WCR common shareholders	$	1,819		$	526		$	1,682		$	964		$	(455	)	$	4,536
Nine Months Ended September 30, 2015
Revenues	$	9,641		$	24,655		$	5,442		$	9,451		$	-		$	49,189
% of total revenue		19.6	%		50.1	%		11.1	%		19.2	%		-%			100.0	%
Net income (loss)	$	1,585		$	910		$	(569	)	$	932		$	(710	)	$	2,148
Net income (loss) attributable to WCR common shareholders	$	1,572		$	910		$	(569	)	$	932		$	(710	)	$	2,135
Pro Forma Nine Months Ended September 30, 2015
Pro Forma Revenues	$	9,641		$	29,632		$	30,296		$	9,451		$	-		$	79,020
Pro Forma % of total revenue		12.2	%		37.5	%		38.3	%		12.0	%		-%			100.0	%
Pro Forma Net income (loss)	$	1,585		$	967		$	1,365		$	932		$	(408	)	$	4,441
Pro Forma Net income (loss) attributable to WCR common shareholders	$	1,572		$	967		$	1,365		$	932		$	(408	)	$	4428

22 

Franchise

The table below summarizes the number of AlphaGraphics business centers owned and operated by franchisees during the nine month periods ended September, 2016 and 2015:

	Beginning		New		Closed			Ending
2016
US Centers		254		7		(3	)		258
International Centers		25		-		-			25
Total		279		7		(3	)		283
2015
US Centers		242		14		(4	)		252
International Centers		32		-		(6	)		26
Total		274		14		(10	)		278

Our U.S. franchisees reported approximate center sales for the nine month periods ended September 30 as follows:

	2016		2015
Total gross U.S. network-wide center sales	$	208,510,000	$	199,346,000

Revenues for the nine month period ended September 30, 2016 and 2015 were $11.45 million and $9.64 million, respectively. Contributing to the revenue growth of 18.78% was a 7.14% increase in royalty and franchise development fee revenue and a 122.04% increase in services revenue, primarily attributable to revenue from new low margin services added in 2016. The revenue growth, net of direct costs and together with a 6.18% increase in operating costs period over period resulted in the segment net income increase to $1.83 million from $1.59 million for the prior year comparable period.

Cellular Retail

A summary table of the number of Cricket cellular retail stores we operated during the nine month periods ended September 30, 2016 and 2015 follows:

	2016			2015
Beginning		99			61
Acquired/ Launched		33			49
Closed		(6	)		(8	)
Ending		126			102

Average store revenue and gross profit was down period over period as expected since the prior period volume was positively influenced by customer migrations to Cricket Wireless’ new GSM network. Discounted phone prices (with a corresponding decrease in cost) have also contributed to the decrease in revenue. However, dealer compensation and customer fee revenue, both with no direct cost of revenues associated with the revenue, each have increased. Increased operating costs include one-time store consolidation costs in addition to cost incurred related to expansion efforts. Management expects to realize the benefit of these non-recurring costs in the mid-term.

Direct to Consumer

On July 1, 2015, we added our newest segment, Direct to Consumer. Revenues for the nine month period ended September 30, 2016 were $30.70 million, up a marginal 1.3% from pro forma revenues for the comparable period in 2015 of $30.30 million. For the nine month period ended September 30, 2016, the Direct to Consumer segment had net income of $1.68 million and pro forma net income of $1.37 million in the comparable period of the prior year, a 22.6% increase.

23 

Consumer Finance

A summary table of the number of consumer finance locations we operated during the nine month periods ended September 30, 2016 and 2015 follows:

	2016			2015
Beginning		47			51
Acquired/ Launched		-			-
Closed		(2	)		-
Ending		45			51

Our Consumer Finance segment revenues decreased 6.57% for the nine months ended September 30, 2016 from the comparable nine month period ended September 30, 2015. Same store payday and installment lending revenue decreased 3.76%. The impact of the regional economic downturns in the Midwest, primarily Wyoming, North Dakota and South Dakota, have contributed significantly to the decrease in same store revenue period over period. Similarly to the quarter over quarter results, reductions in net bad debt and operating costs have helped to keep the net results relatively stable period over period.

Corporate

Costs related to our Corporate segment were $0.46 million for the nine months ended September 30, 2016 compared to $0.71 million for the nine months ended September 30, 2015. The nine month period in 2015 included approximately $0.32 million in transaction related costs.

Liquidity and Capital Resources

Summary cash flow data is as follows:

	Nine Months Ended September 30,
	2016			2015
Cash flows provided (used) by:
Operating activities	$	2,256,955		$	273,798
Investing activities		(1,723,606	)		(644,645	)
Financing activities		(485,121	)		(353,775	)
Net increase (decrease) in cash		48,228			(724,622	)
Cash, beginning of period		7,847,669			4,273,350
Cash, end of period	$	7,895,897		$	3,548,728

At September 30, 2016, we had cash of $7.90 million compared to cash of $3.55 million on September 30, 2015. Both comparable periods include cash flows utilized for growth in our Cellular Retail segment. We believe that our available cash, combined with expected cash flows from operations and available financing, will be sufficient to fund our scheduled debt repayments and the Cellular Retail segment anticipated capital expenditures through September 30, 2017.

Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements as of September 30, 2016.

24 

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 September 30, 2016, 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 September 30, 2016.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended September 30, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

25 

PART II. OTHER INFORMATION

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).

26 

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: November 14, 2016	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

27 

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

Certification

I, John Quandahl, Chief Executive Officer of Western Capital Resources, Inc. certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Western Capital Resources, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Dated: November 14, 2016	/s/ John Quandahl
	JOHN QUANDAHL Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

Certification

I, Stephen Irlbeck, Chief Financial Officer of Western Capital Resources, Inc. certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Western Capital Resources, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Dated: November 14, 2016	/s/ Stephen Irlbeck
	STEPHEN IRLBECK Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Western Capital Resources, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John Quandahl, Chief Executive Officer of the Company and I, Stephen Irlbeck, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ John Quandahl

John Quandahl

Chief Executive Officer

November 14, 2016

/s/ Stephen Irlbeck

Stephen Irlbeck

Chief Financial Officer

November 14, 2016

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 14, 2016
Document And Entity Information
Entity Registrant Name	WESTERN CAPITAL RESOURCES, INC.
Entity Central Index Key	0001363958
Document Type	10-Q
Trading Symbol	WCRS
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity a Well-known Seasoned Issuer	No
Entity a Voluntary Filer	No
Entity's Reporting Status Current	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		9,497,860
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2016

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
CURRENT ASSETS
Cash	$ 7,895,897	$ 7,847,669
Loans receivable (less allowance for losses of $993,000 and $1,177,000, respectively)	4,411,062	4,884,438
Accounts receivable (less allowance for losses of $166,000 and $272,000, respectively)	2,260,911	1,963,192
Inventory	8,856,267	7,617,850
Prepaid expenses and other	2,805,092	2,589,749
TOTAL CURRENT ASSETS	26,229,229	24,902,898
PROPERTY AND EQUIPMENT, net	9,314,175	8,561,321
GOODWILL	13,355,592	13,355,591
INTANGIBLE ASSETS, net	7,677,512	8,018,616
OTHER	877,494	783,907
TOTAL ASSETS	57,454,002	55,622,333
CURRENT LIABILITIES
Accounts payable	3,836,177	4,577,118
Accrued expenses and other liabilities	5,486,943	6,232,267
Income taxes payable	151,869	1,135,031
Note payable - short-term	84,009
Current portion long-term debt	1,100,000	4,900,008
Current portion capital lease obligations	60,464	23,860
Deferred revenue and other	1,226,142	1,796,338
TOTAL CURRENT LIABILITIES	11,945,604	18,664,622
LONG-TERM LIABILITIES
Notes payable, net of current portion	6,776,829	3,096,452
Capital lease obligations, net of current portion	106,167	33,347
Deferred income taxes	4,521,000	3,889,000
Other	120,539	80,403
TOTAL LONG-TERM LIABILITIES	11,524,535	7,099,202
TOTAL LIABILITIES	23,470,139	25,763,824
COMMITMENTS AND CONTINGENCIES (Note 13)
WESTERN SHAREHOLDERS' EQUITY
Common stock, $0.001 and no par value, 12,500,000 shares authorized, 9,497,860 and 9,497,534 issued and outstanding. (Note 8)	950
Additional paid-in capital	28,982,705	28,934,392
Retained earnings	4,959,387	898,038
TOTAL WESTERN SHAREHOLDERS' EQUITY	33,943,042	29,832,430
NONCONTROLLING INTERESTS	40,821	26,079
TOTAL EQUITY	33,983,863	29,858,509
TOTAL LIABILITIES AND EQUITY	$ 57,454,002	$ 55,622,333

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Loans receivable, allowance	$ 993,000	$ 1,177,000
Accounts receivable, allowance	$ 166,000	$ 272,000
Common stock, par value (in dollars per share)	$ 0.001
Common stock, no par value (in dollars per share)
Common stock, authorized	12,500,000	12,500,000
Common stock, issued	9,497,860	9,497,534
Common stock, outstanding	9,497,860	9,497,534

XML

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
REVENUES
Sales and associated fees	$ 13,066,705	$ 13,403,791	$ 52,146,348	$ 27,039,059
Financing fees and interest	2,562,569	2,865,842	7,387,757	8,007,438
Royalty and franchise fees, net	3,056,046	2,803,405	8,446,416	7,883,214
Other revenue	3,840,147	2,878,430	10,152,658	6,259,541
Total Revenues	22,525,467	21,951,468	78,133,179	49,189,252
COST OF REVENUES
Cost of sales	6,544,212	7,324,815	26,360,046	15,329,353
Provisions for loans receivable losses	444,689	572,959	1,176,174	1,351,427
Other	662,410	200,303	1,819,491	730,143
Total Cost of Revenues	7,651,311	8,098,077	29,355,711	17,410,923
GROSS PROFIT	14,874,156	13,853,391	48,777,468	31,778,329
OPERATING EXPENSES
Salaries, wages and benefits	7,040,838	6,236,073	20,467,591	14,733,576
Occupancy	2,081,592	2,016,406	5,949,389	4,729,718
Advertising, marketing and development	1,076,102	1,142,751	5,293,633	1,513,578
Depreciation	309,584	234,122	881,333	444,814
Amortization	140,647	141,783	422,510	359,133
Other	2,795,326	2,280,809	8,049,581	5,754,519
Total Operating Expense	13,444,089	12,051,944	41,064,037	27,535,338
OPERATING INCOME	1,430,067	1,801,447	7,713,431	4,242,991
OTHER INCOME (EXPENSES):
Interest income	955	995	2,964	3,065
Interest expense	(93,665)	(198,048)	(413,390)	(401,299)
Total Other Income (Expenses)	(92,710)	(197,053)	(410,426)	(398,234)
INCOME BEFORE INCOME TAXES	1,337,357	1,604,394	7,303,005	3,844,757
INCOME TAX EXPENSE	551,000	724,293	2,752,000	1,696,813
NET INCOME	786,357	880,101	4,551,005	2,147,944
Less net income attributable to noncontrolling interests	(6,004)	(6,498)	(14,742)	(12,485)
NET INCOME ATTRIBUTABLE TO WESTERN COMMON SHAREHOLDERS	$ 780,353	$ 873,603	$ 4,536,263	$ 2,135,459
EARNINGS PER SHARE ATTRIBUTABLE TO WESTERN COMMON SHAREHOLDERS
Basic and diluted (in dollars per share)	$ 0.08	$ 0.09	$ 0.48	$ 0.3
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic and diluted (in shares)	9,497,608	9,497,689	9,497,559	7,177,176

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
OPERATING ACTIVITIES
Net Income	$ 4,551,005	$ 2,147,944
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	881,333	444,814
Amortization	422,510	359,133
Share based compensation	49,263	76,538
Deferred income taxes	632,000	390,000
Loss on disposal of property and equipment	8,014
Changes in operating assets and liabilities:
Loans receivable	473,376	233,848
Accounts receivable	(297,719)	(492,684)
Inventory	(1,238,417)	(1,645,395)
Prepaid expenses and other assets	(224,921)	(612,532)
Accounts payable and accrued liabilities	(2,469,429)	(468,720)
Deferred revenue and other current liabilities	(570,196)	(137,896)
Accrued liabilities and other	40,136	(21,252)
Net cash provided by operating activities	2,256,955	273,798
INVESTING ACTIVITIES
Purchases of property and equipment	(1,244,715)	(507,075)
Acquisition of stores, net of cash acquired	(588,241)	(2,608,500)
Cash received through acquisitions		2,470,930
Proceeds from sale of property and equipment	109,350
Net cash used by investing activities	(1,723,606)	(644,645)
FINANCING ACTIVITIES
Payments on notes payable - short-term		(120,000)
Advances on line of credit, net	1,538,708
Advances on note payable - long-term	418,301
Payments on notes payable - long-term, net	(2,076,640)	(191,668)
Advances (payments) on capital leases, net	109,424	(42,107)
Dividend paid	(474,914)
Net cash used in financing activities	(485,121)	(353,775)
NET INCREASE (DECREASE) IN CASH	48,228	(724,622)
CASH
Beginning of period	7,847,669	4,273,350
End of period	7,895,897	3,548,728
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Income taxes paid	3,103,162	1,759,171
Interest paid	550,231	392,751
Noncash investing and financing activities:
Net assets acquired in JPPA/RAI/JPRE acquisition		6,123,398
Deposit applied to purchase of intangibles		50,000
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

XML

Basis of Presentation, Nature of Business and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation, Nature of Business and Summary of Significant Accounting Policies

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 nine month period ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

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, 2015. The condensed consolidated balance sheet at December 31, 2015, 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

o AlphaGraphics, Inc. (“AGI”) (99.2%) – franchisor of 258 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

o PQH Wireless, Inc. and subsidiaries (“PQH”) (100%) – owns and operates 126 cellular retail stores as an exclusive dealer of the Cricket brand.

• Direct to Consumer

o J & P Park Acquisitions, Inc. (“JPPA”) (100% – Acquired July 1, 2015) – 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.

o Restorers Acquisition, Inc. (“RAI”) (100% – Acquired July 1, 2015) – an online and direct marketing distribution retailer of home improvement and restoration products operating under Van Dyke’s Restorers.

o J & P Real Estate, LLC (“JPRE”) (100% – Acquired July 1, 2015) – owns real estate utilized as JPPA’s distribution and warehouse facility and the corporate offices of JPPA and RAI.

• Consumer Finance

o Wyoming Financial Lenders, Inc. (“WFL”) (100%) – owns and operates 45 “payday” stores in eight states (Colorado, Iowa, Kansas, Nebraska, North Dakota, South 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.

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

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.

Basis of Consolidation

The consolidated financial statements include the accounts of 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 condensed 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 condensed 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 customer 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 nine months ended September 30, 2016.

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, including subsequent updates, 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 November 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”). The standard requires that deferred tax assets and liabilities be classified as noncurrent on the balance sheet rather than being separated into current and noncurrent. ASU 2015-17 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is permitted and the standard may be applied either retrospectively or on a prospective basis to all deferred tax assets and liabilities. The Company early adopted ASU 2015-17 during our first quarter of fiscal year 2016 on a retrospective basis. Accordingly, we reclassified the current deferred taxes to noncurrent on our December 31, 2015 Condensed Consolidated Balance Sheet, which decreased current deferred tax assets by $0.56 million and decreased noncurrent deferred tax liabilities by $0.56 million.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The standard requires recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted and the standard is to be applied using a modified retrospectively approach. The Company is currently evaluating the impact that ASU 2016-02 will have on our financial condition, results of operations and consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). 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. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years and the standard is to be applied using a modified retrospectively approach. The Company is currently evaluating the impact that ASU 2016-13 will have on our financial condition, results of operations and consolidated financial statements.

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

XML

Risks Inherent in the Operating Environment

9 Months Ended

Sep. 30, 2016

Risks and Uncertainties [Abstract]

Risks Inherent in the Operating Environment

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 and regulatory 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 enforcing existing regulations within its jurisdiction.

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, 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, 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.

In addition, the passage of federal or state 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.

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Loans Receivable

9 Months Ended

Sep. 30, 2016

Receivables [Abstract]

Loans Receivable

3. Loans Receivable –

At September 30, 2016 and December 31, 2015, the Consumer Finance segment’s outstanding loans receivable aging was as follows:

September 30, 2016
	Payday			Installment			Pawn & Title		Total
Current	$	3,645,540		$	248,820		$	282,212	$	4,176,572
1-30		290,044			46,460			-		336,504
31-60		249,995			23,836			-		273,831
61-90		175,254			15,287			-		190,541
91-120		150,320			10,087			-		160,407
121-150		131,000			3,684			-		134,684
151-180		129,724			1,799			-		131,523
		4,771,877			349,973			282,212		5,404,062
Less Allowance		(920,000	)		(73,000	)		-		(993,000	)
	$	3,851,877		$	276,973		$	282,212	$	4,411,062

December 31, 2015
	Payday			Installment			Pawn & Title		Total
Current	$	4,065,706		$	291,947		$	286,514	$	4,644,167
1-30		332,217			43,179			-		375,396
31-60		263,486			24,233			-		287,719
61-90		199,526			16,293			-		215,819
91-120		196,123			9,417			-		205,540
121-150		160,386			4,985			-		165,371
151-180		165,237			2,189			-		167,426
		5,382,681			392,243			286,514		6,061,438
Less Allowance		(1,081,000	)		(96,000	)		-		(1,177,000	)
	$	4,301,681		$	296,243		$	286,514	$	4,884,438

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Loans Receivable Allowance

9 Months Ended

Sep. 30, 2016

Provision for Loan and Lease Losses [Abstract]

Loans Receivable Allowance

4. Loans Receivable Allowance –

As a result of the Consumer Finance segment’s collection efforts, it historically writes off approximately 43% of returned payday items.  Based on days past the check return date, write-offs of payday returned items historically have tracked at the following approximate percentages: 1 to 30 days – 43%; 31 to 60 days – 65%; 61 to 90 days – 83%; 91 to 120 days – 89%; 121 to 150 days – 91%; and 151 + days – 93%.

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

	Nine Months Ended September 30, 2016			Year Ended December 31, 2015
Loans receivable allowance, beginning of period	$	1,177,000		$	1,219,000
Provision for loan losses charged to expense		1,176,174			1,904,893
Charge-offs, net		(1,360,174	)		(1,946,893	)
Loans receivable allowance, end of period	$	993,000		$	1,177,000

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Accounts Receivable

9 Months Ended

Sep. 30, 2016

Receivables [Abstract]

Accounts Receivable

5. Accounts Receivable –

A breakdown of accounts receivables by segment as of September 30, 2016 and December 31, 2015 are as follows:

September 30, 2016
	Franchise			Cellular Retail		Direct to Consumer			Consumer Finance		Total
Accounts receivable	$	1,624,351		$	172,813	$	619,568		$	10,179	$	2,426,911
Less allowance		(149,000	)		-		(17,000	)		-		(166,000	)
Net account receivable	$	1,475,351		$	172,813	$	602,568			10,179	$	2,260,911

December 31, 2015
	Franchise			Cellular Retail		Direct to Consumer			Consumer Finance		Total
Accounts receivable	$	1,332,446		$	148,346	$	754,400		$	-	$	2,235,192
Less allowance		(183,000	)		-		(89,000	)		-		(272,000	)
Net account receivable	$	1,149,446		$	148,346	$	665,400			-	$	1,963,192

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Deferred Revenue and Other Liabilities

9 Months Ended

Sep. 30, 2016

Deferred Revenue Disclosure [Abstract]

Deferred Revenue and Other Liabilities

6. Deferred Revenue and Other Liabilities –

Deferred revenue and other liabilities consist of the following:

	September 30, 2016		December 31, 2015
Deferred financing fees	$	265,779	$	285,452
Deferred franchise development and service fees		130,500		264,000
Merchandise credits and gift card liability		694,302		1,127,470
Other		135,561		119,416
Total	$	1,226,142	$	1,796,338

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Notes Payable - Long Term

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Notes Payable - Long Term

7. Notes Payable – Long Term

	September 30, 2016			December 31, 2015
Note payable (with a credit limit of $3,000,000) to River City Equity, Inc., a related party, with interest payable monthly at 12% due June 30, 2016 and upon certain events can be collateralized by substantially all assets of WCR, excluding any equity interest in AGI (terminated May 2016)	$			$	3,000,000
Note payable to a financial institution with monthly principal payment of $58,333 plus interest at LIBOR plus 3.5% (4.125% at September 30, 2016), secured by substantially all assets of the Company with stated guarantee amounts by subsidiaries, maturing April 21, 2021		3,266,667			-
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% (4.125% at September 30, 2016), secured by substantially all assets of the Company with stated guarantee amounts by subsidiaries, maturing April 21, 2018		1,538,708			-
Subsidiary note payable to a financial institution with quarterly principal payments of $375,000 plus interest at prime rate plus 2.5%, secured by the AGI’s assets, maturing March 2017 (terminated May 2016)		-			1,625,000
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% (4.125% at September 30, 2016), secured by JPRE assets, maturing June 5, 2019 when remaining principal balance is due		3,071,454			3,371,460
Total		7,876,829			7,996,460
Less current maturities		(1,100,000	)		(4,900,008	)
	$	6,776,829		$	3,096,452

Future minimum long-term principal payments are as follows:

Year	Amount
1	$	1,100,000
2		2,638,716
3		2,971,446
4		700,000
5		466,667
Thereafter		-
	$	7,876,829

On April 22, 2016, WCR entered into a Credit Agreement with a financial institution. The Credit Agreement provides the Company with an acquisition loan facility in an aggregate amount of up to $9,000,000, having commitment a maturity date of April 21, 2018. Funds advanced under 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, and mature five years from the date of advance. At closing, $3,500,000 was advanced under the acquisition loan replacing the $3,000,000 River City Equity debt and $500,000 of other term debt. At September 30, 2016 approximately $7,195,000 of credit was available under the acquisition and revolving credit facilities.

See Note 13 for additional terms and conditions related to the Credit Agreement.

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Reincorporation

9 Months Ended

Sep. 30, 2016

Reincorporation

Reincorporation

8. Reincorporation –

On January 20, 2016, our shareholders approved a plan to reincorporate Western Capital Resources, Inc. in Delaware at a special meeting of the shareholders called for that purpose. The reincorporation was completed May 11, 2016.

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Cash Dividends

9 Months Ended

Sep. 30, 2016

Dividends, Common Stock [Abstract]

Cash Dividend

9. Cash Dividends –

Date declared		May 24, 2016		August 11, 2016
Record date		June 6, 2016		September 14, 2016
Date paid		June 15, 2016		September 21, 2016
Dividend per share of common stock	$	0.025	$	0.025

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Other Operating Expense

9 Months Ended

Sep. 30, 2016

Other Income and Expenses [Abstract]

Other Operating Expense

10. Other Operating Expense –

A breakout of other expense is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Bank fees	$	337,939	$	310,419	$	1,273,057	$	595,164
Collection costs		85,306		99,587		311,457		319,890
Conference expense		468,124		460,602		762,680		671,287
Insurance		184,106		110,788		528,995		286,783
Management and advisory fees		195,425		125,754		619,954		400,057
Professional and consulting fees		488,978		483,575		1,531,923		1,401,683
Supplies		231,995		167,480		591,919		496,116
Other		803,453		522,604		2,429,596		1,583,539
	$	2,795,326	$	2,280,809	$	8,049,581	$	5,754,519

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Pro Forma Information

9 Months Ended

Sep. 30, 2016

Business Combinations [Abstract]

Pro Forma Information

11. Pro Forma Information –

Effective June 1, 2015, PQH purchased with cash all outstanding membership interests in four separate limited liability companies (Green Communications, LLC, an Arizona LLC, Green Communications, LLC, an Oregon LLC, Green Communications, LLC, a Washington LLC and Go Green, LLC an Arizona LLC). Effective July 1, 2015, the Company acquired a 100% interest in the businesses of RAI, JPPA, and JPRE, by completing a merger and contribution transaction.

The results of the operations for the acquired business have been included in the consolidated financial statements since the dates of the acquisition. The following table presents the unaudited results of operations for the three and nine months ended September 30, 2016 and the unaudited pro forma results of operations for the three and nine months ended September 30, 2015 (in thousands, except for per share data) as if the acquisitions had been consummated at the beginning of 2015. The pro forma net income below excludes the expense of the transactions. The pro forma results of operations are prepared for comparative purposes only and do not necessarily reflect the results that would have occurred had the acquisition occurred at the beginning of the 2015 or the results which may occur in the future.

	Franchise			Cellular Retail			Direct to Consumer			Consumer Finance			Corporate			Total
Three Months Ended September 30, 2016
Revenue	$	4,278		$	9,294		$	5,944		$	3,009		$	-		$	22,525
% of total revenue		19.0	%		41.2	%		26.4	%		13.4	%		-%			100.0	%
Net income (loss)	$	749		$	73		$	(325	)	$	391		$	(102	)	$	786
Net income attributable to noncontrolling interests	$	6		$	-		$	-		$	-		$	-		$	6
Net income (loss) attributable to WCR common shareholders	$	743		$	73		$	(325	)	$	391		$	(102	)	$	780
Earnings (loss) per share attributable to WCR common shareholders – basic and diluted	$	0.078		$	0.008		$	(0.034	)	$	0.041		$	(0.011	)	$	0.082
Three Months Ended September 30, 2015
Pro forma revenue	$	3,675		$	9,537		$	5,442		$	3,297		$	-		$	21,951
% of total pro forma revenue		16.7	%		43.5	%		24.8	%		15.0	%		-%			100.0	%
Pro forma net income (loss)	$	829		$	443		$	(569	)	$	390		$	(167	)	$	926
Pro forma net income attributable to noncontrolling interests	$	6		$	-		$	-		$	-		$	-		$	6
Pro forma net income (loss) attributable to WCR common shareholders	$	823		$	443		$	(569	)	$	390		$	(167	)	$	920
Pro forma earnings (loss) per share attributable to WCR common shareholders – basic and diluted	$	0.087		$	0.047		$	(0.060	)	$	0.041		$	(0.018	)	$	0.097

	Franchise			Cellular Retail			Direct to Consumer			Consumer Finance			Corporate			Total
Nine Months Ended September 30, 2016
Revenue	$	11,452		$	27,152		$	30,699		$	8,830		$	-		$	78,133
% of total revenue		14.6	%		34.8	%		39.3	%		11.3	%		-%			100.0	%
Net income (loss)	$	1,834		$	526		$	1,682		$	964		$	(455	)	$	4,551
Net income attributable to noncontrolling interests	$	15		$	-		$	-		$	-		$	-		$	15
Net income (loss) attributable to WCR common shareholders	$	1,819		$	526		$	1,682		$	964		$	(455	)	$	4,536
Earnings (loss) per share attributable to WCR common shareholders – basic and diluted	$	0.192		$	0.055		$	0.177		$	0.102		$	(0.048	)	$	0.478
Nine Months Ended September 30, 2015
Pro forma revenue	$	9,641		$	29,632		$	30,296		$	9,451		$	-		$	79,020
% of total pro forma revenue		12.2	%		37.5	%		38.3	%		12.0	%		-%			100.0	%
Pro forma net income (loss)	$	1,585		$	967		$	1,365		$	932		$	(408	)	$	4,441
Pro forma net income attributable to noncontrolling interests	$	13		$	-		$	-		$	-		$	-		$	13
Pro forma net income (loss) attributable to WCR common shareholders	$	1,572		$	967		$	1,365		$	932		$	(408	)	$	4,428
Pro forma earnings (loss) per share attributable to WCR common shareholders – basic and diluted	$	0.165		$	0.102		$	0.144		$	0.098		$	(0.043	)	$	0.466

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Segment Information

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Segment Information

12. Segment Information –

Segment information related to the three and nine month periods ended September 30, 2016 and 2015 is presented below:

Three Months Ended September 30, 2016

(in thousands)

	Franchise		Cellular Retail		Direct to Consumer			Consumer Finance		Corporate			Total
Revenue from external customers	$	4,278	$	9,294	$	5,944		$	3,009	$	-		$	22,525
Net income (loss)	$	749	$	73	$	(325	)	$	391	$	(102	)	$	786
Expenditures for segmented assets	$	3	$	241	$	50		$	21	$	-		$	315

Three Months Ended September 30, 2015

(in thousands)

	Franchise		Cellular Retail		Direct to Consumer			Consumer Finance		Corporate			Total
Revenue from external customers	$	3,675	$	9,537	$	5,442		$	3,297	$	-		$	21,951
Net income (loss)	$	829	$	443	$	(569	)	$	390	$	(213	)	$	880
Expenditures for segmented assets	$	-	$	-	$	186		$	29	$	-		$	215

Nine Months Ended September 30, 2016

(in thousands)

	Franchise		Cellular Retail		Direct to Consumer		Consumer Finance		Corporate			Total
Revenue from external customers	$	11,452	$	27,152	$	30,699	$	8,830	$	-		$	78,133
Net income (loss)	$	1,834	$	526	$	1,682	$	964	$	(455	)	$	4,551
Total segment assets	$	10,111	$	16,472	$	14,723	$	15,735	$	413		$	57,454
Expenditures for segmented assets	$	19	$	1,688	$	89	$	39	$	-		$	1,835

Nine Months Ended September 30, 2015

(in thousands)

	Franchise		Cellular Retail		Direct to Consumer			Consumer Finance		Corporate			Total
Revenue from external customers	$	9,641	$	24,655	$	5,442		$	9,451	$	-		$	49,189
Net income (loss)	$	1,585	$	910	$	(569	)	$	932	$	(710	)	$	2,148
Total segment assets	$	9,379	$	12,823	$	13,568		$	16,299	$	544		$	52,613
Expenditures for segmented assets

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

13. Commitments and Contingencies –

Employment Agreements

The Company is party to an Amended and Restated Employment Agreement with its Chief Executive Officer, Mr. John Quandahl. Among other things, this agreement contains provisions for an annual performance-based cash bonus pool for management. The agreement was amended April 1, 2016 to extend the term through March 2019.

Pursuant to the Company’s numerous employment agreements, bonuses of approximately $390,000 and $1,083,000 were accrued for the three and nine month periods ended September 30, 2016, respectively.

Credit Facility

On April 22, 2016, WCR entered into 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 three months ended September 30, 2016.

Cellular Retail Growth Commitment

Effective June 6, 2016, PQH entered into a Cricket Wireless Exclusive Dealer Agreement Amendment for Retail Expansion. Per the agreement, PQH commits to open at least 150 locations by December 31, 2017, including 50 locations by December 31, 2016. Also effective June 6, 2016, Cricket Wireless, LLC has increased certain compensation arrangements in the existing dealer agreement and will provide a subsidy for each location opened during the term of the agreement.

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Subsequent Events

9 Months Ended

Sep. 30, 2016

Subsequent Events [Abstract]

Subsequent Events

14. Subsequent Events –

Wireless Retail Transaction

PQH entered into an Asset Purchase Agreement for the acquisition of 20 Cricket Wireless retail locations for $2,050,000 and an option to purchase an additional 33 locations for an aggregate purchase price of $7,200,000. In addition, if PQH exercised its option, seller has an option to retain a 30% ownership in the 53 store transaction, with a corresponding adjustment to the purchase price. It is anticipated that the transaction will close in November 2016.

Consumer Finance Segment Law Change

On November 8, 2016, South Dakota voters approved a measure effectively banning payday lending in South Dakota. Unless delayed, the effective date of the measure will be November 16, 2016. Revenue generated in South Dakota is approximately 5% of Consumer Finance segment year to date revenue through September 30, 2016.

The Company evaluated all other events or transactions that occurred after September 30, 2016 up through November 14, 2016, the date we issued these financial statements. During this period we did not have any additional material subsequent events that impacted our financial statements.

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Basis of Presentation, Nature of Business and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

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 nine month period ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

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, 2015. The condensed consolidated balance sheet at December 31, 2015, 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

Nature of Business

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

• Franchise

o AlphaGraphics, Inc. (“AGI”) (99.2%) – franchisor of 258 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

o PQH Wireless, Inc. and subsidiaries (“PQH”) (100%) – owns and operates 126 cellular retail stores as an exclusive dealer of the Cricket brand.

• Direct to Consumer

o J & P Park Acquisitions, Inc. (“JPPA”) (100% – Acquired July 1, 2015) – 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.

o Restorers Acquisition, Inc. (“RAI”) (100% – Acquired July 1, 2015) – an online and direct marketing distribution retailer of home improvement and restoration products operating under Van Dyke’s Restorers.

o J & P Real Estate, LLC (“JPRE”) (100% – Acquired July 1, 2015) – owns real estate utilized as JPPA’s distribution and warehouse facility and the corporate offices of JPPA and RAI.

• Consumer Finance

o Wyoming Financial Lenders, Inc. (“WFL”) (100%) – owns and operates 45 “payday” stores in eight states (Colorado, Iowa, Kansas, Nebraska, North Dakota, South 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.

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

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.

Basis of Consolidation

Basis of Consolidation

The consolidated financial statements include the accounts of 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

Use of Estimates

The preparation of condensed 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 condensed 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 customer credits liability and deferred taxes and tax uncertainties.

Reclassifications

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 nine months ended September 30, 2016.

Recent Accounting Pronouncements

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, including subsequent updates, 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 November 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”). The standard requires that deferred tax assets and liabilities be classified as noncurrent on the balance sheet rather than being separated into current and noncurrent. ASU 2015-17 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is permitted and the standard may be applied either retrospectively or on a prospective basis to all deferred tax assets and liabilities. The Company early adopted ASU 2015-17 during our first quarter of fiscal year 2016 on a retrospective basis. Accordingly, we reclassified the current deferred taxes to noncurrent on our December 31, 2015 Condensed Consolidated Balance Sheet, which decreased current deferred tax assets by $0.56 million and decreased noncurrent deferred tax liabilities by $0.56 million.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The standard requires recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted and the standard is to be applied using a modified retrospectively approach. The Company is currently evaluating the impact that ASU 2016-02 will have on our financial condition, results of operations and consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). 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. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years and the standard is to be applied using a modified retrospectively approach. The Company is currently evaluating the impact that ASU 2016-13 will have on our financial condition, results of operations and consolidated financial statements.

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

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Loans Receivable (Tables)

9 Months Ended

Sep. 30, 2016

Receivables [Abstract]

Schedule of outstanding loans receivable aging

At September 30, 2016 and December 31, 2015, the Consumer Finance segment’s outstanding loans receivable aging was as follows:

September 30, 2016
	Payday			Installment			Pawn & Title		Total
Current	$	3,645,540		$	248,820		$	282,212	$	4,176,572
1-30		290,044			46,460			-		336,504
31-60		249,995			23,836			-		273,831
61-90		175,254			15,287			-		190,541
91-120		150,320			10,087			-		160,407
121-150		131,000			3,684			-		134,684
151-180		129,724			1,799			-		131,523
		4,771,877			349,973			282,212		5,404,062
Less Allowance		(920,000	)		(73,000	)		-		(993,000	)
	$	3,851,877		$	276,973		$	282,212	$	4,411,062

December 31, 2015
	Payday			Installment			Pawn & Title		Total
Current	$	4,065,706		$	291,947		$	286,514	$	4,644,167
1-30		332,217			43,179			-		375,396
31-60		263,486			24,233			-		287,719
61-90		199,526			16,293			-		215,819
91-120		196,123			9,417			-		205,540
121-150		160,386			4,985			-		165,371
151-180		165,237			2,189			-		167,426
		5,382,681			392,243			286,514		6,061,438
Less Allowance		(1,081,000	)		(96,000	)		-		(1,177,000	)
	$	4,301,681		$	296,243		$	286,514	$	4,884,438

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Loans Receivable Allowance (Tables)

9 Months Ended

Sep. 30, 2016

Provision for Loan and Lease Losses [Abstract]

Schedule of loans receivable allowance

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

	Nine Months Ended September 30, 2016			Year Ended December 31, 2015
Loans receivable allowance, beginning of period	$	1,177,000		$	1,219,000
Provision for loan losses charged to expense		1,176,174			1,904,893
Charge-offs, net		(1,360,174	)		(1,946,893	)
Loans receivable allowance, end of period	$	993,000		$	1,177,000

XML

Accounts Receivable (Tables)

9 Months Ended

Sep. 30, 2016

Receivables [Abstract]

Schedule of accounts receivables

A breakdown of accounts receivables by segment as of September 30, 2016 and December 31, 2015 are as follows:

September 30, 2016
	Franchise			Cellular Retail		Direct to Consumer			Consumer Finance		Total
Accounts receivable	$	1,624,351		$	172,813	$	619,568		$	10,179	$	2,426,911
Less allowance		(149,000	)		-		(17,000	)		-		(166,000	)
Net account receivable	$	1,475,351		$	172,813	$	602,568			10,179	$	2,260,911

December 31, 2015
	Franchise			Cellular Retail		Direct to Consumer			Consumer Finance		Total
Accounts receivable	$	1,332,446		$	148,346	$	754,400		$	-	$	2,235,192
Less allowance		(183,000	)		-		(89,000	)		-		(272,000	)
Net account receivable	$	1,149,446		$	148,346	$	665,400			-	$	1,963,192

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Deferred Revenue and Other Liabilities (Tables)

9 Months Ended

Sep. 30, 2016

Deferred Revenue Disclosure [Abstract]

Schedule of deferred revenue and other liabilities

Deferred revenue and other liabilities consist of the following:

	September 30, 2016		December 31, 2015
Deferred financing fees	$	265,779	$	285,452
Deferred franchise development and service fees		130,500		264,000
Merchandise credits and gift card liability		694,302		1,127,470
Other		135,561		119,416
Total	$	1,226,142	$	1,796,338

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Notes Payable - Long Term (Tables)

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Schedule of long-term debt instruments

	September 30, 2016			December 31, 2015
Note payable (with a credit limit of $3,000,000) to River City Equity, Inc., a related party, with interest payable monthly at 12% due June 30, 2016 and upon certain events can be collateralized by substantially all assets of WCR, excluding any equity interest in AGI (terminated May 2016)	$			$	3,000,000
Note payable to a financial institution with monthly principal payment of $58,333 plus interest at LIBOR plus 3.5% (4.125% at September 30, 2016), secured by substantially all assets of the Company with stated guarantee amounts by subsidiaries, maturing April 21, 2021		3,266,667			-
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% (4.125% at September 30, 2016), secured by substantially all assets of the Company with stated guarantee amounts by subsidiaries, maturing April 21, 2018		1,538,708			-
Subsidiary note payable to a financial institution with quarterly principal payments of $375,000 plus interest at prime rate plus 2.5%, secured by the AGI’s assets, maturing March 2017 (terminated May 2016)		-			1,625,000
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% (4.125% at September 30, 2016), secured by JPRE assets, maturing June 5, 2019 when remaining principal balance is due		3,071,454			3,371,460
Total		7,876,829			7,996,460
Less current maturities		(1,100,000	)		(4,900,008	)
	$	6,776,829		$	3,096,452

Schedule of future minimum long-term principal payments

Future minimum long-term principal payments are as follows:

Year	Amount
1	$	1,100,000
2		2,638,716
3		2,971,446
4		700,000
5		466,667
Thereafter		-
	$	7,876,829

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Cash Dividend (Tables)

9 Months Ended

Sep. 30, 2016

Dividends, Common Stock [Abstract]

Schedule of cash dividend

Date declared		May 24, 2016		August 11, 2016
Record date		June 6, 2016		September 14, 2016
Date paid		June 15, 2016		September 21, 2016
Dividend per share of common stock	$	0.025	$	0.025

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Other Operating Expense (Tables)

9 Months Ended

Sep. 30, 2016

Other Income and Expenses [Abstract]

Schedule of other expense

A breakout of other expense is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Bank fees	$	337,939	$	310,419	$	1,273,057	$	595,164
Collection costs		85,306		99,587		311,457		319,890
Conference expense		468,124		460,602		762,680		671,287
Insurance		184,106		110,788		528,995		286,783
Management and advisory fees		195,425		125,754		619,954		400,057
Professional and consulting fees		488,978		483,575		1,531,923		1,401,683
Supplies		231,995		167,480		591,919		496,116
Other		803,453		522,604		2,429,596		1,583,539
	$	2,795,326	$	2,280,809	$	8,049,581	$	5,754,519

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Pro Forma Information (Tables)

9 Months Ended

Sep. 30, 2016

Business Combinations [Abstract]

Schedule of business acquisition, pro forma

The pro forma results of operations are prepared for comparative purposes only and do not necessarily reflect the results that would have occurred had the acquisition occurred at the beginning of the 2015 or the results which may occur in the future.

	Franchise			Cellular Retail			Direct to Consumer			Consumer Finance			Corporate			Total
Three Months Ended September 30, 2016
Revenue	$	4,278		$	9,294		$	5,944		$	3,009		$	-		$	22,525
% of total revenue		19.0	%		41.2	%		26.4	%		13.4	%		-%			100.0	%
Net income (loss)	$	749		$	73		$	(325	)	$	391		$	(102	)	$	786
Net income attributable to noncontrolling interests	$	6		$	-		$	-		$	-		$	-		$	6
Net income (loss) attributable to WCR common shareholders	$	743		$	73		$	(325	)	$	391		$	(102	)	$	780
Earnings (loss) per share attributable to WCR common shareholders – basic and diluted	$	0.078		$	0.008		$	(0.034	)	$	0.041		$	(0.011	)	$	0.082
Three Months Ended September 30, 2015
Pro forma revenue	$	3,675		$	9,537		$	5,442		$	3,297		$	-		$	21,951
% of total pro forma revenue		16.7	%		43.5	%		24.8	%		15.0	%		-%			100.0	%
Pro forma net income (loss)	$	829		$	443		$	(569	)	$	390		$	(167	)	$	926
Pro forma net income attributable to noncontrolling interests	$	6		$	-		$	-		$	-		$	-		$	6
Pro forma net income (loss) attributable to WCR common shareholders	$	823		$	443		$	(569	)	$	390		$	(167	)	$	920
Pro forma earnings (loss) per share attributable to WCR common shareholders – basic and diluted	$	0.087		$	0.047		$	(0.060	)	$	0.041		$	(0.018	)	$	0.097

	Franchise			Cellular Retail			Direct to Consumer			Consumer Finance			Corporate			Total
Nine Months Ended September 30, 2016
Revenue	$	11,452		$	27,152		$	30,699		$	8,830		$	-		$	78,133
% of total revenue		14.6	%		34.8	%		39.3	%		11.3	%		-%			100.0	%
Net income (loss)	$	1,834		$	526		$	1,682		$	964		$	(455	)	$	4,551
Net income attributable to noncontrolling interests	$	15		$	-		$	-		$	-		$	-		$	15
Net income (loss) attributable to WCR common shareholders	$	1,819		$	526		$	1,682		$	964		$	(455	)	$	4,536
Earnings (loss) per share attributable to WCR common shareholders – basic and diluted	$	0.192		$	0.055		$	0.177		$	0.102		$	(0.048	)	$	0.478
Nine Months Ended September 30, 2015
Pro forma revenue	$	9,641		$	29,632		$	30,296		$	9,451		$	-		$	79,020
% of total pro forma revenue		12.2	%		37.5	%		38.3	%		12.0	%		-%			100.0	%
Pro forma net income (loss)	$	1,585		$	967		$	1,365		$	932		$	(408	)	$	4,441
Pro forma net income attributable to noncontrolling interests	$	13		$	-		$	-		$	-		$	-		$	13
Pro forma net income (loss) attributable to WCR common shareholders	$	1,572		$	967		$	1,365		$	932		$	(408	)	$	4,428
Pro forma earnings (loss) per share attributable to WCR common shareholders – basic and diluted	$	0.165		$	0.102		$	0.144		$	0.098		$	(0.043	)	$	0.466

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Schedule of segment information

Segment information related to the three and nine month periods ended September 30, 2016 and 2015 is presented below:

Three Months Ended September 30, 2016

(in thousands)

	Franchise		Cellular Retail		Direct to Consumer			Consumer Finance		Corporate			Total
Revenue from external customers	$	4,278	$	9,294	$	5,944		$	3,009	$	-		$	22,525
Net income (loss)	$	749	$	73	$	(325	)	$	391	$	(102	)	$	786
Expenditures for segmented assets	$	3	$	241	$	50		$	21	$	-		$	315

Three Months Ended September 30, 2015

(in thousands)

	Franchise		Cellular Retail		Direct to Consumer			Consumer Finance		Corporate			Total
Revenue from external customers	$	3,675	$	9,537	$	5,442		$	3,297	$	-		$	21,951
Net income (loss)	$	829	$	443	$	(569	)	$	390	$	(213	)	$	880
Expenditures for segmented assets	$	-	$	-	$	186		$	29	$	-		$	215

Nine Months Ended September 30, 2016

(in thousands)

	Franchise		Cellular Retail		Direct to Consumer		Consumer Finance		Corporate			Total
Revenue from external customers	$	11,452	$	27,152	$	30,699	$	8,830	$	-		$	78,133
Net income (loss)	$	1,834	$	526	$	1,682	$	964	$	(455	)	$	4,551
Total segment assets	$	10,111	$	16,472	$	14,723	$	15,735	$	413		$	57,454
Expenditures for segmented assets	$	19	$	1,688	$	89	$	39	$	-		$	1,835

Nine Months Ended September 30, 2015

(in thousands)

	Franchise		Cellular Retail		Direct to Consumer			Consumer Finance		Corporate			Total
Revenue from external customers	$	9,641	$	24,655	$	5,442		$	9,451	$	-		$	49,189
Net income (loss)	$	1,585	$	910	$	(569	)	$	932	$	(710	)	$	2,148
Total segment assets	$	9,379	$	12,823	$	13,568		$	16,299	$	544		$	52,613
Expenditures for segmented assets	$	91	$	3,656	$	186		$	45	$	14		$	3,992

XML

Basis of Presentation, Nature of Business and Summary of Significant Accounting Policies (Details Narrative)	9 Months Ended
	Sep. 30, 2016 USD ($) Number
Accounting Standards Update 2015-17 [Member]
Decrease in current deferred tax assets | $	$ 560,000
Decrease in noncurrent deferred tax liabilities | $	$ 560,000
JPPA [Member] | Direct to Consumer [Member]
Percentage of equity method investment	100.00%
Business acquisition, effective date of acquisition	Jul. 01, 2015
RAI [Member] | Direct to Consumer [Member]
Percentage of equity method investment	100.00%
Business acquisition, effective date of acquisition	Jul. 01, 2015
JPRE [Member] | Direct to Consumer [Member]
Percentage of equity method investment	100.00%
Business acquisition, effective date of acquisition	Jul. 01, 2015
Alpha Graphics, Inc. [Member] | Franchising [Member]
Number of domestic business centers | Number	258
Number of international business centers | Number	25
Percentage of equity method investment	99.20%
PQH Wireless, Inc. [Member] | Cellular Retail [Member]
Number of stores | Number	126
Percentage of equity method investment	100.00%
Wyoming Financial Lenders, Inc. [Member] | Consumer Finance [Member]
Number of stores | Number	45
Percentage of equity method investment	100.00%
Number of states in which entity operates | Number	8
Wyoming Financial Lenders, Inc. [Member] | Payday [Member] | Minimum [Member] | Consumer Finance [Member]
Non-recourse debt | $	$ 100
Wyoming Financial Lenders, Inc. [Member] | Payday [Member] | Maximum [Member] | Consumer Finance [Member]
Non-recourse debt | $	500
Wyoming Financial Lenders, Inc. [Member] | Installment [Member] | Minimum [Member] | Consumer Finance [Member]
Non-recourse debt | $	300
Wyoming Financial Lenders, Inc. [Member] | Installment [Member] | Maximum [Member] | Consumer Finance [Member]
Non-recourse debt | $	$ 800
Express Pawn, Inc. [Member] | Consumer Finance [Member]
Number of stores | Number	3
Percentage of equity method investment	100.00%

XML

Loans Receivable (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current	$ 5,404,062	$ 6,061,438
Less Allowance	(993,000)	(1,177,000)
Notes, Loans and Financing Receivable, Net, current	4,411,062	4,884,438
151 To 180 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current	131,523	167,426
91 To 120 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current	160,407	205,540
Current [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current	4,176,572	4,644,167
1 To 30 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current	336,504	375,396
31 to 60 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current	273,831	287,719
61 To 90 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current	190,541	215,819
121 To 150 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current	134,684	165,371
Payday and Title Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current	4,771,877	5,382,681
Less Allowance	(920,000)	(1,081,000)
Notes, Loans and Financing Receivable, Net, current	3,851,877	4,301,681
Payday and Title Loans [Member] | 151 To 180 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current	129,724	165,237
Payday and Title Loans [Member] | 91 To 120 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current	150,320	196,123
Payday and Title Loans [Member] | Current [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current	3,645,540	4,065,706
Payday and Title Loans [Member] | 1 To 30 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current	290,044	332,217
Payday and Title Loans [Member] | 31 to 60 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current	249,995	263,486
Payday and Title Loans [Member] | 61 To 90 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current	175,254	199,526
Payday and Title Loans [Member] | 121 To 150 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current	131,000	160,386
Installment Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current	349,973	392,243
Less Allowance	(73,000)	(96,000)
Notes, Loans and Financing Receivable, Net, current	276,973	296,243
Installment Loans [Member] | 151 To 180 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current	1,799	2,189
Installment Loans [Member] | 91 To 120 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current	10,087	9,417
Installment Loans [Member] | Current [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current	248,820	291,947
Installment Loans [Member] | 1 To 30 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current	46,460	43,179
Installment Loans [Member] | 31 to 60 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current	23,836	24,233
Installment Loans [Member] | 61 To 90 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current	15,287	16,293
Installment Loans [Member] | 121 To 150 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current	3,684	4,985
Pawn Title [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current	282,212	286,514
Less Allowance
Notes, Loans and Financing Receivable, Net, current	282,212	286,514
Pawn Title [Member] | 151 To 180 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current
Pawn Title [Member] | 91 To 120 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current
Pawn Title [Member] | Current [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current	282,212	286,514
Pawn Title [Member] | 1 To 30 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current
Pawn Title [Member] | 31 to 60 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current
Pawn Title [Member] | 61 To 90 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current
Pawn Title [Member] | 121 To 150 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes, Loans and Financing Receivable, Gross, Current

XML

Loans Receivable Allowance (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Allowance for Loan and Lease Losses [Roll Forward]
Loans receivable allowance, beginning of period	$ 1,177,000	$ 1,219,000
Provision for loan losses charged to expense	1,176,174	1,904,893
Charge-offs, net	(1,360,174)	(1,946,893)
Loans receivable allowance, end of period	$ 993,000	$ 1,177,000

XML

Loans Receivable Allowance (Details Narrative)	Sep. 30, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of historical written off	43.00%
1 To 30 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of historical written off	43.00%
31 to 60 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of historical written off	65.00%
61 To 90 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of historical written off	83.00%
91 To 120 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of historical written off	89.00%
121 To 150 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of historical written off	91.00%
151 To 180 Days [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of historical written off	93.00%

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Accounts Receivable (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Accounts receivable	$ 2,426,911	$ 2,235,192
Less allowance	(166,000)	(272,000)
Net account receivable	2,260,911	1,963,192
Direct to Consumer [Member]
Accounts receivable	619,568	754,400
Less allowance	(17,000)	(89,000)
Net account receivable	602,568	665,400
Franchise [Member]
Accounts receivable	1,624,351	1,332,446
Less allowance	(149,000)	(183,000)
Net account receivable	1,475,351	1,149,446
Cellular Retail [Member]
Accounts receivable	172,813	148,346
Less allowance
Net account receivable	172,813	148,346
Consumer Finance [Member]
Accounts receivable	10,179
Less allowance
Net account receivable	$ 10,179

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Deferred Revenue and Other Liabilities (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Deferred Revenue Disclosure [Abstract]
Deferred financing fees	$ 265,779	$ 285,452
Deferred franchise development and service fees	130,500	264,000
Merchandise credits and gift card liability	694,302	1,127,470
Other	135,561	119,416
Total	$ 1,226,142	$ 1,796,338

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Notes Payable - Long Term (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Total	$ 7,876,829	$ 7,996,460
Less current maturities	(1,100,000)	(4,900,008)
Notes payable, noncurrent	6,776,829	3,096,452
Note Payable To Financial Institution [Member]
Debt Instrument [Line Items]
Total		1,625,000
Note Payable To River City Equity, Inc. [Member]
Debt Instrument [Line Items]
Total		3,000,000
Note Payable To Financial Institution Four [Member]
Debt Instrument [Line Items]
Total	3,266,667
Revolving Credit Facility To Financial Institution [Member]
Debt Instrument [Line Items]
Total	1,538,708
Note Payable To Financial Institution Two [Member]
Debt Instrument [Line Items]
Total	$ 3,071,454	$ 3,371,460

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Notes Payable - Long Term (Details 1) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Debt Disclosure [Abstract]
Year 1	$ 1,100,000
Year 2	2,638,716
Year 3	2,971,446
Year 4	700,000
Year 5	466,667
Thereafter
Long-term debt	$ 7,876,829	$ 7,996,460

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Notes Payable - Long Term (Details Narrative) - USD ($)

9 Months Ended

Apr. 22, 2016

Sep. 30, 2016

Long Term Note Payable General [Member]

Debt Instrument [Line Items]

Maturity date

Apr. 21, 2018

Maximum borrowing capacity

$ 9,000,000

Credit available capacity

$ 7,195,000

Description of variable rate

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.

Equity debt

3,000,000

Other term debt

500,000

Total repacement acquisition loan

$ 3,500,000

Revolving Credit Facility To Financial Institution [Member]

Debt Instrument [Line Items]

Maturity date

Apr. 21, 2018

Maximum borrowing capacity

$ 3,000,000

Description of variable rate

LIBOR plus 3.5% (4.125% at September 30, 2016)

Note Payable To Financial Institution Two [Member]

Debt Instrument [Line Items]

Maturity date

Jun. 05, 2019

Principal periodic payment

$ 33,334

Description of variable rate

LIBOR plus 3.5% (4% at June 30, 2016)

Note Payable To Financial Institution Four [Member]

Debt Instrument [Line Items]

Maturity date

Apr. 21, 2021

Principal periodic payment

$ 58,333

Description of variable rate

LIBOR plus 3.5% (4.125% at September 30, 2016)

Note Payable To Financial Institution [Member]

Debt Instrument [Line Items]

Termination date

2016-05

Principal periodic payment

$ 375,000

Description of maturity date

March 2017

Description of variable rate

Prime rate plus 2.5%

Note Payable To River City Equity, Inc. [Member]

Debt Instrument [Line Items]

Maturity date

Jun. 30, 2016

Termination date

2016-05

Stated interest rate

12.00%

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Cash Dividends (Details)	9 Months Ended
	Sep. 30, 2016 $ / shares
Dividends One [Member]
Date declared	Aug. 11, 2016
Record date	Sep. 14, 2016
Date paid	Sep. 21, 2016
Dividend per share of common stock (in dollars per share)	$ 0.025
Dividends [Member]
Date declared	May 24, 2016
Record date	Jun. 06, 2016
Date paid	Jun. 15, 2016
Dividend per share of common stock (in dollars per share)	$ 0.025

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Other Operating Expense (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Other Income and Expenses [Abstract]
Bank fees	$ 337,939	$ 310,419	$ 1,273,057	$ 595,164
Collection costs	85,306	99,587	311,457	319,890
Conference expense	468,124	460,602	762,680	671,287
Insurance	184,106	110,788	528,995	286,783
Management and advisory fees	195,425	125,754	619,954	400,057
Professional and consulting fees	488,978	483,575	1,531,923	1,401,683
Supplies	231,995	167,480	591,919	496,116
Other	803,453	522,604	2,429,596	1,583,539
Total other expenses	$ 2,795,326	$ 2,280,809	$ 8,049,581	$ 5,754,519

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Pro Forma Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Revenue	$ 22,525	$ 21,951	$ 78,133	$ 79,020
% of total revenue	100.00%	100.00%	100.00%	100.00%
Net income (loss)	$ 786	$ 926	$ 4,551	$ 4,441
Net income attributable to noncontrolling interests	6	6	15	13
Net income (loss) attributable to WCR common shareholders	$ 780	$ 920	$ 4,536	$ 4,428
Earnings (loss) per share attributable to WCR common shareholders - basic and diluted	$ 0.082	$ 0.097	$ 0.478	$ 0.466
Consumer Finance [Member]
Revenue	$ 3,009	$ 3,297	$ 8,830	$ 9,451
% of total revenue	13.40%	15.00%	11.30%	12.00%
Net income (loss)	$ 391	$ 390	$ 964	$ 932
Net income attributable to noncontrolling interests
Net income (loss) attributable to WCR common shareholders	$ 391	$ 390	$ 964	$ 932
Earnings (loss) per share attributable to WCR common shareholders - basic and diluted	$ 0.041	$ 0.041	$ 0.102	$ 0.098
Direct to Consumer [Member]
Revenue	$ 5,944	$ 5,442	$ 30,699	$ 30,296
% of total revenue	26.40%	24.80%	39.30%	38.30%
Net income (loss)	$ (325)	$ (569)	$ 1,682	$ 1,365
Net income attributable to noncontrolling interests
Net income (loss) attributable to WCR common shareholders	$ (325)	$ (569)	$ 1,682	$ 1,365
Earnings (loss) per share attributable to WCR common shareholders - basic and diluted	$ (0.034)	$ (0.060)	$ 0.177	$ 0.144
Franchise [Member]
Revenue	$ 4,278	$ 3,675	$ 11,452	$ 9,641
% of total revenue	19.00%	16.70%	14.60%	12.20%
Net income (loss)	$ 749	$ 829	$ 1,834	$ 1,585
Net income attributable to noncontrolling interests	6	6	15	13
Net income (loss) attributable to WCR common shareholders	$ 743	$ 823	$ 1,819	$ 1,572
Earnings (loss) per share attributable to WCR common shareholders - basic and diluted	$ 0.078	$ 0.087	$ 0.192	$ 0.165
Cellular Retail [Member]
Revenue	$ 9,294	$ 9,537	$ 27,152	$ 29,632
% of total revenue	41.20%	43.50%	34.80%	37.50%
Net income (loss)	$ 73	$ 443	$ 526	$ 967
Net income attributable to noncontrolling interests
Net income (loss) attributable to WCR common shareholders	$ 73	$ 443	$ 526	$ 967
Earnings (loss) per share attributable to WCR common shareholders - basic and diluted	$ 0.008	$ 0.047	$ 0.055	$ 0.102
Corporate [Member]
Revenue
% of total revenue
Net income (loss)	$ (102)	$ (167)	$ (455)	$ (408)
Net income attributable to noncontrolling interests
Net income (loss) attributable to WCR common shareholders	$ (102)	$ (167)	$ (455)	$ (408)
Earnings (loss) per share attributable to WCR common shareholders - basic and diluted	$ (0.011)	$ (0.018)	$ (0.048)	$ (0.043)

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Pro Forma Information (Details Narrative)	Jun. 01, 2015
JPPA, RAI And JPRE Transaction [Member] | Common Stock [Member]
Percentage of voting rights issued as percent of post acquisition voting rights	100.00%

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Segment Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2016	Dec. 31, 2015
Segment Reporting Information [Line Items]
Revenue from external customers	$ 22,525,467	$ 21,951,468	$ 78,133,179	$ 49,189,252
Net income (loss)	786,357	880,101	4,551,005	2,147,944
Total segment assets	57,454,002	52,613,000	57,454,002	52,613,000	$ 57,454,000	$ 55,622,333
Expenditures for segmented assets	315,000	215,000	1,835,000	3,992,000
Direct to Consumer [Member]
Segment Reporting Information [Line Items]
Revenue from external customers	5,944,000	5,442,000	30,699,000	5,442,000
Net income (loss)	(325,000)	(569,000)	1,682,000	(569,000)
Total segment assets	14,723,000	13,568,000	14,723,000	13,568,000
Expenditures for segmented assets	50,000	186,000	89,000	186,000
Franchise [Member]
Segment Reporting Information [Line Items]
Revenue from external customers	4,278,000	3,675,000	11,452,000	9,641,000
Net income (loss)	749,000	829,000	1,834,000	1,585,000
Total segment assets	10,111,000	9,379,000	10,111,000	9,379,000
Expenditures for segmented assets	3,000		19,000	91,000
Cellular Retail [Member]
Segment Reporting Information [Line Items]
Revenue from external customers	9,294,000	9,537,000	27,152,000	24,655,000
Net income (loss)	73,000	443,000	526,000	910,000
Total segment assets	16,472,000	12,823,000	16,472,000	12,823,000
Expenditures for segmented assets	241,000		1,688,000	3,656,000
Consumer Finance [Member]
Segment Reporting Information [Line Items]
Revenue from external customers	3,009,000	3,297,000	8,830,000	9,451,000
Net income (loss)	391,000	390,000	964,000	932,000
Total segment assets	15,735,000	16,299,000	15,735,000	16,299,000
Expenditures for segmented assets	21,000	29,000	39,000	45,000
Corporate [Member]
Segment Reporting Information [Line Items]
Revenue from external customers
Net income (loss)	(102,000)	(213,000)	(455,000)	(710,000)
Total segment assets	413,000	544,000	413,000	544,000
Expenditures for segmented assets				$ 14,000

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Commitments and Contingencies (Details Narrative) - USD ($)

3 Months Ended

9 Months Ended

Jun. 06, 2016

Apr. 22, 2016

Sep. 30, 2016

Sep. 30, 2016

Employment Agreement [Member]

Amount of bonus

$ 390,000

$ 1,083,000

Mr. John Quandahl [Member] | Employment Agreement [Member]

Extend the term of the agreement

2019-03

Revolving Credit Facility [Member] | Credit Agreement [Member]

Description of debt instrument collateral

All borrowings under the Credit Agreement are secured by substantially all assets of WCR and the guarantor subsidiaries.

Description of debt instrument covenant

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.

PQH Wireless, Inc. [Member] | Cellular Retail Growth Commitment [Member]

Description of retail business expansion

Open at least 150 locations by December 31, 2017, including 50 locations by December 31, 2016.

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Subsequent Events (Details Narrative) - Subsequent Event [Member] - Asset Purchase Agreement [Member] - Wireless Retail Transaction [Member]	1 Months Ended
	Nov. 30, 2016 USD ($) Number
Number of location store acquired	20
Purchase price | $	$ 2,050,000
Number of additional location store acquired	33
Additional location store acquired purchase price | $	$ 7,200,000
Percentage of ownership retain	30.00%
Total number of location store acquired	53