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 March 31, 2009 or




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)





Minnesota
              
              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.




þ o




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).
  Yes o    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 
      oNon-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 May
13, 2009, the registrant had outstanding 7,996,007 shares of common stock, no
par value per share.





Western
Capital Resources, Inc.




Index





PagePART
      I. FINANCIAL INFORMATIONItem
      1. Financial Statements
                    
                    3Item
      2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operations
                    
                    12Item
      3. Quantitative and Qualitative Disclosures About Market
    Risk
                    
                    17Item
      4T. Controls and Procedures
                    
                    17PART
      II. OTHER INFORMATIONItem
      1. Legal Proceedings
                    
                    18Item
      1A. Risk Factors
                    
                    18Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
                    
                    18Item
      3. Defaults Upon Senior Securities
                    
                    18Item
      4. Submission of Matters to a Vote of Security Holders
                    
                    18Item
      5. Other Information
                    
                    18Item
      6. Exhibits
                    
                    19SIGNATURES
                    
                    19


1


PART
I. FINANCIAL INFORMATION




Item 1. Financial
Statements




WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES





CONTENTS





PageCONDENSED
      CONSOLIDATED FINANCIAL STATEMENTSCondensed
      Consolidated Balance Sheets
                    
                    3Condensed
      Consolidated Statements of Operations
                    
                    4Condensed
      Consolidated Statements of Cash Flows
                    
                    5Notes
      to Condensed Consolidated Financial Statements
                    
                    6


2


WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS





March 31, 2009
                                  (Unaudited)
                                
                                
                                December 31, 2008ASSETSCURRENT
      ASSETSCash
                                
                                $
                                1,839,959
                                
                                
                                $
                                3,358,547Loans
      receivable (less allowance for losses of $1,206,000 and
      $1,413,000)
                                
                                
                                3,875,401
                                
                                
                                
                                4,889,940Inventory
                                
                                
                                392,023
                                
                                
                                
                                198,430Prepaid
      expenses and other
                                
                                
                                618,383
                                
                                
                                
                                247,318Deferred
      income taxes
                                
                                
                                480,000
                                
                                
                                
                                558,000TOTAL
      CURRENT ASSETS
                                
                                
                                7,205,766
                                
                                
                                
                                9,252,235PROPERTY
      AND EQUIPMENT
                                
                                
                                1,078,597
                                
                                
                                
                                815,980GOODWILL
                                
                                
                                11,458,744
                                
                                
                                
                                10,253,744INTANGIBLE
      ASSETS
                                
                                
                                1,412,783
                                
                                
                                
                                756,849OTHER
                                
                                
                                83,295
                                
                                
                                
                                133,831TOTAL
      ASSETS
                                
                                $
                                21,239,185
                                
                                
                                $
                                21,212,639LIABILITIES
      AND  SHAREHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts
      payable and accrued liabilities
                                
                                $
                                1,271,687
                                
                                
                                $
                                998,653Note
      payable – short-term
                                
                                
                                2,000,000
                                
                                
                                
                                2,100,000Deferred
      revenue
                                
                                
                                240,867
                                
                                
                                
                                319,543TOTAL
      CURRENT LIABILITIES
                                
                                
                                3,512,554
                                
                                
                                
                                3,418,196LONG-TERM
      LIABILITIESNotes
      payable – long-term
                                
                                
                                2,474,883
                                
                                
                                
                                2,500,000Deferred
      income taxes
                                
                                
                                93,000
                                
                                
                                
                                64,000TOTAL
      LONG-TERM LIABILITIES
                                
                                
                                2,567,883
                                
                                
                                
                                2,564,000TOTAL
      LIABILITES
                                
                                
                                6,080,437
                                
                                
                                
                                5,982,196SHAREHOLDERS'
      EQUITYSeries
      A convertible preferred stock 10% cumulative dividends, $0.01 par value,
      $2.10 stated value, 10,000,000 shares authorized, issued and
      outstanding
                                
                                
                                100,000
                                
                                
                                
                                100,000Common
      stock, no par value, 240,000,000 shares authorized, 7,996,007 and
      7,598,354 shares issued and outstanding
                                
                                
                                -
                                
                                
                                
                                -Additional
      paid-in capital
                                
                                
                                18,478,337
                                
                                
                                
                                18,478,337Retained
      deficit
                                
                                
                                (3,419,589
                                )
                                
                                
                                (3,347,894
                                )TOTAL
      SHAREHOLDERS’ EQUITY
                                
                                
                                15,158,748
                                
                                
                                
                                15,230,443TOTAL
      LIABILITIES AND SHAREHOLDERS' EQUITY
                                
                                $
                                21,239,185
                                
                                
                                $
                                21,212,639





See
notes to condensed consolidated financial statements.


3


WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)





Three months ended
                                                
                                                
                                                Three months endedMarch 31, 2009
                                                
                                                
                                                March 31, 2008REVENUESPayday
      loan fees
                                                
                                                $
                                                2,517,810
                                                
                                                
                                                $
                                                2,203,980Phones
      and accessories
                                                
                                                
                                                1,664,180
                                                
                                                
                                                
                                                168,351Check
      cashing fees
                                                
                                                
                                                267,299
                                                
                                                
                                                
                                                346,091Other
      income and fees
                                                
                                                
                                                317,998
                                                
                                                
                                                
                                                61,9694,767,287
                                                
                                                
                                                
                                                2,780,391STORE
      EXPENSESSalaries
      and benefits
                                                
                                                
                                                1,220,032
                                                
                                                
                                                
                                                734,689Provision
      for loan losses
                                                
                                                
                                                329,469
                                                
                                                
                                                
                                                341,270Phones
      and accessories cost of sales
                                                
                                                
                                                802,229
                                                
                                                
                                                
                                                106,876Occupancy
                                                
                                                
                                                337,517
                                                
                                                
                                                
                                                193,054Advertising
                                                
                                                
                                                150,713
                                                
                                                
                                                
                                                85,526Depreciation
                                                
                                                
                                                57,589
                                                
                                                
                                                
                                                26,955Amortization
      of intangible assets
                                                
                                                
                                                177,066
                                                
                                                
                                                
                                                101,724Other
                                                
                                                
                                                531,868
                                                
                                                
                                                
                                                332,4653,606,483
                                                
                                                
                                                
                                                1,922,559INCOME
      FROM STORES
                                                
                                                
                                                1,160,804
                                                
                                                
                                                
                                                857,832GENERAL
      & ADMINISTRATIVE EXPENSESSalaries
      and benefits
                                                
                                                
                                                344,754
                                                
                                                
                                                
                                                300,291Depreciation
                                                
                                                
                                                4,786
                                                
                                                
                                                
                                                9,796Interest
      expense
                                                
                                                
                                                81,796
                                                
                                                
                                                
                                                -Other
                                                
                                                
                                                351,163
                                                
                                                
                                                
                                                670,616782,499
                                                
                                                
                                                
                                                980,703INCOME
      (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
                                                
                                                
                                                378,305
                                                
                                                
                                                
                                                (122,871
                                                )INCOME
      TAX EXPENSE (BENEFIT)
                                                
                                                
                                                150,000
                                                
                                                
                                                
                                                (30,100
                                                )NET
      INCOME (LOSS) BEFORE DISCONTINUED OPERATIONS
                                                
                                                
                                                228,305
                                                
                                                
                                                
                                                (92,771
                                                )DISCONTINUED
      OPERATIONS
                                                  Loss
      from discontinued operations, net of $1,600 income tax benefit in
      2008
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (2,658
                                                )NET
      INCOME (LOSS)
                                                
                                                
                                                228,305
                                                
                                                
                                                
                                                (95,429
                                                )SERIES
      A CONVERTIBLE PREFERRED STOCK DIVIDENDS (assumes all paid including for
      2009)
                                                
                                                
                                                (525,000
                                                )
                                                
                                                
                                                (525,000
                                                )NET
      LOSS AVAILABLE TO COMMON SHAREHOLDERS
                                                
                                                $
                                                (296,695
                                                )
                                                
                                                $
                                                (620,429
                                                )NET
      LOSS PER COMMON SHARE-BASIC AND DILUTEDContinuing
      operations
                                                
                                                $
                                                (0.04
                                                )
                                                
                                                $
                                                (0.08
                                                )Discontinued
      operations
                                                
                                                
                                                0.00
                                                
                                                
                                                
                                                0.00Net
      loss per common share
                                                
                                                $
                                                (0.04
                                                )
                                                
                                                $
                                                (0.08
                                                )WEIGHTED
      AVERAGE COMMON SHARE OUTSTANDING -Basic
      and diluted
                                                
                                                
                                                7,779,507
                                                
                                                
                                                
                                                8,150,208





See
notes to condensed consolidated financial statements.


4





WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited)





Three Months Ended
                                        March 31, 2009
                                      
                                      
                                      Three Months Ended
                                        March 31, 2008OPERATING
      ACTIVITIESNet
      income (loss)
                                      
                                      $
                                      228,305
                                      
                                      
                                      $
                                      (95,429
                                      )Adjustments
      to reconcile net income (loss) to net cash provided (used) by
      operating activities:Depreciation
                                      
                                      
                                      62,374
                                      
                                      
                                      
                                      42,409Amortization
                                      
                                      
                                      177,066
                                      
                                      
                                      
                                      116,778Deferred
      income taxes
                                      
                                      
                                      107,000
                                      
                                      
                                      
                                      236,000Changes
      in operating assets and liabilitiesLoans
      receivable
                                      
                                      
                                      1,014,539
                                      
                                      
                                      
                                      721,390Inventory
                                      
                                      
                                      (193,593
                                      )
                                      
                                      
                                      -Prepaid
      expenses and other assets
                                      
                                      
                                      (320,529
                                      )
                                      
                                      
                                      (192,907
                                      )Accounts
      payable and accrued liabilities
                                      
                                      
                                      273,034
                                      
                                      
                                      
                                      (1,856,236
                                      )Deferred
      revenue
                                      
                                      
                                      (78,676
                                      )
                                      
                                      
                                      (11,838
                                      )Net
      cash provided (used) by operating activities
                                      
                                      
                                      1,269,520
                                      
                                      
                                      
                                      (1,039,833
                                      )INVESTING
      ACTIVITIESPurchases
      of property and equipment
                                      
                                      
                                      (184,991
                                      )
                                      
                                      
                                      (42,060
                                      )Acquisition
      of stores, net of cash acquired
                                      
                                      
                                      (2,178,000
                                      )
                                      
                                      
                                      (351,900
                                      )Net
      cash used by investing activities
                                      
                                      
                                      (2,362,991
                                      )
                                      
                                      
                                      (393,960
                                      )FINANCING
      ACTIVITIESPayments
      on note payable - short-term
                                      
                                      
                                      (100,000
                                      )
                                      
                                      
                                      -Payments
      on notes payable - long-term
                                      
                                      
                                      (25,117
                                      )
                                      
                                      
                                      -Collections
      on subscription receivable
                                      
                                      
                                      -
                                      
                                      
                                      
                                      4,437,050Dividends
                                      
                                      
                                      (300,000
                                      )
                                      
                                      
                                      -Net
      cash provided (used) by financing activities
                                      
                                      
                                      (425,117
                                      )
                                      
                                      
                                      4,437,050NET
      INCREASE (DECREASE) IN CASH
                                      
                                      
                                      (1,518,588
                                      )
                                      
                                      
                                      3,003,257CASHBeginning
      of period
                                      
                                      
                                      3,358,547
                                      
                                      
                                      
                                      984,625End
      of period
                                      
                                      
                                      1,839,959
                                      
                                      
                                      
                                      3,987,882Less:
      Cash of discontinued operations
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (151,909
                                      )End
      of period, continuing operations
                                      
                                      $
                                      1,839,959
                                      
                                      
                                      $
                                      3,835,973SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATIONIncome
      taxes paid
                                      
                                      $
                                      125,000
                                      
                                      
                                      $
                                      -Interest
      paid
                                      
                                      
                                      79,085
                                      
                                      
                                      
                                      -Noncash
      investing and financing activities:Dividend
      accrued
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      525,000Stock
      issued for store acquisition
                                      
                                      
                                      -
                                      
                                      
                                      
                                      1,337,869400,000
      warrants exercised and 2,347 shares redeemed for a cashless
      exercise
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -





See
notes to condensed consolidated financial statements.


5


WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES




NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





1.
            Nature of Business and Summary of
      Significant Accounting
Policies –





Basis of
Presentation




The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with United States of America generally accepted
accounting principles (GAAP) for interim financial information and with the
instructions to Form 10-Q and Section 210.8-03(b) of Regulation S-X.
Accordingly, the condensed consolidated financial statements do not include all
of the information and footnotes required for complete financial
statements.




In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three month period ended March 31, 2009 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2009. For further information, refer to the Consolidated Financial Statements
and footnotes thereto included in our Form 10-K as of and for the year ended
December 31, 2008. The condensed consolidated balance sheet at December 31,
2008, 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) formerly URON Inc. (URON) through its wholly owned
operating subsidiaries, Wyoming Financial Lenders, Inc. (WFL), and PQH Wireless,
Inc. (PQH), collectively referred to as the Company, provides retail financial
services and retail cellular phone sales to individuals primarily in the
Midwestern United States.  As of March 31, 2009, the Company operated
85 stores in 14 states (Nebraska, Wyoming, Utah, Iowa, North Dakota, South
Dakota, Kansas, Wisconsin, Montana, Colorado, Texas, Missouri, Indiana and
Illinois).   The consolidated financial statements include the
accounts of WCR, WFL, and PQH. All significant intercompany balances and
transactions have been eliminated in consolidation.




In
addition, we have updated our financial statements to classify the results of
operations for NCC and STEN Corporation which were sold on December 31, 2008, as
discontinued operations.


The
Company, through its “payday” division, provides non-recourse cash advance
loans, check cashing and other money services.  As of March 31, 2009,
55 of the retail locations were payday stores.  Our loans and other
services are subject to federal, state and local regulations.  The
short-term consumer loans, known as cash advance loans or “payday” loans, are in
amounts that typically range from $200 to $500. Cash advance loans provide
customers with cash in exchange for a promissory note with a maturity of
generally two to four weeks and the customer’s personal check for the aggregate
amount of the cash advanced plus a fee. The fee varies from state to state,
based on applicable regulations, and generally ranges from $15 to $22 per each
$100 borrowed. To repay the cash advance loans, customers may pay with cash, in
which their personal check is returned to them, or allow their check to be
presented to the bank for collection.





The
Company also provides other ancillary consumer financial products and services
that are complementary to its cash advance-lending business, such as
check-cashing services, money transfers and money orders.  In our
check cashing business, we primarily cash payroll checks, but we also cash
government assistance, tax refund and insurance checks or drafts. Our fees for
cashing payroll checks average approximately 2.5% of the face amount of the
check, subject to local market conditions, and this fee is deducted from the
cash given to the customer for the check. We display our check cashing fees in
full view of our customers on a menu board in each store and provide a detailed
receipt for each transaction. Although we have established guidelines for
approving check-cashing transactions, we have no preset limit on the size of the
checks we will cash.





Our loans
and other related services are subject to state regulations (which vary from
state to state), federal regulations and local regulations, where
applicable.





The
Company, through its Cricket Wireless Retail division, is a dealer for Cricket
Wireless, Inc., reselling cellular phones and accessories and accepting service
payments from Cricket customers. Of the 85 locations at March 31, 2009, 30 were
Cricket cellular phone resellers.





Use of
Estimates





The
preparation of consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that may affect certain reported
amounts and disclosures in the consolidated financial statements and
accompanying notes. Management bases its estimates on historical experience and
on various other assumptions that are believed to be reasonable under the
circumstances. Actual results could differ from those estimates. Significant
management estimates relate to the allowance for loans receivable, allocation of
and carrying value of goodwill and intangible assets, and deferred taxes and tax
uncertainties.


6


Revenue
Recognition





The
Company recognizes fees on cash advance loans on a constant-yield basis ratably
over the loans’ terms. Title loan fees are recognized using the interest
method.  The Company records revenue from check cashing fees, sales
of  phones, and accessories and fees from all other services in the
period in which the sale or service is completed.





Loans Receivable / Loan Loss
Allowance





We
maintain a loan loss allowance for anticipated losses for our cash advance and
title loans. To estimate the appropriate level of the loan loss allowance, we
consider the amount of outstanding loans owed to us, historical loans charged
off, current and expected collection patterns and current economic trends. Our
current loan loss allowance is based on our net write offs, typically expressed
as a percentage of loan amounts originated for the last 12 months applied
against the principal balance of outstanding loans that we write off. 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.





Included
in loans receivable are cash advance loans that are currently due or past due
and cash advance loans that have not been repaid.  This generally is
evidenced 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.  Cash advance loans are carried at cost
less the allowance for doubtful accounts.  The Company does not
specifically reserve for any individual cash advance loan.  The
Company aggregates cash advance loans 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 the maturity of the store location and charge-off and recovery
rates.  The Company utilizes a software program to assist with the
tracking of its historical portfolio statistics.  As a result of the
Company’s collection efforts, it historically writes off approximately 45% of
the returned items.  Based on days past the check return date,
write-offs of returned items historically have tracked at the following
approximately percentages: 1 to 30 days – 45%; 31 to 60 days – 67%; 61 to 90
days – 84%; 91 to 120 days – 92%; and 121 to 180 days – 94%.  All
returned items are charged-off after 180 days, as collections after that date
have not been significant.  The loan loss allowance is reviewed
monthly and any adjustment to the loan loss allowance as a result of historical
loan performance, current and expected collection patterns and current economic
trends is recorded.





A
rollforward of the Company’s loans receivable allowance for the three months
ended March 31, 2009 and 2008 is as follows:





Three Months Ended
                        March 31,2009
                      
                      
                      2008Loans
      receivable allowance, beginning of period
                      
                      $
                      1,413,000
                      
                      
                      $
                      976,000Provision
      for loan losses charged to expense
                      
                      
                      329,469
                      
                      
                      
                      341,270Charge-offs,
      net
                      
                      
                      (536,469
                      )
                      
                      
                      (351,270
                      )Loans
      receivable allowance, end of period
                      
                      $
                      1,206,000
                      
                      
                      $
                      966,000





Net Loss Per Common
Share





Basic net
loss per common share is computed by dividing the loss available to common
shareholders by the weighted average number of common shares outstanding for the
year. Diluted net loss per common share is computed by dividing the net loss
available to common shareholders by the sum of the weighted average number of
common shares outstanding plus potentially dilutive common share equivalents
(stock options, stock warrants, convertible preferred shares) when dilutive.
Potentially dilutive securities Series A Convertible Preferred Stock
(10,000,000) was anti-dilutive and therefore excluded from the dilutive net loss
per share computation for 2009.  Series A Convertible Preferred Stock
(10,000,000) and stock warrants, exercised in 2009, (400,000) were anti-dilutive
and therefore excluded for 2008.


7


Recent Accounting
Pronouncements





In June
2008, the Financial Accounting Standards Board (FASB) issued FASB Staff Position
(FSP) Emerging Issues Task Force (EITF) 03-6-1, Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities(FSP EITF 03-6-1). FSP EITF 03-6-1 clarified that all outstanding
unvested share-based payment awards that contain rights to nonforfeitable
dividends participate in undistributed earnings with common shareholders. Awards
of this nature are considered participating securities and the two-class method
of computing basic and diluted earnings per share must be applied. FSP EITF
03-6-1 is effective for fiscal years beginning after December 15,
2008.  The Company adopted FSP EITF 03-6-1 with no material effect on
earnings per share.





In March
2008, the FASB issued SFAS No. 161, Disclosures About Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133(SFAS 161), which requires enhanced disclosures about an entity's
derivative and hedging activities. The effective date of SFAS 161 is the
Company's fiscal year beginning January 1, 2009. The Company adopted SFAS 161
with no material effect on its consolidated financial statement
disclosures.





In
December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations(SFAS 141R). SFAS 141R broadens the guidance of SFAS 141, extending its
applicability to all transactions and other events in which one entity obtains
control over one or more other businesses. It broadens the fair value
measurement and recognition of assets acquired, liabilities assumed, and
interests transferred as a result of business combinations.  SFAS 141R
expands on required disclosures to improve the statement users' abilities to
evaluate the nature and financial effects of business
combinations.  SFAS 141R is effective for fiscal years beginning on or
after December 15, 2008. The Company adopted SFAS 141R with no material effect
on its consolidated financial statements.





In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51.” SFAS No. 160
changes the accounting and reporting for minority interests, which will be
recharacterized as noncontrolling interest and classified as a component of
equity. This new consolidation method significantly changes the accounting for
transactions with minority interest holders. SFAS No. 160 is effective for
fiscal years beginning after December 15, 2008. The Company adopted SFAS No. 160
with no material effect on its consolidated financial statements.





In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurement. SFAS
157 establishes a common definition for fair value to be applied to generally
accepted accounting principles guidance requiring use of fair value, establishes
a framework for measuring fair value, and expands disclosure about such fair
value measurements. SFAS 157 is effective for fiscal years beginning after
November 15, 2007. The Company adopted SFAS 157 on January 1, 2008 with no
impact on its consolidated financial statements.  The FASB delayed the
effective date to first quarter 2009 for nonfinancial assets and liabilities
recognized or disclosed at fair value in the financial statements on a
nonrecurring basis, in accordance with FASB Staff Position 157-2, Effective Date of FASB 157,(FSP 157-2). Non-financial assets include fair value measurements
associated with business acquisitions and impairment testing of tangible and
intangible assets. The Company adopted the provisions of FSP 157-2 with no
material effect on its consolidated financial statements.




In June
2008, the FASB's Emerging Issues Task Force updated EITF No 07-5, Determining Whether an Instrument
(or Embedded Feature) Is Indexed to an Entity's Own Stock.This abstract
provided guidance for determining whether an equity-linked financial instrument
(or embedded feature) is indexed to an entity's own stock. The Company has
considered EITF No. 07-5 and determined that it has no material effect on its
consolidated financial statements.




2.
            Acquisitions –





Acquisition of Cricket
Wireless Stores in Missouri and Indiana





On
January 14, 2009 PQH acquired for $1,828,000 in cash 12 existing Cricket
Wireless Stores in an asset purchase from VZ Wireless, LLC.  The
stores are located in Kansas City, Missouri (4 stores), St. Louis, Missouri (7
stores) and Cahokia, Illinois (1 store).





In
February 2009, PQH acquired the authorization for seven locations in Northern
Indiana for $300,000 in cash plus sellers’ expenses, not to exceed $50,000, and
in March 2009, PQH launched eight new Cricket Wireless stores in
Indiana.





Under the
purchase method of accounting the assets and liabilities of the aforementioned
acquisitions were recorded at their respective fair values as of the purchase
date as follows:





Estimated
      Fair ValueProperty
      and equipment
                    
                    $
                    140,000Intangible
      assets
                    
                    
                    833,000Goodwill
                    
                    
                    1,205,000$
                    2,178,000


8





The
results of the operations for the acquired locations have been included in the
condensed consolidated financial statements since the date of the acquisitions.
The following table presents the unaudited pro forma results of continuing
operations for the three months ended March 31, 2009 and 2008, as if the
retained acquisitions had been consummated at the beginning of each period
presented and excluding the operating results of NCC and STEN (sold December 31,
2008). The pro forma results of continuing 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 year
presented or the results which may occur in the future.





Three Months Ended March 31,2009
                      
                      2008Pro
      forma revenue
                      
                      $
                      4,988,000
                      
                      
                      $
                      4,824,000Pro
      forma net income
                      
                      
                      241,500
                      
                      
                      
                      87,000Pro
      forma net loss per common share - basic and diluted
                      
                      
                      (.
      04
                      )
                      
                      
                      (.05
                      )




3.
            Segment Information
      –





The
Company has grouped its operations into two segments – Payday Operations and
Cricket Wireless Retail Operations. The Payday Operations segment provides
financial and ancillary services (Note 1). The Cricket Wireless Retail
Operations segment originated in October 2008 and is a dealer for Cricket
Wireless, Inc., reselling cellular phones and accessories and serving as a
payment center for Cricket customers.  For 2008, there was only one
operating segment which was payday.





Segment
information related to the quarter ended March 31, 2009 follows:





Payday
                
                
                Cricket
                  Wireless
                
                
                TotalRevenues
      from external customers
                
                $
                2,843,365
                
                
                $
                1,923,922
                
                
                $
                4,767,287Net
      income (loss)
                
                
                287,785
                
                
                
                (59,480
                )
                
                
                228,305Total
      segment assets
                
                
                15,249,449
                
                
                
                5,989,736
                
                
                
                21,239,185





4.
            Shareholders’ Equity
      –





During
the three months ended March 31, 2009, 400,000 warrants were exercised at an
exercise price of $.01 per share and in a related transaction, the Company
redeemed 2,347 shares in payment of the exercise price, for a net issue of
397,653 shares.





5.
            Risks Inherent in the Operating
      Environment –





The
Company’s payday or short-term consumer loan activities are regulated under
numerous local, state, and federal laws and regulations, which are subject to
change. New laws or regulations could be enacted that could have a negative
impact on the Company’s lending activities. Over the past few years, consumer
advocacy groups and certain media reports have advocated governmental and
regulatory action to prohibit or severely restrict deferred presentment cash
advances.




The
Federal Trade Commission has issued an FTC Consumer Alert (Federal Trade
Commission, March 2008, Consumer Alert entitled “Payday Loans Equal Very Costly
Cash: Consumers Urged to Consider the Alternatives”) that discourages consumers
from obtaining payday loans such as the loans we offer, primarily on the basis
that the types of loans we offer are very costly and consumers should consider
alternatives to accepting a payday loan. For further information, you may obtain
a copy of the alert at www.ftc.gov/bcp/edu/pubs/consumer/alerts. As noted above,
the federal government has passed legislation, the 2007 Military Authorization
Act, prohibiting us from offering or making our loans to members of the military
when the interest and fees calculated as an annual percentage rate exceed 36%.
This limitation effectively prohibits us from utilizing our present business
model for cash advance or “payday” lending when dealing with members of the U.S.
military, and as a result we do not and do not plan to conduct payday lending
business with U.S. military personnel. These facts evidence the widespread
belief that our charges relating to our loans are too expensive to be good for
consumers. Some consumer advocates and others have characterized payday lending
as “predatory.” As a result, there are frequently attempts in the various state
legislatures, and occasionally in the U.S. Congress, to limit, restrict or
prohibit payday lending.


9


In July
2008, a bill was introduced before the U.S. Senate, entitled the “Protecting
Consumers from Unreasonable Credit Rates Act of 2008” (an amendment to the Truth
in Lending Act), proposing to set a maximum actual or imputed interest rate of
36% on all extensions of credit of any type. The bill is intended to limit the
charges and fees payable in connection with payday lending. Presently, the bill
is in the Senate Committee on Banking, Housing, and Urban Affairs. The Company
has no further information regarding the bill at this time. Similar bills have
been proposed in various states as well.





The
passage of this bill into law, or similar bills at state levels, would
essentially prohibit the Company from conducting its payday lending business in
its current form, and would certainly have a material and adverse effect on the
Company, operating results, financial condition and prospects and even its
viability.





Negative
perception of deferred presentment cash advances could also result in increased
regulatory scrutiny and increased litigation and encourage restrictive local
zoning rules, making it more difficult to obtain the government approvals
necessary to continue operating existing stores or open new short-term consumer
loan stores.





For the
three months ended March 31, 2009 and 2008, the Company had significant
revenues by state (shown as a percentage of applicable division’s revenue) as
follows:





Payday Division
                        
                        
                        Cricket Wireless Division2009
                          % of Revenues
                        
                        
                        2008
                          % of Revenues
                        
                        
                        
                        
                        2009
                          % of RevenuesNebraska
                        
                        
                        29
                        %
                        
                        
                        28
                        %
                        
                        Missouri
                        
                        
                        53
                        %Wyoming
                        
                        
                        14
                        %
                        
                        
                        10
                        %
                        
                        Nebraska
                        
                        
                        14
                        %North
      Dakota
                        
                        
                        14
                        %
                        
                        
                        *
                        %
                        
                        Texas
                        
                        
                        13
                        %Iowa
                        
                        
                        11
                        %
                        
                        
                        12
                        %
                        
                        Indiana
                        
                        
                        10
                        %*
      below 10%





6.
            Dividend Declaration and Payment
      –





In April
2009, the Board of Directors of the Company approved the remaining payment of
the fourth quarter 2008 dividend on the Company's Series A Convertible Preferred
Stock in the amount of $225,000.





7.
            Other Expense
      –





A
breakout of other expense is as follows:




Three Months Ended
                        March 31,2009
                      
                      
                      2008Store expensesCollection
      costs
                      
                      $
                      76,203
                      
                      
                      $
                      63,134Repairs
      & maintenance
                      
                      
                      46,043
                      
                      
                      
                      34,425Supplies
                      
                      
                      88,326
                      
                      
                      
                      29,323Telephone
      and utilities
                      
                      
                      132,560
                      
                      
                      
                      68,446Other
                      
                      
                      188,736
                      
                      
                      
                      137,137$
                      531,868
                      
                      
                      $
                      332,465General & administrative
      expensesProfessional
      fees
                      
                      $
                      251,035
                      
                      
                      $
                      593,154Other
                      
                      
                      100,128
                      
                      
                      
                      77,462$
                      351,163
                      
                      
                      $
                      670,616





10




8.         Subsequent Events-





Dividend
Declaration





On April
27, 2009, the Board of Directors of the Company declared $200,000 of the first
quarter 2009 dividends on the Company’s Series A Convertible Preferred
Stock. These amounts have not yet been paid.





Settlement Agreement with
former Chief Executive Officer





On May 1,
2009, the Company entered into a settlement agreement with its former Chief
Executive Officer to settle certain disputes. In addition, the settlement
agreement required the former Chief Executive Officer to place all 550,000
shares of his common stock of the Company into an escrow arrangement that will
result in either complete redemption of those shares or the release or
those shares back to him under certain circumstances.




11





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 headings “Description of Business,” “Risk Factors,”
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations,” but are 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 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 or may
affect the value of the common stock, include, but are not limited
to:





·
            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 our industry or us, particularly in
      certain key states





·
            Our
      need for additional financing, and





·
            Unpredictability
      or uncertainty in financing markets which could impair our ability to grow
      our business through 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 most recent Annual Report on Form 10-K for fiscal
2008.





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.




General
Overview




We
provide (through Wyoming Financial Lenders, Inc.) retail financial services to
individuals primarily in the midwestern and southwestern United States. These
services include non-recourse cash advance loans, check cashing and other money
services. At the close of business on March 31, 2009 and as of the date of this
report, we owned and operated 55 stores in 10 states (Colorado, Iowa, Kansas,
Montana, Nebraska, North Dakota, South Dakota, Utah, Wisconsin and
Wyoming).





We
provide short-term consumer loans—known as “payday” or “cash advance” loans—in
amounts that typically range from $200 to $500. Payday loans provide customers
with cash in exchange for a promissory note with a maturity of generally two to
four weeks and the customer’s post-dated personal check for the aggregate amount
of the cash advanced, plus a fee. The fee varies from state to state, based on
applicable regulations, and generally ranges from $15 to $22 for each whole or
partial increment of $100 borrowed. To repay a payday loan, a customer may pay
with cash, in which case their personal check is returned to them, or allow the
check to be presented to the bank for collection. All of our payday loans and
other services are subject to state regulations (which vary from state to
state), federal regulations and local regulation, where applicable.





In
October 2008, we began operating Cricket Wireless retail stores as an authorized
dealer of Cricket Wireless products and services. Authorized dealers are
permitted to sell the Cricket line and generally locate their store operations
in areas with a strong potential customer base where Cricket does not maintain a
corporate storefront. These locations are generally within the urban core or
surrounding areas of a community. We are an authorized premier Cricket dealer,
and as such, we are only permitted to sell the Cricket line of prepaid cellular
phones at our Cricket retail stores. At the close of business on March 31, 2009
we owned and operated 30 stores in six states (Illinois, Indiana, Kansas,
Missouri, Nebraska, and Texas).


12





Our
expenses primarily relate to the operations of our various stores. The most
significant expenses include salaries and benefits for our store employees,
provisions for payday loan losses, occupancy expense for our leased real estate,
cost of phones sold and advertising. Our other significant expenses
are general and administrative, which includes compensation of employees,
professional fees for consulting, accounting, audit and legal
services.





With
respect to our cost structure, salaries and benefits are one of our largest
costs and are driven primarily by the addition of branches throughout the year.
Our provision for losses is also a significant expense. If a customer’s check is
returned by the bank as uncollected (NSF or account closed), we make an
immediate charge-off to the provision for losses for the amount of the
customer’s loan, which includes accrued fees and interest. Any recoveries on
amounts previously charged off are recorded as a reduction to the provision for
losses in the period recovered. We have experienced seasonality in our
operations, with the first and fourth quarters typically being our strongest
periods as a result of broader economic factors, such as holiday spending habits
at the end of each year and income tax refunds during the first
quarter.





We
evaluate our stores based on revenue growth, gross profit contributions and loss
ratio (which is losses as a percentage of revenues), with consideration given to
the length of time the branch has been open and its geographic location. We
evaluate changes in comparable branch financial and other measures on a routine
basis to assess operating efficiency. We define comparable branches as those
branches that are open during the full periods for which a comparison is being
made. For example, comparable branches for the annual analysis we undertook as
of December 31, 2008 have been open at least 24 months on that date. We monitor
newer branches for their progress toward profitability and rate of loan
growth.





The
growth of the payday loan industry has followed, and continues to be
significantly affected by, payday lending legislation and regulation in the
various states and nationally. We monitor and evaluate legislative and
regulatory initiatives in each of the states and nationally, and are involved
with the efforts of the various industry lobbying efforts. To the extent that
states enact legislation or regulations that negatively impacts payday lending,
whether through preclusion, fee reduction or loan caps, our business could be
adversely affected. In Nebraska, legislation was recently introduced (and
subsequently defeated) to ban all cash advance or payday loans in Nebraska.
Despite the defeat of this legislation, since we derived approximately 29% of
our 2008 total payday lending revenues in Nebraska, any subsequent attempts to
pass similar legislation in Nebraska, or other legislation that would restrict
our ability to make cash advance loans in Nebraska, would pose significant risks
to our business.





In
addition to expanding our geographic reach, our strategic expansion plans also
involve the expansion and diversification of our product and service offerings.
For this reason, we have focused a significant amount of time and attention on
the development of our Cricket Wireless retail stores. We believe that
successful expansion, both geographically and product- and service-wise, will
help to mitigate the regulatory and economic risk inherent in our business by
making us less reliant on (i) payday lending alone and (ii) any particular
aspect of our business that is concentrated geographically.





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.





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 Receivable/Loan Loss
Allowance




We
maintain a loan loss allowance for anticipated losses for our cash advance and
title loans. To estimate the appropriate level of the loan loss allowance, we
consider the amount of outstanding loans owed to us, historical loans charged
off, current and expected collection patterns and current economic trends. Our
current loan loss allowance is based on our net write offs, typically expressed
as a percentage of loan amounts originated for the last 12 months applied
against the principal balance of outstanding loans that we write off. 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.




13


Included
in loans receivable are cash advance loans that are currently due or past due
and cash advance loans that have not been repaid.  This generally is
evidenced 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.  Cash advance loans are carried at cost
less the allowance for doubtful accounts.  The Company does not
specifically reserve for any individual cash advance loan.  The
Company aggregates cash advance loans 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 the maturity of the store location and charge-off and recovery
rates.  The Company utilizes a software program to assist with the
tracking of its historical portfolio statistics.  As a result of the
Company’s collection efforts, it historically writes off approximately 45% of
the returned items.  Based on days past the check return date,
write-offs of returned items historically have tracked at the following
approximately percentages: 1 to 30 days – 45%; 31 to 60 days – 67%; 61 to 90
days – 84%; 91 to 120 days – 92%; and 121 to 180 days – 94%.  All
returned items are charged-off after 180 days, as collections after that date
have not been significant.  The loan loss allowance is reviewed
monthly and any adjustment to the loan loss allowance as a result of historical
loan performance, current and expected collection patterns and current economic
trends is recorded.





A
rollforward of the Company’s loans receivable allowance for the three months
ended March 31, 2009 and 2008 is as follows:





Three Months Ended
                                      March 31,2009
                                    
                                    
                                    2008Loans
      receivable allowance, beginning of period
                                    
                                    $
                                    1,413,000
                                    
                                    
                                    $
                                    976,000Provision
      for loan losses charged to expense
                                    
                                    
                                    329,469
                                    
                                    
                                    
                                    341,270Charge-offs,
      net
                                    
                                    
                                    (536,469
                                    )
                                    
                                    
                                    (351,270
                                    )Loans
      receivable allowance, end of period
                                    
                                    $
                                    1,206,000
                                    
                                    
                                    $
                                    966,000





Valuation of long-lived and
Intangible Assets





The
Company assesses the 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 trends. When management
determines that the carrying value of long-lived and intangible assets may not
be recoverable, impairment is measured based on the excess of the assets'
carrying value over the estimated fair value.





Results
of Operations - Three Months Ended March 31, 2009 Compared to Three Months Ended
March 31, 2008





For the
three month period ended March 31, 2009, net income was $228,305 compared to net
loss from continuing operations of $92,771 for the three months ended March 31,
2008. During the three months ended March 31, 2009, income from continuing
operations before income taxes was $378,305 compared to loss before income taxes
of $122,871 for the three months ended March 31, 2008. The major components of
each of revenues, store expenses, general and administrative expenses, total
operating expenses and income tax expense from continuing operations are
discussed below.





Revenues





Revenues
totaled $4.77 million for the three months ended March 31, 2009 compared to
$2.78 million for the three months ended March 31, 2008. This increase resulted
from the increase in the number of Cricket Wireless stores operating during the
2009 interim period. During the three month period ended March 31, 2009, we
originated approximately $16.6 million in cash advance loans compared to $15.4
million during the 2008 interim period. Our average loan (including fee) totaled
approximately $370 during the period ended March 31, 2009 versus $341 in the
2008 interim period. Our average fee rate for the three months ended March 31,
2009 was $54 compared to $50 for the 2008 interim period.  During the
three month period ended March 31, 2009, we generated $1.66 million in phone and
accessory sales compared to $.17 million for the three month period ended March
31, 2008.  The increase resulted from our stores acquired in the last
quarter of fiscal 2008, that were operating in the three months ended March 31,
2009, and the Cricket Wireless stores we acquired and began operating during
this interim period.





The
following table summarizes our revenues for the three months ended March 31,
2009 and 2008, respectively:


14





Three Months Ended
                              March 31,
                            
                            
                            Three Months Ended
                              March 31,2009
                            
                            
                            2008
                            
                            
                            2009
                            
                            
                            2008(percentage of revenues)Payday
      loan fees
                            
                            $
                            2,517,810
                            
                            
                            $
                            2,203,980
                            
                            
                            
                            52.8
                            %
                            
                            
                            79.3
                            %Phones
      and accessories
                            
                            
                            1,664,180
                            
                            
                            
                            168,351
                            
                            
                            
                            34.9
                            %
                            
                            
                            6.1
                            %Check
      cashing fees
                            
                            
                            267,299
                            
                            
                            
                            346,091
                            
                            
                            
                            5.6
                            %
                            
                            
                            12.4
                            %Other
      income and fees
                            
                            
                            317,998
                            
                            
                            
                            61,969
                            
                            
                            
                            6.7
                            %
                            
                            
                            2.2
                            %Total
                            
                            $
                            4,767,287
                            
                            
                            $
                            2,780,391
                            
                            
                            
                            100
                            %
                            
                            
                            100
                            %





Store
Expenses




Total
expenses associated with store operations for the three months ended March 31,
2009 were $3.61 million compared to $1.92 million for the three months ended
March 31, 2008. The most significant components of these expenses were salaries
and benefits, provisions for loan losses, Cricket costs of sales, occupancy
costs, advertising expenses, depreciation of store equipment, amortization of
intangible assets and other expenses associated with store
operations.





Our most
significant increases in store expenses from the two interim periods related to
salaries and benefits for our store employees, phone and accessories cost of
sales, costs of occupancy and advertising. Our phone and accessories costs of
sales and advertising costs increased significantly in the three months ended
March 31, 2009 compared to the three months ended March 31, 2008 due to our
acquisition of several Cricket Wireless stores.  A discussion of the
various components of our store expenses for the three months ended March 31,
2009 appears below.





Salaries
and Benefits. Payroll and related costs at the store level were $1.22 million
compared to $.73 million for the periods ended March 31, 2009 and 2008,
respectively. Increased salaries and benefits expense resulted from of our
addition of several store locations. We expect that, with anticipated continued
store growth, these salaries and benefits expenses will continue to
increase.





Provisions
for Loan Losses. For the three months ended March 31, 2009 our provisions for
loan losses were $329,000 compared to $341,000 for the three months ended March
31, 2008. Our provisions for loan losses represented approximately 13.1% and
15.5% of our loan fee revenue for the three months ended March 31, 2009 and
2008, respectively. Despite a slight decrease in our provision for loan losses
as a percentage of revenue during the three months ended March 31, 2009 compared
to the same period in 2008, we do not foresee any certain end to the current
economic downturn and as a result we expect higher loan losses during fiscal
2009 than those we experienced during 2008.





Phone and
Accessories Cost of Sales.  The increase in our Cricket Wireless phone
service segment revenues resulted in corresponding increase in costs of
sales.  For the three months ended March 31, 2009, our costs of sales
were $.80 million compared to $.11 million for the same period in
2008.  At March 31, 2009, we had 30 Cricket Wireless stores compared
to two at March 31, 2008.





Occupancy.
Occupancy expenses, comprised mainly of store leases, were $338,000 for the
three months ended March 31, 2009 versus $193,000 for the three months ended
March 31, 2008. The increase in our occupancy expenses relates to our
acquisitions and operation of more stores during the most recent three-month
period. In general, as we pursue a growth by small acquisitions strategy, we
expect this trend to continue for the foreseeable future.





Advertising.
Advertising and marketing expenses were $151,000 during the three-month period
ended March 31, 2009 as compared to $86,000 during the three-month period ended
March 31, 2008. In general, we expect that our marketing and advertising
expenses for fiscal 2009 will increase overall, as compared to fiscal 2008, if
we are successful in implementing our acquisition strategy during the
year.





Depreciation.
Depreciation, relating to store equipment and capital expenditures for stores,
increased to $57,600 for the three months ended March 31, 2009 from $27,000 for
the three months ended March 31, 2008.  The increase in depreciation
was due to our Cricket Wireless store acquisitions.




Amortization
of Intangible Assets. Amortization of intangible assets increased to$177,000 for
the three months ended March 31, 2009 from $102,000 for the three months ended
March 31, 2008 due to the recent Cricket Wireless
acquisition.  .


15


Other.
Other expenses were $532,000 for the three months ended March 31, 2009 versus
$332,000 for the three months ended March 31, 2008 primarily due to higher costs
associated with operating a greater number of stores on a year over year
basis.





General and Administrative
Expenses





Total
general and administrative costs for the three months ended March 31, 2009 were
$782,000 compared to $981,000 for the period ended March 31, 2008. For the
three-month period ended March 31, 2009, the major components of these costs
were salaries and benefits for our executive management, interest expense, and
utilities, office supplies and other minor costs, professional fees for
accounting and legal services (collectively grouped as “other” costs). A
discussion of the various components of our general and administrative costs for
the three months ended March 31, 2009 and 2008 appears below:





Salaries
and Benefits. Salaries and benefits expenses for the three months ended March
31, 2009 were $345,000, a $45,000 increase from the $300,000 in such expenses
during period ended March 31, 2008. The increase resulted from recent store
acquisition and development costs.





Depreciation.
Depreciation for the period ended March 31, 2009 compared to March 31, 2008 was
$4,800 and $10,000, respectively. Depreciation relates primarily to equipment
and capital improvements at the Company’s corporate headquarters.





Interest.  Interest
expenses for the three months ended March 31, 2009 was $82,000 compared to $0
for the three months ended March 31, 2008 and resulted from the Company’s use of
its revolving line of credit and issuance of notes payable for store
acquisitions.





Other
General and Administrative Expenses. Other general and administrative expenses,
which includes professional fees for accounting and legal services, utilities,
office supplies, collection costs and other minor costs associated with
corporate headquarters activities, aggregated to $351,000 for the three months
ended March 31, 2009 versus $671,000 for the three months ended March 31, 2008.
The significant decrease in these expenses is attributable to higher
professional and failed acquisition related fees in 2008.  We expect
professional fees to increase throughout the first half of 2009 as costs related
to our recent restatement have not been totally incurred.





Income Tax
Expense





Income
tax expense for the period ended March 31, 2009 was $150,000 compared to income
tax benefit of $30,100 for the period ended March 31, 2008, which resulted
because our income before taxes for the 2009 period was $393,305 compared to a
net loss before taxes for the 2008 period of $123,000.




Liquidity
and Capital Resources





Summary
cash flow data is as follows:




Three Months Ended March 31,2009
                                        
                                        
                                        2008Cash
      flows provided (used) by :Operating
      activities
                                        
                                        $
                                        1,269,520
                                        
                                        
                                        $
                                        (1,039,833
                                        )Investing
      activities
                                        
                                        
                                        (2,362,991
                                        )
                                        
                                        
                                        (393,960
                                        )Financing
      activities
                                        
                                        
                                        (425,117
                                        )
                                        
                                        
                                        4,437,050Net
      increase (decrease) in cash
                                        
                                        
                                        (1,518,588
                                        )
                                        
                                        
                                        3,003,257Cash,
      beginning of period
                                        
                                        
                                        3,358,547
                                        
                                        
                                        
                                        984,625Cash,
      end of period
                                        
                                        $
                                        1,839,959
                                        
                                        
                                        $
                                        3,987,882




At March
31, 2009, we had cash of $1.84 million compared to cash of $3.99 million on
March 31, 2008. The decrease results mainly from failed payday acquisitions and
our Cricket Wireless store acquisitions.  For fiscal year 2009, we
believe that our available cash, combined with expected cash flows from
operations, will be sufficient to fund our liquidity and capital expenditure
requirements during fiscal 2009. Our expected short-term uses of cash include
funding of operating activities, anticipated increases in payday loans, dividend
payments on our Series A preferred stock (to the extent approved by the Board of
Directors), and the financing of expansion activities, including new store
openings and store acquisitions.


16





Banco
Popular Line of Credit





On
November 13, 2008, Wyoming Financial Lenders, Inc. entered into a Business Loan
Agreement and associated agreements with Banco Popular North America, located in
Rosemont, Illinois, for a one-year revolving line of credit in an amount of up
to $2,000,000.  Among other things, a default occurs under the
Business Loan Agreement in the event of any breach thereunder by Wyoming
Financial Lenders.  In the event of any default, Banco Popular may
accelerate all amounts due subject to a ten-day right to cure applicable in
certain circumstances.  All accrued and unpaid interest, together with
all outstanding principal, will be due on October 30, 2009.





We
notified Banco Popular in April 2009 about our inability to deliver certain
financial information in a timely manner as required under the Business Loan
Agreement, due primarily from our need to restate our financial statements for
the year ended December 31, 2007 and the subsequent interim periods ending
September 30, 2008.  On April 30, 2009, Banco Popular furnished us
with their written waiver of covenants related to our failure to timely deliver
such information; thus, at this time there is no adverse impact upon our
revolving credit line.




Off-Balance
Sheet Arrangements




The
Company had no off-balance sheet arrangements as of March 31, 2009.





Item 3. Quantitative and
Qualitative Disclosures About Market Risk





Not
applicable.




Item 4T. Controls and
Procedures





Evaluation of Disclosure
Controls and Procedures




On March
31, 2009, our Chief Executive Officer and Interim Chief Financial Officer
carried out an evaluation of the effectiveness of the design and operation of
its disclosure controls and procedures (as defined in Exchange Rule 13a-15(e)),
and concluded that, based on the reasons described below, as of the end of the
fiscal quarter covered by this report, and in conjunction with remedial actions
put in place during the first quarter of 2009 as a result of our recent
restatement, internal investigation and other control weaknesses within our
financial reporting process and more fully described in Item 9A(T) in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2008, our disclosure
controls and procedures were not effective and designed to ensure that material
information relating to the Company and our consolidated subsidiaries would be
made known to them by others within the Company.





Changes in Internal Control
over Financial Reporting




There
were no changes in our internal controls over financial reporting that occurred
during the fiscal quarter covered by this report that materially affected, or
were reasonably likely to materially affect such controls, except that, during
the fiscal quarter covered by this report, we were still in the process of
integrating the PQH Wireless, Inc. acquisition from the last fiscal quarter of
2008 and our additional Cricket Wireless store acquisitions completed during the
fiscal quarter covered by this report and were incorporating these operations as
part of our internal controls.  For purposes of this evaluation, the impact
of these acquisitions on our internal controls over financial reporting was
excluded.




In our
Annual Report on Form 10-K for the year ended December 31, 2008, we identified
material weaknesses in internal control over financial reporting and identified
a remediation plan.  Although we have made progress towards remediation, as
of May 15, 2009, we were unable to conclude that the material weaknesses
described above were remediated as of March 31, 2009.  See our Annual
Report on Form 10-K for fiscal year ended December 31, 2008.


17


PART
II. OTHER INFORMATION




Item 1.
Legal Proceedings





None.




Item 1A. Risk
Factors





None.




Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds




In
January 2009, Lantern Advisers exercised a warrant, on a cashless basis pursuant
to net issue exercise provisions contained in the warrant, and acquired 397,325
shares of common stock.  The warrant had originally been issued on
November 29, 2007 and had given Lantern Advisers the right to purchase up to
400,000 shares of common stock at the per-share price of
$0.01.  Lantern Advisers is an accredited
investor.  Accordingly, the issuance of shares upon the exercise of
the warrant was exempt from the registration requirements of the Securities Act
of 1933.


Item 3. Defaults upon
Senior Securities





None.




Item 4.
Submission of Matters to a Vote of Security Holders





None.





Item 5.
Other Information





None.


18




Item 6.
Exhibits




Exhibit
                        
                        Description31.1
                        
                        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
      ).




SIGNATURES




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





Dated:
      May 20, 2009
                  Western
      Capital Resources, Inc.(Registrant)By:
                  /s/
      John QuandahlJohn
      QuandahlChief
      Executive Officer, Chief Operating Officer and
                    Interim
      Chief Financial
Officer




19