SECURITIES
AND EXCHANGE COMMISSION




Washington,
D.C. 20549




Form
10-Q/A




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




For the
quarterly period ended June 30, 2008 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




2201 West Broadway, Suite 1,
Council Bluffs, Iowa 51501


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




Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90
days.




Yes o No þ




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
April 30, 2009, the registrant had outstanding 7,971,007 shares of common stock,
no par value per share.








Western
Capital Resources, Inc.




Index





PageExplanation
      of Our Restatement
                  
                  
                  2PART
      I. FINANCIAL INFORMATIONItem
      1. Financial Statements
                  
                  
                  3Item
      2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operations
                  
                  
                  19Item
      3. Quantitative and Qualitative Disclosures About Market
    Risk
                  
                  
                  27Item
      4T. Controls and Procedures
                  
                  
                  27PART
      II. OTHER INFORMATIONItem
      1. Legal Proceedings
                  
                  
                  28Item
      1A. Risk Factors
                  
                  
                  28Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
                  
                  
                  28Item
      3. Defaults Upon Senior Securities
                  
                  
                  28Item
      4. Submission of Matters to a Vote of Security Holders
                  
                  
                  28Item
      5. Other Information
                  
                  
                  28Item
      6. Exhibits
                  
                  
                  29SIGNATURES
                  
                  
                  29


1




EXPLANATION
OF OUR RESTATEMENT





As
previously reported on a Current Reports on Form 8-K filed with the SEC, we
announced that the consolidated financial statements contained in our Annual
Report on Form 10-K for the year ended December 31, 2007, and subsequent interim
reports for the quarterly periods through September 30, 2008, required
restatement in order to correct errors related to the following:





·
            the
      allocation of purchase price to customer relationships as opposed to
      goodwill for historical acquisitions,
and


·
            an
      understatement of share-based compensation expense for fiscal
      2007.





Additionally,
we announced that the Company’s Board of Directors was conducting an internal
review of the propriety and categorization of certain expense reimbursements and
certain other transactions.  This review has been
completed.  As a result of that review and the execution of a
settlement agreement with the former CEO, the Company determined that $175,000
of cost originally reported as a reduction of proceeds from common stock issued
in the consolidated statements of shareholders’ equity should be reported as an
expense in the consolidated statements of operations.





This Form
10-Q/A reflects the restatement of our previously issued consolidated financial
statements contained in this amended report for the period ended June 30,
2008.  These adjustments are fully discussed in Note 2 to the
condensed consolidated financial statements contained in this amended
report.  Along with this amended report, we are filing our amended
Form 10-K/A for the year ended December 31, 2007, our amended Quarterly Reports
on Form 10-Q/A for the first and third quarters of fiscal 2008 and our Annual
Report on Form 10-K for  fiscal 2008.





In
addition, we have updated our consolidated financial statements to classify the
results of operations for National Cash & Credit, LLC and the business we
acquired from STEN Corporation (“NCC” and “STEN”), both of which were sold on
December 31, 2008, as discontinued operations in accordance with Statement of
Financial Accounting Standards No. 144 “Accounting for the Impairment or
Disposal of Long-Lived Assets.”  See Note 2 to our condensed
consolidated financial statements for further description.





The
following items have been amended as a result of the restatement:





Part
      I
                      Item
      1.       Financial
      StatementsPart
      I
                      Item
      2.       Management’s Discussion and
      Analysis of Financial Condition and Results of
  OperationsPart
      I
                      Item
      4(T).  Controls and
Procedures




Other
than as described above or elsewhere if indicated, no other information in our
original Quarterly Report on Form 10-Q for the period ended June 30, 2008 has
been amended hereby as a result of the restatement contained in this amended
report. For updated information regarding the Company, please see our Annual
Report on Form 10-K for the year ended December 31, 2008 which, as we indicate
above, we are filing concurrently with this amended report.


2


PART
I. FINANCIAL INFORMATION




Item 1. Financial
Statements





WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES





CONTENTS





Page(s)CONDENSED
      CONSOLIDATED FINANCIAL STATEMENTSCondensed
      Consolidated Balance Sheets
                  
                  
                  4Condensed
      Consolidated Statements of Operations
                  
                  
                  5Condensed
      Consolidated Statements of Cash Flows
                  
                  
                  6Notes
      to Condensed Consolidated Financial Statements
                  
                  
                  7


3





WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS (Restated)





June 30, 2008
                        
                        
                        December 31, 2007(Unaudited)ASSETSCURRENT
      ASSETSCash
                        
                        $
                        3,198,182
                        
                        
                        $
                        984,625Loans
      receivable (less allowance for losses of $933,000 and
      $976,000)
                        
                        
                        4,085,714
                        
                        
                        
                        4,117,497Stock
      subscriptions receivable
                        
                        
                        -
                        
                        
                        
                        4,422,300Prepaid
      expenses and other
                        
                        
                        276,662
                        
                        
                        
                        92,333Deferred
      income taxes
                        
                        
                        445,000
                        
                        
                        
                        662,000Assets
      used in discontinued operations
                        
                        
                        919,043
                        
                        
                        
                        -TOTAL
      CURRENT ASSETS
                        
                        
                        8,924,601
                        
                        
                        
                        10,278,755PROPERTY
      AND EQUIPMENT
                        
                        
                        672,248
                        
                        
                        
                        631,736GOODWILL
                        
                        
                        8,001,722
                        
                        
                        
                        7,905,746INTANGIBLE
      ASSETS
                        
                        
                        268,573
                        
                        
                        
                        347,586DEFERRED
      INCOME TAX
                        
                        
                        35,000
                        
                        
                        
                        109,000OTHER
                        
                        
                        -
                        
                        
                        
                        167,000ASSETS
      USED IN DISCONTINUED OPERATIONS
                        
                        
                        650,106
                        
                        
                        
                        -TOTAL
      ASSETS
                        
                        $
                        18,552,250
                        
                        
                        $
                        19,439,823LIABILITIES
      AND SHAREHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts
      payable and accrued liabilities
                        
                        $
                        974,515
                        
                        
                        $
                        1,733,844Accounts
      payable - related parties
                        
                        
                        -
                        
                        
                        
                        1,125,935Accrued
      dividend payable
                        
                        
                        525,000
                        
                        
                        
                        -Deferred
      revenue
                        
                        
                        264,349
                        
                        
                        
                        262,357Liabilities
      from discontinued operations
                        
                        
                        26,968
                        
                        
                        
                        -TOTAL
      CURRENT LIABILITIES
                        
                        
                        1,790,832
                        
                        
                        
                        3,122,136SHAREHOLDERS'
      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, 8,889,644 and
      6,299,753 shares issued and outstanding
                        
                        
                        -
                        
                        
                        
                        -Additional
      paid-in capital
                        
                        
                        19,776,643
                        
                        
                        
                        18,434,318Retained
      earnings (deficit)
                        
                        
                        (3,115,225
                        )
                        
                        
                        (2,216,631
                        )TOTAL
      SHAREHOLDERS’ EQUITY
                        
                        
                        16,761,418
                        
                        
                        
                        16,317,687TOTAL
      LIABILITIES AND SHAREHOLDERS' EQUITY
                        
                        $
                        18,552,250
                        
                        
                        $
                        19,439,823





See
notes to condensed consolidated financial statements.


4





WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Restated)





Three months ended
                                                                                                  
                                                                                                  Six months endedJune 30, 2008
                                                                                                  
                                                                                                  
                                                                                                  June 30, 2007
                                                                                                  
                                                                                                  
                                                                                                  June 30, 2008
                                                                                                  
                                                                                                  
                                                                                                  June 30, 2007REVENUESLoan fees
                                                                                                  
                                                                                                  $
                                                                                                  2,428,834
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  2,197,206
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  4,632,814
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  4,347,512Check
      cashing fees
                                                                                                  
                                                                                                  
                                                                                                  283,063
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  325,295
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  629,154
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  731,740Guaranteed
      phone/Cricket fees
                                                                                                  
                                                                                                  
                                                                                                  145,331
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  171,247
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  313,682
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  438,643Other
      fees
                                                                                                  
                                                                                                  
                                                                                                  42,986
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  36,894
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  104,955
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  84,4202,900,214
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  2,730,642
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  5,680,605
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  5,602,315STORE
      EXPENSESSalaries
      and benefits
                                                                                                  
                                                                                                  
                                                                                                  753,302
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  638,639
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  1,487,991
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  1,322,610Provisions
      for loan losses
                                                                                                  
                                                                                                  
                                                                                                  410,532
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  369,656
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  751,802
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  643,138Guaranteed
      phone/Cricket cost of sales
                                                                                                  
                                                                                                  
                                                                                                  66,427
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  103,662
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  173,303
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  256,399Occupancy
                                                                                                  
                                                                                                  
                                                                                                  236,495
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  188,568
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  429,549
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  374,438Advertising
                                                                                                  
                                                                                                  
                                                                                                  92,519
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  96,188
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  178,045
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  222,477Depreciation
                                                                                                  
                                                                                                  
                                                                                                  31,102
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  23,209
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  58,057
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  57,897Amortization
      of intangible assets
                                                                                                  
                                                                                                  
                                                                                                  114,314
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  209,271
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  216,038
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  418,452Other
                                                                                                  
                                                                                                  
                                                                                                  336,289
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  214,775
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  668,754
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  505,0942,040,980
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  1,843,968
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  3,963,539
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  3,800,595INCOME
      FROM STORES
                                                                                                  
                                                                                                  
                                                                                                  859,234
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  886,674
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  1,717,066
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  1,801,720GENERAL
      & ADMINISTRATIVE EXPENSESSalaries
      and benefits
                                                                                                  
                                                                                                  
                                                                                                  315,349
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  231,905
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  615,640
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  610,115Depreciation
                                                                                                  
                                                                                                  
                                                                                                  7,180
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  11,125
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  16,976
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  21,417Other
                                                                                                  
                                                                                                  
                                                                                                  170,942
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  93,196
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  841,558
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  189,826493,471
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  336,226
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  1,474,174
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  821,358INCOME
      FROM CONTINUING OPERATIONS
                                                                                                  
                                                                                                  
                                                                                                  365,763
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  550,448
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  242,892
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  980,362INCOME
      TAX EXPENSE
                                                                                                  
                                                                                                  
                                                                                                  146,000
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  206,000
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  115,900
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  367,000NET
      INCOME BEFORE DISCONTINUED OPERATIONS
                                                                                                  
                                                                                                  
                                                                                                  219,763
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  344,448
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  126,992
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  613,362INCOME
      FROM DISCONTINUED OPERATIONS
                                                                                                  
                                                                                                  
                                                                                                  27,072
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  24,414
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -NET
      INCOME
                                                                                                  
                                                                                                  
                                                                                                  246,835
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  344,448
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  151,406
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  613,362SERIES
      A CONVERTIBLE PREFERRED STOCK DIVIDENDS (assumed for 2007)
                                                                                                  
                                                                                                  
                                                                                                  (525,000
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  (525,000
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  (1,050,000
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  (1,050,000
                                                                                                  )NET
      LOSS AVAILABLE TO COMMON SHAREHOLDERS
                                                                                                  
                                                                                                  $
                                                                                                  (278,165
                                                                                                  )
                                                                                                  
                                                                                                  $
                                                                                                  (180,552
                                                                                                  )
                                                                                                  
                                                                                                  $
                                                                                                  (898,594
                                                                                                  )
                                                                                                  
                                                                                                  $
                                                                                                  (436,638
                                                                                                  )NET
      LOSS PER COMMON SHARE-BASIC AND DILUTEDContinuing
      operations
                                                                                                  
                                                                                                  $
                                                                                                  0.03
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  (0.16
                                                                                                  )
                                                                                                  
                                                                                                  $
                                                                                                  (0.11
                                                                                                  )
                                                                                                  
                                                                                                  $
                                                                                                  (0.39
                                                                                                  )Discontinued
      operations
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -Net
      income per common share
                                                                                                  
                                                                                                  $
                                                                                                  0.03
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  (0.16
                                                                                                  )
                                                                                                  
                                                                                                  $
                                                                                                  (0.11
                                                                                                  )
                                                                                                  
                                                                                                  $
                                                                                                  (0.39
                                                                                                  )WEIGHTED
      AVERAGE COMMON SHARE OUTSTANDING -Basic
      and diluted
                                                                                                  
                                                                                                  
                                                                                                  8,889,644
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  1,125,000
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  8,178,339
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  1,125,000





See
notes to condensed consolidated financial statements.


5




WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Restated)





Six
      Months Ended June 30,
                                  
                                  2008
                                  
                                  
                                  2007(Unaudited)
                                  
                                  
                                  (Unaudited)OPERATING
      ACTIVITIESNet
      Income
                                  
                                  $
                                  151,406
                                  
                                  
                                  
                                  613,362Adjustments
      to reconcile net income to net cash provided (used) by operating
      activities:Depreciation
                                  
                                  
                                  98,121
                                  
                                  
                                  
                                  79,314Amortization
                                  
                                  
                                  276,252
                                  
                                  
                                  
                                  418,544Deferred
      income taxes
                                  
                                  
                                  241,000
                                  
                                  
                                  
                                  54,000Changes
      in operating assets and liabilitiesLoans
      receivable
                                  
                                  
                                  123,919
                                  
                                  
                                  
                                  147,364Prepaid
      expenses and other assets
                                  
                                  
                                  (44,289
                                  )
                                  
                                  
                                  43,430Accounts
      payable and accrued liabilities
                                  
                                  
                                  (1,940,981
                                  )
                                  
                                  
                                  (18,877
                                  )Deferred
      revenue
                                  
                                  
                                  20,840
                                  
                                  
                                  
                                  6,825Net
      cash provided (used) by operating activities
                                  
                                  
                                  (1,073,732
                                  )
                                  
                                  
                                  1,343,962INVESTING
      ACTIVITIESPurchase
      of property and equipment
                                  
                                  
                                  (159,924
                                  )
                                  
                                  
                                  (90,655
                                  )Acquisition
      of stores, net of cash acquired
                                  
                                  
                                  (351,900
                                  )
                                  
                                  
                                  -Net
      cash used by investing activities
                                  
                                  
                                  (511,824
                                  )
                                  
                                  
                                  (90,655
                                  )FINANCING
      ACTIVITIESPayments
      on notes payable
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (530,000
                                  )Collection
      on sales of stock
                                  
                                  
                                  4,437,050
                                  
                                  
                                  
                                  -Cost
      of raising capital
                                  
                                  
                                  (10,295
                                  )
                                  
                                  
                                  -Dividends
                                  
                                  
                                  (525,000
                                  )
                                  
                                  
                                  (608,748
                                  )Net
      cash provided (used) by financing activities
                                  
                                  
                                  3,901,755
                                  
                                  
                                  
                                  (1,138,748
                                  )NET
      INCREASE IN CASH
                                  
                                  
                                  2,316,199
                                  
                                  
                                  
                                  114,559CASHBeginning
      of period
                                  
                                  
                                  984,625
                                  
                                  
                                  
                                  1,265,460End
      of period
                                  
                                  
                                  3,300,824
                                  
                                  
                                  
                                  1,380,019Less:
      Cash of discontinued operations
                                  
                                  
                                  (102,642
                                  )
                                  
                                  
                                  -End
      of period, continuing operations
                                  
                                  $
                                  3,198,182
                                  
                                  
                                  $
                                  1,380,019SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATIONIncome
      taxes paid
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  191,000Noncash
      investing and financing activities:Dividend
      accrued
                                  
                                  $
                                  525,000
                                  
                                  
                                  $
                                  -Stock
      issued for store acquisition
                                  
                                  
                                  1,337,869
                                  
                                  
                                  
                                  -





See
notes to condensed consolidated financial statements.


6





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 and six month periods ended June 30, 2008 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2008. For further information, refer to the Consolidated Financial
Statements and footnotes thereto included in our Form 10-K/A as of and for the
year ended December 31, 2007. The condensed consolidated balance sheet at
December 31, 2007, 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 known as URON Inc.) through its wholly
owned operating subsidiaries, Wyoming Financial Lenders, Inc. (WFL) and National
Cash & Credit, LLC (NCC), collectively referred to as the “Company,”
provides retail financial services to individuals in the midwestern and
southwestern United States. These services include non-recourse cash advance
loans, title loans, check cashing and other money services. The Company also is
a non-recourse reseller of guaranteed phone service and Cricket cellular phones.
As of June 30, 2008, the Company operated 62 stores in 11 states (Nebraska,
Wyoming, Utah, Iowa, North Dakota, South Dakota, Kansas, Wisconsin, Montana,
Colorado and Arizona). As of June 30, 2007, Company operated in 58 stores in 10
states. The condensed consolidated financial statements include the accounts of
WCR, WFL, and NCC. All significant intercompany balances and transactions have
been eliminated in consolidation.





The
Company provides short-term consumer loans, known as cash advance loans, in
amounts that typically range from $100 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 $20 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 title loans and other ancillary consumer financial
products and services that are complementary to its cash advance-lending
business, such as check-cashing services, money transfers, money orders and
title loans. We also offer guaranteed phone/CricketTM phones to our
customers.





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





Pursuant
to an Agreement and Plan of Merger and Reorganization dated December 13, 2007
(Merger Agreement), by and among WCR, WFL Acquisition Corp., a Wyoming
corporation and wholly owned subsidiary of the WCR, and WFL, WFL Acquisition
Corp. merged with and into WFL, with WFL remaining as the surviving entity and a
wholly owned operating subsidiary of the WCR. This transaction is referred to
throughout this report as the “Merger.”





The
condensed consolidated financial statements account for the Merger as a capital
transaction in substance (and not a business combination of two operating
entities) that would be equivalent to WFL issuing securities to WCR in exchange
for the net monetary liabilities of WCR, accompanied by a recapitalization and,
as a result, no goodwill relating to the Merger has been
recorded.


7





WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES





NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





1.
              Nature of Business and Summary of
      Significant Accounting Policies –
  (continued)





Use of
Estimates





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





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 fees derived from check cashing, guaranteed phone/Cricket
fees, and all other services in the period in which the service is
provided.





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 35% 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 – 35%; 31 to 60 days – 60%; 61 to 90
days – 75%; 91 to 120 days – 80%; and 121 to 180 days – 86%.  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.  The Company uses a third party collection agency
to assist in the collection of the loan collateral related to title loans, when
and as the Company determines appropriate.





A
rollforward of the Company’s loans receivable allowance for the six months ended
June 30, 2008 and 2007 is as follows:





Six
      Months Ended June 30,2008
                      
                      
                      2007Loans
      receivable allowance, beginning of period
                      
                      $
                      976,000
                      
                      
                      $
                      762,000Provision
      for loan losses charged to expense
                      
                      
                      752,000
                      
                      
                      
                      643,000Charge-offs,
      net
                      
                      
                      (795,000
                      )
                      
                      
                      (644,000
                      )Loans
      receivable allowance, end of period
                      
                      $
                      933,000
                      
                      
                      $
                      761,000




The
Company entered into the title loan business with the acquisition of NCC in
February 2008. Currently, title loans are not a significant portion of the
Company’s loan receivable portfolio.


8




WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES
 
 NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


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 of Series A Convertible Preferred Stock
(10,000,000) and stock warrants (400,000) were anti-dilutive and therefore
excluded from the dilutive net loss per share computation for 2008. Series A
Convertible Preferred Stock (10,000,000) was anti-dilutive and therefore
excluded for 2007.





Recent Accounting
Pronouncements





In
September 2006, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements (as
amended),” which defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles and expands disclosure about
fair value measurements. SFAS No. 157 applies whenever other standards require
(or permit) assets or liabilities to be measured at fair value, and therefore,
does not expand the use of fair value in any new circumstances. The effective
date of this standard was for all full fiscal and interim periods beginning
after November 15, 2007. The Company adopted SFAS 157 on January 1, 2008 with no
impact on its condensed consolidated financial statements





In
February 2008, the FASB issued Staff Position 157-2, Effective Date of FASB 157,
(FSP 157-2) which deferred the provisions of SFAS 157 to annual periods
beginning after November 15, 2008 for non-financial assets and liabilities.
Non-financial assets include fair value measurements associated with business
acquisitions and impairment testing of tangible and intangible assets. The
Company is still evaluating the impact, if any, that the adoption of FSP 157-2
will have on its condensed consolidated financial statements.





In
February 2007, the FASB issued Statement of Financial Accounting Standards
No. 159, The Fair Value
Option for Financial Assets and Financial Liabilities (SFAS 159). SFAS
159 permits entities to choose to measure many financial instruments and certain
other items at fair value. The objective is to improve financial reporting by
providing entities with the opportunity to mitigate volatility in reported
earnings caused by measuring related assets and liabilities using different
measurement techniques.





SFAS 159
requires additional disclosures related to fair value measurements included in
the entity’s financial statements. This statement is effective for financial
statements issued for fiscal years beginning after November 15, 2007. The
Company adopted SFAS 159 on January 1, 2008 with no impact on its condensed
consolidated financial statements.





In
December 2007, the FASB issued Statement of Financial Accounting Standards
No. 141R (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 year
beginning on or after December 15, 2008. The Company does not expect the
adoption of SFAS 141R to have a material effect on its condensed consolidated
financial statements.




2.
              Restatement –




Subsequent to the filing
of our Annual Report on Form 10-K for the year ended December 31, 2007,
management determined that the consolidated financial statements for the years
ended December 31, 2007 and 2006, and subsequent interim reports for the
quarterly periods through September 30, 2008 required restatement tocorrect errors related to allocation of purchase price to customer
relationships as opposed to goodwill for historical acquisitions, correct an
understatement of share-based compensation expense for fiscal 2007 and to
re-categorize $175,000 of costs originally reported as a reduction of proceeds
from common stock issued in the consolidated statements of shareholders’ equity
to an expense in the consolidated statements of
operations.  The details of these items are as
follows.




On December 31, 2007, we
completed a reverse merger with WFL. which included the purchase of certain
intangible assets (customer lists).After revisiting certain
assumptions and the analysis used in the initial, valuation management concluded
that allocation of purchase price to customer lists from historical acquisitions
should have been increased with a corresponding decrease to goodwill in the
amount of $1,977,913.  This resulted in an increase in amortization
expense of $175,170 and $111,763 for the three month period ended June
30, 2007 and 2008 and $350,340 and $191,386 for the six month period ended
June 30, 2007 and 2008.


9




WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES
 
 NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


On
November 29, 2007 we issued stock options and warrants to certain employees and
nonemployees.  After revisiting certain assumptions and the analysis
used in the initial valuation, management concluded that the valuation of the
shares should have been recorded at $0.54 per share rather than $0.23 per share.
This resulted in an increase in share-based compensation expense of $20,700 for
the six months ended June 30, 2008.




On April
9, 2009, the Company’s Board of Directors concluded its internal review of
certain expense reimbursements and certain other transactions.  As a
result of that review and the execution of a settlement agreement with the
former CEO, the Company determined that $175,000 of cost originally
reported, in the fourth quarter of 2007, as a reduction of proceeds from
common stock issued in the consolidated statements of shareholders’ equity
should be reported as an expense in the consolidated statements of
operations.




In
addition, we have updated our financial statements to classify the results of
operations for NCC and STEN Corporation which was sold on December 31, 2008, as
discontinued operations in accordance with Statement of Financial Accounting
Standards No. 144 “Accounting for the Impairment or Disposal of Long-Lived
Assets.”


CONDENSED
CONSOLIDATED BALANCE SHEET




December
31, 2007




Reported
              
              
              Adjustment
              
              
              As
                RestatedASSETSCURRENT
      ASSETSCash
              
              $
              984,625
              
              
              $
              -
              
              
              $
              984,625Loans
      receivable (less allowance for losses of $976,000)
              
              
              4,117,497
              
              
              
              -
              
              
              
              4,117,497Stock
      subscriptions receivable
              
              
              4,422,300
              
              
              
              -
              
              
              
              4,422,300Prepaid
      expenses and other
              
              
              92,333
              
              
              
              -
              
              
              
              92,333Deferred
      income taxes
              
              
              526,000
              
              
              
              136,000
              
              
              
              662,000TOTAL
      CURRENT ASSETS
              
              
              10,142,755
              
              
              
              136,000
              
              
              
              10,278,755PROPERTY
      AND EQUIPMENT
              
              
              631,736
              
              
              
              -
              
              
              
              631,736GOODWILL
              
              
              9,883,659
              
              
              
              (1,977,913
              )
              
              
              7,905,746INTANGIBLE
      ASSETS
              
              
              90,926
              
              
              
              256,660
              
              
              
              347,586DEFERRED
      INCOME TAX
              
              
              -
              
              
              
              109,000
              
              
              
              109,000OTHER
              
              
              167,000
              
              
              
              -
              
              
              
              167,000TOTAL
      ASSETS
              
              $
              20,916,076
              
              
              $
              (1,476,253
              )
              
              $
              19,439,823LIABILITIES
      AND SHAREHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts
      payable and accrued liabilities
              
              $
              1,908,844
              
              
              $
              (175,000
              )
              
              $
              1,733,844Accounts
      payable - related parties
              
              
              950,935
              
              
              
              175,000
              
              
              
              1,125,935Accrued
      dividend payable
              
              
              -
              
              
              
              -
              
              
              
              -Deferred
      revenue
              
              
              262,357
              
              
              
              -
              
              
              
              262,357TOTAL
      CURRENT LIABILITIES
              
              
              3,122,136
              
              
              
              -
              
              
              
              3,122,136DEFERRED
      INCOME TAXES
              
              
              545,000
              
              
              
              (545,000
              )
              
              
              -TOTAL
      LIABILITES
              
              
              3,667,136
              
              
              
              (545,000
              )
              
              
              3,122,136SHAREHOLDERS'
      EQUITYSeries
      A convertible preferred stock
              
              
              100,000
              
              
              
              -
              
              
              
              100,000Common
      stock
              
              
              -
              
              
              
              -
              
              
              
              -Additional
      paid-in capital
              
              
              17,639,318
              
              
              
              795,000
              
              
              
              18,434,318Retained
      earnings (deficit)
              
              
              (490,378
              )
              
              
              (1,726,253
              )
              
              
              (2,216,631
              )TOTAL
      SHAREHOLDERS’ EQUITY
              
              
              17,248,940
              
              
              
              (931,253
              )
              
              
              16,317,687TOTAL
      LIABILITIES AND SHAREHOLDERS' EQUITY
              
              $
              20,916,076
              
              
              $
              (1,476,253
              )
              
              $
              19,439,823




10




WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES
 
 NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


CONDENSED
CONSOLIDATED BALANCE SHEET





June
      30, 2008
                                
                                Reported
                                
                                
                                Adjustment
                                
                                
                                Discontinued
                                  Operations
                                  Adjustment
                                
                                
                                As
                                  RestatedASSETSCURRENT
      ASSETSCash
                                
                                $
                                3,300,824
                                
                                
                                $
                                -
                                
                                
                                $
                                (102,642
                                )
                                
                                $
                                3,198,182Loans
      receivable (less allowance for losses of $933,000)
                                
                                
                                4,844,155
                                
                                
                                
                                -
                                
                                
                                
                                (758,441
                                )
                                
                                
                                4,085,714Stock
      subscriptions receivable
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -Prepaid
      expenses and other
                                
                                
                                211,672
                                
                                
                                
                                91,950
                                
                                
                                
                                (26,960
                                )
                                
                                
                                276,662Deferred
      income taxes
                                
                                
                                410,000
                                
                                
                                
                                66,000
                                
                                
                                
                                (31,000
                                )
                                
                                
                                445,000Assets
      used in discontinued operations
                                
                                
                                -
                                
                                
                                
                                
                                
                                
                                
                                919,043
                                
                                
                                
                                919,043TOTAL
      CURRENT ASSETS
                                
                                
                                8,766,651
                                
                                
                                
                                157,950
                                
                                
                                
                                -
                                
                                
                                
                                8,924,601PROPERTY
      AND EQUIPMENT
                                
                                
                                886,840
                                
                                
                                
                                -
                                
                                
                                
                                (214,592
                                )
                                
                                
                                672,248GOODWILL
                                
                                
                                10,443,388
                                
                                
                                
                                (2,296,493
                                )
                                
                                
                                (145,173
                                )
                                
                                
                                8,001,722INTANGIBLE
      ASSETS
                                
                                
                                156,060
                                
                                
                                
                                383,854
                                
                                
                                
                                (271,341
                                )
                                
                                
                                268,573DEFERRED
      INCOME TAX
                                
                                
                                -
                                
                                
                                
                                54,000
                                
                                
                                
                                (19,000
                                )
                                
                                
                                35,000ASSETS
      USED IN DISCONTINUED OPERATIONS
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                650,106
                                
                                
                                
                                650,106TOTAL
      ASSETS
                                
                                $
                                20,252,939
                                
                                
                                $
                                (1,700,689
                                )
                                
                                $
                                -
                                
                                
                                $
                                18,552,250LIABILITIES
      AND SHAREHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts
      payable and accrued liabilities
                                
                                $
                                948,685
                                
                                
                                $
                                33,950
                                
                                
                                $
                                (8,120
                                )
                                
                                $
                                974,515Accrued
      dividend payable
                                
                                
                                525,000
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                525,000Deferred
      revenue
                                
                                
                                283,197
                                
                                
                                
                                -
                                
                                
                                
                                (18,848
                                )
                                
                                
                                264,349Liabilities
      from discontinued operations
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                26,968
                                
                                
                                
                                26,968TOTAL
      CURRENT LIABILITIES
                                
                                
                                1,756,882
                                
                                
                                
                                33,950
                                
                                
                                
                                -
                                
                                
                                
                                1,790,832DEFERRED
      INCOME TAXES
                                
                                
                                672,000
                                
                                
                                
                                (672,000
                                )
                                
                                
                                -
                                
                                
                                
                                -TOTAL
      LIABILITES
                                
                                
                                2,428,882
                                
                                
                                
                                (638,050
                                )
                                
                                
                                -
                                
                                
                                
                                1,790,832SHAREHOLDERS'
      EQUITYSeries
      A convertible preferred stock
                                
                                
                                100,000
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                100,000Common
      stock
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -Additional
      paid-in capital
                                
                                
                                18,981,643
                                
                                
                                
                                795,000
                                
                                
                                
                                
                                
                                
                                
                                19,776,643Retained
      earnings (deficit)
                                
                                
                                (1,257,586
                                )
                                
                                
                                (1,857,639
                                )
                                
                                
                                -
                                
                                
                                
                                (3,115,225
                                )TOTAL
      SHAREHOLDERS’ EQUITY
                                
                                
                                17,824,057
                                
                                
                                
                                (1,062,639
                                )
                                
                                
                                -
                                
                                
                                
                                16,761,418TOTAL
      LIABILITIES AND SHAREHOLDERS' EQUITY
                                
                                $
                                20,252,939
                                
                                
                                $
                                (1,700,689
                                )
                                
                                $
                                -
                                
                                
                                $
                                18,552,250


11




WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES
 
 NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS


For
      the three months ended

                                            June
      30, 2007
                                          
                                          Reported
                                          
                                          
                                          Adjustment
                                          
                                          
                                          As
                                            RestatedREVENUESLoan
      fees
                                          
                                          $
                                          2,197,206
                                          
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          2,197,206Check
      cashing fees
                                          
                                          
                                          325,295
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          325,295Guaranteed
      phone/Cricket fees
                                          
                                          
                                          171,247
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          171,247Other
      fees
                                          
                                          
                                          36,894
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          36,894Total
      Revenue
                                          
                                          
                                          2,730,642
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          2,730,642STORE
      EXPENSESSalaries
      and benefits
                                          
                                          
                                          638,639
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          638,639Provisions
      for loan losses
                                          
                                          
                                          369,656
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          369,656Guaranteed
      phone/Cricket cost of sales
                                          
                                          
                                          103,662
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          103,662Occupancy
                                          
                                          
                                          188,568
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          188,568Advertising
                                          
                                          
                                          96,188
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          96,188Depreciation
                                          
                                          
                                          23,209
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          23,209Amortization
      of intangible assets
                                          
                                          
                                          34,101
                                          
                                          
                                          
                                          175,170
                                          
                                          
                                          
                                          209,271Other
                                          
                                          
                                          214,775
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          214,775Total
      Store Expense
                                          
                                          
                                          1,668,798
                                          
                                          
                                          
                                          175,170
                                          
                                          
                                          
                                          1,843,968INCOME
      (LOSS) FROM STORES
                                          
                                          
                                          1,061,844
                                          
                                          
                                          
                                          (175,170
                                          )
                                          
                                          
                                          886,674GENERAL
      & ADMINISTRATIVE EXPENSESalaries
      and benefits
                                          
                                          
                                          231,905
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          231,905Depreciation
                                          
                                          
                                          11,125
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          11,125Other
                                          
                                          
                                          93,196
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          93,196336,226
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          336,226INCOME
      (LOSS) FROM CONTINUING OPERATIONS
                                          
                                          
                                          725,618
                                          
                                          
                                          
                                          (175,170
                                          )
                                          
                                          
                                          550,448INCOME
      TAX EXPENSE (BENEFIT)
                                          
                                          
                                          273,000
                                          
                                          
                                          
                                          (67,000
                                          )
                                          
                                          
                                          206,000NET
      INCOME (LOSS)
                                          
                                          
                                          452,618
                                          
                                          
                                          
                                          (108,170
                                          )
                                          
                                          
                                          344,448ASSUMED
      SERIES A CONVERTIBLE PREFERRED STOCK DIVIDENDS
                                          
                                          
                                          (525,000
                                          )
                                          
                                          
                                          -
                                          
                                          
                                          
                                          (525,000
                                          )NET
      LOSS AVAILABLE TO COMMON SHAREHOLDERS
                                          
                                          $
                                          (72,382
                                          )
                                          
                                          $
                                          (108,170
                                          )
                                          
                                          $
                                          (180,552
                                          )NET
      LOSS PER COMMON SHARE – BASIC AND DILUTED
                                          
                                          $
                                          (0.06
                                          )
                                          
                                          $
                                          (0.10
                                          )
                                          
                                          $
                                          (0.16
                                          )WEIGHTED
      AVERAGE COMMON SHARES OUTSTANDING -Basic
      and diluted
                                          
                                          
                                          1,125,000
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          1,125,000






12




WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES
 
 NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
 For
      the six months ended

                                    June
      30, 2007
                                  
                                  Reported
                                  
                                  
                                  Adjustment
                                  
                                  
                                  As
                                    RestatedREVENUESLoan
      fees
                                  
                                  $
                                  4,347,512
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  4,347,512Check
      cashing fees
                                  
                                  
                                  731,740
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  731,740Guaranteed
      phone/Cricket fees
                                  
                                  
                                  438,643
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  438,643Other
      fees
                                  
                                  
                                  84,420
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  84,420Total
      Revenue
                                  
                                  
                                  5,602,315
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  5,602,315STORE
      EXPENSESSalaries
      and benefits
                                  
                                  
                                  1,322,610
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  1,322,610Provisions
      for loan losses
                                  
                                  
                                  643,138
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  643,138Guaranteed
      phone/Cricket cost of sales
                                  
                                  
                                  256,399
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  256,399Occupancy
                                  
                                  
                                  374,438
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  374,438Advertising
                                  
                                  
                                  222,477
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  222,477Depreciation
                                  
                                  
                                  57,897
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  57,897Amortization
      of intangible assets
                                  
                                  
                                  68,202
                                  
                                  
                                  
                                  350,340
                                  
                                  
                                  
                                  418,542Other
                                  
                                  
                                  505,094
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  505,094Total
      Store Expense
                                  
                                  
                                  3,450,255
                                  
                                  
                                  
                                  350,340
                                  
                                  
                                  
                                  3,800,595INCOME
      (LOSS) FROM STORES
                                  
                                  
                                  2,152,060
                                  
                                  
                                  
                                  (350,340
                                  )
                                  
                                  
                                  1,801,720GENERAL
      & ADMINISTRATIVE EXPENSESalaries
      and benefits
                                  
                                  
                                  610,115
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  610,115Depreciation
                                  
                                  
                                  21,417
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  21,417Other
                                  
                                  
                                  189,826
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  189,826821,358
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  821,358INCOME
      (LOSS) FROM CONTINUING OPERATIONS
                                  
                                  
                                  1,330,702
                                  
                                  
                                  
                                  (350,340
                                  )
                                  
                                  
                                  980,362INCOME
      TAX EXPENSE (BENEFIT)
                                  
                                  
                                  501,000
                                  
                                  
                                  
                                  (134,000
                                  )
                                  
                                  
                                  367,000NET INCOME
      (LOSS)
                                  
                                  
                                  829,702
                                  
                                  
                                  
                                  (216,340
                                  )
                                  
                                  
                                  613,362ASSUMED
      SERIES A CONVERTIBLE PREFERRED STOCK DIVIDENDS
                                  
                                  
                                  (1,050,000
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (1,050,000
                                  )NET
      LOSS AVAILABLE TO COMMON SHAREHOLDERS
                                  
                                  $
                                  (220,298
                                  )
                                  
                                  $
                                  (216,340
                                  )
                                  
                                  $
                                  (436,638
                                  )NET
      LOSS PER COMMON SHARE – BASIC AND DILUTED
                                  
                                  $
                                  (0.20
                                  )
                                  
                                  $
                                  (0.19
                                  )
                                  
                                  $
                                  (0.39
                                  )WEIGHTED
      AVERAGE COMMON SHARES OUTSTANDING -Basic
      and diluted
                                  
                                  
                                  1,125,000
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  1,125,000


13




WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES
 
 NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS





For
      the three months ended
                                      June
      30, 2008
                                    
                                    Reported
                                    
                                    
                                    Adjustment
                                    
                                    
                                    Discontinued
                                      Operations
                                      Adjustment
                                    
                                    
                                    As
                                      RestatedREVENUESLoan
      fees
                                    
                                    $
                                    2,624,365
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    (195,531
                                    )
                                    
                                    $
                                    2,428,834Check
      cashing fees
                                    
                                    
                                    283,063
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    283,063Guaranteed
      phone/Cricket fees
                                    
                                    
                                    145,331
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    145,331Title
      loan fees
                                    
                                    
                                    158,902
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (158,902
                                    )
                                    
                                    
                                    -Other
      fees
                                    
                                    
                                    43,240
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (254
                                    )
                                    
                                    
                                    42,986Total
      Revenue
                                    
                                    
                                    3,254,901
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (354,687
                                    )
                                    
                                    
                                    2,900,214STORE
      EXPENSESSalaries
      and benefits
                                    
                                    
                                    846,970
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (93,668
                                    )
                                    
                                    
                                    753,302Provisions
      for loan losses
                                    
                                    
                                    438,882
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (28,350
                                    )
                                    
                                    
                                    410,532Guaranteed
      phone/Cricket cost of sales
                                    
                                    
                                    66,427
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    66,427Occupancy
                                    
                                    
                                    299,401
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (62,906
                                    )
                                    
                                    
                                    236,495Advertising
                                    
                                    
                                    93,094
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (575
                                    )
                                    
                                    
                                    92,519Depreciation
                                    
                                    
                                    48,532
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (17,430
                                    )
                                    
                                    
                                    31,102Amortization
      of intangible assets
                                    
                                    
                                    47,711
                                    
                                    
                                    
                                    111,763
                                    
                                    
                                    
                                    (45,160
                                    )
                                    
                                    
                                    114,314Other
                                    
                                    
                                    399,815
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (63,526
                                    )
                                    
                                    
                                    336,289Total
      Store Expense
                                    
                                    
                                    2,240,832
                                    
                                    
                                    
                                    111,763
                                    
                                    
                                    
                                    (311,615
                                    )
                                    
                                    
                                    2,040,980INCOME
      (LOSS) FROM STORES
                                    
                                    
                                    1,014,069
                                    
                                    
                                    
                                    (111,763
                                    )
                                    
                                    
                                    (43,072
                                    )
                                    
                                    
                                    859,234GENERAL
      & ADMINISTRATIVE EXPENSESalaries
      and benefits
                                    
                                    
                                    315,349
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    315,349Depreciation
                                    
                                    
                                    7,180
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    7,180Other
                                    
                                    
                                    170,942
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    170,942493,471
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    493,471INCOME
      (LOSS) FROM CONTINUING OPERATIONS
                                    
                                    
                                    520,598
                                    
                                    
                                    
                                    (111,763
                                    )
                                    
                                    
                                    (43,072
                                    )
                                    
                                    
                                    365,763INCOME
      TAX EXPENSE (BENEFIT)
                                    
                                    
                                    204,000
                                    
                                    
                                    
                                    (42,000
                                    )
                                    
                                    
                                    (16,000
                                    )
                                    
                                    
                                    146,000NET
      INCOME (LOSS) BEFORE DISCONTINUED OPERATIONS
                                    
                                    
                                    316,598
                                    
                                    
                                    
                                    (69,763
                                    )
                                    
                                    
                                    (27,072
                                    )
                                    
                                    
                                    219,763INCOME
      FROM DISCONTINUED OPERATIONS
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    27,072
                                    
                                    
                                    
                                    27,072NET INCOME
      (LOSS)
                                    
                                    
                                    316,598
                                    
                                    
                                    
                                    (69,763
                                    )
                                    
                                    
                                    -
                                    
                                    
                                    
                                    246,835ASSUMED
      SERIES A CONVERTIBLE PREFERRED STOCK DIVIDENDS
                                    
                                    
                                    (525,000
                                    )
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    (525,000
                                    )NET
      LOSS AVAILABLE TO COMMON SHAREHOLDERS
                                    
                                    $
                                    (208,402
                                    )
                                    
                                    $
                                    (69,763
                                    )
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    (278,165
                                    )NET
      LOSS PER COMMON SHARE – BASIC AND DILUTEDContinuing
      operations
                                    
                                    $
                                    (0.02
                                    )
                                    
                                    $
                                    (0.01
                                    )
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    (0.03
                                    )Discontinued
      operations
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Net
      income per common share
                                    
                                    $
                                    (0.02
                                    )
                                    
                                    $
                                    (0.01
                                    )
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    (0.03
                                    )WEIGHTED
      AVERAGE COMMON SHARES OUTSTANDING -Basic
      and diluted
                                    
                                    
                                    8,889,644
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    8,889,644


14




WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES
 
 NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS





For
      the six months ended
                                              June
      30, 2008
                                            
                                            Reported
                                            
                                            
                                            Adjustment
                                            
                                            
                                            Discontinued
                                              Operations
                                              Adjustment
                                            
                                            
                                            As
                                              RestatedREVENUESLoan
      fees
                                            
                                            $
                                            4,874,641
                                            
                                            
                                            $
                                            -
                                            
                                            
                                            $
                                            (241,827
                                            )
                                            
                                            $
                                            4,632,814Check
      cashing fees
                                            
                                            
                                            629,154
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            629,154Guaranteed
      phone/Cricket fees
                                            
                                            
                                            313,682
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            313,682Title
      loan fees
                                            
                                            
                                            221,640
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            (221,640
                                            )
                                            
                                            
                                            -Other
      fees
                                            
                                            
                                            105,292
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            (337
                                            )
                                            
                                            
                                            104,955Total
      Revenue
                                            
                                            
                                            6,144,409
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            (463,804
                                            )
                                            
                                            
                                            5,680,605STORE
      EXPENSESSalaries
      and benefits
                                            
                                            
                                            1,610,847
                                            
                                            
                                            
                                            1,453
                                            
                                            
                                            
                                            (124,309
                                            )
                                            
                                            
                                            1,487,991Provisions
      for loan losses
                                            
                                            
                                            794,956
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            (43,154
                                            )
                                            
                                            
                                            751,802Guaranteed
      phone/Cricket cost of sales
                                            
                                            
                                            173,303
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            173,303Occupancy
                                            
                                            
                                            518,065
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            (88,516
                                            )
                                            
                                            
                                            429,549Advertising
                                            
                                            
                                            178,620
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            (575
                                            )
                                            
                                            
                                            178,045Depreciation
                                            
                                            
                                            81,145
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            (23,088
                                            )
                                            
                                            
                                            58,057Amortization
      of intangible assets
                                            
                                            
                                            84,866
                                            
                                            
                                            
                                            191,386
                                            
                                            
                                            
                                            (60,214
                                            )
                                            
                                            
                                            216,038Other
                                            
                                            
                                            753,888
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            (85,134
                                            )
                                            
                                            
                                            668,754Total
      Store Expense
                                            
                                            
                                            4,195,690
                                            
                                            
                                            
                                            192,839
                                            
                                            
                                            
                                            (424,990
                                            )
                                            
                                            
                                            3,963,539INCOME
      (LOSS) FROM STORES
                                            
                                            
                                            1,948,719
                                            
                                            
                                            
                                            (192,839
                                            )
                                            
                                            
                                            (38,814
                                            )
                                            
                                            
                                            1,717,066GENERAL
      & ADMINISTRATIVE EXPENSESalaries
      and benefits
                                            
                                            
                                            596,393
                                            
                                            
                                            
                                            19,247
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            615,640Depreciation
                                            
                                            
                                            16,976
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            16,976Merger
      transaction expenses
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -Other
                                            
                                            
                                            841,558
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            841,5581,454,927
                                            
                                            
                                            
                                            19,247
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            1,474,174INCOME
      (LOSS) FROM CONTINUING OPERATIONS
                                            
                                            
                                            493,792
                                            
                                            
                                            
                                            (212,086
                                            )
                                            
                                            
                                            (38,814
                                            )
                                            
                                            
                                            242,892INCOME
      TAX EXPENSE (BENEFIT)
                                            
                                            
                                            211,000
                                            
                                            
                                            
                                            (80,700
                                            )
                                            
                                            
                                            (14,400
                                            )
                                            
                                            
                                            115,900NET
      INCOME (LOSS) BEFORE DISCONTINUED OPERATIONS
                                            
                                            
                                            282,792
                                            
                                            
                                            
                                            (131,386
                                            )
                                            
                                            
                                            (24,414
                                            )
                                            
                                            
                                            126,992INCOME
      FROM DISCONTINUED OPERATIONS
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            24,414
                                            
                                            
                                            
                                            24,414NET INCOME
      (LOSS)
                                            
                                            
                                            282,792
                                            
                                            
                                            
                                            (131,386
                                            )
                                            
                                            
                                            -
                                            
                                            
                                            
                                            151,406ASSUMED
      SERIES A CONVERTIBLE PREFERRED STOCK DIVIDENDS
                                            
                                            
                                            (1,050,000
                                            )
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            (1,050,000
                                            )NET
      LOSS AVAILABLE TO COMMON SHAREHOLDERS
                                            
                                            $
                                            (767,208
                                            )
                                            
                                            $
                                            (131,386
                                            )
                                            
                                            $
                                            -
                                            
                                            
                                            $
                                            (898,594
                                            )NET
      LOSS PER COMMON SHARE – BASIC AND DILUTEDContinuing
      operations
                                            
                                            $
                                            (0.09
                                            )
                                            
                                            $
                                            (0.02
                                            )
                                            
                                            $
                                            -
                                            
                                            
                                            $
                                            (0.11
                                            )Discontinued
      operations
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -Net
      income per common share
                                            
                                            $
                                            (0.09
                                            )
                                            
                                            $
                                            (0.02
                                            )
                                            
                                            $
                                            -
                                            
                                            
                                            $
                                            (0.11
                                            )WEIGHTED
      AVERAGE COMMON SHARES OUTSTANDING -Basic
      and diluted
                                            
                                            
                                            8,178,339
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            8,178,339


15
  WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES
 
 NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS




3.
              Acquisitions –





Acquisition of North Dakota
Stores





On March
1, 2008 the Company acquired, for $390,917 in cash, five stores offering cash
advance loans in Fargo, Grand Forks, Bismarck, and Minot, North Dakota. These
stores currently operate under the Ameri-Cash name.





Acquisition of National Cash
& Credit





On
February 26, 2008, the Company entered into an Exchange Agreement with National
Cash & Credit, LLC, a Minnesota limited liability company (NCC), and the
members of NCC. Under the Exchange Agreement, the members of NCC assigned all of
the outstanding membership interests in NCC to the Company in exchange 1,114,891
shares (valued at $1.20 per share) of the Company’s common stock and a cash
payment of $100,000.





The
Company's CEO at the time of the acquisition had a material financial interest
in NCC. The CEO’s ownership and conditions of the Exchange Agreement were
disclosed to the Company's Board of Directors, which approved the Exchange
Agreement.





NCC was
formed approximately two years ago and owned and operated five stores located in
suburban Phoenix, Arizona. NCC principally offered cash advance loans ranging
from $100 to $2,500 and title loans ranging from $500 to $2,000.





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





2008Cash
                        
                        $
                        139,017Loans
      receivable
                        
                        
                        850,577Property
      and equipment
                        
                        
                        193,301Intangible
      assets
                        
                        
                        468,850Goodwill
                        
                        
                        240,879Current
      liabilities
                        
                        
                        (63,837
                        )$
                        1,828,787





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 pro forma results of operations for the three
and six months ended June 30, 2008 and 2007, as if these acquisitions had been
consummated at the beginning of each period presented. The pro forma results of
operations are prepared for comparative purposes only and do not necessarily
reflect the results that would have occurred had the acquisition occurred at the
beginning of the year presented or the results which may occur in the
future.





Three Months Ended June
      30,
                      
                      
                      Six
      Months Ended June 30,2008
                      
                      2007
                      
                      
                      2008
                      
                      
                      2007Pro
      forma revenue
                      
                      $
                      3,254,901
                      
                      
                      $
                      3,040,690
                      
                      
                      $
                      6,461,110
                      
                      
                      $
                      6,424,722Pro
      forma net income
                      
                      
                      246,835
                      
                      
                      
                      289,089
                      
                      
                      
                      333,717
                      
                      
                      
                      623,179Pro
      forma net loss per common share – basic and
    diluted
                      
                      $
                      (.03
                      )
                      
                      $
                      (.21
                      )
                      
                      $
                      (.09
                      )
                      
                      $
                      (.38
                      )





16




WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES
 
 NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


4.
              Shareholders’ Equity
      –





During
the quarter ended March 31, 2008, 1,475,000 options (mostly which were held by
related parties) were exercised at an exercise price of $.01 per share. Also,
125,000 options and warrants were cancelled.





5.
              Risks Inherent in the Operating
      Environment –





The
Company’s 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. If this
negative characterization of deferred presentment cash advances becomes widely
accepted by consumers, demand for deferred presentment cash advances could
significantly decrease, which could have a materially adverse affect on the
Company’s financial condition.





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
six months ended June 30, 2008 and 2007, the Company had significant revenues by
state as follows:





2008
                          % of Revenues
                        
                        
                        2007
                          % of RevenuesWyoming
                        
                        11
                        %
                        
                        
                        9
                        %Iowa
                        
                        12
                        %
                        
                        12
                        %Nebraska
                        
                        31
                        %
                        
                        33
                        %North
      Dakota
                        
                        13
                        %
                        
                        12
                        %





6.
              Dividend Declaration and
      Payment-





On March
17, 2008, the Board of Directors of the Company approved the payment of the
first quarter 2008 dividend on the Company's Series A Convertible Preferred
Stock in the amount of $525,000. The dividends were paid on April 1, 2008. On
July 14, 2008, the Board of Directors of the Company ratified the payment of the
second quarter 2008 dividend on the Company’s Series A Convertible Preferred
Stock in the amount of $525,000. The dividends were paid on July 10,
2008.





7.
              Other
    Expense-





A
breakout of other expense is as follows:





Three Months Ended
                                              June
      30,
                                            
                                            
                                            Six
      Months Ended
                                              June
      30,2008
                                            
                                            
                                            2007
                                            
                                            
                                            2008
                                            
                                            
                                            2007Store
      expenses:Insurance
                                            
                                            $
                                            20,735
                                            
                                            
                                            $
                                            17,241
                                            
                                            
                                            $
                                            45,954
                                            
                                            
                                            $
                                            33,695Collection
      costs
                                            
                                            
                                            64,539
                                            
                                            
                                            
                                            56,071
                                            
                                            
                                            
                                            127,673
                                            
                                            
                                            
                                            94,275Repairs
      & maintenance
                                            
                                            
                                            38,879
                                            
                                            
                                            
                                            16,942
                                            
                                            
                                            
                                            73,304
                                            
                                            
                                            
                                            44,443Supplies
                                            
                                            
                                            29,729
                                            
                                            
                                            
                                            32,850
                                            
                                            
                                            
                                            59,053
                                            
                                            
                                            
                                            74,533Telephone
      and utilities
                                            
                                            
                                            66,228
                                            
                                            
                                            
                                            49,072
                                            
                                            
                                            
                                            134,163
                                            
                                            
                                            
                                            121,430Other
                                            
                                            
                                            116,179
                                            
                                            
                                            
                                            42,599
                                            
                                            
                                            
                                            228,607
                                            
                                            
                                            
                                            136,718$
                                            336,289
                                            
                                            
                                            $
                                            214,775
                                            
                                            
                                            $
                                            668,754
                                            
                                            
                                            $
                                            505,094General
      & administrative expenses:Professional
      fees
                                            
                                            $
                                            96,218
                                            
                                            
                                            $
                                            7,934
                                            
                                            
                                            $
                                            689,372
                                            
                                            
                                            $
                                            9,871Other
                                            
                                            
                                            74,724
                                            
                                            
                                            
                                            85,262
                                            
                                            
                                            
                                            152,186
                                            
                                            
                                            
                                            179,955$
                                            170,942
                                            
                                            
                                            $
                                            93,196
                                            
                                            
                                            $
                                            841,558
                                            
                                            
                                            $
                                            189,826


17




WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES
 
 NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


8.
              Subsequent
      Events-





Effective
July 31, 2008, WCR purchased four payday loan and check cashing operations and
an on-line lending website, which included all related assets including store
level working capital, from Sten Corporation, a Minnesota corporation. Three of
the stores are located in Salt Lake City, Utah and one store is located in
Tempe, Arizona. The acquisition was completed through the Company’s subsidiary,
WCR Acquisition Co., a Minnesota corporation. The Company will finance this
transaction out of its current working capital.





On July
29, 2008, the Company changed its corporate name from URON Inc. to Western
Capital Resources, Inc.


18




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




Restatement




As
previously described in the “Explanation of Our Restatement” preface to this
amendment, we have restated our consolidated financial statements for the year
ended December 31, 2007 and 2006, and subsequent interim reports for the
quarterly periods through September 30, 2008, to correct errors related to the
allocation of purchase price to customer relationships as opposed to goodwill
for historical acquisitions, correct an understatement of share-based
compensation expense for fiscal 2007 and
re-categorize $175,000 of costs originally reported as a reduction of proceeds
from common stock in the consolidated statements of shareholders’ equity to an
expense in the consolidated statements of operations .  The
following Management’s Discussion and Analysis of Financial Condition and
Results of Operations has been updated to reflect the restatement and
discontinued operations which is more fully described in Note 2 to our condensed
consolidated financial statements.  Except as amended to reflect the
restatements previously described, the information in this Item 2 has not been
updated and continues to speak as of the date of the original
filing.





Forward-Looking
Statements




Except
for the historical information contained herein, the matters discussed in this
Report on Form 10-Q/A are forward-looking statements involving risks and
uncertainties that could cause actual results to differ materially from those in
such forward-looking statements. Numerous factors, risks and uncertainties
affect the Company’s operating results and could cause the Company’s actual
results to differ materially from forecasts and estimates or from any other
forward-looking statements made by, or on behalf of, the Company, and there can
be no assurance that future results will meet expectations, estimates or
projections. Further information regarding these and other risks is included in
the “Risk Factors” section of our most recent Annual Report on Form 10-K for
fiscal 2008.





Overview




Throughout
this report, we refer to Western Capital Resources, Inc., a Minnesota
corporation, as “we,” “us,” “Western Capital Resources” and the “Company.” Prior
to July 29, 2008, the Company’s corporate name was URON Inc.




Pursuant
to the December 13, 2007 Merger Agreement, WFL Acquisition Corp. merged with and
into Wyoming Financial Lenders, Inc., with Wyoming Financial Lenders remaining
as the surviving entity and a wholly owned operating subsidiary of the Company.
As indicated above, this transaction is referred to throughout this report as
the “Merger.” The Merger was effective as of the close of business on December
31, 2007.




Since the
Merger, the Company (primarily through Wyoming Financial Lenders, Inc.) provides
retail financial services to individuals in the mid-western and southwestern
United States. These services include non-recourse cash advance loans, check
cashing and other money services. At the close of business on December 31, 2007,
the Company owned and operated 52 stores in ten states (Colorado, Iowa, Kansas,
Montana, Nebraska, North Dakota, South Dakota, Utah, Wisconsin and Wyoming). As
of August 14, 2008 (the date on which we filed our original quarterly report for
the period covered hereby), we owned and operated a total of 62 stores in the
foregoing states and Arizona.




On
February 26, 2008, we entered into an Exchange Agreement with National Cash
& Credit, LLC, a Minnesota limited liability company, and its members. Under
the Exchange Agreement, the members of National Cash & Credit assigned to us
all of the outstanding membership interests in National Cash & Credit in
exchange for our issuance to them of an aggregate of 1,114,891 shares of common
stock and a cash payment of $100,000. The closing of the transactions
contemplated by the Exchange Agreement occurred effective as of February 26,
2008. As a result of this transaction, we acquired five new stores located in
the Phoenix, Arizona market. These stores engage in cash advance lending and
title lending.




We
provide short-term consumer loans—known as cash advance loans—in amounts that
typically range from $100 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 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 $20 for each $100
borrowed. To repay the cash advance loans, customers 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 loans and other services are
subject to state regulations (which vary from state to state), federal
regulations and local regulation, where applicable.





Our
expenses primarily relate to the operations of our stores. The most significant
expenses include salaries and benefits for our store employees, provisions for
loan losses, occupancy expense for our leased real estate and advertising. Our
other significant expenses are general and administrative, which includes
compensation of employees, professional fees and stock-based compensation
expenses and merger transaction expenses.




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
and growth in loan volumes. Our provision for losses is also a significant
expense.  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.




19




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, 2007 have been open at least 24 months on that date. We monitor
newer branches for their progress toward profitability and rate of loan
growth.




We also
have 10,000,000 shares of Series A Convertible Preferred Stock (10% cumulative
dividends,$0.01 par value, $2.10 stated value) authorized, issued and
outstanding.  Our board of directors votes quarterly to approve this
dividend in the amount of $525,000, which represents an annual cost to us of
$2.1 million.  The dividend can be paid either in cash or in shares of
our common stock at the investor’s discretion. This dividend is calculated in to
the net income or loss available to common shareholders.




Our
obligation to pay dividends significantly impacts our cash flow and our ability
to grow through acquisitions, which is the most significant way in which we
expect to grow. For instance, our use of cash in satisfaction of the dividend
payment obligations prevents us from using that cash as part of acquisition
transactions. The present condition of the credit markets also makes it
difficult for us to surmount this obstacle through borrowing. In addition, our
use of cash in satisfaction of the dividend payment obligations makes it more
difficult for us to manage our cash in way that we will ensure the availability
of cash for lending to our cash advance customers during the fall and winter
months, which is typically the busiest time of year for payday
lending.




According
to the Community Financial Services Association of America (CFSA), industry
analysts estimate that the industry has grown to approximately 22,000 payday
loan branches in the United States and these branches extend approximately $40
billion in short-term credit to millions of households that experience cash-flow
shortfalls between paydays. We believe our industry is highly fragmented as ten
companies presently operate approximately 10,200 branches in the United States.
With this industry growth and current fragmentation (discussed above), we
believe there are opportunities to grow our business, primarily through
acquisitions as opposed to organic growth. We are actively identifying
possible store locations in numerous states in which we currently operate
and evaluating the regulatory environment and market potential in the various
states in which we currently do not have stores. In addition to expanding our
geographic reach, our strategic expansion plans also involve the expansion and
diversification of our product and service offerings. 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) cash advance lending alone and (ii) any particular aspect of
our business that concentrated geographically.




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 actively 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.




As of
August 14, 2008, legislation was pending in Arizona which would have extended a
law permitting cash advance loans. In the absence of such legislation, law
permitting cash advance loans was to “sunset” or expire at the end of 2009. The
failure to extend or outrightly permit cash advance lending would negatively
affect us. In Nebraska, legislation was introduced to ban all cash advance loans
in Nebraska. This bill was ultimately defeated. Nevertheless, since we derive
approximately 36% (for the 12 months ended December 31, 2007) of our 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 2007,
the federal government passed legislation (the 2007 Military Authorization Act)
prohibiting the making of payday (cash advance) loans and title loans to members
of the United States military. The law also prohibits creditors in general from
charging more than 36% interest to military borrowers (in calculating the
applicable rate of interest, all fees, service charges, renewal charges, credit
insurance premiums or any other product sold with the loan must be included).
Management does not believe that this 2007 law has materially affected or will
materially affect the Company and its business. As with the various state
legislatures, however, it is possible that the federal government may enact
legislation or regulation that further restricts payday lending or title lending
in general, which would undoubtedly affect our business in adverse
ways.




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:




20




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 notes 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 experiences returned items of
approximately 6.5% of gross loans written and writes off approximately 35% of
these returned items. Based on
days past the check return date, write-offs of returned items historically have
tracked at the following approximate percentages: 1 to 30 days - 35%; 31 to 60
days - 60%; 61 to 90 days - 75%; 91 to 120 days - 80%; and 121 to 180 days -
85%.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.  The Company uses a third party
collection agency to assist in the collection of the loan collateral related to
title loans, when and as the Company determines appropriate.





The
Company entered into the title loan business with the acquisition of National
Cash & Credit, LLC in February 2008.  Currently, title loans are
not a significant portion of the Company’s loans receivable
portfolio.




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.




Share-Based
Compensation





Under the
fair value recognition provisions of Financial Accounting Standards Board
Statement No. 123R (SFAS 123R), “Share-Based Payment,” our share-based
compensation cost is measured at the grant date based on the value of the award
and is recognized as expense based on the applicable vesting
schedule.  Determining the fair value of share-based awards at grant
date requires judgment, which includes estimating the amount of share-based
awards expected to be forfeited.  The Black-Scholes option pricing
model (using estimated value of the Company) is used to measure fair value for
stock option grants.





During
2007, we granted 1,600,000 shares of restricted stock options and warrants to
certain of our employees and non-employees.  There were 11 recipients
of these grants. These options and warrants vested upon the successful
completion of the Merger on December 31, 2007.  We estimated that the
grant date fair market value of these restricted options and warrants totaled
$864,000 ($0.54 per share) at the time of issuance.  The market price
of our common stock on November 29, 2007 (the date of issuance) was $1.80, and
the exercise price for all of those options and warrants was $0.01 per
share.  During 2007, we also granted warrants to a Company adviser for
the purchase of up to 400,000 common shares at $0.01 per share.  These
warrants vested upon the successful completion of the merger on December 31,
2007.  We estimated that the grant date fair market value of these
restricted warrants totaled $216,000 at the time of issuance ($0.54 per
share).  These warrants had not been exercised as of August 14,
2008.




21




The table
below summarizes information about the above-referenced grants of options and
warrants:





Recipient (security type)
                      
                      Date
                      
                      Share-Based
                        Compensation
                        ExpenseSteven
      Staehr (option)
                      
                      11/29/2007
                      
                      $
                      297,000David
      Stueve (option)
                      
                      11/29/2007
                      
                      $
                      135,000Rich
      Horner (option)
                      
                      11/29/2007
                      
                      $
                      54,000Ted
      Dunham (option)
                      
                      11/29/2007
                      
                      $
                      54,000Rose
      Piel (option)
                      
                      11/29/2007
                      
                      $
                      13,500Brian
      Chaney (option)
                      
                      11/29/2007
                      
                      $
                      13,500John
      Quandahl (option)
                      
                      11/29/2007
                      
                      $
                      216,000John
      Richards (option) *
                      
                      11/29/2007
                      
                      $
                      54,000Tom
      Griffith (option) *
                      
                      11/29/2007
                      
                      $
                      13,500Lantern
      Advisers, LLC (warrant)
                      
                      11/29/2007
                      
                      $
                      216,000Donna
      Mendez (warrant)
                      
                      11/29/2007
                      
                      $
                      8,100Robert
      Jorgenson (warrant)
                      
                      11/29/2007
                      
                      $
                      5,400





* Option
was later cancelled.





Results
of Operations - Three Months Ended June 30, 2008 Compared to Three Months Ended
June 30, 2007





For the
three-month period ended June 30, 2008, net income was $247,000 compared to net
income of $344,000 for the three months ended June 30, 2007. During the three
months ended June 30, 2008, income before income taxes was $366,000 compared to
income before income taxes of $550,000 for the three months ended June 30, 2007.
The major components of each of revenues, store expenses, general and
administrative expenses, total operating expenses and income tax expense, are
discussed below.





Revenues





Revenues
totaled $2.90 million for the three months ended June 30, 2008 compared to $2.73
million for the three months ended June 30, 2007. This increase resulted from
the increase in the number of stores operating during the 2008 interim due to
our small acquisition of five stores in North Dakota operating under the name
“Ameri-Cash,” and the acquisition of National Cash & Credit,
LLC. During the three-month period ended June 30, 2008 we originated
approximately $17.9 million in cash advance loans compared to $15.3 during the
2007 interim period. Our average loan (including fee) totaled approximately $353
during the period ended June 30, 2008 versus $332 in the 2007 interim period.
Our average fee rate for the three months ended June 30, 2008 was $51 compared
to $47 for the 2007 interim period. Revenues from check cashing, guaranteed
phone/Cricket phone fees, and other sources totaled $471,000 and $530,000 for
the three month periods ended June 30, 2008 and 2007, respectively.




The
following table summarizes our revenues for the three months ended June 30, 2008
and 2007, respectively:




Three
      Months Ended June 30,
                              
                              
                              Three
      Months Ended June 30,2008
                              
                              
                              2007
                              
                              
                              2008
                              
                              
                              2007(percentage of revenues)Loan
      Fees
                              
                              $
                              2,428,834
                              
                              
                              $
                              2,197,206
                              
                              
                              
                              83.8
                              %
                              
                              
                              80.5
                              %Check
      cashing fees
                              
                              
                              283,063
                              
                              
                              
                              325,295
                              
                              
                              
                              9.7
                              %
                              
                              
                              11.9
                              %Guaranteed
      phone/Cricket fees
                              
                              
                              145,331
                              
                              
                              
                              171,247
                              
                              
                              
                              5.0
                              %
                              
                              
                              6.3
                              %Other
      fees
                              
                              
                              42,986
                              
                              
                              
                              36,894
                              
                              
                              
                              1.5
                              %
                              
                              
                              1.3
                              %Total
                              
                              $
                              2,900,214
                              
                              
                              $
                              2,730,642
                              
                              
                              
                              100.0
                              %
                              
                              
                              100.0
                              %




Store
Expenses




Total
expenses associated with store operations for the three months ended June 30,
2008 were $2.04 million compared to $1.84 million for the three months ended
June 30, 2007. The most significant components of these expenses were salaries
and benefits, provisions for loan losses, guaranteed phone/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, provisions for loan losses, and
our costs of occupancy. As with our fiscal year-end results, guaranteed
phone/Cricket phone costs of sales showed continued reductions in expense
resulting from slowing guaranteed phone/Cricket phone sales overall. In the
three months ending June 30, 2008 we also modestly decreased advertising
expenses. A discussion of the various components of our store expenses for the
three months ended June 30, 2008 appears below.





Salaries
and Benefits. Payroll and related costs at the store level were $753,000
compared to $638,000 for the periods ended June 30, 2008 and 2007, 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.




22




Provisions
for Loan Losses. For the three months ended June 30, 2008 our provisions for
loan losses were $411,000. For the three months ended June 30, 2007 such
provisions were $370,000. Our provisions for loan losses represented
approximately 16.9% and 16.8% of our loan fee revenue for the three months ended
June 30, 2008 and 2007, respectively. We are currently experiencing a more
challenging collections environment mainly reflected by increased bankruptcy
filings, higher energy and other prices. Presently, we do not foresee any
certain end to the current economic downturn and as a result we expect higher
loan losses during fiscal 2008 than those we experienced during
2007.





Guaranteed
phone/Cricket. Guaranteed phone/Cricket costs (reflecting costs of sales of such
items) decreased from $100,000 for the three months ended June 30, 2007 to
$66,000 for the three months ended June 30, 2008, a decrease of $34,000. This
decrease has followed our expectations that our guaranteed phone/Cricket phone
line of business will become increasingly less significant to our overall
revenues as consumers move away from home phones in general (which is where the
guaranteed phone/Cricket phone product is used) toward cell phones. By the end
of fiscal 2008, we do not expect that this line of business will be
significant.





Occupancy
Costs. Occupancy expenses, comprised mainly of store leases, were $237,000 for
the three months ended June 30, 2008 versus $189,000 for the three months ended
June 30, 2007. 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 $92,500 during the three-month period
ended June 30, 2008 as compared to $96,000 during the three-month period ended
June 30, 2007. In general, we expect that our marketing and advertising expenses
for fiscal 2008 will remain relatively stable but will increase overall, as
compared to fiscal 2007, if we are successful in implementing our acquisition
strategy during the year.





Depreciation.
Depreciation, relating to store equipment and capital expenditures for stores,
increased from $23,000 for the three months ended June 30, 2007 to $31,000 for
the three months ended June 30, 2008.




Amortization
of Intangible Assets. Amortization of intangible assets was slightly higher for
the two interim periods, being $114,314 for the three months ended June 30, 2008
versus $209,000 for the three months ended June 30, 2007.  The
significant increase in amortization in 2008 was due to the change in customer
relationships recorded as an intangible asset rather than goodwill.





Other.
Other expenses were $336,000 for the three months ended June 30, 2008 versus
$215,000 for the three months ended June 30, 2007 primarily due higher costs
associated with operating a higher number of stores on a year over year
basis.





General and Administrative
Expenses





Total
general and administrative costs for the three months ended June 30, 2008 were
$493,000 compared to $336,000 for the period ended June 30, 2007. For the
three-month period ended June 30, 2008, the major components of these costs were
salaries and benefits for our corporate headquarters operations and executive
management, depreciation of certain headquarters-related equipment, 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 June 30, 2008 and 2007 appears below:





Salaries
and Benefits. Salaries and benefits expenses for the three months ended June 30,
2008 were $315,000, an $83,000 increase from the $232,000 in such expenses
during period ended June 30, 2007. The increase resulted mainly from
headquarters and management employees being slightly higher for the period ended
June 30, 2008 then they were for the corresponding period ended June 30, 2007.
This slight increase is mainly due to our addition of employees since the
Merger.





Depreciation.
Depreciation for the period ended June 30, 2008 compared to June 30, 2007 was
$7,000 and $11,000, respectively. Depreciation relates primarily to equipment
and capital improvements at the Company’s corporate headquarters.





Other
General and Administrative Expenses. Other general and administrative expenses,
which includes professional fees for accounting and legal services, consulting
services related to Sarbanes-Oxley compliance, utilities, office supplies,
collection costs and other minor costs associated with corporate headquarters
activities, aggregated to $171,000 for the three months ended June 30, 2008
versus $93,000 for the three months ended June 30, 2007. We do not expect these
types of costs to decrease to their fiscal 2007 levels, as most of them are
attributed to efforts to comply with various rules and regulations applicable to
public reporting companies.




23




Total Operating
Expenses





Our total
operating expenses for the three months ended June 30, 2008 were $2.53 million
compared to $2.18 million for the comparable period for 2007. Overall, the
$350,000 increase in operating expenses were mainly attributed to our growth in
the number of operating stores and increased costs associated with being a
public reporting company.





Income Tax
Expense





Income
tax expense for the period ended June 30, 2008 was $146,000 compared to income
tax expense of $206,000 for the period ended June 30, 2007, which decreased
primarily as a result of our net income before taxes for the 2008 period of
$366,000 versus net income before taxes for the 2007 period of
$550,000.





Discontinued
Operations





Income from discontinued
operations was $27,072 for the three months ended June 30,
2008.





See Note
2, “Restatement” for further information regarding the specific impacts of the
discontinued operations to our consolidated balance sheets and consolidated
statements of income.





Results
of Operations - Six Months Ended June 30, 2008 Compared to Six Months Ended June
30, 2007





For the
six-month period ended June 30, 2008, net income was $151,000 compared to net
income of $613,000 for the six months ended June 30, 2007. During the six months
ended June 30, 2008, income before income taxes was $243,000 compared to income
before income taxes of $980,000 for the six months ended June 30, 2007. The
major components of each of revenues, store expenses, general and administrative
expenses, total operating expenses and income tax expense, as restated, are
discussed below.





Revenues





Revenues
totaled $5.68 million for the six months ended June 30, 2008 compared to $5.60
million for the six months ended June 30, 2007. This increase resulted from the
increase in the number of stores operating during the 2008 interim due to our
small acquisition of five stores in North Dakota operating under the name
“Ameri-Cash,” and the acquisition of National Cash & Credit,
LLC. During the six-month period ended June 30, 2008 we originated
approximately $33.2 million in cash advance loans compared to $29.7 during the
2007 interim period. Our average loan (including fee) totaled approximately $351
during the period ended June 30, 2008 versus $334 in the 2007 interim period.
Our average fee rate for the six months ended June 30, 2008 was $50 compared to
$48 for the 2007 interim period. Revenues from check cashing, title loans,
guaranteed phone/Cricket phone fees, and other sources totaled $1.05 million and
$1.25 for the six month periods ended June 30, 2008 and 2007,
respectively.





24




The
following table summarizes our revenues for the six months ended June 30, 2008
and 2007, respectively:




Six Months Ended June 30,
                                
                                
                                Six Months Ended June 30,2008
                                
                                
                                2007
                                
                                
                                2008
                                
                                
                                2007(percentage of revenues)Loan
      Fees
                                
                                $
                                4,632,814
                                
                                
                                $
                                4,347,512
                                
                                
                                
                                81.6
                                %
                                
                                
                                77.6
                                %Check
      cashing fees
                                
                                
                                629,154
                                
                                
                                
                                731,740
                                
                                
                                
                                11.1
                                %
                                
                                
                                13.1
                                %Guaranteed
      phone/Cricket fees
                                
                                
                                313,682
                                
                                
                                
                                438,643
                                
                                
                                
                                5.5
                                %
                                
                                
                                7.8
                                %Other
      fees
                                
                                
                                104,955
                                
                                
                                
                                84,420
                                
                                
                                
                                1.8
                                %
                                
                                
                                1.5
                                %Total
                                
                                $
                                5,680,605
                                
                                
                                $
                                5,602,315
                                
                                
                                
                                100.0
                                %
                                
                                
                                100.0
                                %





Store
Expenses




Total
expenses associated with store operations for the six months ended June 30, 2008
were $3.96 million compared to $3.80 million for the six months ended June 30,
2007. The most significant components of these expenses were salaries and
benefits, provisions for loan losses, guaranteed phone/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, provisions for loan losses, and
our costs of occupancy. As with our fiscal year-end results, guaranteed
phone/Cricket phone costs of sales showed continued reductions in expense
resulting from slowing guaranteed phone/Cricket phone sales overall. In the six
months ending June 30, 2008 we also modestly decreased advertising expenses. A
discussion of the various components of our store expenses for the six months
ended June 30, 2008 appears below.





Salaries
and Benefits. Payroll and related costs at the store level were $1.49 million
compared to $1.32 million for the six months ended June 30, 2008 and 2007,
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 six months ended June 30, 2008 our provisions for loan
losses were $752,000. For the six months ended June 30, 2007 such provisions
were $643,000. Our provisions for loan losses represented approximately 16.2%
and 14.8% of our loan fee revenue for the six months ended June 30, 2008 and
2007, respectively. We believe that the increased loss ratio for the comparable
periods results from both our increased store count, since the processes of
integrating acquired store locations frequently involves some amount of time
before store management had adopted and implemented our protective
pre-transaction measures, and a more challenging consumer collections
environment in general. The more challenging environment is mainly reflected by
increased bankruptcy filings, higher energy and other prices. Presently, we do
not foresee any certain end to the current economic downturn and as a result we
expect higher loan losses during fiscal 2008 than those we experienced during
2007.





Guaranteed
phone/Cricket. Guaranteed phone/Cricket costs (reflecting costs of sales of such
items) decreased from $256,000 for the six months ended June 30, 2007 to
$173,000 for the six months ended June 30, 2008, a decrease of $83,000. This
decrease has followed our expectations that our guaranteed phone/Cricket phone
line of business will become increasingly less significant to our overall
revenues as consumers move away from home phones in general (which is where the
guaranteed phone/Cricket phone product is used) toward cell phones. By the end
of fiscal 2008, we do not expect that this line of business will be
significant.





Occupancy
Costs. Occupancy expenses, comprised mainly of store leases, were $430,000 for
the six months ended June 30, 2008 versus $374,000 for the six months ended June
30, 2007. The increase in our occupancy expenses relates to our acquisitions and
operation of more stores during the most recent six-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 $178,000 during the six-month period
ended June 30, 2008 as compared to $222,000 during the six-month period ended
June 30, 2007. We have made a concerted effort to reduce our advertising
expenses, the decrease in advertising and marketing expenses primarily results
from the timing of payments. In general, we expect that our marketing and
advertising expenses for fiscal 2008 will remain relatively stable but will
increase overall, as compared to fiscal 2007, if we are successful in
implementing our acquisition strategy during the year.





Depreciation.
Depreciation, relating to store equipment and capital expenditures for stores,
remained fairly equal at $58,000 for the six months ended June 30, 2007 and six
months ended June 30, 2008.




25




Amortization
of Intangible Assets. Amortization of intangible assets was roughly equivalent
for the two interim periods, being $216,000 for the six months ended June 30,
2008 versus $419,000 for the six months ended June 30, 2007.  This is
primarily due to the change in recording of our customer relationships as
intangible assets.





Other.
Other expenses were $669,000 for the six months ended June 30, 2008 versus
$505,000 for the six months ended June 30, 2007 primarily due higher costs
associated with operating a higher number of stores on a year over year
basis.





General and Administrative
Expenses





Total
general and administrative costs for the six months ended June 30, 2008 were
$1.47 million compared to $821,000 for the period ended June 30, 2007. For the
six-month period ended June 30, 2008, the major components of these costs were
salaries and benefits for our corporate headquarters operations and executive
management, depreciation of certain headquarters-related equipment, 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 six months ended June 30, 2008 and 2007 appears below:





Salaries
and Benefits. Salaries and benefits expenses remained constant
during  the six months ended June 30, 2008 and 2007 at
approximately  $610,000.





Depreciation.
Depreciation for the period ended June 30, 2008, in the amount of $17,000, and
$21,000 for the period ended June 30, 2007. Depreciation relates primarily to
equipment and capital improvements at the Company’s corporate
headquarters.





Other
General and Administrative Expenses. Other general and administrative expenses,
which includes professional fees for accounting and legal services, consulting
services related to Sarbanes-Oxley compliance, utilities, office supplies,
collection costs and other minor costs associated with corporate headquarters
activities, aggregated to $842,000 for the six months ended June 30, 2008 versus
$190,000 for the six months ended June 30, 2007. We do not expect these types of
costs to decrease to their fiscal 2007 levels, as most of them are attributed to
efforts to comply with various rules and regulations applicable to public
reporting companies.





Total Operating
Expenses





Our total
operating expenses for the six months ended June 30, 2008 were $5.44 million
compared to $4.62 million for the comparable period for 2007. Overall, the
$820,000 increase in operating expenses were mainly attributed to our growth in
the number of operating stores and increased costs associated with being a
public reporting company.





Income Tax
Expense





Income
tax expense for the period ended June 30, 2008 was $116,000 compared to income
tax expense of $367,000 for the period ended June 30, 2007, which decreased
primarily as a result of our net income before taxes for the 2008 period of
$243,000 versus net income before taxes for the 2007 period of
$980,000.





Discontinued
Operations





See Note
2, “Restatement” for information regarding the specific impacts of the
discontinued operations to our consolidated balance sheets and consolidated
statements of income.




26





Liquidity
and Capital Resources





Summary
cash flow data is as follows:




Six-Months Ended June 30,2008
                                        
                                        
                                        2007Cash
      flows provided (used) by :Operating
      activities
                                        
                                        $
                                        (1,073,732
                                        )
                                        
                                        $
                                        1,343,962Investing
      activities
                                        
                                        
                                        (511,824
                                        )
                                        
                                        
                                        (90,655
                                        )Financing
      activities
                                        
                                        
                                        3,901,755
                                        
                                        
                                        
                                        (1,138,748
                                        )Net
      increase in cash
                                        
                                        
                                        2,316,199
                                        
                                        
                                        
                                        114,559Cash,
      beginning of period
                                        
                                        
                                        984,625
                                        
                                        
                                        
                                        1,265,460Cash,
      end of period
                                        
                                        $
                                        3,300,824
                                        
                                        
                                        $
                                        1,380,019




At June
30, 2008 we had cash of $3.20 million compared to cash of $985,000 on December
31, 2007. The increase results mainly from our receipt of cash in the private
placement transaction that closed simultaneously with the Merger. For fiscal
year 2008, 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 2008. 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.




Off-Balance
Sheet Arrangements




The
Company had no off-balance sheet arrangements as of June 30, 2008.





Item 3. Quantitative and
Qualitative Disclosures About Market Risk





Not
applicable.




Item 4T. Controls and
Procedures





Evaluation of Disclosure
Controls and Procedures




On June
30, 2008, our Chief Executive Officer and 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)). Based upon that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that, except for the item noted below, our disclosure controls and procedures
were effective.




During
the course of their audit of our consolidated financial statements for fiscal
2007, our independent registered public accounting firm, Lurie Besikof Lapidus
& Company, LLP, advised management and the audit committee of our Board of
Directors that they had identified a material weakness. The material weakness
relates to the lack of segregation of duties within the financial processes in
the Company.





The
Company periodically assesses the cost versus benefit of adding the resources
that would remedy or mitigate this situation, and currently does not consider
the benefits to outweigh the costs of adding additional staff in light of the
limited number of transactions related to the Company's operations.





In
addition, subsequent to the fiscal quarter covered by this report, but prior to
the filing of this Form 10-Q/A, several remedial measures were identified and
implemented in response to the conclusion reached by our Chief Executive and
Chief Financial Officer that, as of December 31, 2008, our disclosure controls
and procedures were not effective.  For further information relating
to our assessment of disclosure controls and procedures generally, and our
internal control over financial reporting more particularly, including our
remediation plan, see our Annual Report on Form 10-K for fiscal year ended
December 31, 2008 filed contemporaneously with this Form 10-Q/A.




27




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.





PART
II. OTHER INFORMATION




Item 1.
Legal Proceedings





None.




Item 1A. Risk
Factors





Not
applicable.




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




None.




Item 3. Defaults upon
Senior Securities





None.




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





None.





Item 5.
Other Information





None.




28




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 4, 2009
                    Western
      Capital Resources, Inc.(Registrant)By:
                    /s/
      John QuandahlJohn
      QuandahlChief
      Executive Officer, Chief Operating Officer and
                      Interim
      Chief Financial
Officer




29