SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




Form
10-Q




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




For the
quarterly period ended September 30, 2009 or




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




Commission File Number:  
000-52015




Western
Capital Resources, Inc.


(Exact
Name of Registrant as Specified in its Charter)





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




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


(Address
of Principal Executive Offices) (Zip Code)




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





N/A







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




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





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




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




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




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




Yes o No þ




APPLICABLE
ONLY TO CORPORATE ISSUERS




As of
November 1, 2009, the registrant had outstanding 7,996,007 shares of common
stock, no par value per share.







Western
Capital Resources, Inc.




Index





PagePART
      I. FINANCIAL INFORMATIONItem
      1. Financial Statements
              
              2Item
      2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operations
              
              11Item
      3. Quantitative and Qualitative Disclosures About Market
    Risk
              
              18Item
      4T. Controls and Procedures
              
              18PART
      II. OTHER INFORMATIONItem
      1. Legal Proceedings
              
              20Item
      1A. Risk Factors
              
              20Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
              
              20Item
      3. Defaults Upon Senior Securities
              
              20Item
      4. Submission of Matters to a Vote of Security Holders
              
              20Item
      5. Other Information
              
              20Item
      6. Exhibits
              
              21SIGNATURES
              
              21


1


PART
I. FINANCIAL INFORMATION




Item 1. Financial
Statements





WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES





CONTENTS





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


2





WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS





September 30, 2009
                  (Unaudited)
                
                
                December 31, 2008ASSETSCURRENT
      ASSETSCash
                
                $
                1,216,656
                
                
                $
                3,358,547Loans
      receivable (less allowance for losses of $1,187,000 and
      $1,413,000)
                
                
                4,674,491
                
                
                
                4,889,940Inventory
                
                
                388,565
                
                
                
                198,430Prepaid
      expenses and other
                
                
                575,625
                
                
                
                247,318Deferred
      income taxes
                
                
                471,000
                
                
                
                558,000TOTAL
      CURRENT ASSETS
                
                
                7,326,337
                
                
                
                9,252,235PROPERTY
      AND EQUIPMENT
                
                
                1,191,045
                
                
                
                815,980GOODWILL
                
                
                11,458,744
                
                
                
                10,253,744INTANGIBLE
      ASSETS
                
                
                1,053,455
                
                
                
                756,849OTHER
                
                
                139,644
                
                
                
                133,831TOTAL
      ASSETS
                
                $
                21,169,225
                
                
                $
                21,212,639LIABILITIES
      AND  SHAREHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts
      payable and accrued liabilities
                
                $
                1,202,898
                
                
                $
                998,653Note
      payable – short-term
                
                
                2,000,000
                
                
                
                2,100,000Current
      portion long-term debt
                
                
                162,570
                
                
                
                -Preferred
      dividend payable
                
                
                950,000
                
                
                
                -Deferred
      revenue
                
                
                286,937
                
                
                
                319,543TOTAL
      CURRENT LIABILITIES
                
                
                4,602,405
                
                
                
                3,418,196LONG-TERM
      LIABILITIESNotes
      payable – long-term
                
                
                2,235,186
                
                
                
                2,500,000Deferred
      income taxes
                
                
                194,000
                
                
                
                64,000TOTAL
      LONG-TERM LIABILITIES
                
                
                2,429,186
                
                
                
                2,564,000TOTAL
      LIABILITES
                
                
                7,031,591
                
                
                
                5,982,196SHAREHOLDERS'
      EQUITYSeries
      A convertible preferred stock 10% cumulative dividends, $0.01 par value,
      $2.10 stated value, 10,000,000 shares authorized, issued and
      outstanding
                
                
                100,000
                
                
                
                100,000Common
      stock, no par value, 240,000,000 shares authorized, 7,996,007 and
      7,598,354 shares issued and outstanding
                
                
                -
                
                
                
                -Additional
      paid-in capital
                
                
                18,478,337
                
                
                
                18,478,337Accumulated
      deficit
                
                
                (4,440,703
                )
                
                
                (3,347,894
                )TOTAL
      SHAREHOLDERS’ EQUITY
                
                
                14,137,634
                
                
                
                15,230,443TOTAL
      LIABILITIES AND SHAREHOLDERS' EQUITY
                
                $
                21,169,225
                
                
                $
                21,212,639





See
notes to condensed consolidated financial statements.


3


WESTERN
CAPITAL RESOURCES, INC.


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)





Three months ended
                    
                    
                    Nine months endedSeptember 30, 2009
                    
                    
                    September 30, 2008
                    
                    
                    September 30, 2009
                    
                    
                    September 30, 2008REVENUESPayday
      loan fees
                    
                    $
                    2,814,599
                    
                    
                    $
                    2,759,648
                    
                    
                    $
                    7,872,094
                    
                    
                    $
                    7,392,462Phones
      and accessories
                    
                    
                    1,186,550
                    
                    
                    
                    130,405
                    
                    
                    
                    4,163,525
                    
                    
                    
                    444,087Check
      cashing fees
                    
                    
                    184,213
                    
                    
                    
                    279,787
                    
                    
                    
                    646,863
                    
                    
                    
                    908,941Other
      income and fees
                    
                    
                    382,807
                    
                    
                    
                    63,381
                    
                    
                    
                    1,107,072
                    
                    
                    
                    168,3354,568,169
                    
                    
                    
                    3,233,221
                    
                    
                    
                    13,789,554
                    
                    
                    
                    8,913,825STORE
      EXPENSESSalaries
      and benefits
                    
                    
                    1,273,036
                    
                    
                    
                    746,786
                    
                    
                    
                    3,851,396
                    
                    
                    
                    2,234,777Provisions
      for loan losses
                    
                    
                    453,626
                    
                    
                    
                    566,817
                    
                    
                    
                    1,142,131
                    
                    
                    
                    1,318,619Phones
      and accessories cost of sales
                    
                    
                    438,646
                    
                    
                    
                    50,247
                    
                    
                    
                    1,772,002
                    
                    
                    
                    223,550Occupancy
                    
                    
                    442,058
                    
                    
                    
                    245,708
                    
                    
                    
                    1,199,446
                    
                    
                    
                    675,257Advertising
                    
                    
                    102,566
                    
                    
                    
                    103,100
                    
                    
                    
                    359,389
                    
                    
                    
                    281,145Depreciation
                    
                    
                    63,430
                    
                    
                    
                    27,155
                    
                    
                    
                    188,637
                    
                    
                    
                    85,213Amortization
      of intangible assets
                    
                    
                    179,664
                    
                    
                    
                    101,130
                    
                    
                    
                    536,394
                    
                    
                    
                    317,168Other
                    
                    
                    671,172
                    
                    
                    
                    303,743
                    
                    
                    
                    1,788,120
                    
                    
                    
                    972,4973,624,198
                    
                    
                    
                    2,144,686
                    
                    
                    
                    10,837,515
                    
                    
                    
                    6,108,226INCOME
      FROM STORES
                    
                    
                    943,971
                    
                    
                    
                    1,088,535
                    
                    
                    
                    2,952,039
                    
                    
                    
                    2,805,599GENERAL
      & ADMINISTRATIVE EXPENSESSalaries
      and benefits
                    
                    
                    376,885
                    
                    
                    
                    355,381
                    
                    
                    
                    1,011,934
                    
                    
                    
                    971,021Depreciation
                    
                    
                    8,103
                    
                    
                    
                    13,502
                    
                    
                    
                    17,564
                    
                    
                    
                    30,477Interest
      expense
                    
                    
                    81,351
                    
                    
                    
                    -
                    
                    
                    
                    245,457
                    
                    
                    
                    -Other
                    
                    
                    155,902
                    
                    
                    
                    284,123
                    
                    
                    
                    901,893
                    
                    
                    
                    1,125,680622,241
                    
                    
                    
                    653,006
                    
                    
                    
                    2,176,848
                    
                    
                    
                    2,127,178INCOME
      FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
                    
                    
                    321,730
                    
                    
                    
                    435,529
                    
                    
                    
                    775,191
                    
                    
                    
                    678,421INCOME
      TAX EXPENSE
                    
                    
                    124,000
                    
                    
                    
                    158,000
                    
                    
                    
                    293,000
                    
                    
                    
                    273,900NET
      INCOME BEFORE DISCONTINUED OPERATIONS
                    
                    
                    197,730
                    
                    
                    
                    277,529
                    
                    
                    
                    482,191
                    
                    
                    
                    404,521INCOME
      FROM DISCONTINUED OPERATIONSNet
      of $32,000 and $46,600  income tax expense in
    2008
                    
                    
                    -
                    
                    
                    
                    52,197
                    
                    
                    
                    -
                    
                    
                    
                    76,611NET
      INCOME
                    
                    
                    197,730
                    
                    
                    
                    329,726
                    
                    
                    
                    482,191
                    
                    
                    
                    481,132SERIES
      A CONVERTIBLE PREFERRED STOCK DIVIDENDS (assumes all paid including for
      2009)
                    
                    
                    (525,000
                    )
                    
                    
                    (525,000
                    )
                    
                    
                    (1,575,000
                    )
                    
                    
                    (1,575,000
                    )NET
      LOSS AVAILABLE TO COMMON STOCKHOLDERS
                    
                    $
                    (327,270
                    )
                    
                    $
                    (195,274
                    )
                    
                    $
                    (1,092,809
                    )
                    
                    $
                    (1,093,868
                    )NET
      LOSS PER COMMON SHARE-BASIC AND DILUTEDContinuing
      operations
                    
                    
                    (0.04
                    )
                    
                    
                    (0.03
                    )
                    
                    
                    (0.14
                    )
                    
                    
                    (0.14
                    )Discontinued
      operations
                    
                    
                    0.00
                    
                    
                    
                    0.01
                    
                    
                    
                    0.00
                    
                    
                    
                    0.01Net
      loss per common share
                    
                    
                    (0.04
                    )
                    
                    
                    (0.02
                    )
                    
                    
                    (0.14
                    )
                    
                    
                    (0.13
                    )WEIGHTED
      AVERAGE COMMON SHARE OUTSTANDING -Basic
      and diluted
                    
                    
                    7,996,007
                    
                    
                    
                    8,889,644
                    
                    
                    
                    7,924,633
                    
                    
                    
                    8,644,065





See
notes to condensed consolidated financial statements.


4


WESTERN
CAPITAL RESOURCES, INC.


CONDENSED
CONSOLIDATED CASH FLOW (Unaudited)





Nine Months Ended
                      September 30, 2009
                    
                    
                    Nine Months Ended
                      September 30, 2008OPERATING
      ACTIVITIESNet
      Income
                    
                    $
                    482,191
                    
                    
                    $
                    481,132Adjustments
      to reconcile net income to net cash provided (used) by operating
      activities:Depreciation
                    
                    
                    206,201
                    
                    
                    
                    156,734Amortization
                    
                    
                    536,394
                    
                    
                    
                    422,543Deferred
      income taxes
                    
                    
                    217,000
                    
                    
                    
                    134,000Changes
      in operating assets and liabilitiesLoans
      receivable
                    
                    
                    215,449
                    
                    
                    
                    (546,249
                    )Inventory
                    
                    
                    (190,135
                    )
                    
                    
                    -Prepaid
      expenses and other assets
                    
                    
                    (334,120
                    )
                    
                    
                    69,661Accounts
      payable and accrued liabilities
                    
                    
                    204,245
                    
                    
                    
                    (1,855,189
                    )Deferred
      revenue
                    
                    
                    (32,606
                    )
                    
                    
                    45,695Net
      cash provided (used) by operating activities
                    
                    
                    1,304,619
                    
                    
                    
                    (1,091,673
                    )INVESTING
      ACTIVITIESPurchase
      of property and equipment
                    
                    
                    (441,266
                    )
                    
                    
                    (299,164
                    )Acquisition
      of stores
                    
                    
                    (2,178,000
                    )
                    
                    
                    (344,447
                    )Net
      cash used by investing activities
                    
                    
                    (2,619,266
                    )
                    
                    
                    (643,611
                    )FINANCING
      ACTIVITIESPayments
      on note payable – short-term
                    
                    
                    (100,000
                    )
                    
                    
                    -Payments
      on notes payable – long-term
                    
                    
                    (102,244
                    )
                    
                    
                    -Collections
      on subscription receivable
                    
                    
                    -
                    
                    
                    
                    4,437,050Cost
      of raising capital
                    
                    
                    -
                    
                    
                    
                    (79,145
                    )Dividends
                    
                    
                    (625,000
                    )
                    
                    
                    (1,050,000
                    )Net
      cash provided (used) by financing activities
                    
                    
                    (827,244
                    )
                    
                    
                    3,307,905NET
      INCREASE (DECREASE) IN CASH
                    
                    
                    (2,141,891
                    )
                    
                    
                    1,572,621CASHBeginning
      of period
                    
                    
                    3,358,547
                    
                    
                    
                    984,625End
      of period
                    
                    
                    1,216,656
                    
                    
                    
                    2,557,246Less:  Cash
      of discontinued operations
                    
                    
                    -
                    
                    
                    
                    (155,172
                    )End
      of period, continuing operations
                    
                    $
                    1,216,656
                    
                    
                    $
                    2,402,074SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATIONIncome
      taxes paid
                    
                    $
                    125,000
                    
                    
                    $
                    -Interest
      paid
                    
                    
                    245,457
                    
                    
                    
                    -Noncash
      investing and financing activities:Dividend
      accrued
                    
                    $
                    950,000
                    
                    
                    $
                    525,000Stock
      issued for store acquisition
                    
                    
                    -
                    
                    
                    
                    1,337,869Notes
      issued for STEN acquisition
                    
                    
                    -
                    
                    
                    
                    287,500





See
notes to condensed consolidated financial statements.


5




WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES




NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





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





Basis of
Presentation




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




In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three and nine month periods ended September 30, 2009 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2009. For further information, refer to the Consolidated Financial
Statements and footnotes thereto included in our Form 10-K as of and for the
year ended December 31, 2008. The condensed consolidated balance sheet at
December 31, 2008, has been derived from the audited consolidated financial
statements at that date, but does not include all of the information and
footnotes required by GAAP.





Nature of
Business





Western
Capital Resources, Inc. (WCR) formerly URON Inc. (URON) through its wholly owned
operating subsidiaries, Wyoming Financial Lenders, Inc. (WFL), and PQH Wireless,
Inc. (PQH), collectively referred to as the “Company”, provides retail financial
services and retail cellular phone sales to individuals primarily in the
Midwestern United States.  As of September 30, 2009, the Company
operated 55 “payday” stores in 10 states (Colorado, Iowa, Kansas, Montana,
Nebraska, North Dakota, South Dakota, Utah, Wisconsin and Wyoming) and 35
Cricket wireless retail stores in seven states (Illinois, Indiana, Kansas,
Maryland, Missouri, Nebraska and Texas).   The consolidated financial
statements include the accounts of WCR, WFL, and PQH. All significant
intercompany balances and transactions have been eliminated in
consolidation.




In
addition, we classified the results of operations for NCC and STEN Corporation
which were sold on December 31, 2008, as discontinued operations.




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





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





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





The
Company, through its Cricket Wireless Retail division, is a dealer for Cricket
Wireless, Inc., reselling cellular phones and accessories and accepting service
payments from Cricket customers.


6


Use of
Estimates





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





Revenue
Recognition





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





Loans Receivable / Loan Loss
Allowance





We
maintain a loan loss allowance for anticipated losses for our cash advance and
title loans. To estimate the appropriate level of the loan loss allowance, we
consider the amount of outstanding loans owed to us, historical loans charged
off, current and expected collection patterns and current economic trends. Our
current loan loss allowance is based on our net write offs, typically expressed
as a percentage of loan amounts originated for the last 12 months applied
against the principal balance of outstanding loans that we write off. The
Company also periodically performs a look-back analysis on its loan loss
allowance to verify the historical allowance established tracks with the actual
subsequent loan write-offs and recoveries. The Company is aware that as
conditions change, it may also need to make additional allowances in future
periods.





Included
in loans receivable are cash advance loans that are currently due or past due
and cash advance loans that have not been repaid.  This generally is
evidenced where a customer’s personal check has been deposited and the check has
been returned due to non-sufficient funds in the customer’s account, a closed
account, or other reasons.  Cash advance loans are carried at cost
less the allowance for doubtful accounts.  The Company does not
specifically reserve for any individual cash advance loan.  The
Company aggregates cash advance loans for purposes of estimating the loss
allowance using a methodology that analyzes historical portfolio statistics and
management’s judgment regarding recent trends noted in the
portfolio.  This methodology takes into account several factors,
including the maturity of the store location and charge-off and recovery
rates.  The Company utilizes a software program to assist with the
tracking of its historical portfolio statistics.  As a result of the
Company’s collection efforts, it historically writes off approximately 45% of
the returned items.  Based on days past the check return date,
write-offs of returned items historically have tracked at the following
approximately percentages: 1 to 30 days – 45%; 31 to 60 days – 68%; 61 to 90
days – 84%; 91 to 120 days – 89%; and 121 to 180 days – 92%.  All
returned items are charged-off after 180 days, as collections after that date
have not been significant.  The loan loss allowance is reviewed
monthly and any adjustment to the loan loss allowance as a result of historical
loan performance, current and expected collection patterns and current economic
trends is recorded.





A
rollforward of the Company’s loans receivable allowance for the nine months
ended September 30, 2009 and 2008 is as follows:





Nine Months Ended
                    September 30,2009
                  
                  
                  2008Loans
      receivable allowance, beginning of period
                  
                  $
                  1,413,000
                  
                  
                  $
                  976,000Provision
      for loan losses charged to expense
                  
                  
                  1,142,000
                  
                  
                  
                  1,318,619Charge-offs,
      net
                  
                  
                  (1,368,000
                  )
                  
                  
                  (1,030,619
                  )Loans
      receivable allowance, end of period
                  
                  $
                  1,187,000
                  
                  
                  $
                  1,261,000





Net Loss Per Common
Share





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


7





Recent Accounting
Pronouncements





On
September 15, 2009, WCR adopted changes issued by the Financial Accounting
Standards Board (FASB) to the authoritative hierarchy of GAAP. These changes
establish the FASB Accounting Standards CodificationTM
(Codification) as the source of authoritative accounting principles recognized
by the FASB to be applied by nongovernmental entities in the preparation of
financial statements in conformity with GAAP. Rules and interpretive releases of
the Securities and Exchange Commission (SEC) under authority of federal
securities laws are also sources of authoritative GAAP for SEC registrants. The
FASB will no longer issue new standards in the form of Statements, FASB Staff
Positions, or Emerging Issues Task Force Abstracts; instead the FASB will issue
Accounting Standards Updates. Accounting Standards Updates will not be
authoritative in their own right as they will only serve to update the
Codification. These changes and the Codification itself do not change GAAP.
Other than the manner in which new accounting guidance is referenced, the
adoption of these changes had no impact on the Financial
Statements.





On
September 15, 2009,  WCR adopted new accounting guidance on
codification referencing that encourages the use of plain English to describe
broad accounting topic areas in an attempt to make financial statements more
useful to users and more clearly explain accounting
concepts.   As the guidance was not intended to change or alter
existing GAAP, it did not have a material impact on our consolidated financial
statements




No other
new accounting pronouncement issued or effective during the fiscal quarter has
had or is expected to have a material impact on the Consolidated Financial
Statements.





2.
            Acquisitions –





Acquisition of Cricket
Wireless Stores in Missouri and Indiana





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





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





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





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





The
results of the operations for the acquired locations have been included in the
condensed consolidated financial statements since the date of the acquisitions.
The following table presents the unaudited pro forma results of continuing
operations for the three and nine months ended September 30, 2009 and 2008, as
if the retained acquisitions had been consummated at the beginning of each
period presented and excluding the operating results of NCC and STEN (sold
December 31, 2008). The pro forma results of continuing operations are prepared
for comparative purposes only and do not necessarily reflect the results that
would have occurred had the acquisition occurred at the beginning of the year
presented or the results which may occur in the future.





Three Months Ended
                    September 30,
                  
                  
                  Nine Months Ended
                    September 30,2009
                  
                  2008
                  
                  
                  2009
                  
                  
                  2008Pro
      forma revenue
                  
                  $
                  4,568,000
                  
                  
                  $
                  4,387,000
                  
                  
                  $
                  14,010,000
                  
                  
                  $
                  13,447,000Pro
      forma net income
                  
                  
                  197,700
                  
                  
                  
                  621,200
                  
                  
                  
                  495,400
                  
                  
                  
                  1,093,900Pro
      forma net loss per common share – basic and
    diluted
                  
                  
                  (0.04
                  )
                  
                  
                  0.01
                  
                  
                  
                  (0.14
                  )
                  
                  
                  (0.06
                  )


8




3.
            Segment Information
      –





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





Segment
information related to the three and nine months ended September 30, 2009
follows:





Three Months Ended
                    September 30, 2009
                  
                  
                  Nine Months Ended
                    September 30, 2009Payday
                  
                  Cricket
                    Wireless
                  
                  
                  Total
                  
                  
                  Payday
                  
                  
                  Cricket
                    Wireless
                  
                  
                  TotalRevenues
      from external customers
                  
                  $
                  3,062,043
                  
                  
                  $
                  1,506,126
                  
                  
                  $
                  4,568,169
                  
                  
                  $
                  8,703,516
                  
                  
                  $
                  5,086,038
                  
                  
                  $
                  13,789,554Net
      income (loss)
                  
                  
                  425,974
                  
                  
                  
                  (228,244
                  )
                  
                  
                  197,730
                  
                  
                  
                  964,715
                  
                  
                  
                  (482,524
                  )
                  
                  
                  482,191Total
      segment assets
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  15,316,690
                  
                  
                  
                  5,852,535
                  
                  
                  
                  21,169,225





4.
            Shareholders’
      Equity –





During
the nine months ended September 30, 2009, 400,000 warrants were exercised at an
exercise price of $.01 per share and in a related transaction, the Company
redeemed 2,347 shares in payment of the exercise price, for a net issue of
397,653 shares.





5.
            Risks Inherent in the Operating
      Environment –





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




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




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





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





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


9





For the
nine months ended September 30, 2009 and 2008, the Company had significant
revenues by state (shown as a percentage of applicable division’s revenue) as
follows:





Payday Division
                          
                          
                          Cricket Wireless Division2009
                            % of Revenues
                          
                          
                          2008
                            % of Revenues
                          
                          
                          
                          
                          2009
                            % of RevenuesNebraska
                          
                          
                          28
                          %
                          
                          
                          29
                          %
                          
                          Missouri
                          
                          
                          40
                          %Wyoming
                          
                          
                          14
                          %
                          
                          
                          10
                          %
                          
                          Nebraska
                          
                          
                          13
                          %North
      Dakota
                          
                          
                          15
                          %
                          
                          
                          13
                          %
                          
                          Texas
                          
                          
                          11
                          %Iowa
                          
                          
                          12
                          %
                          
                          
                          12
                          %
                          
                          Indiana
                          
                          
                          22
                          %





6.
            Preferred Stock Dividend
  –





On July
15, 2009, the first and second quarter 2009 dividend on the Company's Series A
Convertible Preferred Stock in the amount of $1,050,000 was due and payable.
Payments of $100,000, $125,000 and $200,000 were made on September 18, October
14 and November 10, 2009, respectively.





7.
            Other Expense
      –





A
breakout of other expense is as follows:





Three Months Ended
                      September 30,
                    
                    
                    Nine Months Ended
                      September 30,2009
                    
                    
                    2008
                    
                    
                    2009
                    
                    
                    2008Store expensesCollection
      costs
                    
                    $
                    116,828
                    
                    
                    $
                    73,349
                    
                    
                    $
                    286,804
                    
                    
                    $
                    201,022Repairs
      & maintenance
                    
                    
                    66,399
                    
                    
                    
                    48,408
                    
                    
                    
                    157,446
                    
                    
                    
                    121,712Supplies
                    
                    
                    80,426
                    
                    
                    
                    27,297
                    
                    
                    
                    243,481
                    
                    
                    
                    86,350Telephone
      and utilities
                    
                    
                    159,267
                    
                    
                    
                    65,610
                    
                    
                    
                    422,301
                    
                    
                    
                    199,773Other
                    
                    
                    248,252
                    
                    
                    
                    89,079
                    
                    
                    
                    678,088
                    
                    
                    
                    363,640$
                    671,172
                    
                    
                    $
                    303,743
                    
                    
                    $
                    1,788,120
                    
                    
                    $
                    972,497General & administrative
      expensesProfessional
      fees
                    
                    $
                    66,622
                    
                    
                    $
                    164,575
                    
                    
                    $
                    618,959
                    
                    
                    $
                    853,947Other
                    
                    
                    89,280
                    
                    
                    
                    119,548
                    
                    
                    
                    282,934
                    
                    
                    
                    271,733$
                    155,902
                    
                    
                    $
                    284,123
                    
                    
                    $
                    901,893
                    
                    
                    $
                    1,125,680





8.
            Settlement Agreement with former
      Chief Executive Officer –





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





9.
            Subsequent
      Event –





The $2
million promissory note we issued to Banco Popular in connection with the
Business Loan Agreement matured on October 30, 2009.  The Company has
received a proposal letter from Banco Popular to refinance the
note.  Under the proposal the Company would reduce the outstanding
balance by $100,000 prior to refinancing and the remaining balance of $1.9
million would thereafter be amortized (based on a 36 month term) through May 31,
2010 at which time the remaining balance would be due.  Interest under
the proposed promissory note will accrue at a rate equal to the one-month LIBOR
plus 7.25% (a combined current rate of 7.49%).  The proposal is
subject to the execution of definitive documents and therefore is subject to
change.





The
Company did not have any other subsequent events through November 13, 2009,
which is the date the financial statements were issued, for events requiring
recording or disclosure in the financial statements for the three and nine
months ended September 30, 2009.


10




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





Forward-Looking
Statements




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





Specific
factors that might cause actual results to differ from our expectations or may
affect the value of the common stock, include, but are not limited
to:





·
            Changes
      in local, state or federal laws and regulations governing lending
      practices, or changes in the interpretation of such laws and
      regulations





·
            Litigation
      and regulatory actions directed toward our industry or us, particularly in
      certain key states





·
            Our
      need for additional financing, and





·
            Unpredictability
      or uncertainty in financing markets which could impair our ability to grow
      our business through acquisitions.





Other
factors that could cause actual results to differ from those implied by the
forward-looking statements in this report are more fully described in the “Risk
Factors” section of our most recent Annual Report on Form 10-K for fiscal
2008.





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




General
Overview




We
provide (through Wyoming Financial Lenders, Inc.) retail financial services to
individuals primarily in the midwestern and southwestern United States. These
services include non-recourse cash advance loans, check cashing and other money
services. At the close of business on September 30, 2009 and as of the date of
this report, we owned and operated 55 stores in 10 states (Colorado, Iowa,
Kansas, Montana, Nebraska, North Dakota, South Dakota, Utah, Wisconsin and
Wyoming).





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





In
October 2008, we began operating Cricket Wireless retail stores as an authorized
dealer of Cricket Wireless products and services. Authorized dealers are
permitted to sell the Cricket line and generally locate their store operations
in areas with a strong potential customer base where Cricket does not maintain a
corporate storefront. These locations are generally within the urban core or
surrounding areas of a community. We are an authorized premier Cricket dealer,
and as such, we are only permitted to sell the Cricket line of prepaid cellular
phones at our Cricket retail stores. At the close of business on September 30,
2009 we owned and operated 35 stores in seven states (Illinois, Indiana, Kansas,
Maryland, Missouri, Nebraska, and Texas).


11





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





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





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





The
growth of the payday loan industry has followed, and continues to be
significantly affected by, payday lending legislation and regulation in the
various states and nationally. We monitor and evaluate legislative and
regulatory initiatives in each of the states and nationally, and are involved
with the efforts of the various industry lobbying efforts. To the extent that
states enact legislation or regulations that negatively impacts payday lending,
whether through preclusion, fee reduction or loan caps, our business could be
adversely affected. In Nebraska, legislation was recently introduced (and
subsequently defeated) to ban all cash advance or payday loans in Nebraska.
Despite the defeat of this legislation, since we derived approximately 28% of
our 2009 total payday lending revenues in Nebraska, any subsequent attempts to
pass similar legislation in Nebraska, or other legislation that would restrict
our ability to make cash advance loans in Nebraska, would pose significant risks
to our business.





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





Discussion of Critical
Accounting Policies




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





We
believe that the following critical accounting policies affect the more
significant estimates and assumptions used in the preparation of our condensed
consolidated financial statements:




Loan 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.


12


Included
in loans receivable are cash advance loans that are currently due or past due
and cash advance loans that have not been repaid.  This generally is
evidenced where a customer’s personal check has been deposited and the check has
been returned due to non-sufficient funds in the customer’s account, a closed
account, or other reasons.  Cash advance loans are carried at cost
less the allowance for doubtful accounts.  The Company does not
specifically reserve for any individual cash advance loan.  The
Company aggregates cash advance loans for purposes of estimating the loss
allowance using a methodology that analyzes historical portfolio statistics and
management’s judgment regarding recent trends noted in the
portfolio.  This methodology takes into account several factors,
including the maturity of the store location and charge-off and recovery
rates.  The Company utilizes a software program to assist with the
tracking of its historical portfolio statistics.  As a result of the
Company’s collection efforts, it historically writes off approximately 45% of
the returned items.  Based on days past the check return date,
write-offs of returned items historically have tracked at the following
approximately percentages: 1 to 30 days – 45%; 31 to 60 days – 68%; 61 to 90
days – 84%; 91 to 120 days – 89%; and 121 to 180 days – 92%.  All
returned items are charged-off after 180 days, as collections after that date
have not been significant.  The loan loss allowance is reviewed
monthly and any adjustment to the loan loss allowance as a result of historical
loan performance, current and expected collection patterns and current economic
trends is recorded.
 
 A
rollforward of the Company’s loans receivable allowance for the nine months
ended September 30, 2009 and 2008 is as follows:
 
 Nine
      Months Ended
                          September
      30,2009
                        
                        
                        2008Loans
      receivable allowance, beginning of period
                        
                        $
                        1,413,000
                        
                        
                        $
                        976,000Provision
      for loan losses charged to expense
                        
                        
                        1,142,000
                        
                        
                        
                        1,318,619Charge-offs,
      net
                        
                        
                        (1,368,000
                        )
                        
                        
                        (1,030,619
                        )Loans
      receivable allowance, end of period
                        
                        $
                        1,187,000
                        
                        
                        $
                        1,261,000
 
 Valuation of long-lived and
Intangible Assets
 
 The
Company assesses the impairment of long-lived and intangible assets whenever
events or changes in circumstances indicate that the carrying value may not be
recoverable. Factors that could trigger an impairment review include significant
underperformance relative to expected historical or projected future cash flows,
significant changes in the manner of use of acquired assets or the strategy for
the overall business, and significant negative industry trends. When management
determines that the carrying value of long-lived and intangible assets may not
be recoverable, impairment is measured based on the excess of the assets'
carrying value over the estimated fair value.
 
 Results
of Operations - Three Months Ended September 30, 2009 Compared to Three Months
Ended September 30, 2008
 
 For the
three-month period ended September 30, 2009, net income was $198,000 compared to
net income from continuing operations of $278,000 for the three months ended
September 30, 2008. During the three months ended September 30, 2009, income
from continuing operations before income taxes was $322,000 compared to $436,000
for the three months ended September 30, 2008. The major components of revenues,
store expenses, general and administrative expenses, total operating expenses
and income tax expense from continuing operations are discussed
below.
 
 Revenues
 
 Revenues
totaled $4.57 million for the three months ended September 30, 2009 compared to
$3.23 million for the three months ended September 30, 2008. This increase
resulted from the increase in the number of Cricket Wireless stores operating
during the 2009 interim period. During the three-month period ended September
30, 2009, we originated approximately $19.2 million in cash advance loans
compared to $20.5 million during the 2008 interim period. Our average loan
(including fee) totaled approximately $361 during both the period ended
September 30, 2009 and the 2008 interim period. Our average fee for the three
months ended September 30, 2009 and September 30, 2008 was
$53.  During the three-month period ended September 30, 2009, we
generated $1.19 million in phone and accessory sales compared to $.13 million
for the three-month period ended September 30, 2008.  The increase
resulted from our stores acquired in the last quarter of 2008 and first quarter
of 2009 and operating in the three months ended September 30, 2009, as well as
the Cricket Wireless stores we launched during the second quarter of
2009.
 13
 The
following table summarizes our revenues for the three months ended September 30,
2009 and 2008, respectively:
  Three
      Months Ended
                                              September
      30,
                                            
                                            
                                            Three
      Months Ended
                                              September
      30,2009
                                            
                                            
                                            2008
                                            
                                            
                                            2009
                                            
                                            
                                            2008(percentage of revenues)Payday
      loan fees
                                            
                                            $
                                            2,814,599
                                            
                                            
                                            $
                                            2,759,648
                                            
                                            
                                            
                                            61.6
                                            %
                                            
                                            
                                            85.4
                                            %Phones
      and accessories
                                            
                                            
                                            1,186,550
                                            
                                            
                                            
                                            130,405
                                            
                                            
                                            
                                            26.0
                                            %
                                            
                                            
                                            4.0
                                            %Check
      cashing fees
                                            
                                            
                                            184,213
                                            
                                            
                                            
                                            279,787
                                            
                                            
                                            
                                            4.0
                                            %
                                            
                                            
                                            8.7
                                            %Other
      income and fees
                                            
                                            
                                            382,807
                                            
                                            
                                            
                                            63,381
                                            
                                            
                                            
                                            8.4
                                            %
                                            
                                            
                                            1.9
                                            %Total
                                            
                                            $
                                            4,568,169
                                            
                                            
                                            $
                                            3,233,221
                                            
                                            
                                            
                                            100
                                            %
                                            
                                            
                                            100
                                            %
 
 Store
Expenses
  Total
expenses associated with store operations for the three months ended September
30, 2009 were $3.62 million compared to $2.14 million for the three months ended
September 30, 2008. The most significant components of these expenses were
salaries and benefits, provisions for loan losses, phone and accessories costs
of sales, occupancy costs, advertising expenses, depreciation of store
equipment, amortization of intangible assets and other expenses associated with
store operations.
 
 Our most
significant increases in store expenses from the two interim periods related to
salaries and benefits for our store employees, phone and accessories cost of
sales, costs of occupancy, depreciation, amortization and other store expenses
due to our addition of the Cricket Wireless Operations segment.  A
discussion of the various components of our store expenses for the three months
ended September 30, 2009 appears below.
 
 Salaries
and Benefits. Payroll and related costs at the store level were $1.27 million
compared to $.75 million for the periods ended September 30, 2009 and 2008,
respectively. Increased salaries and benefits expense resulted primarily from of
our addition of the Cricket Wireless Operations segment. We expect that, with
anticipated continued store growth, these salaries and benefits expenses will
continue to increase.
 
 Provisions
for Loan Losses. For the three months ended September 30, 2009 our provisions
for loan losses were $454,000 compared to $567,000 for the three months ended
September 30, 2008. Our provisions for loan losses represented approximately
16.1% and 20.5% of our loan fee revenue for the three months ended September 30,
2009 and 2008, respectively.  Our provision for loan losses as a
percentage of revenue during the three months ended September 30, 2009 compared
to the same period in 2008 decreased $113,000 due to improved collection
results.
 
 Phone and
Accessories Cost of Sales.  The increase in our Cricket Wireless phone
service segment revenues resulted in corresponding increase in costs of
sales.  For the three months ended September 30, 2009, our costs of
sales were $439,000 compared to $50,000 for the same period in
2008.  At September 30, 2009, we had 35 Cricket Wireless stores
compared to two at September 30, 2008.
 
 Occupancy.
Occupancy expenses, comprised mainly of store leases, were $442,000 for the
three months ended September 30, 2009 versus $246,000 for the three months ended
September 30, 2008. The increase in our occupancy expenses relates to our
operation of more stores during the most recent three-month period.
 
 Advertising.
Advertising and marketing expenses remained consistent at $103,000 during the
three months ended September 30, 2009 and during the three months ended
September 30, 2008. In general, we expect that our marketing and advertising
expenses for 2009 will remain constant as advertising expense  within
the Cricket division are reimbursed under Cricket’s Coop reimbursement
program.
 
 Depreciation.
Depreciation, relating to store equipment and capital expenditures for stores,
increased to $63,000 for the three months ended September 30, 2009 from $27,200
for the three months ended September 30, 2008.  The increase in
depreciation was due to our Cricket Wireless store acquisitions.
  Amortization
of Intangible Assets. Amortization of intangible assets increased to$180,000 for
the three months ended September 30, 2009 from $101,000 for the three months
ended September 30, 2008. Payday division expense decreased $71,000 due to
intangible assets becoming fully amortized while the expense on the Cricket
division increased by $150,000 due to the recent Cricket Wireless
acquisition.
  14
 
 Other.
Other expenses were $671,000 for the three months ended September 30, 2009
versus $304,000 for the three months ended September 30, 2008 primarily due to
higher costs associated with operating a greater number of stores on a
year-over-year basis and an increase in collection costs.
 
 General and Administrative
Expenses
 
 Total
general and administrative costs for the three months ended September 30, 2009
were $622,000 compared to $653,000 for the period ended September 30, 2008. For
the three months ended September 30, 2009, the major components of these costs
were salaries and benefits for our administrative group and executive
management, interest expense, and utilities, office supplies and other minor
costs, professional fees for accounting and legal services (collectively grouped
as “other” costs). A discussion of the various components of our general and
administrative costs for the three months ended September 30, 2009 and 2008
appears below:
 
 Salaries
and Benefits. Salaries and benefits expenses for the three months ended
September 30, 2009 were $377,000, a $22,000 increase from the $355,000 in such
expenses during period ended September 30, 2008. The increase was due to payday
division bonuses.
 
 Depreciation.
Depreciation for the period ended September 30, 2009 compared to September 30,
2008 was $8,100 and $13,500, respectively. Depreciation relates primarily to
equipment and capital improvements at the Company’s corporate
headquarters.
 
 Interest.  Interest
expenses for the three months ended September 30, 2009 was $81,000 compared to
$0 for the three months ended September 30, 2008 and resulted from the Company’s
use of its revolving line of credit and issuance of notes payable for store
acquisitions.
 
 Other
General and Administrative Expenses. Other general and administrative expenses,
which includes professional fees for accounting and legal services, utilities,
office supplies, collection costs and other minor costs associated with
corporate headquarters activities, aggregated to $156,000 for the three months
ended September 30, 2009 versus $284,000 for the three months ended September
30, 2008. The significant decrease in these expenses is mainly attributable to
reduced professional fees incurred in 2009 compared to 2008.  We
expect professional fees to continue to decrease throughout the remainder of
2009.
 
 Income Tax
Expense
 
 Income
tax expense for the period ended September 30, 2009 was $124,000 compared to
income tax expense of $158,000 for the period ended September 30, 2008, which
resulted because our income before taxes for the 2009 period was $322,000
compared to a net income before taxes for the 2008 period of
$436,000.
 
 Results
of Operations - Nine Months Ended September 30, 2009 Compared to Nine Months
Ended September 30, 2008
 
 For the
nine-month period ended September 30, 2009, net income was $482,000 compared to
net income from continuing operations of $405,000 for the nine months ended
September 30, 2008. During the nine months ended September 30, 2009, income from
continuing operations before income taxes was $775,000 compared to loss before
income taxes of $678,000 for the nine months ended September 30, 2008. The major
components of each of revenues, store expenses, general and administrative
expenses, total operating expenses and income tax expense from continuing
operations are discussed below.
 
 Revenues
 
 Revenues
totaled $13.8 million for the nine months ended September 30, 2009 compared to
$8.91 million for the nine months ended September 30, 2008. This increase
resulted from the increase in the number of Cricket Wireless stores operating
during the 2009 interim period. During the nine-month period ended September 30,
2009, we originated approximately $53.5 million in cash advance loans compared
to $54.2 million during the 2008 interim period. Our average loan (including
fee) totaled approximately $364 during the period ended September 30, 2009
versus $351 in the 2008 interim period. Our average fee for the nine months
ended September 30, 2009 was $54 compared to $52 for the 2008 interim
period.  During the nine-month period ended September 30, 2009, we
generated $4.2 million in phone and accessory sales compared to $.44 million for
the nine-month period ended September 30, 2008.  The increase resulted
from our stores acquired in the last quarter of fiscal 2008 that were operating
in the nine months ended September 30, 2009, as well as the Cricket Wireless
stores we acquired or launched  during this interim
period.
 15
 The
following table summarizes our revenues for the nine months ended September 30,
2009 and 2008, respectively:
  Nine
      Months Ended
                                          September
      30,
                                        
                                        
                                        Nine
      Months Ended
                                          September
      30,2009
                                        
                                        
                                        2008
                                        
                                        
                                        2009
                                        
                                        
                                        2008(percentage of revenues)Payday
      loan fees
                                        
                                        $
                                        7,872,094
                                        
                                        
                                        $
                                        7,392,462
                                        
                                        
                                        
                                        57.1
                                        %
                                        
                                        
                                        83.0
                                        %Phones
      and accessories
                                        
                                        
                                        4,163,525
                                        
                                        
                                        
                                        444,087
                                        
                                        
                                        
                                        30.2
                                        %
                                        
                                        
                                        5.0
                                        %Check
      cashing fees
                                        
                                        
                                        646,863
                                        
                                        
                                        
                                        908,941
                                        
                                        
                                        
                                        4.7
                                        %
                                        
                                        
                                        10.2
                                        %Other
      income and fees
                                        
                                        
                                        1,107,072
                                        
                                        
                                        
                                        168,335
                                        
                                        
                                        
                                        8.0
                                        %
                                        
                                        
                                        1.8
                                        %Total
                                        
                                        $
                                        13,789,554
                                        
                                        
                                        $
                                        8,913,825
                                        
                                        
                                        
                                        100
                                        %
                                        
                                        
                                        100
                                        %
 
 Store
Expenses
  Total
expenses associated with store operations for the nine months ended September
30, 2009 were $10.84 million compared to $6.11 million for the nine months ended
September 30, 2008.
 
 Our most
significant increases in store expenses from the two interim periods related to
salaries and benefits for our store employees, phone and accessories cost of
sales, costs of occupancy, advertising and depreciation. Our phone and
accessories costs of sales and advertising costs increased significantly in the
nine months ended September 30, 2009 compared to the nine months ended September
30, 2008 primarily due to our addition of the Cricket Wireless Operations
segment.  A discussion of the various components of our store expenses
for the nine months ended September 30, 2009 appears below.
 
 Salaries
and Benefits. Payroll and related costs at the store level were $3.85 million
compared to $2.23 million for the periods ended September 30, 2009 and 2008,
respectively. Increased salaries and benefits expense resulted primarily from of
our addition of the Cricket Wireless Operations segment.
 
 Provisions
for Loan Losses. For the nine months ended September 30, 2009 our provisions for
loan losses were $1.14 million compared to $1.32 million for the nine months
ended September 30, 2008. Our provisions for loan losses represented
approximately 14.5% and 17.8% of our loan fee revenue for the nine months ended
September 30, 2009 and 2008, respectively.  Our provision for loan
losses as a percentage of revenue during the nine months ended September 30,
2009 compared to the same period in 2008 decreased due to improved collection
results.
 
 Phone and
Accessories Cost of Sales.  The increase in our Cricket Wireless phone
service segment revenues resulted in corresponding increase in costs of
sales.  For the nine months ended September 30, 2009, our costs of
sales were $1.77 million compared to $.22 million for the same period in
2008.  At September 30, 2009, we had 35 Cricket Wireless stores
compared to two at September 30, 2008.
 
 Occupancy.
Occupancy expenses, comprised mainly of store leases, were $1.2 million for the
nine months ended September 30, 2009 versus $.68 million for the nine months
ended September 30, 2008. The increase in our occupancy expenses relates to our
acquisitions and operation of more stores during the most recent nine-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 $359,000 during the nine months ended
September 30, 2009 as compared to $281,000 during the nine months ended
September 30, 2008. In general, we expect that our marketing and advertising
expenses for  2009 will  remain constant as advertising
expense within the Cricket division are reimbursed under Cricket’s Coop
reimbursement program.
 
 Depreciation.
Depreciation, relating to store equipment and capital expenditures for stores,
increased to $189,000 for the nine months ended September 30, 2009 from $85,000
for the nine months ended September 30, 2008.  The increase in
depreciation was due to our Cricket Wireless store acquisitions.
  Amortization
of Intangible Assets. Amortization of intangible assets increased to $536,000
for the nine months ended September 30, 2009 from $317,000 for the nine months
ended September 30, 2008. Payday division expense decreased $222,000 due to
intangible assets becoming fully amortized while the expense on the Cricket
division increased by $441,000 due to the recent Cricket Wireless
acquisitions.
  16
 
 Other.
Other expenses were $1.79 million for the nine months ended September 30, 2009
versus $.97 million for the nine months ended September 30, 2008 primarily due
to higher costs associated with operating a greater number of stores on a year
over year basis and increased collection costs.
 
 General and Administrative
Expenses
 
 Total
general and administrative costs for the nine months ended September 30, 2009
were $2.18 million compared to $2.13 million for the period ended September 30,
2008. For the nine months ended September 30, 2009, the major components of
these costs were salaries and benefits for our executive management, interest
expense, and utilities, office supplies and other minor costs, professional fees
for accounting and legal services (collectively grouped as “other” costs). A
discussion of the various components of our general and administrative costs for
the nine months ended September 30, 2009 and 2008 appears below:
 
 Salaries
and Benefits. Salaries and benefits expenses for the nine months ended September
30, 2009 were $1.01 million, a $40,000 increase from the $.97 million in such
expenses during period ended September 30, 2008. The increase was due to payday
division administrative bonuses.
 
 Depreciation.
Depreciation for the period ended September 30, 2009 compared to September 30,
2008 was $18,000 and $30,000, respectively. Depreciation relates primarily to
equipment and capital improvements at the Company’s corporate
headquarters.
 
 Interest.  Interest
expenses for the nine months ended September 30, 2009 was $245,000 compared to
$0 for the nine months ended September 30, 2008 and resulted from the Company’s
use of its revolving line of credit and issuance of notes payable for store
acquisitions.
 
 Other
General and Administrative Expenses. Other general and administrative expenses,
which includes professional fees for accounting and legal services, utilities,
office supplies, collection costs and other minor costs associated with
corporate headquarters activities, aggregated to $.90 million for the nine
months ended September 30, 2009 versus $1.12 million for the nine months ended
September 30, 2008. The decrease in these expenses is primarily due to lower
professional fees for legal and accounting services, partially offset by the
increased professional fees incurred in connection with our recent
restatements.  Our higher 2008 professional fees were primarily
related to failed acquisitions that have not reoccurred in 2009.  We
expect professional fees to decrease throughout the remainder of
2009.
 
 Income Tax
Expense
 
 Income
tax expense for the period ended September 30, 2009 was $293,000 compared to
income tax expense of $274,000 for the period ended September 30, 2008, which
resulted because our income before taxes for the 2009 period was $775,000
compared to income before taxes for the 2008 period of $678,000.
  Liquidity
and Capital Resources
 
 Summary
cash flow data is as follows:
  Nine
      Months Ended September 30,2009
                                
                                
                                2008Cash
      flows provided (used) by :Operating
      activities
                                
                                $
                                1,304,619
                                
                                
                                $
                                (1,091,673
                                )Investing
      activities
                                
                                
                                (2,619,266
                                )
                                
                                
                                (643,611
                                )Financing
      activities
                                
                                
                                (827,244
                                )
                                
                                
                                3,307,905Net
      increase (decrease) in cash
                                
                                
                                (2,141,891
                                )
                                
                                
                                1,572,621Cash,
      beginning of period
                                
                                
                                3,358,547
                                
                                
                                
                                984,625Cash,
      end of period
                                
                                $
                                1,216,656
                                
                                
                                $
                                2,557,246
  At
September 30, 2009, we had cash of $1.22 million compared to cash of $2.56
million on September 30, 2008. The decrease results mainly from costs related to
our recent Cricket Wireless store acquisitions and leasehold improvements,
dividend payments, restatement costs and professional fees.  For
fiscal year 2009, we believe that our available cash, combined with expected
cash flows from operations, will be sufficient to fund our liquidity and capital
expenditure requirements during fiscal 2009. Our expected short-term uses of
available cash include the funding of operating activities (including
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.  Although dividend payments are not expected
to materially and adversely affect our liquidity or our ability to sustain
operations, we do intend to reduce our cumulated and unpaid dividends,
aggregating to $1,150,000 as of November 12, 2009, owed to our preferred
stockholder.  Accordingly, we expect that future dividend payments may
inhibit our ability to expand our operations for the foreseeable
future.
  17
 
 Banco
Popular Line of Credit
 
 On
November 13, 2008, Wyoming Financial Lenders, Inc. entered into a Business Loan
Agreement and associated agreements with Banco Popular North America, located in
Rosemont, Illinois, for a one-year revolving line of credit in an amount of up
to $2,000,000.  Among other things, a default occurs under the
Business Loan Agreement in the event of any breach thereunder by Wyoming
Financial Lenders.  In the event of any default, Banco Popular may
accelerate all amounts due subject to a ten-day right to cure applicable in
certain circumstances.
 
 We
notified Banco Popular in April and July 2009 about our inability to deliver
certain financial information in a timely manner as required under the Business
Loan Agreement, due primarily to our need to restate our financial statements
for the year ended December 31, 2007 and the subsequent interim periods
ending September 30, 2008. On April 30, 2009, Banco Popular furnished us
with their written waiver of covenants related to our failure to timely deliver
such information.  In July 2009 we received an extension of time to
furnish them copies of our federal income tax return. At this time there is
no adverse impact upon our revolving credit line.
 
 The $2
million promissory note we issued to Banco Popular in connection with the
Business Loan Agreement matured on October 30, 2009.  The Company has
received a proposal letter from Banco Popular to refinance the
note.  Under the proposal the Company would reduce the outstanding
balance by $100,000 prior to refinancing and the remaining balance of $1.9
million would thereafter be amortized (based on a 36 month term) through May 31,
2010 at which time the remaining balance would be due.  Interest under
the proposed promissory note will accrue at a rate equal to the one-month LIBOR
plus 7.25% (a combined current rate of 7.49%).  The proposal is
subject to the execution of definitive documents and therefore is subject to
change.
 
 Off-Balance
Sheet Arrangements
  The
Company had no off-balance sheet arrangements as of September 30,
2009.
 
 Item 3. Quantitative and
Qualitative Disclosures About Market Risk
 
 Not
applicable.
  Item 4T. Controls and
Procedures
 
 Evaluation of Disclosure
Controls and Procedures
  On
September 30, 2009, our Chief Executive Officer and Interim Chief Financial
Officer carried out an evaluation of the effectiveness of the design and
operation of its disclosure controls and procedures (as defined in Exchange Rule
13a-15(e)), and concluded that our disclosure controls and procedures were not
effective and designed to ensure that material information relating to the
Company and our consolidated subsidiaries would be made known to them by others
within the Company.  This conclusion was based primarily on the facts
identified in our Annual Report on Form 10-K for fiscal year ended December 31,
2008, filed with the SEC on May 4, 2009.
 
 Changes in Internal Control
over Financial Reporting
  There
were no changes in our internal controls over financial reporting that occurred
during the fiscal quarter covered by this report that materially affected, or
were reasonably likely to materially affect such controls, except as described
below.
 
 During
the fiscal quarter covered by this report, we were still in the process of
integrating, and incorporating as part of our internal controls:  (i)
the operations acquired from PQH Wireless, Inc. during the last fiscal quarter
of 2008 and (ii) the operations of our Cricket Wireless stores acquired (or
whose operations commenced) during the fiscal quarter covered by this
report.
 
 In our
Annual Report on Form 10-K for the year ended December 31, 2008, we identified
material weaknesses in internal control over financial reporting and a related
remediation plan.  To date, we believe we have made progress towards
remediation, including taking steps to:
 
 ·
              increase
      the frequency of our board of directors and audit committee meetings to
      more actively engage those bodies in the provision of oversight of our
      internal controls and the review of complex or unusual accounting
      transactions;
  18
 
 ·
              provide
      a mechanism for the submission of anonymous reports, relating to
      accounting or audit irregularities, directly to our audit committee chair
      and legal counsel;
 ·
              provide
      our internal audit consultant with direct access to our audit committee
      chairperson;
 ·
              include
      our internal audit consultant in quarterly meetings of our audit committee
      to provide a status update on the effectiveness of our internal
      controls;
 ·
              conduct
      additional training on internal controls for our management, financial
      reporting and operations staff;
 ·
              integrate
      our PQH Wireless division’s operations into our centralized payroll,
      expenditures, information technology, revenue and financial reporting
      processes
 ·
              execute
      timely preparation of balance sheet account reconciliations accompanied by
      sufficient supporting documentation and review and approval for validity,
      completeness and accuracy performed by a member of accounting
      management;
 ·
              formalize
      journal entry preparation and review process to include sufficient
      supporting documentation and proper review and approval prior to
      recording;
 ·
              launch
      an automated timekeeping system with built-in features to route timesheets
      for supervisor approval;
 ·
              design
      an automated system to track inventory for our PQH Wireless
      division;
 ·
              implement
      a structured financial reporting process that includes properly segregated
      duties, close calendar and schedule of required tasks and internal
      controls;
 ·
              implement
      a procedure that ensures review of the financial statements by our Chief
      Executive Officer and the full board of directors prior to filing with the
      SEC;
 ·
              implement
      a reporting tool with our upgraded financial software application to
      produce the consolidated balance sheet and income statement in an
      automated manner; and
 ·
              generally
      improve the segregation of duties within the financial reporting,
      information technology, payroll and expenditures
  processes.
 
 Despite
the progress we believe we have made, we were unable to conclude that the
material weaknesses described in our Annual Report on Form 10-K for the year
ended December 31, 2008 were effectively remediated as of September 30, 2009 due
to the fact that (i) less than the entire remediation plan has been implemented
and (ii) an insufficient period of time has passed for management to test and
document the effectiveness of those controls which have been altered or newly
created as part of the remediation plan (as summarized above).  For
further information, please see our Annual Report on Form 10-K for fiscal year
ended December 31, 2008.
 19
  PART
II. OTHER INFORMATION
  Item 1.
Legal Proceedings
 
 None.
  Item 1A. Risk
Factors
 
 None.
  Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
  None.
 
 Item 3.
Defaults upon Senior Securities
 
 As of
November 13, 2009, we partially paid the dividends on our Series A Convertible
Preferred Stock that originally became due on January 15, April 15, July 15, and
October 15, 2009, aggregating to $2,100,000.  As of November 13, 2009,
our board of directors has authorized the payment of $950,000, which has been
paid.  Our Series A preferred stock ranks senior to our common
stock.
 
 Item 4.
Submission of Matters to a Vote of Security Holders
 
 None.
 
 Item 5.
Other Information
 
 None.
  20
  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:
      November 13, 2009
                      Western
      Capital Resources, Inc.(Registrant)By:
                      /s/
      John QuandahlJohn
      QuandahlChief
      Executive Officer, Chief Operating Officer and
                        Interim
      Chief Financial
Officer
  21