SECURITIES
AND EXCHANGE COMMISSION




Washington,
D.C. 20549




Form
10-Q/A




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




For the
quarterly period ended September 30, 2008 or




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




Commission File Number:  
000-52015




Western
Capital Resources, Inc.


(Exact
Name of Registrant as Specified in its Charter)





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




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


(Address
of Principal Executive Offices) (Zip Code)




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


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


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




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




Yes o No þ




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




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




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




Yes o No þ




APPLICABLE
ONLY TO CORPORATE ISSUERS




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







Western
Capital Resources, Inc.
  Index
 
 PageExplanation
      of Our Restatement
                          
                          2PART
      I. FINANCIAL INFORMATION
                          
                          3Item
      1. Financial Statements
                          
                          3Item
      2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operations
                          
                          19Item
      3. Quantitative and Qualitative Disclosures About Market
    Risk
                          
                          26Item
      4T. Controls and Procedures
                          
                          26PART
      II. OTHER INFORMATION
                          
                          27Item
      1. Legal Proceedings
                          
                          27Item
      1A. Risk Factors
                          
                          27Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
                          
                          27Item
      3. Defaults Upon Senior Securities
                          
                          27Item
      4. Submission of Matters to a Vote of Security Holders
                          
                          27Item
      5. Other Information
                          
                          27Item
      6. Exhibits
                          
                          29SIGNATURES
                          
                          29
  1
  EXPLANATION
OF OUR RESTATEMENT
 
 As
previously reported on a Current Reports on Form 8-K filed with the SEC, we
announced that the consolidated financial statements contained in our Annual
Report on Form 10-K for the year ended December 31, 2007, and subsequent interim
reports for the quarterly periods through September 30, 2008, required
restatement in order to correct errors related to the following:
 
 ·
              the
      allocation of purchase price to customer relationships as opposed to
      goodwill for historical acquisitions,
and
 ·
              an
      understatement of share-based compensation expense for fiscal
      2007.
 
 Additionally,
we announced that the Company’s Board of Directors was conducting an internal
review of the propriety and categorization of certain expense reimbursements and
certain other transactions.  This review has been
completed.  As a result of that review and the execution of a
settlement agreement with the former CEO, the Company determined that $175,000
of cost originally reported as a reduction of proceeds from common stock issued
in the consolidated statements of shareholders’ equity should be reported as an
expense in the consolidated statements of operations.
 
 This Form
10-Q/A reflects the restatement of our previously issued consolidated financial
statements contained in this amended report for the period ended September 30,
2008.  These adjustments are fully discussed in Note 2 to the
condensed consolidated financial statements contained in this amended
report.  Along with this amended report, we are filing our amended
Form 10-K/A for the year ended December 31, 2007, our amended Quarterly Reports
on Form 10-Q/A for the first and second quarters of fiscal 2008 and our Annual
Report on Form 10-K for fiscal 2008.
 
 In
addition, we have updated our consolidated financial statements to classify the
results of operations for National Cash & Credit, LLC and the business we
acquired from STEN Corporation (“NCC” and “STEN”), both of which were sold on
December 31, 2008, as discontinued operations in accordance with Statement of
Financial Accounting Standards No. 144 “Accounting for the Impairment or
Disposal of Long-Lived Assets.” See Note 2 to our to the condensed consolidated
financial statements for further description.
 
 The
following items have been amended as a result of the restatement:
 
 Part
      I
                Item
      1. Financial StatementsPart
      I
                Item
      2. Management’s Discussion and Analysis of Financial Condition and Results
      of OperationsPart
      I
                Item
      4(T). Controls and Procedures
 Other
than as described above or elsewhere if indicated, no other information in our
original Quarterly Report on Form 10-Q for the period ended September 30, 2008
has been amended hereby as a result of the restatement contained in this amended
report.  For updated information regarding the Company, please see our
Annual Report on Form 10-K for the year ended December 31, 2008 which, as we
indicate above, we are filing concurrently with this amended
report.
  2
  PART
I. FINANCIAL INFORMATION
  Item 1. Financial
Statements
 
 WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES
 
 CONTENTS
 
 Page(s)CONDENSED
      CONSOLIDATED FINANCIAL STATEMENTSCondensed
      Consolidated Balance Sheets
                    4Condensed
      Consolidated Statements of Operations
                    5Condensed
      Consolidated Statements of Cash Flows
                    6Notes
      to Condensed Consolidated Financial Statements
                    7
  3
 
 WESTERN
CAPITAL RESOURCES, INC. AND
SUBSIDIARIES
 CONDENSED
CONSOLIDATED BALANCE SHEETS (Restated)
  September 30, 2008
                                          
                                          
                                          December 31, 2007(Unaudited)ASSETSCURRENT
      ASSETSCash
                                          
                                          $
                                          2,402,074
                                          
                                          
                                          $
                                          984,625Loans
      receivable (less allowance for losses of $1,261,000 and
      $976,000)
                                          
                                          
                                          4,804,707
                                          
                                          
                                          
                                          4,117,497Stock
      subscriptions receivable
                                          
                                          
                                          -
                                          
                                          
                                          
                                          4,422,300Prepaid
      expenses and other
                                          
                                          
                                          190,133
                                          
                                          
                                          
                                          92,333Deferred
      income taxes
                                          
                                          
                                          561,000
                                          
                                          
                                          
                                          662,000Assets
      used in discontinued operations
                                          
                                          
                                          1,162,712
                                          
                                          
                                          
                                          -TOTAL
      CURRENT ASSETS
                                          
                                          
                                          9,120,626
                                          
                                          
                                          
                                          10,278,755PROPERTY
      AND EQUIPMENT
                                          
                                          
                                          761,434
                                          
                                          
                                          
                                          631,736GOODWILL
                                          
                                          
                                          8,001,728
                                          
                                          
                                          
                                          7,905,746INTANGIBLE
      ASSETS
                                          
                                          
                                          167,449
                                          
                                          
                                          
                                          347,586DEFERRED
      INCOME TAX
                                          
                                          
                                          -
                                          
                                          
                                          
                                          109,000OTHER
                                          
                                          
                                          -
                                          
                                          
                                          
                                          167,000ASSETS
      USED IN DISCONTINUED OPERATIONS
                                          
                                          
                                          647,033
                                          
                                          
                                          
                                          -TOTAL
      ASSETS
                                          
                                          $
                                          18,698,270
                                          
                                          
                                          $
                                          19,439,823LIABILITIES
      AND SHAREHOLDERS’ EQUITYCURRENT
      LIABILITIESCurrent
      maturities – notes payable
                                          
                                          $
                                          100,000
                                          
                                          
                                          $
                                          -Accounts
      payable and accrued liabilities
                                          
                                          
                                          1,035,865
                                          
                                          
                                          
                                          1,733,844Accounts
      payable – related parties
                                          
                                          
                                          -
                                          
                                          
                                          
                                          1,125,935Accrued
      dividend payable
                                          
                                          
                                          525,000
                                          
                                          
                                          
                                          -Deferred
      revenue
                                          
                                          
                                          299,063
                                          
                                          
                                          
                                          262,357Liabilities
      from discontinued operations
                                          
                                          
                                          41,550
                                          
                                          
                                          
                                          -TOTAL
      CURRENT LIABILITIES
                                          
                                          
                                          2,001,478
                                          
                                          
                                          
                                          3,122,136LONG-TERM
      LIABILITIESNotes
      payable less current maturities
                                          
                                          
                                          187,500
                                          
                                          
                                          
                                          -Deferred
      income taxes
                                          
                                          
                                          12,000
                                          
                                          
                                          
                                          -TOTAL
      LONG-TERM LIABILITIES
                                          
                                          
                                          199,500
                                          
                                          
                                          
                                          -TOTAL
      LIABILITIES
                                          
                                          
                                          2,200,978
                                          
                                          
                                          
                                          3,122,136SHAREHOLDERS'
      EQUITYSeries
      A convertible preferred stock, 10% cumulative dividends, $0.01 par value,
      $2.10 stated value. 10,000,000 shares authorized, issued and
      outstanding
                                          
                                          
                                          100,000
                                          
                                          
                                          
                                          100,000Common
      stock, no par value, 240,000,000 shares authorized, 8,889,644 and
      6,299,753 shares issued and outstanding
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -Additional
      paid-in capital
                                          
                                          
                                          19,707,792
                                          
                                          
                                          
                                          18,434,318Retained
      earnings (deficit)
                                          
                                          
                                          (3,310,500
                                          )
                                          
                                          
                                          (2,216,631
                                          )TOTAL
      SHAREHOLDERS’ EQUITY
                                          
                                          
                                          16,497,292
                                          
                                          
                                          
                                          16,317,687TOTAL
      LIABILITIES AND SHAREHOLDERS' EQUITY
                                          
                                          $
                                          18,698,270
                                          
                                          
                                          $
                                          19,439,823
 
 See
notes to condensed consolidated financial statements.
  4
 
 WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Restated)
 
 Three months ended
                                                                        
                                                                        
                                                                        Nine months endedSeptember 30, 2008
                                                                          (Unaudited)
                                                                        
                                                                        
                                                                        September 30, 2007
                                                                          (Unaudited)
                                                                        
                                                                        
                                                                        September 30, 2008
                                                                          (Unaudited)
                                                                        
                                                                        
                                                                        September
      30, 2007
                                                                          (Unaudited)REVENUESPayday
      loan fees
                                                                        
                                                                        $
                                                                        2,759,648
                                                                        
                                                                        
                                                                        $
                                                                        2,377,355
                                                                        
                                                                        
                                                                        $
                                                                        7,392,462
                                                                        
                                                                        
                                                                        $
                                                                        6,724,867Check
      cashing fees
                                                                        
                                                                        
                                                                        279,787
                                                                        
                                                                        
                                                                        
                                                                        310,509
                                                                        
                                                                        
                                                                        
                                                                        908,941
                                                                        
                                                                        
                                                                        
                                                                        1,042,249Guaranteed
      phone/Cricket fees
                                                                        
                                                                        
                                                                        130,405
                                                                        
                                                                        
                                                                        
                                                                        154,788
                                                                        
                                                                        
                                                                        
                                                                        444,087
                                                                        
                                                                        
                                                                        
                                                                        593,431Title
      loan fees
                                                                        
                                                                        
                                                                        22,849
                                                                        
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        22,849
                                                                        
                                                                        
                                                                        
                                                                        -Other
      fees
                                                                        
                                                                        
                                                                        40,532
                                                                        
                                                                        
                                                                        
                                                                        14,200
                                                                        
                                                                        
                                                                        
                                                                        145,486
                                                                        
                                                                        
                                                                        
                                                                        98,6203,233,221
                                                                        
                                                                        
                                                                        
                                                                        2,856,852
                                                                        
                                                                        
                                                                        
                                                                        8,913,825
                                                                        
                                                                        
                                                                        
                                                                        8,459,167STORE
      EXPENSESSalaries
      and benefits
                                                                        
                                                                        
                                                                        746,786
                                                                        
                                                                        
                                                                        
                                                                        651,202
                                                                        
                                                                        
                                                                        
                                                                        2,234,777
                                                                        
                                                                        
                                                                        
                                                                        1,973,812Provisions
      for loan losses
                                                                        
                                                                        
                                                                        566,817
                                                                        
                                                                        
                                                                        
                                                                        413,277
                                                                        
                                                                        
                                                                        
                                                                        1,318,619
                                                                        
                                                                        
                                                                        
                                                                        1,056,415Guaranteed
      phone/Cricket cost of sales
                                                                        
                                                                        
                                                                        50,247
                                                                        
                                                                        
                                                                        
                                                                        87,999
                                                                        
                                                                        
                                                                        
                                                                        223,550
                                                                        
                                                                        
                                                                        
                                                                        344,398Occupancy
                                                                        
                                                                        
                                                                        245,708
                                                                        
                                                                        
                                                                        
                                                                        184,785
                                                                        
                                                                        
                                                                        
                                                                        675,257
                                                                        
                                                                        
                                                                        
                                                                        559,223Advertising
                                                                        
                                                                        
                                                                        103,100
                                                                        
                                                                        
                                                                        
                                                                        106,297
                                                                        
                                                                        
                                                                        
                                                                        281,145
                                                                        
                                                                        
                                                                        
                                                                        328,774Depreciation
                                                                        
                                                                        
                                                                        27,155
                                                                        
                                                                        
                                                                        
                                                                        26,742
                                                                        
                                                                        
                                                                        
                                                                        85,213
                                                                        
                                                                        
                                                                        
                                                                        84,639Amortization
      of intangible assets
                                                                        
                                                                        
                                                                        101,130
                                                                        
                                                                        
                                                                        
                                                                        182,898
                                                                        
                                                                        
                                                                        
                                                                        317,168
                                                                        
                                                                        
                                                                        
                                                                        601,441Other
                                                                        
                                                                        
                                                                        303,743
                                                                        
                                                                        
                                                                        
                                                                        251,693
                                                                        
                                                                        
                                                                        
                                                                        972,497
                                                                        
                                                                        
                                                                        
                                                                        756,7862,144,686
                                                                        
                                                                        
                                                                        
                                                                        1,904,893
                                                                        
                                                                        
                                                                        
                                                                        6,108,226
                                                                        
                                                                        
                                                                        
                                                                        5,705,488INCOME
      FROM STORES
                                                                        
                                                                        
                                                                        1,088,535
                                                                        
                                                                        
                                                                        
                                                                        951,959
                                                                        
                                                                        
                                                                        
                                                                        2,805,599
                                                                        
                                                                        
                                                                        
                                                                        2,753,679GENERAL
      & ADMINISTRATIVE EXPENSESSalaries
      and benefits
                                                                        
                                                                        
                                                                        355,381
                                                                        
                                                                        
                                                                        
                                                                        260,098
                                                                        
                                                                        
                                                                        
                                                                        971,021
                                                                        
                                                                        
                                                                        
                                                                        870,213Depreciation
                                                                        
                                                                        
                                                                        13,502
                                                                        
                                                                        
                                                                        
                                                                        10,767
                                                                        
                                                                        
                                                                        
                                                                        30,477
                                                                        
                                                                        
                                                                        
                                                                        32,184Other
                                                                        
                                                                        
                                                                        284,123
                                                                        
                                                                        
                                                                        
                                                                        94,284
                                                                        
                                                                        
                                                                        
                                                                        1,125,680
                                                                        
                                                                        
                                                                        
                                                                        284,110653,006
                                                                        
                                                                        
                                                                        
                                                                        365,149
                                                                        
                                                                        
                                                                        
                                                                        2,127,178
                                                                        
                                                                        
                                                                        
                                                                        1,186,507INCOME
      FROM CONTINUING OPERATIONS
                                                                        
                                                                        
                                                                        435,529
                                                                        
                                                                        
                                                                        
                                                                        586,810
                                                                        
                                                                        
                                                                        
                                                                        678,421
                                                                        
                                                                        
                                                                        
                                                                        1,567,172INCOME
      TAX EXPENSE
                                                                        
                                                                        
                                                                        158,000
                                                                        
                                                                        
                                                                        
                                                                        221,000
                                                                        
                                                                        
                                                                        
                                                                        273,900
                                                                        
                                                                        
                                                                        
                                                                        588,000NET
      INCOME BEFORE DISCONTINUED OPERATIONS
                                                                        
                                                                        
                                                                        277,529
                                                                        
                                                                        
                                                                        
                                                                        365,810
                                                                        
                                                                        
                                                                        
                                                                        404,521
                                                                        
                                                                        
                                                                        
                                                                        979,172INCOME
      FROM DISCONTINUED OPERATIONS
                                                                        
                                                                        
                                                                        52,197
                                                                        
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        76,611
                                                                        
                                                                        
                                                                        
                                                                        -NET
      INCOME
                                                                        
                                                                        
                                                                        329,726
                                                                        
                                                                        
                                                                        
                                                                        365,810
                                                                        
                                                                        
                                                                        
                                                                        481,132
                                                                        
                                                                        
                                                                        
                                                                        979,172SERIES
      A CONVERTIBLE PREFERRED STOCK DIVIDENDS (assumed for 2007)
                                                                        
                                                                        
                                                                        (525,000
                                                                        )
                                                                        
                                                                        
                                                                        (525,000
                                                                        )
                                                                        
                                                                        
                                                                        (1,575,000
                                                                        )
                                                                        
                                                                        
                                                                        (1,575,000
                                                                        )NET
      LOSS AVAILABLE TO COMMON SHAREHOLDERS
                                                                        
                                                                        $
                                                                        (195,274
                                                                        )
                                                                        
                                                                        $
                                                                        (159,190
                                                                        )
                                                                        
                                                                        $
                                                                        (1,093,868
                                                                        )
                                                                        
                                                                        $
                                                                        (595,828
                                                                        )NET
      LOSS PER COMMON SHARE-BASIC AND DILUTEDContinuing
      operations
                                                                        
                                                                        $
                                                                        (0.03
                                                                        )
                                                                        
                                                                        $
                                                                        (0.14
                                                                        )
                                                                        
                                                                        $
                                                                        (0.14
                                                                        )
                                                                        
                                                                        $
                                                                        (0.53
                                                                        )Discontinued
      operations
                                                                        
                                                                        
                                                                        0.01
                                                                        
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        0.01
                                                                        
                                                                        
                                                                        
                                                                        -Net
      income per common share
                                                                        
                                                                        $
                                                                        (0.02
                                                                        )
                                                                        
                                                                        $
                                                                        (0.14
                                                                        )
                                                                        
                                                                        $
                                                                        (0.13
                                                                        )
                                                                        
                                                                        $
                                                                        (0.53
                                                                        )WEIGHTED
      AVERAGE COMMON SHARE OUTSTANDING -Basic
      and diluted
                                                                        
                                                                        
                                                                        8,889,644
                                                                        
                                                                        
                                                                        
                                                                        1,125,000
                                                                        
                                                                        
                                                                        
                                                                        8,644,065
                                                                        
                                                                        
                                                                        
                                                                        1,125,000
 
 See
notes to condensed consolidated financial statements.
  5
  WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Restated)
 
 Nine
      Months Ended September 30,
                      
                      2008
                      
                      
                      2007(Unaudited)
                      
                      
                      (Unaudited)OPERATING
      ACTIVITIESNet
      Income
                      
                      $
                      481,132
                      
                      
                      $
                      979,172Adjustments
      to reconcile net income to net cash provided (used) by operating
      activities:Depreciation
                      
                      
                      156,734
                      
                      
                      
                      116,823Amortization
                      
                      
                      422,543
                      
                      
                      
                      601,440Deferred
      income taxes
                      
                      
                      134,000
                      
                      
                      
                      (417,000
                      )Changes
      in operating assets and liabilitiesLoans
      receivable
                      
                      
                      (546,249
                      )
                      
                      
                      8,637Prepaid
      expenses and other assets
                      
                      
                      69,661
                      
                      
                      
                      45,190Accounts
      payable and accrued liabilities
                      
                      
                      (1,855,189
                      )
                      
                      
                      (33,971
                      )Deferred
      revenue
                      
                      
                      45,695
                      
                      
                      
                      (23,374
                      )Cash
      provided by discontinued operations
                      
                      
                      -
                      
                      
                      
                      -Net
      cash provided (used) by operating activities
                      
                      
                      (1,091,673
                      )
                      
                      
                      1,276,917INVESTING
      ACTIVITIESPurchases
      of property, and equipment
                      
                      
                      (299,164
                      )
                      
                      
                      (106,281
                      )Acquisition
      of stores, net of cash acquired
                      
                      
                      (344,447
                      )
                      
                      
                      -Net
      cash used by investing activities
                      
                      
                      (643,611
                      )
                      
                      
                      (106,281
                      )FINANCING
      ACTIVITIESPayments
      on notes payable
                      
                      
                      -
                      
                      
                      
                      (530,000
                      )Collection
      on sales of stock
                      
                      
                      4,437,050
                      
                      
                      
                      -Cost
      of raising capital
                      
                      
                      (79,145
                      )
                      
                      
                      -Dividends
                      
                      
                      (1,050,000
                      )
                      
                      
                      (674,920
                      )Net
      cash provided (used) by financing activities
                      
                      
                      3,307,905
                      
                      
                      
                      (1,204,920
                      )NET
      INCREASE (DECREASE) IN CASH
                      
                      
                      1,572,621
                      
                      
                      
                      (34,284
                      )CASHBeginning
      of period
                      
                      
                      984,625
                      
                      
                      
                      1,265,460End
      of period
                      
                      $
                      2,557,246
                      
                      
                      $
                      1,231,176Less:  Cash
      of discontinued operations
                      
                      
                      (155,172
                      )
                      
                      
                      -End
      of period, continuing operations
                      
                      $
                      2,402,074
                      
                      
                      $
                      1,231,176SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATIONIncome
      taxes paid
                      
                      $
                      -
                      
                      
                      $
                      649,971Noncash
      investing and financing activities:Dividend
      accrued
                      
                      $
                      525,000
                      
                      
                      $
                      -Stock
      issued for store acquisition
                      
                      
                      1,337,869Notes
      issued for STEN acquisition
                      
                      
                      287,500
 
 See
notes to condensed consolidated financial statements.
  6
  WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES
  NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  1.
                Nature
      of Business and Summary of Significant Accounting
      Policies –
 
 Basis of
Presentation
  The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with United States of America generally accepted
accounting principles (GAAP) for interim financial information and with the
instructions to Form 10-Q and Section 210.8-03(b) of Regulation S-X.
Accordingly, the condensed consolidated financial statements do not include all
of the information and footnotes required for complete financial
statements.
  In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three and nine month periods ended September 30, 2008 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2008. For further information, refer to the Consolidated Financial
Statements and footnotes thereto included in our Form 10-K/A as of and for the
year ended December 31, 2007. The condensed consolidated balance sheet at
December 31, 2007, has been derived from the audited consolidated financial
statements at that date, but does not include all of the information and
footnotes required by GAAP.
 
 Nature of
Business
 
 Western
Capital Resources, Inc. (WCR, formerly known as URON Inc.) through its wholly
owned operating subsidiaries, Wyoming Financial Lenders, Inc. (WFL) and National
Cash & Credit, LLC (NCC), collectively referred to as the “Company,”
provides retail financial services to individuals in the midwestern and
southwestern United States. These services include payday loans, title
loans, check cashing and other money services. The Company also is a
non-recourse reseller of guaranteed phone service and Cricket cellular phones.
As of September 30, 2008, the Company operated 66 stores in 11 states (Nebraska,
Wyoming, Utah, Iowa, North Dakota, South Dakota, Kansas, Wisconsin, Montana,
Colorado and Arizona). As of September 30, 2007, the Company operated in 53
stores in 10 states. The condensed consolidated financial statements include the
accounts of WCR, WFL, and NCC. All significant intercompany balances and
transactions have been eliminated in consolidation.
 
 The
Company provides short-term consumer loans, commonly known as cash advance or
“payday” loans, in amounts that typically range from $100 to $500. Cash advance
loans provide customers with cash in exchange for a promissory note with a
maturity of generally two to four weeks and the customer’s personal check for
the aggregate amount of the cash advanced plus a fee. The fee varies from state
to state, based on applicable regulations and generally ranges from $15 to
$22 per each whole or partial increment of $100 borrowed. To repay the cash
advance loans, customers may pay with cash, in which their personal check is
returned to them, or allow their check to be presented to the bank for
collection.
  The
Company also provides title loans and other ancillary consumer financial
products and services that are complementary to its cash advance-lending
business, such as check-cashing services, money transfers, money orders and
title loans. We also offer guaranteed phone/CricketTM phones to our customers.
We
also offer guaranteed phone/CricketTM phones
to our customers. 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 services are subject to state regulations (which vary from state to
state) and federal and local regulations, where applicable.
 
 Pursuant
to an Agreement and Plan of Merger and Reorganization dated December 13, 2007
(Merger Agreement), by and among WCR, WFL Acquisition Corp., a Wyoming
corporation and wholly owned subsidiary of the WCR, and WFL, WFL Acquisition
Corp. merged with and into WFL, with WFL remaining as the surviving entity and a
wholly owned operating subsidiary of the WCR. This transaction is referred to
throughout this report as the “Merger.”
 
 The
condensed consolidated financial statements account for the Merger as a capital
transaction in substance (and not a business combination of two operating
entities) that would be equivalent to WFL issuing securities to WCR in exchange
for the net monetary liabilities of WCR, accompanied by a recapitalization and,
as a result, no goodwill relating to the Merger has been recorded.
  7
 
 WESTERN
CAPITAL RESOURCES, INC. AND SUBSIDIARIES
 
 NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  1.
                Nature
      of Business and Summary of Significant Accounting Policies –
      (continued)
  Use of
Estimates
 
 The
preparation of condensed consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that may affect certain
reported amounts and disclosures in the condensed consolidated financial
statements and accompanying notes. Management bases its estimates on historical
experience and on various other assumptions that are believed to be reasonable
under the circumstances. Actual results could differ from those estimates.
Significant management estimates relate to the allowance for loans receivable,
allocation of and carrying value of goodwill and intangible assets, value
associated with stock-based compensation, and deferred taxes and tax
uncertainties.
 
 Revenue
Recognition
 
 The
Company recognizes fees on cash advance loans on a constant-yield basis ratably
over the loans’ terms. Title loan fees are recognized using the interest method.
The Company records fees derived from check cashing, guaranteed phone/Cricket
fees, and all other services in the period in which the service is
provided.
 
 Loan Loss
Allowance
 
 We
maintain a loan loss allowance for anticipated losses for our cash advance and
title loans. To estimate the appropriate level of the loan loss allowance, we
consider the amount of outstanding loans owed to us, historical loans charged
off, current and expected collection patterns and current economic trends. Our
current loan loss allowance is based on our net write offs, typically expressed
as a percentage of loan amounts originated for the last 12 months applied
against the principal balance of outstanding loans that we write off. The
Company also periodically performs a look-back analysis on its loan loss
allowance to verify the historical allowance established tracks with the actual
subsequent loan write-offs and recoveries. The Company is aware that as
conditions change, it may also need to make additional allowances in future
periods.
 
 Included
in loans receivable are cash advance loans that are currently due or past due
and cash advance loans that have not been repaid.  This generally is
evidenced where a customer’s personal check has been deposited and the check has
been returned due to non-sufficient funds in the customer’s account, a closed
account, or other reasons.  Cash advance loans are carried at cost
less the allowance for doubtful accounts.  The Company does not
specifically reserve for any individual cash advance loan.  The
Company aggregates cash advance loans for purposes of estimating the loss
allowance using a methodology that analyzes historical portfolio statistics and
management’s judgment regarding recent trends noted in the
portfolio.  This methodology takes into account several factors,
including the maturity of the store location and charge-off and recovery
rates.  The Company utilizes a software program to assist with the
tracking of its historical portfolio statistics.  As a result of the
Company’s collection efforts, it historically writes off approximately 35% of
the returned items.  Based on days past the check return date,
write-offs of returned items historically have tracked at the following
approximately percentages: 1 to 30 days – 35%; 31 to 60 days – 60%; 61 to 90
days – 75%; 91 to 120 days – 80%; and 121 to 180 days – 86%.  All
returned items are charged-off after 180 days, as collections after that date
have not been significant.  The loan loss allowance is reviewed
monthly and any adjustment to the loan loss allowance as a result of historical
loan performance, current and expected collection patterns and current economic
trends is recorded.  The Company uses a third party collection agency
to assist in the collection of the loan collateral related to title loans, when
and as the Company determines appropriate.
 
 The
Company entered into the title loan business with the acquisition of National
Cash & Credit, LLC in February 2008.  Currently, title loans are
not a significant portion of the Company’s loans receivable
portfolio.
 
 A
rollforward of the Company’s loans receivable allowance for the nine months
ended September 30, 2008 and 2007 is as follows:
 
 Nine
      Months Ended
                            September
      30,2008
                          
                          
                          2007Loans
      receivable allowance, beginning of period
                          
                          $
                          976,000
                          
                          
                          $
                          762,000Provision
      for loan losses charged to expense
                          
                          
                          1,318,619
                          
                          
                          
                          1,056,415Charge-offs,
      net
                          
                          
                          (1,003,619
                          )
                          
                          
                          (891,415
                          )Loans
      receivable allowance, end of period
                          
                          $
                          1,261,000
                          
                          
                          $
                          927,000
  8




Net Loss Per Common
Share
 
 Basic net
loss per common share is computed by dividing the loss available to common
shareholders by the weighted average number of common shares outstanding for the
year. Diluted net loss per common share is computed by dividing the net loss
available to common shareholders’ by the sum of the weighted average number of
common shares outstanding plus potentially dilutive common share equivalents
(stock options, stock warrants, convertible preferred shares) when dilutive.
Potentially dilutive securities of Series A Convertible Preferred Stock
(10,000,000) and stock warrants (400,000) were anti-dilutive and therefore
excluded from the dilutive net loss per share computation for the three and nine
months ended September 30, 2008. Series A Convertible Preferred Stock
(10,000,000) was anti-dilutive and therefore excluded for 2007.
 
 Recent Accounting
Pronouncements
 
 In
September 2006, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements (as
amended),” which defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles and expands disclosure about
fair value measurements. SFAS No. 157 applies whenever other standards require
(or permit) assets or liabilities to be measured at fair value, and therefore,
does not expand the use of fair value in any new circumstances. The effective
date of this standard was for all full fiscal and interim periods beginning
after November 15, 2007. The Company adopted SFAS 157 on January 1, 2008 with no
impact on its condensed consolidated financial statements
 
 In
February 2008, the FASB issued Staff Position 157-2, Effective Date of FASB 157,
(FSP 157-2) which deferred the provisions of SFAS 157 to annual periods
beginning after November 15, 2008 for non-financial assets and liabilities.
Non-financial assets include fair value measurements associated with business
acquisitions and impairment testing of tangible and intangible assets. The
Company is still evaluating the impact, if any, that the adoption of FSP 157-2
will have on its condensed consolidated financial statements.
 
 In
February 2007, the FASB issued Statement of Financial Accounting Standards
No. 159, The Fair Value
Option for Financial Assets and Financial Liabilities (SFAS 159). SFAS
159 permits entities to choose to measure many financial instruments and certain
other items at fair value. The objective is to improve financial reporting by
providing entities with the opportunity to mitigate volatility in reported
earnings caused by measuring related assets and liabilities using different
measurement techniques.
 
 SFAS 159
requires additional disclosures related to fair value measurements included in
the entity’s financial statements. This statement is effective for financial
statements issued for fiscal years beginning after November 15, 2007. The
Company adopted SFAS 159 on January 1, 2008 with no impact on its condensed
consolidated financial statements.
 
 In
December 2007, the FASB issued Statement of Financial Accounting Standards
No. 141R (revised 2007), Business Combinations (SFAS
141R). SFAS 141R broadens the guidance of SFAS 141, extending its applicability
to all transactions and other events in which one entity obtains control over
one or more other businesses. It broadens the fair value measurement and
recognition of assets acquired, liabilities assumed, and interests transferred
as a result of business combinations. SFAS 141R expands on required disclosures
to improve the statement users’ abilities to evaluate the nature and financial
effects of business combinations. SFAS 141R is effective for fiscal year
beginning on or after December 15, 2008. The Company does not expect the
adoption of SFAS 141R to have a material effect on its condensed consolidated
financial statements.
  2.
              Restatement –
  Subsequent
to the filing of our Annual Report on Form 10-K for the year ended
December 31, 2007, management determined that the consolidated financial
statements for the years ended December 31, 2007 and 2006, and subsequent
interim reports for the quarterly periods through September 30, 2008 required
restatement to correct errors related to allocation of purchase price to
customer relationships as opposed to goodwill for historical acquisitions,
correct an understatement of share-based compensation expense for fiscal year
2007 and re-categorize $175,000 of cost originally reported as a reduction of
proceeds from common stock in the consolidated statements of shareholders’
equity to an expense in the consolidated statements of
operations.  The details of these items are as follows:
  On
December 31, 2007, we completed a reverse merger with WFL which included the
purchase of certain intangible assets (customer lists).  After
revisiting certain assumptions and the analysis used in the initial valuation,
management concluded that allocation of purchase price to customer lists from
historical acquisitions should have been increased with a corresponding decrease
to goodwill in the amount of $2,296,493.  This resulted in an increase
in amortization expense of $148,796 and $111,058 for the three month periods
ended September 30, 2007 and 2008, respectively, and $499,136 and $302,444 for
the nine month periods ended September 30, 2007 and 2008,
respectively.
  9
  On
November 29, 2007, we issued stock options and warrants to certain employees and
nonemployees.  After revisiting certain assumptions and the analysis
used in the initial valuation management concluded that the valuation of the
shares should have been recorded at $0.54 per share rather than $0.23 per
share.  This resulted in an increase in share-based compensation
expense of $20,700 for the nine month period ended September 30,
2008.
  On April
9, 2009, the Company’s Board of Directors concluded its internal review of
certain expense reimbursements and certain other transactions.  As a
result of that review and the execution of a settlement agreement with the
former CEO, the Company determined that $175,000 of cost originally reported, in
the fourth quarter of 2007, as a reduction of proceeds from common stock in
the consolidated statements of shareholders’ equity to an expense in the
consolidated statement of operations.
  In
addition, we have updated our financial statements to classify the results of
operations for NCC and STEN Corporation which were sold on December 31,
2008, as discontinued operations in accordance with Statement of Financial
Accounting Standards No. 144 “Accounting for the Impairment or Disposal of
Long-Lived Assets.”
  The
following tables represent the effect of the restatement and discontinued
operations:
  CONDENSED
CONSOLIDATED BALANCE SHEET
 
 December 31, 2007
                                      
                                      Reported
                                      
                                      
                                      Adjustment
                                      
                                      
                                      As
                                        RestatedASSETSCURRENT
      ASSETSCash
                                      
                                      $
                                      984,625
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      984,625Loans
      receivable (less allowance for losses of $976,000)
                                      
                                      
                                      4,117,497
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      4,117,497Stock
      subscriptions receivable
                                      
                                      
                                      4,422,300
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      4,422,300Prepaid
      expenses and other
                                      
                                      
                                      92,333
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      92,333Deferred
      income taxes
                                      
                                      
                                      526,000
                                      
                                      
                                      
                                      136,000
                                      
                                      
                                      
                                      662,000TOTAL
      CURRENT ASSETS
                                      
                                      
                                      10,142,755
                                      
                                      
                                      
                                      136,000
                                      
                                      
                                      
                                      10,278,755PROPERTY
      AND EQUIPMENT
                                      
                                      
                                      631,736
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      631,736GOODWILL
                                      
                                      
                                      9,883,659
                                      
                                      
                                      
                                      (1,977,913
                                      )
                                      
                                      
                                      7,905,746INTANGIBLE
      ASSETS
                                      
                                      
                                      90,926
                                      
                                      
                                      
                                      256,660
                                      
                                      
                                      
                                      347,586DEFERRED
      INCOME TAX
                                      
                                      
                                      -
                                      
                                      
                                      
                                      109,000
                                      
                                      
                                      
                                      109,000OTHER
                                      
                                      
                                      167,000
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      167,000TOTAL
      ASSETS
                                      
                                      $
                                      20,916,076
                                      
                                      
                                      $
                                      (1,476,253
                                      )
                                      
                                      $
                                      19,439,823LIABILITIES
      AND SHAREHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts
      payable and accrued liabilities
                                      
                                      $
                                      1,908,844
                                      
                                      
                                      $
                                      (175,000
                                      )
                                      
                                      $
                                      1,733,844Accounts
      payable - related parties
                                      
                                      
                                      950,935
                                      
                                      
                                      $
                                      175,000
                                      
                                      
                                      
                                      1,125,935Deferred
      revenue
                                      
                                      
                                      262,357
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      262,357TOTAL
      CURRENT LIABILITIES
                                      
                                      
                                      3,122,136
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      3,122,136DEFERRED
      INCOME TAXES
                                      
                                      
                                      545,000
                                      
                                      
                                      
                                      (545,000
                                      )
                                      
                                      
                                      -TOTAL
      LIABILITES
                                      
                                      
                                      3,667,136
                                      
                                      
                                      
                                      (545,000
                                      )
                                      
                                      
                                      3,122,136SHAREHOLDERS'
      EQUITYSeries
      A convertible preferred stock
                                      
                                      
                                      100,000
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      100,000Common
      stock
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Additional
      paid-in capital
                                      
                                      
                                      17,639,318
                                      
                                      
                                      
                                      795,000
                                      
                                      
                                      
                                      18,434,318Retained
      earnings (deficit)
                                      
                                      
                                      (490,378
                                      )
                                      
                                      
                                      (1,726,253
                                      )
                                      
                                      
                                      (2,216,631
                                      )TOTAL
      SHAREHOLDERS’ EQUITY
                                      
                                      
                                      17,248,940
                                      
                                      
                                      
                                      (931,253
                                      )
                                      
                                      
                                      16,317,687TOTAL
      LIABILITIES AND SHAREHOLDERS' EQUITY
                                      
                                      $
                                      20,916,076
                                      
                                      
                                      $
                                      (1,476,253
                                      )
                                      
                                      $
                                      19,439,823
  10
  CONDENSED
CONSOLIDATED BALANCE SHEET
 
 September 30, 2008
                            
                            Reported
                            
                            
                            Adjustment
                            
                            
                            Discontinued
                              Operations
                              Adjustment
                            
                            
                            As
                              RestatedASSETSCURRENT
      ASSETSCash
                            
                            $
                            2,557,246
                            
                            
                            $
                            -
                            
                            
                            $
                            (155,172
                            )
                            
                            $
                            2,402,074Loans
      receivable (less allowance for losses of $1,261,000)
                            
                            
                            5,730,777
                            
                            
                            
                            -
                            
                            
                            
                            (926,070
                            )
                            
                            
                            4,804,707Stock
      subscriptions receivable
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -Prepaid
      expenses and other
                            
                            
                            124,653
                            
                            
                            
                            91,950
                            
                            
                            
                            (26,470
                            )
                            
                            
                            190,133Deferred
      income taxes
                            
                            
                            550,000
                            
                            
                            
                            66,000
                            
                            
                            
                            (55,000
                            )
                            
                            
                            561,000Assets
      used in discontinued operations
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            1,162,712
                            
                            
                            
                            1,162,712TOTAL
      CURRENT ASSETS
                            
                            
                            8,962,676
                            
                            
                            
                            157,950
                            
                            
                            
                            -
                            
                            
                            
                            9,120,626PROPERTY
      AND EQUIPMENT
                            
                            
                            1,004,114
                            
                            
                            
                            -
                            
                            
                            
                            (242,680
                            )
                            
                            
                            761,434GOODWILL
                            
                            
                            10,443,394
                            
                            
                            
                            (2,296,493
                            )
                            
                            
                            (145,173
                            )
                            
                            
                            8,001,728INTANGIBLE
      ASSETS
                            
                            
                            120,833
                            
                            
                            
                            272,796
                            
                            
                            
                            (226,180
                            )
                            
                            
                            167,449DEFERRED
      INCOME TAX
                            
                            
                            -
                            
                            
                            
                            33,000
                            
                            
                            
                            (33,000
                            )
                            
                            
                            -OTHER
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -ASSETS
      USED IN DISCONTINUED OPERATIONS
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            647,033
                            
                            
                            
                            647,033TOTAL
      ASSETS
                            
                            $
                            20,531,017
                            
                            
                            $
                            (1,832,747
                            )
                            
                            $
                            -
                            
                            
                            $
                            18,698,270LIABILITIES
      AND SHAREHOLDERS’ EQUITYCURRENT
      LIABILITIESCurrent
      maturities – notes payable
                            
                            $
                            100,000
                            
                            
                            $
                            -
                            
                            
                            $
                            -
                            
                            
                            $
                            100,000Accounts
      payable and accrued liabilities
                            
                            
                            1,034,476
                            
                            
                            
                            33,950
                            
                            
                            
                            (32,561
                            )
                            
                            
                            1,035,865Accrued
      dividend payable
                            
                            
                            525,000
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            525,000Deferred
      revenue
                            
                            
                            308,052
                            
                            
                            
                            -
                            
                            
                            
                            (8,989
                            )
                            
                            
                            299,063Liabilities
      from discontinued operations
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            41,550
                            
                            
                            
                            41,550TOTAL
      CURRENT LIABILITIES
                            
                            
                            1,967,528
                            
                            
                            
                            33,950
                            
                            
                            
                            -
                            
                            
                            
                            2,001,478LONG-TERM
      LIABILITIESNotes
      payable less current maturities
                            
                            
                            187,500
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            187,500Deferred
      income taxes
                            
                            
                            747,000
                            
                            
                            
                            (735,000
                            )
                            
                            
                            -
                            
                            
                            
                            12,000TOTAL
      LONG-TERM LIABILITIES
                            
                            
                            934,500
                            
                            
                            
                            (735,000
                            )
                            
                            
                            -
                            
                            
                            
                            199,500TOTAL
      LIABILITES
                            
                            
                            2,902,028
                            
                            
                            
                            (701,050
                            )
                            
                            
                            -
                            
                            
                            
                            2,200,978SHAREHOLDERS'
      EQUITYSeries
      A convertible preferred stock
                            
                            
                            100,000
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            100,000Common
      stock
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -Additional
      paid-in capital
                            
                            
                            18,912,792
                            
                            
                            
                            795,000
                            
                            
                            
                            
                            
                            
                            
                            19,707,792Retained
      earnings (deficit)
                            
                            
                            (1,383,803
                            )
                            
                            
                            (1,926,697
                            )
                            
                            
                            -
                            
                            
                            
                            (3,310,500
                            )TOTAL
      SHAREHOLDERS’ EQUITY
                            
                            
                            17,628,989
                            
                            
                            
                            (1,131,697
                            )
                            
                            
                            
                            
                            
                            
                            16,497,292TOTAL
      LIABILITIES AND SHAREHOLDERS' EQUITY
                            
                            $
                            20,531,017
                            
                            
                            $
                            (1,832,747
                            )
                            
                            $
                            -
                            
                            
                            $
                            18,698,270
  11
 
 CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
  For the three months ended
                          September 30, 2007
                        
                        Reported
                        
                        
                        Adjustment
                        
                        
                        As
                          RestatedREVENUESPayday
      loan fees
                        
                        $
                        2,377,355
                        
                        
                        $
                        -
                        
                        
                        $
                        2,377,355Check
      cashing fees
                        
                        
                        310,509
                        
                        
                        
                        -
                        
                        
                        
                        310,509Guaranteed
      phone/Cricket fees
                        
                        
                        154,788
                        
                        
                        
                        -
                        
                        
                        
                        154,788Other
      fees
                        
                        
                        14,200
                        
                        
                        
                        -
                        
                        
                        
                        14,200Total
      Revenue
                        
                        
                        2,856,852
                        
                        
                        
                        -
                        
                        
                        
                        2,856,852STORE
      EXPENSESSalaries
      and benefits
                        
                        
                        651,202
                        
                        
                        
                        -
                        
                        
                        
                        651,202Provisions
      for loan losses
                        
                        
                        413,277
                        
                        
                        
                        -
                        
                        
                        
                        413,277Guaranteed
      phone/Cricket cost of sales
                        
                        
                        87,999
                        
                        
                        
                        -
                        
                        
                        
                        87,999Occupancy
                        
                        
                        184,785
                        
                        
                        
                        -
                        
                        
                        
                        184,785Advertising
                        
                        
                        106,297
                        
                        
                        
                        -
                        
                        
                        
                        106,297Depreciation
                        
                        
                        26,742
                        
                        
                        
                        -
                        
                        
                        
                        26,742Amortization
      of intangible assets
                        
                        
                        34,102
                        
                        
                        
                        148,796
                        
                        
                        
                        182,898Other
                        
                        
                        251,693
                        
                        
                        
                        -
                        
                        
                        
                        251,693Total
      Store Expense
                        
                        
                        1,756,097
                        
                        
                        
                        148,796
                        
                        
                        
                        1,904,893INCOME
      (LOSS) FROM STORES
                        
                        
                        1,100,755
                        
                        
                        
                        (148,796
                        )
                        
                        
                        951,959GENERAL
      & ADMINISTRATIVE EXPENSESalaries
      and benefits
                        
                        
                        260,098
                        
                        
                        
                        -
                        
                        
                        
                        260,098Depreciation
                        
                        
                        10,767
                        
                        
                        
                        -
                        
                        
                        
                        10,767Other
                        
                        
                        94,284
                        
                        
                        
                        -
                        
                        
                        
                        94,284365,149
                        
                        
                        
                        -
                        
                        
                        
                        365,149INCOME
      (LOSS) FROM CONTINUING OPERATIONS
                        
                        
                        735,606
                        
                        
                        
                        (148,796
                        )
                        
                        
                        586,810INCOME
      TAX EXPENSE (BENEFIT)
                        
                        
                        277,000
                        
                        
                        
                        (56,000
                        )
                        
                        
                        221,000NET INCOME
      (LOSS)
                        
                        
                        458,606
                        
                        
                        
                        (92,796
                        )
                        
                        
                        365,810ASSUMED
      SERIES A CONVERTIBLE PREFERRED STOCK DIVIDENDS
                        
                        
                        (525,000
                        )
                        
                        
                        -
                        
                        
                        
                        (525,000
                        )NET
      LOSS AVAILABLE TO COMMON SHAREHOLDERS
                        
                        $
                        (66,394
                        )
                        
                        $
                        (92,796
                        )
                        
                        $
                        (159,190
                        )NET
      LOSS PER COMMON SHARE – BASIC AND DILUTED
                        
                        $
                        (0.06
                        )
                        
                        $
                        (0.08
                        )
                        
                        $
                        (0.14
                        )WEIGHTED
      AVERAGE COMMON SHARES OUTSTANDING -Basic
      and diluted
                        
                        
                        1,125,000
                        
                        
                        
                        
                        
                        
                        
                        1,125,000
  12
 
 CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
  For the nine months ended
                            September 30, 2007
                          
                          Reported
                          
                          
                          Adjustment
                          
                          
                          As
                            RestatedREVENUESPayday
      Loan fees
                          
                          $
                          6,724,867
                          
                          
                          $
                          -
                          
                          
                          $
                          6,724,867Check
      cashing fees
                          
                          
                          1,042,249
                          
                          
                          
                          -
                          
                          
                          
                          1,042,249Guaranteed
      phone/Cricket fees
                          
                          
                          593,431
                          
                          
                          
                          -
                          
                          
                          
                          593,431Other
      fees
                          
                          
                          98,620
                          
                          
                          
                          -
                          
                          
                          
                          98,620Total
      Revenue
                          
                          
                          8,459,167
                          
                          
                          
                          -
                          
                          
                          
                          8,459,167STORE
      EXPENSESSalaries
      and benefits
                          
                          
                          1,973,812
                          
                          
                          
                          -
                          
                          
                          
                          1,973,812Provisions
      for loan losses
                          
                          
                          1,056,415
                          
                          
                          
                          -
                          
                          
                          
                          1,056,415Guaranteed
      phone/Cricket cost of sales
                          
                          
                          344,398
                          
                          
                          
                          -
                          
                          
                          
                          344,398Occupancy
                          
                          
                          559,223
                          
                          
                          
                          -
                          
                          
                          
                          559,223Advertising
                          
                          
                          328,774
                          
                          
                          
                          -
                          
                          
                          
                          328,774Depreciation
                          
                          
                          84,639
                          
                          
                          
                          -
                          
                          
                          
                          84,639Amortization
      of intangible assets
                          
                          
                          102,305
                          
                          
                          
                          499,136
                          
                          
                          
                          601,441Other
                          
                          
                          756,786
                          
                          
                          
                          -
                          
                          
                          
                          756,786Total
      Store Expense
                          
                          
                          5,206,352
                          
                          
                          
                          499,136
                          
                          
                          
                          5,705,488INCOME
      FROM STORES
                          
                          
                          3,252,815
                          
                          
                          
                          (499,136
                          )
                          
                          
                          2,753,679GENERAL
      & ADMINISTRATIVE EXPENSESalaries
      and benefits
                          
                          
                          870,213
                          
                          
                          
                          -
                          
                          
                          
                          870,213Depreciation
                          
                          
                          32,184
                          
                          
                          
                          -
                          
                          
                          
                          32,184Other
                          
                          
                          284,110
                          
                          
                          
                          -
                          
                          
                          
                          284,1101,186,507
                          
                          
                          
                          -
                          
                          
                          
                          1,186,507INCOME
      (LOSS) FROM CONTINUING OPERATIONS
                          
                          
                          2,066,308
                          
                          
                          
                          (499,136
                          )
                          
                          
                          1,567,172INCOME
      TAX EXPENSE (BENEFIT)
                          
                          
                          778,000
                          
                          
                          
                          (190,000
                          )
                          
                          
                          588,000NET
      INCOME (LOSS)
                          
                          
                          1,288,308
                          
                          
                          
                          (309,136
                          )
                          
                          
                          979,172ASSUMED
      SERIES A CONVERTIBLE PREFERRED STOCK DIVIDENDS
                          
                          
                          (1,575,000
                          )
                          
                          
                          -
                          
                          
                          
                          (1,575,000
                          )NET
      LOSS AVAILABLE TO COMMON SHAREHOLDERS
                          
                          $
                          (286,692
                          )
                          
                          $
                          (309,136
                          )
                          
                          $
                          (595,828
                          )NET
      LOSS PER COMMON SHARE – BASIC AND DILUTED
                          
                          $
                          (0.25
                          )
                          
                          $
                          (0.27
                          )
                          
                          $
                          (0.53
                          )WEIGHTED
      AVERAGE COMMON SHARES OUTSTANDING -Basic
      and diluted
                          
                          
                          1,125,000
                          
                          
                          
                          
                          
                          
                          
                          1,125,000
  13
  CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
 
 For the three months ended
                                    September 30, 2008
                                  
                                  Reported
                                  
                                  
                                  Adjustment
                                  
                                  
                                  Discontinued
                                    Operations
                                    Adjustment
                                  
                                  
                                  As
                                    RestatedREVENUESPayday
      loan fees
                                  
                                  $
                                  3,031,301
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  (271,653
                                  )
                                  
                                  $
                                  2,759,648Check
      cashing fees
                                  
                                  
                                  279,787
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  279,787Guaranteed
      phone/Cricket fees
                                  
                                  
                                  130,405
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  130,405Title
      loan fees
                                  
                                  
                                  211,719
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (188,870
                                  )
                                  
                                  
                                  22,849Other
      fees
                                  
                                  
                                  40,682
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (150
                                  )
                                  
                                  
                                  40,532Total
      Revenue
                                  
                                  
                                  3,693,894
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (460,673
                                  )
                                  
                                  
                                  3,233,221STORE
      EXPENSESSalaries
      and benefits
                                  
                                  
                                  862,987
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (116,201
                                  )
                                  
                                  
                                  746,786Provisions
      for loan losses
                                  
                                  
                                  629,485
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (62,668
                                  )
                                  
                                  
                                  566,817Guaranteed
      phone/Cricket cost of sales
                                  
                                  
                                  50,247
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  50,247Occupancy
                                  
                                  
                                  303,546
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (57,838
                                  )
                                  
                                  
                                  245,708Advertising
                                  
                                  
                                  106,056
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (2,956
                                  )
                                  
                                  
                                  103,100Depreciation
                                  
                                  
                                  45,111
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (17,956
                                  )
                                  
                                  
                                  27,155Amortization
      of intangible assets
                                  
                                  
                                  35,233
                                  
                                  
                                  
                                  111,058
                                  
                                  
                                  
                                  (45,161
                                  )
                                  
                                  
                                  101,130Other
                                  
                                  
                                  377,439
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  (73,696
                                  )
                                  
                                  
                                  303,743Total
      Store Expense
                                  
                                  
                                  2,410,104
                                  
                                  
                                  
                                  111,058
                                  
                                  
                                  
                                  (376,476
                                  )
                                  
                                  
                                  2,144,686INCOME
      (LOSS) FROM STORES
                                  
                                  
                                  1,283,790
                                  
                                  
                                  
                                  (111,058
                                  )
                                  
                                  
                                  (84,197
                                  )
                                  
                                  
                                  1,088,535GENERAL
      & ADMINISTRATIVE EXPENSESalaries
      and benefits
                                  
                                  
                                  355,381
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  355,381Depreciation
                                  
                                  
                                  13,502
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  13,502Other
                                  
                                  
                                  284,123
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  284,123653,006
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  653,006INCOME
      (LOSS) FROM CONTINUING OPERATIONS
                                  
                                  
                                  630,784
                                  
                                  
                                  
                                  (111,058
                                  )
                                  
                                  
                                  (84,197
                                  )
                                  
                                  
                                  435,529INCOME
      TAX EXPENSE (BENEFIT)
                                  
                                  
                                  232,000
                                  
                                  
                                  
                                  (42,000
                                  )
                                  
                                  
                                  (32,080
                                  )
                                  
                                  
                                  158,000NET
      INCOME (LOSS) BEFORE DISCONTINUED OPERATIONS
                                  
                                  
                                  398,784
                                  
                                  
                                  
                                  (69,058
                                  )
                                  
                                  
                                  (52,197
                                  )
                                  
                                  
                                  277,529INCOME
      FROM DISCONTINUED OPERATIONS
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  52,197
                                  
                                  
                                  
                                  52,197NET
      INCOME (LOSS)
                                  
                                  
                                  398,784
                                  
                                  
                                  
                                  (69,058
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  329,726ASSUMED
      SERIES A CONVERTIBLE PREFERRED STOCK DIVIDENDS
                                  
                                  
                                  (525,000
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (525,000
                                  )NET
      LOSS AVAILABLE TO COMMON SHAREHOLDERS
                                  
                                  $
                                  (126,216
                                  )
                                  
                                  $
                                  (69,058
                                  )
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  (195,274
                                  )NET
      LOSS PER COMMON SHARE – BASIC AND DILUTEDContinuing
      operations
                                  
                                  $
                                  (0.01
                                  )
                                  
                                  $
                                  (0.01
                                  )
                                  
                                  $
                                  (0.01
                                  )
                                  
                                  $
                                  (0.03
                                  )Discontinued
      operations
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  0.01
                                  
                                  
                                  
                                  0.01Net
      income (loss) per common share
                                  
                                  $
                                  (0.01
                                  )
                                  
                                  $
                                  (0.01
                                  )
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  (0.02
                                  )WEIGHTED
      AVERAGE COMMON SHARES OUTSTANDING -Basic
      and diluted
                                  
                                  
                                  8,889,644
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  8,889,644
  14




CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
 
 For the nine months ended
                                    September 30, 2008
                                  
                                  Reported
                                  
                                  
                                  Adjustment
                                  
                                  
                                  Discontinued
                                    Operations
                                    Adjustment
                                  
                                  
                                  As
                                    RestatedREVENUESPayday
      loan fees
                                  
                                  $
                                  7,905,942
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  (513,480
                                  )
                                  
                                  $
                                  7,392,462Check
      cashing fees
                                  
                                  
                                  908,941
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  908,941Guaranteed
      phone/Cricket fees
                                  
                                  
                                  444,087
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  444,087Title
      loan fees
                                  
                                  
                                  433,359
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (410,510
                                  )
                                  
                                  
                                  22,849Other
      fees
                                  
                                  
                                  145,973
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (487
                                  )
                                  
                                  
                                  145,486Total
      Revenue
                                  
                                  
                                  9,838,302
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (924,477
                                  )
                                  
                                  
                                  8,913,825STORE
      EXPENSESSalaries
      and benefits
                                  
                                  
                                  2,473,834
                                  
                                  
                                  
                                  1,453
                                  
                                  
                                  
                                  (240,510
                                  )
                                  
                                  
                                  2,234,777Provisions
      for loan losses
                                  
                                  
                                  1,424,441
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (105,822
                                  )
                                  
                                  
                                  1,318,619Guaranteed
      phone/Cricket cost of sales
                                  
                                  
                                  223,550
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  223,550Occupancy
                                  
                                  
                                  821,611
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (146,354
                                  )
                                  
                                  
                                  675,257Advertising
                                  
                                  
                                  284,676
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (3,531
                                  )
                                  
                                  
                                  281,145Depreciation
                                  
                                  
                                  126,257
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (41,044
                                  )
                                  
                                  
                                  85,213Amortization
      of intangible assets
                                  
                                  
                                  120,099
                                  
                                  
                                  
                                  302,444
                                  
                                  
                                  
                                  (105,375
                                  )
                                  
                                  
                                  317,168Other
                                  
                                  
                                  1,131,327
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (158,830
                                  )
                                  
                                  
                                  972,497Total
      Store Expense
                                  
                                  
                                  6,605,795
                                  
                                  
                                  
                                  303,897
                                  
                                  
                                  
                                  (801,466
                                  )
                                  
                                  
                                  6,108,226INCOME
      (LOSS) FROM STORES
                                  
                                  
                                  3,232,507
                                  
                                  
                                  
                                  (303,897
                                  )
                                  
                                  
                                  (123,011
                                  )
                                  
                                  
                                  2,805,599GENERAL
      & ADMINISTRATIVE EXPENSESalaries
      and benefits
                                  
                                  
                                  951,774
                                  
                                  
                                  
                                  19,247
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  971,021Depreciation
                                  
                                  
                                  30,477
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  30,477Other
                                  
                                  
                                  1,125,680
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  1,125,6802,107,931
                                  
                                  
                                  
                                  19,247
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  2,127,178INCOME
      (LOSS) FROM CONTINUING OPERATIONS
                                  
                                  
                                  1,124,576
                                  
                                  
                                  
                                  (323,144
                                  )
                                  
                                  
                                  (123,011
                                  )
                                  
                                  
                                  678,421INCOME
      TAX EXPENSE (BENEFIT)
                                  
                                  
                                  443,000
                                  
                                  
                                  
                                  (122,700
                                  )
                                  
                                  
                                  (46,400
                                  )
                                  
                                  
                                  273,900NET
      INCOME (LOSS) BEFORE DISCONTINUED OPERATIONS
                                  
                                  
                                  681,576
                                  
                                  
                                  
                                  (200,444
                                  )
                                  
                                  
                                  (76,611
                                  )
                                  
                                  
                                  404,521INCOME
      FROM DISCONTINUED OPERATIONS
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  76,611
                                  
                                  
                                  
                                  76,611NET
      INCOME
                                  
                                  
                                  681,576
                                  
                                  
                                  
                                  (200,444
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  481,132ASSUMED
      SERIES A CONVERTIBLE PREFERRED STOCK DIVIDENDS
                                  
                                  
                                  (1,575,000
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (1,575,000
                                  )NET
      LOSS AVAILABLE TO COMMON SHAREHOLDERS
                                  
                                  $
                                  (893,424
                                  )
                                  
                                  $
                                  (200,444
                                  )
                                  
                                  $
                                  
                                  
                                  
                                  $
                                  (1,093,868
                                  )NET
      LOSS PER COMMON SHARE – BASIC AND DILUTEDContinuing
      operations
                                  
                                  $
                                  (0.10
                                  )
                                  
                                  
                                  (0.04
                                  )
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  (0.14
                                  )Discontinued
      operations
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  (0.01
                                  )Net
      income (LOSS) per common share
                                  
                                  $
                                  (0.10
                                  )
                                  
                                  
                                  (0.04
                                  )
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  (0.13
                                  )WEIGHTED
      AVERAGE COMMON SHARES OUTSTANDING -Basic
      and diluted
                                  
                                  
                                  8,644,065
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  8,644,065
 15
  3.
              Acquisitions –
 
 Acquisition of North Dakota
Stores
 
 On March
1, 2008 the Company acquired, for $390,917 in cash, five stores offering cash
advance loans in Fargo, Grand Forks, Bismarck, and Minot, North Dakota. These
stores currently operate under the Ameri-Cash name.
 
 Acquisition of National Cash
& Credit
 
 On
February 26, 2008, the Company entered into an Exchange Agreement with National
Cash & Credit, LLC, a Minnesota limited liability company (NCC), and the
members of NCC. Under the Exchange Agreement, the members of NCC assigned all of
the outstanding membership interests in NCC to the Company in exchange 1,114,891
shares (valued at $1.20 per share) of the Company’s common stock and a cash
payment of $100,000.
 
 The
Company's CEO at the time of the acquisition had a material financial interest
in NCC. The CEO’s ownership and conditions of the Exchange Agreement were
disclosed to the Company's Board of Directors, which approved the Exchange
Agreement.
 
 NCC was
formed approximately two years ago and owned and operated five stores located in
suburban Phoenix, Arizona. NCC principally offered cash advance loans ranging
from $100 to $2,500 and title loans ranging from $500 to $2,000.
 
 Under the
purchase method of accounting the assets and liabilities of the acquisitions
were recorded at their respective estimated fair values as of the applicable
purchase date as follows:
 
 2008Cash
                                      
                                      $
                                      139,017Loans
      receivable
                                      
                                      
                                      850,577Property
      and equipment
                                      
                                      
                                      193,301Intangible
      assets
                                      
                                      
                                      468,850Goodwill
                                      
                                      
                                      240,879Current
      liabilities
                                      
                                      
                                      (63,837
                                      )$
                                      1,828,787
 
 Acquisition of STEN
Stores
 
 On July
31, 2008, the Company purchased four payday loan and check cashing stores and an
on-line lending website, which included all related assets including store level
working capital, from Sten Corporation, a Minnesota corporation. Three of the
stores are located in Salt Lake City, Utah and one store is located in Tempe,
Arizona. The acquisition was completed through the Company’s subsidiary, WCR
Acquisition Co., a Minnesota corporation. The purchase price of the acquisition
was $287,500, financed through the issuance of seller notes and contingent
consideration in the amount of 50% of net cash flows as discussed in the
agreement. The contingent consideration is limited to the greater of 50% of net
cash flows as described in the agreement (calculated and due annually) through
July 31, 2012 or an aggregate of $800,000.
 
 Under the
purchase method of accounting the assets and liabilities of the acquisitions
were recorded at their respective estimated fair values as of the applicable
purchase date as follows:
 
 2008Cash
                          
                          $
                          7,468Loans
      receivable (net allowance of $54,000)
                          
                          
                          216,454Property
      and equipment
                          
                          
                          36,647Prepaid
      expenses and other current assets
                          
                          
                          26,931$
                          287,500
  16
  The
results of the operations for the acquired locations have been included in the
condensed consolidated financial statements since the date of the acquisitions.
The following table presents the pro forma results of operations for the three
and nine months ended September 30, 2008 and 2007, as if these acquisitions had
been consummated at the beginning of each period presented. The pro forma
results of operations are prepared for comparative purposes only and do not
necessarily reflect the results that would have occurred had the acquisition
occurred at the beginning of the year presented or the results which may occur
in the future.
 
 Three Months Ended
                                  September 30,
                                
                                
                                Nine Months Ended
                                  September 30,2008
                                
                                2007
                                
                                
                                2008
                                
                                
                                2007Pro
      forma revenue
                                
                                $
                                3,751,020
                                
                                
                                $
                                3,537,910
                                
                                
                                $
                                10,456,409
                                
                                
                                $
                                10,325,271Pro
      forma net income
                                
                                
                                396,095
                                
                                
                                
                                526,140
                                
                                
                                
                                678,235
                                
                                
                                
                                1,434,717Pro
      forma net income (loss) per common share – basic and
    diluted
                                
                                $
                                0.01
                                
                                
                                $
                                0.00
                                
                                
                                $
                                (0.10
                                )
      )
                                
                                $
                                (0.12
                                )
 
 4.
              Shareholders’
      Equity –
 
 During
the quarter ended March 31, 2008, 1,475,000 options and warrants (mostly which
were held by related parties) were exercised at an exercise price of $.01 per
share. Also, 125,000 options and warrants were cancelled.
 
 5.
              Risks
      Inherent in the Operating
Environment –
 
 The
Company’s short-term consumer loan activities are regulated under numerous
local, state, and federal laws and regulations, which are subject to change. New
laws or regulations could be enacted that could have a negative impact on the
Company’s lending activities. Over the past few years, consumer advocacy groups
and certain media reports have advocated governmental and regulatory action to
prohibit or severely restrict deferred presentment cash advances. If this
negative characterization of deferred presentment cash advances becomes widely
accepted by consumers, demand for deferred presentment cash advances could
significantly decrease, which could have a materially adverse affect on the
Company’s financial condition.
 
 Negative
perception of deferred presentment cash advances could also result in increased
regulatory scrutiny and increased litigation and encourage restrictive local
zoning rules, making it more difficult to obtain the government approvals
necessary to continue operating existing stores or open new short-term consumer
loan stores.
 
 For the
nine months ended September 30, 2008 and 2007, the Company had significant
revenues by state as follows:
 
 2008
                        % of Revenues
                      
                      
                      2007
                        % of RevenuesNebraska
                      
                      
                      29
                      %
                      
                      
                      33
                      %North
      Dakota
                      
                      
                      13
                      %
                      
                      
                      12
                      %
 
 6.
              Dividend
      Declaration and Payment-
 
 On March
17, 2008, the Board of Directors of the Company approved the payment of the
first quarter 2008 dividend on the Company's Series A Convertible Preferred
Stock in the amount of $525,000. The dividends were paid on April 1, 2008. In
July 2008, the Board of Directors of the Company ratified the payment of
the second quarter 2008 dividend on the Company’s Series A Convertible Preferred
Stock in the amount of $525,000 and the dividends were paid. In October
2008, the Board of Directors of the Company ratified the payment of
the third quarter 2008 dividend on the Company’s Series A Convertible
Preferred Stock in the amount of $525,000. The dividends were paid on October
10, 2008.
  17
  7.
              Other Expense-
 
 A
breakout of other expense is as follows:
 
 Three Months Ended
                                      September 30,
                                    
                                    
                                    Nine Months Ended
                                      September 30,2008
                                    
                                    
                                    2007
                                    
                                    
                                    2008
                                    
                                    
                                    2007Store
      expenses:Insurance
                                    
                                    $
                                    29,750
                                    
                                    
                                    $
                                    17,846
                                    
                                    
                                    $
                                    75,544
                                    
                                    
                                    $
                                    61,040Collection
      costs
                                    
                                    
                                    73,349
                                    
                                    
                                    
                                    66,397
                                    
                                    
                                    
                                    201,022
                                    
                                    
                                    
                                    160,672Repairs
      & maintenance
                                    
                                    
                                    48,408
                                    
                                    
                                    
                                    16,759
                                    
                                    
                                    
                                    121,712
                                    
                                    
                                    
                                    61,200Supplies
                                    
                                    
                                    27,297
                                    
                                    
                                    
                                    31,785
                                    
                                    
                                    
                                    86,350
                                    
                                    
                                    
                                    106,318Telephone
      and utilities
                                    
                                    
                                    65,610
                                    
                                    
                                    
                                    62,000
                                    
                                    
                                    
                                    199,773
                                    
                                    
                                    
                                    183,430Other
                                    
                                    
                                    59,329
                                    
                                    
                                    
                                    56,906
                                    
                                    
                                    
                                    288,096
                                    
                                    
                                    
                                    184,126$
                                    303,743
                                    
                                    
                                    $
                                    251,693
                                    
                                    
                                    $
                                    972,497
                                    
                                    
                                    $
                                    756,786General
      & administrative expenses:Professional
      fees
                                    
                                    
                                    164,575
                                    
                                    
                                    
                                    31,079
                                    
                                    
                                    
                                    853,947
                                    
                                    
                                    
                                    40,950Other
                                    
                                    
                                    119,548
                                    
                                    
                                    
                                    63,205
                                    
                                    
                                    
                                    271,733
                                    
                                    
                                    
                                    243,160$
                                    284,123
                                    
                                    
                                    $
                                    94,284
                                    
                                    
                                    $
                                    1,125,680
                                    
                                    
                                    $
                                    284,110
 
 8.
              Subsequent
      Events-
 
 Effective
October 15, 2008, the Company entered into a Stock Purchase Agreement with
PQH Wireless, Inc., a Nebraska corporation, and Mark Houlton, Charles Payne and
John Quandahl, the three stockholders of PQH Wireless. Under the Stock Purchase
Agreement, the stockholders sold all of the outstanding capital stock in PQH
Wireless to the Company for a total purchase price of $3,035,000. The
transaction was financed by a combination of cash and notes payable to the
sellers.
 
 The Stock
Purchase Agreement contains customary representations, warranties and covenants
of the parties and indemnification obligations relating to those
representations, warranties and covenants which survive until October 15,
2010.
 
 Mark
Houlton is a director of the Company and John Quandahl is the Company’s Chief
Operating Officer. Because each of these individuals were stockholders of the
Company, each had a direct material financial interest in PQH Wireless. The
ownership of Messrs. Houlton and Quandahl in PQH Wireless and the material terms
and conditions of the Stock Purchase Agreement were disclosed to the
disinterested members of the Company’s audit committee, which approved the Stock
Purchase Agreement and the transactions contemplated thereby.
 
 PQH
Wireless was formed approximately two years ago and owns and operates nine
stores at locations in Missouri, Nebraska, and Texas as an authorized seller of
Cricket cellular phones.
  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. The Business Loan Agreement provides Wyoming Financial
Lenders with a one-year revolving line of credit in an amount of up to
$2,000,000. The Business Loan Agreement contained customary representations and
warranties, and contained certain financial covenants (including the
satisfaction of certain financial criteria as a condition to loan advances, such
as current ratio and debt-to-adjusted-net-worth ratio).
 
 The
Business Loan Agreement involved the delivery by Wyoming Financial Lenders of a
promissory note in favor of Banco Popular. Under the promissory note, interest
on advanced amounts accrues at the per annum rate of one point over the Banco
Popular North America Prime Rate (which rate is presently 4.5%). Initially,
therefore, interest will accrue at the rate of 5.5%. Payments consisting solely
of accrued interest will be made on a monthly basis beginning on November 29,
2008. All accrued and unpaid interest, together with all outstanding principal,
will be due on October 30, 2009. Amounts advanced under the Business Loan
Agreement are guaranteed by the Company and personally by Christopher Larson,
our Chief Executive Officer. These guarantees are for payment and performance
(not of collection), which means that Banco Popular may enforce either or both
of the guarantees without having earlier exhausted its remedies against Wyoming
Financial Lenders.
  18
 
 Item 2. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
  Restatement
  As
previously described in the “Explanation of our Restatement” preface to this
amendment, we have restated our consolidated financial statements for the years
ended December 31, 2007 and 2006, and subsequent interim reports for the
quarterly periods through September 30, 2008, to correct errors related to the
allocation of purchase price to customer relationships as opposed to goodwill
for historical acquisitions, correct an understatement of share-based
compensation expense for fiscal 2007 and re-categorize $175,000 of costs
originally reported as a reduction of proceeds from common stock in the
consolidated statement of shareholders’ equity to an expense in the consolidated
statements of operations.  The following Management’s Discussion and
Analysis of Financial Condition and Results of Operations has been updated to
reflect the restatement and discontinued operations which is more fully
described in Note 2 to our condensed consolidated financial
statements.  Except as amended to reflect the restatements previously
described, the information in this Item 2 has not been updated and continues to
speak as of the date of the original filing.
 
 Forward-Looking
Statements
  Except
for the historical information contained herein, the matters discussed in this
Report on Form 10-Q/A are forward-looking statements involving risks and
uncertainties that could cause actual results to differ materially from those in
such forward-looking statements. Numerous factors, risks and uncertainties
affect the Company’s operating results and could cause the Company’s actual
results to differ materially from forecasts and estimates or from any other
forward-looking statements made by, or on behalf of, the Company, and there can
be no assurance that future results will meet expectations, estimates or
projections. Further information regarding these and other risks is included in
the “Risk Factors” section of our most recent Annual Report on Form 10-K for
fiscal 2008.
 
 Overview
  Throughout
this report, we refer to Western Capital Resources, Inc., a Minnesota
corporation, as “we,” “us,” “Western Capital Resources” and the “Company.” Prior
to July 29, 2008, the Company’s corporate name was URON Inc.
          We
provide short-term consumer loans—known as cash advance or
“Payday” loans—in amounts that typically range from $100 to $500. Cash
advance loans provide customers with cash in exchange for a promissory note with
a maturity of generally two to four weeks and the customer’s post-dated personal
check for the aggregate amount of the cash advanced, plus a fee. Approximately
68% of our loan transactions are made for a period of up to four weeks and
approximately 32% of our loan transactions involve loans whose initial
maturities extend beyond four weeks. The fee we charge for a cash advance
or “Payday” loan varies from state to state, based on applicable regulations,
and generally ranges from $15 to $22 for each $100 borrowed. To repay the cash
advance loans, customers may pay with cash, in which case their personal check
is returned to them, or allow the check to be presented to the bank for
collection. All of our loans and other services are subject to state regulations
(which vary from state to state), federal regulations and local regulation,
where applicable.
 
 Our
expenses primarily relate to the operations of our stores. The most significant
expenses include salaries and benefits for our store employees, provisions for
loan losses, occupancy expense for our leased real estate and advertising. Our
other significant expenses are general and administrative, which includes
compensation of employees, professional fees and stock-based compensation
expenses and merger transaction expenses.
  With
respect to our cost structure, salaries and benefits are one of our largest
costs and are driven primarily by the addition of branches throughout the year
and growth in loan volumes. Our provision for losses is also a significant
expense.  We have experienced seasonality in our operations, with the first
and fourth quarters typically being our strongest periods as a result of broader
economic factors, such as holiday spending habits at the end of each year and
income tax refunds during the first quarter.
  We
evaluate our stores based on revenue growth, gross profit contributions and loss
ratio (which is losses as a percentage of revenues), with consideration given to
the length of time the branch has been open and its geographic location. We
evaluate changes in comparable branch financial and other measures on a routine
basis to assess operating efficiency. We define comparable branches as those
branches that are open during the full periods for which a comparison is being
made. For example, comparable branches for the annual analysis we undertook as
of December 31, 2007 have been open at least 24 months on that date. We monitor
newer branches for their progress toward profitability and rate of loan
growth.
 
 We also
have 10,000,000 shares of Series A Convertible Preferred Stock (10% cumulative
dividends, $0.01 par value, $2.10 stated value) authorized, issued and
outstanding.  Our board of directors votes quarterly to approve this
dividend in the amount of $525, which represents an annual cost to us of $2.1
million.  The dividend can be paid either in cash or in shares of our
common stock at the investor’s discretion.  This dividend is
calculated in to the net income or loss available to common
stockholders.
  19
  Our
obligation to pay dividends significantly impacts our cash flow and our ability
to grow through acquisitions, which is the most significant way in which we
expect to grow.  For instance, our use of cash in satisfaction of the
dividend payment obligations prevents us from using that cash as part of
acquisition transactions.  The present condition of the credit markets
also makes it difficult for us to surmount this obstacle through
borrowing.  In addition, our use of cash in satisfaction of the
dividend payment obligations makes it more difficult for us to manage our cash
in a way that we will ensure the availability of cash for lending to our cash
advance customers during the fall and winter months, which is typically the
busiest time of year for payday lending.
 
 According
to the Community Financial Services Association of America (CFSA), industry
analysts estimate that the industry has grown to approximately 22,000 payday
loan branches in the United States and these branches extend approximately $40
billion in short-term credit to millions of households that experience cash-flow
shortfalls between paydays. We believe our industry is highly fragmented as ten
companies presently operate approximately 10,200 branches in the United States.
With this industry growth and current fragmentation (discussed above), we
believe there are opportunities to grow our business, primarily through
acquisitions as opposed to organic growth. We are actively identifying
possible store locations in numerous states in which we currently operate
and evaluating the regulatory environment and market potential in the various
states in which we currently do not have stores. In addition to expanding our
geographic reach, our strategic expansion plans also involve the expansion and
diversification of our product and service offerings. We believe that successful
expansion, both geographically and product- and service-wise, will help to
mitigate the regulatory and economic risk inherent in our business by making us
less reliant on (i) cash advance lending alone and (ii) any particular aspect of
our business that concentrated geographically.
  The
growth of the payday loan industry has followed, and continues to be
significantly affected by, payday lending legislation and regulation in the
various states and nationally. We actively monitor and evaluate legislative and
regulatory initiatives in each of the states and nationally, and are involved
with the efforts of the various industry lobbying efforts. To the extent that
states enact legislation or regulations that negatively impacts payday lending,
whether through preclusion, fee reduction or loan caps, our business could be
adversely affected.
  As
of November 19, 2008, legislation was pending in Arizona which would have
extended a law permitting cash advance loans. In the absence of such
legislation, current law permitting cash advance loans was to “sunset” or expire
at the end of 2009. In Nebraska, legislation was introduced to ban all cash
advance loans in Nebraska. This bill was ultimately defeated. Nevertheless,
since we derive approximately 36% (for the 12 months ended December 31, 2007) of
our revenues in Nebraska, any subsequent attempts to pass similar legislation in
Nebraska, or other legislation that would restrict our ability to make cash
advance loans in Nebraska, would pose significant risks to our
business.
 
 In 2007,
the federal government passed legislation (the 2007 Military Authorization Act)
prohibiting the making of payday (cash advance) loans and title loans to members
of the United States military. The law also prohibits creditors in general from
charging more than 36% interest to military borrowers (in calculating the
applicable rate of interest, all fees, service charges, renewal charges, credit
insurance premiums or any other product sold with the loan must be included).
Management does not believe that this 2007 law has materially affected or will
materially affect the Company and its business. As with the various state
legislatures, however, it is possible that the federal government may enact
legislation or regulation that further restricts payday lending or title lending
in general, which would undoubtedly affect our business in adverse
ways.
 
 Discussion of Critical
Accounting Policies
  Our
condensed consolidated financial statements and accompanying notes have been
prepared in accordance with accounting principles generally accepted in the
United States of America applied on a consistent basis. The preparation of these
financial statements requires us to make a number of estimates and assumptions
that affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods. We
evaluate these estimates and assumptions on an ongoing basis. We base these
estimates on the information currently available to us and on various other
assumptions that we believe are reasonable under the circumstances. Actual
results could vary materially from these estimates under different assumptions
or conditions.
 
 We
believe that the following critical accounting policies affect the more
significant estimates and assumptions used in the preparation of our condensed
consolidated financial statements:
  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.
  20
  Included
in loans receivable are cash advance loans that are currently due or past due
and cash advance loans that have not been repaid.  This generally is
evidenced where a customer’s personal check has been deposited and the check has
been returned due to non-sufficient funds in the customer’s account, a closed
account, or other reasons.  Cash advance loans are carried at cost
less the allowance for doubtful accounts.  The Company does not
specifically reserve for any individual cash advance loan.  The
Company aggregates cash advance loans for purposes of estimating the loss
allowance using a methodology that analyzes historical portfolio statistics and
management’s judgment regarding recent trends notes in the
portfolio.  This methodology takes into account several factors,
including the maturity of the store location and charge-off and recovery
rates.  The Company utilizes a software program to assist with the
tracking of its historical portfolio statistics.  As a result of the
Company's collections efforts, it historically writes off approximately 35% of
the returned items. Based on days past the check return date, write-offs of
returned items historically have tracked at the following approximate
percentages: 1 to 30 days - 35%; 31 to 60 days - 60%; 61 to 90 days - 75%; 91 to
120 days - 80%; and 121 to 180 days - 85%.  All returned items are
charged-off after 180 days, as collections after that date have not been
significant.  The loan loss allowance is reviewed monthly and any
adjustment to the loan loss allowance as a result of historical loan
performance, current and expected collection patterns and current economic
trends is recorded.  The Company uses a third party collection agency
to assist in the collection of the loan collateral related to title loans, when
and as the Company determines appropriate.
 
 The
Company entered into the title loan business with the acquisition of National
Cash & Credit, LLC in February 2008.  Currently, title loans are
not a significant portion of the Company’s loans receivable
portfolio.
  Valuation of long-lived and
Intangible Assets
 
 The
Company assesses the impairment of long-lived and intangible assets whenever
events or changes in circumstances indicate that the carrying value may not be
recoverable. Factors that could trigger an impairment review include significant
underperformance relative to expected historical or projected future cash flows,
significant changes in the manner of use of acquired assets or the strategy for
the overall business, and significant negative industry trends. When management
determines that the carrying value of long-lived and intangible assets may not
be recoverable, impairment is measured based on the excess of the assets'
carrying value over the estimated fair value.
  Share-Based
Compensation
 
 Under the
fair value recognition provisions of Financial Accounting Standards Board
Statement No. 123R (SFAS 123R), “Share-Based Payment,” our share-based
compensation cost is measured at the grant date based on the value of the award
and is recognized as expense based on the applicable vesting
schedule.  Determining the fair value of share-based awards at grant
date requires judgment, which includes estimating the amount of share-based
awards expected to be forfeited.  The Black-Scholes option pricing
model (using estimated value of the Company) is used to measure fair value for
stock option grants.
 
 During
2007, we granted 1,600,000 shares of restricted stock options and warrants to
certain of our employees and non-employees.  There were 11 recipients of
these grants. These options and warrants vested upon the successful completion
of the Merger on December 31, 2007.  We estimated that the grant date
fair market value of these restricted options and warrants totaled $864,000
($0.54 per share) at the time of issuance.  The market price of our
common stock on November 29, 2007 (the date of issuance) was $1.80, and the
exercise price for all of those options and warrants was $0.01 per
share.  During 2007, we also granted warrants to a Company adviser for
the purchase of up to 400,000 common shares at $0.01 per share.  These
warrants vested upon the successful completion of the merger on December 31,
2007.  We estimated that the grant date fair market value of these
restricted warrants totaled $216,000 at the time of issuance ($0.54 per
share).  These warrants had not been exercised as of November 19,
2008.
 
 The table
below summarizes information about the above-referenced grants of options and
warrants:
 
 Recipient (security type)
                          
                          Date
                          
                          Share-Based Compensation ExpenseSteven
      Staehr (option)
                          
                          11/29/2007
                          
                          
                          $297,000David
      Stueve (option)
                          
                          11/29/2007
                          
                          
                          $135,000Rich
      Horner (option)
                          
                          11/29/2007
                          
                          
                          $54,000Ted
      Dunham (option)
                          
                          11/29/2007
                          
                          
                          $54,000Rose
      Piel (option)
                          
                          11/29/2007
                          
                          
                          $13,500Brian
      Chaney (option)
                          
                          11/29/2007
                          
                          
                          $13,500John
      Quandahl (option)
                          
                          11/29/2007
                          
                          
                          $216,000John
      Richards (option) *
                          
                          11/29/2007
                          
                          
                          $54,000Tom
      Griffith (option) *
                          
                          11/29/2007
                          
                          
                          $13,500Lantern
      Advisors, LLC (warrant)
                          
                          11/29/2007
                          
                          
                          $216,000Donna
      Mendez (warrant)
                          
                          11/29/2007
                          
                          
                          $8,100Robert
      Jorgenson (warrant)
                          
                          11/29/2007
                          
                          
                          $5,400
  21
  Results
of Operations - Three Months Ended September 30, 2008 Compared to Three Months
Ended September 30, 2007
 
 For the
three month period ended September 30, 2008, net income was $330,000 compared to
net income of $366,000 for the three months ended September 30, 2007. During the
three months ended September 30, 2008, income before income taxes was $436,000
compared to income before income taxes of $587,000 for the three months ended
September 30, 2007. The major components of each of revenues, store expenses,
general and administrative expenses, total operating expenses and income tax
expense are discussed below.
 
 Revenues
 
 Revenues
totaled $3.23 million for the three months ended September 30, 2008 compared to
$2.86 million for the three months ended September 30, 2007. This increase
resulted from the increase in the number of stores operating during the 2008
interim period due to our acquisition of five stores in North Dakota operating
under the name “Ameri-Cash,” the acquisition of National Cash & Credit,
LLC and the acquisition of four stores from the “STEN” acquisition. During
the three-month period ended September 30, 2008 we originated approximately
$20.5 million in cash advance loans compared to $16.2 during the 2007 interim
period. Our average loan (including fee) totaled approximately $361 during the
period ended September 30, 2008 versus $333 in the 2007 interim period. Our
average fee rate for the three months ended September 30, 2008 was $53 compared
to $49 for the 2007 interim period. Revenues from check cashing, title loan,
guaranteed phone/Cricket phone fees, and other sources totaled $474,000 and
$479,000 for the three month periods ended September 30, 2008 and 2007,
respectively.
 
 The
following table summarizes our revenues for the three months ended September 30,
2008 and 2007, respectively:
  Three
      Months Ended
                                September 30,
                              
                              
                              Three
      Months Ended
                                September 30,2008
                              
                              
                              2007
                              
                              
                              2008
                              
                              
                              2007(percentage of revenues)Payday
      loan fees
                              
                              $
                              2,759,648
                              
                              
                              $
                              2,377,355
                              
                              
                              
                              85.4
                              %
                              
                              
                              83.2
                              %Check
      cashing fees
                              
                              
                              279,787
                              
                              
                              
                              310,509
                              
                              
                              
                              8.7
                              %
                              
                              
                              10.9
                              %Guaranteed
      phone/Cricket fees
                              
                              
                              130,405
                              
                              
                              
                              154,788
                              
                              
                              
                              4.0
                              %
                              
                              
                              5.4
                              %Title
      loan fees
                              
                              
                              22,849
                              
                              
                              
                              -
                              
                              
                              
                              0.7
                              %
                              
                              
                              0
                              %Other
      fees
                              
                              
                              40,532
                              
                              
                              
                              14,200
                              
                              
                              
                              1.2
                              %
                              
                              
                              0.5
                              %Total
                              
                              $
                              3,233,221
                              
                              
                              $
                              2,856,852
                              
                              
                              
                              100.0
                              %
                              
                              
                              100.0
                              %
 
 Store
Expenses
  Total
expenses associated with store operations for the three months ended September
30, 2008 were $2.14 million compared to $1.90 million for the three months ended
September 30, 2007. The most significant components of these expenses were
salaries and benefits, provisions for loan losses, guaranteed phone/Cricket
costs of sales, occupancy costs, advertising expenses, depreciation of store
equipment, amortization of intangible assets and other expenses associated with
store operations.
 
 Our most
significant increases in store expenses from the two interim periods related to
salaries and benefits for our store employees, provisions for loan losses, and
our costs of occupancy. As with our fiscal year-end results, guaranteed
phone/Cricket phone costs of sales showed continued reductions in expense
resulting from slowing guaranteed phone/Cricket phone sales overall. In the
three months ending September 30, 2008 we also modestly decreased advertising
expenses. A discussion of the various components of our store expenses for the
three months ended September 30, 2008 appears below.
 
 Salaries
and Benefits. Payroll and related costs at the store level were $747,000
compared to $651,000 for the periods ended September 30, 2008 and 2007,
respectively. Increased salaries and benefits expense resulted from of our
addition of several store locations. We expect that, with anticipated continued
store growth, these salaries and benefits expenses will continue to
increase.
 
 Provisions
for Loan Losses. For the three months ended September 30, 2008 our provisions
for loan losses were $567,000. For the three months ended September 30, 2007
such provisions were $413,000. Our provisions for loan losses represented
approximately 20.5% and 17.4% of our loan fee revenue for the three months ended
September 30, 2008 and 2007, respectively. We are currently experiencing a more
challenging collections environment mainly reflected by increased bankruptcy
filings, higher energy and other prices. Presently, we do not foresee any
certain end to the current economic downturn and as a result we expect higher
loan losses during fiscal 2008 than those we experienced during
2007.
  22
  Guaranteed
phone/Cricket. Guaranteed phone/Cricket costs (reflecting costs of sales of such
items) decreased from $88,000 for the three months ended September 30, 2007 to
$50,000 for the three months ended September 30, 2008, a decrease of $38,000.
This decrease has followed our expectations that our guaranteed phone/Cricket
phone line of business will become increasingly less significant to our overall
revenues as consumers move away from home phones in general (which is where the
guaranteed phone/Cricket phone product is used) toward cell phones. By the end
of fiscal 2008, we do not expect that this line of business will be
significant.
 
 Occupancy
Costs. Occupancy expenses, comprised mainly of store leases, were $246,000 for
the three months ended September 30, 2008 versus $185,000 for the three months
ended September 30, 2007. The increase in our occupancy expenses relates to our
acquisitions and operation of more stores during the most recent three-month
period. In general, as we pursue a growth by small acquisitions strategy, we
expect this trend to continue for the foreseeable future.
 
 Advertising.
Advertising and marketing expenses were $103,000 during the three-month period
ended September 30, 2008 as compared to $106,000 during the three-month period
ended September 30, 2007. In general, we expect that our marketing and
advertising expenses for fiscal 2008 will remain relatively stable but will
increase overall, as compared to fiscal 2007, if we are successful in
implementing our acquisition strategy during the year.
 
 Depreciation.
Depreciation, relating to store equipment and capital expenditures for stores,
increased from $27,200 for the three months ended September 30, 2007 to $26,700
for the three months ended September 30, 2008.
  Amortization
of Intangible Assets. Amortization of intangible assets was slightly higher for
the two interim periods, being $101,000 for the three months ended September 30,
2008 versus $183,000 for the three months ended September 30,
2007.  The significant increase in amortization in 2008 was due to the
change in customer relationships recorded as an intangible asset rather than
goodwill.
 
 Other.
Other expenses were $304,000 for the three months ended September 30, 2008
versus $252,000 for the three months ended September 30, 2007 primarily due
higher costs associated with operating a higher number of stores on a year over
year basis.
 
 General and Administrative
Expenses
 
 Total
general and administrative costs for the three months ended September 30, 2008
were $653,000 compared to $365,000 for the period ended September 30, 2007. For
the three-month period ended September 30, 2008, the major components of these
costs were salaries and benefits for our corporate headquarters operations and
executive management, depreciation of certain headquarters-related equipment,
and utilities, office supplies and other minor costs, professional fees for
accounting and legal services (collectively grouped as “other” costs). A
discussion of the various components of our general and administrative costs for
the three months ended September 30, 2008 and 2007 appears below:
 
 Salaries
and Benefits. Salaries and benefits expenses for the three months ended
September 30, 2008 were $355,000, an $95,000 increase from the $260,000 in such
expenses during period ended September 30, 2007. The increase resulted mainly
from headquarters and management employees being slightly higher for the period
ended September 30, 2008 then they were for the corresponding period ended
September 30, 2007. This slight increase is mainly due to our addition of
employees since the Merger.
 
 Depreciation.
Depreciation for the period ended September 30, 2008 compared to September 30,
2007 was $13,500 and $10,800, respectively. Depreciation relates primarily to
equipment and capital improvements at the Company’s corporate
headquarters.
 
 Other
General and Administrative Expenses. Other general and administrative expenses,
which includes professional fees for accounting and legal services, consulting
services related to Sarbanes-Oxley compliance, utilities, office supplies,
collection costs and other minor costs associated with corporate headquarters
activities, aggregated to $284,000 for the three months ended September 30, 2008
versus $94,000 for the three months ended September 30, 2007. We do not expect
these types of costs to decrease to their fiscal 2007 levels, as most of them
are attributed to efforts to comply with various rules and regulations
applicable to public reporting companies.
 
 Total Operating
Expenses
 
 Our total
operating expenses for the three months ended September 30, 2008 were $2.80
million compared to $2.27 million for the comparable period for 2007. Overall,
the $530,000 increase in operating expenses were mainly attributed to our growth
in the number of operating stores and increased costs associated with being a
public reporting company.
 
 Income Tax
Expense
 
 Income
tax expense for the period ended September 30, 2008 was $158,000 compared to
income tax expense of $221,000 for the period ended September 30, 2007, which
decreased primarily as a result of our income before taxes for the 2008 period
of $436,000 versus income before taxes for the 2007 period of
$587,000.
  23
  Discontinued
Operations
 
 Income
from discontinued operations was $52,197 for the nine months ended September 30,
2008.
 
 Results
of Operations - Nine Months Ended September 30, 2008 Compared to Nine Months
Ended September 30, 2007
 
 For the
nine month period ended September 30, 2008, net income was $481,132 compared to
net income of $979,000 for the nine months ended September 30, 2007. During the
nine months ended September 30, 2008, income before income taxes was $678,000
compared to income before income taxes of $1.57 million for the nine months
ended September 30, 2007. The major components of each of revenues, store
expenses, general and administrative expenses, total operating expenses and
income tax expense, as restated, are discussed below.
 
 Revenues
 
 Revenues
totaled $8.91 million for the nine months ended September 30, 2008 compared to
$8.46 million for the nine months ended September 30, 2007. This increase
resulted from the increase in the number of stores operating during the 2008
interim period due to our acquisition of five stores in North Dakota operating
under the name “Ameri-Cash,” the acquisition of National Cash & Credit,
LLC and the acquisition of four stores from the “STEN” acquisition.
 During the nine-month period ended September 30, 2008 we originated
approximately $54.2 million in cash advance loans compared to $45.9 million
during the 2007 interim period. Our average loan (including fee) totaled
approximately $351 during the period ended September 30, 2008 versus $334 in the
2007 interim period. Our average fee rate for the nine months ended September
30, 2008 was $52 compared to $49 for the 2007 interim period. Revenues from
check cashing, title loans, guaranteed phone/Cricket phone fees, and other
sources totaled $1.52 million and $1.73 for the nine month periods ended
September 30, 2008 and 2007, respectively.
 
 The
following table summarizes our revenues for the nine months ended September 30,
2008 and 2007, respectively:
 
 Nine Months Ended
                                September
      30,
                              
                              
                              Nine Months Ended
                                September 30,2008
                              
                              
                              2007
                              
                              
                              2008
                              
                              
                              2007(percentage of revenues)Loan
      Fees
                              
                              $
                              7,392,462
                              
                              
                              $
                              6,724,867
                              
                              
                              
                              83.0
                              %
                              
                              
                              79.5
                              %Check
      cashing fees
                              
                              
                              908,941
                              
                              
                              
                              1,042,249
                              
                              
                              
                              10.2
                              %
                              
                              
                              12.3
                              %Guaranteed
      phone/Cricket fees
                              
                              
                              444,087
                              
                              
                              
                              593,431
                              
                              
                              
                              5.0
                              %
                              
                              
                              7.0
                              %Title
      loan fees
                              
                              
                              22,849
                              
                              
                              
                              -
                              
                              
                              
                              0.2
                              %
                              
                              
                              0
                              %Other
      fees
                              
                              
                              145,486
                              
                              
                              
                              98,620
                              
                              
                              
                              1.6
                              %
                              
                              
                              1.2
                              %Total
                              
                              $
                              8,913,825
                              
                              
                              $
                              8,459,167
                              
                              
                              
                              100.0
                              %
                              
                              
                              100.0
                              %
 
 Store
Expenses
  Total
expenses associated with store operations for the nine months ended September
30, 2008 were $6.11 million compared to $5.71 million for the nine months ended
September 30, 2007. The most significant components of these expenses were
salaries and benefits, provisions for loan losses, guaranteed phone/Cricket
costs of sales, occupancy costs, advertising expenses, depreciation of store
equipment, amortization of intangible assets and other expenses associated with
store operations.
 
 Our most
significant increases in store expenses from the two interim periods related to
salaries and benefits for our store employees, provisions for loan losses, and
our costs of occupancy. As with our fiscal year-end results, guaranteed
phone/Cricket phone costs of sales showed continued reductions in expense
resulting from slowing guaranteed phone/Cricket phone sales overall. In the nine
months ending September 30, 2008 we also modestly decreased advertising
expenses. A discussion of the various components of our store expenses for the
nine months ended September 30, 2008 and 2007 appears below.
 
 Salaries
and Benefits. Payroll and related costs at the store level were $2.23 million
compared to $1.97 million for the nine months ended September 30, 2008 and 2007,
respectively. Increased salaries and benefits expense resulted from of our
addition of several store locations. We expect that, with anticipated continued
store growth, these salaries and benefits expenses will continue to
increase.
 
 Provisions
for Loan Losses. For the nine months ended September 30, 2008 our provisions for
loan losses were $1.32 million. For the nine months ended September 30, 2007
such provisions were $1.06 million. Our provisions for loan losses represented
approximately 17.8% and 15.7% of our loan fee revenue for the nine months ended
September 30, 2008 and 2007, respectively. We believe that the increased loss
ratio for the comparable periods results from both our increased store count,
since the processes of integrating acquired store locations frequently involves
some amount of time before store management had adopted and implemented our
protective pre-transaction measures, and a more challenging consumer collections
environment in general. The more challenging environment is mainly reflected by
increased bankruptcy filings, higher energy and other prices. Presently, we do
not foresee any certain end to the current economic downturn and as a result we
expect higher loan losses during fiscal 2008 than those we experienced during
2007.
  24
  Guaranteed
phone/Cricket. Guaranteed phone/Cricket costs (reflecting costs of sales of such
items) decreased from $344,000 for the nine months ended September 30, 2007 to
$224,000 for the nine months ended September 30, 2008, a decrease of $120,000.
This decrease has followed our expectations that our guaranteed phone/Cricket
phone line of business will become increasingly less significant to our overall
revenues as consumers move away from home phones in general (which is where the
guaranteed phone/Cricket phone product is used) toward cell phones. By the end
of fiscal 2008, we do not expect that this line of business will be
significant.
 
 Occupancy
Costs. Occupancy expenses, comprised mainly of store leases, were $675,000 for
the nine months ended September 30, 2008 versus $559,000 for the nine months
ended September 30, 2007. The increase in our occupancy expenses relates to our
acquisitions and operation of more stores during the most recent six-month
period. In general, as we pursue a growth by small acquisitions strategy, we
expect this trend to continue for the foreseeable future.
 
 Advertising.
Advertising and marketing expenses were $281,000 during the nine month period
ended September 30, 2008 as compared to $329,000 during the nine month period
ended September 30, 2007. We have made a concerted effort to reduce our
advertising expenses, the decrease in advertising and marketing expenses
primarily results from the timing of payments. In general, we expect that our
marketing and advertising expenses for fiscal 2008 will remain relatively stable
but will increase overall, as compared to fiscal 2007, if we are successful in
implementing our acquisition strategy during the year.
 
 Depreciation.
Depreciation, relating to store equipment and capital expenditures for stores,
remained fairly equal at $85,000 for the nine months ended September 30, 2007
and nine months ended September 30, 2008.
 
 Amortization
of Intangible Assets. Amortization of intangible assets was roughly equivalent
for the two interim periods, being $317,000 for the nine months ended September
30, 2008 versus $601,000 for the nine months ended September 30,
2007.  This is primarily due to the change in recording of our
customer relationships as intangible assets.
 
 Other.
Other expenses were $972,000 for the nine months ended September 30, 2008 versus
$757,000 for the nine months ended September 30, 2007 primarily due higher costs
associated with operating a higher number of stores on a year over year
basis.
 
 General and Administrative
Expenses
 
 Total
general and administrative costs for the nine months ended September 30, 2008
were $2.13 compared to $1.19 million for the nine months ended September 30,
2007. For the nine-month period ended September 30, 2008, the major components
of these costs were salaries and benefits for our corporate headquarters
operations and executive management, depreciation of certain
headquarters-related equipment, and utilities, office supplies and other minor
costs, professional fees for accounting and legal services (collectively grouped
as “other” costs). A discussion of the various components of our general and
administrative costs for the nine months ended September 30, 2008 and 2007
appears below.
 
 Salaries
and Benefits. Salaries and benefits expenses for the nine months ended September
30, 2008 were $971,000, an increase of $101,000 over the $870,000 in such
expenses during period ended September 30, 2007. Our payment cost for
headquarters and management employees are slightly higher for the period ended
September 30, 2008 then they were for the corresponding period ended September
30, 2007. This increase is mainly due to our addition of employees since the
Merger.
 
 Depreciation.
Depreciation for the period ended September 30, 2008, in the amount of $31,000,
and $32,000 for the period ended September 30, 2007. Depreciation relates
primarily to equipment and capital improvements at the Company’s corporate
headquarters.
 
 Other
General and Administrative Expenses. Other general and administrative expenses,
which includes professional fees for accounting and legal services, consulting
services related to Sarbanes-Oxley compliance, utilities, office supplies,
collection costs and other minor costs associated with corporate headquarters
activities, aggregated to $1.12 million for the nine months ended September 30,
2008 versus $284,000 for the nine months ended September 30, 2007. We do not
expect these types of costs to decrease to their fiscal 2007 levels, as most of
them are attributed to efforts to comply with various rules and regulations
applicable to public reporting companies.
 
 Total Operating
Expenses
 
 Our total
operating expenses for the nine months ended September 30, 2008 were $8.24
million compared to $6.89 million for the comparable period for 2007. Overall,
the $1.35 million increase in operating expenses were mainly attributed to our
growth in the number of operating stores and increased costs associated with
being a public reporting company.
  25
  Income Tax
Expense
 
 Income
tax expense for the period ended September 30, 2008 was 274,000 compared to
income tax expense of $588,000 for the period ended September 30, 2007, which
decreased primarily as a result of our income before taxes for the 2008 period
of $678,000 versus income before taxes for the 2007 period of
$1,567,000.
 
 Discontinued
Operations
 
 See Note
2, “Restatement” for information regarding the specific impacts of the
discontinued operations to our consolidated balance sheets and consolidated
statements of income.
  Liquidity
and Capital Resources
 
 Summary
cash flow data is as follows:
  Nine
      Months Ended September 30,2008
                                  
                                  2007Cash
      flows provided (used) by :Operating
      activities
                                  
                                  
                                  $
                                  (1,091,673
                                  )
                                  
                                  $
                                  1,276,917Investing
      activities
                                  
                                  
                                  
                                  (643,611
                                  )
                                  
                                  
                                  (106,281
                                  )Financing
      activities
                                  
                                  
                                  
                                  3,307,905
                                  
                                  
                                  
                                  (1,204,920
                                  )Net
      increase in cash
                                  
                                  
                                  
                                  1,572,621
                                  
                                  
                                  
                                  (34,284
                                  )Cash,
      beginning of period
                                  
                                  
                                  
                                  984,625
                                  
                                  
                                  
                                  1,265,460Cash,
      end of period
                                  
                                  
                                  $
                                  2,557,246
                                  
                                  
                                  $
                                  1,231,176
  At
September 30, 2008 we had cash of $2.40 million compared to cash of $984,000 on
December 31, 2007. The increase results mainly from our receipt of cash in the
private placement transaction that closed simultaneously with the Merger. For
fiscal year 2008, we believe that our available cash, combined with expected
cash flows from operations, will be sufficient to fund our liquidity and capital
expenditure requirements during fiscal 2008. Our expected short-term uses of
cash include funding of operating activities, anticipated increases in payday
loans, dividend payments on our Series A preferred stock (to the extent approved
by the Board of Directors), and the financing of expansion activities, including
new store openings and store acquisitions.
  Off-Balance
Sheet Arrangements
  The
Company had no off-balance sheet arrangements as of September 30,
2008.
 
 Item 3. Quantitative and
Qualitative Disclosures About Market Risk
 
 Not
applicable.
  Item 4T. Controls and
Procedures
 
 Evaluation of Disclosure
Controls and Procedures
  On
September 30, 2008, our Chief Executive Officer and Chief Financial Officer
carried out an evaluation of the effectiveness of the design and operation of
its disclosure controls and procedures (as defined in Exchange Rule 13a-15(e)).
Based upon that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that, except for the item noted below, our disclosure controls
and procedures were effective.
  During
the course of their audit of our consolidated financial statements for fiscal
2007, our independent registered public accounting firm, Lurie Besikof Lapidus
& Company, LLP, advised management and the audit committee of our Board of
Directors that they had identified a material weakness. The material weakness
relates to the lack of segregation of duties within the financial processes in
the Company.
 
 The
Company periodically assesses the cost versus benefit of adding the resources
that would remedy or mitigate this situation, and currently does not consider
the benefits to outweigh the costs of adding additional staff in light of the
limited number of transactions related to the Company's operations.
  26
  In
addition, subsequent to the fiscal quarter covered by this report, but prior to
the filing of this Form 10-Q/A, several remedial measures were identified and
implemented in response to the conclusion reached by our Chief Executive and
Chief Financial Officer that, as of December 31, 2008, our disclosure controls
and procedures were not effective.  For further information relating
to our assessment of disclosure controls and procedures generally, and our
internal control over financial reporting more particularly, including our
remediation plan, see our Annual Report on Form 10-K for fiscal year ended
December 31, 2008 filed contemporaneously with this Form 10-Q/A.
 
 Changes in Internal Control
over Financial Reporting
  There
were no changes in our internal controls over financial reporting that occurred
during the fiscal quarter covered by this report that materially affected, or
were reasonably likely to materially affect such controls.
 
 PART
II. OTHER INFORMATION
  Item 1.
Legal Proceedings
 
 None.
  Item 1A. Risk
Factors
 
 In
addition to the other information set forth in this report, you should carefully
consider the factors discussed in our Current Report on Form 8-K filed with the
SEC on January 7, 2008, and in our Registration Statement on Form S-1 (including
all amendments) (333-150914). Additional risks and uncertainties not currently
known to us or that we currently deem to be immaterial may also materially
adversely affect our business, financial condition and/or operating
results.
 
 Recently
legislation introduced into the U.S. Senate would, if passed into law,
materially and adversely affect our business and threaten the viability of the
Company.
 
 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 anywhere in the United States. The
bill is intended to limit the charges and fees payable in connection with payday
lending, and it is modeled after a similar law that was passed in 2007 with
respect to the U.S. military. Under that law (contained in the 2007 Military
Authorization Act), no extensions of credit to U.S. military personnel may be
made at an actual or imputed rate of annual interest exceeding 36%. 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. The passage
of this bill into law 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.
  Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
  None.
  Item 3. Defaults upon
Senior Securities
 
 None.
  Item 4.
Submission of Matters to a Vote of Security Holders
 
 None.
 
 Item 5.
Other Information
 
 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. The Business Loan Agreement provides Wyoming Financial
Lenders with a one-year revolving line of credit in an amount of up to
$2,000,000. The Business Loan Agreement contained customary representations and
warranties, and contained certain financial covenants (including the
satisfaction of certain financial criteria, as a condition to loan advances,
such as current ratio and debt-to-adjusted-net-worth ratio).
 
 The
Business Loan Agreement involved the delivery by Wyoming Financial Lenders of a
promissory note in favor of Banco Popular. Under the promissory note, interest
on advanced amounts accrues at the per annum rate of one point over the Banco
Popular North America Prime Rate (which rate is presently 4.5%). Initially,
therefore, interest will accrue at the rate of 5.5%. Payments consisting solely
of accrued interest will be made on a monthly basis beginning on November 29,
2008. All accrued and unpaid interest, together with all outstanding principal,
will be due on October 30, 2009. Amounts advanced under the Business Loan
Agreement are guaranteed by the Company and personally by Christopher Larson,
our Chief Executive Officer. These guarantees are for payment and performance
(not of collection), which means that Banco Popular may enforce either or both
of the guarantees without having earlier exhausted its remedies against Wyoming
Financial Lenders.
  27
  Defaults
occur under the Business Loan Agreement in the event of:
 
 ·
              Default
      in payment
 ·
              Default
      by Wyoming Financial Lenders under the Business Loan Agreement or any of
      the other agreements entered into in connection with the Business Loan
      Agreement
 ·
              Default
      under any other material agreement to which Wyoming Financial Lenders or
      any guarantor is a party
 ·
              Insolvency
      of Wyoming Financial Lenders
 ·
              An
      adverse change in the financial condition of Wyoming Financial
      Lenders
 ·
              Defective
      collateralization or the commencement of creditor proceedings against
      borrower or against any collateral securing the obligations under the
      Business Loan Agreement, or
 ·
              A
      change in control of more than 25% of the common stock of 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.
 
 In
connection with the Business Loan Agreement, both Wyoming Financial Lenders and
the Company granted security to Banco Popular. In particular, Wyoming Financial
Lenders granted Banco Popular a security interest in substantially all of its
assets, and the Company pledged its ownership (i.e., shares of common stock) in
Wyoming Financial Lenders.
  28
  Item 6.
Exhibits
  Exhibit
                      
                      Description31.1
                      
                      Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed
      herewith).31.2
                      
                      Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed
      herewith).32
                      
                      Certification
      pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002 (filed
      herewith).
  SIGNATURES
  Pursuant
to the requirements of the Securities and Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
 
 Dated:
      May 4, 2009
                          Western
      Capital Resources, Inc.(Registrant)By:
                          /s/
      John QuandahlJohn
      QuandahlChief
      Executive Officer, Chief Operating Officer and
                            Interim
      Chief Financial Officer


29