According to the Community Financial Services Association of America (CFSA), payday loan customers typically are middle-income or lower-middle-income, middle-educated individuals who are a part of a young family (See Community Financial Services Association of America, citing to The Credit Research Center, McDonough School of Business, Georgetown University, Gregory Elliehausen and Edward C. Lawrence, “Payday Advance Credit in America: An Analysis of Customer Demand”). The CFSA is a lobbying organization for the payday loan industry. The Credit Research Center study cited by the CFSA was based upon telephone interviews of 427 borrowers of payday loans in 2000 and 2001, and the answers provided in those interviews by the borrowers were not independently verified by the study’s authors. Moreover, the authors of that study note that, of the 5,364 payday loan consumers whom they attempted to contact and interview for the study, 1,113 were not able to be reached because their phones had been disconnected and another 1,043 refused to be interviewed or else quit the interview prior to completion. We do not possess independent information that corroborates the findings of The Credit Research Center, and we do not collect demographic data about our customers.

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The Consumer Federation of America (CFA), a nonprofit consumer advocacy organization, has submitted written comments to the Federal Trade Commission that make assertions very different from those proponed by the CFSA. For example, the CFA asserts that “payday loan borrowers are typically female, make around $25,000 a year, are renters, and more likely to be minorities than the general population. Payday lenders have clustered around military bases, in low to moderate income neighborhoods, and in predominantly minority areas.” (See Comments To the Federal Trade Commission Regarding the Fair Debt Collection Practices Act Collecting Consumer Debts: The Challenges of Change By the Consumer Federation of America, June 20, 2007). The CFA presently does not make available to the public the research data to support its claims, and as a consequence we are unable to evaluate their accuracy. However, other statistics concerning payday lending (such as default rates) that are contained in CFA website material conflict with our statistics borne out by years of involvement in the business.

Predatory Lending and Regulatory Concerns

The Federal Trade Commission has issued an FTC Consumer Alert (Federal Trade Commission, March 2008, Consumer Alert entitled “Payday Loans Equal Very Costly Cash: Consumers Urged to Consider the Alternatives”) that discourages consumers from obtaining payday loans such as the loans we offer, primarily on the basis that payday loans are very costly and consumers should consider alternatives to accepting a payday loan. For further information, you may obtain a copy of the alert at www.ftc.gov/bcp/edu/pubs/consumer/alerts/~~alt060.shtm.~~alt060.shtm.

In general, the payday lending suffers from the perception and widespread belief that payday lenders are in the nature of predatory lenders, offering loans to low income and poorly educated consumers at costs that are too high to be good for consumers. This perception and belief results in frequent efforts in the U.S. Congress and various state legislatures, often proponed by consumer advocacy groups and lobbyists for traditional financial institutions such as banks, to further regulate and restrict or ~~outrightly~~ prohibit payday ~~lending.~~lending outright. For example, the federal government ~~recently~~ passed the 2007 Military Authorization Act which prohibits any persons from offering or making loans to members of the military when the interest and loan fees, calculated as an annual percentage rate, exceed 36%. This limitation effectively prohibits payday lenders from making payday loans to members of the U.S. military. ~~Moreover, a bill~~

In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act was ~~introduced before~~passed by the U.S. ~~Senate~~Congress and signed into law. Under the Act, a new Consumer Financial Protection Bureau will consolidate most federal regulation of financial services offered to consumers, and replace the Office of Thrift Supervision’s seat on the FDIC Board. Almost all credit providers, including mortgage lenders, providers of payday loans, other nonbank financial companies, and banks and credit unions with assets over $10 billion, will be subject to new regulations to be passed by the Bureau. While the Bureau does not appear to have authority to make rules limiting interest rates or fees charged, the scope and extent of the Bureau’s authority will nonetheless be broad, and it is expected that the Bureau will address issues such as rollovers or extensions of payday loans. Future restrictions on the payday lending industry could have serious consequences for the Company.

During the 2010 legislative session in ~~July 2008, entitled~~Colorado, House Bill 10-1351 was passed into law. This bill amended the ~~“Protecting Consumers from Unreasonable Credit Rates~~Colorado Deferred Deposit Loan Act, the existing payday lending law. The law became effective August 11, 2010 and modified traditional payday lending by changing the single payment advance (with no minimum term) into a single or multiple payment loan with a minimum six month term. It also limited the amount and type of ~~2008” (an amendment~~fees that can be charged on these loans, effectively reducing by one-half the fees that can be charged and when the fees may be realized. The Company continues to operate its sole store in Colorado while the impact to profitability of this new law is being assessed. In 2010, 1.42% of our Payday division revenues were generated in Colorado.

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In May 2010, new laws were enacted in Wisconsin that restrict the number of times a consumer may renew (or rollover) a payday loan. Previously, there were no limits to the ~~Truth~~number of rollovers permitted. Effective January 1, 2011, consumers in ~~Lending Act), proposing~~Wisconsin will only be allowed to ~~set~~renew a ~~maximum actual or~~payday loan once, and then lenders will be required to offer a 60-day, interest free, payment plan to consumers. The Company is still assessing the impact of these new Wisconsin laws. Our preliminary projections indicate the changes could reduce revenue in the state by 30% - 40%. In 2010, 6.17% of our Payday division revenues were generated in Wisconsin.

On November 2, 2010, voters in Montana passed Petition Initiative I-164. Effective January 1, 2011, Petition Initiative I-164 capped fees on payday loans at an imputed interest rate of 36% ~~on all extensions of credit of any type anywhere in~~. Due to the United States. The bill is intended to limit the charges and fees payable in connection with payday lending. Presently, the bill is in the Senate Committee on Banking, Housing, and Urban Affairs. The Company has no further information regarding the bill at this time. The passage of ~~this bill into law would essentially prohibit~~I-164, the Company ~~from conducting~~closed its four stores in Montana on or prior to December 31, 2010. In 2010, 3.87% of our Payday division revenues were generated in Montana.

Any adverse change in present federal or state laws or regulations that govern or otherwise affect payday lending ~~business~~could, at any point, result in ~~its current form, and~~our curtailment or cessation of operations in certain jurisdictions or locations. Furthermore, any failure to comply with any applicable federal laws or regulations could result in fines, litigation, the closure of one or more store locations or negative publicity. Any such change or failure would ~~certainly~~ have a ~~highly material~~corresponding impact on our results of operations and ~~adverse effect on the Company, its operating results,~~ financial condition, primarily through a decrease in revenues resulting from the cessation or curtailment of operations, decrease in our operating income through increased legal expenditures or fines, and ~~prospects—including its very viability. For more information, please see “Risk Factors” below.~~could also negatively affect our general business prospects as well if we are unable to effectively replace such revenues in a timely and efficient manner or if negative publicity effects our ability to obtain additional financing a needed.

We do not believe the payday lending is predatory, nor do we believe that our loans are too costly for consumers if they are judiciously obtained. In fact, we believe that bank overdraft fees by themselves are typically far more costly for consumers, and bouncing a check can often involve other negative consequences such as independent fees levied by the parties to whom a bad check is written, negative publicity, etc. In this regard, the FDIC released a November 2008 report called “Study of Bank Overdraft Programs.” The report indicates that the average amount obtained when bank customers overdraw their accounts is $60, and the average overdraft fee charged by the bank is $27. This equates to an APR of 1,173% and ~~585%~~587% for a two-week and four-week $60 bank “loan,” respectively. In sum, we believe that many of the bad perceptions about our industry are fueled primarily by:

·

the effects of our loans on consumers who do not judiciously obtain payday loans

·

a lack of genuine understanding about the choices faced by low and middle-income people facing a critical cash shortage, and

·

anti-payday lending lobbying campaigns often funded by traditional financial institutions, such as banks and credit unions, that would economically benefit from the elimination of payday lending.

In February 2009, Congress introduced H.R. 1214 (the Payday Loan Reform Act of 2009) as an amendment to the Truth in Lending Act. If enacted, this amendment would restrict charges for a single-payment loan to a 391% effective annual rate, or $15 per $100 for a two-week loan, prohibit loan rollovers, limit borrowers to one outstanding loan at a time and permit only one extended repayment plan every six months.

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Finally, we have become aware of continued aggressive enforcement and prosecution by the Federal Trade Commission against payday lenders using unfair and abusive lending practices in violation of the Truth in Lending Act and Regulation Z, including failures to properly disclose loan terms and imputed APRs. In particular, we believe that FTC regulators are expanding theories relating to “fair and adequate” disclosure loan terms. This focus includes marketing and advertising materials (specifically, the layout and presentation of such materials), and specific practices, that may detract attention from or diminish the prominence of disclosures relating to loan terms, and the costs and risks involved with payday loans. Moreover, it has come to our attention that FTC regulators are more keenly scrutinizing whether payday lending business practices match advertised claims. While we do not presently anticipate any adverse regulatory issues or outcomes relating to our business, it is possible that one or more of our store locations could come under FTC scrutiny and that any such scrutiny could negatively affect store performance and ~~consumer~~consume considerable time and attention of our management.

Seasonality

We have experienced seasonality in our payday lending 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.

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TECHNOLOGY AND INFORMATION

We maintain an integrated system of software applications and platforms for processing the various types of financial transactions we offer. These systems provide us with customer service, internal control mechanisms, record-keeping and reporting information. We have one point-of-sale system used by all of our payday store locations. On a daily basis, transaction data is collected and integrated into our management information systems. These systems are designed to provide summary, detailed and exception information to regional, area and store managers as well as corporate staff. We utilize a point-of-sale system designed to collect customer information that can be utilized for demographic analysis, as well as the financial tracking of purchases, returns and Cricket service payments.

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SECURITY

We believe the principal security risks to our operations are robbery and employee theft. We have established extensive security systems, dedicated security personnel and management information systems to address both areas of potential loss. To protect against robbery, most payday lending store employees work behind bullet-resistant glass and steel partitions, and the back office, safe and computer areas are locked and closed to customers. Our security measures in most payday lending and Cricket stores include safes, electronic alarm systems monitored by third parties, control over entry to customer service representative and inventory areas, detection of entry through perimeter openings, walls and ceilings and the tracking of all employee movement in and out of secured areas. Employees use cellular phones to ensure safety and security whenever they are outside secured areas. Additional security measures used in many stores include some combination of alarm systems, remote control over alarm systems, the arming, disarming and changing of user codes, and mechanically and electronically controlled time-delay safes.

Since we have high volumes of cash and negotiable instruments at our stores and inventory volumes at our Cricket stores, we believe that daily monitoring, unannounced audits and immediate responses to irregularities are critical to security and play an important role in our internal controls. Our regional managers and corporate staff perform ~~weekly~~ unannounced store audits and cash counts at our stores as well as random inventory counts of cellular phones and accessories. We self-insure for employee theft and dishonesty at the store level.

EMPLOYEES

At December 31, ~~2009,~~2010, we had approximately ~~208~~205 employees, consisting of ~~192~~190 store personnel ~~(111~~(112 of whom were employed at payday loan stores and 8178 of which were employed at Cricket retail stores), ~~two Guaranteed Phone employees, ten~~11 corporate office employees and four corporate office managers. We believe our relationship with our employees is good, and we have not suffered any work stoppages or labor disputes. We do not have any employees that operate under collective-bargaining agreements.

CORPORATE INFORMATION

General

Our principal offices are located at 11550 “I” Street, Suite 150, Omaha, Nebraska 68137, and our telephone number at that office is (402) 551-8888.

Western Capital Resources, Inc. was originally incorporated and organized as a Minnesota corporation under the name URON Inc. in November 2001. From its incorporation until August 2006, URON was wholly owned by Multiband Corporation, a Minnesota corporation. Multiband spun off URON to Multiband’s shareholders in August ~~2006. In connection with this spin-off transaction,~~2006 and caused URON ~~filed~~to become a ~~Form 10-SB registration with the SEC and Multiband distributed an information statement to its shareholders. In the spin-off transaction, Multiband distributed to its shareholders approximately 49%~~public reporting corporation as part of the issued and outstanding shares of URON common stock, and retained for itself ownership of approximately 51% of the issued and outstanding shares of URON common stock. The spin-off dividend was effected on August 10, 2006 for shareholders of record of Multiband common stock as of May 1, 2006. On August 11, 2006, Multiband sold its remaining approximate 51% interest in URON Inc. to Lantern Advisers, LLC for $75,000 in cash.

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spinoff process. URON’s principal business was the provision of dial-up internet service to residential and commercial customers, principally in the midwestern United States, Texas, South Carolina and Florida. ~~URON’s customers paid a monthly recurring fee for such services.~~ In December 2007, ~~we engaged in a merger transaction with~~URON and Wyoming Financial Lenders, Inc., a Wyoming ~~corporation. Further information about the reverse~~corporation, engaged in a merger transaction ~~is set forth below. At~~which caused URON to acquire the ~~time of the Merger, URON had no full-time employees involved in the~~payday lending business of providing internet service. Instead, URON utilized billing and customer service personnel from its former parent company, Multiband Corporation pursuant to a written agreement between URON and Multiband.we currently operate through Wyoming Financial Lenders. In July 2008, and in connection with the December 2007 merger, we changed our corporate name from URON Inc. to “Western Capital Resources, Inc.”

The Company’s year ends December 31, ~~2009.~~2010. Neither the Company nor any of its predecessors have been in bankruptcy, receivership or any similar proceeding.

~~Reverse Merger Transaction~~

Pursuant to an Agreement and Plan of Merger and Reorganization dated December 13, 2007 (referred to throughout this report as the “Merger Agreement”), by and among URON Inc. (the Company), WFL Acquisition Corp. (a Wyoming corporation and then our wholly owned subsidiary), and Wyoming Financial Lenders, Inc., a Wyoming corporation, WFL Acquisition Corp. merged with and into Wyoming Financial Lenders with Wyoming Financial Lenders remaining as the surviving entity and our wholly owned operating subsidiary. This transaction is referred to throughout this report as the “Merger.” The Merger became effective as of the close of business on December 31, 2007.

At the effective time of the Merger, the legal existence of WFL Acquisition Corp. ceased and all shares of capital stock of Wyoming Financial Lenders that were outstanding immediately prior to the Merger were cancelled, with one share of common stock of such corporation issued to the Company. Simultaneously, WERCS, a Wyoming corporation and the former sole holder of capital stock of Wyoming Financial Lenders, Inc., received:

·

~~1,125,000 shares of our common stock, representing approximately 17.9% of our common stock outstanding immediately after the Merger, and~~

·

10,000,000 shares of our newly created preferred stock, designated as “Series A Convertible Preferred Stock,” which was then and presently remains convertible into our common stock on a share-for-share basis, subject to adjustment.

On an aggregate and as-if-converted basis, WERCS received and held 11,125,000 common shares representing approximately 63.3% of our common stock immediately after the Merger. In addition, WERCS received a cash payment of $278,845 in return of capital in connection with the Merger.

Each share of our Series A Convertible Preferred Stock has a stated value of $2.10. Upon any event resulting in our liquidation, each holder of Series A Convertible Preferred Stock would be entitled to receive $2.10 per preferred share, plus accrued but unpaid dividends. Dividends on the Series A Convertible Preferred Stock accrue at the per annum rate of 10%, and are payable in cash (subject to the option of the holder to receive shares of common stock in lieu of cash). Based on the foregoing, the shares of Series A Convertible Preferred Stock issued in the Merger had, and presently still have, an aggregate liquidation value of $21 million. We believe that the liquidation value of our Series A Convertible Preferred Stock approximated the fair value of such stock on the date of issuance. The shares of our common stock issued in the Merger had an approximate aggregate value of $1.35 million, based on a $1.20 per share valuation for such shares—the same per share price at which 3,331,669 shares were sold in a private placement that closed on the same date as the Merger. Accordingly, and after considering the return of capital payment issued to WERCS in connection with the Merger, the total consideration issued to WERCS in the Merger aggregated approximately $22.6 million.

We engaged in the Merger in order to acquire the business of Wyoming Financial Lenders, Inc., having met with the management of that company and investigated its business. Prior to the Merger, our business consisted of providing dial-up internet service to residential and commercial customers, principally in the midwestern United States, Texas, South Carolina and Florida. Because of the proliferation of more advanced and attractive alternatives to dial-up modems for accessing the Internet, URON’s business was rapidly dwindling for a period of time prior to the Merger and its operations were deemed insignificant enough to have the Company classified as a “shell company” under applicable SEC rules.

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The Merger resulted in the change of control of the Company and a change in our Board of Directors. In that change of control, and as contemplated by the Merger Agreement, WERCS, the former owner of Wyoming Financial Lenders, became our controlling shareholder (beneficially owning, immediately after the Merger, approximately 63.3% of our common stock) and the sole director serving on our Board of Directors prior to the Merger resigned immediately after approving an increase in the number of directors comprising the Board of Directors, and appointing five new directors at the effective time of the Merger. Nevertheless, certain management-level appointments were made several weeks prior to the Merger. For instance, at the time of the Merger our Chief Operating Officer (Mr. John Quandahl) was the Chief Operating Officer of Wyoming Financial Lenders. Our executive management was changed on November 29, 2007, in anticipation of the Merger. At that time, it was the determination of the URON Board of Directors that, since a letter of intent had already been entered into with Wyoming Financial Lenders with respect to a possible merger transaction, the process of integrating the two companies would proceed far more smoothly if day-to-day operational decisions respecting such integration could be made by persons who were intimately familiar with the business to be acquired. This decision was significantly influenced by the fact that (i) the management personnel appointed on November 29, 2007 were not involved in URON’s dwindling dial-up internet business and (ii) our Board of Directors remained unaffected and wholly controlled by our pre-Merger shareholders. Accordingly, if the parties had failed to promptly reach a definitive Merger Agreement and eventually engage in the Merger, our Board of Directors would have removed the newly appointed executives without effect on URON’s dial-up internet business. Furthermore, our Board of Directors was fully informed about the conflicts of interest presented by the management appointments, and expressly retained final discretion to approve the closing of the Merger transaction—even after the Merger Agreement had been executed and delivered on December 13, 2007.

Prior to the Merger, we effected a 1-for-10 share combination (i.e., reverse stock split) of our capital stock that was effective as of December 27, 2007. The share combination was approved by our Board of Directors pursuant to the provisions of the Minnesota Business Corporation Act together with a corresponding reduction in the number of shares of authorized capital stock. The reverse stock split was deemed necessary by the parties to Merger Agreement in order to obtain a post-Merger capitalization that would properly apportion the Company’s equity in a manner consistent with the intent expressed in the Merger Agreement. In this regard, the Merger Agreement made the effectuation of the reverse stock split a condition to the consummation of the Merger. The effect of the reverse stock split upon the shareholders of URON prior to the Merger was to reduce the absolute number of shares of capital stock which each possessed by a factor of ten, maintain their percentage ownership in the Company until the Merger, and then, upon the effectiveness of the Merger, reduce their collective percentage ownership in the Company to approximately 9.5%.

Neither the Merger nor the Merger Agreement was approved by the shareholders of URON. This is because Minnesota corporate law does not require any such approval from the shareholders of a Minnesota corporation who will acquire another company in a merger transaction structured as a triangular merger. A triangular merger is a merger in which the legal entities engaged in the merger itself are an acquisition target (in our case, Wyoming Financial Lenders) and an acquisition subsidiary (in our case, a subsidiary formed and owned by URON that was named WFL Acquisition Corp.). In a reverse triangular merger, the acquisition subsidiary merges with and into the acquisition target; the outstanding stock of the acquisition subsidiary and the acquisition target is cancelled; a new ownership interest in the acquisition target is issued to the parent corporation of the acquisition subsidiary (in our case, URON); and shares of the parent corporation are issued to the former owners of the acquisition target. In other words, although URON was a party to the Merger Agreement and was involved in the transactions associated with the Merger, URON did not itself merge with any other entity. Minnesota law requires shareholder approval of a merger only when a Minnesota corporation is itself merging with or into another entity.

RECENT DEVELOPMENTS

~~Acquisition of VZ Wireless~~

On January 14, 2009, our PQH Wireless subsidiary purchased certain assets of VZ Wireless, LLC, a Wisconsin limited liability company. Under the related Asset Purchase Agreement, PQH Wireless acquired 12 Cricket Wireless store locations and related assets for a cash purchase price of $1,828,000. The acquired stores and assets are located in Kansas City, Missouri (four stores) and St. Louis, Missouri (eight stores).

~~Settlement Agreement~~

On May 1, 2009, we entered into a Settlement Agreement with Christopher Larson, our former Chief Executive Officer. We entered into the Settlement Agreement to settle certain disputes that we had with Mr. Larson. Under the Settlement Agreement, we, together with Wyoming Financial Lenders, WERCS and John Quandahl (collectively, the “Western Parties”), fully released Mr. Larson and National Cash & Credit (together, the “Larson Parties”) from any and all claims, known and unknown, and the Larson Parties similarly fully released the Western Parties from any and all claims, known and unknown. In addition, the Settlement Agreement required Mr. Larson to place all 550,000 shares of his common stock in the Company in an escrow arrangement that will result in either the complete redemption of those shares or the release of those shares back to him under certain circumstances. In particular:

·

the shares will be fully redeemed in the event that either Mr. Larson’s personal guaranty of debt owed by Wyoming Financial Lenders to Banco Popular North America is terminated or revoked, or all amounts owed by Wyoming Financial Lenders to Banco Popular are fully paid; or

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·

the shares will be released back to Mr. Larson in the event that Mr. Larson pays money in satisfaction of the guaranty or WERCS breaches the terms of an agreement it has with Mr. Larson to indemnify him in the event he is required to perform any obligations under his personal guaranty.

~~For further information regarding the Settlement Agreement, please see our Annual Report on Form 10-K for the year ended December 31, 2008, filed with the SEC on May 4, 2009.~~

~~Banco Popular Line of Credit~~

On November 13, 2008, Wyoming Financial Lenders, Inc. entered into a Business Loan Agreement and associated agreements with Banco Popular North America, located in Rosemont, Illinois. 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. Among other things, a default occurs under the Business Loan Agreement in the event of any breach thereunder by Wyoming Financial Lenders. In the event of any default, Banco Popular may accelerate all amounts due subject to a ten-day right to cure applicable in certain circumstances.Facilities

On January 4, 2010, Wyoming Financial Lenders, Inc., executed an amended Business Loan Agreement and associated Promissory Note with Banco Popular North America ~~with~~(with an effective date of October 30, ~~2009~~2009) refinancing ~~the matured note.~~a then-existing line of credit with Banco Popular. At that time, Western Capital Resources and Banco Popular also entered into a new Commercial Pledge Agreement pursuant to which Western Capital Resources pledged its share ownership in Wyoming Financial Lenders ~~Inc.~~ and substantially all of its other assets to Banco Popular as collateral security for the obligations of Wyoming Financial Lenders under the amended Business Loan Agreement and Promissory Note.

In connection with the execution of the new agreements, Wyoming Financial Lenders paid Banco Popular $216,046 in principal ($100,000 loan reduction at renewal plus the first two scheduled installments of $52,776) and interest accrued through December 31, 2009. The payment terms under the new Promissory Note require the company to make seven monthly principal payments of $52,776 from November 29, 2009 through May 29, 2010, followed by $175,000 principal payment on May 29, 2010 and a balloon payment of $1,508,895 on May 31, 2010. Under the new Promissory Note, interest will accrue on the unpaid principal balance at the variable rate equal to (i) the one-month LIBOR (as published by the British Banker’s Association) (currently 0.24%) plus (ii) a margin of 7.25%.

~~Definitive Stock Purchase and Sale Agreement~~

On February 23, 2010, WERCS entered into a definitive Stock Purchase and Sale Agreement by and between WERCS, and WCR Acquisition, Inc., a Delaware corporation, pursuant to which WERCS has agreed to sell to WCR all shares of the Common Stock and Series A Convertible Preferred Stock of the Company owned by WERCS. The parties later agreed to the assignment of the purchase rights to WCR, LLC, a Delaware limited liability company, pursuant to an amendment to the Stock Purchase and Sale Agreement . The sale of these shares is scheduled to close on the later of March 31, 2010 or two business days after the satisfaction or waiver of all applicable closing conditions set forth in the Stock Purchase and Sale Agreement, including conditions that the Company’s Articles of Incorporation be amended so that the provisions of the Minnesota Control Share Acquisition Act do not apply to the sale of such shares to WCR, LLC and that three of the four existing directors of the Company resign from the Company’s Board of Directors. It is anticipated that the resigning directors will be replaced by persons designated by WCR, LLC.

WERCS received an aggregate of 1,125,000 shares of the Company’s common stock and 10,000,000 shares of Series A Convertible Preferred Stock in connection with a merger transaction with Wyoming Financial Lenders that was completed on December 31, 2007. WERCS beneficially own 11,125,000 shares of the Company’s common stock, representing approximately 61.8% of the Company’s common shares.

~~Special Shareholder Meeting~~

On March 29, 2010, the Company held a special shareholder meeting in accordance with a demand made by WERCS on February 24, 2010, together with a shareholder proposal to consider and vote on an amendment to the Company’s Amended and Restated Articles of Incorporation, as amended (the “Articles”), to make the Minnesota Control Share Acquisition Act inapplicable to the Company. The meeting demand and proposal are covered in the Company’s Proxy Statement (on Form DEF 14A) filed with the SEC on March 15, 2010. The shareholders of the Company approved the amendment to the Articles at the special shareholder meeting.

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~~The amendment to~~On April 2, 2010, Wyoming Financial Lenders refinanced its credit facility with Banco Popular. On that date, WERCS, the former holder of the Company’s ~~Amended and Restated Articles of Incorporation, as amended, is a condition to the sale by WERCS of all of its Company common stock and~~ Series A Convertible Preferred Stock, satisfied all of Wyoming Financial Lenders’ obligations to ~~WCR, LLC,~~Banco Popular and entered into a ~~Delaware limited liability company, pursuant~~Business Loan Agreement and associated $2,000,000 promissory note with Wyoming Financial Lenders. The loan from WERCS extinguished the $1,637,341 that Wyoming Financial Lenders then owed to Banco Popular and the remaining $362,659 of loan proceeds were used for general working capital. The Business Loan Agreement and associated promissory note contained terms ~~and conditions of~~ that ~~certain Stock Purchase and Sale Agreement by and among WERCS and WCR, LLC. A copy of~~were substantially similar to those contained in the ~~Stock Purchase and Sale Agreement is publicly available as Exhibit B to the Schedule 13D/A filed by WERCS~~loan documents with ~~the SEC on February 24, 2010. In addition, there are other conditions to the closing of the sale by WERCS of its capital stock to WCR, LLC under the Stock Purchase and Sale Agreement, including:~~

~~the resignation of specified members of our board of directors;~~

~~the release of Mr. Moberly from his guarantee of~~Banco Popular. To secure the obligations of Wyoming Financial Lenders ~~in connection with~~under the ~~loan obtained from Banco Popular (see the “Banco Popular Line of Credit” caption above”);~~new Business Loan Agreement and

promissory note, the Company ~~entering~~entered into ~~an employment agreement~~(i) a Commercial Pledge Agreement with WERCS pursuant to which the Company pledged its ~~current Chief Executive Officer, John Quandahl, on terms~~share ownership in Wyoming Financial Lenders, and ~~conditions that are~~(ii) a Commercial Security Agreement pursuant to which the Company granted WERCS a security interest in substantially ~~similar to Mr. Quandahl’s current employment arrangement with~~all of the ~~Company.~~

Company’s assets. The Company ~~is not~~also entered into a ~~party~~Commercial Guaranty relating to the ~~Stock Purchase and Sale~~repayment of Wyoming Financial Lenders’ obligations under the Business Loan Agreement and ~~is not bound~~promissory note. The payment terms under the promissory note required Wyoming Financial Lenders to make monthly payments of accrued interest only for 11 months, followed by an April 1, 2011 balloon payment of any remaining accrued but unpaid interest and all $2,000,000 of principal under the promissory note. Interest accrues on the unpaid principal balance of the ~~provisions~~promissory note at the rate of ~~such agreement, including any of the conditions to the closing of the purchase and sale.~~

~~WERCS Financing Commitment~~12.0% per annum.

On ~~March 30, 2010,~~January 26, 2011, the Company ~~received~~and Wyoming Financial Lenders, Inc. entered into a ~~commitment letter from WERCS agreeing to provide a~~Loan Extension Agreement with WERCS. The Loan Extension Agreement extends the maturity date for the payment of all obligations under the Business Loan Agreement to April 1, 2012. In connection with the extension agreement, the Company ~~to replace the existing Banco Popular Business Loan Agreement and associated agreements. Under the anticipated agreements with WERCS, an amount up to the unpaid balance~~made a principal payment of the existing Banco Pupular note may be borrowed at an interest rate of 12% payable monthly, with principal due one year from the date of the loan, and the note secured by the grant of a security interest covering substantially all of the assets of the Company. Other than the repayment terms, interest rate, and change in collateral, all other terms and conditions are expected to be substantially similar to those of the Banco Popular Business Loan Agreement and associated agreements.$1,000,000.

~~ITEM 1A~~

ITEM 1A

RISK FACTORS

You should consider the following risk factors, in addition to the other information presented or incorporated by reference into this Annual Report on Form 10-K, in evaluating our business and your investment in us.

The payday loan industry is highly regulated under state laws. Changes in state laws and regulations governing lending practices, or changes in the interpretation of such laws and regulations, could negatively affect our business.

Our business is regulated under numerous state laws and regulations, which are subject to change and which may impose significant costs or limitations on the way we conduct or expand our business. As of the date of this report, approximately 34 states and the District of Columbia had legislation permitting or not prohibiting payday loans. During the last few years, legislation has been adopted in some states that prohibits or severely restricts payday loans. For example, in 2006, Oregon passed a ballot initiative that caps interest rates and origination fees on payday loans at 36%, among other limitations. Before that, Georgia law effectively prohibited direct payday lending in 2004.

There are nearly always bills pending in various states to alter the current laws governing payday lending. Any of these bills, or future proposed legislation or regulations prohibiting payday loans or making them less profitable, could be passed in any state at any time, or existing laws permitting payday ~~loan laws~~lending could expire.

For example, recent legislation has been passed in Colorado, Wisconsin and Montana that restricts certain payday lending practices. In ~~2008,~~particular,

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During 2010, Colorado House Bill 10-1351 was passed into law effective August 11, 2010, by changing the single payment advance (with no minimum term) into a single or multiple payment loan with a minimum six-month term. It also limited the amount and type of fees that can be charged on these loans, effectively reducing by one-half the fees that can be charged, and when the fees may be realized. At present, the Company continues to operate its sole store in Colorado while the impact to profitability of this new law is being assessed. In 2010, 1.42% of our Payday division revenues were generated in Colorado.

·

In Wisconsin, new legislation effective January 1, 2011 will limit payday loans to the lesser of $1,500 or 35% of the applicant’s monthly income, and permit borrowers to cancel loans within 24 hours and roll their loans over only one time. In addition, payday lenders will be required to offer a 60-day, interest free, payment plan to consumers upon maturity of their payday loans. The Company is still assessing the impact of these new Wisconsin laws. Our preliminary projections indicate the changes could reduce revenue in the state by 30% - 40%. In 2010, 6.17% of our Payday division revenues were generated in Wisconsin.

·

Finally, on November 2, 2010, voters in Montana passed Petition Initiative I-164. Effective January 1, 2011, Petition Initiative I-164 will cap fees on payday loans at an imputed interest rate of 36%. The Company discontinued its operations and closed all four stores in Montana due to this law change. In 2010, 3.87% of the Company’s Payday division revenues were generated in Montana.

14

In addition, legislation banning payday loans was introduced in Nebraska ~~however, the bill never made it out of committee. However,~~in 2008 but eventually was dropped. Nevertheless, since we derive approximately ~~27%~~27.55% of our payday revenues in Nebraska, the passage of any such legislation in Nebraska would have a highly material and negative effect on our business.

Statutes authorizing payday loans typically provide state agencies that regulate banks and financial institutions with significant regulatory powers to administer and enforce the laws relating to payday lending. Under statutory authority, state regulators have broad discretionary power and may impose new licensing requirements, interpret or enforce existing regulatory requirements in different ways or issue new administrative rules, even if not contained in state statutes, that affect the way we do business and may force us to terminate or modify our operations in those jurisdictions. They may also impose rules that are generally adverse to our industry. Finally, in many states, the attorney general has scrutinized or continues to scrutinize the payday loan statutes and the interpretations of those statutes.

16

Any adverse change in present laws or regulations, or their interpretation, in one or more such states (or an aggregation of states in which we conduct a significant amount of business) ~~would likely~~could result in our curtailment or cessation of operations in such jurisdictions. Any such action ~~would~~could have a corresponding highly material and negative impact on our results of operations and financial condition, primarily through a material decrease in revenues, and could also negatively affect our general business prospects as well if we are unable to effectively replace such revenues in a timely and efficient manner.

Our business is subject to complex federal laws and regulations governing lending practices, and changes in such laws and regulations could negatively affect our business.

Although states provide the primary regulatory framework under which we offer payday loans, certain federal laws also affect our business. For example, because payday loans are viewed as extensions of credit, we must comply with the federal Truth-in-Lending Act and Regulation Z under that Act. Additionally, we are subject to the Equal Credit Opportunity Act, the Gramm-Leach-Bliley Act and certain other federal laws. Additionally, anti-payday loan legislation has occasionally been introduced in the U.S. Congress in the past. These efforts culminated in federal legislation in 2006 that limits the interest rate and fees that may be charged on any loans, including payday loans, to any person in the military to the equivalent of 36% per annum. The military lending prohibition became effective on October 1, 2007.Congress. For example:

In July 2008, a bill was introduced before the U.S. Senate, entitled the “Protecting Consumers from Unreasonable Credit Rates Act of 2008” (an amendment to the Truth in Lending Act), proposing to set a maximum actual or imputed interest rate of 36% on all extensions of credit of any type. The bill was intended to limit the charges and fees payable in connection with payday lending. No action has been taken on the bill since its referral to the Senate Committee on Banking, Housing and Urban Affairs in July 2008.

·

2006 legislation limits the interest rate and fees that may be charged on any loans, including payday loans, to any person in the military to the equivalent of 36% per annum. The military lending prohibition became effective on October 1, 2007.

In February 2009, Congress introduced H.R. 1214 (the Payday Loan Reform Act of 2009, an amendment to the Truth in Lending Act). If enacted, this amendment would restrict charges for a single-payment loan to a 391% effective annual rate, or $15 per $100 for a two-week loan, prohibit loan rollovers, limit borrowers to one outstanding loan at a time and permit only one extended repayment plan every six months. Presently, the bill is in the House Financing Committee. We have no further information regarding this bill or any legislative efforts Congress may propose at this time. The passage of this bill would have a material and adverse effect on the Company, operating results,financial conditions and prospects and even its viability.

·

In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act was passed by the U.S. Congress and signed into law. Under the Act, a new federal agency, the Consumer Financial Protection Bureau, will consolidate most federal regulation of financial services offered to consumers and replaces the Office of Thrift Supervision’s seat on the FDIC Board. Almost all credit providers, including mortgage lenders, providers of payday loans, other nonbank financial companies, and banks and credit unions with assets over $10 billion, will be subject to new regulations. While the Bureau does not appear to have authority to make rules limiting interest rates or fees charged, the scope and extent of the Bureau’s authority will nonetheless be broad, and it is expected that the Bureau will address issues such as rollovers or extensions of payday loans. Future restrictions on the payday lending industry could have serious consequences for the Company.

Any adverse change in present federal laws or regulations that govern or otherwise affect payday lending could result in our curtailment or cessation of operations in certain jurisdictions or locations. Furthermore, any failure to comply with any applicable federal laws or regulations could result in fines, litigation, the closure of one or more store locations or negative publicity. Any such change or failure would have a corresponding impact on our results of operations and financial condition, primarily through a decrease in revenues resulting from the cessation or curtailment of operations, decrease in our operating income through increased legal expenditures or fines, and could also negatively affect our general business prospects as well if we are unable to effectively replace such revenues in a timely and efficient manner or if negative publicity effects our ability to obtain additional financing a needed.

Changes in local regulations could have a material adverse effect on our business, results of operations and financial condition.

In addition to state and federal laws and regulations, our business is subject to various local rules and regulations such as local zoning regulations and permit licensing. We are aware of increasing efforts by local jurisdictions to restrict payday lending through the use of local zoning and permitting laws. Any actions taken in the future by local zoning boards or other governing bodies to require special use permits for, or impose other restrictions on, payday lenders could have a material adverse effect on the growth of our business and business prospects primarily by restricting any efforts to grow our business “organically” by opening more lending store locations.

15

Litigation and regulatory actions directed toward our industry or us could adversely affect our operating results, particularly in certain key states.

During the last few years, our industry has been subject to regulatory proceedings, class action lawsuits and other litigation regarding the offering of payday loans, and we could suffer losses resulting from interpretations of state laws in those lawsuits or regulatory proceedings, even if we are not a party to those proceedings. For example, the North Carolina Commissioner of Banks recently issued a ruling in which it determined that Advance America, which marketed, originated, serviced and collected payday loans on behalf of a state-chartered bank located in Kentucky, violated various North Carolina consumer-protection statutes. Thus, the losses we could suffer could be directly incurred through our involvement in litigation or regulatory proceedings, or could be indirectly incurred through negative publicity regarding the industry in general that is generated by litigation on regulatory proceedings involving third parties.

17

In addition, regulatory actions taken with respect to a particular non-payday lending financial service that we offer could negatively affect our ability to offer such other financial services. For example, if we were the subject of regulatory action related to our check-cashing business, that regulatory action could adversely affect our ability to maintain our payday lending licenses. Moreover, the suspension or revocation of our license or other authorization in one state could adversely affect our ability to maintain licenses in other states. Accordingly, a violation of a law or regulation with respect to otherwise unrelated products or in other jurisdictions could affect other parts of our business and adversely affect our business and operations as a whole.

We ~~will likely~~may need additional financing in the future and any such financing may dilute our existing shareholders.

We anticipate that we will continue to experience growth in our income and expenses for the foreseeable future and that our operating expenses will be a material use of cash resources. Presently, we believe we have cash sufficient to maintain operations through ~~May 31, 2010~~April 1, 2012 when ~~the~~a balloon payment for any remaining ~~balance~~accrued but unpaid interest and all $1,000,000 of ~~approximately $1.5 million on a $2 million lending facility~~principal under our promissory note to WERCS is due. In the event that our income does not meet our expectations, we may sooner require additional financing for working capital. In addition, if we determine to grow our business through acquisitions, any acquisitions we consummate will likely involve outside financing. Any additional financing, for whatever purpose and for whatever reason, may dilute our existing shareholders.

Additional financing could be sought from a number of sources, including but not limited to additional sales of equity or debt securities (including equity-linked or convertible debt securities), loans from banks, loans from our affiliates or other financial institutions. We may not, however, be able to sell any securities or obtain any such additional financing when needed, or do so on terms and conditions acceptable or favorable to us, if at all. If financing is not available, we may be forced to consider strategic alternatives, such as (but not limited to) curtailing certain aspects of our operations or closing certain operating locations. If we successfully enter into a financing transaction, any additional equity or equity-linked financing would be dilutive to shareholders, and additional debt financing, if available, may involve restrictive covenants.

Failure to achieve and maintain effective internal controls could limit our ability to detect and prevent fraud and thereby adversely affect our business and stock price.

Effective internal controls are necessary for us to provide reliable financial reports. Nevertheless, all internal control systems, no matter how well designed, have inherent limitations. Even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Our most recent evaluation of our internal controls resulted in our conclusion that our disclosure controls and procedures were effective. Our ability to maintain an effective control environment may cause investors to lose confidence in our reported financial information, which could in turn have a material adverse effect on our stock price.

A significant portion of our assets consists of goodwill and other intangible assets.

As of December 31, 2010, 57% of our assets consisted of goodwill and other intangible assets. Under generally accepted accounting principles, the carrying value of goodwill is subject to periodic review and testing to determine if it is impaired. The value of our assets will depend on market conditions, regulatory environment, the availability of buyers and similar factors. While the value of these assets is based on management projections and assumptions and is determined by using the discounted cash flow method for purposes of our impairment testing, those values may differ from what could ultimately be realized by us in a sales transaction or otherwise and that difference, while not affecting cash flow, could have a material adverse impact on our operating results and financial position.

16

The concentration of our revenues in certain states could adversely affect us.

We currently provide payday lending services in 10nine states. For the year ended December 31, ~~2009,~~2010, revenues from our locations in Nebraska represented approximately ~~27%~~28% of our total payday revenues. For the foreseeable future, we expect that a material and significant portion of our revenues will continue to be generated in Nebraska. We operate Cricket stores in ~~seven~~eight states. For the year ended December 31, ~~2009,~~2010, revenues from our Missouri and Indiana stores represented approximately ~~39%~~31% and 28% of our total Cricket ~~revenues.~~revenues, respectively. As a result, changes to prevailing economic, demographic, competitive, regulatory or any other conditions, including the legislative, regulatory or litigation risks mentioned above, in the markets in which we operate, and in Nebraska and Missouri in particular, could lead to a reduction in demand for our services and result in a decline in our revenues or an increase in our provision for doubtful accounts, or even an outright legal prohibition on the conduct of our business. Any of these outcomes could in turn result in a material and swift deterioration of our financial condition principally by impairing our revenues and affecting our ability to obtain financing and operating liquidity, our operating results and our business prospects (again, principally by reducing our revenues and impairing our ability to grow our business).

18

A default under our borrowing ~~agreements~~arrangement with ~~Banco Popular~~WERCS could require us to seek financing on a short-term basis that may be disadvantageous to the ~~Company and could result in our inability to redeem and retire 550,000 shares of our common stock presently held in an escrow arrangement.~~Company.

On ~~November 13, 2008, Wyoming Financial Lenders, Inc. entered into a~~April 2, 2010, we refinanced our outstanding credit facility. The Business Loan Agreement and associated ~~agreements~~promissory note contains certain loan covenants. Failure to comply with ~~Banco Popular North America (“Banco Popular”), located~~the covenants may result in ~~Rosemont, Illinois.~~the creditor’s calling of the note. The Business Loan Agreement provided Wyoming Financial Lenders with a one-year revolving line of credit in an amount of up to $2,000,000. All accrued and unpaid interest, together with all outstanding principal, was due on October 30, 2009. On October 30, 2009, we amended our Business Loan Agreement and alsoCompany entered into (i) a ~~new~~ Commercial Pledge Agreement ~~wherein we~~with WERCS pursuant to which the Company pledged ~~our~~its share ownership in Wyoming Financial Lenders, ~~Inc.~~ and ~~substantially all of its other assets~~(ii) a Commercial Security Agreement pursuant to Banco Popular as collateral security for the obligations of Wyoming Financial Lenders under the amended Business Loan Agreement and Promissory Note. The structure of the new Business Loan Agreement changed from a line of credit to a term loan requiringwhich the Company to make seven monthly principal payments of $52,776 from November 29, 2009 through May 29, 2010, followed by $175,000 principal payment on May 29, 2010 and a balloon payment of $1,508,895 on May 31, 2010.

~~In connection with the Business Loan Agreement, both Wyoming Financial Lenders and Western Capital~~ granted ~~security to Banco Popular. In particular, Wyoming Financial Lenders granted Banco Popular~~WERCS a security interest in substantially all of ~~its assets, and Western Capital pledged its ownership (ie., shares~~the Company’s assets. The Company also entered into a Commercial Guaranty relating to the repayment of ~~common stock) in~~ Wyoming Financial ~~Lenders. Because Wyoming Financial Lenders conducts our payday lending business, this means that if we were unable to meet our accelerated payment~~Lenders’ obligations ~~in the event of a default, we could lose some or all of our ownership of our payday lending business.~~

It is also possible that other difficulties may arise in relation to our Business Loan Agreement with Banco Popular. For instance, since we have separated with Mr. Christopher Larson, it is possible that Mr. Larson may revoke or breach the terms of his guaranty agreement, resulting in a default under the Business Loan Agreement. It is also possible that we may, at some point in the future, be unable to meet a material covenant under the Business Loan Agreement ~~or may otherwise find ourselves in default.~~

~~Defaults occur under the Business Loan Agreement in the event of:~~

·

~~a default in payment~~

·

~~a default in a representation, warranty or covenant under the Business Loan Agreement or any of the other agreements entered into in connection therewith~~

·

~~a default under any other material agreement to which Wyoming Financial Lenders or any guarantor is a party~~

·

~~the insolvency of Wyoming Financial Lenders~~

·

~~an adverse change in the financial condition of Wyoming Financial Lenders~~

·

~~the 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. This right may require us to take steps that would otherwise be adverse to us in order to meet our accelerated payment obligations, including such steps as selling additional securities or assets of the Company or obtaining financing on terms thatand promissory note. If we are ~~disadvantageous.~~

Finally, as disclosed under the Recent Development section of Part I, Item 1, we entered into a Settlement Agreement with Christopher Larson on May 1, 2009 to settle certain disputes that we had with Mr. Larson. Under the Settlement Agreement, Mr. Larson has placed 550,000 shares of his common stock in the Company in an escrow arrangement that will result in either the complete redemption of those shares or the release of those shares back to him under certain circumstances. In particular:

·

the shares will be fully redeemed in the event that either Mr. Larson's guaranty of debt owed by Wyoming Financial Lenders to Banco Popular is terminated or revoked, or all amounts owed by Wyoming Financial Lenders to Banco Popular are fully paid; or

·

the shares will be released back to Mr. Larson in the event that Mr. Larson pays money in satisfaction of the guaranty or WERCS breaches the terms of an agreement it has with Mr. Larson to indemnify him in the event he is required to perform any obligations under his personal guaranty.

~~Therefore, if we were~~ unable to ~~meet our accelerated payment obligations in~~comply with the ~~event of a default,~~required interest-only payments or covenants, we ~~could lose our right~~may need to ~~redeem and retire the 550,000 shares of common stock presently held in the name of Mr. Larson.~~seek additional financing with unfavorable terms.

Unpredictability in financing markets could impair our ability to grow our business through acquisitions.

We anticipate that opportunities to acquire similar businesses will materially depend on the availability of financing alternatives with acceptable terms. As a result, poor credit and other market conditions or uncertainty in the financing markets or the payday lending business in particular could materially limit our ability to grow through acquisitions since such conditions and uncertainty make obtaining financing more difficult.

19

Public perception of payday lending as being predatory or abusive could adversely affect our business.

Recently, consumer advocacy groups and media reports have advocated governmental action to prohibit or severely restrict payday loans. The consumer groups and media reports typically focus on the cost to a consumer for this type of loan, which is higher than the interest typically charged by credit card issuers. The consumer groups and media reports typically characterize these transactions as predatory or abusive toward consumers. If this negative characterization of our business becomes widely accepted by consumers, demand for our payday loans could significantly decrease, which could adversely affect our results of operations primarily by decreasing our revenues. Negative perception of our business activities could also result in our industry being subject to more restrictive laws and regulations and greater exposure to litigation.

Any disruption in the availability of our information systems could adversely affect our operations.

We rely upon our information systems to manage and operate our business. Each location is part of an information network that permits us to maintain adequate cash inventory, reconcile cash balances daily, and report revenues and loan losses in a timely manner. Our security measures could fail to prevent a disruption in the availability of our information systems or our back-up systems could fail to operate properly. Any disruption in the availability of our information systems could adversely affect our results of operations by impairing our ability to efficiently effect transactions.

17

If we lose key managers or are unable to attract and retain the talent required for our business, our operating results could suffer.

Our future success depends to a significant degree upon the members of our executive management, particularly John Quandahl, who is our Chief Executive Officer and interim Chief Financial Officer. Accordingly, the loss of ~~the~~these services ~~of Mr. Quandahl~~ would likely materially and adversely affect our business. ~~Importantly, we do not currently have~~The Company has an employment agreement with Mr. Quandahl ~~and thus~~effective through March 31, 2013. Nevertheless, we cannot be certain that Mr. Quandahl will ~~feel obligated to~~ continue providing services to us for any particular period of time. Our continued growth will also depend upon our ability to attract and retain additional skilled management personnel. Competition for highly skilled and experienced management is intense and likely to continue and increase. To the extent that we are unable to attract and retain the talent required for our business, our operating results could suffer.

We lack product and business diversification with a customer base primarily in urban areas, which creates a risk that our future revenues and earnings will be susceptible to fluctuations.

Our primary payday business activity is offering and servicing payday loans. We also provide certain related and other services, such as check cashing, money transfers and money orders. The payday segment accounted for approximately ~~64%~~65% of our total revenues in ~~2009.~~2010. Our Cricket retail segment accounted for approximately ~~36%~~35% of our total revenues in ~~2009.~~2010. If we are unable to further diversify our business products and services and expand our customer-base outside of the urban areas, we may experience fluctuations in our revenues and earnings, which may be significant, relating to our payday lending business and wireless cellular sales. Such fluctuations could result from legal or regulatory changes in one or more jurisdictions, changes in economic conditions in the jurisdictions where we provide services, or result from other risks or adverse events befalling us. Our susceptibility to fluctuations or the actual happening of significant fluctuations in our revenues or earnings could cause our Company to be perceived as a less stable and therefore less attractive investment in general, which would likely negatively affect the market price of our common stock and our ability to obtain additional financing an acceptable terms.

Competition in the retail financial services industry is intense and could cause us to lose market share and revenues.

We believe that the primary competitive factors in the payday loan industry are store location and customer service. We face intense competition in the payday loan industry, and we believe that the payday lending market is becoming more competitive as this industry matures and begins to consolidate. The payday loan industry has low barriers to entry, and new competitors, such as Wal-Mart, may enter the market easily. We currently compete with services, such as overdraft protection offered by traditional financial institutions, and with other payday loan and check cashing stores and other financial service entities and retail businesses that offer payday loans or other similar financial services, as well as a rapidly growing internet-based payday loan market. Some of our competitors have larger and more established customer bases and substantially greater financial, marketing and other resources than we have. As a result, we could lose market share and our revenues could decline, thereby affecting our earnings and potential for growth.

20

We face significant wireless cellular competition that may reduce our market share and lower our profits.

We face significant competition in our industry. We currently compete with resellers of our size including US Cellular and Metro PCS. We also compete with the four national wireless service providers: AT&T, Sprint Nextel, T-Mobile and Verizon Wireless and with Walmart’s recent rollout of their Straight Talk ~~plan .~~plan. Our ability to compete effectively will depend on, among other things, the pricing of Cricket services and equipment, the quality of our customer service, the reach and quality of our sales and distribution channels and our capital resources. It will also depend on how successfully we anticipate and respond to various factors affecting our industry, including new technologies and business models, changes in consumer preferences, demographic trends and economic conditions. Finally, as a Cricket reseller, we are dependent upon pricing and channel strategies established by Leap Wireless.

The wireless industry also faces competition from other communications and technology companies seeking to capture customer revenue and brand dominance with respect to the provision of wireless products and services. For example, Apple Inc. is packaging software applications and content with its handsets, and Google Inc. has developed and deployed an operating system and related applications for mobile devices.

18

General economic conditions affect our loan losses, and accordingly, our results of operations could be adversely affected by a general economic ~~slowdown.~~slowdown or other negative economic conditions such as high unemployment.

Provision for loan losses, net of recoveries, is one of our largest operating expenses, constituting approximately 9%7% of total revenues for the fiscal year ended December 31, ~~2009,~~2010, with payday loan losses comprising most of the losses. At the end of each ~~quarter,~~month, management considers recent collection history to develop expected loss rates, which are used to establish the allowance for loan losses. Any changes in economic factors that adversely affect our customers, such as ~~a continued~~an economic downturn or ~~worsening economy,~~high unemployment, could result in higher loan loss experiences than anticipated, which could in turn adversely affect our loan charge-offs and operating results.

If estimates of our loan losses are not adequate to absorb actual losses, our financial condition and results of operations may be adversely affected.

We maintain an allowance for loan losses at levels to cover the estimated incurred losses in the collection of our loan portfolio outstanding at the end of each applicable period. At the end of each period, management considers recent collection history to develop expected loss rates, which are used to establish the allowance for loan losses. Our allowance for loan losses was ~~$1.24~~$1.16 million on December 31, ~~2009.~~2010. Our allowance for loan losses is an estimate, and if actual loan losses are materially greater than our allowance for losses, our financial condition and results of operations could be adversely affected.

Because we maintain a significant supply of cash in our locations, we may experience losses due to employee error and theft.

Because our business requires us to maintain a significant supply of cash in our stores, we are subject to the risk of cash shortages resulting from employee error and theft. We periodically experience employee error and theft in stores, which can significantly increase the operating losses of those stores for the period in which the employee error or theft is discovered. We self-insure for employee error and theft at the store level. If our controls to limit our exposure to employee error and theft at the store level and at our corporate headquarters do not operate effectively or are structured ineffectively, our operating margins could be adversely affected by costs associated with increased security and preventative measures.

Regular turnover among our location managers and employees makes it more difficult for us to operate our locations and increases our costs of operation.

We experience a relatively stable workforce among our location managers and employees. Turnover interferes with implementation of operating strategies. Increases in our workforce turnover in the future would likely increase our operating pressures and operating costs and could restrict our ability to grow. Additionally, high turnover would create challenges for us in maintaining high levels of employee awareness of and compliance with our internal procedures and external regulatory compliance requirements. In sum, high turnover would increase our training and supervisory costs, and result in decreased earnings with corresponding greater risks of regulatory non-compliance.

21

Our ~~directors, officers and our~~ controlling shareholder ~~possess~~possesses controlling voting power with respect to our common stock and voting preferred stock, which will limit ~~practically~~ your influence on corporate matters.

Our ~~officers and directors collectively possess~~controlling shareholder, WCR, LLC, has beneficial ownership of ~~approximately 11,600,307~~10,791,250 shares (9,700,000 of ~~our common stock,~~ which ~~currently represents approximately 64.5% of our common stock. This includes all of the 1,125,000 common shares and 10,000,000 shares~~are issuable upon conversion of Series A Convertible Preferred ~~Stock (presently convertible into~~Stock). WCR’s beneficial ownership amounts to 61.9% of our common ~~stock on a share-for-share basis) held by WERCS, the former sole stockholder of Wyoming Financial Lenders, Inc.~~stock. As a result, ~~our directors, officers and WERCS (our most significant shareholder), will have~~WCR has the ability to outrightly control our management and affairs through the election and removal of our ~~directors,~~entire Board of Directors and all other matters requiring shareholder approval, including the future merger, consolidation or sale of all or substantially all of our assets. In fact, Mr. Robert Moberly, our Chairman, beneficially owns all of the shares held by WERCS and therefore has beneficial ownership of 11,125,000 common shares, which gives him alone beneficial ownership of 61.8% of our common stock on a voting basis. Therefore, Mr. Moberly has the power, alone, to control the composition of our Board of Directors and the outcome of any matters submitted to a vote of the shareholders. In addition, Mr. Joseph A. Geraci, II possesses beneficial ownership of 800,000 common shares (indirectly through Mill City Ventures, LP). Mr. Geraci is also a part owner of Lantern Advisers, LLC, which was instrumental in arranging for and structuring important terms of the reverse merger transaction in which the Company acquired Wyoming Financial Lenders. Mr. Geraci does not, however, have investment or voting control over shares of our Company held by Lantern Advisers.

~~When the shares held by of our officers and directors are aggregated with those beneficially owned by Mr. Geraci, such persons beneficially own and control over 68% of our common stock.~~ This concentrated control could discourage others from initiating any potential merger, takeover or other change-of-control transaction that may otherwise be beneficial to our shareholders. Furthermore, this concentrated control will limit the practical effect of your participation in Company matters, through shareholder votes and otherwise.

Our articles of incorporation grant our Board of Directors the power to issue additional shares of common and preferred stock and to designate other classes of preferred stock, all without shareholder approval.

Our authorized capital consists of 250 million shares of capital stock. Pursuant to authority granted by our articles of incorporation, our Board of Directors, without any action by our shareholders, may designate and issue shares in such classes or series (including other classes or series of preferred stock) as it deems appropriate and establish the rights, preferences and privileges of such shares, including dividends, liquidation and voting rights. The rights of holders of other classes or series of stock that may be issued could be superior to the rights of holders of our common shares. The designation and issuance of shares of capital stock having preferential rights could adversely affect other rights appurtenant to shares of our common stock. Furthermore, any issuances of additional stock (common or preferred) will dilute the percentage of ownership interest of then-current holders of our capital stock and may dilute our book value per share.

The planned sale by WERCS of control of Company to WCR, LLC could ultimately have materially adverse consequences to our common shareholders if, after its acquisition of control, WCR, LLC were to pursue certain courses of action.

As indicated elsewhere in this report, WERCS intends to sell all of its Company capital stock to WCR, LLC under the terms of a Stock Purchase and Sale Agreement. This transaction could ultimately have a material and adverse effect upon our common shareholders if WCR, LLC, after it has obtained control over the Company, were to pursue certain courses of action. For example, if WCR, LLC were to attempt to liquidate and dissolve the Company then nearly all of the proceeds of such liquidation would be distributable to WCR, LLC pursuant to the liquidation preference associated with the Series A Convertible Preferred Stock. If WCR, LLC were to sell all of the Company’s assets to a third party, nearly all of the proceeds of such sale (net of any payments for dissenting shares) would be distributable to WCR, LLC as the controlling shareholder of the Company. Similarly, WCR, LLC may later determine that the costs associated with being a public reporting company are unjustified, and that the Company should de-register with the SEC in some fashion. In that event, the value of any then-outstanding shares of our common stock could be materially and adversely affected.

As noted in our Proxy Statement filed with the SEC on March 15, 2010, WCR, LLC has informed the Company that it does not presently intend to initiate any liquidation and dissolution of the Company, any sale of assets of the Company, or any tender offer (which is often part of a going-private transaction ultimately ending with deregistration with the SEC). Nonetheless, there can be no certainty that WCR, LLC will not in the future consider any such courses of action, or ultimately take any such action.

2219

Because we became public by means of a reverse merger, we may not be able to attract the attention of major brokerage firms.

Additional risks to our investors may exist since we became public through a “reverse merger.” Security analysts of major brokerage firms may not provide coverage of the Company since, because we became public through a reverse merger, there is no incentive to brokerage firms to recommend the purchase of our common stock. In addition, because of past abuses and fraud concerns stemming primarily from a lack of public information about newly public businesses, there are many people in the securities industry and business in general who view reverse merger/public shell transactions with suspicion. Without brokerage firm and analyst coverage, there may be fewer people aware of us and our business, resulting in fewer potential buyers of our securities, less liquidity, and depressed stock prices for our investors.

Our common stock trades only in an illiquid trading market.

Trading of our common stock is conducted on the ~~over-the-counter bulletin board.~~OTC Markets (OTCQB: WCRS). This has an adverse effect on the liquidity of our common stock, not only in terms of the number of shares that can be bought and sold at a given price, but also through delays in the timing of transactions and reduction in security analysts’ and the media’s coverage of us and our common stock. This may result in lower prices for our common stock than might otherwise be obtained and could also result in a larger spread between the bid and asked prices for our common stock.

In addition, there has typically been very little trading activity in our common stock. During ~~2009,~~2010, the average daily trading volume (as reported by Yahoo Finance) was approximately ~~8,000 shares. This number drops~~12,000 shares with the 52-week trading prices ranging from $0.02 to ~~approximately 1,100 when excluding December 2009.~~$0.30 per share. The trade volume was as low as 3,000 shares for the entire month of September 2010. The small trading volume will likely make it difficult for our shareholders to sell their shares as and when they choose. Furthermore, small trading volumes generally depress market prices. As a result, you may not always be able to resell shares of our common stock publicly at the time and prices that you feel are fair or appropriate.

There is not now and there may not ever be an active market for shares of our common stock.

In general, there has been minimal trading volume in our common stock. The small trading volume will likely make it difficult for our shareholders to sell their shares as and when they choose. Furthermore, small trading volumes are generally understood to depress market prices. As a result, you may not always be able to resell shares of our common stock publicly at the time and prices that you feel are fair or appropriate.

We do not intend to pay dividends on our common stock for the foreseeable future. We will, however, pay dividends on our convertible preferred stock.

We ~~have paid~~pay dividends to ~~WERCS, Inc. as~~ the ~~holder~~holders of ~~10,000,000 shares of “Series~~our Series A Convertible Preferred Stock,” each share of which carries a $2.10 stated value. There are 10 million shares of Series A Convertible Preferred Stock outstanding. Our Series A Convertible Preferred Stock entitles its holders to (i) a cumulative 10% dividend, compounded and payable on a quarterly basis; (ii) in the event of a liquidation or dissolution of the Company, a preference in the amount of all accrued but unpaid dividends plus the stated value of such shares, before any payment shall be made or any assets distributed to the holders of any junior securities; (iii) convert their preferred shares into our common stock on a share-for-share basis, subject to adjustment; and (iv) vote their preferred shares on an as-if-converted basis.

We have the right to redeem some or all such preferred shares, at any time upon 60 days’ advance notice, at a per-share price of $3.50 plus accrued but unpaid dividends. Holders of Series A Convertible Preferred Stock have no preemptive or cumulative-voting rights.

We do not anticipate that we will pay any dividends for the foreseeable future on our common stock. Accordingly, any return on an investment in us will be realized only when you sell shares of our common stock.

~~ITEM 1B UNRESOLVED STAFF COMMENTS~~

~~Not applicable.~~ When legally permitted, we expect to pay dividends to our preferred stockholders.

2320

~~ITEM 2~~

ITEM 1B

UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2

PROPERTIES

Our headquarters is in Omaha, Nebraska. There, we have a 2,440-square-foot space, with additional space available, which is sufficient for our projected near-term future growth. The monthly lease amount is currently ~~$1,200 and the term runs through November 2010.~~$2,751 under a month-to-month lease. The corporate phone number is (402) 551-8888.

As of the date of this report, we have 5551 payday store locations. Our payday store locations typically range in size from 1,000 square feet to 2,000 square feet, and have varying lease terms (none of which, however, have remaining terms of more than five years). As of the date of this report, we have payday lending stores in the following cities:

· Sterling, Colorado

· Council Bluffs, Iowa

· Des Moines, Iowa (four locations)

· Sioux City, Iowa

· Dodge City, Kansas

· Garden City, Kansas

· ~~Billings, Montana (two locations)~~

· ~~Butte, Montana~~

· ~~Great Falls, Montana~~

· Columbus, Nebraska

· Grand Island, Nebraska

· Hastings, Nebraska

· Lincoln, Nebraska (three locations)

· North Platte, Nebraska

· Omaha, Nebraska (seven locations)

· Bismarck, North Dakota (two locations)

·Grand Forks, North Dakota (three locations)

· Fargo, North Dakota (four locations)

· Minot, North Dakota

· Aberdeen, South Dakota

· Rapid City, South Dakota

· Sioux Falls, South Dakota

· Watertown, South Dakota

· Salt Lake City, Utah

· Sandy, Utah

· Taylorsville, Utah

·West Jordan, Utah

· Kenosha, Wisconsin

· Pleasant Prairie, Wisconsin

· Racine, Wisconsin (two locations)

· Casper, Wyoming (two locations)

· Gillette, Wyoming

· Laramie, Wyoming

· Sheridan, Wyoming

· Rock Springs, Wyoming

As of the date of this report, we have 3331 Cricket store locations. Our Cricket store locations typically range in size from 1,000 square feet to 2,000 square feet, and have varying lease terms (none of which, however, have remaining terms of more than five years). As of the date of this report, we have Cricket retail stores in the following cities:

· Cahokia, Illinois	· ~~Columbia, Maryland~~
· ~~Granite City, Illinois~~	· ~~Lutherville, Maryland~~
· Elkhart, Indiana	· ~~Ballwin, Missouri~~
· Gary, Indiana (two locations)	· ~~Kansas City, Missouri (five locations)~~
· Merrillville, Indiana	· ~~St. Louis, Missouri (three locations)~~
· ~~Michigan City, Indiana~~	· ~~Wellston, Missouri~~
· Mishawaka, Indiana	·~~Lincoln, Nebraska~~
· South Bend, Indiana (two locations)	· Griffith, Indiana · ~~Omaha, Nebraska (three locations)~~Council Bluffs, Iowa
· Kansas City, Kansas (two locations)	· Baltimore, Maryland · Ballwin, Missouri · Kansas City, Missouri (four locations) · St. Louis, Missouri (three locations) · Wellston, Missouri · Lincoln, Nebraska · Omaha, Nebraska (five locations) · San Antonio, Texas (three locations)
· ~~Baltimore, Maryland (two locations)~~

24

ITEM 3

LEGAL PROCEEDINGS

We are involved in a variety of legal claims and proceedings incidental to our business, including customer bankruptcy and employment-related matters from time to time, and other legal matters that arise in the normal course of business. We believe these claims and proceedings are not out of the ordinary course for a business of the type and size in which we are engaged. In addition, on March 26, 2010, the Company and all of the members of its Board of Directors, among others, were sued by former members of our management team, Messrs. Steven Staehr and David Stueve. In that lawsuit, the plaintiffs have alleged, among other things, that our Board of Directors have breached certain of their fiduciary duties primarily in connection with the proposed sale by WERCS of its capital stock in the Company to WCR, LLC. The Company believes the lawsuit is entirely meritless. While we are unable to predict the ultimate outcome of these claims and proceedings, management believes there is not a reasonable possibility that the costs and liabilities of such matters, individually or in the aggregate, will have a material adverse effect on our financial condition or results of operations.

~~ITEM 4~~

~~RESERVED~~

2521

On March 26, 2010, the Company and all of the then-current members of its Board of Directors, among others, were sued by our former Chief Financial Officer and another former member of management, Messrs. Steven Staehr and David Stueve, respectively. In that lawsuit, the plaintiffs have alleged, among other things, that our Board of Directors breached certain of their fiduciary duties primarily in connection with the sale by WERCS of its capital stock in the Company to WCR, LLC. The complaint seeks injunctive and declaratory relief and unspecified money damages. The Company believes the claims are without merit. While we are unable to predict the ultimate outcome of these claims and proceedings, management currently believes there is not a reasonable possibility that the costs and liabilities of such matters, individually or in the aggregate, will have a material adverse effect on our financial condition or results of operations. After the filing of the lawsuit, the Company removed the lawsuit to federal court and the plaintiffs sought to remand the case back to state court. On October 26, 2010, the plaintiffs’ motion to remand the case to state court was denied by the federal court. The Company has filed a motion to dismiss the lawsuit, and was required to resubmit such motion based on certain amendments the plaintiffs made to their complaint. The Company’s motion to dismiss is currently being considered by the federal court.

ITEM 4

RESERVED

22

PART II

ITEM 5

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS

MARKET INFORMATION

Our common stock is listed for trading on the OTC Markets’ middle tier for over-the-counter ~~bulletin board~~stock quotation, the “OTCQB,” under the symbol ~~“WCRS.OB.~~“WCRS.” The transfer agent and registrar for our common stock is Corporate Stock Transfer, Inc., 3200 Cherry Creek Drive South, Suite 430, Denver, Colorado 80209. The following table sets forth the high and low bid prices for our common stock as reported by the OTC Bulletin Board in ~~2009~~2010 and ~~2008.~~2009. The Company’s common shares did not begin trading on the OTC Bulletin Board until February 2007. These quotations reflect inter-dealer prices, without retail mark-up, markdown, or commission, and may not represent actual transactions. Trading in the Company’s common stock during the period represented was sporadic, exemplified by low trading volume and many days during which no trades occurred. On or about March 1, 2010, our common stock ceased being quoted on the OTCBB (a quotation service administered by FINRA) and began being quoted on the OTCQB, which is the OTC Markets’ middle-tier over-the-counter quotation platform. OTC Markets is the entity formerly known as “The Pink Sheets.”

	Market Price (high/low)				Market Price (high/low)
For the Fiscal Year	2009		2008		2010		2009
First Quarter	$	2.20 – 0.25	$	6.00 – 2.60	$	0.30 – 0.08	$	2.20 – 0.25
Second Quarter	$	2.00 – 0.30	$	5.60 – 3.30	$	0.18 – 0.02	$	2.00 – 0.30
Third Quarter	$	2.00 – 0.22	$	4.95 – 2.10	$	0.08 – 0.02	$	2.00 – 0.22
Fourth Quarter	$	0.80 – 0.08	$	4.00 – 1.00	$	0.19 – 0.02	$	0.80 – 0.08

HOLDERS

As of the date of this report, we had ~~7,996,007~~7,446,007 shares of common stock outstanding held by approximately ~~510~~520 holders of record.

DIVIDENDS

Holders of our common stock are entitled to share pro rata in dividends and distributions with respect to the common stock when, as and if declared by our Board of Directors out of funds legally available ~~therefor.~~therefore. We have not paid any dividends on our common stock and intend to retain earnings, if any, to finance the development and expansion of our business. In addition, we must first pay preferred dividends on its Series A Convertible Preferred Stock as described under the caption “Description of Equity Securities” below. The current dividend payable to the holders of Series A Convertible Preferred Stock aggregates to $525,000 on a quarterly basis. Other than with respect to shares of Series A Convertible Preferred Stock, future dividend policy is subject to the sole discretion of our Board of Directors and will depend upon a number of factors, including future earnings, capital requirements and our financial condition. As of the date of this report, the Company had an outstanding accrued but unpaid and cumulated dividends on its Series A Convertible Preferred Stock aggregating to $1,975,000.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The table below sets forth certain information, as of the close of business on December 31, ~~2009,~~2010, regarding equity compensation plans (including individual compensation arrangements) under which securities of Western Capital were then authorized for issuance.

23

	~~Number of Securities~~ ~~to be Issued Upon~~ ~~Exercise of~~ ~~Outstanding Options,~~ ~~Warrants and Rights~~	~~Weighted-Average~~ ~~Exercise Price of~~ ~~Outstanding Options,~~ ~~Warrants and Rights~~	~~Number of Securities~~ ~~Remaining Available~~ ~~for Issuance Under~~ ~~Equity Compensation~~ ~~Plans (excluding~~ ~~securities reflected in~~ ~~column a)~~
	~~(a)~~	~~(b)~~	~~(c)~~
~~Equity compensation plans approved by securityholders~~	~~None~~	~~n/a~~	~~None~~
~~Equity compensation plans not approved by securityholders~~	~~None~~	~~n/a~~	~~2,000,000~~ ~~(1)~~

	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights	Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights	Number of Securities Remaining Available for Issuance Under Equity Compensation Plans (excluding securities reflected in column a)
	(a)	(b)	(c)
Equity compensation plans approved by securityholders	None	n/a	None
Equity compensation plans not approved by securityholders	None	n/a	2,000,000	(1)

(1)

In January 2008, our Board of Directors adopted the 2008 Stock Incentive Plan which permits the issuance of various incentives, including options or similar rights to purchase or acquire up to 2,000,000 shares of common stock. As of the date of this report, no incentives have been issued under such plan. We are not required by applicable state law or the listing standards of any self-regulatory ~~agency~~organization or quotation service (e.g., the OTC ~~Bulletin Board,~~Markets, NASD, AMEX or NYSE) to obtain the approval of its security holders prior to issuing any such compensatory options, warrants or other rights to purchase securities of the Company.

26

SALES OF UNREGISTERED SECURITIES AND REPURCHASES OF EQUITY SECURITIES BY THE ISSUER

None.

DESCRIPTION OF EQUITY SECURITIES

Our authorized capital stock consists of 250 million shares of capital stock, no par value per share (unless otherwise determined by the Board of Directors). All shares of common stock have equal voting rights and are entitled to one vote per share on all matters to be voted upon by our shareholders. Shares of our common stock have no preemptive, subscription, conversion or redemption rights and may be issued only as fully-paid and non-assessable shares. Cumulative voting in the election of directors is not permitted. In the event of our liquidation, each holder of our common stock is entitled to receive a proportionate share of our assets available for distribution to stockholders after the payment of liabilities. All shares of our common stock issued and outstanding are fully-paid and non-assessable.

Of our 250 million shares of authorized capital, we have designated 10,000,000 for issuance as “Series A Convertible Preferred Stock.” Each share of Series A Convertible Preferred Stock carries a $2.10 stated value and entitles its holders to (i) a cumulative 10% dividend, compounded and payable on a quarterly basis; (ii) in the event of a liquidation or dissolution of the Company, a preference in the amount of all accrued but unpaid dividends plus the stated value of such shares, before any payment shall be made or any assets distributed to the holders of any junior securities; (iii) convert their preferred shares into common shares of the Company on a share-for-share basis (subject to adjustment); and (iv) vote their preferred shares on an as-if-converted basis. The Company has the right to redeem some or all of such preferred shares, at any time upon 60 days’ advance notice, at a price of $3.50 per share plus accrued but unpaid dividends. Holders of Series A Convertible Preferred Stock have no preemptive or cumulative-voting rights.

~~ITEM 6~~

ITEM 6

SELECTED FINANCIAL DATA

Not applicable.

27

ITEM 7

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the financial statements and related notes that appear elsewhere in this report. This discussion contains forward-looking statements that involve significant uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in “Risk Factors” elsewhere in this report. For further information, see “Forward-Looking Statements” below.

24

OVERVIEW

We provide (through Wyoming Financial Lenders, Inc.) retail financial services to individuals primarily in the midwestern and southwestern United States. These services include non-recourse cash advance loans, check cashing and other money services, including title loans. At the close of business on December 31, ~~2009~~2010 and as of the date of this report, we owned and operated 5551 stores in 10nine states, including Colorado, Iowa, Kansas, ~~Montana,~~ Nebraska, North Dakota, South Dakota, Utah, Wisconsin and Wyoming.

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

In October 2008, we began operating Cricket Wireless retail stores as an authorized dealer of Cricket Wireless products and services. Authorized dealers are permitted to sell the Cricket line and generally locate their store operations in areas with a strong potential customer base where Cricket does not maintain a corporate storefront. ~~These locations~~Our storefronts are generally within the urban core or surrounding areas of a community. We are an authorized premier Cricket dealer, and as such, we are only permitted to sell the Cricket line of prepaid cellular phones at our Cricket retail stores. In addition, each store we operate must resemble a Cricket corporate store. Once we identify an area to locate a new store, we contact Cricket Wireless to obtain approval. Once Cricket Wireless approves our recommended location, we establish the storefront. Cricket Wireless provides assistance with exterior signage cost, marketing funds for the launch and premier kits for display. At the close of business on December 31, ~~2009~~2010, we owned and operated 3331 Cricket wireless retail stores in ~~seven~~eight states, including Illinois, Indiana, Iowa, Kansas, Maryland, Missouri, Nebraska and Texas.

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

With respect to our cost structure, salaries and benefits are one of our largest costs and are driven primarily by the ~~addition~~number of ~~branches~~storefronts operated throughout the year and ~~growth~~seasonal fluctuation in ~~loan~~sales volumes. ~~Phone~~Occupancy costs and phone and accessory cost of sales make up our second and third largest expense ~~item.~~items, respectively. 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, for the payday segment, is losses as a percentage of revenues), with consideration given to the length of time the ~~branch~~storefront has been open and its geographic location. We evaluate changes in comparable ~~branch~~storefront financial and other measures on a routine basis to assess operating efficiency. We define comparable ~~branches~~storefronts as those ~~branches~~ that are open during the full periods for which a comparison is being made. For example, comparable ~~branches~~storefronts for the annual analysis we undertook as of December 31, ~~2009~~2010 have been open at least 24 months on that date. We monitor newer ~~branches~~storefronts for their progress toward profitability and rate of loan growth or units sold.

Revenues ~~increased~~decreased to ~~$18.31~~$17.98 million in ~~2009~~2010 from ~~$12.87~~$18.31 million ~~in 2008, the increase resulting mainly from our addition of Cricket retail locations~~ in 2009. Payday loan revenues totaled $10.61 million in 2010 compared to $10.70 million in ~~2009 compared to $10.19 million in 2008.~~2009. Revenues from our Cricket phone sales ~~increased~~decreased in ~~2009~~2010 to $4.10 million compared to $5.29 million ~~compared to $1.06 million~~ during ~~2008.~~2009. Store salaries and benefits expense was $4.57 million in 2010 compared to $5.58 million in 2009, ~~compared to $3.78 million in 2008, an increase~~a decrease that resulted mainly from the ~~additional~~closing payday loan and Cricket cellular retail ~~locations~~storefronts in ~~2009.~~2010 and realignment of some store management to corporate management. Our ~~2009~~2010 phone and accessories cost of sales was ~~$2.16~~$1.71 million compared to ~~$.64~~$2.16 million in ~~2008, again~~2009. The decrease in our Cricket Wireless segment revenues had a ~~result~~corresponding downward impact to our costs of ~~the increase in Cricket retail locations in 2009.~~sales. Income from stores increased to $5.08 million in 2010 compared to $3.54 million in ~~2009 compared to $3.45 million in 2008.~~2009. Primarily as a result of these factors, net income increased to ~~$.77~~$1.35 million in ~~2009~~2010 from net income of ~~$.60~~$.77 million in ~~2008.~~2009.

2825

We 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. One-fourth of the $2.1 million annual preferred dividend accrues each quarter, whether paid or not. Our Board of Directors votes ~~quarterly~~ to approve ~~the~~ payment of ~~this dividend in the amount of $525,000, as~~dividends when appropriate and as permitted by Minnesota ~~law, which represents an annual liability to us of up to $2.1 million.~~law. The dividend can be paid either in cash or in shares of our common stock at the discretion of the preferred shareholder. This preferred dividend is included in the net income or loss available to common shareholders. As a result, we had a net loss available to common shareholders in ~~2009~~2010 and ~~2008.~~2009.

Our obligation to pay preferred 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~~requires us to manage our cash in ways that we will ensure the availability of cash for lending to our payday loan customers during the fall and winter months, which is typically the busiest time of year for payday lending.

The preferred dividend obligation also significantly affects our net income available to common shareholders. For example, absent the 2010 preferred dividend of ~~which $1~~$2.1 million, ~~is still payable for 2009,~~ our net income available to common shareholders ~~for 2009~~ would have been ~~over $.77~~approximately $1.35 million. For this reason, we are continuing to explore ways in which we may be able to retire or redeem the Series A Convertible Preferred Stock. It is difficult for us to forecast what success, if any, we may have in this endeavor. In particular, this is because all outstanding shares of the Series A Convertible Preferred Stock are contemplated to be purchased from our current preferred shareholder by WCR, LLC, with whom the Company has no current relationship, whether as a partner, shareholder, creditor, consultant or otherwise. As a result, we presently have no way of knowing how receptive WCR, LLC may be to renegotiating the rights, privileges and preferences ofendeavor since the preferred ~~stock.~~stockholders are not obligated to surrender their shares, exchange them, or engage in any sort of recapitalization transaction.

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. In Nebraska, legislation was introduced in 2008 (but did not advance) to ban all cash advance or payday loans in Nebraska. Despite the defeat of this legislation, since we derived approximately ~~27%~~27.55% of our ~~2009~~2010 total payday ~~lending~~segment 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.

With payday loan industry growth and fragmentation, we believe there are opportunities to grow our business, primarily through acquisitions as opposed to organic growth. We continually evaluate opportunities 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. For this reason, we have focused, and will continue to focus, a significant amount of time and resources on the development of our Cricket Wireless retail stores. We believe that successful expansion, both geographically and product- and service-wise, will help to mitigate the regulatory and economic risk inherent in our business by making us less reliant on (i) cash advance lending alone and (ii) any particular aspect of our business that concentrated geographically.

RESULTS OF OPERATIONS:

YEAR ENDED DECEMBER 31, ~~2009~~2010 COMPARED TO YEAR ENDED DECEMBER 31, ~~2008~~2009

For the year ended December 31, ~~2009,~~2010, net income was ~~$.77~~$1.35 million compared to a net income of ~~$.60~~$.77 million in ~~2008.~~2009. Income from continuing operations before income taxes was $2.10 million in 2010 compared to $1.24 million in ~~2009 compared to $1.11 million in 2008.~~2009. The major components of each of revenues, store expenses, general and administrative expenses, total operating expenses and income tax expense are discussed below.

29

Revenues

Revenues totaled $17.98 million in 2010 compared to $18.31 million in 2009, ~~compared~~a decrease of $.33 million or 1.80%. The decrease in total revenues resulted primarily from the following factors impacting the Cricket Wireless division: a reduction in the number of phone and modem units sold, which can be attributed to ~~$12.87 million~~elevated sales in ~~2008,~~2009 as Cricket rolled out new markets, a lower average selling price per unit under Cricket’s new pricing structure which took effect in all markets on August 3, 2010; and the closing of some Cricket storefronts. These factors have the effect of decreasing the average per-unit selling price and gross revenues. This was partially offset by an increase ~~of $5.44 million or 42.3%. The increase~~ in ~~revenues was primarily a result of an increased number of~~fees generated from accepting Cricket ~~cellular wireless stores in operation.~~service payments. This trend is expected to partially reverse due to another recent change to Cricket’s compensation structure for dealers. We originated approximately ~~$73.16~~$71.88 million in payday loans during ~~2009~~2010 compared to ~~$69.30~~$73.16 million in payday loans during the prior year. The average loan (including fee) totaled ~~$368~~$367 in ~~2009~~2010 versus ~~$359~~$368 in the prior year. Our average fee for ~~2009~~2010 was ~~$52.08~~$54 compared to ~~$51.69~~$52 for ~~2008. No new~~2009. We closed four payday ~~locations were added~~storefronts in ~~2009.~~Montana late in the fourth quarter of 2010 because of recent state legislation. Revenues from Cricket phone sales totaled $4.09 million in 2010 compared to $5.29 million in ~~2009~~2009. Cricket payment fee revenue totaled $1.42 million in 2010 compared to ~~$1.06~~$.49 million in ~~2008.~~2009. We ~~added a net of 22~~had 37 Cricket retail ~~location~~storefronts open and operating during at least some part of fiscal 2010 compared to 43 storefronts during fiscal 2009. During 2010, we added four Cricket storefronts and closed six. Other revenues, including check cashing, title loans, ~~Cricket payment processing and~~ service change fees and other sources, totaled ~~$2.32~~$1.12 million and ~~$1.62~~$1.01 million for ~~2009~~2010 and ~~2008,~~2009, respectively.

26

The following table summarizes revenues:

	Year Ended December 31,				Year Ended December 31,						Year Ended December 31,				Year Ended December 31,
	2009		2008		2009			2008			2010		2009		2010			2009
					(percentage of revenues)											(percentage of revenues)
Payday loan fees	$	10,700,842	$	10,193,324		58.5	%		79.2	%	$	10,607,136	$	10,700,842		59.0	%		58.5	%
Phones and accessories		5,289,537		1,060,002		28.9	%		8.2	%		4,094,049		5,289,537		22.8	%		28.9	%
Payment processing fees												1,418,377		494,074		7.9	%		2.7	%
Check cashing fees		813,174		1,128,169		4.4	%		8.8	%		739,733		813,174		4.1	%		4.4	%
Other income and fees		1,506,048		493,322		8.2	%		3.8	%		1,119,152		1,011,974		6.2	%		5.5	%
Total	$	18,309,601	$	12,874,817		100	%		100	%	$	17,978,447	$	18,309,601		100	%		100	%

We expect that our sources of revenue for ~~2010~~2011 may continue to diversify as we continue to improve and ~~grow~~increase sales in our Cricket retail ~~operations.~~operations and look to open new Cricket retail storefronts.

Store Expenses

Total expenses associated with store operations for ~~2009~~2010 were ~~$14.77~~$12.90 million compared to ~~$9.42~~$14.77 million for ~~2008.~~2009, a decrease of $1.87 million or 12.7%. The major components of these expenses are salaries and benefits for our store employees, provision for loan losses, costs of sales for phones and accessories, occupancy costs primarily relating to our store leaseholds, advertising expenses, depreciation of store equipment, amortization of intangible assets and other expenses associated with store operations.

Overall, our most significant ~~increases~~decreases in store expenses from ~~2009~~2010 to ~~2008~~2009 related to salaries and benefits for our store employees, the provision for loan losses, and phones and ~~accessories, and our costs of occupancy.~~accessories. Our most significant ~~decrease~~increase in store expenses over that same period relates to ~~the provision for loan losses.~~our costs of occupancy. A discussion and analysis of the various components of our store expenses appears below.

Salaries and Benefits. Payroll and related costs at the store level were $4.57 million in 2010 compared to $5.58 million in 2009, ~~compared to $3.78 million in 2008, an increase~~a decrease of ~~$1.80 million as headcount increased mostly due to an increase~~$1.01. This decrease is a result of a decrease in the number of storefronts operating throughout the year and from our realignment of employee duties from store ~~locations during the year.~~to general and administrative. We believe this realignment will provide better oversight and management of storefronts from one centralized point while also reducing costs. As a result of ~~added~~this realignment and fewer Cricket and payday retail ~~store locations~~storefronts in 2010 compared to 2009, ~~and future expansion into new market,~~ we expect that salaries and benefits for ~~2010~~2011 will ~~continue to increase for the foreseeable future.~~decrease baring significant expansion into new markets or additional new storefronts.

Provisions for Loan Losses. Our provision for losses for ~~2009~~2010 totaled $1.28 million and $1.55 million ~~and $1.88 million~~ for ~~2008.~~2009. Our provision for loan losses as a percentage of loan fee revenue was 12.1% during 2010 versus 14.5% during ~~2009 versus 18.5% during 2008.~~2009. The more favorable loss ratio year-to-year reflects our ~~expanded~~focused collection efforts in ~~2009 compared to 2008.~~2010. Due to our inability to foretell the ~~depth~~speed and ~~duration~~scope of the ~~continued~~current economic ~~downturn,~~recovery, we believe there are currently uncertainties in ~~how significant any increased~~what loan losses for ~~2010~~2011 may be.

Phone and Accessories Cost of Sales. The ~~increase~~decrease in our Cricket Wireless phone ~~service segment~~and accessory revenues resulted in corresponding ~~increase~~decrease in costs of sales. For the year ended December 31, ~~2009,~~2010, our costs of sales were ~~$2.16~~$1.71 million compared to ~~$.64~~$2.16 million ~~for the same period~~ in ~~2008. At December 31, 2009, we had 33 Cricket Wireless stores compared to 11 at December 31, 2008.~~2009.

Occupancy Costs. Occupancy expenses, consisting primarily of store leases were $1.85 million during 2010 compared to $1.68 million ~~during~~in 2009, ~~compared to $.91 million in 2008,~~ an increase of ~~$.77~~$.17 million primarily resulting from a higher number of storefront days (number of storefronts times days leased for year) in 2010 compared to 2009 when many Cricket storefronts were open only part of the ~~addition of stores during 2009.~~year. Occupancy expenses as a percentage of revenues increased from ~~7.1 % in 2008 to~~ 9.2% in 2009 to 10.3% in 2010, primarily due to the higher occupancy expense to revenue percentage in our Cricket stores.

3027

Advertising. Advertising and marketing related expense was $.36 million in 2010 compared to $.45 million in ~~2009 compared to $.38 million in 2008.~~2009. We believe that our advertising expenses in ~~2010~~2011 may increase slightly over those in ~~2009,~~2010, mainly as a result of the need to increase advertisement of our ~~payday lending and~~Cricket wireless cellular ~~services during the continued economic downturn.~~segment.

Depreciation. Depreciation increased by ~~$.11~~$.01 million in ~~2009~~2010 due to depreciation associated with capital expenditures for stores. Depreciation was $.28 million for 2010 and $.27 million for ~~2009 and $.16 million for 2008.~~2009.

Amortization of Intangible Assets. Amortization of the customer relationship and other intangible assets was $.52 million for 2010 and $.69 million for ~~2009 and $.42 million for 2008.~~2009.

Other Store Expenses. Other store expenses ~~increased~~decreased from ~~$1.25 million in 2008 to~~ $2.38 million in ~~2009.~~2009 to $2.33 million in 2010. Other store expenses include bank fees, collection costs, repair and maintenance, supplies, telephone, utilities and network lines, and others. The ~~significant increase~~decrease in these expenses during ~~2009 are as a result of the additional stores~~2010 was due to reduced supplies and telephone expense that was partially offset by an increase in ~~operation during 2009.~~utility costs.

General and Administrative Expenses

Total general and administrative costs for ~~2009~~2010 were ~~$2.30~~$2.98 million compared to ~~$2.34~~$2.30 million for ~~2008.~~2009. The major components of these costs for ~~2009~~2010 are salaries and benefits for our corporate headquarters operations and executive management, ~~depreciation of certain headquarters-related equipment,~~interest expense, and other general and administrative expenses.

Salaries and Benefits. Salaries and benefits expenses for ~~2009~~2010 were ~~$.84~~$1.53 million compared to ~~$.72~~$.84 million for ~~2008,~~2009, with the increase being mainly attributed to ~~enhancing~~realignment of management from storefronts to the corporate ~~infrastructure to manage the increased operating locations added in 2009 and planned for future years.~~infrastructure. The Company expects that during ~~2010~~2011 salaries and benefits expenses associated with executive management and corporate headquarters will ~~only slightly~~ increase from their ~~2009 levels.~~2010 levels due to the realignment being in effect for the entire 2011 year.

Interest Expense. The Company had ~~$.35~~$.41 million of interest expense in ~~2009~~2010 compared to ~~$.08~~$.35 million in ~~2008 as a result of our outstanding notes payable balance throughout~~ 2009.

Other General and Administrative Expenses. Other general and administrative expenses, such as professional fees, management / consulting fees, utilities, office supplies, and other minor costs associated with corporate headquarters activities were $1.03 million in 2010 compared to $1.09 million during 2009. The decrease in ~~2009,~~these expenses is mainly attributable to a decrease in nonrecurring professional fees which is ~~a decrease of $.46 million over the $1.55 million in such expenses incurred~~partially offset by management / consulting fees we began incurring during ~~2008.~~2010. Management expects management / consulting fees to increase since these ~~expense levels to decrease slightly~~services will be provided for all 12 months in ~~2010 as certain legal and accounting expense are not expected again in 2010.~~2011.

Total Operating Expenses

Total operating expenses for 2010 and 2009 ~~and 2008~~ were ~~$17.07~~$15.88 million ~~compared to $11.77~~and$17.07 million, ~~respectively~~respectively. We anticipate our total operating expenses in ~~2010~~2011 to ~~increase~~slightly decrease compared to 2010 with the ~~continued expansion~~closing of ~~our~~four payday storefronts and two Cricket Wireless retail ~~operations.~~storefronts.

Income Tax Expense

Income tax expense on continuing operations increased to $.75 million in 2010 compared to $.47 million in 2009 ~~compared to $.27 million in 2008.~~for an effective rate of 35.8% and 37.9%, respectively.

~~Discontinued Operations~~

In 2008 the Company both acquired and disposed of payday loan stores acquired through the acquisition on National Cash & Credit, LLC and assets acquired from affiliates of STEN Corporation. These discontinued operations resulted in a net loss to the Company of $.23 million.

~~Adjusted EBITDA – Non-GAAP Financial Measure~~

Although the Company reports its financial results in accordance with generally accepted accounting principles (GAAP), the Company believes that EBITDA adjusted for continuing operations (Adjusted EDBITDA), a non-GAAP financial measure, is useful in managing its business and evaluating its performance. Adjusted EBITDA is not intended to be viewed as a source of liquidity or as a cash flow measure. Adjusted EBITDA, which the Company defines as net income from continuing operations before interest expense, taxes on income, depreciation and amortization, is used by management primarily because of its wide acceptance as a measure of operating profitability before non-operating expenses (e.g., interest and taxes) and non-cash charges (e.g., depreciation and amortization). The Company’s Adjusted EBITDA for the year ended December 31, 2009 was $2,565,526, as compared to the Adjusted EBITDA of $1,770,418 for the year ended December 31, 2008, a 44% increase.

3128

As a non-GAAP financial measure, Adjusted EBITDA is not a substitute for GAAP financial results and should only be considered and evaluated in conjunction with the Company’s financial information that is presented in accordance with GAAP. A quantitative reconciliation of Adjusted EBITDA to GAAP net income is provided in the following table:

Year Ended December 31,
2009 2008
Net Income $ 771,682 $ 604,685
Loss from Discontinued Operations (net of $12,000 income tax expense) - (349,546 )
Gain on Disposal of Discontinued Operations (net of $47,000 income tax expense) - 120,873
Income Tax 470,000 272,000
Interest Expense 348,388 79,425
Depreciation 287,676 164,866
Amortization 687,780 420,769
Adjusted EBITDA (non-GAAP) $ 2,565,526 $ 1,770,418

LIQUIDITY AND CAPITAL RESOURCES

Summary cash flow data is as follows:

	Year Ended December 31,								Year Ended December 31,
	2009				2008				2010			2009

Cash flows provided (used) by :
Operating activities		$	2,386,400			$	(1,207,459	)	$	2,743,235		$	2,386,400
Investing activities			(2,670,928	)			(1,280,670	)		(103,964	)		(2,670,928	)
Financing activities			(1,547,457	)			4,862,051			(2,073,447	)		(1,547,457	)
Net increase (decrease) in cash			(1,831,985	)			2,373,922			565,824			(1,831,985	)
Cash, beginning of period			3,358,547				984,625			1,526,562			3,358,547
Cash, end of period		$	1,526,562			$	3,358,547		$	2,092,386		$	1,526,562

At December 31, ~~2009~~2010, we had cash of ~~$1.53~~$2.09 million compared to cash of ~~$3.36~~$1.53 million on December 31, ~~2008.~~2009. The ~~decrease~~increase results mainly from an increase in cash ~~used in investing activities through~~provided by operating additional storefronts throughout fiscal 2010 compared to fiscal 2009, offset by the ~~opening of additional stores and~~ purchase of related property and equipment, interest and principal payments on our notes payable, and ~~partial~~ payment of our preferred stock dividend. For ~~2010,~~2011, we believe that our available cash, combined with expected cash flows from operations, will be sufficient to fund our liquidity and capital expenditure requirements ~~for the remainder 2010, subject to obtaining either extended terms with Banco Popular for the May 2010 balloon payment~~through March of ~~approximately $1.5 million or financing with which to pay off such obligation.~~2012. Our expected short-term uses of cash include the ~~funding~~reduction in accruals related to operations, scheduled principal and interest payments on long-term debts, repayment of ~~our operating activities, anticipated increases in payday loans, repayments~~$1,000,000 of ~~bank~~short-term debt, and ~~dividend payments on our Series A Convertible Preferred Stock (to the extent approved by the Board of Directors).~~capital expenditures.

~~Banco Popular Line of~~ Credit Facilities

On January 4, 2010, Wyoming Financial Lenders, Inc., ~~the wholly owned payday lending operating subsidiary of Western Capital Resources, Inc., entered into~~executed an amended Business Loan Agreement and associated Promissory Note with Banco Popular North America ~~relating to the outstanding debt~~(with an effective date of ~~Wyoming Financial Lenders in the amount~~October 30, 2009) refinancing a then-existing line of ~~$1,999,924.~~credit with Banco Popular. At that time, Western Capital Resources and Banco Popular also entered into a ~~new~~(new) Commercial Pledge Agreement pursuant to which Western Capital Resources pledged its share ownership in Wyoming Financial Lenders ~~Inc.~~ and substantially all of its other assets to Banco Popular as collateral security for the obligations of Wyoming Financial Lenders under the amended Business Loan Agreement and Promissory Note.

~~In connection with the new agreements,~~On April 2, 2010, Wyoming Financial Lenders ~~paid~~refinanced its credit facility with Banco Popular. On that date, WERCS, the former holder of the Company’s Series A Convertible Preferred Stock, satisfied all of Wyoming Financial Lender’s financial obligations to Banco Popular ~~$216,046~~and entered into a Business Loan Agreement and associated $2,000,000 promissory note with Wyoming Financial Lenders. The loan from WERCS extinguished the $1,637,341 that Wyoming Financial Lenders then owed to Banco Popular and the remaining $362,659 of loan proceeds were used for general working capital. The Business Loan Agreement and associated promissory note contained terms that were substantially similar to those contained in ~~principal and interest accrued through December 31, 2009. The payment structure~~the loan documents with Banco Popular. To secure the obligations of Wyoming Financial Lenders under the new ~~Promissory Note changed from~~Business Loan Agreement and promissory note, the Company entered into (i) a ~~line~~Commercial Pledge Agreement with WERCS pursuant to which the Company pledged its share ownership in Wyoming Financial Lenders, and (ii) a Commercial Security Agreement pursuant to which the Company granted WERCS a security interest in substantially all of ~~credit~~the Company’s assets. The Company also entered into a Commercial Guaranty relating to ~~a term loan requiring~~ the ~~company~~repayment of Wyoming Financial Lenders’ obligations under the Business Loan Agreement and promissory note. The payment terms under the promissory note required Wyoming Financial Lenders to make ~~seven~~ monthly ~~principal~~ payments of ~~$52,776 from November 29, 2009 through May 29, 2010,~~accrued interest only for 11 months, followed by ~~$175,000 principal payment on May 29, 2010 and a~~an April 1, 2011 balloon payment of ~~$1,508,895 on May 31, 2010. Under~~any remaining accrued but unpaid interest and all $2,000,000 of principal under the ~~new Promissory Note, interest will accrue~~promissory note. Interest accrues on the unpaid principal balance of the promissory note at the ~~variable~~ rate ~~equal to (i)~~of 12.0% per annum. On January 26, 2011, the ~~one-month LIBOR (as published by~~Company and Wyoming Financial Lenders entered into a Loan Extension Agreement with WERCS. The Loan Extension Agreement extends the ~~British Banker’s Association) (currently 0.24%) plus (ii) a margin~~maturity date for the payment of ~~7.25%.~~

32

~~Defaults occur~~all obligations under the Business Loan Agreement into April 1, 2012. In connection with the ~~event of:~~

·

~~a default in payment~~

·

~~a 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~~

·

~~a default under any other material~~extension agreement, ~~to which Wyoming Financial Lenders or any guarantor is a party~~

·

~~the insolvency of Wyoming Financial Lenders~~

·

~~an adverse change in the financial condition of Wyoming Financial Lenders~~

·

~~the 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~~Company made a principal payment of any default, Banco Popular may accelerate all amounts due subject to a ten-day right to cure applicable in certain circumstances. Furthermore, Wyoming Financial Lenders conducts our payday lending business, this means that if we were unable to meet our accelerated payment obligations in the event of a default, we could lose some or all of our ownership of our payday lending business.$1,000,000.

CRITICAL ACCOUNTING POLICIES

Our 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.

29

Our significant accounting policies are discussed in Note 1, “Nature of Business and Summary of Significant Accounting Policies,” of the notes to our consolidated financial statements included in this report. We believe that the following critical accounting policies affect the more significant estimates and assumptions used in the preparation of our consolidated financial statements:

Loan Loss Allowance

We maintain a loan loss allowance for anticipated losses for our payday 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 1224 months applied against the principal balance of outstanding loans that we write off. We also periodically ~~performs~~perform a look-back analysis on our loan loss allowance to verify the historical allowance established tracks with the actual subsequent loan write-offs and recoveries. We are aware that as conditions change, we may also need to make additional allowances in future periods.

Included in loans receivable are payday loans that are currently due or past due and payday 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. Payday loans are carried at cost less the allowance for doubtful accounts. We do not specifically reserve for any individual payday loan. We aggregate payday 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. We utilize a software program to assist with the tracking of its historical portfolio statistics. As a result of the Company’s collection efforts, it historically writes off approximately 45% of the returned items. Based on days past the check return date, write-offs of returned items historically have tracked at the following approximate percentages: 1 to 30 days – 45%; 31 to 60 days – ~~68%~~67%; 61 to 90 days – ~~84%~~83%; 91 to 120 days – ~~89%~~87%; and 121 to 180 days – ~~91%~~90%. All returned items are charged-off after 180 days, as collections after that date have not been significant. The loan loss allowance is reviewed ~~quarterly~~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.

33

At December 31, ~~2009~~2010 and ~~2008~~2009 our outstanding loans receivable aging was as follows:

	December 31,						December 31,
	2009			2008			2010			2009
Current	$	4,965,000		$	4,988,000		$	4,542,000		$	4,700,000
1-30								276,000			265,000
31 – 60		216,000			253,000			234,000			216,000
61 – 90		238,000			310,000			209,000			238,000
91 - 120		226,000			252,000			220,000			226,000
121 – 150		232,000			259,000			227,000			232,000
151 – 180		236,000			241,000			201,000			236,000
		6,113,000			6,303,000			5,909,000			6,113,000
Allowance for losses		(1,237,000	)		(1,413,000	)		(1,165,000	)		(1,237,000	)
	$	4,876,000		$	4,890,000		$	4,744,000		$	4,876,000

A rollforward of our loans receivable allowance for the years ended December 31, ~~2009~~2010 and ~~2008~~2009 is as follows:

	Year Ended December 31
	2010			2009
Loans receivable allowance, beginning of year	$	1,237,000		$	1,413,000
Provision for loan losses charged to expense:		1,280,000			1,552,000
Charge-offs, net		(1,352,000	)		(1,728,000	)

Loans receivable allowance, end of year	$	1,165,000		$	1,237,000

30

Year Ended December 31
2009
2008

Loans receivable allowance, beginning of year $ 1,413,000 $ 976,000
Provision for loan losses charged to expense:
Continuing operations 1,552,000 1,884,000
Discontinued operations - 266,000
Charge-offs, net (1,728,000 ) (1,713,000 )

Loans receivable allowance, end of year $ 1,237,000 $ 1,413,000

Valuation of Long-lived and Intangible Assets

The Company assesses the possibility of impairment of long-lived and intangible assets whenever events or changes in circumstances indicate that the carrying value may not be ~~recoverable; goodwill is tested on an annual basis.~~recoverable. Factors that could trigger an impairment review include significant underperformance relative to expected historical or projected future cash flows, significant changes in the manner of use of acquired assets or the strategy for the overall business, and significant negative industry events or trends. ~~When management determines that~~In addition, we conduct an annual goodwill impairment test as of October 1 each year. We assess our goodwill for impairment at the reporting unit level by applying a fair value test. This fair value test involves a two-step process. The first step is to compare the carrying value of ~~long-lived~~our net assets to our fair value. If the fair value is determined to be less than the carrying value, a second step is performed to measure the amount of the impairment, if any.

A reporting unit is an operating segment, or under certain circumstances, a component of an operating segment that constitutes a business. Our reporting units consist of multiple state and ~~intangible~~multi-state based operations and therefore the cessation of operations in any particular state does not imply that goodwill for the relevant reporting unit will be impaired.

Due to our capital structure involving preferred stock and related cumulative preferred dividends, the market capitalization approach of valuing the reporting unit as a whole is not practical. The discounted future cash flows method is utilized in estimating value. When estimated future cash flows are less than the carrying value of the net assets ~~may not be recoverable,~~and related goodwill, an impairment test is ~~measured based on~~performed to measure and recognize the amount of the impairment loss, if any. Impairment losses, which are limited to the carrying value of goodwill, represent the excess of the ~~assets'~~carrying amount of a reporting unit's goodwill over the implied fair value of that goodwill.

In determining the estimated future discounted cash flows, we consider current and projected future levels of income, as well as strategic plans, business trends, prospects, and market and economic conditions. Impairment tests involve the use of judgments and estimates related to the fair market value of the business operations with which goodwill is associated, taking into consideration both historical operating performance and anticipated financial position and future earnings. We believe that the estimates of future cash flows and fair value determined as of October 1, 2010 are reasonable. Changes in estimates of those cash flows and fair value, however, could affect the evaluation. Based upon this evaluation, we concluded that the fair value exceeded the carrying value ~~over~~of net assets and there was no impairment.

As of December 31, 2010, we evaluated whether any triggering events or changes in circumstances had occurred subsequent to our annual impairment test. As part of this evaluation, we considered additional qualitative factors, including whether there had been any significant adverse changes in legal factors or in our business climate, adverse action or assessment by a regulator, unanticipated competition, loss of key personnel or likely sale or disposal of all or a significant portion of our reporting unit. Due to various state regulatory changes, we determined that there may have been events or changes in circumstances in our Payday business that could indicate an impairment condition may have exited as of December 31, 2010. This analysis resulted in a determination that the ~~estimated~~ fair ~~value.~~value of the Payday operating unit exceeded the carrying value of its net assets, and thus would not have required any further impairment evaluation.

OFF BALANCE SHEET ARRANGEMENTS

We have no off balance sheet arrangements.

34

FORWARD-LOOKING STATEMENTS

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

31

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

·

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

·

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

·

Our need for additional financing, and

·

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

Other factors that could cause actual results to differ from those implied by the forward-looking statements in this report are more fully described in the “Risk Factors” section and of this report.

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

~~ITEM 7A~~

ITEM 7A

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

35

~~ITEM 8~~

ITEM 8

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX OF FINANCIAL INFORMATION

CONTENTS

		Page(s)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		F-1

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheets		F-2

Consolidated Statements of Income		F-3

Consolidated Statements of Shareholders’ Equity		F-4

Consolidated Statements of Cash Flows		F-5

Notes to Consolidated Financial Statements		F-6

3632

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON CONSOLIDATED FINANCIAL STATEMENTS

Board of Directors

Western Capital Resources, Inc.

Omaha, Nebraska

We have audited the accompanying consolidated balance sheets of Western Capital Resources, Inc. and Subsidiaries as of December 31, ~~2009~~2010 and ~~2008,~~2009, and the related consolidated statements of ~~operations,~~income, shareholders’ equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Western Capital Resources, Inc. and Subsidiaries as of December 31, ~~2009~~2010 and ~~2008~~2009 and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

~~/s/ Lurie Besikof Lapidus & Company, LLP~~

Minneapolis, Minnesota

/s/ Lurie Besikof Lapidus & Company, LLP

March ~~30, 2010~~25, 2011

F-1

WESTERN CAPITAL RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31,						December 31,
	2009			2008			2010			2009

ASSETS

CURRENT ASSETS
Cash	$	1,526,562		$	3,358,547		$	2,092,386		$	1,526,562
Loans receivable (less allowance for losses of $1,237,000 and $1,413,000)		4,875,870			4,889,940
Loans receivable (less allowance for losses of $1,165,000 and $1,237,000)								4,743,906			4,875,870
Inventory		373,858			198,430			502,415			373,858
Prepaid expenses and other		288,145			247,318			152,736			288,145
Deferred income taxes		486,000			558,000			467,000			486,000
TOTAL CURRENT ASSETS		7,550,435			9,252,235			7,958,443			7,550,435

PROPERTY AND EQUIPMENT		1,075,715			815,980			824,102			1,075,715

GOODWILL		11,458,744			10,253,744			11,458,744			11,458,744

INTANGIBLE ASSETS		902,069			756,849			434,413			902,069

OTHER		107,715			133,831			95,180			107,715

TOTAL ASSETS	$	21,094,678		$	21,212,639		$	20,770,882		$	21,094,678

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	1,352,989		$	998,653		$	1,477,607		$	1,352,989
Income tax payable		145,773			-			435,670			145,773
Note payable – short-term		1,794,372			2,100,000			2,000,000			1,794,372
Current portion long-term debt		165,431			-			769,330			165,431
Preferred dividend payable		1,000,000			-			1,450,000			1,000,000
Deferred revenue		345,826			319,543			320,021			345,826
TOTAL CURRENT LIABILITIES		4,804,391			3,418,196			6,452,628			4,804,391

LONG-TERM LIABILITIES
Note payable – long-term		2,138,162			2,500,000			905,188			2,138,162
Deferred income taxes		250,000			64,000			350,000			250,000
TOTAL LONG-TERM LIABILITIES		2,388,162			2,564,000			1,255,188			2,388,162

TOTAL LIABILITIES		7,192,553			5,982,196			7,707,816			7,192,553

SHAREHOLDERS’ EQUITY
Series 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			100,000			100,000			100,000
Common stock, no par value, 240,000,000 shares authorized, 7,996,007 and 7,598,354 shares issued and outstanding.		-			-
Common stock, no par value, 240,000,000 shares authorized, 7,446,007 and 7,996,007 shares issued and outstanding.								-			-
Additional paid-in capital		18,478,337			18,478,337			18,221,777			18,478,337
Accumulated deficit		(4,676,212	)		(3,347,894	)		(5,258,711	)		(4,676,212	)
TOTAL SHAREHOLDERS’ EQUITY		13,902,125			15,230,443			13,063,066			13,902,125

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	21,094,678		$	21,212,639		$	20,770,882		$	21,094,678

Minnesota		47-0848102
(State of incorporation)		(I.R.S. Employer Identification No.)

11550 “I” Street, Suite 150 Omaha, Nebraska		68137
(Address of principal executive offices)		(Zip Code)

Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class		Name of Each Exchange on which Registered
None		N/A

		Page

PART I
Item 1.	Business	1
Item 1A.	Risk Factors	1614
Item 1B.	Unresolved Staff Comments	2321
Item 2.	Properties	2421
Item 3.	Legal Proceedings	2521
Item 4.	Reserved	2522

PART II
Item 5.	Market for Registrant’s Common Equity, Related Shareholder Matters	2623
Item 6.	Selected Financial Data	2724
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2824
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	3532
Item 8.	Financial Statements and Supplementary Data	3632
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	3733
Item 9A(T).	Controls and Procedures	3733
Item 9B.	Other Information	3834

PART III
Item 10.	Directors, Executive Officers and Corporate Governance	3935
Item 11.	Executive Compensation	4238
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	4339
Item 13.	Certain Relationships and Related Transactions and Director Independence	4541
Item 14.	Principal Accountant Fees and Services	4641

PART IV
Item 15.	Exhibits and Financial Statement Schedules	4743
	Signatures	4945

State	Fees	APR (%) on a 14-day $100 Loan			APR (%) on a 28-day $100 Loan			APR (%) on a 14-day $300 Loan			APR (%) on a 28-day $300 Loan
Colorado *	20% on first $300 advanced; $7.50 per $100 advanced (up to $500)		521	%		261	%		521	%		261	%
Iowa	$15 on first $85 advanced; 11.1% on additional amounts (up to $445)		435	%		217	%		338	%		169	%
Kansas	$15 per $100 advanced		391	%		196	%		391	%		196	%
Montana **	23% per $100 advanced if greater than 16 days or 13% per $100 advanced if 16 days or less (max. fee of $61.62)		339	%		300	%		338	%		268	%
Nebraska	$17.50 per $100 advanced		456	%		228	%		456	%		228	%
North Dakota	$20 per $100 advanced		521	%		261	%		521	%		261	%
South Dakota	$20 per $100 advanced		521	%		261	%		521	%		261	%
Utah	$20 per $100 advanced		521	%		261	%		521	%		261	%
Wisconsin	$22 per $100 advanced		574	%		287	%		574	%		287	%
Wyoming	30% per $100 advanced if loan is less than $150 or 20% per $100 advanced if loan is equal to or greater than $150 (subject to numerous maximums)		782	%		391	%		521	%		261	%

State	Fees	APR (%) on a 14-day $100 Loan			APR (%) on a 28-day $100 Loan			APR (%) on a 14-day $300 Loan			APR (%) on a 28-day $300 Loan
Colorado	20% on first $300 advanced; $7.50 per $100 advanced (up to $500)		521	%		261	%		521	%		261	%
Iowa	$15 on first $85 advanced; 11.1% on additional amounts (up to $445)		435	%		217	%		338	%		169	%
Kansas	$15 per $100 advanced		391	%		196	%		391	%		196	%
Montana	23% per $100 advanced if greater than 16 days or 13% per $100 advanced if 16 days or less (max. fee of $61.62)		339	%		300	%		338	%		300	%
Nebraska	$17.50 per $100 advanced		456	%		228	%		456	%		228	%
North Dakota	$20 per $100 advanced		521	%		261	%		521	%		261	%
South Dakota	$20 per $100 advanced		521	%		261	%		521	%		261	%
Utah	$20 per $100 advanced		521	%		261	%		521	%		261	%
Wisconsin	$22 per $100 advanced		574	%		287	%		574	%		287	%
Wyoming	30% per $100 advanced if loan is less than $150 or 20% per $100 advanced if loan is equal to or greater than $150 (subject to numerous maximums)		521	%		391	%		261	%		261	%

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, ~~2009~~
	or2010

o¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _______________________ to ___________________

	December 31, 2009		December 31, 2008
Revenues	$	18,309,601	$	12,874,817
Net loss to common shareholders	$	1,328,318	$	1,495,315
Current assets	$	7,550,435	$	9,252,235
Current liabilities	$	4,804,391	$	3,418,196
Total assets	$	21,094,678	$	21,212,639
Total liabilities	$	7,192,553	$	5,982,196
Shareholder equity	$	13,902,125	$	15,230,443

	December 31, 2010		December 31, 2009
Revenues	$	17,978,447	$	18,309,601
Net loss to common shareholders	$	751,059	$	1,328,318
Current assets	$	7,958,443	$	7,550,435
Current liabilities	$	6,452,628	$	4,804,391
Total assets	$	20,770,882	$	21,094,678
Total liabilities	$	7,707,816	$	7,192,553
Shareholder equity	$	13,063,066	$	13,902,125

State	Minimum Loan	Maximum Loan	Maximum Fee	Maximum Term	Extension/Rollover Permitted
Colorado	No minimum	$500	20% origination on first $300; 7.5% thereafter;	40 days	Yes
			45% interest and a monthly maintenance fee 1	Minimum of 6 months	Yes
Iowa	No minimum	$500	$5+10% of first $100 10% thereafter 2	31 days	No
Kansas	No minimum	$500	$15 per $100	30 days	Not prohibited
Montana3	$50	$300	25%	31 days	No
Nebraska	No minimum	$500	15% 2 per $100	31 days	No
North Dakota	No minimum	$600	20%	60 days	Yes
South Dakota	No minimum	$500	No limit	No limit	Yes
Utah	No minimum	No limit	No limit	84 days	Yes
Wisconsin	No minimum	No limit	No limit	No limit	Yes
Wyoming	No minimum	No limit	20%	30 days	No

	Series A Convertible Preferred Stock				Common Stock					Additional Paid-In			Retained			Shareholders’
	Shares		Amount		Shares			Amount		Capital			Deficit			Equity
BALANCE - December 31, 2008		10,000,000	$	100,000		7,598,354		$	-	$	18,478,337		$	(3,347,894	)	$	15,230,443

Warrant exercise February 2009 at a per share exercise price of $0.01		-		-		397,653			-		-			-			-
Dividends		-		-		-			-		-			(2,100,000	)		(2,100,000	)
Net income		-		-		-			-		-			771,682			771,682
BALANCE - December 31, 2009		10,000,000		100,000		7,996,007			-		18,478,337			(4,676,212	)		13,902,125

Shares retired						(550,000	)		-		(256,560	)		168,560			(88,000	)
Dividends		-		-		-			-		-			(2,100,000	)		(2,100,000	)
Net income		-		-		-			-		-			1,348,941			1,348,941
BALANCE - December 31, 2010		10,000,000	$	100,000		7,446,007		$	-	$	18,221,777		$	(5,258,711	)	$	13,063,066

	Year Ended December 31, 2009
Property and equipment	$	140,000
Intangible assets		833,000
Goodwill		1,205,000
	$	2,178,000

	Year Ended December 31, 2009
Pro forma revenue	$	18,530,000
Pro forma net income	$	785,000
Pro forma net loss per common share – basic and diluted	$	(0.17	)

	For the Year Ended December 31, 2009							For the Year Ended December 31, 2008
	Payday		Cricket Wireless			Total		Payday			Cricket Wireless		Total

Revenues from continuing operations	$	11,756,714	$	6,552,887		$	18,309,601	$	11,506,178		$	1,368,639	$	12,874,817
Depreciation and amortization from continuing operations	$	285,364	$	690,092		$	975,456	$	513,237		$	72,398	$	585,635
Interest expense	$	-	$	348,388		$	348,388	$	-		$	79,425	$	79,425
Income tax expense	$	882,000	$	(412,000	)	$	470,000	$	244,000		$	28,000	$	272,000
Income (loss) from continuing operations	$	1,443,094	$	(671,412	)	$	771,682	$	605,452		$	227,906	$	833,358
Loss from discontinued operations	$	-	$	-		$	-	$	(349,546	)	$	-	$	(349,546	)
Gain on disposal of discontinued operations	$	-	$	-		$	-	$	120,873		$	-	$	120,873
Total segment assets	$	15,263,935	$	5,830,743		$	21,094,678	$	17,760,154		$	3,452,485	$	21,212,639
Expenditures for segmented assets	$	88,650	$	2,582,178		$	2,670,828	$	2,116,287		$	3,035,000	$	5,151,287

	For the Year Ended December 31, 2010							For the Year Ended December 31, 2009
	Payday		Cricket Wireless			Total		Payday		Cricket Wireless			Total

Revenues	$	11,753,254	$	6,225,193		$	17,978,447	$	11,756,714	$	6,552,887		$	18,309,601
Depreciation and amortization	$	183,186	$	632,397		$	815,583	$	285,364	$	690,092		$	975,456
Interest expense	$	144	$	405,105		$	405,249	$	-	$	348,388		$	348,388
Income tax expense (benefit)	$	1,009,000	$	(257,000	)	$	752,000	$	882,000	$	(412,000	)	$	470,000
Net Income	$	1,745,791	$	(396,850	)	$	1,348,941	$	1,443,094	$	(671,412	)	$	771,682
Total segment assets	$	15,481,283	$	5,289,599		$	20,770,882	$	15,263,935	$	5,830,743		$	21,094,678
Expenditures for segmented assets	$	101,991	$	51,973		$	153,964	$	88,650	$	2,582,178		$	2,670,828

	For the Year Ended December 31,
	2010		2009
Furniture and equipment	$	938,535	$	927,728
Leasehold improvements		705,909		735,234
Other		71,983		69,702
		1,716,427		1,732,664
Less accumulated depreciation		892,325		656,949

	$	824,102	$	1,075,715

Year Ending December 31,	Amount
2010		1,271,000
2011		947,000
2012		544,000
2013		328,000
2014		93,000
	$	3,183,000

Payday Division							Cricket Wireless Division
	2009 % of Revenues			2008 % of Revenues				2009 % of Revenues			2008 % of Revenues
Nebraska		27	%		30	%	Missouri		39	%		31	%
Wyoming		14	%		11	%	Nebraska		15	%		47	%
North Dakota		15	%		14	%	Texas		11	%		22	%
Iowa		12	%		*	%	Indiana		22	%
Utah		*	%		10	%
Wisconsin		*	%		10	%

	2008
Revenue	$	1,586,220
Costs and expenses		1,935,766
Loss from discontinued operations	$	(349,546	)

Payday Division							Cricket Wireless Division
	2010 % of Revenues			2009 % of Revenues				2010 % of Revenues			2009 % of Revenues
Nebraska		28	%		27	%	Missouri		31	%		39	%
Wyoming		14	%		14	%	Nebraska		16	%		15	%
North Dakota		16	%		15	%	Texas		12	%		11	%
Iowa		12	%		12	%	Indiana		28	%		22	%

	·	increase the frequency of our Board of Directors and Audit Committee meetings to more actively engage those bodies in the oversight of our internal controls and the review of complex or unusual accounting transactions;
	·	~~provide a mechanism for the submission of anonymous reports, relating to accounting or audit irregularities, directly to our Audit Committee chair and legal counsel;~~
	·	~~provide our internal audit consultant with direct access to our Audit Committee chairperson;~~
	·	~~include our internal audit consultant in quarterly meetings of our Audit Committee to provide a status update on the effectiveness of our internal controls;~~
	·	conduct additional training on internal controls for our management, financial reporting and operations staff, including our Chief Executive Officer’s emphasis on the importance of complying with our internal control framework;
	·	~~integrate our PQH Wireless division’s operations into our centralized payroll, expenditures, information technology, revenue and financial reporting processes;~~
	·	execute timely preparation of balance sheet account reconciliations accompanied by sufficient supporting documentation and review and approval for validity, completeness and accuracy performed by a member of accounting management;
	·	~~formalize journal entry preparation and review process to include sufficient supporting documentation and proper review and approval prior to recording;~~
	·	~~implement a structured financial reporting process that includes properly segregated duties, close calendar and schedule of required tasks and internal controls;~~
	·	improve our expenditures process to require contracts for services, expense report support and approval, approval of our Chief Executive Officer’s expense reports by the Audit Committee chairperson, invoice approval prior to vouchering and disbursement, budget-to-actual reviews each quarter with root cause analysis performed for significant variances;
	·	~~implement a formalized impairment analysis process, and process to analyze the appropriate accounting treatment for intangibles and goodwill in future acquisitions;~~
	·	~~launch an automated timekeeping system with built-in features to route timesheets for supervisor approval;~~
	·	~~design an automated system to track inventory for our PQH Wireless division;~~
	·	~~utilize our in-house tax expertise, and supplement with outsourced professionals as necessary, to prepare the income tax provisions, tax returns, and timely submission of tax payments, when required;~~
	·	~~implement a procedure that ensures timely review of the financial statements by our Chief Executive Officer and the Audit Committee prior to filing with the SEC;~~
	·	~~implement a reporting tool with our upgraded financial software application to produce the consolidated balance sheet and income statement in an automated manner; and~~
	·	~~generally improve the segregation of duties within the financial reporting, information technology, payroll and expenditures processes.~~

Name	Age	Positions
John Quandahl	4344	Chief Executive Officer, Chief Operating Officer, Interim Chief Financial Officer and Director
Rich Horner	4647	Vice President, Wyoming Financial Lenders
~~Robert W. Moberly~~Richard Miller	5763	Director (Chairman)
~~Mark Houlton~~Angel Donchev	4529	Director
~~James Mandel~~Aldus Chapin II	5347	Director
Ellery Roberts	40	Director

Name and Principal Position	Salary		Other Annual Compensation		Stock Option Awards		Total
John Quandahl (1) 2009	$	246,000	$	0	$	0	$	246,000
Pres. and Chief Operating Officer 2008	$	246,000	$	0	$	0	$	246,000
Rich Horner (2) 2009	$	136,000	$	35,558	$	0	$	171,558
Vice President of WFL 2008	$	131,682	$	0	$	0	$	131,682

Name and Principal Position		Compensation		Other Annual Compensation		Stock Option Awards		Total
Richard Miller (1)	2010	$	0	$	75,000	$	0	$	75,000
Chairman	2009	$	N/A	$	N/A	$	N/A	$	N/A
Ellery Roberts	2010	$	11,666	$	0	$	0	$	11,666
Director	2009	$	N/A	$	N/A	$	N/A	$	N/A
Angel Donchev	2010	$	0	$	0	$	0	$	0
Director	2009	$	N/A	$	N/A	$	N/A	$	N/A
Aldus Chapin II	2010	$	0	$	0	$	0	$	0
Director	2009	$	N/A	$	N/A	$	N/A	$	N/A

Name and Address	Common Shares Beneficially Owned (1)		Percentage of Common Shares (1)
James Mandel (2)		58,640		*

Robert W. Moberly (3)		11,125,000		61.8	%

Mark Houlton (4)		316,667		3.9	%

Rich Horner (5)		100,000		*

All current executive officers and directors as a group (6)		11,600,307		64.5	%

Steve Irlbeck (7)		400,000		5.0	%

WERCS (8) 400 East First Street PO Box 130 Casper, WY 82602		11,125,000		61.8	%

Christopher Larson (9) 8912 East Pinnacle Peak Road Scottsdale, AZ 85255		550,000		6.9	%

Lantern Advisers, LLC (10) 80 South Eighth Street, Suite 900 Minneapolis, MN 55402		520,963		6.5	%

Mill City Ventures, LP (11) 80 South Eighth Street, Suite 900 Minneapolis, MN 55402		800,000		10.0	%

Joseph A. Geraci, II (12) 80 South Eighth Street, Suite 900 Minneapolis, MN 55402		800,000		10.0	%

Steven Staehr (13) 7778 Barbican Ct. Las Vegas, NV 89147		966,667		12.1	%

Item		Page
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements		F-1
Consolidated Balance Sheets – December 31, ~~2009~~2010 and December 31, ~~2008~~2009		F-2
Consolidated Statements of Operations – Years ended December 31, ~~2009~~2010 and December 31, ~~2008~~2009		F-3
Consolidated Statement of Shareholders’ Equity – Years ended December 31, ~~2009~~2010 and December 31, ~~2008~~2009		F-4
Consolidated Statements of Cash Flows – Years ended December 31, ~~2009~~2010 and December 31, ~~2008~~2009		F-5
Notes to Consolidated Financial Statements		F-6

Exhibit No.		Description
2.1		Exchange Agreement with National Cash & Credit, LLC and certain members of National Cash & Credit, LLC, dated February 26, 2008 (incorporated by reference to Exhibit 2.2 to the registrant’s annual report on Form 10-K filed on April 7, 2008).

~~2.2~~		Stock Purchase Agreement with PQH Wireless, Inc., John Quandahl, Mark Houlton and Charles Payne, dated October 15, 2008 (incorporated by reference to Exhibit 2.3 to the registrant’s registration statement on Form S-1/A filed with the SEC on November 24, 2008).

~~2.3~~2.2		Asset Purchase Agreement with Dean Salem and VZ Wireless, LLC dated January 14, 2009 (incorporated by reference to Exhibit 2.4 to the registrant’s annual report on Form 10-K filed on May 4, 2009).

3.1		Amended and Restated Articles of Incorporation, filed with the Minnesota Secretary of State on May 25, 2007 (incorporated by reference to Exhibit 3.1 to the registrant’s annual report on Form 10-K filed on April 7, 2008) (see also Exhibits 3.2 and 3.4 below).

3.2		Amendment to Amended and Restated Articles of Incorporation, filed with the Minnesota Secretary of State on December 27, 2007 (incorporated by reference to Exhibit 3.2 to the registrant’s annual report on Form 10-K filed on April 7, 2008).

3.3		Articles of Merger relating to the merger of WFL Acquisition Corp. with and into Wyoming Financial Lenders, Inc. (incorporated by reference to Exhibit 3.1 to the registrant’s current report on Form 8-K filed on January 7, 2008) (see also Exhibit 2.1 above).

3.4		Certificate of Designation for Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.2 to the registrant’s current report on Form 8-K filed on January 7, 2008).

3.5		Amendment to Articles of Incorporation, filed with the Minnesota Secretary of State on March 18, 2008 (incorporated by reference to Exhibit 3.5 to the registrant’s annual report on Form 10-K filed on April 7, 2008).

3.6		Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the registrant’s current report on Form 8-K filed on June 23, 2008).

3.7		Amendment to Articles of Incorporation, filed with the Minnesota Secretary of State on July 29, 2008 (incorporated by reference to the registrant’s current report on Form 8-K filed on July 29, 2008).

~~10.1~~3.8		~~Common Stock Purchase Warrant issued~~Amendment to ~~Lantern Advisers, LLC,~~Articles of Incorporation, filed with the Minnesota Secretary of State on ~~November 29, 2007~~March 30, 2010 (incorporated by reference to ~~Exhibit 10.1 to~~ the registrant’s ~~annual~~current report on Form ~~10-K~~8-K filed on April ~~7, 2008)~~2, 2010).

~~10.2~~10.1		2008 Stock Incentive Plan (incorporated by reference to Exhibit 10.3 to the registrant’s annual report on Form 10-K filed on April 7, 2008).

~~10.3~~10.2		Term Promissory Note in principal amount of $500,000 in favor of Charles Payne (incorporated by reference to Exhibit 10.6 to the registrant’s registration statement on Form S-1/A filed with the SEC on November 24, 2008).

~~10.4~~
10.3		Term Promissory Note in principal amount of $1,000,000 in favor of John Quandahl (incorporated by reference to Exhibit 10.7 to the registrant’s registration statement on Form S-1/A filed with the SEC on November 24, 2008).


~~10.5~~10.4		Term Promissory Note in principal amount of $1,000,000 in favor of Mark Houlton (incorporated by reference to Exhibit 10.8 to the registrant’s registration statement on Form S-1/A filed with the SEC on November 24, 2008).

~~10.6~~10.5		Form of Security Agreement with Charles Payne, John Quandahl and Mark Houlton (incorporated by reference to Exhibit 10.9 to the registrant’s registration statement on Form S-1/A filed with the SEC on November 24, 2008).

~~10.7~~		Business Loan Agreement with Banco Popular, NA, dated as of October 20, 2008 (incorporated by reference to Exhibit 10.8 to the registrant’s annual report on Form 10-K filed on May 4, 2009) (see also Exhibit 10.10 below).

~~10.8~~		Redemption Agreement with Christopher Larson and National Cash & Credit, LLC, dated December 31, 2008 (incorporated by reference to Exhibit 10.9 to the registrant’s annual report on Form 10-K filed on May 4, 2009).

~~10.9~~10.6		Settlement Agreement with Christopher D. Larson, National Cash & Credit, LLC, Wyoming Financial Lenders, Inc., WERCS, Inc. and John Quandahl dated as of May 1, 2009 (incorporated by reference to Exhibit 10.10 to the registrant’s annual report on Form 10-K filed on May 4, 2009).

~~10.10~~10.7		Business Loan Agreement between Wyoming Financial Lenders, Inc. and Banco Popular North America, dated effective as of October 30, 2009 (amending and restating the Business Loan Agreement dated October 20, 2008, and included as Exhibit 10.7 above) (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K filed on January 19, 2010).

~~10.11~~10.8		Promissory Note of Wyoming Financial Lenders, Inc. to Banco Popular North America, dated effective as of October 30, 2009 (incorporated by reference to Exhibit 10.2 to the registrant’s current report on Form 8-K filed on January 19, 2010).

~~10.12~~10.9		Commercial Pledge Agreement between Western Capital Resources, Inc. and Banco Popular North America, dated effective as of October 30, 2009 (incorporated by reference to Exhibit 10.3 to the registrant’s current report on Form 8-K filed on January 19, 2010).

10.10		Business Loan Agreement between Wyoming Financial Lenders, Inc. and WERCS, dated as of April 2, 2010 (incorporated by reference to Exhibit 10.5 to the registrant’s quarterly report on Form 10-Q filed on May 13, 2010).

10.11		Promissory Note of Wyoming Financial Lenders, Inc. to WERCS, dated as of April 2, 2010 (incorporated by reference to Exhibit 10.6 to the registrant’s quarterly report on Form 10-Q filed on May 13, 2010).

10.12		Commercial Pledge Agreement between Western Capital Resources, Inc. and WERCS, dated as of April 2, 2010 (incorporated by reference to Exhibit 10.7 to the registrant’s quarterly report on Form 10-Q filed on May 13, 2010).

10.13		Commercial Security Agreement between Wyoming Financial Lenders, Inc. and WERCS, dated as of April 2, 2010 (incorporated by reference to Exhibit 10.8 to the registrant’s quarterly report on Form 10-Q filed on May 13, 2010).

10.14		Employment Agreement with John Quandahl dated as of March 31, 2010 (incorporated by reference to Exhibit 10.4 to the registrant’s quarterly report on Form 10-Q filed on May 13, 2010).

10.15		Management and Advisory Agreement with Blackstreet Capital Management, LLC, dated as of May 10, 2010 (incorporated by reference to Exhibit 10.4 to the registrant’s quarterly report on Form 10-Q filed on August 13, 2010).

10.16		Consulting Agreement with Ric Miller Consulting, Inc. dated as of April 1, 2010 (filed herewith).

21		List of Subsidiaries (filed herewith).

31.1		Certification pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith).

31.2		Certification pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith).

32		Certification pursuant to Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

	Western Capital Resources, Inc.

~~/s/~~	/s/ John Quandahl	3/~~30/10~~25/11
	John Quandahl

	Chief Executive Officer and
	Interim Chief Financial Officer

/s/ John Quandahl	3/~~30/10~~25/11	/s/ ~~Robert W. Moberly~~Richard Miller	3/~~30/10~~25/11
John Quandahl, Director,		Richard Miller, Director
Chief Executive Officer, Chief Operating Officer and		(Chairman)
Interim Chief Financial Officer
(principal executive officer and principal financial ~~officer)~~		~~Robert W. Moberly,~~
officer)		/s/ Angel Donchev	3/25/11
		Angel Donchev, Director ~~(Chairman)~~

/s/ Steve Irlbeck	3/25/11	/s/ Aldus Chapin II	3/25/11
Steve Irlbeck, Senior Director of Accounting		Aldus Chapin II, Director

		/s/ ~~Mark Houlton~~Ellery Roberts	3/~~30/10~~25/11
		~~Mark Hou lton, Director~~
		~~/s/ James Mandel~~	~~3/30/10~~
		~~James Mandel,~~Ellery Roberts, Director