SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the quarterly period ended September 30, ~~2015~~2016

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

Commission File Number: 000-52015

Western Capital Resources, Inc.

(Exact Name of Registrant as Specified in its Charter)

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

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

(Address of Principal Executive Offices) (Zip Code)

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

N/A

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

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

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

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

Large accelerated filer ¨o	Accelerated filer ¨o

Non-accelerated filer ¨o	Smaller reporting company þ

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

Yes¨o Noþ

APPLICABLE ONLY TO CORPORATE ISSUERS

As of November ~~13, 2015,~~14, 2016, the registrant had outstanding ~~9,497,689~~9,497,860 shares of common stock, no$0.001 par value per share.

Western Capital Resources, Inc.

Index

		Page
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements		3

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		2116

Item 4. Controls and Procedures		3225

PART II. OTHER INFORMATION
Item 6. Exhibits		26

~~Item 6. Exhibits~~SIGNATURES		34

~~SIGNATURES~~		3527

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

WESTERN CAPITAL RESOURCES, INC. AND SUBSIDIARIES

CONTENTS

	Page

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets	4

Condensed Consolidated Statements of Income	5

Condensed Consolidated Statements of Cash Flows	6

Notes to Condensed Consolidated Financial Statements	7

WESTERN CAPITAL RESOURCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

	September 30, 2015 (Unaudited)			December 31, 2014			September 30, 2016		December 31, 2015
ASSETS

CURRENT ASSETS
Cash	$	3,548,728		$	4,273,350		$	7,895,897	$	7,847,669
Loans receivable (less allowance for losses of $1,301,000 and $1,219,000, respectively)		5,097,418			5,331,266
Accounts receivable (less allowance for losses of $266,000 and $59,405, respectively)		2,155,177			1,135,127
Loans receivable (less allowance for losses of $993,000 and $1,177,000, respectively)								4,411,062		4,884,438
Accounts receivable (less allowance for losses of $166,000 and $272,000, respectively)								2,260,911		1,963,192
Inventory		7,583,661			2,340,824			8,856,267		7,617,850
Prepaid expenses and other		2,756,249			1,435,918			2,805,092		2,589,749
Deferred income taxes		600,000			644,000
TOTAL CURRENT ASSETS		21,741,233			15,160,485			26,229,229		24,902,898

PROPERTY AND EQUIPMENT, net		8,518,038			1,197,710			9,314,175		8,561,321

GOODWILL		13,788,612			12,956,868			13,355,592		13,355,591

INTANGIBLE ASSETS, net		8,126,180			7,248,793			7,677,512		8,018,616

OTHER		439,402			198,408			877,494		783,907

TOTAL ASSETS	$	52,613,465		$	36,762,264		$	57,454,002	$	55,622,333

LIABILITIES AND EQUITY

CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	9,381,954		$	6,025,920
Accounts payable							$	3,836,177	$	4,577,118
Accrued expenses and other liabilities								5,486,943		6,232,267
Income taxes payable		923,827			755,615			151,869		1,135,031
Current portion notes payable		4,900,008			3,500,000
Note payable – short-term								84,009		-
Current portion long-term debt								1,100,000		4,900,008
Current portion capital lease obligations		27,128			42,240			60,464		23,860
Deferred revenue and other		960,604			638,068			1,226,142		1,796,338
TOTAL CURRENT LIABILITIES		16,193,521			10,961,843			11,945,604		18,664,622

LONG-TERM LIABILITIES
Notes payable, net of current portion		3,571,454			1,625,000			6,776,829		3,096,452
Capital lease obligations, net of current portion		48,922			31,481			106,167		33,347
Deferred income taxes		4,268,000			3,939,000			4,521,000		3,889,000
Other		93,262			114,514			120,539		80,403
TOTAL LONG-TERM LIABILITIES		7,981,638			5,709,995			11,524,535		7,099,202

TOTAL LIABILITIES		24,175,159			16,671,838			23,470,139		25,763,824

COMMITMENTS AND CONTINGENCIES (Note 16)
COMMITMENTS AND CONTINGENCIES (Note 13)

EQUITY

WESTERN SHAREHOLDERS’ EQUITY
Common stock, no par value, 12,500,000 shares authorized, 9,497,689 and 5,997,588 issued and outstanding.		-			-
Common stock, $0.001 and no par value, 12,500,000 shares authorized, 9,497,860 and 9,497,534 issued and outstanding. (Note 8)								950		-
Additional paid-in capital		28,903,681			22,703,745			28,982,705		28,934,392
Accumulated deficit		(486,233	)		(2,621,692	)
Retained earnings								4,959,387		898,038
TOTAL WESTERN SHAREHOLDERS’ EQUITY		28,417,448			20,082,053			33,943,042		29,832,430

NONCONTROLLING INTERESTS		20,858			8,373			40,821		26,079

TOTAL EQUITY		28,438,306			20,090,426			33,983,863		29,858,509

TOTAL LIABILITIES AND EQUITY	$	52,613,465		$	36,762,264		$	57,454,002	$	55,622,333

See notes to condensed consolidated financial ~~statements.~~statements

WESTERN CAPITAL RESOURCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

	Three months ended						Nine months ended						Three months ended						Nine months ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014			September 30, 2016			September 30, 2015			September 30, 2016			September 30, 2015
REVENUES
Sales and associated fees	$	13,403,791		$	5,710,322		$	27,039,059		$	15,680,700		$	13,066,705		$	13,403,791		$	52,146,348		$	27,039,059
Financing fees and interest		2,865,842			2,919,822			8,007,438			8,229,216			2,562,569			2,865,842			7,387,757			8,007,438
Royalty and franchise fees, net		2,803,405			-			7,883,214			-			3,056,046			2,803,405			8,446,416			7,883,214
Other revenue		2,878,430			928,600			6,259,541			2,901,385			3,840,147			2,878,430			10,152,658			6,259,541
		21,951,468			9,558,744			49,189,252			26,811,301
Total Revenues														22,525,467			21,951,468			78,133,179			49,189,252

COST OF REVENUES
Cost of sales		7,324,815			2,982,059			15,329,353			8,841,356			6,544,212			7,324,815			26,360,046			15,329,353
Provisions for loans receivable losses		572,959			514,763			1,351,427			1,268,330			444,689			572,959			1,176,174			1,351,427
Other		200,303			-			730,143			-			662,410			200,303			1,819,491			730,143
Total Cost of Revenues		8,098,077			3,496,822			17,410,923			10,109,686			7,651,311			8,098,077			29,355,711			17,410,923

GROSS PROFIT		13,853,391			6,061,922			31,778,329			16,701,615			14,874,156			13,853,391			48,777,468			31,778,329

OPERATING EXPENSES
Salaries, wages and benefits		6,236,073			2,706,386			14,733,576			7,702,265			7,040,838			6,236,073			20,467,591			14,733,576
Occupancy		2,016,406			1,122,669			4,729,718			3,409,951			2,081,592			2,016,406			5,949,389			4,729,718
Selling, marketing and development		1,142,751			91,164			1,513,578			260,831
Advertising, marketing and development														1,076,102			1,142,751			5,293,633			1,513,578
Depreciation		234,122			87,150			444,814			258,644			309,584			234,122			881,333			444,814
Amortization		141,783			28,373			359,133			82,962			140,647			141,783			422,510			359,133
Other		2,280,809			1,053,371			5,754,519			2,972,548			2,795,326			2,280,809			8,049,581			5,754,519
		12,051,944			5,089,113			27,535,338			14,687,201
Total Operating Expense														13,444,089			12,051,944			41,064,037			27,535,338

OPERATING INCOME		1,801,447			972,809			4,242,991			2,014,414			1,430,067			1,801,447			7,713,431			4,242,991

OTHER INCOME (EXPENSES):
Interest income		995			-			3,065			-			955			995			2,964			3,065
Interest expense		(198,048	)		(60,493	)		(401,299	)		(191,823	)		(93,665	)		(198,048	)		(413,390	)		(401,299	)
		(197,053	)		(60,493	)		(398,234	)		(191,823	)
Total Other Income (Expenses)														(92,710	)		(197,053	)		(410,426	)		(398,234	)

INCOME BEFORE INCOME TAXES		1,604,394			912,316			3,844,757			1,822,591			1,337,357			1,604,394			7,303,005			3,844,757

INCOME TAX EXPENSE		724,293			347,000			1,696,813			686,000			551,000			724,293			2,752,000			1,696,813

NET INCOME		880,101			565,316			2,147,944			1,136,591			786,357			880,101			4,551,005			2,147,944

Less net income attributable to noncontrolling interests		(6,498	)		-			(12,485	)		-			(6,004	)		(6,498	)		(14,742	)		(12,485	)

NET INCOME ATTRIBUTABLE TO WESTERN SHAREHOLDERS	$	873,603		$	565,316		$	2,135,459		$	1,136,591
NET INCOME ATTRIBUTABLE TO WESTERN COMMON SHAREHOLDERS													$	780,353		$	873,603		$	4,536,263		$	2,135,459

EARNINGS PER SHARE ATTRIBUTABLE TO WESTERN COMMON SHAREHOLDERS
Basic and diluted	$	0.09		$	0.19		$	0.30		$	0.38		$	0.08		$	0.09		$	0.48		$	0.30

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic and diluted		9,497,689			3,010,765			7,177,176			3,010,922			9,497,608			9,497,689			9,497,559			7,177,176

See notes to condensed consolidated financial statements.

WESTERN CAPITAL RESOURCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ~~(unaudited)~~(Unaudited)

	Nine Months Ended						Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2016			September 30, 2015
OPERATING ACTIVITIES
Net Income	$	2,147,944		$	1,136,591		$	4,551,005		$	2,147,944
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		444,814			258,644			881,333			444,814
Amortization		359,133			82,962			422,510			359,133
Stock based compensation		76,538			-
Share based compensation								49,263			76,538
Deferred income taxes		390,000			275,000			632,000			390,000
Loss on disposal of property and equipment								8,014			-
Changes in operating assets and liabilities:
Loans receivable		233,848			344,103			473,376			233,848
Accounts receivable		(492,684	)		-			(297,719	)		(492,684	)
Inventory		(1,645,395	)		(445,191	)		(1,238,417	)		(1,645,395	)
Prepaid expenses and other assets		(612,532	)		345,883			(224,921	)		(612,532	)
Accounts payable and accrued liabilities		(468,720	)		327,633			(2,469,429	)		(468,720	)
Deferred revenue and other current liabilities		(137,896	)		-			(570,196	)		(137,896	)
Accrued liabilities and other		(21,252	)		(26,401	)		40,136			(21,252	)
Net cash provided by operating activities		273,798			2,299,224			2,256,955			273,798

INVESTING ACTIVITIES
Purchase of property and equipment		(507,075	)		(211,106	)
Purchase of intangible assets		-			(250,000	)
Acquisition of stores		(2,608,500	)		-
Cash acquired through acquisition		2,470,930			-
Purchases of property and equipment								(1,244,715	)		(507,075	)
Acquisition of stores, net of cash acquired								(588,241	)		(2,608,500	)
Cash received through acquisitions								-			2,470,930
Proceeds from sale of property and equipment								109,350			-
Net cash used by investing activities		(644,645	)		(461,106	)		(1,723,606	)		(644,645	)

FINANCING ACTIVITIES
Payments on notes payable – short-term		(120,000	)		-			-			(120,000	)
Advances on line of credit, net								1,538,708			-
Advances on note payable – long-term								418,301			-
Payments on notes payable – long-term, net		(191,668	)		(750,000	)		(2,076,640	)		(191,668	)
Common stock redemption		-			(388	)
Payments on capital leases		(42,107	)		-
Net cash used by financing activities		(353,775	)		(750,388	)
Advances (payments) on capital leases, net								109,424			(42,107	)
Dividend paid								(474,914	)		-
Net cash used in financing activities								(485,121	)		(353,775	)

NET (DECREASE) INCREASE IN CASH		(724,622	)		1,087,730
NET INCREASE (DECREASE) IN CASH								48,228			(724,622	)

CASH
Beginning of period		4,273,350			1,983,835			7,847,669			4,273,350
End of period	$	3,548,728		$	3,071,565		$	7,895,897		$	3,548,728

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Income taxes paid	$	1,759,171		$	164,838		$	3,103,162		$	1,759,171
Interest paid	$	392,751		$	200,124		$	550,231		$	392,751

Noncash investing and financing activities:
Net assets acquired in JPPA/RAI/JPRE acquisition (see Note 13)	$	6,123,398		$	-
Net assets acquired in JPPA/RAI/JPRE acquisition							$	-		$	6,123,398
Deposit applied to purchase of intangibles	$	50,000		$	-		$	-		$	50,000
Long-term debt proceeds used to pay off debt and interest							$	3,021,699		$	-
Long-term debt proceeds used to pay prepaid financing costs							$	60,000		$	-

See notes to condensed consolidated financial statements.

WESTERN CAPITAL RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Basis of Presentation, Nature of Business and Summary of Significant Accounting Policies –

Basis of Presentation

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

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the ~~three-~~three and ~~nine-month periods~~nine month period ended September 30, ~~2015~~2016 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2015.~~2016.

For further information, refer to the Condensed Consolidated Financial Statements and footnotes thereto included in our Form 10-K for the year ended December 31, ~~2014.~~2015. The condensed consolidated balance sheet at December 31, ~~2014,~~2015, has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by GAAP.

Nature of Business

References in these financial statement notes to the “Company” or “we” refer to Western Capital Resources, Inc. and its subsidiaries. References to specific companies within our enterprise, such as “PQH,” “WFL,” “EPI”, “AGI,”, “JPPA”, “RAI” or “JPRE” are references only to those companies. Western Capital Resources, Inc. (“WCR”) is a ~~holding~~parent company owning operating subsidiaries, with ~~the percentages~~percentage owned ~~by WCR of each subsidiary~~ shown parenthetically, as summarized ~~below.~~below:

Franchise

AlphaGraphics, Inc. ~~(AGI)~~(“AGI”) (99.2%) – franchisor of ~~252~~258 domestic and 2625 international AlphaGraphics Business Centers ~~as of September 30, 2015, specializing~~which specialize in the planning, production and management of visual communications for businesses and individuals throughout the world.

Cellular Retail

PQH Wireless, Inc. and subsidiaries ~~(PQH)~~(“PQH”) (100%) – owns and operates ~~102~~126 cellular retail stores ~~as of September 30, 2015,~~ as an exclusive dealer of the Cricket ~~brand in 15 states~~—~~Arizona, Colorado, Idaho, Illinois, Indiana, Iowa, Kansas, Missouri, Nebraska, Ohio, Oklahoma, Oregon, Texas, Washington and Wisconsin.~~brand.

Direct to Consumer

J & P Park Acquisitions, Inc. ~~(JPPA)~~(“JPPA”) (100%) – ~~a multi-channel~~Acquired July 1, 2015) – an online and direct marketing distribution retailer of live plants, seeds, holiday gifts and garden accessories selling its products under Park Seed, Jackson & Perkins, and Wayside Gardens brand names as well as a wholesaler under the Park Wholesale brand. ~~JPPA sells over the internet and through direct mail catalogs.~~

Restorers Acquisition, Inc. ~~(RAI)~~(“RAI”) (100%) – ~~operates primarily as a retail seller~~Acquired July 1, 2015) – an online and direct marketing distribution retailer of home improvement and restoration ~~products. The company sells over the internet through the domain namewww.Vandykes.com~~ ~~and through direct mail catalogs.~~products operating under Van Dyke’s Restorers.

J & P Real Estate, LLC ~~(JPRE)~~(“JPRE”) (100%) – Acquired July 1, 2015) – owns real estate utilized as JPPA’s distribution and warehouse facility and the corporate offices of JPPA and RAI.

Consumer Finance

Wyoming Financial Lenders, Inc. ~~(WFL)~~(“WFL”) (100%) – owns and operates 5045 “payday” stores ~~as of September 30, 2015,~~ in ~~nine~~eight states (Colorado, Iowa, Kansas, Nebraska, North Dakota, South Dakota, ~~Utah,~~ Wisconsin and Wyoming) providing sub-prime short-term uncollateralized non-recourse “cash advance” or “payday” loans typically ranging from $100 to $500 with a maturity of generally two to four weeks, ~~“installment”~~sub-prime short-term uncollateralized non-recourse installment loans typically ranging from $300 to $800 with a maturity of six months, check cashing and other money services to individuals.

Express Pawn, Inc. ~~(EPI)~~(“EPI”) (100%) – owns and operates three retail pawn stores ~~as of September 30, 2015,~~ in Nebraska and Iowa providing collateralized non-recourse pawn loans and retail sales of merchandise obtained from forfeited pawn loans or purchased from customers.

References in these financial statement notes to “Company” or “we” refer to Western Capital Resources, Inc. and its subsidiaries. References to specific companies within our enterprise, such “AGI,” “PQH,” “JPPA,” “RAI,” “JPRE,” “WFL” or “EPI” are references only to those companies.

Basis of Consolidation

The consolidated financial statements include the accounts of WCR, its wholly owned subsidiaries and other entities in which the Company owns a controlling financial interest. For financial interests in which the Company owns a controlling financial interest, the Company applies the ~~guidance~~provisions of ASC 810 applicable to reporting the equity and net income or loss attributable to noncontrolling interests. All significant intercompany balances and transactions of the Company have been eliminated in consolidation.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect certain reported amounts and disclosures in the condensed consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. Significant management estimates relate to the notes and loans receivable allowance, carrying value and impairment of long-lived goodwill and intangible assets, inventory valuation and obsolescence, estimated useful lives of property and equipment, gift certificate ~~liabilities~~and customer credits liability and deferred taxes and tax uncertainties.

~~Receivables and Loss Allowance~~

~~Direct to Consumer~~Reclassifications

Receivables are recorded when billed or accrued and represent claims against third parties that will be settled in cash. The carrying value of receivables, net of the allowance for doubtful accounts, represents their estimated net realizable value. The allowance for doubtful accounts is estimated based on historical collection trends, type of customer, the age of outstanding receivables and existing economic conditions. If events or changes in circumstances indicate that specific receivable balances may be impaired, further consideration is given to the collectability of those balances and the allowance is adjusted accordingly. Past due receivable balances are written-off when internal collection efforts have been unsuccessful in collecting the amount due.

~~Inventory~~

~~Direct to Consumer~~

~~Inventory is valued at the lower of cost or market using the weighted-average method of determining cost.~~

~~Property and Equipment~~

~~Direct to Consumer~~

~~Property and equipment are recorded at cost less accumulated depreciation. Depreciation is provided on the straight-line method over the estimated useful lives of the related assets as follows:~~

Ÿ	~~Computer equipment and software~~	~~3 – 10 years~~
Ÿ	~~Warehouse improvements and equipment~~	~~3 – 15 years~~
Ÿ	~~Building~~	~~39 years~~

~~The cost of maintenance and repairs is charged to operations as incurred while renewals and betterments are capitalized.~~

The Company capitalizes certain internal costs, including payroll costs, incurred in connection with the development of software for internal use. These costs are capitalized beginning when the Company has entered the application development stage. The capitalization of these costs ceases when the software is substantially complete and ready for its intended use. Costs incurred for enhancements that are expected to result in additional features or functionality are capitalized and expensed over the estimated useful life of the enhancements.

~~Deferred Revenue~~

~~Direct to Consumer~~

~~Sales billed or cash received in advance of actual delivery are deferred and recorded as income in the period in which the related deliveries are made.~~

~~Merchandise Credits and Gift Card Liabilities~~

~~Direct to Consumer~~

The Company maintains a liability for unredeemed gift cards, gift certificates and merchandise credits until the earlier of redemption, escheatment or a maximum of two years. The Company has concluded that the likelihood of these liabilities being redeemed beyond two years from the date of issuance is remote.

~~Advertising~~

~~Direct to Consumer~~

The Company expenses advertising costs as they are incurred, except for direct-response advertising, which is capitalized and amortized over its expected period of future benefits, not to exceed six months. Direct-response advertising consists primarily of catalog book production, printing, and postage costs.

~~Shipping and Handling Costs~~

~~Direct to Consumer~~

~~The Company includes shipping and handling fees billed to customers in net sales. Shipping and handling costs are expensed as incurred and included in cost of sales.~~

~~Stock-based Compensation~~

The Company accounts for its employee stock-based compensation plans using the fair value method. The fair value method requires the Company to estimate the grant-date fair value of its stock-based awards and amortize this fair value to compensation expense over the requisite service period or vesting term.

The Company uses the Black-Scholes option-pricing model to estimate the fair value of the Company’s stock option awards. The determination of the fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables. These variables include the expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, the risk-free interest rate and expected dividends. Due to the inherent limitations of option-valuation models, future events that are unpredictable and the estimation process utilized in determining the valuation of the stock-based awards, the ultimate value realized by award holders may vary significantly from the amounts expensed in the Company’s financial statements.

Stock-based compensation expense is recognized net of estimated forfeitures such that expense is recognized only for those stock-based awards that are expected to vest. A forfeiture rate is estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimate.

~~Net Income Per Common Share~~

Basic net income per common share is computed by dividing the income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share gives effect to all dilutive potential common shares outstanding during the period, including stock options, using the treasury stock method. Options to purchase 65,000 shares granted under the 2015 Stock Incentive Plan effective February 6, 2015 (see Note 18) were outstanding at September 30, 2015. These options have a strike price in excess of the market price as of September 30, 2015, were antidilutive and therefore not included in the computation of diluted earnings per share. Thus, there were no dilutive common shares as of September 30, 2015 and 2014.

~~Segment Reporting~~

The Company has grouped its operations into five segments – Franchise, Cellular Retail, Direct to Consumer, Consumer Finance, and Corporate. The Franchise segment specializes in the planning, production and management of visual communications for businesses and individuals. The Cellular Retail segment is an authorized Cricket premier dealer selling cellular phones and accessories, providing ancillary services and accepting service payments from customers. The Direct to Consumer segment consists primarily of online and mail order catalog retailers’ sales of product offerings including seeds, live goods, holiday gifts, garden accessories and home improvement and restoration products. The Consumer Finance segment provides financial and ancillary services and also sells used merchandise at retail pawn stores. The Corporate segment consists of Company activities related to acquisitions and subsequent management of acquired businesses.

~~Reclassifications~~

Certain ~~Statement~~Statements of Income reclassifications have been made in the presentation of our prior financial statements and accompanying notes ~~including pro forma presentation,~~ to conform to the presentation as of and for the three and nine months ended September 30, ~~2015.~~2016.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under US GAAP. This standard, including subsequent updates, is effective for annual and interim periods beginning after December 15, 2017. The Company is currently assessing the potential effects on our financial condition, results of operations and consolidated financial statements.

In November 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”). The standard requires that deferred tax assets and liabilities be classified as noncurrent on the balance sheet rather than being separated into current and noncurrent. ASU 2015-17 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is permitted and the standard may be applied either retrospectively or on a prospective basis to all deferred tax assets and liabilities. The Company early adopted ASU 2015-17 during our first quarter of fiscal year 2016 on a retrospective basis. Accordingly, we reclassified the current deferred taxes to noncurrent on our December 31, 2015 Condensed Consolidated Balance Sheet, which decreased current deferred tax assets by $0.56 million and decreased noncurrent deferred tax liabilities by $0.56 million.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The standard requires recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted and the standard is to be applied using a modified retrospectively approach. The Company is currently evaluating the impact that ASU 2016-02 will have on our financial condition, results of operations and consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). The standard requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years and the standard is to be applied using a modified retrospectively approach. The Company is currently evaluating the impact that ASU 2016-13 will have on our financial condition, results of operations and consolidated financial statements.

No ~~new~~other accounting ~~pronouncement~~pronouncements issued or effective during the fiscal quarter ~~has~~have had or isare expected to have a material impact on our condensed consolidated financial statements.

Risks Inherent in the Operating Environment –

Regulatory

~~Consumer Finance~~

The Company’s Consumer Finance segment activities are highly regulated under numerous local, state, and federal laws, regulations and ~~regulations,~~rules, which are subject to change. New laws, regulations or ~~regulations~~rules could be enacted or issued, interpretations of existing laws, regulations or ~~regulations~~rules may change and enforcement action by regulatory agencies may intensify. Over the past several years, consumer advocacy groups and certain media reports have advocated governmental and regulatory action to prohibit or severely restrict sub-prime lending activities of the kind conducted by ~~WFL and EPI.~~the Company. The federal Consumer Financial Protection Bureau has indicated that it will use its authority to further regulate the payday ~~lending industry.~~industry and has been actively enforcing existing regulations within its jurisdiction.

Any adverse change in present local, state, orand federal laws or regulations that govern or otherwise affect lending could result in the Consumer Finance segment’s curtailment or cessation of operations in certain or all jurisdictions or locations. Furthermore, any ~~actual or perceived~~ failure to comply with any applicable local, state or federal laws or regulations could result in fines, litigation, closure of one or more store locations or negative publicity. Any such ~~outcome~~change or failure would have a corresponding impact on the Company’s and segment’s results of operations and financial condition, primarily through a decrease in revenues, non-cash charges from the write-down of the carrying value of goodwill and intangible assets resulting from the cessation or curtailment of operations, and increased legal expenditures or fines, and could also negatively affect the Company’s general business prospects ~~if the Company is unable~~due to ~~effectively replace such revenues in a timely and efficient manner~~lost or decreased operating income or if negative publicity effects its ability to obtain additional financing as needed.

In addition, the passage of federal or state laws and regulations or changes in interpretations of them could, at any point, essentially prohibit ~~WFL or EPI~~the Consumer Finance segment from conducting its lending business in its current form. Any such legal or regulatory change would certainly have a material and adverse effect on the Company, its operating results, ~~and its financial condition and prospects.~~

~~Franchise~~

In August 2015, the National Labor Relations Board (NLRB) changed its long-standing joint-employer standard in a widely discussed decision, Browning Ferris Industries of California, Inc. In that decision, the NLRB asserted that two or more entities are joint employers of a single workforce if they share or co-determine, even indirectly, those matters governing the essential terms and conditions of employment. In terms of franchise business models, the NLRB has to date refused to dismiss various labor and wage-violation complaints alleging that McDonalds is a joint employer together with its franchisees. In the past, courts determining whether a franchisor and franchisee are joint employers of a single workforce have generally examined whether the franchisor exercises direct (as opposed to indirect) and significant control over the franchisees' employment-related decisions-i.e., the hiring, firing or discipline of franchisee employees, payment of their wages, or setting of their work schedules. It is presently uncertain what the ultimate outcome will be of attempts by plaintiffs and regulatory authorities to impose employment-related liabilities upon franchisors under the theory that they are joint employers of their franchisees' employees. Nevertheless, the extension of the Browning Ferris principles to franchise business models, and their application to our AlphaGraphics business, could have material and adverse consequences to the operating results, financial condition and prospects, and perhaps even the viability of ~~that business and our Company.~~

~~Vendor Concentration~~

~~Direct to~~the Consumer

RAI has an agreement with a third-party fulfillment provider that is in effect through January 31, 2016. The fulfillment provider receives and stores inventory, performs periodic cycle counts, picks, packs and ships customer orders. Additional services such as, order taking, processing of customer payments, personalization, customer services, and order processing are also performed by the fulfillment provider. RAI is currently in negotiations to extend the agreement.

JPPA has an agreement with a third party wholesale grower that is in effect until 2019. The grower has agreed to perform research for JPPA and maintain JPPA's research crop in exchange for a reduction in royalties to be paid to JPPA for growing JPPA's patented roses. There is an option to renew the agreement for consecutive two year terms and the agreement calls for a 24 month notice prior to termination. Finance segment.

Loans Receivable –

At September 30, ~~2015~~2016 and December 31, ~~2014,~~2015, the ~~Company’s~~Consumer Finance segment’s outstanding loans receivable aging was as follows:

September 30, 2015
September 30, 2016												September 30, 2016
	Payday			Installment			Pawn & Title		Total				Payday			Installment			Pawn & Title		Total
Current	$	4,234,640		$	263,313		$	326,968	$	4,824,921			$	3,645,540		$	248,820		$	282,212	$	4,176,572
1-30		369,269			43,826			-		413,095				290,044			46,460			-		336,504
31-60		278,035			21,511			-		299,546				249,995			23,836			-		273,831
61-90		250,381			13,988			-		264,369				175,254			15,287			-		190,541
91-120		249,758			5,757			-		255,515				150,320			10,087			-		160,407
121-150		168,596			1,815			-		170,411				131,000			3,684			-		134,684
151-180		170,475			86			-		170,561				129,724			1,799			-		131,523
		5,721,154			350,296			326,968		6,398,418				4,771,877			349,973			282,212		5,404,062
Less Allowance		(1,204,000	)		(97,000	)		-		(1,301,000	)			(920,000	)		(73,000	)		-		(993,000	)
	$	4,517,154		$	253,296		$	326,968	$	5,097,418			$	3,851,877		$	276,973		$	282,212	$	4,411,062

December 31, 2014
December 31, 2015												December 31, 2015
	Payday			Installment			Pawn & Title		Total				Payday			Installment			Pawn & Title		Total
Current	$	4,387,393		$	321,634		$	372,805	$	5,081,832			$	4,065,706		$	291,947		$	286,514	$	4,644,167
1-30		305,382			47,321			-		352,703				332,217			43,179			-		375,396
31-60		223,465			24,791			-		248,256				263,486			24,233			-		287,719
61-90		236,072			11,799			-		247,871				199,526			16,293			-		215,819
91-120		206,705			5,438			-		212,143				196,123			9,417			-		205,540
121-150		200,101			1,984			-		202,085				160,386			4,985			-		165,371
151-180		204,804			572			-		205,376				165,237			2,189			-		167,426
		5,763,922			413,539			372,805		6,550,266				5,382,681			392,243			286,514		6,061,438
Less Allowance		(1,147,000	)		(72,000	)		-		(1,219,000	)			(1,081,000	)		(96,000	)		-		(1,177,000	)
	$	4,616,922		$	341,539		$	372,805	$	5,331,266			$	4,301,681		$	296,243		$	286,514	$	4,884,438

Loans Receivable Allowance –

As a result of the ~~Company’s~~Consumer Finance segment’s collection efforts, it historically writes off approximately 43% of returned payday items. Based on days past the check return date, write-offs of payday returned items historically have tracked at the following approximate percentages: 1 to 30 days – 43%; 31 to 60 days – 65%; 61 to 90 days – 83%; 91 to 120 days – ~~88%~~89%; 121 to 150 days – 91%; and 151 ~~to 180~~+ days – 93%.

A rollforward of the ~~Company’s~~Consumer Finance segment’s loans receivable allowance is as follows:

Nine Months Ended
September 30, 2015 Year Ended
December 31, 2014
Loans receivable allowance, beginning of period $ 1,219,000 $ 1,215,000
Provision for loan losses charged to expense 1,351,427 1,817,822
Charge-offs, net (1,269,427 ) (1,813,822 )
Loans receivable allowance, end of period $ 1,301,000 $ 1,219,000
11
Nine Months Ended
September 30, 2016
Year Ended
December 31, 2015

Loans receivable allowance, beginning of period $ 1,177,000 $ 1,219,000
Provision for loan losses charged to expense 1,176,174 1,904,893
Charge-offs, net (1,360,174 ) (1,946,893 )
Loans receivable allowance, end of period $ 993,000 $ 1,177,000

5. Accounts Receivable –

A breakdown of accounts receivables by segment as of September 30, ~~2015~~2016 and December 31, ~~2014~~2015 are as follows:

September 30, 2015
September 30, 2016 September 30, 2016
Franchise Cellular
Retail Direct to
Consumer Total Franchise Cellular
Retail Direct to
Consumer Consumer
Finance Total
Accounts receivable $ 1,423,267 $ 103,738 $ 894,172 $ 2,421,177 $ 1,624,351 $ 172,813 $ 619,568 $ 10,179 $ 2,426,911
Less allowance (150,000 ) - (116,000 ) (266,000 ) (149,000 ) - (17,000 ) - (166,000 )
Net account receivable $ 1,273,267 $ 103,738 $ 778,172 $ 2,155,177 $ 1,475,351 $ 172,813 $ 602,568 10,179 $ 2,260,911

December 31, 2014
December 31, 2015 December 31, 2015
Franchise Cellular
Retail Direct to
Consumer Total Franchise Cellular
Retail Direct to
Consumer Consumer
Finance Total
Accounts receivable $ 1,164,532 $ - $ - $ 1,164,532 $ 1,332,446 $ 148,346 $ 754,400 $ - $ 2,235,192
Less allowance (59,405 ) - - (59,405 ) (183,000 ) - (89,000 ) - (272,000 )
Net account receivable $ 1,135,127 $ - $ - $ 1,135,127 $ 1,149,446 $ 148,346 $ 665,400 - $ 1,963,192

6. ~~Property and Equipment –~~
~~A rollforward of the Company’s property and equipment is as follows:~~
December 31, 2014 Merger
Transaction Additions Deletions September 30, 2015
Furniture and equipment $ 2,853,603 $ 492,435 $ 1,042,617 $ (730,468 ) $ 3,658,187
Leasehold improvements 787,188 - 22,766 (9,117 ) 800,837
Software 504,967 1,197,839 81,243 (108,081 ) 1,675,968
Building 85,906 5,034,348 28,449 - 5,148,703
Land 9,500 1,200,000 - - 1,209,500
Other 96,311 - - - 96,311
4,337,475 7,924,622 1,175,075 (847,666 ) 12,589,506
Accumulated depreciation (3,139,765 ) (1,334,555 ) (444,814 ) 847,666 (4,071,468 )
$ 1,197,710 $ 6,590,067 $ 730,261 $ - $ 8,518,038
7. ~~Intangible Assets –~~
~~A rollforward of the Company’s intangible assets consisted of the follows:~~
December 31, 2014 Merger
Transaction Additions Deletions September 30, 2015
Customer relationships $ 4,924,912 $ - $ 1,115,000 $ - $ 6,039,912
Acquired franchise agreements 5,227,112 - - - 5,227,112
Other - 227,000 - - 227,000
Amortizable Intangible assets 10,152,024 227,000 1,115,000 - 11,494,024
Less accumulated amortization (5,685,523 ) (105,480 ) (359,133 ) - (6,150,136 )
Net Amortizable Intangible Assets 4,466,501 121,520 755,867 - 5,343,888
Non-amortizable trademarks 2,782,292 - - - 2,782,292
Intangible Assets, net $ 7,248,793 $ 121,520 $ 755,867 $ - $ 8,126,180
~~As of September 30, 2015, estimated future amortization expense for the amortizable intangible assets is as follows:~~
2015 (remainder) $ 139,720
2016 550,796
2017 537,740
2018 525,991
2019 515,416
2020 499,165
Thereafter 2,575,060
$ 5,343,888
12
8. ~~Other Non-Current Assets –~~
Other Non-Current Assets include $145,800 for a note receivable. Our agreement with the borrower includes an approximate 50% forgiveness of principal if, among other terms and conditions, required payments under the agreement are received. The agreement provides for monthly payments of principal over a five-year term ending March 2020.
9. Deferred Revenue and Other Liabilities –

Deferred revenue and other liabilities consist of the following:

September 30, 2015 December 31, 2014
Deferred financing fees $ 269,526 $ 284,231
Deferred franchise fees 49,579 281,837
Merchandise credits and gift card liability 447,499 -
Other 194,000 72,000
Total $ 960,604 $ 638,068
September 30, 2016 December 31, 2015
Deferred financing fees $ 265,779 $ 285,452
Deferred franchise development and service fees 130,500 264,000
Merchandise credits and gift card liability 694,302 1,127,470
Other 135,561 119,416
Total $ 1,226,142 $ 1,796,338

~~10.~~7. Notes Payable – Long Term
September 30, 2016 December 31, 2015
Note payable (with a credit limit of $3,000,000) to River City Equity, Inc., a related party, with interest payable monthly at 12% due June 30, 2016 and upon certain events can be collateralized by substantially all assets of WCR, excluding any equity interest in AGI (terminated May 2016) $ $ 3,000,000
Note payable to a financial institution with monthly principal payment of $58,333 plus interest at LIBOR plus 3.5% (4.125% at September 30, 2016), secured by substantially all assets of the Company with stated guarantee amounts by subsidiaries, maturing April 21, 2021 3,266,667 -
Revolving credit facility (with a credit limit of $3,000,000) to a financial institution with monthly payments of interest only at LIBOR plus 3.5% (4.125% at September 30, 2016), secured by substantially all assets of the Company with stated guarantee amounts by subsidiaries, maturing April 21, 2018 1,538,708 -
Subsidiary note payable to a financial institution with quarterly principal payments of $375,000 plus interest at prime rate plus 2.5%, secured by the AGI’s assets, maturing March 2017 (terminated May 2016) - 1,625,000
Subsidiary note payable to a financial institution with monthly principal payment of $33,334 plus annual paydowns equal to JPRE’s net cash flow from operations due within 120 days of the calendar year end plus interest at LIBOR plus 3.5% (4.125% at September 30, 2016), secured by JPRE assets, maturing June 5, 2019 when remaining principal balance is due 3,071,454 3,371,460
Total 7,876,829 7,996,460
Less current maturities (1,100,000 ) (4,900,008 )
$ 6,776,829 $ 3,096,452
Future minimum long-term principal payments are as follows:
Year     Amount
1 $ 1,100,000
2 2,638,716
3 2,971,446
4 700,000
5 466,667
Thereafter -
$ 7,876,829
On April 22, 2016, WCR entered into a Credit Agreement with a financial institution. The Credit Agreement provides the Company with an acquisition loan facility in an aggregate amount of up to $9,000,000, having a commitment maturity date of April 21, 2018. Funds advanced under the acquisition loan facility bear interest at a floating per annum rate equal to one-month LIBOR plus 3.50%, adjusted on a monthly basis, and mature five years from the date of advance. At closing, $3,500,000 was advanced under the acquisition loan replacing the $3,000,000 River City Equity debt and $500,000 of other term debt. At September 30, 2016 approximately $7,195,000 of credit was available under the acquisition and revolving credit facilities.
See Note 13 for additional terms and conditions related to the Credit Agreement.
8. Reincorporation –

September 30, 2015 December 31, 2014
Note payable (with a credit limit of $3,000,000) to River City Equity, Inc., a related party, with interest payable monthly at 12% per annum, due June 30, 2016 and upon certain events can be collateralized by substantially all assets of WCR, excluding any equity interest in AGI $ 3,000,000 $ 2,000,000
Subsidiary note payable to a financial institution with quarterly principal payments of $375,000 plus interest at prime rate plus 2.5% per annum (5.75% as of September 30, 2015), secured by AGI’s assets, due June 2017 2,000,000 3,125,000
Subsidiary note payable to a financial institution with monthly principal payments of $33,334 plus annual paydowns equal to JPRE’s net cash flow from operations due within 120 days of the calendar year end plus interest at LIBOR plus 3.5% per annum (3.75% as of September 30, 2015), secured by JPRE assets, due June 2019 3,471,462 -
Total 8,471,462 5,125,000
Less current maturities (4,900,008 ) (3,500,000 )
$ 3,571,454 $ 1,625,000
~~As part of their lending agreement, AGI may draw on~~On January 20, 2016, our shareholders approved a ~~$1,000,000 line of credit (LOC). The LOC bears interest~~plan to reincorporate Western Capital Resources, Inc. in Delaware at the greater of (a) the prime rate plus 2.50% per annum or (b) the LIBOR rate plus 5.50% per annum. The LOC matures in August 2017. There was no activity on this LOC during the period ended September 30, 2015 and there was no balance outstanding as of September 30, 2015.
~~As part of their lending agreement, JPPA may draw on~~ a $4,250,000 LOC. The LOC bears interest at the LIBOR rate plus 2.75% per annum (3.00% as of September 30, 2015). The LOC matures on July, 2016. There was no activity on this LOC during the period ended September 30, 2015 and there was no balance outstanding as of September 30, 2015.
~~RAI is party to a $2,000,000 revolving LOC from a financial institution. This revolving LOC is collateralized by substantially all the assets~~special meeting of the ~~RAI and matures in November 2015. Interest is payable monthly at LIBOR plus 3.50% per annum (3.75% as of September 30, 2015). There~~shareholders called for that purpose. The reincorporation was ~~no outstanding balance at September 30, 2015.~~completed May 11, 2016.

9. Cash Dividends –

The Company’s notes payable with financial institutions includes certain financial covenants. Management has determined that the Company borrowers were in compliance with these financial covenants as of September 30, 2015.
13
Date declared May 24, 2016 August 11, 2016
Record date June 6, 2016 September 14, 2016
Date paid June 15, 2016 September 21, 2016
Dividend per share of common stock $ 0.025 $ 0.025

~~11.~~10. Other Operating Expense –

A breakout of other ~~operating~~ expense is as follows:

Three Months Ended
September 30, Nine Months Ended
September 30,
2015 2014 2015 2014 Three Months Ended
September 30, Nine Months Ended
September 30,
2016 2015 2016 2015
Bank fees $ 310,419 $ 114,391 $ 595,164 $ 334,069 $ 337,939 $ 310,419 $ 1,273,057 $ 595,164
Collection costs 99,587 102,653 319,890 324,635 85,306 99,587 311,457 319,890
Conferences 460,602 - 671,287 -
Conference expense 468,124 460,602 762,680 671,287
Insurance 110,788 79,339 286,783 177,003 184,106 110,788 528,995 286,783
Management and advisory fees 125,754 126,163 400,057 364,148 195,425 125,754 619,954 400,057
Professional and consulting fees 483,575 106,113 1,401,683 422,515 488,978 483,575 1,531,923 1,401,683
Supplies 167,480 150,058 496,116 474,571 231,995 167,480 591,919 496,116
Other 522,604 374,654 1,583,539 875,607 803,453 522,604 2,429,596 1,583,539
$ 2,280,809 $ 1,053,371 $ 5,754,519 $ 2,972,548 $ 2,795,326 $ 2,280,809 $ 8,049,581 $ 5,754,519

~~12.~~11. ~~Income Tax Provision~~Pro Forma Information –
Income tax expense, as a percentage of Income Before Income Taxes, was 45% and 38% for the three months ended September 30, 2015 and 2014, respectively, and 44% and 38% for the nine months ended September 30, 2015 and 2014, respectively. Nondeductible portion of meal and entertainment expense and nondeductible transaction costs contributed to the higher effective tax rates.
~~13.~~ ~~Acquisitions –~~
~~Cellular Retail~~

Effective June 1, 2015, PQH ~~consummated the acquisition of~~purchased with cash all outstanding membership interests in four separate limited liability companies. The entities acquired, when combined, do not meet the 20% significant subsidiaries thresholds under Rule 210.1-02 as modified by Rule 210.3-05(b) of SEC Reg. S-X. Under the equity method of accounting, the assets acquiredcompanies (Green Communications, LLC, an Arizona LLC, Green Communications, LLC, an Oregon LLC, Green Communications, LLC, a Washington LLC and ~~liabilities assumed were recorded at their estimated fair values as of the purchase date as follows:~~
June 1, 2015
Cash $ 389,000
Inventory 427,000
Other receivables 405,000
Property and equipment 612,000
Goodwill 578,000
Intangible assets 903,000
Other assets 69,000
Accounts payable and accrued liabilities (826,000 )
$ 2,557,000
~~JPPA, RAI and JPRE Transaction~~
Go Green, LLC an Arizona LLC). Effective July 1, 2015, the Company acquired a 100% interest in the businesses of RAI, JPPA, ~~RAI~~ and JPRE, by completing a merger and contribution transaction. In consideration for the acquisition of these businesses, the Company issued to the former owners an aggregate of 3.5 million shares of the Company’s common stock representing approximately 37% of the total issued and outstanding common stock after consummation of the acquisition.
~~The e~~ntities are affiliated entities under common control and in accordance with Accounting Standards Codification Topic 805, “Business Combinations,” and the Company, as the acquirer, recognized the assets and liabilities of the target entities at their historical values as of the date of merger as follows:
14
July 1, 2015
Cash $ 2,082,000
Accounts Receivables, net 527,000
Inventory 3,170,000
Deferred income tax asset 186,000
Prepaid expense and other current assets 525,000
Property and equipment, net 6,590,000
Goodwill 31,000
Intangible assets, net 122,000
Accounts payable and accrued liabilities (2,231,000 )
Short-term notes payable (120,000 )
Income taxes payable (547,000 )
Deferred revenue and other (460,000 )
Notes payable and capital leases (3,583,000 )
Deferred income tax liability (169,000 )
$ 6,123,000

The results of the operations for the acquired ~~businesses, as well as the acquisition of AGI (see Note 13 to the Company’s December 31, 2014 Notes to Consolidated Financial Statements) on October 1, 2014~~business have been included in the consolidated financial statements since the ~~respective~~ dates of the acquisition. The following table presents the unaudited results of operations for the three and nine months ended September 30, 2016 and the unaudited pro forma results of operations for the three and nine months ended September 30, 2015 ~~and 2014,~~(in thousands, except for per share data) as if ~~these~~the acquisitions had been consummated at the beginning of ~~2014.~~2015. The pro forma net income below excludes the ~~expenses~~expense of the ~~transactions and includes a reduction in management and advisory fees that resulted from the AGI transaction.~~transactions. The pro forma results of operations are prepared for comparative purposes only and do not necessarily reflect the results that would have occurred had the ~~acquisitions been consummated~~acquisition occurred at the beginning of the ~~2014,~~2015 or the results ~~that~~which may occur in the future.

For the Three Months Ended September 30, 2015
(in thousands except earnings per share)
Franchise Cellular
Retail Direct to
Consumer Consumer
Finance Corporate Total Franchise Cellular
Retail Direct to
Consumer Consumer
Finance Corporate Total
Three Months Ended September 30, 2016
Revenue $ 4,278 $ 9,294 $ 5,944 $ 3,009 $ - $ 22,525
% of total revenue 19.0 % 41.2 % 26.4 % 13.4 % -% 100.0 %
Net income (loss) $ 749 $ 73 $ (325 ) $ 391 $ (102 ) $ 786
Net income attributable to noncontrolling interests $ 6 $ - $ - $ - $ - $ 6
Net income (loss) attributable to WCR common shareholders $ 743 $ 73 $ (325 ) $ 391 $ (102 ) $ 780
Earnings (loss) per share attributable to WCR common shareholders – basic and diluted $ 0.078 $ 0.008 $ (0.034 ) $ 0.041 $ (0.011 ) $ 0.082

Three Months Ended September 30, 2015
Pro forma revenue $ 3,675 $ 9,537 $ 5,442 $ 3,297 $ - $ 21,951 $ 3,675 $ 9,537 $ 5,442 $ 3,297 $ - $ 21,951
% of total pro forma revenue 16.7 % 43.5 % 24.8 % 15.0 % -% 100.0 %
Pro forma net income (loss) $ 829 $ 443 $ (569 ) $ 390 $ (167 ) $ 926 $ 829 $ 443 $ (569 ) $ 390 $ (167 ) $ 926
Pro forma net income attributable to noncontrolling interests $ 6 $ - $ - $ - $ - $ 6 $ 6 $ - $ - $ - $ - $ 6
Pro forma net income (loss) available to Western shareholders $ 823 $ 443 $ (569 ) $ 390 $ (167 ) $ 920
Pro forma earnings (loss) per share available to Western common shareholders – basic and diluted $ 0.087 $ 0.047 $ (0.060 ) $ 0.041 $ (0.018 ) $ 0.097
Pro forma net income (loss) attributable to WCR common shareholders $ 823 $ 443 $ (569 ) $ 390 $ (167 ) $ 920
Pro forma earnings (loss) per share attributable to WCR common shareholders – basic and diluted $ 0.087 $ 0.047 $ (0.060 ) $ 0.041 $ (0.018 ) $ 0.097

For the Three Months Ended September 30, 2014
(in thousands except earnings per share)
Franchise Cellular
Retail Direct to
Consumer Consumer
Finance Corporate Total

Pro forma revenue $ 3,665 $ 9,078 $ 5,734 $ 3,366 $ - $ 21,843
Pro forma net income (loss) $ 648 $ 393 $ (606 ) $ 364 $ - $ 799
Pro forma net income attributable to noncontrolling interests $ 5 $ - $ - $ - $ - $ 5
Pro forma net income (loss) available to Western shareholders $ 643 $ 393 $ (606 ) $ 364 $ - $ 794
Pro forma earnings (loss) per share available to Western common shareholders – basic and diluted $ 0.068 $ 0.041 $ (0.064 ) $ 0.039 $ - $ 0.084
Franchise Cellular
Retail Direct to
Consumer Consumer
Finance Corporate Total
Nine Months Ended September 30, 2016
Revenue $ 11,452 $ 27,152 $ 30,699 $ 8,830 $ - $ 78,133
% of total revenue 14.6 % 34.8 % 39.3 % 11.3 % -% 100.0 %
Net income (loss) $ 1,834 $ 526 $ 1,682 $ 964 $ (455 ) $ 4,551
Net income attributable to noncontrolling interests $ 15 $ - $ - $ - $ - $ 15
Net income (loss) attributable to WCR common shareholders $ 1,819 $ 526 $ 1,682 $ 964 $ (455 ) $ 4,536
Earnings (loss) per share attributable to WCR common shareholders – basic and diluted $ 0.192 $ 0.055 $ 0.177 $ 0.102 $ (0.048 ) $ 0.478

Nine Months Ended September 30, 2015
Pro forma revenue $ 9,641 $ 29,632 $ 30,296 $ 9,451 $ - $ 79,020
% of total pro forma revenue 12.2 % 37.5 % 38.3 % 12.0 % -% 100.0 %
Pro forma net income (loss) $ 1,585 $ 967 $ 1,365 $ 932 $ (408 ) $ 4,441
Pro forma net income attributable to noncontrolling interests $ 13 $ - $ - $ - $ - $ 13
Pro forma net income (loss) attributable to WCR common shareholders $ 1,572 $ 967 $ 1,365 $ 932 $ (408 ) $ 4,428
Pro forma earnings (loss) per share attributable to WCR common shareholders – basic and diluted $ 0.165 $ 0.102 $ 0.144 $ 0.098 $ (0.043 ) $ 0.466

12. Segment Information –
15
Segment information related to the three and nine month periods ended September 30, 2016 and 2015 is presented below:

Three Months Ended September 30, 2016
(in thousands)

For the Nine Months Ended September 30, 2015
(in thousands except earnings per share)
Franchise Cellular
Retail Direct to
Consumer Consumer
Finance Corporate Total

Pro forma revenue $ 9,641 $ 29,632 $ 30,296 $ 9,451 $ - $ 79,020
Pro forma net income (loss) $ 1,585 $ 967 $ 1,365 $ 932 $ (408 ) $ 4,441
Pro forma net income attributable to noncontrolling interests $ 13 $ - $ - $ - $ - $ 13
Pro forma net income (loss) available to Western shareholders $ 1,572 $ 967 $ 1,365 $ 932 $ (408 ) $ 4,428
Pro forma earnings (loss) per share available to Western common shareholders – basic and diluted $ 0.165 $ 0.102 $ 0.144 $ 0.098 $ (0.043 ) $ 0.466
Franchise Cellular
Retail Direct to
Consumer Consumer
Finance Corporate Total

Revenue from external customers $ 4,278 $ 9,294 $ 5,944 $ 3,009 $ - $ 22,525
Net income (loss) $ 749 $ 73 $ (325 ) $ 391 $ (102 ) $ 786
Expenditures for segmented assets $ 3 $ 241 $ 50 $ 21 $ - $ 315

For the Nine Months Ended September 30, 2014
(in thousands except earnings per share)
Franchise Cellular
Retail Direct to
Consumer Consumer
Finance Corporate Total

Pro forma revenue $ 9,568 $ 25,215 $ 30,587 $ 9,506 $ - $ 74,876
Pro forma net income (loss) $ 1,165 $ 526 $ 480 $ 1,076 $ - $ 3,247
Pro forma net income attributable to noncontrolling interests $ 5 $ - $ - $ - $ - $ 5
Pro forma net income (loss) available to Western shareholders $ 1,160 $ 526 $ 480 $ 1,076 $ - $ 3,242
Pro forma earnings (loss) per share available to Western common shareholders – basic and diluted $ 0.122 $ 0.055 $ 0.051 $ 0.113 $ - $ 0.341
Three Months Ended September 30, 2015
(in thousands)
Franchise Cellular
Retail Direct to
Consumer Consumer
Finance Corporate Total

Revenue from external customers $ 3,675 $ 9,537 $ 5,442 $ 3,297 $ - $ 21,951
Net income (loss) $ 829 $ 443 $ (569 ) $ 390 $ (213 ) $ 880
Expenditures for segmented assets $ - $ - $ 186 $ 29 $ - $ 215
Nine Months Ended September 30, 2016
(in thousands)
Franchise Cellular
Retail Direct to
Consumer Consumer
Finance Corporate Total

Revenue from external customers $ 11,452 $ 27,152 $ 30,699 $ 8,830 $ - $ 78,133
Net income (loss) $ 1,834 $ 526 $ 1,682 $ 964 $ (455 ) $ 4,551
Total segment assets $ 10,111 $ 16,472 $ 14,723 $ 15,735 $ 413 $ 57,454
Expenditures for segmented assets $ 19 $ 1,688 $ 89 $ 39 $ - $ 1,835
Nine Months Ended September 30, 2015
(in thousands)
Franchise Cellular
Retail Direct to
Consumer Consumer
Finance Corporate Total

Revenue from external customers $ 9,641 $ 24,655 $ 5,442 $ 9,451 $ - $ 49,189
Net income (loss) $ 1,585 $ 910 $ (569 ) $ 932 $ (710 ) $ 2,148
Total segment assets $ 9,379 $ 12,823 $ 13,568 $ 16,299 $ 544 $ 52,613
Expenditures for segmented assets $ 91 $ 3,656 $ 186 $ 45 $ 14 $ 3,992

~~14.~~     ~~Segment Information –~~
~~Segment information related to the three and nine months ended September 30, 2015 and 2014, is presented below:~~
For the Three Months Ended September 30, 2015
(in thousands)
Franchise Cellular
Retail Direct to
Consumer Consumer
Finance Corporate Total

Revenues from external customers $ 3,675 $ 9,537 5,442 $ 3,297 $ - $ 21,951
Depreciation and amortization $ 109 $ 136 102 $ 29 $ - $ 376
Interest expense $ 57 $ 91 50 $ - $ - $ 198
Income tax expense (benefit) $ 534 $ 221 (177 ) $ 221 $ (75 ) $ 724
Net income (loss) $ 829 $ 443 (569 ) $ 390 $ (213 ) $ 880
Expenditures for segmented assets $ - $ - 186 $ 29 $ - $ 215
For the Three Months Ended September 30, 2014
(in thousands)
Franchise Cellular
Retail Direct to
Consumer Consumer
Finance Corporate Total

Revenues from external customers $ - $ 6,193 $ - $ 3,366 $ - $ 9,559
Depreciation and amortization $ - $ 85 $ - $ 31 $ - $ 116
Interest expense $ - $ 42 $ - $ 18 $ - $ 60
Income tax expense (benefit) $ - $ 164 $ - $ 183 $ - $ 347
Net income (loss) $ - $ 266 $ - $ 299 $ - $ 565
Expenditures for segmented assets $ - $ 34 $ - $ 9 $ - $ 43
16
For the Nine Months Ended September 30, 2015
(in thousands)
Franchise Cellular
Retail Direct to
Consumer Consumer
Finance Corporate Total

Revenues from external customers $ 9,641 $ 24,655 $ 5,442 $ 9,451 $ - $ 49,189
Depreciation and amortization $ 325 $ 292 $ 102 $ 85 $ - $ 804
Interest expense $ 156 $ 195 $ 50 $ - $ - $ 401
Income tax expense (benefit) $ 1,015 $ 503 $ (177 ) $ 553 $ (197 ) $ 1,697
Net income (loss) $ 1,585 $ 910 $ (569 ) $ 932 $ (710 ) $ 2,148
Total segment assets $ 9,379 $ 12,823 $ 13,568 $ 16,299 $ 544 $ 52,613
Expenditures for segmented assets $ 91 $ 3,656 $ 186 $ 45 $ 14 $ 3,992
For the Nine Months Ended September 30, 2014
(in thousands)
Franchise Cellular
Retail Direct to
Consumer Consumer
Finance Corporate Total

Revenues from external customers $ - $ 17,305 $ - $ 9,506 $ - $ 26,811
Depreciation and amortization $ - $ 256 $ - $ 86 $ - $ 342
Interest expense $ - $ 130 $ - $ 62 $ - $ 192
Income tax expense (benefit) $ - $ 119 $ - $ 567 $ - $ 686
Net income (loss) $ - $ 199 $ - $ 938 $ - $ 1,137
Total segment assets $ - $ 8,625 $ - $ 16,749 $ - $ 25,374
Expenditures for segmented assets $ - $ 401 $ - $ 60 $ - $ 461
~~15.~~ ~~Leases –~~
The Company leases retail and office facilities under operating leases with terms ranging from month to month to six years, with rights to extend for additional periods. Future minimum base lease payments (in thousands) are approximately as follows:
Year Ending December 31, Operating Leases
2015 (remainder) $ 938
2016 2,920
2017 2,110
2018 998
2019 554
2020 90
Thereafter -
Total minimum base lease payments $ 7,610
~~16.~~13. Commitments and Contingencies –

Employment Agreements

~~On April 11, 2013, the~~The Company ~~entered into~~is party to an Amended and Restated Employment Agreement with its Chief Executive Officer, Mr. John Quandahl. ~~This~~Among other things, this agreement ~~has a term of three years and~~ contains ~~among other terms and conditions,~~ provisions for an annual performance-based cash bonus pool for management.
~~Effective February 9, 2015,~~ The agreement was amended April 1, 2016 to extend the Company entered into a three-year employment agreement with its Chief Investment Officer (CIO). Pursuant to that agreement, the CIO is eligible for a discretionary annual performance-based bonus up to $200,000. To date no performance-based bonus has been accrued.
17
The Company has also entered into several employment agreements with certain members of subsidiary management. The terms of each agreement are different, but may ordinarily include stipulated base salary and bonus potential.term through March 2019.

Pursuant to the Company’s numerous employment agreements, bonuses of approximately ~~$353,000~~$390,000 and ~~$655,000~~$1,083,000 were accrued for the three and nine month periods ended September 30, 2016, respectively.

Credit Facility
On April 22, 2016, WCR entered into a Credit Agreement with a financial institution. Certain company subsidiaries are guarantors of the borrowings and obligations under the Credit Agreement. All borrowings under the Credit Agreement are secured by substantially all assets of WCR and the guarantor subsidiaries.
The Credit Agreement requires WCR to meet certain financial tests, including a leverage ratio and a fixed charge coverage ratio, as defined in the Credit Agreement. Subject to certain exceptions, the Credit Agreement contains covenants limiting the company’s ability to (or to permit the guarantor subsidiaries to) merge or consolidate with, or engage in a sale of substantially all assets to, any party, but WCR or any guarantor subsidiary generally may nonetheless merge with another party if (i) WCR or guarantor subsidiary is the entity surviving such merger, and (ii) immediately after giving effect to such merger, no default shall have occurred and be continuing under the Credit Agreement. Subject to certain exceptions, the Credit Agreement also contains covenants limiting WCR’s ability to (or to permit the guarantor subsidiaries to) create liens on assets, incur additional indebtedness, make certain types of investments, and pay dividends or make certain other types of restricted payments, but WCR may nonetheless pay dividends to its shareholders if (a) there are no outstanding loans or unpaid interest under the revolving credit facility, and (b) no default shall have occurred and be continuing under the Credit Agreement. Some covenant waivers were granted by the financial institution during the three months ended September 30, ~~2015, respectively.~~2016.

~~Vendor Service Agreement~~Cellular Retail Growth Commitment

~~In September 2015, AGI~~Effective June 6, 2016, PQH entered into a ~~service~~Cricket Wireless Exclusive Dealer Agreement Amendment for Retail Expansion. Per the agreement, ~~with a vendor for approximately $680,000. The vendor~~PQH commits to open at least 150 locations by December 31, 2017, including 50 locations by December 31, 2016. Also effective June 6, 2016, Cricket Wireless, LLC has increased certain compensation arrangements in the existing dealer agreement and will provide ~~services over~~ a ~~three year period.~~subsidy for each location opened during the term of the agreement.

~~17.~~ ~~Management and Advisory Agreement –~~
The Company is party to an Amended and Restated Management and Advisory Agreement with Blackstreet Capital Management, LLC, (“Blackstreet”) under which Blackstreet provides certain financial, managerial, strategic and operating advice and assistance to the Company (see Note 17 to the Company’s December 31, 2014 Notes to Consolidated Financial Statements).
The amended and restated agreement requires the Company to pay Blackstreet a fee in an amount equal to $400,000 upon the closing of an acquisition in consideration for Blackstreet’s referral to the Company of such acquisition opportunity, and Blackstreet’s assistance in the performance of due diligence services relating thereto. Any fees which may have been payable per these terms related to the JPPA, RAI and JPRE acquisition (see Note 12) were waived by Blackstreet.
Effective July 1, 2015 the agreement with Blackstreet was amended. The annual fees under the amended and restated contract will be the greater of (i) $612,100 (subject to annual increases of five percent) or (ii) five percent of Western Capital’s “EBITDA” as defined under the agreement. All other terms and provisions remain unmodified.
~~18.~~ ~~Equity –~~
~~Common Stock Issued~~
As further explained in Note 13, on July 1, 2015, WCR issued an aggregate of 3.5 million shares of common stock for the acquisition of JPPA, RAI and JPRE. This represented approximately 37% of the total issued and outstanding common stock of the Company after the issuance.
~~WCR 2015 Stock Incentive Plan~~
The Board of Directors of WCR adopted WCR’s new 2015 Stock Incentive Plan effective February 6, 2015. The plan replaces the Company’s earlier adopted 2008 Stock Incentive Plan, which the board terminated effective February 6, 2015. There were no incentives issued or outstanding under the terminated plan.
WCR’s Board of Directors, or a committee of the board, will administer the 2015 Stock Incentive Plan and have complete authority to award incentives, interpret the plan and make any other determination it believes necessary and advisable for the proper administration of the plan. A total of 100,000 shares of WCR common stock were reserved in connection with the adoption of the 2015 Stock Incentive Plan.
~~The new plan permits the granting of incentives in any one or a combination of the following forms:~~
Ÿ ~~stock options, including options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended, as “qualified” or “incentive” stock options;~~
Ÿ ~~stock appreciation rights (often referred to as “SARs”) payable in cash or shares of common stock;~~
Ÿ ~~restricted stock and restricted stock units;~~
Ÿ ~~performance awards of cash, stock or property; and~~
Ÿ ~~stock awards.~~
18
~~The following table summarizes nonvested stock option awards outstanding at September 30, 2015 and the changes for the nine months then ended:~~
Number of
Shares Weighted-
Average
Exercise
Price Per
Share Weighted-
Average
Remaining
Contractual
Term
(in years) Aggregate
Intrinsic
Value
Outstanding and nonvested at December 31, 2014 - $ - $ -
Granted 65,000 6.00 9.37 -
Vested - - -
Forfeited - - -
Outstanding and nonvested at September 30, 2015 65,000 $ 6.00 9.37 $ -
Exercisable at September 30, 2015 -
The option vests in three annual and near-equal installments on each of February 8, 2016, 2017 and 2018, and has a contract life of ten years. There were no vested options at September 30, 2015, and thus no intrinsic value in outstanding vested options at September 30, 2015. As of September 30, 2015, total unrecognized stock-based compensation expense related to nonvested stock options was approximately $119,000, which is expected to be recognized over a weighted-average period of approximately 1.4 years.
~~JPPA Stock Incentive Plan~~
~~The following table summarizes nonvested stock option awards outstanding at September 30, 2015 and the changes for the three months then ended:~~
Number of
Shares Weighted-
Average
Exercise
Price Per
Share Weighted-
Average
Remaining
Contractual
Term
(in years) Aggregate
Intrinsic
Value
Outstanding and nonvested at June 30, 2015 35.1 $ 3403.37 $ -
Granted - - 9.4 -
Vested - - -
Forfeited - - -
Outstanding and nonvested at September 30, 2015 35.1 $ 3403.37 9.4 $ -
Exercisable at September 30, 2015 -
Subject to the provisions of the J&P Park Acquisitions, Inc. 2010 Stock Option Plan, the options vest 10% annually beginning on the one year anniversary of the grant until 50% of the options have vested. The remaining options vest upon a sale of the company (as defined in the agreement). The options have a contract life of ten years. There were no vested options at September 30, 2015, and thus no intrinsic value in outstanding vested options at September 30, 2015. As of September 30, 2015, total unrecognized stock-based compensation expense related to nonvested stock options was approximately $108,000. At September 30, 2015 JPPA had 4,645 shares issued and outstanding.
~~RAI Stock Incentive Plan~~
~~The following table summarizes nonvested stock option awards outstanding at September 30, 2015 and the changes for the three months then ended:~~
Number of
Shares Weighted-
Average
Exercise
Price Per
Share Weighted-
Average
Remaining
Contractual
Term
(in years) Aggregate
Intrinsic
Value
Outstanding and nonvested at June 30, 2015 - $ - $ -
Granted 73.76 3,765.90 9.16 -
Vested - - -
Forfeited - - -
Outstanding and nonvested at September 30, 2015 73.76 $ 3,765.90 9.16 $ -
Exercisable at September 30, 2015 2.96 6,471.00 6.45 -
19
Subject to the provisions of the Restorers Acquisition, Inc. 2011 Stock Option Plan, the options vest 10% annually beginning on the one year anniversary of the grant until 50% of the options have vested. The remaining options vest upon a sale of the company (as defined in the agreement). The options have a contract life of 10 years. There were no vested options at September 30, 2015 and thus no intrinsic value in outstanding vested options at September 30, 2015. As of September 30, 2015, total unrecognized stock-based compensation expense related to nonvested stock options was approximately $230,000. At September 30, 2015 RAI had 573 shares issued and outstanding.
~~19.~~14. Subsequent Events –

~~On October 1, 2015,~~Wireless Retail Transaction
PQH entered into an Asset Purchase Agreement for the acquisition of 20 Cricket Wireless retail locations for $2,050,000 and an option to purchase an additional 33 locations for an aggregate purchase price of $7,200,000. In addition, if PQH exercised its option, seller has an option to retain a 30% ownership in the 53 store transaction, with a corresponding adjustment to the purchase price. It is anticipated that the transaction will close in November 2016.
Consumer Finance ~~segment disposed of all four of its locations in an underperforming Utah market for $167,500 in cash, resulting in a loss of approximately $450,000.~~Segment Law Change

On November ~~10, 2015 PQH executed an Asset Purchase Agreement~~8, 2016, South Dakota voters approved a measure effectively banning payday lending in South Dakota. Unless delayed, the effective date of the measure will be November 16, 2016. Revenue generated in South Dakota is approximately 5% of Consumer Finance segment year to ~~acquire 10 Cricket Retail Locations for approximately $450,000. The purchase is expected to close on December 1, 2015.~~date revenue through September 30, 2016.

The Company evaluated all other events or transactions that occurred after September 30, ~~2015~~2016 up through November ~~16, 2015,~~14, 2016, the date ~~on which~~we issued these financial ~~statements were issued.~~statements. During this period ~~the Company~~we did not have any ~~other~~additional material subsequent events that impacted ~~its~~our financial statements.
20

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

Forward-Looking Statements

Some of the statements made in this report are “forward-looking statements,” as that term is defined under Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based upon our current expectations and projections about future events. Whenever used in this report, the words “believe,” “anticipate,” “intend,” “estimate,” “expect” and similar expressions, or the negative of such words and expressions, are intended to identify forward-looking statements, although not all forward-looking statements contain such words or expressions. The forward-looking statements in this report are primarily located in the material set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (Part I, Item 2), but may be 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 necessarily update forward-looking statements even though our situation may change in the future.

Specific factors that might cause actual results to differ from our expectations embodied in our forward-looking statements, or that might affect the value of the common stock, include but are not limited to:

· the seasonal nature of the products sold in our Direct to Consumer segment - a significant portion of pre-tax net income contributed by the segment is earned during the months of March through May and December, consequently the third quarter of each year typically results in a net loss;
· the success of new stores related to our expansion plans in the Retail Wireless segment;
· 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 us or the industries in which we operate, particularly in certain key states or nationally;

· our need for additional financing;

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

· changes in Cricket dealer compensation;

· the impact on us, as a Cricket dealer, of the AT&T acquisition of the Cricket Wireless business;

· failure of or disruption caused by a significant vendor;
· outside factors that affect our ability to obtain product and fulfill orders; and

· our ability to successfully operate or integrate ~~our recently acquired businesses.~~recent or future business acquisitions.

Other factors that could cause actual results to differ from those implied by the forward-looking statements in this report are more fully described in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2014.~~2015.

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.

OVERVIEW

Western Capital Resources, Inc. (“~~we”, “WCR”~~WCR” or “Western Capital”) is a holding company ~~that operates, through its~~having a controlling interest in subsidiaries operating in the following industries and operating segments:

21

Our “Franchise” segment ~~involves~~is comprised of AlphaGraphics, Inc. (99.2% owned), the ~~franchising~~franchisor of AlphaGraphics® customized print and marketing ~~solutions offered through our majority owned subsidiary AlphaGraphics, Inc. (99.2% owned) (“AlphaGraphics” or “AGI”).~~solutions. Our “Cellular Retail” segment is comprised of an authorized Cricket Wireless dealer and involves the retail sale of cellular phones and accessories to consumers through our wholly owned subsidiary PQH Wireless, Inc. and its ~~subsidiaries (“PQH”). On July 1, 2015, we acquired our~~subsidiaries. Our “Direct to Consumer” segment ~~which~~ consists of an(1) a wholly owned online and direct marketing ~~distribution~~ retailer ~~with product offerings including~~and distributor of live plants, seeds, ~~live goods~~holiday gifts and garden accessories operating in the retail market under the Park Seed, Jackson & Perkins and Wayside Gardens trade names, and in the wholesale market under the Park Wholesale trade name, and an(2) a wholly owned online ~~retail seller~~and direct marketing distribution retailer of home improvement and restoration products operating ~~over the internet through the domain name of www.Vandykes.com and through direct mail catalogs.~~as Van Dyke’s Restorers. Our “Consumer Finance” segment consists of retail financial services conducted through our wholly owned subsidiaries Wyoming Financial Lenders, Inc. ~~(“WFL”)~~ and Express Pawn, Inc. ~~(“EPI”). On January 1, 2015, our “Corporate” segment was formed which includes the corporate acquisition and due-diligence team and management of acquired subsidiaries.~~ Throughout this report, we collectively refer to WCR and its consolidated subsidiaries as “we,” the “Company,” and “us.” ~~References to specific companies within our enterprise, such as “PQH,” “WFL,” “EPI”, “AGI”, “JPPA”, “RAI”, or “JPRE” are references only to those companies.~~

~~Key~~Following are actual andpro forma ~~financial data~~revenues by operating segment for the three and nine ~~months~~month periods ended September 30, ~~2015~~2016 and ~~2014 were as follows:~~2015:

Discussion of Critical Accounting Policies

Our condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America applied on a consistent basis.  The preparation of these financial statements requires us to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods.  We evaluate these estimates and assumptions on an ongoing basis.  We base these estimates on the information currently available to us and on various other assumptions that we believe are reasonable under the circumstances.  Actual results could vary materially from these estimates under different assumptions or conditions.
22

Our significant accounting policies are discussed in Note 1, “Basis of Presentation, Nature of Business and Summary of Significant Accounting Policies,” of the notes to our condensed 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 condensed consolidated financial statements.

Loan Loss Allowance

Included in loans receivable are unpaid principal, interest and fee balances of payday, installment, pawn and title loans that have not reached their maturity date, and “late” payday loans that have reached maturity within the last 180 days and have remaining outstanding balances.  Late payday loans generally are unpaid loans 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. All returned items are charged-off after 180 days, as collections after that date have not been significant. Loans are carried at cost plus accrued interest or fees through maturity date, less payments made and a loans receivable allowance.

~~We do~~The Company does not specifically reserve for any individual payday, installment or title loan.  ~~We aggregate~~The Company aggregates loan types 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 (1) the amount of loan principal, interest and fee outstanding, (2) historical charge offs from loans that originated during the last 24 months, (3) current and expected collection patterns and (4) current economic trends. ~~We utilize~~The Company utilizes a software program to assist with the tracking of ~~our~~its historical portfolio statistics. A loan loss allowance is maintained for anticipated losses for payday and installment loans based primarily on our historical percentages by loan type of net charge offs, applied against the applicable balance of loan principal, interest and fees outstanding. WeThe Company also periodically ~~perform~~performs a look-back analysis on ~~our~~its loan loss allowance to verify the historical allowance established tracks with the actual subsequent loan write-offs and recoveries. ~~We are~~The Company is aware that as conditions change, weit may also need to make additional allowances in future periods. Loan losses or charge-offs of pawn or title loans are not recorded because the value of the collateral exceeds the loan amount.
A See Note 4 to our condensed consolidated financial statements included in this report for a rollforward of our loans receivable ~~allowance (in thousands) is as follows:~~allowance.
Nine Months Ended
September 30, 2015 Year Ended
December 31, 2014
Loans receivable allowance, beginning of period $ 1,219 $ 1,215
Provision for loan losses charged to expense 1,351 1,818
Charge-offs, net (1,269 ) (1,814 )
Loans receivable allowance, end of period $ 1,301 $ 1,219

Valuation of Long-lived and Intangible Assets

We assess 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 analyzed on an annual basis.~~ 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 and intangible~~our net assets ~~may not~~to our fair value. If the fair value is determined to be ~~recoverable, impairment~~less than the carrying value, a second step is ~~measured based on~~performed to measure the ~~excess~~amount of the ~~assets’ carrying value over the estimated fair value.~~impairment, if any.

Results of Operations – Three Months Ended September 30, ~~2015~~2016 Compared to Three Months Ended September 30, ~~2014~~2015

On July 1, 2015, we acquired our newest segment, Direct to Consumer. In the acquisition, we acquired the assets and businesses of J&P Park Acquisitions, Inc. (“JPPA”), Restorers Acquisition, Inc. (“RAI”), and J&P Real Estate, LLC (“JPRE”) in exchange for our issuance to the former owners of those businesses of an aggregate of 3.5 million shares of our common stock, representing approximately 37% of our total issued and outstanding common stock on a post-acquisition basis. The Direct to Consumer segment is seasonal and historically experiences a loss in the quarter ending September 30 due to a slowdown in sales of the seasonal products it sells (seeds and live goods) and the period ending prior to the start of holiday gift sales. For the current quarter the Direct to Consumer segment had a loss of ($0.57) million or $0.06 cents per share, which was in line with managements’ expectations, resulting in a drag on consolidated earnings and earnings per share period over period. In addition, our Corporate segment, which was created at the beginning of the 2015, contributed a loss of $0.02 cents per share, which management views as investment in future growth. Net income attributable to our common shareholders was $0.78 million, or $0.08 per share (basic and diluted), for the quarter ended September 30, 2016, compared to $0.87 million, or $0.09 per share (basic and diluted), for the ~~three months~~quarter ended September 30, 2015, compared to $0.57 million, or $0.19 per share (basic and diluted), for the three months ended September 30, 2014. For the current quarter, the Franchise segment, acquired on October 1, 2014, contributed $0.82 million in net income while the Cellular Retail segment contributed $0.44 million in net income and the Consumer Finance segment contributed $0.39 million in net income. 2015.
We expect segment ~~contribution to~~operating results and earnings per share to ~~further~~ change ~~in the fourth quarter~~throughout 2016 due, at least in part, to the seasonality of the Direct to Consumer ~~segment, higher holiday sales activity~~and Cellular Retail segments, growth in the Cellular Retail segment and ~~fluctuating levels of~~potential mergers and acquisitions ~~expenditures.~~activity.

Following is a discussion of operating results by segment.
23

The following table provides quarter-over-quarter revenues and net income ~~(in thousands)~~ attributable to WCR common shareholders by operating ~~segment:~~segment (in thousands):

Franchise Cellular
Retail Direct to
Consumer Consumer
Finance Corporate Total
Three Months Ended September 30, 2015
Revenues $ 3,675 $ 9,537 $ 5,442 $ 3,297 $ - $ 21,951
% of total revenue 16.7 % 43.5 % 24.8 % 15.0 % - 100.0 %
Net income (loss) $ 829 $ 443 $ (569 ) $ 390 $ (213 ) $ 880
Net income (loss) attributable to WCR common shareholders $ 823 $ 443 $ (569 ) $ 390 $ (213 ) $ 874

Three Months Ended September 30, 2014
Revenues $ - $ 6,193 $ - $ 3,366 $ - $ 9,559
% of total revenue - 64.8 % - 35.2 % - 100.0 %
Net income (loss) $ - $ 266 $ - $ 299 $ - $ 565
Net income (loss) attributable to WCR common shareholders $ - $ 266 $ - $ 299 $ - $ 565
Franchise Cellular
Retail Direct to
Consumer Consumer
Finance Corporate Total
Three Months Ended September 30, 2016
Revenues $ 4,278 $ 9,294 $ 5,944 $ 3,009 $ - $ 22,525
% of total revenue 19.0 % 41.2 % 26.4 % 13.4 % -% 100.0 %
Net income (loss) $ 749 $ 73 $ (325 ) $ 391 $ (102 ) $ 786
Net income (loss) attributable to WCR common shareholders $ 743 $ 73 $ (325 ) $ 391 $ (102 ) $ 780

Three Months Ended September 30, 2015
Revenues $ 3,675 $ 9,537 $ 5,442 $ 3,297 $ - $ 21,951
% of total revenue 16.7 % 43.5 % 24.8 % 15.0 % -% 100.0 %
Net income (loss) $ 829 $ 443 $ (569 ) $ 390 $ (213 ) $ 880
Net income (loss) attributable to WCR common shareholders $ 823 $ 443 $ (569 ) $ 390 $ (213 ) $ 874

24

Franchise

Three Months Ended
September 30,
(in thousands)
2015 % of 2014 % of
2015 2014 Revenues Revenues

Revenues $ 3,675 $ - 100.0 % - %
Less:
Cost of revenues 200 - 5.5 % - %
Expenses 2,646 - 71.8 % - %
Net income $ 829 $ - 22.7 % - %
~~Our U.S. franchisees reported center sales for the three months ended September 30 as follows:~~
2015 2014
Total gross U.S. network-wide center sales $ 67,194,000 $ 63,641,000

The table below summarizes the number of AlphaGraphics business centers owned and operated by franchisees during the ~~three-month periods~~quarters ended September 30, ~~2015~~2016 and ~~2014:~~2015:

Beginning New Closed Ending
2016
US Centers 258 1 (1 ) 258
International Centers 25 - - 25
Total 283 1 (1 ) 283
Beginning New Closed Ending
2015
US Centers 250 4 2 252 250 4 (2 ) 252
International Centers 26 - - 26 26 - - 26
Total 276 4 2 278 276 4 (2 ) 278

2014
US Centers 245 - 1 244
International Centers 33 - 1 32
Total 278 - 2 276
Our U.S. franchisees reported approximate center sales for the quarters ended September 30 as follows:
2016 2015
Total gross U.S. network-wide center sales $ 69,849,000 $ 67,193,000

Revenues and net income for the ~~three months~~quarters ended September 30, 2016 and 2015 were $4.28 million versus $3.68 million and $0.75 million versus $0.83 million, ~~respectively, compared~~respectively. Contributing to ~~pro forma revenues~~the revenue growth of 16.40% was a 9.01% increase in royalty and franchise development fee revenue and a 150.78% increase in services revenue which includes revenue from new low margin services added in 2016. The revenue growth of 3.89% was offset with the increase direct cost of services provided and a 13.61% increase in operating costs, resulting in the segment net income ~~for~~decrease to $0.75 million from $0.83 million in the prior year comparable ~~period in 2014 of $3.67 million and $0.65 million, respectively. Gross U.S. network-wide center sales as provided by franchisees increased 5.6% over the comparable periods.~~quarter.

Cellular Retail

~~The following table summarizes our Cellular Retail segment operating results:~~

Three Months Ended
September 30,
(in thousands)
2015 % of 2014 % of
2015 2014 Revenues Revenues

Revenues $ 9,537 $ 6,193 100.0 % 100.0 %
Less:
Cost of revenues 4,461 2,839 46.8 % 45.9 %
Expenses 4,633 3,088 48.6 % 49.8 %
Net income (loss) $ 443 $ 266 4.6 % 4.3 %
A summary table of the number of Cricket cellular retail stores we operated during the ~~three-month periods~~quarters ended September 30, ~~2015~~2016 and ~~2014~~2015 follows:

2015 2014
Beginning 110 58
Acquired/ Launched - -
Closed (8 ) -
Ending 102 58
25
2016 2015
Beginning 116 110
Acquired/ Launched 10 -
Closed - (8 )
Ending 126 102

On June 1, 2015 we acquired 41 Cricket retail stores, seven of which we subsequently closed. We closed one additional underperforming store bringing the number of Cricket retail stores we operated at September 30, 2015 to 102.
~~Revenues in the~~The Cellular Retail ~~segment increased $3.35 million, or 54.0%,~~division revenues and contribution to ~~$9.54 million for the three months ended September 30, 2015, compared to $6.19 million for the three months ended September 30, 2014. This increase~~net income each decreased period over period. A significant portion of revenue is ~~due to a several~~from phone sales and there are two factors that ~~contributed~~have influenced a decline in phone revenue period over period. Prior year comparable quarter volume was positively influenced by customer migrations to ~~an approximate 52% increase in units activated~~Cricket Wireless’ new GSM network, so a volume decrease was anticipated. Discounting of phones is also a significant factor affecting revenue and discounts increased approximately $1.35 million period over period. These discounts also reduce cost of phones and do not impact gross profit or net income. While phone sales revenue decreased period over period, ~~including our acquisition of additional stores, relocation of underperforming locations,~~dealer compensation and customer fees increased 17.9%. Other factors contributing to the ~~effects of AT&T’s acquisition of Cricket Wireless.~~
~~Our expenses~~decline in net income are growth related and include increased $1.54 million from $3.09 million for the three-month period ended September 30, 2014 to $4.63 million for the three-month period ended September 30, 2015, primarily as a result of adding the new store locations. Stated as a percentage of Cellular Retail revenues, our period-over-period expenses were 48.6% compared to 49.8% the prior period, a decrease of 1.2%.marketing and development costs, infrastructure costs and depreciation expense.

Direct to Consumer

The ~~following table summarizes our~~ Direct to Consumer segment ~~operating results:~~
Three Months Ended
September 30,
(in thousands) 2015 % of 2014 % of
2015 2014 Revenues Revenues

Revenues $ 5,442 $ - 100.0 % - %
Less:
Cost of revenues 2,703 - 49.7 % - %
Expenses 3,308 - 60.7 % - %
Net loss $ (569 ) $ - (10.4 )% - %
~~Revenues~~has seasonal sources of revenue and historically experiences a greater proportion of annual revenue and net income in the months of March through May and December due to the seasonal products it sells. For the current quarter, the Direct to Consumer segment had net loss of ($0.33) million compared to a net loss of ($0.57) million for the comparable prior year period. Revenues for the three ~~months~~month period ended September 30, ~~2015~~2016 were ~~$5.44~~$5.94 million ~~and ($0.57) million, respectively,~~ compared to pro forma revenues ~~and net loss~~ for the comparable period in ~~2014~~2015 of ~~$5.73~~$5.44 million, ~~and ($0.61) million, respectively.~~an increase in of 9.2%

Consumer Finance
~~The following table summarizes our Consumer Finance segment operating results:~~
Three Months Ended
September 30,
(in thousands) 2015 % of 2014 % of
2015 2014 Revenues Revenues

Revenues $ 3,297 $ 3,366 100.0 % 100.0 %
Less:
Cost of revenues 734 657 22.3 % 19.5 %
Expenses 2,173 2,410 65.9 % 71.6 %
Net income $ 390 $ 299 11.8 % 8.9 %

A summary table of the number of consumer finance locations we operated during the ~~three month periods~~quarters ended September 30, ~~2015~~2016 and ~~2014~~2015 follows:

2015 2014 2016 2015
Beginning 51 51 46 51
Acquired/ Launched - - - -
Closed - - (1 ) -
Ending 51 51 45 51

Our Consumer Finance segment revenues decreased ~~slightly~~8.7% for the ~~three months~~quarter ended September 30, ~~2015~~2016 compared to the three months ended September 30, 2014. Our cost of revenues, which is made up of pawn merchandise sales and net bad debt, increased from $0.66 million for the three months ended September 30, 2014 to $0.73 million for the three monthsquarter ended September 30, 2015. ~~Our~~We sold or closed 6 underperforming store locations between the comparable periods and regional economic downturns in the Midwest, primarily Wyoming, North Dakota and South Dakota, continue to contribute to revenue declines. Reductions in net bad debt and operating ~~expenses for~~costs have helped to keep the net income flat quarter ~~decreased year-over-year primarily as a result of Company resources being re-directed to other segments.~~over quarter.
26

Corporate

Costs related to our Corporate segment were $0.10 million for the quarter ended September 30, 2016 compared to $0.21 million for the ~~three months~~quarter ended September 30, 2015.

Results of Operations – Nine Months Ended September 30, ~~2015~~2016 Compared to ~~Six~~Nine Months Ended September 30, ~~2014~~2015

Net income attributable to our common shareholders was ~~$2.14~~$4.54 million, or ~~$0.30~~$0.48 per share (basic and diluted), for the nine months ended September 30, ~~2015,~~2016, compared to ~~$1.14~~$2.14 million, or ~~$0.38~~$0.30 per share (basic and diluted), for the ~~nine months ended September 30, 2014.~~comparable period in 2015 and compared to pro forma net income for the prior comparable period of $4.43 million or $0.47 per share (basic and diluted). As further discussed below, The Franchise, ~~segment, acquired on October 1, 2014,~~Direct to Consumer and Consumer Finance operating segments each contributed ~~$1.57 million~~to the increase in net income for the year over year period, while the Retail Wireless segment decreased.
As previously noted, we expect segment operating results and earnings per share to change throughout 2016 due, at least in part, to the seasonality of the Direct to Consumer and Cellular Retail segments, growth in the Cellular Retail segment ~~contributed $0.91 million in net income,~~ and the Consumer Finance segment contributed $0.93 million in net income, offset by a ($0.57) million loss in our Direct to Consumer segment, which represents three months of activity since being acquired on July 1, 2015. The Corporate segment had $0.70 million in net costs. As previously indicated, we expect the mix of segment contributions to net income to change in future periods.potential mergers and acquisitions activity.

Following is a discussion of operating results by segment.
27

The following table provides ~~quarter-over-quarter~~period over period revenues and net income ~~(in thousands)~~ attributable to WCR common shareholders by operating ~~segment:~~segment (in thousands):

Franchise Cellular
Retail Direct to
Consumer Consumer
Finance Corporate Total
Nine Months Ended September 30, 2015
Revenues $ 9,641 $ 24,655 $ 5,442 $ 9,451 $ - $ 49,189
% of total revenue 19.6 % 50.1 % 11.1 % 19.2 % - 100.0 %
Net income (loss) $ 1,585 $ 910 $ (569 ) $ 932 $ (710 ) $ 2,148
Net income (loss) attributable to WCR common shareholders $ 1,572 $ 910 $ (569 ) $ 932 $ (710 ) $ 2,135

Nine Months Ended September 30, 2014
Revenues $ - $ 17,305 $ - $ 9,506 $ - $ 26,811
% of total revenue - 64.5 % - 35.5 % - 100.0 %
Net income (loss) $ - $ 199 $ - $ 938 $ - $ 1,137
Net income (loss) attributable to WCR common shareholders $ - $ 199 $ - $ 938 $ - $ 1,137
Franchise Cellular
Retail Direct to
Consumer Consumer
Finance Corporate Total
Nine Months Ended September 30, 2016
Revenues $ 11,452 $ 27,152 $ 30,699 $ 8,830 $ - $ 78,133
% of total revenue 14.6 % 34.8 % 39.3 % 11.3 % -% 100.0 %
Net income (loss) $ 1,834 $ 526 $ 1,682 $ 964 $ (455 ) $ 4,551
Net income (loss) attributable to WCR common shareholders $ 1,819 $ 526 $ 1,682 $ 964 $ (455 ) $ 4,536

Nine Months Ended September 30, 2015
Revenues $ 9,641 $ 24,655 $ 5,442 $ 9,451 $ - $ 49,189
% of total revenue 19.6 % 50.1 % 11.1 % 19.2 % -% 100.0 %
Net income (loss) $ 1,585 $ 910 $ (569 ) $ 932 $ (710 ) $ 2,148
Net income (loss) attributable to WCR common shareholders $ 1,572 $ 910 $ (569 ) $ 932 $ (710 ) $ 2,135

Pro Forma Nine Months Ended September 30, 2015

Pro Forma Revenues $ 9,641 $ 29,632 $ 30,296 $ 9,451 $ - $ 79,020
Pro Forma % of total revenue 12.2 % 37.5 % 38.3 % 12.0 % -% 100.0 %
Pro Forma Net income (loss) $ 1,585 $ 967 $ 1,365 $ 932 $ (408 ) $ 4,441
Pro Forma Net income (loss) attributable to WCR common shareholders $ 1,572 $ 967 $ 1,365 $ 932 $ (408 ) $ 4428
28

Franchise
Nine Months Ended
September 30,
(in thousands) 2015 % of 2014 % of
2015 2014 Revenues Revenues

Revenues $ 9,641 $ - 100.0 % - %
Less:
Cost of revenues 730 - 7.6 % - %
Expenses 7,326 - 75.9 % - %
Net income $ 1,585 $ - 16.5 % - %
~~Our U.S. franchisees reported center sales for the nine months ended September 30, 2015 and 2014, as follows:~~
2015 2014
Total gross U.S. network-wide center sales $ 199,347,000 $ 189,802,000

The table below summarizes the number of AlphaGraphics business centers owned and operated by franchisees during the ~~nine-month~~nine month periods ended September, 2016 and 2015:
Beginning New Closed Ending
2016
US Centers 254 7 (3 ) 258
International Centers 25 - - 25
Total 279 7 (3 ) 283

2015
US Centers 242 14 (4 ) 252
International Centers 32 - (6 ) 26
Total 274 14 (10 ) 278
Our U.S. franchisees reported approximate center sales for the nine month periods ended September 30 ~~2015 and 2014:~~as follows:

Beginning New Closed Ending
2015
US Centers 242 14 4 252
International Centers 32 0 6 26
Total 274 14 10 278

2014
US Centers 243 7 �� 6 244
International Centers 34 2 4 32
Total 277 9 10 276
2016 2015
Total gross U.S. network-wide center sales $ 208,510,000 $ 199,346,000

Revenues ~~and net income~~ for the ~~nine-months~~nine month period ended September 30, 2016 and 2015 were $11.45 million and $9.64 million, respectively. Contributing to the revenue growth of 18.78% was a 7.14% increase in royalty and franchise development fee revenue and a 122.04% increase in services revenue, primarily attributable to revenue from new low margin services added in 2016. The revenue growth, net of direct costs and together with a 6.18% increase in operating costs period over period resulted in the segment net income increase to $1.83 million from $1.59 million ~~respectively, compared to pro forma revenues and net income~~ for the prior year comparable ~~period in 2014 of $9.57 million and $1.17 million, respectively. Gross U.S. network-wide center sales as provided by franchisees increased 5.0% over the comparable periods.~~period.

Cellular Retail

~~The following table summarizes our Cellular Retail segment operating results:~~
Nine Months Ended
September 30,
(in thousands) 2015 % of 2014 % of
2015 2014 Revenues Revenues

Revenues $ 24,655 $ 17,305 100.0 % 100.0 %
Less:
Cost of revenues 12,058 8,435 48.9 % 48.7 %
Expenses 11,687 8,671 47.4 % 50.2 %
Net income (loss) $ 910 $ 199 3.7 % 1.1 %
A summary table of the number of Cricket cellular retail stores we operated during the ~~nine-month~~nine month periods ended September 30, ~~2015~~2016 and ~~2014~~2015 follows:

2015 2014
Beginning 61 57
Acquired/ Launched 49 6
Closed (8 ) (5 )
Ending 102 58
29
2016 2015
Beginning 99 61
Acquired/ Launched 33 49
Closed (6 ) (8 )
Ending 126 102

~~Revenues~~Average store revenue and gross profit was down period over period as expected since the prior period volume was positively influenced by customer migrations to Cricket Wireless’ new GSM network. Discounted phone prices (with a corresponding decrease in the Cellular Retail segment increased $7.35 million, or 42.5%, to $24.66 million for the nine months ended September 30, 2015, compared to $17.31 million for the nine months ended September 30, 2014. This increase is due to a several factors thatcost) have also contributed to ~~an approximate 68% increase~~the decrease in ~~units sold period over period. Factors include our acquisition~~revenue. However, dealer compensation and customer fee revenue, both with no direct cost of additional stores, relocation or closing of under-performing locations and the effects of AT&T’s acquisition of Cricket Wireless, which effects include Cricket Wireless’ post-acquisition offering of subsidized and/or lower priced handsets to existing Cricket customers migrating off the older CDMA network onto the current GSM network and Cricket Wireless’ increased post-acquisition advertising and marketing. The migration of Cricket customers had a significant contribution to our increased unit sales throughout the year.
Our expenses increased $3.02 million from $8.67 million for the nine-month period ended September 30, 2014 to $11.69 million for the nine-month period ended September 30, 2015, primarily as a result of adding new stores but partially offset by the reduction in costsrevenues associated with the ~~closure~~revenue, each have increased. Increased operating costs include one-time store consolidation costs in addition to cost incurred related to expansion efforts. Management expects to realize the benefit of a small number of underperforming stores. Stated as a percentage of Cellular Retail revenues, our expenses were 47.4% and 50.1% of revenue for the nine months ended September 30, 2015 and 2014, respectively.
We operate in a highly competitive marketplace and our future growth and success is largely dependent on our relationship with Cricket and the dealer compensation package and operational requirements provided by Cricket Wireless. We expect to continue our strategic acquisitions of other dealers, the opening of additional Cricket stores in new and existing markets, and the consolidation of store locations operatingthese non-recurring costs in the ~~same markets to reduce our operating costs.~~mid-term.

Direct to Consumer

~~The following table summarizes~~On July 1, 2015, we added our newest segment, Direct to Consumer. Revenues for the nine month period ended September 30, 2016 were $30.70 million, up a marginal 1.3% from pro forma revenues for the comparable period in 2015 of $30.30 million. For the nine month period ended September 30, 2016, the Direct to Consumer segment ~~operating results:~~
Nine Months Ended
September 30,
(in thousands) 2015 % of 2014 % of
2015 2014 Revenues Revenues

Revenues $ 5,442 $ - 100.0 % - %
Less:
Cost of revenues 2,703 - 49.7 % - %
Expenses 3,308 - 60.7 % - %
Net income $ (569 ) $ - (10.4 )% - %
~~Revenues and~~had net ~~loss, which include only the three months~~income of ~~activity since acquisition on July 1, 2015,, were $5.44~~$1.68 million and ~~($0.57) million, respectively. Pro~~pro forma ~~revenues and~~ net income ~~for the nine month periods in 2015 and 2014 are $30.3 million and~~of $1.37 million ~~and $30.6 million and $0.48 million, respectively.~~in the comparable period of the prior year, a 22.6% increase.

Consumer Finance
~~The following table summarizes our Consumer Finance segment operating results:~~
Nine Months Ended
September 30,
(in thousands) 2015 % of 2014 % of
2015 2014 Revenues Revenues

Revenues $ 9,451 $ 9,506 100.0 % 100.0 %
Less:
Cost of revenues 1,920 1,675 20.3 % 17.6 %
Expenses 6,599 6,893 69.8 % 72.5 %
Net income $ 932 $ 938 9.9 % 9.9 %

A summary table of the number of consumer finance locations we operated during the ~~nine-month~~nine month periods ended September 30, ~~2015~~2016 and ~~2014~~2015 follows:

2015 2014
Beginning 51 52
Acquired/ Launched - -
Closed - (1 )
Ending 51 51
30
2016 2015
Beginning 47 51
Acquired/ Launched - -
Closed (2 ) -
Ending 45 51

Our Consumer Finance segment revenues ~~increased slightly~~decreased 6.57% for the nine months ended September 30, ~~2015 compared to~~2016 from the comparable nine ~~months~~month period ended September 30, ~~2014.~~2015. Same store payday and installment lending revenue decreased 3.76%. The ~~increase~~impact of the regional economic downturns in ~~our revenues for~~ the ~~nine months ended September 30, 2015 was due to slight growth in pawn retail sales.~~
~~Our cost of revenues increased $0.25 million,~~Midwest, primarily ~~due~~Wyoming, North Dakota and South Dakota, have contributed significantly to the ~~increased pawn retail sales. Our~~decrease in same store revenue period over period. Similarly to the quarter over quarter results, reductions in net bad debt and operating ~~expenses for~~costs have helped to keep the net results relatively stable period ~~decreased from 72.5% of segment revenue to 69.8%.~~over period.

Corporate

Costs related to our ~~new~~ Corporate segment were $0.46 million for the nine months ended September 30, 2016 compared to $0.71 million for the nine months ended September 30, 2015. The nine month period in 2015 ~~which includes nonrecurring acquisition costs of~~included approximately $0.32 ~~million. As acquisition activity increases or decreases, costs within this segment will show a corresponding change.~~million in transaction related costs.

Liquidity and Capital Resources

Summary cash flow data is as follows:

Nine Months Ended September 30,
2015 2014 Nine Months Ended September 30,
2016 2015
Cash flows provided (used) by:
Operating activities $ 273,798 $ 2,299,224 $ 2,256,955 $ 273,798
Investing activities (644,645 ) (461,106 ) (1,723,606 ) (644,645 )
Financing activities (353,775 ) (750,388 ) (485,121 ) (353,775 )
Net increase (decrease) in cash (724,622 ) 1,087,730 48,228 (724,622 )
Cash, beginning of period 4,273,350 1,983,835 7,847,669 4,273,350
Cash, end of period $ 3,548,728 $ 3,071,565 $ 7,895,897 $ 3,548,728

At September 30, ~~2015,~~2016, we had cash of ~~$3.55~~$7.90 million compared to cash of ~~$3.07~~$3.55 million on September 30, ~~2014. Cash~~2015. Both comparable periods include cash flows ~~provided by operating activities along with a $1.0 million draw on a credit facility have been~~ utilized for growth in our Cellular Retail division in 2015 and for scheduled repayments of term debt obligations. The cash used in investing activity year-to-date through September 30, 2015 of $0.64 million is net of $2.47 million of cash received in the acquisition of JPPA, RAI and JPRE on July 1, 2015.segment. We believe that our available cash, combined with expected cash flows from operations and available financing, will be sufficient to fund our ~~liquidity~~scheduled debt repayments and the Cellular Retail segment anticipated capital ~~expenditure requirements~~expenditures through September 30, 2016. Our expected short-term uses of available cash together with utilizing our line of credit facilities include the funding of operating activities, including anticipated increases in inventory levels, the financing of additional Cellular Retail segment expansion activities and the reduction of term debt.
~~Credit Facility - WCR~~
On October 18, 2011 (and later amended on December 7, 2012, March 21, 2014 and May 21, 2015), we entered in a borrowing arrangement with River City Equity, Inc. Under this arrangement, as amended, we may borrow up to $3.0 million at an interest rate of 12% per annum, with interest payable on a monthly basis. The note contains no prepayment penalties, and pursuant to the May 21, 2015 amendment, matures on June 30, 2016. The note, under certain circumstances, permits River City Equity to obtain a security interest in substantially all of our assets. As of September 30, 2015, $3.0 million was due and owing under this borrowing agreement.
~~Credit Facilities - AGI~~
AGI is a party to term and revolving notes payable with a financial institution. Under the term debt agreements, $2.0 million was outstanding at September 30, 2015. The notes accrue interest at prime rate plus 2.5% per annum (5.75% as of September 30, 2015), require quarterly payments of $375,000 principal plus accrued interest, and mature in June 2017. Under the revolving debt agreement, as amended, AGI may borrow up to $1.0 million, accruing interest at the higher of (a) prime rate plus 2.5% per annum or (b) the LIBOR rate plus 5.5% per annum. AGI has not drawn on the revolving debt arrangement during the nine-month period ended September 30, 2015. The revolving note matures in August 2017. The notes payable are secured by all the assets of AGI.
~~Credit Facilities - JPPA~~
JPPA is a party to a revolving line of credit with a financial institution. Under the related debt agreement, as amended, JPPA may borrow up to $4.25 million, subject to borrowing base constraints as defined in the agreement, accruing interest at LIBOR plus 2.75% per annum (3.0% as of September 30, 2015). Amounts borrowed under the debt agreement mature in June 2017. The line of credit is secured by substantially all the assets of JPPA. There was no outstanding balance at September 30, 2015.
31
~~Credit Facilities - RAI~~
RAI is a party to a revolving line of credit with a financial institution. Under the related debt agreement, as amended, RAI may borrow up to $2 million, subject to borrowing base constraints as defined in the agreement, accruing interest at LIBOR plus 3.5% per annum (3.75% as of September 30, 2015). Amounts borrowed under the debt agreement mature in November 2015. The line of credit is secured by substantially all the assets of RAI. There was no outstanding balance at September 30, 2015.
~~Credit Facilities - JPRE~~
JPRE is a party to term note payable with a financial institution. Under the term debt agreement, $3.47 million was outstanding at September 30, 2015. The note accrues interest at LIBOR plus 3.5% per annum (3.75% as of September 30, 2015), requires monthly payments of $33,334 principal plus accrued interest, and matures in July 2019. The note payable is secured by substantially all the assets of JPRE.

Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements as of September 30, ~~2015.~~2016.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in our reports filed pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance the objectives of the control system are met.

We utilize the Committee of Sponsoring Organization’sInternal Control – Integrated Framework, 2013 version,for the design, implementation and assessment of the effectiveness of our disclosure controls and procedures and internal control over financial reporting.

As of September 30, ~~2015,~~2016, our Chief Executive Officer and Chief Financial Officer carried out an assessment of the effectiveness of our disclosure controls and procedures as such term is defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934.Based on this assessment, ~~management identified material weaknesses in~~ our ~~internal control over financial reporting, as described below. As a result of these material weaknesses, management~~Chief Executive Officer and Chief Financial Officer concluded ~~that,~~our disclosure controls and procedures are effective as of September 30, 2015, our internal control over financial reporting was not effective based on the Framework. Nevertheless, as a result of the completion of our independent review of certain transactions, and remedial actions taken by management prior to the filing of this quarterly report, we believe that the consolidated financial statements contained in this report present fairly, in all material respects, our financial position, results of operations, and cash flows as of the dates, and for the periods, presented in conformity with generally accepted accounting principles in the Unites States of America (“GAAP”)2016.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.
~~The following control deficiencies were identified and were determined to be material weaknesses in our internal control over financial reporting as of September 30, 2015:~~
· Effective controls over the period-end financial reporting process with respect to journal entries and proper segregation of duties were not maintained. Journal entries, both recurring and nonrecurring, were not always accompanied by sufficient supporting documentation and were not adequately reviewed and approved for validity, completeness and accuracy.
· Proper segregation of duties within the financial application were not maintained. In certain instances, persons responsible for financial reporting lacked restrictions to their access to ensure separation of functions involving custody of assets, authorization or approval of related transactions affecting those assets, and recording or reporting of related transactions were established and maintained.
· Effective general computer controls to ensure proper change management policies and procedures existed and were followed for migration of updates and upgrades to our financial application or to maintain separate development, test and production environments were not implemented.
32
~~MANAGEMENT’S REMEDIATION PLAN~~
~~Management has undertaken appropriate remediation efforts to correct the identified material weaknesses as follow:~~
· Prior to filing this Quarterly Report on Form 10-Q, a Chief Technology Officer (“CTO”) was hired. The CTO has taken active steps to implement separate development, test and production environments, to develop, adopt and issue comprehensive change management policies and procedures, and ensure proper and ongoing training of staff occurs on a routine basis.
· ~~Prior to filing this Quarterly Report on Form 10-Q, realignment of job functions within our financial reporting process to ensure proper segregation of duties began.~~
· We will design and implement role-based security within our financial reporting process and financial application to ensure proper segregation of duties includes the separation of the custody of assets, authorization or approval of related transactions affecting those assets, and recording or reporting of related transactions is established and maintained.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended September 30, ~~2015~~2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

33
25

PART II. OTHER INFORMATION

Item 6. Exhibits

Exhibit Description

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 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

101.INS XBRL Instance Document (filed herewith).

101.SCH XBRL Schema Document (filed herewith).

101.CAL XBRL Calculation Linkbase Document (filed herewith).

101.DEF XBRL Definition Linkbase Document (filed herewith).

101.LAB XBRL Label Linkbase Document (filed herewith).

101.PRE XBRL Presentation Linkbase Document (filed herewith).

34
26

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: November ~~16, 2015~~14, 2016 Western Capital Resources, Inc.
(Registrant)

By: /s/ John Quandahl
John Quandahl
Chief Executive Officer and Chief Operating Officer

By: /s/ Stephen Irlbeck
Stephen Irlbeck
Chief Financial Officer
35

	Nine Months Ended September 30, 2015			Year Ended December 31, 2014
Loans receivable allowance, beginning of period	$	1,219,000		$	1,215,000
Provision for loan losses charged to expense		1,351,427			1,817,822
Charge-offs, net		(1,269,427	)		(1,813,822	)
Loans receivable allowance, end of period	$	1,301,000		$	1,219,000

	Nine Months Ended September 30, 2016			Year Ended December 31, 2015
Loans receivable allowance, beginning of period	$	1,177,000		$	1,219,000
Provision for loan losses charged to expense		1,176,174			1,904,893
Charge-offs, net		(1,360,174	)		(1,946,893	)
Loans receivable allowance, end of period	$	993,000		$	1,177,000

	December 31, 2014			Merger Transaction			Additions			Deletions			September 30, 2015
Furniture and equipment	$	2,853,603		$	492,435		$	1,042,617		$	(730,468	)	$	3,658,187
Leasehold improvements		787,188			-			22,766			(9,117	)		800,837
Software		504,967			1,197,839			81,243			(108,081	)		1,675,968
Building		85,906			5,034,348			28,449			-			5,148,703
Land		9,500			1,200,000			-			-			1,209,500
Other		96,311			-			-			-			96,311
		4,337,475			7,924,622			1,175,075			(847,666	)		12,589,506
Accumulated depreciation		(3,139,765	)		(1,334,555	)		(444,814	)		847,666			(4,071,468	)
	$	1,197,710		$	6,590,067		$	730,261		$	-		$	8,518,038

2015 (remainder)	$	139,720
2016		550,796
2017		537,740
2018		525,991
2019		515,416
2020		499,165
Thereafter		2,575,060
	$	5,343,888

	September 30, 2015		December 31, 2014
Deferred financing fees	$	269,526	$	284,231
Deferred franchise fees		49,579		281,837
Merchandise credits and gift card liability		447,499		-
Other		194,000		72,000
Total	$	960,604	$	638,068

	September 30, 2016			December 31, 2015
Note payable (with a credit limit of $3,000,000) to River City Equity, Inc., a related party, with interest payable monthly at 12% due June 30, 2016 and upon certain events can be collateralized by substantially all assets of WCR, excluding any equity interest in AGI (terminated May 2016)	$			$	3,000,000
Note payable to a financial institution with monthly principal payment of $58,333 plus interest at LIBOR plus 3.5% (4.125% at September 30, 2016), secured by substantially all assets of the Company with stated guarantee amounts by subsidiaries, maturing April 21, 2021		3,266,667			-
Revolving credit facility (with a credit limit of $3,000,000) to a financial institution with monthly payments of interest only at LIBOR plus 3.5% (4.125% at September 30, 2016), secured by substantially all assets of the Company with stated guarantee amounts by subsidiaries, maturing April 21, 2018		1,538,708			-
Subsidiary note payable to a financial institution with quarterly principal payments of $375,000 plus interest at prime rate plus 2.5%, secured by the AGI’s assets, maturing March 2017 (terminated May 2016)		-			1,625,000
Subsidiary note payable to a financial institution with monthly principal payment of $33,334 plus annual paydowns equal to JPRE’s net cash flow from operations due within 120 days of the calendar year end plus interest at LIBOR plus 3.5% (4.125% at September 30, 2016), secured by JPRE assets, maturing June 5, 2019 when remaining principal balance is due		3,071,454			3,371,460
Total		7,876,829			7,996,460
Less current maturities		(1,100,000	)		(4,900,008	)
	$	6,776,829		$	3,096,452

Year	Amount
1	$	1,100,000
2		2,638,716
3		2,971,446
4		700,000
5		466,667
Thereafter		-
	$	7,876,829

Date declared		May 24, 2016		August 11, 2016
Record date		June 6, 2016		September 14, 2016
Date paid		June 15, 2016		September 21, 2016
Dividend per share of common stock	$	0.025	$	0.025

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014		Three Months Ended September 30,				Nine Months Ended September 30,
									2016		2015		2016		2015
Bank fees	$	310,419	$	114,391	$	595,164	$	334,069	$	337,939	$	310,419	$	1,273,057	$	595,164
Collection costs		99,587		102,653		319,890		324,635		85,306		99,587		311,457		319,890
Conferences		460,602		-		671,287		-
Conference expense										468,124		460,602		762,680		671,287
Insurance		110,788		79,339		286,783		177,003		184,106		110,788		528,995		286,783
Management and advisory fees		125,754		126,163		400,057		364,148		195,425		125,754		619,954		400,057
Professional and consulting fees		483,575		106,113		1,401,683		422,515		488,978		483,575		1,531,923		1,401,683
Supplies		167,480		150,058		496,116		474,571		231,995		167,480		591,919		496,116
Other		522,604		374,654		1,583,539		875,607		803,453		522,604		2,429,596		1,583,539
	$	2,280,809	$	1,053,371	$	5,754,519	$	2,972,548	$	2,795,326	$	2,280,809	$	8,049,581	$	5,754,519

	June 1, 2015
Cash	$	389,000
Inventory		427,000
Other receivables		405,000
Property and equipment		612,000
Goodwill		578,000
Intangible assets		903,000
Other assets		69,000
Accounts payable and accrued liabilities		(826,000	)
	$	2,557,000

	July 1, 2015
Cash	$	2,082,000
Accounts Receivables, net		527,000
Inventory		3,170,000
Deferred income tax asset		186,000
Prepaid expense and other current assets		525,000
Property and equipment, net		6,590,000
Goodwill		31,000
Intangible assets, net		122,000
Accounts payable and accrued liabilities		(2,231,000	)
Short-term notes payable		(120,000	)
Income taxes payable		(547,000	)
Deferred revenue and other		(460,000	)
Notes payable and capital leases		(3,583,000	)
Deferred income tax liability		(169,000	)
	$	6,123,000

For the Three Months Ended September 30, 2015 (in thousands except earnings per share)
	Franchise		Cellular Retail		Direct to Consumer			Consumer Finance		Corporate			Total		Franchise			Cellular Retail			Direct to Consumer			Consumer Finance			Corporate			Total
Three Months Ended September 30, 2016
Revenue															$	4,278		$	9,294		$	5,944		$	3,009		$	-		$	22,525
% of total revenue																19.0	%		41.2	%		26.4	%		13.4	%		-%			100.0	%
Net income (loss)															$	749		$	73		$	(325	)	$	391		$	(102	)	$	786
Net income attributable to noncontrolling interests															$	6		$	-		$	-		$	-		$	-		$	6
Net income (loss) attributable to WCR common shareholders															$	743		$	73		$	(325	)	$	391		$	(102	)	$	780
Earnings (loss) per share attributable to WCR common shareholders – basic and diluted															$	0.078		$	0.008		$	(0.034	)	$	0.041		$	(0.011	)	$	0.082

Three Months Ended September 30, 2015
Pro forma revenue	$	3,675	$	9,537	$	5,442		$	3,297	$	-		$	21,951	$	3,675		$	9,537		$	5,442		$	3,297		$	-		$	21,951
% of total pro forma revenue																16.7	%		43.5	%		24.8	%		15.0	%		-%			100.0	%
Pro forma net income (loss)	$	829	$	443	$	(569	)	$	390	$	(167	)	$	926	$	829		$	443		$	(569	)	$	390		$	(167	)	$	926
Pro forma net income attributable to noncontrolling interests	$	6	$	-	$	-		$	-	$	-		$	6	$	6		$	-		$	-		$	-		$	-		$	6
Pro forma net income (loss) available to Western shareholders	$	823	$	443	$	(569	)	$	390	$	(167	)	$	920
Pro forma earnings (loss) per share available to Western common shareholders – basic and diluted	$	0.087	$	0.047	$	(0.060	)	$	0.041	$	(0.018	)	$	0.097
Pro forma net income (loss) attributable to WCR common shareholders															$	823		$	443		$	(569	)	$	390		$	(167	)	$	920
Pro forma earnings (loss) per share attributable to WCR common shareholders – basic and diluted															$	0.087		$	0.047		$	(0.060	)	$	0.041		$	(0.018	)	$	0.097

	12.	Segment Information –
	15
		Segment information related to the three and nine month periods ended September 30, 2016 and 2015 is presented below:

For the Nine Months Ended September 30, 2015 (in thousands except earnings per share)
	Franchise		Cellular Retail		Direct to Consumer		Consumer Finance		Corporate			Total

Pro forma revenue	$	9,641	$	29,632	$	30,296	$	9,451	$	-		$	79,020
Pro forma net income (loss)	$	1,585	$	967	$	1,365	$	932	$	(408	)	$	4,441
Pro forma net income attributable to noncontrolling interests	$	13	$	-	$	-	$	-	$	-		$	13
Pro forma net income (loss) available to Western shareholders	$	1,572	$	967	$	1,365	$	932	$	(408	)	$	4,428
Pro forma earnings (loss) per share available to Western common shareholders – basic and diluted	$	0.165	$	0.102	$	0.144	$	0.098	$	(0.043	)	$	0.466

Year Ending December 31,	Operating Leases
2015 (remainder)	$	938
2016		2,920
2017		2,110
2018		998
2019		554
2020		90
Thereafter		-
Total minimum base lease payments	$	7,610

	Number of Shares		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term *(in years)*		Aggregate Intrinsic Value
Outstanding and nonvested at December 31, 2014		-	$	-			$	-
Granted		65,000		6.00		9.37		-
Vested		-		-				-
Forfeited		-		-				-
Outstanding and nonvested at September 30, 2015		65,000	$	6.00		9.37	$	-
Exercisable at September 30, 2015		-

	Three Months Ended September 30, (in thousands)				2015 % of			2014 % of
	2015		2014		Revenues			Revenues

Revenues	$	3,675	$	-		100.0	%		-	%
Less:
Cost of revenues		200		-		5.5	%		-	%
Expenses		2,646		-		71.8	%		-	%
Net income	$	829	$	-		22.7	%		-	%

		2015				2014
Total gross U.S. network-wide center sales		$	67,194,000			$	63,641,000

									Beginning		New		Closed			Ending
2016
US Centers										258		1		(1	)		258
International Centers										25		-		-			25
Total										283		1		(1	)		283
	Beginning		New		Closed		Ending
2015
US Centers		250		4		2		252		250		4		(2	)		252
International Centers		26		-		-		26		26		-		-			26
Total		276		4		2		278		276		4		(2	)		278

2014
US Centers		245		-		1		244
International Centers		33		-		1		32
Total		278		-		2		276

	Nine Months Ended September 30, (in thousands)				2015 % of			2014 % of
	2015		2014		Revenues			Revenues

Revenues	$	9,641	$	-		100.0	%		-	%
Less:
Cost of revenues		730		-		7.6	%		-	%
Expenses		7,326		-		75.9	%		-	%
Net income	$	1,585	$	-		16.5	%		-	%

	Nine Months Ended September 30,
	2015			2014			Nine Months Ended September 30,
							2016			2015
Cash flows provided (used) by:
Operating activities	$	273,798		$	2,299,224		$	2,256,955		$	273,798
Investing activities		(644,645	)		(461,106	)		(1,723,606	)		(644,645	)
Financing activities		(353,775	)		(750,388	)		(485,121	)		(353,775	)
Net increase (decrease) in cash		(724,622	)		1,087,730			48,228			(724,622	)
Cash, beginning of period		4,273,350			1,983,835			7,847,669			4,273,350
Cash, end of period	$	3,548,728		$	3,071,565		$	7,895,897		$	3,548,728

Exhibit		Description

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 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

101.INS		XBRL Instance Document (filed herewith).

101.SCH		XBRL Schema Document (filed herewith).

101.CAL		XBRL Calculation Linkbase Document (filed herewith).

101.DEF		XBRL Definition Linkbase Document (filed herewith).

101.LAB		XBRL Label Linkbase Document (filed herewith).

101.PRE		XBRL Presentation Linkbase Document (filed herewith).

Dated: November ~~16, 2015~~14, 2016	Western Capital Resources, Inc.
	(Registrant)

	By:	/s/ John Quandahl
		John Quandahl
		Chief Executive Officer and Chief Operating Officer

	By:	/s/ Stephen Irlbeck
		Stephen Irlbeck
		Chief Financial Officer