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

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

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

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☑ No ☐

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of ~~August~~May 14, ~~2020,~~2021, the registrant had outstanding ~~9,134,889~~9,249,900 shares of common stock, $0.0001 par value per share.

Western Capital Resources, Inc. (“WCR”) is a parent company owning operating subsidiaries, with percentage owned shown parenthetically, as summarized below.

PQH Wireless, Inc. (“PQH”) (100%) – operates 205 cellular retail stores as of March 31, 2021 (104 100% owned plus 101 held through its controlled but less than 100% owned subsidiaries), exclusively as an authorized retailer of the Cricket brand.

J&P Park Acquisitions, Inc. (“JPPA”) (100%) – an online and direct marketing distribution retailer of 1) live plants, seeds, holiday gifts and garden accessories selling its products under Park Seed, Jackson & Perkins, and Wayside Gardens brand names and 2) home improvement and restoration products operating under the Van Dyke’s Restorers brand, as well as a seed wholesaler under the Park Wholesale brand.

J&P Real Estate, LLC (“JPRE”) (100%) – owns real estate utilized as JPPA’s distribution and warehouse facility.

Swisher Acquisition, Inc. (“SAI”) (100%) - a manufacturer of lawn and garden power equipment and emergency safety shelters under the Swisher brand name, and provides turn-key manufacturing services to third parties.

Wyoming Financial Lenders, Inc. (“WFL”) (100%) – owns and operates “payday” stores (19 as of March 31, 2021) in four states (Iowa, Kansas, North Dakota 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, 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”) (100%) – owns and operates retail pawn stores (three as of March 31, 2021) 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 as” “PQH,” “JPPA,” “JPRE,” “SAI,” “WFL,” or “EPI” are references only to those companies.

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 note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been omitted.

On January 8, 2021, we completed a merger with SAI (“Merger Transaction”). The Company issued 408,000 shares of our common stock in exchange for all of the equity interest of SAI resulting in SAI becoming a wholly-owned subsidiary of the Company. The transaction falls under the guidance of Accounting Standards Codification (“ASC”) 805, “Business Combinations” for entities under common control. Financial statements and financial information presented herein for prior years has been retrospectively adjusted using the pooling-of-interest method to furnish enhanced comparative information.

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the ~~three and six month periods~~three-month period ended ~~June 30, 2020~~March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2020.~~2021.

Management has analyzed the impact of the Coronavirus pandemic ~~("COVID-19"~~(”COVID-19”) on its financial statements as of ~~June 30, 2020~~March 31, 2021 and has determined that the changes to its significant judgements and estimates did not have a material impact with respect to goodwill, intangible assets or long-lived assets.

For further information, refer to the Consolidated Financial Statements and notes thereto included in our Form 10-K for the year ended December 31, 2019. The condensed consolidated balance sheet at December 31, 2019, has been derived from the audited consolidated financial statements at that date, but does not include all of the information and notes required by GAAP.2020.

~~Western Capital Resources, Inc. (“WCR”) is a parent company owning operating subsidiaries, with percentage owned shown parenthetically, as summarized below.~~

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 as” “PQH,” “JPPA,” “JPRE,” “WFL,” or “EPI” are references only to those companies.

The consolidated financial statements include the accounts of WCR, its ~~wholly owned~~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 provisions of Financial Accounting Standards Board ~~Accounting Standards Codification~~ (“~~ASC”~~FASB”) ASC 810, “Consolidation” applicable to reporting the equity and net income or loss attributable to noncontrolling interests. ~~All significant intercompany~~Intercompany balances and transactions of the Company have been eliminated in consolidation.

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

~~Certain Statement~~For purposes of ~~Income reclassifications have been made~~the consolidated statements of cash flows, the Company considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents.

Inventory is stated at the lower of cost or market. Cost for manufactured finished goods is determined using the standard cost method. Raw materials consist primarily of parts used to make products. Fabricated components consist of processed raw materials, capitalized labor and overhead. Finished goods consist of completed products, parts and accessories available for sale. An inventory valuation allowance is provided for excess, obsolete and slow-moving inventory.

The Company computes basic earnings per common share in accordance with ASC 260, Earnings Per Share (“EPS”), which is computed by dividing the ~~presentation~~income available to common shareholders by the weighted average number of ~~our prior financial statements to conform to the presentation as of and~~common shares outstanding for the ~~three and six months ended June 30, 2020.~~period. Diluted EPS gives effect to all potentially dilutive common shares outstanding during the period, as calculated using the treasury stock method. In computing diluted EPS, the weighted average market price for the period is used in determining the number of common shares assumed to be purchased from the exercise of stock options. As of December 31, 2020, 65,000 of potential common shares equivalents from stock options were excluded from the diluted EPS calculations as their effect is anti-dilutive.

In ~~April, 2020~~December 2019, the ~~staff of the Financial~~FASB issued Accounting Standards ~~Board (FASB) issued a question-and-answer document that says entities can elect not to evaluate whether a concession provided by a lessor to a lessee in response~~Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which eliminates certain exceptions to the ~~effects~~existing guidance for income taxes related to the approach for intra-period tax allocations, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. This ASU also simplifies the ~~coronavirus pandemic is a lease modification. Retailers may make the elections~~accounting for ~~any lessor-provided concessions~~income taxes by clarifying and amending existing guidance related to the effects of ~~the coronavirus pandemic as long as the concession does not result~~enacted changes in ~~a substantial increase~~tax laws or rates in the ~~rights~~effective tax rate computation, the recognition of franchise tax and the ~~lessor or~~evaluation of a step-up in the ~~obligations~~tax basis of ~~the lessee.~~goodwill, among other clarifications. ASU 2019-12 is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company ~~has made such election. The Company has received minimal rent concessions and has~~adopted ASU 2019-12 on January 1, 2021, the adoption of which did not ~~entered into any lease modifications to date. As such, the Company does not believe this election will~~ have a material impact on its ~~financial condition, results of operations or consolidated~~ financial statements.

No other new accounting pronouncements issued or effective during the fiscal year have had or are expected to have a material impact on the consolidated financial statements.

Supply Chain - Fluctuations in the availability and price of inputs could have an adverse effect on our ability to manufacture and sell our products profitably and could adversely affect our margins and revenue.

Our manufacturing operations depend upon the adequate supply of steel, engines and other components and raw materials. Our direct to consumer operations depend upon an adequate supply of, among other things, seeds and live plants. Our inability to procure any of these production materials, components or finished goods, delays in receiving them or not being able to procure them at competitive prices, particularly during applicable peak seasons, could adversely impact our ability to produce our products and to sell our products on a cost effective basis which, in turn, could adversely affect our revenue and profitability.

Our results of operations may be negatively impacted by product liability lawsuits.

The Company’s Manufacturing segment is subject to potential product liability risks that relate to the design, manufacture, sale and use of our products. To date, we have not incurred material costs related to these product liability claims. While we believe our current general liability and product liability insurance is adequate to protect us from future product liability claims, there can be no assurance that our coverage will be adequate to cover all claims that may arise. Additionally, we may not be able to maintain insurance coverage in the future at an acceptable cost. Significant losses not covered by insurance or for which third-party indemnification is not available could have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, it may be necessary for us to recall products that do not meet approved specifications, which could result in adverse publicity as well as costs connected to the recall and loss of revenue.

The Company’s Consumer Finance segment activities are highly regulated under numerous federal, state, and local laws, regulations and rules, which are subject to change. New laws, regulations or rules could be enacted or issued, interpretations of existing laws, regulations or 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 the Company. After several years of research, debate, and public hearings, in October 2017 the U.S. Consumer Financial Protection Bureau (“CFPB”) adopted a new rule for payday lending. The 2017 rule, originally scheduled to go into effect in August 2019, would ~~impose~~have imposed significant restrictions on the industry, and it iswas expected that a large number of lenders would be forced to close their stores. The CFPB’s studies projected a reduction in the number of lenders by 50%, while industry studies ~~forecast~~forecasted a much higher attrition rate if the rule is implemented as originally adopted.

However, in January 2018, the CFPB issued a statement that it intends to “reconsider” the ~~regulation and delayed the August 19, 2019 compliance date for the other provisions to November 19, 2020.~~regulation. In July 2020, the CFPB issued a final rule applicable to the 2017 rule. The final rule rescinds the mandatory underwriting provisions of the 2017 rule but does not rescind or alter the payments provisions of the 2017 rule. The ~~Bureau~~CFPB will seek to have these rules go into effect with a reasonable period for entities to come into compliance. The implementation of the final rule ~~could have~~is likely to result in a ~~significant~~reduction of in-house bad debt collections, higher collection costs and thus a negative impact ~~on business conducted within~~and further contraction of our Consumer Finance segment.

Consumer advocacy groups in many states are actively seeking state law changes which would effectively end the viability of a payday loan business, including Nebraska where in 2019 we generate approximately 30% of our payday lending revenue, or approximately 2% of our consolidated revenue. If these groups are successful in Nebraska, we will likely cease payday lending activities in Nebraska. In June 2020, a Nebraska group submitted signatures for a ballot initiative that would limit all fees charged by payday lenders in Nebraska to an annual interest rate of 36%. As a result, the initiative is expected to be on the Nebraska statewide ballot for the November 3, 2020 election.

The ~~implementation of the CFPB~~above rule ~~the passage of the Nebraska ballot initiative~~ or any other adverse change in present federal, state, or local 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 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 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 resulting from the cessation or curtailment of operations, or a decrease in operating income through increased legal expenditures or fines, and could also negatively affect the Company’s general business prospects due to lost or decreased operating income or if negative publicity effects its ability to obtain additional financing as needed.

In addition, the passage of federal, additional state or local laws and regulations or changes in interpretations of them could, at any point, essentially prohibit 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, financial condition and prospects, and perhaps even the viability of the Consumer Finance segment.

The following table shows the Company’s cash and cash equivalents, held-to-maturity investments, and other investments by significant investment category, recorded as cash and cash equivalents or short- and long-term investments:

Interest income recognized on held-to-maturity investments and other sources was as follows:

The Company has demand deposits at financial institutions, often times in excess of the limit for insurance by the Federal Deposit Insurance Corporation. As of ~~June 30, 2020,~~March 31, 2021, the Company had demand deposits in excess of insurance amounts of approximately ~~$7.93~~$14.10 million.

In December 2019 COVID-19 emerged in Wuhan, China. While initially the outbreak was largely concentrated in China and caused significant disruptions to its economy, it has now spread to almost all other countries, including the United States, and infections have been reported globally.

Because COVID-19 infections have been reported throughout the United States, certain federal, state and local governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. Additional, more restrictive proclamations and/or directives may be issued in the future. Since the start of the pandemic, the Company’s Cellular Retail segment had temporarily closed approximately 75 locations, all but 22 of which subsequently re-opened by the end of April 2020. In June 2020, those 22 closed locations plus five others were permanently closed.

The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, reduced customer traffic and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but may have a material impact on our business, financial condition and results of operations. The significance of the impact of the COVID-19 outbreak on the Company’s businesses and the duration for which it may have an impact cannot be determined at this time.

The following table shows the Company’s cash and cash equivalents and held-to-maturity investments, by significant investment category, recorded as cash and cash equivalents or short- and long-term investments:

~~Interest income recognized on held-to-maturity investments and other sources was as follows:~~

The Company has deposited in aggregate ~~$1.75~~$2.79 million of cash across seven different accounts at a financial ~~institution~~institutions as an accommodation to its majority stockholder, who has other business relationships with the financial institution. The funds in these accounts can be withdrawn at any time, do not serve as collateral in any way, and are held on market terms.

The Consumer Finance segment’s outstanding loans receivable aging is as follows:

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

A portion of accounts receivable are unsettled credit card sales from the prior one to five business days. ~~This makes up 79%~~Included in Accounts Receivable is $1,054,354 and ~~68%~~$492,213 of ~~the net~~merchant accounts receivable ~~balance at June 30, 2020~~as of March 31, 2021 and December 31, ~~2019,~~2020, respectively.

As a result of changes in the market for certain Company products and the resulting deteriorating value, carrying amounts for those inventories were reduced by approximately ~~$751,000~~$1.53 million and ~~$1,065,000~~$1.32 million at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. These inventory write-downs have been reflected in adjustments to cost of goods sold in the statement of operations. Management believes that these reductions properly reflect inventory ~~at lower of cost or market,~~values, and no additional losses will be incurred upon disposition.

~~The Company lease accounting policy follows~~Prepaid direct-response advertising costs as of March 31, 2021 and December 31, 2020 were $0 and $0.48 million, respectively. Included in Advertising, Marketing and Development for the ~~guidance from ASC 842 - Leases, which provides guidance on the recognition, presentation~~three-month periods ended March 31, 2021 and ~~disclosure~~2020 was advertising expenses of ~~leases in consolidated condensed financial statements.~~$1.96 million and $1.66 million, respectively.

Total components of operating lease expense ~~for the real property asset class~~ (in thousands) were as ~~follows:~~follows for the three months ended:

Future minimum lease payments under operating leases as of ~~June 30, 2020~~March 31, 2021 (in thousands) were as follows:

On October 22, 2010 SAI obtained a senior credit facility (“Revolving Loan”) with a bank. The Revolving Loan, as amended, has a credit limit of up to $4,500,000 based on percentages of eligible inventory, an interest rate of LIBOR plus 4.5%, and a maturity date of October 21, 2021, is secured by substantially all assets of SAI and contains certain restrictive financial covenants.

On August 6, 2010 SAI executed secured subordinated promissory notes (“Subordinated Loans”) to borrow $1,350,000 from parties that were majority shareholders up until the Merger Transaction on January 8, 2021. The notes, as amended, included interest at 16% and a maturity date of December 31, 2023. Pursuant to the Merger Transaction, $596,602 of principal and $123,572 of accrued interest was paid at or around the closing of the Merger Transaction and the remaining principal balance of $922,178 was repaid with WCR stock issued in the Merger Transaction. The $922,178 repayment is presented herein retrospectively to furnish comparative information.

SAI was party to a Management and Advisory Agreement dated August 6, 2010, as amended April 1, 2012, with Blackstreet Capital Management, LLC (“Blackstreet”) under which Blackstreet provides certain financial, managerial, strategic and operating advice and assistance. The agreement required SAI to pay Blackstreet a fee in an amount equal to the greater of (i) $250,000 (subject to annual increases of five percent) or (ii) five percent of SAI’s “EBITDA” as defined under the agreement. As of December 31, 2020, SAI owed Blackstreet $2,513,546 of accrued fees under the agreement. On January 8, 2021, pursuant to the Merger Transaction, the agreement was terminated, $13,546 of the accrued fees were paid to Blackstreet and the remaining $2,500,000 was converted into a note payable to Blackstreet. The note is payable in ten consecutive annual lump sum installments of $250,000, without interest thereon, commencing on January 31, 2021, is unsecured and is guaranteed by the Company. The accrued liability converted to a note is presented herein retrospectively to furnish comparative information.

The Company is party to a variety of legal actions arising out of the normal course of business. Plaintiffs occasionally seek punitive or exemplary damages. The Company does not believe that such normal and routine litigation will have a material impact on its consolidated financial results.

~~Revenue generated from contracts with customers and recognized per ASC 606 primarily consists of sales of merchandise and services at the point of sale and compensation~~Cellular Retail

Compensation from Cricket ~~Wireless.~~Wireless – As a Cricket Wireless authorized retailer, we earn compensation from Cricket Wireless for activating a new customer on the Cricket Wireless network and activating new devices for existing Cricket Wireless customers (“back-end compensation”) and upon an existing Cricket Wireless customer whom we originally activated on the Cricket Wireless GSM network making a continuing service payment (“CSP”). Compensation from Cricket Wireless for the three-month periods ended March 31, 2021 and 2020 was $8.71 million and $8.53 million, respectively.

Cellular Retail segment temporarily closed approximately 75 retail locations in March 2020. In conjunction with the request, Cricket Wireless notified the Company that it would be providing temporary supplemental commissions for the store closures. In addition, Cricket Wireless temporarily increased other supplemental commissions for qualifying activations. COVID-19 related supplemental commissions of approximately $1,245,000 and $1,530,000, as reported to us by Cricket, was included in revenue in the three and six month periods ended June 30, 2020. The closure related supplemental compensation assistance from Cricket ended by June 30, 2020.

~~Revenue generated from short-term lending agreements in the Consumer Finance segment and from Company investments~~revenues are recognized ~~in accordance with~~per ASC ~~825.~~

~~Total net sales~~606 and consist of ~~merchandise, which exclude sales taxes, are generally recorded as follows:~~the following:

Direct to Consumer revenue is recognized per ASC 606 and consists of the following:

Consumer Finance revenue from merchandise sales is recognized per ASC 606 and consists of the following:

Consumer finance revenue from customer paid fees is generally recorded at point of sale when payment is received and the customer receives the benefit of the service. CSP compensation from Cricket Wireless is recorded as of the time certain Cricket Wireless customers make a service payment, as reported to us by Cricket Wireless.

~~Recognized as revenue per ASC 825, Consumer Finance~~ loan fees and interest ~~on cash advance loans are~~is recognized ~~on a constant-yield basis ratably over a loan’s term. Installment loan fees~~per ASC 825 and ~~interest are recognized using~~consist of the interest method, except that installment loan origination fees are recognized as they become non-refundable and installment loan maintenance fees are recognized when earned. The Company recognizes fees on pawn loans on a constant-yield basis ratably over the loans’ terms, less an estimated amount for expected forfeited pawn loans which is based on historical forfeiture rates.following:

See Note ~~14,~~15, “Segment Information,” for disaggregation of revenue by segment.

~~Cellular Retail Acquisitions~~

~~In 2020, PQH completed Cricket retail location transactions, acquiring 18 locations.~~

In 2019, PQH contributed a note payable in exchange for a 51% ownership interest in a newly formed subsidiary Summit JV, LLC (“Summit”) and another Cricket Wireless dealer contributed substantially all its assets, including 28 Cricket Wireless retail locations, and specified liabilities in exchange for a 49% ownership interest in Summit and receipt of the note payable contributed by PQH. Effective March 1, 2019, we consummated the transaction.

~~The purchase price calculations (in thousands) are as follows:~~

2020 2019
Cash $ 506 $ —
Note payable — 18
Noncontrolling interests/equity — 17
$ 506 $ 35

~~The assets acquired and liabilities assumed (in thousands) were recorded at their estimated fair values as of the purchase dates as follows:~~

2020 2019
Cash $ 2 $ 14
Receivables — 272
Inventory 66 50
Property and equipment 234 596
Intangible assets 234 —
Operating lease right-of-use assets 1,124 772
Other assets 32 48
Other liabilities (55 ) (597 )
Operating lease liabilities (1,124 ) (772 )
Term note payable — (348 )
$ 513 $ 35

14.

Segment Information –

Segment information related to the ~~three and six month~~three-month periods ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ (in thousands) is as follows:

Three Months Ended June 30, 2020
(in thousands)

Cellular Retail
Direct to Consumer Consumer Finance Corporate Total

Revenue from external customers $ 21,488 $ 16,340 $ 572 $ — $ 38,400
Fees and interest income $ — $ — $ 1,172 $ — $ 1,172
Total Revenue $ 21,488 $ 16,340 $ 1,744 $ — $ 39,572
Net income (loss) $ 1,534 $ 3,557 $ 140 $ (163 ) $ 5,068
Expenditures for segmented assets $ 298 $ 81 $ — $ — $ 379

Three Months Ended March 31, 2021
(in thousands)

Three Months Ended June 30, 2019
(in thousands)

Cellular Retail
Direct to Consumer Consumer Finance Corporate Total

Revenue from external customers $ 16,283 $ 11,473 $ 414 $ — $ 28,170
Fees and interest income $ — $ — $ 1,986 $ — $ 1,986
Total Revenue $ 16,283 $ 11,473 $ 2,400 $ — $ 30,156
Net income $ 441 $ 693 $ 228 $ 17 $ 1,379
Expenditures for segmented assets $ 93 $ 33 $ — $ — $ 126

Six Months Ended June 30, 2020 (in thousands)


	Cellular Retail		Direct to Consumer		Consumer Finance		Corporate			Total
												Cellular Retail		Direct to Consumer		Manufacturing			Consumer Finance		Corporate			Total
Revenue from external customers	$	41,021	$	27,939	$	993	$	—		$	69,953	$	25,511	$	14,678	$	2,523		$	472	$	—		$	43,184
Fees and interest income	$	—	$	—	$	3,216	$	—		$	3,216	$	—	$	—	$	—		$	1,002	$	—		$	1,002
Total Revenue	$	41,021	$	27,939	$	4,209	$	—		$	73,169
Total revenue												$	25,511	$	14,678	$	2,523		$	1,474	$	—		$	44,186
Net income (loss)	$	2,719	$	4,732	$	365	$	(381	)	$	7,435	$	2,522	$	2,269	$	(18	)	$	162	$	(256	)	$	4,679
Total segment assets	$	35,980	$	13,247	$	7,967	$	38,876		$	96,070	$	40,186	$	17,515	$	10,629		$	6,356	$	37,149		$	111,835
Expenditures for segmented assets	$	634	$	199	$	—	$	—		$	833	$	191	$	63	$	—		$	—	$	—		$	254

Six Months Ended June 30, 2019
(in thousands)

Cellular Retail
Direct to Consumer Consumer Finance Corporate Total

Revenue from external customers $ 32,784 $ 22,414 $ 815 $ — $ 56,013
Fees and interest income $ — $ — $ 4,101 $ — $ 4,101
Total Revenue $ 32,784 $ 22,414 $ 4,916 $ — $ 60,114
Net income (loss) $ 1,012 $ 1,343 $ 462 $ (138 ) $ 2,679
Total segment assets $ 34,063 $ 10,945 $ 8,844 $ 35,153 $ 89,005
Expenditures for segmented assets $ 322 $ 67 $ — $ — $ 389

Three Months Ended March 31, 2020
(in thousands)

	Cellular Retail		Direct to Consumer		Manufacturing			Consumer Finance		Corporate			Total
Revenue from external customers	$	19,533	$	11,599	$	2,050		$	421	$	—		$	33,603
Fees and interest income	$	—	$	—	$	—		$	2,045	$	—		$	2,045
Total revenue	$	19,533	$	11,599	$	2,050		$	2,466	$	—		$	35,648
Net income (loss)	$	1,184	$	1,176	$	(191	)	$	225	$	(218	)	$	2,176
Total segment assets	$	35,495	$	15,307	$	11,653		$	8,347	$	35,157		$	105,959
Expenditures for segmented assets	$	336	$	118	$	—		$	—	$	—		$	454

15.

~~Commitments~~Basic and ~~Contingencies~~Diluted Weighted Average Shares Outstanding –

~~Employment Agreements~~Following is the calculation of basic and diluted weighted average shares outstanding as of:

~~Pursuant to the numerous employment agreements, bonuses of approximately $339,000 and $585,000 were accrued for the three and six months ended June 30, 2020, respectively.~~

	Three Months Ended:
	March 31, 2021		December 31, 2020
Weighted average shares outstanding - basic		9,249,900		9,265,778
Retroactive adjustment – shares issued January 8, 2021		—		408,000
Adjusted weighted average shares outstanding - basic		9,249,900		9,673,778

Dilutive common shares:
Stock options (treasury method)		8,231		—
Weighted average shares outstanding - diluted		9,258,131		9,673,778

~~Assigned Leases~~

The Company’s Cellular Retail segment has transferred operations of many locations to other dealers and remains contingently liable under many lease agreements. Minimum lease payments of assigned or assumed non-cancelable operating leases related to transferred locations in which a release has not been obtained from the lessor are approximately $1,594,000 as of June 30, 2020.

~~Legal Proceedings~~

16.

Dividends –

Our Board of Directors declared and paid the following dividend payable in the first quarter of 2021:

Date Declared	Record Date	Dividend Per Share	Payment Date	Dividend Paid
February 15, 2021	February 23, 2021	$0.025	March 5, 2021	$231,248

17.

Subsequent Events –

Dividend Declared

Our Board of Directors declared the following ~~dividend:~~dividend after March 31, 2021:

Date Declared	Record Date	Dividend Per Share	Payment Date
~~August 4, 2020~~May 6, 2021	~~August 25, 2020~~May 21, 2021	$0.025	~~September~~June 4, ~~2020~~2021

SAI Amended and Restated Credit Agreement

SAI entered into an Amended and Restated Credit Agreement (the “Credit Agreement”) with its senior lender on April 8, 2021. The Credit Agreement provides for a revolving line of credit of up to $2.5 million based on an inventory and receivables availability, and subjects SAI to various covenants, including a minimum Fixed Charge Coverage ratio and maximum Senior Funded Debt to EBITDA ratio. The Commercial Promissory Note associated with the Credit Agreement has a maturity date of April 30, 2022.

We evaluated all events or transactions that occurred after ~~June 30, 2020~~March 31, 2021 through the date we issued these financial statements. During this period we did not have any other material subsequent events that impacted our financial statements.

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

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

●

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

●

Litigation and regulatory actions directed toward the consumer finance industry or us, particularly in certain key states;

●

Our need for additional financing;

●

Changes in our authorization to be a dealer for Cricket Wireless;

●

Changes in authorized Cricket dealer compensation;

●

Lack of advertising support and sales promotions from Cricket Wireless in the markets we operate;

●

Direct and indirect effects of COVID-19 on our employees, customers, our supply chain, the economy and financial markets; and

●

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

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

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

OVERVIEW

Western Capital Resources, Inc. (“WCR”), a Delaware corporation originally incorporated in Minnesota in 2001 and reincorporated in Delaware in 2016, is a holding company having a controlling interest in subsidiaries operating in the following industries and operating segments:

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~~wholly-owned subsidiary PQH Wireless, Inc. and its controlled but less than 100% owned subsidiaries. Our Direct to Consumer segment consists of a ~~wholly owned~~wholly-owned branded 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 and home improvement and restoration products operating as Van Dyke’s Restorers as well as a wholesaler under the Park Wholesale brand. Our manufacturing segment consists of a wholly-owned manufacturer of lawn and garden power equipment and emergency safety shelters selling products primarily under the Swisher brand name, and provides turn-key manufacturing services to third parties. Our Consumer Finance segment consists of retail financial services conducted through our ~~wholly owned~~wholly-owned subsidiaries Wyoming Financial Lenders, Inc. and Express Pawn, Inc. Throughout this report, we collectively refer to WCR and its consolidated subsidiaries as “we,” the “Company,” and “us.”

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 condensed consolidated 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 condensed consolidated 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.

Our significant accounting policies are discussed in Note ~~1, “Basis of Presentation, Nature of Business and Summary~~2, “Summary of Significant Accounting Policies,” of the notes to our condensed consolidated financial statements included in this report together with our significant accounting policies discussed in Note 1, ~~“Nature~~“Basis of Presentation, Nature of Business and Summary of Significant Accounting Policies,” of the

notes to our December 31, ~~2019~~2020 consolidated financial statements included in our Form 10-K for the year ended December 31, ~~2019.~~2020. 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.

Receivables and Credit Loss Allowance

Direct to Consumer -

Receivables are recorded when billed or accrued and represent claims against third parties that will be settled in cash. The carrying value of receivables is net of ~~the~~an allowance for ~~doubtful accounts, represents their estimated net realizable value.~~credit losses. The allowance for ~~doubtful accounts is estimated based~~credit losses represents an estimate of expected lifetime credit losses on ~~historical collection trends, type of customer,~~ the ~~age of outstanding receivables~~asset considering economic conditions and ~~existing~~future 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.trends. Past due receivable balances are written-off when internal collection efforts have been unsuccessful in collecting the amount due.

Consumer Finance -

Included in loans receivable are unpaid principal, interest and fee balances of payday, installment and pawn 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 the present value of future collections after that date ~~have~~is not ~~been~~expected to be significant. Loans are carried at cost plus accrued interest or fees less payments made and ~~a loans receivable allowance.~~an allowance for credit losses.

We do not specifically reserve for any individual payday or installment loan. Instead, we aggregate loan types for purposes of estimating the ~~loss~~ allowance for credit losses using a methodology that ~~analyzes historical portfolio statistics~~estimates expected lifetime credit losses on the asset considering economic conditions and ~~management’s judgment regarding~~future economic trends. In addition, this methodology takes into account current and expected collection patterns, recent trends noted in the ~~portfolio. This methodology takes into account several factors, including (1) the amount of loan principal, interest~~portfolio and ~~fee outstanding, (2) historical~~ charge ~~offs~~off patterns from loans that originated during the last 24 months, (3) current and expected collection patterns and (4) current economic trends. We utilize a software program to assist with the tracking of our historical portfolio statistics. A loan loss allowance is maintained for anticipatedwhich assists management in estimating future recoveries. Credit 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. We also periodically perform a look-back analysis on our loan loss allowance to verify the historical allowance established tracks with the actual subsequent loan write-offs and recoveries. We are aware that as conditions change, we may also need to make additional allowances in future periods. Loan losses or charge-offs of pawn loans are not recorded because the value of the collateral exceeds the loan amount.

See Note ~~4, “Loans Receivable,” and Note~~ 5, “Loans Receivable, ~~Allowance,~~” of the notes to our consolidated financial statements included in this report for our outstanding loans receivable aging ~~and loans receivable allowance rollforward~~ as of and for the ~~six month period~~three-month periods ended ~~June 30, 2020~~March 31, 2021 and the year ended December 31, ~~2019.~~2020.

Valuation of Long-lived and Intangible Assets

We assess the possibility of impairment of long-lived assets, other than goodwill, whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors that could trigger an impairment review include significant underperformance relative to expected historical or projected future cash flows, significant changes in the manner of use of acquired assets or the strategy for the overall business, and significant negative industry events or trends.

Goodwill

Goodwill represents the excess of acquisition cost over the fair value of identifiable finite lived net assets acquired and is not amortized. Goodwill is tested for impairment annually as of October 1, or more frequently if events or changes in circumstances indicate potential impairment. We test for goodwill impairment at the reporting unit level, which aligns with the Company’s segments. We perform a qualitative assessment to determine if a quantitative impairment test is necessary. If quantitative testing is necessary based on a qualitative assessment, we apply a fair value test. This fair value test involves a two-step process. The first step is to compare the carrying value of our net assets to our fair value. If the fair value is determined to be less than the carrying value, a second step is performed to measure the amount of the impairment, if any.

Management has analyzed the impact of the Coronavirus pandemic (“COVID-19”) on its financial statements as of June 30, 2020 and has determined that the changes to its significant judgements and estimates did not have a material impact with respect to goodwill, intangible assets or long-lived assets. However, the Company’s future assessment of the magnitude and duration of COVID-19 / coronavirus, as well as other factors, could result in material impacts to the Consolidated Financial Statements in future reporting periods.

~~Operating~~ Leases

~~We have~~The Company has many retail ~~and office space lease agreements and insignificant equipment~~ lease agreements which are accounted for as operating leases. The ~~real property leases typically are for three to five year terms with many containing options for similar renewal periods. We determine~~Company determines if an arrangement is or contains a lease at inception.

~~Under ASC 842, we recognize~~ Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities ~~for operating leases.~~ (current and noncurrent).

ROU assets and lease liabilities are recognized ~~at commencement date~~ based on the present value of future minimum lease payments over the lease ~~term. For our leased real property asset class, we do not separate lease and non-lease components when determining the amounts of a lease payment.~~term at commencement date. As most of ~~our~~the Company’s leases do not provide an implicit rate, ~~we use WCR’s~~Management used the Company’s collateralized incremental borrowing rate based on the information available at commencement date in determining the present value of future payments.

The lease payment terms may include fixed payment terms and variable payments. Fixed payment terms and variable payments that depend on an index (i.e., Consumer Price Index, or “CPI”) or rate are considered in the determination of the operating lease liabilities. While lease liabilities are not remeasured because of changes to the CPI, changes are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. Variable payments that do not depend on an index or rate are not included in the lease liabilities determination. Rather, these payments are recognized as variable lease expense when incurred. Expenses related to leases with a lease term of one month or less are recognized as variable lease expense when incurred. Variable lease payments are included within operating costs and expenses in our condensed consolidated statement of operations.

Due to the significant assumptions and judgements required in accounting for leases ~~(to include~~(including whether a contract contains a lease, ~~whether and at what point the period covered by an option to extend a lease is reasonable certain to be exercised,~~ the allocation of the consideration, and the determination of the discount rate), the ~~judgements~~judgment and estimates made could have a significant effect on the amount of assets and liabilities ~~recognized.~~recognized

Results of Operations – Three Months Ended ~~June 30, 2020~~March 31, 2021 Compared to Three Months Ended ~~June 30, 2019~~March 31, 2020

Net income attributable to our common shareholders was ~~$4.61~~$3.91 million, or ~~$0.50~~$0.42 per share (basic and diluted), for the quarter ended ~~June 30, 2020,~~March 31, 2021, compared to net income of ~~$1.13~~$1.71 million, or ~~$0.12~~$0.18 per share (basic and diluted), for the quarter ended ~~June 30, 2019.~~March 31, 2020.

We expect segment operating results and earnings per share to change throughout ~~2020~~2021 due, at least in part, to the seasonality of the ~~Direct to Consumer and Cellular Retail~~various segments, potential mergers and acquisitions activity and the unknown impact of COVID-19.

Following is a discussion of operating results by segment.

The following table provides revenues and net income attributable to WCR common shareholders for the quarters ended ~~June 30,~~March 31, 2021 and March 31, 2020 ~~and June 30, 2019~~ (in thousands).

	Cellular Retail			Direct to Consumer			Consumer Finance			Corporate			Total			Cellular Retail			Direct to Consumer			Manufacturing			Consumer Finance			Corporate			Total
Three Months Ended June 30, 2020
Three Months Ended March 31, 2021
Revenue	$	21,488		$	16,340		$	1,744		$	—		$	39,572		$	25,511		$	14,678		$	2,523		$	1,474		$	—		$	44,186
% of total revenue		54.3	%		41.3	%		4.4	%		—	%		100.0	%		57.8	%		33.2	%		5.7	%		3.3	%		—	%		100	%
Net income (loss)	$	1,534		$	3,557		$	140		$	(163	)	$	5,068		$	2,522		$	2,269		$	(18	)	$	162		$	(256	)	$	4,679
Net income attributable to noncontrolling interests	$	454		$	—		$	—		$	—		$	454		$	769		$	—		$	—		$	—		$	—		$	769
Net income (loss) attributable to WCR common shareholders	$	1,080		$	3,557		$	140		$	(163	)	$	4,614		$	1,753		$	2,269		$	(18	)	$	162		$	(256	)	$	3,910

Three Months Ended June 30, 2019
Three Months Ended March 31, 2020
Revenue	$	16,283		$	11,473		$	2,400		$	—		$	30,156		$	19,533		$	11,599		$	2,050		$	2,466		$	—		$	35,648
% of total revenue		54.0	%		38.0	%		8.0	%		—	%		100.0	%		54.8	%		32.5	%		5.8	%		6.9	%		—	%		100	%
Net income	$	441		$	693		$	228		$	17		$	1,379
Net income (loss)																$	1,184		$	1,176		$	(191	)	$	225		$	(218	)	$	2,176
Net income attributable to noncontrolling interests	$	248		$	—		$	—		$	—		$	248		$	463		$	—		$	—		$	—		$	—		$	463
Net income attributable to WCR common shareholders	$	193		$	693		$	228		$	17		$	1,131
Net income (loss) attributable to WCR common shareholders																$	721		$	1,176		$	(191	)	$	225		$	(218	)	$	1,713

Cellular Retail

A summary table of the number of Cricket Wireless retail stores we operated during the three months ended ~~June 30,~~March 31, 2021 and March 31, 2020 ~~and June 30, 2019~~ follows:

	2020			2019		2021			2020
Beginning		221			201		205			222
Acquired/ Launched		12			—		2			7
Closed/Transferred		(28	)		—
Closed/Divested							(2	)		(8	)
Ending		205			201		205			221

Period over period, net income attributable to shareholders increased from ~~$1.13~~$1.18 million in the comparable prior year quarter to ~~$4.61~~$1.75 million in the current quarter. ~~Significantly contributing~~Many factors have contributed to ~~the~~this period over period increase, ~~was $1.25 million of supplemental compensation from~~most notably successful Cricket ~~Wireless provided to alleviate the financial strain caused by COVID-19 and the temporary store closures. Our~~sales promotions, Cricket’s 2020 distribution optimization program under which we closed 27 underperforming locations, our strategic location disposals and additions ~~from the first quarter of 2019 through the current quarter has also resulted in a better mix of stores~~ and ~~contributed~~COVID-19 stimulus programs contributing to ~~the~~ increased ~~operating results attributable to shareholders period over period.~~sales.

Due to the impact of COVID-19 and even though our stores were generally deemed to be “essential businesses”, on March 19, 2020 we began the process of temporarily closing approximately 75 of our retail stores. By the end of April 2020, all but 22 had reopened. In June 2020 we permanently closed the 22 remaining un-opened stores and five others. We recorded a loss of $0.67 million due to the closures.

Direct to Consumer

The Direct to Consumer segment 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 income of ~~$3.56~~$2.27 million compared to net income of ~~$0.69~~$1.18 million for the comparable prior year period. Revenues for the ~~three month period~~quarter ended ~~June 30, 2020~~March 31, 2021 were ~~$16.34~~$14.68 million compared to ~~$11.47~~$11.60 million for the comparable period in ~~2019.~~2020. Similar to other online retailers, the Direct to Consumer segment has experienced an increase in demand and on-line sales activity due to COVID-19.

Manufacturing

Manufacturing segment sales increased from $2.05 million in the comparable prior period to $2.52 million in the current period as demand across product lines has increased. For the current quarter, the Manufacturing segment had a net loss of ($0.02) million compared to a net loss of ($0.19) million for the comparable prior year period.

Consumer Finance

A summary table of the number of consumer finance locations we operated during the quarters ended ~~June 30,~~March 31, 2021 and March 31, 2020 ~~and June 30, 2019~~ follows:

	2020		2019		2021		2020
Beginning		39		39		22		39
Acquired/ Launched		—		—		—		—
Closed		—		—
Closed/Divested						—		—
Ending		39		39		22		39

Our Consumer Finance segment continues to struggle due to COVID-19 and industry regulation and trends with our lending volume being down period over period. Consumer Finance segment revenues decreased ~~$0.66~~$0.99 million, or ~~27.3%~~40.2%, for the quarter ended ~~June 30, 2020~~March 31, 2021 compared to the quarter ended ~~June 30, 2019. This segment and the industry continues to experience declines in loan and check cashing activity~~March 31, 2020 mostly due to ~~industry regulation~~the closing of locations in Nebraska and ~~trends and COVID-19.~~divesting of locations in Iowa in 2020.

Corporate

Net costs related to our Corporate segment were ~~$0.16~~$0.26 million for the quarter ended ~~June 30, 2020~~March 31, 2021 compared to ~~$0.02~~$0.22 million ~~in benefits~~ for the quarter ended ~~June 30, 2019.~~March 31, 2020. The period over period increase in net costs is primarily due to a decrease in income from investments.

~~Results of Operations – Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019~~

Net income attributable to our common shareholders was $6.52 million, or $0.71 per share (basic and diluted), for the six month period ended June 30, 2020, compared to net income of $2.18 million, or $0.23 per share (basic and diluted), for the six month period ended June 30, 2019.

We expect segment operating results and earnings per share to change throughout 2020 due, at least in part, to the seasonality of the Direct to Consumer and Cellular Retail segments, potential mergers and acquisitions activity and unknown impact of COVID-19.

~~Following is a discussion of operating results by segment.~~

~~The following table provides revenues and net income attributable to WCR common shareholders for the six month period ended June 30, 2020 and June 30, 2019 (in thousands).~~

Cellular Retail Direct to Consumer Consumer Finance Corporate Total
Six Months Ended June 30, 2020
Revenue $ 41,021 $ 27,939 $ 4,209 $ — $ 73,169
% of total revenue 56.1 % 38.2 % 5.7 % — % 100.0 %
Net income (loss) $ 2,719 $ 4,732 $ 365 $ (381 ) $ 7,435
Net income attributable to noncontrolling interests $ 917 $ — $ — $ — $ 917
Net income (loss) attributable to WCR common shareholders $ 1,802 $ 4,732 $ 365 $ (381 ) $ 6,518

Six Months Ended June 30, 2019
Revenue $ 32,784 $ 22,414 $ 4,916 $ — $ 60,114
% of total revenue 54.5 % 37.3 % 8.2 % — % 100.0 %
Net income (loss) $ 1,012 $ 1,343 $ 462 $ (138 ) $ 2,679
Net income attributable to noncontrolling interests $ 497 $ — $ — $ — $ 497
Net income (loss) attributable to WCR common shareholders $ 515 $ 1,343 $ 462 $ (138 ) $ 2,182

~~Cellular Retail~~

~~A summary table of the number of Cricket Wireless retail stores we operated during the six months ended June 30, 2020 and June 30, 2019 follows:~~

2020 2019
Beginning 222 205
Acquired/ Launched 19 31
Closed/Transferred (36 ) (35 )
Ending 205 201

Period over period, net income attributable to shareholders increased from $0.52 million in the six month period ended June 30, 2019 compared to $1.80 million for the six month period ended June 30, 2020. Significantly contributing to the increase was $1.53 million of supplemental compensation from Cricket Wireless provided to alleviate the financial strain caused by COVID-19 and temporary closure of 75 of our stores. Our strategic location disposals and additions from the first quarter of 2019 through the current quarter has resulted in a better mix of stores and contributed to the increased operating results attributable to shareholders period over period.

~~Direct to Consumer~~

The Direct to Consumer segment 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 six month period ended June 30, 2020, the Direct to Consumer segment had net income of $4.73 million compared to net income of $1.34 million for the comparable six month period prior year. Revenues for the six month period ended June 30, 2020 were $27.94 million compared to $22.41 million for the comparable period in 2019. Similar to other online retailers, the Direct to Consumer segment has experienced an increase in demand and on-line sales activity due to COVID-19.

~~Consumer Finance~~

~~A summary table of the number of consumer finance locations we operated during the six month periods ended June 30, 2020 and June 30, 2019 follows:~~

2020 2019
Beginning 39 41
Acquired/ Launched — —
Closed — (2 )
Ending 39 39

Our Consumer Finance segment revenues decreased $0.71 million, or 14.4%, for the six months ended June 30, 2020 compared to the six months ended June 30, 2019. This segment and the industry continues to experience declines in loan and check cashing activity due to industry regulation and trends and COVID-19. In the later part of March 2020 the segment began to experience a larger than normal decline in lending activity due to COVID-19.

~~Corporate~~

Net costs related to our Corporate segment were $0.38 million for the six month period ended June 30, 2020 compared to $0.14 million for the six month period ended June 30, 2019. The period over period increase in net costs is primarily due to a decrease in investment income.

Consolidated Income Tax Expense

Provision for income tax expense for the ~~six months~~quarter ended ~~June 30, 2020~~March 31, 2021 was ~~$2.01~~$1.30 million compared to ~~$0.68~~$0.53 million for the ~~six months~~quarter ended ~~June 30, 2019~~March 31, 2020 for an effective rate of ~~21.3%~~21.7% and ~~20.1%~~19.7%, respectively. The effective tax rate is lower than the federal plus state ~~effective~~statutory rates and increased period over period due to impact of the noncontrolling interests’ share of net income not subject to income tax at the consolidated group level. Excluding the noncontrolling interests’ share of net income, the effective rate is 24.9% and 23.8%, respectively. This increase period over period is due to increased state income tax exposure resulting from a change in the number and mix of states in which subsidiaries are subject to state income taxes due to various factors such as changes in multistate activities by members of the consolidated group and its impact on state taxation rules and regulations applicable to us.

Liquidity and Capital Resources

Summary cash flow data is as follows:

	Six Months Ended June 30,						Three Months Ended March 31,
	2020			2019			2021			2020
Cash flows provided (used) by:
Operating activities	$	12,007,074		$	1,599,099		$	5,324,004		$	1,668,728
Investing activities		(12,069,112	)		(231,027	)		1,654,007			(7,609,719	)
Financing activities		(2,399,350	)		(1,738,849	)		(191,375	)		137,476
Net decrease in cash and cash equivalents		(2,461,388	)		(370,777	)
Net increase (decrease) in cash and cash equivalents								6,786,636			(5,803,515	)
Cash and cash equivalents, beginning of period		27,132,540			16,724,983			32,504,803			27,160,991
Cash and cash equivalents, end of period	$	24,671,152		$	16,354,206		$	39,291,439		$	21,357,476

~~At June 30, 2020,~~As of March 31, 2021, we had cash and cash equivalents of ~~$24.67~~$39.29 million compared to cash and cash equivalents of ~~$16.35~~$21.36 million on ~~June 30, 2019,~~March 31, 2020, the increase coming ~~primarily~~from cash flows provided by operating activities and from a ~~combination~~conversion of ~~converting~~ investments to cash and cash equivalents ~~in the latter part~~ of ~~2019 and cash flows provided by current year operating activities being partially invested.~~$8.1 million. We believe that our available cash, combined with expected cash flows from operations and our ~~held-to-maturity~~ investments, will be sufficient to fund our liquidity and capital expenditure requirements through ~~June of 2021.~~March 2022. Our expected short-term uses of available cash include the funding of operating activities, ~~and~~ the payment of ~~dividends.~~dividends and distributions to the noncontrolling interests.

In addition to cash and cash equivalents, at ~~June 30, 2020,~~March 31, 2021, we had ~~$17.59~~$15.41 million invested in certificates of deposit (limited to $250,000 per financial institution per entity) and ~~$10.36 million in short-term T-Bills or Notes.~~U.S. Treasuries. This is ~~an increase~~a decrease of ~~$11.69~~$1.93 million ~~over~~from our investment holdings at December 31, ~~2019~~2020, with the decrease simply being a shuffling of investment holdings which consist of short-term certificates of deposit and ~~a result of investing excess~~U.S. Treasuries and U.S. Treasury vehicles included in cash and cash equivalents.

~~At June 30, 2020, our~~As of March 31, 2021, we had $3.51 million in outstanding debt and capital lease obligations ~~were $1.05 million~~ compared to ~~$1.09~~$3.11 million at December 31, ~~2019.~~2020.

Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements as of ~~June 30, 2020.~~March 31, 2021.

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’s Internal 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 ~~June 30, 2020,~~March 31, 2021, 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, our Chief Executive Officer and Chief Financial Officer concluded our disclosure controls and procedures are effective as of ~~June 30, 2020.~~March 31, 2021.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting that occurred during the fiscal ~~year~~period covered by this report that materially affected, or were reasonably likely to materially affect, such controls.

PART II. OTHER INFORMATION

Item 1A. Risk Factors

Our results of operations may be negatively impacted by product liability lawsuits.

We are subject to potential product liability risks that relate to the design, manufacture, sale and use of our products. To date, we have not incurred material costs related to these product liability claims. While we believe our current general liability and product liability insurance is adequate to protect us from future product liability claims, there can be no assurance that our coverage will be adequate to cover all claims that may arise. Additionally, we may not be able to maintain insurance coverage in the future at an acceptable cost. Significant losses not covered by insurance or for which third-party indemnification is not available could have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, it may be necessary for us to recall products that do not meet approved specifications, which could result in adverse publicity as well as costs connected to the recall and loss of revenue.

We could be subject to disparate state regulations governing the collection of state taxes and other matters.

Our manufacturing and direct to consumer businesses are subject to a variety of laws and regulations applicable to companies conducting business on the Internet. Jurisdictions vary as to how, or whether, existing laws governing areas such as personal privacy and data security, consumer protection or sales and other taxes, among other areas, apply to the Internet and e-commerce, and these laws are continually evolving. For example, certain applicable privacy laws and regulations require us to provide customers with our policies on sharing information with third parties, and advance notice of any changes to these policies. Related laws may govern the manner in which we store or transfer sensitive information or impose obligations on us in the event of a security breach or inadvertent disclosure of such information. Additionally, tax regulations in jurisdictions where we do not currently collect state or local taxes may subject us to the obligation to collect and remit such taxes, or to additional taxes, or to requirements intended to assist jurisdictions with their tax collection efforts. New legislation or regulation, the application of laws from jurisdictions whose laws do not currently apply to our businesses, or the application of existing laws and regulations to the Internet and e-commerce generally could result in significant additional taxes on our businesses. Further, we could be subject to fines or other payments for any past failures to comply with these requirements. The continued growth and demand for e-commerce is likely to result in more laws and regulations that impose additional compliance burdens on e-commerce companies.

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

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

The following table provides information about purchases of Western Capital Resources, Inc. common stock by us during the three months ended ~~June 30, 2020.~~March 31, 2021.

Share Repurchases

Period Beginning
Period
Ending
sTotal Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Board Approved Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program ⁽¹⁾
April 1, 2020 April 30, 2020 — $ — — $ 1,476,900
May 1, 2020 May 31, 2020 130,889 $ 4.18 130,889 $ 929,700
June 1, 2020 June 30, 2020 — $ — — $ 929,700
130,889 130,889

Share Repurchases
Period Beginning	Period Ending	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Board Approved Plans or Programs		Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program ⁽¹⁾
January 1, 2021	January 31, 2021		—	$	—		—	$	1,171,800
February 1, 2021	February 28, 2021		—	$	—		—	$	1,171,800
March 1, 2021	March 31, 2021		—	$	—		—	$	1,171,800
			—				—

(1)

On September 13, 2018, our Board of Directors authorized a share repurchase program under which we may repurchase up to $1 million of common stock. Repurchases may be made from time to time on the open market or through privately negotiated transactions

~~In March 2020, our Board of Directors amended the repurchase program, increasing the amount of share repurchases authorized from $1 million to $2 million.~~

In February and September 2020, our Board of Directors amended the repurchase program, increasing the amount of share repurchases authorized from $1 million to $2 million and $2 million to $4 million, respectively.

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).

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: ~~August~~May 14, ~~2020~~2021	Western Capital Resources, Inc.
	(Registrant)

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

	By:	/s/ Angel Donchev
		Angel Donchev
		Chief Financial Officer

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	N/A	N/A

Large accelerated filer ☐	Accelerated filer ☐	Emerging growth company ☐

Non-accelerated filer ☑	Smaller reporting company ☑

	Page

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets	4

Condensed Consolidated Statements of Income	5

Condensed Consolidated Statements of Shareholders’ Equity	6

Condensed Consolidated Statements of Cash Flows	7

Notes to Condensed Consolidated Financial Statements	8

WESTERN CAPITAL RESOURCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
	June 30, 2020		December 31, 2019
	(Unaudited)
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	24,671,152	$	27,132,540
Short-term investments		26,948,347		14,756,665
Loans receivable (net of allowance for losses of $340,000 and $673,000, respectively)		2,099,121		3,860,411
Accounts receivable (net of allowance for losses of $65,000 and $13,000, respectively)		567,715		517,476
Inventories (net of allowance of $751,000 and $1,065,000, respectively)		7,927,993		8,330,691
Prepaid expenses and other		2,168,917		2,679,859
TOTAL CURRENT ASSETS		64,383,245		57,277,642

INVESTMENTS		1,000,000		1,500,000

PROPERTY AND EQUIPMENT, net		8,934,805		9,725,043

OPERATING LEASE RIGHT-OF-USE ASSETS		10,827,671		12,344,894

INTANGIBLE ASSETS, net		3,901,997		4,041,650

LOAN RECEIVABLE		715,885		694,987

OTHER		509,686		525,884

GOODWILL		5,796,528		5,796,528

TOTAL ASSETS	$	96,069,817	$	91,906,628

LIABILITIES AND EQUITY

CURRENT LIABILITIES
Accounts payable	$	7,095,707	$	7,710,222
Accrued payroll		1,929,018		2,572,331
Current portion operating lease liabilities		4,788,516		5,079,745
Other current liabilities		1,260,648		1,276,613
Income taxes payables		2,225,124		243,149
Current portion notes payable		67,299		65,414
Current portion finance lease obligations		—		1,161
Contract liabilities		472,371		794,830
TOTAL CURRENT LIABILITIES		17,838,683		17,743,465

LONG-TERM LIABILITIES
Notes payable, net of current portion		985,702		1,019,837
Operating lease liabilities, net of current portion		6,642,294		7,444,789
Deferred income taxes		221,000		385,000
TOTAL LONG-TERM LIABILITIES		7,848,996		8,849,626

TOTAL LIABILITIES		25,687,679		26,593,091

COMMITMENTS AND CONTINGENCIES (Note 15)		—		—

EQUITY

WESTERN SHAREHOLDERS’ EQUITY
Common stock, $0.0001 par value, 12,500,000 shares authorized, 9,134,889 and 9,265,778 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively		913		927
Additional paid-in capital		29,031,741		29,031,741
Retained earnings		38,982,780		33,706,035
TOTAL WESTERN SHAREHOLDERS’ EQUITY		68,015,434		62,738,703

NONCONTROLLING INTERESTS		2,366,704		2,574,834

TOTAL EQUITY		70,382,138		65,313,537

TOTAL LIABILITIES AND EQUITY	$	96,069,817	$	91,906,628

		Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements		3

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1516

Item 4. Controls and Procedures		20

PART II. OTHER INFORMATION
Item 1A. Risk Factors		21

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		21

Item 6. Exhibits		22

SIGNATURES		23

WESTERN CAPITAL RESOURCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
	March 31, 2021		December 31, 2020
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	39,291,439	$	32,504,803
Short-term investments		15,408,362		17,088,073
Loans receivable (net of allowance for credit losses of $248,000 and $315,000, respectively)		1,386,460		1,941,180
Accounts receivable (net of allowance for credit losses of $47,000 and $33,000, respectively)		2,688,846		1,538,377
Inventories (less reserve of $1,530,000 and $1,321,000, respectively)		14,737,629		11,739,228
Prepaid income taxes		—		246,560
Prepaid expenses and other		2,931,963		3,096,058
TOTAL CURRENT ASSETS		76,444,699		68,154,279

Investments		—		250,000
Property and equipment, net		8,341,504		8,509,971
Operating lease right-of-use assets		16,598,436		15,751,687
Intangible assets, net		3,423,595		3,585,919
Deferred income taxes		405,000		254,000
Other loans receivable		370,680		368,071
Other		454,396		471,991
Goodwill		5,796,528		5,796,528

TOTAL ASSETS	$	111,834,838	$	103,142,446

LIABILITIES AND EQUITY

CURRENT LIABILITIES
Accounts payable	$	11,692,469	$	8,492,721
Accrued payroll		2,212,184		3,439,535
Current portion operating lease liabilities		5,449,362		5,111,429
Other current liabilities		1,485,249		1,403,249
Income taxes payables		1,203,028		—
Current portion long-term debt		1,508,475		—
Contract and other liabilities		964,041		774,625
TOTAL CURRENT LIABILITIES		24,514,808		19,221,559

LONG-TERM LIABILITIES
Notes payable, net of current portion		2,000,000		3,110,148
Operating lease liabilities, net of current portion		11,655,351		11,222,095
TOTAL LONG-TERM LIABILITIES		13,655,351		14,332,243

TOTAL LIABILITIES		38,170,159		33,553,802

COMMITMENTS AND CONTINGENCIES (Note 11)		—		—

EQUITY

WESTERN SHAREHOLDERS’ EQUITY
Common stock, $0.0001 par value, 12,500,000 shares authorized, 9,249,900 and 8,841,900 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively		925		925
Additional paid-in capital		29,562,271		29,562,271
Retained earnings		42,148,787		38,470,323
TOTAL WESTERN SHAREHOLDERS’ EQUITY		71,711,983		68,033,519
Noncontrolling interests		1,952,696		1,555,125

TOTAL EQUITY		73,664,679		69,588,644

TOTAL LIABILITIES AND EQUITY	$	111,834,838	$	103,142,446

See notes to condensed consolidated financial statements

WESTERN CAPITAL RESOURCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
		Three Months Ended
		March 31, 2021			March 31, 2020
REVENUES
Sales and associated fees		$	37,653,669		$	28,858,231
Financing fees and interest			1,002,470			2,044,697
Other revenues			5,529,945			4,744,598
Total Revenues			44,186,084			35,647,526

COST OF REVENUES
Cost of sales			21,405,354			15,530,285
Provisions for loans receivable credit losses	��		(86,436	)		291,428
Total Cost of Revenues			21,318,918			15,821,713

GROSS PROFIT			22,867,166			19,825,813

OPERATING EXPENSES
Salaries, wages and benefits			8,936,986			9,119,172
Occupancy			2,511,712			2,848,068
Advertising, marketing and development			2,442,191			1,936,425
Depreciation			397,948			501,390
Amortization			159,825			184,975
Other			2,452,469			2,560,923
Total Operating Expenses			16,901,131			17,150,953

OPERATING INCOME			5,966,035			2,674,860

OTHER INCOME (EXPENSES):
Dividend and interest income			30,654			138,727
Interest expense			(18,056	)		(103,662	)
Total Other Income (Expenses)			12,598			35,065

INCOME BEFORE INCOME TAXES			5,978,633			2,709,925

PROVISION FOR INCOME TAX EXPENSE			1,299,350			534,110


NET INCOME			4,679,283			2,175,815

LESS NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS			(769,571	)		(462,568	)

NET INCOME ATTRIBUTABLE TO WESTERN COMMON SHAREHOLDERS		$	3,909,712		$	1,713,247

EARNINGS PER SHARE ATTRIBUTABLE TO WESTERN COMMON SHAREHOLDERS
Basic		$	0.42		$	0.18
Diluted		$	0.42		$	0.18

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (Note 15)
Basic			9,249,900			9,673,778
Diluted			9,258,131			9,673,778

See notes to condensed consolidated financial statements

WESTERN CAPITAL RESOURCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited)
	Western Capital Resources, Inc. Shareholders’
	Common Stock
	Shares		Amount		Additional Paid-In Capital		Retained Earnings			Noncontrolling Interests			Total
BALANCE – December 31, 2020		9,249,900	$	925	$	29,562,271	$	38,470,323		$	1,555,125		$	69,588,644
Net income		—		—		—		3,909,712			769,571			4,679,283
Distributions to noncontrolling interests		—		—		—		—			(372,000	)		(372,000	)
Dividends paid		—		—		—		(231,248	)		—			(231,248	)
BALANCE – March 31, 2021		9,249,900	$	925	$	29,562,271	$	42,148,787		$	1,952,696		$	73,664,679

	Three Months Ended						Six Months Ended
	June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
REVENUES
Sales and associated fees	$	33,319,275		$	24,178,741		$	60,127,761		$	47,999,579
Financing fees and interest		1,172,099			1,985,774			3,216,796			4,100,645
Other revenues		5,080,224			3,991,590			9,824,822			8,014,101
Total Revenues		39,571,598			30,156,105			73,169,379			60,114,325

COST OF REVENUES
Cost of sales		16,973,872			13,059,484			30,905,221			25,795,905
Provisions for loans receivable losses		(212,031	)		175,831			79,397			394,108
Total Cost of Revenues		16,761,841			13,235,315			30,984,618			26,190,013

GROSS PROFIT		22,809,757			16,920,790			42,184,761			33,924,312

OPERATING EXPENSES
Salaries, wages and benefits		7,934,605			8,065,521			16,849,559			16,161,468
Occupancy		2,763,468			2,647,662			5,590,707			5,411,945
Advertising, marketing and development		1,998,620			2,023,838			3,826,575			3,799,680
Depreciation		490,966			438,198			989,624			867,698
Amortization		188,891			178,379			373,669			362,915
Other		3,004,700			2,021,278			5,289,018			4,285,870
Total Operating Expenses		16,381,250			15,374,876			32,919,152			30,889,576

OPERATING INCOME		6,428,507			1,545,914			9,265,609			3,034,736

OTHER INCOME (EXPENSES):
Dividend and interest income		71,720			193,976			210,447			375,519
Interest expense		(15,590	)		(29,159	)		(31,406	)		(55,414	)
Total Other Income (Expenses)		56,130			164,817			179,041			320,105

INCOME BEFORE INCOME TAXES		6,484,637			1,710,731			9,444,650			3,354,841

PROVISION FOR INCOME TAX EXPENSE		1,417,000			332,000			2,010,110			676,000

NET INCOME		5,067,637			1,378,731			7,434,540			2,678,841

LESS NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		(453,904	)		(247,531	)		(916,472	)		(497,228	)

NET INCOME ATTRIBUTABLE TO WESTERN COMMON SHAREHOLDERS	$	4,613,733		$	1,131,200		$	6,518,068		$	2,181,613

EARNINGS PER SHARE ATTRIBUTABLE TO WESTERN COMMON SHAREHOLDERS
Basic and diluted	$	0.50		$	0.12		$	0.71		$	0.23

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic and diluted		9,212,669			9,388,677			9,239,224			9,388,677

March 31, 2021
	Level 1		Level 2		Level 3		Amortized Cost		Unrealized Gain (Loss)			Estimated Fair Value
Certificates of Deposit	$	—	$	11,817,751	$	—	$	11,817,751	$	(28,124	)	$	11,789,627
U.S. Treasuries		3,590,611		—		—		3,590,611		(465	)		3,590,146
	$	3,590,611	$	11,817,751	$	—	$	15,408,362	$	(28,589	)	$	15,379,773

	Three Months Ended March 31, 2021		Three Months Ended March 31, 2020
Held-to-maturity	$	92	$	62,974
Other		30,562		75,753
	$	30,654	$	138,727

	June 30, 2020		December 31, 2019
Cash and cash equivalents
Operating accounts	$	16,202,326	$	10,163,845
Money Market – U.S. Treasury obligations		4,438,931		4,450,433
U.S. Treasury obligations		4,029,895		12,518,262
Subtotal		24,671,152		27,132,540

Held to Maturity Investments
Certificates of deposit (4 – 24 month maturities, FDIC insured)	$	17,588,365	$	9,049,787
U.S. Treasury obligations (less than one year maturities)		10,359,982		7,206,878
Subtotal		27,948,347		16,256,665

TOTAL	$	52,619,499	$	43,389,205

June 30, 2020
	Cost		Accrued Interest		Amortized Discount		Amortized Cost		Unrealized Gain (Loss)		Estimated Fair Value

Certificates of Deposit	$	17,525,765	$	62,600	$	—	$	17,588,365	$	34,074	$	17,622,439
U.S. Treasuries		10,359,214		—		768		10,359,982		18		10,360,000
	$	27,884,979	$	62,600	$	768	$	27,948,347	$	34,092	$	27,982,439

	Three Months Ended June 30, 2020		Three Months Ended June 30, 2019		Six Months Ended June 30, 2020		Six Months Ended June 30, 2019

Held-to-maturity	$	67,733	$	158,551	$	183,808	$	300,697
Other		3,987		35,425		26,639		74,822
	$	71,720	$	193,976	$	210,447	$	375,519

June 30, 2020
	Payday			Installment		Pawn		Total
Current	$	1,815,634		$	24,059	$	203,730	$	2,043,423
1-30		85,070			1,812		—		86,882
31-60		29,805			264		—		30,069
61-90		56,317			—		—		56,317
91-120		67,655			—		—		67,655
121-150		72,138			—		—		72,138
151-180		82,637			—		—		82,637
		2,209,256			26,135		203,730		2,439,121
Less Allowance		(340,000	)		—		—		(340,000	)
	$	1,869,256		$	26,135	$	203,730	$	2,099,121

December 31, 2019
March 31, 2021											March 31, 2021
	Payday			Installment		Pawn		Total				Payday			Pawn		Total
Current	$	3,322,131		$	67,891	$	309,934	$	3,699,956			$	1,107,990		$	211,971	$	1,319,961
1-30		216,753			10,590		—		227,343				79,771			—		79,771
31-60		140,872			6,234		—		147,106				44,171			—		44,171
61-90		117,544			2,649		—		120,193				46,272			—		46,272
91-120		118,626			840		—		119,466				51,184			—		51,184
121-150		110,278			395		—		110,673				51,850			—		51,850
151-180		108,674			—		—		108,674				41,251			—		41,251
		4,134,878			88,599		309,934		4,533,411				1,422,489			211,971		1,634,460
Less Allowance		(673,000	)		—		—		(673,000	)
Less Allowance for Credit Losses													(248,000	)		—		(248,000	)
	$	3,461,878		$	88,599	$	309,934	$	3,860,411			$	1,174,489		$	211,971	$	1,386,460

	Six Months Ended June 30, 2020			Year Ended December 31, 2019
Loans receivable allowance, beginning of period	$	673,000		$	818,000
Provision for loan losses charged to expense		79,397			975,938
Write-offs, net		(412,397	)		(1,120,938	)
Loans receivable allowance, end of period	$	340,000		$	673,000

	June 30, 2020			December 31, 2019
Finished Goods
Cellular Retail	$	5,609,452		$	5,687,771
Direct to Consumer		2,345,894			2,888,483
Consumer Finance		723,647			819,437
Reserve		(751,000	)		(1,065,000	)
TOTAL	$	7,927,993		$	8,330,691

	Three Months Ended June 30, 2020		Six Months Ended June 30, 2020
Operating lease expense	$	1,620	$	3,240
Variable lease expense		586		1,157
Total lease expense	$	2,206	$	4,397

	Operating Leases			Operating Leases
Remainder of 2020	$	2,875
2021		4,464
Remainder of 2021				$	4,694
2022		2,928			4,884
2023		1,399			3,081
2024		717			1,687
2025		113			877
2026					4,243
Thereafter		28			11
Total future minimum lease payments		12,524			19,477
Less: imputed interest		(1,093	)		(2,373	)
Total	$	11,431		$	17,104

Current portion operating lease liabilities	$	4,789		$	5,449
Non-Current operating lease liabilities		6,642
Non-current operating lease liabilities					11,655
Total	$	11,431		$	17,104

	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended
	2020		2019		2020		2019		March 31, 2021		March 31, 2020
Bank fees	$	733,415	$	539,586	$	1,294,393	$	1,044,567	$	724,645	$	608,675
Collection costs		79,406		82,637		157,475		160,352		72,283		78,069
Insurance		199,951		178,346		396,332		366,642		164,521		205,933
Management and advisory fees		220,303		211,001		431,306		413,148		224,771		307,961
Professional and consulting fees		269,240		236,184		649,736		789,805		431,678		405,153
Supplies		202,575		144,219		420,154		282,811		166,872		222,320
Loss on disposal		670,259		12,613		662,522		11,198
Loss (Gain) on disposal										13,056		(9,337	)
Other		629,551		616,692		1,277,100		1,217,347		654,643		742,149
	$	3,004,700	$	2,021,278	$	5,289,018	$	4,285,870	$	2,452,469	$	2,560,923

	2020		2019
Cash	$	506	$	—
Note payable		—		18
Noncontrolling interests/equity		—		17
	$	506	$	35

Share Repurchases
Period Beginning	Period Ending		sTotal Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Board Approved Plans or Programs		Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program ⁽¹⁾
April 1, 2020		April 30, 2020		—	$	—		—	$	1,476,900
May 1, 2020		May 31, 2020		130,889	$	4.18		130,889	$	929,700
June 1, 2020		June 30, 2020		—	$	—		—	$	929,700
				130,889				130,889