We are writing to advise you that Western Capital
Resources, Inc. (the “Company”) intends to amend its Certificate of Incorporation to effect a reverse stock split
of the outstanding shares of its common stock at a ratio of 5,000,000:5,000,001.
This action was approved on July 26, 2016 by
our Board of Directors. In addition, the holders of a majority of our issued and outstanding voting securities have approved this
action as of July 26, 2016 by written consent in accordance with the Delaware General Corporation Law.
No action is required by you. The information
statement accompanying this notice is furnished, as required under Rule 14c-2 of the Securities Exchange Act of 1934, only to inform
our stockholders of the actions described above before they take place. This information statement is first mailed to stockholders
on or about August 12, 2016.
INFORMATION STATEMENT REGARDING ACTION TAKEN
BY WRITTEN CONSENT OF MAJORITY OF STOCKHOLDERS IN LIEU OF A SPECIAL MEETING
WE ARE NOT ASKING YOU FOR A PROXY,
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
GENERAL
This Information Statement is being furnished
to the stockholders of Western Capital Resources, Inc. in connection with the written consent of the holders of a majority of our
issued and outstanding voting securities granting our Board of Directors the authority to effect a reverse stock split of all of
the outstanding shares of our common stock at a ratio of 5,000,000:5,000,001. If implemented, the reverse stock split will be effected
through the filing of a Certificate of Amendment to our Certificate of Incorporation (the “Certificate of Amendment”).
A form of the proposed Certificate of Amendment is attached to this information statement as Appendix A. On July 26, 2016, our
Board of Directors approved the reverse stock split, and on July 26, 2016, the holders of a majority of our issued and outstanding
voting securities executed a written consent approving the reverse stock split and the Certificate of Amendment in substantially
the form attached to this information statement.
The elimination of the need for a special meeting
of stockholders to approve this action is made possible by Section 228 of the Delaware General Corporation Law, which provides
that the written consent of the holders of outstanding shares of voting capital stock, having not less than the minimum number
of votes which would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were
present and voted, may be substituted for such a meeting. Utilizing the written consent of the holders of a majority in interest
of our voting securities eliminates the costs involved in holding a special meeting of our stockholders.
Pursuant to Section 228 of the Delaware General
Corporation Law, we are required to provide prompt notice of the taking of the corporate action without a meeting of stockholders
to all stockholders who did not consent in writing to such action. This information statement serves as this notice, and is first
being mailed on or about August 12, 2016 to our stockholders of record as of July 26, 2016. No appraisal rights are
afforded to our stockholders under Delaware law as a result of the adoption of the Certificate of Amendment.
We will bear the entire cost of furnishing this
information statement to our stockholders. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding
copies of this information statement to beneficial owners.
THE REVERSE STOCK SPLIT
The Board of Directors has been granted the
authority to effect a reverse stock split of our common stock, as described below. If the Board of Directors decides to implement
the reverse stock split, it will become effective upon the filing of an amendment to our Certificate of Incorporation.
The reverse stock split amendment permits the
Board of Directors to effect a reverse stock split of our common stock by a ratio of 5,000,000 for 5,000,001. This means that
every 5,000,001 shares of our common stock will be combined into 5,000,000 shares of our common stock. The Board of Directors
reserves the right to abandon the reverse stock split if it determines, in its sole discretion, that the reverse stock split is
no longer in our best interests and the best interests of our stockholders.
If effected, the reverse stock split as approved
by our Board of Directors and our stockholders will not affect the number of authorized shares of our common stock.
Reasons for and Potential Consequences of the Reverse Stock
Split
The primary purpose for the reverse stock split
is to eliminate fractional shares of our outstanding common stock and other fractions of shares that are on our books and records.
Fractional shares of our common stock are outstanding due to distributions of stock made by some of our stockholders. These distributing
stockholders are typically limited liability companies or partnerships that have effected distributions to their equity owners
on account of those owners’ interests in those distributing stockholders. In addition, as of the date of this information
statement, we have fractions of shares set forth on our books and records that resulted from a prior reverse stock split effected
on June 23, 2014, which did not involve a compulsory share certificate exchange. These fractions of shares represent only the
right to receive payment on account of those fractions, and as such, the Company will mail payment to these holders for his, her
or its share fraction and those share fractions will be cancelled prior to effecting the reverse stock split described herein.
The Board of Directors has determined that the
outstanding fractional shares and the fractions of shares remaining on our books and records are not in the best interests of the
Company or its stockholders. Many if not most brokerage firms will not accept certificates representing fractional shares since
those fractional shares cannot easily be sold in the public markets. As a result, our stockholders holding certificates with fractional
shares are forced to bear the burden and expense of dividing their share certificate into two share certificates—one representing
only whole shares and a second representing only fractional shares. This process takes significant time dealing with our transfer
agent and our brokerage firm. It is not unusual for stockholders or their brokerage firm to call the Company or its legal counsel
with questions about how to deal with the fractional shares, and questions posed to our legal counsel end up costing the Company
legal fees. In addition, our transfer agent (like most transfer agents) charges a stockholder a fee for the exchange or replacement
of share certificates.
In sum, we believe that the reverse stock split
is in the best interests of our Company and our stockholders because it will:
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Make it easier and more cost effective for many of our stockholders to place their shares in brokerage;
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Make it easier and more cost effective for our stockholders to buy and sell our common stock;
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Result in the issuance of new certificates reflecting the fact that the Company recently reincorporated in the State of Delaware;
and
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Result in the elimination of fractions of shares that remain on the Company’s books and records from a prior reverse
stock split effected in June 2014.
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Procedure for Implementing the Reverse Stock Split
The Company must provide the Financial
Industry Regulatory Authority with at least ten (10) calendar days’ advance notice of the record date of the reverse
stock split in compliance with Rule 10b-17 under the Securities Exchange Act of 1934. The reverse stock split will become effective
upon the filing of the Certificate of Amendment with the Secretary of State of the State of Delaware. The exact timing of the filing
of the Certificate of Amendment will be determined by the Board of Directors based on its evaluation as to when such action will
be the most advantageous to us and our stockholders. In addition, the Board of Directors reserves the right to elect not to proceed
with the reverse stock split if, at any time prior to filing the amendment to the Certificate of Incorporation, the Board of Directors,
in its sole discretion, determines that it is no longer in our best interests and the best interests of our stockholders to proceed
with the reverse stock split.
Effect of the Reverse Stock Split on Holders of Outstanding Common
Stock
If the reverse stock split is effected, then
every 5,000,001 shares of our outstanding common stock will be combined into 5,000,000 shares of outstanding common stock. We will
not, however, issue any fractional shares as a result of this reverse stock split. Instead, any resulting fractional shares will
be rounded up to the nearest whole share of common stock. So for example, if you were a holder of 88.25 shares of common stock,
then your post-split would be determined by multiplying your 88.25 shares by 5,000,000 (resulting in a product of 441,250,000),
and then dividing that product by 5,000,0001 (resulting in a quotient of 88.2499824); and the resulting fractional share would
be rounded up so that you would have 89 full shares after giving effect to the reverse stock split. Similarly, if you were a holder
of 10,100 shares, then your post-split would be determined by multiplying your 10,100 shares by 5,000,000 (resulting in a product
of 50,500,000,000), and then dividing that product by 5,000,0001 (resulting in a quotient of 10,099.998); and the resulting fractional
share would be rounded up so that you would have 10,100 shares after giving effect to the reverse stock split.
The reverse stock split will affect all holders
of our common stock uniformly and will not affect any stockholder’s percentage ownership interest in our Company in other
than a nominal manner.
The reverse stock split may result in some stockholders
owning “odd lots” of less than 100 shares of common stock. Odd lot shares may be more difficult to sell, and brokerage
commissions and other costs of transactions in odd lots are generally somewhat higher than the costs of transactions in “round
lots” of even multiples of 100 shares.
After the effectiveness of the reverse stock
split, our common stock will have new Committee on Uniform Securities Identification Procedures (CUSIP) numbers, which are numbers
used to identify our equity securities, and stock certificates with the older CUSIP numbers will need to be exchanged for stock
certificates with the new CUSIP numbers by following the procedures described below. The effectiveness of the reverse stock split
will not affect our periodic reporting and other obligations under the Securities Exchange Act of 1934. We expect that our common
stock will, immediately after the effectiveness of the reverse stock split, continue to be quoted on the OTCQB tier of the OTC
Markets under the symbol “WCRS.”
Beneficial Holders of Common Stock (i.e., stockholders who hold
shares in street name)
Upon the effectiveness of the reverse stock
split, we intend to treat shares held by stockholders through a bank, broker, custodian or other nominee in the same manner as
registered stockholders whose shares are registered in their names. Banks, brokers, custodians or other nominees will be instructed
to effect the reverse stock split for their beneficial holders holding our common stock in street name. These banks, brokers, custodians
or other nominees may, however, have different procedures than registered stockholders for processing the reverse stock split.
Stockholders who hold shares of our common stock with a bank, broker, custodian or other nominee and who have any questions in
this regard are encouraged to contact their banks, brokers, custodians or other nominees.
Holders of Common Stock Share Certificates
Stockholders holding shares of our common stock
in certificated form will be sent necessary instructions by our transfer agent after the effectiveness of the reverse stock split
indicating how a stockholder should surrender his, her or its certificate(s) representing shares of our common stock (the “Old
Certificates”) to the transfer agent in exchange for certificates representing the appropriate number of whole shares of
post-split common stock (the “New Certificates”). No New Certificates will be issued to a stockholder until such stockholder
has surrendered all Old Certificates to our transfer agent in accordance with its instructions. No stockholder will be required
to pay a transfer or other fee to exchange his, her or its Old Certificates. Stockholders will then receive a New Certificate(s)
representing the number of whole shares of common stock that they are entitled as a result of the reverse stock split. Until surrendered,
the outstanding Old Certificates held by stockholders will continue to remain valid but will represent the number of whole shares
of post- split common stock to which these stockholders are entitled. Any Old Certificates submitted for exchange, whether because
of a sale, transfer or other disposition of stock, will automatically be exchanged for New Certificates. If an Old Certificate
has a restrictive legend on the back of the Old Certificate(s), the New Certificate will be issued with the same restrictive legends
that are on the back of the Old Certificate(s), unless the Old Certificate is covered by a legal opinion on file with our transfer
agent.
Stockholders should not destroy any stock
certificate(s) and should not submit any stock certificate(s) until requested to do so.
Effect on Outstanding Options
Proportionate adjustments are required to be
made to the per-share exercise price and the number of shares issuable upon the exercise or conversion of all outstanding options
entitling the holders to purchase shares of common stock. Other than options, we have no outstanding warrants or other securities
convertible into or exercisable for shares of our common stock. This would result in approximately the same aggregate price being
required to be paid under such options, and approximately the same value of shares of common stock being delivered upon such exercise,
immediately following the reverse stock split as was the case immediately preceding the reverse stock split. The number of shares
reserved for issuance pursuant to our 2015 Stock Incentive Plan will be adjusted proportionately based upon the reverse stock split
ratio.
Accounting Matters
This proposed amendment to the Certification
of Incorporation will not affect the par value of our common stock per share. As a result, as of the effectiveness of the reverse
stock split, the stated capital attributable to common stock and the additional paid-in capital account on our balance sheet will
not change due to the reverse stock split. Reported per-share net income or loss may be nominally higher if there are fewer shares
of common stock outstanding after the reverse stock split.
Certain Federal Income-Tax Consequences
The following summary describes certain material
U.S. federal income-tax consequences of the reverse stock split to holders of our common stock.
Unless otherwise specifically indicated herein,
this summary addresses the tax consequences only to a beneficial owner of our common stock that is a citizen or individual resident
of the United States, a corporation organized in or under the laws of the United States or any state thereof or the District of
Columbia or otherwise subject to U.S. federal income taxation on a net income basis in respect of our common stock (a “U.S.
holder”). A trust may also be a U.S. holder if (1) a U.S. court is able to exercise primary supervision over administration
of such trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) it has a
valid election in place to be treated as a U.S. person. An estate whose income is subject to U.S. federal income taxation regardless
of its source may also be a U.S. holder.
This summary does not address all of the tax
consequences that may be relevant to any particular investor, including tax considerations that arise from rules of general application
to all taxpayers or to certain classes of taxpayers or that are generally assumed to be known by investors. This summary also does
not address the tax consequences to (i) persons that may be subject to special treatment under U.S. federal income-tax law, such
as banks, insurance companies, thrift institutions, regulated investment companies, real estate investment trusts, tax-exempt organizations,
U.S. expatriates, persons subject to the alternative minimum tax, traders in securities that elect to mark to market and dealers
in securities or currencies, (ii) persons that hold our common stock as part of a position in a “straddle” or as part
of a “hedging,” “conversion” or other integrated investment transaction for federal income-tax purposes,
or (iii) persons that do not hold our common stock as “capital assets” (generally, property held for investment). If
a partnership or other entity classified as a partnership for U.S. federal income-tax purposes is the beneficial owner of our common
stock, the U.S. federal income-tax treatment of a partner in the partnership will generally depend on the status of the partner
and the activities of the partnership. Partnerships that hold our common stock, and partners in such partnerships, should consult
their own tax advisors regarding the U.S. federal income-tax consequences of the reverse stock split.
This summary is based on the provisions of the
Internal Revenue Code of 1986, as amended, U.S. Treasury regulations, administrative rulings and judicial authority, all as in
effect as of the date of this information statement. Subsequent developments in U.S. federal income-tax law, including changes
in law or differing interpretations, which may be applied retroactively, could have a material effect on the U.S. federal income-tax
consequences of the reverse stock split.
PLEASE CONSULT YOUR OWN TAX ADVISOR REGARDING
THE U.S. FEDERAL, STATE, LOCAL, AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT IN YOUR PARTICULAR CIRCUMSTANCES
UNDER THE INTERNAL REVENUE CODE AND THE LAWS OF ANY OTHER TAXING JURISDICTION.
The reverse stock split should be treated as
a recapitalization for U.S. federal income-tax purposes. Therefore, a stockholder generally will not recognize gain or loss on
the reverse stock split, except for a stockholder receiving an additional share of common stock in lieu of a fractional share,
as described below. The aggregate tax basis of the post-split shares received will be equal to the aggregate tax basis of the pre-split
shares exchanged therefor, excluding the basis of the fractional share, and the holding period of the post-split shares received
will include the holding period of the pre-split shares exchanged.
No gain or loss will be recognized by us as
a result of the reverse stock split. A stockholder who receives one whole share of common stock in lieu of a fractional share generally
may recognize gain in an amount not to exceed the excess of the fair market value of such share over the fair market value of the
fractional share to which the stockholder was otherwise entitled. Our view regarding the tax consequences of the reverse stock
split is not binding on the Internal Revenue Service or the courts. Accordingly, each stockholder should not rely on the foregoing
and may wish to consult with his or her own tax advisor with respect to all of the potential tax consequences to him or her of
the reverse stock split.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of the close of business on July 26, 2016,
we had outstanding 9,497,534 shares of common stock. Each share of capital stock is currently entitled to one vote on all matters
put to a vote of our stockholders. The following table sets forth the number of common shares, and percentage of outstanding common
shares, beneficially owned as of July 26, 2016, by:
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each person known by us to be the beneficial owner of more than five percent of our outstanding common stock;
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each executive officer; and
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all current executive officers and directors as a group.
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Unless otherwise indicated, the address of each
of the following persons is 11550 “I” Street, Omaha, Nebraska 68137, and each such person has sole voting and investment
power with respect to the shares set forth opposite his, her or its name.
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Name and Address
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Common Shares
Beneficially Owned
(1)
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Percentage of
Common Shares
(1)
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Richard Miller
(2)
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84,166
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*
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%
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Ellery Roberts
(2)
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-
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-
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%
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Lawrence Berger
(3)
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24,248
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*
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%
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Kevin Kuby
(2)
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-
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-
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%
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John Quandahl
(4)
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30,000
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*
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%
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Steve Irlbeck
(5)
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10,000
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*
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%
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Angel Donchev
(6)
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29,445
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*
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%
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Rich Horner
(7)
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5,000
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*
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%
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All current executive officers and directors as a group
(8)
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182,859
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1.93
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%
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WCR, LLC
(9)
c/o Blackstreet Capital Management, LLC
5425 Wisconsin Avenue
Suite #701
Chevy Chase, MD 20815
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4,117,509
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43.35
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%
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BC Alpha Holdings I, LLC
(10)
c/o Blackstreet Capital Management, LLC
5425 Wisconsin Avenue
Suite #701
Chevy Chase, MD 20815
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3,167,513
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33.35
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%
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* less than one percent.
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(1)
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Beneficial ownership is determined in accordance with the rules of the SEC, and includes general voting power or investment
power with respect to securities. Shares of common stock issuable upon exercise of options or warrants that are currently exercisable
or exercisable within 60 days of the record rate, and shares of common stock issuable upon conversion of other securities currently
convertible or convertible within 60 days, are deemed outstanding for computing the beneficial ownership percentage of the person
holding such securities but are not deemed outstanding for computing the beneficial ownership percentage of any other person. Under
the applicable SEC rules, each person’s beneficial ownership is calculated by dividing the total number of shares with respect
to which they possess beneficial ownership by the total number of outstanding shares of the Company. In any case where an individual
has beneficial ownership over securities that are not outstanding, but are issuable upon the exercise of options or warrants or
similar rights within the next 60 days, that same number of shares is added to the denominator in the calculation described above.
Because the calculation of each person’s beneficial ownership set forth in the “Percentage of Common Shares”
column of the table may include shares that are not presently outstanding, the sum total of the percentages set forth in such column
may exceed 100%.
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(2)
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A director of the Company.
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(3)
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Mr. Berger is our Chairman of the Board of Directors. Includes 9,923 common shares held by Blue Jays Investment 2, LLC, a
Delaware limited liability company to which Mr. Berger is a
member and manager and taken from Mr. Berger’s most recent filing
under §16 of the Securities Exchange Act of 1934, filed on June 8, 2016 (with respect to which Mr. Berger disclaims
beneficial ownership except to the extent of his pecuniary interest). Also includes 7,800 shares held by Mr. Berger’s
spouse, and 1,375 shares held by Mr. Berger or his spouse as a UTMA custodian for a minor.
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(4)
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A director of the Company and our Chief Executive Officer and President.
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(5)
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Our Chief Financial Officer.
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(6)
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Our Chief Investments Officer. Includes 22,000 shares purchasable under an outstanding incentive stock option.
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(7)
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The Vice President of our Wyoming Financial Lenders subsidiary.
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(8)
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Consists of Messrs. Miller, Roberts, Berger, Kuby, Quandahl, Irlbeck and Donchev.
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(9)
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Share figures contained in the table are taken from WCR, LLC’s most recent filing under §13 of the Securities Exchange
Act of 1934, filed on August 10, 2015.
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(10)
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Share figures contained in the table are taken from BC Alpha Holdings I, LLC’s most recent filing under §13 of the
Securities Exchange Act of 1934, filed on August 10, 2015.
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Changes
in Control
We are not aware of any arrangements, including
any pledge by any person of our common stock, the operation of which may at a subsequent date result in a change of control of
the Company.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly, and current reports
and other information with the SEC. Our filings with the SEC are available to the public on the SEC’s website at www.sec.gov.
Those filings are also available to the public on our corporate website at
www.westerncapitalresources.com
. The information
we file with the SEC or contained on, or linked to through, our corporate website or any other website that we may maintain is
not part of this information statement. You may also read and copy, at the SEC’s prescribed rates, any document we file with
the SEC at the SEC’s Public Reference Room located at 100 F Street, N.E., Washington, D.C. 20549. You can call the SEC
at 1-800-SEC-0330 to obtain information on the operation of the Public Reference Room.
This information statement is provided to the
holders of common stock of Western Capital Resources, Inc. for informational purposes in connection with the reverse stock split,
pursuant to and in accordance with Rule 14c-2 of the Securities Exchange Act of 1934. Please read this information statement carefully.
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By Order of the Board of Directors,
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/s/ John Quandahl
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John Quandahl
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Chief Executive Officer and President
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Omaha, Nebraska
August 10, 2016
Appendix A
FORM OF CERTIFICATE
OF AMENDMENT
TO THE CERTIFICATE
OF INCORPORATION
OF
WESTERN CAPITAL
RESOURCES, INC.
Pursuant
to
Section 242 of the Delaware General Corporation Law, the undersigned, being the Chief Executive Officer and President
of Western Capital Resources, Inc., a Delaware corporation (the “Corporation”), does hereby certify that the following
resolutions were adopted by the Corporation’s Board of Directors and its stockholders as hereinafter described:
BE IT HEREBY RESOLVED:
Section 4 of the Certificate of Incorporation of this Corporation shall be amended and replaced with the following:
4.
Number
of Shares
. The aggregate number of shares which this corporation shall have the authority to issue is 12,500,000 shares, having
no par value.
The Board of Directors of the Corporation
(“Board”) is authorized from time to time to establish by resolution or resolutions different classes or series of
shares and in connection with the creation of any such classes or series, by resolution or resolutions, to provide for the issuance
of shares thereof and, by filing such resolutions in a certificate of designation pursuant to the General Corporation Law, to determine
and fix the number of shares to be included in such classes or series and such voting powers, full or limited, or no voting powers,
and such designations, preferences and relative participating, optional or other special rights, and qualifications, limitations
or restrictions thereof, including without limitation thereof, dividend rights, conversion rights, redemption privileges and liquidation
preferences, as shall be stated and expressed in such resolutions, all to the full extent now or hereafter permitted by the General
Corporation Law
On the date of effective date of the
Certificate of Amendment, the Corporation will effect a reverse stock split (the “Reverse Stock Split”) of its outstanding
common stock pursuant to which every 5,000,001 issued and outstanding shares of the Corporation’s common stock, no par value
(the “Old Common Stock”) shall be reclassified and converted into 5,000,000 validly issued, fully paid and non-assessable
shares of common stock, no par value (the “New Common Stock”). Each certificate representing shares of Old Common Stock
shall thereafter represent the number of shares of New Common Stock into which the shares of Old Common Stock represented by such
certificate were reclassified and converted hereby. No fractional shares of the Corporation’s common stock shall be issued
as a result of the Reverse Stock Split. If the Reverse Stock Split would result in the issuance of any fractional share, the Corporation
shall issue one whole share in lieu of the fractional share.
FURTHER RESOLVED: That the effective date of the Certificate
of Amendment shall be the date on which the Certificate of Amendment is filed with the Delaware Secretary of State.
The foregoing resolutions
and this Certificate of Amendment were adopted by the Board of Directors of the Corporation effective July 26, 2016, in accordance
with Section 141 of the Delaware General Corporation Law, and by the holders of a majority of the outstanding shares of the Corporation’s
voting stock effective July 26, 2016, in accordance with Section 228 of the Delaware General Corporation Law.
In Witness
Whereof
, the undersigned has executed this Certificate of Amendment to the Corporation’s Certificate of Incorporation
as of [●], 2016.
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WESTERN CAPITAL RESOURCES, INC.
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By:
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John Quandahl
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Chief Executive Officer and President
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