Western Capital Resources, Inc., through its subsidiaries, engages in the cellular retail, direct to consumer, manufacturing, and consumer finance activities.
Segments
Cellular Retail segment
This segment operates as an authorized Cricket Wireless dealer and involves the retail sale of cellular phones and accessories to consumers through the company’s wholly-owned subsidiary PQH Wireless, Inc. and its controlled but less than 100% owned subsidiaries.
The company operates cellular retail stor...
Western Capital Resources, Inc., through its subsidiaries, engages in the cellular retail, direct to consumer, manufacturing, and consumer finance activities.
Segments
Cellular Retail segment
This segment operates as an authorized Cricket Wireless dealer and involves the retail sale of cellular phones and accessories to consumers through the company’s wholly-owned subsidiary PQH Wireless, Inc. and its controlled but less than 100% owned subsidiaries.
The company operates cellular retail stores as an authorized Cricket Wireless retailer, selling cellular phones and accessories, activating Cricket Wireless customers on the Cricket network, providing ancillary services and accepting service payments from Cricket customers. As an authorized Cricket Wireless dealer, the company is permitted to sell the Cricket line of no-contract cellular phones and service at the company’s Cricket retail stores.
The company generates revenue in this business through the retail sales of cellular phones, receipt of back-end compensation from Cricket, the sales of phone accessories (e.g., cases, chargers and Bluetooth devices), fees charged when a customer changes services (service activations and reactivations, adding lines, phone number changes, etc.), or whenever a customer whom it activated on the Cricket network pays his or her no-contract cellular bill.
Products and Services
The company’s authorized Cricket retail stores offer the following products and services:
Cricket Wireless service plans, each designed to attract customers by offering simple, no annual contract, no overages, predictable and affordable talk, text, picture messaging and high-speed data services that are a competitive alternative to traditional wireless and wireline services (e.g., flat-rate and unlimited talk/text/picture messages plans, without fixed-term contracts, early termination fees or credit checks); Cricket Wireless plan upgrades, such as Cricket International, individual country add-ons, Cricket Protect and mobile hotspots; Cricket handsets; and a wide range of cellular accessories.
When purchasing a phone, the company’s customers have options among the latest in Apple, Samsung and other Android-based and Windows OS-based smartphones.
Seasonality
The company’s Cellular Retail segment operations are influenced by seasonal effects related to traditional retail selling periods and other factors affecting its customer base. In particular, it expects sales activity to be highest in the first and fourth quarters (year ended December 2021).
Competition
Competition for the no-contract customers historically was primarily among Metro, Virgin Mobile and Boost Mobile, but also includes the traditional postpaid carriers that have introduced no-contract products. There is also competition with other no-contract phone service providers, such as Straight Talk by Wal-Mart or Wal-Mart’s Family Mobile powered by T-Mobile, an increase of national retailers offering similar or identical products and services that the company provides, such as Cricket phones sold at Game Stop, Best Buy, Wal-Mart and others, and an increase in mobile virtual network operator (MVNO) offerings.
Direct to Consumer segment
This segment consists of a 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.
This segment is a direct marketer of roses, plants, seeds, holiday gifts and home restoration products. The business includes a multi-channel retailer of seeds, garden and living gift products; a wholesale seed business; and a multi-channel retailer of home hardware and restoration products.
Products and Services
This segment sells product through catalogs and online under the following brands:
Jackson & Perkins is a brand of premium garden roses. Jackson and Perkins is a direct-to-consumer retailers of bare root roses in the United States, selling active varieties of bare root roses, of which some are varieties are patented by Jackson and Perkins. In addition to bare root roses, the company sells perennials, flower bulbs, and outdoor living products, as well as living holiday gifts plants. Holiday gifts include fresh evergreen wreaths, live decorative Christmas trees and holiday amaryllis.
Park Seed operates as a direct-to-consumer seed retailer. Park Seed sells premium vegetable and flower seed options, as well as various gardening supplies. The wholesale seed business sells seeds, plants and other horticultural products in larger quantities to small-medium sized growers, nurseries and garden centers. Plants and seeds sales are concentrated during the spring months.
Wayside Gardens sells flowers, plants and gardening supplies to the master gardener. Approximately 70% of sales occur in the three months from March to May, during the spring planting season.
Van Dyke’s, an online and catalog retailer with an assortment of vintage home restoration wood products, hardware and antique furniture, many of which are hard to find. Van Dyke’s focus is on hardware, decorative wood, home accents, knobs and pulls and kitchen, bath and other décor.
Seasonality
Demand for live goods and holiday products is cyclical in nature, sensitive to seasonal growing patterns, general weather conditions, holiday sales patterns and competitive influences. The majority of segment revenue is derived in three selling periods, spring, fall, and the December holiday season, while the summer season accounts for a small portion of sales.
Competition
In the retail garden business, within the bare root rose category, the company competes against brick and mortar garden centers and nurseries (approximately 10,000 across the United States), as well as other online and mail-order retailers, including David Austin Roses and Regan Nursery. Across other plant categories, it competes against brick and mortar garden centers and big-box retailers, Gardens Alive and their portfolio of brands, as well as other direct-to-consumer competitors. Competitors for the company’s seed and growing accessory category include brick and mortar retailers and other direct-to-consumers retailers, such as Burpee. Within the seed business, Burpee, in addition to having an online presence, supplies lower-end seed products to mass-market retailers, including Wal-Mart. The most direct competitor for Wayside Gardens is White Flower Farms.
Within the holiday gifting portion of this segment, the company competes against larger competitors, including Harry and David and 1-800 Flowers, among others.
The company’s competitors are Signature Hardware, House of Antique Hardware, and Rejuvenation Hardware (part of Williams Sonoma).
Manufacturing segment
This segment consists of a wholly-owned manufacturer of lawn and garden power equipment and emergency safety shelters selling products primarily under the Swisher Acquisition, Inc. (Swisher) brand name and also providing turn-key manufacturing services to third parties.
This segment is a 2021 addition resulting from a merger with Swisher, a manufacturer of lawn and garden power equipment and emergency safety shelters, and provider of turn-key manufacturing services to third parties.
Products and Services
Swisher is a manufacturing of mowers (finish cut, rough cut, walk behind and zero turn), safety shelters, agricultural accessories, timber management equipment and string trimmers and sells product primarily under the Swisher brand name. Product is sold through e-commerce and brick & mortar retailers, factory/consumer direct and at its factory direct and at its factory outlet store in Warrensburg, Missouri.
In addition to manufacturing products, Swisher provides a host of manufacturing services, including powder coating, fabrication, assembly and distribution, welding, engineering and design, and contract manufacturing.
The company expanded into the above ground home security/tornado shelter market with ‘ESP’ branded products.
Seasonality
The company’s entry into ESP safety shelters, contract manufacturing and the retail business with the Swisher factory outlet has significantly reduced the seasonality and reliance on favorable weather to stimulate outdoor power equipment sales.
Competition
In the outdoor power equipment space, Swisher's largest competitor are Deere & Company, Husqvarna and Toro.
Consumer Finance segment
This segment consists of retail financial services conducted through the company’s wholly-owned subsidiaries Wyoming Financial Lenders, Inc. and Express Pawn, Inc.
The majority of short-term consumer loans the company provides are commonly referred to as ‘payday loans’ or ‘cash advance’ loans. Such loans are referred to as ‘payday loans’ because they are typically made to borrowers who have no available cash and promise to repay the loan out of their next paycheck. The company also provides pawn loans.
The company provides short-term consumer loans in amounts that typically range from $100 to $500, with the average loan amount, including fee, being approximately $474. Cash advance loans provide customers with cash in exchange for a promissory note with a maturity of generally two to four weeks and the customer’s post-dated personal check for the aggregate amount of the cash advance, plus a fee. The fee varies from state to state based on applicable regulations and generally ranges from $15 to $22 for each whole or partial increment of $100 borrowed. To repay the cash advance loan, a customer may pay with cash, in which case their personal check is returned to them, or allow the check to be presented to the bank for collection.
The company operates three pawn stores in its Consumer Finance segment. Its pawn stores provide collateralized non-recourse loans, commonly known as ‘pawn loans’ with maturities of one to four months. Allowable service charges vary by state and loan size. The loan amount varies depending on the company’s valuation of each item pawned. The company generally lends from 30% to 55% of its estimate of the collateral’s resale value. Customers have the option to redeem the pawned merchandise during the term or at maturity, or else forfeit the merchandise to the company on maturity. At its pawn stores, the company sells merchandise acquired through either customer forfeiture of pawn collateral, second-hand merchandise purchased from customers or consigned to it, or new merchandise purchased from vendors.
All of the company’s Consumer Finance lending activities and other services are subject to state regulations (which vary from state to state), federal regulations and local regulations, where applicable.
As part of each payday loan transaction, the company enters into a standardized written promissory note with the borrowing customer and obtain proof of income and identity, a personal post-dated check for the principal loan amount plus a specified fee, and other documentation. Its standardized contracts vary based on state laws, but all of its contracts plainly state in simple terms the annual percentage rate (assuming the fees it charges are computed as interest) in compliance with Regulation Z, the borrower’s right to rescind the transaction, a dispute-resolution clause, a notice of financial privacy rights, an affirmative representation about whether the borrower is a member of the U.S. military, and the consequences of defaulting on the loan. The company retains copies of its written contracts and provides a signed copy to its customers.
Seasonality
The company’s Consumer Finance segment results are subject to seasonality, with the first and fourth quarters (year ended December 2021) typically being its strongest periods as a result of broader economic factors, such as holiday spending habits at the end of each year and income tax refunds during the first quarter.
Acquisitions
In March 2022, this segment entered into a series of definitive agreements to purchase 80% of Gateway Wireless, LLC, an operator of 56 Cricket Wireless locations in Missouri and several other states.
In January 2022, the company’s Direct to Consumer segment acquired From Seed to Spoon, a garden planning App that makes growing food easier.
Regulation
The company’s payday lending practices must also comply with the disclosure requirements of the Federal Truth-In-Lending Act and Regulation Z under that Act. Finally, its payday lending business subjects it to the Equal Credit Opportunity Act and the Gramm-Leach-Bliley Act.
In addition, the company’s Consumer Finance segment activities are subject to the following federal consumer laws, regulations and the Consumer Financial Protection Bureau (CFPB) guidance: Unfair, Deceptive or Abusive Acts or Practices (UDAAP); Fair Debt Collections Practice Act (FDCPA); Consumer Complaint Management; Electronic Fund Transfer Act (EFTA) (Reg. E); Fair Credit Reporting Act (FCRA); and Service Members Civil Relief Act.
Regulations promulgated by the United States Department of the Treasury under the Bank Secrecy Act require the company to report all transactions involving currency in an amount greater than $10,000. The Bank Secrecy Act requires the company, under certain circumstances, to file a suspicious activity report.
The Money Laundering Suppression Act of 1994 requires the company to register with the United States Department of the Treasury as a money service business. Finally, the company has established various procedures designed to comply, and it continues to monitor and evaluate its business methods and procedures to ensure compliance with the USA PATRIOT Act.
The company has identified its systems that capture and maintain nonpublic personal information, as that term is understood under the Gramm-Leach-Bliley Act and associated regulations. It also has systems in place intended to safeguard this information as required by the Gramm-Leach-Bliley Act, which specifically governs certain aspects of its payday lending business.
History
Western Capital Resources, Inc. was incorporated in 2001.
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