UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20192020 OR
☐TRANSITION 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

For the transition period from to 

Commission File No. 001-37986

INTERNATIONAL MONEY EXPRESS, INC.
(Exact name of registrant as specified in its charter)


Delaware47-4219082
Delaware47-4219082
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)

9480 South Dixie Highway
Miami, Florida

33156
(Address of Principal Executive Offices)(Zip Code)


(305) 671-8000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock ($0.0001 par value)IMXINasdaq Capital Market

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 the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

☐Large accelerated filer☒Accelerated filer
☐Accelerated filer
☒Non-accelerated filer☐☒Smaller reporting company
☒☒Emerging growth company

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): Yes ☐  No ☒

As of November 5, 2019,October 30, 2020, there were 38,007,61138,072,882 shares of the registrant’s common stock, $0.0001 par value per share, outstanding. The registrant has no other class of common stock outstanding.




INTERNATIONAL MONEY EXPRESS, INC.
INDEX TO FINANCIAL STATEMENTS

Page
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3
PART 1 - FINANCIAL INFORMATION
Item 1.
4
4
5
6
8
10
Item 2.22
20
Item 3.37
35
Item 4.38
37
PART II - OTHER INFORMATION
Item 1.39
38
Item 1A.39
38
Item 2.
39
Item 3.
39
Item 4.
39
Item 5.
39
Item 6.
40
41


2
Index

Index

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements contained in thisThis Quarterly Report on Form 10-Q thatmay contain certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect our current views with respect to certain events that could have an effect on our future events andperformance, including but without limitation, statements regarding our plans, objectives, financial performance, business strategies, expectations for our business and the business of the Company and any otherCompany.
These statements of a future or forward-looking nature, constitute “forward-looking statements” for the purposes of federal securities laws. Our forward-looking statements include, butrelate to expectations concerning matters that are not limited to, statements regarding ourhistorical fact and may include the words or our management’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,phrases such as “would,” “believe,“will,” “continue,“should,” “expects,” “believes,” “anticipates,” “continues,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,“plans,” “possible,” “potential,” “predict,“predicts,” “project,“projects,” “should,“forecasts,” “would,“intends,” “will,“assumes,” “estimates,” “approximately,” “shall”“shall,” “our planning assumptions,” “future outlook” and similar expressions, may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statementsExcept for historical information, matters discussed in this Quarterly Report on Form 10-Q may include, for example, the future financial performance of the Company.

The forward-looking statements contained in this Quarterly Report on Form 10-Q are forward-looking statements. These forward-looking statements are based largely on information currently available to our management and on our current expectations, assumptions, plans, estimates, judgments and beliefs concerning future developmentsprojections about our business and their potential effectsour industry, as well as macroeconomic conditions, and are subject to various risks and uncertainties that could cause actual results to differ materially from historical results or those currently anticipated. Although we believe our expectations are based on us. We cannot assure you that future developments affecting us will be those that we have anticipated. These forward-looking statements involvereasonable estimates and assumptions, they are not guarantees of performance and there are a number of known and unknown risks, uncertainties, (somecontingencies and other factors (many of which are beyondoutside our control) or other assumptions that maycould cause actual results or performance to bediffer materially different from those expressed or implied by thesesuch forward-looking statements. Should oneAccordingly, there is no assurance that our expectations will, in fact, occur or more of these risksthat our estimates or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in thesewill be correct, and we caution investors and all others not to place undue reliance on such forward-looking statements. Some factors that could cause actual results to differ and could materially adversely affect our business, financial condition, results of operations, cash flows and liquidity include, but are not limited to:

•the ability to maintain the listing of our common stock on Nasdaq;
the ability to recognize the anticipated benefits of the Merger (as defined herein), which may be affected by, among other things, competition, and the ability of the combined business to grow and manage growth profitably;
•changes in applicable laws or regulations;
•the possibility that we may be adversely affected by other economic, business and/or competitive factors;
•factors relating to our business, operations and financial performance, including:
◦the COVID-19 pandemic, responses thereto and the economic and market effects thereof, including unemployment levels and increased capital markets volatility;

o
competition in the markets in which we operate;
◦competition in the markets in which we operate;
◦volatility in foreign exchange rates that could affect the volume of consumer remittance activity and/or affect our foreign exchange related gains and losses;

o
cyber-attacks or disruptions to our information technology, computer network systems and data centers;
◦cyber-attacks or disruptions to our information technology, computer network systems and data centers;
◦our ability to maintain agent relationships on terms consistent with those currently in place;

o
our ability to maintain agent relationships on terms consistent with those currently in place;
◦our ability to maintain banking relationships necessary for us to conduct our business;
◦credit risks from our agents and the financial institutions with which we do business;

o
our ability to maintain banking relationships necessary for us to conduct our business;
◦bank failures, sustained financial illiquidity, or illiquidity at our clearing, cash management or custodial financial institutions;
◦new technology or competitors that disrupt the current ecosystem by introducing digital platforms;

o
credit risks from our agents and the financial institutions with which we do business;
◦our ability to satisfy our debt obligations and remain in compliance with our credit facility requirements;
◦interest rate risk from elimination of the London Inter-bank Offered Rate (“LIBOR”) as a benchmark interest rate;

o
bank failures, sustained financial illiquidity, or illiquidity at our clearing, cash management or custodial financial institutions;
◦our success in developing and introducing new products, services and infrastructure;
◦customer confidence in our brand and in consumer money transfers generally;

o
new technology or competitors that disrupt the current ecosystem;
◦our ability to maintain compliance with the regulatory requirements of the jurisdictions in which we operate or plan to operate;
◦international political factors or implementation of tariffs, border taxes or restrictions on remittances or transfers of money out of the United States and Canada;

o
our ability to satisfy our debt obligations and remain in compliance with our credit facility requirements;
◦changes in tax laws and unfavorable outcomes of tax positions we take;
◦political instability, currency restrictions and volatility in countries in which we operate or plan to operate;

o
interest rate risk from elimination of LIBOR as a benchmark interest rate;
◦consumer fraud and other risks relating to customers’ authentication;
◦weakness in U.S. or international economic conditions;

o
our success in developing and introducing new products, services and infrastructure;
◦change or disruption in international migration patterns;
◦our ability to protect our brand and intellectual property rights;

o
customer confidence in our brand and in consumer money transfers generally;
◦our ability to retain key personnel; and

o
our ability to maintain compliance with the regulatory requirements of the jurisdictions in which we operate or plan to operate;

o
international political factors or implementation of tariffs, border taxes or restrictions on remittances or transfers of money out of the United States;

o
changes in tax laws and unfavorable outcomes of tax positions we take;

o
political instability, currency restrictions and devaluation in countries in which we operate or plan to operate;

o
consumer fraud and other risks relating to customers’ authentication;

o
weakness in U.S. or international economic conditions;

o
change or disruption in international migration patterns;

o
our ability to protect our brand and intellectual property rights;

o
our ability to retain key personnel; and

o
changes in foreign exchange rates that could impact consumer remittance activity.
•other economic, business and/or competitive factors, risks and uncertainties, including those described in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018 and in the section entitled “Risk Factors” in the prospectus supplement, dated September 11, 2019, filed pursuant to Rule 424(b)(4).

2019.
We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

3
3
Index
PART 1 – FINANCIAL INFORMATION
ITEM 1.
ITEM 1.    FINANCIAL STATEMENTS

INTERNATIONAL MONEY EXPRESS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except for share data)

September 30, 2020December 31, 2019
ASSETS(unaudited)
Current assets:
Cash$109,067 $86,117 
Accounts receivable, net of allowance of $1,243 and $759, respectively59,962 39,754 
Prepaid wires, net8,983 18,201 
Prepaid expenses and other current assets2,685 4,155 
Total current assets180,697 148,227 
Property and equipment, net12,770 13,282 
Goodwill36,260 36,260 
Intangible assets, net22,168 27,381 
Deferred tax asset, net0 741 
Other assets2,328 1,415 
Total assets$254,223 $227,306 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt, net$7,044 $7,044 
Accounts payable9,890 13,401 
Wire transfers and money orders payable, net48,189 40,197 
Accrued and other liabilities24,086 23,074 
Total current liabilities89,209 83,716 
Long-term liabilities:
Debt, net82,340 87,623 
Deferred tax liabilities, net571 0 
Total long-term liabilities82,911 87,623 
Commitments and contingencies, see Note 13
Stockholders' equity:
Common stock $0.0001 par value; 230,000,000 shares authorized, 38,059,737 and 38,034,389 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively.4 4 
Additional paid-in capital56,793 54,694 
Retained earnings25,340 1,176 
Accumulated other comprehensive (loss) income(34)93 
Total stockholders' equity82,103 55,967 
Total liabilities and stockholders' equity$254,223 $227,306 
  
September 30,
2019
  
December 31,
2018
 
ASSETS (unaudited)    
Current assets:      
Cash $94,189  $73,029 
Accounts receivable, net of allowance of $772 and $842, respectively  53,763   35,795 
Prepaid wires  9,382   26,655 
Other prepaid expenses and current assets  2,267   3,171 
Total current assets  159,601   138,650 
         
Property and equipment, net  11,550   10,393 
Goodwill  36,260   36,260 
Intangible assets, net  29,720   36,395 
Deferred tax asset, net  2,032   2,267 
Other assets  1,744   1,874 
Total assets $240,907  $225,839 
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
Current liabilities:        
Current portion of long-term debt, net $6,405  $3,936 
Accounts payable  14,100   11,438 
Wire transfers and money orders payable  57,339   36,311 
Accrued and other liabilities  24,061   16,355 
Total current liabilities  101,905   68,040 
         
Long-term liabilities:        
Debt, net  89,383   113,326 
Total long-term liabilities  89,383   113,326 
         
Commitments and contingencies, see Note 13        
         
Stockholders' equity:        
Common stock $0.0001 par value; 230,000,000 shares authorized, 38,005,623 and 36,182,783 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively.  4   4 
Additional paid-in capital  53,748   61,889 
Accumulated deficit  (4,165)  (17,418)
Accumulated other comprehensive income (loss)  32   (2)
Total stockholders' equity  49,619   44,473 
Total liabilities and stockholders' equity $240,907  $225,839 


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4
4
Index
INTERNATIONAL MONEY EXPRESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
(in thousands, except for share data, unaudited)

Three Months Ended
September 30,		Nine Months Ended
September 30,
2020201920202019
Revenues:
Wire transfer and money order fees, net$82,646 $72,468 $222,534 $201,410 
Foreign exchange gain, net12,296 12,272 33,510 33,297 
Other income652 594 1,863 1,652 
Total revenues95,594 85,334 257,907 236,359 
Operating expenses:
Service charges from agents and banks63,904 56,319 172,403 156,510 
Salaries and benefits8,084 7,612 22,512 22,806 
Other selling, general and administrative expenses6,336 9,788 16,827 20,850 
Depreciation and amortization2,698 3,179 8,079 9,486 
Total operating expenses81,022 76,898 219,821 209,652 
Operating income14,572 8,436 38,086 26,707 
Interest expense1,530 2,145 5,033 6,503 
Income before income taxes13,042 6,291 33,053 20,204 
Income tax provision3,544 2,253 8,889 5,936 
Net income9,498 4,038 24,164 14,268 
Other comprehensive income (loss)14 (9)(127)34 
Comprehensive income$9,512 $4,029 $24,037 $14,302 
Earnings per common share:
Basic$0.25 $0.11 $0.64 $0.38 
Diluted$0.25 $0.11 $0.63 $0.38 
Weighted-average common shares outstanding:
Basic38,050,610 37,984,316 38,040,339 37,230,831 
Diluted38,652,707 38,286,702 38,246,429 37,365,371 
  
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
  2019  2018  2019  2018 
    
Revenues:            
Wire transfer and money order fees, net $72,468  $61,332  $201,410  $168,554 
Foreign exchange gain  12,272   10,697   33,297   29,013 
Other income  594   479   1,652   1,277 
Total revenues  85,334   72,508   236,359   198,844 
                 
Operating expenses:                
Service charges from agents and banks  56,319   48,305   156,510   132,565 
Salaries and benefits  7,612   10,959   22,806   24,633 
Other selling, general and administrative expenses  9,788   5,207   20,850   13,390 
Transaction costs  -   6,305   -   10,319 
Depreciation and amortization  3,179   4,142   9,486   11,750 
Total operating expenses  76,898   74,918   209,652   192,657 
                 
Operating income (loss)  8,436   (2,410)  26,707   6,187 
                 
Interest expense  2,145   3,434   6,503   10,110 
                 
Income (loss) before income taxes  6,291   (5,844)  20,204   (3,923)
                 
Income tax provision  2,253   7,569   5,936   8,186 
                 
Net income (loss)  4,038   (13,413)  14,268   (12,109)
                 
Other comprehensive (loss) income  (9)  22   34   7 
                 
Comprehensive income (loss) $4,029  $(13,391) $14,302  $(12,102)
                 
Income (loss) per common share:                
Basic and diluted $0. 11  $(0.43) $0.38  $(0.55)
                 
Weighted-average common shares outstanding:                
Basic  37,984,316   30,975,338   37,230,831   21,827,082 
Diluted  38,286,702   30,975,338   37,365,371   21,827,082 


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5
INTERNATIONAL MONEY EXPRESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands, except for share data, unaudited)

  Three Months Ended 
  

Common Stock
  

Additional
  

Accumulated
  
Accumulated Other
Comprehensive
  
Total
Stockholders'
 
  Shares  Amount  Paid-in Capital  Deficit  Income (Loss)  Equity 
Balance, June 30, 2019  37,982,848  $4  $53,118  $(8,203) $41  $44,960 
Net income  -   -   -   4,038   -   4,038 
Issuance of common stock:                        
Exercise of stock options  1,583   -   (4)  -   -   (4)
Restricted stock units  21,192   -   -   -   -   - 
Share-based compensation  -   -   634   -   -   634 
Adjustment from foreign currency translation, net  -   -   -   -   (9)  (9)
Balance, September 30, 2019  38,005,623  $4  $53,748  $(4,165) $32  $49,619 

  Three Months Ended 
  

Common Stock
  

Additional
  

Accumulated
  
Accumulated Other
Comprehensive
  
Total
Stockholders'
 
  Shares  Amount  Paid-in Capital  Deficit  Income (Loss)  Equity 
Balance, June 30, 2018  17,227,682  $2  $46,789  $(8,870) $(17) $37,904 
Net equity infusion from reverse recapitalization  18,955,101   2   8,962   -   -   8,964 
Net loss  -   -   -   (13,413)  -   (13,413)
Share-based compensation  -   -   4,453   -   -   4,453 
Adjustment from foreign currency translation, net  -   -   -   -   22   22 
Balance, September 30, 2018  36,182,783  $4  $60,204  $(22,283) $5  $37,930 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6
INTERNATIONAL MONEY EXPRESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands, except for share data, unaudited)

Three Months Ended
Common StockAdditional
Paid-in Capital		Retained EarningsAccumulated Other
Comprehensive
Loss		Total
Stockholders'
Equity
SharesAmount
Balance, June 30, 202038,035,279 $4 $56,098 $15,842 $(48)$71,896 
Net income— — — 9,498 — 9,498 
Issuance of common stock:
Exercise of stock options10,607 — (106)— — (106)
Restricted stock units13,851 — — — — 0 
Share-based compensation— — 801 — — 801 
Adjustment from foreign currency translation, net— — — — 14 14 
Balance, September 30, 202038,059,737 $4 $56,793 $25,340 $(34)$82,103 
  Nine Months Ended 
  

Common Stock
  

Additional
  

Accumulated
  
Accumulated Other
Comprehensive
  
Total
Stockholders'
 
  Shares  Amount  Paid-in Capital  Deficit  Income (Loss)  Equity 
Balance, December 31, 2018  36,182,783  $4  $61,889  $(17,418) $(2) $44,473 
Adoption of new accounting pronouncement  -   -   -   (1,015)  -   (1,015)
Warrant exchange  1,800,065   -   (10,031)  -   -   (10,031)
Net income  -   -   -   14,268   -   14,268 
Issuance of common stock:                        
Exercise of stock options  1,583   -   (4)  -   -   (4)
Restricted stock units  21,192   -   -   -   -   - 
Share-based compensation  -   -   1,894   -   -   1,894 
Adjustment from foreign currency translation, net  -   -   -   -   34   34 
Balance, September 30, 2019  38,005,623  $4  $53,748  $(4,165) $32  $49,619 


  Nine Months Ended 
  

Common Stock
  

Additional
  

Accumulated
  
Accumulated Other
Comprehensive
  
Total
Stockholders'
 
  Shares  Amount  Paid-in Capital  Deficit  Income (Loss)  Equity 
Balance, December 31, 2017  17,227,682  $2  $46,076  $(10,174) $(2) $35,902 
Net equity infusion from reverse recapitalization  18,955,101   2   8,962   -   -   8,964 
Net loss  -   -   -   (12,109)  -   (12,109)
Share-based compensation  -   -   5,166   -   -   5,166 
Adjustment from foreign currency translation, net  -   -   -   -   7   7 
Balance, September 30, 2018  36,182,783  $4  $60,204  $(22,283) $5  $37,930 

Three Months Ended
Common StockAdditional
Paid-in Capital		Accumulated
Deficit		Accumulated Other
Comprehensive
Income		Total
Stockholders'
Equity
SharesAmount
Balance, June 30, 201937,982,848 $4 $53,118 $(8,203)$41 $44,960 
Net income— — — 4,038 — 4,038 
Issuance of common stock:
Exercise of stock options1,583 — (4)— — (4)
Restricted stock units21,192 — — — — 0 
Share-based compensation— — 634 — — 634 
Adjustment from foreign currency translation, net— — — — (9)(9)
Balance, September 30, 201938,005,623 $4 $53,748 $(4,165)$32 $49,619 


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6

7
INTERNATIONAL MONEY EXPRESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSCHANGES IN STOCKHOLDERS’ EQUITY
(in thousands, except for share data, unaudited)

Nine Months Ended
Common StockAdditional
Paid-in Capital		Retained EarningsAccumulated Other
Comprehensive
(Loss) Income		Total
Stockholders'
Equity
SharesAmount
Balance, December 31, 201938,034,389 $4 $54,694 $1,176 $93 $55,967 
Net income— — — 24,164 — 24,164 
Issuance of common stock:
Exercise of stock options11,497 — (110)— — (110)
Restricted stock units13,851 — — — — 0 
Share-based compensation— — 2,209 — — 2,209 
Adjustment from foreign currency translation, net— — — — (127)(127)
Balance, September 30, 202038,059,737 $4 $56,793 $25,340 $(34)$82,103 
  Nine Months Ended September 30, 
  2019  2018 
       
Cash flows from operating activities:      
Net income (loss) $14,268  $(12,109)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:        
Depreciation and amortization  9,486   11,750 
Share-based compensation  1,894   5,166 
Provision for bad debts  1,171   743 
Debt origination costs amortization  546   700 
Deferred income tax provision, net  572   6,906 
Loss on disposal of property and equipment  182   152 
Total adjustments  13,851   25,417 
Changes in operating assets and liabilities:        
Accounts receivable  (19,224)  (30,286)
Prepaid wires  17,259   2,785 
Other prepaid expenses and assets  933   (1,428)
Wire transfers and money orders payables  21,047   29,640 
Accounts payable and accrued and other liabilities  9,013   16,497 
Net cash provided by operating activities  57,147   30,516 
         
Cash flows from investing activities:        
Purchases of property and equipment  (3,817)  (3,575)
Acquisition of agent locations  (250)  - 
Net cash used in investing activities  (4,067)  (3,575)
         
Cash flows from financing activities:        
Borrowings under term loan  12,000   - 
Repayments under revolving loan, net  (30,000)  - 
Repayments of term loan  (3,679)  (3,638)
Debt origination costs  (240)  - 
Proceeds from reverse recapitalization  -   101,664 
Cash consideration to Intermex shareholders  -   (101,659)
Cash paid in warrant exchange  (10,031)  - 
Net cash used in financing activities  (31,950)  (3,633)
         
Effect of exchange rate changes on cash  30   27 
         
Net increase in cash and restricted cash  21,160   23,335 
         
Cash and restricted cash, beginning of the period  73,029   59,795 
         
Cash and restricted cash, end of the period $94,189  $83,130 


Nine Months Ended
Common StockAdditional
Paid-in Capital		Accumulated
Deficit		Accumulated Other
Comprehensive
Income (Loss)		Total
Stockholders'
Equity
SharesAmount
Balance, December 31, 201836,182,783 $4 $61,889 $(17,418)$(2)$44,473 
Adoption of revenue recognition accounting pronouncement— — — (1,015)— (1,015)
Warrant exchange1,800,065 — (10,031)— — (10,031)
Net income— — — 14,268 — 14,268 
Issuance of common stock:
Exercise of stock options1,583 — (4)— — (4)
Restricted stock units21,192 — — — — 0 
Share-based compensation— — 1,894 — — 1,894 
Adjustment from foreign currency translation, net— — — — 34 34 
Balance, September 30, 201938,005,623 $4 $53,748 $(4,165)$32 $49,619 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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INTERNATIONAL MONEY EXPRESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
Nine Months Ended September 30,
20202019
Cash flows from operating activities:
Net income$24,164 $14,268 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization8,079 9,486 
Share-based compensation2,209 1,894 
Provision for bad debt1,421 1,171 
Debt origination costs amortization564 546 
Deferred income tax provision, net1,312 572 
Loss on disposal of property and equipment336 182 
Total adjustments13,921 13,851 
Changes in operating assets and liabilities:
Accounts receivable(21,694)(19,224)
Prepaid wires, net7,773 17,259 
Prepaid expenses and other assets433 933 
Wire transfers and money orders payable, net9,465 21,047 
Accounts payable and accrued and other liabilities(2,465)9,013 
Net cash provided by operating activities31,597 57,147 
Cash flows from investing activities:
Purchases of property and equipment(2,770)(3,817)
Acquisition of agent locations0 (250)
Net cash used in investing activities(2,770)(4,067)
Cash flows from financing activities:
Borrowings under term loan0 12,000 
Repayments of term loan(5,746)(3,679)
Repayments under revolving loan, net0 (30,000)
Debt origination costs0 (240)
Proceeds from exercise of options20 0 
Cash paid in warrant exchange0 (10,031)
Net cash used in financing activities(5,726)(31,950)
Effect of exchange rate changes on cash(151)30 
Net increase in cash22,950 21,160 
Cash, beginning of period86,117 73,029 
Cash, end of period$109,067 $94,189 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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INTERNATIONAL MONEY EXPRESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(in thousands, unaudited)

Nine Months Ended September 30,
20202019
Supplemental disclosure of cash flow information:
Cash paid for interest$4,475 $5,780 
Cash paid for income taxes$7,323 $2,550 
Supplemental disclosure of non-cash investing activity:
Agent business acquired in exchange for receivables$0 $85 
Supplemental disclosure of non-cash financing activity:
Issuance of common stock for cashless exercise of options$130 $4 
  Nine Months Ended September 30, 
  2019  2018 
    
Supplemental disclosure of cash flow information:      
Cash paid for interest $5,780  $9,410 
Cash paid for income taxes $2,550  $1,495 
         
Supplemental disclosure of non-cash investing activity:        
Agent business acquired in exchange for receivables $85  $- 
         
Supplemental disclosure of non-cash financing activity:        
Intermex transaction accruals settled by acquisition proceeds $-  $9,063 
Issuance of common stock for cashless exercise of options $4  $- 


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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INTERNATIONAL MONEY EXPRESS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1 -– BUSINESS AND ACCOUNTING POLICIES

On July 26, 2018 (the “Closing Date”), International Money Express, Inc. (formerly FinTech Acquisition Corp. II) consummated the previously announced transaction (the “Merger”) by and among FinTech Acquisition Corp. II, a Delaware corporation (“FinTech”), FinTech II Merger Sub Inc., a wholly-owned subsidiary of FinTech (“Merger Sub 1”), FinTech II Merger Sub 2 LLC, a wholly-owned subsidiary of FinTech (“Merger Sub 2”), Intermex Holdings II, Inc. (“Intermex”) and SPC Intermex Representative LLC (“SPC Intermex”)(See Note 2). As a result of the Merger, the separate corporate existence of Intermex ceased and Merger Sub 2 (which changed its name to International Money Express Sub 2, LLC in connection with the closing of the Merger) continued as the surviving entity. In connection with the closing of the Merger, FinTech changed its name to International Money Express, Inc. (the “Company”). Unless the context below otherwise provides, the “Company” refers to the combined company following the Merger and, together with their respective subsidiaries, “FinTech” refers to the registrant prior to the closing of the Merger and “Intermex” refers to Intermex Holdings II, Inc. prior to the closing of Merger.

The Merger was accounted for as a reverse recapitalization where FinTech was treated as the “acquired” company for financial reporting purposes. This determination was primarily based on the facts that following the Merger, the former stockholders of Intermex control the majority of the voting rights in respect of the board of directors of the Company, Intermex comprising the ongoing operations of the Company and Intermex’s senior management comprising the senior management of the Company. Accordingly, the Merger was treated as the equivalent of Intermex issuing stock for the net assets of FinTech, accompanied by a recapitalization. The net assets of FinTech were stated at historical cost, with no goodwill or other intangible assets resulting from the Merger. The consolidated assets, liabilities and results of operations prior to the Closing Date of the Merger are those of Intermex, and FinTech’s assets, liabilities and results of operations are consolidated with Intermex beginning on the Closing Date. The shares and corresponding capital amounts included in common stock and additional paid-in capital, pre-merger, have been retroactively restated as shares reflecting the exchange ratio in the Merger. The historical financial information and operating results of FinTech prior to the Merger have not been separately presented in these condensed consolidated financial statements as they were not significant“us” or meaningful.

The Company“we”) operates as a money transmitter primarily between the United States of America (“U.S.”) and Canada to Mexico, Guatemala and other countries in Latin America, Africa and AfricaAsia through a network of authorized agents located in various unaffiliated retail establishments and 34 Company-operated stores throughout the U.SU.S. and 33 Company-owned stores.

Canada.
The condensed consolidated financial statements of the Company include Intermex Holdings, Inc., its wholly-owned indirect subsidiary, Intermex Wire Transfer, LLC (“LLC”), Intermex Wire Transfers de Guatemala, S.A. (“Intermex Guatemala”) - 99.8% owned by LLC, Intermex Wire Transfer de Mexico, S.A. and Intermex Transfers de Mexico, S.A. (“Intermex Mexico”) - 98% owned by LLC, Intermex Wire Transfer Corp. - 100% owned by LLC, Intermex Wire Transfer II, LLC - 100% owned by LLC and Canada International Transfers Corp. - 100% owned by LLC. Non-controlling interest in the results of operations of consolidated subsidiaries represents the minority stockholders’ share of the profit or (loss)loss of Intermex Mexico and Intermex Guatemala. The non-controlling interest asset and non-controlling interest in the portion of the profit or (loss)loss from operations of these subsidiaries were not recorded by the Company as they are considered immaterial.

The condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United statements of AmericaU.S. (“GAAP”). All significant inter-company balances and transactions have been eliminated from the condensed consolidated financial statements.

The Company’s interim condensed consolidated financial statements and related notes are unaudited. In the opinion of management, all adjustments (including normal recurring adjustments) and disclosures necessary for a fair presentation of these interim financial statements have been included. The results reported in these interim financial statements are not necessarily indicative of the results that may be reported for the entire year. Certain information and footnote disclosures required by GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.2019.

Risks and Uncertainties
On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of the outbreak of a new strain of coronavirus (“COVID-19”) and the risks to the international community as the virus spread globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally and national, state and local governments in the jurisdictions where we operate and serve our customers imposed emergency restrictions to mitigate the spread of the virus.
10Starting in March 2020, governmental authorities took measures that restricted the normal course of operations of businesses and consumers. Although those restrictions were in place for most of the second and third quarter and affected the Company, sending and paying agents as well as consumers and their beneficiaries, those measures did not have a material adverse effect on the Company’s financial condition, results of operations and cash flows for the three and nine month periods ended September 30, 2020.
The Company and our sending agents are considered essential businesses under current federal guidance; however, the Company’s business is dependent upon the willingness and ability of its employees, network of agents and consumers to conduct money transfer services and the ultimate effects of the economic disruption caused by the pandemic and responses thereto. Although the Company’s operations continued effectively despite social distancing and other measures taken in response to the pandemic, the ultimate impact of the COVID-19 pandemic on our results of operations and financial condition is dependent on future developments, including the duration of the pandemic and the related extent of its severity, as well as its impact on the economic conditions, particularly the level of unemployment of our customers, all of which remain uncertain and cannot be predicted at this time. If the global response to contain the COVID-19 pandemic escalates further or is unsuccessful, or if governmental decisions to ease pandemic related restrictions are ineffective, premature, counterproductive or reversed, the Company could experience a material adverse effect on its business, financial condition, results of operations and cash flows.
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INTERNATIONAL MONEY EXPRESS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Accounting Pronouncements

The Financial Accounting Standards Board (“FASB”) issued guidance, Revenue from Contracts with Customers, which amended the existing accounting standards for revenue recognition. Refer to Note 3 for additional discussion on the adoption of this standard on January 1, 2019.

The FASB issued amended guidance, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments, which clarifies how certain cash receipts and cash payments are presented and classified in the condensed consolidated statements of cash flows. The amendments are aimed at reducing the existing diversity in practice. The Company adopted this guidance in the first quarter of 2019 applying a retrospective approach for each period presented. The adoption of this guidance did not have a material impact on the condensed consolidated financial statements.

The FASB issued guidance, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous accounting rules.GAAP. The guidance requires that a lessee recognizerecognizes a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term on the balance sheet. This guidance willis required to be adopted by the Company on January 1, 20212022 and may be applied using either the earliest period adjustment method or the modified retrospective approach. The Company is currently evaluating the impactadoption of this guidance willis not expected to have a material impact on the condensed consolidated financial statements.

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The FASB issued amended guidance, Intangibles – Goodwill and other (Topic 350): Simplifying the Test for Goodwill Impairment. The amended standard simplifies how an entity tests goodwill by eliminating Step 2 of the goodwill impairment test related to measuring an impairment charge. Instead, impairment will be recorded for the amount that the carrying amount of a reporting unit exceeds its fair value. This new guidance is effective for the Company on January 1, 2021. The adoption of this guidance is not expected to have a material impact on the condensed consolidated financial statements.

The FASB issued amended guidance, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amended standard requires implementation costs incurred by customers in cloud computing arrangements to be deferred and recognized over the term of the arrangement, if those costs would be capitalized by the customers in a software licensing arrangement. This new guidance is effective for the Company on January 1, 2021. The adoption of this guidance is not expected to have a material impact on the condensed consolidated financial statements.
The FASB issued guidance, Simplifying the Accounting for Income Taxes (Topic 740), which removes certain exceptions to the general principles in Topic 740 and improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This new guidance is effective for the Company on January 1, 2021. The adoption of this guidance is not expected to have a material impact on the condensed consolidated financial statements.
The FASB issued guidance, Financial Instruments -– Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, regarding the measurement of credit losses for certain financial instruments. The new standard replaces the incurred loss model with a current expected credit loss (“CECL”) model. The CECL model is based on historical experience, adjusted for current conditions and reasonable and supportable forecasts. The Company is currently required to adopt the new standard on January 1, 2023. The Company is currently evaluating the impact this guidance will have on the condensed consolidated financial statements.

The FASB issued guidance, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of interbank offered rates (“IBORs”) and, particularly, the risk of cessation of the LIBOR, regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. This accounting standards update provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. This new guidance may be adopted by the Company no later than December 1, 2022, with early adoption permitted. The potential adoption of this guidance is not expected to have a material impact on the condensed consolidated financial statements.
Reclassifications

Certain reclassifications have been made to prior-year amounts to conform with current presentation.

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INTERNATIONAL MONEY EXPRESS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 2 – FINTECH MERGERREVENUES

FinTech Merger

As discussed in Note 1, on July 26, 2018 Intermex and FinTech consummated the Merger, which was accounted for as a reverse recapitalization. Immediately prior to the Merger, FinTech’s shareholders exercised their right to redeem certain of their outstanding shares for cash, resulting in the redemption of 4.9 million shares of FinTech for gross redemption payments of $49.8 million. Subsequent to this redemption, there were 18.9 million outstanding shares. The aggregate consideration paid in the Merger by FinTech to the Intermex shareholders consisted of approximately (i) $102.0 million in cash and (ii) 17.2 million shares of FinTech common stock. In accounting for the reverse recapitalization, the net cash proceeds received in the third quarter of 2018Company recognized revenues from FinTech amounted to $5.0 thousand as shown in the table below (in thousands):

Cash balance available to Intermex prior to the consummation of the Merger $110,726 
Less:    
Intermex Merger costs paid from acquisition proceeds at closing  (9,062)
Cash consideration to Intermex shareholders  (101,659)
Net cash proceeds from reverse recapitalization $5 
     
Cash balance available to Intermex prior to the consummation of the Merger $110,726 
Less:    
Cash consideration to Intermex shareholders  (101,659)
Other FinTech assets acquired and liabilities assumed in the Merger:    
Prepaid expenses  76 
Accrued liabilities (1)
  (136)
Deferred tax assets (1)
  982 
Net equity infusion from FinTech (1)
 $9,989 

(1) During the fourth quarter of 2018, the Company acquired approximately $1 million of deferred tax assets from FinTech, which is reflected in the table above. These deferred tax assets relate to capitalized transaction costs incurred by FinTech prior to the merger, therefore they have been recorded in additional-paid in capital.

Cash consideration to Intermex shareholders included the payout of all vested Incentive Units issued to employees of the Company as discussed in Note 10.

After the completion of the Merger on July 26, 2018, there were 36.2 million shares of International Money Express, Inc. common stock outstanding, warrants to purchase 9 million shares of common stock and 3.4 million shares reserved for issuance under the International Money Express, Inc. 2018 Omnibus Equity Compensation Plan (See Note 10).

Transaction Costs

Direct costs related to the Merger were expensed as incurred and included as “transaction costs” in the condensed consolidated statements of operations and comprehensive income (loss). Transaction costs included all internal and external costs directly related to the Merger, consisting primarily of legal, consulting, accounting, advisory and financing fees and certain incentive bonuses directly related to the Merger. Transaction costscontracts with customers for the three and nine months ended September 30, 2018 amounted to $6.3 million2020 and $10.3 million, respectively.2019, as follows (in thousands):

Three Months Ended
September 30,		Nine Months Ended
September 30,
2020201920202019
Wire transfer and money order fees$82,890 $72,710 $223,171 $202,202 
Discounts and promotions(244)(242)(637)(792)
Wire transfer and money order fees, net82,646 72,468 222,534 201,410 
Foreign exchange gain, net12,296 12,272 33,510 33,297 
Other income652 594 1,863 1,652 
Total revenues$95,594 $85,334 $257,907 $236,359 
NOTE 3 – REVENUE RECOGNITION STANDARD

On January 1, 2019, the Company adopted the new accounting standard, Revenue from Contracts with Customers, as amended, which modified the existing accounting standards for revenue recognition. The guidance establishes that an entity should recognize revenue to depict the transfer of promised goods or services, that is, the satisfaction of performance obligations, to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance establishes a five-step model to determine when revenue recognition is appropriate. The Company adopted the guidance using the modified retrospective approach recording the cumulative effect of initially applying the new guidance as an adjustment to the opening balance of accumulated deficit in the condensed consolidated balance sheet, amounting to $1.0 million, net of tax, with a corresponding increase to deferred revenue liability, included within accrued and other liabilities in the condensed consolidated balance sheet. In accordance with the modified retrospective approach, the comparative information has not been restated and continues to be reported under the accounting standards in effect for that period.

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INTERNATIONAL MONEY EXPRESS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

For the three and nine months ended September 30, 2019, the Company recognized in revenues from contracts with customers the following:

  
Three Months ended
September 30, 2019
  
Nine Months ended
September 30, 2019
 
Wire transfer and money order fees $72,710  $202,202 
Discounts and promotions  (242)  (792)
Wire transfer and money order fees, net  72,468   201,410 
Foreign exchange gain  12,272   33,297 
Other income  594   1,652 
Total revenues $85,334  $236,359 


There are no significant initial costs incurred to obtain contracts with customers. However,customers, although the Company has a loyalty program that for each wire transfer completed,under which customers earn points. Customers earn 1 point for each wire transfer processed, whichcompleted. Points can be redeemed for a discounted wire transaction fee or higher foreign exchange rate. The discounts vary by country, and the earned points expire if the customer has not initiated and completed an eligible wire transfer transaction within the immediately preceding 180 day period. In addition, earned points will expire 30 days after the end of the program. Therefore, due tobecause the loyalty program benefits represent a future performance obligation, a portion of the initial consideration is recorded as deferred revenue (See(see Note 6). Prior to the implementation of the standard, the Company used the incremental cost method to account for the loyalty program; therefore,7) and a liability for the cost associated with the company’s future obligation to its customers was created and the loyalty program expense was recorded within Service charges from agents and banks in the consolidated statements of operations and comprehensive income (loss). Under the new guidance,corresponding loyalty program expense is recorded as contra revenue. The loyalty program reserve balance asRevenue from this performance obligation is recognized upon customers redeeming points or upon expiration of January 1, 2019 of $0.6 million was credited to accumulated deficit as this became part of the beginning balance of the new deferred revenue liability.any points outstanding.

Based on our assessment of the new standard, exceptExcept for the loyalty program discussed above, we have determined that our revenues include only one1 performance obligation, which is to collect the consumer’scustomer’s money and make funds available for payment, generally on the same day, to a designated recipient in the currency requested.

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The Company also offers several other services, including money orders and check cashing, for which revenue is derived byfrom a fee per transaction. For substantially all of the Company’s revenues, the Company acts as the principal in the transactions and reports revenue on a gross basis, asbecause the Company controls the service at all times prior to transfer to the customer, is primarily responsible for fulfilling the customer contracts, has the risk of loss and has the ability to establish transaction prices.

NOTE 3 – ACCOUNTS RECEIVABLE, NET OF ALLOWANCE
Accounts receivable represent outstanding balances from sending agents for pending wire transfers or money orders from our customers. The outstanding balance consists of the following (in thousands):
September 30, 2020December 31, 2019
Accounts receivable$61,205 $40,513 
Allowance for credit losses(1,243)(759)
Accounts receivable, net$59,962 $39,754 

The changes in the allowance for credit losses related to accounts receivable and notes receivable are as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Beginning balance$1,350 $1,236 $1,236 $1,290 
Provision320 619 1,421 1,171 
Charge-offs(120)(589)(1,338)(1,317)
Recoveries154 45 385 167 
Ending Balance$1,704 $1,311 $1,704 $1,311 

The allowance for credit losses allocated by financial instrument category is as follows (in thousands):
September 30, 2020December 31, 2019
Accounts receivable$1,243 $759 
Notes receivable (1)
461 477 
Allowance for credit losses$1,704 $1,236 
(1) This allowance relates to $1.3 million in notes receivable from sending agents as of both September 30, 2020 and December 31, 2019. The current portion of these notes amounted to $1.1 million and $1.0 million as of September 30, 2020 and December 31, 2019, respectively. The net current portion is included in prepaid expenses and other current assets (see Note 4) and the net long-term portion is included in other assets in the condensed consolidated balance sheets.

NOTE 4 – OTHER PREPAID EXPENSES AND OTHER CURRENT ASSETS

Other prepaidPrepaid expenses and other current assets consisted of the following (in thousands):

 
September 30,
2019
 
December 31,
2018
 September 30, 2020December 31, 2019
Prepaid insurance $377  $300 Prepaid insurance$431 $404 
Prepaid fees  733   719 Prepaid fees682 1,211 
Notes receivable  507   451 
Notes receivable, net of allowanceNotes receivable, net of allowance705 648 
Prepaid taxesPrepaid taxes130 1,025 
Other prepaid expenses and current assets  650   1,701 Other prepaid expenses and current assets737 867 
 $2,267  $3,171 $2,685 $4,155 

13
INTERNATIONAL MONEY EXPRESS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 5 – GOODWILL AND OTHER INTANGIBLE ASSETS

Intangible assets on the condensed consolidated balance sheets of the Company consist of goodwill, agent relationships, trade name, developed technology and other intangible assets. Agent relationships, trade name and developed technology are all amortized over 15 years using an accelerated method that correlates with the projected realization of the benefit. The agent relationships intangible represents the network of independent sending agents; trade name refers to the Intermex name, branded on all agent locations and well recognized in the market; and developed technology includes the state-of-the-art system that the Company has continued to develop and improve upon over the past 20 years. Other intangiblesintangible assets primarily relate to the acquisition of certain agent locations or company-ownedCompany-operated stores, which are amortized on a straight line basis over 10 years. The determination of our other intangible fair values includes several assumptions that are subject to various
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risks and uncertainties. Management believes it has made reasonable estimates and judgments concerning these risks and uncertainties. A change in the conditions, circumstances or strategy of the Company may result in a need to recognize an impairment charge.

See below for further discussion on impairment.
The following table presents the changes in goodwill and other intangible assets (in thousands):

GoodwillIntangibles
Balance at December 31, 2019$36,260 $27,381 
Amortization expense0 (5,213)
Balance at September 30, 2020$36,260 $22,168 
  Goodwill  Other Intangibles 
Balance at December 31, 2018 $36,260  $36,395 
Acquisition of agent locations  -   335 
Amortization expense  -   (7,010)
Balance at September 30, 2019 $36,260  $29,720 

Amortization expense related to intangible assets for the next five years and thereafter is as follows (in thousands):
2020$1,738 
20215,161 
20223,997 
20232,989 
20242,270 
Thereafter6,013 
$22,168 

Due to the COVID-19 pandemic that has resulted in a deterioration in macro-economic conditions and increased stock market volatility, the Company performed a qualitative assessment of goodwill during both the second and third quarter of 2020 to determine whether a quantitative test was necessary. Although our fair value measurements include some significant inputs, such as the Company’s forecasted revenues and assumed turnover of agent locations, that may have or will be affected by the pandemic, we believe that as of September 30, 2020, the effects of the pandemic have not had a material negative effect on the Company’s financial condition, results of operations and cash flows. As a result, there are currently no indicators that the fair value of the Company’s goodwill is below its carrying amount based on our qualitative assessment. Therefore, we determined that a quantitative test was not necessary as of September 30, 2020.
For our finite-lived intangibles, we also assessed during both the second and third quarter of 2020 whether there were events or changes in circumstances that indicated that the carrying amounts of our intangible assets may not be recoverable. Similar to our goodwill assessment above, we believe that as of September 30, 2020, the effects of the COVID-19 pandemic have not had a material negative effect on the company’s financial condition, results of operations and cash flows. As a result, there are currently no indicators that could require an impairment test. Therefore, we determined that the carrying amounts of our intangibles are recoverable as of September 30, 2020.
We will continue to monitor this evolving pandemic to determine the need, if any, to further evaluate for impairment our goodwill and intangible assets.
NOTE 6 – WIRE TRANSFERS AND MONEY ORDERS PAYABLE, NET
Wire transfers and money orders payable, net consisted of the following (in thousands):
September 30, 2020December 31, 2019
Wire transfers payable, net$18,995 $16,058 
Customer voided wires payable13,888 10,937 
Money orders payable15,306 13,202 
$48,189 $40,197 
Customer voided wires payable consist of wire transfers that were not completed because the recipient did not collect the funds within 30 days and the sender has not claimed the funds and, therefore, are considered unclaimed property. Unclaimed property laws of each state in the United States in which we operate, the District of Columbia, and Puerto Rico require us to track certain information for all of our money remittances and payment instruments and, if the funds underlying such remittances and instruments are unclaimed at the end of an applicable statutory abandonment period, require us to remit the proceeds of the unclaimed property to the appropriate jurisdiction. Applicable statutory abandonment periods range from three to seven years.
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NOTE 67 – ACCRUED AND OTHER LIABILITIES

Accrued and other liabilities consisted of the following (in thousands):

September 30, 2020December 31, 2019
Commissions payable to sending agents$11,866 $10,124 
Accrued legal settlement (see Note 13)2,925 3,250 
Accrued salaries and benefits2,413 2,374 
Accrued bank charges1,158 976 
Accrued interest12 17 
Accrued legal fees343 120 
Accrued other professional fees848 655 
Accrued taxes866 2,345 
Deferred revenue loyalty program2,602 2,495 
Other1,053 718 
$24,086 $23,074 
  
September 30,
2019
  
December 31,
2018
 
Payables to agents $10,118  $8,972 
Accrued legal settlement (see Note 13)  3,250   - 
Accrued compensation  1,998   2,344 
Accrued bank charges  955   983 
Accrued loyalty program reserve  -   621 
Accrued interest  1,185   1,009 
Accrued legal fees  400   920 
Accrued taxes  2,330   745 
Deferred revenue loyalty program  2,483   - 
Other  1,342   761 
  $24,061  $16,355 


The following table shows the changes in the deferred revenue loyalty program liability (in thousands):

Balance, December 31, 2018 $- 
Adoption of ASC 606  1,976 
Revenue deferred during the period  2,104 
Revenue recognized during the period  (1,597)
Balance, September 30, 2019 $2,483 

Balance, December 31, 2019$2,495 
Revenue deferred during the period535 
Revenue recognized during the period(428)
Balance, September 30, 2020$2,602 

14
INTERNATIONAL MONEY EXPRESS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 78 – DEBT

Debt consisted of the following (in thousands):

 
September 30,
2019
 
December 31,
2018
 
Revolving credit facility $-  $30,000 
September 30, 2020December 31, 2019
Term loan  98,321   90,000 Term loan$91,298 $97,044 
  98,321   120,000 
Less: Current portion of long-term debt (1)
  (6,405)  (3,936)
Less: Current portion of long-term debt (1)
(7,044)(7,044)
Less: Debt origination costs  (2,533)  (2,738)Less: Debt origination costs(1,914)(2,377)
 $89,383  $113,326 $82,340 $87,623 
(1)Current portion of long-term debt is net of debt origination costs of approximately $0.6 million both at September 30, 2020 and December 31, 2019.
(1)
Current portion of long-term debt is net of debt origination costs of $0.6 million both at September 30, 2019The Company and December 31, 2018.

On November 7, 2018 and further amended on December 7, 2018, the Company entered into a new financing agreement (the “Credit Agreement”) with, among others, certain of its domestic subsidiaries as borrowers and(the “Loan Parties”) have a financing agreement (as amended, the “Credit Agreement”) with a group of banking institutions. The Credit Agreement provides for a $35 million revolving credit facility, a $90 million term loan facility and an up to $30 million incremental facility.facility of which $12 million was utilized in the second quarter of 2019. The Credit Agreement also provides for the issuance of letters of credit, which would reduce availability under the revolving credit facility. The proceeds of the Credit Agreement were used to repay existing indebtedness, for working capital purposes and to pay fees and expenses in connection with the transaction. The maturity date of the Credit Agreement is November 7, 2023.

On March 25, As of September 30, 2020 and December 31, 2019, there were 0 outstanding amounts drawn on the Company entered into an Increase Joinder No. 1 to the Credit Agreement (the “Increase Joinder”), which was accounted for as a debt modification, under which the Company received $12 million from the incremental facility on April 29, 2019. The proceeds of the Increase Joinder were primarily used to pay for the cash portion of the Tender Offer (the “Offer”) to purchase warrants (See Note 10) during the second quarter of 2019.

revolving credit facility.
Interest on the term loan facility and revolving credit facility under the Credit Agreement is determined by reference to either LIBOR or a “base rate”, in each case plus an applicable margin of 4.50% per annum for LIBOR loans or 3.50% per annum for base rate loans. The Company is also required to pay a fee on the unused portion of the revolving credit facility equal to 0.35% per annum. The effective interest rates for the periodnine months ended September 30, 20192020 for the term loan facility and revolving credit facility were 7.73%5.93% and 8.48%0.99%, respectively.

The principal amount of the term loan facility includingunder the Increase Joinder,Credit Agreement must be repaid in consecutive quarterly installments of 5.0% in year 1, 7.5% in years 2 and 3, and 10.0% in years 4 and 5, in each case on the last day of each quarter, commencingwhich commenced in March 2019 with a final payment at maturity. The loans under the Credit Agreement may be prepaid at any time without premium or penalty.

14
Index
The Credit Agreement contains covenants that limit the Company’s and its subsidiaries’ ability to, among other things, grant liens, incur additional indebtedness, make acquisitions or investments, dispose of certain assets, make dividends and distributions, change the nature of their businesses, enter into certain transactions with affiliates or amend the terms of material indebtedness.

The Credit Agreement also contains financial covenants whichthat require the Company to maintain a quarterly minimum fixed charge coverage ratio of 1.25:1.00 and a quarterly maximum consolidated leverage ratio of 3.25:1.00.

15
INTERNATIONAL MONEY EXPRESS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The obligations under the Credit Agreement are guaranteed by the Company and certain domestic subsidiaries of the Company and secured by liens on substantially all of the assets of the loan parties,Loan Parties, subject to certain exclusions and limitations.

On April 20, 2020, the Company received funds under the Paycheck Protection Program (the “Program”) in the amount of $3.5 million. Although the Company believes that it met all eligibility criteria for a loan under the Program at the time of its application, subsequent to receiving the funds, the Small Business Administration (“SBA”), in consultation with the Department of the Treasury (“Treasury”), provided additional guidance to address public, borrower and lender questions concerning the eligibility criteria under the Program. Based on this guidance provided by the SBA and Treasury, the Company returned the funds received under the Program on April 29, 2020.
NOTE 89 – FAIR VALUE MEASUREMENTS

The Company determines fair value in accordance with the provisions of FASB guidance, Fair Value Measurements and Disclosures, which defines fair value as an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a three-level fair value hierarchy that prioritizes the inputs used to measure fair value was established. There are three levels of inputs used to measure fair value.value and for disclosure purposes. Level 1 relates to quoted market prices for identical assets or liabilities.liabilities in active markets. Level 2 relates to observable inputs other than quoted prices included in Level 1. Level 3 relates to unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s non-financial assets measured at fair value on a nonrecurring basis include the goodwill and intangibles assets. The determination of our intangible fair values includes several assumptions and inputs (Level 3) that are subject to various risks and uncertainties. Management believes it has made reasonable estimates and judgments concerning these risks and uncertainties. All other intangibles. financial assets and liabilities are carried at amortized cost.
The Company’s cash is representative of fair value as these balances are comprised of deposits available on demand. Accounts receivable, prepaid wires, accounts payable and wire transfers and money orders payable are representative of their fair values because of the short turnover of these items.

The Company’s financial instruments that are not measured at fair value on a recurring basisliabilities include its revolving credit facility and term loan. The fair value of the term loan, which approximates book value, is estimated by discounting the future cash flows using a current market interest rate. The estimated fair value of the revolving credit facility would approximate face value given the payment schedule and interest rate structure, which approximates current market interest rates.

NOTE 9 – RELATED PARTY TRANSACTIONS

Prior to the Merger, Intermex paid a monthly management fee of $65.0 thousand, plus reimbursement of expenses, to a related party for management services, which was included in other selling, general and administrative expenses on the Company’s condensed consolidated statements of operations and comprehensive income (loss). There were no amounts payable to or receivable from related parties included in the condensed consolidated balance sheets at September 30, 2019 and December 31, 2018. Upon closing of the Merger on July 26, 2018 (See Note 2), the management fee agreement with the related party was terminated.

NOTE 10 – STOCKHOLDERS’STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION

On the Closing Date of the Merger, there were 36.2 million shares of the Company’s common stock outstanding and outstanding warrants to purchase approximately 9 million shares of common stock. As of the Closing Date, the former stockholders of Intermex owned approximately 48.3% and the former stockholders of FinTech owned approximately 51.7% of the combined company’s outstanding common stock. At September 30, 2019, the Company was authorized to issue 230 million shares of common stock and had approximately 38.0 million shares of common stock issued and outstanding at $0.0001 par value per common share.

On September 11, 2019,2020, the Company entered into an underwriting agreement with certain selling stockholders and several underwriters relating to the underwritten public offering of 5.24.9 million shares of the Company’s common stock at a price to the public of $12.75$13.50 per share. The selling stockholders also grantedclosing of the offering occurred on October 5, 2020. Also, on November 4, 2020, the underwriters a 30-day option tocompleted the purchase up to 782,608of 0.7 million additional shares of Common Stockcommon stock at the same price as the initial shares sold to the underwriters. The closingunder a 30-day option granted by certain of the offering occurred on September 16, 2019.selling stockholders. The Company did not receive any of the proceeds from the offering. However, itIt did, however, incur approximately $0.8$0.5 million in certain costs, which are included in other selling, general and administrative expenses in the condensed consolidated statementsstatement of operations and comprehensive income (loss).

16
INTERNATIONAL MONEY EXPRESS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Equity Warrants

Prior to the Merger, FinTech issued 8.8 million public warrants (“Public Warrants”) and 0.2 million private placement warrants (“Placement Warrants”)(combined are referred to as the “Warrants”). The Company assumed the Warrants upon the change of control event. As a result of the Merger, the Warrants issued by FinTech were no longer exercisable for shares of FinTech common stock but instead were exercisable for common stock of the Company. All other features of the Warrants remained unchanged. There were no cash obligations for the Company pertaining to these Warrants.

Each whole Warrant entitled the holder to purchase one share of the Company’s common stock at a price of $11.50 per share. The Warrants became exercisable 30 days after the completion of the Merger and were to expire 5 years after that date, or earlier upon redemption or liquidation.

income.
On March 28, 2019, the Company commenced a Tender Offer (the “Offer”) to purchase the Warrants. In connection with the Offer, the Company offered the holders of the Warrants a combination of 0.201 shares of its common stock and $1.12 in cash (the “Exchange Consideration”) for each Warrant tendered and exchanged pursuant to the Offer. Concurrently with the Offer, the Company solicited consents from holders of the Warrants to amend the Warrant Agreement dated January 19, 2017 (the “Warrant Agreement”), to permit the Company to require that each outstanding Warrant be converted into a combination of 0.181 shares of our Common Stock and $1.00 in cash, without interest (the “Conversion Consideration”), which Conversion Consideration was approximately 10% less than the Exchange Consideration applicable to the Offer. Approximately 99.51% of the outstanding Warrants were validly tendered and not withdrawn in the Offer.  On April 29, 2019, the Company entered into Amendment No. 1 to the Warrant Agreement and, on or about May 20, 2019, exchanged all remaining untendered Warrants for the Conversion Consideration.

Between April and May of 2019, the Company issued an aggregate of approximately 1.8 million shares of common stock and paid approximately $10.0 million in cash in exchange for the Warrants tendered in the Offer as well as the Warrants convertedJune 26, 2020, at the Conversion Consideration, resulting in a total2020 Annual Meeting of approximately 38.0 million shares of common stock outstanding followingStockholders, the issuance. ForCompany's stockholders approved the nine months ended September 30, 2019, the Company incurred approximately $0.9 million in professional and legal fees related to the Offer, which are included in other selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive income (loss). There were no expenses related to the Offer for the three months ended September 30, 2019.

International Money Express, Inc. 20182020 Omnibus Equity Compensation Plan

In connection with (the “2020 Plan”), which provides for the Merger,granting of stock-based incentive awards, including stock options and restricted stock units (“RSUs”), to employees and independent directors of the stockholdersCompany. There are 3.4 million shares of FinTech approvedthe Company's common stock available for issuance under the 2020 Plan, including 0.4 million shares that were available for grant under the International Money Express, Inc. 2018 Omnibus Equity Compensation Plan (the “2018 Plan”). ThereAs of September 30, 2020, there are 3.40.3 million shares reserved for issuancestock options granted under the 2020 Plan. The 2018 Plan of which stock optionswas terminated effective June 26, 2020. Hereafter, we refer to purchase 2.8 million shares of common stockthe 2020 Plan and restricted stock units in respect of 21.2 thousand shares of common stock were granted to employees and independent directors of2018 Plan together as the Company in connection with the completion of the transactions at the Closing Date.

“Plans.”
The value of each option grant is estimated on the grant date using the Black-Scholes option pricing model.model (“BSM”). The option pricing model requires the input of highly subjectivecertain assumptions, including the grant date fair value of our common stock, expected volatility, expected forfeitures and risk-free interest rates.rates, expected term and expected dividend yield. To determine the grant date fair value of the Company’s common stock, we use the closing market price of our common stock at the grant date. We also use an expected volatility based on the historical volatilitiesvolatility of a group of guideline companiesthe
15
Index
Company's common stock and the “simplified” method for calculating the expected life of our stock options.options as the options are “plain vanilla” and we do not have any significant historical post-vesting activity. We have elected to account for forfeitures as they occur. The risk-free interest rates are obtained from publicly available U.S. Treasury yield curve rates.

17
INTERNATIONAL MONEY EXPRESS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Share-based compensation is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period. The stock options issued under the 2018 PlanCompany’s Plans have 10-year terms and vest in four4 equal annual installments beginning one year after the date of the grant. During both the three and nine months ended September 30, 2019,2020, 0.7 million of stock options vested. The Company recognized compensation expense for stock options of approximately $0.6$0.7 million and $1.8$0.6 million for the three months ended September 30, 2020 and 2019, respectively, and $1.9 million for both the nine months ended September 30, 2020 and 2019, which are included in salaries and benefits in the condensed consolidated statements of operations and comprehensive income. As of September 30, 2020, there were 3.2 million outstanding stock options and unrecognized compensation expense of $7.4 million is expected to be recognized over a weighted-average period of 2.5 years.
A summary of the stock option activity under the Company’s Plans during the nine months ended September 30, 2020 is presented below:
Number of
Options		Weighted-Average
Exercise Price		Weighted-Average
Remaining Contractual
Term (Years)		Weighted-Average
Grant Date
Fair Value
Outstanding at December 31, 20192,905,219 $10.51 8.74$3.58 
Granted555,000 $12.66 $5.54 
Exercised(47,500)$9.98 $3.45 
Forfeited(244,792)$11.66 $3.89 
Outstanding at September 30, 20203,167,927 $10.81 8.24$3.90 
Exercisable at September 30, 20201,239,443 $10.11 7.88$3.48 
The RSUs issued under the Company’s Plans to the Company’s independent directors vest on the one-year anniversary from the grant date and the RSUs issued under the 2020 Plan to the Company’s employees vest with respect to 25% of the shares on each of the first four anniversaries of the date of grant. The Company recognized compensation expense for RSUs of $89.1 thousand and $17.5 thousand for the three months ended September 30, 2020 and 2019, respectively, and $0.3 million and $0.1 million for the nine months ended September 30, 2020 and 2019, respectively, which is included in salaries and benefits in the condensed consolidated statements of operations and comprehensive income (loss).income. During the nine months ended September 30, 2020, 10.0 thousand RSUs were granted to the Company's employees and 0 RSUs vested. There were 0 forfeited RSUs during the nine months ended September 30, 2020. As of September 30, 2019,2020, there were 3.0was $0.4 million outstanding stock options andof unrecognized compensation expense of $7.9 millionfor the restricted stock units, which is expected to be recognized over a weighted-average period of 2.931.74 years.

A summary of the stock option activity during the nine months ended September 30, 2019 is presented below:

  
Number of
Options
  
Weighted-Average
Exercise Price
  
Weighted-Average
Remaining Contractual
Term (Years)
  
Weighted-Average
Grant Date
Fair Value
 
Outstanding at December 31, 2018  2,881,219  $10.00   9.60  $3.47 
Granted  375,000   13.77       4.37 
Exercised  (6,250)  9.91       3.43 
Forfeited  (267,750)  10.28       3.56 
Outstanding at September 30, 2019  2,982,219  $10.45   8.97  $3.57 
                 
Exercisable at September 30, 2019  658,430             

The restricted stock units issued under the 2018 Plan to the Company’s independent directors vest on the one-year anniversary from the grant date. The Company recognized compensation expense for restricted stock units of $17.5 thousand and $122.5 thousand for the three and nine months ended September 30, 2019, respectively, which is included in salaries and benefits in the condensed consolidated statements of operations and comprehensive income (loss). During the three and nine months ended September 30, 2019, 21.2 thousand restricted stock units were vested for both periods.  There were no forfeited restricted stock units during the three and nine months ended September 30, 2019. As of September 30, 2019, there was no unrecognized compensation expense for the restricted stock units.

Incentive Units

Interwire LLC, the former parent company of Intermex, issued Class B, C and D incentive units to employees of the Company (collectively “incentive units”). As these units were issued as compensation to the Company’s employees, the expense was recorded by the Company. In connection with the Merger, on the Closing Date, all unvested incentive units for Class B, C and D became fully vested and were immediately recognized as share-based compensation expense in the third quarter of 2018. Share-based compensation expense recognized related to these incentive units and included in salaries and benefits in the condensed consolidated statements of operations and comprehensive income (loss), amounted to $4.0 million and $4.7 million for the three and nine months ended September 30, 2018, respectively. Subsequent to the Merger, all incentive units ceased to exist.

18
INTERNATIONAL MONEY EXPRESS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 11 – INCOME (LOSS)EARNINGS PER SHARE

Basic income (loss)earnings per share is calculated by dividing net income (loss) for the period by the weighted average number of common shares outstanding for the period. In computing dilutive income (loss)earnings per share, basic income (loss)earnings per share is adjusted for the assumed issuance of all applicable potentially dilutive share-based awards, including common stock options restricted stock units and warrants.RSUs.

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Index
Below are basic and diluted net income (loss)earnings per share for the periods indicated (in thousands, except for share data):

 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 2019 2018 2019 2018 Three Months Ended
September 30,		Nine Months Ended
September 30,
   2020201920202019
Net income (loss) for basic and diluted income (loss) per common share $4,038  $(13,413) $14,268  $(12,109)
                
Net income for basic and diluted earnings per common shareNet income for basic and diluted earnings per common share$9,498 $4,038 $24,164 $14,268 
Shares:                Shares:
Weighted-average common shares outstanding – basic  37,984,316   30,975,338   37,230,831   21,827,082 Weighted-average common shares outstanding – basic38,050,610 37,984,316 38,040,339 37,230,831 
Effect of dilutive securities:                Effect of dilutive securities:
Restricted stock units  19,222   -   16,555   - 
Stock Options  283,164   -   100,975   - 
RSUsRSUs12,721 19,222 9,570 16,555 
Stock optionsStock options589,376 283,164 196,520 100,975 
Warrants  -   -   17,010   - Warrants0 0 0 17,010 
Weighted-average common shares outstanding – diluted  38,286,702   30,975,338   37,365,371   21,827,082 Weighted-average common shares outstanding – diluted38,652,707 38,286,702 38,246,429 37,365,371 
                
Net income (loss) per common share – basic and diluted $0.11  $(0.43) $0.38  $(0.55)
Earnings per common share – basicEarnings per common share – basic$0.25 $0.11 $0.64 $0.38 
Earnings per common share – dilutedEarnings per common share – diluted$0.25 $0.11 $0.63 $0.38 
The computationAs of September 30, 2020, there were 0.7 million options excluded from the diluted weighted-average common shares outstanding above excludes 447,500 options to purchase shares of the Company’s common stockearnings per share calculation because, under the treasury stock method, the inclusion of these would be anti-dilutive.

As of September 30, 2019, there were 0.4 million options excluded from the diluted earnings per share calculation because, under the treasury stock method, the inclusion of these would be anti-dilutive. In April 2019, the Company executed a tender offer for all warrants, subsequent to which all warrants ceased to exist.
NOTE 12 -– INCOME TAXES

A reconciliation between the income tax provision at the US statutory tax rate and the Company’s income tax provision on the condensed consolidated statements of operations and comprehensive income (loss) is below (in thousands, except for tax rates):

  
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
  2019  2018  2019  2018 
             
Income (loss) before income taxes $6,291  $(5,844) $20,204  $(3,923)
US statutory tax rate  21%  21%  21%  21%
Income tax expense (benefit) at statutory rate  1,321   (1,227)  4,243   (824)
                 
State tax expense, net of federal  345   1,355   1,140   1,471 
Foreign tax rates different from U.S. statutory rate  26   114   41   147 
Non-deductible expenses  218   7,411   246   7,484 
Credits  8   (86)  (1)  (95)
Other  335   2   267   3 
Total tax provision $2,253  $7,569  $5,936  $8,186 

19
INTERNATIONAL MONEY EXPRESS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Three Months Ended
September 30,		Nine Months Ended
September 30,
2020201920202019
Income before income taxes$13,042 $6,291 $33,053 $20,204 
US statutory tax rate21 %21 %21 %21 %
Income tax expense at statutory rate2,739 1,321 6,941 4,243 
State tax expense, net of federal745 345 1,803 1,140 
Foreign tax rates different from U.S. statutory rate19 26 78 41 
Non-deductible expenses92 218 114 246 
Credits(7)8 (10)(1)
Other(44)335 (37)267 
Total tax provision$3,544 $2,253 $8,889 $5,936 
Effective income tax rates for interim periods are based upon our current estimated annual rate. The Company’s effective income tax rate varies based upon an estimate of taxable earnings as well as on the mix of taxable earnings in the various states and countries in which we operate. Changes in the annual allocation and apportionment of the Company’s activity among these jurisdictions results in changes to the effective rate utilized to measure the Company’s deferred tax assets and liabilities.

As presented in the income tax reconciliation above, the tax provision recognized on the condensed consolidated statements of operations and comprehensive income (loss) was impactedaffected by state taxes, non-deductible expenses, such as share-based compensation expense, transaction costsexpenses and foreign tax rates applicable to the Company’s foreign subsidiaries that are higher or lower than the U.S. statutory rate.

On December 22, 2017,In January 2020, Intermex Holdings II, Inc., the U.S. enacted tax reform legislation known as H.R. 1, commonly referred to as the “Tax Cuts and Jobs Act” (the “Act”), resulting in significant modifications to existing law. All changesCompany's parent company prior to the tax code that were effective as of January 1, 2018 have been applied by the Company in computing its income tax expense for the three and nine months ended September 30, 2019 and 2018. Additional guidance issued by the U.S. Treasury Department, the IRS and other standard-setting bodies may materially impact the provision for income taxes and effective tax rate in the period in which the guidance is issued.

In 2018, FinTech Acquisition Corp IImerger, was notified by the IRS that its 2017 federal income tax return was selected for examination. In August 2020, the examination was closed with no changes to the reported tax.
17
Index
On March 27, 2020, the United States enacted the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The Cares Act is an emergency economic stimulus package that includes spending and tax breaks to strengthen the United States economy and fund a nationwide effort to curtail the effects of COVID-19. The CARES Act provides various tax law changes in response to the COVID-19 pandemic, including increasing the ability to deduct interest expense, providing for deferral on tax deposits, and amending certain provisions of the previously enacted Tax Cuts and Jobs Act. After considering the provisions of the CARES Act, the Company has complied with all information requests to date. As ofdetermined that the CARES Act did not have a material effect on its annual effective tax rate and the income tax provision for the three and nine months ended on September 30, 2019, no amounts for tax, interest, or penalties have been paid or accrued as a result of this examination or any other uncertain tax positions.2020.

NOTE 13 -– COMMITMENTS AND CONTINGENCIES

Leases

The Company is a party to leases for office space, warehouses and company-operated stores.Company-operated store locations. Rent expense under all operating leases, included in other selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive income, (loss), amounted to approximately $0.6 million and $0.5 million for both the three months ended September 30, 2020 and 2019, respectively, and 2018,$1.6 million and $1.5 million and $1.4 million for the nine months ended September 30, 20192020 and 2018,2019, respectively.


In April 2018, the Company renegotiated its corporate lease to extend the term through November 2025.
18
Index
At September 30, 2019,2020, future minimum rental payments required under operating leases for the remainder of 20192020 and thereafter are as follows (in thousands):

2019 $381 
2020  1,409 2020$385 
2021  1,202 20211,374 
2022  983 20221,096 
2023  869 2023882 
20242024776 
Thereafter  1,439 Thereafter662 
 $6,283 $5,175 
20
INTERNATIONAL MONEY EXPRESS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Contingencies and Legal Proceedings

The Company is subject to legal proceedings and claims that have arisen in the ordinary course of its business and have not been finally adjudicated. Although there can be no assurance as to the ultimate disposition of these matters, it is the opinion of the Company’s management, based upon the information available at this time and the stage of the proceedings, that it is not possible to determine the probability of loss or estimate of damages, and therefore, the Company has not established a reserve for any of these proceedings, except for the matter related to a complaint filed under the Telephone Consumer Protection Act of 1991 (the “TCPA claim”) described below.

On May 30, 2019, Stuart Sawyer filed a putative class action complaint in the United States District Court for the Southern District of Florida asserting a claim under the Telephone Consumer Protection Act,TCPA, 47 U.S.C. § 227, et seq., based on allegations that since May 30, 2015, the Company had sent text messages to class members’ wireless telephones without their consent. AtFollowing a mediation held on October 7, 2019, the Company and the plaintiff entered into a term sheet providing the general terms for the settlement of the action, which is subject to memorializationwas memorialized in a definitive agreement, andSettlement Agreement on March 16, 2020 subject to subsequent Court approval. The terms of the settlement provideSettlement Agreement provides for resolution of Mr. Sawyer's TCPA claims and the claims of a class of similarly situated individuals, as defined in the complaint, who received text messages from the Company during the period May 30, 2015 through October 7, 2019, and for the creation of a $3.25 million settlement fund that will be used to pay all class member claims, class counsel's fees and the costs of administering the settlement.

The Settlement Agreement also established procedures for the notification of claimants and the processing of claims. The settlement fund will be managed by a duly-appointed settlement administrator which will be authorized to communicate with class members, process claims and make payments from the fund in accordance with the terms of the Settlement Agreement and the final judgment in the case. No amount of the settlement fund will revert to the Company; instead, any unclaimed funds will be sent to a consumer advocacy organization approved by the Court.
The settlementremaining balance of the amount payable under the Settlement Agreement of approximately $3.3$2.9 million and related legal expenses of $0.1 million areis included in accrued and other liabilities in the condensed consolidated balance sheet as of September 30, 2019 and other selling, general and administrative expenses2020. The $2.9 million was paid to the settlement fund in the condensed consolidated statements of operations and comprehensive income (loss) for both the three and nine month periods ended September 30, 2019.

Contingencies

October 2020.
The Company operates in 50all U.S. states, two2 U.S. territories and three3 other countries. Money transmitters and their agents are under regulation by Statestate and Federalfederal laws. Violations may result in civil or criminal penalties or a prohibition from providing money transfer services in a particular jurisdiction. It is the opinion of the Company’s management, based on information available at this time, that the expected outcome of regulatory examinations will not have a material adverse effect on either the results of operations or financial condition of the Company.

Regulatory Requirements

CertainPursuant to applicable licensing laws, certain domestic subsidiaries of the Company are subjectrequired to maintainingmaintain minimum tangible net worth and liquid assets (eligible securities) to cover the amount outstanding of wire transfers and money orders payable. As of September 30, 2019,2020, the Company’s subsidiaries were in compliance with these two requirements.

 NOTE 14 – SUBSEQUENT EVENTS

The Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date the condensed consolidated financial statements are issued. Except for the matter discussed in Note 13, there were no other subsequent events that would have required adjustment or disclosure in the condensed consolidated financial statements.

21
ITEM 2.
ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management's Discussion and Analysis of Financial Condition and Results of Operations ("(“MD&A"&A”) should be read in conjunction with our Unaudited Condensed Consolidated Financial Statements and related Notes included in this Quarterly Report on Form 10-Q, andas well as our Audited Consolidated Financial Statements and related Notes and MD&A included in our Annual Report on Form 10-K for the year ended December 31, 2018.2019. This MD&AQuarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in other sections of this Quarterly Report on Form 10-Q.10-Q, including risks related to the COVID-19 pandemic described in Pt. II, Item 1A, “Risk Factors” below which is incorporated in the MD&A by reference. See “Special Note Regarding Forward-Looking Statements” for additional factors relating to such statements, and see “Risk Factors” in ourthe documents that we have filed with or furnished withto the SEC for a discussion of certain risk factors applicable to our business, financial condition and results of operations. Past operating results are not necessarily indicative of operating results in any future periods.

Recent Developments
During March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus (“COVID-19”). The pandemic continues affecting economic conditions in the United States of America (“United States” or “U.S.”), as federal, state, local and foreign governments reacted to the public health crisis with mitigation measures, creating significant uncertainties in the U.S. and global economy. The extent to which the COVID-19 pandemic affects our business, operations and financial results depends, and will continue to depend, on numerous evolving factors that we may not be able to accurately predict.
In response to the pandemic, our top priority has been to take appropriate actions to protect the health and safety of our employees. We have adjusted standard operating procedures within our business operations to ensure continued worker safety, and are continually monitoring evolving health guidelines and responding to changes as appropriate. These procedures include reconfiguring facilities to reduce employee density, expanded and more frequent cleaning within facilities, implementation of appropriate and mandated distancing programs, employee temperature monitoring and requiring use of certain personal protective equipment at our U.S. headquarters and call centers in Mexico and Guatemala. Initially, we temporarily closed our Company-operated stores and implemented a mandatory work-at-home program for all of our administrative offices and employees in all countries where we operate. Starting in the second quarter, however, we started to allow office-based employees to work from our offices on a voluntary basis, while maintaining the option to work at home and, as of September 30, 2020, all Company-operated stores have been reopened with adjustments to ensure social distancing and facial covering requirements established by state and local regulations.
Notwithstanding the operational challenges created by these measures, our business continues to function and, to date, our customer service has not been adversely affected in any material respect. Despite these efforts, the COVID-19 pandemic continues to pose the risk that we or our employees, sending and paying agents, as well as consumers and their beneficiaries, are or may become further restricted from conducting business activities, partially or completely, for an indefinite period of time, including due to shutdowns requested or mandated by governmental authorities or imposed by our management, or that the pandemic may otherwise interrupt or impair business activities. These risks could be magnified if the recent resurgence of COVID-19 illnesses continues or is not adequately contained and governmental authorities once again impose restrictions on commercial and social activities or businesses that employ our customers take actions that adversely affect the incomes of those employees.
The operational changes noted above had only a limited effect on the Company’s financial results for the three and nine month periods ended September 30, 2020. Although we saw a slight year over year decrease in our volume of transactions at the beginning of the pandemic, the three months ended September 30, 2020 have shown a year-over-year increase in volume and transactions, including an all-time high for one-month sales in August. The economic effects of the pandemic caused increased foreign exchange volatility, particularly with respect to the Mexican peso, which has created additional operational challenges; however, the overall effect on our results of operations to date has been positive. Despite positive trends during the third quarter, we continue to monitor this evolving pandemic and its potential effects on the Company’s operations.
Although governmental authorities took measures that restricted the normal course of operations of businesses and consumers that were in place for much of the pandemic affected period, the Company and our sending agents are considered essential businesses under current federal guidance and such measures did not have a material adverse effect on the Company’s financial condition, results of operations and cash flows for the three and nine month periods ended September 30, 2020. Notwithstanding the foregoing, the Company’s business is dependent upon the willingness and ability of its employees, network of agents and consumers to conduct money transfer services and the ultimate effects of the economic disruption caused by the pandemic and responses thereto. Although the Company’s operations continued effectively despite social distancing and other measures taken in response to the pandemic, the ultimate impact of the COVID-19 pandemic on our financial condition, results of operations and cash flows is dependent on future developments, including the duration of the pandemic and the related extent of its severity, as well as its impact on the economic conditions, particularly the level of
unemployment of our customers, which remain uncertain and cannot be predicted at this time. If the global response to contain the COVID-19 pandemic escalates further or is unsuccessful, or if governmental decisions to ease pandemic related restrictions are ineffective, premature or counterproductive, the Company could experience a material adverse effect on its financial condition, results of operations and cash flows.
Further quantification and discussion of these pandemic related effects, to the extent relevant and material, are included in the discussion of results of operations below.
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Overview

We are a rapidly growing and leading money remittance services company focused primarily on the U.S.United States to the Latin America and the Caribbean (“LAC”) corridor, which includes Mexico, Central and South America and the Caribbean. In 2019, we expanded our services to allow remittances to Africa from the United States and also began offering sending services from Canada to Latin America and Africa. We utilize our proprietary technology to deliver convenient, reliable and value-added services to our customers through a broad network of sending and paying agents. Our remittance services, which include a comprehensive suite of ancillary financial processing solutions and payment services, are available in all 50 states in the U.S., Washington D.C., Puerto Rico and licensed in 13 provinces in Canada, where customers can send money to beneficiaries in 17 LAC countries, and fourseven countries in Africa.Africa and two countries in Asia. Our services are accessible in person through over 100,000 sending and paying agents and company-operatedCompany-operated stores, as well as online and via Internet-enabled mobile devices.

Additionally, we have expanded our product and service portfolio to include online payment options, pre-paid debit cards and direct deposit payroll cards, which may present different cost, demand, regulatory and risk profiles relative to our core remittance business.
Money remittance services to Latin America,LAC countries, primarily Mexico and Guatemala, are the primary source of our revenue. These services involve the movement of funds on behalf of an originating customer for receipt by a designated beneficiary at a designated receiving location. Our remittances to Latin AmericaLAC countries are primarily generated in the United States by customers with roots in Latin American and Caribbean countries, many of whom do not have an existing relationship with a traditional full-service financial institution capable of providing the services we offer. We provide these customers with flexibility and convenience to help them meet their financial needs. OtherWe believe many of our customers who use our services may have access to traditional banking services, but prefer to use our services based on reliability, convenience and value. We generate money remittance revenue from fees paid by our customers (i.e., the senders of funds), which we share with our sending agents in the originating country and our paying agents in the destination country. Remittances paid in local currencies that are not pegged to the U.S. dollar also earn revenue through our daily management of currency exchange spreads.

Our money remittance services enable our customers to send and receive funds through our extensivebroad network of locations in the United States and Canada that are primarily operated by third-party businesses, which weas well as through 34 Company-operated stores. Transactions are processed and payment is collected by our agent (“sending agent(s)”) and those funds become available for pickup by the beneficiary at the designated destination, usually within minutes, at any Intermex payer location (“paying agent(s)”). We refer to asour sending agents and 33 company-operated stores.our paying agents collectively as agents. In addition, our services are offered digitally through Intermexonline.com and via Internet-enabled mobile devices. We currently operate in the United States, Mexico, Guatemala, Canada and 1915 additional countries.countries in LAC corridor, seven countries in Africa and two in Asia. Since January 20172019 through September 30, 2019,2020, we have grown our sending agent network by more than 77%13% and increased our remittance transactions volume by approximately 49%15%. In the three and nine months ended September 30, 2019,2020, we processed approximately 7.68.5 million and 21.123.1 million remittances, respectively, representing approximately 19%13% and 21%10% growth in transactions, respectively, as compared to the same periods in 2018.

2019.
As a non-bank financial institution in the United States, we are regulated by the Department of Treasury, the Internal Revenue Service, FinCEN, the CFPB,Consumer Financial Protection Bureau (“CFPB”), the Department of Banking and Finance of the State of Florida and additionally by the various regulatory institutions of those states wherein which we hold an operating license. We are duly registered as an MSBa Money Service Business (“MSB”) with FinCEN, the financial intelligence unit of the U.S. Department of the Treasury. We are also subject to a wide range of regulations in the United States and other countries, including anti-money laundering laws and regulations;regulations; financial services regulations;regulations; currency control regulations;regulations; anti-bribery law;laws; money transfer and payment instrument licensing laws;laws; escheatment laws;laws; privacy, data protection and information security laws;laws, such as the Graham-Leach-Bliley Act (“GLBA”); and consumer disclosure and consumer protection laws.laws, such as the California Consumer Privacy Act (“CCPA”).

Key Factors and Trends Affecting our Business

Various trends and other factors have affected and may continue to affect our business, financial condition and operating results, including:including, but not limited to:

•the COVID-19 pandemic, responses thereto and the economic and market effects thereof, including unemployment levels and increased capital market volatility;
•competition in the markets in which we operate;

•volatility in foreign exchange rates that could affect the volume of consumer remittance activity and/or affect our foreign exchange related gains and losses;
•cyber-attacks or disruptions to our information technology, computer network systems and data centers;

•our ability to maintain agent relationships on terms consistent with those currently in place;

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•our ability to maintain banking relationships necessary for us to conduct our business;

•credit risks from our agents and the financial institutions with which we do business;

•bank failures, sustained financial illiquidity, or illiquidity at our clearing, cash management or custodial financial institutions;

•new technology or competitors that disrupt the current ecosystem;
ecosystem by introducing digital platforms;

•our ability to satisfy our debt obligations and remain in compliance with our credit facility requirements;

•interest rate risk from elimination of LIBOR as a benchmark interest rate;

•our success in developing and introducing new products, services and infrastructure;

•customer confidence in our brand and in consumer money transfers generally;

•our ability to maintain compliance with the regulatory requirements of the jurisdictions in which we operate or plan to operate;

•international political factors or implementation of tariffs, border taxes or restrictions on remittances or transfers of money out of the United States;
States and Canada;

•changes in tax laws and unfavorable outcomes of tax positions we take;

•political instability, currency restrictions and devaluationvolatility in countries in which we operate or plan to operate;

•consumer fraud and other risks relating to customer authentication;

•weakness in U.S. or international economic conditions;

•change or disruption in international migration patterns;

•our ability to protect our brand and intellectual property rights;
and

•our ability to retain key personnel; and

changes in foreign exchange rates that could impact consumer remittance activity.

personnel.
Throughout 2019,2020, Latin American political and economic conditions have remained unstable, as evidenced by high unemployment rates in key markets, currency reserves, currency controls, restricted lending activity, weak currencies, and low consumer confidence and the impact of the COVID-19 pandemic, among other factors. Specifically, continued political and economic unrest in parts of Mexico and some countries in South America contributed to volatility. Our business has generally been resilient during times of economic instability as money remittances are essential to many recipients, with the funds used by the receiving party for their daily needs. However,needs; however, long-term sustained appreciation of the Mexican Pesopeso or Guatemalan Quetzalquetzal as compared to the U.S. Dollar could negatively affect our revenues and profitability.

Money remittance businesses such as ours have continued to be subject to strict legal and regulatory requirements, and we continue to focus on and regularly review our compliance programs. In connection with these reviews, and in light of regulatory complexity and heightened attention of governmental and regulatory authorities related to cybersecurity and compliance activities, we have made, and continue to make, enhancements to our processes and systems designed to detect and prevent cyber-attacks, consumer fraud, money laundering, terrorist financing and other illicit activity,activities, along with enhancements to improve consumer protection, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and similar regulations outside the United States. In coming periods, we expect these enhancements will continue to result in changes to certain of our business practices and may result in increased costs.

We maintain a regulatory compliance department, under the direction of our experienced Chief Administrative and Compliance Officer, whose foremost responsibility is to monitor transactions, detect suspicious activity, maintain financial records and train our employees and agents. An independent third-party consulting firm periodically reviews our policies and procedures to ensure the efficacy of our anti-money laundering and regulatory compliance program.

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The market for money remittance services is very competitive. Our competitors include a small number of large money remittance providers, financial institutions, and banks as well asand a large number of small niche money remittance service providers that serve select regions. We compete with larger companies, such as Western Union, MoneyGram and EuroNetEuronet and a number of other smaller MSB entities. We generally compete for money remittance agents on the basis of value, service, quality, technical and operational differences, commission
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structure and marketing efforts. WeAs a philosophy, we sell credible solutions to our sending agents, not discounts or higher commissions, as is typical for the industry. We compete for money remittance customers on the basis of trust, convenience, service, efficiency of outlets, value, technology and brand recognition.

We expect to encounter increasing competition as new technologieselectronic platforms emerge that enable customers to send and receive money through a variety of channels, but we do not expect adoption rates to be as significant in the near term for the customer segment we serve. Regardless, we continue to innovate in the industry by differentiating our money remittance business through programs to foster loyalty among agents as well as customers and have expanded our channels through which our services are accessed to include online and mobile offerings in preparation for customer adoption and new customer acquisition.

adoption.
We qualify as an “emerging growth company” pursuant to the provisions of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), enacted on April 5, 2012. An “emerging growth company” can take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” These provisions include:

•an exemption from the auditor attestation requirement of Section 404 of the Sarbanes-Oxley Act in the assessment of the emerging growth company’s internal control over financial reporting;

•an exemption from the adoption of new or revised financial accounting standards until they would apply to private companies; and

•an exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer.

We will remain an “emerging growth company” until the earlier of (1) the earliest of: (i)of the last day of the fiscal year during which we had total annual gross revenues of $1.07 billion or more; (ii) the last day of the fiscal year(a) following January 19, 2022, the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement; (iii) the date onus becoming a publicly-traded company, (b) in which we have during the previous three-year period, issued more than $1.0total annual gross revenue of at least $1.07 billion in non-convertible debt; or (iv) the date on(c) in which we are deemed to be a “largelarge accelerated filer,” which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the last business day of our prior June 30.second fiscal quarter, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. As of June 30, 2019,2020, the market value of our common stock that is held by non-affiliates approximated $214.8$308.0 million. As a result, beginning with our December 31, 2019 Form 10-K, we will be deemed an accelerated filer, which will only accelerate our reporting deadlines with the SEC. This new designation does not affect our filing status as an emerging growth company.

The Merger

On July 26, 2018 (the “Closing Date”), International Money Express, Inc. (formerly FinTech Acquisition Corp. II) consummated the previously announced merger by and among FinTech, Merger Sub 1, a wholly-owned subsidiary of FinTech, Merger Sub 2, a wholly-owned subsidiary of FinTech, Intermex Holdings, and SPC Intermex (the “Merger”). In connection with the closing of the Merger, FinTech changed its name to International Money Express, Inc.

The Merger was accounted for as a reverse recapitalization where FinTech was treated as the “acquired” company for financial reporting purposes. This determination was primarily based on the facts that, following the Merger, the former stockholders of Intermex Holdings control the majority of the voting rights in respect of the board of directors of the Company, Intermex Holdings’ comprising the ongoing operations of the Company and Intermex Holdings’ senior management comprising the senior management of the Company. Accordingly, the Merger was treated as the equivalent of Intermex Holdings issuing stock for the net assets of FinTech, accompanied by a recapitalization. The net assets of FinTech were stated at historical cost, with no goodwill or other intangible assets resulting from the Merger. The consolidated assets, liabilities and results of operations prior to the Closing Date of the Merger are those of Intermex Holdings, and FinTech’s assets, liabilities and results of operations were consolidated with Intermex Holdings beginning on the Closing Date. The shares and corresponding capital amounts included in common stock and additional paid-in capital, pre-merger, have been retroactively restated as shares reflecting the exchange ratio in the Merger.

The Merger was approved by FinTech’s stockholders at the Special Meeting of FinTech Stockholders held on July 20, 2018. In connection with the closing of the Merger, FinTech redeemed a total of 4.9 million shares of its common stock at a redemption price of $10.086957 per share, resulting in a total payment to redeemed stockholders of approximately $49.8 million. The aggregate consideration paid in the Merger consisted of approximately (i) $102.0 million in cash and (ii) 17.2 million shares of FinTech common stock.

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After the completion of the transactions on the Closing Date, there were 36.2 million shares of International Money Express, Inc. outstanding common stock, warrants to purchase 9 million shares of common stock (“Warrants”) and 3.4 million shares reserved for issuance under the International Money Express, Inc. 2018 Equity Compensation Plan, of which stock options to purchase 2.8 million shares of common stock and restricted stock units in respect of 21.2 thousand shares of common stock were granted to employees and independent directors of the Company in connection with the completion of the transaction. As of the Closing Date, the former stockholders of Intermex owned approximately 48.3% and the former stockholders of FinTech owned approximately 51.7%, respectively, of the combined Company’s outstanding common stock.

Tender Offer

On March 28, 2019, the Company commenced a Tender Offer (the “Offer”) to purchase the Warrants. In connection with the Offer, the Company offered the holders of the Warrants a combination of 0.201 shares of its common stock and $1.12 in cash (the “Exchange Consideration”) for each Warrant tendered and exchanged pursuant to the Offer. Concurrently with the Offer, the Company solicited consents from holders of the Warrants to amend the Warrant Agreement dated January 19, 2017 (the “Warrant Agreement”), to permit the Company to require that each outstanding Warrant be converted into a combination of 0.181 shares of our Common Stock and $1.00 in cash, without interest (the “Conversion Consideration”), which Conversion Consideration was approximately 10% less than the Exchange Consideration applicable to the Offer.  Approximately 99.51 % of the outstanding Warrants were validly tendered and not withdrawn in the Offer.  On April 29, 2019, the Company entered into Amendment No. 1 to the Warrant Agreement and, on or about May 20, 2019, exchanged all remaining untendered Warrants for the Conversion Consideration.

Between April and May of 2019, the Company issued an aggregate of approximately 1.8 million shares of common stock and paid approximately $10.0 million in cash in exchange for the Warrants tendered in the Offer as well as the Warrants converted for the Conversion Consideration, resulting in a total of approximately 38.0 million shares of Common Stock outstanding following the issuance.

Secondary Offering

On September 11, 2019,30, 2020, the Company entered into an underwriting agreement with certain selling stockholders and several underwriters relating to the underwritten public offering of 5.24.9 million shares of the Company’s common stock at a price to the public of $12.75$13.50 per share. The selling stockholders also grantedclosing of the offering occurred on October 5, 2020. Also, on November 4, 2020, the underwriters a 30-day option tocompleted the purchase up to 782,608of 0.7 million additional shares of Common Stockcommon stock at the same price as the initial shares sold to the underwriters. The closingunder a 30-day option granted by certain of the offering occurred on September 16, 2019.selling stockholders. The Company did not receive any of the proceeds from the offering. However, itIt did, however, incur approximately $0.8$0.5 million in certain costs, which are included in other selling, general and administrative expenses in the condensed consolidated statementsstatement of operations and comprehensive income (loss).income.

How We Assess the Performance of Our Business

In assessing the performance of our business, we consider a variety of performance and financial measures. The key indicators of the financial condition and operating performance of our business are revenues, servicesservice charges from agents and banks, salaries and benefits, andother selling, general and administrative expenses.expenses and net income. To help us assess our performance with these key indicators, we use Adjusted net income, (loss), Adjusted income (loss)earnings per share and Adjusted EBITDA as non-GAAP financial measures. We believe these non-GAAP measures provide useful information to investors and expanded insight to measure our revenue and cost performance as a supplement to our U.S. GAAP consolidated financial statements. See the “Adjusted Net Income (Loss) and Adjusted Income (Loss)Earnings per Share” and “Adjusted EBITDA” sections below for reconciliations of these non-GAAP financial measures to our net income (loss), theand earnings per share, our closest GAAP measure.

measures.
Revenues

Transaction volume is the primary generator of revenue in our business. Revenue on transactions is derived primarily from transaction fees paid by customers to transfer money. Revenues per transaction vary based upon send and receive locations and the amount sent. In certain transactions involving different send and receive currencies, we generate foreign exchange revenuesgains based on the difference between the set exchange rate charged by us to the sender and the rate available to us in the wholesale foreign exchange market.

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Operating Expenses

Service Charges from Agents and Banks

Service charges and fees primarily consist of agent commissions and bank fees. Service charges and fees vary based on agent commission percentages and the amount of fees charged by the banks. Sending agents earn a commission on each transaction they process of approximately 50% of the transaction fee. Service charges and fees may increase if banks or payer organizations increase their fee structure.structure or sending agents use higher fee methods to remit the funds to us. Service charges also vary based on the method the customer selects to send the transfer and payer organization that facilitates the transaction.

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Salaries and Benefits

Salaries and benefits include cash and share-based compensation associated with our corporate employees and sales team as well as employees at our company-operatedCompany-operated stores. Corporate employees include management, customer service, compliance, information technology, finance and human resources. Our sales team, located throughout the United States and Canada, is focused on supporting and growing our sending agent network.

Other Selling, General and Administrative

General and administrative expenses primarily consist of fixed overhead expenses associated with our operations, such as information technology, rent, expense, insurance, professional services, non-income taxes, facilities maintenance and other similar types of expenses. A portion of these expenses relate to our 33 company-operated34 Company-operated stores; however, the majority relate to the overall business and compliance for beingrequirements of a publicregulated publicly traded financial services company. Selling expenses include expenses such as advertising and promotion, provision for bad debt and expenses associated with increasing our network of agents. These expenses are expected to continue to increase in line with increase in revenues.

Transaction Costs

We incurred transaction costs associated with the Merger. These costs included all internal and external costs directly related to the transaction, consisting primarily of legal, consulting, accounting, advisory fees and certain incentive bonuses. Due to their significance, they are presented separately in our condensed consolidated financial statements.

Depreciation and Amortization

Depreciation largely consists of depreciation of computer equipment and amortization of software that supports our technology platform. Amortization of intangible assets is primarily related to our agent relationships, trade name and developed technology.

Non-Operating Expenses

Interest Expense

Interest expense consists primarily of interest associated with our debt, which consists of a term loan and revolving credit facility that were both refinanced on November 7, 2018 and subsequently amended on March 25, 2019. As of September 30, 2019 and December 31, 2018, thefacility. The effective interest rates for the nine months ended September 30, 2020 for the term loan facility and revolving credit facility related to our current Credit Agreement were 7.12%5.93% and 6.53%, and 7.34% and 7.01%0.99%, respectively. Interest on the term loan facility and revolving credit facility is determined by reference to either LIBOR or a “base rate”, in each case, plus an applicable margin of 4.50% per annum for LIBOR loans or 3.50% per annum for base rate loans. The Company is also required to pay a fee on the unused portion of the revolving credit facility equal to 0.35% per annum.

Income tax provision

Our income tax provision includes the expected benefit of all deferred tax assets, including our net operating loss carryforwards. With few exceptions, our net operating loss carryforwards will expire from 2029 through 20372037. After consideration of all evidence, both positive and are subject to annual utilization limitations; however, our current assessment isnegative, management has determined that no valuation allowance is required for any of ourat September 30, 2020 on the Company's U.S. federal or state deferred tax assets.assets; however, a valuation allowance of $0.1 million as of September 30, 2020 has been recorded on deferred tax assets associated with Canadian net operating loss carryforwards. Our income tax provision has been impacted byreflects the effects of state taxes, non-deductible expenses, including shared-basedshare-based compensation expenses, and transaction costs.

foreign tax rates applicable to the Company’s foreign subsidiaries that are higher or lower than the U.S. statutory rate.
Net Income (Loss)

Net income (loss) is determined by subtracting operating and non-operating expenses from revenues.

Segments

Our business is organized around one reportable segment that provides money transmittal services primarily between the United States and Canada to Mexico, Guatemala and other countries in Latin America.America, Africa and Asia through a network of authorized agents located in various unaffiliated retail establishments and 34 Company-operated stores throughout the U.S. and Canada. This is based on the objectives
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of the business and how our chief operating decision maker, the CEO and President, monitors operating performance and allocates resources.

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Results of Operations

The following table summarizedsummarizes key components of our results of operations for the periods indicated:

Three Months Ended
September 30,		Nine Months Ended
September 30,
(in thousands)2020201920202019
Revenues:
Wire transfer and money order fees, net$82,646 $72,468 $222,534 $201,410 
Foreign exchange gain, net12,296 12,272 33,510 33,297 
Other income652 594 1,863 1,652 
Total revenues95,594 85,334 257,907 236,359 
Operating expenses:
Service charges from agents and banks63,904 56,319 172,403 156,510 
Salaries and benefits8,084 7,612 22,512 22,806 
Other selling, general and administrative expenses6,336 9,788 16,827 20,850 
Depreciation and amortization2,698 3,179 8,079 9,486 
Total operating expenses81,022 76,898 219,821 209,652 
Operating income14,572 8,436 38,086 26,707 
Interest expense1,530 2,145 5,033 6,503 
Income before income taxes13,042 6,291 33,053 20,204 
Income tax provision3,544 2,253 8,889 5,936 
Net income$9,498 $4,038 $24,164 $14,268 
  
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
(in thousands) 2019  2018  2019  2018 
Revenues:            
Wire transfer and money order fees, net $72,468  $61,332  $201,410  $168,554 
Foreign exchange gain  12,272   10,697   33,297   29,013 
Other income  594   479   1,652   1,277 
Total revenues  85,334   72,508   236,359   198,844 
                 
Operating expenses:                
Service charges from agents and banks  56,319   48,305   156,510   132,565 
Salaries and benefits  7,612   10,959   22,806   24,633 
Other selling, general and administrative expenses  9,788   5,207   20,850   13,390 
Transaction costs  -   6,305   -   10,319 
Depreciation and amortization  3,179   4,142   9,486   11,750 
Total operating expenses  76,898   74,918   209,652   192,657 
                 
Operating income (loss)  8,436   (2,410)  26,707   6,187 
                 
Interest expense  2,145   3,434   6,503   10,110 
                 
Income (loss) before income taxes  6,291   (5,844)  20,204   (3,923)
                 
Income tax provision  2,253   7,569   5,936   8,186 
                 
Net income (loss) $4,038  $(13,413) $14,268  $(12,109)


Three Months Ended September 30, 20192020 Compared to Three Months Ended September 30, 2018

2019
Revenues

Revenues for the above periods are presented below:

($ in thousands) 
Three Months
Ended September 30,
2019
 
%
of
Revenues
 
Three Months
Ended September 30,
2018
 
%
of
Revenues
 ($ in thousands)Three Months
Ended September 30,
2020		%
of
Revenues		Three Months
Ended September 30,
2019		%
of
Revenues
         
Revenues:         Revenues:
Wire transfer and money order fees, net $72,468   85% $61,332   84%Wire transfer and money order fees, net$82,646 86 %$72,468 85 %
Foreign exchange gain  12,272   14%  10,697   15%
Foreign exchange gain, netForeign exchange gain, net12,296 13 %12,272 14 %
Other income  594   1%  479   1%Other income652 1 %594 1 %
Total revenues $85,334   100% $72,508   100%Total revenues$95,594 100 %$85,334 100 %
Wire transfer and money order fees, net of $82.6 million for the three months ended September 30, 2020 increased by $10.1 million from $72.5 million for the three months ended September 30, 2019 increased by $11.2 million from $61.3 million for the three months ended September 30, 2018.2019. This increase of $11.2$10.1 million was primarily due to a 19%13% increase in transaction volume compared to the third quarter of 2018,2019, largely due to the continued growth in our agent network, which has grownincreased by 12%5% from September 20182019 to September 2019.

2020.
Revenues from foreign exchange gain, net of $12.3 million for the three months ended September 30, 2019 increased by $1.6 million from $10.72020 remained consistent with $12.3 million for the three months ended September 30, 2018. This increase was primarily2019 due to higher transaction volume achieved by growth in our agent network.

lower foreign exchange volatility during the quarter.
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Operating Expenses

Operating expenses for the above periods are presented below:

 
Three Months
Ended September 30,
 
%
of
 
Three Months
Ended September 30,
 
%
of
 
($ in thousands) 2019 Revenues 2018 Revenues ($ in thousands)Three Months
Ended September 30,
2020		%
of
Revenues		Three Months
Ended September 30,
2019		%
of
Revenues
         
Operating expenses:         Operating expenses:
Service charges from agents and banks $56,319   66% $48,305   67%Service charges from agents and banks$63,904 67 %$56,319 66 %
Salaries and benefits  7,612   9%  10,959   15%Salaries and benefits8,084 8 %7,612 9 %
Other selling, general and administrative expenses  9,788   11%  5,207   7%Other selling, general and administrative expenses6,336 7 %9,788 11 %
Transaction costs  -   0%  6,305   9%
Depreciation and amortization  3,179   4%  4,142   6%Depreciation and amortization2,698 3 %3,179 4 %
Total operating expenses $76,898   90% $74,918   104%Total operating expenses$81,022 85 %$76,898 90 %
Service charges from agents and banks— Service charges from agents and banks were $63.9 million, or 67% of revenues, for the three months ended September 30, 2020 compared to $56.3 million, or 66% of revenues, for the three months ended September 30, 2019 compared to $48.3 million, or 67% of revenues, for the three months ended September 30, 2018.2019. The increase of $8.0$7.6 million was primarily due to the increase in transaction volume.volume described above.

Salaries and benefits —Salaries and benefits were— Salaries and benefits of $8.1 million for the three months ended September 30, 2020 increased by $0.5 million from $7.6 million for the three months ended September 30, 2019, a decrease2019. The increase of $3.4 million from $11.0 million for the three months ended September 30, 2018. The decrease of $3.4$0.5 million is primarily due to $4.0 million of share-based compensation in the three months ended September 30, 2018 related to the accelerated vesting of incentive units in connection with the Merger that did not reoccur in the comparable 2019 period.  This decrease was offset by $0.4$0.6 million in increased wages largely in management and other areas to support the continued growth of our growing operations,business and $0.2 increase in stock based compensation. These increases are offset by a $0.2$0.3 million increase relateddecrease in commission expense for our representatives primarily due to share-based compensation in connection with the International Money Express, Inc. 2018 Omnibus Equity Compensation Plan.a lower than expected gross margin achieved compared to established goals.

Other selling, general and administrative expenses— Other selling, general and administrative expenses of $9.8 million for the three months ended September 30, 2019 increased by $4.6 million from $5.2 million for the three months ended September 30, 2018. The increase of $4.6 million is primarily due to a $3.3 million settlement and legal fees associated with a Telephone Consumer Protection Act (“TCPA”) lawsuit, $0.7 million of insurance premiums, property taxes and other operating expenses and $0.6 million in IT related expenses.

Transaction costs — Transaction costs of $6.3 million for the three months ended September 30, 2018 include $1.82020 decreased by $3.5 million in employee bonuses, $1.6from $9.8 million to terminate our management fee agreement, $1.5 million change in control fee to our lender, and $1.4 million in legal and other professional fees all directly related to the Merger. There were no transaction costs for the three months ended September 30, 2019.

The decrease was the result of:
•$3.3 million - nonrecurrence of settlement and legal fees associated with a Telephone Consumer Protection Act of 1991 (“TCPA”) class action lawsuit in 2019;
•$0.3 million - reduction in advertising and promotion expense due to a change in marketing strategy;
•$0.3 million - lower legal and professional fees in connection with secondary offerings of the Company’s common stock; and
•$0.3 million - decrease in travel expenses due to reduced employee travel during the COVID-19 pandemic.

These decreases were partially offset by:

•$0.4 million - higher IT related expenses incurred to sustain our business expansion; and
•$0.3 million - loss incurred in the closure of a financial institution in Mexico.

Depreciation and amortization— Depreciation and amortization of $2.7 million for the three months ended September 30, 2020 decreased by $0.5 million from $3.2 million for the three months ended September 30, 2019 decreased by $0.9 million from $4.1 million for the three months ended September 30, 2018.2019. This decrease is mainly due to $0.8$0.6 million less amortization related to theour trade name, developed technology and agent relationships during the third quarter of 20192020 as these intangibles are being amortized on an accelerated basis, which declines over time.

This decrease was partially offset by an increase in depreciation of $0.1 million associated primarily with additional computer equipment to support our growing business and sending agent network.
Non-Operating Expenses

Interest expense— Interest expense wasof $1.5 million for the three months ended September 30, 2020 decreased by $0.6 million from $2.1 million for the three months ended September 30, 2019, a2019. The decrease of $1.3$0.6 million from $3.4was primarily due to a reduction in interest rates paid under the Credit Agreement (as defined below) and lower drawings under the revolving credit facility.
Income tax provision — Income tax provision of $3.5 million for the three months ended September 30, 2018. The decrease of $1.32020 increased by $1.2 million was primarily due to a reduction in the interest rates paid under the Credit Agreement.

Incomefrom an income tax provision — Income tax provision wasof $2.3 million for the three months ended September 30, 2019, a decrease of $5.3 million from an2019. The increase in the income tax provision was mainly attributable to higher taxable income resulting from higher revenues.
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Index
Net Income
We reported net income of $7.6$9.5 million for the three months ended September 30, 2018. The decrease in the income tax provision wasmainly due2020 compared to $7.2 million less non-deductible expenses and $1.0 million less state tax expense, which are offset by a $2.5 million increase attributable to higher taxable income.

Net Income (Loss)

We had net income of $4.0 million for the three months ended September 30, 2019, compared to net lossrepresenting an increase of $13.4$5.5 million for the three months ended September 30, 2018or 138%, due primarily to the same factors discussed above.

Non-GAAP Financial Measures
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Index
We use Adjusted Net Income, (Loss)Adjusted Earnings Per Share and Adjusted Income (Loss) per Share

Adjusted Net Income (Loss) is definedEBITDA to evaluate our performance, both internally and as net income adjusted to add backcompared with our peers, because these measures exclude certain charges and expenses, suchitems that may not be indicative of our core operating results, as transaction costs, non-cash amortization resulting from push-down accounting, andwell as items that can vary widely among companies within our industry. For example, non-cash compensation costs as these charges and expenses are not considered a partcan be subject to volatility from changes in the market price per share of our core business operationscommon stock or variations in the value and are not an indicatornumber of ongoing, future company performance.

shares granted, and amortization of intangible assets is subject to acquisition activity, which varies from period to period and amortization of intangibles expense is primarily related to the effects of push down accounting resulting from our 2018 merger.
We present Adjusted Net Income (Loss) and Adjusted Income (Loss) per Sharethese non-GAAP financial measures because we believe they are frequently used by analysts, investors and other interested parties to evaluate companies in our industry. Further, we believe they are helpful in highlighting trends in our operating results because it excludes, among other things, certainby focusing on our core operating results of decisions thatand are outside the control of management, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the jurisdictionsuseful to evaluate our performance in which we operate and capital investments.

conjunction with our GAAP financial measures. Adjusted Net Income, (Loss) is aAdjusted Earnings Per Share and Adjusted EBITDA are non-GAAP financial measuremeasures and should not be considered as an alternative to operating income, or net income or earnings per share as a measure of operating performance or cash flows or as a measure of liquidity. Non-GAAP financial measures are not necessarily calculated the same way by different companies and should not be considered a substitute for or superior to GAAP.

Adjusted Net Income for the three months ended September 30, 2019 was $9.5 million, representing an increase of $8.2 million, or 631%, from Adjusted Net Income of $1.3 million for the three months ended September 30, 2018. The increase in Adjusted Net Income was primarily due to the increase in revenues of $12.9 million and a decrease in transaction costs, salaries and benefits and income taxes, less the increase in service charges from agents and banks of $8.0 million as well as increases in other operating expenses to support the growth in our business.

The following table presents the reconciliation of net income (loss), our closest GAAP measure, to Adjusted Net Income (Loss).

  Three Months Ended September 30, 
(in thousands) 2019  2018 
       
Net Income (Loss) $4,038  $(13,413)
Adjusted for:        
Transaction costs (a)  -   6,305 
Incentive units plan (b)  -   4,023 
Share-based compensation, 2018 Plan (c)  634   430 
Offering costs (d)  766   - 
Management fee (e)  -   195 
TCPA settlement (f)  3,358   - 
Costs related to registering stock underlying warrants (g)  -   615 
Other employee severance (h)  -   106 
Other charges and expenses (i)  86   38 
Amortization of intangibles (j)  2,312
  3,098 
Income tax benefit related to adjustments (k)  (1,654)  (146)
Adjusted Net Income
 $9,540  $1,251 
         
Adjusted Income per Share        
Basic and diluted $0.25  $0.04 
         
Weighted-average common shares outstanding        
Basic  37,984,316   30,975,338 
Diluted  38,286,702   30,975,338 

(a)Represents direct costs for the three months ended September 30, 2018 related to the Merger, which were expensed as incurred and included as “transaction costs” in our condensed consolidated statements of operations and comprehensive income (loss).
(b)In connection with the Stella Point acquisition, Class B, C and D incentive units were granted to our employees by Interwire LLC. The three months ended September 30, 2018 included an expense regarding these incentive units, which became fully vested and were paid out upon the closing of the Merger. As a result, employees no longer hold profits interests following the Merger.
(c)Stock options and restricted stock were granted to employees and independent directors of the Company. The Company recorded $0.6 million and $0.4 million of expense related to these equity instruments during the three months ended September 30, 2019 and 2018, respectively.
(d)The Company incurred $0.8 million of offering costs during the three months ended September 30, 2019 for professional and legal fees in connection with a Secondary Offering of the Company’s common stock.
(e)Represents payments under our management agreement with Stella Point pursuant to which we paid a quarterly fee for certain advisory and consulting services. In connection with the Merger, this agreement was terminated.

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Index
(f)Represents a charge for the settlement of a class action lawsuit related to the TCPA, which included a $3.3 million settlement payment and $0.1 million in related legal fees.
(g)The Company incurred $0.6 million of expenses during the three months ended September 30, 2018 for professional fees in connection with the registration of common stock underlying outstanding warrants.
(h)Represents $0.1 million of severance costs incurred during the three months ended September 30, 2018, related to departmental changes.
(i)Both periods include loss on disposal of fixed assets and foreign currency (gains) losses.
(j)Represents the amortization of certain intangible assets that resulted from the application of pushdown accounting.
(k)
Represents the current and deferred tax impact of the relevant tax-deductible adjustments to net income (loss) using the Company’s blended federal and state tax rate for each period. Relevant tax-deductible adjustments include all adjustments to net income except for $0.8 million of offering costs for the three months ended September 30, 2019 and $5.8 million of non-deductible transaction costs and $4.0 million of non-deductible incentive units plan expense for the three months ended September 30, 2018.

Adjusted EBITDA

Adjusted EBITDA is defined as net income (loss) before depreciation and amortization, interest expense, income taxes, and also adjusted to add back certain charges and expenses, such as transaction costs and non-cash compensation costs, as these charges and expenses are not considered a part of our core business operations and are not an indicator of ongoing, future company performance.

measures.
Adjusted EBITDA is one of the primary metrics used by management to evaluate the financial performance of our business. We present Adjusted EBITDA because we believe it is frequently used by analysts, investors and other interested parties to evaluate companies in our industry. Further, we believe it is helpful in highlighting trends in our operating results,business because it excludes, among other things, the effects of certain results of decisionstransactions that are outside the control of management, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the jurisdictions in which we operate and capital investments.

In particular, Adjusted EBITDA is a non-GAAP financial measure and should not be considered as an alternativesubject to operating income or net income as a measure of operating performance or cash flows or as a measure of liquidity. Non-GAAP financial measures are not necessarily calculated the same way by different companies and should not be considered a substitute for or superior to GAAP. Some of thesecertain limitations, includeincluding the following:

•Adjusted EBITDA does not reflect the significant interest expense, or the amounts necessary to service interest or principal payments on our senior secured credit facility;
Credit Agreement;

•Adjusted EBITDA does not reflect income tax provision (benefit), and because the payment of taxes is part of our operations, tax expenseprovision is a necessary element of our costs and ability to operate;

•Although depreciation and amortization are eliminated in the calculation of Adjusted EBITDA, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any costs of such replacements;

•Adjusted EBITDA does not reflect the noncash component of employeeshare-based compensation;

•Adjusted EBITDA does not reflect the impact of earnings or charges resulting from matters we consider not to be reflective, on a recurring basis, of our ongoing operations; and

Other•other companies in our industry may calculate Adjusted EBITDA or similarly titled measures differently than we do, limiting its usefulness as a comparative measure.

We compensateadjust for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA, as well as our other non-GAAP financial measures, only as supplemental information.

Adjusted Net Income and Adjusted Earnings per Share
Adjusted Net Income is defined as net income adjusted to add back certain charges and expenses, such as non-cash amortization of intangible assets resulting from push-down accounting, which will recur in future periods until these assets have been fully amortized, and excludes the amortization of other intangible assets related to the acquisition of Company-operated stores, non-cash compensation costs, litigation settlements and other items set forth in the table below, as these charges and expenses are not considered a part of our core business operations and are not an indicator of ongoing, future company performance.
Adjusted Earnings per Share - Basic and Diluted is calculated by dividing Adjusted Net Income by GAAP weighted-average common shares outstanding (basic and diluted).
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Index
Adjusted Net Income for the three months ended September 30, 2020 was $12.2 million, representing an increase of $2.7 million, or 28%, from Adjusted Net Income of $9.5 million for the three months ended September 30, 2019. The increase in Adjusted Net Income was primarily due to the increase in revenues of $10.3 million, offset primarily by an increase in service charges from agents and banks of $7.6 million due to higher transaction volume.
The following table presents the reconciliation of Net Income, our closest GAAP measure, to Adjusted Net Income:
Three Months Ended September 30,
(in thousands, except for per share data)20202019
Net Income$9,498 $4,038 
Adjusted for:
Share-based compensation (a)801 634 
Offering costs (b)479 766 
TCPA settlement (c)12 3,358 
Loss on bank closure (d)252 — 
Other charges and expenses (e)282 86 
Amortization of intangibles (f)1,710 2,312 
Income tax benefit related to adjustments (g)(822)(1,654)
Adjusted Net Income$12,212 $9,540 
Adjusted Earnings per Share
Basic and diluted$0.32 $0.25 
Weighted-average common shares outstanding
Basic38,050,610 37,984,316 
Diluted38,652,707 38,286,702 
(a)Stock options and restricted stock were granted to employees and independent directors of the Company.
(b)Represents expenses incurred for professional and legal fees in connection with secondary offerings of the Company’s common stock.
(c)Represents legal fees and charge for the settlement of a class action lawsuit related to the TCPA.
(d)Represents a loss during the three months ended September 30, 2020 related to the closure of a financial institution in Mexico.
(e)Includes loss on disposal of fixed assets and foreign currency (gains) losses.
(f)Represents the amortization of certain intangible assets that resulted from the application of push-down accounting.
(g)Represents the current and deferred tax impact of the taxable adjustments to net income using the Company’s blended federal and state tax rate for each period. Relevant tax-deductible adjustments include all adjustments to net income.

Adjusted Earnings per Share - Basic and Diluted for the three months ended September 30, 2020 was $0.32, representing an increase of $0.07, or 28%, compared to $0.25 for the three months ended September 30, 2019.
The following table presents the reconciliation of GAAP Earnings per Share, our closest GAAP measure, to Adjusted Earnings per Share:
Three Months Ended September 30,
20202019
GAAP Earnings per Share - Basic and Diluted$0.25 $0.11 
Adjusted for:
Share-based compensation0.02 0.02 
Offering costs0.01 0.02 
TCPA settlementNM0.09 
Loss on bank closure0.01 — 
Other charges and expenses0.01 NM
Amortization of intangibles0.04 0.06 
Income tax benefit related to adjustments(0.02)(0.04)
Adjusted Earnings per Share - Basic and Diluted$0.32 $0.25 

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NM - Per share amounts are not meaningful.
The table above may contain slight summation differences due to rounding.
Adjusted EBITDA
Adjusted EBITDA is defined as net income before depreciation and amortization, interest expense, income taxes, and also adjusted to add back certain charges and expenses, such as non-cash compensation costs and other items set forth in the table below, as these charges and expenses are not considered a part of our core business operations and are not an indicator of ongoing, future company performance.
Adjusted EBITDA for the three months ended September 30, 20192020 was $16.5$19.1 million, representing an increase of $3.1$2.6 million, or 22%16%, from $13.4$16.5 million for the three months ended September 30, 2018.2019. The increase in Adjusted EBITDA was primarily due to the increase in revenues of $12.9$10.3 million, and a decrease in salaries and benefits, less theoffset primarily by an increase in service charges from agents and banks of $8.0$7.6 million as well as increasesdue to an increase in other operating expenses to support the growth in our business.transaction volume.

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The following table presents the reconciliation of net income (loss),Net Income, our closest GAAP measure, to Adjusted EBITDA.
EBITDA:

  Three Months Ended September 30, 
(in thousands) 2019  2018 
       
Net Income (Loss) $4,038  $(13,413)
Adjusted for:        
Interest expense  2,145   3,434 
Income tax provision  2,253   7,569 
Depreciation and amortization  3,179   4,142 
EBITDA  11,615   1,732 
Transaction costs (a)  -   6,305 
Incentive units plan (b)  -   4,023 
Share-based compensation, 2018 Plan (c)  634   430 
Offering costs (d)  766   - 
Management fee (e)  -   195 
TCPA settlement (f)  3,358   - 
Costs related to registering stock underlying warrants (g)  -   615 
Other employee severance (h)  -   106 
Other charges and expenses (i)  86   38 
Adjusted EBITDA $16,459  $13,444 

Three Months Ended September 30,
(in thousands)20202019
Net Income$9,498 $4,038 
Adjusted for:
Interest expense1,530 2,145 
Income tax provision3,544 2,253 
Depreciation and amortization2,698 3,179 
EBITDA17,270 11,615 
Share-based compensation (a)801 634 
Offering costs (b)479 766 
TCPA settlement (c)12 3,358 
Loss on bank closure (d)252 — 
Other charges and expenses (e)282 86 
Adjusted EBITDA$19,096 $16,459 
(a)Represents direct costs for the three months ended September 30, 2018 related to the Merger, which were expensed as incurred and included as “transaction costs” in our condensed consolidated statements of operations and comprehensive income (loss).
(a)Stock options and restricted stock were granted to employees and independent directors of the Company.
(b)In connection with the Stella Point acquisition, Class B, C and D incentive units were granted to our employees by Interwire LLC. The three months ended September 30, 2018 included an expense regarding these incentive units, which became fully vested and were paid out upon the closing of the Merger. As a result, employees no longer hold profits interests following the Merger.
(b)Represents expenses incurred for professional and legal fees in connection with secondary offerings for the Company’s common stock.
(c)Stock options and restricted stock were granted to employees and independent directors of the Company. The Company recorded $0.6 million and $0.4 million of expense related to these equity instruments during the three months ended September 30, 2019 and 2018, respectively.
(c)Represents legal fees and charge for the settlement of a class action lawsuit related to the TCPA.
(d)The Company incurred $0.8 million of expenses during the three months ended September 30, 2019 for professional and legal fees in connection with a Secondary Offering of the Company’s common stock.
(d)Represents a loss in the three months ended September 30, 2020 related to the closure of a financial institution in Mexico.
(e)Represents payments under our management agreement with Stella Point pursuant to which we paid a quarterly fee for certain advisory and consulting services. In connection with the Merger, this agreement was terminated.
(e)Includes loss on disposal of fixed assets and foreign currency (gains) losses.
(f)Represents a charge for the settlement of a class action lawsuit related to the TCPA, which included a $3.3 million settlement payment and $0.1 million in related legal fees.

(g)The Company incurred $0.6 million of expenses during the three months ended September 30, 2018 for professional fees in connection with the registration of common stock underlying outstanding warrants.
(h)Represents $0.1 million of severance costs incurred during the three months ended September 30, 2018, related to departmental changes.
(i)Both periods include loss on disposal of fixed assets and foreign currency (gains) losses.

Nine Months Ended September 30, 20192020 Compared to Nine Months Ended September 30, 2018

2019
Revenues

Revenues for the above periods are presented below:

  
Nine Months
Ended September 30,
  
%
of
  
Nine Months
Ended September 30,
  
%
of
 
($ in thousands) 2019  Revenues  2018  Revenues 
             
Revenues:            
Wire transfer and money order fees, net $201,410   85% $168,554   85%
Foreign exchange gain  33,297   14%  29,013   14%
Other income  1,652   1%  1,277   1%
Total revenues $236,359   100% $198,844   100%

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($ in thousands)Nine Months
Ended September 30,
2020		%
of
Revenues		Nine Months
Ended September 30,
2019		%
of
Revenues
Revenues:
Wire transfer and money order fees, net$222,534 86 %$201,410 85 %
Foreign exchange gain, net33,510 13 %33,297 14 %
Other income1,863 1 %1,652 1 %
Total revenues$257,907 100 %$236,359 100 %
Wire transfer and money order fees, net of $222.5 million for the nine months ended September 30, 2020 increased by $21.1 million from $201.4 million for the nine months ended September 30, 2019 increased by $32.82019. This increase of $21.1 million from $168.6 million forwas primarily due to a 10% increase in transaction volume compared to the nine months ended September 30, 2018. This increase of $32.8 million was due to a 21% increase in transaction volume,2019, largely due to the continued growth in our agent network, which has grownincreased by 12%5% from September 20182019 to September 2019.2020.

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Revenues from foreign exchange gain, net of $33.5 million for the nine months ended September 30, 2020 increased by $0.2 million from $33.3 million for the nine months ended September 30, 2019 increased by $4.3 million from $29.0 million for the nine months ended September 30, 2018.2019. This increase was primarily due to higher transaction volume achieved byresulting from growth in our agent network.

network and a higher average amount sent by our customers as a result of increased foreign exchange volatility due to the pandemic for the first half of the year.
Operating Expenses

Operating expenses for the above periods are presented below:

 
Nine Months
Ended September 30,
  
%
of
  
Nine Months
Ended September 30,
  
%
of
 
($ in thousands) 2019  Revenues  2018  Revenues ($ in thousands)Nine Months
Ended September 30,
2020		%
of
Revenues		Nine Months
Ended September 30,
2019		%
of
Revenues
            
Operating expenses:            Operating expenses:
Service charges from agents and banks $156,510  66% $132,565  67%Service charges from agents and banks172,403 67 %$156,510 66 %
Salaries and benefits 22,806  10% 24,633  12%Salaries and benefits22,512 9 %22,806 10 %
Other selling, general and administrative expenses 20,850  9% 13,390  7%Other selling, general and administrative expenses16,827 7 %20,850 9 %
Transaction costs -  -% 10,319  5%
Depreciation and amortization  9,486  4%  11,750  6%Depreciation and amortization8,079 3 %9,486 4 %
Total operating expenses $209,652  89% $192,657  97%Total operating expenses$219,821 85 %$209,652 89 %
Service charges from agents and banks— Service charges from agents and banks were $172.4 million, or 67% of revenues, for the nine months ended September 30, 2020 compared to $156.5 million, or 66% of revenues, for the nine months ended September 30, 2019 compared to $132.6 million, or 67% of revenues, for the nine months ended September 30, 2018.2019. The increase of $23.9$15.9 million was primarily due to the increase in transaction volume.volume described above.

Salaries and benefits — Salaries and benefits wereof $22.5 million for the nine months ended September 30, 2020 decreased by $0.3 million from $22.8 million for the nine months ended September 30, 2019, a decrease of $1.8 million from $24.6 million for the nine months ended September 30, 2018.2019. The decrease of $1.8$0.3 million is primarily due to $4.7a $1.0 million of share-based compensationdecrease in the nine months ended September 30, 2018 relatedcommission expense for our representatives primarily due to the accelerated vesting of incentive units in connection with the Merger that did not reoccur in the comparable 2019 period.lower than expected gross margin achieved compared to established goals. This decrease wasis offset by $1.4an increase of $0.4 million in increased wages, largely in management and other areas to support our growing operations and a $1.5$0.3 million increase related to share-based compensation in connection with the International Money Express, Inc. 2018 Omnibus Equity Compensation Plan.compensation.

Other selling, general and administrative expenses— Other selling, general and administrative expenses of $16.8 million for the nine months ended September 30, 2020 decreased by $4.1 million from $20.9 million for the nine months ended September 30, 2019 increased2019.
The decrease was the result of:
•$3.3 million - nonrecurrence of settlement and legal fees associated with a TCPA class action lawsuit in 2019;
•$1.2 million - primarily lower legal and professional fees in connection with secondary offerings of the Company’s common stock and an exchange offer for warrants (“Warrant Offer”);
•$0.9 million - decrease in travel expenses due to reduced employee travel during the COVID-19 pandemic; and

These decreases were partially offset by:

•$0.8 million - higher IT related expenses incurred to sustain our business expansion;
•$0.3 million - loss incurred in the closure of a financial institution in Mexico; and
•$0.2 million - increase in provision for bad debt as write-offs were higher in the 2020 period, resulting primarily from the deterioration of the creditworthiness of a small number of sending agents during the first quarter that were affected by $7.5 million from $13.4events other than the COVID-19 pandemic.

Depreciation and amortization — Depreciation and amortization of $8.1 million for the nine months ended September 30, 2018. The increase includes $3.32020 decreased by $1.4 million in settlement and legal fees associated with a TCPA class action lawsuit, $1.3 million of legal and other professional fees associated with the Company’s SEC filings, including the Offer for the Company’s outstanding warrants and a Secondary Offering of the Company’s common stock, $1.9 million of insurance premiums, property taxes and other operating expenses and $1.0 million in IT related expenses. 

Transaction costs — Transaction costs of $10.3 million for the nine months ended September 30, 2018 include costs related to the Merger, consisting primarily of employee bonuses, termination of management fee agreement, change in control fee to our lender and legal and other professional fees. There were no transaction costs for the nine months ended September 30, 2019.

Depreciation and amortization — Depreciation and amortization offrom $9.5 million for the nine months ended September 30, 2019 decreased by $2.3 million from $11.8 million for the nine months ended September 30, 2018.2019. This decrease is mainly due to $2.4$1.8 million less amortization related to theour trade name, developed technology and agent relationships during the nine months ended September 30, 20192020 as these intangibles are being amortized on an accelerated basis, which declines over time. This decrease was partially offset by an increase in depreciation of $0.1$0.4 million associated primarily with additional computer equipment to support our growing business and sending agent network.

Non-Operating Expenses

Interest expense— Interest expense was $5.0 million for the nine months ended September 30, 2020, representing a decrease of $1.5 million from $6.5 million for the nine months ended September 30, 2019, a2019. The decrease of $3.6$1.5 million from $10.1was primarily due to a reduction in interest rates paid under the Credit Agreement (as defined below) and lower drawings under the revolving credit facility.
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Income tax provision — Income tax provision was $8.9 million for the nine months ended September 30, 2018. The decrease2020, representing an increase of $3.6$3.0 million was primarily due to a reduction in the interest rates paid under the Credit Agreement.

Incomefrom an income tax provision — Income tax provision wasof $5.9 million for the nine months ended September 30, 2019,2019. This increase was mainly attributable to higher taxable income primarily as a decreaseresult of $2.3 million from anhigher revenues.
Net Income
We reported net income tax provision of $8.2$24.2 million for the nine months ended September 30, 2018.  The decrease in the income tax provision was mainly due2020 compared to $7.2 million and $0.3 million less non-deductible expenses and state tax expense, respectively, which were offset by a $5.1 million increase attributable to higher taxable income.

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Net Income (Loss)

We had net income of $14.3 million for the nine months ended September 30, 2019, comparedrepresenting an increase of $9.9 million or 69%, due to net lossthe same factors discussed above.
Non-GAAP Financial Measures
Adjusted Net Income and Adjusted Earnings per Share
Adjusted Net Income (previously defined and used as described above) for the nine months ended September 30, 2020 was $30.6 million, representing an increase of $12.1$5.6 million or 22% from Adjusted Net Income of $25.0 million for the nine months ended September 30, 2018 due primarily to the same factors discussed above. 

Adjusted Net Income (Loss) and Adjusted Income (Loss) per Share

Adjusted Net Income for the nine months ended September 30, 2019 was $25.0 million, representing an increase of $14.0 million, or 127%, from Adjusted Net Income of $11.0 million for the nine months ended September 30, 2018.2019. The increase in Adjusted Net Income was primarily due to the increase in revenues of $37.5$21.5 million, and a decrease in transaction costs, interest expense and income taxes, less theoffset primarily by an increase in service charges from agents and banks of $23.9$15.9 million as well as increases in other operating expensesdue to support the growth in our business.

higher transaction volume.
The following table presents the reconciliation of net income,Net Income, our closest GAAP measure, to Adjusted Net Income.Income:

  Nine Months Ended September 30, 
(in thousands) 2019  2018 
       
Net Income (Loss) $14,268  $(12,109)
Adjusted for:        
Transaction costs (a)  -   10,319 
Incentive units plan (b)  -   4,735 
Share-based compensation, 2018 Plan (c)  1,894   430 
Offering costs (d)  1,665   - 
Management fee (e)  -   585 
TCPA Settlement (f)  3,358   192 
Transition expenses (g)  -   348 
Costs related to registering stock underlying warrants (h)  -   615 
Other employee severance (i)  172   106 
Other charges and expenses (j)  205   346 
Amortization of intangibles (k)  6,936   9,294 
Income tax benefit related to adjustments (l)  (3,526)  (3,819)
Adjusted Net Income
 $24,972  $11,042
         
Adjusted Income per Share        
Basic and diluted $0.67  $0.51 
         
Weighted-average common shares outstanding        
Basic  37,230,831   21,827,082 
Diluted  37,365,371   21,827,082 

Nine Months Ended September 30,
(in thousands, except for per share data)20202019
Net Income$24,164 $14,268 
Adjusted for:
Share-based compensation (a)2,209 1,894 
Offering costs (b)479 1,665 
TCPA settlement (c)58 3,358 
Loss on bank closure (d)252 — 
Other employee severance (e)— 172 
Other charges and expenses (f)526 205 
Amortization of intangibles (g)5,131 6,936 
Income tax benefit related to adjustments (h)(2,188)(3,526)
Adjusted Net Income$30,631 $24,972 
Adjusted Earnings per Share
Basic$0.81 $0.67 
Diluted$0.80 $0.67 
Weighted-average common shares outstanding
Basic38,040,339 37,230,831 
Diluted38,246,429 37,365,371 
(a)Represents direct costs for the nine months ended September 30, 2018 related to the Merger, which were expensed as incurred and included as “transaction costs” in our condensed consolidated statements of operations and comprehensive income (loss).
(a)Stock options and restricted stock were granted to employees and independent directors of the Company.
(b)In connection with the Stella Point acquisition, Class B, C and D incentive units were granted to our employees by Interwire LLC. The nine months ended September 30, 2018 included an expense regarding these incentive units, which became fully vested and were paid out upon the closing of the Merger. As a result, employees no longer hold profits interests following the Merger.
(b)Represents expenses incurred for professional and legal fees in connection with secondary offerings for the Company’s common stock and Warrants Offer.
(c)Stock options and restricted stock were granted to employees and independent directors of the Company. The Company recorded $1.9 million and $0.4 million of expense related to these equity instruments during the nine months ended September 30, 2019 and 2018, respectively.
(c)Represents legal fees and charge for the settlement of a class action lawsuit related to the TCPA.
(d)The Company incurred $1.7 million of expenses during the nine months ended September 30, 2019 for professional and legal fees in connection with the Offer for the Company’s outstanding warrants and the Secondary Offering of the Company’s common stock.
(d)Represents a loss in the nine months ended September 30, 2020 related to the closure of a financial institution in Mexico.
(e)Represents payments under our management agreement with Stella Point pursuant to which we paid a quarterly fee for certain advisory and consulting services. In connection with the Merger, this agreement was terminated.
(e)Represents severance costs incurred during the nine months ended September 30, 2019 related to departmental changes.
(f)Represents charges for the settlements of lawsuits related to the TCPA, which included a $3.3 million settlement charge and $0.1 million in related fees during the nine months ended September 30, 2019 and $0.1 million settlement payment and $0.1 million in related legal fees during the nine months ended September 30, 2018.
(f)Includes loss on disposal of fixed assets and foreign currency (gains) losses.

(g)Represents the amortization of certain intangible assets that resulted from the application of push-down accounting.
(h)Represents the current and deferred tax impact of the taxable adjustments to net income using the Company’s blended federal and state tax rate for each period. Relevant tax-deductible adjustments include all adjustments to net income.
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(g)Represents recruiting fees and severance costs related to managerial changes in connection with becoming a publicly-traded company.
(h)The Company incurred $0.6 million of expenses during the nine months ended September 30, 2018 for professional fees in connection with the registration of common stock underlying outstanding warrants.
(i)Represents $0.2 million and $0.1 million of severance costs incurred during the nine months ended September 30, 2019 and 2018, respectively, related to departmental changes.
(j)Both periods include loss on disposal of fixed assets and foreign currency (gains) losses.
(k)Represents the amortization of certain intangible assets that resulted from the application of pushdown accounting.
(l)Represents the current and deferred tax impact of the relevant tax-deductible adjustments to net income (loss) using the Company’s blended federal and state tax rate for each period. Relevant tax-deductible adjustments include all adjustments to net income except for $1.7 million of offering costs for the nine months ended September 30, 2019 and $5.8 million of non-deductible transaction costs and $4.7 million of non-deductible incentive units plan expense in the nine months ended September 30, 2018.

Adjusted EBITDA

Adjusted EBITDAEarnings per Share - Basic (previously defined and used as described above) for the nine months ended September 30, 20192020 was $43.5$0.81, representing an increase of $0.14, or 21%, compared to $0.67 for the nine months ended September 30, 2019.
Adjusted Earnings per Share - Diluted (previously defined and used as described above) for the nine months ended September 30, 2020 was $0.80, representing an increase of $0.13, or 19%, compared to $0.67 for the nine months ended September 30, 2019.
The following table presents the reconciliation of GAAP Earnings per Share, our closest GAAP measure, to Adjusted Earnings per Share:
Nine Months Ended September 30,
20202019
BasicDilutedBasic and Diluted
GAAP Earnings per Share$0.64 $0.63 $0.38 
Adjusted for:
Share-based compensation0.06 0.06 0.05 
Offering costs0.01 0.01 0.05 
TCPA settlementNMNM0.09 
Loss on bank closure0.01 0.01 — 
Other employee severance— — NM
Other charges and expenses0.01 0.01 0.01 
Amortization of intangibles0.13 0.13 0.19 
Income tax benefit related to adjustments(0.06)(0.06)(0.09)
Adjusted Earnings per Share$0.81 $0.80 $0.67 

NM - Per share amounts are not meaningful.
The table above may contain slight summation differences due to rounding.
Adjusted EBITDA
Adjusted EBITDA (previously defined and used as described above) for the nine months ended September 30, 2020 was $49.7 million, representing an increase of $7.8$6.2 million, or 22%14%, from $35.6$43.5 million for the nine months ended September 30, 2018.2019. The increase in Adjusted EBITDA was primarily due to the increase in revenues of $37.5$21.5 million, less theoffset primarily by an increase in service charges from agents and banks of $23.9$15.9 million as well as increasesdue to an increase in other operating expenses to support the growth in our business.

transaction volume.
The following table presents the reconciliation of net income,Net Income, our closest GAAP measure, to Adjusted EBITDA.EBITDA:

  Nine Months Ended September 30, 
(in thousands) 2019  2018 
       
Net Income (Loss) $14,268  $(12,109)
Adjusted for:        
Interest expense  6,503   10,110 
Income tax provision  5,936   8,186 
Depreciation and amortization  9,486   11,750 
EBITDA  36,193   17,937 
Transaction costs (a)  -   10,319 
Incentive units plan (b)  -   4,735 
Share-based compensation, 2018 Plan (c)  1,894   430 
Offering costs (d)  1,665   - 
Management fee (e)  -   585 
TCPA Settlement (f)  3,358   192 
Transition expenses (g)  -   348 
Costs related to registering stock underlying warrants (h)  -   615 
Other employee severance (i)  172   106 
Other charges and expenses (j)  205   346 
Adjusted EBITDA $43,487  $35,613 

Nine Months Ended September 30,
(in thousands)20202019
Net Income$24,164 $14,268 
Adjusted for:
Interest expense5,033 6,503 
Income tax provision8,889 5,936 
Depreciation and amortization8,079 9,486 
EBITDA46,165 36,193 
Share-based compensation (a)2,209 1,894 
Offering costs (b)479 1,665 
TCPA settlement (c)58 3,358 
Loss on bank closure (d)252 — 
Other employee severance (e)— 172 
Other charges and expenses (f)526 205 
Adjusted EBITDA$49,689 $43,487 
(a)Represents direct costs for the nine months ended September 30, 2018 related to the Merger, which were expensed as incurred and included as “transaction costs” in our condensed consolidated statements of operations and comprehensive income (loss).
(a)Stock options and restricted stock were granted to employees and independent directors of the Company.
(b)In connection with the Stella Point acquisition, Class B, C and D incentive units were granted to our employees by Interwire LLC. The nine months ended September 30, 2018 included an expense regarding these incentive units, which became fully vested and were paid out upon the closing of the Merger. As a result, employees no longer hold profits interests following the Merger.
(c)Stock options and restricted stock were granted to employees and independent directors of the Company. The Company recorded $1.9 million and $0.4 million of expense related to these equity instruments during the nine months ended September 30, 2019 and 2018, respectively.
(d)The Company incurred $1.7 million of expenses during the nine months ended September 30, 2019 for professional and legal fees in connection with the Offer for the Company’s outstanding warrants and the Secondary Offering of the Company’s common stock.
(e)Represents payments under our management agreement with Stella Point pursuant to which we paid a quarterly fee for certain advisory and consulting services. In connection with the Merger, this agreement was terminated.
(f)Represents charges for the settlements of lawsuits related to the TCPA, which included a $3.3 million settlement payment and $0.1 million in related fees during the nine months ended September 30, 2019 and $0.1 million settlement payment and $0.1 million in related legal fees during the nine months ended September 30, 2018.

(b)Represents expenses incurred for professional and legal fees in connection with secondary offerings for the Company’s common stock and Warrants Offer.
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(g)Represents recruiting fees and severance costs related to managerial changes in connection with becoming a publicly-traded company.
(c)Represents legal fees and charge for the settlement of a class action lawsuit related to the TCPA.
(h)The Company incurred $0.6 million of expenses during the nine months ended September 30, 2018 for professional fees in connection with the registration of common stock underlying outstanding warrants.
(d)Represents a loss in the nine months ended September 30, 2020 related to the closure of a financial institution in Mexico.
(i)Represents $0.2 million and $0.1 million of severance costs incurred during the nine months ended September 30, 2019 and 2018, respectively, related to departmental changes.
(e)Represents severance costs incurred during the nine months ended September 30, 2019 related to departmental changes.
(j)Both periods include loss on disposal of fixed assets and foreign currency (gains) losses.
(f)Includes loss on disposal of fixed assets and foreign currency (gains) losses.


Liquidity and Capital Resources

Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, debt service, acquisitions, contractual obligations and other commitments. We consider liquidity in terms of cash flows from operations and their sufficiency to fund our operatingbusiness operations, including working capital needs, debt service, acquisitions, contractual obligations and investing activities. Toother commitments. In particular, to meet our payment service obligations at all times, we must have sufficient highly liquid assets and be able to move funds on a timely basis.

Our principal sources of liquidity are our cash generated by operating activities and supplemented with borrowings under our revolving credit facility. Our primary cash needs are for day to day operations, to pay interest and principal on our indebtedness, to fund working capital requirements and to make capital expenditures.

WeNotwithstanding the recent effects of the COVID-19 pandemic in the U.S. economy, we still expect to continue funding our liquidity requirements through internally generated funds, and supplemented in the ordinary course, with borrowings under our revolving credit facility. WeWhile our operating cash flows may be affected by the economic conditions resulting from the pandemic, we maintain a strong cash balance position and have access to committed funding sources, which we have used only on a limited and ordinary course basis during the nine months ended September 30, 2020. Therefore, we believe that our projected cash flows generated from operations, together with borrowings under our revolving credit facility are sufficient to fund our principal debt payments, interest expense, our working capital needs and our expected capital expenditures for at least the next twelve months. We will, however, continue to evaluate the nature and extent of these potential impacts to our business and liquidity and capital resources and take action, as necessary, to preserve adequate liquidity, such as limiting discretionary spending and re-prioritizing our capital projects, to ensure that our business can continue to operate during these uncertain times.

On November 7, 2018The Company and further amended on December 7, 2018, the Company entered into a new financing agreement (the “Credit Agreement”) with, among others, certain of its domestic subsidiaries as borrowers certain other domestic subsidiaries andmaintain a financing agreement (as amended, the “Credit Agreement”) with a group of banking institutions. The Credit Agreement provides for a $35.0 million revolving credit facility, a $90.0 million term loan facility and up to a $30.0 million incremental facility.facility, of which $12.0 million was primarily used to pay for the cash portion of the tender offer to purchase warrants during the second quarter of 2019 (the “Offer”). The Credit Agreement also provides for the issuance of letters of credit, which would reduce availability under the revolving credit facility. The proceeds of the loans were used to repay existing indebtedness under the Senior Secured Credit Facility, for working capital purposes and to pay fees and expenses in connection with the transaction. The maturity date of the Credit Agreement is November 7, 2023.

On March 25, 2019, the Company entered into an Increase Joinder No 1 to the Credit Agreement (the “Increase Joinder”) under which the Company received $12 million from the incremental facility on April 29, 2019. The proceeds of the Increase Joinder were primarily used to pay for the cash portion of the Exchange Consideration and the Conversion Consideration pursuant to the Offer between April and May of 2019.

Interest on the term loan facility and revolving credit facility forfacilities of the Credit Agreement is determined by reference to either LIBOR or a “base rate”, in each case plus an applicable margin of 4.50% per annum for LIBOR loans or 3.50% per annum for base rate loans. The Company is also required to pay a fee on the unused portion of the revolving credit facility equal to 0.35% per annum. The effective interest rates for the nine months ended September 30, 20192020 for the term loan facility and revolving credit facility were 7.73%5.93% and 8.48%0.99%, respectively.

The principal amount of the term loan facility forunder the Credit Agreement including the Increase Joinder, must be repaid in consecutive quarterly installments of 5% in year 1, 7.5% in years 2 and 3, and 10% in years 4 and 5, in each case on the last day of each quarter, commencingwhich commenced in March 2019 with a final payment at maturity. The loans under the Credit Agreement may be prepaid at any time without payment or penalty.

The Credit Agreement contains covenants that limit the Company’s and its subsidiaries’ ability to, among other things, grant liens, incur additional indebtedness, make acquisitions or investments, dispose of certain assets, make dividends and distributions, change the nature of their businesses, enter into certain transactions with affiliates or amend the terms of material indebtedness. The Credit Agreement allows for redemptions or acquisitions of the Company’s equity interests subject to certain dollar limitations.

The Credit Agreement also contains financial covenants whichthat require the Company to maintain a quarterly minimum fixed charge coverage ratio of 1.25:1.00 and a quarterly maximum consolidated leverage ratio of 3.25:1.00.

As of September 30, 2019,2020, we were in compliance with the covenants of the Credit Agreement.

As of September 30, 2019,2020, we had total indebtedness of $98.3$91.3 million, consisting of borrowings under the term loan facility, and excluding debt origination costs of $2.5$1.9 million. There were $53.0 million of additional borrowings available under these facilities as of September 30, 2019.2020.

On April 20, 2020, the Company received funds under the Paycheck Protection Program (the “Program”) in the amount of $3.5 million. Although the Company believes that it met all eligibility criteria for a loan under the Program at the time of its application, subsequent to receiving the funds, the Small Business Administration (“SBA”), in consultation with the Department of the Treasury (“Treasury”), provided additional guidance to address public, borrower and lender questions concerning the eligibility criteria under the
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Program. Based on this guidance provided by the SBA and Treasury, the Company returned the funds received under the Program on April 29, 2020.
Our indebtedness could adversely affect our ability to raise additional capital, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk and prevent us from meeting our obligations. See “Risk Factors—Risks Relating to Our Indebtedness—We have a substantial amount of indebtedness, which may limit our operating flexibility and could adversely affect our business, financial condition and results of operations” included in our Annual Report on Form 10-K for the year ended December 31, 2018.2019.

Cash Flows

The following table summarizes the changes to our cash flows for the periods presented:

 Nine Months Ended September 30 Nine Months Ended September 30,
(in thousands) 2019  2018 (in thousands)20202019
Statement of Cash Flows Data:      Statement of Cash Flows Data:
Net cash provided by operating activities $57,147  $30,516 Net cash provided by operating activities$31,597 $57,147 
Net cash used in investing activities (4,067) (3,575)Net cash used in investing activities(2,770)(4,067)
Net cash used in financing activities (31,950) (3,633)Net cash used in financing activities(5,726)(31,950)
Effect of exchange rate changes on cash  30   27 Effect of exchange rate changes on cash(151)30 
Net increase in cash and restricted cash 21,160  23,335 
Net increase in cashNet increase in cash22,950 21,160 
      
Cash and restricted cash, beginning of the period  73,029   59,795 
Cash and restricted cash, end of the period $94,189  $83,130 
Cash, beginning of periodCash, beginning of period86,117 73,029 
Cash, end of periodCash, end of period$109,067 $94,189 
Operating Activities

Net cash provided by operating activities was $31.6 million for the nine months ended September 30, 2020, representing a decrease of $25.5 million from net cash provided by operating activities of $57.1 million for the nine months ended September 30, 2019, an increase of $26.6 million from net cash provided by operating activities of $30.5 million for the nine months ended September 30, 2018.2019. The increasedecrease is a result of a $35.5 million change in working capital, which may vary from period to period due to timing of transmittal orders and payments, offset by additional cash generated by our operating results for the nine months ended September 30, 2019,2020, which were positively impacted by thebenefited from further growth of the business, and also $11.8 million related to changes in working capital.

business.
Investing Activities

Net cash used in investing activities was $2.8 million for the nine months ended September 30, 2020, representing a decrease of $1.3 million from net cash used in investing activities of $4.1 million for the nine months ended September 30, 2019, an increase of $0.5 million from net2019. This decrease in cash used in investing activities was primarily due to lower purchases of $3.6property and equipment and no acquisitions of agent locations during the nine months ended September 30, 2020.
Financing Activities
Net cash used in financing activities was $5.7 million for the nine months ended September 30, 2018. This increase in cash used was primarily2020, which consisted of scheduled quarterly repayments due to higher purchaseson the term loan facility, offset by proceeds from issuance of property and equipment duringstock as a result of the nine months ended September 30, 2019.

Financing Activities

exercise of options.
Net cash used in financing activities was $32.0 million for the nine months ended September 30, 2019, which consisted of $30.0 million in revolving credit line repayments, $10.0 million related to payments made in connection with the Offer, $3.7 million in quarterly payments due on the term loan and payment of debt origination costs associated with an amendment to the Increase Joinder,Credit Agreement, offset by $12$12.0 million in borrowings under the Increase Joinder. Net cash used in financing activities was $3.6 million for the nine months ended September 30, 2018, which related to the quarterly payment due on the term loan, as well as proceeds and payments related to the Merger.Credit Agreement.

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Contractual Obligations

The following table includes aggregated information about contractual obligations that affect our liquidity and capital needs. At September 30, 2019,2020, our contractual obligations over the next several periods were as follows:

(in thousands) 

Total
  
Less than
1 year
  

1 to 3 years
  

3 to 5 years
  
More than
5 years
 (in thousands)TotalLess than
1 year		1 to 3 years3 to 5 yearsMore than
5 years
Debt, principal payments $98,321  $7,023  $17,238  $74,060  $- Debt, principal payments$91,298 $7,661 $19,792 $63,845 $— 
Interest payments 25,345  7,115  12,514  5,716  - Interest payments11,970 4,286 7,331 353 — 
Non-cancelable operating leases  6,283   1,463   2,285   1,677   858 Non-cancelable operating leases5,175 1,441 2,092 1,537 105 
Total $129,949  $15,601  $32,037  $81,453  $858 Total$108,443 $13,388 $29,215 $65,735 $105 
Our condensed consolidated balance sheet reflects $95.8$89.4 million of debt as of September 30, 2019,2020, as the principal payment obligations of $98.3$91.3 million are gross of unamortized debt origination costs. The above table reflects the principal and interest of the revolver and term loan under the Credit Agreement that will be paid through the maturity of the debt using the rates in effect on September 30, 20192020 and assuming no voluntary prepayments of principal.

Non-cancelable operating leases include various office leases, including our office headquarters.

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Off-Balance Sheet Arrangements

We are not a party to any material off-balance sheet arrangements, includingsuch as guarantee contracts, retained or contingent interests, certain derivative instruments and variable interest entities that either have, or are reasonably likely to have, a current or future material effect on our condensed consolidated financial statements.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions about future events that affect amounts reported in our condensed consolidated financial statements and related notes, as well as the related disclosure of contingent assets and liabilities at the date of the financial statements. Management evaluates its accounting policies, estimates and judgments on an on-going basis. Management bases its estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions and conditions.

Critical accounting policies are those policies that management believes are very important to the portrayal of our financial position and results of operations, and that require management to make estimates that are difficult, subjective or otherwise complex. Our Critical Accounting Policies and Estimates disclosed in “Management’s“Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates”Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2018,2019, for which there were no material changes, except as described below, included:included the following:

•Revenue Recognition
•Accounts Receivable and Allowance for Doubtful Accounts
Credit Losses
•Goodwill and Intangible Assets
•Income Taxes

On January 1, 2019, the Company adopted the new accounting standard, Revenue from Contracts with Customers, as amended, which modified the existing accounting standards for revenue recognition. Refer to Note 3 of our condensed consolidated financial statements included in this filing for further information about the impact of the adoption of this new accounting standard.

Recent Accounting Pronouncements

Refer to Note 1 of our unaudited condensed consolidated financial statements included in this filing for further information on recent accounting pronouncements.

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ITEM 3.
ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Risk

We manage foreign currency risk through the structure of the business and an active risk management process. We currently settle with our payers in Latin America primarily by entering into foreign exchange spot transactions with local and foreign currency providers (“counterparties”). The foreign currency exposure on our foreign exchange spot transactions is limited by the fact that all transactions are settled within two business days from trade date. However, foreignForeign currency fluctuations, however, may negatively impactaffect our average exchange gain per transaction.

In addition, included in wire transfer and money orders payable in our condensed consolidated balance sheets as of September 30, 2020 and December 31, 2019, there are $7.6 million and $9.9 million, respectively, of wires payable denominated primarily in Mexican pesos and Guatemalan quetzales.
We are also exposed to changes in currency rates as a result of our investments in foreign operations and revenues generated in currencies other than the U.S. dollar. Revenues and profits generated by international operations will increase or decrease because of changes in foreign currency exchange rates. This foreign currency risk is related primarily to our operations in Mexico and Guatemala.our foreign subsidiaries. Revenues from these operationsour foreign subsidiaries represent less than 3%1% of our consolidated revenues for the three and nine months ended September 30, 2020 and 2019, and 2018.respectively. Therefore, a 10% increase or decrease in these currency rates against the U.S. Dollar would result in a minimal change to our overall operating results.

The spot exchange rates as of September 30, 20192020 and December 31, 20182019 were 19.7422.16 and 19.6518.86 for the Mexico Peso/Dollar,U.S. dollar/Mexican peso, respectively, 7.77 and 7.69 for the U.S. dollar/Guatemalan quetzal, respectively, and 7.731.34 and 1.31 for the Guatemala Quetzal/Dollar as of both respective dates.U.S. dollar/Canadian dollar, respectively. The average exchange rates for the nine months ended September 30, 2020 and 2019 were 21.79 and 2018 were 19.24 and 19.03 for the Mexico Peso/DollarU.S. dollar/Mexican peso, respectively, and 7.69 and 7.41for both periods for the Guatemala Quetzal/Dollar, respectively.U.S. dollar/Guatemalan quetzal. The average exchange rates for the U.S. dollar/Canadian dollar for the nine months ended September 30, 2020 was 1.35 and the average rate for the 3 months ended September 30, 2019 was 1.32. We commenced operations in Canada during the third quarter of 2019, therefore, information prior to this period has not been presented. Long-term sustained appreciation of the Mexican peso or Guatemalan Quetzalquetzal as compared to the U.S. dollar could negatively affect our margins.

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Beginning in March 2020, we have experienced increased volatility in the U.S. dollar/Mexican peso rates related to economic effects of the COVID-19 pandemic, as well as actions taken by governments and central banks in response to the pandemic. We continue to expect an increase in volatility in foreign exchange rates and depreciation against the U.S. dollar, especially for the Mexican peso, during 2020. We cannot, however, reasonably estimate the duration or extent of that volatility.
Interest Rate Risk

Interest on the term loan and revolving credit facility under the Credit Agreement is determined by reference to either LIBOR or a “base rate”, in each case, plus an applicable margin of 4.50% per annum for LIBOR loans or 3.50% per annum for base rate loans. The Company is also required to pay a fee on the unused portion of the revolving credit facility equal to 0.35% per annum. SinceBecause interest expense is subject to fluctuation, if interest rates increase, our debt service obligations on such variable rate indebtedness would increase even though the amount borrowed remained the same. Accordingly, an increase in interest rates would adversely affect our profitability.

Due to the economic effects of the COVID-19 pandemic, market interest rates have declined significantly, with the 10-year Treasury bond yield falling below 1.00% on March 3, 2020 and averaging 0.65% for the three months ended September 30, 2020, and the 30-day LIBOR rate decreasing to 0.15% as of September 30, 2020, favorably affecting interest expense on the variable-rate portion of our debt during the three months ended September 30, 2020. We cannot predict, however, whether or for how long interest rates will remain at these low levels.
As of September 30, 2019,2020, we had $98.3$91.3 million in outstanding borrowings under the term loan. A hypothetical 1% increase or decrease in the interest rate on our indebtedness as of September 30, 20192020 would have increased or decreased cash interest expense on our term loan by approximately $1.0$0.9 million per annum.

Credit Risk

We maintain certain cash balances in various U.S. banks, which at times, may exceed federally insured limits. We have not incurred any losses on these accounts. In addition, we maintain various bank accounts in Canada, Mexico, Guatemala and Guatemala,Canada, which are not insured. WeOther than an isolated instance in the three months ended September 30, 2020, we have not incurred any losses on these uninsured accounts. To manage our exposures to credit risk with respect to cash balances and other credit risk exposures resulting from our relationships with banks and financial institutions, we regularly review cash concentrations, and we attempt to diversify our cash balances among global financial institutions.

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We are also exposed to credit risk related to receivable balances from sending agents. We perform a credit review before each agent signing and conduct ongoing analyses of sending agents and certain other parties we transact with directly. As of September 30, 2019 and 2018,2020, we also had $1.5 million and $1.3 million outstanding of notes receivable from sending agents, respectively.agents. Most of the notes are collateralized by personal guarantees from the sending agents and by assets from their businesses.

Due to the COVID-19 pandemic, it is possible we could be adversely affected by credit losses, such as those related to our outstanding notes receivables from sending agents. At the date of this report, however, we are not aware of any significant exposure and are continuing to monitor our credit risk.
Our provision for bad debt was approximately $1.4 million for the nine months ended September 30, 2020 (0.6% of total revenues) and $1.2 million for the nine months ended September 30, 2019 (0.5% of total revenues) and $0.7 million foras write-offs were higher in the nine months ended September 30, 2018 (0.4%2020, resulting primarily from the deterioration of total revenues) as recoveriesthe creditworthiness of a small number of sending agents during the first quarter that were higher last year.adversely affected by events other than the COVID-19 pandemic.

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ITEM 4.
CONTROLS AND PROCEDURES

ITEM 4.    CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports filed pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules, regulations and related 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 that the objectives of the control system are met. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within an organization have been detected. Accordingly, our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our disclosure control system are met.

As required by Rules 13a-15(e)13a-15(b) and 15d-15(e)15d-15(b) under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of our disclosure controls and procedures as of September 30, 2019.2020. Based on their evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures were effective and operating to provide reasonable assurance that material information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including ensuring that such material 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, as of September 30, 2019.

2020.
Changes in Internal Control Over Financial Reporting

DuringNotwithstanding operational changes in response to the COVID-19 pandemic, during the most recently completed fiscal quarter, there have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On May 30, 2019, Stuart Sawyer filed a putative class action complaintFrom time to time, we are subject to various claims, charges and litigation matters that arise in the United States District Court for the Southern Districtordinary course of Florida assertingbusiness. We believe these actions are a claim under the Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq., based on allegations that since May 30, 2015, the Company had sent text messages to class members’ wireless telephones without their consent. At mediation held on October 7, 2019, the Company and the plaintiff entered into a term sheet providing the general terms for the settlementnormal incident of the action,nature and kind of business in which we are engaged. While it is subjectnot feasible to memorialization in a definitive agreement, and subsequent Court approval. The termspredict the outcome of the settlement provide for resolution of Mr. Sawyer's TCPAthese matters with certainty, we do not believe that any asserted or unasserted legal claims and the claims of a class of similarly situated individuals, as definedor proceedings, individually or in the complaint, who received text messages from the Company during the period May 30, 2015 through October 7, 2019,aggregate, will have a material and for the creationadverse effect on our business, financial condition and results of a $3.25 million settlement fund that will be used to pay all class member claims, class counsel's fees and the costs of administering the settlement. The Company has accrued, during the third fiscal quarter, an amount equal to the settlement fund.

operations.
Reference is also made to Note 13 – Commitments and Contingencies in the Unaudited Condensed Consolidated Financial Statements of International Money Express, Inc. contained elsewhere in this Quarterly Report on Form 10–Q for information regarding certain other legal proceedings to which we are a party.party, which information is incorporated by reference herein.

ITEM 1A. RISK FACTORS

ThereExcept as set forth below, there have been no material changes to our principal risks that we believe are material to our business, results of operations and financial condition, from the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 20182019 (the “2018“2019 Form 10-K”) and under the caption “Risk Factors” in our the prospectus supplement, dated September 11, 2019, filed pursuant to Rule 424(b)(4) (the “Prospectus Supplement”), which sections are incorporated by reference into this report.. Prospective investors are encouraged to consider the risks described in our 20182019 Form 10-K, the Prospectus Supplement, our Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this Quarterly Report on Form 10-Q and in our 2019 Form 10-K, and other information publicly disclosed or contained in documents we file with the Securities and Exchange Commission before purchasing our securities.

Our financial condition, results of operations, business and cash flow may be negatively affected by a public health crises such as the recent coronavirus (COVID-19) pandemic.
We may face risks related to health epidemics and pandemics or other outbreaks of communicable diseases. During March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus (“COVID-19”). The global spread of COVID-19 has created significant volatility, uncertainty and economic disruption, including significant volatility in the capital markets. The extent to which the COVID-19 pandemic affects our business, operations, financial results and the trading price of our common stock will depend on numerous evolving factors that we may not be able to accurately predict, including: the duration and scope and possible resurgence of the pandemic; governmental and business actions that have been and continue to be taken in response to the pandemic (including mitigation efforts such as stay at home and other social distancing orders) and the impact of the pandemic on economic activity and actions taken in response (including stimulus efforts such as the Families First Coronavirus Act and the CARES Act).
A public health epidemic or pandemic, such as the COVID-19 pandemic, can have a material adverse effect on the demand for our money remittance services to the extent it impacts the markets in which we operate, and poses the risk that we or our employees, network of agents and consumers and their beneficiaries may be prevented from conducting business activities for an indefinite period of time, including due to shutdowns requested or mandated by governmental authorities, or that such epidemic may otherwise interrupt or impair business activities. In the first nine months of 2020 we have been subject, on a limited basis, to such shutdowns. We have adjusted standard operating procedures within our business operations to ensure the continued safety of our workers, continue to take further actions to mitigate the impact of the pandemic on our business, and are continually monitoring evolving health guidelines, as well as market conditions, and responding to changes as appropriate. Despite these efforts, the COVID-19 pandemic continues to pose the risk that we or our employees, sending and paying agents, as well as consumers and their beneficiaries, may be prevented from conducting business activities, partially or completely, for an indefinite period of time, including due to shutdowns requested or mandated by governmental authorities or imposed by our management, or that the pandemic may otherwise interrupt or impair business activities.
Adjustments to our operating procedures as a result of the COVID-19 pandemic only had a limited effect on the Company’s financial condition, results of operations and cash flows for the three and nine months ended September 30, 2020, however, we will continue to monitor this evolving pandemic and its potential effects on the Company’s operations. The Company and our sending agents are considered essential businesses under current federal guidance, however, the Company’s business is dependent upon the willingness and ability of its employees, network of agents and consumers to conduct money transfer services and the ultimate effects of the economic disruption caused by the pandemic and responses thereto. Although the Company’s operations continued effectively in the first nine months of 2020 despite store closures, social distancing and other measures taken in response to the pandemic, the ultimate impact of the COVID-19 pandemic on our results of operations and financial condition is dependent on future developments, including the duration of the pandemic and the related extent of its severity, as well as its impact on the economic conditions, particularly the level of unemployment of our customers, which remain uncertain and cannot be predicted at this time. If the global response to contain the COVID-19 pandemic escalates further or is unsuccessful, or if governmental decisions to ease pandemic related restrictions are ineffective, premature or counterproductive, the Company could experience a material adverse effect on the Company's financial condition, results of operations and cash flows.
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In addition, to protect our workers, we are utilizing work from home measures. Despite our implementation of security measures, there is no guarantee that the data security and privacy safeguards we have put in place will be completely effective or that we will not encounter some of the common risks associated with employees accessing Company data and systems remotely.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

Exhibit No.Document
Exhibit No.Document
10.14.1*
Shareholders Agreement Waiver, dated August 23, 2019,October 5, 2020, among the Company, FinTech Investor Holdings II LLC,and SPC Intermex Representative LLC.
10.1*†
Form of RSU Agreement (Employees) pursuant to the International Money Express, Inc. and SPC Intermex Representative LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on August 23, 2019).2020 Omnibus Equity Compensation Plan.
10.231.1*
Registration Rights Agreement Waiver dated August 23, 2019, among FinTech Investor Holdings II, LLC, International Money Express, Inc. and SPC Intermex, LP (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on August 23, 2019).
10.3
Underwriting Agreement dated September 11, 2019, among the Company, Credit Suisse Securities (USA) LLC and Cowen and Company, LLC, as representatives of the several underwriters listed therein, and certain selling stockholders (incorporated by reference to Exhibit 1.1 to the Registrant’s Current Report on Form 8-K filed on September 13, 2019).
10.4
Employment Agreement dated September 23, 2019, between the Company and Joseph Aguilar (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on October 3, 2019).
31.1*
Certification pursuant to Section 302 of the Sarbanes-Oxley Act - Chief Executive Officer
31.2*31.2*
Certification pursuant to Section 302 of the Sarbanes-Oxley Act - Chief Financial Officer
32.1*32.1*
Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350.
32.2*32.2*
Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350.

*
Filed herewith.
101.INSInline XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema
101.CALInline XBRL Taxonomy Extension Calculation Linkbase
101.DEFInline XBRL Taxonomy Extension Definition Linkbase
101.LABInline XBRL Taxonomy Extension Label Linkbase
101.PREInline XBRL Taxonomy Extension Presentation Linkbase
104*The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, formatted in Inline XBRL (included with the Exhibit 101 attachments).


†Management contract or compensatory plan or arrangement.
*Filed herewith.
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IndexSIGNATURES

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


Date: November 12, 20196, 2020
International Money Express, Inc.
By:
/s/ Robert Lisy
Robert Lisy
Chief Executive Officer and President
Date: November 12, 2019
6, 2020
International Money Express, Inc.
By:
/s/ Tony Lauro II
Tony Lauro II
Chief Financial Officer



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