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92
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92
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92
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93
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94
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Common stock offered
|
8,959,999 shares underlying 8,959,999 warrants.
|
|
Common stock outstanding as of September 15, 2018
|
36,182,783 shares.
|
|
Use of proceeds
|
We will receive the net proceeds from the exercise of the warrants to purchase one share of common stock at an exercise price of $11.50. This prospectus relates to
the issuance by us of such shares of common stock. See “Use of Proceeds.”
|
|
Dividend policy
|
We currently expect to retain any future earnings for use in our business operations, and, accordingly, we do not anticipate paying any cash dividends in the
foreseeable future. Any determination to pay dividends in the future will be at the discretion of our board of directors.
|
|
Controlled Company
|
After the completion of this offering, the parties to our Shareholders Agreement will continue to control a majority of our common stock. We will avail ourselves
of the controlled company exemption under the corporate governance standards of Nasdaq.
|
|
Rick factors
|
Investing in our common stock involves a high degree of risk. See “Risk Factors”
beginning on page 9 of this prospectus for a discussion of factors you should carefully consider before deciding to invest in our common stock.
|
|
Symbols for trading on The Nasdaq Capital Market
|
Our common stock is quoted under the symbol “IMXI.” Our warrants are quoted under the symbol “IMXIW.”
|
Successor Company
|
Predecessor Company
|
|||||||||||||||||||||||||||||||
Six Months
Ended June
30, 2018
|
Period from
February 1,
2017 to June
30, 2017
|
Period from
February 1,
2017 to
December 31,
2017
|
Period from
January 1,
2017 to
January 31,
2017
|
Year Ended
December
31, 2016
|
Year Ended
December
31, 2015
|
Year Ended
December
31, 2014
|
Year Ended
December
31, 2013
|
|||||||||||||||||||||||||
Unaudited
|
Unaudited
|
Unaudited
|
Unaudited
|
|||||||||||||||||||||||||||||
Statement of Operations and Dividend Data:
|
||||||||||||||||||||||||||||||||
Revenues
|
$
|
126,335,424
|
$
|
85,377,828
|
$
|
201,039,131
|
$
|
14,425,343
|
$
|
165,394,491
|
$
|
124,199,313
|
$
|
98,311,096
|
$
|
82,777,400
|
||||||||||||||||
Operating expenses(a)
|
117,738,536
|
87,126,578
|
199,230,246
|
19,333,395
|
142,370,764
|
110,015,475
|
90,611,351
|
78,822,418
|
||||||||||||||||||||||||
Operating income (loss)(a)
|
8,596,888
|
(1,748,750
|
)
|
1,808,885
|
(4,908,052
|
)
|
23,023,727
|
14,183,838
|
7,699,745
|
3,954,982
|
||||||||||||||||||||||
Interest expense
|
6,675,933
|
3,494,828
|
11,447,936
|
613,742
|
9,540,046
|
4,234,371
|
1,789,497
|
2,122,246
|
||||||||||||||||||||||||
Income (loss) before taxes(a)
|
1,920,955
|
(5,243,578
|
)
|
(9,639,051
|
)
|
(5,521,794
|
)
|
13,483,681
|
9,949,467
|
5,910,248
|
1,832,736
|
|||||||||||||||||||||
Provision for income tax expense (benefit)(b)
|
616,372
|
1,244,206
|
534,402
|
(2,203,373
|
)
|
4,083,655
|
4,191,643
|
(20,151,815
|
)
|
101,191
|
||||||||||||||||||||||
Net income (loss)(c)
|
$
|
1,304,583
|
$
|
(6,487,784 | ) |
$
|
(10,173,453
|
)
|
$
|
(3,318,421
|
)
|
$
|
9,400,026
|
$
|
5,757,824
|
$
|
26,062,063
|
$
|
1,731,545
|
|||||||||||||
Cash dividends declared
|
$
|
-
|
$
|
-
|
$
|
20,178,000
|
$
|
-
|
$
|
1,286,995
|
$
|
18,144,839
|
$
|
-
|
$
|
-
|
Successor Company
|
Predecessor Company
|
|||||||||||||||||||||||||||
As of June 30, 2018
|
As of June 30,
2017
|
As of
December 31, 2017 |
As of
December 31, 2016 |
As of
December 31, 2015 |
As of
December 31, 2014 |
As of
December 31, 2013 |
||||||||||||||||||||||
Unaudited
|
Unaudited
|
Unaudited
|
Unaudited
|
|||||||||||||||||||||||||
Balance Sheet Data:
|
||||||||||||||||||||||||||||
Cash
|
$
|
61,335,968
|
$
|
34,606,107
|
$
|
59,155,618
|
$
|
37,601,096
|
$
|
18,925,469
|
$
|
19,266,715
|
$
|
9,197,254
|
||||||||||||||
Total assets(d)
|
224,781,284
|
181,663,837
|
216,052,911
|
118,773,952
|
89,802,448
|
70,178,022
|
39,825,419
|
|||||||||||||||||||||
Total liabilities
|
186,877,086
|
122,479,275
|
180,150,792
|
115,515,409
|
60,829,369
|
27,590,665
|
22,233,440
|
|||||||||||||||||||||
Total stockholder’s equity(d)
|
37,904,198
|
59,184,562
|
35,902,119
|
3,258,543
|
28,973,079
|
42,587,357
|
17,591,979
|
(a) |
Restated to reduce amortization of intangible assets by $1,811,599 and $1,842,587 for the years ended December 31, 2016 and 2015, respectively.
|
(b) |
Restated to increase provision for income tax expense by $701,611 and $713,612 for the years ended December 31, 2016 and 2015, respectively.
|
(c) |
The impact of restatements in (a) and (b) to net loss (income) amounted to $1,109,988 and $1,128,975 for the years ended December 31, 2016 and 2015, respectively.
|
(d) |
The cumulative impact of the amortization correction reduced total assets and total stockholder’s equity by $1,323,989 and $2,433,927 as of December 31, 2016 and 2015,
respectively.
|
Successor Company
|
Predecessor Company
|
|||||||||||||||||||||||||||||||
Six Months
Ended June
30, 2018
|
Period from
February 1,
2017 to June
30, 2017
|
Period from
February 1,
2017 to
December
31, 2017
|
Period from
January 1,
2017 to
January
31, 2017
|
Year Ended
December
31, 2016
|
Year Ended
December
31, 2015
|
Year Ended
December
31, 2014
|
Year Ended
December
31, 2013
|
|||||||||||||||||||||||||
Unaudited
|
Unaudited
|
Unaudited
|
Unaudited
|
|||||||||||||||||||||||||||||
Cash Flow Data:
|
||||||||||||||||||||||||||||||||
Net cash provided by (used in) operating activities
|
$
|
6,930,874
|
$
|
(11,067,094
|
)
|
$
|
7,416,703
|
$
|
8,652,067
|
$
|
22,395,778
|
$
|
4,465,445
|
$
|
10,599,258
|
$
|
4,342,758
|
|||||||||||||||
Net cash used in investing activities
|
(2,238,143
|
)
|
(2,731,618
|
)
|
(5,275,160
|
)
|
(249,382
|
)
|
(3,012,110
|
)
|
(2,064,577
|
)
|
(2,437,394
|
)
|
(1,360,797
|
)
|
||||||||||||||||
Net cash (used in) provided by financing activities
|
(2,425,000
|
)
|
3,975,429
|
12,926,670
|
(2,000,000
|
)
|
(558,157
|
)
|
(3,018,807
|
)
|
1,904,579
|
(9,027,330
|
)
|
Successor Company
|
Predecessor Company
|
|||||||||||||||||||||||||||||||
(in thousands)
|
Six Months
Ended June
30,2018
|
Period from
February 1,
2017 to
June 30,
2017
|
Period from
February 1,
2017 to
December 31,
2017
|
Period from
January 1,
2017 to
January 31,
2017
|
Year Ended
December
31, 2016
|
Year Ended
December
31, 2015
|
Year Ended
December
31, 2014
|
Year Ended
December
31, 2013
|
||||||||||||||||||||||||
Unaudited
|
Unaudited
|
Unaudited
|
Unaudited
|
|||||||||||||||||||||||||||||
Non-GAAP Data:
|
||||||||||||||||||||||||||||||||
Adjusted EBITDA
|
$
|
22,169
|
$
|
13,610
|
$
|
31,072
|
$
|
2,309
|
$
|
27,101
|
$
|
18,761
|
$
|
12,549
|
$
|
9,101
|
Successor Company
|
Predecessor Company
|
|||||||||||||||||||||||||||||||
(in thousands)
|
Six Months
Ended
June 30,
2018
|
Period
from
February
1, 2017 to
June 30,
2017
|
Period from
February 1,
2017 to
December
31, 2017
|
Period from
January 1,
2017 to
January 31,
2017
|
Year Ended
December
31, 2016
|
Year Ended
December
31, 2015
|
Year Ended
December
31, 2014
|
Year Ended
December
31, 2013
|
||||||||||||||||||||||||
Unaudited
|
Unaudited
|
Unaudited
|
Unaudited
|
|||||||||||||||||||||||||||||
Net income (loss)
|
$
|
1,305
|
$
|
(6,488
|
)
|
$
|
(10,173
|
)
|
$
|
(3,318
|
)
|
$
|
9,400
|
$
|
5,758
|
$
|
26,062
|
$
|
1,732
|
|||||||||||||
Adjusted for:
|
||||||||||||||||||||||||||||||||
Interest expense
|
6,676
|
3,495
|
11,448
|
614
|
9,540
|
4,234
|
1,789
|
2,122
|
||||||||||||||||||||||||
Provision for income tax expense (benefit)
|
616
|
1,244
|
534
|
(2,203
|
)
|
4,084
|
4,192
|
(20,152
|
)
|
101
|
||||||||||||||||||||||
Depreciation and amortization
|
7,607
|
7,504
|
16,645
|
382
|
2,530
|
2,453
|
4,257
|
4,227
|
||||||||||||||||||||||||
EBITDA
|
16,204
|
5,755
|
18,454
|
(4,525
|
)
|
25,554
|
16,637
|
11,956
|
8,182
|
|||||||||||||||||||||||
Transaction costs(a)
|
4,014
|
6,213
|
8,706
|
3,917
|
901
|
1,609
|
-
|
-
|
||||||||||||||||||||||||
Incentive units plan(b)
|
713
|
1,247
|
1,846
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Change in control adjustment for stock options(c)
|
-
|
-
|
-
|
2,813
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Management fee(d)
|
390
|
325
|
715
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
One-time adjustment - bank fees(e)
|
-
|
-
|
642
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
One-time incentive bonus(f)
|
-
|
-
|
514
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Transition expenses(g)
|
348
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
TCPA settlement(h)
|
192
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Other charges and expenses(i)
|
308
|
70
|
195
|
104
|
646
|
515
|
593
|
919
|
||||||||||||||||||||||||
Adjusted EBITDA
|
$
|
22,169
|
$
|
13,610
|
$
|
31,072
|
$
|
2,309
|
$
|
27,101
|
$
|
18,761
|
$
|
12,549
|
$
|
9,101
|
(a) |
Represents direct costs related to mergers and acquisitions which are expensed as incurred and included as “transaction costs” in our condensed consolidated statements of
operations and comprehensive income (loss). The six months ended June 30, 2018 and 2017 Successor Period includes $4.0 million and $2.5 million, respectively, related to the Merger. Costs related to the Stella Point acquisition amounts to
$6.2 million for the 2017 Q2 Successor Period, $6.2 million for the 2017 Successor Period, $3.9 million for the 2017 Predecessor Period, $0.9 million and $1.6 million for the Predecessor years ended December 31, 2016 and 2015,
respectively. These costs consist primarily of legal, consulting, accounting, advisory fees and certain incentive bonuses directly related to the above transactions.
|
(b) |
In connection with the Stella Point acquisition, Class B, C and D incentive units were granted to our employees by Interwire LLC. The Successor Periods include expense regarding
Class B incentive units. In connection with the Merger, Interwire LLC distributed the Merger consideration to its members and the holders of the Incentive Units received distributions in accordance with their ownership interest. As a
result, employees no longer hold profits interests following the Merger.
|
(c) |
Represents $2.8 million related to stock options issued by the Predecessor company which vested upon the Stella Point acquisition.
|
(d) |
Represents payments under our management agreement with Stella Point pursuant to which we paid a monthly fee for certain advisory and consulting services. In connection with the
Merger, this agreement was terminated.
|
(e) |
Holdings incurred a one-time expense in the 2017 Successor Period to true up the accrual for bank charges. The amount of $0.6 million relates to prior year bank charges, which
were not considered material to any individual year.
|
(f) |
Represents certain one-time cash bonuses paid to certain members of management in 2017 that were not part of Holdings’ annual bonus plan.
|
(g) |
Represents recruiting fees and severance costs related to managerial changes in connection with becoming a publicly-traded company.
|
(h) |
Represents payments related to the settlement of a lawsuit related to the federal Telephone Consumer Protection Act of 1991 (the “TCPA”), which includes a $0.1 million settlement
payment and $0.1 million in related legal expenses.
|
(i) |
Includes loss on disposal of fixed assets and foreign currency (gains) or losses. The six months ended June 30, 2018 also includes a one-time adjustment related to the Company’s
loyalty programs of $0.2 million, while the Predecessor periods also include amortization of restricted stock awards.
|
|
Six Months Ended June 30,
|
|
Year Ended December 31,
|
|
Period from
May 28, 2015
(inception) through
December 31,
|
|||||||||||||||
2018
|
2017
|
2017
|
2016
|
2015
|
||||||||||||||||
(dollars in thousands, except per share data)
|
Unaudited
|
Unaudited
|
||||||||||||||||||
Statement of Operations Data:
|
||||||||||||||||||||
Formation and operating costs
|
$
|
1,027,825
|
$
|
332,819
|
$
|
1,131,812
|
$
|
1,621
|
$
|
2,187
|
||||||||||
Interest income
|
1,193,551
|
402,131
|
1,383,186
|
‑
|
‑
|
|||||||||||||||
Provision for income taxes
|
(245,412
|
)
|
(109,457
|
)
|
(436,721
|
)
|
‑
|
‑
|
||||||||||||
Net loss
|
(79,686
|
)
|
(40,145
|
)
|
(185,347
|
)
|
(1,621
|
)
|
(2,187
|
)
|
||||||||||
Net loss per share
|
||||||||||||||||||||
Basic and Diluted
|
(0.01
|
)
|
(0.01
|
)
|
(0.02
|
)
|
(0.00
|
)
|
(0.00
|
)
|
||||||||||
As of June 30,
|
As of December 31,
|
|||||||||||||||||||
2018 |
2017
|
2017
|
2016 |
2015
|
||||||||||||||||
(dollars in thousands)
|
Unaudited
|
Unaudited
|
||||||||||||||||||
Balance Sheet Data:
|
||||||||||||||||||||
Cash
|
$
|
51,659
|
$
|
163,746
|
$
|
362,581
|
$
|
82,614
|
$
|
‑
|
||||||||||
Cash and securities held in Trust Account
|
176,418,186
|
175,402,131
|
175,883,186
|
‑
|
‑
|
|||||||||||||||
Total assets
|
176,580,539
|
175,622,116
|
176,259,327
|
‑
|
‑
|
|||||||||||||||
Common stock subject to redemption
|
161,047,380
|
161,272,260
|
161,127,060
|
‑
|
‑
|
|||||||||||||||
Total stockholders’ equity (deficit)
|
5,000,002
|
5,000,010
|
5,000,008
|
21,192
|
(2,187
|
)
|
||||||||||||||
Six Months Ended June 30,
|
Year Ended December 31,
|
Period from
May 28, 2015
(inception) through
December 31,
|
||||||||||||||||||
2018
|
2017
|
2017
|
2016
|
2015 | ||||||||||||||||
(dollars in thousands)
|
Unaudited
|
Unaudited
|
||||||||||||||||||
Cash Flow Data:
|
||||||||||||||||||||
Net cash used in operating activities
|
$
|
(1,359,473
|
)
|
$
|
(366,555
|
)
|
$
|
(667,720
|
)
|
$
|
(662
|
)
|
$
|
(300
|
)
|
|||||
Net cash provided by (used in) investing activities
|
658,551
|
175,000,000
|
(174,500,000
|
)
|
‑
|
‑
|
||||||||||||||
Net cash provided by financing activities
|
390,000
|
175,447,687
|
175,447,687
|
83,236
|
300
|
· |
the quality of our services and our customer experience, and our ability to meet evolving customer needs and preferences;
|
· |
failure of our agents to deliver services in accordance with our requirements;
|
· |
reputational concerns resulting from actual or perceived events, including those related to fraud or consumer protection or other matters;
|
· |
changes or proposed changes in laws or regulations, or regulator or judicial interpretation thereof, that have the effect of making it more difficult or less desirable to transfer
money using consumer money remittance service providers, including additional customer due diligence, identification, reporting, and recordkeeping requirements;
|
· |
actions by federal, state or foreign regulators that interfere with our ability to remit customers’ money reliably; for example, attempts to seize money remittance funds, imposition
of tariffs or limits on our ability to, or that prohibit us from, remitting money in the corridors in which we operate;
|
· |
federal, state or foreign legal requirements, including those that require us to provide customer or transaction data, and other requirements or to a greater extent than is currently
required;
|
· |
any interruption or downtime in our systems, including those caused by fire, natural disaster, power loss, telecommunications failure, terrorism, vendor failure, unauthorized entry
and computer viruses or disruptions in our workforce; and
|
· |
any attack or breach of our computer systems or other data storage facilities resulting in a compromise of personal data.
|
· |
We may be unable to access funds in our deposit accounts and clearing accounts on a timely basis to pay money remittances and make related settlements to agents. Any resulting need to
access other sources of liquidity or short-term borrowing would increase our costs. Any delay or inability to pay money remittances or make related settlements with our agents could adversely impact our business, financial condition and
results of operations.
|
· |
In the event of a major bank failure, we could face major risks to the recovery of our bank deposits used for the purpose of settling with our agents. A substantial portion of our
cash and cash equivalents are either held at banks that are not subject to insurance protection against loss or exceed the deposit insurance limit.
|
· |
We may be unable to borrow from financial institutions or institutional investors on favorable terms, or at all, which could adversely impact our ability to pursue our growth strategy
and fund key strategic initiatives.
|
· |
changes in political and economic conditions and potential instability in certain regions, including in particular the recent civil unrest, terrorism and political turmoil in Latin
America;
|
· |
restrictions on money transfers to, from and between certain countries;
|
· |
inability to recruit and retain paying agents and customers for new corridors;
|
· |
currency exchange controls, new currency adoptions and repatriation issues;
|
· |
changes in regulatory requirements or in foreign policy, including the adoption of domestic or foreign laws, regulations and interpretations detrimental to our business;
|
· |
possible increased costs and additional regulatory burdens imposed on our business;
|
· |
the implementation of U.S. sanctions, resulting in bank closures in certain countries and the ultimate freezing of our assets;
|
· |
burdens of complying with a wide variety of laws and regulations;
|
· |
possible fraud or theft losses, and lack of compliance by international representatives in foreign legal jurisdictions where collection and legal enforcement may be difficult or
costly;
|
· |
inability to maintain or improve our software and technology systems;
|
· |
reduced protection of our intellectual property rights;
|
· |
unfavorable tax rules or trade barriers; and
|
· |
inability to secure, train or monitor international agents.
|
|
· |
increasing our vulnerability to, and reducing our flexibility to respond to, general adverse economic and industry conditions;
|
· |
requiring the dedication of a substantial portion of the our cash flow from operations to servicing debt, including interest payments and quarterly excess cash flow prepayment
obligations;
|
· |
limiting our flexibility in planning for, or reacting to, changes in its business and the competitive environment; and
|
· |
limiting our ability to borrow additional funds and increasing the cost of any such borrowing.
|
· |
prior to such time, our board of directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;
|
· |
upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock outstanding
at the time the transaction commenced, excluding certain shares; or
|
· |
at or subsequent to that time, the business combination is approved by our board of directors and by the affirmative vote of holders of at least two-thirds of our outstanding voting
stock that is not owned by the interested stockholder.
|
· |
our existing stockholders’ proportionate ownership interest in us will decrease;
|
· |
the amount of cash available per share, including for payment of dividends in the future, may decrease;
|
· |
the relative voting strength of each previously outstanding share of common stock may be diminished; and
|
· |
the market price of our common stock may decline.
|
· |
actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;
|
· |
changes in the market’s expectations about our operating results;
|
· |
success of competitors;
|
· |
our operating results failing to meet market expectations in a particular period;
|
· |
changes in financial estimates and recommendations by securities analysts concerning us or the money transfer services industry and market in general;
|
· |
operating and stock price performance of other companies that investors deem comparable to us;
|
· |
our ability to market new and enhanced products on a timely basis;
|
· |
changes in laws and regulations affecting our business;
|
· |
commencement of, or involvement in, litigation involving us;
|
· |
changes in our capital structure, such as future issuances of securities or the incurrence of additional debt;
|
· |
the volume of shares of our common stock available for public sale;
|
· |
any significant change in our board or management;
|
· |
sales of substantial amounts of common stock by our directors, executive officers or significant stockholders or the perception that such sales could occur; and
|
· |
general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.
|
· |
a limited availability of market quotations for our securities;
|
· |
a limited amount of news and analyst coverage for us; and
|
· |
a decreased ability to obtain capital or pursue acquisitions by issuing additional equity, convertible securities or by obtaining additional financing.
|
· |
the company have a board that is composed of a majority of “independent directors,” as defined under the Nasdaq rules;
|
· |
the company have a compensation committee that is composed entirely of independent directors and that has a written charter addressing the committee’s purpose and responsibilities;
and
|
· |
the company’s director nominations be made, or recommended to the full board of directors, by its independent directors or by a nominations committee that is composed entirely of
independent directors, and that the company adopt a written charter or a board resolution addressing the nominations process.
|
· |
the ability to obtain or maintain the listing of our common stock on Nasdaq;
|
· |
the ability to recognize the anticipated benefits of the Merger, 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:
|
o |
competition in the markets in which we operate;
|
o |
our ability to maintain agent relationships on terms consistent with those currently in place;
|
o |
our ability to maintain banking relationships necessary for us to conduct our business;
|
o |
credit risks from our agents and the financial institutions with which we do business;
|
o |
bank failures, sustained financial illiquidity, or illiquidity at our clearing, cash management or custodial financial institutions;
|
o |
new technology or competitors that disrupt the current ecosystem;
|
o |
disruptions to our information technology, computer network systems and data centers;
|
o |
our success in developing and introducing new products, services and infrastructure;
|
o |
customer confidence in our brand and in consumer money transfers generally;
|
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 |
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;
|
o |
changes in foreign exchange rates could impact consumer remittance activity; and
|
· |
other economic, business and/or competitive factors, risks and uncertainties, including those described in the section entitled “Risk Factors”.
|
|
(A)
Holdings
|
(B)
FinTech
|
Pro Forma
Adjustments
|
Pro Forma
Balance Sheet
|
|||||||||||||
Assets
|
|||||||||||||||||
Current assets:
|
|||||||||||||||||
Cash
|
$
|
61,335,968
|
$
|
51,659
|
$
|
176,418,186
|
(1)
|
||||||||||
|
(24,656,442
|
)
|
(2)
|
||||||||||||||
|
(390,000
|
)
|
(3)
|
||||||||||||||
|
(49,808,935
|
)
|
(4)
|
||||||||||||||
|
(102,000,000
|
)
|
(5)
|
$
|
60,950,436
|
||||||||||||
Receivables, net
|
55,803,921
|
-
|
-
|
55,803,921
|
|||||||||||||
Prepaid wires
|
14,226,586
|
-
|
-
|
14,226,586
|
|||||||||||||
Prepaid expenses and other
|
1,725,205
|
110,694
|
-
|
1,835,899
|
|||||||||||||
Total Current Assets
|
133,091,680
|
162,353
|
(437,191
|
)
|
132,816,842
|
||||||||||||
|
|||||||||||||||||
Cash and marketable securities held in Trust Account
|
-
|
176,418,186
|
(176,418,186
|
)
|
(1)
|
-
|
|||||||||||
Property and equipment, net
|
9,245,656
|
-
|
-
|
9,245,656
|
|||||||||||||
Goodwill
|
36,259,666
|
-
|
-
|
36,259,666
|
|||||||||||||
Intangible assets, net
|
42,503,932
|
-
|
-
|
42,503,932
|
|||||||||||||
Deferred tax asset
|
2,779,388
|
-
|
-
|
2,779,388
|
|||||||||||||
Other assets
|
900,962
|
-
|
-
|
900,962
|
|||||||||||||
Total Assets
|
$
|
224,781,284
|
$
|
176,580,539
|
$
|
(176,855,377
|
)
|
$
|
224,506,446
|
||||||||
|
|||||||||||||||||
Liabilities and Stockholders’ Equity
|
|||||||||||||||||
Current liabilities:
|
|||||||||||||||||
Wire transfers and money orders payable
|
$
|
49,879,419
|
$
|
-
|
$
|
-
|
$
|
49,879,419
|
|||||||||
Accounts payable, accrued expenses and other current liabilities
|
27,518,844
|
928,157
|
(4,193,978
|
)
|
(2)
|
24,253,023
|
|||||||||||
Promissory note and advances - related party
|
-
|
390,000
|
(390,000
|
)
|
(3)
|
-
|
|||||||||||
Current portion of long-term debt
|
4,078,627
|
-
|
-
|
4,078,627
|
|||||||||||||
Total Current Liabilities
|
81,476,890
|
1,318,157
|
(4,583,978
|
)
|
78,211,069
|
||||||||||||
|
|||||||||||||||||
Debt
|
105,400,196
|
-
|
-
|
105,400,196
|
|||||||||||||
Deferred underwriting fees
|
-
|
9,190,000
|
(9,190,000
|
)
|
(2)
|
-
|
|||||||||||
Deferred legal fees payable
|
-
|
25,000
|
(25,000
|
)
|
(2)
|
-
|
|||||||||||
Total Liabilities
|
186,877,086
|
10,533,157
|
(13,798,978
|
)
|
183,611,265
|
||||||||||||
|
|||||||||||||||||
Commitments and Contingencies
|
|||||||||||||||||
Common stock subject to redemption
|
-
|
161,047,380
|
(161,047,380
|
)
|
(4)
|
-
|
|||||||||||
|
|||||||||||||||||
Stockholders’ Equity
|
|||||||||||||||||
Common stock
|
-
|
779
|
1,117
|
(4)
|
|||||||||||||
|
1,723
|
(5)
|
3,619
|
||||||||||||||
Additional paid-in capital
|
46,790,540
|
5,268,064
|
111,237,328
|
(4)
|
|||||||||||||
|
(102,270,564
|
)
|
(5)
|
61,025,368
|
|||||||||||||
Accumulated other comprehensive loss
|
(17,472
|
)
|
-
|
-
|
(17,472
|
)
|
|||||||||||
Accumulated deficit
|
(8,868,870
|
)
|
(268,841
|
)
|
(11,247,464
|
)
|
(2)
|
||||||||||
|
268,841
|
(5)
|
(20,116,334
|
)
|
|||||||||||||
Total Stockholders’ Equity
|
37,904,198
|
5,000,002
|
(2,009,019
|
)
|
40,895,181
|
||||||||||||
Total Liabilities and Stockholders’ Equity
|
$
|
224,781,284
|
$
|
176,580,539
|
$
|
(176,855,377
|
)
|
$
|
224,506,446
|
(A)
|
Derived from the unaudited condensed consolidated balance sheet of Holdings as of June 30, 2018.
|
(B)
|
Derived from the unaudited condensed consolidated balance sheet of FinTech as of June 30, 2018.
|
(1)
|
Represents the release of cash from the investments held in the trust account.
|
(2)
|
To reflect the payment of legal, financial advisory and other professional fees related to the Merger.
|
(3)
|
To reflect the repayment of advances and notes payable from related parties.
|
(4) |
To reflect (a) the cancellation of 4,938,232 shares of common stock for stockholders who elected cash conversion for cash payment of $49,808,935 and (b) the reclassification of
11,166,506 shares of common stock to permanent equity for those stockholders who did not exercise their redemption rights.
|
(5) |
To reflect the recapitalization of Intermex through the contribution of all the share capital of Intermex to FinTech, the issuance of 17,227,682 shares of FinTech common stock and the
elimination of the historical accumulated deficit of FinTech, the accounting acquiree.
|
|
(A)
Holdings
|
(B)
FinTech
|
Pro Forma
Adjustments
|
Pro Forma
Statement
of Operations
|
|||||||||||||
|
|||||||||||||||||
Total revenue
|
$
|
126,335,424
|
$
|
-
|
$
|
-
|
$
|
126,335,424
|
|||||||||
|
|||||||||||||||||
Operating expenses
|
|||||||||||||||||
Service charges from agents and banks
|
84,259,931
|
-
|
-
|
84,259,931
|
|||||||||||||
Salaries and benefits
|
13,673,403
|
-
|
-
|
13,673,403
|
|||||||||||||
Other selling, general and administrative expenses
|
8,183,517
|
1,027,825
|
(550,219
|
) |
(1)
|
8,661,123
|
|||||||||||
Transaction costs
|
4,014,311
|
-
|
(4,014,311
|
) |
(1)
|
-
|
|||||||||||
Depreciation and amortization
|
7,607,374
|
-
|
-
|
7,607,374
|
|||||||||||||
Total operating expenses
|
117,738,536
|
1,027,825
|
(4,564,530
|
) |
|
114,201,831
|
|||||||||||
|
|||||||||||||||||
Operating income (loss)
|
8,596,888
|
(1,027,825
|
)
|
4,564,530
|
12,133,593
|
||||||||||||
|
|||||||||||||||||
Other income (expense):
|
|||||||||||||||||
Interest income
|
-
|
1,193,551
|
(1,193,551
|
) |
(2)
|
-
|
|||||||||||
Interest expense
|
(6,675,933
|
)
|
-
|
-
|
(6,675,933
|
)
|
|||||||||||
Income before income taxes
|
1,920,955
|
165,726
|
3,370,979
|
5,457,660
|
|||||||||||||
Provision for income taxes
|
616,372
|
245,412
|
284,325
|
(3)
|
1,146,109
|
||||||||||||
Net income (loss)
|
$
|
1,304,583
|
$
|
(79,686
|
)
|
$
|
3,086,654
|
$
|
4,311,551
|
||||||||
|
|||||||||||||||||
Weighted average shares outstanding, basic and diluted
|
7,783,163
|
28,394,188
|
(4)
|
36,177,351
|
|||||||||||||
Basic and diluted net income (loss) per share
|
$
|
(0.01
|
)
|
$
|
0.12
|
(A)
|
Derived from the unaudited statement of operations of Intermex for the six months ended June 30, 2018.
|
(B)
|
Derived from the unaudited statement of operations of FinTech for the six months ended June 30, 2018.
|
|
(C)
Holdings
|
(D)
FinTech
|
Pro Forma
Adjustments
|
Pro Forma
Statement
of Operations
|
|||||||||||||
|
|||||||||||||||||
Total revenue
|
$
|
215,464,474
|
$
|
-
|
$
|
-
|
$
|
215,464,474
|
|||||||||
|
|||||||||||||||||
Operating expenses
|
|||||||||||||||||
Service charges from agents and banks
|
144,886,807
|
-
|
-
|
144,886,807
|
|||||||||||||
Salaries and benefits
|
26,410,636
|
-
|
-
|
26,410,636
|
|||||||||||||
Other selling, general and administrative expenses
|
17,616,942
|
1,131,812
|
(442,844
|
)
|
(1)
|
18,305,910
|
|||||||||||
Transaction costs
|
12,622,689
|
-
|
(2,492,900
|
)
|
(1)
|
10,129,789
|
|||||||||||
Depreciation and amortization
|
17,026,567
|
-
|
-
|
17,026,567
|
|||||||||||||
Total operating expenses
|
218,563,641
|
1,131,812
|
(2,935,744
|
)
|
216,759,709
|
||||||||||||
|
|||||||||||||||||
Operating loss
|
(3,099,167
|
)
|
(1,131,812
|
)
|
2,935,744
|
(1,295,235
|
)
|
||||||||||
|
|||||||||||||||||
Other income (expense):
|
|||||||||||||||||
Interest income
|
-
|
1,383,186
|
(1,383,186
|
)
|
(2)
|
-
|
|||||||||||
Interest expense
|
(12,061,678
|
)
|
-
|
-
|
(12,061,678
|
)
|
|||||||||||
(Loss) income before income taxes
|
(15,160,845
|
)
|
251,374
|
1,552,558
|
(13,356,913
|
)
|
|||||||||||
Provision (benefit) for income taxes
|
(1,668,971
|
)
|
436,721
|
(3,309,100
|
)
|
(3)
|
(4,541,350
|
)
|
|||||||||
Net loss
|
$
|
(13,491,874
|
)
|
$
|
(185,347
|
)
|
$
|
4,861,658
|
$
|
(8,815,563
|
)
|
||||||
|
|||||||||||||||||
Weighted average shares outstanding, basic and diluted
|
7,594,116
|
28,402,156
|
(4)
|
35,996,272
|
|||||||||||||
Basic and diluted net loss per share
|
$
|
(0.02
|
)
|
$
|
(0.24
|
)
|
(A) |
Derived from the unaudited condensed consolidated statements of operations and comprehensive income (loss) of Holdings for the six months ended June 30, 2018.
|
(B) |
Derived from the unaudited condensed consolidated statements of operations of FinTech for the six months ended June 30, 2018.
|
(C) |
Derived from the consolidated statements of operations and comprehensive income (loss) of Holdings for the year ended December 31, 2017.
|
(D) |
Derived from the consolidated statements of operations of FinTech for the year ended December 31, 2017.
|
(1) |
Represents an adjustment to eliminate direct, incremental costs of the Merger which are reflected in the historical financial statements of Holdings and FinTech in the amount of
$4,014,311 and $550,219 as of June 30, 2018, respectively, and $2,492,900 and $442,844 as of December 31, 2017, respectively.
|
(2) |
Represents an adjustment to eliminate interest income on marketable securities held in the trust account as of the beginning of the period.
|
(3) |
To record normalized blended statutory income tax expense (benefit) rate of 21.0% as of June 30, 2018 and 34.0% as of December 31, 2017 for pro forma financial presentation purposes.
|
(4) |
Because the Merger is being reflected as if it had occurred at the beginning of the period presented, the calculation of weighted average shares outstanding for basic and diluted net
loss per share assumes that the shares issued relating to the Merger have been outstanding for the entire period presented. The calculation is retroactively adjusted to eliminate the 4,938,232 shares redeemed for the entire period. Weighted
average common shares outstanding — basic and diluted are calculated as follows:
|
|
Six Months
Ended
June 30, 2018
|
Year Ended
December 31,
2017
|
||||||
Weighted average shares calculation, basic and diluted
|
||||||||
FinTech weighted average shares outstanding
|
7,783,163
|
7,594,116
|
||||||
FinTech shares subject to redemption reclassified to equity
|
11,166,506
|
11,174,474
|
||||||
FinTech shares issued in Merger
|
17,227,682
|
17,227,682
|
||||||
Weighted average shares outstanding
|
36,177,351
|
35,996,272
|
||||||
|
||||||||
Percent of shares owned by Intermex holders
|
48.3
|
%
|
48.5
|
%
|
||||
Percent of shares owned by FinTech
|
51.7
|
%
|
51.5
|
%
|
||||
|
||||||||
Weighted average shares calculation, basic and diluted
|
||||||||
Existing Intermex holders
|
17,477,682
|
17,477,682
|
||||||
FinTech holders
|
18,699,669
|
18,518,590
|
||||||
Weighted average shares, basic and diluted
|
36,177,351
|
35,996,272
|
Year ending December 31, 2018
|
High
|
Low
|
Third Quarter (July 26, 2018 to September 27, 2018)
|
$11.61
|
$9.25
|
Year ending December 31, 2018
|
High
|
Low
|
Third Quarter (July 26, 2018 to September 27, 2018)
|
$2.10
|
$1.42
|
· |
Exclusive focus on the Latin American Corridor. Unlike many of our competitors, who we believe
prioritize global reach over growth and profitability, we are focused exclusively on one geographical region. We believe the LAC corridor provides an attractive operating environment with significant opportunity for future growth. According
to data from the World Bank, the LAC corridor represented approximately 13% of total worldwide remittance volume for 2016, or $74.3 billion of annual transaction volume, and was the most rapidly growing remittance corridor in the world.
|
· |
Highly scalable, proprietary software platform. We provide our money remittance services
utilizing our internally developed proprietary software systems, which we believe enhance the productivity of our network of agents, enabling them to quickly, reliably and cost-effectively process remittance transactions. Our proprietary
software systems were designed to incorporate real-time compliance functionality, which improves our regulatory compliance and helps to minimize fraud. We have developed a platform that has the capacity to handle traffic well in excess of ten
times the number of transactions we currently process. Our money remittance platform has experienced limited downtime with our 2017 downtime being less than 0.01%, despite multiple natural disasters in our markets during that period.
|
· |
Highly selective agent recruitment process designed to identify productive long-term partners.
We strategically target agents for our network only after a metric-based analysis of potential productivity and a thorough vetting process. In our agent selection process we focus on geographic locations that we believe are likely to have
high customer volume and demand for our services. By closely monitoring individual agent performance and money remittance trends, we can offer our agents real-time technical support and marketing assistance to help increase their productivity
and remittance volume. As a result of our high touch approach, we have increased the productivity of our network of agents by over a 14% compound annual growth basis, as measured in the average wires per sending agent, since 2011.
|
· |
Strong relationships with major banks and financial institutions. Our relationships with
clearing, check processing, trading and exchange rate and cash management banks are critical to an efficient and reliable remittance network. We benefit from our strong and long-term relationships with a number of large banks and financial
institutions. We believe we are the only privately-owned company in our industry that maintains a long-term relationship with each of Wells Fargo, Bank of America and US Bank, which represented over 65% of the cash deposits made by our agents
during 2017. In addition, we maintain strong relationships with a number of other national and regional banking and financial institutions in the United States and Latin America. Due to increasing regulatory scrutiny of banks and financial
institutions, we believe that new banking relationships may be difficult to develop, hence creating a barrier to entry to new competition and making our existing relationships a competitive advantage.
|
· |
Powerful brand with strong consumer awareness and loyalty in the LAC corridor. We believe we
are a leading money remittance provider from the United States to the LAC corridor, processing 15.7% of the aggregate volume of remittances to Mexico as reported by the Central Bank of Mexico in 2017 and 21.6% of the aggregate volume of
remittances to Guatemala as reported by the Central Bank of Guatemala in 2017. We believe that our customers associate the Intermex brand with reliability, strong customer service and the ability to safely and efficiently remit their funds.
|
· |
Strong compliance processes and procedures. We operate in a highly-regulated environment and
are reviewed by regulators and external auditors periodically. We maintain a comprehensive and rigorous compliance process with policies, procedures and internal controls designed to exceed current regulatory requirements. Our software also
includes embedded compliance systems that provide real-time transaction alerts and OFAC screening. Our risk and compliance management tools include programs by Equifax, Experian, LexisNexis and TransUnion, among others.
|
· |
Experienced and proven management team. Our management team consists of industry veterans with
a track record of achieving profitable growth, even during periods involving transformative transactions, such as during the time around our acquisition by Stella Point Capital. Led by our Chief Executive Officer, Robert Lisy, with a
successful 27-year track record in the retail financial services and electronic payment processing industry, our team has grown Adjusted EBITDA from $18.8 million in 2015 to $33.4 million in 2017, while growing our aggregate number of
remittance transactions to the LAC corridor by 71% during that period.
|
· |
Expand our market share in our largest corridors. The two largest remittance corridors we
serve are the United States to Mexico and United States to Guatemala corridors. According to the World Bank, the United States to Mexico remittance corridor was the largest in the world in 2016, with an aggregate of over $28.1 billion sent.
The United States to Guatemala corridor represented the eighth largest in the world in 2016 as reported by the World Bank, with an aggregate of over $6.7 billion sent. We aim to continue to expand our market share by:
|
o |
Growing our market share in our current stronghold states. We are currently well-established
in 15 states (Alabama, Delaware, Florida, Georgia, Kentucky, Maryland, Mississippi, North Carolina, New Jersey, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee and Virginia) and poised for continued profitable growth within those
markets via targeted regional penetration. We believe that we can leverage our current customer data to increase repeat customer usage, track and effectively recapture one-time users of our service and improve sending agent productivity to
drive growth in these states.
|
o |
Increasing our market share in growth states. We have identified 10 states (California,
Colorado, Illinois, Kansas, Nevada, New York, Oklahoma, Texas, Utah and Wisconsin), collectively accounting for approximately 63% of the United States to Mexico remittance send volume, according to the Bank of Mexico, where we expect to
realize significantly increased market share growth. In particular, we are staging a targeted marketing effort in these large states where we are underrepresented.
|
· |
Expand our services into new corridors. We believe that there is significant room to grow our
business in underserved geographic regions in the LAC where there is demand from customers and agents for our value-added approach to money remittances. Specifically, we are targeting future growth opportunities via new corridors from the
United States to other non-Spanish speaking LAC regions, including the Caribbean. In 2017, we achieved strong 38% and 50% growth in remittance volume to our newer markets of El Salvador and Honduras, respectively, compared to 2016. We are
currently in discussions with paying agents and prospective employees in these new corridors.
|
· |
Leverage our technology in the business-to-business market. We believe that our money
remittance platform has significant excess capacity. We believe we can leverage this capacity to sell business-to-business solutions to third parties, such as banks and major retailers.
|
· |
Continue to grow online and mobile remittance channels. Our money remittance platform
currently enables our customers to send funds from the United States to Latin America through the Internet via Intermexonline.com and on their Internet-enabled mobile devices. We believe these channels not only expand our potential customer
base as digital transaction capabilities become more relevant to Latin American consumers but also benefit from secular and demographic trends as consumers continue to migrate to conducting financial transactions online.
|
· |
reporting of large cash transactions and suspicious activity;
|
· |
transaction screening against government watch-lists, including the watch-list maintained by OFAC;
|
· |
prohibition of transactions in, to or from certain countries, governments, individuals and entities;
|
· |
limitations on amounts that may be transferred by a customer or from a jurisdiction at any one time or over specified periods of time, which require aggregation over multiple
transactions;
|
· |
customer information gathering and reporting requirements;
|
· |
customer disclosure requirements, including language requirements and foreign currency restrictions;
|
· |
notification requirements as to the identity of contracting agents, governmental approval of contracting agents or requirements and limitations on contract terms with our agents;
|
· |
registration or licensing of us or our agents with a state or federal agency in the United States or with the central bank or other proper authority in a foreign country; and
|
· |
minimum capital or capital adequacy requirements.
|
· |
competition in the markets in which we operate;
|
· |
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;
|
· |
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;
|
· |
disruptions to our information technology, computer network systems and data centers;
|
· |
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;
|
· |
changes in tax laws and unfavorable outcomes of tax positions we take;
|
· |
political instability, currency restrictions and devaluation in countries in which we operate or plan to operate;
|
· |
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;
|
· |
our ability to retain key personnel; and
|
· |
changes in foreign exchange rates could impact consumer remittance activity.
|
· |
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.
|
|
Successor Company
|
Predecessor
Company
|
||||||||||
|
Six Months
Ended June 30,
|
Period from
February 1, 2017
to June 30,
|
Period from
January 1, 2017
to January 31,
2017
|
|||||||||
(in thousands)
|
2018
|
2017
|
||||||||||
|
(Unaudited)
|
|||||||||||
Revenues:
|
||||||||||||
Wire transfer and money order fees
|
$
|
107,222
|
$
|
71,585
|
$
|
11,877
|
||||||
Foreign exchange
|
18,316
|
13,277
|
2,450
|
|||||||||
Other income
|
797
|
516
|
99
|
|||||||||
Total revenues
|
126,335
|
85,378
|
14,426
|
|||||||||
|
||||||||||||
Operating expenses:
|
||||||||||||
Service charges from agents and banks
|
84,260
|
56,762
|
9,441
|
|||||||||
Salaries and benefits
|
13,673
|
10,411
|
4,530
|
|||||||||
Other selling, general and administrative expenses
|
8,184
|
6,237
|
1,063
|
|||||||||
Transaction costs
|
4,014
|
6,213
|
3,917
|
|||||||||
Depreciation and amortization
|
7,607
|
7,504
|
382
|
|||||||||
Total operating expenses
|
117,738
|
87,127
|
19,333
|
|||||||||
|
||||||||||||
Operating income (loss)
|
8,597
|
(1,749
|
)
|
(4,907
|
)
|
|||||||
|
||||||||||||
Interest expense
|
6,676
|
3,495
|
614
|
|||||||||
|
||||||||||||
Income (loss) before income taxes
|
1,921
|
(5,244
|
)
|
(5,521
|
)
|
|||||||
|
||||||||||||
Income tax provision (benefit)
|
616
|
1,244
|
(2,203
|
)
|
||||||||
|
||||||||||||
Net income (loss)
|
$
|
1,305
|
$
|
(6,488
|
)
|
$
|
(3,318
|
)
|
Successor
Company
|
Predecessor
Company
|
|||||||||||||||
(in thousands)
|
Period from
February 1,
2017 to
December 31,
2017
|
Period from
January 1, 2017
to January 31,
2017
|
Year Ended
December 31, 2016
|
Year Ended
December 31, 2015
|
||||||||||||
(as Restated)
|
(as Restated)
|
|||||||||||||||
Revenues:
|
||||||||||||||||
Wire transfer and money order fees
|
$
|
169,796
|
$
|
11,877
|
$
|
138,468
|
$
|
105,516
|
||||||||
Foreign exchange
|
30,014
|
2,450
|
25,782
|
17,596
|
||||||||||||
Other income
|
1,229
|
99
|
1,145
|
1,087
|
||||||||||||
Total revenues
|
201,039
|
14,426
|
165,395
|
124,199
|
||||||||||||
Operating expenses
|
||||||||||||||||
Service charges from agents and banks
|
135,455
|
9,431
|
107,968
|
81,747
|
||||||||||||
Salaries and benefits
|
21,954
|
4,457
|
17,261
|
14,307
|
||||||||||||
Other selling, general and administrative expenses
|
16,470
|
1,146
|
13,711
|
9,899
|
||||||||||||
Transaction costs
|
8,706
|
3,917
|
901
|
1,609
|
||||||||||||
Depreciation and amortization
|
16,645
|
382
|
2,530
|
2,453
|
||||||||||||
Total operating expenses
|
199,230
|
19,333
|
142,371
|
110,015
|
||||||||||||
Operating income (loss)
|
1,809
|
(4,907
|
)
|
23,024
|
14,184
|
|||||||||||
Interest expense
|
11,448
|
614
|
9,540
|
4,234
|
||||||||||||
(Loss) income before income taxes
|
(9,639
|
)
|
(5,521
|
)
|
13,484
|
9,950
|
||||||||||
Provision for income tax expense (benefit)
|
534
|
(2,203
|
)
|
4,084
|
4,192
|
|||||||||||
Net (loss) income
|
$
|
(10,173
|
)
|
$
|
(3,318
|
)
|
$
|
9,400
|
$
|
5,758
|
Successor Company
|
Predecessor
Company
|
||||||||||||||||||||||||
($ in thousands)
|
Six Months
Ended June 30,
2018
|
%
of
Revenues
|
Period from
February 1, 2017
to June 30,
2017
|
%
of
Revenues
|
Period from
January 1, 2017
to January 31,
2017
|
%
of
Revenues
|
|||||||||||||||||||
Revenues:
|
|||||||||||||||||||||||||
Wire transfer and money order fees
|
$
|
107,222
|
85
|
%
|
$
|
71,585
|
84
|
%
|
$
|
11,877
|
82
|
%
|
|||||||||||||
Foreign exchange
|
18,316
|
14
|
%
|
13,277
|
16
|
%
|
2,450
|
17
|
%
|
||||||||||||||||
Other income
|
797
|
1
|
%
|
516
|
1
|
%
|
99
|
1
|
%
|
||||||||||||||||
Total revenues
|
$
|
126,335
|
100
|
%
|
$
|
85,378
|
100
|
%
|
$
|
14,426
|
100
|
%
|
Successor Company
|
Predecessor
Company
|
||||||||||||||||||||||||
($ in thousands)
|
Six Months
Ended June 30,
2018
|
%
of
Revenues
|
Period from
February 1, 2017
to June 30,
2017
|
%
of
Revenues
|
Period from
January 1, 2017
to January 31,
2017
|
%
of
Revenues
|
|||||||||||||||||||
Operating expenses:
|
|||||||||||||||||||||||||
Service charges from agents and banks
|
$
|
84,260
|
67
|
%
|
$
|
56,762
|
66
|
%
|
$
|
9,441
|
65
|
%
|
|||||||||||||
Salaries and benefits
|
13,673
|
11
|
%
|
10,411
|
12
|
%
|
4,530
|
31
|
%
|
||||||||||||||||
Other selling, general and administrative expenses
|
8,184
|
6
|
%
|
6,237
|
7
|
%
|
1,063
|
7
|
%
|
||||||||||||||||
Transaction costs
|
4,014
|
3
|
%
|
6,213
|
7
|
%
|
3,917
|
27
|
%
|
||||||||||||||||
Depreciation and amortization
|
7,607
|
6
|
%
|
7,504
|
9
|
%
|
382
|
3
|
%
|
||||||||||||||||
Total operating expenses
|
$
|
117,738
|
93
|
%
|
$
|
87,127
|
102
|
%
|
$
|
19,333
|
134
|
%
|
· |
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;
|
· |
Adjusted EBITDA does not reflect income tax expense (benefit), and because the payment of taxes is part of our operations, tax expense 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 employee 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 companies in our industry may calculate Adjusted EBITDA or similarly titled measures differently than we do, limiting its usefulness as a comparative measure.
|
Successor Company
|
Predecessor
Company |
|||||||||||
(in thousands)
|
Six Months
Ended June 30, |
Period from
February 1, 2017 |
Period from
January 1, 2017 |
|||||||||
Net income (loss)
|
$
|
1,305
|
$
|
(6,488
|
)
|
$
|
(3,318
|
)
|
||||
Adjusted for:
|
||||||||||||
Interest expense
|
6,676
|
3,495
|
614
|
|||||||||
Income tax provision (benefit)
|
616
|
1,244
|
(2,203
|
)
|
||||||||
Depreciation and amortization
|
7,607
|
7,504
|
382
|
|||||||||
EBITDA
|
16,204
|
5,755
|
(4,525
|
)
|
||||||||
Transaction costs (a)
|
4,014
|
6,213
|
3,917
|
|||||||||
Incentive units plan (b)
|
713
|
1,247
|
-
|
|||||||||
Change in control adjustment for stock options (c)
|
-
|
-
|
2,813
|
|||||||||
Management fee (d)
|
390
|
325
|
-
|
|||||||||
TCPA settlement (e)
|
192
|
-
|
-
|
|||||||||
Transition expenses (f)
|
348
|
-
|
-
|
|||||||||
Other charges and expenses (g)
|
308
|
70
|
104
|
|||||||||
Adjusted EBITDA
|
$
|
22,169
|
$
|
13,610
|
$
|
2,309
|
(a) |
Represents direct costs related to the anticipated Merger which are expensed as incurred and included as “transaction costs” in our condensed consolidated statements of operations
and comprehensive income (loss). The six months ended June 30, 2018 includes $4.0 million related to the Merger. Costs related to the Stella Point acquisition amounts to $6.2 million for the 2017 Q2 Successor Period and $3.9 million for
the 2017 Predecessor Period. These costs consist primarily of legal, consulting, accounting, advisory fees and certain incentive bonuses directly related to the above transactions.
|
(b) |
In connection with the Stella Point acquisition, Class B, C and D incentive units were granted to our employees by Interwire LLC. The Successor Periods include expense regarding
Class B incentive units. In connection with the Merger, Interwire LLC distributed the Merger consideration to its members and the holders of the Incentive Units received distributions in accordance with their ownership interest. As a
result, employees no longer hold profits interests following the Merger.
|
(c) |
Represents $2.8 million related to stock options issued by the Predecessor company which vested upon the Stella Point acquisition.
|
(d) |
Represents payments under our management agreement with Stella Point pursuant to which we pay a monthly fee for certain advisory and consulting services. In connection with the
Merger, this agreement was terminated.
|
(e) |
Represents payments related to the settlement of a lawsuit related to the TCPA, which includes a $0.1 million settlement payment and $0.1 million in related legal expenses.
|
(f) |
Represents recruiting fees and severance costs related to managerial changes in connection with becoming a publicly-traded company.
|
(g) |
Includes loss on disposal of fixed assets and foreign currency (gains) or losses. The six months ended June 30, 2018 also includes a one-time adjustment related to the Company’s
loyalty programs of $0.2 million, while the 2017 Predecessor Period also includes amortization of restricted stock awards.
|
Successor
Company
|
Predecessor Company
|
||||||||||||||||||||||||
(in thousands)
|
Period from
February 1,
2017 to
December 31,
2017
|
% of
Revenues |
Period from
January 1,
2017 to
January 31,
2017
|
% of
Revenues |
Year Ended
December 31,
2016
|
% of
Revenues |
|||||||||||||||||||
Revenues:
|
|||||||||||||||||||||||||
Wire transfer and money order fees
|
$
|
169,796
|
84
|
%
|
$
|
11,877
|
82
|
%
|
$
|
138,468
|
84
|
%
|
|||||||||||||
Foreign exchange
|
30,014
|
15
|
%
|
2,450
|
17
|
%
|
25,782
|
16
|
%
|
||||||||||||||||
Other income
|
1,229
|
1
|
%
|
99
|
1
|
%
|
1,145
|
1
|
%
|
||||||||||||||||
Total revenues
|
$
|
201,039
|
100
|
%
|
$
|
14,426
|
100
|
%
|
$
|
165,395
|
100
|
%
|
Successor
Company
|
Predecessor Company
|
||||||||||||||||||||||||
(in thousands)
|
Period from
February 1,
2017 to
December 31,
2017
|
% of
Revenues |
Period from
January 1,
2017 to
January 31,
2017
|
% of
Revenues |
Year Ended
December 31,
2016
|
% of
Revenues |
|||||||||||||||||||
(as Restated)
|
|||||||||||||||||||||||||
Operating expenses
|
|||||||||||||||||||||||||
Service charges from agents and banks
|
$
|
135,455
|
67
|
%
|
$
|
9,431
|
65
|
%
|
$
|
107,968
|
65
|
%
|
|||||||||||||
Salaries and benefits
|
21,954
|
11
|
%
|
4,457
|
31
|
%
|
17,261
|
10
|
%
|
||||||||||||||||
Other selling, general and administrative expenses
|
16,470
|
8
|
%
|
1,146
|
8
|
%
|
13,711
|
8
|
%
|
||||||||||||||||
Transaction costs
|
8,706
|
4
|
%
|
3,917
|
27
|
%
|
901
|
1
|
%
|
||||||||||||||||
Depreciation and amortization
|
16,645
|
8
|
%
|
382
|
3
|
%
|
2,530
|
2
|
%
|
||||||||||||||||
Total operating expenses
|
$
|
199,230
|
99
|
%
|
$
|
19,333
|
134
|
%
|
$
|
142,371
|
86
|
%
|
Successor
Company
|
Predecessor Company
|
|||||||||||
(in thousands)
|
Period from
February 1, 2017
to December 31,
2017
|
Period from
January 1, 2017
to January 31,
2017
|
Year Ended
December 31,
2016
|
|||||||||
(as Restated)
|
||||||||||||
Net (loss) income
|
$
|
(10,173
|
)
|
$
|
(3,318
|
)
|
$
|
9,400
|
||||
Adjusted for:
|
||||||||||||
Interest expense
|
11,448
|
614
|
9,540
|
|||||||||
Provision for income tax expense (benefit)
|
534
|
(2,203
|
)
|
4,084
|
||||||||
Depreciation and amortization
|
16,645
|
382
|
2,530
|
|||||||||
EBITDA
|
18,454
|
(4,525
|
)
|
25,554
|
||||||||
Transaction costs(a)
|
8,706
|
3,917
|
901
|
|||||||||
Incentive units plan(b)
|
1,846
|
|||||||||||
Change in control adjustment for stock options(c)
|
—
|
2,813
|
—
|
|||||||||
Management fee(d)
|
715
|
—
|
—
|
|||||||||
One-time adjustment – bank fees(e)
|
642
|
—
|
—
|
|||||||||
One-time incentive bonus(f)
|
514
|
—
|
—
|
|||||||||
Other charges and expenses(g)
|
195
|
104
|
646
|
|||||||||
Adjusted EBITDA
|
$
|
31,072
|
$
|
2,309
|
$
|
27,101
|
(a) |
Represents direct costs related to mergers and acquisitions, which are expensed as incurred and included as “transaction costs” in Holdings’ consolidated statements
of operations and comprehensive (loss) income. Costs related to the Stella Point acquisition amounted to $6.2 million in the 2017 Successor Period, $3.9 million for the 2017 Predecessor Period and $0.9 million and $1.6 million for the
Predecessor year ended December 31, 2016. These costs consist primarily of legal, consulting, accounting, advisory fees and certain incentive bonuses directly related to the above transactions.
|
(b) |
In connection with the Stella Point acquisition, Class B, C and D incentive units were granted to Holdings’ employees by Interwire LLC. The Successor Periods include
expense regarding Class B incentive units. In connection with the Merger, Interwire LLC distributed the Merger consideration to its members and the holders of the incentive units received distributions in accordance with their ownership
interest. As a result, employees no longer hold profits interests following the Merger.
|
(c) |
Represents $2.8 million related to stock options issued by the Predecessor company which vested upon the Stella Point acquisition.
|
(d) |
Represents payments under Holdings’ management agreement with Stella Point pursuant to which Holdings paid a monthly fee for certain advisory and consulting
services. In connection with the Merger, this agreement was terminated.
|
(e) |
Holdings incurred a one-time expense in the 2017 Successor Period to true-up the accrual for bank charges. The amount of $0.6 million relates to prior year bank
changes, which were not considered material to any individual year.
|
(f) |
Represents certain one-time cash bonuses paid to certain members of management in 2017 that were not part of Holdings’ annual bonus plan.
|
(g) |
Represents the portion of debt issuance costs that were written off as a result of refinancing Holdings’ debt facilities.
|
Predecessor Company
|
||||||||||||||||
(in thousands)
|
Year Ended
December 31,
2016
|
% of
Revenues
|
Year Ended
December 31,
2015
|
% of
Revenues
|
||||||||||||
Revenues:
|
||||||||||||||||
Wire transfer and money order fees
|
$
|
138,468
|
84
|
%
|
$
|
105,516
|
85
|
%
|
||||||||
Foreign exchange
|
25,782
|
16
|
%
|
17,596
|
14
|
%
|
||||||||||
Other income
|
1,145
|
1
|
%
|
1,087
|
1
|
%
|
||||||||||
Total revenues
|
$
|
165,395
|
100
|
%
|
$
|
124,199
|
100
|
%
|
Predecessor Company
|
||||||||||||||||
(in thousands)
|
Year Ended
December 31,
2016
|
% of
Revenues
|
Year Ended
December 31,
2015
|
% of
Revenues
|
||||||||||||
(as Restated)
|
(as Restated)
|
|||||||||||||||
Operating expenses
|
||||||||||||||||
Service charges from agents and banks
|
$
|
107,968
|
65
|
%
|
$
|
81,747
|
66
|
%
|
||||||||
Salaries and benefits
|
17,261
|
10
|
%
|
14,307
|
12
|
%
|
||||||||||
Other selling, general and administrative expenses
|
13,711
|
8
|
%
|
9,899
|
8
|
%
|
||||||||||
Transaction costs
|
901
|
1
|
%
|
1,609
|
1
|
%
|
||||||||||
Depreciation and amortization
|
2,530
|
2
|
%
|
2,453
|
2
|
%
|
||||||||||
Total operating expenses
|
$
|
142,371
|
86
|
%
|
$
|
110,015
|
89
|
%
|
Predecessor Company
|
||||||||
(in thousands)
|
Year Ended December
31, 2016
|
Year Ended December
31, 2015
|
||||||
(as Restated)
|
(as Restated)
|
|||||||
Net income
|
$
|
9,400
|
$
|
5,758
|
||||
Adjusted for:
|
||||||||
Interest expense
|
9,540
|
4,234
|
||||||
Provision for income tax expense
|
4,084
|
4,192
|
||||||
Depreciation and amortization
|
2,530
|
2,453
|
||||||
EBITDA
|
25,554
|
16,637
|
||||||
Transaction costs(a)
|
901
|
1,609
|
||||||
Other charges and expenses(b)
|
646
|
515
|
||||||
Adjusted EBITDA
|
$
|
27,101
|
$
|
18,761
|
(a) |
Represents direct costs related to the Stella Point acquisition which are expensed as incurred and included as “transaction costs” in our consolidated statements of
operations and comprehensive (loss) income. Costs related to the Stella Point acquisition amounted to $0.9 million and $1.6 million for the Predecessor years ended December 31, 2016 and 2015, respectively.
|
(b) |
Includes loss on disposal of fixed assets, non-recurring legal fees, foreign currency (gains) or losses and amortization of restricted stock awards.
|
• |
incur liens on our assets;
|
• |
consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;
|
• |
pay dividends or make distributions on our capital stock;
|
• |
incur or guarantee additional indebtedness;
|
• |
make certain investments;
|
• |
enter into transactions with our affiliates;
|
• |
issue equity interests;
|
• |
make certain modifications to organizational documents; and
|
• |
engage in certain business activities.
|
|
Successor Company
|
Predecessor
Company
|
||||||||||
(in thousands)
|
Six Months
Ended June 30,
2018
|
Period from
February 1, 2017
to June 30,
2017
|
Period from
January 1, 2017
to January 31,
2017
|
|||||||||
Statement of Cash Flows Data:
|
||||||||||||
Net cash provided by (used in) operating activities
|
$
|
6,931
|
$
|
(11,067
|
)
|
$
|
8,652
|
|||||
Net cash used in investing activities
|
(2,238
|
)
|
(2,732
|
)
|
(249
|
)
|
||||||
Net cash (used in) provided by financing activities
|
(2,425
|
)
|
3,976
|
(2,000
|
)
|
|||||||
Effect of exchange rate changes on cash
|
(87
|
)
|
441
|
(15
|
)
|
|||||||
Net increase (decrease) in cash
|
2,181
|
(9,382
|
)
|
6,388
|
||||||||
|
||||||||||||
Cash and restricted cash, beginning of the period
|
59,795
|
44,628
|
38,240
|
|||||||||
Cash and restricted cash, end of the period
|
$
|
61,976
|
$
|
35,246
|
$
|
44,628
|
Successor
Company
|
Predecessor Company
|
|||||||||||||||
(in thousands)
|
Period from
February 1, 2017
to December 31,
2017
|
Period from
January 1, 2017
to January 31,
2017
|
Year Ended
December 31,
2016
|
Year Ended
December 31,
2015
|
||||||||||||
(as Restated)
|
(as Restated)
|
|||||||||||||||
Statement of Cash Flows Data:
|
||||||||||||||||
Net cash provided by operating activities
|
$
|
7,416
|
$
|
8,652
|
$
|
22,396
|
$
|
4,465
|
||||||||
Net cash used in investing activities
|
(5,275
|
)
|
(249
|
)
|
(3,012
|
)
|
(2,064
|
)
|
||||||||
Net cash provided by (used in) financing activities
|
12,927
|
(2,000
|
)
|
(558
|
)
|
(3,019
|
)
|
|||||||||
Effect of exchange rate changes on cash
|
99
|
(15
|
)
|
(150
|
)
|
(64
|
)
|
|||||||||
Net increase (decrease) in cash
|
15,167
|
6,388
|
18,676
|
(682
|
)
|
|||||||||||
Cash, and restricted cash beginning of the period
|
44,628
|
38,240
|
19,564
|
20,246
|
||||||||||||
Cash and restricted cash, end of the period
|
$
|
59,795
|
$
|
44,628
|
$
|
38,240
|
$
|
19,564
|
(in thousands)
|
Total
|
Less than
1 year
|
1 to 3 years
|
3 to 5 years
|
||||||||||||
Debt, principal payments
|
$
|
115,788
|
$
|
4,850
|
$
|
15,763
|
$
|
95,175
|
||||||||
Interest payments
|
48,814
|
11,867
|
21,874
|
15,073
|
||||||||||||
Non-cancelable operating leases
|
3,429
|
1,389
|
1,925
|
115
|
||||||||||||
Total
|
$
|
168,031
|
$
|
18,106
|
$
|
39,562
|
$
|
110,363
|
2017
|
2016
|
|||||||||||||||
Spot
|
Average
|
Spot
|
Average
|
|||||||||||||
Mexico Peso/Dollar
|
19.72
|
18.91
|
20.73
|
18.70
|
||||||||||||
Guatemala Quetzal/Dollar
|
7.35
|
7.35
|
7.52
|
7.61
|
Name
|
Age
|
Position
|
||
Robert Lisy
|
60
|
Chief Executive Officer, President and Chairman of the board of directors
|
||
Tony Lauro II
|
50
|
Chief Financial Officer
|
||
Randy Nilsen
|
53
|
Chief Sales and Marketing Officer
|
||
Eduardo Azcarate
|
46
|
Chief Business Development Officer
|
||
Jose Perez-Villarreal
|
57
|
Chief Administrative and Compliance Officer and Secretary
|
||
William Velez
|
45
|
Chief Information Officer
|
||
Adam Godfrey
|
56
|
Director
|
||
Kurt Holstein
|
58
|
Director
|
||
Robert Jahn
|
38
|
Director
|
||
Stephen Paul
|
51
|
Director
|
||
Michael Purcell
|
61
|
Director
|
||
John Rincon
|
53
|
Director
|
||
Justin Wender
|
49
|
Director
|
· |
Reviewing and discussing with management and/or the Company’s independent registered public accounting firm the following documents and reports:
|
· |
The Company’s annual and quarterly financial statements, the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and
the independent registered public accounting firm’s audit opinions and forms thereof, and any accompanying management letter thereto;
|
o |
the Company’s earnings press releases, the use of any pro forma, adjusted or non-GAAP information, as well as financial information and earnings guidance provided to analysts or
rating agencies;
|
o |
any major issues arising as to the adequacy of the Company’s internal controls, any actions taken in light of material control deficiencies and the adequacy of disclosures about
changes in internal control over financial reporting;
|
o |
any major issues regarding accounting principles and financial statement presentation;
|
o |
any material correcting adjustments that the Company’s independent registered public accounting firm has identified;
|
o |
any related party transactions and off-balance sheet transactions;
|
o |
the effect of regulatory and accounting initiatives on the financial statements of the Company and any report or opinion proposed to be rendered in connection therewith;
|
o |
disclosures made to the Company’s Audit Committee by the Company’s Chief Executive Officer and Chief Financial Officer during their certification process for filings made to the SEC
on annual and quarterly bases;
|
o |
the guidelines and policies that management has established to assess and manage the Company’s exposure to risk;
|
o |
any evidence of a material violation of the Company’s Code of Business Conduct and Ethics or programs established in connection therewith;
|
o |
appointing and managing the compensation, retention, oversight and termination of any independent registered public accounting firm engaged for the purpose of preparing or issuing an
audit report or performing other audit, review or attest services for the Company;
|
o |
pre-approval of all auditing services and non-audit services to be provided to the Company by its independent registered public accounting firm;
|
o |
reviewing the qualifications, performance and independence of the Company’s independent registered public accounting firm;
|
o |
conducting regular executive sessions with the Company’s independent registered public accounting firm;
|
o |
reviewing the integrity of the Company’s financial reporting process, in consultation with the independent registered public accounting firm, management and internal auditors and/or
independent consultants;
|
o |
reviewing the appointment and replacement of the Company’s senior internal auditing manager, personnel or consultant;
|
o |
reviewing the significant reports made to the Company’s management prepared by the internal auditing department or consultants and management’s responses;
|
o |
reviewing and approving the scope, performance and results of the internal audit plan and any amendments thereto to be submitted to the Company’s Audit Committee on an annual basis;
|
o |
periodically reviewing and discussing with management any legal matter that could have a significant impact on the Company’s financial statements and raise such matter to internal or
external legal counsel;
|
o |
setting clear hiring policies for the Company’s hiring of employees or former employees of the independent registered public accounting firm; and
|
o |
reviewing and approving or ratifying transactions between the Company and any related person that are required to be disclosed.
|
· |
establishing the Company’s general compensation philosophy and overseeing and approving the development, adoption and implementation of compensation and benefits plans and programs;
|
· |
reviewing the Company’s compensation arrangements to determine whether they encourage excessive risk-taking, review the relationship between risk management policies and practices and
compensation, and evaluating compensation policies and practices that could mitigate risk;
|
· |
with respect to the Chief Executive Officer and any other employees who may be directors of the Company, if applicable (“Inside Directors”), annually reviewing and approving corporate
goals and objectives relevant to their compensation, evaluating their performance in light of such goals and objectives, and, based on this evaluation, establishing their total compensation;
|
· |
annually reviewing and making recommendations to the Company’s board of directors with respect to the compensation of all directors who are not Inside Directors;
|
· |
in consultation with the Company’s Chief Executive Officer, annually reviewing and approving the compensation for executive officers of the Company other than Inside Directors;
|
· |
annually reviewing and considering the competitiveness of the Company’s executive compensation as compared with the Company’s peer groups;
|
· |
reviewing and authorizing the Company to enter into employment, severance or other compensation agreements with its senior executives;
|
· |
monitoring the Company’s compliance with the requirements of the Sarbanes-Oxley Act of 2002 and other applicable laws, regulations and rules relating to compensation arrangements for
directors and executive officers;
|
· |
reviewing and recommending to the Company’s full board director’s and officer’s indemnification arrangements and insurance matters;
|
· |
reviewing and monitor any employee retirement, profit sharing and benefit plans of the Company; and
|
· |
administering any Company incentive program providing for performance-based awards under Section 162(m) with respect to those associates who are described in subsection 16(a) of the
Exchange Act, or who are or are expected to be “covered employees,” as defined in Section 162(m).
|
· |
overseeing the composition of the board and its committees, including the following:
|
o |
overseeing board succession planning;
|
o |
determining the qualifications, qualities, skills and other expertise required to be a director and developing, and recommending to the board for its approval, criteria to be
considered in selecting nominees for director;
|
o |
identifying and screening individuals qualified to become members of the board, consistent with the criteria approved by the board, and, if required by applicable SEC or Nasdaq
requirements, considering any director candidates recommended by the Company’s stockholders;
|
o |
conducting all necessary and appropriate inquiries into the backgrounds and qualifications of possible director candidates;
|
o |
making recommendations to the board regarding (i) the selection and approval of the nominees for director to be submitted to a stockholder vote at the annual meeting of stockholders
and (ii) candidates for vacancies on the board to be filled from time to time (including any vacancy created by an increase in the size of the board) pursuant to the Company’s bylaws;
|
o |
reviewing the suitability of each board member for continued service as a director when his or her term expires and recommending to the board whether the director should be
re-nominated;
|
o |
assessing at least annually the independence of non-employee directors and members of the independent committees of the board; and
|
o |
making recommendations to the board regarding the chairperson, membership, size and composition of each standing committee of the board, including any necessary “independence” or
other qualification determinations as may be required by applicable SEC and Nasdaq rules, and to make recommendations to the board regarding individual directors to fill any committee vacancies;
|
· |
developing and maintaining the Company’s corporate governance policies and related matters, including evaluating any waivers to the Company’s Code of Business Conduct and Ethics, and
reviewing such policies and related matters at least once each year and recommending any related changes to the board of directors;
|
· |
reviewing any proposed changes to the Company’s certificate of incorporation, bylaws and other documents affecting the rights of the Company’s stockholders or otherwise affecting our
corporate governance and making recommendations to the board with respect to any such changes;
|
· |
establishing and overseeing a process for the annual evaluation of the board and each standing committee thereof;
|
· |
overseeing executive management succession planning;
|
· |
identifying and communicating to the board relevant current and emerging corporate and governance trends, issues and practices and overseeing the continuing education program for
directors and the orientation program for new directors; and
|
· |
overseeing the Company’s compliance with any applicable reporting requirements of the SEC relating to director nominations, director independence and corporate governance and
reviewing and discussing with management any related disclosure.
|
Name and Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Nonequity
Incentive Plan
Compensation
($)(1)
|
All Other
Compensation
($)(2)
|
Total
($)
|
|||||||||||||||
Robert Lisy
President and Chief Executive Officer
|
2017
|
579,167
|
500,000
|
(3)
|
445,000
|
1,834,550
|
3,358,717
|
||||||||||||||
Darrell Ebbert(4)
Chief Financial Officer
|
2017
|
257,736
|
—
|
131,409
|
50,000
|
439,145
|
|||||||||||||||
Randy Nilsen
Chief Sales and Marketing Office
|
2017
|
261,655
|
—
|
148,859
|
109,000
|
519,514
|
(1) |
The amounts included in the “Nonequity Incentive Plan Compensation” column reflect the named executive officers’ quarterly and annual performance bonuses earned in
respect of fiscal year 2017, which were based on performance targets for fiscal year 2017 as described below in “Annual Cash Incentive Awards” and were paid in quarterly installments, with the final payment being made on December 15, 2017. In
addition, the amounts in this column also reflect payments made under our stretch bonus plan in the amounts of $185,825 (for Mr. Lisy), $54,855 (for Mr. Nilsen) and $51,752 (for Mr. Ebbert), which bonuses were paid following the end of the
fiscal year 2017 on January 31, 2018.
|
(2) |
For Mr. Lisy, the amount set forth above includes (x) an allowance to Mr. Lisy in the amount of $80,500 for the rental of an apartment in the Miami, Florida area,
(y) matching contributions under our 401(k) retirement savings, as further discussed below in “—Retirement Benefit Programs”, in the amount of $4,050 and
(z) transaction bonuses paid in connection with the Stella Point Acquisition equal to $1,750,000 in the aggregate. For Mr. Ebbert, the amount set forth above includes a transaction bonus paid in connection with the Stella Point Acquisition
equal to $50,000. For Mr. Nilsen, the amount set forth above includes (x) $9,000 in reimbursements for car-related costs and (y) transaction bonuses paid in connection with the Stella Point Acquisition equal to $100,000 in the aggregate.
|
(3) |
Under the terms of Mr. Lisy’s employment agreement, he was entitled to a guaranteed bonus of $500,000 for performance in 2017 in connection with the signing of the
Merger Agreement.
|
(4) |
On March 10, 2018, Intermex and Mr. Ebbert entered into an Employment, Transition and Separation Agreement. Mr. Ebbert served as Intermex’s Chief Financial Officer
through March 15, 2018, at which time he began a 45-day transition period scheduled to end on April 30, 2018 when Mr. Ebbert’s employment with Intermex ceased. Further information regarding this agreement is included under the section
entitled “—Potential Payments upon Termination or Change in Control.”
|
· |
If termination is due to death or disability or retirement, fair market value of the date of the call notice;
|
· |
If termination is due to a termination by Interwire LLC or any of its subsidiaries without cause or resignation by the holder for good reason, fair market value on the date of the
call notice (except for Class B units). For Class B units, the price will be a percentage of the fair market value on the date of the call notice based on the amount of time passed since the closing of the Stella Point Acquisition, ranging
from 20% (if terminated prior to the first anniversary of such date) to 100% (if terminated on or after the fourth anniversary of such date) (the “Class B Calculation”);
|
· |
If termination is due to resignation of the holder without good reason, the price that would be payable pursuant to the Class B Calculation above; provided that if the holder is, or
is expected to be, employed by a competitor, the price will be discounted by 10%; and
|
· |
If termination is due to a termination by Interwire LLC or any of its subsidiaries with cause, the price for Class A units will be the lesser of (A) the fair market value on the date
of the call notice discounted by 15% and (b) the holder’s initial capital contribution (less the amount of distributions made in respect of such units) with respect to such units. All Incentive Units will be automatically forfeited for no
consideration.
|
Executive Officer
|
Options Granted
|
Robert Lisy
|
1,189,902
|
Tony Lauro II
|
198,317
|
Randy Nilsen
|
230,000
|
● |
each person or “group” (as such term is used in Section 13(d)(3) of the Exchange Act) who is or is expected to be the beneficial owner of more than 5% of the outstanding shares of the
Company’s common stock;
|
● |
each of the Company’s executive officers and directors; and
|
● |
all executive officers and directors of the Company as a group.
|
Name and Address of Beneficial Owners
|
Number of Shares
|
Percentage
|
||||||
Directors and Executive Officers:(1)
|
||||||||
Robert Lisy(2)
|
1,861,060
|
5.1
|
%
|
|||||
Tony Lauro II
|
-
|
-
|
||||||
Eduardo Azcarate
|
241,421
|
*
|
||||||
Jose Perez-Villarreal
|
246,202
|
*
|
||||||
Randall D. Nilsen
|
170,922
|
*
|
||||||
William Velez
|
151,968
|
*
|
||||||
Adam Godfrey(3)
|
-
|
-
|
||||||
Kurt Holstein(4)
|
78,467
|
*
|
||||||
Robert Jahn(5)
|
-
|
-
|
||||||
Stephen Paul(6)
|
-
|
-
|
||||||
Michael Purcell
|
-
|
-
|
||||||
John Rincon(7)
|
1,285,719
|
3.6
|
%
|
|||||
Justin Wender(8)
|
-
|
-
|
||||||
All directors and executive officers as a group (13 individuals)
|
4,035,759
|
11.2
|
%
|
|||||
Five Percent Holders:
|
||||||||
FinTech Investor Holdings II, LLC
|
3,309,996
|
(9)
|
9.1
|
%(10)
|
||||
Robert Lisy(2)
|
1,861,060
|
5.1
|
%
|
|||||
SPC Intermex, LP(11)
|
12,348,554
|
34.1
|
%
|
|||||
Parties to Shareholder Agreement(12)
|
21,431,653
|
58.9
|
%
|
* |
Less than 1 percent.
|
(1) |
Unless otherwise noted, the business address of each of the directors and executive officers is 9480 South Dixie Highway, Miami, Florida 33156.
|
(2)
|
Includes (i) 438,531 shares held
by Hawk Time Enterprises, LLC, a Delaware limited liability company (“Hawk Time”), and (ii) 1,422,529 shares held by the Robert Lisy Family Revocable Living Trust, Robert W. Lisy, Trustee (the “Lisy Trust”). Mr. Lisy is the sole manager of Hawk
Time and sole trustee of the Lisy Trust.
|
(3) |
Excludes 12,348,554 shares held by
SPC Intermex, LP, whose general partner is SPC Intermex GP, LLC. Stella Point is the sole manager of SPC Intermex GP, LLC, and Mr. Godfrey is a Managing Partner of Stella Point. Mr. Godfrey serves on the board of directors of the Company as
a representative of Stella Point. Mr. Godfrey disclaims beneficial ownership of the shares of common stock held by SPC Intermex, LP. The address for Mr. Godfrey is c/o Stella Point Capital LLC, 444 Madison Ave., 25th Floor, New York, New York 10022.
|
(4) |
Mr. Holstein currently serves on the board of directors of the Company.
|
(5) |
Does not include any shares held by SPC Intermex, LP. Mr. Jahn is a Managing Director at Stella Point. Mr. Jahn serves on the board of directors of the Company as a
representative of Stella Point. Mr. Jahn also owns a limited partnership interest in SPC Intermex, LP. Mr. Jahn disclaims beneficial ownership of the shares of common stock held by SPC Intermex, LP. The address for Mr. Jahn is c/o Stella
Point Capital LLC, 444 Madison Ave., 25th Floor, New York, New York 10022.
|
(6) |
Does not include any shares held by SPC Intermex, LP. The Louis Berkman Investment Company, of which
Mr. Paul is President and is a trustee of various trusts which own 28.24% of its non-voting stock,
owns a limited partnership interest in SPC Intermex, LP. Mr. Paul currently serves on the board of directors of the Company. Mr. Paul disclaims beneficial ownership of any shares of common stock held by SPC Intermex, LP.
|
(7) |
Includes (i) 1,105,288 shares held by Latin American Investment Holdings, Inc. and (ii) 180,431 shares held by Rincon Capital Partners, LLC. Mr. Rincon owns 100% of Latin American Investment Holdings,
Inc. and jointly owns Rincon Capital Partners, LLC.
|
(8) |
Excludes 12,348,554 shares held by SPC Intermex, LP, whose general partner is SPC Intermex GP, LLC. Stella Point is the sole manager of SPC Intermex GP, LLC, and Mr. Wender is a Managing Partner of Stella
Point. Mr. Wender serves on the board of directors of the Company as a representative of Stella Point. Mr. Wender disclaims beneficial ownership of the shares of common stock held by SPC Intermex, LP. The address for Mr. Wender is c/o
Stella Point Capital LLC, 444 Madison Ave., 25th Floor, New York, New York 10022.
|
(9) |
Includes 3,127,496 shares and warrants to purchase 182,500 shares
that are exercisable within 30 days. The address for FinTech Investor Holdings II, LLC is c/o Cohen and Company, 3 Columbus Circle, 24th Floor, New York, NY 10019.
|
(10) |
Beneficial ownership percentage is based on 36,182,783 shares of common stock of the Company issued and outstanding as of as of August 1, 2018 and warrants to
purchase 182,500 shares that are exercisable within 30 days.
|
(11) |
Includes 12,348,554 shares held by SPC Intermex, LP, and excludes shares of common stock held by other parties to the Shareholders Agreement with which SPC Intermex, LP and associated entities may be
deemed to share beneficial ownership by virtue of voting provisions of such agreement. See the section of the Prospectus entitled “Certain
Relationships and Related Transactions—Shareholders Agreement” for additional information. The general partner of SPC Intermex, LP is SPC Intermex GP, LLC and Stella Point
is the sole manager of SPC Intermex GP, LLC. Messrs. Godfrey and Wender are the Managing Partners of and jointly control Stella Point. Messrs. Godfrey and Wender disclaim beneficial ownership of the shares of common stock held by SPC
Intermex, LP. The address for SPC Intermex, LP is c/o Stella Point Capital LLC, 444 Madison Ave., 25thFloor, New York, New York 10022.
|
(12) |
Includes shares held by each of the parties to the Shareholders Agreement. Includes warrants to
purchase 182,500 shares that are exercisable within 30 days following the closing of the Merger. The
parties to the Shareholders Agreement are: International Money Express, Inc., SPC Intermex Representative LLC, SPC Intermex, LP, C.A.R. Holdings, Hawk Time, Lisy Trust, Robert Lisy, Darrell Ebbert, Jose Perez, Eduardo Azcarate, William
Velez, Randy Nilsen, DGC Family FinTech Trust, Daniel Cohen, Betsy Cohen, Swarthmore Trust of 2016, James J. McEntee, III, Hepco Family Trust, Jeremy Kuiper, Shami Patel, Plamen Mitrikov, FinTech Investor Holdings II, LLC (Sponsor), Cohen
Sponsor Interests II, LLC, Cohen and Company LLC and Solomon Cohen.
|
· |
an individual citizen or resident of the United States;
|
· |
a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or
the District of Columbia;
|
· |
an entity or arrangement treated as a partnership for U.S. federal income tax purposes;
|
· |
an estate if its income is subject to U.S. federal income taxation regardless of its source; or
|
· |
a trust if it (1) is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial
decisions of the trust or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a “United States person” (within the meaning of the Code).
|
· |
the gain is effectively connected with a trade or business of the non-U.S. holder in the United States (and, if required by an applicable income tax treaty, is attributable to a U.S.
permanent establishment of the non-U.S. holder);
|
· |
the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of that disposition, and certain other conditions are met; or
|
· |
we are or have been a “United States real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of (i) the five-year period ending on the
date of disposition and (ii) the period that the non-U.S. holder held our common stock.
|
· |
in whole and not in part;
|
· |
at a price of $0.01 per warrant;
|
· |
upon not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder; and
|
· |
if, and only if, the reported last sale price of the common stock (or the closing bid price of our common stock in the event shares of our common stock are not traded on any specific
day) equals or exceeds $24.00 per share on each of 20 trading days within the 30 trading-day period ending on the third business day prior to the date on which we send proper notice of such redemption, provided that on the date we give notice
of redemption and during the entire period thereafter until the time we redeem the warrants, we have an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a
current prospectus relating to them.
|
· |
1% of the total number of shares of common stock then outstanding; or
|
· |
the average weekly reported trading volume of the common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.
|
· |
the issuer of the securities that was formerly a shell company has ceased to be a shell company;
|
· |
the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;
|
· |
the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the
issuer was required to file such reports and materials), other than Form 8-K reports; and
|
· |
at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.
|
INTERMEX HOLDINGS, INC. FINANCIAL STATEMENTS:
|
|
Condensed Consolidated Financial Statements for the Successor Periods of the three and six months ended June 30, 2018 and February 1, 2017 through June 30, 2017
and Predecessor Period of January 1, 2017 through January 31, 2017
|
|
Condensed Consolidated Balance Sheets | F-1 |
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) | F-2 |
Condensed Consolidated Statements of Cash Flows | F-3 |
Notes to Condensed Consolidated Financial Statements | F-4 |
Audited Consolidated Financial Statements for the Successor Period of February 1, 2017 through
December 31, 2017 and Predecessor Periods of January 1, 2017 through January 31, 2017 and years ended December 31, 2016 and 2015
|
|
F-14
|
|
F-15
|
|
F-16
|
|
F-17
|
|
F-19
|
|
F-21
|
|
|
|
INTERNATIONAL MONEY EXPRESS, INC. (formerly known as FINTECH ACQUISITION CORP. II) FINANCIAL STATEMENTS:
|
|
Condensed Consolidated Financial Statements as of June 30, 2018 and December 31, 2017 and for the periods ended June 30, 2018 and 2017
|
|
Condensed Consolidated Balance Sheets | F-43 |
Condensed Consolidated Statements of Operations | F-44 |
Condensed Consolidated Statements of Cash Flows | F-45 |
Notes to Condensed Consolidated Financial Statements | F-46 |
Audited Consolidated Financial Statements as of December 31, 2017 and 2016 and for the periods
ended December 31, 2017, 2016 and 2015
|
|
F-53
|
|
F-54
|
|
F-55
|
|
F-56
|
|
F-57
|
|
F-58
|
Successor Company
|
||||||||
June 30,
2018
|
December 31,
2017
|
|||||||
ASSETS
|
(Unaudited)
|
|||||||
Current assets:
|
||||||||
Cash
|
$
|
61,335,968
|
$
|
59,155,618
|
||||
Accounts receivable, net of allowance of $456,985 and $307,562, respectively
|
55,803,921
|
51,374,377
|
||||||
Prepaid wires
|
14,226,586
|
7,675,491
|
||||||
Other prepaid expenses and current assets
|
1,725,205
|
900,386
|
||||||
Total current assets
|
133,091,680
|
119,105,872
|
||||||
Property and equipment, net
|
9,245,656
|
8,490,794
|
||||||
Goodwill
|
36,259,666
|
36,259,666
|
||||||
Intangible assets, net
|
42,503,932
|
48,741,032
|
||||||
Deferred tax asset, net
|
2,779,388
|
1,748,854
|
||||||
Other assets
|
900,962
|
1,706,693
|
||||||
Total assets
|
$
|
224,781,284
|
$
|
216,052,911
|
||||
LIABILITIES AND STOCKHOLDER’S EQUITY
|
||||||||
Current liabilities:
|
||||||||
Current portion of long-term debt, net
|
$
|
4,078,627
|
$
|
3,913,436
|
||||
Accounts payable
|
10,862,718
|
8,919,796
|
||||||
Wire transfers and money orders payable
|
49,879,419
|
48,276,649
|
||||||
Accrued and other
|
16,656,126
|
11,514,449
|
||||||
Total current liabilities
|
81,476,890
|
72,624,330
|
||||||
Long term liabilities:
|
||||||||
Debt, net
|
105,400,196
|
107,526,462
|
||||||
Total long term liabilities
|
105,400,196
|
107,526,462
|
||||||
Commitments and contingencies, see Note 10
|
||||||||
Stockholder’s equity:
|
||||||||
Common stock $0.01 par value; 1,000 shares authorized, 10 shares issued and outstanding
|
-
|
-
|
||||||
Additional paid-in capital
|
46,790,540
|
46,077,943
|
||||||
Accumulated deficit
|
(8,868,870
|
)
|
(10,173,453
|
)
|
||||
Accumulated other comprehensive loss
|
(17,472
|
)
|
(2,371
|
)
|
||||
Total stockholder’s equity
|
37,904,198
|
35,902,119
|
||||||
Total liabilities and stockholder’s equity
|
$
|
224,781,284
|
$
|
216,052,911
|
Successor Company
|
Predecessor
Company
|
|||||||||||||||||||
Three Months
Ended June 30,
|
Six Months
Ended June 30,
|
Period from
February 1, 2017
to June 30,
|
Period from
January 1, 2017
to January 31,
|
|||||||||||||||||
2018
|
2017
|
2018
|
2017
|
2017
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||||||
Revenues:
|
||||||||||||||||||||
Wire transfer and money order fees
|
$
|
59,367,955
|
$
|
45,259,255
|
$
|
107,222,338
|
$
|
71,584,634
|
$
|
11,876,919
|
||||||||||
Foreign exchange
|
10,585,269
|
8,202,907
|
18,316,053
|
13,277,182
|
2,449,709
|
|||||||||||||||
Other income
|
426,167
|
315,182
|
797,033
|
516,012
|
98,715
|
|||||||||||||||
Total revenues
|
70,379,391
|
53,777,344
|
126,335,424
|
85,377,828
|
14,425,343
|
|||||||||||||||
Operating expenses:
|
||||||||||||||||||||
Service charges from agents and banks
|
46,323,264
|
35,995,569
|
84,259,931
|
56,761,860
|
9,440,774
|
|||||||||||||||
Salaries and benefits
|
7,441,220
|
5,877,726
|
13,673,403
|
10,411,401
|
4,530,308
|
|||||||||||||||
Other selling, general and administrative expenses
|
4,183,193
|
3,737,922
|
8,183,517
|
6,236,771
|
1,063,379
|
|||||||||||||||
Transaction costs
|
2,553,301
|
2,000
|
4,014,311
|
6,212,602
|
3,917,188
|
|||||||||||||||
Depreciation and amortization
|
3,818,126
|
4,526,650
|
7,607,374
|
7,503,944
|
381,746
|
|||||||||||||||
Total operating expenses
|
64,319,104
|
50,139,867
|
117,738,536
|
87,126,578
|
19,333,395
|
|||||||||||||||
Operating income (loss)
|
6,060,287
|
3,637,477
|
8,596,888
|
(1,748,750
|
)
|
(4,908,052
|
)
|
|||||||||||||
Interest expense
|
3,392,043
|
2,120,240
|
6,675,933
|
3,494,828
|
613,742
|
|||||||||||||||
Income (loss) before income taxes
|
2,668,244
|
1,517,237
|
1,920,955
|
(5,243,578
|
)
|
(5,521,794
|
)
|
|||||||||||||
Income tax provision (benefit)
|
823,889
|
243,754
|
616,372
|
1,244,206
|
(2,203,373
|
)
|
||||||||||||||
Net income (loss)
|
1,844,355
|
1,273,483
|
1,304,583
|
(6,487,784
|
)
|
(3,318,421
|
)
|
|||||||||||||
Other comprehensive (loss) income
|
(36,190
|
)
|
12,177
|
(15,101
|
)
|
15,131
|
(2,453
|
)
|
||||||||||||
Comprehensive income (loss)
|
$
|
1,808,165
|
$
|
1,285,660
|
$
|
1,289,482
|
$
|
(6,472,653
|
)
|
$
|
(3,320,874
|
)
|
Successor Company
|
Predecessor
Company
|
|||||||||||
Six Months
Ended June 30,
|
Period from
February 1, 2017
to June 30,
|
Period from
January 1, 2017
to January 31,
|
||||||||||
2018
|
2017
|
2017
|
||||||||||
(Unaudited)
|
||||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income (loss)
|
$
|
1,304,583
|
$
|
(6,487,784
|
)
|
$
|
(3,318,421
|
)
|
||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
||||||||||||
Depreciation and amortization
|
7,607,374
|
7,503,944
|
381,746
|
|||||||||
Share-based compensation
|
712,597
|
1,247,215
|
2,916,324
|
|||||||||
Provision for bad debts
|
384,766
|
571,347
|
83,695
|
|||||||||
Debt origination cost amortization
|
463,925
|
17,142
|
39,298
|
|||||||||
Deferred taxes
|
(1,030,534
|
)
|
1,144,902
|
(2,214,351
|
)
|
|||||||
Loss on disposals of property and equipment
|
104,146
|
46,214
|
13,472
|
|||||||||
Total adjustments
|
8,242,274
|
10,530,764
|
1,220,184
|
|||||||||
Changes in operating assets and liabilities:
|
||||||||||||
Accounts receivable
|
(4,820,933
|
)
|
(3,891,443
|
)
|
3,612,332
|
|||||||
Prepaid wires
|
(6,661,522
|
)
|
(12,725,342
|
)
|
7,848,641
|
|||||||
Other prepaid expenses and assets
|
(19,292
|
)
|
(337,483
|
)
|
70,927
|
|||||||
Wire transfer and money order payables
|
1,787,276
|
3,912,942
|
(1,884,922
|
)
|
||||||||
Accounts payable and accrued other
|
7,098,488
|
(2,068,748
|
)
|
1,103,326
|
||||||||
Net cash provided by (used in) operating activities
|
6,930,874
|
(11,067,094
|
)
|
8,652,067
|
||||||||
Cash flows from investing activities:
|
||||||||||||
Purchases of property and equipment
|
(2,238,143
|
)
|
(1,807,964
|
)
|
(249,382
|
)
|
||||||
Net cash used in acquisition
|
-
|
(923,654
|
)
|
-
|
||||||||
Net cash used in investing activities
|
(2,238,143
|
)
|
(2,731,618
|
)
|
(249,382
|
)
|
||||||
Cash flows from financing activities:
|
||||||||||||
Borrowings under term loan
|
-
|
5,000,000
|
-
|
|||||||||
Borrowings/(repayments) under revolving loan, net
|
-
|
2,000,000
|
(2,000,000
|
)
|
||||||||
Repayment of term loan
|
(2,425,000
|
)
|
(2,825,017
|
)
|
-
|
|||||||
Debt origination costs
|
-
|
(199,554
|
)
|
-
|
||||||||
Net cash (used in) provided by financing activities
|
(2,425,000
|
)
|
3,975,429
|
(2,000,000
|
)
|
|||||||
Effect of exchange rate changes on cash
|
(87,381
|
)
|
440,805
|
(15,196
|
)
|
|||||||
Net increase (decrease) in cash and restricted cash
|
2,180,350
|
(9,382,478
|
)
|
6,387,489
|
||||||||
Cash and restricted cash, beginning of the period
|
59,795,280
|
44,628,247
|
38,240,758
|
|||||||||
Cash and restricted cash, end of the period
|
$
|
61,975,630
|
$
|
35,245,769
|
$
|
44,628,247
|
Successor
Company
|
||||
Cash
|
$
|
43,064,931
|
||
Accounts receivables
|
24,031,575
|
|||
Prepaid and other current assets
|
3,712,848
|
|||
Property and equipment
|
6,328,146
|
|||
Other assets
|
1,345,562
|
|||
Total tangible assets acquired
|
78,483,062
|
|||
Intangible assets acquired
|
62,660,000
|
|||
Deferred tax asset, net
|
2,118,801
|
|||
Less: Liabilities assumed
|
(115,111,529
|
)
|
||
Net assets
|
28,150,334
|
|||
Goodwill
|
36,259,666
|
|||
Total purchase price
|
$
|
64,410,000
|
Successor Company
|
||||||||
Goodwill
|
Other Intangibles
|
|||||||
Balance at January 1, 2018
|
$
|
36,259,666
|
$
|
48,741,032
|
||||
Amortization expense
|
-
|
(6,237,100
|
)
|
|||||
Balance at June 30, 2018
|
$
|
36,259,666
|
$
|
42,503,932
|
Successor Company
|
||||||||
June 30,
2018
|
December 31,
2017
|
|||||||
Payables to agents
|
$
|
8,230,526
|
$
|
6,875,416
|
||||
Accrued legal fees
|
3,378,289
|
1,644,470
|
||||||
Accrued compensation
|
1,572,609
|
1,092,460
|
||||||
Accrued bank charges
|
1,033,120
|
897,404
|
||||||
Accrued taxes
|
840,289
|
318,792
|
||||||
Other
|
1,601,293
|
685,907
|
||||||
$
|
16,656,126
|
$
|
11,514,449
|
Successor Company
|
||||||||
June 30,
2018
|
December 31,
2017
|
|||||||
Revolving credit facility
|
$
|
20,000,000
|
$
|
20,000,000
|
||||
Term loan
|
93,362,500
|
95,787,500
|
||||||
113,362,500
|
115,787,500
|
|||||||
Less: Current portion of long term debt (1)
|
(4,078,627
|
)
|
(3,913,436
|
)
|
||||
Less: Debt origination costs
|
(3,883,677
|
)
|
(4,347,602
|
)
|
||||
$
|
105,400,196
|
$
|
107,526,462
|
(1)
|
Current portion of long term debt is net of debt origination costs of $771,373 at June 30, 2018 and $936,564 at December 31, 2017.
|
Successor Company
|
||||||||||||||||||||||||
Number of
Class B
Units
|
Weighted-
Average
Grant Date
Fair Value
|
Number of
Class C
Units
|
Weighted-
Average
Grant Date
Fair Value
|
Number of
Class D
Units
|
Weighted-
Average
Grant Date
Fair Value
|
|||||||||||||||||||
Outstanding at
|
||||||||||||||||||||||||
December 31, 2017
|
7,472,000
|
$
|
0.4879
|
4,670,000
|
$
|
0.2080
|
4,670,000
|
$
|
0.1489
|
|||||||||||||||
Granted
|
410,000
|
0.4948
|
205,000
|
0.2126
|
205,000
|
0.1535
|
||||||||||||||||||
Vested
|
(2,720,000
|
)
|
0.4875
|
-
|
-
|
-
|
-
|
|||||||||||||||||
Outstanding at | ||||||||||||||||||||||||
June 30, 2018
|
5,162,000
|
$
|
0.4884
|
4,875,000
|
$
|
0.2082
|
4,875,000
|
$
|
0.1491
|
Successor Company
|
Predecessor
Company
|
|||||||||||||||||||
Three Months
Ended June 30,
|
Six Months
Ended June 30,
|
Period from
February 1, 2017
to June 30,
|
Period from
January 1, 2017
to January 31,
|
|||||||||||||||||
2018
|
2017
|
2018
|
2017
|
2017
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||||||
Income (loss) before income taxes
|
$
|
2,668,244
|
$
|
1,517,237
|
$
|
1,920,955
|
$
|
(5,243,578
|
)
|
$
|
(5,521,794
|
)
|
||||||||
US statutory tax rate
|
21
|
%
|
34
|
%
|
21
|
%
|
34
|
%
|
34
|
%
|
||||||||||
Income tax expense (benefit) at statutory rate
|
560,331
|
515,861
|
403,401
|
(1,782,817
|
)
|
(1,877,410
|
)
|
|||||||||||||
State tax expense (benefit), net of federal
|
156,527
|
38,064
|
116,242
|
8,575
|
(278,657
|
)
|
||||||||||||||
Foreign tax rates different from US statutory rate
|
25,947
|
(6,254
|
)
|
33,264
|
90,003
|
(45,631
|
)
|
|||||||||||||
Non-deductible expenses
|
89,671
|
(303,917
|
)
|
72,055
|
2,928,445
|
409
|
||||||||||||||
Other
|
(8,587
|
)
|
-
|
(8,590
|
)
|
-
|
(2,084
|
)
|
||||||||||||
Total tax provision (benefit)
|
$
|
823,889
|
$
|
243,754
|
$
|
616,372
|
$
|
1,244,206
|
$
|
(2,203,373
|
)
|
2018
|
$
|
682,730
|
||
2019
|
1,202,361
|
|||
2020
|
918,872
|
|||
2021
|
822,439
|
|||
2022
|
738,385
|
|||
2023
|
753,692
|
|||
Thereafter
|
1,438,239
|
|||
$
|
6,556,718
|
Successor
Company
2017
|
Predecessor
Company
2016
|
|||||||
ASSETS
|
As Restated
|
|||||||
Current assets:
|
||||||||
Cash
|
$
|
59,155,618
|
$
|
37,601,096
|
||||
Accounts receivable, net of allowance of $307,562 and $290,801 for 2017 and 2016, respectively
|
51,374,377
|
27,769,967
|
||||||
Prepaid wires
|
7,675,491
|
11,380,391
|
||||||
Other prepaid expenses and current assets
|
900,386
|
392,867
|
||||||
Total current assets
|
119,105,872
|
77,144,321
|
||||||
Property and equipment, net
|
8,490,794
|
6,246,447
|
||||||
Goodwill
|
36,259,666
|
—
|
||||||
Intangible assets, net
|
48,741,032
|
6,347,634
|
||||||
Deferred tax asset, net
|
1,748,854
|
27,816,112
|
||||||
Other assets
|
1,706,693
|
1,219,438
|
||||||
Total assets
|
$
|
216,052,911
|
$
|
118,773,952
|
||||
LIABILITIES AND STOCKHOLDER’S EQUITY
|
||||||||
Current liabilities:
|
||||||||
Current portion of long-term debt
|
$
|
3,913,436
|
$
|
849,809
|
||||
Accounts payable
|
8,919,796
|
5,881,754
|
||||||
Wire transfers and money orders payable
|
48,276,649
|
21,714,100
|
||||||
Accrued and other
|
11,514,449
|
9,886,935
|
||||||
Total current liabilities
|
72,624,330
|
38,332,598
|
||||||
Long term liabilities:
|
||||||||
Debt, net
|
107,526,462
|
77,182,811
|
||||||
Total long term liabilities
|
107,526,462
|
77,182,811
|
||||||
Commitments and contingencies, see Note 14
|
||||||||
Stockholder’s equity:
|
||||||||
Common stock (Successor), $0.01 par value; 1,000 shares authorized, 10 shares issued and outstanding
|
—
|
—
|
||||||
Common stock (Predecessor), $0.01 par value; 200,000,000 shares authorized, 81,879,165 shares issued and outstanding
|
—
|
818,791
|
||||||
Additional paid-in capital
|
46,077,943
|
70,010,991
|
||||||
Accumulated deficit
|
(10,173,453
|
)
|
(67,550,973
|
)
|
||||
Accumulated other comprehensive loss
|
(2,371
|
)
|
(20,266
|
)
|
||||
Total stockholder’s equity
|
35,902,119
|
3,258,543
|
||||||
Total liabilities and stockholder’s equity
|
$
|
216,052,911
|
$
|
118,773,952
|
Successor Company
|
Predecessor Company
|
|||||||||||||||
|
Period from
February 1,
2017 to
December 31,
2017
|
Period from
January 1, 2017 to January 31, 2017
|
Year Ended
December 31,
2016
|
Year Ended
December 31,
2015
|
||||||||||||
Revenues:
|
(as Restated)
|
(as Restated)
|
||||||||||||||
Wire transfer and money order fees
|
$
|
169,795,746
|
$
|
11,876,919
|
$
|
138,467,934
|
$
|
105,515,500
|
||||||||
Foreign exchange
|
30,014,304
|
2,449,709
|
25,781,882
|
17,596,590
|
||||||||||||
Other income
|
1,229,081
|
98,715
|
1,144,675
|
1,087,223
|
||||||||||||
Total revenues
|
201,039,131
|
14,425,343
|
165,394,491
|
124,199,313
|
||||||||||||
Operating expenses
|
||||||||||||||||
Service charges from agents and banks
|
135,455,304
|
9,431,503
|
107,967,505
|
81,746,818
|
||||||||||||
Salaries and benefits
|
21,954,005
|
4,456,631
|
17,261,125
|
14,307,184
|
||||||||||||
Other selling, general and administrative expenses
|
16,470,615
|
1,146,327
|
13,711,270
|
9,898,985
|
||||||||||||
Transaction costs
|
8,705,501
|
3,917,188
|
900,530
|
1,609,034
|
||||||||||||
Depreciation and amortization
|
16,644,821
|
381,746
|
2,530,334
|
2,453,454
|
||||||||||||
Total operating expenses
|
199,230,246
|
19,333,395
|
142,370,764
|
110,015,475
|
||||||||||||
Operating income (loss)
|
1,808,885
|
(4,908,052
|
)
|
23,023,727
|
14,183,838
|
|||||||||||
|
||||||||||||||||
Interest expense
|
11,447,936
|
613,742
|
9,540,046
|
4,234,371
|
||||||||||||
(Loss) income before income taxes
|
(9,639,051
|
)
|
(5,521,794
|
)
|
13,483,681
|
9,949,467
|
||||||||||
Provision for income tax expense (benefit)
|
534,402
|
(2,203,373
|
)
|
4,083,655
|
4,191,643
|
|||||||||||
Net (loss) income
|
(10,173,453
|
)
|
(3,318,421
|
)
|
9,400,026
|
5,757,824
|
||||||||||
Other comprehensive (loss) income
|
(2,371
|
)
|
(2,453
|
)
|
109,920
|
(56,582
|
)
|
|||||||||
|
||||||||||||||||
Comprehensive (loss) income
|
$
|
(10,175,824
|
)
|
$
|
(3,320,874
|
)
|
$ |
9,509,946
|
$
|
5,701,242
|
|
Series A Convertible
Preferred Stock
|
Common Stock
|
Additional
Paid-In
Capital
|
Accumulated
Deficit
|
Accumulated
Other
Comprehensive
Loss
|
|||||||||||||||||||||||||||
|
Number
of Shares
|
Amount
|
Number of
Shares
|
Amount
|
Total | |||||||||||||||||||||||||||
Predecessor Company
|
|
|||||||||||||||||||||||||||||||
Balance at December 31, 2014, as restated
|
10,451
|
$
|
10,450,663
|
135,368,059
|
$
|
1,353,680
|
$
|
122,971,721
|
$
|
(82,708,823
|
)
|
$
|
(73,604
|
)
|
$
|
51,993,637
|
|
|||||||||||||||
Net income, as restated
|
—
|
—
|
—
|
—
|
—
|
5,757,824
|
—
|
5,757,824
|
||||||||||||||||||||||||
Purchase of Preferred Stock
|
(10,640
|
)
|
(10,639,850
|
)
|
—
|
—
|
—
|
—
|
—
|
(10,639,850
|
)
|
|||||||||||||||||||||
Common dividend distributions
|
—
|
—
|
—
|
—
|
(18,144,839
|
)
|
—
|
—
|
(18,144,839
|
)
|
||||||||||||||||||||||
Preferred dividend in-kind
|
189
|
189,187
|
—
|
—
|
(189,187
|
)
|
—
|
—
|
—
|
|||||||||||||||||||||||
Share-based compensation
|
—
|
—
|
2,174,306
|
21,743
|
41,096
|
—
|
—
|
62,839
|
||||||||||||||||||||||||
Adjustment from Foreign currency translation
|
—
|
—
|
—
|
—
|
—
|
—
|
(56,582
|
)
|
(56,582
|
)
|
||||||||||||||||||||||
Balance at December 31, 2015, as restated
|
—
|
$
|
—
|
137,542,365
|
1,375,423
|
$
|
104,678,791
|
$
|
(76,950,999
|
)
|
$ |
(130,186
|
)
|
$
|
28,973,029
|
|||||||||||||||||
Net income, as restated
|
—
|
—
|
—
|
$
|
—
|
—
|
9,400,026
|
—
|
9,400,026
|
|||||||||||||||||||||||
Purchase of Common Stock
|
—
|
—
|
(57,627,100
|
)
|
(576,271
|
)
|
(33,423,729
|
)
|
—
|
—
|
(34,000,000
|
)
|
||||||||||||||||||||
Common dividend distributions
|
—
|
—
|
—
|
—
|
(1,286,995
|
)
|
—
|
—
|
(1,286,995
|
)
|
||||||||||||||||||||||
Share-based compensation
|
—
|
—
|
1,963,900
|
19,639
|
42,924
|
—
|
—
|
62,563
|
||||||||||||||||||||||||
Adjustment from foreign currency translation
|
—
|
—
|
—
|
—
|
—
|
—
|
109,920
|
109,920
|
||||||||||||||||||||||||
Balance at December 31, 2016, as restated
|
—
|
$
|
—
|
81,879,165
|
$
|
818,791
|
$
|
70,010,991
|
$
|
(67,550,973
|
)
|
$
|
(20,266
|
)
|
$
|
3,258,543
|
||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
(3,318,421
|
)
|
—
|
(3,318,421
|
)
|
||||||||||||||||||||||
Share-based compensation
|
—
|
—
|
561
|
5,611
|
2,910,713
|
—
|
—
|
2,916,324
|
||||||||||||||||||||||||
Adjustment from foreign currency translation
|
—
|
—
|
—
|
—
|
—
|
—
|
(2,453
|
)
|
(2,453
|
)
|
||||||||||||||||||||||
Balance at January 31, 2017
|
—
|
$
|
—
|
81,879,726
|
$
|
824,402
|
$
|
72,921,704
|
$
|
(70,869,394
|
)
|
$
|
(22,719
|
)
|
$
|
2,853,993
|
Series A
Convertible
Preferred Stock
|
Common Stock
|
Additional
Paid-
In Capital
|
Accumulated
Deficit
|
Accumulated
Other
Comprehensive
Loss
|
Total
|
||||||||||||||||||||
Number of
Shares
|
Amount
|
Number of
Shares
|
Amount
|
||||||||||||||||||||||
Successor Company
|
|||||||||||||||||||||||||
Balance at February 1, 2017
|
|||||||||||||||||||||||||
Initial capitalization
|
—
|
$
|
—
|
10
|
$
|
—
|
$
|
64,410,000
|
$
|
—
|
$
|
—
|
$ | 64,410,000 | |||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
(10,173,453
|
)
|
—
|
(10,173,453
|
)
|
|||||||||||||||
Common dividend distributions
|
—
|
—
|
—
|
—
|
(20,178,000
|
)
|
—
|
—
|
(20,178,000 | ) | |||||||||||||||
Share-based compensation
|
—
|
—
|
—
|
—
|
1,845,943
|
—
|
—
|
1,845,943
|
|||||||||||||||||
Adjustment from foreign currency translation
|
—
|
—
|
—
|
—
|
—
|
—
|
(2,371
|
)
|
(2,371
|
)
|
|||||||||||||||
Balance at December 31, 2017
|
—
|
$
|
—
|
10
|
$
|
—
|
$
|
46,077,943
|
$ | (10,173,453 | ) |
$
|
(2,371
|
)
|
$ | 35,902,119 |
|
Successor
Company
|
Predecessor Company
|
||||||||||||||
Period from
February 1,
2017 to
December 31,
2017
|
Period from
January 1,
2017 to
January 31,
2017
|
Year Ended
December 31,
2016
|
Year Ended
December 31,
2015
|
|||||||||||||
Cash flows from operating activities |
(as Restated)
|
(as Restated) | ||||||||||||||
Net (loss) income
|
$
|
(10,173,453
|
)
|
$
|
(3,318,421
|
)
|
$
|
9,400,026
|
$
|
5,757,824
|
||||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
||||||||||||||||
Depreciation and amortization
|
16,644,821
|
381,746
|
2,530,334
|
2,453,454
|
||||||||||||
Share-based compensation
|
1,845,943
|
2,916,324
|
62,563
|
62,839
|
||||||||||||
Provision for bad debts
|
1,401,446
|
83,695
|
909,275
|
720,416
|
||||||||||||
Debt issuance cost amortization
|
335,221
|
39,298
|
2,670,976
|
741,450
|
||||||||||||
Deferred taxes
|
369,947
|
(2,214,351
|
)
|
3,718,943
|
3,971,485
|
|||||||||||
Loss on disposals of property and equipment
|
127,850
|
13,472
|
172,934
|
87,038
|
||||||||||||
Total adjustments
|
20,725,228
|
1,220,184
|
10,065,025
|
8,036,682
|
||||||||||||
Changes in operating assets and liabilities:
|
||||||||||||||||
Accounts receivable
|
(29,172,953
|
)
|
3,612,332
|
(15,865,867
|
)
|
(5,316,628
|
)
|
|||||||||
Prepaid wires
|
(4,143,741
|
)
|
7,848,641
|
777,111
|
(9,652,582
|
)
|
||||||||||
Other prepaid expenses and assets
|
(1,011,440
|
)
|
70,927
|
(302,025
|
)
|
(44,622
|
)
|
|||||||||
Wire transfer and money order payables
|
27,637,839
|
(1,884,922
|
)
|
13,759,090
|
1,718,158
|
|||||||||||
Accounts payable and accrued other
|
3,555,223
|
1,103,326
|
4,562,418
|
3,966,613
|
||||||||||||
Net cash provided by operating activities
|
7,416,703
|
8,652,067
|
22,395,778
|
4,465,445
|
||||||||||||
Cash flows from investing activities:
|
||||||||||||||||
Purchases of property and equipment
|
(4,351,506
|
)
|
(249,382
|
)
|
(3,012,110
|
)
|
(2,064,577
|
)
|
||||||||
Net cash used in acquisition
|
(923,654
|
)
|
—
|
—
|
—
|
|||||||||||
Net cash used in investing activities
|
(5,275,160
|
)
|
(249,382
|
)
|
(3,012,110
|
)
|
(2,064,577
|
)
|
||||||||
Cash flows from financing activities:
|
||||||||||||||||
Borrowings under term loan
|
102,000,000
|
—
|
40,331,834
|
35,000,000
|
||||||||||||
Borrowings/(repayments) under revolving loan, net
|
12,000,000
|
(2,000,000
|
)
|
(2,000,000
|
)
|
3,000,000
|
||||||||||
Repayment of term loan
|
(76,212,500
|
)
|
—
|
(1,287,004
|
)
|
(9,444,830
|
)
|
|||||||||
Debt issuance costs
|
(4,682,830
|
)
|
—
|
(2,315,992
|
)
|
(2,789,288
|
)
|
|||||||||
Common dividend distributions
|
(20,178,000
|
)
|
—
|
(1,286,995
|
)
|
(18,144,839
|
)
|
|||||||||
Purchase of preferred stock
|
—
|
—
|
—
|
(10,639,850
|
)
|
|||||||||||
Purchase of common stock
|
—
|
—
|
(34,000,000
|
)
|
—
|
|||||||||||
Net cash provided by (used in) financing activities
|
12,926,670
|
(2,000,000
|
)
|
(558,157
|
)
|
(3,018,807
|
)
|
|||||||||
Effect of exchange rate changes on cash
|
98,820
|
(15,196
|
)
|
(149,884
|
)
|
(64,403
|
)
|
|||||||||
Net increase (decrease) in cash
|
15,167,033
|
6,387,489
|
18,675,627
|
(682,342
|
)
|
|||||||||||
Cash, beginning of the period
|
43,988,585
|
37,601,096
|
18,925,469
|
19,607,811
|
||||||||||||
Cash, end of the period
|
$
|
59,155,618
|
$
|
43,988,585
|
$
|
37,601,096
|
$
|
18,925,469
|
Successor
Company
|
Predecessor Company
|
|||||||||||||||
|
Period from
February 1,
2017 to
December 31,
2017
|
Period from
January 1,
2017 to
January 31,
2017
|
Year Ended
December 31,
2016
|
Year Ended
December 31,
2015
|
||||||||||||
(as Restated)
|
(as Restated)
|
|||||||||||||||
Supplemental disclosures of cash flow information:
|
||||||||||||||||
Cash paid for interest
|
$
|
11,687,159
|
$
|
658,888
|
$
|
6,764,648
|
$
|
3,274,862
|
||||||||
Cash paid for taxes
|
$
|
400,000
|
$
|
—
|
$
|
155,000
|
$
|
126,000
|
||||||||
Non-cash financing activities: | ||||||||||||||||
Agent businesses acquired in exchange for receivables
|
$
|
639,688
|
$
|
—
|
$
|
342,876
|
$
|
—
|
||||||||
Dividends paid in‑kind
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
189,187
|
a.
|
Consolidated Balance Sheet
|
Impact of Correction of Errors
|
||||||||||||||||
As
previously
reported
|
Adjustments
|
|||||||||||||||
Amortization
|
Deferred
Tax
|
As Restated
|
||||||||||||||
Balance at December 31, 2016 (Predecessor Company)
|
||||||||||||||||
Intangible assets, net
|
$
|
8,508,502
|
$
|
(2,160,868
|
)
|
$
|
—
|
$
|
6,347,634
|
|||||||
Deferred tax asset, net
|
$
|
26,979,233
|
$
|
836,879
|
$
|
—
|
$
|
27,816,112
|
||||||||
Total assets
|
$
|
120,097,941
|
$
|
(1,323,989
|
)
|
$
|
—
|
$
|
118,773,952
|
|||||||
Accumulated deficit
|
$
|
(66,226,984
|
)
|
$
|
(1,323,989
|
)
|
$
|
—
|
$
|
(67,550,973
|
)
|
|||||
Total stockholder’s equity
|
$
|
4,582,532
|
$
|
(1,323,989
|
)
|
$
|
—
|
$
|
3,258,543
|
b.
|
Consolidated Statements of Operations and Comprehensive (Loss) Income
|
Impact of Correction of Errors
|
||||||||||||||||
As
previously
reported
|
Adjustments
|
|||||||||||||||
Amortization
|
Deferred
Tax
|
As Restated
|
||||||||||||||
For the year ended December 31, 2016 (Predecessor Company)
|
||||||||||||||||
Depreciation and amortization
|
$
|
4,341,933
|
$
|
(1,811,599
|
)
|
$
|
—
|
$
|
2,530,334
|
|||||||
Provision for income tax expense
|
$
|
3,382,044
|
$
|
701,611
|
$
|
—
|
$
|
4,083,655
|
||||||||
Net income
|
$
|
8,290,038
|
$
|
1,109,988
|
$
|
—
|
$
|
9,400,026
|
||||||||
Comprehensive income
|
$
|
8,399,958
|
$
|
1,109,988
|
$
|
—
|
$
|
9,509,946
|
||||||||
For the year ended December 31, 2015 (Predecessor Company)
|
||||||||||||||||
Depreciation and amortization
|
$
|
4,296,041
|
$
|
(1,842,587
|
)
|
$
|
—
|
$
|
2,453,454
|
|||||||
Provision for income tax (benefit) expense
|
$
|
(9,491,201
|
)
|
$
|
713,612
|
$
|
12,969,232
|
$
|
4,191,643
|
|||||||
Net income
|
$
|
17,598,081
|
$
|
1,128,975
|
$
|
(12,969,232
|
)
|
$
|
5,757,824
|
|||||||
Comprehensive income
|
$
|
17,541,499
|
$
|
1,128,975
|
$
|
(12,969,232
|
)
|
$
|
5,701,242
|
c.
|
Consolidated Statements of Changes in Stockholder’s Equity
|
Impact of Correction of Errors | ||||||||||||||||
As
previously
reported
|
Adjustments
|
|||||||||||||||
Amortization
|
Deferred
Tax
|
As Restated
|
||||||||||||||
Balance at December 31, 2014 (Predecessor Company)
|
||||||||||||||||
Accumulated deficit
|
$
|
(92,115,103
|
)
|
$
|
(3,562,952
|
)
|
$
|
12,969,232
|
$
|
(82,708,823
|
)
|
|||||
Total stockholder’s equity
|
$
|
42,587,357
|
$
|
(3,562,952
|
)
|
$
|
12,969,232
|
$
|
51,993,637
|
|||||||
Balance at December 31, 2015 (Predecessor Company)
|
||||||||||||||||
Accumulated deficit
|
$
|
(74,517,022
|
)
|
$
|
(2,433,977
|
)
|
$
|
—
|
$
|
(76,950,999
|
)
|
|||||
Total stockholder’s equity
|
$
|
31,407,006
|
$
|
(2,433,977
|
)
|
$
|
—
|
$
|
28,973,029
|
|||||||
Balance at December 31, 2016 (Predecessor Company)
|
||||||||||||||||
Accumulated deficit
|
$
|
(66,226,984
|
)
|
$
|
(1,323,989
|
)
|
$
|
—
|
$
|
(67,550,973
|
)
|
|||||
Total stockholder’s equity
|
$
|
4,582,532
|
$
|
(1,323,989
|
)
|
$
|
—
|
$
|
3,258,543
|
d.
|
Consolidated Statements of Cash Flows
|
Impact of Correction of Errors
|
||||||||||||||||
As
previously
reported
|
Adjustments
|
|||||||||||||||
Amortization
|
Deferred
Tax
|
As Restated
|
||||||||||||||
For the year ended December 31, 2016 (Predecessor Company)
|
||||||||||||||||
Net income
|
$
|
8,290,038
|
$
|
1,109,988
|
$
|
—
|
$
|
9,400,026
|
||||||||
Depreciation and amortization
|
$
|
4,341,933
|
$
|
(1,811,599
|
)
|
$
|
—
|
$
|
2,530,334
|
|||||||
Deferred taxes
|
$
|
3,017,332
|
$
|
701,611
|
$
|
—
|
$
|
3,718,943
|
||||||||
Net cash provided by operating activities
|
$
|
22,395,778
|
$
|
—
|
$
|
—
|
$
|
22,395,778
|
||||||||
For the year ended December 31, 2015 (Predecessor Company)
|
||||||||||||||||
Net income
|
$
|
17,598,081
|
$
|
1,128,975
|
$
|
(12,969,232
|
)
|
$
|
5,757,824
|
|||||||
Depreciation and amortization
|
$
|
4,296,041
|
$
|
(1,842,587
|
)
|
$
|
—
|
$
|
2,453,454
|
|||||||
Deferred taxes
|
$
|
(9,711,359
|
)
|
$
|
713,612
|
$
|
12,969,232
|
$
|
3,971,485
|
|||||||
Net cash provided by operating activities
|
$
|
4,465,445
|
$
|
—
|
$
|
—
|
$
|
4,465,445
|
Successor
Company
2017
|
Predecessor
Company
2016
|
|||||||
Cash in U.S. dollars in U.S. banks
|
$
|
55,375,471
|
$
|
34,437,494
|
||||
Cash in foreign banks and foreign currency
|
3,774,454
|
3,159,019
|
||||||
Petty cash
|
5,693
|
4,583
|
||||||
$
|
59,155,618
|
$
|
37,601,096
|
Successor
Company
|
||||
Cash
|
$
|
43,064,931
|
||
Accounts receivables
|
27,183,489
|
|||
Prepaid and other current assets
|
560,934
|
|||
Property and equipment
|
6,328,146
|
|||
Other assets
|
1,345,562
|
|||
Total tangible assets acquired
|
78,483,062
|
|||
Intangible assets acquired
|
62,660,000
|
|||
Deferred tax asset, net
|
2,118,801
|
|||
Less: Liabilities assumed
|
(115,111,529
|
)
|
||
Net assets
|
28,150,334
|
|||
Goodwill
|
36,259,666
|
|||
Total purchase price
|
$
|
64,410,000
|
|
Successor
Company
2017 |
Predecessor
Company
2016
|
||||||
Notes receivable, current
|
$ | 740,068 |
$
|
525,440
|
||||
Allowance
|
(434,210 | ) |
(313,696
|
)
|
||||
Net current
|
$ | 305,858 |
$
|
211,744
|
||||
Notes receivable, long-term
|
608,396 |
444,981
|
||||||
Allowance
|
(248,432 | ) |
(209,259
|
)
|
||||
Net long-term
|
$ | 359,964 |
$
|
235,722
|
Unpaid
Principal
Balance
|
||||
Under 1 year
|
$
|
740,068
|
||
Between 1 and 2 years
|
|
564,516
|
||
Between 2 and 3 years
|
43,880
|
|||
Total
|
$
|
1,348,464
|
Successor
Company
2017
|
Predecessor
Company
2016
|
Estimated
Useful Lives
(in Years)
|
||||||||||
Computer software and equipment
|
$
|
9,153,855
|
$
|
13,057,313
|
3 to 5
|
|||||||
Office improvements
|
798,130
|
1,526,350
|
5
|
|||||||||
Furniture and fixtures
|
303,400
|
1,078,267
|
7
|
|||||||||
10,255,385
|
15,661,930
|
|||||||||||
Less: Accumulated depreciation
|
(1,764,591
|
)
|
(9,415,483
|
)
|
||||||||
$
|
8,490,794
|
$
|
6,246,447
|
Successor
Company
2017
|
Predecessor
Company
2016
|
|||||||
As Restated
|
||||||||
Indefinite lives:
|
||||||||
Goodwill
|
$
|
36,259,666
|
$
|
—
|
||||
Trade name
|
—
|
5,300,000
|
||||||
Total indefinite lives
|
36,259,666
|
5,300,000
|
||||||
Amortizable:
|
||||||||
Agent relationships
|
40,500,000
|
29,200,000
|
||||||
Trade name
|
15,500,000
|
|||||||
Developed technology
|
6,600,000
|
—
|
||||||
Other intangibles
|
699,689
|
1,430,224
|
||||||
Accumulated amortization expense
|
(14,558,657
|
)
|
(29,582,590
|
)
|
||||
Net amortizable intangibles
|
48,741,032
|
1,047,634
|
||||||
Total goodwill and other intangible assets
|
$
|
85,000,698
|
$
|
6,347,634
|
Goodwill |
Other
Intangibles
|
|||||||
Predecessor Company
|
||||||||
Balance at December 31, 2014, as restated
|
$ | — |
$
|
8,119,749
|
||||
Amortization expense, as restated
|
— |
(1,184,897
|
)
|
|||||
Effect of exchange rate changes
|
— |
(1,067
|
)
|
|||||
Balance at December 31, 2015, as restated
|
$ | — |
$
|
6,933,785
|
||||
Acquisition of agent locations
|
— |
342,876
|
||||||
Amortization expense, as restated
|
— |
(928,945
|
)
|
|||||
Effect of exchange rate changes
|
— |
(82
|
)
|
|||||
Balance at December 31, 2016, as restated
|
$ | — |
$
|
6,347,634
|
||||
Amortization expense
|
— |
(230,663
|
)
|
|||||
Balance at January 31, 2017
|
$ | — |
$
|
6,116,971
|
Goodwill
|
Other
Intangibles
|
|||||||
Successor Company
|
||||||||
Balance at February 1, 2017
|
$
|
36,259,666
|
$
|
62,660,000
|
||||
Acquisition of agent locations
|
—
|
639,689
|
||||||
Amortization expense
|
—
|
(14,558,657
|
)
|
|||||
Balance at December 31, 2017
|
$
|
36,259,666
|
$
|
48,741,032
|
2018
|
$
|
12,458,705
|
||
2019
|
9,320,428
|
|||
2020
|
6,902,482
|
|||
2021
|
5,112,601
|
|||
2022
|
3,952,547
|
|||
Thereafter
|
10,994,269
|
|||
$
|
48,741,032
|
Successor
Company
2017
|
Predecessor
Company
2016
|
|||||||
Payables to agents
|
$
|
6,875,416
|
$
|
4,879,360
|
||||
Compensation accruals
|
1,092,460
|
870,856
|
||||||
Accruals for taxes
|
318,792
|
163,843
|
||||||
Accrued interest
|
—
|
676,806
|
||||||
Other
|
3,227,781
|
3,296,070
|
||||||
$
|
11,514,449
|
$
|
9,886,935
|
Successor
Company
2017
|
Predecessor
Company
2016
|
|||||||
Revolving credit facility
|
$
|
20,000,000
|
$
|
10,000,000
|
||||
Term loan
|
95,787,500
|
70,000,000
|
||||||
115,787,500
|
80,000,000
|
|||||||
Less: Current portion of long term debt(1)
|
(3,913,436
|
)
|
(849,809
|
)
|
||||
Less: Debt issuance costs
|
(4,347,602
|
)
|
(1,967,380
|
)
|
||||
$
|
107,526,462
|
$
|
77,182,811
|
(1) |
Current portion of long term debt is net of debt issuance costs of $936,564 at December 31, 2017 of the Successor period and $462,691 at December 31, 2016 of the Predecessor
period.
|
2018
|
$
|
4,850,000
|
||
2019
|
6,062,500
|
|||
2020
|
9,700,000
|
|||
2021
|
9,700,000
|
|||
2022
|
65,475,000
|
|||
$
|
95,787,500
|
Incentive Units
|
Authorized
|
Units
Issued
February
2017
|
Units
Issued
September
2017
|
|||||||||
Class B
|
10,000,000
|
9,055,000
|
665,000
|
|||||||||
Class C
|
5,000,000
|
4,527,500
|
332,500
|
|||||||||
Class D
|
5,000,000
|
4,527,500
|
332,500
|
Period from
February 1,
2017, to
December 31,
2017
|
||||
Expected dividend yield
|
0
|
%
|
||
Expected volatility
|
46.9
|
%
|
||
Risk-free interest rate
|
2.1
|
%
|
||
Expected term (in years)
|
6.0
|
Incentive Units
|
Per Unit
Amount February 2017
Issuance |
Per Unit
Amount September 2017 Issuance |
||||||
Class B
|
$
|
0.4872
|
$
|
0.4948
|
||||
Class C
|
$
|
0.2077
|
$
|
0.2126
|
||||
Class D
|
$
|
0.1485
|
$
|
0.1535
|
Number of
Class B Units
|
Weighted-
Average Grant
Date Fair Value
|
Number of
Class C Units
|
Weighted-
Average Grant
Date Fair Value
|
Number of
Class D Units
|
Weighted-
Average Grant
Date Fair Value
|
|||||||||||||||||||
Granted during Successor Period
|
9,720,000
|
$
|
0.4878
|
4,860,000
|
$
|
0.2080
|
4,860,000
|
$
|
0.1489
|
|||||||||||||||
Vested
|
(1,944,000
|
)
|
0.4878
|
—
|
—
|
—
|
—
|
|||||||||||||||||
Forfeited
|
(304,000
|
)
|
0.4872
|
(190,000
|
)
|
0.2077
|
(190,000
|
)
|
0.1485
|
|||||||||||||||
Outstanding at December 31, 2017
|
7,472,000
|
$
|
0.4879
|
4,670,000
|
$
|
0.2080
|
4,670,000
|
$
|
0.1489
|
Successor
Company
|
Predecessor Company
|
|||||||||||||||
Period from
February 1,
2017 to
December 31,
2017
|
Period from
January 1,
2017 to
January 31,
2017
|
Year Ended
December 31,
2016
|
Year Ended
December 31,
2015
|
|||||||||||||
(as Restated)
|
(as Restated)
|
|||||||||||||||
Current tax provision:
|
||||||||||||||||
Foreign
|
$
|
164,126
|
$
|
10,977
|
$
|
184,058
|
$
|
143,954
|
||||||||
Federal
|
329
|
1
|
180,654
|
76,204
|
||||||||||||
Total Current
|
164,455
|
10,978
|
364,712
|
220,158
|
||||||||||||
Deferred tax provision (benefit):
|
||||||||||||||||
Federal
|
595,682
|
(1,791,686
|
)
|
4,537,301
|
3,492,740
|
|||||||||||
State
|
(225,735
|
)
|
(422,665
|
)
|
(818,358
|
)
|
478,745
|
|||||||||
Total deferred
|
369,947
|
(2,214,351
|
)
|
3,718,943
|
3,971,485
|
|||||||||||
Total tax provision (benefit)
|
$
|
534,402
|
$
|
(2,203,373
|
)
|
$
|
4,083,655
|
$
|
4,191,643
|
Successor
Company
|
Predecessor Company
|
|||||||||||||||
Period from
February 1,
2017 to
December 31,
2017
|
Period from
January 1,
2017 to
January 31,
2017
|
Year Ended
December 31,
2016
|
Year Ended
December 31,
2015
|
|||||||||||||
(as Restated)
|
(as Restated)
|
|||||||||||||||
(Loss) income before income taxes
|
$
|
(9,639,051
|
)
|
$
|
(5,521,794
|
)
|
$
|
13,483,681
|
$
|
9,949,467
|
||||||
US statutory tax rate
|
34
|
%
|
34
|
%
|
34
|
%
|
34
|
%
|
||||||||
Income tax (benefit) expense at statutory rate
|
(3,277,277
|
)
|
(1,877,410
|
)
|
4,584,452
|
3,382,819
|
||||||||||
State tax expense (benefit), net of federal
|
(182,027
|
)
|
(278,657
|
)
|
574,478
|
338,818
|
||||||||||
Foreign tax rates different from US statutory rate
|
94,688
|
(45,631
|
)
|
124,107
|
50,267
|
|||||||||||
Non-deductible expenses
|
3,309,549
|
409
|
(58,494
|
)
|
6,772
|
|||||||||||
Change in tax rate
|
604,153
|
—
|
(1,070,363
|
)
|
405,866
|
|||||||||||
Other
|
(14,684
|
)
|
(2,084
|
)
|
(70,525
|
)
|
7,101
|
|||||||||
Total tax provision (benefit)
|
$
|
534,402
|
$
|
(2,203,373
|
)
|
$
|
4,083,655
|
$
|
4,191,643
|
Successor
Company
2017
|
Predecessor
Company
2016
|
|||||||
Deferred tax assets:
|
||||||||
Net operating losses
|
$
|
10,582,599
|
$
|
14,793,711
|
||||
Allowance for doubtful accounts
|
211,926
|
239,789
|
||||||
Deferred rent
|
—
|
15,553
|
||||||
Intangibles
|
—
|
11,499,513
|
||||||
Transaction costs
|
532,651
|
770,220
|
||||||
Alternative minimum tax credit
|
272,186
|
271,937
|
||||||
Depreciation
|
—
|
141,021
|
||||||
Other
|
72,321
|
126,621
|
||||||
Total deferred tax assets
|
11,671,683
|
27,858,365
|
||||||
Deferred tax liabilities:
|
||||||||
Depreciation
|
(500,343
|
)
|
—
|
|||||
Intangibles
|
(9,422,486
|
)
|
—
|
|||||
Other
|
—
|
(42,253
|
)
|
|||||
Total deferred tax liabilities
|
(9,922,829
|
)
|
(42,253
|
)
|
||||
Net deferred tax (liability) asset
|
$
|
1,748,854
|
$
|
27,816,112
|
2018
|
$
|
1,389,126
|
||
2019
|
1,152,447
|
|||
2020
|
772,735
|
|||
2021
|
108,496
|
|||
Thereafter
|
6,645
|
|||
Total future minimum payments
|
$
|
3,429,449
|
June 30,
2018
|
December 31,
2017
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Current Assets
|
||||||||
Cash
|
$
|
51,659
|
$
|
362,581
|
||||
Prepaid expenses and other current assets
|
110,694
|
13,560
|
||||||
Total Current Assets
|
162,353
|
376,141
|
||||||
Cash and held-to-maturity securities held in Trust Account
|
176,418,186
|
175,883,186
|
||||||
Total Assets
|
$
|
176,580,539
|
$
|
176,259,327
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current Liabilities
|
||||||||
Accrued expenses
|
$
|
747,805
|
$
|
480,538
|
||||
Income taxes payable
|
180,352
|
436,721
|
||||||
Advances from related party
|
275,000
|
—
|
||||||
Promissory note – related party
|
115,000
|
—
|
||||||
Total Current Liabilities
|
1,318,157
|
917,259
|
||||||
Deferred underwriting fees
|
9,190,000
|
9,190,000
|
||||||
Deferred legal fees payable
|
25,000
|
25,000
|
||||||
Total Liabilities
|
10,533,157
|
10,132,259
|
||||||
Commitments and Contingencies
|
||||||||
Common stock subject to possible redemption, $0.0001 par value; 16,104,738 and 16,112,706 shares (at redemption value of
approximately $10.00 per share as of June 30, 2018 and December 31, 2017, respectively)
|
161,047,380
|
161,127,060
|
||||||
Stockholders’ Equity
|
||||||||
Preferred stock, $0.0001 par value; 5,000,000 authorized, none issued and outstanding
|
—
|
—
|
||||||
Common stock, $0.0001 par value; 35,000,000 shares authorized; 7,788,595 and 7,780,627 shares issued and outstanding
(excluding 16,104,738 and 16,112,706 shares subject to possible redemption) as of June 30, 2018 and December 31, 2017, respectively
|
779
|
778
|
||||||
Additional paid-in capital
|
5,268,064
|
5,188,385
|
||||||
Accumulated deficit
|
(268,841
|
)
|
(189,155
|
)
|
||||
Total Stockholders’ Equity
|
5,000,002
|
5,000,008
|
||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
176,580,539
|
$
|
176,259,327
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Operating costs
|
$
|
614,652
|
$
|
106,063
|
$
|
1,027,825
|
$
|
332,819
|
||||||||
Loss from operations
|
(614,652
|
)
|
(106,063
|
)
|
(1,027,825
|
)
|
(332,819
|
)
|
||||||||
Other income:
|
||||||||||||||||
Interest income
|
708,882
|
340,465
|
1,193,551
|
402,131
|
||||||||||||
Income before taxes
|
94,230
|
234,402
|
165,726
|
69,312
|
||||||||||||
Provision for income taxes
|
(144,675
|
)
|
(109,457
|
)
|
(245,412
|
)
|
(109,457
|
)
|
||||||||
Net Income (Loss)
|
$
|
(50,445
|
)
|
$
|
124,945
|
$
|
(79,686
|
)
|
$
|
(40,145
|
)
|
|||||
Weighted average shares outstanding
|
||||||||||||||||
Basic
|
7,783,551
|
(1)
|
|
7,070,173
|
(1)
|
7,783,163
|
(1)
|
7,426,344
|
(1)
|
|||||||
Diluted
|
7,783,551
|
(1)
|
|
21,321,280
|
7,783,163
|
(1)
|
7,426,334
|
(1)
|
||||||||
Net income (loss) per common share
|
||||||||||||||||
Basic
|
$
|
(0.01
|
)
|
$
|
0.02
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
|||||
Diluted
|
(0.01
|
)
|
0.01
|
(0.01
|
)
|
(0.01
|
)
|
(1) |
This number excludes an aggregate of up to 16,104,738 shares and 16,127,226 shares subject to possible redemption at June 30, 2018 and 2017, respectively.
|
Six Months Ended
June 30,
|
||||||||
2018
|
2017
|
|||||||
Cash Flows from Operating Activities:
|
||||||||
Net loss
|
$
|
(79,686
|
)
|
$
|
(40,145
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Interest earned on held-to-maturity securities held in Trust Account
|
(1,193,551
|
)
|
(402,131
|
)
|
||||
Changes in operating assets and liabilities:
|
||||||||
Prepaid expenses and other current assets
|
(97,134
|
)
|
(56,239
|
)
|
||||
Accrued expenses
|
267,267
|
22,503
|
||||||
Income taxes payable
|
(256,369
|
)
|
109,457
|
|||||
Net cash used in operating activities
|
(1,359,473
|
)
|
(366,555
|
)
|
||||
Cash Flows from Investing Activities:
|
||||||||
Investment of cash in Trust Account
|
—
|
(175,000,000
|
)
|
|||||
Cash deposited into Trust Account
|
(25,592
|
)
|
—
|
|||||
Cash withdrawn from Trust Account
|
684,143
|
—
|
||||||
Net cash provided by (used) in investing activities
|
658,551
|
(175,000,000
|
)
|
|||||
Cash Flows from Financing Activities:
|
||||||||
Proceeds from sale of Units, net of underwriting discounts paid
|
—
|
171,940,000
|
||||||
Proceeds from sale of Placement Units
|
—
|
4,200,000
|
||||||
Proceed from issuance of common stock to Initial Stockholders
|
—
|
3,311
|
||||||
Advances from related party
|
275,000
|
—
|
||||||
Proceeds from promissory note – related party
|
115,000
|
—
|
||||||
Repayment of promissory note – related party
|
—
|
(231,846
|
)
|
|||||
Payment of offering costs
|
—
|
(463,778
|
)
|
|||||
Net cash provided by financing activities
|
390,000
|
175,447,687
|
||||||
Net Change in Cash
|
(310,922
|
)
|
81,132
|
|||||
Cash – Beginning of period
|
362,581
|
82,614
|
||||||
Cash – Ending of period
|
$
|
51,659
|
$
|
163,746
|
||||
Non-Cash investing and financing activities:
|
||||||||
Deferred underwriting fees charged to additional paid in capital
|
$
|
—
|
$
|
9,190,000
|
||||
Deferred legal fees charged to additional paid in capital
|
$
|
—
|
$
|
25,000
|
||||
Initial classification of common stock subject to possible redemption
|
$
|
—
|
$
|
161,314,270
|
||||
Change in value of common stock subject to possible redemption
|
$
|
(79,680
|
)
|
$
|
(42,010
|
)
|
●
|
in whole and not in part;
|
●
|
at a price of $0.01 per warrant;
|
●
|
upon a minimum of 30 days’ prior written notice of redemption;
|
●
|
if, and only if, the last sale price of the Company’s common stock equals or exceeds $24.00
per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders; and
|
●
|
if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying such warrants at the time of
redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption.
|
Held-To-Maturity
|
Amortized Cost
|
Gross
Holding
Gains
(Losses)
|
Fair Value
|
|||||||||||
June 30, 2018
|
U.S. Treasury Securities (Mature on 7/12/2018)
|
$
|
176,156,606
|
$
|
10,556
|
$
|
176,167,162
|
|||||||
December 31, 2017
|
U.S. Treasury Securities (Mature on 1/18/2018)
|
$
|
175,877,136
|
$
|
(80,806
|
)
|
$
|
175,796,330
|
Level 1:
|
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur
with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
Level 2: |
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical
assets or liabilities in markets that are not active.
|
Level 3: |
Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
|
Description
|
Level
|
June 30,
2018
|
December 31,
2017
|
||||||||
Assets:
|
|||||||||||
Held-to-maturity securities held in Trust Account
|
1
|
$
|
176,167,162
|
$
|
175,796,330
|
December 31,
2017
|
December 31,
2016
|
|||||||
ASSETS
|
||||||||
Current Assets
|
||||||||
Cash
|
$
|
362,581
|
$
|
82,614
|
||||
Prepaid expenses and other current assets
|
13,560
|
—
|
||||||
Total Current Assets
|
376,141
|
82,614
|
||||||
Cash and marketable securities held in Trust Account
|
175,883,186
|
—
|
||||||
Deferred offering costs
|
—
|
387,922
|
||||||
Total Assets
|
$
|
176,259,327
|
$
|
470,536
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities
|
||||||||
Accrued expenses
|
$
|
480,538
|
$
|
2,886
|
||||
Income taxes payable
|
436,721
|
—
|
||||||
Accrued offering costs
|
—
|
214,612
|
||||||
Promissory note – related party
|
—
|
231,846
|
||||||
Total Current Liabilities
|
917,259
|
449,344
|
||||||
Deferred underwriting fees
|
9,190,000
|
—
|
||||||
Deferred legal fees payable
|
25,000
|
—
|
||||||
Total Liabilities
|
10,132,259
|
449,344
|
||||||
Commitments and Contingencies
|
||||||||
Common stock subject to possible redemption, $0.0001 par value; 16,112,706 and -0- shares (at redemption value of
approximately $10.00 per share) as of December 31, 2017 and 2016, respectively
|
161,127,060
|
—
|
||||||
Stockholders’ Equity
|
||||||||
Preferred stock, $0.0001 par value; 5,000,000 authorized, none issued and outstanding
|
—
|
—
|
||||||
Common stock, $0.0001 par value; 35,000,000 shares authorized; 7,780,627 and 5,298,333 shares issued and outstanding
(excluding 16,112,706 and -0- shares subject to possible redemption) as of December 31, 2017 and 2016, respectively
|
778
|
530
|
||||||
Additional paid-in capital
|
5,188,385
|
24,470
|
||||||
Accumulated deficit
|
(189,155
|
)
|
(3,808
|
)
|
||||
Total Stockholders’ Equity
|
5,000,008
|
21,192
|
||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
176,259,327
|
$
|
470,536
|
Year Ended December
31,
|
For the
Period from
May 28,
2015
(inception)
through
December 31,
|
|||||||||||
2017
|
2016
|
2015
|
||||||||||
Operating costs
|
$
|
1,131,812
|
$
|
1,621
|
$
|
2,187
|
||||||
Loss from operations.
|
(1,131,812
|
)
|
(1,621
|
)
|
2,187
|
|||||||
Other income:
|
||||||||||||
Interest income
|
1,383,186
|
—
|
—
|
|||||||||
Income (loss) before taxes
|
251,374
|
(1,621
|
)
|
(2,187
|
)
|
|||||||
Provision for income taxes
|
(436,721
|
)
|
—
|
—
|
||||||||
Net loss
|
$
|
(185,347
|
)
|
$
|
(1,621
|
)
|
(2,187
|
)
|
||||
Weighted average shares outstanding
|
||||||||||||
Basic and diluted (1) (2)
|
7,594,116
|
5,271,666
|
5,271,666
|
|||||||||
Net loss per common share
|
||||||||||||
Basic and diluted
|
$
|
(0.02
|
)
|
$
|
(0.00
|
)
|
(0.00
|
)
|
(1) |
This number excludes an aggregate of up to 16,112,706 shares subject to possible redemption at December 31, 2017.
|
(2) |
On January 25, 2017, as a result of the underwriters’ election to exercise a portion of their over-allotment option, 26,667 shares held by the Initial Stockholders (as defined in
Note 1) were forfeited (Note 5).
|
Common Stock (1)
|
Additional
Paid-in
|
Notes
Receivable
from
|
Accumulated
|
Total
Stockholders’
Equity
|
||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Stockholders
|
Deficit
|
(Deficit)
|
|||||||||||||||||||
Balance – May 28, 2015 (inception)
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
|||||||||||||
Common stock issued to Initial Stockholders in exchange for a note receivable
|
5,298,333
|
530
|
24,470
|
(25,000
|
)
|
—
|
—
|
|||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
(2,187
|
)
|
(2,187
|
)
|
||||||||||||||||
Balance – December 31, 2015
|
5,298,333
|
$
|
530
|
$
|
24,470
|
$
|
(25,000
|
)
|
$
|
(2,187
|
)
|
$
|
(2,187
|
)
|
||||||||||
Collection of notes receivable from stockholders
|
—
|
—
|
—
|
25,000
|
—
|
25,000
|
||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
(1,621
|
)
|
(1,621
|
)
|
||||||||||||||||
Balance – December 31, 2016
|
5,298,333
|
530
|
24,470
|
—
|
(3,808
|
)
|
21,192
|
|||||||||||||||||
Issuance of common stock to Initial Stockholders
|
701,667
|
70
|
3,241
|
—
|
—
|
3,311
|
||||||||||||||||||
Sale of 17,500,000 Units, net of underwriters discount and offering expenses
|
17,500,000
|
1,750
|
162,086,162
|
—
|
—
|
162,087,912
|
||||||||||||||||||
Sale of 420,000 Placement Units
|
420,000
|
42
|
4,199,958
|
—
|
—
|
4,200,000
|
||||||||||||||||||
Forfeiture of 26,667 shares of common stock due to underwriter not exercising its full over-allotment option
|
(26,667
|
)
|
(3
|
)
|
3
|
—
|
—
|
—
|
||||||||||||||||
Common stock subject to redemption
|
(16,112,706
|
)
|
(1,611
|
)
|
(161,125,449
|
)
|
—
|
—
|
(161,127,060
|
)
|
||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
(185,347
|
)
|
(185,347
|
)
|
||||||||||||||||
Balance – December 31, 2017
|
7,780,627
|
$
|
778
|
$
|
5,188,385
|
$
|
—
|
$
|
(189,155
|
)
|
$
|
5,000,008
|
Year Ended December
31,
|
For the
Period from
May 28,
2015
(inception)
through
December 31,
|
|||||||||||
2017
|
2016
|
2015
|
||||||||||
Cash Flows from Operating Activities:
|
||||||||||||
Net loss
|
$
|
(185,347
|
)
|
$
|
(1,621
|
)
|
$
|
(2,187
|
)
|
|||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||||||
Interest earned on marketable securities held in Trust Account
|
(1,383,186
|
)
|
—
|
—
|
||||||||
Changes in operating assets and liabilities:
|
||||||||||||
Prepaid expenses and other current assets
|
(13,560
|
)
|
—
|
—
|
||||||||
Accrued expenses
|
477,652
|
999
|
1,887
|
|||||||||
Income taxes payable
|
436,721
|
—
|
—
|
|||||||||
Net cash used in operating activities
|
(667,720
|
)
|
(622
|
)
|
(300
|
)
|
||||||
Cash Flows from Investing Activities:
|
||||||||||||
Investment of cash in Trust Account
|
(175,000,000
|
)
|
—
|
—
|
||||||||
Cash withdrawn from Trust Account
|
500,000
|
—
|
—
|
|||||||||
Net cash used in investing activities
|
(174,500,000
|
)
|
—
|
—
|
||||||||
Cash Flows from Financing Activities:
|
||||||||||||
Proceeds from sale of Units, net of underwriting discounts paid
|
171,940,000
|
—
|
—
|
|||||||||
Proceeds from sale of Private Placement Units
|
4,200,000
|
—
|
—
|
|||||||||
Proceed from issuance of common stock to Initial Stockholders
|
3,311
|
—
|
—
|
|||||||||
Proceeds from collection of notes receivable from stockholders
|
—
|
25,000
|
—
|
|||||||||
Proceeds from promissory note – related party
|
—
|
231,546
|
300
|
|||||||||
Repayment of promissory note – related party
|
(231,846
|
)
|
—
|
—
|
||||||||
Payment of offering costs
|
(463,778
|
)
|
(173,310
|
)
|
—
|
|||||||
Net cash provided by financing activities
|
175,447,687
|
83,236
|
300
|
|||||||||
Net Change in Cash
|
279,967
|
82,614
|
—
|
|||||||||
Cash – Beginning
|
82,614
|
—
|
—
|
|||||||||
Cash – Ending
|
$
|
362,581
|
$
|
82,614
|
$
|
—
|
||||||
Non-Cash investing and financing activities:
|
||||||||||||
Deferred offering costs included in accrued expenses
|
$
|
—
|
$
|
214,612
|
$
|
—
|
||||||
Deferred underwriting fees charged to additional paid in capital
|
$
|
9,190,000
|
$
|
—
|
$
|
—
|
||||||
Deferred legal fees charged to additional paid in capital
|
$
|
25,000
|
$
|
—
|
$
|
—
|
||||||
Initial classification of common stock subject to possible redemption
|
$
|
161,314,270
|
$
|
—
|
$
|
—
|
||||||
Change in value of common stock subject to possible redemption
|
$
|
(187,210
|
)
|
$
|
—
|
$
|
—
|
|||||
Issuance of stock for notes receivable from stockholders
|
$
|
—
|
$
|
—
|
$
|
25,000
|
● |
in whole and not in part;
|
● |
at a price of $0.01 per warrant;
|
● |
upon a minimum of 30 days’ prior written notice of redemption;
|
● |
if, and only if, the last sale price of the Company’s common stock equals or exceeds $24.00 per share for any 20 trading days within a 30-trading day period ending on the third
trading day prior to the date on which the Company sends the notice of redemption to the warrant holders; and
|
● |
if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying such warrants at the time of redemption and for the entire
30-day trading period referred to above and continuing each day thereafter until the date of redemption.
|
December 31,
2017
|
||||
Deferred tax asset
|
||||
Organizational costs/Startup expenses
|
$
|
216,951
|
||
Total deferred tax assets
|
216,951
|
|||
Valuation allowance
|
(216,951
|
)
|
||
Deferred tax asset, net of allowance
|
$
|
—
|
Year Ended
December 31,
2017
|
||||
Federal
|
||||
Current
|
$
|
436,721
|
||
Deferred
|
(216,951
|
)
|
||
State
|
||||
Current
|
$
|
—
|
||
Deferred
|
—
|
|||
Change in valuation allowance
|
216,951
|
|||
Income tax provision
|
$
|
436,721
|
Year Ended
December 31,
2017
|
||||
Statutory federal income tax rate
|
34.0
|
%
|
||
State taxes, net of federal tax benefit
|
0.0
|
%
|
||
Deferred tax rate change
|
53.4
|
%
|
||
Change in valuation allowance
|
86.3
|
%
|
||
Income tax provision
|
173.7
|
%
|
Held-To-Maturity
|
Amortized
Cost
|
Gross
Holding
Losses
|
Fair Value
|
||||||||||
December 31, 2017
|
U.S. Treasury Securities (Mature on 1/18/2018)
|
$
|
175,877,136
|
$
|
(80,806
|
)
|
$
|
175,796,330
|
|||||
December 31, 2016
|
$
|
—
|
$
|
—
|
$
|
—
|
Level 1: |
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur
with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
Level 2: |
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical
assets or liabilities in markets that are not active.
|
Level 3: |
Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
|
Description
|
Level
|
December 31,
2017
|
December 31,
2016
|
|||||||||
Assets:
|
||||||||||||
Cash and marketable securities held in Trust Account
|
1
|
$
|
175,883,186
|
$
|
—
|