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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020 OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to 
Commission File No. 001-37986
INTERNATIONAL MONEY EXPRESS, INC.
(Exact name of registrant as specified in its charter)

Delaware47-4219082
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
9480 South Dixie Highway
Miami, Florida
33156
(Address of Principal Executive Offices)(Zip Code)

(305) 671-8000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock ($0.0001 par value)IMXI
Nasdaq Capital Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes   No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes   No
As of July 31, 2020, there were 38,048,562 shares of the registrant’s common stock, $0.0001 par value per share, outstanding. The registrant has no other class of common stock outstanding.




INTERNATIONAL MONEY EXPRESS, INC.
INDEX TO FINANCIAL STATEMENTS
Page
PART 1 - FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II - OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.



Index

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q may contain certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect our current views with respect to certain events that could have an effect on our future performance, including but without limitation, statements regarding our plans, objectives, financial performance, business strategies, expectations for our business and the business of the Company.
These statements relate to expectations concerning matters that are not historical fact and may include the words or phrases such as “would,” “will,” “should,” “expects,” “believes,” “anticipates,” “continues,” “could,” “may,” “might,” “plans,” “possible,” “potential,” “predicts,” “projects,” “forecasts,” “intends,” “assumes,” “estimates,” “approximately,” “shall,” “our planning assumptions,” “future outlook” and similar expressions, but the absence of these words does not mean that a statement is not forward-looking. Except for historical information, matters discussed in this Form 10-Q are forward-looking statements. These forward-looking statements are based largely on information currently available to our management and on our current expectations, assumptions, plans, estimates, judgments and projections about our business and our industry, as well as macroeconomic conditions, and are subject to various risks and uncertainties that could cause actual results to differ materially from historical results or those currently anticipated. Although we believe our expectations are based on reasonable estimates and assumptions, they are not guarantees of performance and there are a number of known and unknown risks, uncertainties, contingencies and other factors (many of which are outside our control) that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Accordingly, there is no assurance that our expectations will, in fact, occur or that our estimates or assumptions will be correct, and we caution investors and all others not to place undue reliance on such forward-looking statements. Some factors that could cause actual results to differ and could materially adversely affect our business, financial condition, results of operations, cash flows and liquidity include, but are not limited to:
the ability to maintain the listing of our common stock on Nasdaq;
changes in applicable laws or regulations;
the possibility that we may be adversely affected by other economic, business and/or competitive factors;
factors relating to our business, operations and financial performance, including:
the COVID-19 pandemic, responses thereto and the economic and market effects thereof, including unemployment levels and increased capital markets volatility;
competition in the markets in which we operate;
volatility in foreign exchange rates that could affect the volume of consumer remittance activity and/or affect our foreign exchange related gains and losses;
cyber-attacks or disruptions to our information technology, computer network systems and data centers;
our ability to maintain agent relationships on terms consistent with those currently in place;
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 by introducing digital platforms;
our ability to satisfy our debt obligations and remain in compliance with our credit facility requirements;
interest rate risk from elimination of the London Inter-bank Offered Rate (“LIBOR”) as a benchmark interest rate;
our success in developing and introducing new products, services and infrastructure;
customer confidence in our brand and in consumer money transfers generally;
our ability to maintain compliance with the regulatory requirements of the jurisdictions in which we operate or plan to operate;
international political factors or implementation of tariffs, border taxes or restrictions on remittances or transfers of money out of the United States;
changes in tax laws and unfavorable outcomes of tax positions we take;
political instability, currency restrictions and volatility in countries in which we operate or plan to operate;
consumer fraud and other risks relating to customers’ authentication;
weakness in U.S. or international economic conditions;
change or disruption in international migration patterns;
our ability to protect our brand and intellectual property rights;
our ability to retain key personnel; and
other economic, business and/or competitive factors, risks and uncertainties, including those described in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019.
We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
3

Index
PART 1 – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTERNATIONAL MONEY EXPRESS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except for share data)
June 30, 2020December 31, 2019
ASSETS(unaudited)
Current assets:
Cash$101,985  $86,117  
Accounts receivable, net of allowance of $808 and $759, respectively
60,023  39,754  
Prepaid wires, net5,460  18,201  
Prepaid expenses and other current assets2,536  4,155  
Total current assets170,004  148,227  
Property and equipment, net12,735  13,282  
Goodwill36,260  36,260  
Intangible assets, net23,905  27,381  
Deferred tax asset, net83  741  
Other assets1,954  1,415  
Total assets$244,941  $227,306  
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt, net$7,044  $7,044  
Accounts payable9,560  13,401  
Wire transfers and money orders payable, net47,712  40,197  
Accrued and other liabilities24,628  23,074  
Total current liabilities88,944  83,716  
Long-term liabilities:
Debt, net84,101  87,623  
Total long-term liabilities84,101  87,623  
Commitments and contingencies, see Note 13
Stockholders' equity:
Common stock $0.0001 par value; 230,000,000 shares authorized, 38,035,279 and 38,034,389 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively.
4  4  
Additional paid-in capital56,098  54,694  
Retained earnings15,842  1,176  
Accumulated other comprehensive (loss) income(48) 93  
Total stockholders' equity71,896  55,967  
Total liabilities and stockholders' equity$244,941  $227,306  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4

Index
INTERNATIONAL MONEY EXPRESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME
(in thousands, except for share data, unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2020201920202019
Revenues:
Wire transfer and money order fees, net$72,793  $70,490  $139,888  $128,941  
Foreign exchange gain, net11,660  11,623  21,214  21,025  
Other income609  562  1,211  1,058  
Total revenues85,062  82,675  162,313  151,024  
Operating expenses:
Service charges from agents and banks56,271  54,622  108,498  100,191  
Salaries and benefits7,069  7,597  14,428  15,194  
Other selling, general and administrative expenses
5,155  5,337  10,492  11,061  
Depreciation and amortization2,691  3,155  5,381  6,307  
Total operating expenses71,186  70,711  138,799  132,753  
Operating income13,876  11,964  23,514  18,271  
Interest expense1,633  2,288  3,503  4,358  
Income before income taxes12,243  9,676  20,011  13,913  
Income tax provision3,265  2,602  5,345  3,683  
Net income8,978  7,074  14,666  10,230  
Other comprehensive income (loss)3  35  (141) 43  
Comprehensive income$8,981  $7,109  $14,525  $10,273  
Earnings per common share:
Basic and diluted$0.24  $0.19  $0.39  $0.28  
Weighted-average common shares outstanding:
Basic38,035,279  37,505,598  38,035,146  36,847,845  
Diluted38,047,792  37,594,151  38,043,233  36,898,462  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5

Index
INTERNATIONAL MONEY EXPRESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands, except for share data, unaudited)
Three Months Ended
Common StockAdditional
Paid-in Capital
Retained EarningsAccumulated Other
Comprehensive
Loss
Total
Stockholders'
Equity
SharesAmount
Balance, March 31, 202038,035,279  $4  $55,412  $6,864  $(51) $62,229  
Net income—  —  —  8,978  —  8,978  
Share-based compensation—  —  686  —  —  686  
Adjustment from foreign currency translation, net
—  —  —  —  3  3  
Balance, June 30, 202038,035,279  $4  $56,098  $15,842  $(48) $71,896  

Three Months Ended
Common StockAdditional
Paid-in Capital
Accumulated
Deficit
Accumulated Other
Comprehensive
Income
Total
Stockholders'
Equity
SharesAmount
Balance, March 31, 201936,182,783  $4  $62,515  $(15,277) $6  $47,248  
Warrant exchange1,800,065  —  (10,031) —  —  (10,031) 
Net income—  —  —  7,074  —  7,074  
Share-based compensation—  —  634  —  —  634  
Adjustment from foreign currency translation, net
—  —  —  —  35  35  
Balance, June 30, 201937,982,848  $4  $53,118  $(8,203) $41  $44,960  


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

Index
INTERNATIONAL MONEY EXPRESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands, except for share data, unaudited)
Six Months Ended
Common StockAdditional
Paid-in Capital
Retained EarningsAccumulated Other
Comprehensive
(Loss) Income
Total
Stockholders'
Equity
SharesAmount
Balance, December 31, 201938,034,389  $4  $54,694  $1,176  $93  $55,967  
Net income—  —  —  14,666  —  14,666  
Issuance of common stock:
Exercise of stock options890  —  (4) —  —  (4) 
Share-based compensation—  —  1,408  —  —  1,408  
Adjustment from foreign currency translation, net
—  —  —  —  (141) (141) 
Balance, June 30, 202038,035,279  $4  $56,098  $15,842  $(48) $71,896  

Six Months Ended
Common StockAdditional
Paid-in Capital
Accumulated
Deficit
Accumulated Other
Comprehensive
Income (Loss)
Total
Stockholders'
Equity
SharesAmount
Balance, December 31, 201836,182,783  $4  $61,889  $(17,418) $(2) $44,473  
Adoption of revenue recognition accounting pronouncement
—  —  —  (1,015) —  (1,015) 
Warrant exchange1,800,065  —  (10,031) —  —  (10,031) 
Net income—  —  —  10,230  —  10,230  
Share-based compensation—  —  1,260  —  —  1,260  
Adjustment from foreign currency translation, net
—  —  —  —  43  43  
Balance, June 30, 201937,982,848  $4  $53,118  $(8,203) $41  $44,960  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7

Index

INTERNATIONAL MONEY EXPRESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
Six Months Ended June 30,
20202019
Cash flows from operating activities:
Net income$14,666  $10,230  
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization5,381  6,307  
Share-based compensation1,408  1,260  
Provision for bad debt1,101  552  
Debt origination costs amortization376  358  
Deferred income tax provision, net658  672  
Loss on disposal of property and equipment131  113  
Total adjustments9,055  9,262  
Changes in operating assets and liabilities:
Accounts receivable(21,485) (57,861) 
Prepaid wires, net11,635  17,954  
Prepaid expenses and other assets1,008  726  
Wire transfers and money orders payable, net8,648  47,222  
Accounts payable and accrued other liabilities(2,054) 4,553  
Net cash provided by operating activities21,473  32,086  
Cash flows from investing activities:
Purchases of property and equipment(1,591) (2,413) 
Acquisition of agent locations  (250) 
Net cash used in investing activities(1,591) (2,663) 
Cash flows from financing activities:
Borrowings under term loan  12,000  
Repayments of term loan(3,830) (2,402) 
Borrowings under revolving loan, net  5,000  
Debt origination costs  (240) 
Cash paid in warrant exchange  (10,031) 
Net cash (used in) provided by financing activities(3,830) 4,327  
Effect of exchange rate changes on cash(184) 105  
Net increase in cash15,868  33,855  
Cash, beginning of period86,117  73,029  
Cash, end of period$101,985  $106,884  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8

Index
INTERNATIONAL MONEY EXPRESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(in thousands, unaudited)
Six Months Ended June 30,
20202019
Supplemental disclosure of cash flow information:
Cash paid for interest$3,133  $3,783  
Cash paid for income taxes$2,403  $1,060  
Supplemental disclosure of non-cash investing activity:
Agent business acquired in exchange for receivables$  $85  
Supplemental disclosure of non-cash financing activity:
Issuance of common stock for cashless exercise of options$4  $  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
9

Index
INTERNATIONAL MONEY EXPRESS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 – BUSINESS AND ACCOUNTING POLICIES
International Money Express, Inc. (the “Company” or “us” or “we”) operates as a money transmitter between the United States of America (“U.S.”) and Canada to Mexico, Guatemala and other countries in Latin America, Africa and Asia through a network of authorized agents located in various unaffiliated retail establishments and 33 Company-operated stores throughout the U.S. and Canada.
The condensed consolidated financial statements of the Company include Intermex, its wholly-owned indirect subsidiary, Intermex Wire Transfer, LLC (“LLC”), Intermex Wire Transfers de Guatemala, S.A. (“Intermex Guatemala”) - 99.8% owned by LLC, Intermex Wire Transfer de Mexico, S.A. and Intermex Transfers de Mexico, S.A. (“Intermex Mexico”) - 98% owned by LLC, Intermex Wire Transfer Corp. - 100% owned by LLC, Intermex Wire Transfer II, LLC - 100% owned by LLC and Canada International Transfers Corp. - 100% owned by LLC. Non-controlling interest in the results of operations of consolidated subsidiaries represents the minority stockholders’ share of the profit or loss of Intermex Mexico and Intermex Guatemala. The non-controlling interest asset and non-controlling interest in the portion of the profit or loss from operations of these subsidiaries were not recorded by the Company as they are considered immaterial.
The condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). All significant inter-company balances and transactions have been eliminated from the condensed consolidated financial statements.
The Company’s interim condensed consolidated financial statements and related notes are unaudited. In the opinion of management, all adjustments (including normal recurring adjustments) and disclosures necessary for a fair presentation of these interim financial statements have been included. The results reported in these interim financial statements are not necessarily indicative of the results that may be reported for the entire year. Certain information and footnote disclosures required by GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
Risks and Uncertainties
On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of the outbreak of a new strain of coronavirus (“COVID-19”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally and national, state and local governments in the jurisdictions where we operate and serve our customers imposed emergency restrictions to mitigate the spread of the virus.
Starting in March 2020, governmental authorities took measures that restricted the normal course of operations of businesses and consumers. Although those restrictions were in place for most of the second quarter and affected the Company, sending and paying agents as well as consumers and their beneficiaries, those measures did not have a material adverse effect on the Company’s financial condition, results of operations and cash flows for the three and six month periods ended June 30, 2020.
The Company and our sending agents are considered essential businesses under current federal guidance; however, the Company’s business is dependent upon the willingness and ability of its employees, network of agents and consumers to conduct money transfer services and the ultimate effects of the economic disruption caused by the pandemic and responses thereto. Although the Company’s operations continued effectively despite social distancing and other measures taken in response to the pandemic, the ultimate impact of the COVID-19 pandemic on our results of operations and financial condition is dependent on future developments, including the duration of the pandemic and the related extent of its severity, as well as its impact on the economic conditions, particularly the level of unemployment of our customers, all of which remain uncertain and cannot be predicted at this time. If the global response to contain the COVID-19 pandemic escalates further or is unsuccessful, or if governmental decisions to ease pandemic related restrictions are ineffective, premature, counterproductive or reversed, the Company could experience a material adverse effect on its business, financial condition, results of operations and cash flows.
Accounting Pronouncements
The Financial Accounting Standards Board (“FASB”) issued guidance, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous GAAP. The guidance requires that a lessee recognizes a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term on the balance sheet. This guidance is required to be adopted by the Company on January 1, 2022 and may be applied using either the earliest period adjustment method or the modified retrospective approach. The adoption of this guidance is not expected to have a material impact on the condensed consolidated financial statements.
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The FASB issued amended guidance, Intangibles – Goodwill and other (Topic 350): Simplifying the Test for Goodwill Impairment. The amended standard simplifies how an entity tests goodwill by eliminating Step 2 of the goodwill impairment test related to measuring an impairment charge. Instead, impairment will be recorded for the amount that the carrying amount of a reporting unit exceeds its fair value. This new guidance is effective for the Company on January 1, 2021. The adoption of this guidance is not expected to have a material impact on the condensed consolidated financial statements.
The FASB issued amended guidance, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amended standard requires implementation costs incurred by customers in cloud computing arrangements to be deferred and recognized over the term of the arrangement, if those costs would be capitalized by the customers in a software licensing arrangement. This new guidance is effective for the Company on January 1, 2021. The Company is currently evaluating the impact this guidance will have on the condensed consolidated financial statements.
The FASB issued guidance, Simplifying the Accounting for Income Taxes (Topic 740), which removes certain exceptions to the general principles in Topic 740 and improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This new guidance is effective for the Company on January 1, 2021. The adoption of this guidance is not expected to have a material impact on the condensed consolidated financial statements.
The FASB issued guidance, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, regarding the measurement of credit losses for certain financial instruments. The new standard replaces the incurred loss model with a current expected credit loss (“CECL”) model. The CECL model is based on historical experience, adjusted for current conditions and reasonable and supportable forecasts. The Company is currently required to adopt the new standard on January 1, 2023. The Company is currently evaluating the impact this guidance will have on the condensed consolidated financial statements.
The FASB issued guidance, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of interbank offered rates (“IBORs”) and, particularly, the risk of cessation of the LIBOR, regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. This accounting standards update provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. This new guidance can be adopted by the Company no later than December 1, 2022, with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the condensed consolidated financial statements.
NOTE 2 – REVENUES
The Company recognized revenues from contracts with customers for the three and six months ended June 30, 2020 and 2019, as follows (in thousands):
Three Months Ended
June 30,
Six Months Ended
June 30,
2020201920202019
Wire transfer and money order fees$72,965  $70,833  $140,281  $129,491  
Discounts and promotions(172) (343) (393) (550) 
Wire transfer and money order fees, net72,793  70,490  139,888  128,941  
Foreign exchange gain, net11,660  11,623  21,214  21,025  
Other income609  562  1,211  1,058  
Total revenues$85,062  $82,675  $162,313  $151,024  

There are no significant initial costs incurred to obtain contracts with customers, although the Company has a loyalty program under which customers earn one point for each wire transfer completed. Points can be redeemed for a discounted wire transaction fee or foreign exchange rate. The discounts vary by country, and the earned points expire if the customer has not initiated and completed an eligible wire transfer transaction within the immediately preceding 180 day period. In addition, earned points will expire 30 days after the end of the program. Therefore, because the loyalty program benefits represent a future performance obligation, a portion of the initial consideration is recorded as deferred revenue (see Note 7) and a corresponding loyalty program expense is recorded as contra revenue. Revenue from this performance obligation is recognized upon customers redeeming points or upon expiration of any points outstanding.
Except for the loyalty program discussed above, our revenues include only one performance obligation, which is to collect the customer’s money and make funds available for payment, generally on the same day, to a designated recipient in the currency requested.
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The Company also offers several other services, including money orders and check cashing, for which revenue is derived from a fee per transaction. For substantially all of the Company’s revenues, the Company acts as principal in the transactions and reports revenue on a gross basis, because the Company controls the service at all times prior to transfer to the customer, is primarily responsible for fulfilling the customer contracts, has the risk of loss and has the ability to establish transaction prices.
NOTE 3 – ACCOUNTS RECEIVABLE, NET OF ALLOWANCE
Accounts receivable represent outstanding balances from sending agents for pending wire transfers or money orders from our customers. The outstanding balance consists of the following (in thousands):
June 30, 2020December 31, 2019
Accounts receivable$60,831  $40,513  
Allowance for credit losses(808) (759) 
Accounts receivable, net$60,023  $39,754  

The changes in the allowance for credit losses is as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
Beginning balance$1,477  $1,242  $1,236  $1,290  
Provision364  192  1,101  552  
Charge-offs(589) (272) (1,186) (728) 
Recoveries98  74  199  122  
Ending Balance$1,350  $1,236  $1,350  $1,236  

The allowance for credit losses allocated by financial instrument category is as follows (in thousands):
June 30, 2020December 31, 2019
Accounts receivable$808  $759  
Notes receivable (1)
542  477  
Allowance for credit losses$1,350  $1,236  
(1) This allowance relates to $1.5 million and $1.3 million in notes receivable from sending agents as of June 30, 2020 and December 31, 2019, respectively. The current portion of these notes amounted to $1.1 million and $1.0 million as of June 30, 2020 and December 31, 2019, respectively, The net current portion is included in prepaid expenses and other current assets (see Note 4) and the net long-term portion is included in other assets in the condensed consolidated balance sheets.

NOTE 4 – PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consisted of the following (in thousands):
June 30, 2020December 31, 2019
Prepaid insurance$188  $404  
Prepaid fees786  1,211  
Notes receivable, net of allowance675  648  
Prepaid taxes  1,025  
Other prepaid expenses and current assets887  867  
$2,536  $4,155  

NOTE 5 – GOODWILL AND INTANGIBLE ASSETS
Intangible assets on the condensed consolidated balance sheets of the Company consist of goodwill, agent relationships, trade name, developed technology and other intangible assets. Agent relationships, trade name and developed technology are all amortized over 15 years using an accelerated method that correlates with the projected realization of the benefit. The agent relationships intangible represents the network of independent sending agents; trade name refers to the Intermex name, branded on all agent locations and well recognized in the market; and developed technology includes the state-of-the-art system that the Company has continued to develop and improve upon over the past 20 years. Other intangible assets primarily relate to the acquisition of certain agent locations or Company-operated stores, which are amortized on a straight line basis over 10 years. The determination of our intangible fair values includes several assumptions that
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are subject to various risks and uncertainties. Management believes it has made reasonable estimates and judgments concerning these risks and uncertainties. See below for further discussion on impairment.
The following table presents the changes in goodwill and intangible assets (in thousands):
GoodwillIntangibles
Balance at December 31, 2019$36,260  $27,381  
Amortization expense  (3,476) 
Balance at June 30, 2020$36,260  $23,905  
Amortization expense related to intangible assets for the next five years and thereafter is as follows (in thousands):
2020$3,475  
20215,161  
20223,997  
20232,989  
20242,270  
Thereafter6,013  
$23,905  

Due to the COVID-19 pandemic that has resulted in a deterioration in macro-economic conditions and increased stock market volatility, the Company performed a qualitative assessment of goodwill during the second quarter of 2020 to determine whether a quantitative test was necessary. Although our fair value measurements include some significant inputs, such as the Company’s forecasted revenues and assumed turnover of agent locations, that may have or will be affected by the pandemic, we believe that as of June 30, 2020, the effects of the pandemic have not had a material negative effect on the Company’s financial condition, results of operations and cash flows. As a result, there are currently no indicators that the fair value of the Company’s goodwill is below its carrying amount based on our qualitative assessment. Therefore, we determined that a quantitative test was not necessary as of June 30, 2020.
For our finite-lived intangibles, we also assessed during the second quarter of 2020 whether there were events or changes in circumstances that indicated that the carrying amounts of our intangible assets may not be recoverable. Similar to our goodwill assessment above, we believe that as of June 30, 2020, the effects of the COVID-19 pandemic have not had a material negative effect on the company’s financial condition, results of operations and cash flows. As a result, there are currently no indicators that could require an impairment test. Therefore, we determined that the carrying amounts of our intangibles are recoverable as of June 30, 2020.
We will continue to monitor this evolving pandemic to determine the need, if any, to further evaluate for impairment our goodwill and intangible assets.
NOTE 6 – WIRE TRANSFERS AND MONEY ORDERS PAYABLE, NET
Wire transfers and money orders payable, net consisted of the following (in thousands):
June 30, 2020December 31, 2019
Wire transfers payable, net$19,762  $16,058  
Customer voided wires payable13,114  10,937  
Money orders payable14,836  13,202  
$47,712  $40,197  
Customer voided wires payable consist of wire transfers that were not completed because the recipient did not collect the funds within 30 days and the sender has not claimed the funds and, therefore, are considered unclaimed property. Unclaimed property laws of each state in the United States in which we operate, the District of Columbia, and Puerto Rico require us to track certain information for all of our money remittances and payment instruments and, if the funds underlying such remittances and instruments are unclaimed at the end of an applicable statutory abandonment period, require us to remit the proceeds of the unclaimed property to the appropriate jurisdiction. Applicable statutory abandonment periods range from three to seven years.
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NOTE 7 – ACCRUED AND OTHER LIABILITIES
Accrued and other liabilities consisted of the following (in thousands):
June 30, 2020December 31, 2019
Commissions payable to sending agents$11,163  $10,124  
Accrued legal settlement (see Note 13)2,925  3,250  
Accrued salaries and benefits2,008  2,374  
Accrued bank charges1,137  976  
Accrued interest12  17  
Accrued legal fees5  120  
Accrued other professional fees700  655  
Accrued taxes3,423  2,345  
Deferred revenue loyalty program2,494  2,495  
Other761  718  
$24,628  $23,074  

The following table shows the changes in the deferred revenue loyalty program liability (in thousands):
Balance, December 31, 2019$2,495  
Revenue deferred during the period852  
Revenue recognized during the period(853) 
Balance, June 30, 2020$2,494  

NOTE 8 – DEBT
Debt consisted of the following (in thousands):
June 30, 2020December 31, 2019
Term loan$93,214  $97,044  
Less: Current portion of long-term debt (1)
(7,044) (7,044) 
Less: Debt origination costs(2,069) (2,377) 
$84,101  $87,623  
(1)Current portion of long-term debt is net of debt origination costs of approximately $0.6 million both at June 30, 2020 and December 31, 2019.
The Company and certain of its domestic subsidiaries as borrowers (the “Loan Parties”) have a financing agreement (as amended, the “Credit Agreement”) with a group of banking institutions. The Credit Agreement provides for a $35 million revolving credit facility, a $90 million term loan facility and an up to $30 million incremental facility of which $12 million was utilized in the second quarter of 2019. The Credit Agreement also provides for the issuance of letters of credit, which would reduce availability under the revolving credit facility. The maturity date of the Credit Agreement is November 7, 2023. As of June 30, 2020 and December 31, 2019, there were no outstanding amounts drawn on the revolving credit facility.
Interest on the term loan facility and revolving credit facility under the Credit Agreement is determined by reference to either LIBOR or a “base rate”, in each case plus an applicable margin of 4.50% per annum for LIBOR loans or 3.50% per annum for base rate loans. The Company is also required to pay a fee on the unused portion of the revolving credit facility equal to 0.35% per annum. The effective interest rates for the six months ended June 30, 2020 for the term loan and revolving credit facility were 6.23% and 1.09%, respectively.
The principal amount of the term loan facility under the Credit Agreement must be repaid in consecutive quarterly installments of 5.0% in year 1, 7.5% in years 2 and 3, 10.0% in years 4 and 5, in each case on the last day of each quarter, which commenced in March 2019 with a final payment at maturity. The loans under the Credit Agreement may be prepaid at any time without premium or penalty.
The Credit Agreement contains covenants that limit the Company’s and its subsidiaries’ ability to, among other things, grant liens, incur additional indebtedness, make acquisitions or investments, dispose of certain assets, make dividends and distributions, change the nature of their businesses, enter into certain transactions with affiliates or amend the terms of material indebtedness.
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The Credit Agreement also contains financial covenants that require the Company to maintain a quarterly minimum fixed charge coverage ratio of 1.25:1.00 and a quarterly maximum consolidated leverage ratio of 3.25:1.00.
The obligations under the Credit Agreement are guaranteed by the Company and certain domestic subsidiaries of the Company and secured by liens on substantially all of the assets of the Loan Parties, subject to certain exclusions and limitations.
On April 20, 2020, the Company received funds under the Paycheck Protection Program (the “Program”) in the amount of $3.5 million. Although the Company believes that it met all eligibility criteria for a loan under the Program at the time of its application, subsequent to receiving the funds, the Small Business Administration (“SBA”), in consultation with the Department of the Treasury (“Treasury”), provided additional guidance to address public, borrower and lender questions concerning the eligibility criteria under the Program. Based on this guidance provided by the SBA and Treasury, the Company returned the funds received under the Program on April 29, 2020.
NOTE 9 – FAIR VALUE MEASUREMENTS
The Company determines fair value in accordance with the provisions of FASB guidance, Fair Value Measurements and Disclosures, which defines fair value as an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a three-level fair value hierarchy that prioritizes the inputs used to measure fair value was established. There are three levels of inputs used to measure fair value. Level 1 relates to quoted market prices for identical assets or liabilities. Level 2 relates to observable inputs other than quoted prices included in Level 1. Level 3 relates to unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The Company’s non-financial assets measured at fair value on a nonrecurring basis include goodwill and intangibles assets (see Note 5 for further discussion). The Company’s cash is representative of fair value as these balances are comprised of deposits available on demand. Accounts receivable, prepaid wires, accounts payable and wire transfers and money orders payable are representative of their fair values because of the short turnover of these items.
The Company’s financial instruments that are not measured at fair value on a recurring basis include its revolving credit facility and term loan. The fair value of the term loan, which approximates book value, is estimated by discounting the future cash flows using a current market interest rate. The estimated fair value of the revolving credit facility would approximate face value given the payment schedule and interest rate structure, which approximates current market interest rates.
NOTE 10 – SHARE-BASED COMPENSATION
The International Money Express, Inc. 2020 Omnibus Equity Compensation Plan (the “2020 Plan”) was approved by stockholders at the 2020 Annual Meeting of Stockholders on June 26, 2020, and provides for the granting of stock-based incentive awards, including stock options and restricted stock units (“RSUs”), to employees and independent directors of the Company. There are 3.7 million shares of the Company's common stock reserved for issuance under the 2020 Plan, consisting of 3.3 million new issuable shares and 0.4 million shares that were available for grant under the International Money Express, Inc. 2018 Omnibus Equity Compensation Plan (the “2018 Plan”). As of June 30, 2020, no stock options or RSUs have been issued under the 2020 Plan. The 2020 Plan replaced the 2018 Plan effective June 26, 2020. As of June 30, 2020, there were 3.3 million shares reserved for outstanding awards granted under the 2018 Plan.
The value of each option grant is estimated on the grant date using the Black-Scholes option pricing model (“BSM”). The option pricing model requires the input of highly subjective assumptions, including the grant date fair value of our common stock, expected volatility, risk-free interest rates, expected term and expected dividend yield. To determine the grant date fair value of the Company’s common stock, we use the closing market price of our common stock at the grant date. We also use an expected volatility based on the historical volatility of the Company's common stock and the “simplified” method for calculating the expected life of our stock options as the options are “plain vanilla” and we do not have any significant historical post-vesting activity. We have elected to account for forfeitures as they occur. The risk-free interest rates are obtained from publicly available U.S. Treasury yield curve rates.
Share-based compensation is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period. The stock options issued by the Company under the 2018 Plan have 10-year terms and vest in four equal annual installments beginning one year after the date of the grant. During the six months ended June 30, 2020, 11.3 thousand stock options vested. The Company recognized compensation expense for stock options of approximately $0.6 million for both the three months ended June 30, 2020 and 2019 and $1.2 million for both the six months ended June 30, 2020 and 2019, which are included in salaries and benefits in the condensed consolidated statements of operations and comprehensive income. As of June 30, 2020, there were 3.1 million outstanding stock options and unrecognized compensation expense of $6.8 million is expected to be recognized over a weighted-average period of 2.4 years.
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A summary of the stock option activity under the 2018 Plan during the six months ended June 30, 2020 is presented below: