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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 September 30, 2021
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 filer
Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes   No ☒

As of October 29, 2021, there were 38,613,689 shares of the registrant’s common stock, $0.0001 par value per share, outstanding. The registrant has no other class of common stock outstanding.

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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.

2

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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 or contribute to such differences include, but are not limited to, the following:
changes in applicable laws or regulations;
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, inflation, recovery from related adverse economic effects, 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 environment, computer network systems and data centers;
our ability to maintain agent relationships on terms consistent with those currently in place;
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 regulatory requirements of the jurisdictions in which we operate or plan to operate;
international political factors or implementation of tariffs, border taxes or restrictions on remittances or transfers of money out of the United States and Canada;
changes in U.S. tax laws;
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;
changes in immigration laws and their enforcement;
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 “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections in our Annual Report on Form 10-K for the year ended December 31, 2020.
All forward-looking statements that are made or attributable to us are expressly qualified in their entirety by this cautionary notice. The forward-looking statements included herein are only made as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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PART 1 – FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS
INTERNATIONAL MONEY EXPRESS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except for share data)
September 30, 2021December 31, 2020
ASSETS(unaudited)
Current assets:
Cash$125,132 $74,907 
Accounts receivable, net of allowance of $2,156 and $1,503, respectively
97,406 55,017 
Prepaid wires, net14,355 53,281 
Prepaid expenses and other current assets6,369 3,521 
Total current assets243,262 186,726 
Property and equipment, net14,051 13,021 
Goodwill36,260 36,260 
Intangible assets, net16,560 20,430 
Other assets7,973 3,036 
Total assets$318,106 $259,473 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt, net$3,882 $7,044 
Accounts payable13,696 12,771 
Wire transfers and money orders payable, net59,520 41,746 
Accrued and other liabilities27,108 22,380 
Total current liabilities104,206 83,941 
Long-term liabilities:
Debt, net80,181 80,579 
Deferred tax liability, net1,365 692 
Total long-term liabilities81,546 81,271 
Commitments and contingencies, see Note 15
Stockholders’ equity:
Common stock $0.0001 par value; 230,000,000 shares authorized, 38,739,480 and 38,217,125 shares issued and 38,669,040 and 38,217,125 shares outstanding as of September 30, 2021 and December 31, 2020, respectively.
4 4 
Additional paid-in capital65,036 59,310 
Retained earnings68,671 34,960 
Accumulated other comprehensive loss(152)(13)
Treasury stock, at cost; 70,440 shares as of September 30, 2021 (none as of December 31, 2020)
(1,205) 
Total stockholders’ equity132,354 94,261 
Total liabilities and stockholders’ equity$318,106 $259,473 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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INTERNATIONAL MONEY EXPRESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME
(in thousands, except for share data, unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Revenues:
Wire transfer and money order fees, net$104,191 $82,646 $284,409 $222,534 
Foreign exchange gain, net15,643 12,296 45,347 33,510 
Other income873 652 2,275 1,863 
Total revenues120,707 95,594 332,031 257,907 
Operating expenses:
Service charges from agents and banks81,416 63,904 222,654 172,403 
Salaries and benefits10,859 8,084 30,909 22,512 
Other selling, general and administrative expenses
9,966 6,336 22,549 16,827 
Depreciation and amortization2,362 2,698 7,041 8,079 
Total operating expenses104,603 81,022 283,153 219,821 
Operating income16,104 14,572 48,878 38,086 
Interest expense968 1,530 3,562 5,033 
Income before income taxes15,136 13,042 45,316 33,053 
Income tax provision3,629 3,544 11,605 8,889 
Net income11,507 9,498 33,711 24,164 
Other comprehensive (loss) income(151)14 (139)(127)
Comprehensive income$11,356 $9,512 $33,572 $24,037 
Earnings per common share:
Basic$0.30 $0.25 $0.88 $0.64 
Diluted$0.29 $0.25 $0.86 $0.63 
Weighted-average common shares outstanding:
Basic38,647,931 38,050,610 38,441,767 38,040,339 
Diluted39,336,051 38,652,707 39,071,622 38,246,429 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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INTERNATIONAL MONEY EXPRESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands, except for share data, unaudited)
Three Months Ended September 30, 2021
Common StockTreasury StockAdditional
Paid-in Capital
Retained EarningsAccumulated Other
Comprehensive
Loss
Total
Stockholders’
Equity
SharesAmountSharesAmount
Balance, June 30, 202138,585,724$4 $ $64,009 $57,164 $(1)$121,176 
Net income— — — 11,507 — 11,507 
Issuance of common stock:
Exercise of stock options, net of shares withheld for taxes152,678— — (85)— — (85)
Fully vested shares1,078— — — — — — 
Share-based compensation— — 1,112 — — 1,112 
Adjustment from foreign currency translation, net— — — — (151)(151)
Acquisition of treasury stock, at cost— (70,440)(1,205)— — — (1,205)
Balance, September 30, 202138,739,480$4 (70,440)$(1,205)$65,036 $68,671 $(152)$132,354 

Three Months Ended September 30, 2020
Common StockAdditional
Paid-in Capital
Retained EarningsAccumulated Other
Comprehensive Loss
Total
Stockholders’
Equity
SharesAmount
Balance, June 30, 202038,035,279$4 $56,098 $15,842 $(48)$71,896 
Net income— — 9,498 — 9,498 
Issuance of common stock:
Exercise of stock options10,607— (106)— — (106)
Restricted stock units13,851— — — — — 
Share-based compensation— 801 — — 801 
Adjustment from foreign currency translation, net
— — — 14 14 
Balance, September 30, 202038,059,737$4 $56,793 $25,340 $(34)$82,103 


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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INTERNATIONAL MONEY EXPRESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(CONTINUED)
(in thousands, except for share data, unaudited)
Nine Months Ended September 30, 2021
Common StockTreasury StockAdditional
Paid-in Capital
Retained EarningsAccumulated Other
Comprehensive
Loss
Total
Stockholders’
Equity
SharesAmountSharesAmount
Balance, December 31, 202038,217,125$4 $ $59,310 $34,960 $(13)$94,261 
Net income— — — 33,711 — 33,711 
Issuance of common stock:
Exercise of stock options, net of shares withheld for taxes397,585— — 2,344 — — 2,344 
Restricted stock units33,381— — — — — — 
Restricted stock awards88,215— — — — — — 
Fully vested shares3,174— — — — — — 
Share-based compensation— — 3,382 — — 3,382 
Adjustment from foreign currency translation, net— — — — (139)(139)
Acquisition of treasury stock, at cost— (70,440)(1,205)— — — (1,205)
Balance, September 30, 202138,739,480$4 (70,440)$(1,205)$65,036 $68,671 $(152)$132,354 

Nine Months Ended September 30, 2020
Common StockAdditional
Paid-in Capital
Retained EarningsAccumulated Other
Comprehensive
(Loss) Income
Total
Stockholders’
Equity
SharesAmount
Balance, December 31, 201938,034,389$4 $54,694 $1,176 $93 $55,967 
Net income— — 24,164 — 24,164 
Issuance of common stock:
Exercise of stock options11,497— (110)— — (110)
Restricted stock units13,851— — — — — 
Share-based compensation— 2,209 — — 2,209 
Adjustment from foreign currency translation, net
— — — (127)(127)
Balance, September 30, 202038,059,737$4 $56,793 $25,340 $(34)$82,103 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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INTERNATIONAL MONEY EXPRESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
Nine Months Ended September 30,
20212020
Cash flows from operating activities:
Net income$33,711 $24,164 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization7,041 8,079 
Share-based compensation3,382 2,209 
Provision for credit losses1,009 1,421 
Debt origination costs amortization626 564 
Deferred income tax provision, net673 1,312 
Loss on disposal of property and equipment1,311 336 
Total adjustments14,042 13,921 
Changes in operating assets and liabilities:
Accounts receivable, net(43,402)(21,694)
Prepaid wires, net38,561 7,773 
Prepaid expenses and other assets(6,210)433 
Wire transfers and money orders payable, net18,136 9,465 
Accounts payable and accrued and other liabilities5,867 (2,465)
Net cash provided by operating activities60,705 31,597 
Cash flows from investing activities:
Purchases of property and equipment(5,523)(2,770)
Net cash used in investing activities(5,523)(2,770)
Cash flows from financing activities:
Repayments of term loan facility(43,135)(5,746)
Borrowings under term loan facility40,158  
Debt origination costs(2,894) 
Proceeds from exercise of stock options3,192 20 
Payments for stock-based awards(849) 
Repurchases of common stock(1,205) 
Net cash used in financing activities(4,733)(5,726)
Effect of exchange rate changes on cash(224)(151)
Net increase in cash50,225 22,950 
Cash, beginning of period74,907 86,117 
Cash, end of period$125,132 $109,067 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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INTERNATIONAL MONEY EXPRESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(in thousands, unaudited)
Nine Months Ended September 30,
20212020
Supplemental disclosure of cash flow information:
Cash paid for interest$2,940 $4,475 
Cash paid for income taxes$12,567 $7,323 
Supplemental disclosure of non-cash financing activity:
Issuance of common stock for cashless exercise of stock options$2,973 $130 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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INTERNATIONAL MONEY EXPRESS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1 – BUSINESS AND ACCOUNTING POLICIES
International Money Express, Inc. (the “Company” or “us” or “we”) operates as a money transmitter between the United States of America (“United States” or “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 34 Company-operated stores throughout the United States and Canada.

During March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus (“COVID-19”). Although the worst effects of the pandemic appear to have subsided in the United States, the pandemic has had and continues to have a significant effect on economic conditions in the United States, and continues to cause significant uncertainties in the U.S. and global economies, particularly as a result of new Delta and other variants of COVID-19, which appear to be causing an increase in COVID-19 cases in certain places around the world. Public health officials and medical professionals have warned that COVID-19 resurgences may continue to occur due to a variety of factors, including the extent of economic activity, social interaction, vaccination rates and the emergence of potent variants. It is unclear how long any resurgence will last, how severe it will be, and what safety measures governments and businesses will impose in response.

The extent to which the COVID-19 pandemic affects our business, operations and financial results depends, and will continue to depend, on numerous evolving factors that we may not be able to accurately predict. Although the Company’s operations continued effectively despite social distancing and other measures taken in response to the pandemic, the ultimate impact of the COVID-19 pandemic on our financial condition, results of operations and cash flows is dependent on future developments, including the duration or resurgence 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, inflation, interest rate levels and foreign exchange volatility, all of which remain uncertain and cannot be predicted at this time. If the global response to contain and remedy the COVID-19 pandemic escalates further or is unsuccessful, or if governmental decisions to ease pandemic related restrictions are ineffective, premature or counterproductive, or if an escalation in the global response to contain the COVID-19 pandemic is required or is unsuccessful, the Company could experience a material adverse effect on its financial condition, results of operations and cash flows.

The condensed consolidated financial statements of the Company include Intermex Holdings, Inc., its wholly-owned indirect subsidiary, Intermex Wire Transfer, LLC (“LLC”), Intermex Wire Transfers de Guatemala, S.A. (“Intermex Guatemala”) - 100% 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.

The condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“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 condensed consolidated financial statements have been included. The results reported in these interim condensed consolidated 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 interim 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, 2020.

Accounting Pronouncements

The Financial Accounting Standards Board (“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 guidance was adopted by the Company on January 1, 2021. The adoption of this guidance did not have a material impact on the condensed consolidated financial statements.

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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 guidance was adopted by the Company on January 1, 2021. The adoption of this guidance did not have a material impact on the condensed consolidated financial statements.

The FASB issued guidance, Simplifying the Accounting for Income Taxes (Topic 740), which removes certain exceptions to the general principles in Topic 740 and improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This guidance was adopted by the Company on January 1, 2021. The adoption of this guidance did not have a material impact on the condensed consolidated financial statements.

The FASB issued guidance, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous 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 using the modified retrospective approach. The Company is currently evaluating the impact this guidance will have 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 required to adopt the new guidance on January 1, 2023. The Company is currently evaluating the impact this guidance will have on the condensed consolidated financial statements.

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

NOTE 2 – REVENUES
The Company recognized revenues from contracts with customers for the three and nine months ended September 30, 2021 and 2020, as follows (in thousands):

Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Wire transfer and money order fees$104,543 $82,890 $285,430 $223,171 
Discounts and promotions(352)(244)(1,021)(637)
Wire transfer and money order fees, net104,191 82,646 284,409 222,534 
Foreign exchange gain, net15,643 12,296 45,347 33,510 
Other income873 652 2,275 1,863 
Total revenues$120,707 $95,594 $332,031 $257,907 

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 a foreign exchange rate that is more favorable to the customer. The customer benefits 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. Because the loyalty program benefits represent a future performance obligation, a portion of the initial consideration is recorded as deferred revenue loyalty program (see Note 8) 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.

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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.

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 AND NOTES RECEIVABLE, NET OF ALLOWANCE
Accounts Receivable

Accounts receivable represents outstanding balances from sending agents for pending wire transfers or money orders from our customers. The outstanding balance of accounts receivable, net of allowance for credit losses, consists of the following (in thousands):

September 30, 2021December 31, 2020
Accounts receivable$99,562 $56,520 
Allowance for credit losses(2,156)(1,503)
Accounts receivable, net$97,406 $55,017 

Notes Receivable

The Company had notes receivable, net of allowance for credit losses, from sending agents as follows (in thousands):

September 30, 2021December 31, 2020
Notes receivable, current$685 $710 
Allowance for credit losses(17)(244)
Net current$668 $466 
Notes receivable, long-term$982 $816 
Allowance for credit losses(33)(295)
Net long-term$949 $521 

The net current portion of notes receivable 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. The notes have interest rates ranging from 0% to 16% per annum. At September 30, 2021 and December 31, 2020, there were $1.7 million and $1.5 million, respectively, of notes collateralized by personal guarantees from the sending agents and assets from their businesses in case of a default by the agent.

The maturities of notes receivable at September 30, 2021 are as follows (in thousands):
Unpaid Principal
Balance
Under 1 year$685 
Between 1 and 2 years982 
Total$1,667 

Allowance for Credit Losses

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The changes in the allowance for credit losses related to accounts receivable and notes receivable are as follows (in thousands):

Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Beginning balance$2,028 $1,350 $2,042 $1,236 
Provision342 320 1,009 1,421 
Charge-offs(361)(120)(1,249)(1,338)
Recoveries197 154 404 385 
Ending Balance$2,206 $1,704 $2,206 $1,704 

The allowance for credit losses allocated by financial instrument category is as follows (in thousands):

September 30, 2021December 31, 2020
Accounts receivable$2,156 $1,503 
Notes receivable50 539 
Allowance for credit losses$2,206 $2,042 

Change in Accounting Estimate to Calculate the Allowance for Credit Losses

Accounts receivable and notes receivable are recorded at their net realizable value, which is net of an allowance for credit losses. The current accounting policy for the allowance for credit losses considers a number of factors, predominantly collection experience and historical net loss rates, but also other qualitative considerations.

In the third quarter of 2021, the Company modified its estimate of the allowance for credit losses and made refinements to the related calculation methodology of net historical loss rates for the different pools of accounts and notes receivable grouped based on similar characteristics.

The aforementioned change was treated as a change in accounting estimate for accounting purposes and applied prospectively beginning August 2021. The impact of the change in estimate and any effect in comparability to prior periods are not material. Further, the change is not expected to materially impact any financial statement line items or the Company’s results from operations in a future period.


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NOTE 4 – PREPAID EXPENSES AND OTHER ASSETS
Prepaid expenses and other current assets consisted of the following (in thousands):

September 30, 2021December 31, 2020
Prepaid insurance$1,040 $465 
Prepaid fees and services1,201 1,452 
Notes receivable, net of allowance668 466 
Assets pending settlement400 218 
Prepaid income taxes1,756 103 
Prepaid expenses and current assets - other1,304 817 
$6,369 $3,521 

Other assets consisted of the following (in thousands):


September 30, 2021December 31, 2020
Revolving line origination fees$2,108 $423 
Agent incentives advances980 1,110 
Notes receivable, net of allowance949 521 
Funds held by seized banking entities3,239 130 
Other assets697 852 
$7,973 $3,036 

During September 2021, local banking regulators in Mexico resolved to close and liquidate a local financial institution, citing a lack of compliance with minimum capital requirements. The Company had approximately $5.2 million on deposit with this bank when it was closed. In accordance with the banking regulations in Mexico, large depositors such as the Company will be paid once the assets of the financial institution are liquidated. Currently, it is difficult to predict the length of the liquidation process or if the proceeds from the asset liquidation will be sufficient to recover a portion or all of its funds on deposit. As of September 30, 2021, the Company recognized a pre-tax provision of $2.0 million in connection with the closure of the financial institution, which is included in other selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive income.

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 over the past 20 years. Other intangible assets primarily relate to the acquisition of 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 are subject to various risks and uncertainties. Management believes it has made reasonable estimates and judgments concerning these risks and uncertainties, and no impairment charges were determined necessary to be recognized during the three and nine months ended September 30, 2021.

The following table presents the changes in goodwill and intangible assets (in thousands):

GoodwillIntangibles
Balance at December 31, 2020$36,260 $20,430 
Amortization expense (3,870)
Balance at September 30, 2021$36,260 $16,560 

Amortization expense related to intangible assets for the next five years and thereafter is as follows (in thousands):

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2021$1,291 
20223,997 
20232,989 
20242,270 
20251,717 
Thereafter4,296 
$16,560 

NOTE 6 – PROPERTY AND EQUIPMENT
Property and equipment amounted to $14.1 million and $13.0 million as of September 30, 2021 and December 31, 2020, respectively, net of $13.6 million and $10.9 million of accumulated depreciation, respectively. During the three months ended September 30, 2021, the Company wrote-off $1.0 million in software development expenditures, which is included in other selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive income.


NOTE 7 – WIRE TRANSFERS AND MONEY ORDERS PAYABLE, NET
Wire transfers and money orders payable, net consisted of the following (in thousands):

September 30, 2021December 31, 2020
Wire transfers payable, net$26,962 $11,806 
Customer voided wires payable15,606 13,374 
Money orders payable16,952 16,566 
$59,520 $41,746 

Customer voided wires payable consist primarily 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.

NOTE 8 – ACCRUED AND OTHER LIABILITIES
Accrued and other liabilities consisted of the following (in thousands):

September 30, 2021December 31, 2020
Commissions payable to sending agents$15,048 $12,500 
Accrued salaries and benefits3,674 2,957 
Accrued bank charges1,410 1,170 
Accrued legal fees65 75 
Accrued other professional fees1,244 826 
Accrued taxes1,199 1,276 
Deferred revenue loyalty program3,181 2,750 
Other1,287 826 
$27,108 $22,380 

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

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Balance, December 31, 2020$2,750 
Revenue deferred during the period1,657 
Revenue recognized during the period(1,226)
Balance, September 30, 2021$3,181 

NOTE 9 – DEBT
Debt consisted of the following (in thousands):

September 30, 2021December 31, 2020
Term loan facility$86,406 $89,383 
86,406 89,383 
Less: Current portion of long-term debt (1)
(3,882)(7,044)
Less: Debt origination costs(2,343)(1,760)
$80,181 $80,579 
(1)Current portion of long-term debt is net of debt origination costs of approximately $0.5 million and $0.6 million at September 30, 2021 and December 31, 2020, respectively.

The Company and certain of its domestic subsidiaries as borrowers and the other guarantors from time to time party thereto (collectively, the “Loan Parties”) entered into a financing agreement with a group of banking institutions, dated November 7, 2018 and further amended on December 7, 2018 (the “Original Credit Agreement”). The Original Credit Agreement provided for a $35.0 million revolving credit facility, a $90.0 million term loan facility and an up to $30.0 million incremental facility of which $12.0 million was utilized in 2019 for the term loan facility and $10.0 million was utilized in May of 2021 for the revolving credit facility (see below). The Original Credit Agreement also provided for the issuance of letters of credit, which would reduce availability under the revolving credit facility. The maturity date of the Original Credit Agreement was November 7, 2023.

Effective as of May 12, 2021, the Company amended the Original Credit Agreement by entering into Increase Joinder No. 2 (the “Joinder No. 2”) to the Original Credit Agreement, which was accounted for as a debt modification, under which the revolving line of credit commitment under the Original Credit Agreement was increased by $10.0 million to an aggregate of $45.0 million. The Joinder No. 2 did not have any impact to any of the terms of the term loan facility under the Original Credit Agreement. The Company incurred debt origination costs of $76.8 thousand in the second quarter of 2021 which were capitalized and will be amortized over the remaining life of the revolving line of credit facility, as described below, using the straight-line method, as it is not significantly different than the effective interest method.

On June 24, 2021, the Loan Parties entered into an Amended and Restated Credit Agreement (the “A&R Credit Agreement”) with a group of banking institutions. The A&R Credit Agreement amended and restated in its entirety the Original Credit Agreement. The A&R Credit Agreement provides for a $150.0 million revolving credit facility, an $87.5 million term loan facility and an uncommitted incremental facility, which may be utilized for additional revolving or term loans, of up to $70.0 million. The A&R Credit Agreement also provides for the issuance of letters of credit, which would reduce availability under the revolving credit facility. The proceeds of the term loan were used to refinance the $87.5 million principal amount of the existing term loan facility under the Original Credit Agreement, and the revolving credit facility is available for working capital, general corporate purposes and to pay fees and expenses in connection with this transaction. The maturity date of the A&R Credit Agreement is June 24, 2026.

This refinancing was accounted for as a debt modification. The balance of the unamortized debt origination costs of $1.8 million under the Original Credit Agreement, the origination costs paid to the Loan Parties of $1.0 million in connection with the term loan facility of the A&R Credit Agreement and debt origination costs paid to the Loan Parties and third-party costs of $1.8 million incurred in connection with the revolving credit facility of the A&R Credit Agreement will be associated with the new arrangement, and therefore, they will be amortized over the remaining life of the A&R Credit Agreement using the straight-line method, as it is not significantly different than the effective interest method. Debt origination costs paid to third parties related to a portion of the term loan facility in connection with the A&R Credit Agreement were expensed as incurred during the second quarter of 2021.

At the election of the Company, interest on the term loan facility and revolving credit facility under the A&R Credit Agreement is determined by reference to either LIBOR (subject to replacement) or a “base rate”, in each case plus an applicable margin ranging between 2.50% and 3.00% per annum for LIBOR loans and between 1.50% and 2.00% per annum for base rate loans depending on the level of our consolidated leverage ratio, as calculated pursuant to the terms of the A&R Credit Agreement. The Company is also required to pay a fee on the unused portion of the revolving credit facility equal to 0.35% per annum. The effective interest rates for the nine months ended September 30, 2021 for the term loan facility and revolving credit facility, which substantially related to the Original Credit Agreement, were 4.58% and 0.82%, respectively.
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Interest is payable (x)(i) generally on the last day of each interest period selected for LIBOR loans, but in any event, not less frequently than every three months, and (ii) on the last business day of each quarter for base rate loans and (y) at final maturity. The principal amount of the term loan facility under the A&R Credit Agreement must be repaid in consecutive quarterly installments of 5.0% in years 1 and 2, 7.5% in year 3, and 10.0% in years 4 and 5, in each case on the last day of each quarter, commencing in September 2021 with a final balloon payment at maturity. The term loans under the A&R Credit Agreement may be prepaid at any time without premium or penalty. Revolving loans may be borrowed, repaid and reborrowed from time to time in accordance with the terms and conditions of the A&R Credit Agreement. The Company is also required to repay the loans upon receipt of net proceeds from certain casualty events, upon the disposition of certain property and upon incurrence of indebtedness not permitted by the A&R Credit Agreement. In addition, the Company is required to make mandatory prepayments annually from excess cash flow if the Company’s consolidated leverage ratio (as calculated under the A&R Credit Agreement) is greater than or equal to 3.0, and the remainder of any such excess cash flow is contributed to the available amount which may be used for a variety of purposes, including investments and distributions.

The A&R Credit Agreement 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 A&R Credit Agreement also 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, change the nature of their businesses, enter into certain transactions with affiliates or amend the terms of material indebtedness.

In addition, the A&R Credit Agreement generally restricts the payment of dividends or cash distributions by the Company with certain exceptions, including the following: i) to repurchase the Company’s common stock from current or former employees in an aggregate amount of up to $10.0 million per calendar year, and ii) other restricted payments in an aggregate amount not to exceed $40.0 million plus the Available Amount (as defined in the A&R Credit Agreement).

The obligations under the A&R 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.

NOTE 10 – 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 and for disclosure purposes. Level 1 relates to quoted market prices for identical assets or liabilities in active markets. Level 2 relates to observable inputs other than quoted prices included in Level 1. Level 3 relates to unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s non-financial assets measured at fair value on a nonrecurring basis include goodwill and intangibles assets. The determination of our intangible fair values includes several assumptions and inputs (Level 3) that are subject to various risks and uncertainties. Management believes it has made reasonable estimates and judgments concerning these risks and uncertainties. All other financial assets and liabilities are carried at amortized cost.

The Company’s cash balances are representative of their fair values as these balances are comprised of deposits available on demand. The carrying amounts of 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 instruments.

The Company’s financial liabilities include its revolving credit facility and term loan facility. The fair value of the term loan facility, 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 11 – SHARE-BASED COMPENSATION
International Money Express, Inc. Omnibus Equity Compensation Plans

On June 26, 2020, at the 2020 Annual Meeting of Stockholders, the Company’s stockholders approved the International Money Express, Inc. 2020 Omnibus Equity Compensation Plan (the “2020 Plan”), which provides for the granting of stock-based incentive awards, including stock options, restricted stock units (“RSUs”), restricted stock awards (“RSAs”) and performance stock units (“PSUs”) to employees and independent directors of the Company. There are 3.4 million shares of the Company’s common stock available for issuance under the 2020 Plan, including 0.4 million shares that were available for grant under the International Money Express, Inc. 2018 Omnibus
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Equity Compensation Plan (the “2018 Plan” and together with the 2020 Plan, the “Plans”). As of September 30, 2021, 3.6 million shares remained available for future awards under the 2020 Plan. The 2018 Plan was terminated effective June 26, 2020.

Stock Options

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 under the Plans have 10-year terms and generally vest in four equal annual installments beginning one year after the date of the grant. The Company recognized compensation expense for stock options of approximately $0.5 million and $0.7 million for the three months ended September 30, 2021 and 2020, respectively, and $1.8 million and $1.9 million for the nine months ended September 30, 2021 and 2020, respectively, which are included in salaries and benefits in the condensed consolidated statements of operations and comprehensive income. As of September 30, 2021, unrecognized compensation expense related to stock options of approximately $3.5 million is expected to be recognized over a weighted-average period of 1.5 years.

A summary of the stock option activity under the Plans during the nine months ended September 30, 2021 is presented below:

Number of
Options
Weighted-Average
Exercise Price
Weighted-Average
Remaining Contractual
Term (Years)
Weighted-Average
Grant Date
Fair Value
Outstanding at December 31, 20202,714,902 $10.97 8.19$4.03 
Granted $ $ 
Exercised(621,082)$9.93 $3.55 
Forfeited(120,125)$12.67 $5.95 
Outstanding at September 30, 20211,973,695 $11.19 7.34$4.14 
Exercisable at September 30, 20211,111,094 $10.64 7.09$3.76 

Restricted Stock Units and Share Awards

The RSUs granted under the Plans to the Company’s employees generally vest in four equal annual installments beginning one year after the date of the grant, while RSUs issued to the Company’s independent directors vest on the one-year anniversary from the grant date. The Company recognized compensation expense for RSUs of approximately $0.3 million and $0.1 million for the three months ended September 30, 2021 and 2020, respectively, and $0.8 million and $0.2 million for the nine months ended September 30, 2021 and 2020, respectively, which are included in salaries and benefits in the condensed consolidated statements of operations and comprehensive
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income. As of September 30, 2021, unrecognized compensation expense related to RSUs of approximately $3.0 million is expected to be recognized over a weighted-average period of 2.0 years.

A summary of the RSU activity during the nine months ended September 30, 2021 is presented below:

Number of RSUsWeighted-Average
Grant Price
Nonvested at December 31, 202040,881 $13.38 
Granted281,602 $14.98 
Vested(33,381)$13.13 
Forfeited(43,554)$14.81 
Nonvested at September 30, 2021245,548 $14.99 

Under the 2020 Plan and effective October 1, 2020, the Lead Independent Director and Chairs of the Committees of the Board of Directors are granted, in aggregate, $64.0 thousand in awards of fully vested shares of the Company’s common stock, payable on a quarterly basis at the end of each quarter in payment of fees earned in such capacities. During the three and nine months ended September 30, 2021, 1,078 and 3,174 fully vested shares were granted to the Lead Independent Director and Chairs of the Committees of the Board of Directors resulting in compensation expense of $16.0 thousand and $48.0 thousand, respectively, recorded in the condensed consolidated statements of operations and comprehensive income.

Restricted Stock Awards

The RSAs issued under the Plans to the Company’s employees generally vest in four equal annual installments beginning one year after the date of grant. The Company recognized compensation expense for RSAs granted of $78.8 thousand and $179.8 thousand for the three and nine months ended September 30, 2021, respectively, which are included in salaries and benefits in the condensed consolidated statements of operations and comprehensive income. No compensation expense was recognized for the three and nine months ended September 30, 2020. As of September 30, 2021, there was $1.1 million of unrecognized compensation expense related to RSAs, which is expected to be recognized over a weighted-average period of 2.2 years.

A summary of the RSA activity during the nine months ended September 30, 2021 is presented below:

Number of RSAsWeighted-Average
Grant Price
Nonvested at December 31, 2020 $ 
Granted88,215 $14.17 
Vested $ 
Forfeited $ 
Nonvested at September 30, 202188,215 $14.17 

Performance Stock Units

PSUs granted to the Company’s employees generally vest subject to attainment of performance criteria during the service period established by the Compensation Committee. Each PSU represents the right to receive one share of common stock, and the actual number of shares issuable upon vesting is determined based upon performance compared to financial performance targets. The PSUs vest based on the achievement of certain revenue parameters for a period of two years combined with a service period of three years. Compensation cost is recognized over the requisite service period when it is probable that the performance condition will be satisfied. The Company recognized compensation expense for PSUs of $0.2 million and $0.5 million for the three and nine months ended September 30, 2021, which are included in salaries and benefits in the condensed consolidated statements of operations and comprehensive income. There was no compensation expense recognized for the three and nine months ended September 30, 2020. As of September 30, 2021, there was $1.9
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million of unrecognized compensation expense related to PSUs, which is expected to be recognized over a weighted-average period of 2.3 years.

A summary of the PSU activity during the nine months ended September 30, 2021 is presented below:

Number of PSUsWeighted-Average
Remaining Contractual
Term (Years)
Weighted-Average
Grant Price
Nonvested at December 31, 2020 — $ 
Granted171,500 $14.17 
Vested $ 
Forfeited $ 
Nonvested at September 30, 2021171,500 9.42$14.17 

NOTE 12 – EQUITY
In August 2021, the Company's Board of Directors approved a stock repurchase program (the “Repurchase Program”) that authorizes the Company to purchase up to $40.0 million of outstanding shares of the Company’s common stock. Under the Repurchase Program, the Company is authorized to repurchase shares from time to time in accordance with applicable laws, both on the open market and in privately negotiated transactions and may include the use of derivative contracts or structured share repurchase agreements. The timing and amount of repurchases depends on several factors, including market and business conditions, the trading price of the Company’s common stock and the nature of other investment opportunities. The Repurchase Program may be limited, suspended or discontinued at any time without prior notice. The program does not have an expiration date. Under the terms of the A&R Credit Agreement, the Company has restrictions that limit the maximum amount of repurchases to (i) $40.0 million in the aggregate (plus the Available Amount as defined in the A&R Credit Agreement) and (ii) $10.0 million annually for shares held by any current or former officer, director, employee or consultant (or any spouses, ex-spouses or estates of the foregoing) of the Company or its subsidiaries.

The Company accounts for purchases of treasury stock under the cost method. Any direct costs incurred to acquire treasury stock are considered stock issue costs and added to the cost of the treasury stock. During the three and nine months ended September 30, 2021, the Company purchased 70,440 shares for an aggregate purchase price totaling $1.2 million. As of September 30, 2021, the remaining amount available for future share repurchases under the Repurchase Program was $38.8 million.

NOTE 13 – EARNINGS PER SHARE
Basic earnings per share is calculated by dividing net income for the year by the weighted average number of common shares outstanding for the period. In computing dilutive earnings per share, basic earnings per share is adjusted for the assumed issuance of all applicable potentially dilutive share-based awards, including common stock options, RSUs, RSAs and PSUs.

Below are basic and diluted earnings per share for the periods indicated (in thousands, except for share data):
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Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Net income for basic and diluted earnings per common share$11,507 $9,498 $33,711 $24,164 
Shares:
Weighted-average common shares outstanding – basic38,647,931 38,050,610 38,441,767 38,040,339 
Effect of dilutive securities:
RSUs66,964 12,721 44,843 9,570 
Stock options539,111 589,376 548,371 196,520