International Money Express, Inc. annual report, FY2017

Business context and reporting period

Entity mismatch: Although the request identifies International Money Express, Inc., this filing is FinTech Acquisition Corp. II’s Form 10-K for the fiscal year ended December 31, 2017. It is a blank-check company, not an operating remittance business; the filing does not report Intermex’s standalone financial results.

FinTech had no operating revenue or substantive operations. Its activities were formation, its January 2017 IPO, and seeking a business combination. On December 19, 2017, it agreed to acquire Intermex Holdings II, Inc. The transaction was pending at year-end.

Financial results and position

For fourth-quarter 2017, operating costs were $636,953, interest income was $524,831, the tax provision was $172,148, and net loss was $284,270. Fourth-quarter 2016 operating costs and net loss were each $750.

At December 31, 2017, cash outside the trust was $362,581; trust cash and marketable securities totaled $175.883 million; total assets were $176.259 million; total liabilities were $10.132 million; and stockholders’ equity was $5.000 million. Common stock subject to possible redemption was recorded as temporary equity at $161.127 million. The company reported no long-term debt or lease obligations.

Cash used in operating activities was $667,720 for 2017. The filing provides no quarterly cash-flow figures. Profit margins are not meaningful because the company had no operating revenue.

Material changes versus prior period

• The company completed its IPO and private placement in January 2017, placing $175 million in the trust account; trust assets earned $1.383 million in interest during the year.
• Operating costs rose from $1,621 in 2016 to $1.132 million in 2017, while the company moved from a small loss to a $185,347 annual net loss despite trust interest income.
• Year-end liabilities included $9.190 million of deferred underwriting fees, payable only upon a completed business combination, and $436,721 of income taxes payable.

Transaction, outlook and risks

The proposed Intermex acquisition provided for $92 million in cash (including $2 million escrowed for working-capital adjustments) and approximately $161 million in FinTech common stock, subject to adjustments, plus consideration for Intermex excess cash. The transaction required stockholder approvals and other customary conditions, including at least $125 million remaining in the trust after redemptions and deferred underwriting fees, unless Intermex waived that condition. Management expected closing in the second quarter of 2018; closing was not assured.

The company’s deadline to complete a business combination was January 25, 2019; failure to do so would require it to cease operations, redeem public shares and liquidate. The auditor’s report expressed substantial doubt about the company’s ability to continue as a going concern if it did not complete a combination by that deadline. Public stockholders could redeem shares in connection with a transaction, subject to deal terms and applicable limits. The filing also highlights risks of redemption shortfalls, third-party claims against trust funds, transaction execution and financing, conflicts of interest, dilution, and warrants expiring worthless if no combination is completed.

Important facts for investors to verify

• Confirm the intended filing entity: this 10-K is for FinTech Acquisition Corp. II, not International Money Express, Inc.
• Review subsequent filings for whether the Intermex merger closed, final consideration, redemptions, and resulting ownership and capitalization.
• Verify trust-account cash available at closing after redemptions, taxes, and deferred underwriting fees, and whether the $125 million condition was met or waived.
• Assess the going-concern warning, liquidation deadline, and potential effect of creditor claims on public-share redemption proceeds.
• Review the treatment and potential dilution from public, placement, and any sponsor-converted warrants.