Currency Exchange International
Annual Report 2016

Plain-text annual report

£ € $ ¥ Currency Exchange International 2016 Annual Report FINANCIAL HIGHLIGHTS Exchange Volume: In Millions Total Revenue: In Millions Total Assets: In Millions at Fiscal Year End 20131 $878 $16.0 $33.7 2014 2015² 2016 $1,456 $1,636 $2,137 $22.0 $39.7 $24.1 $52.1 $26.8 $62.2 All amounts in this report are stated in USD unless otherwise noted. Exchange Volum e $ Millions 31% Year Over Year Tota l R evenue $ Millions 12% Year Over Year Total Assets $ Millions 19% Year Over Year $1,636 $1,456 $878 $2,137 $26.8 $22.0 $24.1 $62.2 $52.1 $16.0 $39.7 $33.7 20131 2014 2015² 2016 20131 2014 2015² 2016 2013¹ 2014 2015² 2016 Corporate Custo me rs a nd Tran s ac ti ng L ocation s Key R atios 20131 2014 2015 2016 2015² 2016 Company-Owned Branch Locations Wholesale Company Relationships 26 32 36 38 Earnings Per Share $0.77 $0.58 364 469 521 928 Transacting Locations 5,741 8,274 10,157 13,603 Return On Assets 10.2% 6.4% Qua rte rly Stock Pric e (TSX:CXI ) Return On Equity 11.7% 7.5% Q1 Q2 Q3 Q4 Ended 1/31/2016 Ended 4/30/2016 Ended 7/31/2016 Ended 10/31/2016 $19.60 $24.31 $27.20 $30.50 TSX stock prices are quoted in Cdn$ Operating Margin 29.6% 25.6% ¹13 month period-ended October 31, 2013 ²Restatement made in Fiscal Year 2015 to correct the presentation of a gain on foreign exchange along with its corresponding income tax impact which was required to be presented under IFRS as other income. The foreign exchange gain was previously disclosed under comprehensive income with no corresponding tax provision. The restatement does not impact the Company’s revenues, operating expenses, or net operating income. 1 CXI ANNUAL REPORT 2016 PRESIDENT’S LETTER Dear CXI Shareholders, Customers, Employees and Friends, I am pleased to present the progress and achievements of Currency Exchange International, Corp. for our year ended October 31, 2016. CXI’s Growth in 2016 During the fiscal 2016 year, CXI accomplished many important objectives toward its goal of growing into a significant foreign exchange bank provider of FX services. The most notable accomplishment was that CXI’s wholly-owned subsidiary in Canada did receive approval to continue as Exchange Bank of Canada (“EBC”), a Toronto based, Schedule I Canadian Bank. This bank status allows our group to expand its wholesale correspondent relationships that will support its ability to grow its customer base in all aspects of the business, especially international payments, which includes cheque processing. In the US and Canada, both sales teams continued their success in gaining additional market share by acquiring 407 new customer contracted relationships, bringing the total number of transacting locations to over 13,600 as of October 31, 2016. This represents an increase of over 33%. Randolph W. Pinna President and Chief Executive Officer The CXI retail operation added two new company-owned branches, one additional in Southern California, and CXI’s first and only store in Honolulu’s Waikiki Beach. CXI will continue to grow its retail selectively in areas that are in need of a new FX retail solution. Sharehold er’s Equity $ Millions October 31, 20 16 $50.8 October 31, 20 15 $46.8 This expansion of retail and wholesale locations contributed to revenue growth for a total revenue of US $26.8 million, up 11.5% from the previous year. Due to higher operating costs and investment into expanding CXI’s and Exchange Bank of Canada’s payment business, costs grew faster, causing net operating income to slip to $6.87 million down from $7.13 million the previous year. While the CXI board agrees to continue to invest significantly into expanding its current payment business with enhancements to both CXI’s proprietary software and the leadership team driving this expansion, CXI’s new customers and sales expansion will allow CXI to eventually reverse this trend and see impressive growth in both top and bottom line income. October 31, 20 14 $33.0 Human R esources October 31, 20 13 $29.8 All amounts in this report are stated in USD unless otherwise noted. The most noticeable new costs that exist are in the form of payroll at both businesses. CXI recruited a top sales executive, Senior Vice President of Sales (Bob Dowd), from a leading prominent specialty FX payment business in Toronto. More recently, a senior operations executive (Sharna Gayle) has joined from the same company, further enhancing the experience of the management team. Additional new hires in sales managers occurred both in the US and Canada, which is in addition to the added compliance personnel employed to ensure safe, compliant growth that is planned for the next few years. CXI ANNUAL REPORT 2016 2 Positioned for Conti nued Growth With the enhanced management team and software, combined with Exchange Bank of Canada’s ability to be a leading FX bank, our Board of Directors and management team are confident in its ability to execute on its expansion plan. We are proud of the accomplishments of the past year while we stay focused on the growth of revenues and profits in the years ahead. I am proud of the loyal team of nearly 280 employees across the US and Canada who will all work together to grow our group to record levels of trading activities. I personally thank all of CXI’s customers, employees, directors, shareholders, and friends for their continued support of our organization. I always remain available for feedback and to discuss our company and its business with you personally. Sincerely, Randolph W. Pinna President and Chief Executive Officer PRESIDENT’S LETTER Additional changes in Senior Management will occur in the current year, allowing CXI group to retain the best resources for both businesses for many years to come. At the CXI board level, I am proud to have Bryan Osmar formally elected and expand the board number to eight at CXI and EBC, one more than the required seven-member board required in the Bank Act for a Schedule I Canadian Bank. In his senior roles at RBC, where he retired last year as Managing Director, Head of Market Infrastructure and as Director at CLS Bank, he obtained valuable experience in every aspect of foreign exchange and international banking. Strategic Growth CXI will continue to grow its capabilities in banknote and payment processing for banks and select corporations in both its primary jurisdictions with its expanded payment products including its new Global EFT offering, allowing for low cost international payments using the local banking systems as opposed to a traditional SWIFT wire payment. Expansion of digital processing of cheque items is another area that the company is focused in rapidly expanding FX volumes/revenues using the latest technology in the banking sectors. FX ATMs, while being a smaller business is another area that CXI sees noticeable profit growth potential and its pilot of ATMs launched in the year prior, has proven to be a successful use of capital. Sha reholder Per forman ce Graph Currency Exchange International, Corp. S&P/TSX Composite Index $500 $450 $400 $350 $300 $250 $200 $150 $100 $50 October 31, 2013 October 31, 2014 CXI/TSX S&P/TSX Composite Index 09/03/12 $100 $100 31/10/13 $168.42 $106.86 October 31, 2015 31/10/14 $280.45 $116.87 October 31, 2016 31/10/16 $458.65 $118.26 31/10/15 $354.59 $111.96 This graph compares the yearly percentage change in the cumulative total shareholder return for Cdn$100 invested in Currency Exchange International, Corp. Common Shares on March 9, 2012, against the cumulative total shareholder return of the S&P/TSX Composite Index for the four most recent completed financial year ends of CXI, Corp., assuming the reinvestment of all dividends. 3 CXI ANNUAL REPORT 2016 CXI SNAPSHOT CXI officially launches its proprietary, web-based FX software - CEIFX. CXI commences services for financial institutions, allowing its wholesale partnerships to grow rapidly. CXI Canada is established and its Toronto vault begins operations. CXI completes its IPO on the Toronto Stock Exchange (TSX). CXI Canada files an application to be continued as a new Schedule I Candian Bank. CXI buys certain assets of U.S. Exchange House in the U.S. and Canada, merging them within its business operations. CXI’s west coast vault in California moves to Los Angeles, increasing service capacity and operational support. CXI owns and operates 38 branch locations. CXI Canada continues as a new Schedule I Bank in Canada called Exchange Bank of Canada in English and Banque de change du Canada in French. 2007 -2009 Operations at CXI commence when Randolph Pinna purchases eight retail branches of Foreign Currency Exchange Corp. from the Bank of Ireland Group. 2010 -2012 Three vaults are established in the U.S. with the main currency processing center in Miami, Florida and regional vaults in New York and California. 2013 -2015 98% of Common Share Purchase Warrants and Broker Compensation Units from CXI’s IPO are exercised for total gross proceeds of Cdn$11.3 million. 2016 CXI exchanges more than $2.1 billion in total exchange volume and ends the year with more than $62.2 million in assets. TSX:CXI Cdn$180million. Marketcap surpasses EBC SNAPSHOT EXCHANGE BANK O F C A N A D A TM BANQUE DE CHANGE D U C A N A D A MC ToTAl REv EnuE* $4.8 M ill ion W h o lEsAlE RElATionships 348 ADDE D i n 20 16 TRAnsAcT ing lo cA Ti o n s 1,282 ADD ED in 20 16 On September 19, 2016, Currency Exchange International of Canada Corp., CXI’s wholly-owned subsidiary, continued as Exchange Bank of Canada (EBC), in English, and Banque de change du Canada, in French, and is now operating as a Canadian Schedule I Bank. EBC is one of 30 Schedule I Canadian Banks regulated under the Bank Act in Canada and is a specialized foreign exchange bank focused on facilitating the international banking service needs of Canada’s businesses including the exchange of foreign currencies, international wire transfers, Global EFT payments, sale of foreign bank drafts, and foreign cheque clearing. As a specialty bank, Exchange Bank of Canada identifies and creates foreign exchange solutions leveraging its global banking and logistical relationships to provide significant financial and operational efficiencies for its clients. EBC instills confidence in its clients by enhancing their resources through integrated technology, unparalleled customer service and industry knowledge. *Total revenue for Currency Exchange International of Canada Corp and Exchange Bank of Canada in fiscal year 2016 Fo reign Banknote Excha nge Intern ational W ire Transfers Gl oba l EFT Payments Foreign Draft Payments Foreign Cheque Cl earing CXI ANNUAL REPORT 2016 4 BUSINESS OPERATIONS Business Overview CXI’s growth as a foreign currency and international payments provider in North America is based on successfully pairing the company’s resources and relationships. Through strategic partnerships, both have continued to expand, allowing the company to further support and gain new clients. Clients of CXI find the company is adept at working closely with them to identify their needs or challenges and provide solutions that address their unique situation. CXI has built a scalable foreign exchange business as it became an industry leader. The company services hundreds of financial institutions, ranging from top 10 U.S. banks, as ranked by number of locations, to banker’s banks that roll CXI’s services down to their own set of financial institution customers. Now, Exchange Bank of Canada acts as a banker’s bank in Canada and continues the momentum of its Canadian business. In all, CXI services more than 13,000 transacting locations that interact with CXI as their currency exchange provider. CXI’s company- locations in the U.S. directly service consumers owned immediately with walkup currency exchange. In the U.S., CXI’s company-owned branches provide a balance of higher margin currency trades with individuals. Since its branch network is a net buyer of foreign currency, these higher margin transactions serve as a way to source foreign currencies the company can then make available through its network of relationships, such as financial institutions, who are generally net sellers of foreign currency. This synergy, which CXI effectively creates, affords the company the ability to offer its customers and clients highly competitive rates, helping grow the business, while enjoying larger margins in its business lines. CXI’s expertise in the specialized field of foreign exchange, as well as its experience and technology, build a foundation to enhance its client’s operations. Whether it’s a financial institution, money service business (MSB), corporation, or individual, CXI creates mutually beneficial relationships as clients experience convenience, high quality customer service, industry best practices, cost-savings and business efficiencies. Company-Owned Branch Network CXI’s company-owned branch network continues its positive growth trajectory within the company providing significant and consistent revenue. Through hundreds of thousands of walk-up transactions a year, consumers are introduced to CXI’s brand and experience the company’s commitment to delivering a quality product with a high level of customer service. CXI added two company-owned locations increasing its total from 36 branches to 38 in the 2016 fiscal year. Management is committed 5 CXI ANNUAL REPORT 2016 to finding additional location opportunities and is judicious in selecting when and where it opens company-owned locations moving forward in markets and environments with the most positive indicators of success based on its internal evaluation process. CXI dedicates time and resources to analyzing new products, as well as new company-owned locations, with the goal of leveraging its company-owned branch footprint without deteriorating the quality of its core business. Key criteria for new product offerings are that they must complement the current business, drive new revenue and be executed at CXI’s customer service standards. In 2016’s fiscal year, the company launched the sale of three of the most popular and recognized consumer gold products being the gold American Eagle coin, the Canadian Maple Leaf and the Royal Canadian Mint gold wafer. CXI opened its first expansion location of 2016’s fiscal year at Glendale Galleria in Glendale, California. The shopping center is in a major suburb of the Greater Los Angeles area, which as a whole has proven to be an attractive market for CXI. In the fourth quarter of the 2016 fiscal year, CXI began transacting at its first company-owned branch in Hawaii. The branch opened in the newly constructed International Market Place operated by the Westfield Corporation. The shopping center is in the immensely popular Waikiki Beach tourist corridor near Honolulu, Hawaii. CXI has maintained client relationships with financial institutions and hotels on Oahu finding many foreign exchange opportunities available with millions of visitors to the Hawaiian Islands every year. Company-owned branches take dedicated time and concerted effort to open. Resources, personnel and capital investment at the opening and early stages of the branch’s launch are required to successfully make it profitable. CXI’s market selection process and marketing strategy have proven time and time again to provide positive return for the company. United States Business Environment During the 2016 fiscal year, CXI added more than 407 new customer relationships representing 3,400 new transacting locations across the United States. These relationships are with financial institutions, MSBs and other corporate clients. Each relationship varies in the services utilized ranging from one or more of the following: foreign currency banknotes, international wire transfers, issuing foreign drafts, and clearing foreign denominated cheques. Increasingly, CXI has seen clients taking advantage of the company’s ability to service multiple foreign currency services all on one online platform - CEIFX software. There are a number of factors that come into play when considering why companies switch to CXI. New customers BUSINESS OPERATIONS CEIFX ONLINE PLATFORM CXI’s online platform processes all of the company’s services through one portal. Each service’s module includes robust reporting, user roles, compliance verification integration, live status updates, and can be white-labeled. BANKNOTES - Custom setups: Inventory/Non-inventory Hub/Decentralized - Live Stop - Home Delivery - Shipment Tracking INTERNATIONAL PAYMENTS - Wires, Global EFT, Foreign Cheques - IBAN and Beneficiary Validations - Status Update Alerts - Risk Mitigation and Tiered Approval - Repetitive Templates - File Integrations CHEQUE CLEARING - Foreign Cash Letters and Foreign Collection Items - Smart Cheque ID - Compliance Checks - File Integrations - Status Update Alerts quickly find what makes CXI different from its competition and why existing customers remain loyal to the company. CXI’s employees work within a company culture fully committed to building long lasting customer relationships that help them succeed in their business. Canadian Business Environment The continuation of Currency Exchange International of Canada as Exchange Bank of Canada has received positive attention and will continue to grow the company’s global relationships. As a foreign currency specialist, EBC enters the Canadian marketplace as a Schedule I Canadian Bank poised to provide its unique value. The bank is neither a deposit taking nor a lending institution and will not deal directly with individuals in order to specialize in providing its foreign exchange services consisting of foreign banknote exchange, international wire transfers, Global EFTs, foreign cheque clearing and foreign draft issuance for other financial institutions, MSBs and select corporations. EBC’s emergence as a specialty bank gives clients the trust that they are working with a federally regulated Schedule I Canadian Bank, while maintaining a relationship with a dedicated foreign exchange and international payments team. Additionally, being a bank opens the door for correspondent and client relationships not previously available to CXI Canada as a Canadian money service business. In today’s regulatory environment, compliance is at the forefront of every conversation. EBC is committed to the responsibilities that come with working in the financial industry where “Know Your Customer” and other regulations mean tightly scrutinizing all customers who exchange with the bank. The EBC team has developed the bank’s operations with policies and procedures following all oversight provisions determined by the various regulating bodies. The compliance staff within the company, its procedures and the tools at their disposal through the CEIFX software, gives the company and all of its customers the confidence that it is fully compliant with its regulatory obligations. CEIFX Software Advanta ge Viewed as a leading application in foreign currency exchange, the CEIFX software is a major component in the success of the group. The software continues to generate interest with new and potential customers, while CXI is dedicated to maintaining an active development cycle. Investing in the development of the CEIFX software is a high priority as it delivers routine maintenance, security upgrades, new features and client request fulfillment. The web-based software accommodates all product lines offered by CXI. The core features allow for fully customized customer setups and integration, instinctual user interface, user management, and robust reporting capabilities. A key integration is the software’s Compliance Verification System (CVS). The CVS allows for live compliance checks of regulatory watch lists, easy to review matches, live-stop capabilities, branch-hopper aggregation, compliance reporting and it maintains compliance with all current applicable U.S. and Canadian regulations. An emphasis for CEIFX’s ongoing development is increasingly connecting the system through software integrations. Notably, integrations to outside systems allow CEIFX to effectively and seamlessly improve clients’ workflow within their current processes. Facilitating an online environment where clients’ existing core banking software, enterprise resource planning software, and data exchanges can access CEIFX with APIs (application programing for seamless operational, financial and regulatory compliance, thereby cultivating more interest in the online platform by other institutions and creating strategic opportunities for CXI. interfaces) allows Even with such robust capabilities, the system remains flexible for many setup types and deployment needs. CEIFX is a sophisticated tool that helps clients be better at their own business by simplifying foreign exchange and payments through enhanced efficiencies, risk management, and powerful validations. As such, CEIFX remains an integral part of the company’s competitive advantage. *All trademarks, registered trademarks, product names, and brands are property of their respective owners. CXI ANNUAL REPORT 2016 6 CURRENCY EXCHANGE INTERNATIONAL, CORP. MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE THREE MONTHS AND YEAR ENDED OCTOBER 31, 2016 AND 2015 7 Management Discussion and Analysis (All amounts expressed in U.S. Dollars unless otherwise noted) For the three months and year ended October 31, 2016 and 2015 Restatement of Prior Period financial Statements During the preparation of the Consolidated Financial Statements for the year ended October 31, 2016, the Company identified prior period adjustments for the years ended October 31, 2015 and 2014. The restatement is being made to correct the presentation of a gain on foreign exchange along with its corresponding income tax impact which was required to be presented under IFRS as other income. The foreign exchange gain was previously disclosed under comprehensive income with no corresponding tax provision. The restatement reduces cumulative net equity by $676,463 and increases net income and earnings per share in both 2015 and 2014 as summarized in the following table: As previously reported 2015 $ Change $ Consolidated Financial Statement of Financial Position Current Liabilities Restated $ Income taxes (receivable)/payable (129,403) 676,463 547,060 Equity Retained earnings Equity reserves Consolidated Statements of Income and Comprehensive Income Other income Foreign exchange gains on the translation of currencies held in subsidiary Interest and accretion Income tax expense Other comprehensive income Exchange differences on translating foreign operations Consolidated Statement of Changes in Equity Accumulated other comprehensive income (loss) Retained Earnings Consolidated Statement of Cash Flows Net income Change in cash flows from operating activities Exchange difference on foreign operations Earnings per Share Basic Diluted 14,206,109 27,112,536 41,189,242 1,887,873 (2,564,336) - 16,093,982 24,548,200 41,189,242 - (13,980) (1,891,150) 1,497,717 (21,004) (418,938) 1,497,717 (34,984) (2,310,088) (1,745,025) (3,650,155) (1,435,471) (377,696) (3,180,496) (4,027,851) (2,787,940) 14,206,109 11,418,169 (2,564,336) 1,887,873 (676,463) (5,352,276) 16,093,982 10,741,706 3,608,210 4,356,745 (1,616,093) 6,348,862 1,057,775 1,503,321 (1,503,321) 1,057,775 4,665,985 5,860,066 (3,119,414) 7,406,637 0.62 0.59 0.18 0.18 0.80 0.77 8Management Discussion and Analysis (All amounts expressed in U.S. Dollars unless otherwise noted) For the three months and year ended October 31, 2016 and 2015 Restatement of Prior Period financial Statements (continued) Consolidated Financial Statement of Financial Position Current Liabilities Income taxes payable Equity Retained earnings Equity reserves Consolidated Statements of Income and Comprehensive Income Other income Foreign exchange gains on the translation of currencies held in subsidiary Interest and accretion Income tax expense Other comprehensive income Exchange differences on translating foreign operations Consolidated Statement of Changes in Equity Accumulated other comprehensive income (loss) Retained Earnings Consolidated Statement of Cash Flows Net income Change in cash flows from operating activities Exchange difference on foreign operations Earnings per Share Basic Diluted Scope of Analysis As previously reported 2014 $ Change $ Restated $ 1,063,224 298,768 1,361,992 10,597,899 17,032,203 28,693,326 830,098 (1,128,866) - 11,427,997 15,903,337 28,693,326 - (66,482) (2,602,711) 1,138,890 (28,107) (280,685) 1,138,890 (94,589) (2,883,396) (756,245) (3,425,438) (1,128,866) (298,768) (1,885,111) (3,724,206) (1,042,915) 10,597,899 9,554,984 (1,128,865) 830,098 (298,767) (2,171,780) 11,427,997 9,256,217 3,419,125 2,216,775 (712,318) 4,923,582 830,098 1,138,246 (1,138,246) 830,098 4,249,223 3,355,021 (1,850,564) 5,753,680 0.63 0.62 0.15 0.15 0.78 0.77 This Management Discussion and Analysis (“MD&A”) covers the results of operations, and financial condition of Currency Exchange International, Corp. and its subsidiaries (the “Company,” or "CXI") for the three months and year ended October 31, 2016 and 2015, including the notes thereto. This document is intended to assist the reader in better understanding and assessing operations and the financial results of the Company. This MD&A has been prepared as at January 10, 2017 in accordance with International Financial Reporting Standards (“IFRS) issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Interpretations Committee (“ IFRIC”) and should be read in conjunction with the audited consolidated financial statements of the Company the years ended October 31, 2016 and 2015 and the notes thereto. A detailed summary of the Company's significant accounting policies is included in Note 2 of the Company's audited consolidated financial statements for the year ended October 31, 2016. The functional currency of the Company and its U.S. subsidiary, Currency Exchange International America Corp. (“ CXIA”), is the U.S. Dollar. The functional currency of the Company’s Canadian subsidiary, Exchange Bank of Canada (“EBC”), is the Canadian Dollar. The Company’s presentation currency is the U.S. Dollar. Unless otherwise noted, all references to currency in this MD&A refer to U.S. Dollars. The condensed interim consolidated financial statements and the MD&A have been reviewed by the Company’s Audit Committee and approved by its Board of Directors. In this document, “our”, “Company” and "CXI" refer to Currency Exchange International, Corp. collectively with its subsidiaries, EBC and CXIA. 9Management Discussion and Analysis (All amounts expressed in U.S. Dollars unless otherwise noted) For the three months and year ended October 31, 2016 and 2015 Additional Information Additional information relating to the Company, including annual financial statements, is available on the Company’s SEDAR profile at www.sedar.com and on the Company’s website at www.ceifx.com (“CEIFX”). Forward Looking Statements This MD&A contains certain “forward-looking information” as defined in applicable securities laws. These statements relate to future events or the Company’s future performance. All statements other than statements of historical fact are forward-looking information. Often, but not always, forward-looking information can be identified by the use of words such as “plans”, “expects”, “budgeted”, “scheduled”, “estimates”, “continues”, “forecasts”, “projects”, “predicts”, “intends”, “anticipates” or “believes”, or variations of, or the negatives of, such words and phrases, or state that certain actions, events or results “may”, “could”, “would”, “should”, “might” or “will” be taken, occur or be achieved. The forward-looking information in this MD&A speaks only as of the date of this MD&A or as of the date specified in such statements. The following table outlines certain significant forward-looking information contained in this MD&A and provides the material assumptions used to develop such forward-looking information and material risk factors that could cause actual results to differ materially from the forward looking information. Forward-looking information Assumptions Risk factors Sensitivity analyses relating to foreign currencies and interest rates All factors other than the variable in question remain unchanged; CXI’s entire unhedged balance of foreign currency holdings is affected uniformly by changes in exchange rates; CXI’s interest-bearing instruments and obligations were constant during the period Exchange rate and interest rate fluctuations Inherent in forward-looking information are risks, uncertainties and other factors beyond the Company’s ability to predict or control. Please also make reference to those risk factors referenced in the “Risk Factors” section in the Company’s MD&A for the year ended October 31, 2016. Readers are cautioned that the above chart does not contain an exhaustive list of the factors or assumptions that may affect the forward-looking information in this MD&A, and that the assumptions underlying such statements may prove to be incorrect. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking information contained in this MD&A. Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to be materially different from any of its future results, performance or achievements expressed or implied by forward-looking information. All forward-looking information herein is qualified by this cautionary statement. Accordingly, readers should not place undue reliance on forward-looking information. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking information, whether as a result of new information or future events or otherwise, except as may be required by applicable securities laws. If the Company does update any forward-looking information, no inference should be drawn that it will make additional updates with respect to that or other forward-looking information, unless required by applicable securities laws. 10Management Discussion and Analysis (All amounts expressed in U.S. Dollars unless otherwise noted) For the three months and year ended October 31, 2016 and 2015 Overview CXI is a publicly traded company ( T SX : C X I ; O T CB B :C UR N ) specializing in providing currency exchange and related products to banks, money service businesses, travel companies, and to clients through its company owned branches and inventory on consignment locations, throughout the United States and Canada, by utilizing the Company’s proprietary online software system, CEIFX. The Company has developed CEIFX, its proprietary customizable web-based software, as an integral part of its business and believes that it represents an important competitive advantage. CEIFX is also an on-line compliance and risk management tool. The trade secrets associated with CEIFX are protected via copyright, restricted access to both the software and its source code, and secure maintenance of source code by the head office. CEIFX is updated regularly and o n - g o i n g system development and enhancement is a core activity of the Company. Issuance of banking license On November 23, 2012, the Company submitted its application to continue its wholly-owned Canadian subsidiary, Currency Exchange International of Canada Corp (“CXIC”), as a new Canadian Schedule I bank. In September of 2016, the Office of the Superintendent of Financial Institutions (“OSFI”) and the Minister of Finance, issued letters patent for the bank and CXIC is now Exchange Bank of Canada. The head office of EBC is located in Toronto, Ontario, Canada. The objective of the Exchange Bank of Canada is to continue to expand current and future business opportunities and become a leading banker's bank for foreign exchange products and services. Obtaining a Canadian bank charter benefits the Canadian banking system by providing a domestic alternative for foreign exchange services to banks in Canada. The foreign currency bank note market for financial institutions in Canada is primarily serviced by foreign financial institutions. A Canadian bank charter affords the Company numerous advantages including the opportunity to bank with Central Banks, thereby obtaining a source of stable, cost-effective funds, collateral reductions with corresponding banks, and enhancing existing bank relationships. The Company is a reporting issuer in the provinces of British Columbia, Alberta and Ontario. The Company has the following sources of revenues which are reported as commissions and fees: ● Commission revenue is comprised of the spread between the cost and selling price of foreign currency products, including bank notes, wire transmissions, cheque collections and draft issuances and the revaluation of foreign exchange positions to market value, combined with the net gain or loss from foreign currency forward contracts used to offset the revaluation of inventory positions and commissions paid to bank and non-bank financial institutions on the sale and purchase of currency products. The amount of this spread is based on competitive conditions and the convenience and value added services offered; and ● Fee revenue is comprised of the following: ○ Fees generated at the Company’s branch locations and certain inventory on consignment locations from foreign currency (bank note) exchange, foreign traveler’s cheques, and fees collected on payroll cheque cashing; and o Fees collected on foreign wire transfers, foreign drafts, and foreign cheque collection transactions. The following are some of the characteristics of the Company’s revenue streams: 11Management Discussion and Analysis (All amounts expressed in U.S. Dollars unless otherwise noted) For the three months and year ended October 31, 2016 and 2015 Overview (continued)  The Company operates three vaults that serve Canada and the United Sates as well as two small vaults that serve local markets on the West Coast and Northeast Regions of the United States and serve as distribution centers for its branch network as well as order fulfillment centers for its clients including banks, money service businesses, and other corporate clients. Revenues generated from vaults have greater scale as the Company maintains a sales force to increase its geographic customer base. Exchange rate margins vary from customer to customer and are dependent on criteria such as exchange volumes and customer setup. On-boarding of new clients, specifically banking clients, normally requires an upfront investment, such as training, and currency signage, as well as additional one-time shipping costs to distribute start-up materials. The Company also normally absorbs information technology costs to customize the CEIFX software for specific client use during the customer implementation phase. There are two common customer setups: o Centralized setup - For customers with a high volume of foreign currency exchange who maintain and manage their own inventory in central vault facilities, the Company offers bulk wholesale bank note trading. Trades of this nature are generally executed at lower margins as the cost per transaction is low and the average value is high. The customer implementation phase is normally shorter and the costs of on-boarding clients is low; o Decentralized setup - Many customers have determined that it is advantageous to avoid a currency inventory and allow their locations to buy and sell directly from CXI. Transactions in a decentralized setup typically are executed at a higher margin as the average transaction is low and the cost to fulfill each trade is higher than that of a centralized setup. Several of the Company's financial institutions outsource their currency needs in return for a commission based upon exchange volume. When a client outsources their currency needs, the Company is granted access to the entire branch network thus immediately increasing its geographic footprint and expanding its customer base. The customer implementation phase is normally longer in a decentralized setup and the cost of client on-boarding is higher as these clients normally require additional training and support; ● The Company operates 38 branch locations which are located in high tourist traffic areas, staffed by CXI employees, and located across the United States. These locations hold domestic and foreign currencies to buy and sell on demand. The currency exchange margins associated with the transactions occurring at these locations are generally higher in order to recapture costs of deployed capital in the form of domestic and foreign currencies, rent, payroll, and other general and administrative costs; ● CXI and EBC currently maintains inventory in the form of domestic and foreign bank notes in banks and other high traffic locations. These locations can be very profitable as there are no occupancy costs or payroll. Foreign exchange currency is placed in these locations on a consignment basis. At October 31, 2016, the Company had inventory on consignment in 598 locations, primarily located inside banks across the United States and Canada. To encourage inventory turnover, the Company pays commissions as a percentage on volumes generated by these locations; and ● Company owned branch locations generally act as a net buyer of foreign currency whereas CXI's bank and non-bank clients generally act as a net seller. Excess currency collected via the branch network can be redeployed to banks and non-bank clients which reduces the need to source currency through wholesale sources at a greater cost, thus increasing currency margins. The Company has aggressively grown its branch network as well as the number of wholesale relationships over the years. Below is a summary of the Company’s wholesale company relationships and transacting locations as well as a listing of its 38 branch locations: 12Management Discussion and Analysis (All amounts expressed in U.S. Dollars unless otherwise noted) For the three months and year ended October 31, 2016 and 2015 Overview (continued) Store City State Start date Store City State Apple Bank - Avenue of Americas New York Apple Bank - Grand Central Station New York Apple Bank - Penn Station MacArthur Mall Apple Bank - Union Square New York Norfolk New York NY NY NY VA NY 2011 International Market Place 2011 Mainplace at Santa Ana Honolulu Santa Ana 2013 Mechanics Bank - Berkeley Berkeley 2009 Mechanics Bank - San Francisco San Francisco 2014 Mission Valley Arundel Mills Mall Hanover MD 2012 Montgomery at Bethesda Aventura Mall Booth #1 Aventura Mall Booth #2 Aventura Aventura FL FL 2008 Ontario Mills Mall 2012 Potomac Mills Mall San Diego Bethesda Ontario Woodbridge Century City Mall Cherry Creek Citadel Outlets Copley Place Mall Dadeland Mall Dolphin Mall Florida Mall Booth #1 Florida Mall Booth #2 Los Angeles CA 2009 San Francisco City Center San Francisco Denver CO 2014 San Jose Great Mall Los Angeles CA 2014 Santa Monica Place San Jose Santa Monica Boston Miami Miami Orlando Orlando MA 2009 Sawgrass Mills Mall Booth #1 2009 Sawgrass Mills Mall Booth #2 2009 Shops at Northbridge 2007 SouthCenter 2014 Sunvalley Shopping Center Sunrise Sunrise Chicago Tukwila Concord Apple Bank - Upper East Side New York Garden State Glendale Galleria Paramus Glendale 2014 The Galleria at Fort Lauderdale Ft. Lauderdale 2015 The Orlando Eye Orlando 2016 Tyson's Corner Center Tyson’s Corner VA FL FL FL FL NY NJ CA HI CA CA CA CA MD CA VA CA CA CA FL FL IL WA CA FL FL Start date 2016 2013 2007 2008 2015 2013 2007 2007 2011 2011 2012 2007 2010 2013 2012 2015 2013 2015 2014 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Company owned branch locations Wholesale company relationships Number of transacting locations 14 61 190 15 70 18 123 23 245 26 364 32 469 36 521 38 928 267 1,983 2,455 5,741 8,274 10,157 13,603 The Company’s largest asset is cash. The cash position consists of local currency notes, both in U.S. and Canadian Dollars, held in inventory at its branch and consignment locations to facilitate the buying and selling of foreign currency, as well as foreign currency held at the Company's vaults, branch locations, consignment locations, or cash inventory in transit between Company locations. The Company also has traditional bank deposits which act as reserves to maintain operations and as settlement accounts to facilitate currency transactions at various financial institutions. Accounts receivable consist primarily of bulk wholesale transactions where the Company is awaiting payment. The credit risk associated with accounts receivable is limited, as the Company's receivables consist primarily of bulk currency trades with a settlement cycle of 24 to 48 hours. There is minimal counterparty risk as the majority of the Company's receivables reside with banks, money service business customers and other financial institutions. The company has longstanding relationships with most of its customers and has a strong repayment history. Accounts payable consist mainly of foreign currency transactions and commissions payable at period end where the Company receives currency from a customer and then remits payment at a later date. 13Management Discussion and Analysis (All amounts expressed in U.S. Dollars unless otherwise noted) For the three months and year ended October 31, 2016 and 2015 Overview (continued) Bought deal private placement On March 12, 2015 the Company entered into an agreement with a syndicate of underwriters who purchased 540,000 common shares of the Company on a bought deal private placement offering (“Offering”), at a price of $21.06 (Cdn$26.75) per Common Share for aggregate gross proceeds of $11,371,104 (Cdn$14,445,000). In connection with the Offering, the Company paid commission to the agents in the amount of $596,983 and incurred other professional fees and expenses of $108,516 for a total cost of $705,499. $650,715 of the fees were deducted from the gross proceeds resulting in net proceeds of $10,720,389 from the Offering. $58,720 related to the listing of the common shares were expensed. Purchase of assets from U.S. Exchange House, Inc. On March 28, 2014 the Company purchased certain assets of U.S. Exchange House, Inc. (“USEH”), pertaining to its bank note operations located in the United States and Canada. The Company acquired USEH’s customer trading relationships, certain prepaid and fixed assets and the USEH trading software used to operate the bank note business. CXI paid $2,350,000 in cash on closing and had two additional contingent payments of up to a maximum of $1,325,000 each and payable within sixty days of the first and second anniversary after closing. The Company made additional payments of $767,684 subsequent to the first anniversary after closing and $731,706 subsequent to the second anniversary after closing. SELECTED FINANANCIAL DATA The below chart summarizes the performance of the Company over the last eight fiscal quarters. Earnings per share (diluted) $ 0.22 0.24 0.08 0.05 0.06 0.47 Three-months ending Revenue $ Net operating income $ Net income $ Total assets $ Total equity $ 10/31/2016* 7,692,144 2,219,101 1,379,937 62,196,008 50,752,352 7/31/2016* 4/30/2016* 1/31/2016* 7,708,332 2,603,843 1,484,257 71,027,239 49,568,941 5,854,925 1,160,181 479,540 57,181,863 48,527,966 5,572,055 894,364 298,377 50,313,593 46,308,790 10/31/2015* 6,882,336 2,330,425 390,841 52,112,593 46,760,103 7/31/2015* 4/30/2015* 6,688,467 2,231,642 2,929,194 50,622,082 46,350,494 5,311,102 1,333,013 (34,711) 49,633,903 44,076,240 (0.01) 1/31/2015* 0.25 * Restatement made in Fiscal Year 2015 to correct the presentation of a gain on foreign exchange along with its corresponding income tax impact which was required to be presented under IFRS as other income. The foreign exchange gain was previously disclosed under comprehensive income with no corresponding tax provision. The restatement does not impact the Company’s revenues, operating expenses, or net operating income. 32,083,776 38,859,546 1,242,367 5,193,869 1,380,660 Seasonality is reflected in the timing of when foreign currencies are in greater or lower demand. In a normal operating year there is seasonality to the Company's operations with higher revenues generally from March until September and lower revenues from October to February. This coincides with peak tourism seasons in North America when there are generally more travelers entering and leaving the United States and Canada. 14Management Discussion and Analysis (All amounts expressed in U.S. Dollars unless otherwise noted) For the three months and year ended October 31, 2016 and 2015 Selected Financial Results for the three months and year ended October 31, 2016 and October 31, 2015 Year Ended October 31, 2016 Year ended October 31, 2015 Three months ended October 31, 2016 Three months ended October 31, 2015 Revenue Operating expenses Net Operating income Total other income/(expense), net EBITDA1 Net income2 Basic earnings per share2 Diluted earnings per share2 26,827,456 19,949,967 6,877,489 (138,183) 6,739,306 3,642,111 0.59 24,075,775 16,938,331 7,137,444 7,692,144 5,473,043 2,219,101 6,882,337 4,551,915 2,330,422 1,228,178 (16,568) (597,849) 8,365,622 4,665,985 0.80 2,202,533 1,379,937 0.22 2,095,707 390,837 0.06 0.58 0.77 0.22 0.06 1 Earnings before interest, taxes, depreciation and amortization 2 Restatement made in Fiscal Year 2015 to correct the presentation of a gain on foreign exchange along with its corresponding income tax impact which was required to be presented under IFRS as other income. The foreign exchange gain was previously disclosed under comprehensive income with no corresponding tax provision. The restatement does not impact the Company’s revenues, operating expenses, or net operating income. October 31, 2016 October 31, 2015 (As restated) Total assets Total long term financial liabilities Total equity 62,196,008 - 50,752,351 52,112,593 - 46,760,103 Results of operations – year ended October 31, 2016 and 2015 A breakdown of revenues by geographic location is presented below: Total revenues Year ended October 31, 2016 Year ended October 31, 2015 United States Canada Total 22,053,195 4,774,261 26,827,456 17,694,904 6,380,871 24,075,775 Beginning in May of 2015, the Company shifted away from utilizing an intercompany inventory on consignment model resulting in a shift in income from Canada to the United States. During the year ended October 31, 2016 total commission revenues increased by 11% to $26,827,456 compared to $24,075,775 for the year ended October 31, 2015. Since October 31, 2015, the Company has added 407 new wholesale relationships comprising 3,446 transacting locations, of which 59 wholesale relationships representing 2,164 transacting locations were added in the United States and 348 wholesale relationships representing 1,282 transacting locations were added in Canada. During the year ended October 31, 2016, the number of transactions between the Company and its customers increased 21% to 704,000 transactions from 583,000 from the same period of the previous year. 15Management Discussion and Analysis (All amounts expressed in U.S. Dollars unless otherwise noted) For the three months and year ended October 31, 2016 and 2015 Results of operations – year ended October 31, 2016 and 2015 (continued) During the year ended October 31, 2016, operating expenses increased 17% to $19,869,020 compared to $16,938,331 for the year ended October 31, 2015, the major components of which are presented below: Salaries and benefits Rent Legal, professional and director's fees Postage and shipping Stock based compensation Other general and administrative Total operating expenses Year ended October 31, 2016 Year ended October 31, 2015 Change Change % 10,787,911 2,652,296 1,054,277 2,546,923 650,216 2,258,344 19,949,967 9,247,602 1,540,309 2,435,837 907,806 1,974,032 585,600 216,459 146,471 572,891 64,616 1,787,454 470,890 16,938,331 3,011,636 17% 9% 16% 29% 11% 26% 18%  Salaries and benefits increased 17% to $10,787,911 from $9,247,602 which is attributed to increases in the Company’s employment base for the period. As of October 31, 2016, the Company employed 274 full and part-time employees in the United States and Canada compared to 231 full and part-time employees at October 31, 2015. The increase in staffing is a result of adding a company owned branch location as well as the hiring of two senior executives in the areas of sales and compliance and other hires engaged in the areas of compliance, information technology, finance, operations, vault operations and sales;  Rent increased 9% to $2,652,296 from $2,435,837. The Company has opened 2 new branch location since October 31, 2015 and 6 new locations since the start of 2015 fiscal year;    Legal, professional and director’s fees increased 16% to $1,054,277 from $907,032. The increase is related primarily to one-time costs for executive search fees; Postage and shipping increased 29% to $2,546,923 from $1,974,032 and is due to an increase in the frequency of inbound and outbound shipments. The Company incurs shipping fees from couriers and armored carriers to transport currency between the Company’s stores and customers. The Company added 407 new customers representing 3,446 new transacting locations since October 31, 2015 which has led to increased transactional activity thus increasing shipping costs. Additionally, the Company has increased the frequency of inbound and outbound armored shipments due to an increase in high value, bulk shipments to centralized clients. Shipping fees collected by the Company are netted against shipping charges charged to the Company; Stock based compensation increased 11% to $650,216 from $585,600 for the vested portion of stock options granted pursuant to the Company's stock option plan. The options have an expiry date of 5 years from the date of the grant, unless otherwise stated by the Board of Directors, and have a weighted average exercise price of Cdn$18.50. There were 521,592 options outstanding at October 31, 2016 compared to 424,866 options outstanding at October 31, 2015; and 16Management Discussion and Analysis (All amounts expressed in U.S. Dollars unless otherwise noted) For the three months and year ended October 31, 2016 and 2015 Results of operations – year ended October 31, 2016 and 2015 (continued)  Other general and administrative expenses increased 26% to $2,258,344 from $1,787,454. Other expenses are comprised of insurance, travel and lodging, software maintenance, utilities, bank service charges, foreign exchange gains and losses through profit and loss, and other general and administrative expenses. The increase is a result of additions to insurance policies, non-capitalized costs to support the Company’s software, CEIFX.com, bank service charges, and increases in costs to support new transacting locations. The ratio of operating expenses to total revenue for the year ended October 31, 2016 was 74% compared to 70% for the year ended October 31, 2015. The Company expects this ratio to remain steady in the short term. In time, the Company can increase its operating efficiency by the addition of new bank and non-bank financial institutions in Canada and the United States to redeploy excess currency purchased by its branches, affiliate partners, and other clientele. Other income and expenses are comprised of the following: Year ended October 31, 2016 Year ended October 31, 2015 (As restated) Other income Revaluation of contingent consideration Foreign exchange gain on the translation of currencies held in Subsidiary Expenses related to bought deal Interest and accretion expense Expenses related to bank application Depreciation and amortization Income tax expense Total other expense 16,859 (96,359) - - (95,758) (58,683) (1,311,526) (1,689,911) (3,235,378) 19,191 68,777 1,497,717 (58,720) (34,984) (298,787) (1,354,565) (2,310,088) (2,471,459)  Other income decreased to $16,859 from $19,191 and relates to interest collected for surplus cash deposits held at various financial institutions in Canada and the United States as well as other miscellaneous income;  Revaluation of contingent consideration relates to the change in contingent consideration from customer trading relationships acquired from the USEH acquisition. During the year ended October 31, 2016 contingent consideration was reassessed with final payment being made and the Company recorded a revaluation of contingent consideration of $ 96,359;   Expenses related to bought deal consist of legal and professional fees resulting from the listing of 540,000 Common Shares on a bought deal private placement at a price of Cdn$26.75 for aggregate proceeds of Cdn$14,445,000 in March of 2015; Interest and accretion expense increased to $95,758 from $34,984 and relates primarily to interest payments on credit lines and tax accounts; Results of operations – year ended October 31, 2016 and 2015 (continued)  Expenses pertaining to completing the bank license application decreased to $58,683 from $298,787; 17Management Discussion and Analysis (All amounts expressed in U.S. Dollars unless otherwise noted) For the three months and year ended October 31, 2016 and 2015  Depreciation and amortization decreased to $1,311,526 from $1,354,565 and relates to amortization of the Company’s intangible assets and depreciation of fixed assets over their estimated economic life. The software acquired from the purchase of assets from USEH has been fully amortized; and  Income tax expense decreased to $1,689,911 from $2,310,088 and is a total of federal income tax as well as various state and provincial taxes for the jurisdictions in which the Company operates. The prior year income tax expense included a one-time increase in income tax of $190,000 resulting from a reorganization of the corporate structure. In June of 2015, 176,174 employee and director stock options were exercised for proceeds of $1,197,028 (Cdn$1,495,164). Upon exercise of the options, the Company deducted the difference b etween the fair market value of the options and the option strike price from taxable income resulting in a reduction in income tax payable and income tax expense of $990,000 during the three month period ended October 31, 2015. Results of operations – three month periods ended October 31, 2016 and October 31, 2015 A breakdown of revenues by geographic location is presented below: Total revenues Three months ended October 31, 2016 Three months ended October 31, 2015 United States Canada Total 6,509,599 1,182,545 7,692,144 6,172,654 709,683 6,882,337 During the three month period ended October 31, 2016, total commission revenues increased by 12% to $7,692,144 compared to $6,882,337 for the three month period ended October 31, 2015. Since October 31, 2015, the Company has added 407 new wholesale relationships comprising 3,446 locations, of which 59 wholesale relationships representing 2,164 transacting locations were added in the United States and 348 wholesale relationships representing 1,282 transacting locations were added in Canada. During the three month period ended October 31, 2016, the number of transactions between the Company and its customers increased 34% to 211,000 transactions from 157,000 from the same period of the previous year. 18Management Discussion and Analysis (All amounts expressed in U.S. Dollars unless otherwise noted) For the three months and year ended October 31, 2016 and 2015 Results of operations – three month periods ended October 31, 2016 and October 31, 2015 (continued) During the three month period ended October 31, 2016, operating expenses increased 20% to $5,473,045 compared to $4,551,911 for the three month period ended October 31, 2015, the major components of which are presented below: Salaries and benefits Rent Legal, professional and director's fees Postage and shipping Stock based compensation Other general and administrative Total operating expenses Three months ended October 31, 2016 Three months ended October 31, 2015 Change 2,848,522 2,406,976 441,546 708,856 214,178 768,015 174,057 759,417 661,729 266,264 602,315 143,227 471,400 5,473,045 4,551,911 Change % 18% 7% 47,127 (52,086) -20% 165,700 30,830 288,017 921,134 28% 22% 61% 20%  Salaries and benefits increased 18% to $2,848,522 from $2,406,976 which is attributed to increases in the Company’s employment base for the period. As of October 31, 2016, the Company employed 274 full and part-time employees in the United States and Canada compared to 231 full and part-time employees at October 31, 2015. The increase in staffing is a result of adding a company owned branch location as well as the hiring of two senior executives in the areas of sales and compliance and other hires engaged in the areas of compliance, information technology, operations, finance, vault operations and sales;  Rent increased 7% to $708,856 from $661,729. The Company has opened 2 new branch locations since October 31, 2015;    Legal, professional and director’s fees decreased 20% to $214,178 from $266,264; Postage and shipping increased 28% to 768,015 from $602,315 and is due to an increase in the frequency of inbound and outbound shipments. The Company incurs shipping fees from couriers and armored carriers to transport currency between the Company’s stores and customers. The Company added 407 new customers representing 3,446 new transacting locations since October 31, 2015 which has led to increased transactional activity thus increasing shipping costs. Additionally, the Company has increased the frequency of inbound and outbound armored shipments due to an increase in high value, bulk shipments to centralized clients. Shipping fees collected by the Company are netted against shipping charges charged to the Company; Stock based compensation increased 22% to $174,057 from $143,227 for the vested portion of stock options granted pursuant to the Company's stock option plan. The options have an expiry date of 5 years from the date of the grant, unless otherwise stated by the Board of Directors, and have a weighted average exercise price of Cdn$18.50. There were 521,592 options outstanding at October 31, 2016 compared to 424,866 options outstanding at October 31, 2015; and  Other general and administrative expenses increased 61% to $759,417 from $471,400. Other expenses are comprised of insurance, travel and lodging, software maintenance, utilities, bank service charges, foreign exchange gains and losses through profit and loss, and other general and administrative expenses. 19Management Discussion and Analysis (All amounts expressed in U.S. Dollars unless otherwise noted) For the three months and year ended October 31, 2016 and 2015 Results of operations – three month periods ended October 31, 2016 and October 31, 2015 (continued) The ratio of operating expenses to total revenue for the three month period ended October 31, 2016 was 71% compared to 66% for the three month period ended October 31, 2015. The ratio traditionally is higher during the winter months and decreases as the fiscal year progresses. This is du e to the cyclical nature of the business as the Company has more exchange volumes from March to September and the Company is able to redeploy the currency it purchases in the summer months from its branch locations and resell it to other bank and non-bank customers, thus bypassing currency wholesalers and widening its gross margins. The Company expects this ratio to remain steady in the short term. In time, the Company can increase its operating efficiency by the addition of new bank and non -bank financial institutions in Canada and the United States to redeploy excess currency purchased by its branches, affiliate partners, and other clientele. Other income and expenses are comprised of the following: Other income Revaluation of contingent consideration Exchange difference on foreign operations Expenses related to bought deal Interest and accretion expense Expenses related to bank application Depreciation and amortization Income tax expense Total other expense Three months ended October 31, 2016 Three months ended October 31, 2015 (As restated) 3,258 - - - (37,866) (19,826) (308,864) (475,866) (839,164) 3,214 (56,262) (4,954) (3,936) (3,222) (172,778) (344,155) (1,357,489) (1,939,582)  Other income increased slightly to $3,258 from $3,214 and relates to interest collected for surplus cash deposits held at various financial institutions in Canada and the United States as well as other miscellaneous income;  Revaluation of contingent consideration relates to the change in contingent consideration from customer trading relationships acquired from the USEH acquisition;   Interest and accretion expense increased to $37,866 from $3,222 and relates to interest payments on credit lines and tax accounts; Expenses pertaining to completing the bank license application decreased to $19,826 from $172,778;  Depreciation and amortization decreased to $308,864 from $344,155 and relates to amortization of the Company’s intangible assets and depreciation of fixed assets over their estimated economic life; and  Income tax expense decreased to $475,866 compared to an income tax expense of $1,357,489 during the three month period ended October 31, 2015. In October 2015, the Company transferred capital from its Canadian subsidiary to the parent company, resulting in a one -time income tax expense of $600,000. Income taxes are a total of federal income tax as well as various state and provincial taxes for the jurisdictions in which the Company operates. 20Management Discussion and Analysis (All amounts expressed in U.S. Dollars unless otherwise noted) For the three months and year ended October 31, 2016 and 2015 Cash flows Cash flows from operating activities during the year ended October 31, 2016 resulted in an inflow of $2,446,143 compared to an inflow of $5,860,066 during the year ended October 31, 2015. The primary reason for the decrease in operating cash was due to an increase in accounts receivable offset slightly by an increase in accounts payable. The actual amount of accounts receivable and accounts payable fluctuate from period to period due to the volume of activity and timing differences. In most instances accounts receivable and accounts payable have a settlement cycle of 24 to 48 hours. Operating cash flow is generated by commission and fee income, and is offset by operating expenses. Cash used in investing activities during the year ended October 31, 2016 resulted in an outflow of $595,863 compared to an outflow of $643,006 during the year ended October 31, 2015. This represents additions to property and equipment and to the internally developed software, CEIFX. Cash provided by financing activities during the year ended October 31, 2016 was $3,293,301 related primarily to borrowing on the Company’s credit line to meet season compared to net inflows of $11,962,606 resulting from employee stock options exercised as well as financing from the bought deal offering during the year ended October 31, 2015. Liquidity and capital resources At October 31, 2016, the Company had working capital of $47,016,377 (October 31, 2015 Restated - $42,674,895). The Company maintains a revolving line of credit with BMO Harris Bank, N.A. for up to $10,000,000 to assist with its short-term cash flow needs. In June of 2016, EBC entered in to an unsecured Master Purchasing Agreement with a shareholder of the Company. The Company has available credit of Cdn$3,000,000 ($2,297,794) under the agreement. Specific payment terms and interest rates are negotiated when drawings are made. At October 31, 2016, the balance outstanding was $Nil (October 31, 2016 - $Nil) The Company had a total available balance of unused lines of credit of $9,055,205 at October 31, 2016. 21Management Discussion and Analysis (All amounts expressed in U.S. Dollars unless otherwise noted) For the three months and year ended October 31, 2016 and 2015 Selected annual financial information The following tables set out selected consolidated financial information of the Company for the periods indicated. Each investor should read the following information in conjunction with those financial statements for the relevant period and notes related thereto. The operating results for any past period are not necessarily indicative of results for any future period. The selected financial information set out below has been derived from the consolidated financial statements of the Company. Year ended Year ended October 31, 2016 October 31, 2015 October 31, 2014 (As restated) (3) (As restated) (3) $ $ Year ended $ Revenues Net operating income (2) Net income Basic earnings per share Diluted earnings per share Total assets Total liabilities Total non-current financial liabilities 26,827,456 24,075,775 22,005,953 6,877,489 3,642,111 $0.59 $0.58 62,196,008 11,443,657 - 7,137,444 4,665,985 0.80 0.77 52,112,593 5,352,490 - 7,189,769 4,249,225 0.78 0.77 39,709,302 6,982,895 585,144 Working capital 47,016,377 42,674,895 33,311,551 Thirteen months ended October 31, 2013 (1) $ 15,990,434 4,392,515 2,641,694 0.64 0.64 33,681,819 3,917,843 - 28,935,018 The Company changed its year-end to October 31, and reported on the thirteen month period ended October 31, 2013. Notes: 1. 2. Operating income for prior periods has been adjusted to exclude depreciation and amortization expense. 3. Restatement made in Fiscal Year 2015 to correct the presentation of a gain on foreign exchange along with its corresponding income tax impact which was required to be presented under IFRS as other income. The foreign exchange gain was previously disclosed under comprehensive income with no corresponding tax provision. Commitments and contingencies On October 1, 2011, the Company entered into an employment agreement with the President and CEO of the Company. Such agreement contains clauses requiring additional payments of a minimum of $450,000 to be made upon the occurrence of certain events such as a change of control of the Company or termination for reasons other than cause. As the likelihood of a change of control of the Company is not determinable, the contingent payments have not been reflected in the consolidated financial statements. The Company has entered into non-cancellable operating leases with terms in excess of one year for the use of certain facilities. The minimum rental payments associated with these leases are $6,403,730 and are payable as follows: Within 1 year 1 to 5 years after 5 years Total $ $ $ $ October 31, 2016 2,351,712 3,805,658 246,359 6,403,730 October 31, 2015 1,887,044 3,440,553 23,506 5,351,103 Off-balance sheet arrangements There are currently no off-balance sheet arrangements which could have an effect on current or future results or operations, or on the financial condition of the Company. 22Management Discussion and Analysis (All amounts expressed in U.S. Dollars unless otherwise noted) For the three months and year ended October 31, 2016 and 2015 Hedging activity Other than as noted below, the Company does not engage in any form of hedged, derivative or leveraged trading. The Company does not extend credit to any of its customers, other than through industry standard settlement terms. The Company enters into non-deliverable foreign currency forward contracts on a daily basis to mitigate the risk of fluctuations in the exchange rates of its holdings of major currencies. Changes in the fair value of the contracts and the corresponding gains or losses are recorded daily and are included in commissions from trading on the consolidated statements of income and comprehensive income. The Company’s management strategy is to reduce the risk of fluctuations associated with foreign exchange rate changes. The foreign currency forward contracts can be closed immediately resulting in the collateral being liquidated. The fair value of forward contracts, which represents the amount that would be (paid)/received by the Company if the forward contracts were terminated at October 31, 2016 was $44,771 - (October 31, 2015 $210,367). At October 31, 2016 and October 31, 2015 approximately $1,240,694 and $780,583, respectively, were being held as collateral on these contracts and are reflected as restricted cash held in escrow in the consolidated statements of financial position. Transactions with related parties The remuneration of directors and key management personnel during year ended October 31, 2016 and October 31, 2015 were as follows: Short-term benefits Post-employment benefits Stock based compensation Year ended October 31, 2016 October 31, 2015 $ 1,100,460 50,499 559,717 1,710,676 $ 1,826,519 62,146 640,251 2,528,916 The Company incurred legal and professional fees in the aggregate of $23,530 for the year ended October 31, 2016 (October 31, 2015 - $42,409) charged by entities controlled by directors or officers of the Company. 23Management Discussion and Analysis (All amounts expressed in U.S. Dollars unless otherwise noted) For the three months and year ended October 31, 2016 and 2015 Option grants The Company adopted an incentive stock option plan dated April 28, 2011 (the "Plan"). The Plan is a rolling stock option plan, under which 10% of the outstanding shares at any given time are available for issuance thereunder. The purpose of the Plan is to promote the profitability and growth of the Company by facilitating the efforts of the Company to attract and retain directors, senior officers, employees and management. Vesting terms under the Plan will occur 1/3 upon the first anniversary, 1/3 upon the second anniversary and 1/3 upon the third anniversary of the grant unless otherwise specified by the Board of Directors. Below is information related to each option grant: Date of Grant 4-May-12 17-Dec-12 3-May-13 29-Oct-13 29-Oct-13 9-Jul-14 30-Oct-14 30-Oct-14 11-Mar-15 30-Oct-15 30-Oct-15 16-Jan-16 11-Mar-16 28-Mar-16 26-Oct-16 26-Oct-16 Expiry Date 4-May-17 18-Dec-17 3-May-18 29-Oct-18 29-Oct-18 9-Jul-19 30-Oct-19 30-Oct-19 11-Mar-20 30-Oct-20 30-Oct-20 16-Jan-21 11-Mar-21 28-Mar-21 25-Oct-21 25-Oct-21 Share price at grant date (Cdn$) Amount granted 7.30 6.75 7.35 10.86 10.86 13.24 18.00 18.00 28.40 23.50 23.50 17.89 21.30 23.15 32.96 32.96 90,000 116,000 22,000 35,640 114,420 1,762 87,215 24,144 2,726 28,972 89,435 17,600 4,182 2,261 22,757 66,820 Risk-free interest rate 0.78% 0.74% 0.73% 1.29% 1.29% 1.70% 1.61% 1.61% 1.62% 1.47% 1.47% 1.46% 1.45% 1.37% 1.30% 1.30% Expected volatility 45% 49% 38% 35% 35% 29% 27% 27% 25% 32% 32% 33% 34% 34% 34% 34% Exercise Price (Cdn$) 7.50 7.50 7.65 10.86 10.86 13.24 16.21* 16.21* 28.15* 24.64* 24.64* 17.79* 22.78* 22.45* 30.75* 30.75* *Exercise price determined by average share price for previous 20 trading days Fair value of option at grant date ($) 2.84 2.66 2.42 3.44 3.44 3.58 4.97 4.97 5.75 5.10 5.10 3.86 4.78 5.87 8.46 8.46 The outstanding options at October 31, 2016 and the respective changes during the periods are summarized as follows: Number of options Weighted average price # Cdn$ Outstanding at October 31, 2014 Granted Exercised Outstanding at October 31, 2015 Granted Exercised Outstanding at October 31, 2016 486,581 121,133 (182,848) 424,866 113,620 (16,894) 521,592 10.54 24.72 8.49 15.49 28.28 8.61 18.50 24Management Discussion and Analysis (All amounts expressed in U.S. Dollars unless otherwise noted) For the three months and year ended October 31, 2016 and 2015 Option grants (continued) The following options are outstanding and exercisable at October 31, 2016: Grant Date Exercise price (Cdn$) Number outstanding 4-May-12 17-Dec-12 3-May-13 29-Oct-13 29-Oct-13 30-Oct-14 30-Oct-14 11-Mar-15 30-Oct-15 30-Oct-15 16-Jan-16 11-Mar-16 28-Mar-16 26-Oct-16 26-Oct-16 7.50 7.50 7.65 10.86 10.86 16.21 16.21 28.15 24.64 24.64 17.79 22.78 22.45 30.75 30.75 Total Subsequent events 45,000 28,667 7,333 23,760 70,720 87,215 24,144 2,726 28,972 89,435 17,600 4,182 2,261 22,757 66,820 521,592 Average remaining contractual life (years) 0.51 1.13 1.50 1.99 1.99 3.00 3.00 3.36 4.00 4.00 4.21 4.36 4.41 4.99 4.99 Number exercisable 45,000 28,667 7,333 23,760 70,720 58,142 24,144 909 28,972 29,812 - - 2,261 - - 319,719 The Company evaluated subsequent events through January 10, 2017 the date these condensed interim consolidated financial statements were issued. There were no material subsequent events that required recognition or additional disclosure in the financial statements. Accounting standards and policies The Company's accounting policies are described in Note 2 to the Company's audited consolidated financial statements for the years ended October 31, 2016 and 2015. Internal Control Over Financial Reporting Management has evaluated whether there were any changes in the Company’s internal controls over financial reporting (“ICFR”) that occurred during the period beginning on November 1, 2015 and ending on October 31, 2016 that has materially affected, or is reasonably likely to materially affect, the Company’s ICFR. No such changes were identified. However, in the course of completing the audit for the twelve months ended October 31, 2016, the following identified control deficiency was found to be a material weakness. During the completion of the audit of the financial statements for the reporting period, it was identified that there was an incorrect application of IAS 21 The effects of changes in foreign exchange rates to foreign currency inventory balances held within the Company’s Canadian subsidiary. This incorrect application resulted from an error in the accounting for foreign currency translation and the management review of the results of the subsidiary’s financial statements. The incorrect application of the accounting standards was considered an error and resulted in a restatement in accordance with IAS 8 Accounting policies, changes in accounting estimates and errors. See “Restatement of Prior Period Financial Statements”. 25Management Discussion and Analysis (All amounts expressed in U.S. Dollars unless otherwise noted) For the three months and year ended October 31, 2016 and 2015 The Company has considered a remediation plan for the material weakness in ICFR. With the growth of the Company, management will continue to add internal accounting expertise to support complex accounting standards. Management will also continue to assess how to optimize the Canadian and US tax compliance and tax accounting for complex tax issues and structures. Lastly, management will initiate an independent third party review by the Company’s internal auditors to assess financial statement reporting and internal control processes on an ongoing basis and implement recommendations as appropriate. Senior management has discussed the aforementioned material weakness with the Audit Committee, and the Board of Directors will continue to review progress on these remediation activities on a regular and ongoing basis. No assurance can be provided at this time that the actions and remediation efforts to be taken or implemented will effectively remediate the material weakness described above or prevent the incidence of other material weaknesses in the Company’s ICFR in the future. Management of the Company , including our Chief Executive Officer and Chief Financial Officer, do not expect that disclosure controls or ICFR will prevent all errors, even as the remediation measures are implemented and further improved to address the material weakness. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving our stated goals under all potential future conditions. Risk factors The operations of the Company are speculative due to the high-risk nature of its business. These risk factors could materially affect the Company’s financial condition and/or future operating results and could cause actual events to differ materially from those described in forward-looking statements relating to the Company. Although the following are major risk factors identified by management, they do not comprise a definitive list of all risk factors related to the Company, and other risks and uncertainties not presently known by management could impair the Company and its business in the future. Limited operating history The Company has only a limited operating history upon which an evaluation of the Company and its prospects can be based. Although the Company anticipates increases in revenues, it is also incurring substantial expenses in the establishment of its business. To the extent that such expenses do not result in appropriate revenue increases, the Company’s long-term viability may be materially and adversely affected. A significant portion of the Company’s financial resources have been and will continue to be, directed to the development of its business and marketing activities. The success of the Company will ultimately depend on its ability to generate cash from its business. There is no assurance that the future expansion of the Company’s business will be sufficient to cover the related operational cost as well as costs associated with continuing the development of its business and marketing activities. Future capital needs and uncertainty of additional financing The Company may need to raise funds in order to support expansion, develop new or enhanced services and products, respond to competitive pressures, acquire complementary businesses or technologies or take advantage of unanticipated opportunities. The Company may be required to raise additional funds through public or private financing, strategic relationships or other arrangements. There can be no assurance that such additional funding, if needed, will be available on terms attractive to the Company, or at all. Furthermore, any additional equity financing may be dilutive to shareholders and debt financing, if available, may involve restrictive covenants. If additional funds are raised through the issuance of equity securities, the percentage ownership of the shareholders of the Company will be reduced, shareholders may experience additional dilution in net book value per share, or such equity securities may have rights, 26Management Discussion and Analysis (All amounts expressed in U.S. Dollars unless otherwise noted) For the three months and year ended October 31, 2016 and 2015 preferences or privileges senior to those of the holders of Common Shares. If adequate funds are not available on acceptable terms, the Company may be unable to develop or enhance its business, take advantage of future opportunities or respond to competitive pressures, any of which could have a material adverse effect on the Company's business, financial condition and operating results. Competition The Company faces competition from established competitors such as Travelex Group, Wells Fargo Bank, Bank of America and American Express, and also from competitors using alternative technologies. While the market for foreign currency exchange is highly fragmented in the United States, the Company believes that it must continue to develop new products and services and introduce enhancements to its existing products and services in a timely manner if it is to remain competitive. Even if the Company introduces new and enhanced products and services, it may not be able to compete effectively because of the significantly greater financial, technical, marketing and other resources available to some of its competitors. As the markets for the Company’s products and services expand, additional competition may emerge and competitors may commit more resources to competitive products and services. There can be no assurance that the Company will be able to compete successfully in these circumstances. Management of Growth The Company may experience rapid growth in the scope of its operations. In order to manage its current operations and any future growth effectively, the Company will need to continue to implement and improve its operational, financial compliance and management information systems, as well as hire, manage and retain its employees and maintain its compliant corporate culture including technical and customer service standards. There can be no assurance that the Company will be able to manage such growth effectively or that Credit Risk Credit risk is the risk of financial loss associated with counterparty’s inability to fulfill its payment obligations. The Company’s credit risk is primarily attributable to cash in bank accounts, accounts receivable and forward contracts from hedging counterparties. All banking relationships are negotiated by senior management. The Company maintains accounts in high quality financial institutions. At various times, the Company's bank balances exceed insured limits. The credit risk associated with accounts receivable is limited, as the Company's receivables consist primarily of bulk currency trades with a settlement cycle of 24 to 48 hours. There is minimal counterparty risk as the majority of the Company's receivables reside with banks, money service business customers and other financial institutions. The company has longstanding relationships with most of its money service business customers and has a strong repayment history. For the purpose of risk control, the customers are grouped as follows: domestic and international banks, money service businesses, and other customers. Credit limits are established for each customer, whereby the credit limit represents the maximum open amount without requiring payments in advance. These limits are reviewed regularly by senior management. Due to seasonality, amounts in accounts receivable are usually at their highest during peak periods. 27Management Discussion and Analysis (All amounts expressed in U.S. Dollars unless otherwise noted) For the three months and year ended October 31, 2016 and 2015 A breakdown of accounts receivable by category is below: At October 31, 2016 At October 31, 2015 Customer type Domestic and international banks Money service businesses Other Total $ 3,562,076 4,405,212 118,973 8,086,261 $ 1,217,511 1,600,658 19,520 2,837,689 The maximum exposure to credit risk is represented by the carrying amount of each financial asset on the statement of financial position. There are no commitments that could increase this exposure to more than the carrying amount. Foreign Currency Risk The volatility of the Company's foreign currency holdings may increase as a result of the political and financial environment of the corresponding issuing country. Several currencies have limited exchange rate exposure as they are pegged to the U.S. Dollar, the reporting currency of the Company. Management believes its exposure to foreign currency fluctuations is mitigated by the short-term nature and rapid turnover of its foreign currency inventory, as well as the use in certain instances of forward contracts to offset these fluctuations. Due to their nature, some minor and exotic foreign currencies cannot be hedged or are too cost prohibitive to hedge. In order to mitigate the risks associated with holding these foreign currencies, the Company assigns wider bid/ask spreads and maintains specific inventory targets to minimize the impact of exchange rate fluctuations. These targets are reviewed regularly and are increased or decreased to accommodate demand within acceptable risk tolerances. The amount of unhedged inventory held in vaults, tills and in transit at October 31, 2016 was approximately $6,400,000 (2015 - $5,475,000). The amount of currency that is unhedged and that is not pegged to the U.S. Dollar is approximately $3,250,000 (2015 - $3,660,000). A 2% increase/reduction in the market price for the aggregate of the Company's unhedged/un- pegged foreign currencies would result in an exchange gain/loss of approximately +$65,000/-$65,000 (2015 gain/loss of approximately +$73,000/-$73,000). On a consolidated basis, the Company is also exposed to foreign currency fluctuations between the U.S. Dollar and the Canadian Dollar, being the functional currency of its Canadian subsidiary. The Company does not hedge its net investment in its Canadian subsidiary and the related foreign currency translation of its earnings. Interest Rate Risk At October 31, 2016, the Company had access to interest bearing financial instruments in cash, short term accounts payable and line of credit. A significant amount of the Company's cash is held as foreign currency bank notes in tills and vaults. These amounts are not subject to interest rate risk. Cash held in some of the Company’s accounts are interest bearing; however, since prevailing interest rates are low there is minimal interest rate risk. Borrowings bear interest at variable rates. Cash and borrowings issued at variable rates expose the Company to cash flow interest rate risk. For the interest rate profile of the Company's interest bearing financial liabilities, refer to Note 14. The Company manages interest rate risk in order to reduce the volatility of the financial results as a consequence of interest rate movements. For the decision whether new borrowings shall be arranged at a variable or fixed interest rate, senior management focuses on an internal long-term benchmark interest rate and considers the amount of cash currently held at a variable interest rate. Currently the interest rate exposure is un-hedged. If interest rates had been 50 basis points higher/lower with all other variables held constant, after tax profit 28Management Discussion and Analysis (All amounts expressed in U.S. Dollars unless otherwise noted) For the three months and year ended October 31, 2016 and 2015 for the year ended October 31, 2016 would have been approximately +$9,700/-$9,700 higher/lower as a result of credit lines held at variable interest rates. Liquidity Risk Liquidity Risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The CFO informs the Chief Executive Officer, the Board of Directors, and the Audit Committee of capital and liquidity issues as they occur in accordance with established policies and guidelines. The Company targets to have a cash reserve or credit lines greater than 15% of the Company's prior year's revenues. The following are non-derivative contractual financial liabilities: Non-derivative financial liabilities Carrying amount Estimated contractual amount Next fiscal year Future fiscal years At October 31 , 2016 Accounts payable Accrued expenses Income taxes payable Line of credit $ 5,984,751 1,509,411 767,690 3,181,805 $ $ 5,984,751 1,285,606 767,690 5,984,751 1,285,606 767,690 3,181,805 3,181,805 $ $Nil $Nil $Nil $Nil Non-derivative financial liabilities Carrying amount Estimated contractual amount Next fiscal year Future fiscal years At October 31, 2015 (As restated) Accounts payable Accrued expenses Income taxes payable Contingent consideration $ 3,190,957 973,067 547,060 641,406 $ $ 3,190,957 3,190,957 770,361 547,060 641,406 770,361 $Nil 641,406 $ $Nil $Nil 547,060 $Nil The Company had available unused lines of credit amounting to $9,055,205 at October 31, 2016 (October 31, 2015 - $10,000,000). Capital Management The Company manages capital through its financial and operational forecasting processes. The Company defines working capital as total current assets less current liabilities. The Company reviews its working capital and forecasts its cash flows based on operating expenditures, and other investing and financing activities related to its daily operations. October 31, 2016 10/31/2015 (as restated) Current assets 58,460,034 Current liabilities (11,443,657) Working capital 47,016,377 48,027,385 (5,352,490) 42,674,895 The Company monitors its capital structure and makes adjustments according to market conditions in an effort to meet its objectives given the current outlook of the business and industry in general. The Company may manage its capital structure by issuing new shares, obtaining loan financing, adjusting capital spending, 29Management Discussion and Analysis (All amounts expressed in U.S. Dollars unless otherwise noted) For the three months and year ended October 31, 2016 and 2015 or disposing of assets. The capital structure is reviewed by management and the Board of Directors on an ongoing basis. Product Development and Rapid Technological Change The advent of the “cashless society” may erode the physical bank note currency markets resulting in a significant adverse effect upon the Company’s continued growth and profitability. While the enabling technology has existed for over a decade, the development of a truly cashless society continues to be slowed by such factors as issues respecting infrastructure, cultural resistance, distribution problems and patchwork regulations. Nevertheless, the success of the Company could be seriously affected by a competitor’s ability to develop and market competing technologies. To remain competitive, the Company must continue to enhance and improve the responsiveness, functionality and features of its technology and website, CEIFX. The Internet and the e-commerce industry are characterized by rapid technological change, changes in user and customer requirements and preferences, frequent new product and service introductions embodying new technologies and the emergence of new industry standards and practices that could render the Company’s existing operations and proprietary technology and systems obsolete. The Company’s success will depend, in part, on its ability to develop leading technologies useful in its business, enhance its existing services, develop new services and technology that address the increasingly sophisticated and varied needs of its existing and prospective customers and respond to technological advances and emerging industry standards and practices on a cost-effective and timely basis. The development of Internet based and other proprietary technology entails significant technical, financial and business risks. There can be no assurance that the Company will successfully implement new technologies or adapt its website, proprietary technology and transaction-processing systems to customer requirements or emerging industry standards. If the Company is unable to adapt in a timely manner in response to changing market conditions or customer requirements for technical, legal, financial or other reasons, the Company’s business could be materially adversely affected. Intellectual Property Proprietary rights are important to the Company’s success and its competitive position. Although the Company seeks to protect its proprietary rights, its actions may be inadequate to protect any trademarks and other proprietary rights or to prevent others from claiming violations of their trademarks and other proprietary rights. In addition, effective copyright and trademark protection may be unenforceable or limited in certain countries, and the global nature of the Internet makes it impossible to control the ultimate protection of the Company’s intellectual work product. Any of these claims, with or without merit, could subject the Company to costly litigation and the diversion of the time and attention of its technical management personnel. Government Regulation and Compliance Any non-compliance with regulatory currency licensing and transaction reporting procedures could result in significant financial penalties and the possibility of criminal prosecution. The Company has a robust regulatory compliance management regime, overseen by experienced, Board-appointed Officers leading a well-resourced staff. The Company and its subsidiaries are regularly subject to regulatory as well as internal and/or external audits. Several countries prohibit non-banks from providing currency exchange transaction services. While the Company believes the possibility is remote, the risk does exist that the jurisdictions in which it operations may someday institute regulations to prohibit non-banks from providing foreign currency exchange services 30Management Discussion and Analysis (All amounts expressed in U.S. Dollars unless otherwise noted) For the three months and year ended October 31, 2016 and 2015 Network Security Risks Despite the implementation of network security measures by the Company, its infrastructure is potentially vulnerable to computer break-ins and similar disruptive problems. Concerns over Internet security have been, and could continue to be, a barrier to commercial activities requiring consumers and businesses to send confidential information over the Internet. Computer viruses, break-ins or other security problems could lead to misappropriation of proprietary information and interruptions, delays or cessation in service to the Company’s clients. Moreover, until more comprehensive security technologies are developed, the security and privacy concerns of existing and potential clients may inhibit the growth of the Internet as a medium for commerce. Risk of System Failure or Inadequacy to protect its systems against damage The Company’s operations are dependent on its ability to maintain its equipment in effective working order and loss, telecommunications failure or similar events. In addition, the growth of the Company’s customer base may strain or exceed the capacity of its computer and telecommunications systems and lead to degradations in performance or systems failure. The Company may in the future experience failure of its information systems which may result in decreased levels of service delivery or interruptions in service to its customers. While the Company continually reviews and seeks to upgrade its technical infrastructure and maintains a fully integrated, offsite, backup server farm to limit the likelihood of systems overload or failure, any damage, failure or delay that causes interruptions in the Company’s operations could have a material and adverse effect on the Company’s business. fire, natural disaster, power from In addition, some of the Company’s applications are hosted by third parties. Any failure on the part of third parties to maintain their equipment in good working order and to prevent system disruptions could have a material and adverse effect on the Company’s business. Theft and Risk of Physical Harm to Personnel The Company stores and transports bank notes as part of its daily business and faces the risk of theft and employee dishonesty. The Company maintains a crime insurance policy which provides coverage against theft and employee dishonesty, but any particular claim is subject to verification that it is within policy limits which may not be assured and may require legal proceedings to enforce coverage. The Company’s Audit Committee monitors internal controls and the CEIFX technology monitors and accounts for all fund balances in real time. In addition, employees and agents of the Company are potentially subject to physical harm if subjected to a forcible robbery. The Company’s Management Committee oversees the deployment of a comprehensive security program which includes surveillance cameras, alarms, safe/vault equipment alarms and additional intrusion protection devices, as well as multiple staff on site at all times. 31Management Discussion and Analysis (All amounts expressed in U.S. Dollars unless otherwise noted) For the three months and year ended October 31, 2016 and 2015 Reliance on Key Personnel The Company currently has a small senior management group, which is sufficient for the Company's present level of activity. The Company's future growth and its ability to develop depend, to a significant extent, on its ability to attract and retain highly qualified personnel. The Company relies on a limited number of key employees, consultants and members of senior management and there is no assurance that the Company will be able to retain such key employees, consultants and senior management. The loss of one or more of such key employees, consultants or members of senior management, if not replaced, could have a material adverse effect on the Company's business, financial condition and prospects. The development of the Company is dependent upon its ability to attract and retain key personnel, particularly the services of the President and CEO, Randolph W. Pinna. The loss of Mr. Pinna’s services could have a materially adverse impact on the business of the Company. There can be no assurance that the Company can retain its key personnel or that it can attract and train qualified personnel in the future. The Company currently has key person insurance on Mr. Pinna of $4.5 million. Control of the Company Randolph W. Pinna, the Chief Executive Officer and Chairman of the Company, is the principal shareholder of the Company and the promoter of the Company. Mr. Pinna beneficially owns approximately 22%, net of options, of the issued and outstanding Common Shares. By virtue of his status as the principal shareholder of the Company and by being a director and officer of the Company, Randolph W. Pinna has the power to exercise significant influence over all matters requiring shareholder approval, including the election of directors, amendments to the Company’s articles and by-laws, mergers, business combinations and the sale of substantially all of the Company’s assets. As a result, the Company could be prevented from entering into transactions that could be beneficial to the Company or its other shareholders. Also, third parties could be discouraged from making a take-over bid. As well, sales by Randolph W. Pinna of a substantial number of Common Shares could cause the market price of Common Shares to decline. Mr. Randolph Pinna's influence over the control of the Company is mitigated by the Company's appointment of a Lead Independent Director, Chirag Bhavsar, on December 7, 2012 as well as the independent majority of its Board of Directors and its Committees. Global Economic and Financial Market Conditions Market events and conditions, including disruption in the U.S. and Canadian, international credit markets and other financial systems and the deterioration of U.S. and Canadian, global economic conditions, could, among other things, impact tourism and impede access to capital or increase the cost of capital, which would have an adverse effect on the Company's ability to fund its working capital and other capital requirements. Market disruptions could, among other things, make it more difficult for the Company to obtain, or increase its cost of obtaining, capital and financing for its operations. The Company's access to additional capital may not be available on terms acceptable to the Company or at all. Market Price and Volatile Securities Markets Market forces may render it difficult or impossible for the Company to secure purchasers to purchase its securities at a price which will not lead to severe dilution to existing shareholders, or at all. In addition, shareholders may realize less than the original amount paid on dispositions of their Common Shares during periods of such market price decline. 32Management Discussion and Analysis (All amounts expressed in U.S. Dollars unless otherwise noted) For the three months and year ended October 31, 2016 and 2015 International Issuer, Management and Directors The Company is incorporated, continued or otherwise organized under the laws of a foreign jurisdiction or resides outside of Canada. Certain of the officers and directors of the Company reside outside of Canada. Although the Company and such persons have appointed Peterson Law Professional Company as their agents for service of process in Canada, it may not be possible for investors to enforce judgments obtained in Canada against the Company or such persons. 33CURRENCY EXCHANGE INTERNATIONAL, CORP. Consolidated Financial Statements For the years ended October 31, 2016 and 2015 (Expressed in U.S. Dollars) 34 CURRENCY EXCHANGE INTERNATIONAL, CORP. Consolidated Financial Statements For the years ended October 31, 2016 and 2015 (Expressed in U.S. Dollars) TABLE OF CONTENTS Independent Auditor’s Report Consolidated Statements of Financial Position Consolidated Statements of Income and Comprehensive Income Consolidated Statements of Changes in Equity Consolidated Statements of Cash Flows Notes to the Consolidated Financial Statements 36-37 38 39 40 41 42-66 35Independent auditor’s report Grant Thornton LLP Suite 501 201 City Centre Drive Mississauga, ON L5B 2T4 T +1 416 369 7076 F +1 905 804 0509 www.GrantThornton.ca To the shareholders of Currency Exchange International, Corp. We have audited the accompanying consolidated financial statements of Currency Exchange To the shareholders of International, Corp., which comprise the consolidated statements of financial position as at Currency Exchange International, Corp. October 31, 2016 and October 31, 2015, and the consolidated statements of income and comprehensive income, consolidated statements of changes in equity and consolidated We have audited the accompanying consolidated financial statements of cash flows for the years then ended, and a summary of significant accounting statements of Currency Exchange International, Corp., which policies and other explanatory information. comprise the consolidated statements of financial position as at October 31, 2014 and October 31, 2013, and the consolidated statements of income and comprehensive income, consolidated Management’s responsibility for the financial statements statements of changes in equity and consolidated statements of Management is responsible for the preparation and fair presentation of these consolidated cash flows for the year and thirteen-month period then ended, and financial statements in accordance with International Financial Reporting Standards, and for a summary of significant accounting policies and other explanatory such internal control as management determines is necessary to enable the preparation of information. consolidated financial statements that are free from material misstatement, whether due to fraud or error. Management’s responsibility for the financial statements Auditor’s responsibility Management is responsible for the preparation and fair Our responsibility is to express an opinion on these consolidated financial statements based on presentation of these consolidated financial statements in our audits. We conducted our audit in accordance with Canadian generally accepted auditing accordance with International Financial Reporting Standards, and standards. Those standards require that we comply with ethical requirements and plan and for such internal control as management determines is necessary to perform the audit to obtain reasonable assurance about whether the consolidated financial enable the preparation of consolidated financial statements that are statements are free from material misstatement. free from material misstatement, whether due to fraud or error. An audit involves performing procedures to obtain audit evidence about the amounts and Auditor’s responsibility disclosures in the consolidated financial statements. The procedures selected depend on the Our responsibility is to express an opinion on these consolidated auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements based on our audits. We conducted our audit consolidated financial statements, whether due to fraud or error. In making those risk in accordance with Canadian generally accepted auditing standards. assessments, the auditor considers internal control relevant to the entity’s preparation and fair Those standards require that we comply with ethical requirements presentation of the consolidated financial statements in order to design audit procedures that and plan and perform the audit to obtain reasonable assurance are appropriate in the circumstances, but not for the purpose of expressing an opinion on the about whether the consolidated financial statements are free from effectiveness of the entity’s internal control. An audit also includes evaluating the material misstatement. appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated An audit involves performing procedures to obtain audit evidence financial statements. about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order 36 We believe that the audit evidence we have obtained in our audit is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Currency Exchange International, Corp. as at October 31, 2016 and October 31, 2015, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards. Toronto, Canada January 10, 2017 Chartered Professional Accountants Licensed Public Accountants 37CURRENCY EXCHANGE INTERNATIONAL, CORP. Consolidated Statements of Financial Position October 31, 2016 and 2015 (Expressed in U.S. Dollars) ASSETS October 31, 2016 October 31, 2015 (as restated Note 4) Current assets Cash (Note 7) Accounts receivable (Note 16) Restricted cash held in escrow (Note 8) Forward contract assets (Note 17) Other current assets (Note 23) Total current assets Property and equipment (Note 10) Intangible assets (Note 11) Other assets Net deferred tax asset (Note 12) Total assets Current liabilities Accounts payable Line of credit (Note 14) Accrued expenses Income taxes payable (Note 12) Contingent consideration - current (Note 5) Total current liabilities Total liabilities Equity Share capital Equity reserves Retained earnings Total equity Total liabilities and equity LIABILITIES AND EQUITY $ 48,435,544 8,086,261 1,240,694 44,771 652,764 58,460,034 719,254 2,171,501 91,106 754,113 62,196,008 5,984,751 3,181,805 1,509,411 767,690 - 11,443,657 11,443,657 6,134,815 24,881,443 19,736,093 50,752,351 62,196,008 $ 43,690,996 2,837,689 780,583 210,367 507,750 48,027,385 722,187 2,922,390 81,045 359,586 52,112,593 3,190,957 - 973,067 547,060 641,406 5,352,490 5,352,490 6,117,921 24,548,200 16,093,982 46,760,103 52,112,593 Approved on behalf of Board of Directors: (signed) "Randolph Pinna", Director (signed) "Chirag Bhavsar", Director The accompanying notes are an integral part of these consolidated financial statements. 38CURRENCY EXCHANGE INTERNATIONAL, CORP. Consolidated Statements of Income and Comprehensive Income Years ended October 31, 2016 and 2015 (Expressed in U.S. Dollars) Revenues Commissions from trading Fee income Total revenues (Note 6) Operating expenses (Note 20) Net operating income Other income (expense) Other income Revaluation of contingent consideration (Note 5) Expenses related to bank application (Note 21) Expenses related to bought deal (Note 18) Foreign exchange gain on the translation of currencies held in subsidiary (Note 4) Total other income (expense) Earnings before interest, taxes, depreciation and amortization Interest and accretion Depreciation and amortization Income before income taxes Income tax expense (Note 12) Net income for the period Other comprehensive income, after tax Net income for the period Items that may subsequently be reclassified to profit or loss Exchange differences on translating foreign operations Total other comprehensive income Earnings per share (Note 19) Weighted average number of common shares outstanding (Note 19) Year ended October 31, 2016 October 31, 2015 (As restated Note 4) $ 25,147,376 1,680,080 26,827,456 19,949,967 6,877,489 16,859 (96,359) (58,683) - - (138,183) 6,739,306 95,758 1,311,526 5,332,022 1,689,911 3,642,111 $ 22,430,121 1,645,654 24,075,775 16,938,331 7,137,444 19,191 68,777 (298,787) (58,720) 1,497,717 1,228,178 8,365,622 34,984 1,354,565 6,976,073 2,310,088 4,665,985 3,642,111 4,665,985 (411,575) 3,230,536 (3,180,496) 1,485,489 -basic -diluted $0.59 $0.58 $0.80 $0.77 -basic -diluted 6,121,985 6,277,080 5,806,235 6,068,226 The accompanying notes are an integral part of these consolidated financial statements. 39CURRENCY EXCHANGE INTERNATIONAL, CORP. Consolidated Statements of Changes in Equity Years ended October 31, 2016 and 2015 (Expressed in U.S Dollars) Share Capital Equity Reserves Retained Earnings Total Equity Shares Amount Share premium Accumulated Other Comprehensive Income (Loss) # $ $ $ Balance at November 1, 2015 (As restated Note 4) 6,117,921 6,117,921 28,938,419 (5,352,276) Stock based compensation (Note 18) - - - Issue of share capital and share premium on exercise of stock options (Note 18) 16,894 16,894 143,877 - - Stock Options Amount Amount $ $ $ 962,057 16,093,982 46,760,103 # 424,866 113,620 650,216 (16,894) (49,275) - - - 650,216 111,496 (411,575) 3,642,111 3,642,111 Loss on foreign currency translation Net income - - - - - - (411,575) - - - - - Balance, October 31, 2016 6,134,815 6,134,815 29,082,296 (5,763,851) 521,592 1,562,998 19,736,093 50,752,351 Balance at November 1, 2014 (As restated Note 4) 5,395,073 5,395,073 17,167,069 (2,171,780) Stock based compensation - - - Issue of share capital and share premium on bought deal (Note 18) Issue of share capital and share premium on exercise of stock options (Note 18) 540,000 540,000 10,180,389 486,581 121,133 908,049 11,427,997 32,726,408 585,600 - 585,600 - - - 10,720,389 - - 182,848 182,848 1,590,961 (182,848) (531,592) - 1,242,217 Loss on foreign currency translation Net income - - - - - - (3,180,496) - - - - - - (3,180,496) 4,665,985 4,665,985 Balance, October 31, 2015 (As restated Note 4) 6,117,921 6,117,921 28,938,419 (5,352,276) 424,866 962,057 16,093,982 46,760,103 The accompanying notes are an integral part of these consolidated financial statements. 40CURRENCY EXCHANGE INTERNATIONAL, CORP. Consolidated Statements of Cash Flows Years ended October 31, 2016 and 2015 (Expressed in U.S. Dollars) Cash flows from operating activities Net income Adjustments to reconcile net income to net cash flows from operating activities Depreciation and amortization Stock based compensation Change in fair value of forward contract positions (Note 17) Deferred taxes Increase (decrease) in cash due to change in: Accounts receivable Restricted cash held in escrow Other assets Accounts payable, accrued expenses, contingent consideration and income taxes payable Net cash flows from operating activities Cash flows from investing activities Purchase of property and equipment Purchase of intangible assets Net cash outflow from investing activities Cash flows from financing activities Year ended Year ended October 31, 2016 October 31, 2015 (As restated Note 4) $ $ 3,642,111 4,665,985 1,311,526 1,354,565 650,216 165,433 (395,509) 585,600 (96,119) (193,855) (5,291,382) 1,161,518 (460,111) (155,754) 2,979,613 2,446,143 (387,949) (207,914) (595,863) (66,462) (90,821) (1,460,345) 5,860,066 (389,789) (253,217) (643,006) Net proceeds from bought deal financing, net of share issuance costs (Note 18) - 10,720,389 Proceeds from the exercise of stock options Net borrowings on line of credit Net cash flows from financing activities Net change in cash Cash, beginning of period Exchange difference on foreign operations Cash, end of period SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for income taxes Cash paid during the period for interest Cash received during the year for interest 111,496 3,181,805 3,293,301 5,143,581 43,690,996 1,242,217 - 11,962,606 17,179,666 29,630,744 (399,033) (3,119,414) 48,435,544 43,690,996 1,858,707 3,267,318 95,758 16,859 13,980 17,187 The accompanying notes are an integral part of these consolidated financial statements. 41CURRENCY EXCHANGE INTERNATIONAL, CORP. Notes to the Consolidated Financial Statements Years ended October 31, 2016 and 2015 1. Nature of Operations and Basis of Presentation Nature of operations Currency Exchange International, Corp. (the "Company") was originally incorporated under the name Currency Exchange International, Inc. under the Florida Business Corporation Act on April 7, 1998. The Company changed its name to Currency Exchange International, Corp. on October 19, 2007 and commenced its current business operations at that time. The Company is a public corporation whose shares are listed and posted for trading on the Toronto Stock Exchange (“TSX”) under the symbol "CXI," and the over the counter market (“OTCBB”) under the symbol “CURN”. The Company operates as a money service business and provides currency exchange, wire transfer, and cheque cashing services at its locations in the United States and Canada. The Company maintains a head office and five vaults as well as 38 branch locations. The Company’s registered head office is located at 6675 Westwood Boulevard, Suite 300, Orlando, Florida, 32821, United States of America. In September 2016, the Company’s wholly owned Canadian Subsidiary, Currency Exchange International of Canada Corp (“CXIC”) received letters patent to continue as a schedule 1 Bank. The continued entity, Exchange Bank of Canada (“EBC”) is a non deposit taking, non-lending financial institution engaged in foreign exchange services. See Note 21. Basis of presentation The presentation currency of the Company's consolidated financial statements is the U.S. Dollar. The accounting policies set out in Note 2 have been applied consistently to all periods presented in these consolidated financial statements. These consolidated financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which are stated at their fair value: financial instruments classified as fair value through profit or loss (“FVTPL”), foreign currency forward contracts and share-based payment plans. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information. Statement of compliance The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The consolidated financial statements were authorized for issue and approved by the Board of Directors on January 10, 2017. Significant management judgment in applying accounting policies and estimation uncertainty When preparing the financial statements, management makes a number of judgments, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expense. Significant management judgment The following are significant management judgments in applying the accounting policies of the Company and have the most significant effect on the financial statements: Carrying value of internally developed software The Company makes significant judgments about the value of its proprietary software, www.ceifx.com. Once the scope of a project is deemed technologically feasible, the Company capitalizes costs incurred for the planning, development, and testing phases of modules developed within its software. Subsequent to the completion of the software development cycle, each module is amortized over its estimated useful economic life, which has been assessed as a period of five years. Costs relating to software maintenance, regular software updates, and minor software customizations are expensed as incurred. The Company reviews completed software modules within www.ceifx.com for impairment on an ongoing basis. 42CURRENCY EXCHANGE INTERNATIONAL, CORP. Notes to the Consolidated Financial Statements Years ended October 31, 2016 and 2015 1. Nature of Operations and Basis of Presentation (continued) Income taxes and recoverability of potential deferred tax assets In assessing the probability of realizing income tax assets recognized, management makes estimates related to expectations of future taxable income, applicable tax planning opportunities, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. In making its assessments, management gives additional weight to positive and negative evidence that can be objectively verified. Estimates of future taxable income are based on forecasted cash flows from operations and the application of existing tax laws in each jurisdiction. The Company considers whether relevant tax planning opportunities are (i) within the Company’s control, (ii) feasible, and (iii) within management’s ability to implement. Examination by applicable tax authorities is supported based on individual facts and circumstances of the relevant tax position examined in light of all available evidence. Where applicable tax laws and regulations are either unclear or subject to ongoing varying interpretations, it is reasonably possible that changes in these estimates can occur that materially affect the amounts of income tax assets recognized. Also, future changes in tax laws could limit the Company from realizing the tax benefits from the deferred tax assets. The Company reassesses unrecognized income tax assets at each reporting period. Estimation uncertainty Estimates and underlying assumptions are reviewed on an ongoing basis. Information about estimates and assumptions that have the most significant effect on recognition and measurements of assets, liabilities, income and expenses is provided below. Actual results may be substantially different. Share-based payments Management determines the overall expense for share-based payments using market-based valuation techniques. The fair value of the market-based and performance-based share awards are determined at the date of grant using generally accepted valuation techniques. The determination of the most appropriate valuation model is dependent on the terms and conditions of the grant. Assumptions are made and judgment used in applying valuation techniques. These assumptions and judgments include estimating the future volatility of the stock price, expected dividend yield, future employee turnover rates, future employee stock option exercise behaviors and corporate performance. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 18. Such judgments and assumptions are inherently uncertain. Changes in these assumptions affect the fair value estimates. Assets’ carrying values and impairment charges In the determination of carrying values and impairment charges, management looks at the higher of recoverable amount or fair value less costs to sell (in the case of non-financial assets) and at objective evidence, for a significant or prolonged decline of fair value on financial assets indicating impairment. These determinations and their individual assumptions require that management make a decision based on the best available information at each reporting period. The Company reviews property and equipment and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Amortization expense The Company's property and equipment and intangible assets are amortized over their estimated useful economic lives. Useful lives are based upon management's best estimates of the length of time that the assets will generate revenue, which is reviewed at least annually for appropriateness. Changes to these estimates can result in variations in the amounts charged for amortization and in the assets' carrying amounts. 43CURRENCY EXCHANGE INTERNATIONAL, CORP. Notes to the Consolidated Financial Statements Years ended October 31, 2016 and 2015 1. Nature of Operations and Basis of Presentation (continued) Fair value measurement Management uses valuation techniques to determine the fair value of certain financial instruments (where active market quotes are not available). This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management bases its assumptions on observable data as much as possible but this is not always available. In that case management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm’s length transaction at the reporting date. Contingencies The Company is subject to contingencies that are not recognized as liabilities because they are either:   possible obligations that have yet to be confirmed whether the Company has a present obligation that could lead to an outflow of resources embodying economic benefits; or present obligations that do not meet recognition criteria because either it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, or a sufficiently reliable estimate of the amount of the obligation cannot be made. Refer to Notes 5, 9 and 22. 2. Accounting Policies Principles of consolidation The consolidated financial statements comprise the financial statements of the Company and its wholly- owned subsidiaries, EBC , a Schedule 1 bank in Canada and Currency Exchange International America Corp. (“CXIA”), a corporation incorporated under the Florida Business Corporation Act. Subsidiaries are entities over which the Company has control, where control is defined as the power to govern financial and operating policies of an entity so as to obtain benefit from its activities. Subsidiaries are fully consolidated from the date control is transferred to the Company, and are de-consolidated from the date control ceases. All material intercompany transactions are eliminated on consolidation. Cash Cash includes, but is not limited to:      local and foreign currency notes; local and foreign currencies held in tills and vaults; local and foreign currencies in transit; local and foreign currencies in branches or distribution centers; and cash in bank accounts. Foreign cash is recorded at fair value based on foreign exchange rates as at October 31, 2016 and 2015, respectively. 44CURRENCY EXCHANGE INTERNATIONAL, CORP. Notes to the Consolidated Financial Statements Years ended October 31, 2016 and 2015 2. Accounting Policies (continued) Accounts receivable Trade accounts receivable are stated net of an allowance for doubtful accounts. Accounts receivable consist primarily of bulk currency trades with a settlement cycle of 24 to 48 hours. The amount of accounts receivable varies widely from period to period due to the volume of activity and timing differences. There is minimal counter-party risk as the majority of the Company's receivables reside with banks, money service business customers and other financial institutions. The Company has longstanding relationships with most of its customers and has a strong repayment history. Management estimates the allowance based on an analysis of specific customers, taking into consideration the age of past due accounts and an assessment of the customer's ability to pay. The Company does not accrue interest on past due receivables. Management determined that the allowance for doubtful accounts was $Nil as of October 31, 2016 and 2015, respectively. Revenue recognition Commissions from trading are the difference between the cost and selling price of foreign currency products, including bank notes, wire transmissions, cheque collections and draft issuances (foreign currency margin) and the revaluation of open foreign exchange positions to market value, together with the net gain or loss from foreign currency forward contracts and commissions paid on the sale and purchase of currencies. The amount of this spread is based on competitive conditions and the convenience and value added services offered. These revenue streams are all reflected in commissions from trading and are recognized at the time each transaction takes place or at the end of each reporting period when revaluations of foreign exchange positions take place. Fee income includes fees collected on cheque cashing, wire transfers, cheque collections, and currency exchange transactions. Fee income is recognized at the time the transaction occurs on a trade date basis. Foreign currency translation Transactions denominated in foreign currencies are translated at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the consolidated statement of financial position date are translated at rates at that date. Exchange gains and losses, which arise from normal trading activities, are included in operating expenses in the consolidated statements of income and comprehensive income when incurred. The functional currency of EBC is the Canadian Dollar and the functional currency of the Company and CXIA is the U.S. Dollar. In situations where the functional currency is not the same as the presentation currency, foreign currency denominated assets and liabilities are translated to their functional currency equivalents using foreign exchange rates in effect at the consolidated statement of financial position date. Revenues and expenses are translated at average rates of exchange during the period. Exchange gains or losses arising on the consolidation of the Canadian subsidiary are included in accumulated other comprehensive income. On disposal of a foreign operation, the related cumulative translation differences recognized in equity reserves are reclassified to profit or loss and are recognized as part of the gain or loss on disposal. Foreign currency forward contracts Foreign currency forward contracts are recognized on the Company's consolidated statement of financial position when the Company becomes a party to the contractual provisions of the instrument. The instrument is derecognized from the consolidated statement of financial position when the contractual rights or obligations arising from that instrument expire or are extinguished. Forward currency contracts are recognized at fair value. The gain or loss on fair value is recognized immediately in the consolidated statement of income and comprehensive income. 45CURRENCY EXCHANGE INTERNATIONAL, CORP. Notes to the Consolidated Financial Statements Years ended October 31, 2016 and 2015 2. Accounting Policies (continued) Leases The Company has entered into various operating leases. Payments on operating lease agreements are recognized and expensed on a straight-line basis over the term of the lease. Associated costs, such as maintenance and insurance, are expensed as incurred. Property and equipment Property and equipment is initially recorded at its cost and depreciated over its estimated useful life. Cost includes expenditures which are directly attributable to bringing the asset into working condition for its intended use. Depreciation is calculated on a straight line basis, as follows: Vehicles Computer equipment Furniture and equipment Leasehold improvements 3 years 3 years 3 years lesser of the lease term or useful life When parts of an asset have different useful lives, depreciation is calculated on each separate part. In determining the useful lives of the component parts, the Company considers both the physical condition of the parts as well as technological life limitations. Estimates of remaining useful lives and residual values are reviewed annually. Changes in estimates are accounted for prospectively. Provisions Provisions are recognized when, (a) the Company has a present obligation (legal or constructive) as a result of a past event, and (b) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Company expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the consolidated statement of income and comprehensive income net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost. 46CURRENCY EXCHANGE INTERNATIONAL, CORP. Notes to the Consolidated Financial Statements Years ended October 31, 2016 and 2015 2. Accounting Policies (continued) Intangible assets Intangible assets are comprised of the Company's internally developed software (“CEIFX”) and its related modules as well as software and customer trading relationships purchased from U.S. Exchange House, Inc. (“USEH”) (Note 5). Costs that are directly attributable to a project’s development phase are recognized as intangible assets, provided they have met the following recognition requirements:      the development costs can be measured reliably; the project is technically and commercially feasible ; the Company intends to and has sufficient resources to complete the project; the Company has the ability to use or sell the software; and the software will generate probable future economic benefits. Development costs not meeting these criteria for capitalization are expensed as incurred. Amortization for intangibles is computed on an individual basis over the estimated economic life using the straight-line method as follows: Internally developed software Software purchased from USEH Customer trading relationships 5 years 2 years 5 years Residual values and useful lives are reviewed at each reporting date. Share-based payments The Company's share option plan allows certain employees, directors and consultants to acquire shares of the Company. Equity settled share based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a graded vesting basis over the period during which the employee, director or consultant becomes unconditionally entitled to the equity instruments, based on the Company's estimate of equity instruments that will eventually vest. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserves. Financial instruments Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted for transaction costs, except for those carried at FVTPL which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities is described below. Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognized when it is extinguished, discharged, cancelled or expires. 47CURRENCY EXCHANGE INTERNATIONAL, CORP. Notes to the Consolidated Financial Statements Years ended October 31, 2016 and 2015 2. Accounting Policies (continued) Financial assets Financial assets within the scope of International Accounting Standards (“IAS”) 39 Financial Instruments: Recognition and Measurement (“IAS 39”) are classified as financial assets at FVTPL, loans and receivables, held-to-maturity investments or available-for-sale financial assets for purposes of subsequent measurement. The Company determines the classification of its financial assets at initial recognition. Note that the Company does not hold any held-to-maturity or available-for-sale financial assets. All financial assets except for those at FVTPL are reviewed for impairment at least at each reporting date to identify whether there is any objective evidence that a financial asset or group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets, which are described below. Fair value through profit or loss Financial assets at fair value through profit or loss include financial assets that are either classified as held for trading or they meet certain conditions and are designated at FVTPL upon initial recognition. All derivative financial instruments fall into this category, except for those designated as effective hedging instruments, for which the hedge accounting requirements apply. Assets within this category are initially recognized at fair value with changes in fair value recorded profit or loss. The fair values of financial assets in this category are determined by reference to active market transaction or using a valuation technique where no active market exists. Cash in local and foreign currencies held in tills, vaults, or in transit as well as derivatives are included in this category of financial assets. Derivatives are initially recognized at fair value at the date a derivative contract is entered into and are subsequently re-measured to their fair value at each reporting date. The resulting gain or loss is recognized in profit or loss immediately. A derivative with a positive fair value is recognized as a financial asset whereas a derivative with a negative fair value is recognized as a financial liability. A derivative is presented as a non- current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realized or settled within 12 months. Other derivatives are presented as current assets or current liabilities. Loans and receivables Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Subsequent to initial recognition, loans and receivables are measured at amortized cost using the effective interest method, less any impairment losses. Financial assets including accounts receivable, income taxes receivable, financial instruments included in other current assets and restricted cash held in escrow are all classified as loans and receivables. Individually significant receivables are considered for impairment when they are past due or when objective evidence is received that a specific counterparty will default. Receivables that are not considered to be individually impaired are reviewed for impairment in groups, which are determined by reference to the type of counterparty and other shared credit risk characteristics. The impairment loss estimate is then based on recent historical counterparty default rates for each identified group. Financial liabilities Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss or other financial liabilities. The Company determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognized initially at fair value. The Company's financial liabilities include accounts payable, accrued expenses and contingent consideration. All financial liabilities are classified as other financial liabilities, with the exception of contingent consideration, which is classified as fair value through profit or loss. 48CURRENCY EXCHANGE INTERNATIONAL, CORP. Notes to the Consolidated Financial Statements Years ended October 31, 2016 and 2015 2. Accounting Policies (continued) Other financial liabilities Other financial liabilities are recognized initially at fair value net of any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortized cost using the effective interest method. The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest and any transaction costs over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability or (where appropriate) to the net carrying amount on initial recognition. Financial instruments recorded at fair value Financial instruments recorded at fair value in the consolidated statements of financial position are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:    Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3: unobservable inputs for the asset or liability. Earnings per share The Company presents basic and diluted earnings per share data for its common shares, calculated by dividing the earnings attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted earnings per share is determined by adjusting the earnings attributable to common shareholders and the weighted average number of common shares outstanding for the effects of all dilutive warrants and options outstanding that may add to the total number of common shares. Income taxes Current income tax assets and liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting period, that are unpaid at the consolidated statement of financial position date. Deferred income taxes are calculated using the liability method on temporary differences. Tax losses available to be carried forward as well as other income tax credits are assessed for recognition as deferred tax assets. Deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realization, provided they are enacted or substantively enacted at the consolidated statement of financial position date. This provision is not discounted. Deferred tax liabilities are generally recognized in full, although IAS 12 Income Taxes (“IAS 12”) specifies limited exemptions. Deferred tax assets are recognized to the extent that it is probable that they will be able to be offset against future taxable income. Management bases its assessment of the probability of future taxable income on the Company's latest approved forecasts, which are adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit. The specific tax rules in the numerous jurisdictions in which the Company operates are also carefully taken into consideration. If a positive forecast of taxable income indicates the probable use of a deferred tax asset, that deferred tax asset is recognized in full. The recognition of deferred tax assets that are subject to certain legal or economic limits or uncertainties is assessed individually by management based on the specific facts and circumstances. Changes in deferred tax assets and liabilities are recognized as a component of tax expense in the consolidated statement of income and comprehensive income, except where they relate to items that are charged or credited directly to equity in which case the related deferred tax is also charged or credited directly to equity. 49CURRENCY EXCHANGE INTERNATIONAL, CORP. Notes to the Consolidated Financial Statements Years ended October 31, 2016 and 2015 3. Future Accounting Pronouncements Certain pronouncements were issued by the IASB or International Financial Reporting Interpretations Committee (“IFRIC”). Many are not applicable or do not have a significant impact to the Company and have been excluded. The following standards have not yet been adopted and are being evaluated to determine their impact on the Company. IFRS 9 Financial Instruments (“IFRS 9”) was issued in July 2014. IFRS 9 replaces IAS 39 Financial Instruments: Recognition and Measurement. The new standard includes guidance on recognition and derecognition of financial assets and financial liabilities, impairment and hedge accounting. IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted. The Company has not yet determined the impact of IFRS 9 on its consolidated financial statements. IFRS 15 Revenue from Contracts with Customers (“IFRS 15”) was issued in May 2014. IFRS 15 replaces IAS 18 Revenue, IAS 11 Construction Contracts, and some revenue related Interpretations. IFRS 15 establishes a new control-based revenue recognition model; changes the basis for deciding whether revenue is to be recognized over time or at a point in time; provides new and more detailed guidance on specific topics; and expands and improves disclosures about revenue. In July 2015, the IASB approved a one-year deferral of the effective date of IFRS 15 to fiscal periods beginning on or after January 1, 2018, with early adoption permitted. The Company has not yet determined the impact of IFRS 15 on its consolidated financial statements. IFRS 16 Leases (“IFRS 16”) was issued in January 2016. IFRS 16 replaces IAS 17 Leases. IFRS 16 introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities for all leases with a term of more than twelve months, unless the underlying asset is of low value. A lessee is required to recognize a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. IFRS 16 is effective for fiscal periods beginning on or after January 1, 2019, with early adoption permitted. The Company has not yet determined the impact of IFRS 16 on its consolidated financial statements. 50CURRENCY EXCHANGE INTERNATIONAL, CORP. Notes to the Consolidated Financial Statements Years ended October 31, 2016 and 2015 4. Restatement of Prior Period Financial Statements During the preparation of the Consolidated Financial Statements for the year ended October 31, 2016, the Company identified prior period adjustments for the years ended October 31, 2015 and 2014. The restatement is being made to correct the presentation of gains on foreign exchange along with the corresponding income tax impact which was required to be presented under IFRS as other income. The foreign exchange gains were previously presented under comprehensive income with no corresponding tax provision. The restatement reduces cumulative net equity by $676,463 and increases net income and earnings per share in both 2015 and 2014 as summarized in the following table: Consolidated Financial Statement of Financial Position Current Liabilities Income taxes (receivable)/payable Equity Retained earnings Equity reserves Consolidated Statements of Income and Comprehensive Income Other income Foreign exchange gains on the translation of currencies held in subsidiary Interest and accretion Income tax expense Other Comprehensive income As previously reported 2015 $ Change $ Restated $ (129,403) 676,463 547,060 14,206,109 1,887,873 16,093,982 27,112,536 41,189,242 (2,564,336) - 24,548,200 41,189,242 - 1,497,717 1,497,717 (13,980) (21,004) (34,984) (1,891,150) (418,938) (2,310,088) Exchange differences on translating foreign operations (1,745,025) (1,435,471) (3,180,496) Consolidated Statement of Changes in Equity Accumulated other Comprehensive income (loss) Retained Earnings Consolidated Statement of Cash Flows Net income Change in cash flows from operating activities Exchange difference on foreign operations Earnings per Share Basic Diluted (3,650,155) (377,696) (4,027,851) (2,787,940) 14,206,109 (2,564,336) 1,887,873 (5,352,276) 16,093,982 11,418,169 (676,463) 10,741,706 3,608,210 4,356,745 1,057,775 1,503,321 4,665,985 5,860,066 (1,616,093) 6,348,862 (1,503,321) 1,057,775 (3,119,414) 7,406,637 0.62 0.59 0.18 0.18 0.80 0.77 51CURRENCY EXCHANGE INTERNATIONAL, CORP. Notes to the Consolidated Financial Statements Years ended October 31, 2016 and 2015 4. Restatement of Prior Period Financial Statements (continued) Consolidated Financial Statement of Financial Position Current Liabilities Income taxes payable Equity Retained earnings Equity reserves Consolidated Statements of Income and Comprehensive Income Other income Foreign exchange gains on the translation of currencies held in subsidiary Interest and accretion Income tax expense Other Comprehensive income Exchange differences on translating foreign operations Consolidated Statement of Changes in Equity Accumulated other Comprehensive income (loss) Retained Earnings Consolidated Statement of Cash Flows Net income Change in cash flows from operating activities Exchange difference on foreign operations Earnings per Share Basic Diluted As previously reported 2014 $ Change $ Restated $ 1,063,224 298,768 1,361,992 10,597,899 17,032,203 28,693,326 830,098 (1,128,866) - 11,427,997 15,903,337 28,693,326 - (66,482) (2,602,711) 1,138,890 (28,107) (280,685) 1,138,890 (94,589) (2,883,396) (756,245) (3,425,438) (1,128,866) (298,768) (1,885,111) (3,724,206) (1,042,915) 10,597,899 9,554,984 (1,128,865) 830,098 (298,767) (2,171,780) 11,427,997 9,256,217 3,419,125 2,216,775 (712,318) 4,923,582 830,098 1,138,246 (1,138,246) 830,098 4,249,223 3,355,021 (1,850,564) 5,753,680 0.63 0.62 0.15 0.15 0.78 0.77 5. Purchase of Assets from U.S. Exchange House, Inc. On March 28, 2014 the Company purchased certain assets of U.S. Exchange House, Inc. (“USEH”), pertaining to its bank note operations located in the United States and Canada. The Company acquired USEH’s customer trading relationships, certain prepaid and fixed assets and the USEH trading software used to operate the bank note business. The Company paid $2,350,000 in cash on closing and had two additional contingent payments of up to a maximum of $1,325,000 each and payable within sixty days of the first and second anniversary after closing. The additional payments are based on the amount of revenue generated from the customer trading relationships acquired. The Company estimated the likelihood of future revenues to determine the estimated contingent consideration. Management estimated these payments for the first and second anniversary at $892,723 and $585,144, respectively, for total contingent consideration of $1,477,867. The Company allocated this contingent consideration to customer trading relationships. Subsequent to the first anniversary of the closing, the actual amount of contingent consideration paid to USEH was $767,684. As a result, the Company realized a revaluation adjustment of $125,039 to the first year’s contingent consideration. At October 31, 2015, the remaining contingent consideration was reassessed and the Company recorded a revaluation of contingent consideration of $56,262 resulting in a net revaluation of contingent consideration of $68,777 for the year ended October 31, 2015. At January 31, 2016, the remaining contingent consideration was reassessed and the Company recorded a revaluation of contingent consideration of $65,552. Subsequent to the second anniversary of the closing, the actual amount of contingent consideration to be paid to USEH was $731,706. As a result, the Company realized a revaluation adjustment of $30,807 to the second year’s contingent consideration. 52CURRENCY EXCHANGE INTERNATIONAL, CORP. Notes to the Consolidated Financial Statements Years ended October 31, 2016 and 2015 5. Purchase of Assets from U.S. Exchange House, Inc. (continued) This transaction did not meet the criteria of an acquisition of a business under IFRS 3 thus the transaction did not result in any goodwill being recognized. The Company allocated the purchase price and contingent consideration of $3,827,867 as follows: Customer trading relationships Property and Equipment and prepaid assets Acquired software Total $3,288,283 59,584 480,000 $3,827,867 6. Geographical Segments The Company operates in the United States and Canada. The Company's revenue from external customers and information about its assets by geographical location are detailed below: Revenues ($) United States Canada Total Year ended October 31, 2016 22,053,195 4,774,261 26,827,456 Year ended October 31, 2015 17,694,904 6,380,871 24,075,775 Assets Cash At October 31, 2016 At October 31, 2015 (As restated Note 4) United States Canada Total United States Canada Total $ $ $ $ $ $ 32,320,063 16,115,481 48,435,544 32,102,749 11,588,247 43,690,996 Accounts receivable 6,051,174 2,035,087 8,086,261 1,456,074 1,381,615 2,837,689 Restricted cash held in escrow 1,240,694 - 1,240,694 780,583 - 780,583 Forward contract assets 102,159 (57,388) 44,771 147,426 62,941 210,367 Other current assets 607,694 45,070 652,764 496,980 10,770 507,750 Property and equipment 655,096 64,158 719,254 634,800 87,387 722,187 Intangible assets 1,642,755 528,746 2,171,501 2,175,015 747,375 2,922,390 Other assets 91,106 - 91,106 81,045 - 81,045 Net deferred tax asset (Note 12) 701,851 52,262 754,113 332,850 26,736 359,586 Total assets 43,412,592 18,783,416 62,196,008 38,207,522 13,905,071 52,112,593 53CURRENCY EXCHANGE INTERNATIONAL, CORP. Notes to the Consolidated Financial Statements Years ended October 31, 2016 and 2015 7. Cash Included within cash of $48,435,544 at October 31, 2016 (2015 - $43,690,996) are the following balances: Cash held in transit, vaults, tills and consignment locations Cash deposited in bank accounts in jurisdictions in which the Company operates Total At October 31, 2016 $ At October 31, 2015 $ 41,385,819 7,049,725 48,435,544 29,745,213 13,945,783 43,690,996 8. Restricted Cash Held in Escrow Certain of the Company's secured transactions and derivative contracts require the Company to post cash collateral or maintain minimum cash balances in escrow. The foreign currency forward contracts can be closed immediately resulting in the collateral being liquidated. The Company had cash collateral amounts of $1,240,694 at October 31, 2016 (2015 - $780,583). 9. Operating Leases The Company and its subsidiary companies entered into non-cancellable operating leases with terms in excess of one year for the use of certain facilities. The rent expense associated with these leases for the year ended October 31, 2016 was $2,652,296 (2015 - $2,435,837). The following is a schedule of future minimum rental payments under these lease agreements: Within 1 year 1 to 5 years after 5 years Total $ $ $ $ October 31, 2016 2,351,712 3,805,658 246,359 6,403,729 October 31, 2015 1,887,044 3,440,553 23,506 5,351,103 54CURRENCY EXCHANGE INTERNATIONAL, CORP. Notes to the Consolidated Financial Statements Years ended October 31, 2016 and 2015 10. Property and Equipment Property and equipment consist of the following: Vehicles Computer equipment Furniture and equipment Leasehold improvements Total Cost $ $ $ $ $ Balance, October 31, 2014 65,121 213,996 313,517 1,053,677 1,646,311 Additions Disposals - 15,463 125,845 246,151 387,459 (16,520) - - - (16,520) Net exchange differences - (3,404) (11,139) (21,211) (35,754) Balance, October 31, 2015 48,601 226,055 Additions 31,646 28,001 Net exchange differences - (645) 428,223 100,699 (1,840) 1,278,617 1,981,496 227,153 387,499 (2,906) (5,391) Balance, October 31, 2016 80,247 253,411 527,082 1,502,864 2,363,604 Vehicles Computer equipment Furniture and equipment Leasehold improvements Total Depreciation $ $ Balance, October 31, 2014 33,701 130,629 Additions Disposals 16,200 40,057 (16,520) - $ 178,976 72,673 - $ $ 634,925 978,231 189,260 318,190 - (16,520) Net exchange differences - (2,281) (6,464) (11,847) (20,592) Balance, October 31, 2015 33,381 168,405 245,185 812,338 1,259,309 Additions 16,612 38,489 Net exchange differences - (523) 96,515 (1,385) 237,317 388,933 (1,984) (3,892) Balance, October 31, 2016 49,993 206,371 340,315 1,047,671 1,644,350 Vehicles Computer equipment Furniture and equipment Leasehold improvements Total Carrying amounts $ $ Balance, October 31, 2015 Balance, October 31, 2016 15,220 30,254 57,650 47,040 $ 183,038 186,767 $ $ 466,279 722,187 455,193 719,254 55CURRENCY EXCHANGE INTERNATIONAL, CORP. Notes to the Consolidated Financial Statements Years ended October 31, 2016 and 2015 11. Intangible Assets Intangible assets are comprised of the Company's internally developed software (“CEIFX”) and its related modules as well as software and customer trading relationships purchased from USEH (Note 5). Amortization for intangibles is computed on an individual basis over the estimated useful life using the straight-line method as follows: Internally developed software Software purchased from USEH Customer trading relationships 5 years 2 years 5 years Intangible assets consist of the following at October 31, 2016 and 2015: Internally developed software Acquired software Customer trading relationships Total Cost Balance, October 31, 2014 Additions Balance, October 31, 2015 Additions $ 727,007 253,217 980,224 207,913 $ $ $ 480,000 3,288,283 4,495,290 - - 253,217 480,000 3,288,283 4,748,507 - - 207,913 Balance, October 31, 2016 1,188,137 480,000 3,288,283 4,956,420 Amortization Balance, October 31, 2014 Amortization Net exchange differences Balance, October 31, 2015 Amortization Net exchange differences Internally developed software Acquired software Customer trading relationships Total $ 241,121 163,544 - 404,665 201,308 - $ 140,000 240,000 - 380,000 100,000 - $ $ 383,795 764,916 632,831 1,036,375 24,826 24,826 1,041,452 1,826,117 621,285 922,593 36,209 36,209 Balance, October 31, 2016 605,973 480,000 1,698,946 2,784,919 Internally developed software Acquired software Customer trading relationships Total Carrying amounts Balance, October 31, 2015 Balance, October 31, 2016 $ 575,559 582,164 $ $ $ 100,000 2,246,831 2,922,390 - 1,589,337 2,171,501 56CURRENCY EXCHANGE INTERNATIONAL, CORP. Notes to the Consolidated Financial Statements Years ended October 31, 2016 and 2015 12. Income Taxes The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of October 31, 2016 and 2015 consist of the following: Deferred tax assets Accrued expenses Stock based compensation Other Net intangible assets Total deferred tax assets Deferred tax liabilities Net property and equipment Total deferred tax liabilities Net deferred tax asset October 31, 2016 $ October 31, 2015 $ 91,809 591,012 78,787 180,070 941,678 (187,565) (187,565) 754,113 70,459 383,692 59,176 58,133 571,460 (211,874) (211,874) 359,586 Reconciliation of the provision for income taxes to the amount calculated using the Company’s statutory tax rate for the year ended October 31, 2016 and 2015 are as follows: Income before taxes Statutory tax rate Tax expense at statutory rate Tax on intercompany return of capital Tax on sale of subsidiary to related party Recovery on exercise of director and employee stock options Foreign tax rate adjustment Other non-deductible differences Income tax expense October 31, 2016 $ 5,332,022 38.5% 2,052,828 - - (52,379) (290,531) (20,007) 1,689,911 October 31, 2015 (As restated Note 4) $ 6,976,073 38.5% 2,685,788 600,000 190,000 (989,700) (280,358) 104,358 2,310,088 The enacted tax rates in the United States of 38.5% (2015 - 38.5%) and Canada of 26.5% (2015 – 26.5%) where the Company operates are applied in the in the tax provision calculation. The provision for income taxes for the year ended October 31, 2016 and 2015 consists of the following: Current tax expense Deferred tax (benefit) Income tax expense October 31, 2016 $ 2,084,438 (394,527) 1,689,911 October 31, 2015 (As restated Note 4) $ 2,500,576 (190,488) 2,310,088 13. Seasonality of Operations Seasonality is reflected in the timing of when foreign currencies are in greater or lower demand. In a normal operating year there is some seasonality to the Company's operations with higher commissions generally from March until September and lower commissions from October to February. This coincides with peak tourism seasons in North America when there are generally more travelers entering and leaving the United States and Canada. 57CURRENCY EXCHANGE INTERNATIONAL, CORP. Notes to the Consolidated Financial Statements Years ended October 31, 2016 and 2015 14. Lines of Credit The Company maintains a line of credit for access to capital during peak business periods. The Company has a revolving line of credit with BMO Harris Bank, N.A. for up to $10,000,000. The credit line is secured against the Company’s cash and other non-cash assets. The line of credit bears interest at Libor plus 2.0% (at October 31, 2016 – 2.53%). At October 31, 2016, the balance outstanding was $3,181,805 (2015 - $Nil). In June of 2016, the Company’s wholly-owned Canadian subsidiary, EBC entered into an unsecured Master Purchasing Agreement with a shareholder of the Company. EBC has available credit of Cdn$3,000,000 ($2,237,010) under the agreement. Specific payment terms and interest rates are negotiated when drawings are made. At October 31, 2016, the balance outstanding was $Nil. 15. Fair Value Measurement of Financial Instruments Financial assets and financial liabilities measured at fair value in the consolidated statement of financial position are grouped into three Levels of a fair value hierarchy. The three Levels are defined based on the observability of significant inputs to the measurement, as outlined in Note 2. The fair value determination is the estimated amount that the Company would receive to sell a financial asset or pay to transfer a financial liability in an orderly transaction between market participants at the measurement date. There were no transfers between Level 1 and Level 2 during the year ended October 31, 2016 and 2015. The following table shows the Levels within the hierarchy of financial assets and liabilities measured at fair value. Financial assets Cash Forward contract assets Total assets Financial assets Cash Forward contract assets Total assets Financial Liabilities Contingent consideration Total liabilities At October 31, 2016 Level 1 $ Level 2 $ Level 3 $ 48,435,544 - 48,435,544 - 44,771 44,771 At October 31, 2015 Level 1 $ Level 2 $ Level 3 $ 43,690,996 - 43,690,996 - - - 210,367 210,367 - - 641,406 641,406 - - - - - - Total $ 48,435,544 44,771 48,480,315 Total $ 43,690,996 210,367 43,901,363 641,406 641,406 Cash (Level 1) The Company’s cash balances consisting of local and foreign currency notes held in vaults, tills, bank accounts, and in transit are based upon foreign exchange rates quoted in active markets as of October 31, 2016 and 2015. Forward contract positions (Level 2) The Company’s forward contract positions are not traded in active markets. The fair value of these instruments has been determined using observable forward exchange rates. The effects of non-observable inputs are not significant for foreign contract positions. 58CURRENCY EXCHANGE INTERNATIONAL, CORP. Notes to the Consolidated Financial Statements Years ended October 31, 2016 and 2015 15. Fair Value Measurement of Financial Instruments (continued) Contingent Consideration (Level 3) The fair value of contingent consideration, related to the USEH asset acquisition described in Note 5, is estimated based on the amount of revenue expected to be generated from the acquired customer trading relationships. The significant input for the fair value estimate is management’s estimate of revenues from acquired customers to continue transacting with the Company. The fair value estimate of cash outflows was $641,406 at October 31, 2015. This reflected management’s best estimate of a retention rate of key acquired customers. Due to their short term nature, the carrying value of the following financial instruments approximates their fair value at the balance sheet date: Accounts receivable   Restricted cash held in escrow  Accounts payable, accrued expenses, and income taxes payable/receivable 16. Risk Management The Company's activities expose it to a variety of financial risk: credit risk, foreign currency risk, interest rate risk, and liquidity risk. The Company's risk management policies are designed to minimize the potential adverse effects on the Company's financial performance. Financial risk management is carried out by the Chief Financial Officer (“CFO”) under policies approved by senior management and the Board of Directors. Policies are in place to evaluate and monitor risk and in some cases, prescribe that the Company hedge its financial risks. The analysis below presents information about the Company's exposure to each of the risks arising from financial instruments and the Company's objectives, policies and processes for measuring and managing these risks. Credit Risk Credit risk is the risk of financial loss associated with counterparty’s inability to fulfill its payment obligations. The Company’s credit risk is primarily attributable to cash in bank accounts, accounts receivable and forward contracts from hedging counterparties. All banking relationships are negotiated by senior management. The Company maintains accounts in high quality financial institutions. At various times, the Company's bank balances exceed insured limits. The credit risk associated with accounts receivable is limited, as the Company's receivables consist primarily of bulk currency trades with a settlement cycle of 24 to 48 hours. There is minimal counterparty risk as the majority of the Company's receivables reside with banks, money service business customers and other financial institutions. The company has longstanding relationships with most of its money service business customers and has a strong repayment history. For the purpose of risk control, the customers are grouped as follows: domestic and international banks, money service businesses, and other customers. Credit limits are established for each customer, whereby the credit limit represents the maximum open amount without requiring payments in advance. These limits are reviewed regularly by senior management. Due to seasonality, amounts in accounts receivable are usually at their highest during peak periods. 59CURRENCY EXCHANGE INTERNATIONAL, CORP. Notes to the Consolidated Financial Statements Years ended October 31, 2016 and 2015 16. Risk Management (continued) A breakdown of accounts receivable by category is below: At October 31, 2016 At October 31, 2015 Customer type Domestic and international banks Money service businesses Other Total $ 3,562,076 4,405,212 118,973 8,086,261 $ 1,217,511 1,600,658 19,520 2,837,689 The maximum exposure to credit risk is represented by the carrying amount of each financial asset on the statement of financial position. There are no commitments that could increase this exposure to more than the carrying amount. Foreign Currency Risk The volatility of the Company's foreign currency holdings may increase as a result of the political and financial environment of the corresponding issuing country. Several currencies have limited exchange rate exposure as they are pegged to the U.S. Dollar, the reporting currency of the Company. Management believes its exposure to foreign currency fluctuations is mitigated by the short-term nature and rapid turnover of its foreign currency inventory, as well as the use in certain instances of forward contracts to offset these fluctuations. Due to their nature, some minor and exotic foreign currencies cannot be hedged or are too cost prohibitive to hedge. In order to mitigate the risks associated with holding these foreign currencies, the Company assigns wider bid/ask spreads and maintains specific inventory targets to minimize the impact of exchange rate fluctuations. These targets are reviewed regularly and are increased or decreased to accommodate demand within acceptable risk tolerances. The amount of unhedged inventory held in vaults, tills and in transit at October 31, 2016 was approximately $6,350,000 (2015 - $5,475,000). The amount of currency that is unhedged and that is not pegged to the U.S. Dollar is approximately $3,250,000 (2015 - $3,660,000). A 2% increase/reduction in the market price for the aggregate of the Company's unhedged/un-pegged foreign currencies would result in an exchange gain/loss of approximately +$65,000/-$65,000 (2015 gain/loss of approximately +$73,000/-$73,000). On a consolidated basis, the Company is also exposed to foreign currency fluctuations between the U.S. Dollar and the Canadian Dollar, being the functional currency of its Canadian subsidiary. The Company does not hedge its net investment in its Canadian subsidiary and the related foreign currency translation of its earnings. 60CURRENCY EXCHANGE INTERNATIONAL, CORP. Notes to the Consolidated Financial Statements Years ended October 31, 2016 and 2015 16. Risk Management (continued) Interest Rate Risk At October 31, 2016, the Company had access to interest bearing financial instruments in cash, short term accounts payable and line of credit. A significant amount of the Company's cash is held as foreign currency bank notes in tills and vaults. These amounts are not subject to interest rate risk. Cash held in some of the Company’s accounts are interest bearing; however, since prevailing interest rates are low there is minimal interest rate risk. Borrowings bear interest at variable rates. Cash and borrowings issued at variable rates expose the Company to cash flow interest rate risk. For the interest rate profile of the Company's interest bearing financial liabilities, refer to Note 14. The Company manages interest rate risk in order to reduce the volatility of the financial results as a consequence of interest rate movements. For the decision whether new borrowings shall be arranged at a variable or fixed interest rate, senior management focuses on an internal long-term benchmark interest rate and considers the amount of cash currently held at a variable interest rate. Currently the interest rate exposure is un-hedged. If interest rates had been 50 basis points higher/lower with all other variables held constant, after tax profit for the year ended October 31, 2016 would have been approximately +$9,700/-$9,700 higher/lower as a result of credit lines held at variable interest rates. Liquidity Risk Liquidity Risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The CFO informs the Chief Executive Officer, the Board of Directors, and the Audit Committee of capital and liquidity issues as they occur in accordance with established policies and guidelines. The Company targets to have a cash reserve or credit lines greater than 15% of the Company's prior year's revenues. The following are non-derivative contractual financial liabilities: At October 31 , 2016 Non-derivative financial liabilities Carrying amount Estimated contractual amount Next fiscal year Future fiscal years Accounts payable Accrued expenses Income taxes payable Line of credit $ 5,984,751 1,509,411 767,690 3,181,805 $ 5,984,751 1,285,606 767,690 3,181,805 $ 5,984,751 1,285,606 767,690 3,181,805 $ $Nil $Nil $Nil $Nil At October 31, 2015 (As restated Note 4) Non-derivative financial liabilities Carrying amount Estimated contractual amount Next fiscal year Future fiscal years Accounts payable Accrued expenses Income taxes payable Contingent consideration $ 3,190,957 973,067 547,060 641,406 $ 3,190,957 770,361 547,060 641,406 $ 3,190,957 770,361 $Nil 641,406 $ $Nil $Nil 547,060 $Nil The Company had available unused lines of credit amounting to $9,055,205 at October 31, 2016. 61CURRENCY EXCHANGE INTERNATIONAL, CORP. Notes to the Consolidated Financial Statements Years ended October 31, 2016 and 2015 16. Risk Management (continued) Capital Management The Company manages capital through its financial and operational forecasting processes. The Company defines working capital as total current assets less current liabilities. The Company reviews its working capital and forecasts its cash flows based on operating expenditures, and other investing and financing activities related to its daily operations. October 31, 2016 10/31/2015 (As restated Note 4) Current assets 58,460,034 Current liabilities (11,443,657) Working capital 47,016,377 48,027,385 (5,352,490) 42,674,895 The Company monitors its capital structure and makes adjustments according to market conditions in an effort to meet its objectives given the current outlook of the business and industry in general. The Company may manage its capital structure by issuing new shares, obtaining loan financing, adjusting capital spending, or disposing of assets. The capital structure is reviewed by management and the Board of Directors on an ongoing basis. 17. Foreign Currency Forward Contracts The Company enters into non-deliverable foreign currency forward contracts on a daily basis to mitigate the risk of fluctuations in the exchange rates of its holdings of major currencies. Changes in the fair value of the contracts and the corresponding gains or losses are recorded daily and are included in commissions from trading on the consolidated statements of income and comprehensive income. The Company’s management strategy is to reduce the risk of fluctuations associated with foreign exchange rate changes. The foreign currency forward contracts can be closed immediately resulting in the collateral being liquidated. The fair value of forward contracts, which represents the amount that would be received/(paid) by the Company if the forward contracts were terminated at October 31, 2016 was $44,771 (2015 - $210,367). At October 31, 2016 and October 31, 2015 approximately $1,240,694 and $780,583, respectively, were being held as collateral on these contracts and are reflected as restricted cash held in escrow in the consolidated statements of financial position. See Note 8. 18. Equity Share Capital The authorized share capital consists of 100,000,000 common shares. The common shares have a par value of $1.00. In January of 2015, 6,674 employee stock options were exercised for proceeds of $45,188 (Cdn$56,577). 62CURRENCY EXCHANGE INTERNATIONAL, CORP. Notes to the Consolidated Financial Statements Years ended October 31, 2016 and 2015 18. Equity (continued) On March 12, 2015, the Company completed a bought deal private placement offering (“Offering”) by issuing 540,000 common shares at a price of $21.06 (Cdn$26.75) for aggregate gross proceeds of $11,371,104 (Cdn$14,445,000). In connection with the Offering, the Company paid commission to the agents in the amount of $596,983 and incurred other professional fees and expenses of $108,516 for a total cost of $705,499. $650,715 of the fees were deducted from the gross proceeds resulting in net proceeds of $10,720,389 from the offering. $58,720 related to the listing of the common shares was expensed in the period. In June of 2015, 176,174 employee and director stock options were exercised for proceeds of $1,197,029 (Cdn$1,495,164). Upon exercise of the options, the Company deducted the difference between the fair market value of the options and the option strike price from taxable income resulting in a reduction in current income tax payable of $989,700 during the year ended October 31, 2015. See Note 12. In June of 2016, 13,894 employee stock options were exercised for proceeds of $94,686 (Cdn$120,885). In October of 2016, 3,000 employee stock options were exercised for proceeds of $16,810 (Cdn$22,500). Stock options The Company adopted an incentive stock option plan dated April 28, 2011 (the "Plan"). The Plan is a rolling stock option plan, under which 10% of the outstanding shares at any given time are available for issuance thereunder. The purpose of the Plan is to promote the profitability and growth of the Company by facilitating the efforts of the Company to attract and retain directors, senior officers, employees, and management. Vesting terms under the Plan will occur 1/3 upon the first anniversary, 1/3 upon the second anniversary and 1/3 upon the third anniversary of the grant unless otherwise specified by the Board of Directors. Below is information related to each option grant: *Exercise price determined by average share price for previous 20 trading days The outstanding options at October 31, 2016 and 2015 and the respective changes during the periods are summarized as follows: Date of Grant 4-May-12 17-Dec-12 3-May-13 29-Oct-13 29-Oct-13 9-Jul-14 30-Oct-14 30-Oct-14 11-Mar-15 30-Oct-15 30-Oct-15 16-Jan-16 11-Mar-16 28-Mar-16 26-Oct-16 26-Oct-16 Expiry Date 4-May-17 18-Dec-17 3-May-18 29-Oct-18 29-Oct-18 9-Jul-19 30-Oct-19 30-Oct-19 11-Mar-20 30-Oct-20 30-Oct-20 16-Jan-21 11-Mar-21 28-Mar-21 25-Oct-21 25-Oct-21 Share price at grant date (Cdn$) Amount granted 7.30 6.75 7.35 10.86 10.86 13.24 18.00 18.00 28.40 23.50 23.50 17.89 21.30 23.15 32.96 32.96 90,000 116,000 22,000 35,640 114,420 1,762 87,215 24,144 2,726 28,972 89,435 17,600 4,182 2,261 22,757 66,820 Risk-free interest rate 0.78% 0.74% 0.73% 1.29% 1.29% 1.70% 1.61% 1.61% 1.62% 1.47% 1.47% 1.46% 1.45% 1.37% 1.30% 1.30% Expected volatility 45% 49% 38% 35% 35% 29% 27% 27% 25% 32% 32% 33% 34% 34% 34% 34% Exercise Price (Cdn$) 7.50 7.50 7.65 10.86 10.86 13.24 16.21* 16.21* 28.15* 24.64* 24.64* 17.79* 22.78* 22.45* 30.75* 30.75* Fair value of option at grant date ($) 2.84 2.66 2.42 3.44 3.44 3.58 4.97 4.97 5.75 5.10 5.10 3.86 4.78 5.87 8.46 8.46 *Exercise price determined by average share price for previous 20 trading days 63CURRENCY EXCHANGE INTERNATIONAL, CORP. Notes to the Consolidated Financial Statements Years ended October 31, 2016 and 2015 18. Equity (continued) Number of options Weighted average price # Cdn$ Outstanding at October 31, 2014 Granted Exercised Outstanding at October 31, 2015 Granted Exercised Outstanding at October 31, 2016 486,581 121,133 (182,848) 424,866 113,620 (16,894) 521,592 10.54 24.72 8.49 15.49 28.28 8.61 18.50 The following options are outstanding and exercisable at October 31, 2016: Grant Date Exercise price (Cdn$) 4-May-12 17-Dec-12 3-May-13 29-Oct-13 29-Oct-13 30-Oct-14 30-Oct-14 11-Mar-15 30-Oct-15 30-Oct-15 16-Jan-16 11-Mar-16 28-Mar-16 26-Oct-16 26-Oct-16 7.50 7.50 7.65 10.86 10.86 16.21 16.21 28.15 24.64 24.64 17.79 22.78 22.45 30.75 30.75 Total 19. Earnings per Share Number outstanding 45,000 28,667 7,333 23,760 70,720 87,215 24,144 2,726 28,972 89,435 17,600 4,182 2,261 22,757 66,820 521,592 Average remaining contractual life (years) 0.51 1.13 1.50 1.99 1.99 3.00 3.00 3.36 4.00 4.00 4.21 4.36 4.41 4.99 4.99 Number exercisable 45,000 28,667 7,333 23,760 70,720 58,142 24,144 909 28,972 29,812 - - 2,261 - - 319,719 The calculation of earnings per share is presented below. Diluted earnings per share for the year ended October 31, 2016 and 2015 included all stock option grants with the exception of the options granted March 11, 2015 and October 31, 2015 as the strike price exceeded the average stock price from the date of the option grant. Year ending October 31, 2016 October 31, 2015 (As restated Note 4) Basic Net income Weighted average number of shares outstanding Basic earnings per share Diluted Net income Weighted average number of shares outstanding Diluted earnings per share $ 3,642,111 6,121,985 $0.59 3,642,111 6,277,080 $0.58 $ 4,665,985 5,806,235 $0.80 $4,665,985 6,068,226 $0.77 64CURRENCY EXCHANGE INTERNATIONAL, CORP. Notes to the Consolidated Financial Statements Years ended October 31, 2016 and 2015 20. Operating Expenses Salaries and benefits Rent Legal, professional and director's fees Postage and shipping Stock based compensation Other general and administrative Operating expenses Year ended October 31, 2016 October 31, 2015 $ 9,247,602 2,435,837 907,806 1,974,032 585,600 1,787,454 16,938,331 $ 10,787,911 2,652,296 1,054,277 2,546,923 650,216 2,258,344 19,949,967 21. Expenses Related to Bank Application On November 23, 2012, the Company submitted its application to continue its wholly-owned Canadian subsidiary, CXIC, as a new Canadian Schedule I bank. In September of 2016, the Office of the Superintendent of Financial Institutions (“OSFI”) and the Minister of Finance, issued letters patent for the bank and CXIC is now Exchange Bank of Canada. The head office of EBC is located in Toronto, Ontario, Canada. During the year ended October 31, 2016, the Company incurred legal and administrative expenses of $58,683 in relation to the application process (2015 – $298,787). 22. Compensation of Key Management Personnel and Related Party Transactions In accordance with IAS 24 Related Party Disclosures, key management personnel are those persons having authority and responsibility for planning, directing and controlling activities of the Company directly or indirectly, including any directors (executive and non-executive) of the Company. The remuneration of directors and other members of key management personnel during the year ended October 31, 2016 and 2015 was as follows: Short-term benefits Post-employment benefits Stock based compensation October 31, 2016 October 31, 2015 Year ended $ 1,826,519 62,146 640,251 2,528,916 $ 1,100,460 50,499 559,717 1,710,676 The Company incurred legal and professional fees in the aggregate of $23,530 for the year ended October 31, 2016 (2015 - $42,409) charged by entities controlled by directors or officers of the Company. On October 1, 2011, the Company entered into an employment agreement with the President and CEO of the Company. Such agreement contains clauses requiring additional payments of a minimum of $450,000 to be made upon the occurrence of certain events such as a change of control of the Company or termination for reasons other than cause. As the likelihood of a change of control of the Company is not determinable, the contingent payments have not been reflected in the consolidated financial statements. On November 1, 2014, the Company completed a reorganization of its corporate structure resulting in a one-time increase in income taxes of approximately $190,000. This tax liability occurred as a result of the fair value increase in its investment in a subsidiary and was recorded in its entirety in the first quarter of 2015. 65CURRENCY EXCHANGE INTERNATIONAL, CORP. Notes to the Consolidated Financial Statements Years ended October 31, 2016 and 2015 23. Other current assets Prepaid rent Prepaid insurance Due on debit and credit cards Other assets Total At October 31, 2016 At October 31, 2015 $ 186,463 143,545 25,886 296,870 652,764 $ 175,128 105,187 85,554 141,881 507,750 24. Subsequent Events The Company evaluated subsequent events through January 10, 2017, the date these financial statements were issued. There were no material subsequent events that required recognition or additional disclosure in the financial statements. 66BOARD OF DIRECTORS Randolph W. Pinna CEO, President, Chairman of the Board of CXI, Director of EBC Mr. Pinna was appointed the Chief Executive Officer, President and Director of CXI when it began operating in October 2007. From 1989 to 2003, Mr. Pinna was President, Chief Executive Officer and Director of Foreign Currency Exchange Corp. and remained in this role after the friendly acquisition by Bank of Ireland Group until October 2007. Mr. Pinna was responsible for the growth of Foreign Currency Exchange Corp. from a small, one location operation in Tampa, Florida to an international, publicly-traded company listed on the TSX. Mr. Pinna has more than 25 years of experience in international banking with an emphasis on foreign exchange. James D.A. White Director of CXI Director of EBC Independent Board Member Joseph August Director of CXI Director of EBC Independent Board Member Chirag Bhavsar Lead Director of CXI Chairman of the Board of EBC Independent Board Member Mark D. Mickleborough Director of CXI Director of EBC Board Member Bryan Osmar Director of CXI Director of EBC Independent Board Member V. James Sardo Director of CXI Director of EBC Independent Board Member Linda Stromme Director of CXI Director of EBC Independent Board Member SHAREHOLD INFORMATION Annual Meeting of Shareholders Shareholders are invited to attend the annual meeting of Currency Exchange International, Corp. to be held on March 8, 2017 at 4:30 p.m. (EST) at: 333 Bay Street, 46th Floor, Toronto, Ontario M5H 2S5 Canada Investor Relations Financial Analysts, portfolio managers and other investors requiring financial information may contact our Investor Relations’ departments: (USA) Telephone: (407) 240 0224 (USA) Toll-Free: (888) 998 3948 (USA) Email: InvestorRelations@ceifx.com (CANADA) Telephone: (416) 479 9547 (CANADA) Email: bill.mitoulas@ceifx.com Shareholder Services For information or assistance regarding your share account, including dividends, changes of address or ownership, lost certificates, to eliminate duplicate mailings or to receive shareholder material electronically, please contact our Transfer Agents in Canada. Transfer Agent Computershare Investor Services 100 University Avenue, 8th Floor, South Tower Toronto, Ontario M5J 2Y1 Canada Telephone: (800) 564 6253 (Toll Free) Facsimile: (888) 453 0330 (Toll Free) Web Site: www.computershare.com Computershare offices are also located in Calgary, Halifax, Montreal, Richmond Hill and Vancouver. Auditors Grant Thornton LLP Chartered Professional Accountants Licensed Professional Accountants Mississauga, Canada CXI ANNUAL REPORT 2016 68 $ € ¥ £ Currency Exchange International, Corp. 6675 Westwood Boulevard, Suite 300 Orlando, Florida 32821 U.S.A www.ceifx.com U.S.A. (888) 998 3948 Exchange Bank of Canada 390 Bay Street Toronto, Ontario M5H 2Y2 Canada www.ebcfx.com Canada (888) 223 3934 $ € ¥ £ Currency Exchange International, Corp. 6675 Westwood Boulevard, Suite 300 Orlando, Florida 32821 U.S.A www.ceifx.com U.S.A. (888) 998 3948 Exchange Bank of Canada 390 Bay Street Toronto, Ontario M5H 2Y2 Canada www.ebcfx.com Canada (888) 223 3934 

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