A N N U A L
R E P O R T
2019
$
¥
€
Financial Highlights
2016
2017
2018
2019
Exchange Volume:
In Millions
$2,137
$2,835
$4,157
$4,899
18 %
Year Over Year
2016
2017
2018
2019
Total Revenue:
In Millions
$26.8
$32.5
$39.1
$41.7
7%
Year Over Year
2016
2017
2018
2019
Total Assets:
In Millions
$62.2
$64.0
$73.3
$82.7
13 %
Year Over Year
All amounts in this report are stated in USD and are based on fiscal year end unless otherwise noted.
2016
2017
2018
2019
Corporate Customers and Transacting Locations
2016
2017
2018
2019
Company-Owned Branch Locations
Wholesale Company Relationships
38
928
41
977
43
46
1,337
1,685
Transacting Locations
13,603
15,026
17,482
19,509
Quarterly Stock Price (TSX:CXI)
TSX stock prices are quoted in Cdn$
Key Ratios
2018
2019
Earnings Per Share
$0.67
$0.67
Q1
Q2
Q3
Q4
Ended 1/31/2019
Ended 4/30/2019
Ended 7/31/2019
Ended 10/31/2019
Return On Assets
5.8%
3.5%
$27.75
$24.00
$21.39
$17.25
Return On Equity
6.7%
4.4%
Operating Margin
20.8%
14.7%
1
Currency Exchange International: Annual Report 2019
Message from the CEO
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, 2019.
Randolph W. Pinna
President and Chief Executive Officer
CXI’s Growth in 2019
CXI’s strategic goals set its path of growing into a leading-edge
international bank group focused on foreign exchange. In 2019, the
company’s achievements have cleared the way for CXI to realize the
gains of implementing and delivering innovative foreign exchange
solutions through integrated technologies. CXI successfully expanded
its foreign currency exchange and international payments services,
adding 348 new wholesale client companies representing more than
1,750 transacting locations. This raises the total number of wholesale
clients served by CXI across North America to more than 1,685, a
year-over-year increase of more than 26%.
CXI added three new company-owned retail branch locations to its
network in fiscal year 2019, bringing the total retail branch network
to 46 locations. The openings in Lynnwood, Washington (serving
the Seattle metropolitan area) and Aiea, Hawaii (serving Honolulu)
represent second branches in strong retail markets for CXI. The third
company-owned branch opened in Philadelphia, Pennsylvania—one
of the last top ten international travel destinations in the US where
CXI did not have a branch. The company-owned locations continued
to generate gross income at healthy retail exchange margins,
conducting more than 440,000 transactions. However, a decline in
average transaction size contributed to less revenue from company-
owned branches compared to the previous year. CXI feels confident
it is represented in all of its currently desired markets and only has
plans to open one new location in 2020. Instead of opening more
new branches, the company will actively seek strategic partnerships
under its agent locations model. Agent relationships offer the benefit
of less overhead—CXI doesn’t manage labor or rent—while still
growing its service network. The agents get access to CXI’s software,
management expertise, marketing support and follow the company’s
compliance regimen.
processing and support of eZforex clients into its existing business
allowing for operational efficiencies.
than wholesale banknote
In fiscal year 2019, Exchange Bank of Canada (EBC), CXI’s wholly-
owned subsidiary, established more new international payments
relationships
relationships. This
contributed to an increase in the international payment volume the
bank processed. One of EBC’s unique values for the company group
is to establish new worldwide correspondent banking relationships
and in doing so has helped realize efficiencies in banknote inventory
management and streamlined payment processing, lowering FX
transaction sourcing and processing costs. As well, they have
allowed for a more comprehensive suite of offered services such
as tapping into SWIFT GPI for faster payments and increased
operational efficiencies. A number of initiatives in the past year
strengthen EBC’s risk and compliance structure including automating
previously manual processes for quicker and more accurate reporting
capabilities. EBC continues to await regulatory approval in order to
proceed with its previously announced acquisition of a longstanding
payments company in Montreal, Canada.
CXI and EBC’s expanding retail and wholesale footprint grew revenues
to US $41.8 million, up 7% from the previous fiscal year. Payments
revenues specifically grew 54.8% year over year, increasing from
4.3% to 6.3% of revenue. Net operating income decreased to US $6.2
million from $8.1 million in the previous fiscal year. The company
experienced lower revenue from its company-owned branches and
increased expenses related to salaries, software development costs,
and professional fees involved in strengthening the risk, compliance,
and IT infrastructure in support of CXI’s strategic goal of growing the
payments business. This has resulted in a lower operating margin,
which is expected to return to higher sustainable levels as payments
revenues increase.
On September 6, 2019, CXI acquired eZforex.com, a foreign
currency provider to 236 financial institutions that represent over
4,000 transacting locations throughout the United States. eZforex
contributed $255,527 in revenue to CXI from September 7, 2019 to
October 31, 2019, and $117,122 in net income after tax, including one-
time transaction costs of $52,095. CXI has successfully integrated the
Consistent with CXI’s strategic plan, the company continues to
commit significant resources to expanding its current payment
business with enhancements to both CXI’s processing capabilities
and expansions to the sales team driving these products. These
processing enhancements and sales efforts are intended to support
growth in CXI’s top and bottom lines.
Currency Exchange International: Annual Report 2019
2
Message from the CEO
Strategic Growth
Delivering innovative technology through our foreign exchange and
international payment services is one of the clear reasons CXI has
succeeded in building a large customer base. CXI is committed to
integrating its innovations into easy-to-use and efficient processes so
form and function converge into a service that makes life better for our
clients and their own. We are the ultimate stewards of our core value
that our customers come first.
In the past year, CXI has streamlined wire processing for financial
institutions through our integration into Fiserv’s WireXchange®
bringing both innovative solutions with high-touch collaboration and
personalized support. Another example of an innovative approach
is exemplified by our CXI FX Now payments platform. Corporate
clients are now able to access their foreign currency balances, initiate
payments, and better manage their payments than ever before with
the company.
Another payment service that has seen tremendous market appetite
is our previously announced digital cheque processing. This initiative
utilizes the latest technology in the banking sectors to securely and
quickly transmit data for processing. CXI has seen increased clients
and revenue generated through these payment-processing services
for financial institutions and select corporations over the past year
helping to diversify our revenue streams.
With its payment and technology strategy demonstrating success,
CXI has more initiatives in the queue to increase its proprietary CEIFX
software’s connectivity to outside systems. Integrations with strategic
partners allows the company to expand its market reach and is
instrumental in being a leading international banking group.
Positioned for Continued Growth
We are pleased with the accomplishments of the past year as we stay
focused on the growth of revenues and profits in the years ahead. The
comprehensive services, technology, and customer focus all speak to
the vision of the company. I am particularly proud of how our loyal
team of more than 350 employees across the US and Canada embody
our core values: Customer First, Integrity, Collaborative, Innovative,
and Passionate. I see it every day that we are all working together to
grow our group long-term. CXI is well-positioned in the market with a
strong capital base to support additional growth initiatives, including
prospective merger and acquisition opportunities.
With an experienced management team and robust 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
our ability to execute on the expansion plan.
I personally thank all of CXI’s customers, employees, shareholders, and
friends for their continued support of Currency Exchange International.
As always, I remain available for feedback and to discuss our company
and its business with you personally.
Randolph W. Pinna
President and Chief Executive Officer
Shareholder’s Equity
$ Millions
October 31, 2019
$66.3
October 31, 2018
$62.7
October 31, 2017
$56.5
October 31, 2016
$50 .8
All amoun ts in this repor t are sta t ed i n US D
unless oth er wise noted.
Shareholder Performance Graph
$180
$160
$140
$120
$100
$80
$60
$40
$20
$-
1-Nov-14
31-Oct-15
31-Oct-16
31-Oct-17
31-Oct-18
31-Oct-19
Currency Exchange International, Corp.
S&P/TSX Composite Index
01/01/14
10/31/15
10/31/16
10/31/17
10/31/18
10/31/19
CXI/TSX
S&P/TSX Composite Index
$100
$100
$126.43
$163.54
$92.58
$99.29
$142.84
$109.66
$149.60
$102.83
$92.49
$120.04
This graph compares the yearly percentage change in the cumulative total shareholder return for C$100 invested in Common Shares on
November 1, 2014 against the cumulative total shareholder return of the S&P/TSX Composite Index for the most recently completed financial
years of Currency Exchange International, Corp. since it became listed on the Toronto Stock Exchange (“TSX”), assuming the reinvestment of
all dividends. Currency Exchange International, Corp. has never paid any dividends, and will only pay dividends in the future as the board of
directors deems appropriate.
3
Currency Exchange International: Annual Report 2019
Company Snapshot
THEN
2007 - 2009
2010 - 2012
CXI, under Randolph Pinna, purchases the
retail branches of Foreign Currency Exchange
Corp. from the Bank of Ireland Group
Company-owned branches include eight retail
locations and over the next eight years, CXI
adds an additional 24 wholly-owned branches.
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.
CXI Canada is established and its
Toronto vault begins operations.
CXI launches its proprietary, web-based
foreign currency software solution.
CXI completes its IPO on the
Toronto Stock Exchange (TSX).
CXI commences services for financial
institutions, allowing its wholesale
partnerships to grow rapidly.
CXI Canada files an application to
be continued as a new Schedule I
Canadian Bank.
2016 - 2017
2013 - 2015
September 2016, the Minister of Finance in Canada
approves the continuance of Currency Exchange
International of Canada Corp. as Exchange Bank of
Canada in English and Banque de change du
Canada in French.
At 2017 fiscal year-end, CXI exchanges more than
$2.8 billion in total exchange volume and ends the
year with more than $64.0 million in assets and
services 977 companies at 15,000+ locations.
Exchange Bank of Canada is accepted for SWIFT
membership, the world's leading provider of secure
financial messaging services, expanding its global
payment capabilities.
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.
CXI aquires U.S. Exchange House in the U.S.
and Canada, merging them within its business.
CXI’s west coast vault in California moves to
Los Angeles, increasing service capacity and
operational support.
NOW
2018
2019
CXI launches its Digital Remote Deposit
Service for Canadian Checks increasing
accuracy, security, and transmission times
for US financial institutions.
At 2019 fiscal year-end, CXI exchanges
more than USD $4.9 billion worth of
currency, and services 1,685 companies at
19,000+ transacting locations.
CXI launches OnlineFX website allowing
consumers to reserve foreign currency
online and pick it up at their local branch.
CXI owns and operates 46 branch
locations.
CXI has USD $82.7 million in assets.
Currency Exchange International: Annual Report 2019
4
Key Activities
International Payments Integration with WireXchange® by Fiserv
CXI Expands Straight-Through-Processing of International Payments Solutions
For Financial Institutions
In July 2019, CXI launched its integration providing financial institutions enhanced automation through
an efficient end-to-end payment process supported by an experienced, foreign exchange specialist. With
several hundred financial institutions already on the WireXchange® platform, the relationship between CXI
and Fiserv opens the door for more financial institutions than ever before to discover CXI’s world-class
customer service, pricing, and full suite of foreign exchange solutions. Already the integration has helped
some existing clients using CXI for banknotes and cheques to easily switch to CXI as their international
payments service provider where otherwise they would not have done so.
Acquisition of eZforex, Inc.
CXI Announces Acquisition of eZforex.com, Inc a Foreign Currency and Technology
Business
In September 2019, CXI acquired eZforex.com, Inc. (“eZforex”), a Longview, Texas-based privately-held
foreign currency and technology business which has wholesale banknote financial institution customers
located throughout the United States. The customers of eZforex include a total of approximately 4,000
transacting locations represented by banks, bankers’ banks (being financial institutions that provide financial
services to community banks in the US), credit unions and corporate credit union groups. The overlapping
financial institution market and service model to CXI’s own wholesale banknote business have made for a
smooth transition. By the end of the 2019 fiscal year, all operations were running through CXI’s processing
centers as expected.
CXI Launches CXI FX Now Payments Platform
CXI Launches CXI FX Now Platform Providing Faster and Clearer Global Payment
Management for Organizations Moving Money Around the World
In June 2019, CXI launched its CXI FX Now platform. The web-based international payments platform was
built specifically for corporations and businesses. CXI’s goal to grow in the international payments space
meant directly addressing the needs of businesses with a modern design and full featured system. CXI
FX Now brings these both to clients, while giving more control to businesses. Additionally, the platform is
integrated directly into CXI’s treasury management system allowing for straight-through-processing that
reduces the overall resource required to manage the business. The majority of CXI’s corporate payment
clients are now on CXI FX Now.
5
Currency Exchange International: Annual Report 2019
Business Operations
Business Overview
CXI’s stated mission is to be a leading-edge international banking
group focused on currency exchange by utilizing technology and
delivering superior service. This mission has been at the forefront
of what drives the business since day one. By delivering upon
superior service and providing leading technology, CXI has built a
stellar reputation with its clients and the markets it serves be it
financial institutions, businesses or individual travelers.
Today, CXI continues its mission and goes beyond simply servicing
clients with the products that address their needs today. It focuses
on innovative currency exchange solutions to address the needs
of its clients in the future. CXI is consistently ready to invest in
its technology, data and personnel each year. The dedication to
always improve has created a corporate culture that is not satisfied
unless it’s providing the best solutions and customer support to its
clients. To assist in delivering the best solutions, CXI will continue
to integrate its product and service offerings through technology in
order to eliminate inefficiencies for our clients and offering peace
of mind through its AML/KYC solutions
CXI’s expertise is trusted by more than a thousand financial
institutions and businesses, including some of the largest banks
in the US, credit unions and banker’s banks. Their advocacy and
continued business are testaments to CXI’s leadership and ability
to build mutually beneficial relationships. Exchange Bank of
Canada’s status as the only Schedule 1 bank in Canada specializing
exclusively in foreign currency solutions has opened up pathways
to expand the group’s global network of correspondents. In all,
more than 19,000 transacting locations interact with CXI or EBC as
their currency exchange provider.
Whether it’s a financial institution, corporation, or individual, CXI
creates positive client experiences. CXI’s dedication to not only
be a leader today, but help build the future through solutions that
improve processes and create financial efficiencies, creates tighter
bonds with clients and attracts new clients. CXI knows technology,
relationships and service are at the center of this future. This is
how CXI will bring its vision to be a leading international banking
group focused on innovative currency exchange solutions to the
masses.
Company-Owned Branch Network
In the US, CXI’s company-owned branches provide higher margin
currency trades with individuals compared to the wholesale
business. The company is able to utilize its branch network as
a source of foreign currencies, which it can then make available
through its network of relationships. This operational synergy is
leveraged to offer CXI’s clients highly competitive rates, helping
grow the business, while enjoying larger margins in its business
lines.
In 2019, CXI added three company-owned locations, increasing
its total branches from 43 to 46. The new branch openings were
spread out across the country as branches opened in Lynnwood,
Washington (Alderwood Mall); Aiea, Hawaii (Pearlridge Center);
and Philadelphia, Pennsylvania (Fashion District). Fashion District
opened in a new market for CXI, while Alderwood Mall and Pearlridge
Center opened near established company-owned locations.
Phase 1 of CXI’s OnlineFX expansion was recently launched, offering
reservation of currency for pickup at local company-owned retail
branches. One of the main initiatives of CXI’s consumer strategy
in 2020 will be expanding the OnlineFX service to include direct to
consumer ordering with home delivery. Phase 2, OnlineFX Home
Delivery, was launched in Q1 of 2020 and is available in the states
(currently 17) in which CXI has the required licensing.
CXI sees home delivery of currency as the clear evolution of
servicing international travelers’ banknotes needs. Providing an
always on and always available way to order foreign currency
aligns with today’s consumer trends and service expectations. This
offering will allow CXI to expand revenues traditionally earned in a
brick and mortar retail setting without the accompanying rent and
payroll costs.
United States Business Environment
During the 2019 fiscal year, CXI added 318 new client relationships
representing more than 1,680 new transacting locations across
the United States. Each relationship varies in the services utilized,
ranging from one or more of the following: foreign currency
banknotes, international payments, issuance of foreign drafts
and clearing foreign-denominated cheques. More than ever, CXI’s
existing financial institution clients have expanded the services for
which they utilize the company. Predominately, this means several
financial institutions that exclusively used its banknote services
have begun to process international payments or foreign cheque
clearing through CXI and benefit from having multiple international
services with one system and one provider.
Two significant drivers of this have been CXI’s digital remote deposit
solution and the integration with Fiserv’s WireXchange® platform.
With digital remote deposit, financial institutions can clear cheques
drawn on Canadian banks directly in CEIFX with cheque scanners
most institutions already have in use. The process improvements,
savings in shipping costs and faster clearing times have been
well received. With CXI’s WireXchange® integration, financial
institutions switching international payments service providers
is much simpler than most other scenarios. There is no actual
Currency Exchange International: Annual Report 2019
6
Business Operations
change in the way financial institutions send wires as the platform
will automatically route their wires to CXI upon switching. Financial
institutions then get access to the customer support and personal
interaction they’ve experienced with CXI’s banknotes service.
CXI recently signed an agent agreement with Duty Free Americas
(“DFA”), adding more than 30 locations on an inventory on
consignment agent basis. These locations are located on the US and
Canadian border providing convenient foreign exchange for those
driving across the border. This relationship has the opportunity to
expand to 35 additional DFA locations across the southern border
and in airports in the future as well as potential corporate payment
activities.
CXI has built a positive reputation within the wholesale foreign
exchange industry as a trusted thought-leader and experienced
service provider. New clients quickly find CXI is different from
its competition and learn why existing clients remain loyal to the
company. CXI’s employees work within a corporate culture that
values a high level of customer service in every interaction and
is fully committed to building long-lasting relationships that help
clients succeed in their business.
Canadian Business Environment
Exchange Bank of Canada has made progress in its strategic goals
around growing its global network of correspondents, dealing
directly with a central bank and diversifying its client base. These
goals would either not be possible or have taken much longer to
achieve without EBC’s Schedule 1 bank status.
In EBC’s third full year of operations, it successfully established new
global correspondents that have reduced sourcing and processing
costs. With new correspondents, EBC continues to expand its
service capabilities that provide it competitive advantages in the
market. The results of these improvements are evident as EBC
has continued to win new international payments clients and
lowered the capital required to run its banknote business through a
significant just-in-time inventory management program.
Additional developments have been made in streamlining EBC’s
payment capabilities after fully operationalizing its international
payments trade desk in fiscal 2018. This has enabled the trade
desk to handle more clients while still acting as a direct resource
to all corporate payment clients. The tools and expertise continue
to earn outstanding reviews from clients. While EBC’s progress can
take time, the strides it has made and will continue to make are
necessary to be the foreign exchange and international payments
wholesale bank that Canada needs.
7
Currency Exchange International: Annual Report 2019
Software & Technology
CXI had the vision to build a scalable foreign exchange business
as it became an industry force. Through its proprietary web-based
software, CEIFX, the company has introduced businesses and
financial institutions to a better way to manage and process foreign
currency exchange and international payments. Today, CXI provides
more comprehensive foreign exchange solutions than ever before
and can successfully manage it through developing automated
processes. Automation within financial services is an essential
growth tool primarily achieved through an integrated and open
software development ecosystem. CXI is committed to advancing
its business with an emphasis on the ongoing development of its
systems that increasingly connect through software integrations,
recently done with WireXchange®, CXI FX Now and OnlineFX Home
Delivery.
Never before has the CEIFX software been able to connect and
service clients in so many ways. CXI has seen the number of
clients and systems connecting to the software through APIs rise
allowing for more of a seamless workflow for both the client and the
company. The advancement of API connections brings a whole new
level of scalability for the business. The flexibility means initiatives
like OnlineFX Home Delivery can expand CXI’s retail business, as
well as, opens new home delivery options for our client financial
institutions.
Not only are financial institutions experiencing the benefit of these
integrations, CXI’s corporate-focused international payments portal
CXI FX Now would not have been possible without it. CXI’s Treasury
Management System (TMS) is the foundation that ensures all
payment flows are easily managed. Clients utilizing CXI FX Now,
WireXchange®, and CEIFX all flow through CXI’s TMS creating a
fully integrated payments ecosystem generating a more automated
end-to-end payment process and reducing manual costs. This
coincides with the larger evolution in the digital payments industry
as businesses and financial institutions expect faster, clearer and
simpler ways to fulfill their global payment obligations.
The popularity of financial service technologies and third-party
service providers for both financial institutions and businesses has
made CXI’s technology strategy an integral part of its competitive
advantage. CXI’s systems provide strong capabilities, yet remain
flexible for many client setup types and deployment needs. Pillars
of the strategy are that CXI’s technology helps clients be better at
their own business by simplifying foreign exchange and payments
through enhanced efficiencies, risk management and powerful data
validations. CXI’s success lies in its innovation of currency exchange
solutions through comprehensive services, dedication to customer
CURRENCY EXCHANGE INTERNATIONAL, CORP.
MANAGEMENT’S DISCUSSION AND
ANALYSIS
FOR THE THREE-MONTHS AND
YEAR-ENDED OCTOBER 31, 2019
AND 2018
Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2019 and 2018
Scope of Analysis
This Management Discussion and Analysis (“MD&A”) covers the results of operations, and financial
condition of Currency Exchange International, Corp. and its subsidiary (the “Company,” or "CXI") for the
three-months and year ended October 31, 2019 and 2018, 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 28, 2020 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 for the year
ended October 31, 2019 and 2018 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, 2019. The functional currency of the Company and its
wholly-owned subsidiary eZforex.com, Inc (“eZforex”) is the U.S. Dollar. The functional currency of the
Company’s wholly-owned 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 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 wholly-owned subsidiaries, eZforex and EBC.
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”).
Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2019 and 2018
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
Sensitivity analyses relating to
foreign currencies and interest
rates
Assumptions
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
Risk factors
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 beginning on page 18. 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.
Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2019 and 2018
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 financial institutions, money service businesses, travel companies, and
other commercial clients through its proprietary payments platform, company owned branches and
vaults, and inventory on consignment locations, throughout the United States and Canada, by utilizing the
Company’s sophisticated software application, 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, which continued operations as Exchange Bank of
Canada (“EBC”). The head office of EBC is located in Toronto, Ontario, Canada.
The objective of EBC 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
financial institutions and commercial entities 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, as well as collateral reductions with
correspondent banks, and enhancing existing financial institution 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 and option 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.
Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2019 and 2018
Overview (continued)
The following are some of the characteristics of the Company’s revenue streams:
The Company operates four main vaults that serve Canada and the United States 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 financial institutions, 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 46 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 maintain inventory in the form of domestic and foreign bank notes in
financial institutions 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, 2019, the Company had inventory on consignment in 703
locations, primarily located inside financial institutions 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 is
generally a net seller to its bank and non-bank clients. Excess currency collected via the branch
network can be redeployed to financial institutions and non-bank clients which reduces the need
to source currency through wholesale sources at a greater cost, thus increasing currency
margins.
Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2019 and 2018
Overview (continued)
The Company has steadily 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 46 branch locations:
Store
City
Lynnwood
Alderwood Mall
Apple Bank - Avenue of Americas
New York
Apple Bank - Grand Central Station New York
New York
Apple Bank - Penn Station
New York
Apple Bank - Upper East Side
New York
Apple Bank - Union Square
Hanover
Arundel Mills Mall
Aventura
Aventura Mall
Los Angeles
Beverly Center
Los Angeles
Century City Mall
Denver
Cherry Creek
Los Angeles
Citadel Outlets
Boston
Copley Place Mall
Miami
Dadeland Mall
Miami
Dolphin Mall
Philadelphia
Fashion District
Orlando
Florida Mall Booth #1
Orlando
Florida Mall Booth #2
Paramus
Garden State
Glendale
Glendale Galleria
Honolulu
International Market Place
Norfolk
MacArthur Mall
Santa Ana
Mainplace at Santa Ana
State
WA
NY
NY
NY
NY
NY
MD
FL
CA
CA
CO
CA
MA
FL
FL
PA
FL
FL
NJ
CA
HI
VA
CA
Start
date
Store
2019 Mechanics Bank - Berkeley
2011 Mechanics Bank - San Francisco
2011 Mission Valley
2013 Montgomery at Bethesda
2014 North County
2014 Ontario Mills Mall
2012 Pearl Ridge
2008 Potomac Mills Mall
2018 Queens Center
2009 Riverwalk
2014 San Francisco City Center
2014 San Jose Great Mall
2009 Santa Monica Place
2009 Sawgrass Mills Mall Booth #1
2009 Sawgrass Mills Mall Booth #2
2019 Shops at Northbridge
2007 South Center
2014 Stamford Town Center
2015 Sunvalley Shopping Center
2016 The Galleria at Fort Lauderdale
2016 The Orlando Eye
2009 Tyson's Corner Center
2013 Washington Square Mall
City
Berkeley
San Francisco
San Diego
Bethesda
Escondido
Ontario
Aiea
Woodbridge
New York
New Orleans
San Francisco
San Jose
Santa Monica
Sunrise
Sunrise
Chicago
Tukwila
Stamford
Concord
Ft. Lauderdale
Orlando
Tyson’s Corner
Portland
State
CA
CA
CA
MD
CA
CA
HI
VA
NY
LA
CA
CA
CA
FL
FL
IL
WA
CN
CA
FL
FL
VA
OR
Start
date
2007
2008
2015
2013
2017
2007
2019
2007
2017
2018
2011
2011
2012
2007
2010
2013
2012
2018
2015
2013
2015
2014
2017
FY 2009
FY 2010
FY 2011
FY 2012
FY 2013
FY 2014
FY 2015
FY 2016
FY 2017
FY 2018
FY 2019
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
41
977
43
1337
46
1685
267
1,983
2,455
5,741
8,274
10,157
13,603
15,026
17,482
19,509
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 notes 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 financial institutions and money
service business customers. 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.
Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2019 and 2018
SELECTED FINANCIAL DATA
The below chart summarizes the performance of the Company over the last eight fiscal quarters.
Three-months
ending
10/31/2019
7/31/2019
4/30/2019
1/31/2019
10/31/2018
7/31/2018
4/30/2018
1/31/2018
Revenue
$
11,469,079
12,402,483
9,460,809
8,451,671
10,270,234
11,537,280
8,887,772
8,402,855
Net operating
income
$
1,863,442
2,935,898
1,081,292
271,410
1,724,576
3,533,642
1,115,289
1,764,296
Net income
(loss)
$
769,393
1,820,767
507,370
(172,811)
995,967
2,407,522
507,606
316,148
Total assets
$
82,729,716
81,719,232
82,267,882
82,045,951
73,267,274
86,860,274
84,714,970
79,794,495
Total equity
$
66,329,037
65,447,949
63,022,826
62,678,990
62,721,937
61,629,104
57,789,679
57,809,076
Earnings (loss)
per share
(diluted)
$
0.13
0.28
0.08
(0.03)
0.17
0.37
0.08
0.05
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.
Selected Financial Results for the three-months and year ended October 31, 2019 and 2018
On September 6, 2019, the Company acquired eZforex.com, a foreign currency provider to 236 financial
institutions that represent over 4,000 transacting locations throughout the United States. eZforex
contributed $255,527 in revenue to CXI from September 7, 2019 to October 31, 2019, and $117,122 in net
income after tax, including one-time transaction costs of $52,095. The Company also continued to develop
its global foreign currency exchange payments services business, resulting in year-over-year growth of
54.8% for that segment During the course of the year, the Company’s wholly-owned subsidiary, Exchange
Bank of Canada (EBC), implemented a number of initiatives to strengthen its risk and compliance structure.
Management is optimistic that EBC will obtain regulatory approval in order to proceed with its previously
announced acquisition of a longstanding payments company in Montreal, Canada. CXI is well-positioned
in the market with a strong capital base to support additional growth initiatives, including prospective merger
and acquisition opportunities.
Revenue
Operating expenses
Net Operating income
Total other income
EBITDA*
Net income
Basic earnings per share
Diluted earnings per share
Year ended
October 31, 2019
$
Year ended
October 31, 2018
$
Three-months ended
October 31, 2019
$
Three-months ended
October 31, 2018
$
41,784,043
35,632,001
6,152,042
29,339
6,181,381
2,924,720
0.46
0.46
39,098,141
30,960,337
8,137,804
12,707
8,150,511
4,227,243
0.67
0.67
11,469,079
9,605,638
1,863,442
13,884
1,877,326
769,393
0.13
0.13
10,270,233
8,545,657
1,724,576
3,422
1,727,999
995,967
0.17
0.17
* Earnings before interest, taxes, depreciation and amortization
Total assets
Total long-term financial liabilities
Total equity
October 31, 2019
October 31, 2018
82,729,716
-
66,329,037
73,267,274
-
62,721,937
Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2019 and 2018
Results of operations – year ended October 31, 2019 and 2018
A breakdown of revenues by geographic location is presented below:
United States
Canada
Total
Total revenues
Year ended
October 31, 2019
$
Year ended
October 31, 2018
$
35,137,626
6,646,417
41,784,043
33,234,379
5,863,762
39,098,141
During the year ended October 31, 2019, total commission and fee revenues increased by 7% to
$41,784,043 compared to $39,098,141 for the year ended October 31, 2018. Revenue generated from
the purchase and sale of exotic currencies was $1,652,700 lower during the year ended October 31,
2019 than in the year ending October 31, 2018; excluding the effect of transactions related to these
currencies, which fluctuate significantly, revenues increased 11% between the two periods. Since
October 31, 2018, the Company has added 348 new customer relationships comprising 1,759 locations,
of which 318 relationships representing 1,688 transacting locations were added in the United States
and 30 relationships representing 71 locations were added in Canada. During the year ended October
31, 2019, the number of transactions between the Company and its customers increased 8% to
1,210,000 transactions from 1,118,000 for the same period in the previous year.
During the year ended October 31, 2019, operating expenses increased 15% to $35,632,001 compared
to $30,960,337 for the year ended October 31, 2018, the major components of which are presented below:
Salaries and benefits
Rent
Legal and professional
Postage and shipping
Stock based compensation
Travel and entertainment
Bank service charges
Software maintenance
Losses and shortages
Insurance
Other general and administrative
Operating expenses
Year ended
October 31, 2019
$
Year ended
October 31, 2018
$
18,298,892
3,780,465
2,930,426
5,094,817
743,391
702,207
856,589
1,119,280
426,385
440,493
1,239,056
35,632,001
15,847,680
3,381,155
2,671,996
4,560,283
629,550
664,823
757,230
685,320
307,029
361,270
1,094,001
30,960,337
Change
$
2,451,212
399,310
258,430
534,534
113,841
37,384
99,359
433,960
119,356
79,223
145,056
4,671,665
Change
%
15%
12%
10%
12%
18%
6%
13%
63%
39%
22%
13%
15%
Salaries and benefits increased 15% to $18,298,892 from $15,847,680 which is attributed to
increases in the Company’s employment base for the period. The increase in staffing is a result
of the hiring of employees engaged in the areas of compliance, risk management, information
technology, payments, operations, vault operations and sales as well as adding 3 company
owned branch locations;
Rent increased 12% to $3,780,465 from $3,381,155. The Company has opened 3 new branch
locations and a Montreal vault as well as expanded the Toronto and Orlando locations since
October 31, 2018;
Legal and professional fees increased 10% to $2,930,426 from $2,671,996. The increase is
related primarily to consulting, legal and accounting fees incurred in support of operational and
strategic initiatives of the Company;
Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2019 and 2018
Results of operations – year ended October 31, 2019 and 2018 (continued)
Postage and shipping increased 12% to $5,094,817 from $4,560,283 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 locations and
customers. The Company added 348 new wholesale banknote customers representing 1,759
new transacting locations since October 31, 2018 which has led to an 8% increase in
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 18% to $743,391 from $629,550 for the vested portion of
stock options granted pursuant to the Company's stock option plan. The increase is due to the
vesting of the 354,410 options granted during the year ended October 30, 2019 (2018 -
153,812). 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$22.93.
There were 708,366 options outstanding at October 31, 2019 compared to 424,495 options
outstanding at October 31, 2018;
Travel and entertainment increased 6% to $702,207 from $664,823 and is due to increased
travel for client support and growth;
Bank service charges increased 13% to $856,589 from $757,230. The increase is related
primarily to increased volumes for payments related activity, and its growth rate is expected to
reduce as increased volumes will generate improved efficiencies. These charges are offset
partially by fees collected on wire payments, which are captured in revenues;
Software maintenance expense increased 63%to $1,119,280 from $685,320 due to expanded
usage of software applications purchased to support Sales, Operations, Payments, IT, and
Finance functions in the Company;
Losses and shortages expense increased 39% to $426,385 from $307,029. Losses typically
range from 0.5-1% of revenues;
Insurance expense increased 22% to $440,493 from $361,270 due to the opening of the
Montreal vault location as well as annual increases to various policies; and
Other general and administrative expenses increased 13% to $1,239,056 from $1,094,001.
Other expenses are comprised of licenses and fees, utilities, office supplies, foreign exchange
gains and losses through profit and loss, and other general and administrative expenses.
The ratio of operating expenses to total revenue for the year ended October 31, 2019 was 85%
compared to 79% for the year ended October 31, 2018. The ratio traditionally is higher during the winter
months and decreases as the fiscal year progresses. This is due to the cyclical nature of the business
as the Company has higher 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
financial institutions and non-financial institution customers, thus bypassing currency wholesalers and
widening its gross margins. The Company expects this ratio to remain consistent with the seasonality
of the business in the short term. Over time, the Company will endeavor to increase its operating
efficiency by the addition of new bank and non-bank financial institutions in Canada and the United
States to redeploy currency purchased by its branches, affiliate partners, and other clientele.
Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2019 and 2018
Results of operations – year ended October 31, 2019 and 2018 (continued)
Other income and expenses are comprised of the following:
Other income
Interest expense
Depreciation and amortization
Income tax expense
Total other expense
Year ended
October 31, 2019
$
Year ended
October 31, 2018
$
29,339
(303,218)
(1,330,258)
(1,623,185)
(3,227,322)
12,707
(369,724)
(1,371,256)
(2,182,288)
(3,910,561)
Other income increased to $29,339 from $12,707 and relates to interest collected for surplus
cash deposits held at various financial institutions in Canada and the United States as well as
a small gain from the sale of an asset;
Interest and accretion expense decreased to $303,218 from $369,724 and relates to interest
payments on credit lines;
Depreciation and amortization decreased to $1,330,258 from $1,371,256 and relates to
amortization of the Company’s intangible assets and depreciation of fixed assets over their
estimated economic life; and
For the year ended October 31, 2019, income tax expense decreased to $1,623,185 compared to an
expense of $2,182,288 for the year ended October 31, 2018 and is a total of federal income tax in both
the United States and Canada, as well as various state and provincial taxes for the jurisdictions in which
the Company operates. There are a number of factors that impacted the year over year change. The
lower profitability in 2019 compared to 2018, combined with the lower average tax rate decreased
income tax expense by $626,638. In addition, the prior year was impacted by one-time adjustments
related to the Tax Cuts and Jobs Act of 2017 that increased income tax expense for the year ended
October 31, 2018. On December 22, 2017, the President of the United States signed tax reform legislation,
which included a broad range of tax reform proposals affecting businesses, including corporate tax rates,
business deductions, and international tax provisions. Many of these provisions significantly differ from
previous US tax law, resulting in pervasive financial reporting implications. The 2018 income tax expense
included a one-time increase in deferred tax expense of $308,000 which arose from a reduction in deferred
tax assets of an identical amount. The deferred tax asset was generated on the basis of the former higher
tax rate and will be liquidated over time at the lower rate now in effect. This change represents an estimated
reduction in the statutory tax rate in the United States from 38.5% to 26.7%. The second factor caused by
tax changes in the United States was a one-time expense related to a “repatriation” tax on earnings
generated outside of the United States since 2011; this expense was $80,000 related to retained earnings
in EBC and its predecessor company Currency Exchange International of Canada Corp. Partially offsetting
the factors above were $311,541 in adjustments recorded in 2019 that increased income tax expense
to reflect differences between estimates and the actual amounts when the 2018 tax returns were
assessed.
Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2019 and 2018
Results of operations – three-month periods ended October 31, 2019 and 2018
A breakdown of revenues by geographic location is presented below:
Total revenues
Three-months ended
October 31, 2019
$
Three-months ended
October 31, 2018
$
9,564,465
1,904,614
11,469,079
8,630,105
1,640,128
10,270,233
United States
Canada
Total
During the three-month period ended October 31, 2019, total commission and fee revenues increased
by 12% to $11,469,079 compared to $10,270,233 for the three-month period ended October 31, 2018.
Revenue generated from the purchase and sale of exotic currencies was $97,200 lower in the three-
month period ended October 31, 2019 than in the three-month period ending October 31, 2018;
excluding the effect of transactions related to these currencies, which fluctuate significantly, revenues
increased 13% between the two periods. Since October 31, 2018, the Company has added 348 new
customer relationships comprising 1,759 locations, of which 318 relationships representing 1,688
transacting locations were added in the United States and 30 relationships representing 71 locations
were added in Canada. During the three-month period ended October 31, 2019, the number of
transactions between the Company and its customers increased 10% to 351,000 transactions from
320,000 for the same period in the previous year.
During the three-month period ended October 31, 2019, operating expenses increased 12% to
$9,605,638 compared to $8,545,657 for the three-month period ended October 31, 2018, the major
components of which are presented below:
Salaries and benefits
Rent
Legal and professional
Postage and shipping
Stock based compensation
Travel and entertainment
Bank service charges
Software maintenance
Losses and shortages
Insurance
Other general and administrative
Operating expenses
Three-months ended
October 31, 2019
$
Three-months ended
October 31, 2018
$
4,827,339
991,167
837,186
1,456,884
195,317
204,892
247,835
307,080
82,283
103,417
352,238
9,605,638
4,266,130
874,070
778,290
1,379,326
95,854
161,532
306,606
237,709
-10,916
90,830
366,226
8,545,657
Change
$
561,209
117,097
58,896
77,558
99,463
43,360
(58,771)
69,371
93,199
12,587
(13,988)
1,059,981
Change
%
13%
13%
8%
6%
104%
27%
-19%
29%
854%
14%
-4%
12%
Salaries and benefits increased 13% to $4,827,339 from $4,266,130 which is attributed to
increases in the Company’s employment base for the period. The increase in staffing is a result
of the hiring of employees engaged in the areas of compliance, information technology,
payments, operations, vault operations and sales as well as adding 3 company owned branch
locations;
Rent increased 13% to $991,167 from $874,070. The Company has opened 3 new branch
locations and a Montreal vault as well as expanded the Toronto and Orlando locations since
October 31, 2018;
Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2019 and 2018
Results of operations – three-month periods ended October 31, 2019 and 2018 (continued)
Legal and professional fees increased 8% to $837,186 from $778,290. Legal, consulting, and
accounting fees are incurred in support of operational and strategic initiatives of the Company;
Postage and shipping increased 6% to $1,456,884 from $1,379,326 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 348 new wholesale banknote customers representing 1,759
new transacting locations since October 31, 2018 which has led to an 8% increase in
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 to $195,317 from $95,854 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$22.93. There were 708,366 options outstanding
at October 31, 2019 compared to 424,495 options outstanding at October 31, 2018;
Travel and entertainment increased 27% to $204,892 from $161,532 and is due to increased
travel for client support and growth;
Bank service charges decreased 19% to $247,835 from $306,606. The decrease is related
primarily due to increased volumes generating improved efficiencies. These charges are offset
partially by fees collected on wire payments, which are captured in revenues;
Software maintenance expense increased 29% to $307,080 from $237,709 due to expanded
usage of software applications purchased to support Sales, Operations, Payments, IT, and
Finance functions in the Company;
Losses and shortages expense increased to $82,283 from a recovery of $10,916. Losses
typically range from 0.5-1% of revenues;
Insurance expenses increased 14% to $103,417 from $90,830 due to the opening of the
Montreal vault location; and
Other general and administrative expenses decreased 4% to $352,238 from $366,276. Other
expenses are comprised of licenses and fees, utilities, office supplies, foreign exchange gains
and losses through profit and loss, and other general and administrative expenses.
The ratio of operating expenses to total revenue for three-month period ended October 31, 2019 was
84% compared to 83% for three-month period ended October 31, 2018. The ratio traditionally is higher
during the winter months and decreases as the fiscal year progresses. This is due to the cyclical nature
of the business as the Company has higher 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 financial institutions and non-financial institution customers, thus bypassing currency
wholesalers and widening its gross margins. The Company expects this ratio to remain consistent with
the seasonality of the business in the short term. Over time, the Company will endeavor to increase its
operating efficiency by the addition of new bank and non-bank financial institutions in Canada and the
United States to redeploy currency purchased by its branches, affiliate partners, and other clientele.
Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2019 and 2018
Results of operations – three-month periods ended October 31, 2019 and 2018 (continued)
Other income and expenses are comprised of the following:
Other income
Interest expense
Depreciation and amortization
Income tax expense
Total other expense
Three-months ended
October 31, 2019
$
Three-months ended
October 31, 2018
$
10,084
(46,006)
(334,841)
(727,085)
(1,097,848)
3,422
(30,957)
(357,775)
(343,300)
(728,610)
Other income increased to $10,084 from $3,422 and relates to interest collected for surplus
cash deposits held at various financial institutions in Canada and the United States as well as
a small gain from the sale of an asset;
Interest and accretion expense increased to $46,006 from $30,957 and relates to interest
payments on credit lines;
Depreciation and amortization decreased to $334,841 from $357,775 and relates to amortization
of the Company’s intangible assets and depreciation of fixed assets over their estimated
economic life; and
Income tax expense increased to $727,085 compared to an expense of $343,300 for the three-
month period ended October 31, 2018. The increase includes $311,541 in adjustments to reflect
differences between the estimates and actual amounts when the 2018 tax returns were
assessed by the authorities.
Cash flows
Cash flows from operating activities during the year ended October 31, 2019 resulted in an inflow of
$10,952,224 compared to an inflow of $5,071,971 during the year ended October 31, 2018. The
principal reason for the increase in operating cash was due to a significant 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, 2019 resulted in an outflow of
$4,942,662 compared to an outflow of $1,314,515 during the year ended October 31, 2018. This
represents additions to property and equipment from the opening of the Montreal vault location and to
internally developed software as well as proceeds of $18,812 from the sale of assets.
Cash provided by financing activities during the year ended October 31, 2019 was $508,955 compared
to $1,707,588 during the year ended October 31, 2018. The Company was accessing its line of credit
at $472,736 on October 31, 2019, compared to a balance of $Nil on October 31, 2018.
Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2019 and 2018
Liquidity and capital resources
At October 31, 2019, the Company had working capital of $58,932,941 (October 31, 2018 -
$59,483,137).
The Company maintains a line of credit to meet borrowing needs during peak business periods. The
Company has a revolving line of credit with BMO Harris Bank, N.A. which was increased in July of 2018
to $20,000,000. 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, 2019 – 2.1% (2018 – 2.3%)). At October
31, 2019, the balance outstanding was $Nil (October 31, 2018 - $Nil).
In April of 2017, the Company’s wholly-owned Canadian subsidiary, EBC, established a CDN$3,000,000
revolving line of credit with Bank of Montreal which was increased in June of 2018 to CDN$6,000,000
($4,559,271) being secured against cash assets held in its vaults. The line of credit bears interest at
CDN prime plus 0.5% [at October 31, 2019 – 3.95% (2018 – 3.95%)]. At October 31, 2019, the balance
outstanding was $472,736 (October 31, 2018 - $Nil).
The Company had a total available balance of unused lines of credit of $24,086,534 at October 31,
2019 (October 31, 2018 - $24,565,515).
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.
Revenues
Net operating income
Net income
Basic earnings per share
Diluted earnings per share
Total assets
Total liabilities
Total non-current financial liabilities
Year ended
Year ended
Year ended
Year ended
October 31, 2019
October 31, 2018
October 31, 2017
October 31, 2016
$
41,784,043
6,152,042
2,924,720
$0.46
$0.46
82,729,716
16,400,679
-
$
39,098,141
8,137,804
4,227,243
$0.67
$0.67
73,267,274
10,545,337
-
$
32,477,220
7,921,509
3,821,469
$0.62
$0.61
63,968,227
7,475,609
-
$
26,827,456
6,877,489
3,642,111
$0.59
$0.58
62,196,008
11,443,657
-
Working capital
58,932,941
59,483,137
52,778,077
47,016,377
Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2019 and 2018
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.
Forward and option contract activity
The Company enters into non-deliverable foreign currency forward and option 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 and option contracts, which represents the amount that would be (paid) received
by the Company if the forward contracts were terminated at October 31, 2019 was $1,735 (October 31,
2018 - $10,857).
At October 31, 2019 and October 31, 2018 approximately $644,657 and $1,998,942, 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 the years ended October 31, 2019
and 2018 were as follows:
Short-term benefits
Post-employment benefits
Stock based compensation
Year ended
October 31, 2019 October 31, 2018
$
2,677,716
82,242
521,918
3,281,876
$
2,535,331
99,795
706,831
3,341,957
The Company incurred legal and professional fees in the aggregate of $299,000 for the year ended October
31, 2019 (2018 - $348,000) charged by entities controlled by directors or officers of the Company.
The Company has clients that are considered related parties through two of its directors. The Company
generated $130,000 in revenue from these clients’ activities for the twelve-month periods ended October
31, 2019 (October 31, 2018 – $47,000). As at October 31, 2019, net accounts receivable included $228,000
from related parties (October 31, 2018 - $84,000).
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.
Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2019 and 2018
Transactions with related parties
Advances between CXI and EBC are provided under a Revolving Line of Credit, renewed May 31, 2018;
loans attract interest at LIBOR + 2%, are repayable on demand, and are unsecured. At October 31, 2019,
the intercompany loan balance was $11,250,000 (2018 - $5,660,000) and was eliminated upon
consolidation.
Key management personnel and directors occasionally conduct transactions with the Company as
individuals. Such transactions are immaterial individually and in total, including for the years ending October
31, 2019 and 2018, and are conducted pursuant to the Company’s policies.
All transactions with related parties as noted above are carried out in the normal course of business and at
prevailing market rates.
Option grants
The Company adopted an incentive stock option plan dated April 28, 2011 (the "Plan"). The Plan is a
rolling stock option plan, under which 10% of the outstanding shares at any given time are available for
issuance thereunder. The purpose of the Plan is to promote the profitability and growth of the Company by
facilitating the efforts of the Company to attract and retain directors, senior officers, employees and
management. Vesting under the Plan will occur 1/3 upon the first anniversary, 1/3 upon the second
anniversary and 1/3 upon the third anniversary of the grant for employees, and for directors vesting occurs
within one year of the grant at the rate of 25% of the grant in each quarter of the following year, unless
otherwise specified by the Board of Directors. The options have a five-year term, unless otherwise specified
by the Board of Directors.
Below is information related to each option grant:
Date of
Grant
30-Oct-15
30-Oct-15
11-Mar-16
26-Oct-16
26-Oct-16
6-Jun-17
26-Oct-17
26-Oct-17
9-Aug-18
23-Oct-18
23-Oct-18
23-Jan-19
4-Mar-19
23-Oct-19
23-Oct-19
23-Oct-19
23-Oct-19
Expiry
Date
30-Oct-20
30-Oct-20
11-Mar-21
25-Oct-21
25-Oct-21
6-Jun-22
26-Oct-22
26-Oct-22
9-Aug-23
23-Oct-23
23-Oct-23
23-Jan-24
4-Mar-24
4-Mar-24
4-Jun-24
23-Oct-24
23-Oct-24
Share price at
grant date
(Cdn$)
23.50
23.50
21.30
32.96
32.96
20.79
26.84
26.84
30.93
28.01
28.01
30.14
25.98
17.03
17.03
17.03
17.03
Amount
granted
28,972
89,435
4,182
22,757
66,820
9,865
25,039
76,981
10,200
32,501
111,111
4,127
13,316
30,000
5,837
72,376
228,754
Risk-free
interest rate
1.47%
1.47%
1.45%
1.30%
1.30%
1.71%
2.07%
2.07%
2.80%
3.10%
3.10%
2.60%
2.50%
1.58%
1.58%
1.58%
1.58%
Expected
volatility
32%
32%
34%
34%
34%
37%
36%
36%
31%
29%
29%
27%
27%
24%
24%
24%
24%
Exercise
Price (Cdn$)*
24.64
24.64
22.78
30.75
30.75
21.53
25.52
25.52
30.69
30.77
30.77
28.23
25.83
17.36
17.36
17.36
17.36
Fair value of
option at grant
date ($)
5.10
5.10
4.78
8.46
8.46
5.27
7.69
7.69
7.74
5.92
5.92
7.18
5.65
3.07
3.07
3.07
3.07
*Exercise price determined by average share price for previous 20 trading days
Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2019 and 2018
Option grants (continued)
The outstanding options at October 31, 2019 and the respective changes during the periods are
summarized as follows:
Outstanding at October 31, 2017
Granted
Exercised
Cancelled through cashless exercise
Forfeited
Outstanding at October 31, 2018
Granted
Exercised
Cancelled through cashless exercise
Forfeited
Outstanding at October 31, 2019
Number of options
#
Weighted average
price
CDN$
442,223
153,812
(144,239)
(1,991)
(25,310)
424,495
354,410
(7,269)
(27,500)
(35,770)
708,366
22.31
30.76
15.61
20.61
26.35
27.42
17.80
21.47
17.19
30.08
22.93
The following options are outstanding and exercisable at October 31, 2019:
Grant Date
30-Oct-15
30-Oct-15
11-Mar-16
26-Oct-16
26-Oct-16
6-Jun-17
26-Oct-17
26-Oct-17
9-Aug-18
9-Aug-18
23-Oct-18
23-Oct-18
23-Jan-19
4-Mar-19
23-Oct-19
23-Oct-19
23-Oct-19
23-Oct-19
Total
Exercise
price
(Cdn$)
Number
outstanding
24.64
24.64
22.78
30.75
30.75
21.53
25.52
25.52
30.69
30.69
30.77
30.77
28.23
25.83
17.36
17.36
17.36
17.36
20,148
55,662
4,182
13,004
42,928
5,586
14,308
62,893
9,084
1,116
27,858
97,187
4,127
13,316
5,837
30,000
72,376
228,754
708,366
Average remaining
contractual life
(years)
1.00
1.00
1.36
1.99
1.99
2.60
2.99
2.99
3.78
3.98
3.98
3.98
4.23
4.35
4.60
4.35
4.98
4.98
Number
exercisable
20,148
55,662
4,182
13,004
42,928
3,724
14,308
41,929
3,028
1,116
27,858
32,397
-
-
1,459
-
-
-
261,743
The October 23, 2019 grant of 228,754 options is made outside of the Company’s stock option plan, and
in accordance with the policies of TSX is subject to approval by the shareholders and regulatory approval.
The options granted pursuant to the October 23, 2019 grant of 228,754 options to employees of the
Company cannot be exercised prior to receipt of such approvals. The shareholders of the Company will be
asked to approve and ratify the October 23, 2019 grant of 228,754 options at the next meeting of
shareholders called for March 25, 2020.
Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2019 and 2018
Potential Transaction
On July 9, 2018 the Company announced its wholly-owned subsidiary, EBC, had entered into a definitive
agreement to acquire the assets of a business operating 22 years primarily in the province of Quebec from
the private family owners who were advised by Laurentian Bank Securities. These assets include a total of
approximately 400 corporate customers that are engaged in international payments. It is expected that
approximately 10 employees will be retained and employed in EBC’s new Montreal Office. The transaction
is subject to regulatory approval and will not close until all approvals have been obtained.
Subsequent events
The Company evaluated subsequent events through January 28, 2020, 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, 2019 and 2018.
Financial Risk factors
Credit Risk
Credit risk is the risk of financial loss associated with a 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 and option 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 financial institutions and money service
business customers. 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 financial institutions, 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. Levels of accounts receivable are a
function of growth in transaction volumes with the Company’s clients. These limits are reviewed regularly
by senior management. Due to seasonality, amounts in accounts receivable are usually at their highest
during peak periods.
A breakdown of accounts receivable by category is below:
Customer type
Domestic and international financial institutions
Money service businesses
Other
Total
At October 31, 2019
$
2,575,497
7,274,152
693,603
10,543,253
At October 31, 2018
$
4,883,305
4,611,497
145,095
9,639,897
Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2019 and 2018
Credit Risk (continued)
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 and option
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, 2019 was approximately $6,860,000 (2018 -
$7,440,000). The amount of currency that is unhedged and that is not pegged to the U.S. Dollar is
approximately $5,464,000 (2018 - $5,360,000). 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 +$109,000/-$109,000 (2018 gain/loss of approximately +$107,000/-$107,000).
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, 2019, the Company had access to interest bearing financial instruments in cash, short term
accounts payable and its 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 9 of the condensed interim consolidated
financial statements.
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, 2019 would have been approximately +$29,300/-$29,300 higher/lower as a
result of credit lines held at variable interest rates.
Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2019 and 2018
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
At October 31, 2019
Estimated contractual
amount
This fiscal year
Future fiscal years
Accounts payable
Line of credit
Accrued expenses
Contract liability
$
12,583,741
472,736
2,767,711
266,392
$
12,583,741
472,736
2,437,831
266,392
$
12,583,741
472,736
2,437,831
$Nil
$
$Nil
$Nil
$Nil
266,392
Non-derivative
financial liabilities
Carrying amount
At October 31, 2018
Estimated contractual
amount
Next fiscal year
Future fiscal years
Accounts payable
Accrued expenses
$
8,312,778
2,232,559
$
8,312,778
2,045,707
$
8,312,778
2,045,707
$
$Nil
$Nil
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.
Current assets
Current liabilities
Working capital
At October 31, 2019
At October 31, 2018
$
$
75,333,620
70,028,474
(16,400,679)
(10,545,337)
58,932,941
59,483,137
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.
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Consolidated Financial Statements
For the years ended October 31, 2019 and 2018
(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
1-3
4
5
6
7
8-31
Independent auditor’s report
To the shareholders of
Currency Exchange International, Corp.
Opinion
We have audited the consolidated financial statements of Currency Exchange International, Corp. and its subsidiary
(“the Group”), which comprise the consolidated statements of financial position as at October 31, 2019, and October
31, 2018 and the consolidated statements of income and comprehensive income, consolidated statements of
changes in equity and consolidated statements of cash flows for the years then ended, and notes to the consolidated
financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the
consolidated financial position of the Group as at October 31, 2019 and October 31, 2018, and its consolidated
financial performance and its consolidated cash flows for the years then ended in accordance with International
Financial Reporting Standards (IFRSs).
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities
under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of the Group in accordance with the ethical
requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Information Other than the Consolidated Financial Statements and Auditor’s Report Thereon
Management is responsible for the other information. The other information comprises the Management Discussion
and Analysis but does not include the consolidated financial statements and our auditor's report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with International Financial Reporting Standards (IFRSs), and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no
realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause
the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events
in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the
direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
The engagement partner on the audit resulting in this independent auditor's report is Grant Cuylle, CPA, CA.
Toronto, Canada
January 28, 2020
Chartered Professional Accountants
Licensed Public Accountants
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Consolidated Statements of Financial Position
October 31, 2019 and 2018
(Expressed in U.S. Dollars)
Current assets
Cash (Note 7)
Accounts receivable (Note 16)
Restricted cash held in escrow (Note 8)
Forward and option contract assets (Note 17)
Income taxes receivable
Other current assets (Note 22)
Total current assets
Property and equipment (Note10)
Intangible assets (Note11)
Goodwill (Note 11)
Other assets
Net deferred tax asset (Note 12)
Total assets
Current liabilities
Accounts payable
Contract liability
Line of credit (Note 14)
Accrued expenses
Income taxes payable
Total current liabilities
Total liabilities
Equity
Share capital
Equity reserves
Retained earnings
Total equity
Total liabilities and equity
ASSETS
October 31, 2019
October 31, 2018
$
62,873,873
10,543,252
644,657
1,735
-
1,270,103
75,333,620
1,552,941
3,910,749
1,238,319
101,686
592,401
$
56,402,979
9,639,897
1,998,942
10,857
840,213
1,135,586
70,028,474
990,374
1,424,879
-
93,280
730,267
82,729,716
73,267,274
LIABILITIES AND EQUITY
12,583,741
266,392
472,736
2,767,711
310,099
16,400,679
16,400,679
6,414,936
29,204,576
30,709,525
66,329,037
82,729,716
8,312,778
-
-
2,232,559
-
10,545,337
10,545,337
6,407,667
28,529,465
27,784,805
62,721,937
73,267,274
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.
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Consolidated Statements of Income and Comprehensive Income
Years ended October 31, 2019 and 2018
(Expressed in U.S. Dollars)
Revenues
Commission revenue
Fee income
Total revenues (Note 6)
Operating expenses (Note 20)
Net operating income
Interest revenue
Gain on sale of assets
Earnings before interest, taxes, depreciation and
amortization
Interest expense (Note 14)
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)
-basic
-diluted
Weighted average number of common shares outstanding (Note 19)
-basic
-diluted
Year ended
October 31, 2019
October 31, 2018
$
39,251,501
2,532,542
41,784,043
35,632,001
6,152,042
23,564
5,775
6,181,381
303,218
1,330,258
4,547,905
1,623,185
2,924,720
$
36,722,112
2,376,029
39,098,141
30,960,337
8,137,804
12,707
-
8,150,511
369,724
1,371,256
6,409,531
2,182,288
4,227,243
2,924,720
4,227,243
(101,699)
2,823,021
$0.46
$0.46
6,412,593
6,415,629
(335,061)
3,892,182
$0.67
$0.67
6,300,026
6,344,557
The accompanying notes are an integral part of these consolidated financial statements.
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Consolidated Statements of Changes in Equity
Years ended October 31, 2019 and 2018
(Expressed in U.S Dollars)
Share Capital
Equity Reserves
Retained
Earnings
Total Equity
Shares
Amount
Share premium
Accumulated Other
Comprehensive
Income (Loss)
Stock Options
Amount
Amount
#
$
$
$
#
$
$
$
Balance at November 1, 2018
6,407,667
6,407,667
32,427,578
(5,489,393)
424,495
1,591,280
27,784,805
62,721,937
Stock based compensation (Note 18)
Issue of share capital and share
premium on exercise of stock options
(Note 18)
Forfeited options (Note 18)
Loss on foreign currency translation
Net income
-
-
-
7,269
7,269
161,039
-
-
-
-
-
-
-
-
-
-
-
-
354,410
935,841
(34,769)
(127,619)
(35,770)
(192,450)
(101,700)
-
-
-
-
-
-
-
-
-
2,924,720
935,841
40,689
(192,450)
(101,700)
2,924,720
Balance, October 31, 2019
6,414,936
6,414,936
32,588,617
(5,591,093)
708,366
2,207,052
30,709,525
66,329,037
Balance at November 1, 2017
6,263,428
6,263,428
30,208,552
(5,154,332)
442,223
1,617,408
23,557,562
56,492,618
Stock based compensation (Note 18)
Issue of share capital and share
premium on exercise of stock options
(Note 18)
Forfeited options (Note 18)
Loss on foreign currency translation
Net income
-
-
-
144,239
144,239
2,219,026
-
-
-
-
-
-
-
-
-
-
-
-
153,812
807,539
(146,230)
(655,678)
(25,310)
(177,989)
(335,061)
-
-
-
-
-
-
-
-
-
807,539
1,707,587
(177,989)
(335,061)
4,227,243
4,227,243
Balance, October 31, 2018
6,407,667
6,407,667
32,427,578
(5,489,393)
424,495
1,591,280
27,784,805
62,721,937
The accompanying notes are an integral part of these consolidated financial statements.
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Consolidated Statements of Cash Flows
Years ended October 31, 2019 and 2018
(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 forward and option contract positions (Note 17)
Gain on disposal of assets
Deferred taxes
Increase (decrease) in cash due to change in:
Accounts receivable
Restricted cash held in escrow
Income taxes receivable
Other assets
Contract liability
Accounts payable, accrued expenses, holding accounts and income taxes
payable
Net cash flows from operating activities
Cash flows from investing activities
Purchase of property and equipment
Purchase of intangible assets
Acquisition, net of cash acquired (Note 5)
Proceeds from sale of asset
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from exercise of stock options (Note 18)
Net borrowing on line of credit (Note 14)
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
Year ended
Year ended
October 31, 2019
October 31, 2018
$
$
2,924,720
4,227,243
1,330,258
743,391
9,119
(5,775)
(542,799)
(917,471)
1,354,286
(183,087)
(143,819)
265,939
6,117,462
10,952,224
(1,205,437)
(529,421)
(3,226,616)
18,812
1,371,256
629,550
6,569
-
377,133
(3,323,832)
(26,774)
-
(472,603)
-
2,283,429
5,071,971
(483,282)
(831,233)
-
-
(4,942,662)
(1,314,515)
40,685
468,270
508,955
6,518,517
56,402,979
(47,623)
62,873,873
1,275,469
303,218
23,564
1,707,588
-
1,707,588
5,465,044
51,147,685
(209,750)
56,402,979
3,083,321
369,724
12,707
The accompanying notes are an integral part of these consolidated financial statements.
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2019 and 2018
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”) in the United States under the symbol “CURN”. The Company operates
as a money service business and provides currency exchange, wire transfer, and cheque cashing services
from its locations in the United States and Canada. The Company maintains a head office and five vaults
as well as 46 branch locations. The Company’s registered head office is located at 6675 Westwood
Boulevard, Suite 300, Orlando, Florida, 32821, United States of America. The Company’s wholly owned
Canadian Subsidiary, Exchange Bank of Canada (“EBC”) is a non-deposit taking, non-lending financial
institution engaged in foreign exchange services and is registered as a Schedule 1 bank.
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 and option
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 28, 2020.
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 eZforex.com, Inc. (“eZforex”), a Texas based
money service business. 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.
Recently adopted accounting standards
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.
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
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2019 and 2018
2.
Accounting Policies (continued)
derecognition of financial assets and financial liabilities, impairment and hedge accounting. IFRS 9 became
effective for annual periods beginning on or after January 1, 2018.
The standard was adopted effective November 1, 2018 and the adoption did not have a significant impact
on the Company’s 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. The standard became effective
January 1, 2018.
The standard was adopted effective November 1, 2018 and the adoption did not have a significant impact
on the Company’s consolidated financial statements or existing revenue recognition policies or necessitate
any significant changes to its internal controls or data systems.
Cash
Cash includes, but is not limited to:
•
•
•
•
•
local and foreign currencies held in tills and vaults;
local and foreign currencies in transit;
local and foreign currencies at customer locations on consignment;
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, 2019 and 2018,
respectively.
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. The
Company applies a simplified approach in accounting for the allowance for doubtful accounts as lifetime
expected credit losses. These consider the potential for default during the life of the financial instrument
and are the expected shortfalls in contractual cash flows. To estimate the expected shortfall, the Company
considers specific customers, historical information, external indicators and forward-looking information.
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. Therefore, the allowance for doubtful
accounts was not impacted by the adoption of IFRS 9 Financial Instruments (“IFRS 9”). The Company
does not accrue interest on past due receivables. Management determined that the allowance for doubtful
accounts was $Nil as of October 31, 2019 and 2018, respectively.
Revenue recognition
IFRS 15 provides a comprehensive framework for the recognition, measurement, and disclosure of revenue
from contracts with customers. To determine whether to recognize revenue, the Company follows a five-
step process whereby the Company: (1) identifies the contract with the customer; (2) identifies the
performance obligations; (3) determines the transaction price; (4) allocates the transaction price to the
performance obligations; and (5) recognizes revenue when or as performance obligations are satisfied.
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2019 and 2018
2.
Accounting Policies (continued)
Commission revenues 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 and option 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 contracts are short term in nature and generally have a single
performance obligation. Revenue is recognized at a point in time, being at the time each transaction occurs,
and the performance obligation is satisfied, generally when the currency is delivered, or at the end of each
reporting period when revaluations of foreign exchange positions take place. Consideration received from
a customer prior to the satisfaction of the performance obligation is included as a contract liability in the
statement of financial position.
Fee income includes fees collected on cheque cashing, wire transfers, cheque collections, and currency
exchange transactions. These revenue contracts are short term in nature and generally have a single
performance obligation with revenue being recognized at a point in time being the time the transaction
occurs, and the performance obligation is satisfied, generally when the currency is delivered.
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 as 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 eZforex is the United States 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 presentation 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 and option contracts
Foreign currency forward and option 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 in income immediately in the
consolidated statement of income and comprehensive income.
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.
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2019 and 2018
2.
Accounting Policies (continued)
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.
Goodwill and intangible assets
Goodwill, representing the excess of the purchase price over the fair value of the net assets acquired, is
carried at its original value based on the acquisition, less impairment losses determined subsequent to the
acquisition.
Intangible assets are comprised of the Company's internally developed software (“CEIFX”) and its related
modules as well as software and customer trading relationships acquired through business combinations
or asset purchase transactions. 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
Acquired software
Customer trading relationships
Tradename & Non-competition agreements
5 years
2 years
5-10 years
5 years
Residual values and useful lives are reviewed at each reporting date.
Business combinations
Business combinations are accounted for by applying the acquisition method. The acquisition method
involves the recognition of the acquiree’s identifiable assets and liabilities, including contingent liabilities,
regardless of whether they were recorded in the financial statements prior to acquisition. The acquiree’s
identifiable assets and liabilities that meet the conditions for recognition under IFRS 3 Business
Combinations (“IFRS 3”), are recognized at their fair value at the acquisition date.
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2019 and 2018
2.
Accounting Policies (continued)
The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured
at acquisition date fair value. Transaction costs related to the acquisition are expensed as they are incurred.
Goodwill arising on acquisition is recognized as an asset and represents the excess of acquisition cost over
the fair value of the Company’s share of the identifiable net assets of the acquiree at the date of the
acquisition. Any excess of identifiable net assets over the acquisition cost is recognized in net income
immediately after acquisition.
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.
Holding and prepayment accounts
Holding and prepayment accounts represent funds received from customers that are held in the functional
currency of the Company on behalf of the customer, who has the unilateral right to transfer out or convert
the funds at any time. Amounts are initially measured at fair value, net of any transaction costs directly
attributable to the issuance of the instrument.
Holding and prepayment accounts are subsequently measured at amortized cost, using the effective
interest rate method. As at October 31, 2019, $386,837 related to these holding and prepayment accounts
were included in accounts payable (2018 - $4,563).
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 on the consolidated statement of financial position
when the Company becomes a party to the contractual provisions of the financial instrument. The Company
is required to initially recognize all of its financial assets and liabilities, including derivatives and embedded
derivatives in certain contracts, at fair value. Subsequent measurement of financial assets and financial
liabilities is described below.
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2019 and 2018
2.
Accounting Policies (continued)
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.
Classification and measurement of financial assets
IFRS 9 provides guidance on the classification and measurement of financial assets and introduces an
‘expected credit loss’ model for the impairment of financial assets. IFRS 9 also contains new requirements
on the application of a hedging model to align hedge accounting more closely with entities’ risk management
activities.
IFRS 9 includes a new classification and measurement approach for financial assets that considers the
business model in which the assets are managed and their cash flow characteristics. Subsequent to initial
recognition, financial assets are not reclassified unless the Company adopts changes in its business model
in managing those assets. Financial assets, other than those designated and effective as hedging
instruments, are classified into the following categories: amortized cost; fair value through profit or loss
(“FVTPL”); or fair value through other comprehensive income (“FVTOCI”). The adoption of IFRS 9 did not
result in significant changes in the classification, measurement or carrying amount of financial assets.
Classification and measurement of financial liabilities
IFRS 9’s requirements for financial liabilities remains largely consistent compared to IAS 39. Subsequent
to initial recognition, financial liabilities are measured at amortized cost using the effective interest method,
except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair
value with gains or losses recorded in the statement of income. The adoption of IFRS 9 did not result in
significant changes in the classification, measurement or carrying amounts of financial liabilities.
The Company’s financial assets and liabilities are classified and measured as follows:
Cash
Accounts receivable
Restricted cash held in escrow
Forward and option contract assets
Accounts payable
Contract liability
Line of credit
Fair value through profit and loss
Amortized cost
Amortized cost
Fair value through profit and loss
Amortized cost
Amortized cost
Amortized cost
Transaction costs other than those related to financial instruments classified as FVTPL or FVTOCI, which
are expensed as incurred, are added to or deducted from the fair value of the financial asset or financial
liability, as appropriate, on initial recognition and amortized using the effective interest method.
Impairment of financial assets
IFRS 9’s impairment requirements use the ‘expected credit loss’ (“ECL”) model. The ECL model replaces
IAS 39’s ‘incurred loss model’ and uses forward-looking information to recognize expected credit losses.
Instruments within the scope of the new requirements included loans and other debt-type financial assets
measured at amortized cost and FVOCI, trade receivables, contract assets recognized and measured under
IFRS 15 and loan commitments and some financial guarantee contracts that are not measured at fair value
through profit or loss.
Under the new standard, the Company considers a wider range of information when assessing credit risk
and measuring expected credit losses, including past events, current conditions, and reasonable
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2019 and 2018
2.
Accounting Policies (continued)
projections that impact the collectability of the future cash flows of the instrument. The adoption of IFRS 9
and the ECL model had no impact on the Company’s condensed interim consolidated financial statements.
Accounts receivable
The Company applies a simplified approach in accounting for the loss allowance for receivables and
contract assets as lifetime expected credit losses. These consider the potential for default during the life of
the financial instrument and are the expected shortfalls in contractual cash flows. To estimate the expected
shortfall, the Company considers specific customers, historical information, external indicators and forward-
looking information. Due to the longstanding relationships with most of its customers, strong repayment
history and the short-term nature of the financial assets, the loss allowance for receivables was not
impacted by the adoption of IFRS 9.
Derivative financial instruments and hedge accounting
Derivative financial instruments are accounted for at FVTPL, except for derivatives designated as hedging
instruments in cash flow hedge relationships, which require a specific accounting treatment. To qualify for
hedge accounting, the hedging relationship must meet all of the following requirements: there is an
economic relationship between the hedged item and the hedging instrument; the effect of credit risk does
not dominate the value changes that result from that economic relationship; and the hedge ratio of the
hedging relationship is the same as that resulting from the quantity of the hedged item that the entity actually
hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of
hedged item. As the Company does not apply hedge accounting, the condensed interim consolidated
financial statements were not impacted by the new hedging requirements under IFRS 9.
Financial instruments recorded at fair value
Financial instruments recorded at fair value in the consolidated statement 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
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2019 and 2018
2.
Accounting Policies (continued)
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.
3.
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.
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
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2019 and 2018
3.
Significant management judgment in applying accounting policies and estimation uncertainty
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.
Impairment of 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.
Impairment of non-financial assets
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.
Goodwill is tested for impairment at least annually and at other times when such indicators exist.
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 16. Such judgments and
assumptions are inherently uncertain. Changes in these assumptions affect the fair value estimates.
Depreciation and amortization expense
The Company's property and equipment and intangible assets are depreciated and 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 depreciation or amortization
and in the assets' carrying amounts.
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2019 and 2018
3.
Significant management judgment in applying accounting policies and estimation uncertainty
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 9 and 21.
4.
Accounting Pronouncements
Accounting standards issued but not yet effective
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 estimated the impact of IFRS
16 on its consolidated financial statements, starting in the fiscal 2020 period. The Company believes that
the most significant impact will be the recognition of a right-of-use asset and a corresponding lease liability
on the statement of financial position for certain facilities currently treated as operating leases. In addition,
certain expense categories on the Consolidated Statement of Income and Comprehensive Income will be
affected. Because operating expenses will only include rent expense for the current period, it will be reduced
from levels prior to implementation of IFRS 16, thereby increasing Earnings before interest, taxes,
depreciation and amortization. However, interest expense will increase, related to long term lease liabilities,
reducing net income before income taxes. The Company intends to disclose the effect of IFRS 16 on its
financial results, compared to the period prior to implementing IFRS, in its financial statements, starting in
the 2020 fiscal year.
5.
Acquisition
On September 6, 2019 the Company completed a share acquisition of eZforex. The Company acquired 100%
of the issued and outstanding shares of eZforex in exchange for cash consideration of $4,180,993. The
acquisition is a business combination accounted for using the acquisition method in accordance with IFRS 3
Business Combinations. Assets assumed in the acquisition have been recorded at their fair values as at the
date of acquisition. The excess of the consideration transferred over the fair value of the assets acquired has
been included in goodwill.
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2019 and 2018
5.
Acquisition (continued)
The acquisition is expected to contribute to the profitability of the Company through key customer contracts
acquired and synergies identified and expected to be realized in the elimination of redundant expenditures
including staff and overheads. In determining the fair market value of the assets acquired, synergies are not
factored in in order to assess a fair market participant value. As a result, goodwill was created which
represents the synergistic benefits to be realized by the Company starting immediately following acquisition.
The goodwill acquired is not expected to be deductible for tax purposes.
The allocation of the purchase consideration and the fair value of net assets acquired is as follows:
Net working capital, including cash
Computer software
Trade name
Customer trading relationships
Non-compete agreements
Deferred tax liability
Goodwill
Consideration paid
$954,377
90,000
470,000
1,910,000
200,000
(681,703)
1,238,319
$4,180,993
The consolidated statements of income and comprehensive income for the year ended October 31, 2019
include $255,527 in revenue, $138,405 in expenses for a net income after tax contribution of $117,122 from
the eZforex business after the date of acquisition. Expenses include one-time transaction costs of $52,095
and amortization and income tax expense totalling $76,542.
6.
Segments
The Company operates in the United States and Canada. The Company's revenue from external customers
and information about its assets by geographical location and product line are detailed below:
Year ended October 31, 2019
Year ended October 31, 2018
Revenues ($)
United States
35,137,626
33,234,379
Canada
6,646,417
5,863,762
Total
41,784,043
39,098,141
Revenues by Product Line
Year ended October 31, 2019
Year ended October 31, 2018
Banknotes
39,144,401
37,393,050
Payments
2,639,642
1,705,091
Total
41,784,043
39,098,141
At October 31, 2019
At October 31, 2018
Assets
Cash
Accounts receivable
Restricted cash held in escrow
Forward and option contract assets
Other current assets
Property and equipment
Intangible assets
Goodwill
Other assets
Income taxes receivable
Net deferred tax asset
Total assets
United States
$
37,760,599
4,961,794
644,657
(10,379)
1,001,960
904,475
3,692,019
1,238,319
101,686
-
368,399
50,663,529
Canada
$
25,113,274
5,581,458
-
12,114
268,143
648,466
218,730
-
-
-
224,002
32,066,187
Total United States
$
$
62,873,873
10,543,252
644,657
1,735
1,270,103
1,552,941
3,910,749
1,238,319
101,686
-
592,401
82,729,716
Canada
$
39,064,052 17,338,927
6,188,182
-
10,892
317,659
296,043
347,609
3,451,715
1,998,942
(35)
817,927
694,331
1,077,270
93,280
426,084
630,516
-
414,129
99,751
48,254,082 25,013,192
Total
$
56,402,979
9,639,897
1,998,942
10,857
1,135,586
990,374
1,424,879
93,280
840,213
730,267
73,267,274
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2019 and 2018
7.
Cash
Included within cash of $62,873,873 at October 31, 2019 (2018 - $56,402,979) 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
8.
Restricted Cash Held in Escrow
At October 31, 2019
At October 31, 2018
$
49,714,265
13,159,608
62,873,873
$
44,609,002
11,793,977
56,402,979
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
$644,657 at October 31, 2019 (2018 - $1,998,942).
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, 2019 was $3,780,465 (2018 - $3,381,155).
The following is a schedule of future minimum rental payments under these lease agreements:
October 31, 2019
October 31, 2018
Within 1 year
1 to 5 years
after 5 years
$
3,182,232
2,604,237
$
3,123,993
4,604,233
$
$Nil
$Nil
Total
$
6,306,225
7,208,470
10.
Property and Equipment
Property and equipment consist of the following:
Cost
Balance, October 31, 2017
Additions
Disposals
Net exchange differences
Balance, October 31, 2018
Additions
Disposals
Net exchange differences
Balance, October 31, 2019
Vehicles
Computer
equipment
Furniture and
equipment
Leasehold
improvements
$
80,247
33,987
(32,995)
-
81,239
17,723
(32,988)
-
65,974
$
311,514
97,018
-
(227)
408,305
326,611
-
432
735,348
$
753,068
109,503
-
(3,223)
859,348
179,542
-
405
1,039,295
$
1,980,041
236,432
-
(2,897)
2,213,576
681,561
-
3,666
2,898,803
Total
$
3,124,870
476,940
(32,995)
(6,347)
3,562,468
1,205,437
(32,988)
4,503
4,739,420
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2019 and 2018
10.
Property and Equipment (continued)
Depreciation
Balance, October 31, 2017
Additions
Disposals
Net exchange differences
Balance, October 31, 2018
Additions
Disposals
Net exchange differences
Balance, October 31, 2019
Carrying amounts
Balance, October 31, 2018
Balance, October 31, 2019
Vehicles
Computer
equipment
Furniture and
equipment
Leasehold
improvements
$
66,181
18,101
(32,995)
-
51,287
13,473
(19,952)
-
44,808
$
246,628
46,617
-
(813)
292,432
104,306
-
266
397,004
$
485,846
150,718
-
(3,128)
633,436
169,055
-
542
803,033
$
1,322,576
275,094
-
(2,731)
1,594,939
345,953
-
742
1,941,634
Vehicles
Computer
equipment
Furniture and
equipment
Leasehold
improvements
$
29,952
21,166
$
115,873
338,344
$
225,912
236,262
$
618,637
957,169
Total
$
2,121,231
490,530
(32,995)
(6,672)
2,572,094
632,787
(19,952)
1,550
3,186,479
Total
$
990,374
1,552,941
11.
Goodwill and 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 acquired through an asset purchase
transaction as well as the purchase of eZforex (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
Acquired software
Customer trading relationships
Tradename & Non-compete agreements
5 years
2 years
5-10 years
5 years
Cost
Internally
developed
software
Acquired
software
$
$
Customer
trading
relationships
$
Trade Name &
Non-Compete
$
Balance, October 31, 2017
1,416,117
480,000
3,288,283
Additions
Net exchange differences
831,233
(5,579)
-
-
-
-
Balance, October 31, 2018
2,241,771
480,000
3,288,283
-
-
-
-
Goodwill
Total
$
-
-
-
-
$
5,184,400
831,233
(5,579)
6,010,054
Additions
526,260
93,161
1,910,000
670,000
1,238,320
4,437,741
Net exchange differences
(217)
-
-
-
-
(217)
Balance, October 31. 2019
2,767,814
573,161
5,198,283
670,000
1,238,320
10,447,578
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2019 and 2018
11.
Goodwill and Intangible Assets (continued)
Amortization
$
$
Internally
developed
software
Acquired
software
Customer
trading
relationships
$
Trade Name &
Non-Compete
$
Goodwill
Total
$
$
Balance, October 31, 2017
837,132
480,000
2,356,603
Amortization
Net exchange differences
253,784
-
-
-
626,941
30,716
Balance, October 31, 2018
1,090,916
480,000
3,014,260
-
-
-
-
Amortization
378,823
6,750
292,098
19,800
Net exchange differences
488
-
15,375
-
Balance, October 31. 2019
1,470,227
486,750
3,321,733
19,800
-
-
-
-
-
-
-
3,673,735
880,725
30,716
4,585,176
697,471
15,863
5,298,510
Carrying amounts
Internally
developed
software
$
Balance, October 31, 2018
1,150,855
Acquired
software
$
-
Customer
trading
relationships
$
Trade Name &
Non-Compete
Goodwill
Total
$
274,024
-
-
1,424,879
Balance, October 31. 2019
1,297,587
86,411
1,876,550
650,200
1,238,320
5,149,068
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, 2019 and 2018 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
Net intangibles assets
Total deferred tax liabilities
Net deferred tax asset
October 31, 2019
October 31, 2018
$
$
308,632
525,503
185,962
-
1,020,097
(129,004)
(298,692)
(427,696)
592,401
246,198
349,829
28,873
212,958
837,858
(107,591)
-
(107,591)
730,267
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2019 and 2018
12.
Income Taxes (continued)
Reconciliation of the provision for income taxes to the amount calculated using the Company’s statutory
tax rate for the year ended October 31, 2019 and 2018 are as follows:
Income before taxes
Statutory tax rate
Tax expense at statutory rate
Sec. 965 Repatriation Tax - Current
Recovery on exercise of director and employee stock options
Foreign tax rate adjustment
Other non-deductible differences
Income tax expense
October 31, 2019
$
4,457,905
25.53%
1,138,103
-
(2,283)
474,741
12,624
1,623,185
October 31, 2018
$
6,409,531
28.41%
1,820,647
80,000
(267,990)
538,978
10,653
2,182,288
The enacted tax rates in the United States of 22% (2018 - 22%) and Canada of 26.5% (2018 – 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, 2019 and 2018 consists of the following:
Current tax expense
Deferred tax benefit
Income tax expense
October 31, 2019
$
2,140,029
(516,844)
1,623,185
October 31, 2018
$
1,803,241
379,047
2,182,288
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.
14.
Lines of Credit
The Company maintains lines of credit to meet borrowing needs during peak business periods. The
Company has a revolving line of credit with BMO Harris Bank, N.A, which was increased in July of 2018 to
$20,000,000. 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, 2019 – 2.1% (2018 – 2.3%)). At October 31,
2019, the balance outstanding was $Nil (2018 - $Nil).
In April of 2017, the Company’s wholly-owned Canadian subsidiary, EBC established a CDN$3,000,000
revolving line of credit with Bank of Montreal which was increased in June of 2018 to CDN$6,000,000
($4,559,271) being secured against cash assets held in its vaults. The line of credit bears interest at CDN
prime plus 0.5% (at October 31, 2019 – 3.95% (2018 – 3.95%)). At October 31, 2019, the balance
outstanding was $472,736 (2018 - $Nil).
Interest expense relates to interest payments on lines of credit. Interest expense was $303,218 for the year
ended October 31, 2019 (2018 - $369,724).
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2019 and 2018
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, 2019 and 2018.
The following table shows the Levels within the hierarchy of financial assets and liabilities measured at fair
value.
At October 31, 2019
Level 1
$
Level 2
$
Level 3
$
Total
$
62,873,873
-
62,873,873
-
1,735
1,735
-
-
-
62,873,873
1,735
62,875,608
At October 31, 2018
Level 1
$
Level 2
$
Level 3
$
Total
$
56,402,979
-
56,402,979
-
10,857
10,857
-
-
-
56,402,979
10,857
56,413,836
Financial assets
Cash
Forward and option contract assets
Total Assets
Financial assets
Cash
Forward and option contract assets
Total Assets
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,
2019 and 2018.
Forward and option contract positions (Level 2)
The Company’s forward and option 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.
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 and accrued expenses
•
Line of credit
• Contract liability
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2019 and 2018
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. As part of its governance structure, the
Company has a designated Risk Committee which oversees and monitors the implementation of these
policies.
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.
A breakdown of accounts receivable by category is below:
Customer type
Domestic and international financial institutions
Money service businesses
Other
Total
At October 31, 2019
At October 31, 2018
$
2,575,497
7,274,152
693,603
10,543,252
$
4,883,305
4,611,497
145,095
9,639,897
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.
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2019 and 2018
16.
Risk Management (continued)
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, 2019 was approximately $6,860,000 (2018 - $7,440,000). The amount of currency
that is unhedged and that is not pegged to the U.S. Dollar is approximately $5,464,000 (2018 - $5,360,000).
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 +$109,000/-$109,000 (2018
gain/loss of approximately +$107,000/-$107,000).
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, 2019, 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, 2019 would have been approximately +$29,300/-$29,300 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.
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2019 and 2018
16.
Risk Management (continued)
The following are non-derivative contractual financial liabilities:
Non-derivative financial
liabilities
Carrying amount
At October 31, 2019
Estimated contractual
amount
This fiscal year
Future fiscal
years
Accounts payable
Line of credit
Accrued expenses
Contract liability
$
12,583,741
472,736
2,767,711
266,392
$
12,583,741
472,736
2,437,831
266,392
$
12,583,741
472,736
2,437,831
$
$Nil
$Nil
$Nil
$Nil
266,392
Non-derivative financial
liabilities
Carrying amount
At October 31, 2018
Estimated contractual
amount
Next fiscal year
Future fiscal
years
Accounts payable
Accrued expenses
$
8,312,778
2,232,559
$
8,312,778
2,045,707
$
8,312,778
2,045,707
$
$Nil
$Nil
The Company had available unused lines of credit amounting to $24,086,534 at October 31, 2019 (October
31, 2018 - $24,565,515).
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.
Current assets
Current liabilities
Working capital
At October 31, 2019
At October 31, 2018
75,333,620
70,028,474
(16,400,679)
(10,545,337)
58,932,941
59,483,137
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 debt 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 foreign currency forward and purchased option contracts 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 commission
revenues on the condensed interim consolidated statements of operations and other comprehensive
income. The Company’s management strategy is to reduce the risk of fluctuations associated with foreign
exchange rate changes.
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2019 and 2018
17.
Foreign Currency Forward Contracts (continued)
The foreign currency forward contracts can be closed immediately resulting in any collateral being
liquidated. The foreign currency option contracts are held to maturity and are either exercised for a net
gain or expire at no obligation to the Company.
The fair value of forward and option contracts, which represents the amount that would be received/(paid)
by the Company if the forward contracts were terminated at October 31, 2019 was $1,735 (2018 - $10,857).
At October 31, 2019 and October 31, 2018 approximately $644,657 and $1,998,942, 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 $1.00. The options exercised during the current and prior periods are summarized as follows:
Period Exercised
Number of shares
USD value
CDN$ value
Q1 2018
Q2 2018
Q3 2018
Q4 2018
Q1 2019
Q2 2019
Q3 2019
Q4 2019
-
-
-
-
-
-
132,258
1,495,848
1,957,765
11,981
6,424
-
-
845
211,740
63,272
280,767
83,870
-
-
-
-
61,316
84,212
Stock options
The Company offers an incentive stock option plan which was established April 28, 2011, and was amended
most recently October 20, 2017 (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. Under the terms of the Plan, vesting
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, and the options have a five-year term, unless otherwise specified by the
Board of Directors.
The outstanding options at October 31, 2019 and 2018 and the respective changes during the periods are
summarized as follows:
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2019 and 2018
18.
Equity (continued)
Date of Grant
Expiry Date
Share price
at grant
date
(CDN$)
Amount
granted
Risk-free
interest rate
Expected
volatility
Exercise
Price
(CDN$) *
Fair value of
option at grant
date ($)
30-Oct-15
30-Oct-20
30-Oct-15
30-Oct-20
11-Mar-16
11-Mar-21
26-Oct-16
25-Oct-21
26-Oct-16
25-Oct-21
6-Jun-17
6-Jun-22
26-Oct-17
26-Oct-22
26-Oct-17
26-Oct-22
9-Aug-18
9-Aug-23
23-Oct-18
23-Oct-23
23-Oct-18
23-Oct-23
23-Jan-19
23-Jan-24
4-Mar-19
4-Mar-24
23-Oct-19
4-Mar-24
23-Oct-19
4-Jun-24
23-Oct-19
23-Oct-24
23-Oct-19
23-Oct-24
23.50
23.50
21.30
32.96
32.96
20.79
26.84
26.84
30.93
28.01
28.01
30.14
25.98
17.03
17.03
17.03
17.03
28,972
89,435
4,182
22,757
66,820
9,865
25,039
76,981
10,200
32,501
111,111
4,127
13,316
30,000
5,837
72,376
228,754
1.47%
1.47%
1.45%
1.30%
1.30%
1.71%
2.07%
2.07%
2.80%
3.10%
3.10%
2.60%
2.50%
1.58%
1.58%
1.58%
1.58%
*Exercise price determined by average share price for previous 20 trading days
32%
32%
34%
34%
34%
37%
36%
36%
31%
29%
29%
27%
27%
24%
24%
24%
24%
24.64
24.64
22.78
30.75
30.75
21.53
25.52
25.52
30.69
30.77
30.77
28.23
25.83
17.36
17.36
17.36
17.36
5.10
5.10
4.78
8.46
8.46
5.27
7.69
7.69
7.74
5.92
5.92
7.18
5.65
3.07
3.07
3.07
3.07
Outstanding at October 31, 2017
Granted
Exercised
Cancelled through cashless exercise
Forfeited
Outstanding at October 31, 2018
Granted
Exercised
Cancelled through cashless exercise
Forfeited
Outstanding at October 31, 2019
Number of options
Weighted average
price
#
CDN$
442,223
153,812
(144,239)
(1,991)
(25,310)
424,495
354,410
(7,269)
(27,500)
(35,770)
708,366
22.31
30.76
15.61
20.61
26.35
27.42
17.80
21.47
17.19
30.08
22.93
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2019 and 2018
18.
Equity (continued)
The following options are outstanding and exercisable at October 31, 2019:
Grant Date
30-Oct-15
30-Oct-15
11-Mar-16
26-Oct-16
26-Oct-16
6-Jun-17
26-Oct-17
26-Oct-17
9-Aug-18
9-Aug-18
23-Oct-18
23-Oct-18
23-Jan-19
4-Mar-19
23-Oct-19
23-Oct-19
23-Oct-19
23-Oct-19
Total
Exercise
price
(CDN$)
Number
outstanding
24.64
24.64
22.78
30.75
30.75
21.53
25.52
25.52
30.69
30.69
30.77
30.77
28.23
25.83
17.36
17.36
17.36
17.36
20,148
55,662
4,182
13,004
42,928
5,586
14,308
62,893
9,084
1,116
27,858
97,187
4,127
13,316
5,837
30,000
72,376
228,754
708,366
Average remaining
contractual life
(years)
1.00
1.00
1.36
1.99
1.99
2.60
2.99
2.99
3.78
3.98
3.98
3.98
4.23
4.35
4.60
4.35
4.98
4.98
Number
exercisable
20,148
55,662
4,182
13,004
42,928
3,724
14,308
41,929
3,028
1,116
27,858
32,397
-
-
1,459
-
-
-
261,743
The October 23, 2019 grant of 228,754 options is made outside of the Company’s stock option plan, and
in accordance with the policies of TSX is subject to approval by the shareholders and regulatory approval.
The options granted pursuant to the October 23, 2019 grant of 228,754 options to employees of the
Company cannot be exercised prior to receipt of such approvals. The shareholders of the Company will be
asked to approve and ratify the October 23, 2019 grant of 228,754 options at the next meeting of
shareholders called for March 25, 2020.
19.
Earnings per Share
The calculation of earnings per share is presented below. Diluted earnings per share for the year ended
October 31, 2019 and 2018 included all stock option grants with the exception of the options granted on
October 30, 2015, October 26, 2016, October 26, 2017, August 9, 2018, October 23, 2018, January 23,
2019, and March 4, 2019 as the strike price exceeded the average stock price for the period.
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
Year ended
October 31, 2019
October 31, 2018
$2,924,720
6,412,593
$0.46
$2,924,720
6,415,629
$0.46
$4,227,243
6,300,026
$0.67
$4,227,243
6,344,557
$0.67
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2019 and 2018
20.
Operating expenses
Year ended
October 31, 2019
October 31, 2018
$
$
Salaries and benefits
18,298,892
15,847,680
Rent
Legal and professional
Postage and shipping
Stock based compensation
Travel and entertainment
Bank service charges
Software maintenance
Losses and shortages
Insurance
Other general and administrative
Operating expenses
3,780,465
2,930,426
5,094,817
743,391
702,207
856,589
1,119,280
426,385
440,493
1,239,056
35,632,001
3,381,155
2,671,996
4,560,283
629,550
664,823
757,230
685,320
307,029
361,270
1,094,001
30,960,337
21.
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 years ended October 31, 2019 and
2018 were as follows:
Short-term benefits
Post-employment benefits
Stock based compensation
Year ended
October 31, 2019
October 31, 2018
$
2,535,331
99,795
706,831
3,341,957
$
2,677,716
82,242
521,918
3,281,876
The Company incurred legal and professional fees in the aggregate of $299,000 for the year ended October
31, 2019 (2018 - $348,000) charged by entities controlled by directors or officers of the Company.
The Company has clients that are considered related parties through two of its directors. The Company
generated $130,000 in revenue from these clients’ activities for the twelve-month period ended October 31,
2019 (October 31, 2018 – $47,000). As at October 31, 2019, net accounts receivable included $228,000
from related parties (October 31, 2018 - $84,000).
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.
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2019 and 2018
21.
Compensation of Key Management Personnel and Related Party Transactions (continued)
Advances between CXI and EBC are provided under a Revolving Line of Credit, renewed May 31, 2018;
loans attract interest at LIBOR + 2%, are repayable on demand, and are unsecured. At October 31, 2019,
the intercompany loan balance was $11,250,000 (2018 - $5,660,000) and was eliminated upon
consolidation.
Key management personnel and directors occasionally conduct transactions with the Company as
individuals. Such transactions are immaterial individually and in total, including for the years ending October
31, 2019 and 2018, and are conducted pursuant to the Company’s policies.
All transactions with related parties as noted above are carried out in the normal course of business and at
prevailing market rates.
22.
Other current assets
At October 31, 2019
At October 31, 2018
Prepaid rent
Prepaid personnel
Prepaid computer software
Prepaid insurance
Prepaid advertising
Other current assets
Total
$
296,102
-
175,517
315,992
20,833
461,659
1,270,103
$
251,855
110,414
171,271
263,429
45,834
292,783
1,135,586
23.
Potential Transaction
On July 9, 2018 the Company announced its wholly-owned subsidiary EBC has entered into a definitive
agreement to acquire the assets of a business operating 22 years primarily in the province of Quebec from
the private family owners who were advised by Laurentian Bank Securities. These assets include a total of
approximately 400 corporate customers that are engaged in international payments. It is expected that
approximately 10 employees will be retained and employed in EBC’s Montreal Office. The transaction is
subject to regulatory approval and will not close until all approvals have been obtained.
24.
Subsequent Events
The Company evaluated subsequent events through January 28, 2020, 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.
Page is intentionally left
blank.
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 30 years of experience in international banking with an emphasis on foreign
exchange.
Joseph August
Chirag Bhavsar
Johanne Brossard
Stacey Mowbray
Director of CXI
Director of EBC
Independent Board Member
Lead Director of CXI
Chairman of the Board of EBC
Independent Board Member
Director of CXI
Director of EBC
Independent Board Member
Director of CXI
Director of EBC
Independent Board Member
Chitwant Kohli
Mark D. Mickleborough
V. James Sardo
Daryl Yeo
Director of CXI
Director of EBC
Independent Board Member
Director of CXI
Director of EBC
Board Member
Director of CXI
Director of EBC
Independent Board Member
Director of CXI
Director of EBC
Independent Board Member
Shareholder Information
Annual Meeting of Shareholders
Shareholders are invited to attend the annual meeting
of Currency Exchange International, Corp. to be held on
March 25, 2020 at 12:00 p.m. (EST) at:
333 Bay Street, 46th Floor,
Toronto, Ontario, Canada M5H 2S5
Investor Relations
Financial Analysts, portfolio managers and other
investors requiring financial information may contact
our Investor Relations’ departments:
Transfer Agent
Computershare Investor Services
100 University Ave, 8th Floor, South Tower
Toronto, Ontario Canada M5J 2Y1
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.
(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
Auditors
Grant Thornton LLP
Chartered Professional Accountants
Licensed Professional Accountants
Mississauga, Canada
information or assistance
Shareholder Services
your
For
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.
regarding
Currency Exchange International: Annual Report 2019
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