Currency Exchange International Annual Report 2021

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FY2021 Annual Report · Currency Exchange International

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A N N U A L
R E P O R T

2021

€$¥£€$¥£$Financial Highlights

Exchange Volume:
In Millions

$4.2

$4.9

$3.8

$6.3

2018

2019

2020

2021

66 %
Year Over Year

Revenue by Business Segment

76%

Banknotes

24%

Payments

Total Revenue:
In Millions

$39.1 $41.7

$25.0

$30.3

2018
2018

2019

2020

2021

21 %
Year Over Year

Revenue by Geography

Total Assets:
In Millions

$73.3 $82.7

$85.8

$102.5

2018

2019

2020

2021

20 %
Year Over Year

All amounts in this report are stated in USD and are based on fiscal year end unless otherwise noted.

76%

United States

24%

Canada

Corporate Customers and Transacting Locations
2018

2019

2020

2021

Company-Owned Branch Locations

Wholesale Company Relationships*

1,267

1,878

1,667

2,653

Transacting Locations*

17,017

21,595

14,787

16,546

*These numbers show the companies and locations that transacted within the period specified.

Shareholder’s Equity
$ millions

Quarterly Stock Price (TSX:CXI)
TSX stock prices are quoted in Cdn$

Key Ratios

2020

2021

October 31, 2018

$62.7

Q1 (Ended 1/31/2021)

$11.10

Earnings Per Share

$-1.33

$-0.18

October 31, 2019

$66.3

Q2 (Ended 4/30/2021)

$13.91

Return On Assets

-9.9%

-1.1%

October 31, 2020

October 31, 2022

$58.2

$58.0

Q3 (Ended 7/31/2021)

Q3 (Ended 10/31/2021)

$13.55

$14.37

Return On Equity

-14.6%

-2.0%

Operating Margin

-15.9%

-0.2%

Currency Exchange International: Annual Report 2021

1Message from the CEO

Dear CXI Shareholders, Clients, Employees and Friends, I
am pleased to present the progress and achievements of
Currency Exchange International, Corp. for our year ended
October 31, 2021.

Randolph W. Pinna
President and Chief Executive Officer

In 2021, CXI employees displayed remarkable resiliency, innovation,
and dedication through the second year of unprecedented disruption.
Despite the significant challenges that the Covid-19 pandemic
presented, the world has shown resiliency and a vast improvement
in getting people back to work and reconnecting across borders. In
a complex situation where company values and strategy are tested,
CXI successfully delivered on its purpose, stayed true to its values,
and executed its strategic plan. Collectively, CXI maintained effective
health and safety protocols that focused on employees’ well-being
first while delivering uninterrupted service to our clients and produced
the most transformative year ever for the company.

With many unknowns going into fiscal year 2021, we were certain
the recovery of the international travel industry would be slower than
most industries and would be uneven globally as governments took
vastly different approaches to travel and keeping their economies
functioning. The headwinds in the international travel industry put an
emphasis on CXI diversifying the business by adeptly executing its
corporate international payments growth plan. Additionally, increased
market share in banknote services with financial institutions and
significant agent locations, including airport clients, expanded our
client reach well beyond our position just a year ago. The results of
the multi-pronged strategy are increasing revenues and foundational
support for our client base and sales pipeline in the years ahead. I’m
proud of how CXI’s employees continue to advance our strategies and
have well-positioned the company’s return to profitability even before
global travel returns to 2019 levels.

Transformative Strategic Priorities on Track
Though CXI’s 2021 fiscal year began with a strong balance sheet
we were challenged by global economic turmoil and minimal
international travel. As we moved into 2021, subsequent quarter-by-
quarter improvements were seen in the global economy and the local
communities we serve. Travel restrictions in some areas around the
world were rolled back. With the reopening of travel, TSA security
check throughput data and consumer surveys showed travelers
were becoming more open to flying. By March 2021, considerable
increases in demand for destinations like Mexico validated travelers’
sentiments. The return of international travel is showing positive
momentum, yet its bounce-back continues to be slower than other

industries and is still not projected to return to 2019 levels in 2022.
Even so, in the fourth quarter of fiscal year 2021, CXI experienced its
first quarter of positive earnings since the pandemic was declared in
March 2020.

CXI’s journey to generating $1.6 million net income in the fourth
quarter of fiscal year 2021, compared to a $3.5 million loss in 2020
was the culmination of successfully advancing and executing the
company’s strategic plan. The expansion of CXI’s market share,
improved travel demand, and an efficient operating structure
provided a path to profitability with quarter-by-quarter improvements.
New business growth was seen in both banknote and payments
businesses. Notably, in fiscal year 2021, CXI transacted with more
than 1,119 new financial institution and business clients. This raises
the total number of wholesale clients served by CXI to more than
2,653, a year-over-year increase of more than 59%.

CXI’s ongoing focus to diversify the company from the volatility of
the travel and tourism industry has led to an increase in payments
business revenue. The payments business generated $7.4 million
in revenue in 2021, up from $3.4 million in 2020, a 117% increase.
In 2021, the payments business contributed 24% of the company’s
revenues compared to 14% of the company’s revenues in 2020.

CXI grew its international payments by building a strong payments team
with experienced traders embodying client-first values, streamlining
process improvements, and expanding its system integrations.
Growing the sales team with proven traders and Exchange Bank of
Canada’s (EBC) acquisition of an international payments business’s
assets in 2020 has demonstrated the Company’s ability to acquire a
significant number of new clients and focus on revenue generation.
EBC added 399 new corporate payment clients, which helped the
bank generate more than three times its payment revenue compared
to 2020. EBC will continue to scale its international payments by
investing in technology that enables operational efficiencies and
people who provide client-centric service through market knowledge
and proactive, personal relationships.

In August 2021, EBC announced it was approved to participate in the
Federal Reserve’s Foreign Bank International Cash Services (FBICS)

Currency Exchange International: Annual Report 2021

2Message from the CEO

program. Through FBICS, EBC receives access to the Federal Reserve’s
International Cash Services program. By becoming an approved
participant of the FBICS program, EBC is well positioned to serve
international based clients who have few avenues to source bulk and
mint US dollar shipments, a definitive, unique advantage for clients
and prospects. With a high barrier for entry, the competition in the
global wholesale banknotes sector has been limited for many years.
EBC has already onboarded new global financial institutions through
a rigorous risk-based approach, thereby allowing for significant new
revenues with a low-risk profile.

Core to CXI expanding its foreign exchange services to financial
institution clients is integrating the company’s proprietary web-
based FX software CXIFX with established client endpoints. In 2021,
CXI announced its participation in Jack Henry Banking®’s Vendor
Integration Program, enabling CXIFX to integrate with their SilverLake,
CIF 20/20, and Core Director platforms. This follows CXIFX’s 2019
integration with Fiserv’s WireXchange. The integration with Jack
Henry Banking increases the addressable bank and credit union
market for CXI. Developing integrations into core platforms improves
client processes and makes transitioning to CXI, their one provider for
multiple foreign exchange services, an easier process.

Travel Is Down But a Larger Network Is Paying Off
Travel estimates from the US Travel Association and US National
Travel and Tourism Office show more than a 60% decline in US
inbound and outbound international travelers between 2019 and
2021. During this time, CXI increased its total FX exchange volume to
$6.3 billion in 2021 from $4.9 billion in 2019. The stark difference is
proof of CXI’s market penetration gains in its wholesale relationships,
globally and in the US, and its direct-to-consumer operations.

CXI’s calculated expansion of its agent program this past year
included bringing on airport foreign exchange businesses. The airport
currency exchange businesses feature CXI branding, licensing,
software, client support, full-service foreign banknote exchange, and
a captive audience. The use of the agent relationship benefits CXI
without adding lease and personnel overhead costs. CXI Airports
now has nine branches at five international airports, including the
busiest international air passenger gateway into North America; JFK
International Airport in New York. Over the past two fiscal years, CXI
targeted unique agent relationships such as its agreement with Duty
Free Americas in December 2019. This past November, CXI executed
an agreement with AAA National, setting the stage for AAA clubs to
opt-in to CXI’s agent program. The foreign currency program “AAA
powered by CXI” allows AAA club members to order currency through
their local AAA branches or website based on the club’s preference.
There are more than 50 million members across all AAA clubs.

California leading to a total of 35 company-owned branches. CXI’s
consumer e-commerce website, OnlineFX Home Delivery, expanded
services from 22 states to 31 states across the US. OnlineFX also
provides popular click-and-collect currency reservations for branch
pick-up. This omnichannel approach has been critical to meeting US
international travelers wherever and whenever they want to order
currency. Additionally, this allows for enhanced client engagement, a
greater understanding of our clients and their foreign currency needs,
and client loyalty gains.

Our Focus Ahead
In 2022, our scalable business model, long-term strategic initiatives,
and essential investments will allow us to expand CXI’s and EBC’s
products and services, offer proactive client-first support, and continue
to drive diversified growth. While the improvement of international
travel will strongly impact profitability, widening CXI’s banknotes
market share across consumers, wholesale, and
international
channels means more volumes are exchanged within our network.
CXI is positioned for record exchange volumes and revenue, even
with reduced travel. The scale of CXI’s banknote network is second to
no other non-bank entity in North America.

The transformation of CXI and EBC’s payments businesses has been
impressive. Client-centric solutions that are made simple, secure,
and convenient by technology will continue to be the winning recipe
for years ahead. CXI’s development of its proprietary web-based
software CXIFX and its API connections to third-party systems build
sticky, long-term clients that know we are consistently investing in
solutions to improve their processes.

We will continue to support our communities, promote inclusion, and
work with our stakeholders to focus on building ESG capabilities as
we believe that going forward sustainable growth should positively
impact our clients, employees, and community.

I am truly proud of our employees’ resilience as they’ve adapted to
meet the challenges the pandemic engendered, all with care and
dedication to their colleagues and our clients. Our Board of Directors
and Executive Team are confident in our plan and the team’s ability
to execute it. Thank you to our loyal clients, 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.

In 2021, CXI’s direct-to-consumer operations closed one branch
in Fort Lauderdale, Florida and added one branch in Costa Mesa,

Randolph W. Pinna
President and Chief Executive Officer

Currency Exchange International: Annual Report 2021

3
Mission and Purpose

For more than 10 years, CXI has been driven by our commitment to be Customer-First. We are a diverse community

of experts who channel a shared passion and collaborative approach into the excellence of Customer-First service.

Inclusion is what we celebrate, integrity is our source of pride, and innovation is how we transform the future.

Strategic Priorities

Expand FX with US Banks
and Credit Unions

Be the best solution for all the foreign
exchange needs of banks and credit
unions. One Provider. One Platform.

Global Expansion of
Wholesale Banknotes

Be the foreign banknote provider of
choice for leading banks around the
world.

Build Scale in Corporate
International Payments

Make foreign exchange easy for
businesses with personalized
service backed by the expertise
and security of Exchange Bank
of Canada. Canada’s Foreign
Exchange BankTM.

Our Mission

Make foreign exchange simple and
secure by combining technology, industry
expertise, and highly personal service.

Our Vision

Be the preferred financial services
provider of foreign exchange solutions
tailored to client needs.

Strengthen and Optimize
Corporate Infrastructure

Enable the business to scale to
support growth and manage risk.

Our values are our commitments

Maximize Direct-to-
Consumer Offering

Deliver convenient, cost-effective
ways to exchange foreign
currency for US residents and
international travelers visiting the
US.

Customer First

Collaborative

Innovative

Integrity

Passionate

Earn the right to be
our customer’s first
choice.

Win as a team.

Find new methods to
deliver change and
advance technology
to the industry.

Hold ourselves to the
highest standard to
build trust.

Driven to be the best
in class.

Currency Exchange International: Annual Report 2021

4Strategic Priorities

Simplifying FX with Core Integrations

In 2021, CXI developed and launched new integrations for its proprietary web-based FX
software CXIFX. CXIFX utilizes integrations including APIs, imports and exports, and file
exchanges that simplify transactions, enhance security, and support compliance with
federal and state regulations. CXIFX’s integrations with common core banking systems
and other third-party platforms streamline client processes for an easy-to-use, powerful
foreign currency exchange and international payments software environment.

With more integrations each year, CXI has expanded the number of financial institutions
that rely on it for multiple foreign exchange services supporting its goal to be the client’s
“One Provider. One Platform”. As a result, in the US, CXI increased its payments revenue
from financial institutions by 40%.

Client-First Values

CXI’s values are embodied by our employees daily and with each client interaction. CXI’s
client-first experience is cultivated within the company and measured through annual
client surveys and account reviews. In 2021, CXI is proud to share that its wholesale
clients rated the company a Net Promoter Score of 83 and a client satisfaction score of
95%. A Net Promoter Score of 80 or more for the financial services industry is in the 90th
percentile and considered “world-class”.

Expand FX with US Banks
and Credit Unions

Core Banking Integrations

Net Promoter Score

Personalized Services that Scale

Build Scale in Corporate
International Payments

EBC has built a strong foundation to scale its corporate international payments business
by providing client-centric services through market knowledge and proactive, personal
relationships. Investing in its technology, processes, and people in the coming years
has EBC ready to attain profitable growth. The investment in technology and process
improvements have been critical and necessary in the bank to efficiently process the
increasing volumes of trades and payments this year and in future years.

As EBC gains more clients, small and medium enterprises are gaining awareness that they
have alternatives to Canada’s big banks. EBC provides competitive pricing, specialization,
and personal service that is tailored to their business needs. In 2021, EBC traded with
more than 600 clients including 399 first-time trades with new clients.

Payment Volumes on the Rise

Volumes for international payments through cross-border network provider SWIFT were
10% higher in December 2020 compared to the prior year according to the 2021 McKinsey
Global Payments Report. An increase in international payments volume is also expected to
be reported for 2021. EBC is positioned to further diversify its revenue streams through its
corporate payments business insulating the company from the international travel market
and enabling a quicker path to profitability with significant long-term growth potential.

Currency Exchange International: Annual Report 2021

399

New Payment Clients

600+

Active Payment Clients

5
Strategic Priorities

Global Expansion of
Wholesale Banknotes

Months of FBICS Participation

10+

Countries

Federal Reserve’s Foreign Bank International Cash Services (FBICS)

EBC was approved to be a participant in the FBICS program in the fourth quarter of its
fiscal year. Even with less than three months of trading activity, the impact was notable.
Immediately, established clients were able to benefit from EBC’s direct relationship with
the Federal Reserve for bulk US dollar shipments. Additionally, new clients have been
onboarded specifically for EBC’s program, while new prospects are in discussion phases.
The full-year impact of being a direct source for bulk US dollars will be realized in 2022.

A Global Landscape

CXI and EBC can provide banks in select countries a premium provider with strong Anti-
Money Laundering (AML) compliance practices, supported by global logistics experience,
relationships with currency suppliers around the world, and exceptional service. Many
financial institutions around the globe are finding fewer options when looking to outsource
the management of foreign banknotes. Over the past few years, traditional wholesale
banknote providers are either not investing in, or are exiting, the business.

CXI works with banks in regions such as the Caribbean, Mexico, and South America
that have FX and US dollar needs and want to deal with a provider that has strong AML
practices.

Maximize Direct-to-
Consumer Offering

New Airport Branches

CXI Airports

Prior to fiscal year 2021, CXI had no visible presence in airports. This changed
dramatically with the expansion of the CXI’s agent program. CXI Airports are wholesale
relationships using CXI licenses, technology, compliance and client support, and branding
at international travel gateways. CXI Airports using the company’s branding includes
nine branches at five airports including New York JFK International Airport, Charlotte
International Airport, Portland International Airport, Newark International Airport, and
Minneapolis-St. Paul International Airport. More than 100 million travelers visited these
airports in 2019 providing a new client base and massive new exposure for CXI.

OnlineFX Brings Omni-Channel Client Engagement

OnlineFX States Added

OnlineFX is CXI’s e-commerce platform enabling home delivery and click-and-collect in-
branch pickup orders. The platform has been quickly adopted by CXI’s existing consumer
base becoming its #1 reservation source and has introduced the company to new
consumers in communities beyond its brick-and-mortar locations. At the end of the 2021
fiscal year, CXI offered OnlineFX services in 31 states and has continued to expand the
number of states it can service in 2022.

In addition, CXI provides a white-labeled version of OnlineFX for wholesale clients. More
than 70 wholesale clients have adopted the platform to make ordering foreign currency
easier for their consumer clients.

Currency Exchange International: Annual Report 2021

6Environmental, Social, and Governance

For 2022, CXI has adopted a Board-approved Environmental, Social,

and Governance (ESG) Vision:

CXI is committed to an ESG Vision that integrates the Corporation’s

core cultural values with stakeholder collaboration to actively drive

responsible growth. It is our commitment to a higher purpose - a way

of life, a means to do good.

ESG

Commerce with a Conscience
Our ESG Vision is embraced by four key pillars:

People

Environment

Partners

Community

We equitably support the
health and wellness of our
employees by enabling
a culture that promotes
diversity, inclusion,
collaboration, and
integrity.

We actively endorse the
global transition to a
low-carbon economy by
overlaying climate change
considerations into our
governance of decision-
making, operations,
strategy, partnerships,
and financial products and
services.

We are committed to
managing ESG risk and
innovating opportunities
to provide our clients,
shareholders, partners,
and regulators with our
commitment to excellence
in client service,
accountability, and ethics.

We are passionate about
enriching the quality of
life in the communities
we serve by holding
ourselves to the highest
standards to build trust,
accountability, and
community outreach.

ESG Strategic Framework

In 2022, CXI will work toward establishing business goals which support the ESG vision and pillars. This involves building
a framework essential to protecting the rights and interests of our employees, shareholders, partners, and community.
In January 2022, the Board approved an ESG Strategic Framework outlining the timeline for integrating ESG initiatives,
delegation of authority and decision making, overarching key impacts, risks, opportunities, and strengths as per the four
pillars. The corporation will launch an inventory of current environmental, social and /or governance practices, and plans
for the implementation of ESG-forward solutions.

Currency Exchange International: Annual Report 2021

7
CURRENCY EXCHANGE INTERNATIONAL, CORP.

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE THREE-MONTHS AND YEAR-
ENDED OCTOBER 31, 2021 AND 2020

Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2021 and 2020

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 subsidiaries (together, the “Company,” or
"CXI") for the three-months and year-ended October 31, 2021, 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 26, 2022 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 three-
months and year-ended October 31, 2021 and 2020, 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, 2021. 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 audited 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”).

9Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2021 and 2020

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 23. 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.

10Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2021 and 2020

Overview

CXI is a publicly traded company (T S X: C X I ; O T CB B : C UR N) , and is a reporting issuer in the
provinces of British Columbia, Alberta, and Ontario. It specializes 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
ongoing system development and enhancement is a core activity of the Company. CXI had 267 employees
at October 31, 2021, of which 62 were part-time.

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 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.

Background

The Company has the following sources of revenues which are reported as commissions and fees:

Commission revenue comprises 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 open foreign exchange positions to market value, together 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 comprises the following:

ii.

Fees generated at the Company’s branch locations and certain inventory on consignment locations
from foreign currency (bank note) exchange, traveler’s cheques, currency price protection and
fees collected on payroll cheque cashing; and

Fees collected on foreign-denominated wire transfers, drafts, and cheque clearing transactions.

11Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2021 and 2020

Overview (continued)

The following are some of the characteristics of the Company’s revenue streams:

The Company operates four main vaults (one of which is temporarily closed), 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:

ii.

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;

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;

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, 2021 the Company had inventory on consignment in 779 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.

The Company operates 35 branch locations that are located in typically high tourist traffic areas across the
United States, staffed by CXI employees. 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. 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.

12Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2021 and 2020

Overview (continued)

In the years prior to the COVID-19 pandemic, the Company had steadily grown its branch network to
46 locations, in addition to the number of wholesale relationships. In response to the significant decline
in travel and tourism as a result of measures taken to control the spread of the COVID-19 virus, the
Company permanently closed 12 branch locations, the last of which on December 31, 2020. The
Company capitalized on an opportunity to secure a new location in a strategic market, opening a branch
in Costa Mesa, CA on November 9, 2020. Below is a summary of the Company’s wholesale company
relationships and transacting locations as well as a listing of its 35 branch locations at October 31, 2021.

Store

City

State

Start
date

Store

City

State

Alderwood Mall

Lynnwood

2019 Mechanics Bank - Berkeley

Berkeley

Apple Bank - Avenue of Americas

New York

Apple Bank - Grand Central Station

New York

Apple Bank - Penn Station

Apple Bank - Upper East Side

Apple Bank - Union Square

Arundel Mills Mall

Aventura Mall

Cherry Creek

Citadel Outlets

Copley Place Mall

Dadeland Mall

Dolphin Mall

Florida Mall Booth #1

Garden State Plaza

International Market Place

MacArthur Mall

New York

Hanover

Aventura

Denver

Los Angeles

Boston

Miami

Orlando

Paramus

Honolulu

Norfolk

Mainplace at Santa Ana

Santa Ana

2011 Mechanics Bank - San Francisco

San Francisco

2011 Mission Valley

2013 Montgomery at Bethesda

2014 North County

2014 Ontario Mills Mall

2012 Pearl Ridge

2008 Potomac Mills Mall

2014 San Francisco City Center

2014 San Jose Great Mall

2009 Santa Monica Place

2009 Sawgrass Mills Mall Booth #1

2009 Shops at Northbridge

2007 South Center

2015 South Coast Plaza

2016 The Orlando Eye

San Diego

Bethesda

Escondido

Ontario

Aiea

Woodbridge

San Francisco

San Jose

Santa Monica

Sunrise

Chicago

Tukwila

Costa Mesa

Orlando

2009 Tyson's Corner Center

Tyson’s Corner VA

2013

Start
date

2007

2008

2015

2013

2017

2007

2019

2007

2011

2012

2007

2013

2012

2020

2015

2014

Company owned branch locations
Wholesale company relationships*
Number of transacting locations*
*These numbers show the companies and locations that transacted within the period specified.

46
1,878
21,595

FY 2016
38
927
11,975

FY 2017
41
954
14,587

FY 2018
43
1,267
17,017

FY 2019

FY 2020
35
1,667
14,787

FY 2021
35
2,481
15,202

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. The counterparty risk is
generally low, 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, with one exception (see note 24 to the consolidated financial statements).

13Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2021 and 2020

Overview (continued)

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 subsequent date.

SELECTED FINANCIAL DATA

The below chart summarizes the performance of the Company over the last eight fiscal quarters.

Three-
months
ending

10/31/2021
7/31/2021
4/30/2021
1/31/2021
10/31/2020
7/31/2020
4/30/2020
1/31/2020

Revenue
$

9,967,107
8,633,413
6,573,570
5,089,428
4,935,917
3,879,873
6,323,344
9,874,289

Net operating
income (loss)
$
776,345
1,047,889
(558,010)
(1,315,153)
(1,852,195)
(1,993,117)
(2,316,356)
1,162,930

Net income
(loss)
$

1,634,364
(120,246)
(924,698)
(1,721,104)
(3,465,632)
(2,274,719)
(2,942,948)
159,274

Total assets
$

Total equity
$

102,525,187
92,962,398
79,856,635
82,354,069
85,758,517
96,105,961
99,263,039
108,319,219

58,015,799
56,319,701
56,520,124
57,039,436
58,229,735
61,462,798
62,965,874
66,323,630

Earnings
(loss) per
share
(diluted)
$

0.25
(0.02)
(0.14)
(0.27)
(0.54)
(0.35)
(0.43)
0.02

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
through September and lower revenues from October through February. This coincides with peak tourism
seasons in North America when there are generally more travelers entering and leaving the United States
and Canada.

CXI has a strong capital base and liquidity position to continue to meet its financial obligations.
Management continues to execute against a strategic plan that is focused on a return to sustained
profitability through increased penetration in a consolidating market, continued acquisition of corporate
payment clients, and expansion in the international marketplace. CXI is well-positioned to support additional
growth initiatives, including prospective merger and acquisition opportunities.

Total assets
Total long term financial liabilities
Total equity

October 31, 2021
102,525,187
3,679,493
58,015,799

October 31, 2020
85,758,517
4,065,164
58,229,735

On March 11, 2020 the World Health Organization officially declared COVID-19, the disease caused by a
novel coronavirus (“COVID-19”), a pandemic. The spread of COVID-19 has severely impacted many local
economies around the globe. In many countries, including Canada and the United States of America,
businesses have been forced to cease or limit operations for long or indefinite periods of time. Measures
have been taken to contain the spread of the virus, including travel bans, quarantines, social distancing,
and closures of nonessential services. These measures have triggered significant disruptions to business
worldwide, resulting in reduced economic activity. Governments and central banks have responded with
monetary and fiscal interventions to stabilize economic conditions. In response to measures implemented
to curtail the effects of COVID-19, the Company permanently closed 12 of its retail locations, and one vault
on a temporary basis. In addition, the Company restructured its operations, including a consolidation of
management positions, resulting in a 26% reduction in employee headcount, from a peak of 361 at March

14Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2021 and 2020

Overview (continued)

11, 2020 to 262 at October 31, 2021. Many of the Company’s commercial customers have been impacted
by the pandemic, resulting in significantly reduced demand for banknotes. While the Company continues
to operate, the threat posed by COVID-19 variants remain a threat that make it impossible to reliably
estimate the duration and severity of these consequences as well as their impact on the financial position
and results of future periods. Some nations maintain advisories against travel to the United States and
Canada as a result of recent increases in COVID-19 cases. The Company continues to pursue a strategy
of diversification to reduce reliance on domestic consumer driven banknote trade. This has included
growing its international payments segment as well as increasing its presence in the global trade of
banknotes with financial institutions in other countries.

Selected Financial Results for the three-months ended October 31, 2021 and 2020

The Company generated revenue for the three-month period ended October 31, 2021 of $9,967,107, a
102% increase over the same period in the prior year. It also represents a 13% decline relative to the three-
month period ending October 31, 2019, the last comparative period prior to the declaration of the COVID-
19 pandemic of $11,967,079. The increase from the prior year reflects not only an improvement in the
demand for foreign currencies as international travel recovers, but also the acquisition of new clients in both
the banknote and payments segment. The Company recorded net operating income of $776,345 in the
three-months ended October 31, 2021 versus a net operating loss of $1,842,199 in the same period in the
prior year. This represents the second and successive quarter in which the Company has generated
positive operating leverage since the three-month period ended January 31, 2020, the last quarter prior to
the commencement of the COVID-19 pandemic,

The Company continued its progression along its three-year strategic plan in the three-month period ended
October 31, 2021, that included the following highlights:

ii.

iii.

Continued its growth in the international payments segment in Canada, initiating trades with 53
new corporate clients that had not previously transacted with the Company (399 in the year-ended
October 31, 2021), enabling it to almost triple its payment revenue over the same quarter in the
prior year;
Increased its penetration of the financial institution sector in the United States with the addition of
204 new clients, representing 256 locations (676 and 1,624, respectively, for the year-ended
October 31, 2021);
Exchange Bank of Canada began trading under the Foreign Bank International Cash Services
(FBICS) program with the Federal Reserve Bank of New York (FRBNY) that was publicly
announced on August 16, 2021.

Three-months ended
October 31, 2021
$

Three-months ended
October 31, 2020
$

Revenue
Operating expenses
Net Operating Income/(loss)
Other income
Government Grants
Other expenses
EBITDA*
Net loss
Basic (loss) earnings per share
Diluted (loss)earnings per share
*Earnings 8efore interest, taxes. Depreciation and amortization

9,967,107
9,190,762
776,345
6,710
3,498,229
(13,177)
4,268,107
1,634,364
0.25
0.25

4,935,917
6,778,116
(1,842,199)
(12,648)
343,818
(680,261)
(1,511,029)
(3,296,835)
(0.51)
(0.51)

15Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2021 and 2020

Results of operations – three-month periods ended October 31, 2021 and 2020 (continued)

Revenue for the three-month period ended October 31, 2021 increased by 93% over the same period
in the prior year. Payments revenue more than doubled in the three-months ending October 31, 2021,
increasing from $1,074,766 in the same period in 2021 to $2,074,766. This demonstrates the Company’s
success in focusing on the growth of payments through key client relationships and addition of key staff
to drive the business since the acquisition made on July 29, 2020. The revenue for banknotes increased
by 104% from $3,861,151 in October 31, 2020 to $7,888,888 during the same period in 2021. The
increase is a result of several factors. Firstly, consumer demand for foreign currencies has improved
as restrictions on international travel have eased. Secondly, the Company’s success at increasing its
market share, as indicated by the increase in new clients. Thirdly, the Company has increased its
penetration in the global banknote trade. The increase over the prior year period has been higher at
Exchange Bank of Canada, reflecting its success in growing both the corporate international payments
segment as well as international banknote trade, aided by the launch of the FBICS program with the
Federal Reserve Bank of New York during the three-month period ended October 31, 2021.

The diversification strategy has been a significant factor in the Company’s resilience in the face of the
ongoing pandemic. It is anticipated that it may take several years for consumer demand for foreign
banknotes to fully recover as it is dependent on a return to pre-pandemic mobility patterns. Until then,
demand will likely fluctuate based on the risk of transmission from COVID-19 variants, the severity of
symptoms associated with them and travel related restrictions in various geographic markets.

A breakdown of revenue by geographic location is presented below:

Three-months ended
October 31, 2021

Three-months ended
October 31, 2020

Change

7,755,266

2,211,841

9,967,107

7,888,888

2,078,219

9,967,107

Revenues by Geography

4,034,114 3,721,152

901,803 1,310,038

4,935,917 5,031,190

Revenues by Product Line

3,861,151 4,027,737

1,074,766 1,003,453

4,935,917 5,031,190

92%

145%

102%

104%

93%

102%

United States

Canada

Total

Banknotes

Payments

Total

16Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2021 and 2020

Results of operations – three-month periods ended October 31, 2021 and 2020 (continued)

During the three-month period ended October 31, 2021, operating expenses increased 36% to
$9,190,762 compared to $6,778,116 for the three-month period ended October 31, 2020. The major
components of operating expenses are presented in the table below, with commentary for significant
variances.

Salaries and benefits
Rent
Legal and professional
Postage and shipping
Stock based compensation
Travel and entertainment
Bank service charges
Information technology
Losses and shortages
Insurance
Foreign exchange (gains) losses
Other general and administrative
Operating expenses

Three-months ended
October 31, 2021
$

Three-months
ended
October 31, 2020
$

4,917,533
271,213
1,030,361
1,148,430
240,791
66,097
418,937
422,165
28,590
208,718
213,624
224,303
9,190,762

3,776,658
305,229
913,018
338,745
175,339
48,855
325,410
368,317
(6,617)
145,256
131,201
256,705
6,778,116

Change
$

1,140,875
(34,015)
117,343
809,685
65,452
17,242
93,527
53,849
35,208
63,462
82,422
(32,402)
2,412,646

Change
%

30%
-11%
13%
239%
37%
35%
29%
15%
-532%
44%
63%
-13%
36%

Salaries and benefits increased 30% to $4,917,533 from $3,776,658. $545,993 of the increase relates
to an increase in incentive compensation, primarily driven by the Company’s financial performance.
Higher commission expense was the other large contributor to the variance by $397,987. While the net
employment base did not change significantly, many of the positions that were eliminated in the
restructuring actions implemented in 2020 have been offset by new roles in support of the strategic
initiatives.

Rent expense decreased 11% to $271,213 from $305,229 primarily due to the permanent closure of the
12 retail locations in addition to certain office space in Orlando and Toronto that was deemed surplus
at October 31, 2020. The Company entered into an agreement to sublet its surplus office space in
Toronto that commenced on April 1, 2021.

Legal and professional fees increased 13% to $1,030,361 from $913,018. The increase is primarily
attributable to higher costs related to tax and audit services, as well as recruiting fees for key roles.

Postage and shipping increased 229% to $1,148,430 from $338,745 and is primarily a result of
increased volumes associated with the banknotes segment. The Company also recorded $161,797 in
expenses in the three-months ending October 31, 2021 on the settlement of a matter with one of its
international counterparties that related to shipping costs for prior periods.

Stock-based compensation increased 37% to $240,791 from $175,339 due primarily to the
implementation of Restricted Stock Units (RSU) and Deferred Stock Units (DSU) as a component of the
Long-Term Incentive Plan (“LTIP”) on November 1, 2020. The RSUs and DSUs are based on the fair
value of the Company’s common stock and subject to variable accounting treatment. The Company
recorded expenses of $222,565 related to RSU and DSU awards in the three-months ended October
31, 2021 as part of stock-based compensation.

17Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2021 and 2020

Results of operations – three-month periods ended October 31, 2021 and 2020 (continued)

Travel and entertainment expenses increased 35% to $66,097 from $48,855 as certain employees of
the Company began to travel as conferences, trade shows and intra-company meetings returned as the
pandemic restrictions eased. The Company is also subsidizing the cost for certain employees to travel
to work by car who, prior to the COVID-19 pandemic, used public transit. The affected employees are
primarily supporting vault operations and cannot carry out their job functions from home.

Bank service charges increased 29% to $418,937 from $325,410. The increase is related to increased
volumes for payments activity. These charges are offset partially by fees collected on payments, which
are captured in revenue.

Information technology expenses increased 15% to $422,165 from $368.317. The increase is mainly
due to variable costs associated with the increased payments volume as the Company relies on third-
party technology to deliver those products.

Losses and shortages increased to $28,590 from a gain $6,617. These costs primarily represent losses
incurred on low-value shipments that disappear while in transit.

Insurance expense increased 44% to $208,718 from $145,256, which is related to general rate
increases on insurance premiums, most notably the Directors & Officers liability coverage as a result of
the increased risk profile associated with the COVID-19 pandemic.

Foreign exchange (gains)/losses increased from a $131,201 loss in the three-month period ended
October 31, 2020 to a $213,624 loss for the same period in 2021. This is mainly due to the change in
value of foreign denominated balances between the time of recognition and settlement or translation at
period end rates. Other general and administrative expenses decreased 13% to $224,303 from
$256,705 This decrease
was mainly driven by the reduction in the retail footprint and the migration to remote work as a result of
the COVID-19 pandemic.

The ratio of operating expenses to total revenue for the three-month period ended October 31, 2021
was 92% compared to 138% for the three-month period ended October 31, 2020, reflecting the growth
in revenue outpacing the growth in expenses.

Other income and expenses are comprised of the following:

Three months ended
October 31, 2021
$

Three months ended
October 31, 2020
$

Other income
Government grants
Provision for loss
Gain on sale of assets
Other expenses
Interest expense
Interest on lease liabilities
Depreciation and amortization
Depreciation of right-of-use-assets
Restructuring and Impairment charges
Income tax (expense) benefit
Total other income (expense)

156
3,498,229
-
6,554
(13,177)
(267,330)
(41,765)
(402,213)
(426,004)
-
(1,496,431)
858,019

1,390
343,818
(680,261)
390
(14,428)
(45,508)
(62,147)
(479,780)
(475,495)
(1,072,472)
871,055
(1,613,438)

18
Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2021 and 2020

Results of operations – three-month periods ended October 31, 2021 and 2020 (continued)

The Company recognized government grant income of $3,498,229 in the three-month period ended
October 31, 2021, an increase from $343,818 recognized in the comparative period in the prior year. The
significant increase relates to $3,400,190 recognized for a wage subsidy program in the United States. On
March 27, 2020, Congress passed legislation known as the Employee Retention Credit (ERC) which was
section 2031 of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). On December 21,
2020, Congress passed an additional round of stimulus which enhanced provisions related to the ERC. The
ERC provides a subsidy towards wages and healthcare costs incurred for U.S. employees retained by
eligible companies that meet certain criteria relative to a decline in revenue following the declaration of the
COVID-19 pandemic, referred to as a gross receipts test. The Company met the eligibility criteria including
the gross receipts test beginning with the period commencing April 1, 2020 and ending on September 30,
2021. Virtually all of the $3,400,190 recognized related to subsidies for eligible wages incurred in the year
ending October 31, 2021, all of which was a receivable as of the reporting date.

The Company also recorded $98,039 in grant income related to Exchange Bank of Canada, which
continued to qualify for support from two federal programs. The Canada Emergency Wage Subsidy
(“CEWS”) program became effective for periods beginning on March 15, 2020 to support organizations that
have been significantly impacted by the COVID-19 pandemic. Under this program, EBC received a subsidy
of up to 75% of qualified employees’ wages in each qualifying four-week period that it met certain tests for
revenue reduction. The Canada Emergency Rent Subsidy (“CERS”) program became effective for periods
beginning on September 27, 2020. All of the amounts recognized in the three-month period ended October
31, 2020 were in relation to these two programs.

In the three-month period ended October 31, 2020, the Company recorded a loss of $680,261 related to
a customer that was declared bankrupt. The Company had previously recorded an initial loss of
$1,012,946 on April 30, 2020. The subsequent provision on October 31, 2020 was recorded pursuant
to a claim made by the Trustee in Bankruptcy to recover amounts it alleged the Company received from
the customer in preference, and thereby in contravention of the Bankruptcy and Insolvency Act
(Canada). On April 6, 2021, the Company reached a settlement with the Trustee in Bankruptcy whereby
the Company paid $825,000 of $1,000,000 in funds it was alleged to have received in preference. As
part of the settlement, the Trustee accepted claims totaling $1,825,000 by the Company against the
bankrupt customer. The Company has not recognized any benefit associated with a future recovery
that is anticipated to be in the range of 6% to 20% of the total claim when the bankrupt’s assets are
distributed. The Company has no additional liability, contingent or otherwise, related to this bankruptcy.

Interest expense increased to $267,330 from $45,508. This is related to a higher interest rate associated
with a new credit facility with a private lender that Exchange Bank of Canada secured in April 2021.
The facility bears interest at 6% per annum, which is used to fund short-term working capital needs for
international banknote volumes. As at October 31, 2021, the Company had $4,037,468 in outstanding
borrowing, with $27,577,519 available. This compares to $3,305,605 outstanding on October 31, 2020
and $22,701,303 available.

Interest on lease liabilities calculated according to IFRS 16, decreased to $41,765 from $62,147 as
a result of the 12 retail branches closed and surplus office space that was impaired in the year ended
October 31, 2020.

Depreciation and amortization decreased to $402,213 from $479,780, primarily due to assets that
became fully depreciated during the year.

Depreciation on right-of-use assets decreased to $426,004 from $475,495 due to the leases that were
impaired or non-renewed related to the retail closures and surplus office space at October 31, 2020,
which also led to a corresponding lower balance of Right of Use assets.

19Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2021 and 2020

Results of operations – three-month periods ended October 31, 2021 and 2020 (continued)

The company recorded income tax expense of $1,496,431 in the three-month period ended October 31,
2021in comparison to a benefit of $871,055 in the prior period. This is related to the improvement in
taxable income in the United States as the Company did not recognize a future income tax benefit on
losses at Exchange Bank of Canada.

Selected Financial Results for the year -ended October 31, 2021 and 2020

The Company generated revenue for the year-ended October 31, 2021 of $30,263,518, a 21% increase
over the year-ended October 31, 2020. Revenue increased progressively throughout the year in part due
to a relaxation of restrictions on international travel that enabled a partial recovery in demand for foreign
currencies in the domestic North American market. Revenue growth was also driven by successful
execution in further penetration of the financial institution market in the U.S. and growth in the corporate
payments segment following the acquisition of a Quebec-based payments business on July 28, 2020. The
operating expenses as a percentage of revenue has improved, resulting in a marginal net operating loss of
$48,929 in the year ended October 31, 2021 versus $3,985,791 in the prior year. As revenue growth
outpaced the growth in operating expenses over the course of the year, the Company returned to positive
operating leverage in the third and fourth quarters. The Company recognized $4,174,220 in other income
associated with government grant assistance, an increase from $761,533 in the prior year. The assistance
primarily relates to wage subsidies that combined with the improved operating performance, contributed to
a reduction in the net loss from $8,524,030 in the year ended October 31, 2020 to $1,131,684 in the year
ended October 31, 2021.

Since October 31, 2020, the Company has added 1220 new customer relationships comprising 2,421
locations, of which 708 relationships representing 1,837 locations were added in the United States and
512 relationships representing 584 locations were added in Canada. During the year-ended October 31,
2021, the number of transactions between the Company and its customers decreased 14% to 518,321
from 605,611 for the previous year, mainly driven by an overall reduction in banknote transactions.
However, by line of business, payments revenue increased 117% or $3,992,498 over the prior year, and
banknotes increased by 6% or $1,257,597. Banknote revenue increased on high volume wholesale
transactions that more than offset the decline in low volume transactions in the direct-to-consumer channel.

Revenue
Operating expenses
Net Operating Income/(loss)
Other income
Government Grants
Other expenses
EBITDA*
Net loss
Basic (loss) earnings per share
Diluted (loss)earnings per share
*Earnings befpre interest, taxes. Depreciation and amortization

Year ended
October 31, 2021
$
30,263,518
30,312,447
(48,929)
33,557
4,174,220
(242,737)
3,916,111
(1,131,684)
(0.18)
(0.18)

Year ended
October 31, 2020
$
25,013,423
28,999,214
(3,985,791)
(3,265)
761,533
(1,693,207)
(4,920,730)
(8,524,030)
(1.33)
(1.33)

20Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2021 and 2020

Results of operations – year-ended October 31, 2021 and 2020 (continued)

A breakdown of revenues by geographic location is presented below:

Year ended
Year ended
October 31, 2020
October 31, 2021
$
$
Revenues by Geography
23,100,695
7,162,824
30,263,518
Revenues by Product Line
22,853,387
7,410,131
30,263,518

21,595,790
3,417,633
25,013,423

19,601,984
5,411,439
25,013,423

Change

3,498,711
1,751,385
5,250,096

1,257,597
3,992,498
5,250,096

18%
32%
21%

6%
117%
21%

United States
Canada
Total

Banknotes
Payments
Total

Revenue for the year-ended October 31, 2021 increased by 21% over the same period in the prior year,
reflecting growth in both lines of business. Banknote revenue increased by 117%, due in part to the
partial closure of most of the Company’s stores as well as some of its clients’ locations during the year-
ended October 31, 2020 due to the severe restrictions imposed early in the COVID-19 pandemic. In
addition to an improvement in consumer demand as international travel continues its gradual recovery
in both the United States and Canada, the Company has benefitted from the acquisition of 1,119 new
clients since October 31, 2020. Relative to the year- ended October 31, 2020, the banknote revenue
represents a 6% growth, which is consistent across both the direct-to-consumer and wholesale
channels. While the Company has 24% fewer stores in 2021 than it did in 2020, it has benefitted from
competitors exiting the space, pricing actions designed to extract higher margins, strong demand for
investment currencies and growth from its online platform that was launched earlier this year. In the
wholesale channel, demand for travel-related currencies has increased 55% from the prior year, partially
due to the addition of 676 new clients acquired since October 31, 2020 as the Company continues to
increase its market penetration in the banknote segment. The payments segment experienced nearly
three-fold growth of 117% compared to the prior year period, due to the addition of new clients, led by
the acquisition that was completed on July 29, 2020 and the subsequent expansion of its corporate
payments’ sales team.

By geography, the Canadian segment, represented by Exchange Bank of Canada, increased its revenue
by 32% over the same period in the prior year. This was primarily due to the growth in the payments
segment for the reasons just mentioned, as consumer demand for banknotes experienced a delay in
recovery as onerous travel restrictions imposed by the Canadian government only began to relax in July
2021 when vaccinated Canadian travelers were permitted to return to Canada without being subject to
a 14-day mandatory quarantine. This has led to an increase in demand for foreign currencies exiting
the quarter. Banknote revenue for the Canadian segment does not include the sale of currencies to its
parent, CXI, that are eliminated on consolidation. It has become a significant source of certain
currencies that the Bank is able to procure for CXI at competitive rates due to its relationships with other
financial institutions. The United States segment experienced revenue growth of 104% relative to the
year-ended October 31, 2020. Most of the increase was attributable to the banknote segment, as
volume in the comparative period was restricted by the closures of its stores and travel restrictions.
What is important is that the growth in banknotes was due to travel currencies rather than exotic
currencies, which declined by 3% over the prior year. In the U.S., the payments segment has been
progressively growing with the continued addition of new clients in the financial institution customer
segment.

During the year-ended October 31, 2021, operating expenses increased 4.5% to $30,312,447 compared
to $28,999.214 for the year-ended October 31, 2020. The major components of operating expenses are
presented in the table on the following table, with commentary for significant variances.

21Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2021 and 2020

Results of operations – year- ended October 31, 2021 and 2020 (continued)

Year ended
October 31, 2021
$
17,691,157
999,821
2,757,692
2,731,708
978,508
219,305
1,485,758
1,450,330
82,713
744,764
364,230
806,461
30,312,447

Year ended
October 31, 2020
$
16,866,772
1,152,141
2,824,561
2,373,942
1,005,903
386,739
1,234,725
1,330,994
276,556
497,701
(23,913)
1,073,093
28,999,214

Change
$

Change
%

824,385
(152,320)
(66,869)
357,765
(27,395)
(167,434)
251,033
119,336
(193,843)
247,063
388,142
(266,632)
1,313,231

5%
-13%
-2%
15%
-3%
-43%
20%
9%
-70%
50%
-1623%
-25%
5%

Salaries and benefits increased 5% to $17,691,157 from $16,866,772. Commission expense in 2021
was $1,212,529 higher than in 2020, associated with higher revenue in both payments and banknotes.
The Company also incurred $413,102 in higher incentive compensation expense, primarily due to the
improved financial performance. The Company has realized savings related to positions eliminated as
part of the restructuring actions taken in 2020, though these have been partially offset from the addition
of new roles in support of its strategic growth initiatives.

Rent expense decreased 13% to $999,821 from $1,152,141 primarily due to locations that were
permanently closed subsequent to July 31, 2020 as well as certain office space in Orlando and Toronto
that was rendered surplus and impaired at October 31, 2020. In the year-ended October 31, 2020, the
Company recognized $218,714 in rent abatements related to stores that were required to close during
the first phase of the COVID-19 pandemic.

Legal and professional fees decreased 2% to $2,757,692 from $2,824,561. A significant portion of these
fees relate to the external auditors, tax compliance and internal audit function that is outsourced, in
addition to variable business needs around contracts, employment matters and special projects. There
were $166,816 in fees recorded in the year-ended October 31, 2020 that related to the acquisition of
the payments business on July 29, 2020.

Postage and shipping increased 15% to $2,731,708 from $2,373,942 and is primarily a result of
increased revenue associated with the banknotes segment, which increased by 6% over the same
periods. Fees have increased as the mix of revenue has changed, with a higher proportion derived from
international customers.

Stock-based compensation decreased slightly by 3% to $978,508 from $1,005,903. This includes the
expense recognized for the RSU and DSUs awarded, in the amount of $644,635 in the year ended
October 31, 2021. The prior year included $111,231 recognized for the accelerated vesting on options
that were cancelled under a stock option exchange program (see note 18 to the consolidated financial
statements).

Travel and entertainment expenses decreased 43% to $219,305 from $386,739. The decrease is
related to the significant decline in travel during the COVID-19 pandemic.

Bank service charges increased 20% to $1,485,758 from $1,234,725. The increase is due to higher
transaction fees related to the growth in the payments segment.

22Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2021 and 2020

Results of operations – year- ended October 31, 2021 and 2020 (continued)

Information technology expenses increased 9% to $1,450,330 from $1,330,994 due primarily to
increased variable expenses for technology associated with the payments segment as well as additional
investment in cybersecurity tools.

Losses and shortages decreased 70% to $82,713 from $276,556. These amounts fluctuate as they
relate primarily to the disappearance of low-value shipments while in transit.

Insurance expense increased 50% to $744,764 from $497,701, which is primarily related to significant
rate increases imposed on Directors and Officers liability premiums subsequent to the onset of the
COVID-19 pandemic.

Foreign exchange (gains)/losses declined from a $23,913 gain during the year-ended October 31, 2020
to a loss of $364,230 in 2021. This is mainly due to the fluctuation of foreign currency denominated
balances between their recognition and settlement. Management continues to monitor and improve its
hedging activities in order to minimize the impact of revaluations.

Other general and administrative expenses decreased 25% to $806,461 from $1,073,093. Other
expenses comprise licenses and fees, utilities, office supplies, and other general and administrative
expenses. The decrease was mainly due to the reduction in retail locations and office space.

The ratio of operating expenses to total revenue for the year-ended October 31, 2021 was 100%
compared to 116% for the year-ended October 31, 2020, reflecting the growth in revenue outpacing the
growth in expenses.

Other income
Government grants
Revaluation of contingent consideration
Provision for loss
Gain on sale of assets
Other expenses
Interest expense
Interest on lease liabilities
Depreciation and amortization
Depreciation of right-of-use-assets
Restructuring and Impairment charges
Income tax (expense) benefit
Total other income (expense)

Year ended
October 31, 2021
$

Year ended
October 31, 2020
$

27,003
4,174,220
(18,989)
(112,299)
6,554
(14,738)
(555,789)
(208,390)
(1,649,125)
(1,679,126)
(96,711)
(955,365)
(1,082,755)

10,773
761,533
-
(1,693,207)
390
(14,428)
(473,242)
(272,687)
(1,621,121)
(1,982,474)
(1,072,472)
1,818,697
(4,538,238)

The Company recognized government grant income of $4,174,220 in the year ended October 31, 2021 an
increase from $761,533 recognized in the prior year. The significant increase relates to $3,400,190
recognized for a wage subsidy program in the United States. On March 27, 2020, Congress passed
legislation known as the Employee Retention Credit (ERC) which was section 2031 of the Coronavirus Aid,
Relief, and Economic Security Act (“CARES Act”). On December 21, 2020, Congress passed an additional
round of stimulus which enhanced provisions related to the ERC. The ERC provides a subsidy towards
wages and healthcare costs incurred for U.S. employees retained by eligible companies that meet certain
criteria relative to a decline in revenue following the declaration of the COVID-19 pandemic, referred to as
a gross receipts test. The Company met the eligibility criteria including the gross receipts test beginning
with the period commencing April 1, 2020 and ending on September 30, 2021. Virtually all of the $3,400,190
recognized related to subsidies for eligible wages incurred in the year ending October 31, 2021, all of which
was a receivable as of the reporting date.

23Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2021 and 2020

Results of operations – year- ended October 31, 2021 and 2020 (continued)

Exchange Bank of Canada also qualified for support from two federal programs in the year-ended October
31, 2021. The Canada Emergency Wage Subsidy (“CEWS”) program became effective for periods
beginning on March 15, 2020 to support organizations that have been significantly impacted by the COVID-
19 pandemic. Under this program, EBC received a subsidy of up to 75% of qualified employees’ wages in
each qualifying four-week period that it met certain tests for revenue reduction. Through October 31, 2021
EBC qualified for $657,117 in grants under the program, of which $107,472 was a receivable as of the
reporting date. The Canada Emergency Rent Subsidy (“CERS”) program became effective for periods
beginning on September 27, 2020. Under this program, EBC received a subsidy for up to 68% of qualified
rent expenses. Through October 31, 2021 EBC qualified for $120,315 in subsidies, of which $18,692 was
a receivable as of the reporting date.

At April 30, 2021 the Company recorded a third and final loss of $112,299 for amounts owed to it by a
customer that was declared bankrupt in 2020. The Company had previously recorded an initial loss of
$1,012,946 on April 30, 2020 for amounts owed to it by the customer followed by a subsequent provision
on October 31, 2020 of $675,000 pursuant to a claim made by the Trustee in Bankruptcy to recover
amounts it alleged the Company received from the customer in preference, and thereby in contravention
of the Bankruptcy and Insolvency Act. On April 6, 2021, Company reached a settlement with the Trustee
in Bankruptcy whereby the Company paid $825,000 of $1,000,000 in funds it was alleged to have
received in preference. As part of the settlement, the Trustee accepted claims totaling $1,825,000 by
the Company against the bankrupt customer. The Company has not recognized any benefit associated
with a future recovery, anticipated to be in the range of 6% to 20% of the total claim when the bankrupt’s
assets are distributed. The Company has no additional liability, contingent or otherwise, related to this
bankruptcy.

Interest expense increased to $555,789 from $473,242, due to the increase in borrowing from new credit
facilities that bear higher interest rates compared to the prior year. This was primarily driven by the new
facility entered into by Exchange Bank of Canada in April 2021 with a private lender, which accounts for
approximately half of the interest expense recognized in the year-ended October 31, 2021. This facility
provides liquidity for short-term settlement cycles associated with high-volume, international banknote
transactions.

Interest on lease liabilities decreased to $208,390 from $272,687 as a result of the closure of the 12
retail locations and impaired office space as part of the restructuring actions taken in the year- ended
October 31, 2020.

Depreciation and amortization increased to $1,649,125 from $1,621,121 primarily driven by the addition
of $2,580,424 in intangible assets, excluding goodwill, related to the acquisition on July 29, 2020. The
incremental expense associated with the additions is partially offset by the elimination of depreciation
and amortization on assets that have since become fully depreciated.

Depreciation on right-of-use assets decreased to $1,679,126 from $1,982,474 as a result of assets that
were previously impaired that related to the 12 retail locations closed and surplus office space at October
31, 2020.

Income tax expense of $955,365 in the year-ended October 31, 2021 compares to a benefit in the prior
year of $1,818,697. The change is due primarily to the relative improvement in taxable income for CXI
in the United States. The Company did not recognize any future benefit related to losses at Exchange
Bank of Canada.

24Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2021 and 2020

Cash flows

Cash flows from operating activities during the year-ended October 31, 2021 resulted in an inflow of
$7,637,678, compared to an outflow of $938,495 during the year-ended October 31, 2020.

Approximately 34% of the decrease in operating cash flow was due to the impact of the net loss adjusted
for non-cash items, while the remainder was due to changes in working capital, driven primarily by a
significant decline in accounts payable and an increase in accounts receivable. The actual amount of
accounts receivable and accounts payable fluctuates 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 flows from investing activities during the year-ended October 31, 2021 resulted in an outflow of
$391,145 compared to an outflow of $3,354,699 during the year-ended October 31, 2020. The primary
reason for the outflows in the prior year related to the acquisition on July 29, 2020 (see note 5a to the
consolidated financial statements at October 31, 2020). Normalizing for the acquisition, the variance in
cash flow from investing activities would only be $497,711 lower in October 31, 2021 compared to the
same period in 2020.

Cash flows from financing activities during the year-ended October 31, 2021 resulted in an outflow of
1,486,175 compared to inflow of $795,043 during the year-ended October 31, 2020. The Company
decreased usage of its line of credit to $475,431 on October 31, 2021 compared to a balance of
$2,810,641 on October 31, 2020.

Liquidity and capital resources

At October 31, 2021, the Company had working capital of $49,880,879 compared to $47,755,695 for
the same period in 2020.

The Company maintains two 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. with a limit of $20,000,000. The
credit line is secured against the Company’s cash and other assets. The line of credit bears interest at
LIBOR plus 2.0% (at October 31, 2021 – 2.59% (October 31, 2020 – 2.15%)). At October 31, 2021, the
balance outstanding was $Nil (October 31, 2020 - $Nil).

In October of 2020,
the Company’s wholly-owned Canadian subsidiary, EBC, established a
CDN$2,000,000 revolving line of credit with Desjardins Group (“Desjardins”), being secured against
collateral of CDN$2,000,000 posted at October 19, 2020.The line of credit bears interest at CDN prime rate
plus 0.25% (at October 31, 2020 - 2.70%). At October 31, 2021, the balance outstanding was $Nil (October
31, 2020 – $Nil).

On April 7, 2021, EBC entered into a Revolving Credit Facility with a private lender. The facility is
guaranteed by the parent company and is subordinated to the parent company’s obligations to its
primary lenders. The facility will be used for working capital purposes of daily operational activity. The
credit facility has a limit of $10,000,000 USD, with a maximum amount of up to $20,000,000, with a
maturity date of three years (April 7, 2024). It bears interest of 6% per annum, and has a standby charge
of $1,500 USD per month if total interest is less than $20,000 USD. The Company had $5,000,000
outstanding as of October 31, 2021.

The Company had a total available balance of unused lines of credit of $27,577,519 at October 31,
2021 (October 31, 2020 - $22,701,303).

25Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2021 and 2020

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 consolidated
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
Working capital

Year ended

October 31, 2021 October 31, 2020

30,263,518
(48,929)
(1,131,684)
($0.18)
($0.18)
102,525,187
44,509,388
3,679,493
49,880,879

25,013,423
(3,985,791)
(8,524,029)
($1.33)
($1.33)
85,758,518
27,528,783
4,065,164
47,755,694

Year ended
October 31, 2019
$
41,784,043
6,152,042
2,924,720
$0.46
$0.46
82,729,716
16,400,679
-
58,932,941

Year ended
October 31, 2018
$
39,098,141
8,137,804

4,227,243

$0.67
$0.67
73,267,274
10,545,337
-
59,483,137

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, 2021 was $461,487 (October 31,
2020 - $92,447).

At October 31, 2021 the Company had cash collateral balances related to forward contracts being held of
$81,613 (October 31, 2020 - $1,461,747). They are reflected as restricted cash held in escrow in the
consolidated statements of financial position.

26Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2021 and 2020

Transactions with related parties

The remuneration of directors and key management personnel during the years ended October 31, 2021
and 2020 were as follows:

Short-term benefits

Post-employment benefits

Stock based compensation

Year ending

Three-months ended

October 31, 2021

October 31, 2020

October 31, 2021

October 31, 2020

3,030,562

42,848

978,508

4,051,917

2,824,853

72,710

1,005,912

3,903,475

1,098,126

16,723

190,259

713,749

15,741

333,412

1,305,108

1,062,903

The Company incurred legal and professional fees in the aggregate of $246,027 for the year-ended October
31, 2021 (2020 - $211,000) 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 $132,000 in revenue from these clients’ activities for the year ended October 31, 2021 (2020 –
$59,000). As at October 31, 2021, accounts receivable included $724,000 from related parties (2020 -
$57,714).

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.

Advances between CXI and EBC are provided under a $20,000,000 Revolving Line of Credit, renewed July
1, 2018 loans attract interest at LIBOR + 2%, are repayable on demand, and are unsecured. At October
31, 2021, the intercompany loan balance was $2,274,000 (October 31, 2020 - $8,565,000) and was
eliminated upon consolidation.

On July 28, 2021, EBC and CXI entered a subordinated debt agreement whereby EBC issued a note
payable to CXI in exchange for CAD 5,000,000 or $3,976,776 USD. The note has a ten-year term but is
repayable earlier at EBC’s option, subject to approval from its regulator. The note contains a non-viability
contingent conversion (“NVCC”) clause that stipulates the note be converted into common shares of the
Bank in the event that the regulator declare it to be non-viable. The note bears interest at 6% per annum,
payable monthly in arrears. All amounts related to the debt and interest are eliminated on 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, 2021 and 2020, 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.

27Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2021 and 2020

Stock Option grants

The Company offers an incentive stock option plan which was established on 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 of options 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 following table sets out the information related to each option grant.

Date of
Grant

6-Jun-17
23-Jan-19
4-Mar-19
4-Mar-19
4-Jun-19
23-Oct-19
23-Oct-19
24-Jun-20
24-Jun-20
29-Jul-20
29-Oct-20
28-Dec-20
28-Jan-21
28-Oct-21

Expiry Date
6-Jun-22
23-Jan-24
4-Mar-24
4-Mar-24
4-Jun-24
23-Oct-24
23-Oct-24
24-Jun-25
24-Jun-25
29-Jul-25
29-Oct-25
28-Dec-25
28-Jan-26
28-Oct-26

Share price at
grant date
(Cdn$)

Amount
granted

20.79
30.14
25.98
17.03
17.03
17.03
17.03
12.50
12.50
10.98
10.00
10.80
11.00
14.49

9,865
4,127
13,316
30,000
5,837
72,376
228,754
7,586
22,369
18,000
322,352
2,431
3,873
134,668

Risk-free
interest
rate
1.71%
2.60%
2.50%
1.58%
1.58%
1.58%
1.58%
0.33%
0.33%
0.26%
0.34%
0.37%
0.41%
1.16%

Expected
volatility

Exercise
Price
(Cdn$)*

Fair value of
option at grant
date ($)

37%
27%
27%
24%
24%
24%
24%
23%
23%
23%
23%
23%
23%
22%

21.53
28.23
25.83
17.36
17.36
17.36
17.36
12.74
12.74
10.83
10.83
9.31
11.02
14.35

5.27
7.18
5.65
3.07
3.07
3.07
3.07
1.87
1.87
1.76
1.33
2.97
2.55
2.57

*Exercise price is determined by the volume-weighted average share price for the previous 20 trading days

The outstanding options at October 31, 2021 and the respective changes during the periods are
summarized as follows:

Number of
options

Weighted average
price

CDN$

Outstanding at October 31, 2020

Granted

Forfeited/Cancelled/Expired

Outstanding at October 31, 2021

732,803

140,972

(60,098)

813,677

14.01

14.65

16.05

14.65

28Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2021 and 2020

Stock Option grants (continued)

The following options were outstanding and exercisable at October 31, 2021:

Grant Date

Exercise
price
(CAD$)

Number
outstanding

6-Jun-17
23-Jan-19
4-Mar-19
4-Jun-19
23-Oct-19
23-Oct-19
24-Jun-20
29-Jul-20
29-Oct-20
29-Oct-20
28-Dec-20
28-Jan-21
28-Oct-21

Total
Weighted Average

21.53
28.23
25.83
17.36
17.36
17.36
12.74
10.83
10.83
10.83
9.31
11.02
14.35

14.65

5,586
1,411
43,316
5,837
72,376
203,849
29,955
18,000
7,032
285,343
2,431
3,873
134,668

813,677

Average remaining
contractual life
(years)
0.60
2.23
2.34
2.59
2.98
2.98
3.65
3.75
4.00
4.00
4.16
4.25
4.99

Number exercisable

5,586
36
28,877
5,837
72,376
127,598
24,898
18,000
7,032
89,732
-
-
-

379,972

The options outstanding from the October 23, 2019 grant of 203,849 were made outside of the Company’s
stock option plan, and in accordance with the policies of TSX and was approved by the shareholders on
March 25, 2020.

On December 28, 2020 2,431 options were granted to an officer that surrendered options under the stock
option exchange program that was announced on July 28, 2020. The replacement options have a weighted
average exercise price of CAD10.36 and 5-year expiration date.

On January 28, 2021 3,873 options were granted to an officer which have a weighted average exercise
price of CAD10.36 and 5-year expiration date.

On October 28, 2021 134,668 options were granted to officers which have a weighted average exercise
price of CAD14.35 and an expiry date of 5 years from the date of grant.

In the year-ended October 31, 2021, the Company recorded expenses of $978,508 related to stock-based
compensation (2020 - $1,005,903).

Restricted Stock Unit and Deferred Stock Unit Plans

On November 1, 2020 the Company made its first grants under the Deferred Share Unit “DSU” Plan and
Restricted Stock Unit “RSU” Plan (the "Plans"). The awards that may be granted under each of the Plans
can be realized in cash only and may not be converted into common shares of the Company. The purpose
of these Plans 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 Plans, vesting of the awards that may be granted under the Plans for management will occur 1/3 upon
the first anniversary, 1/3 upon the second anniversary and 1/3 upon the third anniversary of the grant, while
vesting for awards that may be granted under the Plans for directors will occur equally on a quarterly basis
in the first year after the grant. All the awards have a three-year term, unless otherwise specified by the
Board of Directors.

29Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2021 and 2020

Restricted Stock Unit and Deferred Stock Unit Plans (continued)

On November 1st, 2020, Restricted Stock Unit “RSU” and Deferred Stock Unit “DSU” awards were granted
in the amount of $388,000 and $220,000 respectively. The Company recorded stock-compensation
expenses of $335,118 related to RSUs and DSUs liability at October 31, 2021.

Subsequent events

The Company evaluated subsequent events through January 26, 2022, the date this MD&A was prepared.

On November 1, 2021 the Company made grants under Restricted Stock Unit “RSU” Plan and Deferred
Share Unit “DSU” Plan (the “Plans”). The Company granted 29,872 RSU awards and 20,533 DSU awards
in the amount of $376,250 and $240,000, respectively. The Company will record expense related to RSU
and DSU awards based on FMV at the first quarter of FY 2022 as part of stock-based compensation

There were no other material subsequent events that required recognition or additional disclosure in the
consolidated 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, 2021 and 2020.

Financial Risk factors

Outbreak of Infectious Diseases

The Company’s banknote business, which represents a significant portion of commissions revenue, is
highly correlated to international travel patterns by consumers. The Company’s business has been and is
expected to continue to be adversely affected by the effects of the widespread outbreak of respiratory illness
caused by COVID-19 in its primary North American market, as well as by travel restrictions imposed by
governments to limit the effects of COVID-19 on the health of the local and global population, including
restrictions on air travel to and from North America. The Company cannot accurately predict the impact
COVID-19 will have on its future revenue and business undertaking, due to uncertainties relating to the
ultimate geographic spread of COVID-19, the severity of the disease, the duration of the pandemic, and the
length of travel and quarantine restrictions imposed by governments of affected countries. As a result, the
Company cannot be assured that measures it has taken, or may take in the future, for business continuity
and cost containment will be effective as it is not possible to predict how the Company may be affected if
COVID-19 pandemic persists for an extended period of time or in the event of similar health crises in the
future.

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.

30Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2021 and 2020

Credit Risk (continued)

Due to seasonality, amounts in accounts receivable are usually at their highest during peak periods. They
are atypically low at October 31, 2020 due to the reduction in economic activity caused by COVID-19 related
impacts. A breakdown of accounts receivable by category is below:

Customer type
Domestic and international financial institutions
Money service businesses
Other
Total

At October 31, 2021
$
14,128,422
2,138,098
254,850
16,521,370

At October 31, 2020
$
2,923,202
846,168
2,141,993
5,911,363

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, 2021 was approximately
$5,359,000 (October 31, 2019 - $6,010,000). The amount of currency that is unhedged and that is not
pegged to the U.S. Dollar is approximately $2,183,000 (2020 - $4,672,000). 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 +$44,000/-$44,000 (October 31, 2020 gain/loss of approximately
+$93,000/-$93,000).

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, 2021, 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 14 of the consolidated financial statements.

31Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2021 and 2020

Interest Rate Risk (continued)

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, 2021 would have been approximately +$6,000/-$6,000 higher/lower as a
result of credit lines held at variable interest rates (2020 - +$19,500/-$19,500).

Liquidity Risk

Liquidity Risk is the risk that the Company will not be able to meet its financial obligations as they fall due.
The Chief Financial Officer informs the Chief Executive Officer, the Board of Directors, and the Audit
Committee of capital and liquidity issues as they occur in accordance with established policies and
guidelines. The Company targets to have a cash reserve or credit lines greater than 15% of the Company's
prior year's revenues.

The following are non-derivative contractual financial liabilities:

At October 31, 2021

Carrying amount

Estimated
contractual amount

This fiscal year

Future fiscal years

$
26,641,692
5,535,804
4,037,468
369,830

$
26,641,692
5,535,804
4,037,468
$Nil

$
$Nil
$Nil
$Nil
369,830

At October 31, 2020

Carrying amount

Estimated
contractual amount

Next fiscal year

Future fiscal years

$
13,095,188
1,595,365
3,305,605
703,560
163,901

$
13,095,188
1,595,365
3,305,605
$Nil
$Nil

$
$Nil
$Nil
$Nil
703,560
163,901

Non-derivative financial
liabilities

Accounts payable
Holding Accounts
Line of credit
Contingent consideration

Non-derivative financial
liabilities

Accounts payable
Holding Accounts
Line of credit
Contingent consideration
Contract liability

Capital Management

The Company manages capital through its financial and operational forecasting processes. The Company
defines working capital as total current assets less total 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, 2021
$
90,710,774
(40,829,895)
49,880,879

At October 31, 2020
$
71,219,313
(23,463,619)
47,755,694

32Management Discussion and Analysis
(All amounts expressed in U.S. Dollars unless otherwise noted)
For the three-months and year ended October 31, 2021 and 2020

Capital Management (continued)

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.

33CURRENCY EXCHANGE INTERNATIONAL, CORP.

Consolidated Financial Statements
For the years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

TABLE OF CONTENTS

Independent Auditor’s Report

Consolidated Statements of Financial Position

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Changes in Equity

Consolidated Statements of Cash Flows

36-38

Notes to the Consolidated Financial Statements

43-77

35Independent auditor’s report

Grant Thornton LLP
11th Floor
200 King Street West
Toronto, ON
M5H 3T4

T +1 416 366 0100
F +1 416 360 4949

To the shareholders of

Currency Exchange International, Corp.

Opinion

We have audited the consolidated financial statements of Currency Exchange International, Corp. and its
subsidiaries (“the Group”), which comprise the consolidated statements of financial position as at October 31,
2021, and October 31, 2020 and the consolidated statements of operations and comprehensive loss,
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, 2021 and October 31, 2020, 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.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the consolidated financial statements of the current period. These matters were addressed in the context of our
audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.

Assessment of the recoverable amount of cash generating units (“CGU”) to which goodwill has been
allocated

Refer to Notes 2, 4 and 10 of the consolidated financial statements.

IAS 36 – Impairment of Assets (“IAS 36”) requires indefinite life intangible assets to be tested for impairment at
least annually, and whenever there is an indication that the asset may be impaired. The Group has recorded
goodwill of $2.275 million as at October 31, 2021, and goodwill acquired in a business combination is allocated
to the CGU (or group of CGUs) that will benefit from the synergies of the combination.

The recoverable amount of a CGU (or group of CGUs), which is a significant estimate, is the higher of its value
in use and its fair value less costs of disposal. In determining the recoverable amount of the CGU (or group of
CGUs) on a value in use basis, the Group uses significant assumptions including projected future revenues,
income, terminal growth rate and discount rate.

Audit | Tax | Advisory
© Grant Thornton LLP. A Canadian Member of Grant Thornton International Ltd

36
Given the significance of management’s judgements and estimates in determining the value in use of each
CGU, we have identified the assessment of the recoverable amount of CGU’s to which goodwill has been
allocated as a key audit matter.

Our audit procedures included, amongst other procedures:

• We evaluated the reasonableness of management’s cash flow projections used to establish the
recoverable amount of the CGUs by comparing them to the Group’s historical cash flows

• We compared management’s historical forecasts of cash flow projections with actual results to assess

management’s ability to accurately predict cash flows

• We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating
the reasonableness of the terminal growth rates and discount rates used by management. This
included an assessment of the reasonableness of the required inputs into the two rates
• We assessed how management addressed estimation uncertainty by obtaining support for

management’s sensitivity analysis of their calculations of each CGU’s value in use, future cash flows
and terminal growth and discount rates.

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:

Audit | Tax | Advisory
© Grant Thornton LLP. A Canadian Member of Grant Thornton International Ltd

37•

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.

From the matters communicated with those charged with governance, we determine those matters that were of
most significance in the audit of the consolidated financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because of the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication

The engagement partner on the audit resulting in this independent auditor's report is Grant Cuylle.

Toronto, Canada
January 26, 2022

Chartered Professional Accountants
Licensed Public Accountants

Audit | Tax | Advisory
© Grant Thornton LLP. A Canadian Member of Grant Thornton International Ltd

38CURRENCY EXCHANGE INTERNATIONAL, CORP.
Consolidated Statements of Financial Position
October 31, 2021 and 2020
(Expressed in U.S. Dollars)

Current assets

Cash (Note 7)

Accounts receivable (Note 16)

Restricted cash held in escrow (Note 8)

Forward and option contracts (Note 17)

Income taxes receivable (Note 12)

Other current assets (Note 23)

Total current assets

Property and equipment (Note 9)

Intangible assets (Note 10)

Goodwill (Note 10)

Other assets

Right-of-use assets (Note 11)

Net deferred tax asset (Note 12)

Total assets

ASSETS

October 31, 2021

October 31, 2020

66,527,690

16,521,370

1,696,600

461,487

869,136

4,634,491

90,710,774

514,729

5,243,300

2,275,463

126,176

3,440,059

214,686

59,311,553

5,911,363

2,963,474

92,447

1,829,664

1,110,812

71,219,313

873,643

5,938,900

2,207,733

103,187

4,389,091

1,026,651

102,525,187

85,758,518

LIABILITIES AND EQUITY

Current liabilities

Line of credit (Note 14)

Accounts payable

Holding accounts

Accrued expenses

Contract liability

Loss provision (Note 24)

Contingent consideration (Note 5)

Lease liabilities (Note 11)

Total current liabilities

Long term liabilities

Contingent consideration (Note 5)

Lease liabilities (Note 11)

Other long term liabilities

Total long term liabilities

Total liabilities

Equity

Share capital

Equity reserves

Retained earnings

Total equity

Total liabilities and equity

4,037,468

26,641,692

5,535,804

2,701,860

281,581

369,830

1,261,660

40,829,895

2,812,012

867,481

3,679,493

44,509,388

6,414,936

30,868,533

20,732,330

58,015,799

102,525,187

3,305,605

13,095,188

1,595,365

2,519,167

163,901

675,000

359,666

1,749,727

23,463,619

343,894

3,455,107

266,163

4,065,164

27,528,783

6,414,936

29,967,681

21,847,118

58,229,735

85,758,518

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

39CURRENCY EXCHANGE INTERNATIONAL, CORP.
Consolidated Statements of Operations and Comprehensive Loss
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

Revenues

Commissions revenue

Fee revenue

Total revenues (Note 6)

Operating expenses (Note 20)

Net operating (loss)
Other income (loss)

Interest revenue

Government grants (Note 2)

Revaluation of contingent consideration (Note 5)

Provision for loss (Note 24)

Gain on sale of assets

Restructuring expenses and impairment loss (Note 21)

Other expenses

Total other income (loss)

Year ended

October 31, 2021
$

October 31, 2020

28,259,300

23,300,609

2,004,218

1,712,814

30,263,518

25,013,423

30,312,447

28,999,214

(48,929)

(3,985,791)

27,003

4,174,220

(18,989)

10,773

761,533

(112,299)

(1,693,207)

6,554

(96,711)

(14,738)

390

(1,072,472)

(14,428)

3,965,040

(2,007,411)

Earnings before interest, taxes, depreciation, and amortization

3,916,111

(5,993,202)

Interest expense (Note 14)

Interest on lease liabilities (Note 11)

Depreciation and amortization

Depreciation of right-of-use-assets (Note 11)

(Loss) before income taxes

Income tax expense (recovery) (Note 12)

Net (loss) for the period

Other comprehensive loss, after tax

Net (loss) for the period

Items that may subsequently be reclassified to profit or loss

Exchange differences on translating foreign operations

Total other comprehensive (loss)

(Loss) per share (Note 19)

Weighted average number of common shares outstanding (Note 19)

555,789

208,390

1,649,125

1,679,126

473,242

272,687

1,621,121

1,982,474

(176,319)

(10,342,726)

955,365

(1,818,697)

(1,131,684)

(8,524,029)

(1,131,684)

(8,524,029)

583,876

(274,561)

(547,808)

(8,798,590)

-basic
-diluted

($0.18)
($0.18)

6,414,936
6,414,936

($1.33)
($1.33)

6,414,936
6,414,936

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

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CURRENCY EXCHANGE INTERNATIONAL, CORP.
Consolidated Statements of Cash Flows
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

Cash flows from operating activities

Net loss

Adjustments to reconcile net income to net cash flows from operating activities

Depreciation and amortization
Depreciation of right-of-use assets
Stock based compensation
Change in forward and option contract positions (Note 17)
Loss (Gain) on disposal, impairment of assets and leases
Deferred taxes
Contingent liabilities

Increase (decrease) in cash due to change in:

Accounts receivable
Restricted cash held in escrow
Income taxes receivable
Other assets
Contract liability
Loss provision (Note 24)

Accounts payable, accrued expenses, deposits, 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)
Contingent liabilities

Net cash outflow from investing activities
Cash flows from financing activities
Repayment of leasing liabilities
Interest on leasing liabilities

Net borrowing on lines 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

October 31, 2021

October 31, 2020

(1,131,684)

(8,524,029)

1,649,123
1,679,126
978,508
(365,429)
104,191
986,481
(357,358)

(10,411,534)
1,432,537
952,590
(3,505,097)
251,366
-
15,374,858

7,637,678

(130,620)
(260,525)
-
-
(391,145)

(2,169,808)
208,203
475,431
(1,486,174)
5,760,359
59,311,553
1,455,778

66,527,690

-
764,179
27,003

1,621,121
1,982,474
1,005,903
(90,608)
614,596
(436,907)
-

4,518,684
(2,295,460)
(1,298,634)
157,287
(194,249)
680,261
1,321,066

(938,495)

(123,175)
(469,305)
(3,461,265)
699,046
(3,354,699)

(2,288,112)
272,513
2,810,641
795,042
(3,498,151)
62,873,873
(64,168)

59,311,553

1,613,148
745,929
10,773

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

42CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

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 and payments business that 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 35 branch locations (see Note 11), and 267 employees. 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 “Schedule 1” bank engaged in foreign exchange services.

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 of the consolidated financial statements 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, contingent consideration, 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”).

These consolidated financial statements were authorized for issue and approved by the Board of Directors
on January 26, 2022.

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.

43CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

Accounting Policies (continued)

Recently adopted accounting standards

- Amendments to References to Conceptual Framework in IFRS Standards;
- Definition of a Business (Amendments to IFRS 3); and
- Definition of Material (Amendments to IAS 1 and IAS 8)

Future Accounting Pronouncements

Certain pronouncements were issued by the IASB or International Financial Reporting Interpretations
Committee (“IFRIC”). Many are not applicable or do not have a significant impact to the Company and
have been excluded. The following amended standards and interpretations have not yet been adopted and
are not expected to have a significant impact on the Company’s consolidated financial statements:

- Amendments to References to Conceptual Framework in IFRS Standards;
- Annual Improvements to IFRS Standards 2018-2020 Cycle (Amendments to IFRS 1, IFRS 9, IFRS
16, IAS 41)
- Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37);
- Classification of Liabilities as Current or Non-current (Amendments to IAS 1);
- Deferred Tax related to Assets and Liabilities from a Single Transaction; and
-

IFRS 17 Insurance Contracts.

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, 2021 and 2020,
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 based on
lifetime expected credit losses in accordance with IFRS 9 Financial Instruments (“IFRS 9”). 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. The Company does not accrue interest on past due receivables.
Management determined that the allowance for doubtful accounts was $Nil as of October 31, 2021 and
2020, respectively.

44CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

Accounting Policies (continued)

Revenue recognition

IFRS 15 Revenue from Contracts with Customers (“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.

Commission revenues are the difference between the cost and selling price of foreign currency products,
including bank notes, wire payments, 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 statement
of operations 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 operations.

45CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

Accounting Policies (continued)

Property and equipment

Property and equipment are 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.

CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

Accounting Policies (continued)

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.

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.

Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the
acquisition date. Subsequent changes to the fair value of the contingent consideration that is determined
to be a financial asset or liability will be recognized in accordance with IFRS 9, at fair value through profit
measured, and its subsequent
or loss. Contingent consideration that is classified as equity is not re
settlement is accounted for within equity.

‐

Goodwill arising on acquisition is recognized as an asset that represents the excess of acquisition cost over
the fair value of the Company’s share of the identifiable net assets of the acquiree on the date of the
acquisition. Any excess of identifiable net assets over the acquisition cost is recognized in net income
immediately after acquisition.

Where goodwill forms part of a cash generating unit (“CGU”) and part of the operation within that unit is
disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of
the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this
circumstance is measured based on the relative fair value of the operation disposed of and the portion of
the CGU retained.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which
the combination occurs, the Company reports provisional amounts for the items for which the accounting
is incomplete. Those provisional amounts are adjusted during the measurement period, or additional assets
or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed
at the acquisition date that, if known would have affected the amounts recognized at that time.

The measurement period may be up to one year from the acquisition date. Upon conclusion of the
measurement period or final determination of the values of assets acquired and liabilities assumed
whichever occurs first, any subsequent adjustments are recorded to income within the consolidated
statement of operations.

For a given acquisition, the Company may identify certain pre
acquisition contingencies as of the acquisition
acquisition contingencies throughout the
date and may extend its review and evaluation of these pre
measurement period to obtain sufficient information to assess these contingencies as part of acquisition
accounting, as applicable.

‐

47CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

Accounting Policies (continued)

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 operations net
of any reimbursement. If the effect of the time value of money is material, provisions are discounted using
a current pretax 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.

No liability is recognized if an outflow of economic resources as a result of present obligations is not
probable. Such situations are disclosed as contingent liabilities unless the outflow of resources is remote.

Restructuring provisions

Provisions for legal disputes, onerous contracts or other claims are recognized when the Company has a
present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic
resources will be required from the Company and amounts can be estimated reliably. The timing or amount
of the outflow may still be uncertain.

Restructuring provisions are recognized only if a detailed formal plan for the restructuring exists and
management has either communicated the plan’s main features to those affected or started implementation.
Provisions are not recognized for future operating losses.

Holding accounts

Holding 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 financial instrument.

Holding accounts are subsequently measured at amortized cost, using the effective interest rate method.

Share-based payments

The Company's Deferred Share Unit (“DSU”) Plan and Restricted Stock Unit (“RSU”) Plan (collectively the
“Plans”) allow certain employees and directors to receive restricted and deferred share units (“Units”) of the
Company. The Units are cash-settled only and are therefore classified as a financial liability. The Units are
measured at the fair value of the Company’s equity instruments at the grant date as a financial liability in
the consolidated statement of financial position. The fair value determined at the grant date of the cash-
settled share-based payments is expensed on a straight-line basis over the period during which the
employees and directors become unconditionally entitled to the instrument. At the end of each reporting
period, the Company revises its estimate of the Unit’s liability based on the fair value of the Company’s
equity instruments. 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 the
liability.

48CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

Accounting Policies (continued)

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.

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”).

Classification and measurement of financial liabilities

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 consolidated statement of operations.

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
Holding accounts
Contract asset/(liability)
Line of credit
Contingent consideration

Fair value through profit and loss
Amortized cost
Amortized cost
Fair value through profit and loss
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Fair value through profit and loss

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.

49CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

Accounting Policies (continued)

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
projections that impact the collectability of the future cash flows of the instrument.

Leases

IFRS 16 The adoption of this new Standard has resulted in the Company recognizing a right-of-use asset
and related lease liability in connection with all former operating leases except for those identified as low-
value or leases having substantive substitution rights.

The new Standard has been applied using the modified retrospective approach, with the cumulative effect
of adopting IFRS 16 being recognized in equity as an adjustment to the opening balance of retained
earnings for the current period. Prior periods have not been restated.

The Bank has elected not to include initial direct costs in the measurement of the right-of-use asset for
operating leases in existence at the date of initial application of IFRS 16, being November 1, 2019. At this
date, the Company has also elected to measure the right-of-use assets at an amount equal to the lease
liability adjusted for any prepaid or accrued lease payments that existed at the date of transition.

Instead of performing an impairment review on the right-of-use assets at the date of initial application, the
Company has relied on its historic assessment as to whether leases were onerous immediately before the
date of initial application of IFRS 16.

On transition, for leases of low-value assets the Company has applied the optional exemptions to not
recognize right-of-use assets but to account for the lease expense on a straight-line basis over the
remaining lease term.

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.

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

50CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

Accounting Policies (continued)

hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of
hedged item. The Company does not apply hedge accounting in its consolidated financial statements.

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
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.

51CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

Accounting Policies (continued)

Accounting for government grants and assistance

The Canada Emergency Wage Subsidy (“CEWS”) program became effective for periods beginning on
March 15, 2020 to support organizations that have been significantly impacted by the COVID-19 pandemic.
Under this program, EBC received a subsidy of up to 75% of qualified employees’ wages in each qualifying
four-week period that it met certain tests for revenue reduction. In the year ended October 31, 2021 EBC
qualified for $657,117 (October 31, 2020 - $745,190) in grants under the program, of which $107,472
(October 30, 2020 - $198,990) was a receivable as of the reporting date. The Canada Emergency Rent
Subsidy (“CERS”) program became effective for periods beginning on September 27, 2020. Under this
program, EBC received a subsidy for up to 68% of qualified rent expenses. In the year ended October 31,
2021 EBC qualified for $120,315, of which $18,692 (October 31, 2020 - $16,343) which was a receivable
as of the reporting date.

On March 27, 2020, congress passed legislation known as the Employee Retention Credit (ERC) which
was section 2031 of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). On December
21, 2020, congress passed an additional round of stimulus which enhanced provisions related to the ERC.
The ERC provides a subsidy towards wages and healthcare costs incurred for U.S. employees retained by
eligible companies that meet certain criteria relative to a decline in revenue following the declaration of the
COVID-19 pandemic, referred to as a gross receipts test. The Company met the eligibility criteria including
the gross receipts test beginning with the period commencing April 1, 2020 and ending on September 30,
2021. The Company has recognized $3,400,190 in the year ending October 31, 2021 (2020 - $Nil), all of
which was a receivable as of the reporting date.

The grant revenue has been recognized by the Company separately as other income, “government grants,”
within the consolidated statement of operations.

Impairment testing of goodwill, other intangible assets, and property, plant, and equipment

For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely
independent cash inflows (cash-generating units). As a result, some assets are tested individually for
impairment, and some are tested at the cash-generating unit (“CGU”) level. Goodwill is allocated to those
cash-generating units that are expected to benefit from synergies of a related business combination and
represent the lowest level within the Company at which management monitors goodwill. CGUs to which
goodwill has been allocated are tested for impairment at least annually. All other individual assets or cash-
generating units are tested for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable.

An impairment loss is recognized for the amount by which the asset’s (or cash-generating unit’s) carrying
amount exceeds its recoverable amount, which is the higher of fair value less costs of disposal and value-
in-use. To determine the value-in-use, management estimates expected future cash flows from each cash-
generating unit and determines a suitable discount rate in order to calculate the present value of those cash
flows. The data used for impairment testing procedures are directly linked to the Company’s latest approved
budget, adjusted as necessary to exclude the effects of future reorganizations and asset enhancements.
Discount factors are determined individually for each cash-generating unit and reflect current market
assessments of the time value of money and asset-specific risk factors. Impairment losses for cash-
generating units reduce first the carrying amount of any goodwill allocated to that cash-generating unit. Any
remaining impairment loss is charged pro rata to the other assets in the cash-generating unit. With the
exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss
previously recognized may no longer exist. An impairment loss is reversed if the asset’s or cash-generating
unit’s recoverable amount exceeds it carrying amount.

52CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

IFRS 16 ‘Leases’

IFRS 16 ‘Leases’ replaces IAS 17 ‘Leases’ along with three Interpretations (IFRIC 4 ‘Determining whether
an Arrangement contains a Lease’, SIC 15 ‘Operating Leases-Incentives’ and SIC 27 ‘Evaluating the
Substance of Transactions Involving the Legal Form of a Lease’).

The adoption of this new Standard has resulted in the Company recognizing a right-of-use asset and related
lease liability in connection with all former operating leases except for those identified as low-value or leases
having substantive substitution rights.

The Company has elected not to include initial direct costs in the measurement of the right-of-use asset for
operating leases in existence at the date of initial application of IFRS 16, being November 1, 2019. At this
date, the Company has also elected to measure the right-of-use assets at an amount equal to the lease
liability adjusted for any prepaid or accrued lease payments that existed at the date of transition.

On transition to IFRS 16 the weighted average incremental borrowing rate applied to all lease liabilities
recognized under IFRS 16 was 5.0%.

The Company has applied historical experience in determining the estimated lease terms when considering
options to extend and terminate leases.

The following is a reconciliation of the financial statement line items from IAS 17 to IFRS 16 at November
1, 2019:

Right-of-use-assets
Lease liabilities
Total

Carrying Amount at
October 31,2019

Remeasurement

IFRS 16 carrying amount
at November 1, 2019

$
-
-
-

$
5,481,031
(6,092,927)
(611,896)

53CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

IFRS 16 ‘Leases’ (continued)

The following is a reconciliation of total operating lease commitments at October 31, 2019 to the lease
liabilities recognized at November 1, 2019:

Total operating lease commitments disclosed at October 31, 2019
Recognition exemptions:

Leases with substantive substitution rights
Leases with remaining lease term of less than 12 months

Variable lease payments not recognized
Other minor adjustments relating to commitment disclosers

Reasonably certain extension options
Operating lease liabilities before discounting
Discounted using incremental borrowing rate
Operating lease liabilities

Foreign currency translation
Total Lease liabilities recognized under IFRS 16 at November 1, 2019

(1,795,241)
(149,864)
(2,223,340)

6,306,225

(4,168,445)
5,062,692
7,200,473
(1,054,857)
6,145,616

(52,689)
6,092,927

Additional information with respect to the IFRS 16 changes can be found in Note 11.

Significant management judgment in applying accounting policies and estimation uncertainty

When preparing the consolidated financial statements, management undertakes a number of judgments,
estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses.
The actual results may differ from judgments, estimates and assumptions made by management, and will
seldom equal the estimated results.

The judgments, estimates and assumptions applied in the consolidated financial statements, including the
key sources of estimation uncertainty, have been updated based on information at October 31, 2021 and
with particular respect to the analysis of potential impairment of the Company’s assets, including goodwill,
and its ability to continue as a going concern.

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 consolidated financial statements:

Carrying value of internally developed software

The Company makes significant judgments about the value of its proprietary software, CXIFX. 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 CXIFX for impairment on an ongoing basis.

54CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

Significant management judgment in applying accounting policies and estimation uncertainty

4.
(continued)

Income taxes and recoverability of potential deferred tax assets

In assessing the probability of realizing income tax assets recognized, management makes estimates
related to expectations of future taxable income, applicable tax planning opportunities, intercompany
allocations in accordance with its transfer pricing policy, expected timing of reversals of existing temporary
differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax
authorities. In making its assessments, management gives additional weight to positive and negative
evidence that can be objectively verified. Estimates of future taxable income are based on forecasted cash
flows from operations and the application of existing tax laws in each jurisdiction. The Company considers
whether relevant tax planning opportunities are (i) within the Company’s control, (ii) feasible, and (iii) within
management’s ability to implement. Examination by applicable tax authorities is supported based on
individual facts and circumstances of the relevant tax position examined in light of all available evidence.
Where applicable tax laws and regulations are either unclear or subject to ongoing varying interpretations,
it is reasonably possible that changes in these estimates can occur that materially affect the amounts of
income tax assets recognized. Also, future changes in tax laws could limit the Company from realizing the
tax benefits from the deferred tax assets. The Company reassesses unrecognized income tax assets at
each reporting period.

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.

55CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

Significant management judgment in applying accounting policies and estimation uncertainty

4.
(continued)

Share-based payments

Management determines the overall expense for share-based payments using market-based valuation
techniques. The fair value of the market-based and performance-based share awards are determined at
the date of grant using generally accepted valuation techniques. The determination of the most appropriate
valuation model is dependent on the terms and conditions of the grant. Assumptions are made and
judgment used in applying valuation techniques. These assumptions and judgments include estimating the
future volatility of the stock price, expected dividend yield, future employee turnover rates, future employee
stock option exercise behaviors and corporate performance. The assumptions and models used for
estimating fair value for share-based payment transactions are disclosed in Note 18. Such judgments and
assumptions are inherently uncertain. Changes in these assumptions affect the fair value estimates.

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.

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 Note 5 and Note 24.

56CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

Acquisition

Denarius Financial Group Inc.

On July 29, 2020 the Company’s wholly owned subsidiary, EBC, acquired certain assets of Denarius
Financial Group Inc. (“DFG”), which were determined to meet the definition of a business in accordance
with IFRS 3 Business Combinations (“IFRS 3”).

EBC paid $2,748,290 (CAD 3,660,000) in cash on closing, and EBC’s parent company Currency Exchange
International (“CXI”) issued 18,000 fully vested stock options to the shareholders of the vendor on the date
of acquisition. In addition, there are two contingent payments of up to a maximum of $375,432 (CAD
500,000) each and payable on the first and second anniversary after closing. The additional payments will
be based on the amount of revenue generated from the customer trading relationships acquired. The
Company has estimated the likelihood of future revenues to determine the estimated contingent
consideration. Management had estimated these payments for the first and second anniversary at $359,666
(CAD 479,003) and $343,894 (CAD 457,998) respectively, for total contingent consideration of $727,130
(CAD 968,392). The Company allocated this contingent consideration to customer trading relationships.
The first portion of contingent consideration was paid on July 31, 2021, in accordance with the agreement
with DFG. As a result, the Company recorded a loss of $18,989 associated with the fair value revaluation
with respect to this payment. Furthermore, the second portion of the contingent consideration was
reclassified from short-term to long-term liability on the consolidated statements of financial position.

An increase (decrease) in the estimate of the amount of revenue generated from the customer trading
relationships acquired of +/- 10% would not affect the fair value of the contingent consideration. Contingent
consideration was reassessed at the end of the reporting period and the initial estimate was still determined
to be management’s best estimate of the Company’s obligation. Changes in contingent consideration noted
on the consolidated statements of financial position are a result of foreign exchange fluctuations.

Assets assumed in the acquisition have been recorded at their fair values as at the date of acquisition. The
Company completed its measurement process once the necessary information was obtained and finalized
the purchase price allocation as at October 31, 2020.

The final purchase price of the DFG acquisition was $3,483,615 (CAD 4,639,481). with the final allocation of
the purchase consideration to the net assets acquired as follows:

Final PPA allocation
Net tangible asset
Trade name
Unpatented technology
Customer relationships
Non-compete agreements
Implied goodwill
Balance at October 31, 2020

Final Purchase Consideration
Cash
Stock Options
Contingent Consideration
Contingent Consideration - long term
Balance at October 31, 2020

USD

CAD

5,158
37,543
10,512
2,230,522
301,847
898,033
3,483,615

2,748,290
31,765
359,666
343,894
3,483,615

6,872
50,000
14,000
2,970,609
402,000
1,196,000
4,639,481

3,660,000
42,480
479,003
457,998
4,639,481

57CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

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:

Revenues by Geography

Year ended October 31, 2021
Year ended October 31, 2020

United States
23,100,695
19,601,984

Canada
7,162,823
5,411,439

Total
30,263,518
25,013,423

Revenues by Product Line

Year ended October 31, 2021
Year ended October 31, 2020

Banknotes

22,853,387
21,595,790

Payments
7,410,131
3,417,633

Total
30,263,518
25,013,423

Assets

Cash

At October 31, 2021

At October 31, 2020

United States

Canada

Total

United States

Canada

Total

34,608,888

31,918,802

66,527,690

39,322,593

19,988,960

59,311,553

Accounts receivable

5,996,032

10,525,338

16,521,370

5,187,707

723,656

5,911,363

Restricted cash held in escrow

81,579

1,615,021

1,696,600

581,693

2,381,781

2,963,474

Other current assets

Property and equipment

Intangible assets

Goodwill

Other assets

Forward and option contracts

Right-of-use assets

Income taxes receivable

3,988,541

236,515

2,777,604

1,309,701

125,902

366,962

1,475,613

869,136

645,950

4,634,491

572,830

537,982

1,110,812

278,214

514,729

430,284

443,359

873,643

2,465,696

5,243,300

3,307,050

2,631,850

5,938,900

965,762

2,275,463

1,309,700

898,033

2,207,733

274

126,176

103,187

94,525

461,487

55,232

37,215

92,447

1,964,446

3,440,059

2,358,751

2,030,340

4,389,091

869,136

1,829,664

Net deferred tax asset

(23,351)

238,037

214,686

805,307

221,344

1,026,651

Total assets

51,813,122

50,712,065 102,525,187

55,863,998

29,894,520

85,758,518

Cash

Included within cash of $66,527,690 at October 31, 2021 (October 31, 2020 - $59,311,553) are the
following balances:

Cash held in transit, vaults, tills and consignment locations
Cash deposited in bank accounts in jurisdictions in which
the Company operates
Total

At October 31, 2021
$
45,883,163

At October 31, 2020
$
34,340,751

20,644,526

66,527,690

24,970,802

59,311,553

58CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

Restricted Cash Held in Escrow

Certain of the Company's secured transactions and derivative contracts require the Company to post cash
collateral or maintain minimum cash balances in escrow. The foreign currency forward contracts can be
closed immediately resulting in the collateral being liquidated. The Company has also been required to post
the collateral associated with its credit facility with Desjardins Group (see Note 12). At October 31, 2021 the
Company had cash collateral balances of $1,696,600 (October 31, 2020 - $2,963,474), represented by
$81,613 (October 31, 2020 - $1,461,747) being held as collateral on forward contracts and $1,614,987
(October 31, 2020 - $1,501,727) being held on collateral on the Desjardins credit facility. These balances are
reflected as restricted cash held in escrow in the consolidated statements of financial position.

Property and Equipment

Property and equipment consist of the following:

Cost
Balance, October 31, 2019
Additions
Disposals
Net exchange differences
Balance, October 31, 2020
Additions
Disposals (Note 21)
Net exchange differences

Vehicles

$
65,974
2,628
(2,628)
-
65,974
-
(17,723)
-

Balance, October 31, 2021

48,251

Depreciation
Balance, October 31, 2019
Additions
Impairment of asset
Disposals
Net exchange differences
Balance, October 31, 2020
Additions
Disposals (Note 21)
Net exchange differences

Vehicles

$
44,808
12,321
-
(872)
(7)
56,250
6,276
(14,277)
2

Balance, October 31, 2021

48,251

Carrying amounts
Balance, October 31, 2020
Balance, October 31, 2021

Vehicles

$
9,724

(0)

Computer
equipment

$
735,348
32,801
-
(1,646)
766,503
13,985
-
12,191

792,679
Computer
equipment

$
397,004
159,338

-
-
(1,085)
555,257
138,691
-
9,465

703,413
Computer
equipment

$
211,246

89,266

Furniture and
equipment

$
1,039,295
32,375
(655)
(4,055)
1,066,960
46,339
(1,061)
26,856

1,139,094

Furniture and
equipment

$
803,033
132,977

-
(496)
(7,434)
928,080
96,705
(1,105)
23,643

1,047,322

Furniture and
equipment

$
138,880

91,771

Leasehold
improvements

$
2,898,803
63,762
(244,503)
(8,372)
2,709,690
54,847
(87,339)
52,585

2,729,783
Leasehold
improvements

$
1,941,634
368,376
120,926
(232,603)
(2,436)
2,195,897
258,501
(98,823)
40,516

2,396,091
Leasehold
improvements

$
513,793

Total

$
4,739,420
131,566
(247,786)
(14,073)
4,609,127
115,171
(106,123)
91,632

4,709,807

Total

$
3,186,479
673,012
120,926
(233,971)
(10,962)
3,735,484
500,173
(114,205)
73,625

4,195,078

Total

$
873,643

333,692

514,729

As at the year ended October 31, 2021, the Company disposed of certain leasehold improvement assets
that relate to retail locations that were closed during the period. These locations were included in the
restructuring and impairment provisions that the Company recorded in its fiscal year ended October 31,
2020 (see Note 21).

59CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

10.

Goodwill and Intangible Assets

Intangible assets comprise the Company's internally developed software (“CXIFX”) 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 (see Note 5 in the consolidated financial statements at October 31, 2020)
and DFG (see Note 4). 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
& Unpatented
Tech Cost

Goodwill

Total

Balance, October 31, 2019

2,767,814

573,161

5,198,283

670,000

1,238,319

Additions

396,489

1,435

2,216,211

347,657

963,652

Net exchange differences

(3,202)

14,311

2,245

5,762

Balance, October 31, 2020

3,161,101

574,596

7,428,805

1,019,902

2,207,733

10,447,577

3,925,444

19,116

14,392,137

Additions

Net exchange differences

260,525

20,986

260,525

168,226

26,390

67,730

283,332

Balance, October 31, 2021

3,442,612

574,596

7,597,031

1,046,292

2,275,463

14,935,994

Amortization

Internally
developed
software
$

Acquired
software
$

Customer
trading
relationships

Trade Name,
Non-Compete
& Unpatented
Tech Cost

Goodwill

Balance, October 31, 2019

1,470,227

486,750

3,321,733

19,800

Amortization

533,110

45,000

236,000

134,000

Net exchange differences

(2,800)

921

358

405

Balance, October 31, 2020

2,000,537

532,671

3,558,091

154,205

Amortization

459,099

38,250

295,982

355,621

Net exchange differences

(10,535)

919

22,688

9,705

Balance, October 31, 2021

2,449,101

571,838

3,876,761

519,531

Carrying amounts

Balance, October 31, 2020
Balance, October 31, 2021

Internally
developed
software

1,160,564

993,511

Acquired
software
$

41,925

2,758

Customer
trading
relationships

3,870,714

3,720,270

Trade Name,
Non-Compete
& Unpatented
Tech Cost

865,697

526,761

Goodwill

2,207,733

2,275,463

Total
$

5,298,510

948,110

(1,116)

6,245,504

1,148,952

22,777

7,417,231

Total
$

8,146,633

7,518,763

CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

10.

Goodwill and Intangible Assets (continued)

The movements in the net carrying amount of goodwill are as follows:

Gross carrying amount
Balance October 31
Increase due to adjustment
FX impact
Acquired through business combination

Balance October 31
Accumulated impairment
Balance October 31
Impairment loss recognized
Balance October 31

October 31, 2021
$
2,207,733

-
67,730
-

October 31, 2020
$
1,238,320
71,380

898,033

2,275,463

2,207,733

-
-
-

Carrying amount at October 31

2,275,463

2,207,733

Impairment testing

There were no indicators of impairment at October 31, 2021 or 2020. The Company performs an annual
impairment test of the goodwill.

For the purpose of annual impairment testing, goodwill is allocated to the cash generating units expected
to benefit from the synergies of the business combinations in which the goodwill arises as set out below
and is compared to its recoverable value.

Goodwill allocated to operating segments
eZforex
Denarius
Total

Recoverable amount of each operating segment
eZforex
Denarius

October 31, 2021
$
1,309,701
965,762
2,275,463

October 31, 2021
$
7,050,107
5,112,109

October 31, 2020
$
1,309,701
898,033
2,207,734

October 31, 2020
$
5,151,138
5,136,689

The recoverable amount of each cash generating unit (“CGU”) was determined based on value-in-use
calculations, covering a detailed three-year forecast, followed by an extrapolation of expected cash flows
for the remaining useful lives using a declining growth rate determined by management. The present value
of the expected cash flows of each CGU is determined by applying a suitable discount rate reflecting current
market assessments of the time value of money and risks specific to the CGU.

eZforex
Denarius

Growth Rates

Discount Rates

October 31, 2021
2%
2%

October 31, 2021
20%
20%

CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

10.

Goodwill and Intangible Assets (continued)

Growth rates

The growth rates reflect management’s best estimate of the average long-term growth rates from the
product mix and industry of the cash generating units. The growth rates are in-line with general standards
and are conservative in nature when compared to historical growth rates due to potential uncertainty.

Discount rates

The discount rates are pre-tax rates and reflect appropriate adjustments relating to market risk and specific
risk factors of each cash generating unit.

Cash flow assumptions

The key cash flow assumptions are based on the expected margins of each cash generating unit, which
have been determined based on a combination of past experience in the markets in which the Company
operates as well as historical information and the expected growth in the forecast period for the specific
cash generating units. The Company’s management believes that this is the best available input for
forecasting these markets. Cash flow projections reflect profit margins achieved immediately before the
most recent budget period as well as those utilized to value the recent acquisitions to which goodwill relates.
No material efficiency improvements have been taken into account.

Other than the considerations described in determining the recoverable amount of the cash generating
units described above, there are no other key assumptions

11.

Leases

Lease liabilities are presented in the statement of financial position as follows:

Current lease liabilities
Non-current lease liabilities
Total

October 31, 2021
$
1,261,660
2,812,012

October 31, 2020
$
1,749,727
3,455,107

4,073,672

5,204,834

The Company has leases for corporate offices as well as its retail store locations. With the exception of
short-term leases and leases of low-value underlying assets, each lease, meeting the definition under IFRS
16, is reflected on the consolidated statements of financial position as a right-of-use asset and a lease
liability. Variable lease payments which do not depend on an index or a rate (such as lease payments based
on a percentage of Company sales) are excluded from the initial measurement of the lease liability and
asset. The Company classifies its right-of-use assets in a consistent manner to its property, plant, and
equipment (see Note 8).

Each lease generally imposes a restriction that, unless there is a contractual right for the Company to sublet
the asset to another party, the right-of-use asset can only be used by the Company. Leases are either non-
cancellable or may only be cancelled by incurring a substantial termination fee. Some leases contain an
option to extend the lease for a further term. The Company is prohibited from selling or pledging the
underlying leased assets as security. For leases over corporate offices and retail store locations, the
Company must keep those properties in a good state of repair and return the properties in their original
condition at the end of the lease.

62CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

11.

Leases (continued)

The table below describes the nature of the Company’s leasing activities by type of right-of-use asset
recognized on balance sheet:

Right-of-use asset

No. of right-of-
use assets
leased

Range of
remaining
term

Average
remaining
lease term

No of
leases with
extension
options

No of
lease with
options to
purchase

No of leases
with variable
payments
linked to an
index

No of leases
with
termination
options

Equipment

Corporate offices

Retail store locations

Total

3 years

0-13 years

0-6 years

0-13 years

The lease liabilities are secured by the related underlying assets. Future minimum lease payments at
October 31, 2021 were as follows:

Within 1 Year

1-2 years

2-3 years

3-4 years

4-5
years

After 5
Years

Total

Lease payments

1,410,703

712,568

439,713

410,105

385,747

1,403,597

4,762,432

Finance charges

149,016

113,884

96,026

81,215

66,996

181,622

688,759

Net present values

1,261,687

598,684

343,686

328,889

318,751

1,221,975

4,073,672

The Company has elected not to recognize a lease liability for short term leases (leases with an expected
term of 12 months or less) or for leases of low value assets. In addition, the Company has not recognized
a right-of-use asset or lease liability with respect to leases identified where the lessor was determined to
have substantive substitution rights. Payments made under such leases are expensed on a straight-line
basis. In addition, certain variable lease payments are not permitted to be recognized as lease liabilities
and are expensed as incurred.

The expense relating to payments not included in the measurement of the lease liability is as follows:

Leases with substantial substitution rights
Short-term leases
Variable lease payments

Total

Year ended

October 31, 2021
$
461,374
120,097
426,750

1,008,221

October 31, 2020

$
608,314
187,196
328,969

1,124,479

At October 31, 2021, the Company was committed to short-term leases and the total commitment at that
date was $120,097 (October 31, 2020 - $187,196)

Total cash outflow for leases for the year ended October 31, 2021 was $2,169,808 (October 31, 2020 -
$2,288,112)

63CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

11.

Leases (continued)

Additional information on the right-of-use assets by class of assets is as follows:

Equipment
Corporate offices
Retail store locations
Total right-of-use assets

Carrying Amount

$
3,351
2,251,113
1,185,595
3,440,059

Depreciation
Expense

$
1,514
564,570
1,113,042
1,679,126

Impairment

$
-
-
23,684
23,684

At October 31, 2021 the Company recorded $23,684 in additional impairment charges on right-of-use
assets for one (1) retail branch locations that was closed at October 31, 2020.

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, 2021 and 2020 consist of the following:

Deferred tax assets
Accrued expenses
Stock based compensation
Other
Net property and equipment
Net leasing assets
Net intangible assets
Unrecognized deferred tax assets
Right-of-use assets
Total deferred tax assets
Deferred tax liabilities
Net property and equipment
Net intangible assets
Other
Total deferred tax liabilities
Net deferred tax asset

31-Oct-21
$

147,993
58,229
7,500
(25,588)
212,434
10,946
144,809
165,014
721,337

31-Oct-20
$

187,782
669,675
13,721
103,083
158,598
110,744
308,918
-
1,552,521

(52,144)
(355,417)
(99,090)
(506,651)
214,686

(131,069)
(345,906)
(48,895)
(525,870)
1,026,651

Reconciliation of the provision for income taxes to the amount calculated using the Company’s statutory
tax rate for the year ended October 31, 2021 and 2020 are as follows:

Loss before taxes
Statutory tax rate
Tax (recovery) at statutory rate
Permanent items
Research and Development Credit
Other non-deductible differences
Initial recognition of right-of-use assets
Research and development tax credits related to prior years
Change in tax rate
Benefit not recognized on EBC operating losses
Income tax expense (recovery)

31-Oct-21
$
(176,319)
25.98%
(45,816)
247,876
(80,000)
221,598
-
-
(14,131)
625,838
955,365

31-Oct-20
$
(10,342,726)
26.53%
(2,744,244)
163,975

-
-
(110,207)
(121,883)
-
993,662
(1,818,697)

64CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

12.

Income Taxes (continued)

The enacted tax rates in the United States of 21% (2020 – 21%) and Canada of 26.5% (2020 – 26.5%)
where the Company operates are applied in the in the tax provision calculation.

The Company did not recognize a benefit related to net operating losses incurred in the year ended October
31, 2021, in its Canadian subsidiary, Exchange Bank of Canada, due to uncertainty as to its ability to
generate future taxable income against which the losses may be applied. The estimated benefit not
recognized, based on the statutory tax rate in effect on the reporting date is $625,838 (October 31, 2020 -
$993,662). The losses may be carried forward for up to twenty years.

The company did not recognize a benefit related to foreign tax credits due to uncertainty as to its ability to
generate enough foreign source income before the expiration date. The estimated benefit not recognized,
based on the statutory tax rate in effect on the reporting date is $560,871 (October 31, 2020 - $560,871).

The provision for income taxes for the year ended October 31, 2021 and 2020 consists of the following:

Current tax expense (recovery)
Deferred tax expense (benefit)
Income tax expense

October 31, 2021
$
126,708
828,657
955,365

October 31, 2020
$
(1,382,079)
(436,618)
(1,818,697)

13.

Seasonality of Operations and Impact of Global Pandemic

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.

On March 11, 2020 the World Health Organization officially declared COVID-19, the disease caused by a
novel coronavirus (“COVID-19“), a pandemic. The spread of COVID-19 has severely impacted many local
economies around the globe. In many countries, including Canada and the United States of America,
businesses have been forced to cease or limit operations for long or indefinite periods of time. Measures
have been taken to contain the spread of the virus, including travel bans, quarantines, social distancing,
and closures of nonessential services. These measures have triggered significant disruptions to business
worldwide, resulting in reduced economic activity.

The Company implemented a number of measures since the pandemic was declared. Those comprise the
closing of 12 branch locations, partially offset by the opening of 1 location during the year ended October
31, 2020, resulting in a 24% reduction of retail locations to 35 at October 31, 2021 from 46 at March 11,
2020. In addition, the Company has reduced its net employee population by 96, to 267 at October 31, 2021
from 363 at March 11, 2020. The Company also closed one vault in the fiscal year 2020 due to the low
volume of demand for banknotes, which remained closed as of October 31, 2021.

Governments and central banks have responded with monetary and fiscal interventions to stabilize
economic conditions (Note 2). While the Company continues to operate, it is not possible to reliably
estimate the duration and severity of these consequences as well as their impact on the financial position
and results of future periods.

65CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

14.

Lines of Credit

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. with a limit of $20,000,000. The credit
line is secured against the Company’s cash and other assets. The line of credit bears interest at LIBOR
plus 2.0% (at October 31, 2021 – 2.59% (October 31, 2020 – 2.15%)). At October 31, 2021, the balance
outstanding was $Nil (October 31, 2020 - $Nil).

On January 25, 2021, the Company’s wholly owned Canadian subsidiary, EBC, terminated its revolving
line of credit with Bank of Montreal that had a limit of CAD 6,000,000 ($4,844,961). That line of credit bore
interest at CAD prime plus 0.5% [at January 31, 2021 – 2.95% (October 31, 2020 – 2.95%)]. At January
31, 2021, the balance outstanding was $Nil (October 31, 2020 - $3,305,605). In its place, the Bank
established a fully collateralized revolving line of credit with Desjardins Group (“Desjardins”) on October 19,
2020 with a limit of CAD 2,000,000 ($1,614,987), being secured against cash collateral of CAD 2,000,000
($1,614,987). The line of credit bears interest at CAD prime rate plus 0.25% (at October 31, 2021- 2.70%
(October 31, 2020 – 2.70%)). At October 31, 2021, the balance outstanding was $Nil (October 31, 2020 -
$Nil)

On April 7, 2021, EBC entered into a Revolving Credit Facility with a private lender. The facility is
guaranteed by the Company and is subordinated to the Company’s and EBC’s obligations to its primary
lenders. The facility will be used for working capital purposes of daily operational activity. The credit facility
has a limit of $10,000,000 USD, with the option to increase the limit by mutual consent to $20,000,000, with
a term of three years (maturity date April 7, 2024). It bears interest at 6% per annum and has a standby
charge of $1,500 USD per month if total interest in the month is less than $20,000 USD. At October 31,
2021, the balance outstanding was CAD 5,000,000 ($4,037,468).

Interest expense relates to interest payments on lines of credit. Interest expense for the year ended October
31, 2021 was $555,789 (October 31, 2020 - $473,242).

15.

Fair Value Measurement of Financial Instruments

IFRS 9 requires that financial statements include certain disclosures about the fair value of financial
instruments as set out in IFRS 13 and IFRS 7. These disclosures include the classification of fair values
within a three-Level hierarchy. The three Levels are defined based on the observation of significant inputs
to the measurement, as follows:

•
•

•

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
Level 3: unobservable inputs for the asset or liability

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.

66CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

15.

Fair Value Measurement of Financial Instruments (continued)

There were no transfers between Level 1 and Level 2 during the year ended October 31, 2021, and the
year ended October 31, 2020. The following table shows the Levels within the hierarchy of financial assets
and liabilities measured at fair value.

Financial assets

Cash
Forward and option contract assets
Total assets
Financial liabilities
Forward and option contract liabilities
Contingent consideration
Restricted and deferred share units
Total liabilities

Financial assets
Cash
Forward and option contract assets
Total Assets
Financial liabilities
Contingent consideration
Total liabilities

At October 31, 2021

Level 1
$

Level 2
$

Level 3
$

Total
$

66,527,690
-
66,527,690

-
461,487
461,487

-
-
-

66,527,690
461,487
66,989,177

-
-

-
-
644,635
644,635

-
369,830
-
369,830

-
369,830
644,635
1,014,465

At October 31, 2020

Level 1
$

Level 2
$

59,311,553
-
59,311,553

-
92,447
92,447

Level 3
$

Total
$

-
-
-

59,311,553
92,447
59,404,000

-
-

703,560
703,560

Cash (Level 1)

The Company’s cash balances consisting of local and foreign currency notes held in tills, vaults, bank
accounts, and in transit are based upon foreign exchange rates quoted in active markets as of October 31,
2021, and October 31, 2020.

Forward and option contract positions, and Restricted and Deferred share units (Level 2)

The Restricted and Deferred share units are valued using a volume-weighted average price for the five
days that precede the date of grant. The cost of the awards is recorded on a straight-line basis over the
vesting period. At each reporting date, the vested portion of the awards are remeasured at the current fair
value using the same approach as at initial recognition (see Note 16).

The Company’s forward contract positions are not traded in active markets. The fair value of these
instruments has been determined using observable forward exchange rates. The effects of non-observable
inputs are not significant for foreign contract positions.

67
CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

15.

Fair Value Measurement of Financial Instruments (continued)

Contingent consideration (Level 3)

The fair value of contingent consideration, related to the DFG business combination, is estimated based on
the amount of revenue generated from the acquired customer trading relationships. The significant input
for the fair value estimate is management’s estimate of revenues from acquired customers to continue
transacting with the Company. For information about the sensitivity of the fair value measurement to the
changes in the input at October 31, 2021, see Note 4. The fair value estimate of future cash outflows is
$751,887 at October 31, 2021. The first portion of contingent consideration was paid on July 31, 2021, in
accordance with the agreement with DFG. As a result, the Company recorded a loss of $18,989 associated
with the fair value revaluation with respect to this payment Furthermore, the second portion of the contingent
consideration was reclassed from short to long-term liability on the statements of financial position. This
reflects management’s best estimate of a retention rate of key acquired customers in year 1 and in year 2.

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;
• Holding accounts;
•
Lines of credit; and
• Contract asset (liability).

16.

Risk Management

The Company's activities expose it to a variety of financial risks: credit risk, foreign currency risk, interest
rate risk, and liquidity risk. The Company's risk management policies are designed to minimize the potential
adverse effects on the Company's financial performance.

Financial risk management is carried out by the Chief Financial Officer (“CFO”) under policies approved by
senior management and the Board of Directors. Policies are in place to evaluate and monitor risk and in
some cases, prescribe that the Company hedge its financial risks.

The analysis below presents information about the Company's exposure to each of these financial 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.

68CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

16.

Risk Management (continued)

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. The majority of the Company's
receivables reside with banks, money service business customers and other financial institutions. Due to
seasonality, amounts in accounts receivable are usually at their highest during peak periods. Accounts
receivable balances were higher than at October 31, 2021, due to the steady increase in activity and
operations, resulting in an increase in accounts receivable of $10,610,007 from October 31, 2020 to
October 31, 2021. The Company has longstanding relationships with most of its money service business
customers and has a strong repayment history, with one exception (see Note 21).

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.

A breakdown of accounts receivable by category is below:

Customer type
Domestic and international banks
Money service businesses
Other

Total

At October 31, 2021
$
14,128,422
2,138,098
254,850

At October 31, 2020
$
2,923,202
846,168
2,141,993

16,521,370

5,911,363

Foreign Currency Risk

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 tills, vaults and in
transit at October 31, 2021, was approximately $5,359,377 (October 31, 2020 - $6,010,000). The amount
of currency that is unhedged and that is not pegged to the U.S. Dollar is approximately $2,182,767 (October
31, 2020- $4,672,000). 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 +$44,000/-
$44,000 (October 31, 2020 gain/loss of approximately +$93,000/-$93,000).

69CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

16.

Risk Management (continued)

Interest Rate Risk

At October 31, 2021, 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 12.

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.
Management has assessed the Company’s cash position at October 31, 2021, and determined that it is
sufficient to meet its financial obligations despite the reduction in revenue related to the COVID-19
pandemic.

70CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

16.

Risk Management (continued)

The following are non-derivative contractual financial liabilities:

Non-derivative financial liabilities

Carrying amount

Estimated
contractual amount

This fiscal year

Future fiscal years

At October 31, 2021

Accounts payable

Holding Accounts

Line of credit

Contingent consideration

$
26,641,692

5,535,804

4,037,468

369,830

$
26,641,692

5,535,804

4,037,468

369,830

$
26,641,692

5,535,804

4,037,468

$Nil

$
$Nil

$Nil

369,830

Non-derivative financial liabilities

Carrying amount

Estimated
contractual amount

Next fiscal year

Future fiscal years

At October 31, 2020

Accounts payable

Holding Accounts

Line of credit

Contingent consideration

Contract liability

$
13,095,188

1,595,365

3,305,605

703,560

163,901

$
13,095,188

1,595,365

3,305,605

703,560

163,901

$
13,095,188

1,595,365

3,305,605

$Nil

$
$Nil

$Nil

703,560

163,901

The Company had available unused lines of credit amounting to $27,577,509 at October 31, 2021
(October 31, 2020 - $22,701,303).

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, 2021

At October 31, 2020

90,710,774

(40,829,895)

49,880,879

71,219,313

(23,463,619)

47,755,694

71CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

17.

Foreign Currency Forward and Option Contracts

The Company enters into foreign currency forward and purchase put 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 in the consolidated statements of operations and other comprehensive (loss) 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 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, 2021 was $461,487 (October 31,
2020 - $92,447).

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. There were no options exercised during the current and prior fiscal year.

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 for
management 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, while vesting for directors under the plan will occur equally on
a quarterly basis in the first year after the grant. All the options have a five-year term, unless otherwise
specified by the Board of Directors.

The outstanding options at October 31, 2021, and the respective changes during the periods are
summarized as follows:

Outstanding at October 31, 2020

Granted

Exercised

Forfeited/Cancelled/Expired

Outstanding at October 31, 2021

Number of options

Weighted average price

CAD$

732,803

140,972

(60,098)

813,677

14.01

14.65

16.05

14.65

72CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

18.

Equity (continued)

The following options are outstanding and exercisable at October 31, 2021:

Grant Date
6-Jun-17
23-Jan-19
4-Mar-19
4-Jun-19
23-Oct-19
23-Oct-19
24-Jun-20
29-Jul-20
29-Oct-20
29-Oct-20
28-Dec-20
28-Jan-21
28-Oct-21

Total
Weighted
Average

Exercise
price
(CAD$)

Number
outstanding

21.53
28.23
25.83
17.36
17.36
17.36
12.74
10.83
10.83
10.83
9.31
11.02
14.35

14.65

5,586
1,411
43,316
5,837
72,376
203,849
29,955
18,000
7,032
285,343
2,431
3,873
134,668

813,677

Average remaining
contractual life
(years)
0.60
2.23
2.34
2.59
2.98
2.98
3.65
3.75
4.00
4.00
4.16
4.25
4.99

Number exercisable

5,586
36
28,877
5,837
72,376
127,598
24,898
18,000
7,032
89,732
-
-
-

379,972

The 203,849 remaining options outstanding from the October 23, 2019 grant were made outside of the
Company’s stock option plan, and in accordance with the policies of TSX and was approved by the
shareholders on March 25, 2020.

On January 28, 2021 3,873 options were granted to an officer which have a weighted average exercise
price of CAD10.36 and 5-year expiration date.

On July 31, 2021, 17,771 options were forfeited by former employees whose period for exercising their
options expired during the period. Expenses for vested options that had been recognized prior to fiscal
year 2021, were deducted from retained earnings to comply with matching principle.

On October 28, 2021 134,668 options were granted to officers which have a weighted average exercise
price of CAD14.35 and an expiry date of 5 years from the date of grant.

Restricted Stock Unit and Deferred Stock Unit Plans

On November 1, 2020 the Company made its first grants under the Deferred Share Unit “DSU” Plan and
Restricted Stock Unit “RSU” Plan (collectively the "Plans"). The Company granted 47,144 RSU and 29,596
DSU awards in the amount of $388,000 and $220,000 respectively. The Company recorded expenses of
$644,635 related to RSU and DSU awards in the year ended October 31, 2021 as part of stock-based
compensation. The amounts related to the vested portions of granted RSU and DSU awards are recorded
within other long-term liabilities in the consolidated statements of financial position. The awards that may
be granted under each of the Plans can be realized in cash only and may not be converted into common
shares of the Company. The Units awarded are issued based upon the market value equal to the price of
the Company’s stock price as at the date of the grant and vest over a one-year or three-year period.

73CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

18.

Equity (continued)

The purpose of these Plans 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 Plans, vesting of the awards that may be granted under the Plans for management will
occur 1/3 upon the first anniversary, 1/3 upon the second anniversary and 1/3 upon the third anniversary
of the grant, while vesting for awards that may be granted under the Plans for directors will occur equally
on a quarterly basis in the first year after the grant. All the management awards have a three-year term,
unless otherwise specified by the Board of Directors. The Directors’ awards cannot be exercised until the
Director retires from the Board.

19.

Loss per Share

The calculation of basic and diluted loss per share is presented below. Equity instruments that are anti-
dilutive, such as various stock options granted, have not been included in the calculation of the weighted
average number of shares outstanding.

Basic
Net Loss
Weighted average number of shares outstanding
Basic (loss) per share
Diluted
Net Loss
Weighted average number of shares outstanding
Diluted (loss) per share

20.

Operating Expenses

October 31, 2021

October 31, 2020

Year ending

(1,131,684)
6,414,936
($0.18)

($8,524,029)
6,414,936
($1.33)

The table below identifies the composition of the nature and amounts included within the operating
expenses presented in the consolidated statements of operations for the years ended October 31, 2021,
and 2020.

Salaries and benefits
Rent
Legal and professional
Postage and shipping
Stock based compensation
Travel and entertainment
Bank service charges
Information technology
Losses and shortages
Insurance
Foreign exchange losses (gains)
Other general and administrative
Operating expenses

Year ending

October 31, 2021

October 31, 2020

$
17,691,157
999,821
2,757,692
2,731,708
978,508
219,305
1,485,758
1,450,330
82,713
744,764
364,230
806,461
30,312,447

$
16,866,772
1,152,141
2,824,561
2,373,942
1,005,903
386,739
1,234,725
1,330,994
276,556
497,701
(23,913)
1,073,093
28,999,214

74CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

21.

Restructuring Expenses and Impairment Loss

The COVID-19 pandemic crisis and measures enacted to curtail the effects of COVID-19 have posed
significant challenges to the Company and has brought uncertainties for the business. The Company has
enacted several measures in response to the pandemic to reduce costs and maintain liquidity. These
measures have been comprised of a number of restructuring actions, including the permanent closure of
12 of its retail branch locations, reduced operating hours at its remaining branches, the elimination of 106
employment positions since the beginning of the pandemic, including a consolidation of certain
management positions. As a result, the Company has recognized the additional restructuring expenses of
$96,711 (October 31, 2020 - $1,072,472) in respect of one of the branch locations that it closed.

The significant elements of the restructuring expense are identified in the table below.

Rent related to periods subsequent to closure
Lease impairment
Impairment of property and equipment assets
Operating expense
Termination benefits
Loss on disposal of asset
Loss on lease termination
Total restructuring expense and impairment loss

October 31, 2021
-
23,684
-
73,027
-
-
-
96,711

October 31, 2020

172,774
222,039
120,926
42,747
365,078
13,757
135,151
1,072,472

At October 31, 2021 the Company recorded $23,684 (October 31, 2020 - $222,039) in additional
impairment charges on right-of-use assets for 1 retail branch locations that was closed at October 31,
2020. The Company also recorded $73,027 (October 31, 2020 - $42,747) in additional operating expenses
associated with the closures at October 31, 2020.

22.

Compensation of Key Management Personnel and Related Party Transactions

In accordance with IAS 24 Related Party Disclosures, key management personnel are those persons
having authority and responsibility for planning, directing, and controlling activities of the Company directly
or indirectly, including any directors (executive and non-executive) of the Company. The remuneration of
directors and other members of key management personnel during the year ended October 31, 2021, and
2020 was as follows:

Short-term benefits

Post-employment benefits

Stock based compensation

Year ending

October 31, 2021

October 31, 2020

3,030,562

42,848

978,508

4,051,918

2,824,853

72,710

1,005,912

3,903,475

75CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

22.

Compensation of Key Management Personnel and Related Party Transactions (continued)

The Company incurred legal and professional fees in the aggregate of $246,027 for the year ended October
31, 2021 (2020 – 211,000) charged by entities controlled by directors or officers of the Company.

On October 1, 2011, the Company entered into an employment agreement with the President and CEO of
the Company. Such agreement contains clauses requiring additional payments of a minimum of $450,000
to be made upon the occurrence of certain events such as a change of control of the Company or
termination for reasons other than cause. As the likelihood of a change of control of the Company is not
determinable, the contingent payments have not been reflected in the condensed interim consolidated
financial statements.

On July 28, 2021, EBC and CXI entered a subordinated debt agreement in the amount of CAD 5,000,000
or $3,976,776 USD. The debt is convertible should OSFI declare a Non-Viability Contingent Conversion
(“NVCC”) event. This included receipt of cash in exchange for capital stock, and recording of the
subordinated debt offsetting the intercompany loan balance. This note bears interest at 6% payable monthly
in arrears on August 31, 2021, and thereafter on the last day of each month, up to and including July 28,
2031. All amounts related to the debt and interest are eliminated on 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, 2021 and 2020, 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.

23.

Other Current Assets

Prepaid rent
Prepaid personnel
Prepaid computer software
Prepaid insurance
Prepaid advertising
Government grants
Other current assets
Total

At October 31, 2021

At October 31,
2020

$
269,062
27,786
140,722
39,314
-
3,502,067
655,540
4,634,491

$
248,682
53,494
101,786
86,286
20,833
173,880
425,850
1,110,812

76CURRENCY EXCHANGE INTERNATIONAL, CORP.
Notes to the Consolidated Financial Statements
Years ended October 31, 2021 and 2020
(Expressed in U.S. Dollars)

24.

Loss provision and contingent asset

A wholesale customer of the Company filed a Notice of Intention to Make a Proposal to its creditors under
the Bankruptcy and Insolvency Act (Canada) (“BIA”) on April 30, 2020. At April 30, 2020 the Company
recorded a loss provision of $1,012,946 (CAD 1,424,000) for amounts owed to it by the customer. Such
customer subsequently failed to make a proposal to its creditors and was automatically placed into
Bankruptcy on June 30, 2020, resulting in the Company becoming an unsecured creditor of the bankrupt
customer’s estate. Subsequently, the Trustee in Bankruptcy claimed that three payments that the customer
made to the Company in April 2020 that totaled $1,000,000 were made within 90 days of the date of
bankruptcy, and therefore were preferential, in contravention of the BIA. At October 31, 2020 the Company
recorded an additional provision of $675,000 (CAD 898,965) as a reasonable estimate of the expected
future cash outflows with respect to this customer’s bankruptcy. In April 2021, the Company entered into
an agreement with the Trustee in Bankruptcy to return $825,000 of the alleged preference payments and
in exchange the Trustee accepted the Company’s claims, totaling $1,825,000, against the bankrupt’s
assets. The settlement resulted in the recognition of an additional $112,299 loss, which the Company
recorded in April 2021. It is probable that the Company will receive a distribution of the bankrupt’s assets,
which is estimated to be in the range of 6% to 20% of the total claim. The Company has not recognized
any receivable related to prospective future cash flows on the distribution of the assets.

25.

Subsequent events

The Company evaluated subsequent events through January 26, 2022 the date these consolidated financial
statements were issued.

There were no other material subsequent events that required recognition or additional disclosure in the
financial statements.

77Board of Directors

Joseph August
Director of CXI
Director of EBC
Committees: Governance Committee
Member, Risk Committee Member
Independent board member since 2011

Chirag Bhavsar

Chair of the Board of CXI
Director of EBC
Committees: Audit Committee Member,
Governance Committee Member, Risk
Committee Member
Independent board member since 2012

Johanne Brossard
Director of CXI
Director of EBC
Committees: Chair of the Governance
Committee, Risk Committee Member
Independent board member since 2018

Chitwant Kohli
Director of CXI
Chair of the Board of EBC
Committees: Chair of the Audit Committee,
Risk Committee Member
Independent board member since 2018

Mark D. Mickleborough

Stacey Mowbray

Director of CXI
Director of EBC
Board member since 2007

Director of CXI
Director of EBC
Committees: Audit Committee Member,
Governance Committee Member
Independent board member since 2019

Randolph W. Pinna
Director of CXI
Director of EBC
President and CEO of CXI
President and CEO of EBC
Board member since 2007

V. James Sardo
Director of CXI
Director of EBC
Committees: Audit Committee Member,
Governance Committee Member
Independent board member since 2012

Daryl Yeo
Director of CXI
Director of EBC
Committees: Chair of the Risk Committee,
Audit Committee Member
Independent board member since 2019

Shareholder Information

Annual Meeting of Shareholders
Shareholders are invited to attend the virtual annual meeting
of Currency Exchange International, Corp. to be held on March
17, 2022 at 12:00 p.m. (EST).

Details on how to attend via webcast or telephone will be
listed on CXI’s investor relations webpage:
www.ceifx.com/investor-relations

certificates, to eliminate duplicate mailings or to receive
shareholder material electronically, please contact our
Transfer Agents in Canada.

Transfer Agent
Computershare Investor Services
100 University Ave, 8th Floor, South Tower
Toronto, Ontario Canada M5J 2Y1

Investor Relations
Financial Analysts, portfolio managers and other investors
requiring financial information may contact our Investor
Relations’ departments:

Telephone: (800) 564 6253 (Toll Free)
Facsimile: (888) 453 0330 (Toll Free)
Web Site: www.computershare.com

(USA) Telephone: (407) 240 0224
(USA) Toll-Free: (888) 998 3948
(USA) Email: InvestorRelations@cxifx.com
(CANADA) Telephone: (416) 479 9547
(CANADA) Email: bill.mitoulas@cxifx.com

Shareholder Services
For information or assistance regarding your share account,
including dividends, changes of address or ownership, lost

Currency Exchange International: Annual Report 2021

Computershare offices are also located in Calgary, Halifax,
Montreal, Richmond Hill and Vancouver.

Auditors
Grant Thornton LLP
Chartered Professional Accountants
Licensed Professional Accountants
Mississauga, Canada

78
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