THE GOLDFARB CORPORATION ANNOUNCES THIRD QUARTER RESULTS

TORONTO, Nov. 23 /CNW/ - The Goldfarb Corporation (the "Corporation") today announced its third quarter results. 

Revenues from operations for the third quarter of 2010 were $12,000 compared to $9,000 in 2009, an increase of $3,000. The net income for the Corporation in the third quarter of 2010 was $107,000 or $0.02 per share compared to a net loss of $323,000 or $0.06 per share in 2009.

For the nine-month period ended September 30, 2010, the Corporation's revenues were $33,000 compared to $85,000 in 2009, a decrease of $52,000. The net income for the first nine months of 2010 was $995,000 ($0.17 per share) compared to net income of $377,000 ($0.06 per share) in 2009. 

The accompanying ten pages of unaudited interim financial statements have been prepared by and are the responsibility of the Corporation's management.  The Corporation's auditor has not performed a review of these interim financial statements.

Statement of Income (Loss) Comprehensive Income (Loss) and Deficit

(unaudited)		Three Months Ended September 30		Nine Months Ended September 30
		2010	2009	2010	2009
(thousands of dollars except per share information)		$	$	$	$
Interest revenue		12	9	33	85
Administrative expenses		275	268	764	773
		(263)	(259)	(731)	(688)
Litigation recoveries (note 7)		-	-	834	1,315
Fair value recovery on long-term investments (note 2)		400	-	900	-
Depreciation		(1)	(1)	(3)	(3)
Foreign exchange gains (losses)		(29)	(63)	(5)	(247)
Net Income (Loss) and Comprehensive Income (Loss)		107	(323)	995	377
Deficit, beginning of period		(32,253)	(32,524)	(33,141)	(33,224)
Deficit, end of period		(32,146)	(32,847)	(32,146)	(32,847)
Basic Income (Loss) per Share		0.02	(0.06)	0.17	0.06
Weighted average number of shares outstanding		5,936,660	5,936,660	5,936,660	5,936,660

Cash Flow Statement
(unaudited)	Three Months Ended September 30		Nine Months Ended September 30
	2010	2009	2010	2009
(thousands of dollars)	$	$	$	$
Operating Activities
Income (loss) from operations	107	(323)	995	377
Add (deduct) items not involving cash:
Depreciation	1	1	3	3
Foreign exchange (gains) losses	29	63	5	247
Fair value recovery on long-term investment (note 2)	(400)	-	(900)	-
	(263)	(259)	103	627
Changes in non-cash working capital balances (note 4)	84	78	(25)	(103)
Cash provided by (used in) operating activities	(179)	(181)	78	524
Financing Activities
Distribution to shareholders (note 3)	-	-	-	(6,530)
Cash used in financing activities	-	-	-	(6,530)
Investing Activities
Acquisition of short-term investments	-	(1,330)	-	(6,785)
Redemption of short-term investments	1,453	-	6,570	6,582
Principal and interest received on long-term      investments (note 2)	4	40	11	860
Repayment of note receivable	-	1,122	-	1,478
Acquisition of capital assets, net	-	-	(2)	-
Cash provided by (used in) investing activities	1,457	(168)	6,579	2,135
Foreign exchange gain (loss) on cash held in foreign currecurrency	(29)	(124)	(5)	(247)
Increase (decrease) in cash and cash equivalents for the period	1,249	(473)	6,652	(4,118)
Cash and cash equivalents, beginning of period (note 4)	6,428	1,535	1,025	5,180
Cash and cash equivalents, end of period (note 4)	7,677	1,062	7,677	1,062

Balance Sheet
(unaudited)	September 30 2010	December 31 2009
(thousands of dollars)	$	$
ASSETS
Current Assets
Cash and cash equivalents (note 4)	7,677	1,025
Short-term investments	80	6,650
Accounts receivable and prepaid expenses	70	55
Total Current Assets	7,827	7,730
Long-term Investments (note 2)	9,770	8,881
Capital Assets	11	12
	17,608	16,623
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities	95	105
Total Current Liabilities	95	105
Shareholders' Equity
Capital stock (note 3)	49,206	49,206
Contributed surplus	453	453
Deficit	(32,146)	(33,141)
Total Shareholders' Equity	17,513	16,518
	17,608	16,623

Notes to Interim Financial Statements

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For the period ended September 30, 2010 (thousands of dollars)
(unaudited)

1. Significant Accounting Policies

The disclosures contained in these unaudited interim financial statements do not include all requirements of generally accepted accounting principles for annual financial statements.  The unaudited interim financial statements are based upon accounting principles consistent with those used and described in the annual financial statements for the year ended December 31, 2009.  The unaudited interim financial statements should be read in conjunction with the annual financial statements for the year ended December 31, 2009. 

The unaudited interim financial statements reflect all adjustments, consisting only of normal recurring accruals, which are, in the opinion of management, necessary to present fairly the financial position of the Corporation as of September 30, 2010 and the results of operations and cash flows for the periods ended September 30, 2010 and 2009. 

2. Long-Term Investments (formerly Asset-Backed Commercial Papers ("ABCP"))

	September 30	December 31
	2010	2009
	$	$
Long-Term Investments	9,770	8,881

In 2007, the Corporation invested $17.1 million in three separate non-bank sponsored ABCP that did not redeem on maturity as a consequence of liquidity issues in the non-bank sponsored ABCP market. As a result, the Corporation has classified its investment as held-for-trading long-term investments.  These investments are recorded at fair value with unrealized gains and losses included in earnings.

The securities were subject to restructuring pursuant to which the holders of the ABCP, including the Corporation, exchanged their securities for new floating rate notes with maturities that match the maturities of the underlying assets.  The restructuring was completed in January 2009 and on closing, the Corporation exchanged its holdings of ABCP for $17.1 million of long-term floating rate notes from Master Asset Vehicle 2 ("MAV 2").  During 2009, net interest of $898 was received on the ABCP for the period from August 2007 to the closing of the restructuring. These amounts have been included in the calculation of the fair value of the long-term investments.

The MAV 2 Notes can be summarized as follows at September 30, 2010:

Note Categories	Interest Rate
		$
Class A-1	BA - 50 bps	5,964
Class A-2	BA - 50 bps	8,497
Class B	BA - 50 bps	1,542
Class C	20%	496
Class 15 Tracking Notes	Floating	541
		17,040
Interest received		(932)
Valuation provision		(6,338)
Balance at September 30, 2010		9,770

Interest on the Class A-1 and A-2 Notes is payable quarterly after payment of the margin funding facility ("MFF"). The Class B and C Notes will pay interest only after the Class A-1 and A-2 Notes are fully repaid. The Class 15 Notes pay interest quarterly to the extent that proceeds are realized and cash is available for that note.  On September 21, 2010, the Class A-1 Notes were upgraded to an "A High" rating from the previous "A" Rating, "Under Review With Positive Implications". The Class A-2 Notes continue to carry the "BBB Low" rating assigned in February 2010.  The remaining notes are not rated.

Interest rates on the MAV 2 Notes are primarily based on prevailing Banker's Acceptance rates.  Interest on the Class A-1 and A-2 Notes has not been consistently paid when it became due because of low prevailing banker's acceptance rates. As a result of these low rates, there were insufficient funds to pay the fixed expense of the MFF required to be paid prior to interest being paid.  Interest on the Class 15 Notes has been paid through all quarters since their issuance.  A one-time principal repayment attributable to excluded securities was made on the Class A-1 Notes and was received in two distributions that occurred during 2009 and 2010.

There is currently an illiquid market for the MAV 2 Notes. Trading has been limited and at distressed prices. It is uncertain when or if a liquid market will develop. As a result, until a liquid market develops, the Corporation will continue to estimate the fair value of its long-term investments using a valuation technique which incorporates a probability weighted discounted cash flow approach considering the best available market data for such investments. At September 30, 2010, the Corporation estimated the fair value of its long-term investments to be $9.8 million (December 31, 2009 - $8.9 million).  Consequently, the Corporation recorded a fair value recovery on its long-term investments of $900 during the nine months ended September 30, 2010.

The significant assumptions used to value the Corporation's investment in these securities are as follows:

Timing of principal repayments Risk free interest rate on Class A-1, A-2 and Class 15 Notes    Discount rate on Class B and C Notes Interest rate on Class A-1 and A-2 Notes Interest rate on Class B, C and Class 15 Notes Initial term of notes Recovery of Class A-1 and A-2 Note principal and interest Recovery of Class B and C Note principal and interest Recovery of Class 15 Note principal and interest

at maturity 1.79% to 3.41% 30% 2.0% 2.0% to 20.0% 6-8 years 45% to 100% 0% to 40% 80% to 100%

The fair value of these investments could range from $9.1 million to $11.0 million using the same valuation methodology with alternative reasonably possible assumptions. In subsequent periods, the recorded fair values may change materially from the estimated fair values. A 1% change in the discount rate would increase or decrease the estimated fair value of these long-term investments by approximately $0.5 million.

3. Capital Stock

The Corporation's authorized capital stock is as follows:

• Unlimited number of Preference Shares, issued in series;
• Unlimited number of Class A Subordinate Voting Shares;
• 182,000 Class B Shares carrying 15 votes per share, convertible into Class A Subordinate Voting Shares on a one-for-one basis. In certain prescribed circumstances, additional Class B Shares as may be required to effect the conversion of Class A Subordinate Voting Shares into Class B Shares.

The issued share capital is summarized as follows:

	September 30 2010		December 31 2009
	$		$
5,754,660 Class A Subordinate Voting Shares	49,193		49,913
182,000 Class B Shares	13		13
	49,206		49,206

In February 2009, the shareholders of the Corporation passed a special resolution approving the reduction of the Corporation's stated capital by an aggregate of $6.5 million, resulting in a distribution of $1.10 per Class A Subordinate Voting Share and Class B Share. The distribution was made in February 2009.

4. Supplementary Cash Flow Information

a)  Changes in non-cash working capital balances

	Three Months Ended September 30		Nine Months Ended September 30
	2010	2009	2010	2009
	$	$	$	$
Decrease (increase) in accounts and other receivables	33	60	(15)	(25)
Increase (decrease)  in accounts payable and accrued liabilities	51	18	(10)	(78)
Changes in non-cash working capital balances	84	78	(25)	(103)

b)  Cash and cash equivalents
Cash and cash equivalents consist of cash on hand and with banks, and short-term investments in highly liquid instruments with original maturities of 365 days or less.  Cash and cash equivalents included in cash flow statements comprise the following balance sheet amounts:

	September 30
	2010		2009
	$		$
Cash on hand and with banks	128		85
Cash equivalents	7,549		977
	7,677		1,062

c) Income taxes recovered
There were no income tax payments or recoveries during the periods ended September 30, 2010.
  

5. Income Taxes

The Corporation's provision for income taxes differs from the Canadian statutory income tax rate of 31.0% (2009 - 33.5%) due to the unrecognized benefit of non-capital loss carry-forwards from losses incurred in prior years. At December 31, 2009, the Corporation had non-capital losses available to reduce future taxable income of approximately $13.3 million.  No tax benefits have been recognized on the losses incurred because it is more likely than not that the losses will not be realized.  If unused, these losses expire as follows:

Year of Expiry	Amount
2026	$10,696
2028	2,593
	$13,289

At December 31, 2009, the Corporation had capital losses available to offset future capital gains of approximately $27.0 million.  These capital losses do not expire.

6. Segmented Information

The Corporation's sole business segment is an investment holding company.  The Corporation's operations reside entirely in Canada.

7. Litigation Recoveries

(a) In 2006, the Corporation reached a settlement in the amount of $12 million in the claim that had been filed against the Corporation and certain of its officers by the purchaser of Goldfarb Consultants, the market research and consulting business sold by the Corporation in 1998.  The Corporation sought contribution toward the settlement amount from the insurer of the Corporation's directors and officers.  In April 2009, a panel of arbitrators ruled in favour of the Corporation and determined that the insurer should contribute US$ 960 plus related interest costs. The Corporation received Cdn $1.32 million. The recovery has been recorded as income in 2009.

(b) In 2008, the Corporation reached a settlement in the amount of US$1.45 million in the claim that had been filed against the Corporation and certain of its directors and officers by the trustee of Fleming Packaging Corp. ("Fleming"). The Corporation sought contribution toward the settlement amount from the insurer of the Corporation's directors and officers.  Arbitration proceedings were completed in 2009 and in the first quarter of 2010, the arbitrator ruled in favour of the Corporation determining that the insurer should contribute US$725 plus interest and costs.  In March 2010, the Corporation received CDN$834.  The recovery has been recorded as income.

8. Financial Instruments 

The carrying values reported in the balance sheet for cash and cash equivalents, short-term investments, accounts receivable and accounts payable and accrued liabilities approximate fair values due to the short maturity of those instruments.  Long-term investments are carried at estimated fair value.

The Corporation uses the following hierarchy in attempting to maximize the use of observable inputs and minimize the use of unobservable inputs, primarily using market prices in active markets.

Level 1 - Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing on an ongoing basis.

Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable that can be corroborated by observable market data for substantially the full term of the asset or liability.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following details the fair value hierarchy classification for financial instruments carried at fair value on the balance sheets:

	Fair value at September 30, 2010 using
	Level 1	Level 2	Level 3
	$	$	$
Cash and cash equivalents	7,677	-	-
Short-term investments	80	-	-
Long-term investments	-	-	9,770
	7,757	-	9,770

The nature of these financial instruments and the Corporation's structure as an investment holding company expose the Corporation to credit risk, interest rate risk, currency risk and liquidity risk. The Corporation manages its exposure to these risks by employing risk management strategies and policies to ensure that any exposure to risk is in compliance with the Corporation's capital management objectives and risk tolerance levels. These risks are monitored in relation to market conditions. The Board of Directors has overall responsibility for the establishment and oversight of the Corporation's risk management framework.

a) Credit risk
Financial instruments that potentially subject the Corporation to concentrations of credit risk consist of cash and cash equivalents, short-term and long-term investments and accounts receivable.  The Corporation's cash and cash equivalents and short-term investments consist of bank deposits and investments in highly rated liquid investments with Canadian financial institutions. The long-term investments are in floating rate notes receivable.

Financial instruments are exposed to credit risk as a result of the risk of the counter-party defaulting on its obligations. The Corporation monitors and limits its exposure to credit risk on a continuous basis. The Corporation provides reserves for credit risks based on the financial condition and short and long-term exposures to counter-parties.

As at September 30, 2010, the maximum exposure to credit risk was $17,597 (December 31, 2009 - $16,611) being the carrying value of its cash and cash equivalents, short-term and long-term investments and accounts receivable. None of the financial assets that are fully performing have been renegotiated during the year. The Corporation does not believe that there is significant credit risk arising from any of its receivables and investments except in connection with its long-term investments as disclosed in Note 2.

b) Interest rate risk
The Corporation is exposed to interest rate risk arising from fluctuations in interest rates on its cash and cash equivalents, short-term investments and long-term investments.  Cash and cash equivalents which are in excess of day-to-day requirements are placed on short-term deposit with Canadian financial institutions and earn interest at rates available at the time the deposits are made.  A 1% increase in market interest rates would have increased interest revenue by approximately $57 for the nine months ended September 30, 2010. The Corporation also has interest rate risk relating to its long-term investments as disclosed in Note 2.

c) Currency risk
The Corporation has financial assets which are denominated in U.S. dollars and are subject to fluctuations in exchange rates of the Canadian dollar with the U.S. dollar.  The Corporation does not utilize any financial instruments or cash management policies to mitigate the risks arising from changes in exchange rates.  At September 30, 2010, the Corporation had cash and cash equivalents and short-term investments of $1,617 and accounts payable and accrued liabilities of $52 which were denominated in U.S. dollars. A 10% change in the foreign exchange rate from Canadian dollars to United States dollars at September 30, 2010 would have increased or decreased the foreign exchange gain by approximately $162 for the nine months ended September 30, 2010.

d) Liquidity risk
The Corporation's approach to managing liquidity is to ensure that it will have sufficient liquidity to meet its liabilities when they are due. The Corporation manages liquidity risk through timing the maturities of its investments to match its financial obligations and ensuring that it invests in secure instruments. The Corporation's contractual obligations are specifically related to its accounts payable and accrued liabilities and operating lease obligations. At September 30, 2010, the Corporation's accounts payable and accrued liabilities were $95, all of which become due for payment within the normal terms of trade, generally between 30 and 60 days (December 31, 2009 - $105).  The Corporation leases office space under an operating lease requiring average annual payments of $81 expiring in 2012 for a total commitment of $185 at September 30, 2010.

9. Capital Management

The Corporation defines its capital as cash and cash equivalents, short-term investments and long-term investments. Since the resolution of the arbitration and other contingencies, the Board of Directors have been evaluating the various alternatives for the use of its capital, including determining the cash available for distribution to shareholders. The Board will consider alternative methods of effecting a tax efficient distribution prior to making such a distribution.  The Corporation's objectives in managing its capital are to provide an appropriate return on investment to its shareholders while maintaining capital preservation.

There were no changes in the Corporation's approach to capital management in the period ended September 30, 2010.

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The Goldfarb Corporation trades on the NEX Board of the TSX Venture Exchange under the symbol GDF.H.

November 23, 2010

%SEDAR: 00002535E

For further information:

Karen Killeen, Chief Financial Officer, at (416) 928‑3710, Toronto, [email protected]