The Goldfarb Corporation announces second quarter results



    TORONTO, Aug. 14 /CNW/ - The Goldfarb Corporation (the "Corporation")
today announced its second quarter results.
    Revenues from operations for the second quarter of 2007 were $385,000
compared to $1,435,000 in 2006, a decrease of $1,050,000. The net loss for the
Corporation in the second quarter of 2007 was $160,000 or $0.03 per share
compared to net income of $674,000 or $0.12 per share in 2006. The significant
decrease in revenues and net income in the second quarter of 2007 reflect the
receipt of deferred interest in connection with the early repayment of the
Speedy acquisition note in 2006.
    For the first half of 2007, the Corporation's revenue was $783,000
compared to $1,997,000 in 2006, a decrease of $1,214,000. The net loss for the
first six months of 2007 was $295,000 ($0.05 per share) compared to net income
of $807,000 ($0.14 per share) in 2006.
    The accompanying six 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      Six Months Ended
                                          June 30               June 30
                                       2007       2006       2007       2006
    -------------------------------------------------------------------------
    (thousands of dollars except
     per share information)               $          $          $          $

    Interest revenue                    385      1,435        783      1,997
    Administrative expenses              93        486        592        971
    -------------------------------------------------------------------------
                                        292        949        191      1,026
    Depreciation                         (3)        (3)        (5)        (7)
    Foreign exchange loss              (449)      (272)      (481)      (212)
    -------------------------------------------------------------------------
    Net Income (Loss) and
     Comprehensive Income (Loss)       (160)       674       (295)       807
    Deficit, beginning of period    (23,361)   (12,380)   (23,226)   (12,513)
    -------------------------------------------------------------------------
    Deficit, end of period          (23,521)   (11,706)   (23,521)   (11,706)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic and Diluted Income (Loss)
     per Share                        (0.03)      0.12      (0.05)      0.14
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    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      Six Months Ended
                                          June 30               June 30
                                       2007       2006       2007       2006
    -------------------------------------------------------------------------
    (thousands of dollars)                $          $          $          $

    Operating Activities
    Income (loss) from operations      (160)       674       (295)       807
    Add items not involving cash:
      Depreciation                        3          3          5          7
      Foreign exchange loss             447        272        481        212
    -------------------------------------------------------------------------
                                        290        949        191      1,026
    Changes in non-cash working
     capital balances (note 4)         (276)       (27)       (26)       (49)
    -------------------------------------------------------------------------
    Cash provided by operating
     activities                          14        922        165        977
    -------------------------------------------------------------------------

    Investing Activities
    Repayment of notes receivable         -      9,202      2,545      9,315
    Redemption of short-term investments  -          -     21,871     17,332
    -------------------------------------------------------------------------
    Cash provided by investing
     activities                           -      9,202     24,416     26,647

    Foreign exchange loss on cash
     held in foreign currency          (307)       (69)      (326)       (16)
    -------------------------------------------------------------------------
    Increase (decrease) in cash and
     cash equivalents for the period   (293)    10,055     24,255     27,608
    Cash and cash equivalents,
     beginning of period (note 4)    31,217     29,423      6,669     11,870
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period (note 4)          30,924     39,478     30,924     39,478
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Balance Sheet
    -------------------------------------------------------------------------
    (unaudited)                                        June 30   December 31
                                                          2007          2006
    -------------------------------------------------------------------------
    (thousands of dollars)                                   $             $

    ASSETS
    Current Assets
    Cash and cash equivalents (note 4)                  30,924         6,669
    Short-term investments                                   -        21,871
    Accounts and other amounts receivable                  192           314
    Current portion of notes receivable (note 2)             -         2,545
    Income taxes recoverable                                34            34
    -------------------------------------------------------------------------
    Total Current Assets                                31,150        31,433
    -------------------------------------------------------------------------
    Notes Receivable (note 2)                            1,537         1,692
    -------------------------------------------------------------------------
    Capital Assets                                          21            26
    -------------------------------------------------------------------------
                                                        32,708        33,151
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current Liabilities
    Accounts payable and accrued liabilities                40           188
    -------------------------------------------------------------------------
    Total Current Liabilities                               40           188
    -------------------------------------------------------------------------
    Shareholders' Equity
    Capital stock (note 3)                              55,736        55,736
    Contributed surplus                                    453           453
    Deficit                                            (23,521)      (23,226)
    -------------------------------------------------------------------------
    Total Shareholders' Equity                          32,668        32,963
    Contingencies (note 8)
    -------------------------------------------------------------------------
                                                        32,708        33,151
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Notes to Interim Financial Statements
    -------------------------------------------------------------------------
    For the period ended June 30, 2007 (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 should be read in conjunction with the annual
    financial statements for the year ended December 31, 2006.

    The unaudited interim financial statements are based upon accounting
    principles consistent with those used and described in the annual
    financial statements, except that effective January 1, 2007, the
    Corporation adopted three new Handbook Sections issued by the CICA
    relating to financial instruments: Section 3855 ("Financial Instruments -
    Recognition and Measurement"), Section 1530 ("Comprehensive Income") and
    Section 3865 ("Hedges"). The adoption of these standards did not have a
    significant impact on the Corporation's financial results.

    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 June 30, 2007 and the results of operations and cash
    flows for the periods ended June 30, 2007 and 2006.

    2.  Notes Receivable

    The following notes represent the Corporation's pro-rata share (48.4%) of
    the promissory notes issued by SMK Speedy International Inc. ("Speedy"):

                                                       June 30   December 31
                                                          2007          2006
                                                      -----------------------
                                                             $             $
    T-Note (US $1,453; 2006-US $3,633)                   1,537         4,237

    Less: Amount due within one year                         -         2,545
                                                      -----------------------
                                                         1,537         1,692
                                                      -----------------------
                                                      -----------------------

    T-Note

    The note has terms and conditions that match the note that Speedy
    received from the purchaser, Tuffy Associates Corp. (the "Purchaser"),
    upon the sale of its Car-X business in 2002 and is comprised of:
       a.     A note in the amount of US $1,453 bearing interest at US prime
       plus 3%, payable quarterly, with the principal due July 8, 2007 or at
       an earlier date under certain circumstances.
       b.     A further note in the amount of US $2,906 bearing interest at
       US prime plus 2% payable quarterly, with US $484 of principal payments
       due on July 8 in each of the years 2007 through 2009 with the balance
       of US $969 due on July 2, 2010.

    These notes are collateralized by the assets of the Purchaser and its
    subsidiary, Car-X Associates Corp. The note bearing interest at U.S.
    prime plus 3% is further collateralized by a guarantee of the Purchaser.
    The Corporation is entitled to receive interest and principal payments
    only to the extent that such amounts are received from the Purchaser and
    has no further recourse against Speedy.

    In February 2007, the Purchaser renegotiated certain terms and conditions
    of the note which resulted in an immediate prepayment of all principal
    amounts due in 2007 and 2008 plus related accrued interest (US $2,219).
    The maturity date of the remaining principal of US $1,453 is now July 8,
    2009. The Purchaser has guaranteed the remaining principal balance. The
    noteholders have agreed to subordinate the remaining outstanding
    principal to new increased senior bank financing of the Purchaser.

    Acquisition Note

    The Acquisition Note, which was repaid in May 2006, was originally
    repayable over 5 years to 2009. On the $9,202 principal amount, the total
    yield was 14% per annum of which 8% per annum was calculated and payable
    quarterly in arrears. The remaining 6% per annum accrued and compounded
    annually, and was due in full on the date that the promissory note was
    paid in full. The Corporation accrued the 6% interest and fully provided
    against it because of the timing of payment.

    On May 15, 2006, the note and interest was repaid. The Corporation
    received $10,067 representing full and early repayment of the Acquisition
    Note together with accrued interest, partial deferred interest plus
    transaction fees. The reduction in deferred interest of $857 was
    partially offset by transaction fees of $218. No further payments will be
    made on the notes.

    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:

                                                       June 30   December 31
                                                          2007          2006
                                                      -----------------------
                                                             $             $
    5,754,660 (2006-5,754,660) Class A Subordinate
     Voting Shares                                      55,523        55,523
    182,000 Class B Shares                                 213           213
                                                      -----------------------
                                                        55,736        55,736
                                                      -----------------------
                                                      -----------------------

    At December 31, 2006, the Corporation had 140,000 stock options
    outstanding all of which expired on April 1, 2007.

    Diluted income per share for the periods ended June 30, 2007 and 2006
    have not been adjusted since the effect of any exercise of outstanding
    stock options is anti-dilutive.

    4.  Supplementary Cash Flow Information

    a) Changes in non-cash working
        capital balances

                                       Three Months Ended   Six Months Ended
                                             June 30            June 30
                                         2007        2006    2007       2006
                                       --------------------------------------
                                            $           $       $          $

    Decrease (increase) in
     accounts and other receivables      (138)        275     122        (36)
    Increase (decrease) in accounts
     payable and accrued liabilities     (138)       (302)   (148)       (13)
                                       --------------------------------------
    Changes in non-cash working
     capital balances                    (276)        (27)    (26)       (49)
                                       --------------------------------------
                                       --------------------------------------

    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 three months or less. Cash and cash equivalents included in
    cash flow statements comprise the following balance sheet amounts:

                                                                 June 30
                                                             2007       2006
                                                        ---------------------
                                                                $          $
    Cash on hand and with banks                               117        152
    Short-term investments                                 30,807     39,326
                                                        ---------------------
                                                           30,924     39,478
                                                        ---------------------
                                                        ---------------------

    c) Income taxes recovered

                                       Three Months Ended   Six Months Ended
                                             June 30            June 30
                                         2007        2006    2007       2006
                                       --------------------------------------
                                            $           $       $          $
    Income taxes recovered                  -           -       -          -

    5.  Income Taxes

    At December 31, 2006, the Corporation had non-capital losses available to
    reduce future taxable income of approximately $6.2 million that begin to
    expire in 2009. At December 31, 2006, the Corporation had capital losses
    available to offset future capital gains of approximately $27 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 Settlement

    In the fourth quarter of 2006, the Corporation settled the $110 million
    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 settlement
    was in the amount of $12 million. The Board of Directors of the
    Corporation appointed a committee of independent directors to represent
    the Corporation's interest in this litigation. Amongst other things, the
    committee approved the payment of the settlement and applicable expenses
    of all defendants, being the Corporation's Chairman, Secretary, its
    former Executive-Vice President and its former Chief Financial Officer.
    The Corporation, on behalf of the defendants, is seeking reimbursement of
    a portion of the settlement from the insurer of the Corporation's
    directors and officers. The amount of recovery from the insurance company
    is not currently determinable. Any recovery will be recognized as income
    upon resolution.

    8.  Contingencies

    An action was filed against the Corporation in connection with the
    bankruptcy of a former subsidiary of the Corporation, Fleming Packaging
    Corporation ("Fleming"), seeking damages arising from the February 10,
    2003 amendment of Fleming's loan agreements with its bankers and the
    subsequent payment of $900 to the Corporation on September 4, 2003. The
    claim is currently expressed in the amount of $900 with potential
    additional liability undefined in the claim. Initial depositions have
    been completed. Mediation occurred in December 2006 without successful
    conclusion. The Corporation is preparing for further depositions. The
    Corporation continues to be of the view that it has meritorious defences
    and is vigorously defending the claim.

    In 2004, the Corporation received a notice of withdrawal liability
    assessment and demand for payment of US$900 from the GCIU-Employer
    Retirement Fund in connection with the unionized employees' pension plan
    of Fleming. The Corporation has become aware that a claim has been filed
    in connection with this notice. The Corporation is of the view that the
    Corporation has meritorious defences. The Corporation will vigorously
    defend itself if and when required.

    No amounts have been accrued in the financial statements in connection
    with any of the claims or possible claims.

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

    August 14, 2007
    

    %SEDAR: 00002535E




For further information:

For further information: Karen Killeen, Chief Financial Officer, at
(416) 928-3710, Toronto, info@goldfarbcorp.com

Organization Profile

GOLDFARB CORPORATION

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