UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended March 31, 2009. or [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT. For the transition period from to ----------- ---------- Commission file number: 1-10024 BKF Capital Group, Inc. ----------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 36-0767530 ------------------------------- ----------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 1 North Federal Highway, Suite 201 Boca Raton, Florida 33432 ------------------------------------------------------------ (Address of Principal Executive Office) (Zip Code) (561) 362-5385 -------------------------------------------------- (Registrant's telephone number including area code) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [X] Yes [ ] No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [X] Yes [ ] No As of May 14, 2009, 7,973,216 shares of the registrant's common stock, $1.00 par value, were outstanding. TABLE OF CONTENTS Part I. FINANCIAL INFORMATION Item 1. Financial Statements 3 Consolidated Statements of Financial Condition as of March 31, 2009 (unaudited) and December 31, 2008 3 Consolidated Statements of Operations for the Three Months Ended March 31, 2009 and 2008 (unaudited) 4 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2009 and 2008 (unaudited) 5 Notes to Interim Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 4T. Controls and Procedures 12 Part II. Other Information 13 Item 1. Legal Proceedings 13 Item 5. Other Information 13 Item 6. Exhibits 13 Signatures 13 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements BKF CAPITAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Dollar amounts in thousands) March 31, December 31, 2009 2008 ----------- ------------ (unaudited) Assets Cash and cash equivalents $ 15,003 $ 1,551 U.S. Treasury bills -- 13,320 Investment advisory trailer fees and other receivables 311 783 Prepaid expenses and other assets 212 206 -------- -------- Total assets $ 15,526 $ 15,860 ======== ======== Liabilities and stockholders' equity Accrued expenses $ 181 $ 257 Lease liability 138 -- Accrued lease liability expense 3,737 4,077 -------- -------- Total liabilities 4,056 4,334 -------- -------- Commitments and contingencies Stockholders' equity Common stock, $1 par value, authorized -- 15,000,000 shares, issued and outstanding -- 7,973,216 shares 7,973 7,973 Additional paid-in capital 68,269 68,269 Accumulated deficit (64,772) (64,716) -------- -------- Total stockholders' equity 11,470 11,526 -------- -------- Total liabilities and stockholders' equity $ 15,526 $ 15,860 ======== ======== See accompanying notes 3 BKF CAPITAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollar amounts in thousands, except per share data) (Unaudited) Three Months Ended March 31, --------------------------- 2009 2008 ----------- ----------- Operating income: Royalties $ 174 $ 498 Non-operating income: Interest income 18 271 Other income 54 -- ----------- ----------- Total revenues 246 769 ----------- ----------- Expenses: Employee compensation and benefits 40 206 Occupancy and equipment rental 64 170 Other operating expenses 125 655 Interest expense 73 173 Restructuring costs -- 21 ----------- ----------- Total expenses 302 1,225 Net loss $ (56) $ (456) =========== =========== Net loss per share: Basic and Diluted $ (0.01) $ (0.06) ----------- ----------- Weighted average common shares outstanding 7,973,216 7,973,216 =========== =========== See accompanying notes 4 BKF CAPITAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollar amounts in thousands) (Unaudited) Three Months Ended March 31, --------------------- 2009 2008 -------- -------- Cash flows from operating activities Net loss $ (56) $ (456) Adjustments to reconcile net loss to net cash provided by (used in) operations: Changes in operating assets and liabilities: Decrease (increase) in U.S. treasury bills 13,320 (188) Decrease (increase) in royalty and other receivables 472 (42) Decrease (increase) prepaid expenses and other assets (6) 561 Increase (decrease) in accrued expenses (76) 8 Decrease in accrued lease liability expense (340) (124) Increase in other liabilities 138 -- -------- -------- Net cash provided by (used in) operating activities 13,452 (241) -------- -------- Net increase (decrease) in cash and cash equivalents 13,452 (241) Cash and cash equivalents at the beginning of the period 1,551 1,161 -------- -------- Cash and cash equivalents at the end of the period $ 15,003 $ 920 ======== ======== Supplemental disclosure of cash flow information Cash paid for interest $ -- $ -- ======== ======== Cash paid for income taxes $ -- $ 21 ======== ======== See accompanying notes 5 BKF CAPITAL GROUP, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) The unaudited condensed consolidated financial statements included herein were prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosure normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, disclosures made are adequate to make the information not misleading. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes included in the Company's Form 10-K for the year ended December 31, 2008. In the opinion of management, the interim data includes all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results for the interim period. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the fiscal year. 1. Organization and Summary of Significant Accounting Policies Organization and Basis of Presentation BKF Capital Group, Inc. (the "Company") operates through a wholly-owned subsidiary, BKF Management Co., Inc. and its subsidiaries, all of which are referred to as "BKF." The Company trades on the over the counter market under the symbol ("BKFG"). Currently, the Company is seeking to consummate an acquisition, merger or business combination with an operating entity to enhance BKF's revenues and increase shareholder value. The consolidated financial statements of BKF include its wholly-owned subsidiaries BKF Asset Management, Inc., ("BAM"), BAM's two wholly-owned subsidiaries, BKF GP Inc. ("BKF GP") and LEVCO Securities, Inc. ("LEVCO Securities"). All inter-company accounts have been eliminated. All adjustments necessary for a fair statement of results for the interim period have been made and all such adjustments were of a normal recurring nature. BAM was an investment advisor which was registered under the Investment Advisers Act of 1940, as amended; it withdrew its registration on December 19, 2006. BAM had no operations during the three months ended March 31, 2009 and the year ended December 31, 2008. Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Revenue Recognition Under an agreement with a former partner, BKF is entitled to 15% of the annual revenues collected from carry-over clients by this former partner which are generated based on the utilization of the same investment strategy used previously with respect to such clients at BKF (the "Royalties"). This agreement is in effect through September 30, 2010. Royalties are paid to BKF on a quarterly basis following the former partner's actual collection of revenue. The Company believes that these Royalties are fully collectible and therefore has not recorded any reserves against the related receivable. 6 BKF CAPITAL GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued) (Unaudited) Cash, Cash Equivalents and U.S. Treasury Bills The Company treats all United States Treasury Bills with maturities at acquisition of three months or less as cash equivalents. Investments in U.S. Treasury Bills with maturities at acquisition that are greater than three months are considered held-to-maturity securities and are stated at amortized cost which approximates fair value. As of March 31, 2009, the Company no longer held any U.S. Treasury Bills. Investments in money market funds are valued at net asset value. The Company maintains substantially all of its cash and cash equivalents in interest bearing instruments at two nationally recognized financial institutions, which at times may exceed federally insured limits. As a result the Company is exposed to credit risk related to the money market funds and the market rate inherent in the money market funds. Investments in Affiliated Investment Partnerships BKF GP served as the managing general partner for several affiliated investment partnerships ("AIP"), which primarily engaged in the trading of publicly traded equity securities, and in the case of one partnership, distressed corporate debt. Currently all AIP activities have been terminated and BKF GP is in the process of dissolving those partnerships. Income Taxes The Company accounts for income taxes under the liability method prescribed by Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes." The Company has also adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109, Accounting for Income Taxes (FIN48). Interest costs and penalties related to income taxes are classified as interest expense and general and administrative costs, respectively, in the Company's consolidated financial statements. The Company and its subsidiaries file consolidated Federal and combined state and local tax returns. The Company is currently subject to a three year statue of limitations by major tax jurisdictions. The Company has settled examination issues with New York State and New York City related to income allocation for the years 1999-2004. New York State has recently commenced an audit of the years 2005-2007. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the differences between the financial statement carrying amount of existing assets and liabilities and their respective tax basis. Future tax benefits are recognized only to the extent that realization of such benefits is more likely than not to occur. Included in other receivables as of December 31, 2008, were tax receivable amounts of approximately $297,000, which represented cash refunds due with respect to the federal carry back claims for 2004 and 2003 taxes paid. This amount, plus additional interest, was received in the first quarter of 2009. Certain Reclassifications Certain amounts previously reported may have been reclassified to conform to the current year financial statement presentation. Such reclassifications did not affect net income or stockholders' equity. 7 BKF CAPITAL GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued) Earnings Per Share The Company accounts for Earnings Per Share under SFAS No. 128, "Earnings Per Share." Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the year. Diluted earnings (loss) per share is computed by dividing net income (loss) by the total of the weighted average number of shares of common stock outstanding and common stock equivalents. Diluted earnings (loss) per share is computed using the treasury stock method. In calculating diluted (loss) per share for the three months ended March 31, 2009 and 2008, zero and 450,000 common stock equivalents were excluded due to their anti-dilutive effect on the calculation. Fair Values of Financial Instruments Financial instruments, including cash and cash equivalents, accounts receivable and accounts payable are carried in the consolidated financial statements at amounts that approximate fair value at March 31, 2009 and December 31, 2008. Fair values are based on market prices and assumptions concerning the amount And timing of estimated future cash flows. The U.S. Treasury Bills have been valued using level 1 inputs under SFAS No. 157, "Fair Value Measurements". In April 2007, SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities," was issued. This statement permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. We did not elect to use the fair value option. Recent Accounting Developments In December 2007, the FASB issued SFAS No. 141(R), Business Combinations ("SFAS 141(R)"). SFAS 141(R) expands the definition of transactions and events that qualify as business combinations; requires that the acquired assets and liabilities, including contingencies, be recorded at the fair value determined on the acquisition date and changes thereafter reflected in revenue, not goodwill; changes the recognition timing for restructuring costs; and requires acquisition costs to be expensed as incurred. Adoption of SFAS 141(R) is required for combinations after December 15, 2008. Early adoption and retroactive application of SFAS 141(R) to fiscal years preceding the effective date are not permitted. The adoption of SFAS 141(R) did not have any effect on the Company's financial statements. In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interest in Consolidated Financial Statements ("SFAS 160"). SFAS 160 re-characterizes minority interests in consolidated subsidiaries as non-controlling interests and requires the classification of minority interests as a component of equity. Under SFAS 160, a change in control will be measured at fair value, with any gain or loss recognized in earnings. The effective date for SFAS 160 is for annual periods beginning on or after December 15, 2008. Early adoption and retroactive application of SFAS 160 is for annual periods beginning on or after December 15, 2008. Early adoption and retroactive application of SFAS 160 to fiscal years preceding the effective date are not permitted. The adoption of SFAS 160 did not have any effect on the Company's financial statements. 8 BKF CAPITAL GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued) 2. Concentrations On October 3, 2008, the Emergency Economic Stabilization Act of 2008 increased the insurance coverage offered by the Federal Deposit Insurance Corporation (FDIC) from $100,000 to $250,000 per depositor. This limit is anticipated to return to $100,000 after December 31, 2009. Additionally, under the FDIC's Temporary Liquidity Guarantee Program, amounts held in non-interest bearing transaction accounts at participating institutions are fully guaranteed by the FDIC through December 31, 2009. The Company had amounts in excess of $250,000 in a single bank during the year. Amounts over $250,000 are not insured by the Federal Deposit Insurance Corporation. These balances fluctuate during the year and can exceed this $250,000 limit. Management regularly monitors the financial institution, together with its cash balances, and tries to keep this potential risk to a minimum. 3. Related Party Transactions Royalties Royalties are the Company's portion of fee sharing arrangements from departed portfolio managers. The Company had royalty revenue of $174,000 and $498,000 for the three months ended March 31, 2009 and 2008, respectively, 4. Accrued Lease Liability Expense In September 2001, BKF entered into a 10 year lease agreement with Levin Management Co. Inc. under which they agreed to lease several floors of a building located at One Rockefeller Plaza in New York City. Subsequent to that agreement, the Company determined that they did not need all of the space and surrendered some of the space back to the landlord and sublet other portions. During 2003, BKF surrendered approximately 20,000 square feet of office space back to the landlord and agreed to pay the landlord monthly payments through September 2011 (the end date of the original lease). The present value of the remaining payments was recorded as a lease liability. During 2006, BKF vacated additional office space under the lease and subleased this space to another company. The sublease was executed at a rate which was below the rate of the existing primary lease obligation. As a result, the Company recorded additional lease reserves to account for the lease obligation, less sublease payments expected. The lease liability will be reduced as monthly rent payments are made to the landlord, net of any sublease income received. As of March 31, 2009 and 2008, the lease liability was $3.7 million and $4.1 million, respectively, based on a present value presumption. 5. Commitments and Contingencies The Company is a defendant in a lawsuit seeking damages in the amount of approximately $600,000. The complaint was filed in the Supreme Court of New York and alleges unjust enrichment. The Company is vigorously defending the lawsuit. The Company has no specific reserve for this action. 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This Quarterly Report on Form 10-Q contains certain statements that are not historical facts, including, most importantly, information concerning possible or assumed future results of operations of BKF Capital Group, Inc. (the "Company") and statements preceded by, followed by or that include the words "may," "believes," "expects," "anticipates," or the negation thereof, or similar expressions, which constitute "forward-looking statements" within the meaning of the Section 27A of the Securities Act of 1933 and Section 21E (the "Reform Act") of the Securities Exchange Act of 1934 (the "Exchange Act"). For those statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Reform Act. These forward-looking statements are based on the Company's current expectations and are susceptible to a number of risks, uncertainties and other factors, including the risks specifically enumerated in Company's Annual Report on Form 10-K for the year ended December 31, 2008, and the Company's actual results, performance and achievements may differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. The Company will not undertake and specifically declines any obligation to publicly release the result of any revisions, which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. In addition, it is the Company's policy generally not to make any specific projections as to future earnings, and the Company does not endorse any projections regarding future performance that may be made by third parties. The following discussion and analysis provides information which the Company's management believes to be relevant to an assessment and understanding of the Company's results of operations and financial condition. This discussion should be read together with the Company's financial statements and the notes to financial statements, which are included in this report, as well as the Company's Annual Report on Form 10-K for the year ended December 31, 2008. BKF was incorporated in Delaware in 1954. The Company's securities trade on the over the counter market under the symbol "BKFG." During the third quarter of 2006, the Company ceased all operations, except for maintaining its status as an Exchange Act reporting company and winding down certain investment partnerships for which BKF acts as general partner. Currently, the Company is seeking to consummate an acquisition, merger or other business combination with an operating entity to enhance BKF's revenues and increase shareholder value. The Company operates through its wholly-owned subsidiary, BKF Management Co., Inc. ("BMC") and its subsidiaries, all of which are collectively referred to herein as the "Company" or "BKF." The consolidated financial statements of BKF include its wholly-owned subsidiary BMC, BMC's wholly owned subsidiary BKF Asset Management, Inc., ("BAM") and BAM's two wholly-owned subsidiaries, LEVCO Securities, Inc. ("LEVCO Securities") and BKF GP Inc. ("BKF GP"). There were no affiliated partnerships in BKF's December 31, 2008 or December 31, 2007 consolidated financial statements. Historically the Company operated in the investment advisory and asset management business entirely through BAM, which was a registered investment adviser with the Securities and Exchange Commission ("SEC"). BAM specialized in managing equity portfolios for institutional investors through its long-only equity and alternative investment strategies. BAM withdrew its registration as a registered investment advisor on December 19, 2006 and ceased operating in the investment advisory and asset management business. LEVCO Securities, a subsidiary of BAM, was a broker dealer registered with the SEC and a member of the National Association of Securities Dealers, Inc. (now known as the Financial Industry Regulatory Authority). LEVCO Securities withdrew its registration as a broker-dealer on November 30, 2006 and ceased operating as a broker dealer. BKF GP, Inc., the other subsidiary of BAM, acts as the managing general partner of several affiliated investment partnerships which are in the process of being finally liquidated and dissolved. 10 Since January 1, 2007, the Company has had no operating business and no assets under management. The Company's principal assets consist of a significant cash position, sizable net operating tax losses to potentially carry forward, its status as a publicly traded Exchange Act reporting company and a small revenue stream consisting of royalty payments from a departed portfolio manager. BKF's current revenue stream will not be sufficient to cover BKF's ongoing expenses. On July 22, 2008, the Company paid a $1 per share distribution of capital to shareholders of record as of July 8, 2008. The distribution of capital was approved by the prior Board of Directors on June 24, 2008. On August 27, 2008, the Company entered into an agreement with Catalyst Fund, L.P. a hedge fund which owned approximately 47.5% of the Company's outstanding common stock, Steven N. Bronson, who was the fund manager for the Catalyst Fund, L.P., and each of the Company's current directors and officers to effect a change of control of the Company (the "Change of Control Agreement"). A copy of the Change of Control Agreement was attached as an Exhibit to a Current Report on Form 8-K filed by the Company on September 2, 2008. Pursuant to the Change of Control Agreement all existing officers and directors resigned and new directors and management was appointed. Specifically, effective September 19, 2008, Harvey Bazaar, Marvin Olshan, Ronald LaBow and J. Clark Gray each resigned as directors and/or officers of the Company, pursuant to the Change of Control Agreement. Simultaneously therewith, the following persons were appointed to the Board of Directors of the Company: Steven N. Bronson, John Brunjes and Leonard Hagan and Steven N. Bronson was appointed President of the Company. In connection with the change of control the Company filed and mailed out to all shareholders of record an Information Statement Pursuant to Section 14(f) of the Securities Exchange Act of 1934 and Rule 14f-1 thereunder, which is incorporated herein by reference. Prior to September 19, 2008, the Company was engaged in evaluating strategic alternatives, including merging with, acquiring or commencing a business potentially being funded by a capital raising event; or liquidating the Company and distributing a portion of the Company's remaining cash to stockholders. The Company's current plan of operation is to arrange for a merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity. The Company shall endeavor to utilize some or all of the Company's net operating loss carryforwards in connection with a business combination transaction; however, there can be no assurance that the Company will be able to utilize any of its net operating loss carryforwards. The Company has not identified a viable operating entity for a merger, acquisition, business combination or other arrangement, and there can be no assurance that the Company will ever successfully arrange for a merger, acquisition, business combination or other arrangement by and between the Company and a viable operating entity. 11 RESULTS OF OPERATIONS The following discussion and analysis of the results of operations is based on the Consolidated Statements of Financial Condition and Consolidated Statements of Operations for BKF Capital Group, Inc. and Subsidiaries. Income Total income for the three months ended March 31, 2009 was $246,000, reflecting a decrease of 68% from $769,000 in the same period in 2008. This decrease is primarily attributable to a decrease in interest income, due to a decrease in the amount of outstanding Treasury Bills owned by the Company as well as lower interest rates, as compared to the prior period. Expenses Total expenses for the three months ended March 31, 2009 were approximately $302,000, reflecting a decrease of 75% from $1.2 million in expenses in the same period in 2008. The decrease is primarily attributable to a decrease in other operating expenses, based on the efforts of management to reduce expenses and conserve the assets of the Company. Operating Loss Operating loss for the three months ended March 31, 2009 was $56,000, as compared to an operating loss of $456,000 in the same period in 2008. LIQUIDITY AND CAPITAL RESOURCES BKF's current assets as of March 31, 2009 consist primarily of cash, receivables and security deposits. While BKF has historically met its cash and liquidity needs through cash generated by operating activities, cash flow from current activities will not be sufficient to fund operations in the future. BKF will use a portion of its existing working capital for such purposes. At March 31, 2009, BKF had cash and cash equivalents of $15.0 million, compared to $14.9 million of cash, cash equivalents and U.S Treasury bills at December 31, 2008. OFF BALANCE SHEET RISK There has been no material change with respect to the off balance sheet risk incurred by the Company since March 31, 2009. Item 4T. Controls and Procedures Disclosure Controls and Procedures: An evaluation was performed under the supervision and with the participation of the Company's principal executive officer, who also serves as the Company's principal financial officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, the Company's principal executive officer, concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this report. Changes in Internal Control over Financial Reporting: There have been no changes in the Company's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the Company's most recent quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there is only reasonable assurance that the Company's controls will succeed in achieving the stated goals under all potential future conditions. 12 PART II. OTHER INFORMATION Item 1. Legal Proceedings The Company is a defendant in a lawsuit for claims for alleged services in the amount of approximately $600,000. The complaint was filed in the New York State Supreme Court, New York County and is entitled: Merrill, Lynch, Pierce, Fenner & Smith, Inc. v. BKF Asset Management, Inc. and assigned Index No. 602069/07. In the action Merrill Lynch alleges a claim for unjust enrichment against BAM based on a soft dollar arrangement. The Company is vigorously defending this action. The Company has not recorded a liability reserve because the Company does not believe it will be held liable in the action. The Company's management is unaware of any other material existing or pending legal proceedings or claims against the Company. Item 5. Other Information Effective January 1, 2009, the Company licensed a portion of its office space, located at 1 North Federal Highway, Suite 201, Boca Raton, Florida 33432, to three companies affiliated with Steven N. Bronson who is BKF's Chairman and President. Specifically, BKF licensed offices space and use of facilities to Catalyst Financial, LLC, 4net Software, Inc. and Ridgefield Acquisition Corp. for monthly fees of, $500, $100 and $100, respectively. Each of the licenses are on a month to month basis. Steven N. Bronson is the owner and principal of Catalyst Financial LLC ("Catalyst Financial"), a broker dealer registered with the United Stated Securities and Exchange Commission that provides investment banking and private placement services. Mr. Bronson is also the President and majority shareholder of 4net Software, Inc. and Ridgefield Acquisition Corp., both publicly traded companies. Item 6. Exhibits 31 Section 302 Certification of Principal Executive Officer 32 Section 906 Certification of Principal Executive Officer SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: May 14, 2009 BKF CAPITAL GROUP, INC. By: /s/ Steven N. Bronson ------------------------------- Steven N. Bronson, President (Principle Executive Officer), as Registrant's duly authorized officer 13