UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
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For the quarterly period ended June 30, 2012.
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or
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¨
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT.
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For the transition period from __________ to __________
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Commission file number: 1-10024
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BKF Capital Group, Inc.
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(Exact name of registrant as specified in its charter)
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Delaware
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36-0767530
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(State or other jurisdiction of
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(I.R.S. Employer Identification No.)
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incorporation or organization)
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225 N.E. Mizner Boulevard, Suite 400 Boca Raton, Florida 33432
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(Address of Principal Executive Office) (Zip Code)
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(561) 362-4199
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(Registrant's telephone number including area code)
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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
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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
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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x
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Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act).
x
Yes
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No
As of August 13, 2012, 7,446,593 shares of
the registrant's common stock, $1.00 par value, were outstanding.
TABLE OF CONTENTS
Part I. FINANCIAL INFORMATION
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Item 1. Financial Statements
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3
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Consolidated Statements of Financial Condition as of June 30, 2012 (unaudited) and December 31, 2011 (audited)
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3
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Consolidated Statements of Operations and Comprehensive Income (three-months and six-months ended June 30, 2012 and 2011)
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4
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Consolidated Statements of Cash Flows (six-months ended June 30, 2012 and 2011)
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5
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Notes to Condensed Financial Statements
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6
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
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9
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Item 4. Controls and Procedures
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13
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Part II. Other Information
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13
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Item 1. Legal Proceedings
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13
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Item 6. Exhibits
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14
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Signatures
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14
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BKF CAPITAL GROUP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollar amounts in thousands)
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June 30,
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December 31,
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2012
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2011
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(unaudited)
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Assets
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Cash and cash equivalents
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$
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6,996
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$
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8,292
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Investments
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4,255
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3,337
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Prepaid expenses and other assets
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49
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77
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Total assets
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$
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11,300
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$
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11,706
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Liabilities and Stockholders' Equity
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Accrued expenses
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$
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213
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$
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41
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Total liabilities
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213
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41
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Commitments and contingencies
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Stockholders' equity
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Common stock, $1 par value, authorized -- 15,000,000 shares, 7,446,593
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issued and outstanding as of June 30, 2012 and December 31, 2011
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7,447
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7,447
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Additional paid-in capital
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68,269
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68,269
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Accumulated deficit
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(65,137
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)
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(64,570
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)
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Accumulated other comprehensive income
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508
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519
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Total stockholders' equity
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11,087
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11,665
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Total liabilities and stockholders' equity
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$
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11,300
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$
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11,706
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See accompanying notes
BKF CAPITAL GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME
(Dollar amounts in thousands, except per
share data)
(Unaudited)
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Three Months Ended
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Six Months Ended
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June 30,
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June 30,
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2012
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2011
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2012
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2011
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Non Operating Income
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Interest income
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4
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7
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9
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14
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Other income
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7
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25
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24
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30
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Total revenues
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11
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32
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33
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44
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Expenses:
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Employee compensation and benefits
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71
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71
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144
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132
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Occupancy and equipment rental
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16
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16
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32
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32
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Other operating expenses
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394
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47
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424
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69
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Total expenses
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481
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134
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600
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233
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Net income/(loss)
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(470
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)
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(102
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)
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(567
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(189
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Other comprehensive income, net of tax
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Unrealized gain (loss) on investments
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(94
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)
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14
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(11
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189
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Other comprehensive income/(loss)
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$
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(564
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$
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(88
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$
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(578
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)
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$
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--
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Net income/(loss) per share:
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Basic and Diluted
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$
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(0.06
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$
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(0.01
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$
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(0.08
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$
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0.03
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Weighted average common shares outstanding
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7,446,593
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7,446,593
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7,446,593
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7,446,593
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See accompanying notes
BKF CAPITAL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
(Unaudited)
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Six Months Ended
June 30,
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2012
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2011
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Cash flows from operating activities
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Net income (loss)
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$
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(567
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$
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(189
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)
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Changes in operating assets and liabilities:
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Decrease in advisory trailer fees and
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other receivable
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--
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15
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Decrease in prepaid expenses and other assets
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27
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232
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Increase (decrease) in accrued expenses
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172
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(57
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Decrease in accrued lease liability expense
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--
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(1,139
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)
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Net cash used in operating activities
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(368
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)
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(1,138
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)
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Cash flows from investing activities
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Purchase of investment securities
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(928
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)
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(18
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Net cash provided by investing activities
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(928
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)
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(18
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Net decrease in cash and cash equivalents
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(1,296
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)
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(1,156
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Cash and cash equivalents at the beginning of the period
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8,292
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9,744
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Cash and cash equivalents at the end of the period
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$
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6,996
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$
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8,588
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Supplemental disclosure of cash flow information
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Cash paid for interest
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$
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--
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$
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--
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Cash paid for income taxes
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$
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--
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$
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--
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See accompanying notes
BKF CAPITAL GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
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, 2011.
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.
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.
BKF CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-- (Continued)
Cash and Cash Equivalents
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.
OTHER COMPREHENSIVE INCOME
The Company presents other comprehensive
income in accordance with ASC Topic 220, Comprehensive Income. This section requires that an enterprise (a) classify items of other
comprehensive income by their nature in a financial statement and (b) display the accumulated balance of other comprehensive income
separately from retained earnings and additional paid in capital in the equity section of a statement of position. The Company
reports its unrealized gains and losses on investments in securities as other comprehensive income (loss) in its financial statements.
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 June 30, 2012 and December 31, 2011. Fair values are based on market prices and assumptions concerning the amount and
timing of estimated future cash flows. Investments have been valued using level 1 inputs under ASC Topic 820, Fair Value Measurements
and Disclosures.
Reclassification
Certain amounts in the 2011 financial statements have been
reclassified to conform with the 2012 presentation.
2. Investments
Investments are classified as available-for-sale according to
the provisions of ASC Topic 320, Investments - Debt & Equity Securities. Accordingly, the investments are carried at fair value
with unrealized gains and losses reported separately in other comprehensive income.
At June 30, 2012 the Company held 2,239,419 common shares of
Qualstar valued at
approximately $4,255,000.
3. 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, 2013. 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, 2013. 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.
BKF CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-- (Continued)
4. Commitments and Contingencies
The Company could be subject to a variety of claims, suits and
proceedings that arise from time to time, including actions with respect to contracts, regulatory compliance and public disclosure.
These actions may be commenced by a number of different constituents, including vendors, former employees, regulatory agencies,
and stockholders. The following is a discussion of the more significant matters involving the Company.
The Company is a defendant in a lawsuit
for claims for alleged services in the amount of approximately $171,000. The complaint was filed in the New York State Supreme
Court and alleges a claim for breach of contract against BAM for alleged goods and services delivered to BAM. The Company is vigorously
defending this action. The Company has no specific reserve for this action.
5. Warrants
On March 1, 2011, the Company
granted warrants to purchase 200,000 shares of the Company’s common stock, $1.00 par value to an executive of the
company in exchange for certain services to be rendered. The warrants are exercisable for a period of 5 years, but they shall
expire and terminate ninety (90) days after the Executive’s separation from the Company for any reason. The warrants
shall vest and be exercisable as follows: (i) 50,000 warrants exercisable at $1.55 per share shall vest upon the occurrence
of BKF raising $5,000,000 through the sale of equity and completion of twelve months of employment; (ii) 50,000 warrants
exercisable at $1.55 per share shall vest upon the occurrence of BKF Capital raising an aggregate amount of$10,000,000 from
the execution of this Agreement; (iii) 50,000 warrants exercisable at $2.00 per share shall vest upon the occurrence of BKF
Capital raising an aggregate amount of $15,000,000 from the execution of this Agreement; and (iv) 50,000 warrants exercisable
at $2.00 per share shall vest upon the occurrence of BKF Capital Raising an aggregate amount of $20,000,000 from the
execution of this Agreement.
At June 30, 2012, none of the warrants
had vested and thus none are exercisable. It was determined that the performance conditions under which the warrants vest
have a remote probability of occurring and thus no compensation expense has been recognized for the warrants granted. The
executive to whom these warrants relate resigned as of April 25, 2012.
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, 2011, 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, 2011.
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, 2011 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 liquidated and dissolved.
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, investment in securities, sizable net operating tax losses to potentially carry forward and its status as a
publicly traded Exchange Act reporting company. BKF's current revenue stream will not be sufficient to cover BKF's ongoing
expenses.
BKF, through a subsidiary, acts as the
managing general partner of a number of investment partnerships, formed prior to 2005, which are in the process of being
liquidated and dissolved.
Plan of Operations
The Company has no operating business
and no assets under management at June 30,2012. The Company's principal assets consist of a significant cash position, an
investment in Qualstar Corporation, a publicly traded company, and sizable net operating tax losses to potentially carry
forward, its status as an Exchange Act reporting company and its investment securities. BKF's current revenue stream will not
be sufficient to cover current expenses, however the Company has enough cash to cover operations for the upcoming year.
The Company's 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.
The Company anticipates that
the selection of a business opportunity will be a complex process and will involve a number of risks, because
potentially available business opportunities may occur in many different industries and may be in various stages of
development. Due in part to depressed economic conditions in a number of geographic areas and shortages of available capital,
management believes that there are numerous firms seeking either the additional capital which the Company has or the benefits
of a publicly traded corporation, or both. The perceived benefits of a publicly traded corporation may include facilitating
or improving the terms upon which additional equity financing may be sought, providing liquidity for principal shareholders,
creating a means for providing incentive stock options or similar benefits to key employees, providing liquidity for all
shareholders and other factors.
In some cases, management of the
Company will have the authority to effect acquisitions without submitting the proposal to the shareholders for their
consideration. In some instances,however, the proposed participation in a business opportunity may be submitted to the
shareholders for their consideration, either voluntarily by the Board of Directors to seek the shareholders' advice and
consent, or because of a requirement of State law to do so.
In seeking to arrange a merger,
acquisition, business combination or other arrangement by and between the Company and a viable operating entity,
the Company's objective will be to obtain long-term capital appreciation for the Company's shareholders. There can be no
assurance that the Company will be able to complete any merger, acquisition, business combination or other arrangement by and
between the Company and a viable operating entity.
The Company may need additional
funds in order to effectuate a merger, acquisition or other arrangement by and between the Company and a viable operating
entity, although there is no assurance that the Company will be able to obtain such additional funds, if needed. Even if the
Company is able to obtain additional funds there is no assurance that the Company will be able to effectuate a merger,
acquisition or other arrangement by and between the Company and a viable operating entity.
Qualstar Investment
On December 17, 2010, the Company purchased
1,500,000 shares of Qualstar Corporation("Qualstar") common stock in a privately negotiated transaction at the price
of $1.55 per share or the total aggregate amount of $2,325,000 (the “2010 Purchase”).Qualstar is a diversified electronics
manufacturer specializing in data storage, power supplies and computer pointing devices. Qualstar's products are known throughout
the world for high quality and Simply Reliable designs that provide years of trouble-free service. The securities of Qualstar are
traded on NASDAQ under the symbol "QBAK." The registrant purchased the Qualstar shares from Richard A. Nelson and Kathleen
R. Nelson as Co-Trustees of the Nelson Family Trust U/A DTD 01/19/2000. Richard A. Nelson is an officer and director of Qualstar.
Following the 2010 Purchase, BKF owned approximately 12.2% of issued and outstanding shares of Qualstar. The Company previously
disclosed its acquisition of shares of Qualstar in Current Report on Form 8-K filed on December 23, 2010. Between December 23,2010
and June 30, 2012, BKF increased its Qualstar holdings from 12.2% to 18.2% through open market transactions.
On February 15, 2012 BKF sent
a letter to the Qualstar board of director, which was attached as an exhibit to the Company’s Schedule 13D filing on February
21, 2012.In the February 15, 2012 letter, BKF suggested steps that the Qualsar board can and should take to maximize shareholder
value. The Qualstar board did not discuss the Feburary 15, 2012 letter with BKF and it failed to take any of the requested actions
.In or about May 2012, the BKF launched a proxy contest to remove and replace the board of directors of Qualstar. See BKF’s
Definitive Proxy Statement on Schedule 14A, filed on June 6, 2012, which is incorporated herein by reference. The special meeting
of the shareholders of Qualstar occurred on June 20, 2012.While BKF’s proposals did receive approval of the majority of the
votes cast at the meeting, they did not receive approval from a majority of the outstanding shares, which was required to remove
the incumbent Qualstar board.
At June 30, 2012 the Company held 2,239,419
common shares of Qualstar valued at approximately $4,255,000, representing approximately 18.2% of the issued and outstanding shares
of Qualstar. The Company holds the shares of Qualstar for investment purposes and is currently considering its options.
Subsequent Event
On August 2, 2012, the Company
issued a press release disclosing that the Company plans to create an asset management platform with investment vehicles that focus
on areas of portfolio management that typically receive less attention from investors but also present unique investment opportunities.
The Company is also engaged in seeking to arrange an acquisition, with an operating business with revenues, at least three years
of operating history and unique value opportunities. The Press Release is attached as an exhibit to the Company’s Current
Report on Form 8-K, dated August 3, 2012.
The Company is in the process
of forming a subsidiary that will register as an investment advisor and a subsidiary that will act as general partner of a newly
formed limited partnership investment fund. In the near-term, the Company expects to seed the limited partnership fund which will
focus on small-cap and micro-cap companies based on a value approach to investing. Thereafter, the Company intends to grow its
asset management business by acquiring or seeding other alternative investment funds with unique investment strategies and/or emerging
portfolio managers. The Company’s goal is to grow revenues and income over time and achieve valuation multiples in line with
other publicly-traded comparable companies.The Company expects to create value for its shareholders by rebuilding its asset management
operations, and expects to earn fee income for assets under management, performance fees upon successfully liquidating investments
and from its proprietary capital investments in the investment funds for which BKF acts as the general partner. Moreover, the Company
has substantial net operating loss carry-forwards that it may be able to use to offset future profits and thereby minimize tax
liabilities.
In furtherance of its new business
strategy, the Company has rehired Maria Fregosi to serve as the Company’s Chief Operating Officer. Ms. Fregosi has been involved
with investment banking and financial company management for over 20 years.
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 revenues for the three months
ended June 30, 2012 was $11,000 compared to $32,000 in the same period in 2011, a decrease of $21,000. The decrease is
primarily due to non operating other income.
Total revenues for the six months ended June 30, 2012
was $33,000 compared to $44,000 in the same period in 2011, a decrease of $11,000. The decrease is primarily due to non
operating other income.
Expenses
Total expenses for the three months ended
June 30, 2012 were approximately $481,000, reflecting an increase of 259% from $134,000 in expenses in the same period in 2011.
The increase is primarily attributable to professional fees related to the proxy filings for Qualstar.
Total expenses for the six months ended June 30, 2012 were approximately
$600,000, reflecting an increase of 158% from $233,000 in expenses in the same period in 2011. The increase is primarily attributable
to professional fees related to the proxy filings for Qualstar.
Net Income/Net Loss
Net loss for the three months ended June
30, 2012 was $470,000, as compared to a net loss of $102,000 in the same period in 2011.
Net loss for the six months ended
June 30, 2012 was $567,000, as compared to a net loss of $189,000 in the same period in 2011.
LIQUIDITY AND CAPITAL RESOURCES
BKF's current assets as of June 30, 2012
consist primarily of cash and
investments.
While BKF has historically met its cash
and liquidity needs through cash generated by operating activities, cash flow from current activities may not be sufficient to
fund operations in the future. BKF will use a portion of its existing working capital for such purposes.
At June 30, 2012, BKF had cash and cash
equivalents of $6.9 million, compared to $8.3 million of cash and cash equivalents at December 31, 2011.
OFF BALANCE SHEET RISK
There has been no material change with respect
to the off balance sheet risk incurred by the Company since June 30, 2012.
Item 4. Controls and Procedures
We maintain "disclosure controls and
procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information
required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our
principal executive officer to allow timely decisions regarding required disclosure.
Evaluation of disclosure and controls and procedures.
As of the end of the period covered by this
report, the Company carried out an evaluation, under the supervision and with the participation of our Principal Executive 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 the evaluation, the Company's Principal Executive Officer has concluded that the
Company's disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed
by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the SEC's rules and forms and that the Company’s disclosure controls and procedures are operating
in an effective manner to provide reasonable assurance that information required to be disclosed by the Company in the reports
that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and forms.
Changes in internal controls over financial reporting.
There have been no changes in 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
Company's most recent quarter that has materially affected, or is reasonably likely to materially affect, 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.
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 $171,000. The complaint was filed in the New York State Supreme
Court, New York County and is entitled: Thomson Financial, LLC v. BKF Asset Management, Inc. and assigned Index No. 601390/09.
In the action Thomson Financial alleges a claim for breach of contract against BAM for alleged goods and services delivered to
BAM. 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 6. Exhibits.
a. Exhibits
The following exhibits are hereby filed
as part of this Quarterly Report on Form 10-Q or incorporated herein by reference.
Exhibit
|
|
Number
|
Description of Document
|
31*
|
Section 302 Certification of Chief Executive Officer
|
32*
|
Section 906 Certification of Chief Executive Officer
|
101.INS*#XBRL Instance Document
|
101.SCH*#XBRL Taxonomy Extension Schema
|
101.CAL*#XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF*#XBRL Taxonomy Extension Definition Linkbase
|
101.LAB*#XBRL Taxonomy Extension Label Linkbase
|
101.PRE*#XBRL Taxonomy Extension Presentation Linkbase
|
_________________________
* Filed herewith.
#
Pursuant to Rule 406T of Regulation S-T, the Interactive
Data Files on Exhibit101 hereto are deemed not filed or part of a registration statement or prospectusfor purposes of Sections
11 or 12 of the Securities Act of 1933, as amended, aredeemed not filed for purposes of Section 18 of the Securities Exchange Act
of 1934,as amended, and otherwise are not subject to liability under those sections.
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: August 14, 2012
BKF CAPITAL GROUP, INC.
By:
/s/ Steven N. Bronson
Steven N. Bronson,
Chief Executive Officer,
as Registrant's duly authorized
officer
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