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,
2015.
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) |
|
|
31248 Oak Crest Drive, Suite 110, Westlake
Village, California 91361
(Address of Principal Executive Office)
(Zip Code)
(805) 416-7054
(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 8, 2015, 7,471,593 shares of
the registrant's common stock, $1.00 par value, were outstanding.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
| Item 1. | Financial Statements |
BKF CAPITAL GROUP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollar amounts in thousands)
| |
March 31, | | |
December 31, | |
| |
2015 | | |
2014 | |
| |
(unaudited) | | |
(audited) | |
| |
| | |
| |
Assets | |
| | | |
| | |
Cash and cash equivalents | |
$ | 2,722 | | |
$ | 3,052 | |
Investment in Qualstar and Interlink | |
| 3,153 | | |
| 2,848 | |
Prepaid expenses and other assets | |
| 14 | | |
| 15 | |
Total assets | |
$ | 5,889 | | |
$ | 5,915 | |
| |
| | | |
| | |
Liabilities and Stockholders' Equity | |
| | | |
| | |
| |
| | | |
| | |
Accrued expenses | |
$ | 27 | | |
$ | 52 | |
Total liabilities | |
| 27 | | |
| 52 | |
| |
| | | |
| | |
Commitments and contingencies | |
| | | |
| | |
Stockholders' equity | |
| | | |
| | |
Common stock, $1 par value, authorized — 15,000,000 shares, 7,471,593 issued and outstanding as of March 31, 2015 and as of December 31, 2014 | |
| 7,472 | | |
| 7,472 | |
Additional paid-in capital | |
| 68,270 | | |
| 68,270 | |
Accumulated deficit | |
| (69,880 | ) | |
| (69,879 | ) |
Total stockholders' equity | |
| 5,862 | | |
| 5,863 | |
Total liabilities and stockholders' equity | |
$ | 5,889 | | |
$ | 5,915 | |
See accompanying notes
BKF CAPITAL GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME
(Dollar amounts in thousands, except per
share data)
(Unaudited)
| |
Three Months Ended | |
| |
March 31, | |
| |
2015 | | |
2014 | |
| |
| | |
| |
Non Operating Income | |
| | | |
| | |
Interest income | |
$ | 1 | | |
$ | 2 | |
| |
| | | |
| | |
Total revenues | |
| 1 | | |
| 2 | |
| |
| | | |
| | |
Expenses: | |
| | | |
| | |
Employee compensation and benefits | |
| 25 | | |
| 25 | |
Occupancy and equipment rental | |
| 4 | | |
| 5 | |
Other operating expenses | |
| 4 | | |
| 34 | |
| |
| | | |
| | |
Total expenses | |
| (33 | ) | |
| (64 | ) |
| |
| | | |
| | |
Other income (expense) | |
| | | |
| | |
Gain/(loss) on equity investments | |
| 31 | | |
| (58 | ) |
| |
| | | |
| | |
Total other income (expense) | |
| 31 | | |
| (58 | ) |
| |
| | | |
| | |
Net income/(loss) | |
$ | (1 | ) | |
$ | (120 | ) |
| |
| | | |
| | |
Basic and Diluted Earnings Per Share | |
| (0 | ) | |
| (.02 | ) |
Weighted average common shares outstanding | |
| 7,471,593 | | |
| 7,471,593 | |
See accompanying notes
BKF CAPITAL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
(Unaudited)
| |
Three months Ended | |
| |
March 31, | |
| |
2015 | | |
2014 | |
| |
| | |
| |
Cash flows from operating activities | |
| | | |
| | |
Net loss | |
$ | (1 | ) | |
$ | (120 | ) |
Changes in operating assets and liabilities: | |
| | | |
| | |
Gain / (loss) on equity investments | |
| (31 | ) | |
| 58 | |
(Decrease) in accrued expenses | |
| (25 | ) | |
| (13 | ) |
Net cash used in operating activities | |
| (57 | ) | |
| (75 | ) |
| |
| | | |
| | |
Cash flows from investing activities | |
| | | |
| | |
Purchase of investment securities | |
| (273 | ) | |
| (450 | ) |
Net cash used in investing activities | |
| (273 | ) | |
| (450 | ) |
| |
| | | |
| | |
Net decrease in cash and cash equivalents | |
| (330 | ) | |
| (525 | ) |
Cash and cash equivalents at the beginning of the period | |
| 3,052 | | |
| 5,898 | |
| |
| | | |
| | |
Cash and cash equivalents at the end of the period | |
$ | 2,722 | | |
$ | 5,373 | |
| |
| | | |
| | |
Supplemental disclosure of cash flow information Cash paid for interest | |
$ | — | | |
$ | — | |
| |
| | | |
| | |
Cash paid for income taxes | |
$ | — | | |
$ | — | |
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, 2014.
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
The Company operates through its wholly-owned subsidiaries,
BKF Investment Group, Inc., formerly known as BKF Management Co., Inc. ("BIG") and BKF Asset Holdings, Inc. (“BKF
Holdings”) all of which are collectively referred to herein as the "Company" or "BKF." The Company trades
on the over the counter market under the symbol ("BKFG"). Currently, the Company plans to engage in the asset management
business through its subsidiary BKF Advisors, Inc., which is a registered investment advisor in the State of California. BKF is
also 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 BIG and
BIG's two wholly owned subsidiaries BKF Advisors, Inc. (“BKF Advisors”) and BKF Asset Management, Inc., ("BAM")
and BAM's two wholly-owned subsidiaries, BKF GP, Inc. (“BKF GP”) and LEVCO Securities, Inc. ("LEVCO Securities").
On November 27, 2012 LEVCO Securities was dissolved. All intercompany accounts have been eliminated.
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 2014
and 2013.
Services
During the quarters ended March 31, 2015 and March 31, 2014,
the Company did not provide any investment advisory or asset management services nor did the Company act as a broker dealer.
The Company, through BKF GP, continues to act as the managing
general partner of several private investment partnerships, established prior to 2005, which are in the process of being liquidated
and dissolved.
BKF CAPITAL
GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS - (Continued)
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.
Recent Accounting Developments
In August 2014, the FASB issued ASU No. 2014-15 ("ASU 2014-15"),
Presentation of Financial Statements-Going Concern (Subtopic 205-40) - Disclosure of Uncertainties about an Entity's Ability to
Continue as a Going Concern. ASU 2014-15 requires a Company's management to evaluate, at each reporting period, whether there are
conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within one year after
the date the financial statements are issued and provide related disclosures. ASU 2014-15 is effective for the annual period ending
after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently evaluating the impact
of the adoption of ASU 2014-15 on its consolidated financial statements.
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.
Fair Values of Financial Instruments
The Company adopted FASB ASC 820-10-50, “Fair Value
Measurements”. This guidance defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value
measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:
Level 1 inputs to the valuation methodology are quoted prices
(unadjusted) for identical assets or liabilities in active markets.
Level 2 inputs to the valuation methodology include quoted prices
for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly
or indirectly, for substantially the full term of the financial instrument.
BKF CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- (Continued)
Level 3 inputs to valuation methodology are unobservable and
significant to the fair measurement.
The carrying amounts reported in the balance sheets for cash
and cash equivalents, and current liabilities each qualify as financial instruments and are a reasonable estimate of fair value
because of the short period of time between the origination of such instruments and their expected realization and their current
market rate of interest.
2. Investments
a) Investment in Qualstar:
The investment in Qualstar is accounted for using the equity
method as prescribed by Accounting Standard Codification Section 323, under which the Company’s carrying amount of its investment
in common stock of Qualstar is the initial cost adjusted for the Company’s share of Qualstar’s earnings and losses,
and further adjusted for any distributions or dividends. At March 31, 2015 the Company held 3,095,875 common shares of Qualstar,
representing approximately 25.27% of the outstanding shares. The investment in Qualstar was approximately $705,000 at March
31, 2015. The market value of the Company’s shares in Qualstar was approximately $4.6 million at March 31, 2015.
During the quarter ended March 31, 2015, the Company recorded
a loss on its investment in Qualstar of approximately $62,000. These losses do not include the quarterly results of Qualstar
as of March 31, 2015, as Qualstar’s financial statements were not available at the time we prepared our financial statements.
Therefore, all balances related to the Company’s investment in Qualstar are recorded on a three month (quarterly) lag. This
lag is consistent from period to period.
b) Investment in Interlink
At March 31, 2015, the Company holds 691,020 shares
of Interlink Electronics which represents approximately 11.8% of Internlink’s outstanding shares. Since, Steven
Bronson, BKF’s Chairman is also the Chief Executive Officer of Interlink Electronics and can significantly influence
the operational decisions at Interlink, the Company made a change in its accounting for this investment from
available-for-sale securities to the equity method. The change in accounting methods did not have a material impact on the
financial statements for the previously reported earnings-per-share. The retroactive application of the equity method
resulted in an immaterial change to retained earnings at March 31, 2014. In addition, the basic and
diluted earning per share did not change.
The investment in Interlink Electronics is accounted for using
the equity method as prescribed by Accounting Standard Codification Section 323, under which the Company’s carrying amount
of its investment in common stock of Interlink is the initial cost adjusted for the Company’s share of Qualstar’s earnings
and losses, and further adjusted for any distributions or dividends. At March 31, 2015 the Company held 691,200 common
shares of Interlink, representing approximately 11.8% of the outstanding shares. The investment in Interlink was approximately
$2.5 million at March 31, 2015. The market value of the Company’s shares in Interlink was approximately $6.2 million at March
31, 2015.
During the quarter ending March 31, 2015, the Company
recorded a gain on its investment in Interlink of approximately $93,000. These gains do not include the quarterly results of
Interlink as of March 31, 2015, as Interlink’s financial statements were not available at the time we prepared our
financial statements. Therefore, all balances related to the Company’s investment in Interlink are recorded on a three
month (quarterly) lag. This lag is consistent from period to period.
BKF CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS - (Continued)
3. Concentrations
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.
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. Control
As of March 31, 2015 Mr. Bronson beneficially owns 4,505,100
shares of the Company's common stock. Mr. Bronson's beneficial ownership represents approximately 60.3% of the Company's issued
and outstanding shares of common stock. Accordingly, Mr. Bronson has effective control of the Company. In the election of directors,
stockholders are not entitled to cumulate their votes for nominees. Thus, as a practical matter, Mr. Bronson may be able to elect
all of the Company's directors and otherwise direct the affairs of the Company.
| 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, 2014, 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, 2014.
Background
BKF was incorporated in Delaware in 1954.
The Company's securities trade on the over the counter market under the symbol "BKFG." The Company operates through its
wholly-owned subsidiaries, BKF Investment Group, Inc., formerly known as BKF Management Co., Inc. ("BIG") and BKF Asset
Holdings, Inc. (“BKF Holdings”) all of which are collectively referred to herein as the "Company" or "BKF."
The consolidated financial statements of BKF, BIG and BIG's two wholly owned subsidiaries BKF Advisors, Inc. (“BKF Advisors”)
and BKF Asset Management, Inc., ("BAM") and BAM's two wholly-owned subsidiaries, BKF GP, Inc. (“BKF GP”)
and LEVCO Securities, Inc. ("LEVCO Securities"). On November 27, 2012 LEVCO Securities was dissolved. There were no affiliated
partnerships in BKF's September 30, 2014 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 have been in the process of being liquidated and dissolved since 2006.
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,
investments 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, however the Company
has enough cash to continue in operation beyond the upcoming year.
Plan of Operations
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.
In September 2012, the Company changed
the name of its subsidiary BKF Management Co., Inc. to BKF Investment Group, Inc. and formed a wholly owned subsidiary, BKF Advisors,
Inc. (“BKF Advisors”). BKF Advisors has registered as an investment advisor with the State of Florida and the State
of California. Effective April 1, 2014, BKF Advisors terminated its registration as an investment advisor in the State of Florida.
The Company expects that BKF Advisors will act as the investment advisor to the BKF Technology Fund, L.P., a newly formed Delaware
limited partnership that plans to engage as an investment fund (the “Partnership”). BAM is the general partner of the
Partnership.
The Company expects to seed the Partnership
which expects to focus on small-cap and micro-cap companies with a value based 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.
The Company is also seeking 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. 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. Following the December 17, 2010 transaction BKF increased
its Qualstar holdings through open market transactions.
On February 15, 2012 BKF sent a letter
to the Qualstar board of directors, 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 February 15, 2012 letter with BKF and it failed to take any of the requested actions. In
or about May 2012, 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.
On January 17, 2013, BKF sent a letter
(the “Notice”) to the Qualstar Board, notifying Qualstar Board that in accordance with Section 6 of Article II of Qualstar’s
Bylaws, as amended and restated as of March 24, 2011, BKF Capital intends to nominate six (6) directors to serve on Qualstar’s
Board of Directors at the 2013 Annual Meeting of Shareholders.
On June 6, 2013, BKF filed its definitive
proxy statement for Qualstar’s 2013 Annual Meeting of Shareholders (the “Qualstar Meeting”) to be held on June
28, 2013. In its proxy statement BKF nominated five (5) persons to be elected to the board of directors of Qualstar. At the Qualstar
Meeting, the shareholders of Qualstar voted to elect BKF Capital’s nominees to the board of directors of Qualstar. On July
3, 2013, Steven N. Bronson, our Chairman, CEO and President, was appointed to serve as Qualstar’s Chairman and interim CEO
and President. In August 2013, Qualstar reimbursed BKF for the costs and expenses incurred in connection with the 2012 proxy contest
and the 2013 proxy contest in the aggregate amount of $356,000.
At March 31, 2015, the Company held 3,095,875
common shares of Qualstar consisting of 1,500,000 shares owned directly by the Company, and an additional 1,595,875 shares owned
through BKF Asset Holdings, Inc., a wholly owned subsidiary of the Company, representing approximately 25.27% of the issued and
outstanding shares of Qualstar. The Company holds the shares of Qualstar for investment purposes and is currently considering its
options. On April 17, 2015, the Company transferred 1,500,000 shares of Qualstar common stock to BKF Asset Holdings, Inc., its
wholly owned subsidiary.
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, 2015, was $1,000 compared to $2,000 in the same period in 2014, the decrease of $1,000 was primarily due to other income.
Expenses
Total expenses for the three months ended
March 31, 2015, was approximately $33,000, reflecting a decrease of 48% from $64,000 in expenses in the same period in 2014. The
decrease was primarily related to a decrease in professional fees related to the proxy contest concerning Qualstar.
Other Income and Loss
For the three months ended March 31, 2015 the Company recorded
a gain of approximately $31,000 on equity investments as compared to a loss of $58,000 for the three months ended March 31, 2014.
This is the result of losses related to Qualstar of $62,000 being offset by income from Interlink of $93,000.
Net Income/Net Loss
Net loss for the three months ended March
31, 2015 was $1,000, as compared to a net loss of $120,000 in the same period in 2014.
LIQUIDITY AND CAPITAL RESOURCES
BKF's current assets as of March 31, 2015,
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 March 31, 2015, BKF had cash and cash
equivalents of $2.7 million, compared to $3.1 million of cash and cash equivalents at December 31, 2014.
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, 2015.
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 5. Other Information.
The regulatory scope of the Investment
Company Act of 1940, as amended (the "40 Act"), which was enacted principally for the purpose of regulating vehicles
for pooled investments in securities, extends generally to companies engaged primarily in the business of investing, reinvesting,
owning, holding or trading in securities. The 40 Act may, however, also be deemed to be applicable to a company which does not
intend to be characterized as an investment company but which, nevertheless, engages in activities which may be deemed to be within
the definitional scope of certain provisions of the 40 Act. The Company believes that its investment strategy may subject the Company
to regulation under the 40 Act. If the Company is deemed to be an investment company, the Company may be forced to divest its investments
or become subject to certain restrictions relating to the Company's activities, including restrictions on the nature of its investments
and the issuance of securities. In addition, the 40 Act imposes certain requirements on companies deemed to be within its regulatory
scope, including registration as an investment company, adoption of a specific form of corporate structure and compliance with
certain burdensome reporting, record keeping, voting, proxy, disclosure and other rules and regulations. In the event of the characterization
of the Company as an investment company, the failure by the Company to satisfy such regulatory requirements, whether on a timely
basis or at all, would, under certain circumstances, have a material adverse effect on the Company. It is the Company’s position
that it is not an investment company required to be registered under the 40 Act.
Effective March 1, 2015 BKF Capital
Group, Inc. (“BKF”) relocated its principal offices to 31248 Oak Crest Drive, Suite 110, Westlake Village, California
91361 (the “Premises”). BKF occupies the Premises pursuant to a license agreement, dated March 1, 2015 (the “License
Agreement”) between BKF and Interlink Electronics, Inc. (“Interlink”). BKF’s new telephone number is (805)
416-7054. Pursuant to the License Agreement, BKF licenses one furnished office at the Premises. BKF also has access to a
telephone line and other services as described in the License Agreement. BKF shall pay a license
fee to Interlink of $12,000 per annum, or $1,000 per month, for use of the Premises. Steven N. Bronson, BKF’s Chairman, CEO
and majority shareholder, is also the Chairman, President and CEO of Interlink. A copy of the License Agreement is attached
to the Company’s Current Report on Form 8-K, dated March 4, 2015, as Exhibit 10.43, and is incorporated herein by reference.
Effective March 1, 2015, the Company licensed a portion of the Premises to two companies affiliated with Steven N. Bronson. Specifically,
the Company licensed office space and use of the Premises to 4Net Software, Inc. and Ridgefield Acquisition Corp. for a license
fee of $50 per month each.
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 |
|
|
|
31* — |
|
Section 302 Certification of Principal Executive Officer and Principal Financial Officer |
|
|
|
32* — |
|
Section 906 Certification of Principal Executive Officer and Principal Financial Officer |
|
|
|
101.INS* — |
|
XBRL Instance Document |
101.SCH* — |
|
XBRL Taxonomy Extension Schema Document |
101.CAL* — |
|
XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF* — |
|
XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB* — |
|
XBRL Taxonomy Extension Label Linkbase Document |
* Filed herewith.
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 13, 2015
|
BKF CAPITAL GROUP, INC. |
|
|
|
|
By: |
/s/ Steven N. Bronson |
|
|
Steven N. Bronson, |
|
|
Chief Executive Officer, |
|
|
as Registrant's duly authorized |
|
|
officer
|
EXHIBIT INDEX
The following exhibits are filed herewith:
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.
Exhibit 31
Statement Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
By Principal Executive Officer and Principal
Financial Officer
Regarding Facts and Circumstances Relating
to Exchange Act Filings
I, Steven N. Bronson, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the
quarter ended March 31, 2015 of BKF Capital Group, Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in all material respects the financial condition, results of operations
and cash flows of the small business issuer as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a -15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:
a. Designed such disclosure controls and procedures,
or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating
to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
b. Designed such internal control over financial
reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the small business
issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the small
business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal
quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and
5. I have disclosed, based on my most recent evaluation of internal
control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's
board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses
in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the small business issuer's
ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves
management or other employees who have a significant role in the small business issuer's
internal control over financial reporting.
Dated: May 13, 2015
|
/s/ Steven N. Bronson |
|
Steven N. Bronson, Principle Executive Officer |
Exhibit 32
President's Written Certification
Of Financial Statements
Pursuant to 18 U.S.C. Statute 1350
Pursuant to 18 U.S.C. Statute 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned hereby certifies in his capacity as president of BKF
Capital Group, Inc. (the "Company") that
| (a) | the Quarterly Report of the Company on Form 10-Q for
the period ended March 31, 2015 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934,
and |
| (b) | the information contained in such report fairly presents,
in all material respects, the financial condition of the Company at the end of such period and the results of operations of the
Company for such period. |
Dated: May 13, 2015
|
/s/ Steven N. Bronson |
|
Steven N. Bronson, Principle Executive Officer |
BKF Capital (PK) (USOTC:BKFG)
Historical Stock Chart
From Jul 2024 to Aug 2024
BKF Capital (PK) (USOTC:BKFG)
Historical Stock Chart
From Aug 2023 to Aug 2024