BKF CAPITAL GROUP INC - FORM 10-K

Attached files

file	filename
EX-32 - EXHIBIT 32 - BKF CAPITAL GROUP INC	ex32.txt
EX-31 - EXHIBIT 31 - BKF CAPITAL GROUP INC	ex31.txt
EX-23.1 - EXHIBIT 23.1 - BKF CAPITAL GROUP INC	ex23-1.txt

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2009
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .

Commission file no. 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)

225 N.E. Mizner Boulevard, Suite 400 Boca Raton, Florida 33432
(Address of principal executive offices)

(561) 362-4199
(Registrant's telephone number, including area code)

Securities registered under Section 12(b) of the Act: None

Securities registered under Section 12(g) of the Act: None

Indicate by check mark whether the registrant is a well known seasoned issuer,
as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

Indicate by check mark whether the registrant is not required to file reports
Pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]

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 preceding 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. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of the registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. Yes [X] 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.
See the definitions of "large accelerated filer," "accelerated filer" and
"smaller reporting company" in Rule 12b-2 of the Exchange Act.

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).

Yes [X] No [ ]

The aggregate market value of the voting stock held by non-affiliates of
the registrant as of June 30, 2009, was $4,196,700. For this computation, the
registrant has excluded the market value of all shares of its Common Stock
reported as beneficially owned by executive officers and directors of the
registrant; such exclusion shall not be deemed to constitute an admission that
any such person is an "affiliate" of the registrant.

March 29, 2010, 7,973,216 shares of BKF Capital Group, Inc. common stock,
par value $1.00 per share, were outstanding.

Table of Contents

Page
PART I 1

ITEM 1. BUSINESS. 1

ITEM 1A. RISK FACTORS. 3

ITEM 2. PROPERTIES. 8

ITEM 3. LEGAL PROCEEDINGS. 9

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. 9

PART II 10

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES. 10

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS. 10

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA. 13

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE. 13

ITEM 9A. CONTROLS AND PROCEDURES. 13

PART III 15

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE. 15

ITEM 11. EXECUTIVE COMPENSATION. 18

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS. 21

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
AND DIRECTOR INDEPENDENCE. 22

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES. 22

PART IV 23

ITEM 15. EXHIBITS. 23

SIGNATURES. 27

Special Note Regarding Forward-Looking Statements

Some of the statements made in this Annual Report on Form 10-K, including
statements under "Item 1. Business" and "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations," that are not
historical facts, including, most importantly, those statements preceded by,
followed by, or that include the words "may," "believes," "expects,"
"anticipates," or the negation thereof, or similar expressions constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. For those statements, BKF Capital Group, Inc.
(the "Company" or "BKF") claims the protection of the safe harbor for
forward-looking statements contained in the Reform Act. These forward-looking
statements are based on BKF's current expectations and are susceptible to a
number of risks, uncertainties and other factors including the risks described
in "Item 1A. Risk Factors", and BKF's actual achievements may differ materially
from any future achievements expressed or implied by such forward-looking
statements. Such factors include the following: retention and ability to recruit
qualified personnel; availability, terms and deployment of capital; changes in,
or failure to comply with, government regulations; the costs and other effects
of legal and administrative proceedings; BKF's ability to consummate a merger or
an acquisition and/or raise additional capital; the effect of laws, rules and
regulations on BKF's ability to make investments in new businesses and/or pursue
strategic alternatives; and other risks and uncertainties referred to in this
document and in BKF's other current and periodic filings with the Securities and
Exchange Commission, all of which are difficult or impossible to predict
accurately and many of which are beyond BKF's control. BKF 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 BKF's policy
generally not to make any specific projections as to future earnings, and BKF
does not endorse any projections regarding future performance that may be made
by third parties.

PART I

Item 1. Business

OVERVIEW

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 a wholly owned subsidiary of 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, 2009 or December 31, 2008
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.

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, however the Company has enough cash to continue in operation beyond
the upcoming year.

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.

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.

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.

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.

Services

During the years ended December 31, 2009 and December 31, 2008, 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 which are in the process of
being liquidated and dissolved.

Employees

As of March 29, 2010, BKF employed the services of one individual to act as
Chairman and President.

Item 1A. RISK FACTORS

Potential investors should carefully consider the risks described below
before making an investment decision concerning the common stock of the Company.
The risks and uncertainties described below are not the only ones we face. If
any of the following risks actually occur, our business, financial condition or
results of operations could be materially and adversely affected. In that case,
the trading price of our common stock could decline, and investors may lose all
or part of their investment.

The Company Has Limited Resources

The Company currently does not have any operating business. Except for a
limited revenue stream from a fee sharing agreement with a departed portfolio
manager, the Company has had no revenues from operations for the fiscal years
ended December 31, 2009 and 2008. The Company's plan of operations is to
consummate an acquisition or merger or other business combination (a
"Transaction") with a viable business entity (a "Target"). There can be no
assurance that the Company will be able to consummate a Transaction, nor can
there be any assurance that any Target, at the time of the Company's
consummation of a Transaction of the Target, or at any time thereafter, will
derive any material revenues from its operations or operate on a profitable
basis. The current assets of the Company may not be sufficient to fund a
Transaction. Based on the Company's limited resources, the Company may not be
able to effectuate its business plan and consummate a Transaction. There can be
no assurance that determinations ultimately made by the Company will permit the
Company to achieve its business objectives.

The Company May Need Additional Financing in Order to Execute Its Business Plan

The Company has limited resources. The Company cannot ascertain with any
degree of certainty the capital requirements for the execution of its business
plan to consummate a Transaction. In the event that the Company's limited
financial resources prove to be insufficient to implement its business plan, the
Company may be required to seek additional financing. In addition, in the event
of the consummation of a Transaction, the Company may require additional
financing to fund the operations or growth of the Target.

Additional Financing May Not Be Available to the Company

There can be no assurance that additional financing will be available to
the Company on acceptable terms, or at all. To the extent that additional
financing proves to be unavailable when needed, the Company would be limited in
its attempts to complete Transactions. The inability of the Company to secure
additional financing, if needed, could also have a material adverse effect on
the continued existence of BKF. The Company has no arrangements with any bank or
financial institution to secure financing and there can be no assurance that any
such arrangement, if required or otherwise sought, would be available on terms
deemed to be commercially acceptable and in the best interests of the Company.

The Company May Not Be Able to Borrow Funds

While there currently are no limitations on the Company's ability to
borrow funds, the limited resources of the Company and limited operating history
will make it difficult to borrow funds. The amount and nature of any borrowings
by the Company will depend on numerous considerations, including the Company's
capital requirements, the Company's perceived ability to meet debt service on
any such borrowings and the then prevailing conditions in the financial markets,
as well as general economic conditions. There can be no assurance that debt
financing, if required or sought, would be available on terms deemed to be
commercially acceptable by and in the best interests of the Company. The
inability of the Company to borrow funds required to effect or facilitate a
Transaction may have a material adverse effect on the Company's financial
condition and future prospects. Additionally, to the extent that debt financing
ultimately proves to be available, any borrowings may subject the Company to
various risks traditionally associated with indebtedness, including the risks of
interest rate fluctuations and insufficiency of cash flow to pay principal and
interest. Furthermore, a Target may have already incurred borrowings and,
therefore, the Company will be subjected to all the risks inherent thereto.

Competition for Transactions

The Company expects to encounter intense competition from other entities
having business objectives similar to those of the Company. Many of these
entities, including venture capital partnerships and corporations, blind pool
companies, large industrial and financial institutions, small business
investment companies and wealthy individuals, are well-established and have
extensive experience in connection with identifying and effecting Transactions
directly or through affiliates. Many of these competitors possess greater
financial, technical, human and other resources than the Company and there can
be no assurance that the Company will have the ability to compete successfully.
The Company's financial resources will be limited in comparison to those of many
of its competitors. This inherent competitive limitation may compel the Company
to select certain less attractive acquisition prospects. There can be no
assurance that such prospects will permit the Company to achieve its stated
business objectives.

The Company May Be Subject to
Uncertainty in the Competitive Environment of a Target

In the event that the Company succeeds in effecting a Transaction, the
Company will, in all likelihood, become subject to intense competition from
competitors of the Target. In particular, certain industries which experience
rapid growth frequently attract an increasingly large number of competitors,
including competitors with greater financial, marketing, technical, human and
other resources than the initial competitors in the industry. The degree of
competition characterizing the industry of any prospective Target cannot
presently be ascertained. There can be no assurance that, subsequent to a
consummation of a Transaction, the Company will have the resources to compete
effectively in the industry of the Target, especially to the extent that the
Target is in a high growth industry.

Transaction May Prevent or Limit the Company's
Ability to Use Its Net Operating Tax Loss Carryforwards

As of December 31, 2009 the Company had a net operating loss carryforward
of approximately $9.3 million. The consummation of a Transaction by the Company
may limit, reduce or void the utilization of the net operating losses. While the
Company shall endeavor to complete a Transaction with a Target that will permit
the Company to utilize its net operating losses, there can be no assurances that
the Company will be able to utilize its net operating losses after the
consummation of a Transaction with a Target.

The Company is Exposed to Potential Liabilities
Under Real Estate Leases for One Rockefeller Plaza

The Company is a party to a lease for approximately 32,000 square feet at
One Rockefeller Plaza, New York, New York (the "Premises"), which expires
September 30, 2011. In 2006, the Company sublet the Premises to a third-party at
a rent that was lower than the rent charged to the Company under the lease. The
Company has established a reserve for the aggregate rent shortfall on its
financial statements. However, the Company remains liable under the lease, and
in the event the third-party subtenant defaults under the sublease, then the
Company may be exposed to additional liabilities under the lease beyond the sum
already reserved.

Taxation Considerations May Impact the
Structure of a Transaction and Post-Closing Liabilities

Federal and state tax consequences will, in all likelihood, be major
considerations for the Company in consummating a Transaction. The structure of a
Transaction or the distribution of securities to stockholders may result in
taxation of the Company, the Target or stockholders. Typically, these
transactions may be structured to result in tax-free treatment to both
companies, pursuant to various federal and state tax provisions. The Company
intends to structure any Transaction so as to minimize the federal and state tax
consequences to both the Company and the Target. Management cannot assure that a
Transaction will meet the statutory requirements for a tax-free reorganization,
or that the parties will obtain the intended tax-free treatment upon a transfer
of stock or assets. A non-qualifying reorganization could result in the
imposition of both federal and state taxes, which may have an adverse effect on
both parties to the transaction.

Steven N. Bronson is Critical to the Future Success of the Company

Steven N. Bronson is the Chairman and President of the Company. The
ability of the Company to successfully carry out its business plan and to
consummate a Transaction will be dependent upon the efforts of Mr. Bronson and
the Company's directors. Notwithstanding the significance of Mr. Bronson, the
Company has not obtained any "key man" life insurance on his life. The loss of
the services of Mr. Bronson could have a material adverse effect on the
Company's ability to successfully achieve its business objectives. If additional
personnel are required, there can be no assurance that the Company will be able
to retain such necessary additional personnel.

Mr. Bronson Has Effective Control of the Company's Affairs

As of March 23, 2010, Mr. Bronson beneficially owns and controls 3,333,269
shares of common stock of the Company, representing approximately 42% of the
issued and outstanding shares of common stock and approximately 42% of the
voting power of the issued and outstanding shares of common stock of the
Company. In the election of directors, stockholders are not entitled to cumulate
their votes for nominees. Accordingly, 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.

There Exist Conflicts of Interest
Relating to Mr. Bronson's Commitment to the Company

Mr. Bronson is not required to commit his full time to the affairs of the
Company. Mr. Bronson will have conflicts of interest in allocating management
time among various business activities. Additionally, Mr. Bronson is the
president, director and principal shareholder of two publicly traded companies,
4net Software, Inc. and Ridgefield Acquisition Corp. that are also engaged in
seeking to consummate a merger, acquisition or other business combination
transaction. As a result, the consummation of an Acquisition may require a
greater period of time than if Mr. Bronson devoted his full time to the
Company's affairs. However, Mr. Bronson will devote such time as he deems
reasonably necessary to carry out the business and affairs of the Company,
including the evaluation of potential Targets and the negotiation and
consummation of Acquisitions and, as a result, the amount of time devoted to the
business and affairs of the Company may vary significantly depending upon, among
other things, whether the Company has identified a Target or is engaged in
active negotiation and consummation of an Acquisition.

Indemnification of Officers and Directors

The Company's Certificate of Incorporation provides for the
Indemnification of its officers and directors to the fullest extent permitted by
the laws of the State of Delaware. It is possible that the indemnification
obligations imposed under these provisions could result in a charge against the
Company's earnings and thereby affect the availability of funds for other uses
by the Company.

Stockholders Risk Dilution In Connection with a Transaction

The Company's Certificate of Incorporation authorizes the issuance of
15,000,000 shares of common stock. As of March 23, 2010, the Company had
7,973,216 shares of common stock issued and outstanding and 7,026,784 authorized
but unissued shares of common stock available for issuance. The Company has no
commitments as of this date to issue its securities, however, the Company will,
in all likelihood, issue a substantial number of additional shares in connection
with or following a Transaction. To the extent that additional shares of common
stock are issued, the Company's stockholders would experience dilution of their
ownership interests in the Company. Additionally, if the Company issues a
substantial number of shares of common stock in connection with or following a
Transaction, a change in control of the Company may occur which may affect,
among other things, the Company's ability to utilize net operating loss
carry-forwards, if any. Furthermore, the issuance of a substantial number of
shares of common stock may adversely affect prevailing market prices, if any,
for the common stock and could impair the Company's ability to raise additional
capital through the sale of its equity securities. The Company may use
consultants and other third parties providing goods and services. These
consultants or third parties may be paid in cash, stock, options or other
securities of the Company. The Company may in the future need to raise
additional funds by selling securities of the Company which may involve
substantial additional dilution to the investors.

The Company May Be Deemed an Investment
Company and Subjected to Related Restrictions

The regulatory scope of the Investment Company Act of 1940, as amended
(the "Investment Company 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 Investment Company 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 Investment Company Act. The Company believes that its
investment strategy may subject the Company to regulation under the Investment
Company 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
Investment Company 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.

Investors Should Not Rely on Forward-Looking
Statements Because They Are Inherently Uncertain

This document contains certain forward looking statements that involve
risks and uncertainties. We use words such as "anticipate," "believe," "expect,"
"future," "intend," "plan," and similar expressions to identify forward-looking
statements. These statements are only predictions. Although we believe that the
expectations reflected in these forward-looking statements are reasonable, we
cannot guarantee future results, levels of activity, performance or
achievements. You should not place undue reliance on these forward-looking
statements, which apply only as of the date of this document. Our actual results
could differ materially from those anticipated in these forward-looking
statements for many reasons, including the risks faced by us and described on
the preceding pages and elsewhere in this document.

We believe it is important to communicate our expectations to our
investors. However, there may be events in the future that we are not able to
predict accurately or over which we have no control. The risk factors listed
above, as well as any cautionary language in this document, provide examples of
risks, uncertainties and events that may cause our actual results to differ
materially from the expectations we describe in our forward-looking statements.
Before you invest in our common stock, you should be aware that the occurrence
of the events described in these risk factors and elsewhere in this document
could have a material adverse effect on our business, operating results,
financial condition and stock price.

Item 2. Properties

During the year ended December 31, 2009, BKF's offices were located at
1 North Federal Highway, Suite 201, Boca Raton, Florida 33421. On February 28,
2010 the Company terminated the lease agreement without additional
consideration.

Effective March 1, 2010, BKF relocated its offices to 225 N.E. Mizner
Boulevard, Suite 400, Boca Raton, Florida 33432 (the "Premises"). The Company's
telephone number remains (561) 362-4199. The Company shall occupy the Premises,
which is approximately 2,418 square feet, pursuant to an Agreement of Sublease,
dated as of March 1, 2010 (the "Sublease"), by and between the Company and Lion
Gables Realty Limited Partnership, a Delaware limited partnership. The Sublease
is for a term of 5 years from March 1, 2010 through February 28, 2015 and the
Company shall pay a monthly base rent of $5,038 throughout the Sublease term,
plus certain additional rent. The monthly base rent includes all operating
expenses and real estate taxes. A copy of the form Sublease for the Premises is
attached to BKF's Current Report on Form 8-K, filed on March 8, 2010, as Exhibit
10.38.

One Rockefeller Plaza Leases

Prior to December 31, 2008, BKF maintained its office at One Rockefeller
Plaza, New York, New York.

In September 2001, BKF entered into a 10 year lease agreement with RCPI
Landmark Properties, LLC 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.

In 2007, the Company surrendered additional office space back to the
landlord and in connection therewith the Company paid an early termination
surrender fee of approximately $262,000 to the landlord.

On November 30, 2008, the Company's lease for approximately 7,000 square
feet at One Rockefeller Plaza ended in accordance with its terms and BKF
surrendered the office space to the landlord.

The lease liability will be reduced as monthly rent payments are made to
the landlord, net of any sublease income received.

As of December 31, 2009 and 2008, the lease liability reserve was $2.6
million and $4.1 million, respectively.

Item 3. 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. On or about February 28, 2010,
the Company completed a settlement of the ML Action through the payment of
$30,000 to the plaintiff. In connection with the settlement of the ML Action,
BKF expressly denied any liability and determined to settle the ML Action in an
effort to avoid the further expense, disruption, aggravation and risk of
continuing the ML Action.

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 4. Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of BKF's security holders during the
fiscal year ended December 31, 2009.

PART II

Item 5. Market for the Registrant's Common Equity, Related Stockholders
Matters and Issuer Purchases of Equity Securities

(a) MARKET INFORMATION. BKF's common stock trades over the counter under
the symbol "BKFG." At the close of business on March 26, 2010, there were 436
holders of record of BKF's common stock. As of March 29, 2010, the bid and ask
price of the Company's common stock was $0.92 and $1.05, respectively.

The following table sets forth the range of high and low prices for the
Company's common stock for the periods indicated. These prices represent
reported transactions between dealers that do not include retail markups,
markdowns or commissions, and do not necessarily represent actual transactions.

Stock Price
Ranges
-----------------
COMMON STOCK
------------------------------------------------------------------
Year/Fiscal Period High Low
------------------ ---------- ---------

2009
Fourth Quarter $1.30 $0.93
Third Quarter $1.22 $0.85
Second Quarter $1.05 $0.95
First Quarter $1.13 $0.80

2008
Fourth quarter $1.18 $0.75
Third quarter $2.20 $1.05
Second quarter $2.25 $1.90
First quarter $2.25 $1.90

BKF declared a $1 per share distribution of capital to all shareholders of
record as of July 8, 2008, which was paid on July 22, 2008. There were no other
distributions or dividends declared or paid in 2009 or 2008. The declaration and
payment of distributions or dividends by BKF is at the discretion of BKF's Board
of Directors. BKF is a holding company, and its ability to pay dividends is
subject to the ability of its subsidiaries to provide cash to BKF. BKF has
discontinued its policy of paying quarterly cash dividends and does not expect
to pay dividends in the foreseeable future.

Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations

Currently, the Company has no business 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. 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.

Current Plan of Operations

The Company has no operating business and no assets under management at
December 31, 2009. The Company's principal assets consist of a significant cash
position, sizable net operating tax losses to potentially carry forward, its
status as an 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 current expenses, however the
Company has enough cash to cover operations for the upcoming year.

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.

BKF, through a subsidiary, acts as the managing general partner of a
number of investment partnerships which are in the process of being liquidated
and dissolved.

During the period July 2, 2009 through July 13, 2009, the Company acquired
a total of 500,000 shares of FCStone Group, Inc. ("FCStone") common stock in
open market transactions at an average price of approximately $3.97 per share or
an aggregate amount of approximately $1,985,000. On July 31, 2009 the Company
sold 10,847 common shares of FCStone at $5.62 or $60,848. On October 1, 2009,
the previously announced merger between International Assets Holding Corporation
("IAAC") and FCStone Group, Inc. ("FCStone") was completed and each outstanding
share of FCStone was exchanged for .2950 shares of IAAC. Accordingly, on October
1, 2009 the Company received 144,300 shares of IAAC in exchange for its 489,153
shares of FCStone. At December 31, 2009 the Company held 144,300 of IAAC common
shares valued at approximately $2,098,122.

On June 30, 2009 the Board of Directors of the Company approved a share
repurchase plan (the "Plan"), authorizing the Company to repurchase in the
aggregate up to 1 million shares of its outstanding common stock, $1 par value,
over the twelve month period July 7, 2009 through July 6, 2010. As of March 23
2010, the Company did not repurchase any shares under the Plan.

Results of Operations

Income

Total income for 2009 was $836,000, reflecting a decrease of 70% from $2.8
million in 2008. The decline in income was a result of reduced royalties and
other income and a decrease in interest income due to the significantly reduced
treasury bill balance, year over year. The Company no longer has any revenue
streams except interest on its cash and trailer fees from departed portfolio
management.

Expenses

Total expenses for 2009 were $1.0 million, reflecting a 75% decrease from
$4.1 million in 2008. The decrease is a direct result of the reduction of
expenses and long term commitments, including staffing costs.

Liquidity

At December 31, 2009, BKF had cash and cash equivalents of $11.8 million,
as compared to cash and cash equivalents and U.S. Treasury bills of $14.9
million at December 31, 2008. BKF Capital had receivables of $237,000 at
December 31, 2009, as compared to $783,000 at December 31, 2008. This decrease
in cash and cash equivalents and receivables primarily reflects the overall
reduction in the business as described.

Accrued expenses were $208,000 at December 31, 2009, as compared to
$257,000 at December 31, 2008. This decrease is primarily attributable to
reduced business activity and related expenses.

Over the next twelve months the Company plans to meet its current
obligations from interest on its cash, and royalties from a departed portfolio
manager. To the extent such revenues are insufficient to pay expenses, the
Company shall utilize its cash on hand to meet its obligations.

Off Balance Sheet Risk

BKF GP served as the managing general partner for several affiliated
investment partnerships which traded primarily in equity securities. As of
December 31, 2009 and 2008 virtually all of these partnerships' investments have
been fully liquidated and the proceeds distributed. There is no general partner
or limited partners' capital remaining in these partnerships unless certain
illiquid portfolio positions eventually realize a value. BKF GP has not
guaranteed any of the affiliated investment partnerships' obligations, nor does
it have any contractual commitments associated with them.

Item 8. Financial Statements and Supplemental Data

The independent auditor's reports and financial statements listed in the
accompanying index are included in Item 15 of this Annual Report on Form 10-K.
See Index to Financial Statements on page F-1.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

None.

Item 9A. Controls and Procedures

Disclosure 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. In designing and evaluating our
disclosure controls and procedures, the Company recognized that disclosure
controls and procedures, no matter how well conceived and operated, can provide
only reasonable assurance of achieving the desired control objectives, and we
necessarily are required to apply our judgment in evaluating the cost-benefit
relationship of possible disclosure controls and procedures.

Evaluation of disclosure and controls and procedures
----------------------------------------------------

Based on his evaluation of the Company's disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act)
as of the end of the period covered by this annual report on Form 10-K the
Company's principle executive officer has concluded that the Company's
disclosure controls and procedures did operate in an effective manner as of
December 31, 2009.

Management's Annual Report on
Internal Control over Financial Reporting
-----------------------------------------

Our management is responsible for establishing and maintaining adequate
internal control over financial reporting, as such term is defined in Rules
13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was
designed 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. Because of inherent
limitations, a system of internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate due to change in conditions, or that the degree of compliance with
the policies or procedures may deteriorate.

Internal control over financial reporting is defined, under the Exchange
Act, as a process designed by, or under the supervision of, the issuer's
principal executive and principal financial officers, or persons performing
similar functions, and effected by the issuer's board of directors, management
and other personnel, 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 and
includes those policies and procedures that:

o Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of
the assets of the issuer;

o Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that
receipts and expenditures of the issuer are being made only in
accordance with authorizations of management and directors of the
issuer; and

o Provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the
issuer's assets that could have a material effect on the financial
statements.

The Company's principal executive officer has assessed the effectiveness
of the Company's internal control over financial reporting as of December 31,
2009. In making this assessment, the Company's principal executive officer was
guided by the releases issued by the SEC and to the extent applicable the
criteria established in Internal Control - Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission. The Company's
principal executive officer has concluded that based on his assessment, as of
December 31, 2009, the Company's procedures of internal control over financial
reporting operated in an effective manner.

Readers are cautioned that internal control over financial reporting, no
matter how well designed, has inherent limitations and may not prevent or detect
misstatements. Therefore, even effective internal control over financial
reporting can only provide reasonable assurance with respect to the financial
statement preparation and presentation.

This annual report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to temporary rules of the SEC that
permit the Company to provide only management's report in this annual report.

This report shall not be deemed to be filed for purposes of Section 18 of
the Exchange Act, or otherwise subject to the liabilities of that section, and
is not incorporated by reference into any filing of the Company, whether made
before or after the date hereof, regardless of any general incorporation
language in such filing.

Changes in Internal Control over Financial Reporting
----------------------------------------------------

There were no changes in our internal control over financial reporting
that occurred during the quarter ended December 31, 2009 that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.

Part III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The following table sets forth the names, ages and positions of our
current directors, executive officers and other key employees as of March 23,
2010. Our directors are elected annually and serve until the next annual meeting
of shareholders and until their successors are elected and appointed. Our
executive officers serve until the election and qualification of their
successors or until their death, resignation or removal by our board of
directors. There were five meetings of the board of directors during 2009.

DIRECTORS
---------

Name, Age, and Director Other Business
Principal Occupation During the Last Five Years Since Affiliation(s)
----------------------------------------------- -------- --------------

Steven N. Bronson -- age 44 2008 Officer and director of 4net
President and Chairman of BKF since September 19, 2008. Mr. Software, Inc., a publicly traded
Bronson is the President of Catalyst Financial LLC, a privately corporation and Ridgefield
held securities brokerage and investment banking firm registered Acquisition Corp., a publicly
with the U.S. Securities and Exchange Commission. Mr. Bronson has traded corporation.
held that position since 1998. Mr. Bronson is also the chairman,
president and majority shareholder of Ridgefield Acquisition Corp.
and 4net Software, Inc. both publicly traded companies.

Leonard Hagan -- age 58 2008 Director of 4net Software, Inc., a
Director of BKF since September 19, 2008. publicly traded corporation and
Mr. Hagan is a certified public accountant and for the past fifteen Ridgefield Acquisition Corp., a
years has been a partner at Hagan & Burns CPA's, PC in New York. Mr. publicly traded corporation.
Hagan received a Bachelors of Arts degree in Economics from Ithaca
College in 1974 and earned his Masters of Business Administration
degree from Cornell University in 1976. Mr. Hagan is registered as
the Financial and Operations Principal for the following
broker-dealers registered with the Securities and Exchange
Commission: Mallory Capital Group, LLC; Fieldstone Services Corp.;
Livingston Securities, LLC; FG Healthco Securities LLC and Danske
Markets, Inc. Mr. Hagan is also a director of Ridgefield
Acquisition Corp. and 4net Software, Inc. both publicly traded
companies.

OFFICERS
--------

Name, Age and Principal Occupation During Executive
the Last Five Years Office Officer Since
----------------------------------------- ------ -------------

Steven N. Bronson -- age 44 Chairman and President 2008
President and Chairman of BKF since September 19, 2008.
Mr. Bronson the President of Catalyst Financial LLC, a
privately held securities brokerage and investment banking
firm registered with the U.S. Securities and Exchange
Commission. Mr. Bronson has held that position since
1998. Mr. Bronson is also the chairman, president and
majority shareholder of Ridgefield Acquisition Corp. and
4net Software, Inc. both publicly traded companies.

No director, executive officer, promoter or control person of the Company
has, within the last five years: (i) had a bankruptcy petition filed by or
against any business of which such person was a general partner or executive
officer either at the time of the bankruptcy or within two years prior to that
time; (ii) been convicted in a criminal proceeding or is currently subject to a
pending criminal proceeding (excluding traffic violations or similar
misdemeanors); (iii) been subject to any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring, suspending or
otherwise limiting his involvement in any type of business, securities or
banking activities; (iv) been found by a court of competent jurisdiction (in a
civil action), the Securities and Exchange Commission or the Commodity Futures
Trading Commission to have violated a federal or state securities or commodities
law, and the judgment has not been reversed, suspended or vacated. There are no
family relationships among any directors and executive officers of the Company.

Corporate Governance

Audit Committee

The current member of the audit committee is Leonard Hagan. During the
period October 6, 2008 through December 3, 2008, John Brunjes also served on the
audit committee. Harvey Bazaar served on the audit committee for the period
February 16, 2006 through September 19, 2008, Marvin Olshan served on the audit
committee for the period February 16, 2006 through September 19, 2008, and Kurt
N. Schacht served on the audit committee during the period August 11, 2005
through July 28, 2008. There were four meetings of the audit committee during
2009.

Pursuant to the audit committee's written charter. The Audit Committee's
responsibilities include, among other things:

o reviewing and discussing with management and the independent auditor
the annual audited financial statements, and recommending to the
board whether the audited financial statements should be included in
our Form 10-K;

o discussing with management and the independent auditor significant
financial reporting issues and judgments made in connection with the
preparation of our financial statements;

o discussing with management and the independent auditor the effect on
our financial statements of (i) regulatory and accounting
initiatives and (ii) off-balance sheet structures;

o discussing with management major financial risk exposures and the
steps management has taken to monitor and control such exposures,
including our risk assessment and risk management policies;

o reviewing disclosures made to the audit committee by our chief
executive officer and chief financial officer during their
certification process for our Form 10-K and Form 10-Q about any
significant deficiencies in the design or operation of internal
controls or material weaknesses therein and any fraud involving
management or other employees who have a significant role in our
internal controls;

o verifying the rotation of the lead (or coordinating) audit partner
having primary responsibility for the audit and the audit partner
responsible for reviewing the audit as required by law;

o reviewing and approving all related-party transactions;

o inquiring and discussing with management our compliance with
applicable laws and regulations;

o Pre-approving all auditing services and permitted non-audit services
to be performed by our independent auditor, including the fees and
terms of the services to be performed;

o appointing or replacing the independent auditor;

o determining the compensation and oversight of the work of the
independent auditor (including resolution of disagreements between
management and the independent auditor regarding financial
reporting) for the purpose of preparing or issuing an audit report
or related work; and

o establishing procedures for the receipt, retention and treatment of
complaints received by us regarding accounting, internal accounting
controls or reports which raise material issues regarding our
financial statements or accounting policies.

Financial Expert on Audit Committee

Our board of directors has determined that Mr. Hagan is our "audit
committee financial expert" (as defined in Regulation 240.401(h)(l)(i)(A) of
Regulation S-K). Prior to September 19, 2008 Mr. Bazaar acted as the Company's
"audit committee financial expert."

Code of Ethics

The Board of Directors has adopted a Code of Ethics for the Chief
Executive Officer, Chief Financial Officer and certain other personnel. A copy
of the Company's Code of Ethics is attached as Exhibit 14.1 to BKF's Annual
Report on Form 10-K for the year ended December 31, 2007.

Section 16(a) Beneficial Ownership Reporting Compliance

Each director and executive officer of the Company and each beneficial
owner of 10% or more of the Company's common stock is required to report his or
her transactions in shares of the Company's common stock to the SEC within a
specified period following a transaction. Based on our review of filings with
the SEC and written representations furnished to us during 2009, the directors,
executive officers and 10% beneficial owners filed all such reports within the
specified time period.

ITEM 11. EXECUTIVE COMPENSATION.

Executive Officer Compensation

The following table sets forth the compensation for the years ended
December 31, 2009, December 31, 2008 and December 31, 2007 received by the
Company's Chief Executive Officer and the two most highly compensated other
officers serving at the end of fiscal year 2009 (the "Named Executive
Officers"). The table also includes the former officers who were not serving as
officers on December 31, 2009.

SUMMARY COMPENSATION TABLE

Shares
Name and Restricted Granted
Principal Other Annual Stock Under Options All Other
Position Year Salary ($) Bonus ($) Compensation(1) Award($) Option Value($)(2) Compensation
-------- ---- ---------- --------- --------------- ---------- ------ ----------- ------------

Steven N. Bronson 2009 150,000 0 0 0 0 0 0
Chairman and
President

Steven N. Bronson 2008 37,500 0 0 0 0 0 0
Chairman and
President

Former
Harvey J. Bazaar(3) 2008 187,500 0 0 0 0 0 0
Chief Executive 2007 149,423 0 0 0 200,000 226,535 0
Officer
and President

J. Clarke Gray(4) 2008 169,307 0 0 0 0 0 0
Senior Vice President 2007 137,500 62,500 0 0 50,000 40,621 643,329
and Chief
Financial Officer

Marvin Olshan(3) 2008 187,500 0 0 0 0 0
Chairman 2007 149,423 0 0 0 200,000 226,535

John C. Siciliano(6) 2008 0 0 0 0 0 0 0
Chairman, chief 2007 7,307 0 0 0 0 0 1,250,000
Executive Officer
and President

----------
(1) With respect to each of the Named Executive Officers and the Former
Executive Officers, perquisites and other personal benefits did not exceed
the lesser of $50,000 or 10% of the total of annual salary and bonus except
as noted.

(2) Represents the estimated aggregate fair market value on the grant date in
accordance with the ASC Topic 718.

(3) Mr. Olshan and Mr. Bazaar were appointed Chairman and CEO, respectively, as
of January 2, 2007 and signed term agreements with the Company as of
November 12, 2007. Previous to 2007 their only compensation was director
fees. Effective September 19, 2008, Mr. Olshan and Mr. Bazaar resigned all
of their positions with the Company.

(4) Mr. Gray was appointed CFO of the Company and BKF Asset Management Inc.
effective January 25, 2006. His separation agreement became effective as of
June 30, 2007. Under the terms of his employment and separation agreement,
he received one year's annual salary and minimum bonus totaling $400,000
through June 30, 2007 and received $243,329 in consulting fees from July 1,
2007 to December 31, 2007. Mr. Gray and the Company executed an agreement
dated March 5, 2008 which compensated him approximately $150,000 per annum
to continue as the Company's CFO. Effective September 19, 2008, Mr. Gray
resigned all of his positions with the Company.

(5) Represents the fair market value, as of the grant date, of 25,000 shares of
restricted stock granted on January 25, 2006.

(6) Mr. Siciliano was appointed President and Chief Executive Officer of the
Company and BKF Asset Management, Inc. effective September 28, 2005. His
separation agreement became effective as of January 2, 2007. Under the
terms of his employment and separation agreements he received one year's
annual salary of $950,000. Under his separation agreement he received
$300,000 for consulting fees following his termination date.

(7) Represents reimbursements in connection with relocation and other living
expenses of Mr. Siciliano to New York City in 2006.

Outstanding Equity Awards at December 31, 2009

As of December 31, 2009, there are no outstanding option grants.

Option/SAR Grants in Last Fiscal Year

The following table contains certain information regarding grants of stock
options to Named Executive Officers during the year ended December 31, 2009. The
stock options listed below were granted without tandem stock appreciation
rights. We have no freestanding stock appreciation rights outstanding.

Number of Percent of
Securities Total Options/
Underlying SARs Granted to
Options/SARs Employees Exercise or Expiration
Name Granted (#) in Fiscal Year Base Price ($/Sh) Date
-------------------- ------------ --------------- ----------------- ----------

Steven N. Bronson 0 0 -- --
Harvey Bazaar 0 0 -- --
Marvin Olshan 0 0 -- --
J. Clark Gray 0 0 -- --

----------

Other Plans

Other than the BKF Capital Group, Inc. 1998 Incentive Compensation Plan,
as Amended and Restated on March 28, 2001 (the "1998 Plan"), the Company does
not have any other bonus, profit sharing, pension, retirement, stock option,
stock purchase, or other remuneration or incentive plans in effect.

Long Term Incentive Plan

The Company has no long-term incentive plan.

Aggregate Option Exercises in Fiscal 09 and Fiscal 08 Option Values

The following table contains certain information regarding stock
options exercised during and options to purchase common stock held as of
December 31, 2009, by each of the Named Executive Officers.

Number Number of Securities Value of Unexercised
Of Shares Underlying Unexercised In-the-Money Options
Name/ Acquired Value Options at Fiscal Year End at Fiscal Year End
Position On Exercise Realized Exercised/Unexercised Exercised/Unexercised
------------------ ----------- -------- -------------------------- ---------------------

Steven N. Bronson
Chairman
and President 0 0 0 $0

Agreements with Employees and Directors

Described below are the employees, officers and directors who are subject
to a current employment contract as of December 31, 2009.

Agreements with Steven N. Bronson

On October 1, 2008, the Company entered into an employment agreement with
Steven N. Bronson to serve as the Company's President at an annual salary of
$150,000. A copy of the employment agreement between BKF Capital Group, Inc. and
Steven N. Bronson, dated as of October 1, 2008, is attached as Exhibit 10.35 of
the Company's Current Report on Form 8-K filed on October 14, 2008.

Compensation Committee Interlocks and Insider Participation

During 2009, Leonard Hagan was the only member of the Compensation
Committee. Mr. Hagan also serves as BKF's corporate secretary, but he is
not compensated for serving in that position.

Directors' Compensation

Company employees who serve as directors of the Company receive no
compensation for such services. Non-employee directors currently receive
approximately $10,000 per year in cash compensation, paid quarterly for service
on the board. Non-employee directors currently also receive $1,000 per year in
cash compensation, paid quarterly for service on each committee. Prior to
September 19, 2008, non-employee directors received approximately $34,000 per
year in cash compensation. In addition, directors received $500 for each meeting
of a committee of the board that they attend in person or by telephone. The
Company also reimburses directors for their out-of-pocket expenses incurred in
connection with such meetings.

2009 DIRECTOR COMPENSATION

Fees* Paid
in Cash
----------
Current
-------
Steven N. Bronson (1)
Leonard Hagan $ 12,000

----------
* Fees include director and committee fees earned during fiscal 2009.

(1) Mr. Bronson has a compensation agreement with the Company and thus did not
receive separate director fees.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The table below sets forth the beneficial ownership as of December 31,
2009 of (1) each person known by the Company to be the beneficial owner of more
than 5% of the outstanding shares of the Company's common stock, (2) each
director and nominee for director of the Company, (3) each executive officer of
the Company whose name appears on the summary compensation table (the "Named
Executive Officers") and (4) all directors and executive officers of the Company
as a group. Each person had sole or shared voting or dispositive powers with
respect to such shares.

Number of Percent
Name of Beneficial Owner Shares (1) of Class
------------------------ ---------- --------

Steven N. Bronson 3,333,269 42 %
c/o BKF Capital Group, Inc.
225 N.E. Mizner Boulevard, Suite 400
Boca Raton, Florida 33432

Aegis Financial Corp. 427,100 (2) 5.4 %
1100 North Globe Road, Suite 1040
Arlington, VA 22201

Leonard Hagan 222,368 (3) 2.8 %
c/o BKF Capital Group, Inc.
225 N.E. Mizner Boulevard, Suite 400
Boca Raton, Florida 33432

Directors and executive officers as a group (2 persons) 3,555,637 44.6 %

----------
* Less than 1%

(1) As used in this table, a beneficial owner of a security includes any person
who, directly or indirectly, through contract, arrangement, understanding,
relationship or otherwise has or shares (a) the power to vote, or direct
the voting of, such security or (b) investment power which includes the
power to dispose, or to direct the disposition of, such security. In
addition, a person is deemed to be the beneficial owner of a security if
that person has the right to acquire beneficial ownership of such security
within 60 days.

(2) The information set forth is based solely on Schedule 13G filed with the
SEC on February 12, 2010.

(3) These shares do not include 5,600 shares of BKF owned by Mr. Hagan's son.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Steven N. Bronson is the managing member of Catalyst Fund, G.P., LLC, a
Delaware limited liability company, which is the general partner of the Catalyst
Fund L.P., a Delaware limited partnership, that was engaged as an unregistered
investment fund with an office address of 100 Mill Plain Road, Danbury,
Connecticut 06877. On December 31, 2008, the Catalyst Fund, L.P. ceased
operating and distributed its assets to its limited partners. In addition to
being the fund manager for Catalyst Fund, L.P., Mr. Bronson was also a majority
owner of Catalyst Fund, L.P.

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 full service securities
brokerage, investment banking and consulting firm. Mr. Bronson is also the
President and majority shareholder of 4net Software, Inc. and Ridgefield
Acquisition Corp., both publicly traded companies.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Audit Fees.

Mark Bailey and Company, Ltd. received $45,000 for the year ended December
31, 2009 for professional services rendered in connection with the audit of the
Company's annual financial statements, and a review of the financial statements
included in the Company's quarterly reports on Form 10-Q for the quarters ended
March 31, 2009, June 30, 2009 and September 30, 2009.

No audit-related services were rendered with respect to the fiscal years
ended December 31, 2009 and December 31, 2008 by Mark Bailey & Company, Ltd.

Tax Fees

None.

All Other Fees

No other fees were paid to Mark Bailey and Company, Ltd. during the fiscal
years ended December 31, 2009 and December 31, 2008.

Pre-Approval Procedures

The Audit Committee has adopted the following guidelines regarding the
engagement of the Company's independent registered public accounting firm to
perform services for the Company. Prior to the commencement of the audit
services, the Audit Committee shall approve the terms of the engagement letter
that outlines the scope of the audit services proposed to be performed by the
Company's independent registered public accounting firm during the fiscal year.
Non-audit services will also require pre-approval from the Audit Committee. Tax
preparation and review work has been approved based on the terms included in the
engagement letter that also outlines the scope of the audit services. No other
non-audit work has been approved by the Audit Committee. Any such approval would
require approval of the specific engagement, including the projected fees, at a
regularly scheduled or special Audit Committee meeting or through a written
consent.

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) The following documents are filed as part of this Form 10-K:

(1) Financial Statements

The financial statements of BKF Capital Group, Inc. and Subsidiaries are
filed as part of this report under Item 8-Financial Statements and Supplementary
Data.

(3) Exhibits

Exhibit
Number Description
------ -----------

3.1 -- Restated Certificate of Incorporation of Registrant, as
amended (incorporated by reference Exhibit 3.1 to Registrant's
Quarterly Reports on Form 10-Q for the periods ended June 30,
2000 June 30, 2001 and the December 31, 2005 10K.

3.2 -- Amended and Restated Bylaws of Registrant dated March 5, 2008

4.1 -- Specimen of Common Stock Certificate (incorporated by
reference to Exhibit 4.1 of Registrant's Annual Report on Form
10-K/A for the period ended December 31, 2000).

10.1 -- Amendment to Lease dated October 10, 2003 between Rockefeller
Center Properties and John A. Levin, Inc. (incorporated by
reference to Exhibit 10.1 of Registrant's Annual Report on
Form 10-K/A for the period ended December 31, 2003).

10.2 -- Lease dated December 20, 1993 between Rockefeller Center
Properties and John A. Levin & Co., Inc., as amended
(incorporated by reference to Exhibit 10.1 of Registrant's
Annual Report on Form 10-K/A for the period ended December 31,
2000, Exhibit 10.2 to Registrant's Quarterly Report on Form
10-Q for the period ended June 30, 2001, and Exhibit 10.2 to
Registrant's Quarterly Report on Form 10-Q for the period
ended September 30, 2001).

Exhibit
Number Description
------ -----------

10.3 -- Lease dated September 25, 2002 between River Bend Executive
Center, Inc. and Levin Management Co., Inc. (incorporated by
reference to Exhibit 10.1 of Registrant's Quarterly Report on
Form 10-Q for the period ended September 30, 2002).

10.4 -- Registrant's 1998 Incentive Compensation Plan, as amended
(incorporated by reference to Exhibit 10.1 to Registrant's
Quarterly Report on Form 10-Q for the period ended June 30,
2001).

10.5 -- Registrant's Deferred Compensation Plan (incorporated by
reference to Exhibit 10.2 to Registrant's Quarterly Report on
Form 10-Q for the period ended September 30, 2000).

10.6 -- Form of Stock Option Award Agreement (incorporated by
reference to Exhibit 10.5 to Registrant's Annual Report on Form
10-K/A for the period ended December 31, 2001).

10.7 -- Form of Deferred Stock Award Agreement (incorporated by
reference to Exhibit 4.5 to the Registration Statement on Form
S-8 filed with the Commission on November 17, 2000).

10.8 -- Form of Restricted Stock Award Agreement (incorporated by
reference to Exhibit 10.10 to the Registrant's Annual Report on
Form 10-K for the period ended December 31, 2005).

10.9 -- Letter Agreement between BKF and Levin Management Co., Inc.
and each of Henry Levin and Frank Rango dated April 19, 2005
(incorporated by reference to Exhibit 10.1 of Registrant's
Report on Form 8-K dated April 22, 2005).

10.10 -- Change in Control Agreement between BKF, Levin Management Co.,
Inc. and Glenn A. Aigen dated June 1, 2005 (incorporated by
reference to Exhibit 10.1 of Registrant's Report on Form 8-K
dated June 6, 2005).

10.11 -- Change in Control Agreement between BKF, Levin Management Co.,
Inc. and Norris Nissim dated June 1, 2005 (incorporated by
reference to Exhibit 10.2 of Registrant's Report on Form 8-K
dated June 6, 2005).

10.12 -- Retention Agreement between BKF, Levin Management Co., Inc. and
Philip Friedman dated August 11, 2005 (incorporated by
reference to Exhibit 10.1 of Registrant's Report on Form 8-K
dated August 16, 2005).

10.13 -- First Amendment to Retention Agreement between BKF and Philip
Friedman dated November 15, 2005 (incorporated by reference to
Exhibit 10.1 of Registrant's Report on Form 8-K dated November
16, 2005).

10.14 -- Transition/Separation Agreement between BKF and John A. Levin
dated as of August 23, 2005 (incorporated by reference to
Exhibit 10.1 of Registrant's Report on Form 8-K dated August
24, 2005).

Exhibit
Number Description
------ -----------

10.15 -- First Amendment to Transition/Separation Agreement between BKF
and John A. Levin dated December 21, 2005 (incorporated by
reference to Exhibit 10.1 of Registrant's Report on Form 8-K
dated December 28, 2005).

10.16 -- Employment Agreement between BKF and John C. Siciliano dated
September 28, 2005 (incorporated by reference to Exhibit 10.3
of Registrant's Quarterly Report on Form 10-Q for the period
ended September 30, 2005).

10.17 -- Letter Agreement, dated as of September 28, 2005, among BKF
Capital Group, Inc., Levin Management Co., Inc. and Glenn A.
Aigen (incorporated by reference to Exhibit 10.4 of
Registrant's Quarterly Report on Form 10-Q for the period
ended September 30, 2005).

10.18 -- Letter Agreement, dated as of September 28, 2005, among BKF
Capital Group, Inc., Levin Management Co., Inc. and Norris
Nissim (incorporated by reference to Exhibit 10.5 of
Registrant's Quarterly Report on Form 10-Q for the period
ended September 30, 2005).

10.19 -- Transition/Separation Agreement between BKF and Glenn A. Aigen
dated December 20, 2005 (incorporated by reference to Exhibit
10.6 of Registrant's Report on Form 10-Q for the period ended
September 30, 2005).

10.20 -- Separation Agreement and Release of All Claims between BKF and
Henry Levin dated December 16, 2005 (incorporated by reference
to Exhibit 10.1 of Registrant's Report on Form 8-K dated
December 22, 2005).

10.21 -- Employment Agreement between BKF and Clarke Gray dated as of
January 4, 2006 (incorporated by reference to Exhibit 10.1 of
Registrant's Report on Form 8-K dated January 6, 2006).

10.22 -- Transition/Separation Agreement between BKF and Norris Nissim
dated May 5, 2006 (incorporated by reference to Exhibit 10.1
of Registrant's Quarterly Report on Form 10-Q for the period
ended March 31, 2006).

10.23 -- Separation Agreement between BKF and Philip Friedman dated
July 24, 2006 (incorporated by reference to Exhibit 10.1 of
Registrant's Report on Form 8-K dated July 24, 2006).

10.24 -- Sublease Agreement between BKF and Daylight Forensics and
Advisory LLC dated May 16, 2006 (incorporated by reference to
Exhibit 10.2 to Registrant's Quarterly Report on Form 10-Q for
the period ended June 30, 2006).

10.25 -- First Amendment to the Sublease Agreement between BKF and
Daylight Forensics and Advisory LLC dated May 16, 2006
(incorporated by reference to Exhibit 10.1 of the Registrant's
Quarterly Report on Form 10-Q for the period September 30,
2006).

Exhibit
Number Description
------ -----------

10.26 -- Partial Surrender Agreement and Amendment between BKF and RCPI
Landmark Properties, LLC dated November 22, 2006 (incorporated
by reference to Exhibit 10.26 to Registrant's Annual Report on
Form 10k for the period ended December 31, 2006).

10.27 -- Form of Indemnification Agreement (incorporated by reference
to Exhibit 10.1 of the Company's Current Report on Form 8-K
dated May 18, 2006).

10.28 -- Separation Agreement between BKF and John C. Siciliano dated
October 31, 2006 (incorporated by reference to Exhibit 10.28
to Registrant's Annual Report on Form 10k for the period ended
December 31, 2006).

10.29 -- Separation Agreement between BKF and J. Clarke Gray dated
October 31, 2006 (incorporated by reference to Exhibit 10.29
to Registrant's Annual Report on Form 10-K for the period
ended December 31, 2006).

10.30 -- Employment agreement with Marvin Olshan dated November 12,
2007 (incorporated by reference to Exhibit 10.1 of the
Company's Current Report on Form 10-Q for the period ended
September 30, 2007).

10.31 -- Employment agreement with Harvey J. Bazaar dated November 12,
2007 (incorporated by reference to Exhibit 10.2 of the
Company's Current Report on Form 10-Q for the period ended
September 30, 2007).

10.32 -- Employment agreement with J. Clarke Gray dated November 12,
2007 (incorporated by reference to Exhibit 10.3 of the
Company's Current Report on Form 10-Q for the period ended
September 30, 2007).

10.33 -- Employment agreement with J. Clarke Gray dated March 7, 2007
(incorporated by reference to Exhibit 10.33 to Registrant's
Annual Report on Form 10-K for the period ended December 31,
2007).

10.34 -- Agreement by and among BKF Capital Group, Inc., Catalyst Fund,
L.P. and Steven N. Bronson, Harvey J. Bazaar, Marvin L.
Olshan, Ronald LaBow and J. Clarke Gray, dated August 28, 2008
(incorporated by reference to Exhibit 10.36 of the Company's
Current Report on Form 8-K filed on September 2, 2008)

10.35 -- Employment Agreement between BKF Capital Group, Inc. and
Steven N. Bronson, dated as of October 1, 2008 (incorporated
by reference to Exhibit 10.36 of the Company's Current Report
on Form 8-K filed on October 14, 2008).

10.36 -- Copy of Sublease, dated December , 2008, by and between BKF
Capital Group, Inc. and 1st United, LLC (incorporated by
reference to Exhibit 10.36 of the Company's Current Report on
Form 8-K filed on January 23, 2009).

Exhibit
Number Description
------ -----------

10.37 -- Purchase Agreement, dated December 2, 2009, by and between BKF
Capital Group, Inc. and Steven N. Bronson and Kimberly Bronson.

10.38 -- Copy of form Sublease, dated January 1, 2009, by and between BKF
Capital Group, Inc. and Lion Gables Realty Limited Partnership.

14.1 -- Registrant's Code of Ethics revised as of December 31, 2007
(incorporated by reference to Exhibit 14.1 of the Company's
Annual Report on Form 10-K filed on March 13, 2008).

21.1 -- Subsidiaries of the Registrant (incorporated by reference to
Exhibit 21.1 to the Registrant's Annual Report on Form 10-K/A
for the period ended December 31, 2000).

23.1 -- Consent of Mark Baily & Company, LLP*

31* -- Section 302 Certification of Principal Executive Officer

32* -- Section 906 Certification of Principal Financial Officer

----------
* Filed herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

Dated: March 31, 2010

BKF Capital Group, Inc.

/s/ Steven N. Bronson
--------------------------
Steven N. Bronson
President and Treasurer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:

/s/ Steven N. Bronson /s/ Leonard Hagan
---------------------------- ----------------------
Steven N. Bronson Leonard Hagan
President and Chairman Director
of the Board of Directors March 31, 2010
Principal Executive Officer
March 31, 2010

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page
Number
------

Report of Independent Registered Public Accounting Firm -- Mark Bailey & Company, Ltd. F-2
Consolidated Statements of Financial Condition at December 31, 2009 and 2008 F-4
Consolidated Statements of Operations for the years ended December 31, 2009 and 2008 F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2009 and 2008 F-6
Consolidated Statements of Changes in Stockholders' Equity for the years ended
December 31, 2009 and 2008 F-7
Notes to Consolidated Financial Statements F-8

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Stockholders of BKF Capital Group, Inc.

We have audited the accompanying consolidated balance sheets of BKF Capital
Group Inc. (Company) as of December 31, 2009 and 2008 and the related
consolidated statements of operations and comprehensive income, stockholders'
equity, and cash flows for the years then ended. BKF Capital Group Inc.'s
management is responsible for these consolidated financial statements. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements, assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of BKF
Capital Group Inc. as of December 31, 2009 and 2008, and the results of its
consolidated operations and its cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.

Mark Bailey & Company, Ltd.
Reno, Nevada
March 31, 2010

F-2

BKF CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollar amounts in thousands)

December 31 December 31
2009 2008
-------- --------

Assets

Cash and cash equivalents $ 11,839 $ 1,551
U.S. Treasury Bills -- 13,320
Investments 2,098 --
Royalty and other receivables 237 783
Prepaid expenses and other assets 279 206
-------- --------
Total assets $ 14,453 $ 15,860
======== ========

Liabilities and stockholders' equity

Accrued expenses $ 208 $ 257
Unearned sublease income 138 --
Accrued lease liability expense 2,594 4,077
-------- --------
Total liabilities 2,940 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 (64,888) (64,716)
Accumulate other comprehensive gain 159 --
-------- --------
Total stockholders' equity 11,513 11,526
-------- --------
Total liabilities and stockholders' equity $ 14,453 $ 15,860
======== ========

See accompanying notes

F-3

BKF CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollar amounts in thousands, except per share data)

Year Ended December 31,
----------------------------
2009 2008
----------- -----------

Income:
Royalties $ 712 $ 1,328

Non-operating income:
Interest income 43 428
Realized gains 18 --
Other income 63 1,053
----------- -----------
Total non-operating income 124 1,481
----------- -----------

Total income 836 2,809

Expenses:
Employee compensation and benefits 203 766
Occupancy and equipment rental 138 700
Other operating expenses 374 2,170
Interest expense 293 290
Restructuring costs -- 179
----------- -----------

Total expenses 1,008 4,105
----------- -----------

Net loss $ (172) $ (1,296)
=========== ===========
Other comprehensive income, net of tax
Unrealized gain on investments 159 --
----------- -----------
Comprehensive (loss) $ (13) $ (1,296)
=========== ===========

Loss per share:
Basic and diluted $ (0.02) $ (0.16)
=========== ===========
Weighted average shares outstanding basic and diluted 7,973,216 7,973,216
=========== ===========

See accompanying notes

F-4

BKF CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)

Year Ended
December 31,
---------------------
2009 2008
-------- --------

Cash flows from operating activities:
Net (loss) $ (172) $ (1,296)
Adjustments to reconcile net (loss) to net cash provided by (used in) operations:
Gain on sales of securities (18) --
Loss on disposal of fixed assets -- 28
Decrease in U.S. Treasury Bills 13,320 9,634
Decrease in royalty and other receivables 545 945
(Increase) decrease in prepaid expenses and other assets (72) 1,285
Decrease in accrued expenses (49) (870)
Increase in unearned sublease income 138
Decrease in accrued lease liability expense (1,483) (1,362)
-------- --------
Net cash provided by operating activities 12,209 8,364
-------- --------

Cash flows from investing activities
Proceeds from sale of investments 61 --
Purchase of investment securities (1,982) --
-------- --------
Net cash (used in) investing activities (1,921) --
-------- --------

Cash flows from financing activities:
Distribution of capital -- (7,974)
-------- --------
Net cash (used in) financing activities -- (7,974)
-------- --------

Net increase in cash and cash equivalents 10,288 390
Cash and cash equivalents at the beginning of the year 1,551 1,161
-------- --------
Cash and cash equivalents at the end of the year $ 11,839 $ 1,551
======== ========
Supplemental disclosure of cash flow information:
Cash paid for interest $ -- $ --
======== ========
Cash paid for taxes $ -- $ 149
======== ========

See accompanying notes

F-5

BKF CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years Ended December 31, 2009 and 2008
(Amounts in thousands)

Common Paid-In Accumulated Comprehensive
Stock Capital Deficit Income Total
----- ------- -------- ------------ -------

Balance at December 31, 2007 $ 7,973 $ 76,243 $(63,420) $ -- $ 20,796
Distribution of capital, $1 per share (7,974) -- -- (7,974)
Net loss -- -- (1,296) -- (1,296)
-------- -------- -------- -------- --------
Balance at December 31, 2008 $ 7,973 $ 68,269 $(64,716) $ -- $ 11,526
Net loss (172) -- (172)
Comprehensive income -- -- -- 159 159
-------- -------- -------- -------- --------
Balance at December 31, 2009 $ 7,973 $ 68,269 $(64,888) $ 159 $ 11,513
======== ======== ======== ======== ========

See accompanying notes

F-6

BKF CAPITAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 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 2009 and 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 ("Royalties") collected from carry-over clients by this former
partner. 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.

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. Investments in money market funds are valued at
net asset value. The Company maintains substantially all of its cash and cash
equivalents invested 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 those funds.

F-7

BKF CAPITAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

OTHER COMPREHENSIVE INCOME (LOSS)

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.

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 in accordance with the Financial
Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic
740, Income Taxes.

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. The Company has also settled an audit by
New York State for 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. The Company has recorded a
valuation reserve of approximately $4.3 million and $20.4 million against its
net deferred tax asset as of December 31, 2009 and December 31, 2008,
respectively. The Company believes that it is not likely that this deferred tax
benefit will be utilized within the statutory period allowed.

Tax receivable amounts of approximately $297,000 as of December 31, 2008,
represents a cash refunds due with respect to the federal carry back claims for
2004 and 2003 taxes paid and are included in accounts receivable. This amount,
plus additional interest was received in 2009.

F-8

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.

There were no common stock equivalents for the years ended December 31,
2009 and 2008.

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 December 31, 2009 and 2008.
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.

Recent Accounting Developments

There are no new accounting standards that are expected to have a
significant impact on the Company.

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 $0.7 million and
$1.3 million for the years ended December 31, 2009 and 2008, respectively,

F-9

BKF CAPITAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

4. 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. Realized gains and
losses are calculated using the original cost of those investments.

During the period July 2, 2009 through July 13, 2009, the Company acquired
a total of 500,000 shares of FCStone Group, Inc. ("FCStone") common stock in
open market transactions at an average price of approximately $3.97 per share or
an aggregate amount of approximately $1,985,000. On July 31, 2009 the Company
sold 10,847 common shares of FCStone at $5.62, which resulted in a realized gain
of approximately $18,000. On October 1, 2009, the previously announced merger
between International Assets Holding Corporation ("IAAC") and FCStone Group,
Inc. ("FCStone") was completed and each outstanding share of FCStone was
exchanged for .2950 shares of IAAC. Accordingly, on October 1, 2009 the Company
received 144,300 shares of IAAC in exchange for its 489,153 shares of FCStone.
At December 31, 2009 the Company held 144,300 of IAAC common shares valued at
approximately $2,098,122.

5. 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.

The lease liability will be reduced as monthly rent payments are made to
the landlord, net of any sublease income received.

As of December 31, 2009 and 2008, the lease liability was $2.6 million and
$4.1 million, respectively.

BKF CAPITAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

At December 31, 2009, the minimum annual rental commitments, including
escalation and taxes under the operating lease and related sublease income are
as follows (dollar amounts in thousands):

Minimum
Annual
Rental Sublease
Payments Income Net
-------- -------- --------
2010 $ 3,437 $ (1,659) $ 1,778
2011 2,577 (1,244) 1,333
-------- -------- --------

Total minimum payments required $ 6,014 $ (2,903) $ 3,111
======== ======== ========

Subrental income, which was applied against the accrued lease liability
was approximately $1.6 million for the years ended December 31, 2009 and 2008,
respectively.

6. Distribution of Capital

The Company's Board of Directors declared a $1 per share distribution of
capital to all shareholders of record as of July 8, 2008, which was paid on July
22, 2008.

7. Income Taxes

As of December 31, 2009 the Company has a federal net operating loss
carryforward of approximately $9.3 million, the utilization of which is limited
under IRS Code Section 382 due to changes in the ownership of the Company's
stock. The Company also had a state net operating loss carryforward of
approximately $1.6 million. The NOL carryforwards generated in the years
2005-2008 expire in 2025 thru 2028, and can be used at a rate of $344,000 per
year based on Section 382 limitations. The NOL carryforward generated in the
year 2009 expires in 2029, and is not currently subject to Section 382
limitations.

Since it is not likely that deferred tax assets will be realized, no current tax
benefit was recognized. Net deferred assets have been fully reserved.

During 2008, the Company settled the examination issue with New York State and
New York City for the years 2002, 2003 and 2004 and as a result reversed an over
accrual of approximately $400,000 into other operating expense.

F-11

BKF CAPITAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and liabilities, shown net in the deferred tax
asset on the Consolidated Statements of Financial Condition, consisted of the
following (dollar amounts in thousands):

Year Ended
December 31,
---------------------
2009 2008
-------- --------

Deferred tax assets:
Lease reserve $ 1,051 $ 1,716
Net operating loss carryforward 3,336 19,962
-------- --------
Gross deferred tax asset $ 4,387 $ 21,678
-------- --------
Deferred tax liabilities:
Deferred state income taxes (3) (1,280)
Unrealized gain on investments (64) --
-------- --------
Gross deferred tax liabilities (67) (1,280)
-------- --------
Net deferred tax asset 4,320 20,398
Valuation reserve (4,320) (20,398)
-------- --------

$ -- $ --
======== ========

F-12

BKF CAPITAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

A reconciliation of income tax (benefit) with expected federal income tax
expense (benefit) computed at the applicable federal tax rate of 35% is as
follows (dollar amounts in thousands):

Year Ended
December 31,
---------------------
2009 2008
-------- --------

Expected income tax (benefit) $ (5) (454)
Increase/Decrease in income tax resulting from:
State and local taxes, net -- (261)
Change in state effective tax rate (1,208) 2,276
Section 382 limitations 17,291 --
Other temporary differences -- (834)
Change in prior year net operating loss -- 1,799
Change in valuation reserve (16,078) (2,526)
-------- --------
Income tax expense $ -- $ --
======== ========

8. Restructuring Expenses

During the year ended December 31, 2008, the Company incurred $179,000 in
restructuring costs and the remaining restructuring liability relating to leases
has been combined with the lease liability reserve discussed in Note 4, above.
To date, there have been no additional charges related to this item.

9. 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 seeking damages in the amount of
approximately $600,000. The complaint was filed in the Supreme Court of New York
and alleges unjust enrichment. In February 2010, the Company settled this action
by paying the plaintiff $30,000. The settlement amount has been recorded in the
statements of operations as of December 31, 2009.

The Company is also 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.

F-1

Attached files

BKF CAPITAL GROUP INC Reports

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