<SUBMISSION>
<ACCESSION-NUMBER>0000950123-02-005146
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>1
<PERIOD>20020331
<FILING-DATE>20020514
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>BKF CAPITAL GROUP INC
<CIK>0000009235
<ASSIGNED-SIC>6282
<IRS-NUMBER>360767530
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>811-02144
<FILM-NUMBER>02647380
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>200 W. MADISON ST.
<STREET2>SUITE 3510
<CITY>CHICAGO
<STATE>IL
<ZIP>60606
<PHONE>2123328400
</BUSINESS-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>BAKER FENTRESS & CO
<DATE-CHANGED>19970829
</FORMER-COMPANY>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>BAKER FENTRESS & CO ET AL
<DATE-CHANGED>19940714
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>y60518e10-q.txt
<DESCRIPTION>BKF CAPITAL GROUP
<TEXT>
<PAGE>

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

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

                                   FORM 10-Q

<Table>
<C>          <S>
 (Mark One)
    [X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15
             OF THE SECURITIES EXCHANGE ACT OF 1934



             FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002



                                   OR




    [ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15
             OF THE SECURITIES EXCHANGE ACT OF 1934



             FOR THE TRANSITION PERIOD FROM           TO
</Table>

                        COMMISSION FILE NUMBER: 1-10024

                            BKF CAPITAL GROUP, INC.
             (Exact name of registrant as specified in its charter)

<Table>
<S>                                            <C>
                   DELAWARE                                      36-0767530
       (State or other jurisdiction of                        (I.R.S. Employer
        incorporation or organization)                      Identification No.)

            ONE ROCKEFELLER PLAZA                                  10020
              NEW YORK, NEW YORK                                 (Zip Code)
   (Address of principal executive offices)
</Table>

                                 (212) 332-8400
              (Registrant's telephone number, including area code)

              (Former name, former address and former fiscal year,
                         if changed since last report)

     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 [ ]

     As of April 30, 2002, 6,617,045 shares of the registrant's common stock,
$1.00 par value, were outstanding.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

                         PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                    BKF CAPITAL GROUP, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                         (DOLLAR AMOUNTS IN THOUSANDS)

<Table>
<Caption>
                                                               MARCH 31,    DECEMBER 31,
                                                                 2002           2001
                                                              -----------   ------------
                                                              (UNAUDITED)    (AUDITED)
<S>                                                           <C>           <C>
ASSETS

Cash and cash equivalents...................................    $ 31,624      $ 41,827

Investment advisory fees receivable.........................      16,144        27,826

Investments in securities, at value (cost $1,535 and $2,424,
  respectively).............................................       1,805         2,784

Prepaid expenses and other assets...........................       3,027         2,557

Investments in affiliated partnerships......................      10,541        17,530

Fixed assets (net of accumulated depreciation of $2,897 and
  $2,765, respectively).....................................       3,391         3,177

Deferred tax asset..........................................       5,211         4,889

Goodwill (net of accumulated amortization of $8,566 and
  $8,566, respectively).....................................      14,796        14,796

Investment advisory contracts (net of accumulated
  amortization of $40,301 and $38,549, respectively)........      29,788        31,540
                                                                --------      --------

     Total assets...........................................    $116,327      $146,926
                                                                ========      ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Accrued expenses............................................    $  2,644      $  4,386

Accrued bonuses.............................................       9,116        37,611

Accrued incentive compensation..............................         909           642

Income taxes payable........................................         164           582

Other liabilities...........................................         128           221
                                                                --------      --------

     Total liabilities......................................      12,961        43,442
                                                                --------      --------

STOCKHOLDERS' EQUITY

Common stock, $1 par value, authorized -- 15,000,000 shares;
  issued and outstanding -- 6,617,045 and 6,600,589 shares,
  respectively..............................................       6,617         6,601

Additional paid-in capital..................................      64,283        64,002

Retained earnings...........................................      32,466        32,881
                                                                --------      --------

     Total stockholders' equity.............................     103,366       103,484
                                                                --------      --------

Total liabilities and stockholders' equity..................    $116,327      $146,926
                                                                ========      ========
</Table>

                            See accompanying notes.
                                        2
<PAGE>

                    BKF CAPITAL GROUP, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)
              (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

<Table>
<Caption>
                                                              QUARTER ENDED MARCH 31,
                                                              -----------------------
                                                                 2002         2001
                                                              ----------   ----------
<S>                                                           <C>          <C>
REVENUES:

Investment advisory fees....................................  $   16,956   $   13,938

Incentive fees..............................................       3,397        9,779(a)

Commission income -- net....................................         780          522
                                                              ----------   ----------

     Total revenues.........................................      21,133       24,239
                                                              ----------   ----------

EXPENSES:

Employee compensation and benefits..........................      14,483       15,920(a)

Occupancy & equipment rental................................       1,421          614

Other operating expenses....................................       3,099        3,144(a)

Amortization of intangibles.................................       1,752        2,609
                                                              ----------   ----------

     Total expenses.........................................      20,755       22,287
                                                              ----------   ----------

Operating income............................................         378        1,952

Other income (expense):

Net realized and unrealized gain on investments.............         104            9

Interest and dividend income................................         155          359

Interest expense............................................          (3)         (10)
                                                              ----------   ----------

Income before taxes.........................................         634        2,310

Income tax expense..........................................       1,049        2,468
                                                              ----------   ----------

NET (LOSS)..................................................  $     (415)  $     (158)
                                                              ==========   ==========

Earnings (loss) per share:

Basic and diluted...........................................  $    (0.06)  $    (0.02)
                                                              ==========   ==========

Weighted average shares outstanding

Basic and diluted...........................................   6,612,365    6,518,665
                                                              ==========   ==========
</Table>

---------------

(a) Incentive fees, employee compensation and benefits and other operating
    expenses during the quarter ended March 31, 2001 have been increased by
    $3,968, $3,851 and $117, respectively, to conform to the current
    presentation for certain employee owned and controlled entities.

                            See accompanying notes.
                                        3
<PAGE>

                    BKF CAPITAL GROUP, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
                         (DOLLAR AMOUNTS IN THOUSANDS)

<Table>
<Caption>
                                                              QUARTER ENDED MARCH 31,
                                                              -----------------------
                                                                 2002         2001
                                                              ----------   ----------
<S>                                                           <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss)..................................................   $   (415)    $   (158)
Adjustments to reconcile net (loss) to net cash provided by
  (used in) operations:
     Depreciation and amortization..........................      1,997        2,806
     Compensation expense for vesting of restricted stock
      units.................................................        267          125
     Tax benefit related to employee compensation plans.....        146           --
     Unrealized (gain) on marketable securities.............        (90)         (91)
     Changes in operating assets and liabilities:
       Decrease in investment advisory fees receivable......     11,682       13,221(a)
       (Increase) decrease in prepaid expenses and other
        assets..............................................       (470)         154
       Decrease in investments in affiliated investment
        partnerships........................................      6,989        9,965(a)
       (Increase) decrease in investments in securities.....      1,069          (67)
       (Increase) decrease in deferred income taxes.........       (322)          79
       (Decrease) in accrued expenses.......................     (1,742)        (864)(a)
       (Decrease) in accrued bonuses........................    (28,495)     (23,633)(a)
       (Decrease) in other liabilities......................         --         (393)
       Increase (decrease) in income taxes payable..........       (418)       1,248
                                                               --------     --------
Net cash provided by (used in) operating activities.........     (9,802)       2,392
                                                               --------     --------
CASH FLOWS FROM INVESTING ACTIVITIES
Fixed asset additions.......................................       (458)        (309)
                                                               --------     --------
Net cash (used in) investing activities.....................       (458)        (309)
                                                               --------     --------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of loan principal...................................        (94)         (82)
Issuance of common stock....................................        151           --
                                                               --------     --------
Net cash provided by (used in) financing activities.........         57          (82)
                                                               --------     --------
Net increase (decrease) in cash and cash equivalents........    (10,203)       2,001
Cash and cash equivalents at the beginning of the period....     41,827       22,268
                                                               --------     --------
Cash and cash equivalents at the end of the period..........   $ 31,624     $ 24,269
                                                               ========     ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest......................................   $      3     $     10
                                                               ========     ========
Cash paid for taxes.........................................   $  1,506     $    869
                                                               ========     ========
NON-CASH TRANSACTIONS:
</Table>

     During January 2002, the Company granted a total of 168,213 restricted
stock units to employees with a value of $4,718.

     During March 2001, the Company granted a total of 7,000 restricted stock
units to the Nonemployee Directors of the Company with a value of $146. This
amount will be used to reduce cash payments to Directors for future Board of
Directors and Committee meetings.
---------------

(a) Amounts have been adjusted to conform to the current presentation for
    employee owned and controlled entities. There was no impact to cash flows
    provided by operating activities.

                            See accompanying notes.
                                        4
<PAGE>

                    BKF CAPITAL GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     QUARTER ENDED MARCH 31, 2002 AND 2001
                                  (UNAUDITED)

1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  ORGANIZATION AND BASIS OF PRESENTATION

     The consolidated interim financial statements of BKF Capital Group, Inc.
(formerly Baker, Fentress & Company, hereto referred to as "BKF" or the
"Company") and its subsidiaries included herein have been prepared in accordance
with generally accepted accounting principles for interim financial information
and Rule 10-01 of Regulation S-X. Accordingly, they do not include all the
information and footnotes required by generally accepted accounting principles
for complete financial statements. These consolidated financial statements are
unaudited and should be read in conjunction with the audited consolidated
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the year ended December 31, 2001. The Company follows the same
accounting policies in the preparation of interim reports. In the opinion of
management, the consolidated financial statements reflect all adjustments, which
are of a normal recurring nature, necessary for a fair presentation of the
financial condition, results of operations and cash flows of the Company for the
interim periods presented and are not necessarily indicative of a full year's
results.

     In preparing the consolidated financial statements, management is required
to make estimates and assumptions that affect the amounts reported in the
financial statements. Actual results could differ from those estimates.

     The Company operates through a wholly-owned subsidiary, Levin Management
Co., Inc. and its subsidiaries, all of which are referred to as "Levco." As of
April 2000, financial reporting of BKF and Levco is on a consolidated basis. The
Company trades on the New York Stock Exchange, Inc. ("NYSE") under the symbol
("BKF").

     The Consolidated Financial Statements of Levco include its wholly-owned
subsidiary, John A. Levin & Co., Inc., ("JALCO") and JALCO's two wholly-owned
subsidiaries, Levco GP Inc. ("Levco GP") and LEVCO Securities, Inc. ("LEVCO
Securities"). All intercompany transactions have been eliminated in
consolidation.

     JALCO is an investment advisor registered under the Investment Advisers Act
of 1940, as amended, which provides investment advisory services to its clients
which include U.S. and foreign corporations, mutual funds, limited partnerships,
universities, pension and profit sharing plans, individuals, trusts,
not-for-profit organizations and foundations. JALCO also participates in broker
consulting programs (Wrap Accounts) with several nationally recognized financial
institutions. LEVCO Securities is registered with the SEC as a broker-dealer and
is a member of the National Association of Securities Dealers, Inc. Levco GP
acts as the managing general partner of several affiliated investment
partnerships and is registered with the Commodities Futures Trading Commission
as a commodity pool operator.

  INVESTMENTS IN AFFILIATED INVESTMENT PARTNERSHIPS

     Levco GP serves as the managing general partner for several affiliated
investment partnerships, each of which is primarily engaged in the trading of
equity securities or, in the case of one partnership, of distressed corporate
debt. At March 31, 2002, total partners' capital in the affiliated investment
partnerships aggregated approximately $574.4 million. The financial condition
and results of operations of the affiliated investment partnerships are not
included in the Company's consolidated statements of financial condition with
the exception of Levco GP's equity ownership. The limited partners of the
affiliated investment partnerships have the right to redeem their partnership
interests at least quarterly. Levco GP does not maintain control over the
affiliated investment partnerships, has not guaranteed any of the affiliated
investment partnerships' obligations, nor does it have any contractual
commitments associated with them. Investments in affiliated investment
partnerships held through Levco GP, which amounted to approximately $10.5
million at March 31, 2002, are

                                        5
<PAGE>
                    BKF CAPITAL GROUP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

recorded based upon the equity method of accounting. This investment amount
equals the sum total of Levco GP's capital accounts in the affiliated investment
partnerships.

  INCOME TAXES

     The Company accounts for income taxes under the liability method prescribed
by Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for
Income Taxes." 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.

  INTANGIBLE ASSETS

     The cost in excess of net assets of Levco acquired by BKF in June 1996 is
reflected as goodwill, investment advisory contracts, and employment contracts
in the Consolidated Statements of Financial Condition. Through December 31, 2001
goodwill was amortized straight line over 15 years. Effective January 1, 2002
the Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets". Under
the new rules, goodwill will no longer be amortized but will be subject to an
annual impairment test in accordance with SFAS No. 142. Other intangible assets
with finite lives will continue to be amortized over their useful lives (see
note 4). Investment contracts are amortized straight line over 10 years.
Employment contracts were amortized over the life of the contracts. Such
intangible assets and related amortization have been eliminated in the
Consolidated Statement of Financial Condition as of December 31, 2001.

  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 period.
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.

     The following table sets forth the computation of basic and diluted (loss)
per share.

<Table>
<Caption>
                                                              QUARTER ENDED MARCH 31,
                                                              -----------------------
                                                                 2002         2001
(All amounts in thousands, except per share data)             ----------   ----------
<S>                                                           <C>          <C>
Net (loss)..................................................  $    (415)   $    (158)
                                                              =========    =========
Basic and diluted weighted-average shares outstanding.......  6,612,365    6,518,665
                                                              =========    =========
Basic and diluted (loss) per share..........................  $   (0.06)   $   (0.02)
                                                              =========    =========
</Table>

     In calculating diluted (loss) per share for the periods ended March 31,
2002 and 2001, 1,490,922 and 797,825 common stock equivalents were excluded due
to their anti-dilutive effect on the calculation.

  RECLASSIFICATIONS

     Certain amounts in the 2001 consolidated financial statements have been
reclassified to conform with the current period's classifications.

2.  OFF-BALANCE SHEET RISK

     LEVCO Securities acts as an introducing broker and all transactions for its
customers are cleared through and carried by a major U.S. securities firm on a
fully disclosed basis. LEVCO Securities has agreed to

                                        6
<PAGE>
                    BKF CAPITAL GROUP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

indemnify its clearing broker for losses that the clearing broker may sustain
from the customer accounts introduced by LEVCO Securities. In the ordinary
course of its business, LEVCO Securities does not accept orders with respect to
client accounts if the funds required for the client to meet its obligations are
not on deposit in the client account at the time the order is placed. In the
event a customer is unable to fulfill its contractual obligation to the clearing
broker, LEVCO Securities may be exposed to off-balance sheet risk.

3.  INVESTMENT ADVISORY FEES RECEIVABLE

     Included in investment advisory fees receivable are approximately $2.0
million and $2.2 million of accrued incentive fees as of March 31, 2002 and
December 31, 2001, respectively, for which the full contract measurement period
has not been reached. The Company has provided for the applicable expenses
relating to this revenue. If the accrued incentive fees are not ultimately
realized, a substantial portion of the related accrued expenses will be
reversed.

4.  INTANGIBLE ASSETS

     Effective January 1, 2002, the Company adopted SFAS No. 142, "Goodwill and
Other Intangible Assets". The effect of adopting SFAS No. 142 was as follows:

 EFFECT OF NON-AMORTIZATION OF GOODWILL ON THE STATEMENT OF OPERATIONS

<Table>
<Caption>
                                                              FOR THE QUARTER
                                                              ENDED MARCH 31,
                                                              ---------------
                                                               2002     2001
(All amounts in thousands, except per share data)             ------   ------
<S>                                                           <C>      <C>
Reported net (loss).........................................  $ (415)  $ (158)
Add back: goodwill amortization.............................      --      389
                                                              ------   ------
Adjusted net income (loss)..................................  $ (415)  $  231
                                                              ======   ======
Basic earnings (loss) per share:
  Reported net (loss).......................................  $(0.06)  $(0.02)
  Goodwill amortization.....................................      --     0.06
                                                              ------   ------
Adjusted basic earnings (loss) per share....................  $(0.06)  $ 0.04
                                                              ======   ======
Diluted earnings (loss) per share:
  Reported net (loss).......................................  $(0.06)  $(0.02)
  Goodwill amortization.....................................      --     0.05
                                                              ------   ------
Adjusted diluted earnings (loss) per share..................  $(0.06)  $ 0.03
                                                              ======   ======
</Table>

     In calculating diluted earnings per share for the quarter ended March 31,
2001, accounting for the impact of adopting SFAS No. 142, diluted weighted
average shares outstanding is 7,316,490 shares as opposed to the reported amount
of 6,518,665 shares.

  EXPECTED AMORTIZATION EXPENSE (IN 000'S)

<Table>
<S>                                                           <C>
Remainder of 2002...........................................  $1,169
2003 .......................................................   1,558
2004 .......................................................   1,558
2005 .......................................................   1,558
2006 .......................................................   1,558
</Table>

                                        7
<PAGE>
                    BKF CAPITAL GROUP, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5.  RELATED PARTY TRANSACTIONS

     The Company earned investment advisory fees and general partner allocations
(inclusive of incentive fees) from affiliated domestic investment partnerships
and affiliated offshore investment vehicles of approximately $5.6 million and
$10.1 million for the quarters ended March 31, 2002, and 2001, respectively.

     Included in investments in affiliated investment partnerships at March 31,
2002 and December 31, 2001 are incentive allocations approximating $1.0 million
and $8.0 million. It is the Company's general practice to withdraw the incentive
allocations earned from the affiliated investment partnerships within three
months after the fiscal year end. Levco GP has general partner liability with
respect to its interest in each of the affiliated investment partnerships and
has no assets other than its interest in these partnerships and certain cash and
cash equivalents, which aggregate approximately $10.5 million and $17.5 million
at March 31, 2002 and December 31, 2001, respectively. Included in investment
advisory fees receivable are $1.1 million and $14.4 million of incentive fees
from sponsored offshore investment vehicles at March 31, 2002 and December 31,
2001, respectively.

     Included in the Company's incentive fees and general partner incentive
allocations are approximately $0.5 million and $4.0 million payable directly to
employee owned and controlled entities ("Employee Entities") for the quarters
ended March 31, 2002 and 2001, respectively. These Employee Entities, which
serve as non-managing general partners of several affiliated investment
partnerships, also bear the liability for all compensation expense relating to
the allocated revenue, amounting to approximately $0.5 million and $4.0 million
for the quarters ended March 31, 2002 and 2001, respectively. These amounts are
included in the Consolidated Statements of Operations.

6.  2002 RESTRICTED STICK UNITS ("RSU") GRANT

     In January 2002, the Company issued 168,212 RSU's to seven employees of the
Company. The RSU's will vest in three equal amounts over a three-year period.

7.  INCOME TAXES

     The Company's provision for income taxes differs from the amount of income
tax determined by applying the applicable U.S. federal statutory income tax rate
principally due to state and local taxes and non-deductible amortization. The
Company has determined that the amortization expense on intangible assets is
non-deductible since the purchase method of accounting has been applied
retroactive to June 1996.

     Deferred tax assets arise from the future tax benefit on deferred and
non-cash compensation and utilization of capital losses. Deferred tax
liabilities arise from deferred revenues, unrealized gains on investments, and
state and local taxes.

                                        8
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

INTRODUCTION

     BKF Capital Group, Inc. ("BKF") operates entirely through John A. Levin &
Co., Inc., an investment adviser registered with the U.S. Securities and
Exchange Commission that was acquired by BKF in June 1996. The investment
adviser is a wholly owned subsidiary of Levin Management Co., Inc., which in
turn is a wholly owned subsidiary of BKF. Levin Management Co., Inc. and its
subsidiaries are referred to collectively as "Levco." Levco specializes in
managing equity portfolios for institutional and individual investors primarily
in the United States. Most accounts are managed pursuant to a large cap value
strategy; Levco also offers a range of alternative investment products as well
as other more specialized investment programs.

     Levco acts as the managing general partner of a number of investment
partnerships and also acts as an adviser to private investment vehicles
organized outside the United States.

     With respect to accounts managed pursuant to its value equity strategies,
Levco generally receives advisory fees based on a percentage of the market value
of assets under management, including market appreciation or depreciation and
client contributions and withdrawals. In some cases, Levco receives
performance-based fees from accounts pursuing value equity strategies. With
respect to private investment vehicles and separate accounts managed pursuant to
similar strategies, Levco is generally entitled to receive both a fixed
management fee based on a percentage of the assets under management and a share
of net profits.

     Levco obtains some of its clients for its large cap value product through
wrap fee programs sponsored by major financial services companies. In these
programs, clients pay the sponsoring broker an asset-based fee that covers
brokerage commissions, advisory services, custodial fees, and other reporting
and administrative services. Investors are able to select Levco from among a
limited number of managers participating in the program, and Levco receives a
portion of the wrap fee paid by the clients who select Levco to manage their
accounts through the program.

     At March 31, 2002, assets under management were $14.93 billion, up from
$11.67 billion a year earlier. Following is a comparison of Levco assets under
management (in millions) as defined by product and client type:

<Table>
<Caption>
                                                              MARCH 31,   MARCH 31,
                                                                2002        2001
                                                              ---------   ---------
<S>                                                           <C>         <C>
Institutional...............................................   $ 3,861     $ 3,142
Sub-Advisory................................................     2,277       1,797
Non-institutional...........................................     2,069       1,997
Wrap........................................................     4,703       3,370
Event Driven................................................     1,628       1,135
Private Investment Funds....................................       395         230
                                                               -------     -------
TOTAL.......................................................   $14,933     $11,671
                                                               =======     =======
</Table>

     Levco also has a wholly-owned broker-dealer subsidiary that clears through
Correspondent Services Corporation, a UBS/PaineWebber company, on a fully
disclosed basis. Generally, the customers of the broker-dealer subsidiary are
advisory clients of Levco, and the trades executed through the broker-dealer are
generally placed by Levco in its capacity as investment adviser.

     The following discussion and analysis of the results of operations is based
on the Consolidated Statements of Financial Condition and Consolidated
Statements of Operations for BKF Capital Group, Inc. and Subsidiaries. Incentive
fees and general partner incentive allocations payable directly to employee
owned and controlled entities ("Employee Entities"), and the associated expenses
attributable to such Employee Entities, were not included in revenues and
expenses in the Quarterly Report on Form 10-Q for the period

                                        9
<PAGE>

ended March 31, 2001, but have been reflected in revenues and expenses in all
subsequent reports of the Company and are similarly reflected in the financial
statements for the period ended March 31, 2001 in this Quarterly Report on Form
10-Q. Since the revenues and expenses attributable to Employee Entities were
equal in amount, their inclusion has no impact on operating income.

     Certain statements under this caption "Management's Discussion and Analysis
of Financial Condition and Results of Operations" constitute "forward-looking
statements" under the Private Securities Litigation Reform Act of 1995 (the
"Reform Act"). See "Part II -- Other Information."

RESULTS OF OPERATIONS

  THREE MONTHS ENDED MARCH 31, 2002 AS COMPARED TO THREE MONTHS ENDED MARCH 31,
  2001

  Revenues

     Total revenues for the first quarter of 2002 were $21.13 million,
reflecting a decrease of 12.8% from $24.24 million in revenues during the same
period in 2001. This decrease was attributable to a 65.3% decrease in incentive
fees and general partner incentive allocations to $3.40 million in the first
quarter of 2002 from $9.78 million in the same period in 2001. Incentive fees
and general partner allocations are accrued on a quarterly basis but are
primarily determined and billed or allocated, as the case may be, at the end of
the applicable contract year or upon investor withdrawal. Such accruals may be
reversed prior to being earned or allocated as the result of investment
performance. The decrease in incentive fees and general partner incentive
allocations is attributable to a decrease in the performance of accounts paying
performance-based compensation, including, in one instance, negative performance
resulting in the reversal of accruals made in prior periods. The decrease in
incentive fees and general partner incentive allocations was partially offset by
a 21.7% increase in other investment advisory fees to $16.96 million in the
first quarter of 2002 from $13.94 million in the same period in 2001. This
increase in advisory fees (excluding incentive fees) is primarily attributable
to an increase in assets managed for wrap, institutional, subadvisory and
event-driven clients.

     Net commission income generated by the broker-dealer business, rose 49.3%
to $780,000 in the first quarter of 2002 from $522,000 in the first quarter in
2001.

  Expenses

     Total expenses for the first quarter of 2002 were $20.76 million,
reflecting a decrease of 6.9% from $22.29 million in expenses in the same period
in 2001. Total expenses excluding amortization of intangibles were $19.00
million in the first quarter of 2002, reflecting a decrease of 3.4% from $19.68
million for the first quarter of 2001. The largest component of this decrease
was a 9.0% decrease in compensation expense, which declined from $15.92 million
to $14.48 million. This decrease in compensation expense is attributable to the
decrease in revenues. The effect of this decrease in revenues was partially
offset by an increase in compensation expense related to new product
development, the expansion of the investment teams involved in managing
alternative investment strategies, and the partial vesting of equity awards made
to key employees in January 2002.

     Occupancy and equipment rental was $1.42 million in the first quarter of
2002, reflecting a 131.5% increase from $614,000 in the same period in 2001.
This increase is attributable to the lease amendments entered into in 2001,
which added a total of approximately 38,000 square feet.

     Other operating expenses were $3.10 million in the first quarter of 2002,
reflecting a 1.4% decrease from $3.14 million in the same period in 2001.
Increases in professional fees and telecommunications and portfolio management
software expense, the ladder being directly related to the increase in the
number of wrap accounts managed, were offset by a decrease in reimbursements to
certain client accounts in connection with trading activities.

     Amortization of intangibles was $1.75 million in the first quarter of 2002,
reflecting a decrease of 32.8% from $2.61 million in the same period in 2001.
This decrease is attributable to (i) goodwill no longer being amortized,
pursuant to Statement of Financial Accounting Standards No. 142, "Goodwill and
Other

                                        10
<PAGE>

Intangible Assets," and (ii) employment agreements being completely amortized
over their respective terms as of June 30, 2001.

  Operating Income

     Operating income for the first quarter of 2002 was $378,000, an 80.6%
decline from $1.95 million in the same period in 2001, reflecting the decrease
in revenues, which exceeded the decrease in expenses. Operating income excluding
the amortization of intangibles was $2.13 million in the first quarter of 2002,
reflecting a decrease of 53.3% from $4.56 million in the same period in 2001.

  Gain (Loss) on Investments

     In the first quarter of 2002, BKF had a net realized and unrealized gain on
investments of $104,000 derived from its seed capital investments in a range of
long only and alternative investment strategies (excluding investments in
affiliated partnerships). Such investments yielded a net realized and unrealized
gain of $9,000 in the first quarter of 2001.

  Interest and Dividend Income

     Interest and dividend income in the first quarter of 2002 was $155,000,
reflecting a 56.7% decrease from $359,000 in the same period in 2001. This
decrease is primarily attributable to a decrease in interest rates and a
decrease in cash levels generated by operations.

  Income Taxes

     Income tax expense was $1.05 million in the first quarter of 2002,
reflecting a decrease of 57.5% from $2.47 million for the same period in 2001.
This decrease primarily reflects the decrease in income before taxes (as
determined without a deduction for the amortization of intangibles). An
effective tax rate of 44.0% (before amortization) was used to make the
determination with respect to the provision for taxes at March 31, 2002, while
an effective tax rate of 47.5% (before amortization) was used to calculate the
provision for taxes at March 31, 2001. The differential in tax rates is due to
state allocations.

LIQUIDITY AND CAPITAL RESOURCES

     BKF's current assets as of March 31, 2002 consist primarily of cash, short
term investments and advisory fees receivable.

     While BKF utilizes capital to develop and seed new investment products,
BKF's business is not generally capital intensive. BKF has historically met its
cash and liquidity needs through cash generated by operating activities. At
March 31, 2002, BKF had cash and cash equivalents of $31.62 million, compared to
$41.83 million at December 31, 2001. This decrease primarily reflects the
payment of cash bonuses in 2002 that were accrued in 2001, which payment was
partially offset by the collection of receivables and the annual withdrawal of
general partner incentive allocations from the investment partnerships. The
decrease in investment advisory fees receivable from $27.83 million at December
31, 2001 to $16.14 million at March 31, 2002 primarily reflects the receipt of
incentive fees earned on certain non-partnership accounts in 2001. The decrease
in investments in affiliated investment partnerships from $17.53 million at
December 31, 2001 to $10.54 million at March 31, 2002 reflects the withdrawal of
general partner incentive allocations from the partnerships earned with respect
to 2001, which was partially offset by the accrual of incentive allocations for
the three month period ended March 31, 2002. These incentive allocations
typically are withdrawn within three months following the end of the calendar
year to pay compensation and other expenses.

     Investments in securities at March 31, 2002 were $1.81 million, as compared
to $2.78 million at December 31, 2001. This decrease is primarily attributable
to the liquidation of the long only financial services seed capital portfolio in
the first quarter of 2002.

                                        11
<PAGE>

     Accrued expenses were $2.64 million at March 31, 2002, as compared to $4.39
million at December 31, 2001. This is primarily the result of the payment of
accrued third party marketing fees that were contingent on the receipt of
incentive fees and general partner incentive allocations earned with respect to
2001.

     Accrued bonuses were at $9.12 million at March 31, 2002, as compared to
$37.61 million at December 31, 2001, reflecting the payment of 2001 bonuses,
which was partially offset by the accrual for 2002 bonuses.

     Based upon BKF's current level of operations and anticipated growth, BKF
expects that cash flows from operating activities will be sufficient to finance
its working capital needs for the foreseeable future. BKF has no material
commitments for capital expenditures.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Since BKF's revenues are largely driven by the market value of Levco's
assets under management, these revenues are exposed to fluctuations in the
equity markets. Management fees for most accounts are determined based on the
market value of the account on the last day of the quarter, so any significant
increases or decreases in market value occurring on or shortly before the last
day of a quarter may materially impact revenues. Furthermore, since Levco
manages most of its assets in a large cap value style, a general decline in the
performance of value stocks could have an adverse impact on Levco's revenues.
Similarly, a lack of opportunity to implement, or a failure to successfully
implement, Levco's event-driven strategy, could reduce performance based
incentive fees and allocations and thereby negatively impact BKF's revenues. In
addition, as of March 31, 2002, BKF had invested (i) $1.17 million in seed
capital for long only value equity products, which could be similarly impacted
by a decline in the performance of value stocks, and (ii) $9.85 million in
proprietary alternative investment strategies, which are also exposed to market
fluctuations. Because BKF is primarily in the asset management business and
manages equity portfolios, changes in interest rates, foreign currency exchange
rates, commodity prices or other market rates or prices impact BKF only to the
extent they are reflected in the equity markets.

                          PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     None

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

     None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

     None

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

     None

ITEM 5.  OTHER INFORMATION

     This Quarterly Report on Form 10-Q contains certain statements that are not
historical facts, including, most importantly, information concerning possible
or assumed future results of operations of BKF and statements preceded by,
followed by or that include the words "may," "believes," "expects,"
"anticipates," or the negation thereof, or similar expressions, which constitute
"forward-looking statements" within the meaning of the Reform Act. For those
statements, 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, and BKF's

                                        12
<PAGE>

actual results, performance and achievements may differ materially from any
future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include the following: retention and
ability of qualified personnel; the performance of the securities markets and of
value stocks in particular; the investment performance of client accounts; the
retention of significant client and/or distribution relationships; competition;
the existence or absence of adverse publicity; changes in business strategy;
quality of management; availability, terms and deployment of capital; business
abilities and judgment of personnel; labor and employee benefit costs; changes
in, or failure to comply with, government regulations; the costs and other
effects of legal and administrative proceedings; 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.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits

     None

     (b) Reports on Form 8-K

     None

                                        13
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                          BKF CAPITAL GROUP, INC.

                                          By:      /s/ JOHN A. LEVIN
                                          --------------------------------------
                                                      John A. Levin
                                            Chairman, Chief Executive Officer
                                                      and President

                                          By:     /s/ GLENN A. AIGEN
                                          --------------------------------------
                                                      Glenn A. Aigen
                                                Senior Vice President and
                                                 Chief Financial Officer

Date: May 14, 2002

                                        14

</TEXT>
</DOCUMENT>
</SUBMISSION>
