<SUBMISSION>
<ACCESSION-NUMBER>0001144204-12-011828
<TYPE>8-K
<PUBLIC-DOCUMENT-COUNT>2
<PERIOD>20120228
<ITEMS>8.01
<ITEMS>9.01
<FILING-DATE>20120229
<DATE-OF-FILING-DATE-CHANGE>20120229
<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>8-K
<ACT>34
<FILE-NUMBER>001-10024
<FILM-NUMBER>12650593
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>225 N.E. MIZNER BOULEVARD, SUITE 400
<CITY>BOCA RATON
<STATE>FL
<ZIP>33432
<PHONE>561 362-4199
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>225 N.E. MIZNER BOULEVARD, SUITE 400
<CITY>BOCA RATON
<STATE>FL
<ZIP>33432
</MAIL-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>
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<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>v304118_8k.htm
<DESCRIPTION>FORM 8-K
<TEXT>
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<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="text-align: center; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">UNITED STATES</P>

<P STYLE="text-align: center; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">SECURITIES AND EXCHANGE COMMISSION</P>

<P STYLE="text-align: center; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Washington, D.C. 20549</P>

<P STYLE="margin: 0pt">&nbsp;</P>

<P STYLE="margin: 0pt">&nbsp;</P>

<P STYLE="text-align: center; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">FORM 8-K</P>

<P STYLE="margin: 0pt">&nbsp;</P>

<P STYLE="text-align: center; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">CURRENT REPORT</P>

<P STYLE="text-align: center; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">PURSUANT TO SECTION 13 OR
15(D)</P>

<P STYLE="text-align: center; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">OF THE SECURITIES EXCHANGE
ACT OF 1934</P>

<P STYLE="margin: 0pt">&nbsp;</P>

<P STYLE="margin: 0pt">&nbsp;</P>

<P STYLE="text-align: center; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Date of Report (Date of earliest
event reported): February 28, 2012</P>

<P STYLE="margin: 0pt">&nbsp;</P>

<P STYLE="margin: 0pt">&nbsp;</P>

<P STYLE="text-align: center; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Commission file number: 1-10024</P>

<P STYLE="margin: 0pt">&nbsp;</P>

<P STYLE="text-align: center; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">BKF CAPITAL GROUP INC.</P>

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<P STYLE="text-align: center; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">(Exact Name of Registrant
as Specified in its Charter)</P>

<P STYLE="margin: 0pt">&nbsp;</P>

<P STYLE="margin: 0pt">&nbsp;</P>

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    <TD STYLE="border-bottom: black 2px solid; width: 41%; text-align: center; text-indent: 0pt">Delaware</TD>
    <TD STYLE="width: 4%; padding-bottom: 2px">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2px solid; width: 41%; text-align: center; text-indent: 0pt">36-0767530</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center; text-indent: 0pt">State or other jurisdiction of</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; text-indent: 0pt">(I.R.S. Employer</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center; text-indent: 0pt">incorporation or organization</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center; text-indent: 0pt">Identification No.)</TD></TR>
</TABLE>
<P STYLE="margin: 0pt">&nbsp;</P>

<P STYLE="margin: 0pt">&nbsp;</P>

<P STYLE="text-align: center; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">225 N.E. Mizner, Suite 400
Boca Raton, Florida 33432</P>

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<P STYLE="text-align: center; text-indent: 0pt; margin: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"> &#160;(Address of Principal Executive Office) (Zip Code)</FONT></P>

<P STYLE="margin: 0pt">&nbsp;</P>

<P STYLE="margin: 0pt">&nbsp;</P>

<P STYLE="text-align: center; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">(561) 362-4199</P>

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<P STYLE="text-align: center; text-indent: 0pt; margin: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"> &#160;(Registrant's telephone number including area code)</FONT></P>

<P STYLE="margin: 0pt">&nbsp;</P>

<P STYLE="margin: 0pt">&nbsp;</P>

<P STYLE="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Check the appropriate box below
if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):</P>

<P STYLE="margin: 0pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; padding-left: 10pt; text-indent: -10pt; width: 4%"><FONT STYLE="font-family: Wingdings 2">&#163;</FONT></TD>
    <TD STYLE="text-align: left; padding-left: 10pt; text-indent: -10pt; width: 96%">Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</TD></TR>
</TABLE>


<P STYLE="margin: 0pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; padding-left: 10pt; text-indent: -10pt; width: 4%"><FONT STYLE="font-family: Wingdings 2">&#163;</FONT></TD>
    <TD STYLE="text-align: left; padding-left: 10pt; text-indent: -10pt; width: 96%">Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</TD></TR>
</TABLE>


<P STYLE="margin: 0pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; padding-left: 10pt; text-indent: -10pt; width: 4%"><FONT STYLE="font-family: Wingdings 2">&#163;</FONT></TD>
    <TD STYLE="text-align: left; padding-left: 10pt; text-indent: -10pt; width: 96%">Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</TD></TR>
</TABLE>


<P STYLE="margin: 0pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: left; padding-left: 10pt; text-indent: -10pt; width: 4%"><FONT STYLE="font-family: Wingdings 2">&#163;</FONT></TD>
    <TD STYLE="text-align: left; padding-left: 10pt; text-indent: -10pt; width: 96%">Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</TD></TR>
</TABLE>


<P STYLE="margin: 0pt">&nbsp;</P>

<P STYLE="margin: 0pt"></P>

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<P STYLE="margin: 0pt">&nbsp;</P>

<P STYLE="margin: 0pt"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0">Section 8 - Other Events.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0">Item 8.01 Other Events.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0">On February 28, 2012, BKF Capital Group,
Inc. (the &quot;Company&quot;), as the owner of 15% of the outstanding shares of Qualstar Corporation, a publicly held company
(&ldquo;Qualstar&rdquo;), issued a press release containing an open letter to the Shareholders of Qualstar (the &ldquo;Letter&rdquo;).
The securities of Qualstar trade on the NASDAQ Market under the symbol &ldquo;QBAK.&rdquo; The Letter informed the shareholders
of Qualstar that BKF Capital intends to withhold its votes for Qualstar&rsquo;s slate of directors at Qualstar&rsquo;s Annual Meeting
scheduled for March 21, 2012 for the reasons set forth in the Letter. The Letter also urges other shareholders of Qualstar to do
the same. A copy of the press release containing the Letter is attached to this report as Exhibit 99.1.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0">Section 9 - Financial Statements and Exhibits</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0">Item 9.01 Financial Statements and Exhibits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">(d) Exhibits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following Exhibits are hereby filed as
part of this Current Report on Form 8-K:</P>

<P STYLE="margin: 0pt">&nbsp;</P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Exhibits</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">99.1 Press Release, dated February 28, 2012.</P>



<P STYLE="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"></P>

<P STYLE="margin: 0pt">&nbsp;</P>

<P STYLE="margin: 0pt">&nbsp;</P>

<P STYLE="text-align: center; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">SIGNATURES</P>

<P STYLE="margin: 0pt">&nbsp;</P>

<P STYLE="margin: 0pt"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Pursuant to the requirements of the Securities
Exchange Act of 1934, BKF Capital Group, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Dated: February 28, 2012</P>



<P STYLE="margin: 0pt"></P>

<P STYLE="margin: 0pt">&nbsp;</P>

<P STYLE="margin: 0pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: left; text-indent: 0pt">BKF CAPITAL GROUP, INC.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: left; text-indent: 0pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (Registrant)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%">&nbsp;</TD>
    <TD STYLE="width: 5%">&nbsp;</TD>
    <TD STYLE="width: 45%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: left; text-indent: 0pt">By:</TD>
    <TD STYLE="text-align: left; border-bottom: black 2px solid; text-indent: 0pt">/s/ STEVEN N. BRONSON</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: left; text-indent: 0pt">Steven N. Bronson, President</TD></TR>
</TABLE>
<P STYLE="margin: 0pt">&nbsp;</P>

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<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>v304118_ex99-1.htm
<DESCRIPTION>EXHIBIT 99.1
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<P STYLE="margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">Exhibit 99.1</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0">Press Release</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0">For Immediate Release</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0">BKF Capital Group Inc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0">February 28, 2012</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: center"><B>BKF Capital Group Recommends to Shareholders
of Qualstar that They </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: center"><B>Withhold Their Votes for Qualstar&rsquo;s
Board of Directors</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Boca Raton, Florida, February 28, 2012
&ndash; BKF Capital Group, Inc. (OTCQB &ndash; &ldquo;BKFG&rdquo;), the owner of 15% of the outstanding shares of Qualstar Corporation
(&ldquo;Qualstar&rdquo;), has today filed with the United States Securities and Exchange Commission an amendment to its Schedule
13D, which appends an open letter to the shareholders of Qualstar. The letter informs shareholders of BKF Capital&rsquo;s intention
to withhold its votes for Qualstar&rsquo;s slate of directors at Qualstar&rsquo;s Annual Meeting scheduled for March 21, 2012,
tells shareholders the reasons for its withhold vote and urges other shareholders of Qualstar to do the same. A copy of the letter
is set forth below:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">BKF CAPITAL GROUP, INC.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">225 N.E. Mizner Boulevard, Suite 400</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Boca Raton, Florida 33432</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">Tel. No. (561) 362-4199</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">February 28, 2012</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Dear Fellow Qualstar Corporation Shareholders:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">With its ownership of over 15% of the
outstanding stock of Qualstar Corporation (&ldquo;Qualstar&rdquo; or the &ldquo;Company&rdquo;), BKF Capital Group, Inc. is the
Company&rsquo;s second largest shareholder. <B>We intend to withhold our votes for the Company&rsquo;s directors at the upcoming
Annual Meeting of the Company&rsquo;s shareholders on March 21, 2012, and we strongly urge you to do the same.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company&rsquo;s shareholders are
being asked at the Annual Meeting to elect the full board, consisting of William J. Gervais, Stanley W. Corker, Lawrence D. Firestone,
Carl W. Gromada, Robert A. Meyer and Robert E. Rich. With the exception of Mr. Firestone, who was appointed to the Board last May,
each of the directors has been on the Board for at least the last six years. During that period of time, and since 2003, the Company
has not once been profitable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Other than Mr. Gervais, none of the
directors have a meaningful stake in Qualstar. According to the Company&rsquo;s proxy statement for the Annual Meeting, excluding
Mr. Gervais, the directors collectively own only 1.3% of the Company&rsquo;s outstanding stock (not taking account of stock options).
Meanwhile, Mr. Gromada sold 40,700 shares last year at prices ranging from $1.75 to $1.80 per share. This price range represented
a discount to Qualstar&rsquo;s cash and marketable securities per share at the time of sale. To us, this is indicative of a Board
that, with the exception of Mr. Gervais, is financially disengaged from the Company and lacks confidence in its prospects.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">BKF believes that shareholders must
send a firm message to the directors that, in their view, the Board is not discharging its fiduciary responsibilities and is not
working towards maximizing shareholder value.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Qualstar&rsquo;s share
price is depressed by many fundamental and relative performance measures.</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">There does not seem
to be a sense of urgency by the Board to setting Qualstar on a course to profitability.</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">Over the past decade,
the Board has made no attempt to redeploy Qualstar&rsquo;s assets in order to maximize value. </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">There does not appear
to be any strategic direction on the part of the Board to respond to the changing financial and business realities affecting Qualstar&rsquo;s
business.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company&rsquo;s legacy Tape Libraries
segment is a case in point. On the Company&rsquo;s earnings conference call of February 14, 2012, Mr. Gervais stated that the market
for the Tape Libraries products had decreased from a peak, presumably in the early 2000s, of approximately $1.5 billion annually
to its present level of approximately $600 million. There were 35 industry competitors at the peak versus 8 today, which seemingly
indicates that other players have made the economically rational decision to get out of this business. Qualstar&rsquo;s Board,
in contrast, has simply sat by with this money-losing business, offering no indication whether the segment will ever result in
positive earnings, in the near-term or long-term, and just &ldquo;throws good money after bad.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On February 15, 2012 we sent a letter to the Qualstar Board,
which we attached as an exhibit to our Schedule 13D filing on February 21, 2012. In the letter, we suggested three steps that the
Board can and should take to maximize shareholder value.</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">1.</TD><TD STYLE="text-align: justify; padding-right: 1in">Divest the unprofitable Tape Libraries business.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">2.</TD><TD STYLE="text-align: justify; padding-right: 1in">Distribute excess cash from the sale of marketable securities to the shareholders.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">3.</TD><TD STYLE="text-align: justify; padding-right: 1in">Focus Qualstar&rsquo;s resources on the generally profitable Power Supply business.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We also asked the Board to present
a strategic turnaround plan to Qualstar&rsquo;s shareholders. While developing and implementing a plan to refocus operations may
take some time, the Company should immediately be returning to shareholders a majority of Qualstar&rsquo;s excess cash from the
sale of its marketable securities. Thus far, the Board has responded to our letter with only a terse acknowledgement of its receipt,
saying it will &ldquo;carefully consider&rdquo; our suggestions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We are not seeking at this time to
oust the Board or change control of the Company; however, we do wish to send a strong message to the Board that shareholders are
no longer satisfied with the status quo. We insist on a profitable, dynamic company that is run to generate earnings for the benefit
of the shareholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">By withholding votes for the directors
at the Annual Meeting, shareholders will be voicing their dissatisfaction with the current operations of Qualstar and will be making
an unmistakable call for change.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>We strongly urge all shareholders
to vote &ldquo;Withhold&rdquo; in the election of directors at the 2012 Annual Meeting of Qualstar Shareholders to be held on March
21, 2012.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify">Sincerely,</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify">Greg Heller</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify">Senior Vice President</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: center">*&#9; &#9;* &#9;*</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">WE ARE NOT REQUESTING YOUR PROXY AND
NO PROXIES WILL BE ACCEPTED. PLEASE DO NOT SEND US YOUR PROXIES. SEND YOUR PROXIES TO QUALSTAR CORPORATION.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify; color: red">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify; color: red">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B><U>About BKF Capital Group Inc.</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">BKF Capital Group Inc. (OTCQB - &quot;BKFG&quot;)
is a publicly traded company focused on arranging a merger, acquisition, business combination or other arrangement with both public
and private companies with unique value opportunities and/or acquiring a controlling position in such companies through equity
purchases or debt financings. For additional information please visit: www.bkfcapital.com.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0">Contacts:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0">BKF Capital Group, Inc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0">Greg Heller 561-362-4199 x 330</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0">gheller@bkfcapital.com</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 1in 0 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

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