2. Investments

a) Investment in Qualstar:

The investment in Qualstar is accounted for using the equity method as prescribed by Accounting Standard Codification Section 323, under which the Company’s carrying amount of its investment in common stock of Qualstar is the initial cost adjusted for the Company’s share of Qualstar’s earnings and losses, and further adjusted for any distributions or dividends. At March 31, 2015 the Company held 3,095,875 common shares of Qualstar, representing approximately 25.27% of the outstanding shares. The investment in Qualstar was approximately $705,000 at March 31, 2015. The market value of the Company’s shares in Qualstar was approximately $4.6 million at March 31, 2015.

During the quarter ended March 31, 2015, the Company recorded a loss on its investment in Qualstar of approximately $62,000. These losses do not include the quarterly results of Qualstar as of March 31, 2015, as Qualstar’s financial statements were not available at the time we prepared our financial statements. Therefore, all balances related

to the Company’s investment in Qualstar are recorded on a three month (quarterly) lag. This lag is consistent from period to period.

b) Investment in Interlink

At March 31, 2015, the Company holds 691,020 shares of Interlink Electronics which represents approximately 11.8% of Internlink’s outstanding shares. Since, Steven Bronson, BKF’s Chairman is also the Chief Executive Officer of Interlink Electronics and can significantly influence the operational decisions at Interlink, the Company made a change in its accounting for this investment from available-for-sale securities to the equity method. The change in accounting methods did not have a material impact on the financial statements for the previously reported earnings-per-share. The retroactive application of the equity method resulted in an immaterial change to retained earnings at March 31, 2014. In addition, the basic and diluted earning per share did not change.

The investment in Interlink Electronics is accounted for using the equity method as prescribed by Accounting Standard Codification Section 323, under which the Company’s carrying amount of its investment in common stock of Interlink is the initial cost adjusted for the Company’s share of Qualstar’s earnings and losses, and further adjusted for any distributions or dividends. At March 31, 2015 the Company held 691,200 common shares of Interlink, representing approximately 11.8% of the outstanding shares. The investment in Interlink was approximately $2.5 million at March 31, 2015. The market value of the Company’s shares in Interlink was approximately $6.2 million at March 31, 2015.

During the quarter ending March 31, 2015, the Company recorded a gain on its investment in Interlink of approximately $93,000. These gains do not include the quarterly results of Interlink as of March 31, 2015, as Interlink’s financial statements were not available at the time we prepared our financial statements. Therefore, all balances related to the Company’s investment in Interlink are recorded on a three month (quarterly) lag. This lag is consistent from period to period.