SECURITIES AND EXCHANGE COMMISSION





WASHINGTON, D.C. 20549








FORM 10-QSB








QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)


OF THE SECURITIES EXCHANGE ACT OF 1934





For the quarterly period ended June 30, 2004








Commission file number 0-15932








BF ENTERPRISES, INC.





(Exact name of small business issuer as specified in its charter)


DELAWARE
(State or other jurisdiction
of incorporation or organization)
94-3038456
(I.R.S. Employer
Identification No.)100 Bush Street
Suite 1250
San Francisco, California 94104

(Address of principal executive offices)
Issuer's telephone number, including area code (415) 989-6580











Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___








Indicate the number of shares outstanding of each of the issuer's classes of common stock as of August 9, 2004:





3,491,131 shares of $.10 par value Common Stock




1





BF ENTERPRISES, INC. AND SUBSIDIARIES





INDEX




PART IFINANCIAL INFORMATION
PageItem 1.Financial Statements-Consolidated balance sheets
3-Consolidated statements of income
4-Consolidated statements of stockholders' equity
5-Consolidated statements of cash flows
6-Notes to consolidated financial statements
7Item 2.Management's Discussion and Analysis of Financial Condition and
Results of Operations
11Item 3.Controls and Procedures
13PART II             OTHER INFORMATIONItem 1.            Legal Proceedings
13Item 4.            Submission of Matters to a Vote of Security Holders
14Item 5.            Other Information - Subsequent Event
14Item 6.            Exhibits and Reports on Form 8-K
15





The Company and its representatives may, from time to time, make written or oral forward-looking statements with respect to long-term goals or prospects of the Company, including statements contained in the Company's filings with the Securities and Exchange Commission and in its reports to stockholders.





The words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project" or similar expressions identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, which speak only as of the date made, involve risks and uncertainties, including, but not limited to, competition, general economic conditions, ability to manage and continue growth, the strength of the general economy in the Tampa, Florida area, uncertainties affecting the Tampa real estate market, residential mortgage interest rates, competitive residential and commercial developments in Tampa, inclement weather in Tampa that could delay construction of new homes, weakness in the market for commercial buildings in Tempe, Arizona, the leasing of the Companys Tempe commercial building in view of Bank Ones decision not to exercise its option to renew its lease (which expires on February 28, 2005), the uncertainty of fluctuating rental rates for commercial office space in Tempe, and other factors detailed in the Company's filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated.





The Company specifically declines to undertake any obligation to publicly revise any forward-looking statements that have been made to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.





2


PART I - FINANCIAL INFORMATION


Item 1.   Financial Statements .


BF ENTERPRISES, INC. AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS


(in thousands, except share amounts)


June 30,
2004


December 31,2003(Unaudited)ASSETS:Cash and cash equivalents

$
14,904

$
14,036Marketable securities available for sale, at market value


568


651Mortgage loans receivable


1,550


1,672Other receivables


36


260Real estate rental property, net of accumulated depreciation


1,987


2,012Real estate inventory held for current saleand land held for future development


9,660


9,583Lease contract receivable


110


193Other assets


317


381TOTAL ASSETS

$
29,132

$
28,788LIABILITIES AND STOCKHOLDERS' EQUITY:Payables and accrued liabilities

$
430

$
479Deferred income taxes


984


793Total liabilities


1,414


1,272Stockholders' equity:Common stock, $.10 par valueAuthorized - 10,000,000 sharesIssued and outstanding -3,491,131 and 3,506,128 shares


349


351Capital surplus


13,241


13,402Retained earnings


14,189


13,953Accumulated other comprehensive loss


(61
)

(10
)Notes receivable from employees


--


(180
)Total stockholders' equity


27,718


27,516TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$
29,132

$
28,788


The accompanying notes to consolidated financial statements


are an integral part of these statements.


3




BF ENTERPRISES, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


(in thousands, except per share amounts)


Three Months Ended
June 30,
Six Months Ended
June 30,2004


2003


2004


2003Revenues:Real estate sales

$
319

$
197

$
622

$
204Real estate rental income


453


453


907


907Interest from mortgage loans


47


102


97


208Interest and dividends from
marketable securities


26


31


53


65Other


6


6


6


17851


789


1,685


1,401Costs and Expenses:Cost of real estate sold


69


24


152


27Depreciation and amortization


24


24


48


48General and administrative


579


586


1,100


1,136672


634


1,300


1,211Income before gains from sales of securities and
provision for income taxes


179


155


385


190Gains from sales of securities


--


--


--


23Income before provision for income taxes


179


155


385


213Provision for income taxes


70


57


149


71Net income

$
109

$
98

$
236

$
142Net income per share:
Basic
Diluted


$ .03
$ .03


$ .03
$ .03


$ .07
$ .07


$ .04
$ .04Weighted average shares used in computing basic
net income per share


3,490


3,520


3,492


3,523Weighted average shares and equivalents used
in computing diluted net income per share


3,568


3,717


3,579


3,725


The accompanying notes to consolidated financial statements


are an integral part of these statements.


4


BF ENTERPRISES, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)


(in thousands)


Six Months Ended
June 30,2004


2003Common stock - shares:Balance at beginning of period


3,506


3,528Purchases of common stock


--


(9
)Exercises of stock options


5


--Tender or surrender of common stock for principal and interest payments on notes receivable from employees


(20
)

--Balance at end of period


3,491


3,519Common stock  par value:Balance at beginning of period

$
351

$
353Purchases of common stock


(1
)

(1
)Exercises of stock options


1


--Principal and interest payments on notes receivable from employees


(2
)

--Balance at end of period

$
349

$
352Capital surplus:Balance at beginning of period

$
13,402

$
14,180Purchases of common stock - excess over par value


(38
)

(71
)Exercises of stock options - excess over par value


38


--Benefit for income taxes from exercises of stock options


18


--Principal and interest payments on notes receivable from employees  excess over par value


(179
)

--Balance at end of period

$
13,241

$
14,109Retained earnings:Balance at beginning of period

$
13,953

$
13,682Net income


236


142Balance at end of period

$
14,189

$
13,824Accumulated other comprehensive income (loss):Balance at beginning of period

$
(10
)
$
16Unrealized gains (losses) from marketable equity securities, net of income taxes


(51
)

22Less: reclassification adjustment for gains from sales of securities included in net income


--


(32
)Balance at end of period

$
(61
)
$
6Notes receivable from employees:Balance at beginning of period

$
(180
)
$
(910
)Interest on notes received from employees


(1
)

(16
)Principal and interest payments


181


684Balance at end of period

$
--

$
(242
)Accumulated comprehensive income:Balance at beginning of period

$
13,943

$
13,698Net income


236


142Unrealized gains (losses) from marketable equity securities, net of income taxes


(51
)

22Less: reclassification adjustment for gains from sales of securities included in net income


--


(32
)Comprehensive income for period


185


132Balance at end of period

$
14,128

$
13,830


The accompanying notes to consolidated financial statements


are an integral part of these statements.


5


BF ENTERPRISES, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


(in thousands)


Six Months Ended
June30,2004


2003Cash flows from operating activities:Net income

$
236

$
142Adjustments to reconcile net income to net cash provided (used) by operating activities:Gains from sales of real estate


(470
)

(177
)Gains from sales of securities


--


(23
)Provision for deferred income taxes


131


75Federal alternative minimum tax refund


92


--Net cash proceeds from sales of real estate


442


167Real estate development costs


(398
)

(454
)Reimbursement of real estate development costs


349


--Changes in certain assets and liabilities:Decrease in other receivables


224


184Decrease in lease contract receivable


83


78Decrease in payables and accrued liabilities


(49
)

(66
)Other, net


106


21Total adjustments to net income


510


(195
)Net cash provided (used) by operating activities


746


(53
)Cash flows from investing activities:Principal payments on mortgage loans receivable


122


479Additions to mortgage loans receivable


--


(272
)Proceeds from sales of marketable equity securities


--


129Proceeds from maturities of marketable securities


--


2,988Purchases of marketable securities


--


(61
)Principal and interest payments on notes receivable from employees

--

684Net cash provided by investing activities


122


3,947Cash flows from financing activities:Purchases of the Companys common stock


--


(72
)Net cash used by financing activities


--


(72
)Net increase in cash and cash equivalents


868


3,822Cash and cash equivalents at beginning of period


14,036


11,214Cash and cash equivalents at end of period

$
14,904

$
15,036Supplemental disclosure of non-cash investing activities:Tender or surrender of the Companys common stock for:Principal and interest payments on notes receivable from employees

$
181


--Stock option exercise costs


19


--


The accompanying notes to consolidated financial statements


are an integral part of these statements.


6BF ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)







Note A - Interim Financial Information





The accompanying consolidated financial statements of BF Enterprises, Inc. and its subsidiaries (collectively the "Company") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and, in management's opinion, include all adjustments necessary to present fairly the consolidated financial position of the Company at June 30, 2004, and the consolidated results of its operations for the three and six months ended June 30, 2004 and 2003, and its consolidated cash flows for the six months ended June 30, 2004 and 2003. Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to SEC rules or regulations. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Form 10-KSB for the year ended December 31, 2003 and in the Company's Form 10-QSB for the quarterly period ended June 30, 2003. The results for the three and six months ended June 30, 2004 are not necessarily indicative of the results for the full year or any other or future period.





Note B  Business Segments





The Company currently is engaged in only one business segment, real estate activities. The Companys net investment in and the operating results of its various real estate activities may be derived directly from the accompanying consolidated financial statements.





Note C - Earnings Per Share





Earnings per share data for the periods reported have been computed as follows (in thousands, except per share amounts):









Three Months Ended
June 30,
Six Months Ended
June 30,2004
2003
2004
2003Net Income
$ 109
$ 98
$ 236
$ 142Weighted average number of shares outstanding:Common stock
3,490
3,520
3,492
3,523Common stock equivalents -
stock options
78
197
87
2023,568
3,717
3,579
3,725Net income per share:


Basic - based on weighted average number of shares of common stock outstanding
$.03
$.03
$.07
$.04Diluted - based on weighted average number of shares of common stock and common stock equivalents outstanding
$.03
$.03
$.07
$.04





7BF ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)




Note D - Mortgage Loans Receivable





In March 2002, the Companys Board of Directors authorized and approved the participation of the Company in certain mortgage loans (Loans), with Graham Mortgage Corporation, a Texas corporation (Graham Mortgage). Pursuant to a Master Participation Agreement, by and between the Company and Graham Mortgage, dated as of March 14, 2002, the Companys nine participating interests (collectively, the Participating Interests) at June 30, 2004, were: $150,000 in each of five Loans, $200,000 in each of two Loans and two other Loans of $250,000 and $500,000, respectively. The Loans are for terms of 24 to 30 months with yields to the Company, net of a one-half percent administrative fee, ranging from 9.75% to 14.50% per annum, and are secured by First Deeds of Trust in real property located in Texas. The aggregate principal balance of the Participating Interests at June 30, 2004 was $1,550,000. All loans are currently performing and are being serviced in accordance with their terms.





Note E - Real Estate Rental Property





Real estate rental property consists of a 220,000 square foot office building located on 16 acres of land in Tempe, Arizona. In 1995, the Company entered into a 10-year net lease agreement ("Lease Agreement") with Bank One, Arizona, NA (Bank One), a subsidiary of Bank One Corporation. The lease provided for the phased occupancy and rental of space by Bank One during 1995, with rental of the entire premises commencing January 1, 1996. Contractual rental revenues from the lease with Bank One are $1,980,000 in 2004 and $330,000 in the two months ending February 28, 2005, the lease expiration date. On September 25, 2003, representatives of Bank One verbally advised the Company that Bank One did not intend to exercise its renewal option under the lease agreement.  In accordance with the terms of the Lease Agreement, the option to renew expired on May 31, 2004.  The Company is actively marketing the property for lease to prospective tenants.





On January 1, 1996, as required by accounting principles generally accepted in the United States, the Company began amortizing on a straight-line basis (1) income from the lease with Bank One, resulting in annual real estate leasing income of $1,815,000 through February 28, 2005, and (2) a related $423,000 lease advisory fee, with annual amortization expense of $46,000 over the same period.





Note F- Real Estate Inventory Held for Current Sale and Land


Held for Future Development





Real estate inventory held for current sale and land held for future development consists primarily of approximately 72 acres in the Company's master-planned, mixed use development known as Meadow Pointe near Tampa, Florida. The parcels within this project are in various stages of development. Parcels on which the Company has completed substantially all of its development activities are considered to be held for current sale. Parcels on which development is not yet substantially complete are considered to be held for future development. These assets were carried at a cost of $9,660,000 at June 30, 2004 and $9,583,000 at December 31, 2003. The Company believes that the current fair value of these assets is greater than their carrying value.




It is the Companys policy to review and update its projections on the Meadow Pointe project on a periodic basis. Periodic adjustments to cost of sales are made to reflect the results of these reviews. As a result, gross margins and related percentages, derived on a period-to-period basis, may not be directly comparable.


8BF ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)







Note G - Stockholders' Equity





From time to time, the Company purchases shares of its common stock, primarily in the open market. During the six months ended June 30, 2003, the Company purchased 8,693 shares of its common stock for an aggregate purchase amount of $72,000. There were no such purchases during the six months ended June 30, 2004.





In April and May 2004, one of the Companys directors and the estate of a former director  (together "the Directors") exercised options for the purchase of an aggregate of 10,000 shares of the Companys common stock. In accordance with option agreements, by and between each director and the Company, dated February 15, 1994, the Directors tendered or surrendered 4,560 shares of the Companys common stock, with a market value of $8.50 per share, as payment of the exercise costs aggregating $38,750.





In February 2004, two employees, both of whom are officers, repaid in full promissory notes issued in 2001 under the terms of the Companys stock option loan program. The notes, in the aggregate amount of $181,000, including $4,000 of accrued interest, were paid with the tender or surrender of 20,437 shares of the Companys common stock with a market value of $8.85 per share. The notes were repaid under their original terms.





In April 2003, an officer and director of the Company prepaid in full a promissory note issued in 2001 under the terms of the Company's stock option loan program.  The note was repaid under its original terms and the amount of the loan repayment, $684,000, included accrued interest of $28,000.





Note H  Stock-Based Compensation





The Company accounts for stock-based employee compensation arrangements in accordance with provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25), and complies with the disclosure provisions of SFAS No. 123, Accounting for Stock-Based Compensation . In December 2002, the Financial Accounting Standards Board (FASB) issued SFAS 148, Accounting for Stock-Based Compensation-Transition and Disclosure-an Amendment of FASB Statement 123 . This statement amends SFAS 123 to provide three alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this statement amends the disclosure requirements of SFAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results, i.e. , net income and net income per share. The Company currently uses the intrinsic value based method of accounting for stock-based compensation in accordance with APB 25 and related interpretations.


9BF ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)





The Company does not recognize any compensation expense related to the options that it grants, as they are all exercisable at the fair value of the Company's common stock on the date of grant. Had compensation costs for the Company's option plans been determined consistent with SFAS 123, the Companys consolidated net income and net income per share would have been reduced to the following pro forma amountsfor the periods ended June 30, 2004 and 2003 (in thousands, except per share amounts):




|                                                                                                                                          | Six Months Ended
June 30,
|----------------------------------------------------------------------------------------------------------------------------------------- | -------------------------
|                                                                                                                                          |                          
|                                                                                                                                          | 2004                     
|                                                                                                                                          |                          
|Net income                                                                                                                                | $ 236                    
|Less: Total stock based employee compensation
expense determined under fair value based method for all awards, net of related tax effects | 19                       
|                                                                                                                                          |                          
|Pro Forma net earnings                                                                                                                    | $ 217                    
|                                                                                                                                          |                          
|Net income per share:                                                                                                                     |                          
|Basic:                                                                                                                                    |                          
|As reported                                                                                                                               | $ .07                    
|                                                                                                                                          |                          
|Pro Forma                                                                                                                                 | $.06                     
|                                                                                                                                          |                          
|Diluted:                                                                                                                                  |                          
|As reported                                                                                                                               | $ .07                    
|                                                                                                                                          |                          
|Pro Forma                                                                                                                                 | $.06                     
|                                                                                                                                          |                          

Note I  Quarterly Accumulated Other Comprehensive Income

The components of accumulated other comprehensive income for the three months ended June 30, 2004 and 2003 are as follows:


Three months ended
June 30,2004


2003Balance at beginning of period

$
(29
)
$
(38
)Unrealized gains (losses) from marketable equity
securities, net of income taxes


(32
)

44Balance at end of period

$
(61
)
$
6


The components of accumulated other comprehensive income for the six months ended June 30, 2004 and 2003 are presented in the Consolidated Statements of Stockholders' Equity.




10







Item 2.  Management's Discussion and Analysis of  Financial Condition and Results of Operations




The Company and its representatives may, from time to time, make written or oral forward-looking statements with respect to long-term goals or prospects of the Company, including statements contained in the Company's filings with the Securities and Exchange Commission and in its reports to stockholders.





The words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project" or similar expressions identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, which speak only as of the date made, involve risks and uncertainties, including, but not limited to, competition, general economic conditions, ability to manage and continue growth, the strength of the general economy in the Tampa, Florida area, uncertainties affecting the Tampa real estate market, residential mortgage interest rates, competitive residential and commercial developments in Tampa, inclement weather in Tampa that could delay construction of new homes, weakness in the market for commercial buildings in Tempe, Arizona, the leasing of the Companys Tempe commercial building in view of Bank Ones decision not to renew its lease (which expires on February 28, 2005), the uncertainty of fluctuating rental rates for similar commercial space in Tempe, and other factors detailed in the Company's filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated.





The Company specifically declines to undertake any obligation to publicly revise any forward-looking statements that have been made to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.





Results of Operations





Net income of  $109,000 and $236,000 in the three months and six months ended June 30, 2004 included gains, before taxes, of $250,000 and $470,000, respectively, from sales of properties within the Companys Meadow Pointe project near Tampa, Florida.  Net income of $98,000 and $142,000 in the three months and six months ended June 30, 2003 included gains of $173,000 and $177,000, respectively, from sales of property within the Meadow Pointe project.  Net income in the six month period of 2003 included a gain of $23,000 from sales of securities, but there were no such gains in the three month period ended June 30, 2003.





The Company's reported gains and losses from property sales at Meadow Pointe are based in part upon estimates of the total revenues and costs to be derived by the Company over the life of the project.  The Company periodically reviews these estimates and makes adjustments to reflect any revised estimates.  Adjustments resulting from changes in estimates of sales revenue and related timing, interest rates and other factors affecting the project budget, were made during the first half of both 2004 and 2003.  These adjustments, reflecting changes occurring during these periods, increased pre-tax income by $76,000 in the three months and six months ended June 30, 2004 and by $69,000 in the same periods of 2003.  As a result of recording changes when identified, gross margins and related margin percentages, derived on a period-to-period basis, may not be directly comparable.








11


Property sales at Meadow Pointe are dependent upon, among other things, the availability of lots ready  for sale, the strength of the general economy in the Tampa area, residential mortgage interest rates, competitive residential developments serving the same group of home buyers and other factors related to the local Tampa real estate market.  The Company sold 43 and 98 developed lots at Meadow Pointe, respectively, during the three months and six months ended June 30, 2004 and, 36 and 37 developed lots during the same periods of 2003, respectively.  The decreased sales activity in the 2003 periods reflected delays in permitting and lot construction.  As of June 30, 2004, there remained to be sold at Meadow Pointe, based on current estimates, 30 residential lots, approximately 29 developable acres currently planned for multifamily residential units and three commercial tracts aggregating approximately 24 developable acres. In view of factors beyond the control of the Company, including, but not limited to, the weather, real estate market conditions in Tampa and the economy generally, the Company cannot predict with any reasonable certainty future sales activity at Meadow Pointe.
  Interest income from mortgage loans accounted for $47,000 and $97,000 of revenues in the three and six months ended June 30, 2004 and $102,000 and $208,000 of revenues in the same periods of 2003, respectively.  The decrease in the 2004 periods was due to the repayment of seven of the sixteen loans outstanding at June 30, 2003.
 
 General and administrative expenses in the three months and six months ended June 30, 2004 were respectively $7,000 and $36,000 lower than in the comparable periods in 2003, due principally to decreases in the cost of professional services which more than offset increases in insurance expense incurred by the Company during the 2004 periods.
 
 Liquidity and Capital Resources
 
 At June 30, 2004, the Company held $15,472,000 in cash, cash equivalents and marketable securities, which, together with $1,550,000 in participating interests in mortgage loans with terms of two to three years, aggregated $17,022,000. Short-term and long-term liabilities at the same date were $1,414,000 in total. From time to time, the Company purchases shares of its common stock, primarily in the open market (see Note G of Notes to Unaudited Consolidated Financial Statements).
 
 During the period February 1992 through May 2000, two community development districts encompassing the Meadow Pointe project issued approximately $79,600,000 of capital improvement revenue bonds. The proceeds of such financings were used to construct infrastructure improvements necessary for the development and sale of lots at Meadow Pointe.  In April 2004, one of the districts, the Meadow Pointe II Community Development District ("District"), issued $10,050,000 of revenue refunding bonds.  The bonds were issued i) to redeem the $9,325,000 outstanding principal amount of the capital improvement revenue bonds issued by the District in 1995, ii) to pay for the construction of certain recreational facilities within the District; iii) to pay bond issuance costs; and iv) to reduce annual assessments on properties within the District in view of the improved creditworthiness of the District and the favorable interest rate climate.The districts may require additional financings from time to time; however, as the Companys ownership of land within the districts diminishes with further lot sales, the potential impact on the Company is reduced accordingly.
 
 Based upon the current financial condition and the current strategic initiatives of the Company, the Company believes its existing capital resources will be sufficient to satisfy its current and projected cash requirements.
 
 Qualitative and Quantitative Disclosures About Market Risk
 
 The Company holds certain cash equivalents and marketable securities for non-trading purposes that are sensitive to changes in market value. The Company does not believe that changes in the market value of these financial instruments will have a material impact, either favorable or unfavorable, on its consolidated financial position or results of operations. The Company has not in the past engaged in transactions requiring the use of derivative financial instruments either for hedging or speculative purposes, and has no plans to do so in the future.





12


Item 3.Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Companys reports under the Securities Exchange Act of 1934, as amended, are recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and that the information is accumulated and communicated to the Companys management, including the Companys Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding requireddisclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired objectives, and management was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The Companys management, with the participation of the Companys Chief Executive Officer and Chief Financial Officer, hasevaluated the effectiveness of the design and operation of the Companys disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation and subject to the foregoing, the Companys Chief Executive Officer and Chief Financial Officer concluded that the design and operation of the Companys disclosure controls and procedures provided reasonable assurance that the disclosure controls and procedures are effective to accomplish their objectives.
 
 There have been no significant changes in the Companys internal control over financial reporting during the Companys most recently completed fiscal quarter that could significantly affect internal control over financial reporting subsequent to the date the Company carried out its evaluation.





PART II - OTHER INFORMATION







Item 1. Legal Proceedings .





Meadow Pointe Litigation





On February 1, 2002, one of the Companys subsidiaries, Trout Creek Properties, LLC, commenced an action in the United States District Court for the Middle District of Florida, asserting claims against Akerman, Senterfitt & Eidson, P.A. (Akerman) for attorney malpractice and breach of contract in connection with advice given relating to the proration of CDD special assessments at sales closings of lots in the Companys Meadow Pointe project. In November of 2003, the United States District Court granted a motion for summary judgment filed by Akerman. In December of 2003, the Company filed its appeal with the Eleventh Circuit Court of Appeals and on July 30, 2004, the Court of Appeals affirmed the District Courts decision. The Company does not intend to appeal further the District Courts Summary Judgment decision in favor of Akerman.




13
  Following the entry of the Judgment in the District Court, Akerman filed a motion seeking to recover legal fees and expenses of approximately $304,000 (Motion for Costs). At the Companys request, the District Court deferred consideration of that motion until the appeal had been resolved. In light of the Court of Appeals' decision on July 30, 2004, we expect the District Court to consider the Motion for Costs. The Company has filed an opposition to the Motion for Costs and intends to contest it vigorously. We do not believe that the Motion for Costs will have a material impact on our continuing operations or overall financial condition.Item 4. Submission of Matters to a Vote of Security Holders
 
 The Company held its Annual Meeting of Stockholders on May 13, 2004 at 9:30 a.m. in Palm Beach, Florida (the "Meeting"). All five directors stood for re-election at the Meeting. Directors Brian P. Burns, Daniel S. Mason, Ralph T. McElvenny, Jr., Thomas C. Quick and Paul Woodberry were elected to hold office until the next annual meeting or until the directors' successors are elected.
 
 The votes cast for and the votes withheld for each director were as follows:
 
 Name
Votes For
Votes WithheldBrian P. Burns
3,181,214
2,836Daniel S. Mason
3,181,214
2,836Ralph T. McElvenny, Jr.
3,181,638
2,412Thomas C. Quick
3,181,638
2,412Paul Woodberry
3,181,214
2,836 
 At the Meeting, the stockholders were also asked to approve the Company's 2004 Stock Option Plan for Outside Directors.  The votes were cast as follows:  2,402,441 for, 68,932 against, 2,592 abstained and there were broker non-votes of 710,085.


Item 5. Other Information - Subsequent Event
  On July 9, 2004, the Board of Directors elected Brian P. Burns, Jr. President.  Mr. Burns had been Senior Vice President with responsibilities for administration and corporate development, including property marketing and sale, corporate reporting and governance, strategic planning and other activities.  He has worked closely with the board, senior management and staff since joining the Company on a consulting basis in early 2002 and being appointed Senior Vice President in January 2003.  Brian P. Burns, father of Brian P. Burns, Jr., will continue as Chairman and Chief Executive Officer of the Company.


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Item 6.Exhibits and Reports on Form 8-K.








(a)               Exhibit


Number      Description








31.1         Certification of Brian P. Burns, Chairman of the Board


and Chief Executive Officer of BF Enterprises, Inc., pursuant to


Rule 13a-14(a) of the Securities Exchange Act of 1934.





31.2         Certification of S. Douglas Post, Vice President, Treasurer


and Chief Financial Officer of BF Enterprises, Inc., pursuant to


Rule 13a-14(a) of the Securities Exchange Act of 1934.





32.1         Certification of Brian P. Burns, Chairman of the Board and                 Chief Executive Officer of BF Enterprises, Inc., pursuant to


18 U.S.C. Section 1350.





32.2         Certification of S. Douglas Post, Vice President, Treasurer


and Chief Financial Officer of BF Enterprises, Inc., pursuant to


18 U.S.C. Section 1350.





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(b) Reports on Form 8-K.
 
 The registrant furnished a Form 8-K dated July 12, 2004 reporting the promotion of Brian P. Burns, Jr. to President of the Company on July 9, 2004.


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.





**BF ENTERPRISES, INC.**Date: August 13, 2004
By:
/s/ Brian P. BurnsChairman of the Board and Chief Executive Officer


**BF ENTERPRISES, INC.**Date: August 13, 2004
By:
/s/ S. Douglas PostVice President, Treasurer and Chief Financial Officer








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