U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act 1934 for the Quarterly Period Ended March 31, 2013

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period

from ▪ ▪ to ▪

Commission File Number 0-22153

AMERITRANS CAPITAL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware		52-2102424
(State of incorporation)		(I.R.S. Employer Identification No.)

50 Jericho Quadrangle, Suite 109 Jericho, New York 11753
(Address of registrant’s principal executive office) (Zip Code)

(212) 355-2449
(Registrant’s telephone number, including area code)

N/A
(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 (the “ Act ” ) 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 þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-2 of the Act).

Large accelerated filer

Accelerated filer

Non-accelerated filer

(Do not check if a small

reporting company.)

Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

The number of shares of registrant’s common stock, par value $.0001 per share, outstanding as of May 10, 2013 was 3,395,583. The number of shares of Registrant’s 9-3/8% cumulative participating redeemable preferred stock outstanding as of May 10, 2013 was 300,000.

AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION			3

	ITEM 1.	FINANCIAL STATEMENTS	3

	ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	32

	ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	37

	ITEM 4.	CONTROLS AND PROCEDURES	38

PART II. OTHER INFORMATION			40

	Item 1.	Legal Proceedings	40
	Item 1A.	Risk Factors	41
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
	Item 3.	Default upon Senior Securities	42
	Item 4.	Mine Safety Disclosures	42
	Item 5.	Other Information	42
	Item 6.	Exhibits	43
	Exhibit Index		43
	(a)	Exhibits	43

	SIGNATURES		44

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

	March 31, 2013			June 30, 2012
	(Unaudited)
Assets

Investments at fair value (cost of $18,733,297 and $22,401,381, respectively):
Non-controlled/affiliated investments	$	200,000		$	-
Non-controlled/non-affiliated investments		9,393,253			16,169,728
Controlled affiliated investments		331,487			332,878

Total investments at fair value		9,924,740			16,502,606

Cash		694,620			184,338
Accrued interest receivable		669,372			807,643
Assets acquired in satisfaction of loans		153,325			878,325
Furniture and equipment, net		42,110			44,359
Deferred loan costs, net		-			260,459
Prepaid expenses and other assets		75,793			263,641

Total assets	$	11,559,960		$	18,941,371

Liabilities and Net Liabilities
Liabilities:
Debentures payable to SBA	$	19,975,000		$	21,175,000
Accrued expenses and other liabilities		304,150			312,353
Accrued interest payable		1,099,492			342,506
Dividends payable		928,125			675,000

Total liabilities		22,306,767			22,504,859

Commitments and contingencies (Notes 2, 3, 4, 5 and 8)

Net Liabilities:
Preferred stock 9,500,000 shares authorized, none issued or outstanding		-			-
9-3/8% cumulative participating redeemable preferred stock; $.01 par value, $12.00 face value, 500,000 shares authorized; 300,000 shares issued and outstanding		3,600,000			3,600,000
Common stock, $.0001 par value; 45,000,000 shares authorized, 3,405,583 shares issued; 3,395,583 shares outstanding		341			341
Additional paid-in capital		21,330,544			21,330,544
Losses and distributions in excess of earnings		(26,868,435	)		(22,525,598	)
Net unrealized depreciation on investments		(8,808,557	)		(5,898,775	)
Total		(10,746,107	)		(3,493,488	)
Less: Treasury stock, at fair value in 2013 and at cost in 2012, 10,000 shares of common stock		(700	)		(70,000	)

Total net liabilities		(10,746,807	)		(3,563,488	)
Total liabilities and net liabilities	$	11,559,960		$	18,941,371
Net liability value per common share	$	(4.23	)	$	(2.11	)

The accompanying notes are an integral part of these consolidated financial statements.

AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the three months ended						For the nine months ended
	March 31, 2013			March 31, 2012			March 31, 2013			March 31, 2012
Investment income:	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Interest on loans receivable:
Non-controlled/non-affiliated investments	$	179,998		$	399,385		$	668,687		$	1,333,661
Controlled affiliated investments		6,457			6,716			19,596			20,593
		186,455			406,101			688,283			1,354,254
Fees and other income		-			68			-			8,316
Total investment income		186,455			406,169			688,283			1,362,570
Expenses:
Interest		238,813			232,146			756,985			1,025,219
Salaries and employee benefits		257,233			284,876			758,654			998,960
Occupancy costs		29,256			43,297			117,222			129,890
Legal fees		201,904			495,555			1,043,687			1,028,346
Accounting and compliance fees		141,875			165,291			464,060			587,663
Directors fees and expenses		44,827			51,665			183,286			139,768
Advisory Fee		-			9,289			-			101,984
Other administrative expenses		359,275			170,703			603,056			533,157
Loss and impairment on assets acquired in satisfaction of loans, net		69,720			-			233,612			-
Total expenses		1,342,903			1,452,822			4,160,562			4,544,987
Net investment loss, before gain on extinguishment of debt		(1,156,448	)		(1,046,653	)		(3,472,279	)		(3,182,417	)

Gain on extinguishment of debt		-			353,620			-			353,620

Net investment loss		(1,156,448	)		(693,033	)		(3,472,279	)		(2,828,797	)
Net realized gains (losses) on investments:
Non-controlled/non-affiliated investments		(533,716)			(44,877	)		(617,433	)		235,279
		(533,716)			(44,877	)		(617,433	)		235,279
Net unrealized depreciation on investments		(2,316,075	)		(160,397	)		(2,909,782	)		(1,409,863	)
Net realized/unrealized losses on investments		(2,849,791	)		(205,274	)		(3,527,215	)		(1,174,584	)
Net increase in net liabilities from operations		(4,006,239	)		(898,307	)		(6,999,494	)		(4,003,381	)
Distributions to preferred shareholders		(84,375	)		(84,375	)		(253,125	)		(253,125	)
Net increase in net liabilities from operations available to common shareholders	$	(4,090,614	)	$	(982,682	)	$	(7,252,619	)	$	(4,256,506	)
Weighted Average Number of Common Shares Outstanding:
Basic and diluted		3,395,583			3,395,583			3,395,583			3,395,583
Net Increase in Net Liabilities from Operations Per Common Share:
Basic and diluted	$	(1.20	)	$	(0.29	)	$	(2.14	)	$	(1.25	)

The accompanying notes are an integral part of these consolidated financial statements.

AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (LIABILITIES)

	For the nine months ended
	March 31, 2013			March 31, 2012
	(unaudited)			(unaudited)
Increase in net liabilities from operations:
Net investment loss	$	(3,472,279	)	$	(2,828,797	)
Net realized gain (loss) from investments		(617,433	)		235,279
Unrealized depreciation on investments		(2,909,782	)		(1,409,863	)

Net increase in net liabilitiess resulting from operations		(6,999,494	)		(4,003,381	)

Shareholder distributions:
Distributions to preferred shareholders		(253,125	)		(253,125	)
Write down of treasury stock		69,300			-

Net increase in net liabilities resulting from shareholder distributions		(183,825	)		(253,125	)

Total increase in net liabilities		(7,183,319	)		(4,256,506	)

Net assets (liabilities):
Beginning of period		(3,563,488	)		2,236,093

End of period	$	(10,746,807	)	$	(2,020,413	)

Net assets per preferred	$	3,600,000		$	3,600,000

Net liabilities per common	$	(14,346,807	)	$	(5,620,413	)

The accompanying notes are an integral part of these consolidated financial statements.

AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the nine months ended
	March 31, 2013			March 31, 2012
	(unaudited)			(unaudited)
Cash flows from operating activities:
Net decrease in net assets from operations	$	(6,999,494	)	$	(4,003,381	)
Adjustments to reconcile net decrease in net assets from operations to net cash provided by operating activities:
Depreciation and amortization		54,713			60,365
Net realized gains (losses) on investments		617,433			(235,279	)
Net unrealized depreciation on investments		2,909,782			1,409,863
Portfolio investments		(1,550,606	)		(3,544,205	)
Proceeds from principal receipts, sales, maturity of investments		4,601,257			9,563,811
Proceeds from sale of assets acquired in satisfaction of loans		561,107			-
Loss on sale of assets acquired		163,893			-
Impairment of assets acquired in satisfaction of loan		69,300			-
Changes in operating assets and liabilities:
Accrued interest receivable		138,271			22,784
Deferred loan costs		212,874			-
Prepaid expenses and other assets		187,848			(113,042	)
Accrued expenses and other liabilities		(8,202	)		(773,061	)
Accrued interest payable		756,986			231,738
Total adjustments		8,714,656			6,622,974
Net cash provided by operating activities		1,715,162			2,619,593
Cash flows from investing activities:
Purchases of furniture and equipment		(4,880	)		(1,890	)
Net cash used in investing activities		(4,880	)		(1,890	)
Cash flows from financing activities:
Repayment of notes payable, other and debentures payable to the SBA		(1,200,000	)		(4,500,000	)
Net cash used in financing activities		(1,200,000	)		(4,500,000	)
Net increase (decrease) in cash and cash equivalents		510,282			(1,882,297	)
Cash and cash equivalents:
Beginning of period		184,338			4,151,616
End of period	$	694,620		$	2,269,319

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	-		$	793,481
Supplemental disclosure of non cash investing and financing activities:
Accrued dividends on preferred stock	$	253,125		$	253,125

The accompanying notes are an integral part of these consolidated financial statements.

AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INVESTMENTS

		Portfolio Valuation as of March 31, 2013
Portfolio Company (1)	Investment Investment Rate/Maturity	Principal		Net Cost		Value
Commercial Loans Receivable (40.76%) (4)
PPCP Inc. (6) Computer Software	Business Loan 8.00%, due 7/08 and 1/10	$	36,691	$	36,691	$	-
Geronimo ATM Fund LLC (6) ATM Operator	Collateralized Business Loan 12.0%, due 5/09		123,282		123,282		-
Vivas & Associates, Inc. (6) Nail Salon	Collateralized Business Loan 9.00%, due 1/10		11,985		11,985		-
E&Y General Construction Co. (6) Construction Services	Senior Real Estate Mortgage 10.50%, due 10/10		870,791		870,791		870,791
Soundview Broadcasting LLC Television and Broadcasting	Senior Real Estate Mortgage 6.00%, due 9/16		1,704,316		1,704,316		1,704,316
Golden Triangle Enterprises LLC Retail Food Service	Senior Real Estate Mortgage 4.74%, due 12/13		163,673		163,673		163,673
Conklin Services & Construction Inc. (6) Specialty Construction and Maintenance	Collateralized Business Loan 11.00%, due 10/08		1,648,181		1,648,181		1,000,000
Mountain View Bar & Grill Inc. (6) Retail Food Service	Collateralized Business Loan 12.00%, due 5/09		406,067		406,067		300,000
J. JG. Associates, Inc. (6) Consumer Receivable Collections	Senior Loan no stated rate, no maturity		182,936		182,936		-
J. JG. Associates, Inc. (6) Consumer Receivable Collections	Senior Loan no stated rate, no maturity		35,781		35,781		-
Car-Matt Real Estate LLC (6) Real Estate Mortgage	Senior Real Estate Mortgage 12.00%, due 11/08		135,577		135,577		-
CMCA, LLC (3) Consumer Receivable Collections	Collateralized Business Loan 12,00% no stated maturity		215,226		215,226		215,226
CMCA, LLC #2 (2) (3) (6) Consumer Receivable Collections	Collateralized Business Loan 12.00%, no stated maturity		106,261		106,261		106,261
Andy Fur (6) Dry Cleaners	Collateralized Business Loan 11.5%, due 1/10		12,103		12,103		-
Greaves-Peters Laundry Systems Inc. (6) Laundromat	Collateralized Business Loan 10.90%, due 9/13		20,471		20,471		20,471
Other Miscellaneous Loans (5) (6)			33,054		33,054		-
	Total Commercial Loans				5,706,395		4,380,738
Corporate Loans Receivable (49.80%) (4)
Charlie Brown’s Acquisition Co. (6) Retail Food Service	Term Loan B 10.25%, all PIK, due 10/13		2,356,682		2,356,682		-
Alpha Media Group Inc. Publishing	Term Loan, First Lien 12.00%, all PIK , due 7/13		2,941,798		2,916,703		235,343
Education Affiliates Inc. Private Education	Term Loan, First Lien 8.00%, due 1/15		732,502		725,551		736,105
	Total Corporate Loans				5,998,936		971,448
	Total loans receivable				11,705,331		5,352,186

The accompanying notes are an integral part of these consolidated financial statements.

AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INVESTMENTS (continued)

		Portfolio Valuation as of March 31, 2013
Portfolio Company (1)	Investment Investment Rate/Maturity	Principal	Net Cost		Value
Life Insurance Settlement Contracts (34.00%) (4)
Life Settlement Contracts	4 life insurance policies, aggregate face value of $17,250,000		$	5,525,939	$	3,653,690
Equity Investments (8.56%) (4)
MBS Colonnade, Ltd. Rental Real Estate Limited Partnership	Limited Partnership Interest			50,000		10,211
MBS Sage Creek, Ltd. Rental Real Estate Limited Partnership	Limited Partnership Interest			50,000		2,377
MBS Walnut Creek, Ltd. Rental Real Estate Limited Partnership	Limited Partnership Interest			25,000		-
238 W. 108 Realty LLC (2) Residential Real Estate Development	5.00% LLC Interest			100,000		-
Asset Recovery & Management, LLC (2) (3) Consumer Receivable Collections	30.00% LLC Interest			6,000		-
CMCA, LLC (2) (3) Consumer Receivable Collections	30.00% LLC Interest			4,000		-
Soha Terrace II LLC Real Estate Development	4.20% LLC Interest			700,000		700,000
Bradway Capital GAB LLC (2) Bicycle Manufacturing	6.2% LLC Interest			200,000		200,000
Fusion Telecommunications Internet Telephony	69,736 Shares of Common Stock			367,027		6,276
	Total equity investments			1,502,027		918,864
	Total investments		$	18,733,297	$	9,924,740

(1)

As of July 5, 2011, all investments previously pledged as collateral for a note payable to a bank were released in connection with the expiration of the credit line. All investments, other than investments held through Elk Associates Funding Corporation, were pledged as collateral for a Senior Secured Note, but were released as such note was paid off in March 2012 (see Note 4 to the consolidated financial statements).

(2)

As defined in the Investment Company Act of 1940, we are an affiliate of this portfolio company because, as of March 31, 2013, we own 5% or more of the portfolio company’s outstanding voting securities.

(3)

As defined in the Investment Company Act of 1940, we maintain “control” of this portfolio company because we own more than 25% of the portfolio company’s outstanding voting securities.

(4)

Percentage of net liabilities.

(5)

Other small balance loans.

(6)

Loan receivable is on non-accrual status and therefore is considered non-income producing. Included in Other Miscellaneous Loans is a loan at no value that is on non-accrual status.

The accompanying notes are an integral part of these consolidated financial statements.

AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INVESTMENTS

		Portfolio Valuation as of June 30, 2012
Portfolio Company (1)	Investment Investment Rate/Maturity	Principal		Net Cost		Value
Commercial Loans Receivable (146.72%) (4)
PPCP Inc. (6) Computer Software	Business Loan 8.00%, due 7/08 and 1/10	$	36,691	$	36,691	$	-
Geronimo ATM Fund LLC (6) ATM Operator	Collateralized Business Loan 12.0%, due 5/09		123,282		123,282		-
Vivas & Associates, Inc. (6) Nail Salon	Collateralized Business Loan 9.00%, due 1/10		11,985		11,985		-
E&Y General Construction Co. (6) Construction Services	Senior Real Estate Mortgage 10.50%, due 10/10		870,791		870,791		870,791
Soundview Broadcasting LLC Television and Broadcasting	Senior Real Estate Mortgage 6.00%, due 9/16		1,761,340		1,761,340		1,761,340
Golden Triangle Enterprises LLC Retail Food Service	Senior Real Estate Mortgage 4.74%, due 12/13		174,759		174,759		174,759
Conklin Services & Construction Inc. (6) Specialty Construction and Maintenance	Collateralized Business Loan 11.00%, due 10/08		1,648,181		1,648,181		1,450,000
Mountain View Bar & Grill Inc. (6) Retail Food Service	Collateralized Business Loan 12.00%, due 5/09		406,067		406,067		406,067
J. JG. Associates, Inc. (6) Consumer Receivable Collections	Senior Loan no stated rate, no maturity		182,936		182,936		85,250
J. JG. Associates, Inc. (6) Consumer Receivable Collections	Senior Loan no stated rate, no maturity		35,781		35,781		35,781
Car-Matt Real Estate LLC (6) Real Estate Mortgage	Senior Real Estate Mortgage 12.00%, due 11/08		135,577		135,577		18,933
CMCA, LLC (2) (3) Consumer Receivable Collections	Collateralized Business Loan 12,00% no stated maturity		216,617		216,617		216,617
CMCA, LLC #2 (2) (3) (6) Consumer Receivable Collections	Collateralized Business Loan 12.00%, no stated maturity		106,261		106,261		106,261
Andy Fur (6) Dry Cleaners	Collateralized Business Loan 11.5%, due 1/10		12,103		12,103		-
Greaves-Peters Laundry Systems Inc. (6) Laundromat	Collateralized Business Loan 10.90%, due 9/13		20,471		20,471		20,471
Other Miscellaneous Loans (5) (6)			115,031		115,031		81,977
	Total Commercial Loans				5,857,873		5,228,247
Corporate Loans Receivable (196.20%) (4)
Charlie Brown’s Acquisition Co. (6) Retail Food Service	Term Loan B 10.25%, all PIK, due 10/13		2,356,682		2,356,682		471,336
Alpha Media Group Inc. Publishing	Term Loan, First Lien 12.00%, all PIK , due 7/13		2,687,778		2,649,826		940,722
Hudson Products Holdings Inc. Diversified Manufacturing	Term Loan, First Lien 8.5%, due 8/15		1,259,899		1,239,147		1,165,407
Education Affiliates Inc. Private Education	Term Loan, First Lien 8.0%, due 1/15		773,449		763,519		719,308
Shearer’s Foods Inc. Wholesale Food Supplier	Term Loan, First Lien 15.75%, of which 3.75% is PIK, due 6/15		1,075,400		1,059,775		1,075,400
Impact Confections Inc. Candy Manufacturer	Term Loan, First Lien 17.00%, of which 5% is PIK, due 07/15		1,618,071		1,618,071		1,618,071
Sterling Infosystems, Inc. Information Data Systems	Term Loan, First Lien 7.25%, due 02/18		1,000,000		981,171		1,001,250
	Total Corporate Loans				10,668,191		6,991,494
	Total loans receivable				16,526,064		12,219,741

The accompanying notes are an integral part of these consolidated financial statements.

AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INVESTMENTS (continued)

		Portfolio Valuation as of June 30, 2012
Portfolio Company (1)	Investment Investment Rate/Maturity	Principal	Net Cost		Value
Life Insurance Settlement Contracts (89.91%) (4)
Life Settlement Contracts	4 life insurance policies, aggregate face value of $17,250,000		$	4,573,290	$	3,204,001
Equity Investments (30.28%) (4)
MBS Colonnade, Ltd. Rental Real Estate Limited Partnership	Limited Partnership Interest			50,000		10,211
MBS Sage Creek, Ltd. Rental Real Estate Limited Partnership	Limited Partnership Interest			50,000		2,377
MBS Walnut Creek, Ltd. Rental Real Estate Limited Partnership	Limited Partnership Interest			25,000		-
238 W. 108 Realty LLC (2) Residential Real Estate Development	5.00% LLC Interest			100,000		-
Asset Recovery & Management, LLC (2)(3) Consumer Receivable Collections	30.00% LLC Interest			6,000		6,000
CMCA, LLC (2)(3) Consumer Receivable Collections	30.00% LLC Interest			4,000		4,000
Soha Terrace II LLC Real Estate Development	4.20% LLC Interest			700,000		1,050,000
Fusion Telecommunications Internet Telephony	69,736 Shares of Common Stock			367,027		6,276
	Total equity investments			1,302,027		1,078,864
	Total investments		$	22,401,381	$	16,502,606

(1)

(2)	As defined in the Investment Company Act of 1940, we are an affiliate of this portfolio company because, as of June 30, 2012, we own 5% or more of the portfolio company’s outstanding voting securities.

(3)	As defined in the Investment Company Act of 1940, we maintain “control” of this portfolio company because we own more than 25% of the portfolio company’s outstanding voting securities.

(4)	Percentage of net liabilities.

(5)	Other small balance loans.

(6)	Loan receivable is on non-accrual status and therefore is considered non-income producing. Included in Other Miscellaneous Loans is a loan at no value that is on non-accrual status.

The accompanying notes are an integral part of these consolidated financial statements.

AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Information at and for the three and nine months ended March 31, 2013 and 2012 is unaudited

1.	Organization and Summary of Significant Accounting Policies

Financial Statements

The consolidated statement of assets and liabilities of Ameritrans Capital Corporation (“Ameritrans”, the “Company”, “our”, “us”, or “we”) as of March 31, 2013, and the related consolidated statements of operations, statement of changes in net assets (liabilities), and cash flows for the three and nine months ended March 31, 2013 and 2012, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC” or “Commission”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. In the opinion of management and the board of directors of the Company (“Management” and “Board of Directors”), the accompanying consolidated financial statements include all adjustments (consisting of normal, recurring adjustments) necessary to summarize fairly the Company’s financial position and results of operations. The results of operations for the three and nine months ended March 31, 2013 and 2012, are not necessarily indicative of the results of operations for the full year or any other interim period. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2012, as filed with the Commission by the Company on September 28, 2012.

Organization and Principal Business Activity

Ameritrans is a Delaware closed-end investment company formed in 1998, which, among other activities, makes loans and investments with the goal of generating both current income and capital appreciation. Through our subsidiary, Elk Associates Funding Corporation (“Elk”), we have historically made loans to finance the acquisition and operation of small businesses as permitted by the U.S. Small Business Administration (the “SBA”). Ameritrans also makes direct loans to and directly invests in opportunities that Elk has historically been unable to make due to SBA restrictions. Ameritrans makes loans which have primarily been secured by real estate mortgages or, in the case of corporate loans, generally are senior within the capital structure. The Company categorizes its investments into four types of securities: 1) Corporate Loans Receivable; 2) Commercial Loans Receivable; 3) Life Insurance Settlements and 4) Equity Investments.

Elk was organized primarily to provide long-term loans to businesses eligible for investments by small business investment companies (each an “SBIC”) under the Small Business Investment Act of 1958, as amended (the “1958 Act”). Elk historically made loans for financing the purchase or continued ownership of businesses that qualify for funding as small concerns under SBA Regulations, but has not made any investments since November 2012. However, as described in Notes 3 and 8 below, on October 31, 2012, Elk entered into a Settlement Agreement with the SBA pursuant to which Elk agreed to surrender its SBIC license (the “Settlement Agreement”). In connection with the entry into the Settlement Agreement, Elk also executed and delivered a Consent Order of Receivership appointing the SBA as permanent, liquidating receiver of Elk, to be filed by the SBA in the event that Elk failed to make payments to the SBA in accordance with the Settlement Agreement (the “Consent Order”). On April 25, 2013, the United Stated District Court for the Eastern District of New York (the “Court”) entered the Consent Order, in the proceeding entitled United States of America, on behalf of its agency, the United States Small Business Administration v. Elk Associates Funding Corp. (Case No. 2:13-cv-01326-LDW-GRB) (the “Receivership Proceeding”). The Court appointed the SBA as the receiver of Elk for the purpose of marshaling and liquidating all of Elk’s assets and satisfying the claims of creditors therefrom in the order of priority as determined by the Court. For additional information regarding Elk’s Settlement Agreement with the SBA, see Notes 3 and 8 below.

Both Ameritrans and Elk are registered as business development companies, or “BDCs,” under the Investment Company Act of 1940, as amended (the “1940 Act”). Accordingly, Ameritrans and Elk are subject to the provisions of the 1940 Act governing the operation of BDCs. Both companies are managed by their executive officers under the supervision of their Boards of Directors. Pursuant to the Consent Order, as of April 25, 2013, all of the existing officers, directors and agents of Elk were dismissed.

Basis of Presentation and Consolidation .

The consolidated financial statements are presented based on accounting principles generally accepted in the United States of America (“GAAP”). These consolidated financial statements include the accounts of Ameritrans, Elk Capital Corporation (“Elk Capital”), Elk and Elk’s wholly owned subsidiary, EAF Holding Corporation (“EAF”) and five single-member, limited liability companies, each wholly-owned by Ameritrans and each holding one insurance policy in connection with the Company's life settlement investments portfolio. All significant inter-company transactions have been eliminated in consolidation.

Elk Capital is a wholly owned subsidiary of Ameritrans, which may engage in lending and investment activities similar to its parent. At March 31, 2013, Elk Capital was operating the real estate of 633 Meade Street, LLC, acquired in satisfaction of loans.

The Company has determined that as a result of the Consent Order and beginning on April 25, 2013 (the “Entry Date”), that it will no longer consolidate Elk for financial reporting purposes. See Note 14 for pro forma financial statements.

EAF began operations in December 1993 and owns and operates certain real estate assets acquired in satisfaction of defaulted loans by Elk debtors.

Investment Valuations

The Company’s loans receivable, net of participations and any unearned discount are considered investment securities under the 1940 Act and are recorded at fair value. As part of fair value methodology, loans are valued at cost adjusted for any unrealized appreciation (depreciation). Since no ready market exists for these loans, the fair value is determined in good faith by management and approved by the Board of Directors. In determining the fair value, management and the Board of Directors consider factors such as the financial condition of the borrower, the adequacy of the collateral, individual credit risks, historical loss experience and the relationships between current and projected market rates and portfolio rates of interest and maturities. Foreclosed properties, which represent collateral received from defaulted borrowers, are valued similarly.

Loans are, generally, considered “non–performing” once they become 90 days past due as to principal or interest. The values of past due loans are periodically determined in good faith by management, and if, in the judgment of management, the amount is not collectible and the fair value of the collateral is less than the amount due, the value of the loan will be reduced to fair value.

Equity investments (preferred stock, common stock, stock warrants, LLC interests, and LP interests, including certain controlled subsidiary portfolio investments) and investment securities are recorded at fair value, represented as cost, plus or minus unrealized appreciation or depreciation. Investments for which market quotations are readily available are valued at such quoted amounts. If no public market exists the fair value of investments that have no ready market are determined in good faith by management and approved by the Board of Directors, based upon assets and revenues of the underlying investee companies, as well as general market trends for businesses in the same industry.

The Company records the investment in life insurance settlement contracts at the Company’s estimate of their fair value based upon various factors including a discounted cash flow analysis of anticipated life expectancies, future premium payments and anticipated death benefits. The Company also considers the market for similar policies. The fair value of the investment in life settlement contracts have no ready market and are determined in good faith by management and approved by the Board of Directors (see Note 2).

Because of the inherent uncertainty of valuations, the Company’s estimates of the values of the investments may differ significantly from the values that would have been used had a ready market for the investments existed and the differences could be material.

Income Taxes

The Company has elected to be taxed as a Regulated Investment Company (“RIC”) under the Internal Revenue Code (the “Code”). A RIC, generally, is not taxed at the corporate level to the extent its income is distributed to its stockholders. In order to qualify as a RIC, a company must pay out at least 90 percent of its net taxable investment income to its stockholders as well as meet other requirements under the Code. In order to preserve this election for fiscal year 2012/2013, the Company intends to make the required distributions to its stockholders to the extent the Company has net taxable investment income. No dividends on the Company’s common stock have been paid in each of the fiscal years ended June 30, 2012, 2011 and 2010 or during the three and nine months ended March 31, 2013, inasmuch as the Company had no taxable investment income during such periods. Accordingly, the Company has maintained its status as a RIC.

The Company is subject to certain state and local franchise taxes, as well as related minimum filing fees assessed by state taxing authorities. Such taxes and fees are included in “Other administrative expenses” in the consolidated statements of operations in each of the fiscal periods presented. The Company’s tax returns for fiscal years ended 2009 through 2011 are subject to examination by federal, state and local income tax authorities.

Depreciation and Amortization

Depreciation and amortization are computed using the straight-line method over the useful lives of the respective assets. Leasehold improvements are amortized over the life of the respective leases.

Assets Acquired in Satisfaction of Loans

Assets acquired in satisfaction of loans are carried at the lower of the net value of the related foreclosed loan or the estimated fair value. Losses incurred at the time of foreclosure are charged to the realized losses on loans receivable. Subsequent reductions in estimated net realizable value are charged to operations as losses on assets acquired in satisfaction of loans.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make extensive use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The fair value of the Company’s investments is particularly susceptible to significant changes.

Increase (Decrease) in Net Liabilities Per Share

Increase (decrease) in net liabilities per share includes no dilution and is computed by dividing current net increase (decrease) in net liabilities from operations available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted increase (decrease) in net liabilities per share reflects, in periods in which they have a dilutive effect, the effect of common shares issuable upon the exercise of stock options and warrants. The difference between reported basic and diluted weighted average common shares results from the assumption that all dilutive stock options outstanding were exercised. For the periods presented, the effect of common stock equivalents has been excluded from the diluted calculation since the effect would be antidilutive.

Dividends

Dividends and distributions, if any, declared and paid (or payable) to our common and preferred stockholders are recorded on the applicable record date. The amount to be paid out as a dividend is determined by the Board each quarter and is generally based upon the earnings estimated by management. Net realized capital gains, if any, are distributed at least annually, although the Company may decide to retain such capital gains for investment.

On June 30, 2008, the Board approved and adopted a dividend reinvestment plan that provides for reinvestment of distributions in the Company’s Common Stock on behalf of common stockholders, unless a stockholder elects to receive cash. As a result, if the Board authorizes, and the Company declares, a cash dividend, then those stockholders who have not “opted out” of the dividend reinvestment plan will have their cash dividends automatically reinvested in additional shares of Common Stock, rather than receiving the cash dividends. As of March 31, 2013, no shares have been purchased under the plan.

Income Recognition

Interest income, including interest on loans in default, is recorded on an accrual basis and in accordance with loan terms to the extent such amounts are expected to be collected. The Company recognizes interest income on loans classified as non-performing only to the extent that the fair market value of the related collateral exceeds the specific loan balance. Loans that are not fully collateralized and in the process of collection are placed on nonaccrual status when, in the judgment of management, the collectability of interest and principal is doubtful.

Stock Options

Stock-based employee compensation costs in the form of stock options is recognized as an expense over the vesting period of the underlying option using the fair values established by usage of the Black-Scholes option pricing model. The 1940 Act restricts BDCs’ ability to grant equity-based incentive compensation at a time when it has engaged an investment adviser.

The Company’s stock option plans expired on May 21, 2009 and during the two year period ended December 10, 2011 for which the Company engaged Velocity Capital Advisors LLC as the Company’s investment adviser, the Company’s ability to grant equity-based incentive compensation was severely limited by the 1940 Act.

Financial Instruments

The carrying value of cash and cash equivalents, accrued interest receivable and payable and other receivables and payables, approximates fair value due to the relative short maturities of these financial instruments. The Company’s investments, including loans receivable, life settlement contracts and equity securities, are carried at their estimated fair value. The fair value of the SBA debentures was computed using the discounted amount of future cash flows using the Company’s current incremental borrowing rate for similar types of borrowings (see Note 6).

Going Concern and Management’s Plans

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred operating losses and losses are expected to continue. These factors raise doubt about the Company’s ability to continue as a going concern. Realization of assets is dependent upon continued operations of the Company, which in turn is dependent upon Management’s plans to meet its financing requirements and the success of its future operations. The ability of the Company to continue as a going concern is dependent on securing additional financing and on improving the Company’s profitability and cash flow. Although the Company attempted to obtain equity financing on multiple occasions with a view towards, among other things, curing Elk’s capital impairment and executing its growth strategy, the SBA rejected all financing transactions that the Company had submitted to it for approval (see Note 3 to the consolidated financial statements). In addition, on February 22, 2012, the SBA referred Elk to the SBA’s Office of Liquidation, based on Elk’s violation of capital impairment percentage requirements in prior periods, which is continuing. As discussed in Note 3, on October 31, 2012, Elk and the SBA entered into a Settlement Agreement and Mutual Release with respect to Elk’s pending lawsuit against the SBA, pursuant to which Elk agreed to pay the SBA $7,900,000 (the “Settlement Payment”) by December 15, 2012 and through subsequent amendments extended to January 18, 2013 (the “Settlement Effective Date”) and surrender its SBIC license, in full and final satisfaction of all outstanding SBA leverage owed to the SBA through the Settlement Effective Date plus all additional interest which may accrue through the date the Settlement Payment is made. In connection with Elk’s entry into the settlement agreement, Elk also executed and delivered a Consent Order of Receivership appointing the SBA as permanent, liquidating receiver of Elk, to be filed by the SBA in the event that Elk failed to make payments to the SBA in accordance with the Settlement Agreement. Elk has not paid the entire Settlement Payment and on April 25, 2013, the Court entered the Consent Order appointing the SBA as receiver for Elk, which has had and is expected to continue to have a material adverse effect on the Company’s business, financial condition, results of operations and prospects. The interests of the SBA in its capacity as receiver of Elk will differ materially from, and may be adverse to, the interests of Ameritrans and its stockholders. The Company may be forced to cease operations and liquidate or seek bankruptcy protection, in which case shareholders may receive little or no value for their investment in our securities.

While the Company believes that its business strategy, including its plans to obtain financing, is potentially viable and may provide the Company the opportunity to continue as a going concern, there can be no assurances to that effect, especially in light of Elk’s entry into receivership. The Company’s plan of obtaining financing, even if successful, may not result in funds sufficient to maintain and expand its business. These financial statements do not include any adjustments related to the recoverability and classification of asset amounts or the amounts and classification of liabilities that might be necessary if the Company is unable to continue as a going concern.

2.	Investments

The following table shows the Company’s portfolio by security type at March 31, 2013 and June 30, 2012:

	March 31, 2013						June 30, 2012
	(Unaudited)
Security Type	Cost		Fair Value		% (1)		Cost		Fair Value		% (1)
Commercial Loans	$	5,706,395	$	4,380,738	44.1	%	$	5,857,873	$	5,228,247	31.7	%
Corporate Loans		5,998,936		971,448	9.8	%		10,668,191		6,991,494	42.4	%
Life Settlement Contracts		5,525,939		3,653,690	36.8	%		4,573,290		3,204,001	19.4	%
Equity Securities		1,502,027		918,864	9.3	%		1,302,627		1,078,864	6.5	%
Total	$	18,733,297	$	9,924,740	100.0	%	$	22,401,981	$	16,502,606	100.0	%

(1) Represents percentage of total portfolio at fair value

Investments by Industry

Investments by industry consist of the following as of March 31, 2013 and June 30, 2012:

	March 31, 2013					June 30, 2012
	Value		Percentage of Portfolio			Value		Percentage of Portfolio
Broadcasting/Telecommunications	$	1,704,316		17.2	%	$	1,761,340		10.7	%
Commercial Construction		1,870,791		18.8	%		2,339,724		14.2	%
Construction and Predevelopment		700,000		7.1	%		1,050,000		6.4	%
Debt Collection		321,487		3.2	%		453,909		2.7	%
Education		736,105		7.4	%		719,308		4.3	%
Food and Candy Manufacturing		-		-	%		2,693,471		16.3	%
Info Data Systems		-		-	%		1,001,250		6.1	%
Life Insurance Settlement Contracts		3,653,690		36.8	%		3,204,001		19.4	%
Manufacturing		200,000		2.0	%		1,165,407		7.1	%
Printing/Publishing		235,343		2.4	%		940,722		5.7	%
Restaurant/Food Service		463,673		4.7	%		1,052,162		6.4	%
Other industries less than 1%		39,335		0.4	%		121,312		0.7	%
TOTAL	$	9,924,740		100.00	%	$	16,502,606		100.00	%

Loans Receivable

Loans are considered non-performing once they become ninety (90) days past due as to principal or interest. The Company had sixteen loans which are considered non-performing aggregating $2,461,196 and $3,464,890 as of March 31, 2013 and June 30, 2012, respectively. These loans are either fully or substantially collateralized and are in some instances personally guaranteed by a principal of the debtor or third party. Included in the Company’s non-performing loans is $2,297,523 and $3,464,890 at March 31, 2013 and June 30, 2012, respectively, which are no longer accruing interest since the loan principal and accrued interest exceed the estimated fair value of the underlying collateral. The following table sets forth certain information regarding performing and non-performing loans as of March 31, 2013 and June 30, 2012:

	March 31, 2013		June 30, 2012
Loans receivable	$	5,352,186	$	12,219,741
Performing loans		2,890,990		8,754,851
Nonperforming loans	$	2,461,196	$	3,464,890
Nonperforming loans:
Accrual	$	163,673	$	-
Nonaccrual		2,297,523		3,464,890
	$	2,461,196	$	3,464,890

As of June 30, 2012 the Company had paid all fees in connection with the Company’s Investment Advisory and Management Agreement, as amended, (the “Advisory Agreement”) with Velocity Capital Advisors LLC (the “Adviser”) related to its Corporate Loans business. Pursuant to the Advisory Agreement, the Company incurred fees payable to the Adviser that were comprised of the following: (a) an annual base fee of 1.50% per annum of the aggregate fair value of Corporate Loans outstanding at the end of each quarter; (b) an income-based fee of 5% per annum, calculated quarterly, computed on interest and dividends earned from the Corporate Loan portfolio and (c) a capital gains fee of 17.5%, based on capital gains from the Corporate Loan portfolio. However, because minimum thresholds were not met during the term of the Advisory Agreement, the fees paid or accrued pursuant to the Advisory Agreement were based solely on each quarterly portion of the annual fee. Effective December 10, 2011, the Advisory Agreement expired and has not been renewed. On May 14, 2012, all amounts due to the Adviser were paid.

Life Settlement Contracts

In September, 2006, the Company entered into a joint venture agreement with an unaffiliated entity (the “Joint Venture”) to purchase previously issued life insurance policies owned by unrelated individuals. Subsequently, after a series of events involving charges against the manager of the Joint Venture for securities law violations and a court order freezing the assets of the manager, including the Joint Venture, on April 14, 2009, a receiver was appointed (the “Receiver”) to operate the Joint Venture and to administer the assets of the Joint Venture and other entities with which the manager of the Joint Venture was involved (the “Receivership Estate”). Following discussions with the Receiver, in December 2009, the Company negotiated an agreement, which, among other items, granted the Company the right to purchase the policies, subject to certain terms and conditions, including, but not limited to the Company’s agreement to pay the Receivership Estate 20% of all recoveries until the Company has recouped $2.1 million, plus the amount of any premiums paid following the date of the Purchase Agreement and 50% of all recoveries above such amount.

After a review of the current financing and regulatory environment, and other opportunities to make loans and investments, the Company decided to exit this line of business and plans to make no new investments in life insurance settlement policies other than the continued payment of premiums on existing investments.

As of March 31, 2013 and June 30, 2012, the fair value of the policies owned by the Company was $3,653,690 and $3,204,001, respectively, which represents the estimated fair value for the four life insurance policies with an aggregate face value of $17,250,000. The Company’s cost on these policies to date is $5,525,939, including insurance premiums of $952,649, which were paid during the nine-month period ended March 31, 2013. Premiums on the policies must be paid until the policies are sold in order to keep the policies in full force. One of the insureds who was covered by one of the policies in the Company’s life insurance settlement portfolio, passed away in August, 2011. The Company received approximately $320,000 from the proceeds of such policy after payment to the Receiver. At June 30, 2011, the fair value of such policy was $58,400, with a cost of $39,708.

The Company is entitled to sell the policies at any time, in its sole discretion and has no obligation to pay future premiums on the various policies. The approximate future minimum premiums due for each of the next five (5) years and in the aggregate, thereafter, based on current life expectancy of the insureds, are as follows:

Year Ending June 30	Policy Premiums

2013 (three months)	$	218,520
2014		874,068
2015		874,068
2016		874,068
2017		823,092
Thereafter		683,355
	$	4,347,171

Based upon the current uncertain state of the life settlement market, the lack of liquidity at this time in this market due to the difficult credit conditions and the overall economy, the fact that these policies may have diminished value due to having been associated with the former manager of the Joint Venture, and the Company’s previously stated decision to exit the life settlement area, the Company has adjusted the fair value of these policies to reflect the current anticipated recovery based on estimated actuarial values that take into account the various factors discussed above. This is an estimate based upon the information currently available. The Company intends to pay future premiums and continues to pursue alternatives that could allow for a higher recovery.

Fair Value of Investments

GAAP has established a framework for measuring fair value and has expanded the disclosure requirements related to fair value measurements. Fair value is the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date. GAAP requires the Company to assume that the portfolio investment is sold in a principal market to market participants, or in the absence of a principal market, the most advantageous market, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact. In accordance with GAAP, the Company has considered its principal market as the market in which the Company exits its portfolio investments with the greatest volume and level of activity. GAAP specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. In accordance with GAAP, these inputs are summarized in the three broad levels listed below:

Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

Level 2 – Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

In addition to using the above inputs in investment valuations, the Company continues to employ the valuation policy approved by the Board of Directors that is consistent with GAAP. Consistent with its valuation policy, the Company evaluates the source of inputs, including any markets in which its investments are trading (or any markets in which securities with similar attributes are trading), in determining fair value. The Company’s valuation policy considers the fact that because there may not be a readily available market value for most of the investments in its portfolio, the fair value of the investments must typically be determined using unobservable inputs. The Company's Level 3 investments require significant judgments by its investment committee, its investment advisor (if any) and its management and include market price quotations from market makers, original transaction price, recent transactions in the same or similar investments, financial analysis, economic analysis and related changes in financial ratios or cash flows to determine fair value. Such investments may also be discounted to reflect observed or reported illiquidity and/or restrictions on transferability. See Note 1 for additional information on the Company’s valuation policy.

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period. Additionally, the fair value of the Company’s investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that we may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If the Company was required to liquidate a portfolio investment in a forced or liquidation sale, the Company may realize significantly less than the value at which the Company recorded it.

In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the valuations currently assigned.

Assets measured at fair value on a recurring basis:

			Fair Value at Reporting Date Using
	March 31, 2013 (Unaudited)		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Commercial Loans	$	4,380,738	$	-	$	-	$	4,380,738
Corporate Loans		971,448		-		-		971,448
Life Settlement Contracts		3,653,690		-		-		3,653,690
Equity Securities		918,864		6,276		-		912,588
Total Investments	$	9,924,740	$	6,276	$	-	$	9,918,464

			Fair Value at Reporting Date Using
	June 30, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Commercial Loans	$	5,228,247	$	-	$	-	$	5,228,247
Corporate Loans		6,991,494		-		-		6,991,494
Life Settlement Contracts		3,204,001		-		-		3,204,001
Equity Securities		1,078,864		6,276		-		1,072,588
Total Investments	$	16,502,606	$	6,276	$	-	$	16,496,330

Assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

	Commercial Loans			Corporate Loans			Life Settlement Contracts			Equity Securities		Total
Beginning balance as of June 30, 2012	$	5,228,247		$	6,991,494		$	3,204,001		$	1,072,588	$	16,496,330
Net realized losses on investments		-			(617,432	)		-			-		(617,432	)
Net unrealized losses on investments		(696,031	)		(1,350,791	)		(502,960	)		(360,000)		(2,909,782	)
Purchases of investments					397,957			952,649			200,000		1,550,606
Repayments, sales or redemptions of investments		(151,478	)		(4,449,780	)		-			-		(4,601,258	)
Ending balance as of March 31, 2013	$	4,380,738		$	971,448		$	3,653,690		$	912,588	$	9,918,464

The amount of total gains or (losses) for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to assets still held at the reporting date.	$	(2,909,782	)
Losses (realized and unrealized) included in net decrease in net assets from operations for the period above are reported as follows:
Net realized loss on sales and dispositions		(3,248	)
Change in unrealized gains or losses relating to assets still held at reporting date	$	(2,913,030	)

	Commercial Loans			Corporate Loans			Life Settlement Contracts			Equity Securities			Total
Beginning balance as of June 30, 2011	$	6,244,815		$	12,968,785		$	2,408,000		$	980,661		$	22,602,261
Net realized gains (losses) on investments		-			(28,011	)		288,139			(75,250	)		184,878
Net unrealized gains (losses) on investments		(128,644	)		(1,848,874	)		(95,657	)		168,027			(1,905,148	)
Purchases of investments		2,463			1,517,902			931,366			-			2,451,731
Repayments, sales or redemptions of investments		(890,387	)		(5,618,308	)		(327,847	)		(850	)		(6,837,392	)
Ending balance as of June 30, 2012	$	5,228,247		$	6,991,494		$	3,204,001		$	1,072,588		$	16,496,330

Amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to assets still held at the reporting date	$	(1,905,148	)
Gains and losses (realized and unrealized) included in net decrease in net assets from operations for the period above are reported as follows:
Gain on sales and dispositions		54,055
Change in unrealized losses relating to assets still held at reporting date	$	(1,851,093	)

As of March 31, 2013, the aggregate net unrealized loss on the investments that use Level 3 inputs was $8,447,806. As of March 31, 2013, the aggregate net unrealized loss on Level 1 investments was $360,751. For the three and nine months ended March 31, 2013, the net unrealized loss on Level 1 investments aggregated $(697) and $(5,579), respectively. At March 31, 2013, only the investment in Fusion Communications was included in Level 1.

As of June 30, 2012, the aggregate net unrealized loss on the investments that use Level 3 inputs was $5,538,024. As of June 30, 2012, the aggregate net unrealized loss on Level 1 investments was $360,751. For the year ended June 30, 2012, the net unrealized loss on Level 1 investments aggregated $86,742. At June 30, 2012, only the investment in Fusion Communications was included in Level 1.

The following table provides quantitative information about the Company’s Level 3 fair value measurements of our investments as of March 31, 2013. In addition to the techniques and inputs noted in the table below, according to the Company’s valuation policy other valuation techniques and methodologies also may be used when determining fair value measurements. The below table is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to the Company’s fair value measurements.

		Quantitative Information about Level 3 Fair Value Measurements
		Fair Value as of March 31, 2013	Valuation Techniques/ Methodologies	Unobservable Input	Range (Weighted Average)
Real Estate Secured Loans	$	4,059,251	Market Comparable Approach	Comparable Multiple	4.74% – 12.00% (8.74%)

Subordinated Debt / Corporate		971,448	Market Comparable	Comparable

Notes					8.00% 12.00% (10.00%)

Collateralized Loan Obligations		321,487	Market Comparable Approach	Comparable Multiple	12.00%-12.00% (12.00%)

Life Settlements		3,653,690	Discounted Cash Flow	Discount Rate	20.00%-20.00% (20.00%)

Common Equity / Interests		900,000	Market Comparable Approach	Comparable Multiple	N/A

		12,588	Net Asset Value	Underlying Assets / Liabilities	N/A

Total Level 3 Investments
	$	9,918,464

The significant unobservable inputs used in the fair value measurement of the Company’s debt and equity securities are primarily earnings before interest, taxes, depreciation and amortization (“EBITDA”) comparable multiples and market discount rates. The Company uses EBITDA comparable multiples on its equity securities to determine the fair value of investments. The Company uses market discount rates for debt securities to determine if the effective yield on a debt security is commensurate with the market yields for that type of debt security. If a debt security’s effective yield is significantly less than the market yield for a similar debt security with a similar credit profile, then the resulting fair value of the debt security may be lower. Significant increases or decreases in either of these inputs in isolation would result in a significantly lower or higher fair value measurement. The significant unobservable inputs used in the fair value measurement of the collateralized loan obligations include the discount rate applied in the valuation models in addition to default and recovery rates applied to projected cash flows in the valuation models. Specifically, when a discounted cash flow model is used to determine fair value, the significant input used in the valuation model is the discount rate applied to present value the projected cash flows. Increases in the discount rate can significantly lower the fair value of an investment; conversely decreases in the discount rate can significantly increase the fair value of an investment. The discount rate is determined based on the market rates an investor would expect for a similar investment with similar risks.

3.	Debentures Payable to SBA

At March 31, 2013, and June 30, 2012, debentures payable to the SBA consisted of subordinated debentures with interest payable semiannually, as follows:

Issue Date	Due Date	% Interest Rate		March 31, 2013		June 30, 2012		Annual Amount of Interest and User Fees at March 31, 2013		Annual Amount of Interest and User Fees at June 30, 2012
July 2002	September 2012		4.67 (1)	$	850,000	$	2,050,000	$	47,056	$	113,488
December 2002	March 2013		4.63 (1)		3,000,000		3,000,000		164,880		164,880
September 2003	March 2014		4.12 (1)		5,000,000		5,000,000		249,300		249,300
February 2004	March 2014		4.12 (1)		1,950,000		1,950,000		97,227		97,227
December 2009	March 2020		4.11 (2)		9,175,000		9,175,000		402,782		402,782
				$	19,975,000	$	21,175,000	$	961,245	$	1,027,677

(1) Elk is also required to pay an additional user fee of 0.866% on these debentures.

(2) Elk is also required to pay an additional user fee of 0.28% on these debentures.

(3) See SBA Litigation, discussed below and in Note 8.

Under the terms of the subordinated debentures, Elk may not repurchase or retire any of its capital stock or make any distributions to its stockholders other than dividends out of retained earnings (as computed in accordance with SBA regulations) without the prior written approval of the SBA.

Elk is required to calculate the amount of capital impairment each reporting period based on SBA regulations. The purpose of the calculation is to determine if the Undistributed Net Realized Earnings (Deficit) after adjustment for net unrealized gain or loss on securities exceeds the SBA regulatory limits. If so, Elk is considered to have impaired capital. Since June 30, 2010, Elk’s capital has been impaired. Elk had a condition of capital impairment as of March 31, 2013.

On March 6, 2012 (the “Notice Date”), Sean J. Greene (“Greene”), Associate Administrator Office of Investment and Innovation of SBA delivered written notice (the “Notice”) to Elk of SBA’s determination that Elk has a condition of capital impairment, based on Elk’s financial condition as of September 30, 2011. The Notice also indicated that, on February 22, 2012, the SBA referred Elk to the SBA’s Office of Liquidation, based on Elk’s violation of capital impairment percentage requirements in prior periods, which are continuing. The Company believes that this referral was in error as it was enacted prior to Elk’s receiving the applicable fifteen day notice and opportunity to cure required under SBA regulations. Prior to receiving the Notice, Elk had notified the SBA of Elk’s belief that the SBA was in error. In this regard, the Notice stated that, notwithstanding the prior transfer to the Office of Liquidation, the SBA would suspend liquidation activities during the Cure Period to allow Elk the opportunity to cure its condition of capital impairment to the SBA’s satisfaction.

On March 20, 2012, Elk filed a lawsuit against the SBA and its Administrator. For additional information regarding such litigation see Note 8 to the consolidated financial statements.

On June 1, 2012, Elk received a written notice from the SBA (the “Second SBA Notice”) that declared Elk’s entire indebtedness to the SBA, including principal, accrued interest and any other amounts owed by Elk to the SBA pursuant to Elk’s outstanding debentures, to be immediately due and payable. The Second SBA Notice indicates that such acceleration of Elk’s obligations relates to an event of default under Elk’s outstanding debentures resulting from Elk’s condition of capital impairment described above, which, according to the Second SBA Notice, Elk failed to cure within applicable cure periods.

According to the Second SBA Notice, as of May 25, 2012, Elk was indebted to the SBA in the aggregate principal amount of $21,175,000, plus accrued interest of $239,372 (with an additional $2,816 of interest accruing on a per diem basis) (the “Indebtedness”).The Second SBA Notice stated that Elk was required to remit the entire amount of the Indebtedness to the SBA no later than June 15, 2012. In addition the Second SBA Notice states that the SBA may avail itself of any remedy available to it under the 1958 Act, including institution of proceedings for the appointment of SBA or its designee as receiver for Elk’s assets. In the event Elk is placed into receivership, the interests of the SBA or its designee in its capacity as a receiver of Elk would differ materially from the interests of Ameritrans’ stockholders.

On June 5, 2012, Elk submitted a proposal to cure its condition of capital impairment and return to the active business of providing capital to small business concerns. Notwithstanding the submission of a plan that would permit Elk to remain an active SBIC, SBA requested that Elk submit a proposed settlement plan relating to Elk’s liquidation process to the SBA no later than June 18, 2012. Elk submitted the requested settlement plan which included a proposed schedule for the payment of Elk’s indebted to SBA and alternatives to SBA’s potential attempts to appoint a receiver. Elk subsequently filed an amended complaint in the matter while also pursuing a settlement proposal with the Office of Liquidation. The amended complaint included information that was discovered during Elk’s review of the SBA’s “Administrative Record.”

On October 31, 2012, Elk and the SBA entered into a Settlement Agreement and Mutual Release with respect to Elk’s pending lawsuit against the SBA, pursuant to which Elk agreed to pay the SBA $7,900,000 by the Settlement Effective Date and surrender its SBIC license, in full and final satisfaction of all outstanding SBA leverage owed to the SBA through the Settlement Effective Date plus all additional interest which may accrue through the date the settlement payment is made. Elk did not make the required payment to the SBA prior to the Settlement Effective Date and, accordingly, on April 25, 2013, Elk was placed into receivership. See Note 8 for additional details.

4.	Notes Payable

On December 22, 2009, the Company issued $2,025,000 aggregate principal amount of its 8.75% notes due December 2011 (the “December Notes”) in a private offering. Prior to their amendment, as described below, the Notes bore interest at a rate of 8.75%, payable quarterly, but the Company had the option to extend the December Notes until December 2012 at a rate of 5.5%, plus the then-current prime rate. The December Notes are redeemable by the Company at any time upon not less than 30 days prior notice. A member of the Company’s Board of Directors and certain affiliated entities acquired $1,375,000 of the December Notes in the offering. The total amount of interest incurred on the December Notes issued to related parties was $0 for the three months ended March 31, 2013 and 2012 and $0 and $82,500 for the nine months ended March 31, 2013 and 2012, respectively.

On March 24, 2010, the Company issued $975,000 aggregate principal amount of its 8.75% notes due March 2012 (the “March Notes” and, together with the December Notes, the “2009/2010 Notes”) in a private offering. The March Notes have the same terms as the December Notes, except prior to their amendment as described below, the March Notes were scheduled to mature in March 2012. A member of the Company’s Board of Directors, and certain affiliated entities acquired $685,000 of the March Notes in the offering. The total amount of interest incurred on the March Notes issued to related parties was $0 for the three months ended March 31, 2013 and 2012 and $0 and $41,100 for the nine months ended March 31, 2013 and 2012, respectively.

In connection with the issuance of a Senior Secured Note on January 19, 2011 (see below), the 2009/2010 Notes were amended such that the interest rate on such notes was increased from 8.75% to 12.0% and the maturity date was extended until May 2012. The holders of the 2009/2010 Notes also waived certain covenants contained in the 2009/2010 Notes related to additional borrowings by the Company.

On March 16, 2012, the Company paid the holders of the 2009/2010 Notes an aggregate of $2,650,000 (the “Senior Notes Payoff Amount”) in full satisfaction of the Company’s obligations under the 2009/2010 Notes, including default interest of approximately $77,000. Upon the noteholders’ receipt of such payment, the 2009/2010 Notes and the Company’s obligations thereunder terminated. The Senior Notes Payoff Amount represents an approximate 14.2% discount from the principal, interest and other amounts payable under the 2009/2010 Notes as of date of payment. A member of the Company’s Board of Directors and certain affiliated entities held $2,060,000 principal amount of the 2009/2010 Notes, and as such received approximately $1,820,000 of the Senior Notes Payoff Amount. As a result of the 14.2% discount, the Company realized a gain of $350,000, in the third quarter of fiscal 2012, from the satisfaction of the obligations related to the 2009/2010 Notes.

On January 19, 2011, the Company issued a Senior Secured Note in the principal amount of $1,500,000 (the “Original 2011 Note”) to an unaffiliated lender, Ameritrans Holdings LLC (the “Lender”). The Lender is an affiliate of Renova US Holdings Ltd., the purchaser under the Stock Purchase Agreement (See Note 7, Stock Purchase Agreement). The Original 2011 Note provided for interest at the rate of 12% per annum, except following an event of default under the Original 2011 Note, in which case the Original 2011 Note provided that interest would accrue at the rate of 14%. The Original 2011 Note matured on February 1, 2012.

The Original 2011 Note was originally secured by a pledge of 100% of the issued and outstanding shares of common stock of Elk owned by the Company and was subsequently amended to include all personal property and other assets of the Company other than the common stock and all other equity interests of Elk as provided in the Amended and Restated Pledge Agreement, dated May 5, 2011, between the Company and the Lender (the “Pledge Agreement”).

On April 12, 2011, the Company entered into an amendment to the Original 2011 Note (the “Note Amendment” and the Original 2011 Note, as amended, the “2011 Note”), which amended a provision of the Original 2011 Note that prohibited the Company from incurring any indebtedness for borrowed money in excess of $250,000. All other terms of the Original 2011 Note remained in full force and effect. There was no interest expense incurred in connection with the 2011 Note in the three and nine months ended March 31, 2013 and 2012.

On January 19, 2012 (the “Notice Date”), the Lender delivered written notice (the “Notice”) to the Company that an event of default under the 2011 Note had occurred and was continuing. Pursuant to the Notice, the Lender declared all outstanding principal, interest (including default interest), fees and other amounts owed by the Company under the 2011 Note to be immediately due and payable. Based on the occurrence of an event of default under the 2011 Note, the Lender also declared an event of default under the Pledge Agreement. The event of default specified in the Notice related to the Company’s failure as of June 30, 2011 to maintain a minimum consolidated net asset value equal to at least $4,000,000, in violation of a covenant contained in the 2011 Note.

As of the Notice Date, the Company’s outstanding indebtedness under the 2011 Note included $1,424,000 million of principal and approximately $36,000 of accrued and unpaid interest, including default interest, or approximately $1,460,000 in the aggregate (the “Indebtedness”). In addition to payment of the Indebtedness, the Lender sought reimbursement of costs and expenses related to the execution, delivery, performance, administration and enforcement of the 2011 Note and Pledge Agreement in an unspecified amount, which the Lender estimated to be approximately $100,000.

The 2011 Note matured on February 1, 2012. On March 7, 2012, the Company paid the Lender $1,420,000 (the “Payoff Amount”) in full satisfaction of the Company’s obligations under the 2011 Note. Upon the Lender’s receipt of such payment, the 2011 Note, the Company’s obligations thereunder, all liens and security interests previously granted by the Company to the Lender to secure such obligations, and the related pledge agreement were terminated. The Payoff Amount represents an approximate 9.8% discount from the principal, interest and other amounts payable under the 2011 Note as of the date of payment. Accordingly, the Company realized a gain of $3,620 in the third quarter of fiscal 2012 from the extinguishment of this debt.

5.	Dividends to Stockholders

The following table sets forth the dividends accrued by the Company on its Preferred Stock for the three and nine months ended March 31, 2013, and 2011:

	For the nine months ended March 31, 2013
	Dividend Per Share			Amount			Declaration Date	Record Date	Pay Date
Preferred Stock:
First quarter (July 1, 2012 - September 30, 2012)		$	0.28125		$	84,375	Not Declared
Second quarter (October 1, 2012 – December 31, 2012)			0.28125			84,375	Not Declared
Third quarter (January 1, 2013 – March 31, 2013)			0.28125			84,375	Not Declared
Total Preferred Stock Dividends Accrued		$	0.84375		$	253,125

	For the nine months ended March 31, 2012
	Dividend Per Share			Amount			Declaration Date	Record Date	Pay Date
Preferred Stock:
First quarter (July 1, 2011 - September 30, 2011)		$	0.28125		$	84,375	Not Declared
Second quarter (October 1, 2011 - December 31, 2011)			0.28125			84,375	Not Declared
Second quarter (January 1, 2012 - March 31, 2012)			0.28125			84,375	Not Declared
Total Preferred Stock Dividends Accrued		$	0.84375		$	253,125

The Company did not declare or pay dividends on its Common stock during the three and nine months ended March 31, 2013 or 2012. Dividends on Preferred Stock accrue whether or not they have been declared. As of March 31, 2013, dividends not declared, but accrued and in arrears aggregated $928,125.

6.	Financial Instruments

Fair value is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties. The fair values presented have been determined by using available market information and by applying valuation methodologies.

Loans Receivable and Life Settlement Contracts

Loans receivable and life settlement contracts are recorded at their estimated fair value based on discounted expected future cash flows and other factors (see Note 2).

Investment Securities

The estimated fair value of publicly traded equity securities is based on quoted market prices and privately held equity securities are recorded at their estimated fair value (see Note 2).

Debt

The fair value of the SBA debentures was computed using the discounted amount of future cash flows using the Company’s current incremental borrowing rate for similar types of borrowings. The estimated fair values of such debentures as of March 31, 2013 and June 30, 2012 were $19, 975,000 and $21,175,000, respectively. The fair value is the same as the recorded value, inasmuch as the SBA had given the Company notice on June 1, 2012 that Elk's entire indebtedness to the SBA was due and payable currently. However, Elk’s settlement agreement with the SBA provided that Elk’s obligations under these debentures could be satisfied in full for $7,900,000 on or before the Settlement Effective Date and the surrender of Elk’s SBIC license. Elk paid $1.2 million to the SBA on January 4, 2013 from its cash on hand in partial satisfaction of the Settlement Payment, which left $6.7 million of the Settlement Payment remaining to be paid as of such date. Elk made no additional payments to the SBA and, accordingly, Elk was placed into receivership on April 25, 2013. See Notes 3 and 8.

7.	Stock Purchase Agreement

On April 12, 2011, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Renova US Holdings Ltd. (“Renova”). Subject to the terms and conditions set forth in the Purchase Agreement, the Company agreed to issue and sell to Renova, and Renova agreed to purchase, (i) $25,000,000 of Common Stock of the Company at a price per share equal to the greater of $1.80 and the then-prevailing per share net asset value of the Company at the time of issuance (as determined in accordance with the terms of the Purchase Agreement) (the "Applicable Per Share Purchase Price"), at an initial closing to be held no later than November 30, 2011, following satisfaction or waiver of the conditions to such issuance and (ii) between an additional $35,000,000 to $40,000,000 of additional Common Stock (depending upon the timing of such purchases) at the Applicable Per Share Purchase Price at subsequent closings to be held from time to time, subject to satisfaction of the conditions to such issuances, between the date of the initial closing and the second anniversary of the initial closing, based upon the terms and conditions set forth in the Purchase Agreement.

Requisite stockholder approval of the transactions contemplated by the Purchase Agreement was obtained at a special meeting of stockholders held on June 24, 2011. Consummation of the initial closing was subject to certain additional customary closing conditions, as well as the approval of the SBA of the indirect change of ownership and control of the Company’s wholly-owned subsidiary, Elk, which is a SBA licensee.

On September 19, 2011, the Company received a letter from the SBA describing certain concerns related to its change of ownership and control application and requesting certain additional pieces of information. In particular, the SBA informed the Company that the proposed transaction, as then structured, would not satisfy applicable SBA management-ownership diversity requirements. While the Company and its counsel believed that the transaction satisfied all SBA regulatory requirements, the SBA did not concur with that view.

As of November 16, 2011, the Company and Renova terminated the Purchase Agreement.

8.	Commitments and Contingencies

Litigation

Lawsuit Against the SBA

On March 20, 2012, Elk filed a lawsuit against the SBA and its Administrator in the United States District Court for the District of Columbia (the “District Court”) (Case No. 1200438 CKK), seeking temporary, preliminary, and permanent injunctive relief; declaratory relief; and damages (the “Litigation”). The injunctive relief sought by Elk includes: (i) setting aside the SBA’s decision to transfer Elk to the SBA’s Office of Liquidation (see Note 3, Debentures Payable to SBA), (ii) requiring the SBA to provide Elk with a commercially reasonable amount of time to present a plan for curing Elk’s position of capital impairment and (iii) requiring the SBA to accept legitimate commitment letters from qualified investors in the Company as a cure to Elk’s position of capital impairment, so long as those letters guaranty that funds identified in the commitment letters are transferred by the Company to Elk. Elk’s lawsuit also sought monetary damages in an amount to be determined at trial.

Subsequently, Elk filed an amended complaint in the matter while also pursuing a settlement proposal with the Office of Liquidation.

The SBA made a motion for Summary Judgment in the Litigation and Elk filed its Memorandum of Law in Opposition to SBA's motion for Summary Judgment. Simultaneously with the filing of its reply, Elk filed a motion seeking leave to conduct discovery.

On September 17, 2012, the Court issued a ruling finding it prudent to postpone further briefing on SBA's Motion for Summary Judgment to allow Elk's Motion for Leave to Serve Discovery to be fully briefed. The Court ruled that the Motion for Summary Judgment was held-in-abeyance. The Court ruled that the SBA need not and shall not file a reply until otherwise ordered by the Court. The Court ordered the SBA to file a response to Elk's Motion for Leave to Serve Discovery by no later than October 1, 2012, which was filed; Elk was required to file its reply, if any, by no later than October 11, 2012, which was timely filed.

On October 31, 2012 Elk and the SBA entered into the Settlement Agreement with respect to the Litigation. The Settlement Agreement, as amended on December 7, 2012, provided, among other things, for the payment by Elk to the SBA of $7,900,000 by January 7, 2013 and the surrender of Elk’s small business investment company license, in full and final satisfaction of all outstanding SBA leverage owed to the SBA through the Effective Date plus all additional interest, aggregating approximately $860,000 as of January 31, 2013, which may accrue through the date the Settlement Payment is made. As of January 31, 2013, Elk's outstanding leverage with the SBA was $21,175,000. Elk also executed and delivered the Consent Order, to be filed only if the Settlement Payment was not made within the required period, appointing the SBA as permanent, liquidating receiver of Elk. In connection with the Settlement Agreement, the parties have filed with the court a Joint Stipulation dismissing the SBA Litigation. The Settlement Agreement includes mutual releases by both parties releasing the other party and various associated entities from any and all actions, causes of action, claims, rights and demands of every kind which such party may have through October 31, 2012. SBA's release of Elk does not include any claims of criminal liability, any claims arising from fraudulent conduct or any claims by any other federal agency of the United States, including the Internal Revenue Service. Pursuant to the Settlement Agreement, the SBA has acknowledged that it is unaware of any such claim referred to in the immediately preceding sentence.

On January 4, 2013, the SBA agreed to extend the January 7, 2013 deadline until January 18, 2013 (the “Payoff Deadline”), provided that Elk promptly remits to the SBA all of the proceeds (up to the amount of the Settlement Payment) from any asset sales consummated by Elk prior to such date. As a condition to the SBA’s agreement to the extended Payoff Deadline, Elk paid $1.2 million to the SBA on January 4, 2013 from its cash on hand in partial satisfaction of the Settlement Payment, which left $6.7 million of the Settlement Payment remaining to be paid as of such date.

As of January 18, 2013, Elk had not secured the balance of the Settlement Payment to be paid to the SBA. Accordingly, Elk requested an additional extension of the Payoff Deadline to January 31, 2013. On January 22, 2013, the SBA informed Elk that the SBA had decided it would not grant Elk another extension of the Payoff Deadline. As a result of Elk’s failure to pay the balance of the Settlement Payment by January 18, 2013, the SBA informed Elk that it would forward a receivership complaint and the Consent Order to the United States Attorney’s Office for the Southern District of New York, for filing with the United States District Court for the Southern District of New York. The SBA further informed Elk that should Elk pay the balance of the Settlement Payment prior to the entry of the Consent Order in the U.S. District Court then the SBA would accept such payment in full satisfaction of the Settlement Payment and would ask that the receivership proceedings be rescinded. However, the requisite financing was not obtained and no additional payments were made.

On April 25, 2013, the Court entered the Consent Order in the Receivership Proceeding. The Court appointed the SBA as the receiver of Elk for the purpose of marshaling and liquidating all of Elk’s assets and satisfying the claims of creditors therefrom in the order of priority as determined by the Court. The Court entered judgment in the total sum of $21,175,000.00 (less the $1.2 million paid to the SBA on January 4, 2013) as of October 26, 2012, plus accrued interest of approximately $1,166,000 through April 25, 2013, plus post-judgment interest at the rate allowed by law. The Consent Order dismissed all of the existing officers, directors and agents of Elk.

As a result of the deconsolidation of Elk as of April 25, 2013 for financial reporting, Ameritrans subsequent financial statements will report a liability due to Elk. As of March 31, 2013, such liability was approximately $14.3 million. See Note 14. Pro Forma Financial Information.

The interests of the SBA in its capacity as a receiver of Elk will differ materially from, and may be adverse to, the interests of Ameritrans and its stockholders. The Company anticipates its business, financial condition and results of operations will be materially and adversely affected by the entry of the Consent Order. As such, the Company may be forced to cease operations and liquidate or seek bankruptcy protection, in which case shareholders may receive little or no value for their investment in the Company’s securities.

Other

From time to time, the Company is engaged in various legal proceedings incident to the ordinary course of its business. In the opinion of the Company’s management and based upon the advice of legal counsel, other than the matter referred to above, there is no proceeding pending, or to the knowledge of management threatened, which in the event of an adverse decision would result in a material adverse effect on the Company’s results of operations or financial condition.

9.	Stock Option Plans

The Company’s employee incentive stock option plan and non-employee director stock option plan expired on May 21, 2009.

The following tables summarize information about the transactions of both stock option plans as of March 31, 2013:

	Stock Options
	Number of Options		Weighted Average Exercise Price Per Share
Options outstanding at June 30, 2012		239,426	$	3.28
Granted		-		-
Canceled		-		-
Expired		40,000		-
Exercised		-		-
Options outstanding at March 31, 2013		199,426	$	2.96

The following table summarizes information about the stock options outstanding under the Company’s options plans as of March 31, 2013:

	Options Outstanding and Exercisable
Range of Exercise Prices	Number Outstanding At March 31, 2013		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price
$3.60		13,888		.14 years	$	3.60
$5.28		40,000		1.16 years	$	5.28
$2.36		120,000		.53 years	$	2.36
$1.78		25,538		1.10 years	$	1.78
$ 1.78-$ 5.28		199,426			$	3.28

10.	Financial Highlights

	Nine months Ended March 31, 2013			Nine months Ended March 31, 2012			Year Ended June 30, 2012
Net share data
Net liability value at the beginning of the period	$	(2.11	)	$	(0.40	)	$	(0.40	)
Net investment loss		(1.02	)		(0.83	)		(1.08	)
Net realized and unrealized losses on investments		(1.03	)		(0.35	)		(0.53	)
Net decrease in net assets from operations		(2.05	)		(1.18	)		(1.61	)
Distributions to Stockholders (4)		(0.07	)		(0.07	)		(.10	)
Total decrease in net asset value		(2.12	)		(1.25	)		(1.71	)
Net liability value at the end of the period	$	(4.23	)	$	(1.65		$	(2.11	)
Per share market value at beginning of period	$	0.11		$	1.17		$	1.17
Per share market value at end of period	$	0.15		$	0.15		$	0.11
Total return (1)		36.4	%		(87.2	)%		(90.6	)%
Ratios/supplemental data
Average net liabilities (2) (in 000’s)	$	(10,755	)	$	(3,492	)	$	(4,264	)
Total expense ratio (3)		(51.6	)%		(172.9	)%		142.4	%
Net investment loss to average net liabilities (5)		(43.0	)%		(108.1	)%		85.7	%

(1)	Total return is calculated by dividing the change in market value of a share of common stock during the year, assuming the reinvestment of dividends on the payment date, by the per share market value at the beginning of the year.

(2)	Average net liabilities excludes capital from preferred stock.

(3)	Total expense ratio represents total expenses divided by average net assets annualized for interim periods.

(4)	Amount represents total dividends on both common and preferred stock divided by weighted average shares.

(5)	Annualized for interim periods.

11.	Other Matters

Between September 2011 and January 2012, the Company received notices from The Nasdaq Stock Market (“Nasdaq”) notifying the Company that it did not satisfy various continued listing requirements applicable to the Company’s common stock and preferred stock, including requirements that the Company maintain a minimum bid price for its common stock of $1.00 per share, a minimum of $2.5 million of stockholders’ equity and a minimum market value of publicly held shares of $1 million with respect to the Company’s common stock and its preferred stock. The Company did not regain compliance with Nasdaq’s continued listing requirements and, on May 3, 2012, the Company’s securities were delisted from the Nasdaq Capital Market.

12.	Recently Issued Accounting Standards

No accounting standards or interpretations issued recently are expected by management to a have a material impact on the Company’s results of operations, financial position, or cash flow.

13.	Subsequent Events

Except for the recent developments in connection with the SBA Consent Order and the placement of Elk into receivership, as discussed in Note 8, Commitments and Contingencies, the Company is not aware of any other significant subsequent events.

14.	Pro Forma Financial Information

The following Unaudited Pro Forma Consolidated Financial Statements of Ameritrans Capital Corporation and its consolidated subsidiaries are included herein:

Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 2013

Unaudited Pro Forma Consolidated Statement of Operations for the nine months ended March 31, 2013

Unaudited Pro Forma Consolidated Balance Sheet as of June 30, 2012

Unaudited Pro Forma Consolidated Statement of Operations for the fiscal year ended June 30, 2012

Notes to the Unaudited Pro Forma Consolidated Financial Statements

The Unaudited Pro Forma Consolidated Financial Statements and the related Notes presented reflect the deconsolidation of Elk as a result of the entry of a Consent Order appointing the SBA as permanent, liquidating receiver of Elk, effective as of April 25, 2013 (the “Entry Date”). (See Note 8.) The Company has determined that as a result of the Consent Order and beginning on the Entry Date, that it will no longer consolidate Elk for financial reporting purposes. The Unaudited Pro Forma Consolidated Financial Statements have been prepared by applying pro forma adjustments to the amounts previously reported in the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2012 and the amounts reported herein as of and for the period ended March 31, 2013. The Unaudited Pro Forma Consolidated Statements of Income for the nine months ended March 31, 2013 and the year ended June 30, 2012 reflect the deconsolidation` of Elk, assuming the Consent Order had been entered and effective as of the beginning of the respective fiscal year. The Unaudited Pro Forma Consolidated Balance Sheet reflects the deconsolidation of Elk, assuming the Consent Order had been entered and effective on March 31, 2013. The pro forma adjustments, as described in the Notes to the Unaudited Pro Forma Consolidated Financial Statements, are based on currently available information.

The Unaudited Pro Forma Consolidated Financial Statements reflect the deconsolidation of Elk. For purposes of the Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 2013, the investment in Elk is reflected at a fair value of zero. The Unaudited Pro Forma Consolidated Financial Statements are presented for informational purposes only and are not necessarily indicative of the operating results or financial position that would have occurred had the Consent Order occurred on, or as of, the dates indicated, nor are they necessarily indicative of future operating results or financial position.

Ameritrans Capital Corporation

Pro Forma Consolidated Balance Sheet

March 31, 2013

(Unaudited)

	As Reported (a)			Less: Deconsolidation of Elk (b)			Pro forma Adjustments				Pro forma
Assets

Investments at fair value
Non Controlled/affiliated investments	$	200,000		$	-		$	-			$	200,000
Non Controlled/non affiliated investments		9,393,253			4,705,491			-				4,687,762
Controlled affiliated investments		331,487			331,487			-				-

Total investments at fair value		9,924,740			5,036,978			-				4,887,762

Cash		694,620			184,170			-				510,450
Accrued interest receivable		669,372			620,320			-				49,052
Assets acquired in satisfaction of loans		153,325			29,025			-				124,300
Furniture and equipment, net		42,110			38,374			-				3,736
Due from Ameritrans		-			12,444,927			(12,444,927	)	(c)		-
Prepaid expenses and other assets		75,793			65,552			-				10,241

Total assets	$	11,559,960		$	18,419,346		$	(12,444,927	)		$	5,585,541

Liabilities and Net Liabilities

Liabilities:
Debentures payable to SBA	$	19,975,000		$	19,975,000		$	-			$	-
Due to Elk Associates Funding Corporation		-			-			(14,271,038	)	(c)		14,271,038
Accrued expenses and other liabilities		304,151			289,893			-				14,258
Accrued interest payable		1,099,492			1,099,492			-				-
Dividends payable		928,125			-			-				928,125

Total liabilities		22,306,768			21,364,385			(14,271,038	)			15,213,421

Net Liabilities:
Preferred Stock 9,500,000 shares authorized, none issued or outstanding; 9-3/8% cumulative participating redeemable preferred stock; $.01 par value, $12.00 face value, 500,000 shares authorized; 300,000 shares issued and outstanding		3,600,000			-			-				3,600,000
Common stock, $0001 par value; 45,000,000 shares authorized, 3,405,583 shares issued; 3,395,583 shares outstanding		341			-			-				341
Additional paid in capital		21,330,544			16,129,119			-				5,201,425
Losses and distributions in excess of earnings		(26,868,436	)		(12,713,856	)		(1,826,111	)	(c)		(15,980,691	)
Net unrealized depreciation on investments		(8,808,557	)		(6,359,602	)		-				(2,448,955	)
Total		(10,746,108	)		(2,944,339	)		(1,826,111	)			(9,627,880	)
Less Treasury stock, at cost, 10,000 shares of common		(700	)		(700	)		-				-
Total net liabilities		(10,746,808	)		(2,945,039	)		(1,826,111	)			(9,627,880	)

Total liabilities and net liabilities	$	11,559,960		$	18,419,346		$	(12,444,927	)		$	5,585,541

Net liability value per common share	$	(4.23	)								$	(3.90	)

See Notes to the Unaudited Pro Forma Consolidated Financial Statements

Ameritrans Capital Corporation

Pro Forma Statement of Operations

For the Nine Months Ended March 31, 2013

(Unaudited)

	As Reported (a)			Less: Deconsolidation of Elk (b)			Pro forma Adjustments				Pro forma
Investment Income:
Interest on loans receivable
Non- controlled/ non- affiliated investments	$	668,687		$	668,612		$	-			$	75
Controlled affiliated investments		19,596										19,596
		688,283			668,612			-				19,671
Fees and other income		-			-			-				-
		688,283			668,612			-				19,671

Expenses:
Interest		756,985			756,985			-				-
Salaries and employee benefits		758,654			758,654			512,091		(d)		512,091
Occupancy		117,222			117,222			58,611		(d)		58,611
Legal fees		1,043,687			1,085,278			607,399		(d)		565,808
Accounting and compliance fees		464,060			442,135			252,017		(d)		273,942
Directors fees and expense		183,286			183,286			91,643		(d)		91,643
Other administrative expenses		603,056			649,109			222,403		(d)		176,350
Loss and impairment on assets acquired in satisfaction of loans, net		233,612			233,612			81,947		(d)		81,947
Total expenses		4,160,562			4,226,281			1,826,111				1,760,392
Net investment loss		(3,472,279	)		(3,557,669	)		(1,826,111	)			(1,740,721	)

Net realized losses on investments		(617,433	)		(617,433	)		-				-
		(617,433	)		(617,433	)		-				-
Net unrealized depreciation on investments		(2,909,782	)		(1,906,858	)		-				(1,002,924	)
Net realized/ unrealized losses on investments		(3,527,215	)		(2,524,291	)		-				(1,002,924	)
Net decrease in net assets from operations		(6,999,494	)		(6,081,960	)		(1,826,111	)			(2,743,645	)
Distributions to preferred shareholders		(253,125	)					-				(253,125	)
Net decrease in net assets from operations available to common shareholders	$	(7,252,619	)	$	(6,081,960	)	$	(1,826,111	)		$	(2,996,770	)

See Notes to the Unaudited Pro Forma Consolidated Financial Statements

Ameritrans Capital Corporation

Pro Forma Consolidated Balance Sheet

June 30, 2012

(Unaudited)

	As Reported (a)			Less: Deconsolidation of Elk (b)			Pro forma Adjustments				Pro forma
Assets

Investments at fair value
Non Controlled/non affiliated investments	$	16,169,728		$	11,430,300		$	-			$	4,739,428
Controlled affiliated investments		332,878			332,878			-				-

Total investments at fair value		16,502,606			11,763,178			-				4,739,428

Cash		184,338			122,225			-				62,113
Accrued interest receivable		807,643			763,371			-				44,272
Assets acquired in satisfaction of loans		878,325			753,325			-				125,000
Furniture and equipment, net		44,359			39,417			-				4,942
Deferred loan cost, net		260,459			260,459			-				-
Due from Ameritrans		-			10,874,927			(10,874,927	)	(c)		-
Prepaid expenses and other assets		263,641			250,073			-				13,568

Total assets	$	18,941,371		$	24,826,975		$	(10,874,927	)		$	4,989,323

Liabilities and Net Liabilities

Liabilities:
Debentures payable to SBA	$	21,175,000		$	21,175,000		$	-			$	-
Due to Elk Associates Funding Corporation								(10,874,927	)	(c)		10,874,927
Accrued expenses and other liabilities		312,353			241,848			-				70,505
Accrued interest payable		342,506			342,506			-				-
Dividends payable		675,000			-			-				675,000

Total liabilities		22,504,859			21,759,354			(10,874,927	)			11,620,432

Net Liabilities:
Preferred Stock 9,500,000 shares authorized, none issued or outstanding; 9-3/8% cumulative participating redeemable preferred stock; $.01 par value, $12.00 face value, 500,000 shares authorized; 300,000 shares issued and outstanding		3,600,000										3,600,000
Common stock, $0001 par value; 45,000,000 shares authorized, 3,405,583 shares issued; 3,395,583 shares outstanding		341										341
Additional paid in capital		21,330,544			16,129,119			-				5,201,425
Losses and distributions in excess of earnings		(22,525,598	)		(8,538,754	)		-				(13,986,844	)
Net unrealized depreciation on investments		(5,898,775	)		(4,452,744	)		-				(1,446,031	)
Total		(3,493,488	)		3,137,621			-				(6,631,109	)
Less Treasury stock, at cost, 10,000 shares of common		(70,000	)		(70,000	)		-				-
Total net liabilities		(3,563,488	)		3,067,621			-				(6,631,109	)

Total liabilities and net liabilities	$	18,941,371		$	24,826,975		$	(10,874,927	)		$	4,989,323

Net liability value per common share	$	(2.11	)								$	(3.01	)

See Notes to the Unaudited Pro Forma Consolidated Financial Statements

Ameritrans Capital Corporation

Pro Forma Statement of Operations

For the Fiscal Year Ended June 30, 2012

(Unaudited)

	As Reported (a)			Less: Deconsolidation of Elk (b)			Pro forma Adjustments		Pro forma
Investment Income:
Interest on loans receivable
Non-controlled/non-affiliated investments	$	2,022,374		$	2,022,374		$	-	$	-
Controlled affiliated investments		27,237			4,272			-		22,965
		2,049,611			2,026,646			-		22,965
Fees and other income		11,466			6,858			-		4,608
		2,061,077			2,033,504			-		27,573

Expenses:
Interest		1,280,954			1,029,643			-		251,311
Salaries and employee benefits		1,275,282			414,478			-		860,804
Occupancy		173,187			86,593			-		86,594
Legal fees		1,407,893			971,766			-		436,127
Accounting and compliance fees		737,036			313,021			-		424,015
Directors fees and expense		150,641			75,320			-		75,321
Other administrative expenses		942,590			500,634			-		441,956
Advisory fees		101,984			-			-		101,984
Total expenses		6,069,567			3,391,455			-		2,678,112
Net investment loss, before gain on extinguishment of debt		(4,008,490	)		(1,357,951	)		-		(2,650,539	)
Gain on extinguishment of debt		353,620			-			-		353,620
Net investment loss		(3,654,870	)		(1,357,951	)		-		(2,296,919	)

Net realized gains on investments		184,679			(52,860	)		-		237,539
		184,679			(52,860	)		-		237,539
Net Unrealized depreciation on investments		(1,991,890	)		(1,922,966	)		-		(68,924	)
Net realized/unrealized losses on investments		(1,807,211	)		(1,975,826	)		-		168,615
Net decrease in net assets from operations		(5,462,081	)		(3,333,777	)		-		(2,128,304	)
Distributions to preferred shareholders		(337,500	)		-			-		(337,500	)
Net decrease in net assets from operations available to common shareholders	$	(5,799,581	)	$	(3,333,777	)	$	-	$	(2,465,804	)

See Notes to the Unaudited Pro Forma Consolidated Financial Statements

AMERITRANS CAPITAL CORPORATION

Notes to the Unaudited Pro Forma Consolidated Financial Statements

(a)	Amounts represent historical financial information from Ameritrans Capital Corporation's Quarterly Report on Form 10-Q for the period ended March 31, 2013 or from Ameritrans Capital Corporation's Annual Report on Form 10-K for the fiscal year ended June 30, 2012.

(b)	Amounts represent the Elk Statement of Operations for the nine months ended March 31, 2013 and for the fiscal year ended June 30, 2012 or Elk's Consolidated Balance Sheet as of March 31, 2013 and June 30, 2012.

(c)	To record amounts owed by Ameritrans Capital Corporation to Elk.

(d)	Adjustments relate to allocation of expenses incurred by Ameritrans Capital Corporation, but paid for by and recorded on the books of Elk and, hence, would not be eliminated by the deconsolidation of Elk.

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

The information contained in this section should be read in conjunction with the consolidated Financial Statements and Notes thereto appearing in this quarterly report on Form 10-Q and in the Company’s Annual Report on Form 10-K for the year ended June 30, 2012, filed with the Commission by the Company on September 28, 2012, and which is available on the Company’s web site at www.ameritranscapital.com.

CRITICAL ACCOUNTING POLICIES

Investment Valuations

Our loans receivable, net of participations and any unearned discount, are considered investment securities under the 1940 Act and are recorded at fair value. As part of fair value methodology, loans are valued at cost adjusted for any unrealized appreciation (depreciation). Since no ready market exists for these loans, the fair value is determined in good faith by management, and approved by the Board of Directors. In determining the fair value, we and our Board of Directors consider factors such as the financial condition of borrower, the adequacy of the collateral, individual credit risks, historical loss experience, and the relationships between current and projected market rates and portfolio rates of interest and maturities. Foreclosed properties, which represent collateral received from defaulted borrowers, are valued based on appraisals prepared by third parties and market analysis.

Loans are, generally, considered “non–performing” once they become 90 days past due as to principal or interest. The value of past due loans are periodically determined in good faith by management, and if, in the judgment of management, the amount is not collectible and the fair value of the collateral is less than the amount due, the value of the loan will be reduced to fair value.

Equity investments (preferred stock, common stock, LLC interests, LP interest, and stock warrants, including controlled subsidiary portfolio investments) and investment securities are recorded at fair value, represented as cost, plus or minus unrealized appreciation or depreciation. Investments for which market quotations are readily available are valued at such quoted amounts. If no public market exists, the fair value of investments that have no ready market are determined in good faith by management, and approved by the Board of Directors, based upon assets and revenues of the underlying investee companies as well as general market trends for businesses in the same industry.

We record the investment in life insurance policies at fair value, represented as cost, plus or minus unrealized appreciation or depreciation. The fair value of the investment in life settlement contracts have no ready market and are determined in good faith by management, and approved by the Board of Directors, based on actuarial life expectancy, health evaluations and market trends.

Because of the inherent uncertainty of valuations, our estimates of the values of the investments may differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material.

Assets Acquired in Satisfaction of Loans

Assets acquired in satisfaction of loans are carried at the lower of the net value of the related foreclosed loan or the estimated fair value less cost of disposal. Losses incurred at the time of foreclosure are charged to the realized losses on loans receivable. Subsequent reductions in estimated net realizable value are charged to operations as losses on assets acquired in satisfaction of loans.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make extensive use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates that are particularly susceptible to significant change relate to the determination of the fair value of our investments.

Income Recognition

Interest income, including interest on non-performing loans, is recorded on an accrual basis and in accordance with loan terms to the extent such amounts are expected to be collected. We recognize interest income on loans classified as non-performing only to the extent that the fair market value of the related collateral exceeds the specific loan principal balance. Loans that are not fully collateralized and that are in the process of collection are placed on nonaccrual status when, in the judgment of management, the collectability of interest and principal is doubtful.

Contingencies

We are subject to legal proceedings in the course of our daily operations from enforcement of our rights in disputes pursuant to the terms of various contractual arrangements. We may assess the likelihood of any adverse judgment or outcome to these matters as well as a potential range of probable losses. A determination of the amount of reserve required, if any, for these contingencies may be made after analysis of each individual issue. The required reserves may change in the future due to new developments in each matter or changes in approach, such as a change in settlement strategy in dealing with these matters.

General

Ameritrans acquired Elk on December 16, 1999. Elk is an SBIC that had been operating since 1980, making loans to (and, to a limited extent, investments in) small businesses, who qualified under SBA Regulations until October 31, 2012. However, on October 31, 2012, Elk and the SBA entered into a Settlement Agreement and Mutual Release with respect to Elk’s pending lawsuit against the SBA, pursuant to which Elk agreed to pay the SBA $7,900,000 by December 15, 2012, as extended through subsequent amendments to January 18, 2013, and surrender its SBIC license, in full and final satisfaction of all outstanding SBA leverage owed to the SBA through such date plus all additional interest which may accrue through the date the settlement payment is made. Elk did not remit the entire amount due under the Settlement Agreement and, accordingly, on April 25, 2013, the Court entered the Consent Order in the Receivership Proceeding, appointing the SBA as the receiver of Elk for the purpose of marshaling and liquidating all of Elk’s assets and satisfying the claims of creditors therefrom in the order of priority as determined by the Court. The Court entered judgment in the total sum of $21,175,000.00 (less the $1.2 million paid to the SBA on January 4, 2013) as of October 26, 2012, plus accrued interest of approximately $1,166,000 through April 25, 2013, plus post-judgment interest at the rate allowed by law. The Consent Order dismissed all of the existing officers, directors and agents of Elk.

The interests of the SBA in its capacity as a receiver of Elk will differ materially from, and may be adverse to, the interests of Ameritrans and its stockholders, including with respect to deconsolidated liabilities described in Notes 8 and 14 to the consolidated financial statements and below. We anticipate Ameritrans’ business, financial condition and results of operations will be materially and adversely affected by the entry of the Consent Order. As such, the Company may be forced to cease operations and liquidate or seek bankruptcy protection, in which case shareholders may receive little or no value for their investment in the Company’s securities.

Most of Elk’s business historically consisted of originating and servicing loans collateralized by taxi medallions and loans to and investments in other diversified businesses. Since completing the sale of the medallion portfolio, most of the Company’s net interest income has been generated from its Corporate and Commercial loans. Historically, Elk’s earnings derived primarily from net interest income, which is the difference between interest earned on interest-earning assets (consisting of business loans), and the interest paid on interest-bearing liabilities (consisting of indebtedness to Elk’s banks and subordinated debentures issued to the SBA). Net interest income is a function of the net interest rate spread, which is the difference between the average yield earned on interest-earning assets and the average interest rate paid on interest-bearing liabilities, as well as the average balance of interest-earning assets as compared to interest-bearing liabilities. Unrealized appreciation or depreciation on loans and investments is recorded when Elk adjusts the value of a loan or equity investment to reflect management’s estimate of the fair value, as approved by the Board of Directors.

Results of Operations for the Three Months Ended March 31, 2013 and 2012

Total Investment Income

Our investment income for the three months ended March 31, 2013, decreased $219,714, or 54%, to $186,455, as compared to $406,169 for the three months ended March 31, 2012. The decrease was predominantly due to our smaller portfolio.

Corporate Loans outstanding as of March 31, 2013, decreased by $6,601,950 or 87%, to $971,448, as compared with $7,573,398 at March 31, 2012. The decrease in Corporate Loans outstanding was due to payoffs of approximately $66,000, the sale of four loans for approximately $5,015,000 (primarily, for liquidity purposes) and a decrease in fair value of certain Corporate Loans aggregating approximately $2,037,000. This decrease was partially offset by new fundings and loan discount amortization totaling approximately $516,000. For the three months ended March 31, 2013, interest income on Corporate Loans decreased approximately $220,000 to approximately $151,000 from $371,000 in the comparable quarter in the prior fiscal year.

Commercial Loans outstanding as of March 31, 2013, decreased by $885,910, or 17%, to $4,380,738, as compared with $5,266,648 at March 31, 2012. The decrease in Commercial Loans was due to loan amortization and paid off loans of approximately $178,000 and a downward fair value adjustment of approximately $706,000. For the three months ended March 31, 2013, interest income on Commercial Loans decreased approximately $2,000 to approximately $28,000 from approximately $30,000 in the prior fiscal year’s comparable quarter. This decrease was primarily attributable to paid off loans.

Life settlement contracts outstanding as of March 31, 2013 increased by approximately $854,000, or 30%, to approximately $3,654,000, as compared with approximately $2,800,000 at March 31, 2012. This increase was due primarily to additional premium payments of $1,255,000, as partially offset by a downward adjustment of fair value of $400,000. The fair value as of March 31, 2013, represents our estimate of the policies’ fair value based upon various factors, including a discounted cash flow analysis of anticipated life expectancies, future premium payments, current market conditions and anticipated death benefits related to the four life insurance policies which have an aggregate face value of $17,250,000.

Operating Expenses

Interest expense for the three months ended March 31, 2013 increased $6,667, or 3%, to $238,813, as compared to $232,146 for the three months ended March 31, 2012. .

Salaries and employee benefits for the three months ended March 31, 2013 decreased $27,643, or 10%, to $257,233, when compared to $284,876 for the three months ended March 31, 2012. This decrease was due to a termination of a clerical employee and a reduction in salary of an officer pursuant to an employment agreement.

Occupancy costs for the three months ended March 31, 2013, decreased by $14,041 to $29,256 from $43,297 for the comparable prior year’s quarter due to the cancellation of our New York City lease as of December 31, 2012.

Legal fees decreased $293,651, or 59%, to $201,904 for the three months ended March 31, 2013 from $495,555 in the corresponding quarter in fiscal 2012 due, primarily, to the decrease in legal work in connection with our lawsuit and entry into a settlement agreement with the SBA and, to a lesser extent, SEC filings, foreclosure expense, compliance and general legal matters.

Accounting and compliance fees decreased $23,416 or 14% to $141,875 in the third quarter of fiscal 2013 from $165,291 in the corresponding quarter in the prior fiscal year prior. Such decrease was attributable to a $21,100 decrease in accounting fees, of which approximately $18,000 related to tax consulting on various tax issues, a decrease of $12,000 in consulting fees related to our chief financial officer, as partially offset by an increase of $10,000 for professional fees in connection with a capital raise.

Director fees for the three months ended March 31, 2013 decreased $6,838, or 13%, to $44,827 when compared to $51,665 for the three months ended March 31, 2012. Such decrease resulted from fewer meetings that were related, significantly, to ongoing SBA issues.

Advisory Fees decreased $9,289, or 100%, to $0 for the three months ended March 31, 2013. This was due to the expiration of our Advisory Agreement in December 2011.

Miscellaneous administrative expenses for the three months ended March 31, 2013, increased $188,572, or 110%, to $359,275, when compared with $170,703 for the three months ended March 31, 2012. This increase was due primarily to the write off of SBA commitment fees of $207,000 partially offset by a reduction of $12,000 of foreclosure expense and a decrease of approximately $7,000 of miscellaneous expenses.

Loss and impairment on assets acquired in satisfaction of loans was $69,720 for the three months ended March 31, 2013. This amount is the loss incurred on the write down of treasury stock to its market value at March 31, 2013. There was no comparable amount in the 2012 period.

Increase in Net Liabilities from Operations and Net Unrealized/Realized Gains (Losses)

Net increase in net liabilities from operations for the three months ended March 31, 2013 was $4,006,239, as compared to a net increase in net liabilitiesfrom operations for the three months ended March 31, 2012 of $898,307. This change in net liabilities between three-month periods was, primarily, attributable to (i) the decrease in the size of our investment portfolio, which went from an average of approximately $16.7 million in the third quarter of fiscal 2012 to an average of approximately $10.0 million in the third quarter of fiscal 2013; (ii) an overall decrease in expenses to approximately $1.3 million for the three months ended March 31, 2013, as compared with approximately $1.4 million for the three months ended March 31, 2012, as described above, and (iii) an increase in unrealized loss to approximately $2.3 million for the three months ended March 31, 2013 as compared with a net increase in unrealized loss of approximately $160,000 for the three months ended March 31, 2012. The realized loss for the three months ended March 31, 2013 was approximately $533,000, as compared with a realized loss of approximately $45,000 for the three months ended March 31, 2012.

Results of Operations for the Nine Months Ended March 31, 2013 and 2012

Total Investment Income

The Company’s investment income for the nine months ended March 31, 2013 decreased $674,287, or 49%, to $688,283, as compared with $1,362,570 for the nine months ended March 31, 2012. The decrease in investment income between the periods can be attributed primarily to the decrease in the size of our Corporate Loan portfolio. For changes in outstanding balances of Commercial Loans, Corporate Loans and Life Settlement Contracts see the discussion, above, under “Results of Operations for The Three Months Ended March 31, 2013 and March 31, 2012.”

Operating Expenses

Interest expense for the nine months ended March 31, 2013 decreased $268,234, or 26%, to $756,985, as compared with $1,025,219 for the nine months ended March 31, 2012. This was due to the payoff of approximately $4,500,000 of outstanding notes in March 2012 and the payment of $1,200,000 of principal on SBA debentures in the third quarter of fiscal 2013.

Salaries and employee benefits for the nine months ended March 31, 2013 decreased $240,306 to $758,654, or approximately 24%, when compared to $998,960 for the nine months ended March 31, 2012. This decrease was due to the cancelation of an employment contract, the termination of a clerical employee and a reduction in salary of an officer pursuant to an employment agreement.

Occupancy costs for the nine months ended March 31, 2013decreased to 12,668 to $117,222 for the nine months ended March 31, 2013 compared with $129,890 during the comparable prior period in 2012. This was the result of closing our New York City office in December 2012.

Legal fees increased $15,341, or 1%, to $1,043,687 in nine months ended March 31, 2013 from $1,028,346 in the corresponding period in fiscal 2012 due, primarily, to ongoing legal work in connection with our lawsuit and settlement with SBA, and, to a lesser extent, SEC filings, foreclosure expense, compliance and general legal matters.

Accounting and compliance fees decreased $123,603 or 21% to $464,060 in the nine months ended March 31, 2013 from $587,663 in the corresponding period in the prior fiscal year. Such decrease was attributable to a decrease of approximately $83,600 in general accounting and other compliance fees, an approximate $26,000 decrease in financial management personnel and an approximate $24,000 decrease in audit fees, which were significantly related to the cessation of SBA-related reporting and not using a consultant for various compliance issues. This decrease was partially offset by a fee of approximately $10,000 in connection with our capital raising activities.

Director fees for the nine months ended March 31, 2013 increased $43,518, or 31%, to $183,286 when compared to $139,768 for the nine months ended March 31, 2012. Such increase resulted from more director meetings during the first nine months of fiscal 2013 than in the comparable period of fiscal 2012 that were attributable, primarily, to increased discussions in connection with the SBA litigation and settlement issues.

Advisory Fees decreased 100% to $0 in the nine months ended March 31, 2013 from $101,984 for the nine months ended March 31, 2012, due to the expiration of our Advisory Agreement in December 2011.

Miscellaneous administrative expenses increased $69,899 or 13% to $603,056 for the nine months ended March 31, 2013 when compared with $533,157 for the nine months ended March 31, 2012. The increase was mainly attributable to a write off of $207,321 in SBA Commitment fees, as partially offset by reduction of foreclosure expenses of $86,424, a decrease in insurance expense of $28,034, related to the cost of our Directors and Officers policy, and a decrease of other miscellaneous fees of $22,964.

Loss and impairment on assets acquired in satisfaction of loans was $233,612 for the nine months ended March 31, 2013. This amount is the loss incurred on the sale of one property, Sealmax, Inc., in December 2012 and a write down of treasury stock to market value at March 31, 2013. There was no comparable amount during the corresponding period in the prior year.

Increase in Net Liabilitiess Resulting from Operations and Net Unrealized/Realized Gains (Losses)

The increase in net liabilities resulting from operations was $6,999,494 for the nine months ended March 31, 2013 compared with $4,003,381 for the nine months ended March 31, 2012. This change in net liabilities from operations between periods was attributable primarily to (i) the decrease in the size of our investment portfolio, which went from an average of approximately $16.7 million in the first nine months of fiscal 2012 to an average of approximately $9.7 million in the first nine months of fiscal 2013; (ii) an overall decrease in expenses to approximately $4.1 million for the nine months ended March 31, 2013, as compared with approximately $4.5 million for the nine months ended March 31, 2012, as described above, and (iii) a increase in unrealized loss to approximately $2.9 million for the nine months ended March 31, 2013 as compared with an increase in unrealized loss of approximately $1.4 million for the nine months ended March 31, 2012. The realized loss for the nine months ended March 31, 2013 was approximately $600,000, as compared with a realized gain of approximately $235,000 for the nine months ended March 31, 2012.

Dividends on Participating Preferred Stock, accrued, but not declared, were $253,125 for the nine months ended March 31, 2013 and 2012.

Financial Condition at March 31, 2013 and June 30, 2012

Assets and Liabilities

Total assets decreased approximately $7.2 million to approximately $11.7 million, at March 31, 2013, as compared with total assets of approximately $18.9 million at June 30, 2012. This decrease was primarily due to decreases in (i) investments of approximately $6.5 million, (ii) accrued interest receivable of approximately $140,000 and (iii) assets acquired and other assets of approximately $1.0 million, as partially offset by an increase in cash of approximately $ .5 million

We also had an decrease in liabilities at March 31, 2013 compared with June 30, 2012 aggregating approximately $200,000, comprised primarily of decreases in debentures payable of $1.2 million, as partially offset by an increase in accrued interest of approximately $750,000 and an increase in dividends payable of approximately $250,000. The increase in dividends payable represents fiscal 2013 preferred stock dividends that have not been declared.

As a result of the deconsolidation of Elk as of April 25, 2013 for financial reporting, Ameritrans subsequent financial statements will report a liability due to Elk. As of March 31, 2013, such liability was approximately $12.5 million. See Note 14. Pro Forma Financial Information.

Liquidity and Capital Resources

Since 2008, the Company has relied on SBA Debentures, funds from operations and, to a lesser extent, private placements of debt for liquidity. At March 31, 2013, we had negative working capital of approximately $20.8 million. Substantially, all of our cash was subject to restrictions pursuant to SBA regulations. At March 31, 2013, 100% of our total indebtedness of $19,975,000 was attributable to the debentures issued to the SBA with fixed rates of interest plus user fees which results in rates ranging from 4.11% to 5.54%.

On June 1, 2012, Elk received a written notice (the “Notice”) from the SBA that declared Elk’s entire indebtedness to the SBA, including principal, accrued interest and any other amounts owed by Elk to the SBA pursuant to Elk’s outstanding debentures, to be immediately due and payable. The Notice indicates that such acceleration of Elk’s obligations relates to an event of default under Elk’s outstanding debentures resulting from Elk’s condition of capital impairment described above, which, according to the Notice, Elk failed to cure within applicable cure periods. According to the Notice, as of May 25, 2012, Elk was indebted to the SBA in the aggregate principal amount of $21,175,000, plus accrued interest of $239,372 (with an additional $2,816 of interest accruing on a per diem basis) (the “Indebtedness”) (as of March 31, 2013, Elk’s aggregate Indebtedness to the SBA was $21,074,492, including $1,099,492 of interest and fees).

However, on October 31, 2012, Elk and the SBA entered into a Settlement Agreement and Mutual Release with respect to Elk’s pending lawsuit against the SBA, pursuant to which Elk was entitled to pay the SBA $7,900,000 (the “Settlement Payment”) by December 15, 2012, as subsequently extended through amendments to January 18, 2013 (the “Settlement Effective Date”) and surrender its SBIC license, in full and final satisfaction of all outstanding SBA leverage owed to the SBA through the Settlement Effective Date plus all additional interest which may accrue through the date the Settlement Payment is made. As a condition to the SBA’s willingness to enter into the Settlement Agreement, Elk executed and delivered a Consent Order of Receivership, to be filed only if the Settlement Payment was not made within the required period, appointing the SBA as permanent, liquidating receiver. As of the Settlement Effective Date, Elk had not remitted the entire amount due and, accordingly, the SBA informed Elk that it would forward a receivership complaint and the Consent Order to the United States Attorney’s Office for the Southern District of New York, for filing with the United States District Court for the Southern District of New York (the “Court”). (See Note 8 to the Notes to Consolidated Financial Statements.)

On April 25, 2013, the Court entered the Consent Order. The Court appointed the SBA as the receiver of Elk for the purpose of marshaling and liquidating all of Elk’s assets and satisfying the claims of creditors therefrom in the order of priority as determined by the Court. The Court entered judgment in the total sum of $21,175,000 (less the $1.2 million paid to the SBA on January 4, 2013) as of October 26, 2012, plus accrued interest of approximately $1,166,000 through April 25, 2013, plus post-judgment interest at the rate allowed by law. The Consent Order dismissed all of the existing officers, directors and agents of Elk.

The interests of the SBA in its capacity as a receiver of Elk will differ materially from, and may be adverse to, the interests of Ameritrans and its stockholders. We anticipate Ameritrans’ business, financial condition and results of operations will be materially and adversely affected by the entry of the Consent Order. As such, the Company may be forced to cease operations and liquidate or seek bankruptcy protection, in which case shareholders may receive little or no value for their investment in the Company’s securities.

Our sources of liquidity have historically been credit lines with banks, long-term SBA debentures that are issued to or guaranteed by the SBA, private sources of debt and equity capital and loan amortization and prepayment. As a RIC, we distribute at least 90% of our investment company taxable income, if any. Consequently, we primarily rely upon external sources of funds to finance growth. We are no longer eligible to borrow funds pursuant to the SBIC program and there can be no assurance that we will be able to raise capital from other sources on acceptable terms or at all, particularly in light of Elk being placed in receivership.

We invested in life settlement contracts which require us to continue premium payments to keep the policies in force through each insured’s life expectancy or until such time the policies are sold. We may sell the policies at any time, at our sole discretion. However, if we choose to keep the policies, as of and after March 31, 2013, aggregate premium payments due through the life expectancy of the insureds are approximately $3,664,000 through June 30, 2017 and approximately $683,000, thereafter (see Note 2 to the consolidated financial statements).

Loan amortization and prepayments also provide a source of funding for Elk. Prepayments on loans are influenced significantly by general interest rates, economic conditions and competition.

Like Elk, Ameritrans will distribute at least 90% of its investment company taxable income, if any, and, accordingly, we will continue to rely upon external sources of funds to finance growth. In order to provide the funds necessary for our expansion strategy, we will seek to raise additional capital and may incur, from time to time, additional bank indebtedness. There can be no assurances that such additional financing will be available on acceptable terms or at all.

At March 31, 2013, we had cash on hand and cash equivalents aggregating approximately $695,000 and negative working capital of approximately $10.5 million. Substantially, all of our cash was subject to restrictions pursuant to SBA regulations at March 31, 2013.

Recently Issued Accounting Standards

Refer to Note 12 in the accompanying consolidated financial statements for a summary of the recently issued accounting pronouncements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company’s business activities contain elements of risk. The Company considers the principal types of risk to be fluctuations in interest rates and portfolio valuations. The Company considers the management of risk essential to conducting its businesses. Accordingly, the Company’s risk management systems and procedures are designed to identify and analyze the Company’s risks, to set appropriate policies and limits and to continually monitor these risks and limits by means of reliable administrative and information systems and other policies and programs.

The Company values its investment portfolio at fair value as determined in good faith by the Company’s Board of Directors in accordance with the Company’s valuation policy. Unlike certain lending institutions, the Company is not permitted to establish reserves for loan losses. Instead, the Company must value each individual investment and portfolio loan on a quarterly basis. The Company records unrealized depreciation on investments and loans when it believes that an asset has been impaired and full collection is unlikely. Without a readily ascertainable market value, the estimated value of the Company’s portfolio of investments may differ significantly from the values that would be placed on the investment portfolio if there existed a ready market for the investments. The Company adjusts the valuation of the portfolio quarterly to reflect the Board of Directors’ estimate of the current fair value of each component of the portfolio. Any changes in estimated fair value are recorded in the Company’s statement of operations as net unrealized appreciation or depreciation on investments.

In addition, the illiquidity of our investment portfolio may adversely affect our ability to dispose of investments at times when it may be advantageous for us to liquidate such investments. Also, if we were required to liquidate some or all of the investments in the portfolio, the proceeds of such liquidation might be significantly less than the current value of such investments. Because we borrow money to make loans and investments, our net operating income is dependent upon the difference between the rate at which we borrow funds and the rate at which we loan and invest these funds. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our interest income. As interest rates rise, our interest costs increase, decreasing the net interest rate spread we receive and thereby adversely affect our profitability. Although we intend to continue to manage our interest rate risk through asset and liability management, including the use of interest rate swaps, general rises in interest rates will tend to reduce our interest rate spread in the short term.

Assuming that the assets and liabilities were to remain constant and no actions were taken to alter the existing interest rate sensitivity, based on the balances at March 31, 2013, a hypothetical immediate 1% increase in interest rates would have resulted in an additional net increase in net assets from operations of $69,929 at March 31, 2013. This is based on a 1% increase in the Company’s loans receivable at variable interest rate terms. There is no offset to this because, at March 31, 2013, the Company had no outstanding variable rate loans payable. This hypothetical does not take into account interest rate floors or caps on the Company’s loan receivable portfolio. No assurances can be given however, that actual results would not differ materially from the potential outcome simulated by these estimates.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining adequate disclosure controls and procedures (as defined in Rules 13a-15( e ) and 15d-15( e) under the Exchange Act). Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures. Based on such evaluation, our management, including our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2013.

Because of their inherent limitations, disclosure controls and procedures may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risks that disclosure controls and procedures may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the three months and nine months ended March 31, 2013 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

IMPORTANT FACTORS RELATING TO FORWARD-LOOKING STATEMENTS

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. The matters discussed in this Quarterly Report, as well as in future oral and written statements by management of Ameritrans Capital Corporation, that are forward-looking statements are based on current management expectations that involve substantial risks and uncertainties which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. Forward-looking statements relate to future events or our future financial performance. We generally identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar words. Important assumptions include our ability to originate new investments, achieve certain margins and levels of profitability, the availability of additional capital, and the ability to maintain certain debt to asset ratios. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly Report should not be regarded as a representation by us that our plans or objectives will be achieved. The forward-looking statements contained in this Quarterly Report include but are not limited to statements as to:

our ability to continue as a going concern;

our ability to operate without Elk’s SBIC license;

our ability to operate with Elk in receivership;

our future operating results;

our business prospects and the prospects of our existing and prospective portfolio companies;

the impact of investments that we expect to make;

our informal relationships with third parties;

the dependence of our future success on the general economy and its impact on the industries in which we invest;

the ability of our portfolio companies to achieve their objectives;

our expected financings and investments;

our regulatory structure and tax treatment;

our ability to operate as a BDC and a RIC; and

the adequacy of our cash resources and working capital.

You should not place undue reliance on these forward-looking statements. The forward-looking statements made in this Quarterly Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date of this Quarterly Report.

PART II. OTHER INFORMATION

INFORMATION INCORPORATED BY REFERENCE. Certain information previously disclosed in Part I of this quarterly report on Form 10-Q are incorporated by reference into Part II of this quarterly report on Form 10-Q.

Item 1. Legal Proceedings

On March 20, 2012, Elk filed a lawsuit against the SBA and its Administrator in the United States District Court for the District of Columbia (the “District Court”) (Case No. 1200438 CKK), seeking temporary, preliminary, and permanent injunctive relief; declaratory relief; and damages (the “Litigation”). The injunctive relief sought by Elk included: (i) setting aside the SBA’s decision to transfer Elk to the SBA’s Office of Liquidation (see Note 4, Debentures Payable to SBA), (ii) requiring the SBA to provide Elk with a commercially reasonable amount of time to present a plan for curing Elk’s position of capital impairment and (iii) requiring the SBA to accept legitimate commitment letters from qualified investors in the Company as a cure to Elk’s position of capital impairment, so long as those letters guaranty that funds identified in the commitment letters are transferred by the Company to Elk. Elk’s lawsuit also seeks monetary damages in an amount to be determined at trial.

On the evening of March 20, 2012, the SBA and Elk notified the District Court that the SBA had agreed to suspend liquidation activities and take no action to revoke Elk's license for 15 days from March 21, 2012. On March 21, 2012, the District Court held a Scheduling Conference in connection with the Litigation. During the Scheduling Conference, the SBA represented that it would suspend liquidation activities involving Elk and refrain from taking any action to revoke Elk's license until April 25, 2012. This representation on the record by the SBA made Elk's motion for a temporary restraining order seeking to preserve the status quo pending a decision on Elk's motion for a preliminary injunction moot. Also on March 21, 2012, the District Court set (i) a briefing schedule on Elk's motion for a preliminary injunction and (ii) a schedule related to the SBA’s production of a complete certified administrative record concerning the events identified by Elk in the lawsuit that are the subject of the Litigation.

On April 24, 2012, the District Court denied Elk’s motion for a preliminary injunction and ordered the SBA to file a response to Elk’s lawsuit no later than June 4, 2012. Accordingly, since April 25, 2012, the SBA was no longer required to suspend liquidation activities with respect to Elk.

While Elk believed the settlement conditions proposed by the SBA were vague and created additional uncertainty, in a series of communications designed to create greater certainty, Elk expressed its willingness to agree to substantially all of the terms of the SBA’s proposal and in accordance with SBA’s proposal and committed to cure its capital impairment within 60 days from the date of any such settlement. Moreover, Elk committed to a capital infusion within that time period sufficient to reduce Elk’s capital impairment percentage below 35%, a level that is significantly below the 40% threshold required under SBA regulations. Elk also advised the SBA of its view that, based on Elk’s historic returns, the capital infusion with which Elk proposed to cure its capital impairment would be sufficient to return Elk to profitability and would be advantageous to the SBA inasmuch as it would permit Elk to continue to pay interest on its SBA debentures and repay certain debentures that are scheduled to mature in October 2012. More importantly, an amicable settlement would permit Elk to return to the active business of providing capital to small businesses. In its various communications, Elk offered to meet in person with representatives of SBA to discuss its proposal.

Although Ameritrans believed its counter-proposals were consistent in material respects with the proposal initially set forth by the SBA, on May 16, 2012 the SBA indicated, through an e-mail received from SBA’s counsel, that the SBA “was not interested in exploring those proposals,” refused to consider a refinancing of Elk’s debentures and will be “proceeding with liquidation activities.” Ameritrans believes that the SBA’s response to its settlement proposals is consistent with its arbitrary and capricious conduct to date.

According to the Notice, as of May 25, 2012, Elk was indebted to the SBA in the aggregate principal amount of $21,175,000, plus accrued interest of $239,372 (with an additional $2,816 of interest accruing on a per diem basis) (the “Indebtedness”) (after making a payment of $1,200,000 on January 4, 2013, as of March 31, 2013, Elk’s aggregate Indebtedness to the SBA was $21,074,492, including $1,099,492 of interest and fees).

The Notice stated that Elk was required to remit the entire amount of the Indebtedness to the SBA no later than June 15, 2012. In addition the Notice stated that the SBA may avail itself of any remedy available to it under the Act, including institution of proceedings for the appointment of SBA or its designee as receiver for Elk’s assets. The interests of the SBA or its designee in its capacity as a receiver of Elk would differ materially from the interests of our stockholders. In the event Elk is placed in receivership or is otherwise forced to liquidate, our business, financial condition and results of operations would be materially adversely affected. If Elk is placed into receivership, we may be forced to cease operations and liquidate or seek bankruptcy protection, in which case shareholders may receive little or no value for their investment in our securities.

Elk filed an amended complaint in the matter while also pursuing a settlement proposal with the Office of Liquidation. The amended complaint includes information that was discovered during Elk’s review of the SBA’s “Administrative Record.”

On October 31, 2012 Elk and the SBA entered into the Settlement Agreement with respect to the Litigation. The Settlement Agreement, as amended on December 7, 2012, provided, among other things, for the payment by Elk to the SBA the $7,900,000 Settlement Payment by January 7, 2013 and the surrender of Elk’s small business investment company license, in full and final satisfaction of all outstanding SBA leverage owed to the SBA through the Effective Date plus all additional interest which may accrue through the date the Settlement Payment is made. In connection with the entry into the Settlement Agreement, Elk executed and delivered a Consent Order appointing the SBA as permanent, liquidating receiver of Elk, to be filed by the SBA only in the event that Elk failed to pay the Settlement Payment pursuant to the Settlement Agreement, as amended. On January 4, 2013, the SBA agreed to extend the January 7, 2013 deadline until January 18, 2013 (the “Payoff Deadline”), provided that Elk promptly remits to the SBA all of the proceeds (up to the amount of the Settlement Payment) from any asset sales consummated by Elk prior to such date. As a condition to the SBA’s agreement to the extended Payoff Deadline, Elk paid $1.2 million to the SBA on January 4, 2013 from its cash on hand in partial satisfaction of the Settlement Payment, which left $6.7 million of the Settlement Payment remaining to be paid as of such date.

As of January 18, 2013, Elk had not secured the balance of the Settlement Payment to be paid to the SBA. Accordingly, Elk requested an additional extension of the Payoff Deadline to January 31, 2013. On January 22, 2013, the SBA informed Elk that the SBA had decided it would not grant Elk another extension of the Payoff Deadline. As a result of Elk’s failure to pay the balance of the Settlement Payment by January 18, 2013, the SBA informed Elk that it would forward a receivership complaint and the Consent Order to the United States Attorney’s Office for the Southern District of New York, for filing with the United States District Court for the Southern District of New York. The SBA further informed Elk that should Elk pay the balance of the Settlement Payment prior to the entry of the receivership order in the U.S. District Court, then the SBA would accept such payment in full satisfaction of the Settlement Payment and would ask that the receivership proceedings be rescinded.

However, the requisite financing was not obtained and no additional payments were made.

On April 25, 2013, the United Stated District Court for the Eastern District of New York (the “Court”) entered the Consent Order in the proceeding entitled United States of America, on behalf of its agency, the United States Small Business Administration v. Elk Associates Funding Corp. (Case No. 2:13-cv-01326-LDW-GRB). The Court appointed the SBA as the receiver of Elk for the purpose of marshaling and liquidating all of Elk’s assets and satisfying the claims of creditors therefrom in the order of priority as determined by the Court. The Court entered judgment in the total sum of $21,175,000 (less the $1.2 million paid to the SBA on January 4, 2013) as of October 26, 2012, plus accrued interest of approximately $1,166,000 through April 25, 2013, plus post-judgment interest at the rate allowed by law. The Consent Order dismissed all of the existing officers, directors and agents of Elk.

Except for the matter referred to above, the Company is not currently a party to any material legal proceeding. From time to time, the Company is engaged in various legal proceedings incident to the ordinary course of its business. In the opinion of the Company’s management and based upon the advice of legal counsel, there is no proceeding pending, or to the knowledge of management threatened, which in the event of an adverse decision would result in a material adverse effect on the Company’s results of operations or financial condition.

Item 1A. Risk Factors

Part I, Item 1A — “Risk Factors,” of our Annual Report on Form 10-K for the year ended June 30, 2012 (the “2012 Annual Report”), describes important factors that could materially affect our business, financial condition and/or future results and cause our operating results to differ materially from those indicated, projected or implied by forward-looking statements made in this Quarterly Report or presented elsewhere by management from time to time. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company; additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results and cause our operating results to differ materially from those indicated, projected or implied by forward-looking statements made in this Quarterly Report or presented elsewhere by management from time to time.

There were no material changes during the three months ended March 31, 2013 to the risk factors set for in the 2012 Annual Report, except for the addition of the following risks:

The surrender of Elk’s SBIC license and Elk’s entry into receivership will materially and adversely affect our business.

In accordance with the Settlement Agreement between Elk and the SBA, Elk surrendered its SBIC license. Following the surrender of Elk’s SBIC license, Elk wis no longer eligible for additional financing from the SBA, which it has relied on historically. In addition, the surrender of Elk’s SBIC license may materially and adversely affect our ability to raise capital in public or private markets, which is critical to the execution of our business strategy. If we are unable to attract alternative sources of financing on acceptable terms, or at all, our liquidity, capital resources, results of operations and ability to continue as a going concern could be materially harmed.

As a result of Elk’s failure to comply with the terms of its settlement agreement with the SBA on a timely basis and its entry into receivership, we and the value of our securities could be materially and adversely affected.

On April 25, 2013, the Court entered the Consent Order, in the Receivership Proceeding. The Court appointed the SBA as the receiver of Elk for the purpose of marshaling and liquidating all of Elk’s assets and satisfying the claims of creditors therefrom in the order of priority as determined by the Court. The Court entered judgment in the total sum of $21,175,000.00 (less the $1.2 million paid to the SBA on January 4, 2013) as of October 26, 2012, plus accrued interest of approximately $1,166,000 through April 25, 2013, plus post-judgment interest at the rate allowed by law. The Consent Order dismissed all of the existing officers, directors and agents of Elk.

The interests of the SBA in its capacity as a receiver of Elk will differ materially from, or be adverse to, the interests of Ameritrans and its stockholders. We anticipate that our business, financial condition and results of operations will be materially and adversely affected by the entry of the Consent Order. As such, we may be forced to cease operations and liquidate or seek bankruptcy protection. Regardless of whether we take such actions, as a result of Elk’s receivership, shareholders may receive little or no value for their investment in the Company’s securities.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Default Upon Senior Securities

See our Current Report on Form 8-K filed with the Securities and Exchange Commission on January 25, 2012 and Note 4 to our consolidated financial statements, each of which is incorporated herein by reference.

We have not declared or paid dividends on our 9-3/8% Cumulative Participating Redeemable Preferred Stock; $.01 par value, ($12.00 face value) for the quarterly periods ended September 30, 2010 through March 31, 2013. Accordingly, as of the date of this report, an aggregate of $928,125 of dividends on such preferred stock have accrued, but have not been declared or paid. In accordance with the terms of the preferred stock, holders of the preferred stock are currently entitled to elect a majority of Ameritrans’ board of directors.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

Item 6. Exhibits

The Exhibits filed as part of this report on Form 10-Q are listed on the Exhibit Index immediately preceding such Exhibits, which Exhibit index is incorporated by reference.

Exhibit Index

(a )

Exhibits

31.1	Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (attached hereto)

31.2	Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (attached hereto)

32.1	Certification pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (attached hereto)

32.2	Certification pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (attached hereto)

(All other items of Part II are inapplicable)

AMERITRANS CAPITAL CORPORATION

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.

	AMERITRANS CAPITAL CORPORATION

Dated: May 15, 2013

	By:	/s/ Michael Feinsod
		Michael Feinsod
		Chief Executive Officer and President

AMERITRANS CAPITAL CORP 10-Q