U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q þ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act 1934 for the Quarterly Period Ended December 31, 2010 or  ̈ 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)  Delaware52-2102424(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  ̈ 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 filerþNon-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  ̈ No þ The number of shares of registrant’s common stock, par value $.0001 per share, outstanding as of February 11, 2011 was 3,395,583. The number of shares of registrant’s 93⁄8 cumulative participating redeemable preferred stock outstanding as of February 11, 2011 was 300,000.    AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES FORM 10-Q TABLE OF CONTENTS  PART I. FINANCIAL INFORMATION3ITEM 1.FINANCIAL STATEMENTS3ITEM 2.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS29ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK33ITEM 4.CONTROLS AND PROCEDURES34PART II. OTHER INFORMATION36Item 1.Legal Proceedings36Item 1A.Risk Factors36Item 2.Unregistered Sales of Equity Securities and Use of Proceeds36Item 3.Default upon Senior Securities36Item 4.Removed and Reserved36Item 5.Other Information36Item 6.Exhibits36Exhibit Index36(a)Exhibits36SIGNATURES37      PART I.    FINANCIAL INFORMATION ITEM 1.   FINANCIAL STATEMENTS AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES  ASSETS  December 31, 2010June 30, 2010(Unaudited)AssetsInvestments at fair value
(cost of $31,760,417  and $29,220,386, respectively):Non-controlled/non-affiliated investments$27,944,928$24,904,497Non-controlled affiliated investments4,7614,761Controlled affiliated investments363,697546,440Total investments at fair value28,313,38625,455,698Cash and cash equivalents1,562,6127,362,491Accrued interest receivable473,405417,925Assets acquired in satisfaction of loans1,075,54728,325Furniture, equipment and leasehold improvements, net54,17140,254Deferred loan costs, net366,735402,160Prepaid expenses and other assets233,411202,509Total assets$32,079,267$33,909,362  The accompanying notes are an integral part of these consolidated financial statements.  3   AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES  LIABILITIES AND NET ASSETS  December 31,
2010June 30,
2010Liabilities and Net Assets(unaudited)Liabilities:Debentures payable to SBA$21,175,000$21,175,000Notes payable, banks-370,000Notes payable, other3,000,0003,000,000Accrued expenses and other liabilities612,949576,242Accrued interest payable353,341327,576Dividends payable168,75084,375Total liabilities25,310,04025,533,193Commitments and contingencies (Notes 2, 3, 4 and 8)Net Assets:Preferred stock 9,500,000 shares authorized, none issued--9-3/8% cumulative participating redeemable preferred stock, $.01 par value, $12.00 face value, 500,000 shares authorized; 300,000 shares issued and outstanding3,600,0003,600,000Common stock, $.0001 par value, 45,000,000 shares authorized, 3,405,583 shares issued; 3,395,583 shares outstanding341341Additional paid-in capital21,330,54421,330,544Losses and distributions in excess of earnings(14,644,627)(12,720,028)Net unrealized depreciation on investments(3,447,031)(3,764,688)Total6,839,2278,446,169Less:  Treasury stock, at cost, 10,000 shares of common stock(70,000)(70,000)Total net assets6,769,2278,376,169Total liabilities and net assets$32,079,267$33,909,362Net asset value per common share$0.93$1.40  The accompanying notes are an integral part of these consolidated financial statements.  4   AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS  For the three months endedFor the six months endedDecember 31,
2010December 31,
2009December 31,
2010December 31,
2009Investment income:(unaudited)(unaudited)(unaudited)(unaudited)Interest on loans receivable:Non-controlled/non-affiliated investments$564,298$436,539$1,044,993$674,063Non-controlled affiliated investments----Controlled affiliated investments10,84211,69121,80023,545575,140448,2301,066,793697,608Fees and other income6,39136,35815,11640,740Total investment income581,531484,5881,081,909738,348Expenses:Interest325,440181,154653,032347,413Salaries and employee benefits367,209464,256731,727914,412Occupancy costs42,63070,97886,415145,853Professional fees350,743301,773617,032510,611Directors fees and expenses14,26118,54859,41949,346Advisory Fee71,674268,932121,138313,932Other administrative expenses206,928180,515373,661305,633Total expenses1,378,8851,486,1562,642,4242,587,200Net investment loss(797,354)(1,001,568)(1,560,515)(1,848,852)Net realized gains (losses) on investments:Non-controlled/non-affiliated investments36,771(463,550)(195,334)(689,944)36,771(463,550)(195,334)(689,944)Net unrealized appreciation (depreciation) on
investments(83,062)744,234317,657(1,156,083)Net realized/unrealized gain (losses) on investments(46,291)280,684122,323(1,846,027)Net decrease in net assets from operations(843,645)(720,884)(1,438,192)(3,694,879)Distributions to preferred shareholders(84,375)-(168,750)-Net decrease in net assets from operations available to common shareholders$(928,020)$(720,884)$(1,606,942)$(3,694,879)Weighted Average Number of Common Shares Outstanding:Basic and diluted3,395,5833,395,5833,395,5833,395,583Net Decrease in Net Assets from Operations Per Common Share:Basic and diluted$(0.27)$(0.21)$(0.47)$(1.09)  The accompanying notes are an integral part of these consolidated financial statements.  5   AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS  For the six months endedDecember 31,
2010December 31,
2009(unaudited)(unaudited)Increase (decrease) in net assets from operations:Net investment loss$(1,560,515)$(1,848,852)Net realized loss from investments(195,334)(689,944)Unrealized appreciation (depreciation) on investments317,657(1,156,083)Net decrease in net assets resulting from operations(1,438,192)(3,694,879)Shareholder distributions:Distributions to preferred shareholders(168,750)-Capital share transactions:Stock options compensation expense-26,897Net increase (decrease) in net assets resulting from capital shares
transactions and shareholder distributions(168,750)26,897Total decrease in net assets(1,606,942)(3,667,982)Net assets:Beginning of period8,376,16915,143,842End of period$6,769,227$11,475,860Net assets per preferred$3,600,000$3,600,000Net assets per common$3,169,277$7,875,860  The accompanying notes are an integral part of these consolidated financial statements.  6   AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS  For the six months endedDecember 31,
2010December 31,
2009(unaudited)(unaudited)Cash flows from operating activities:Net decrease in net assets from operations$(1,438,192)$(3,694,879)Adjustments to reconcile net decrease in net assets from operations to net cash used in operating activities:Depreciation and amortization39,53738,061Deferred compensation-26,897Net realized losses on investments195,334689,944Net unrealized (appreciation) depreciation on investments(317,657)1,156,083Portfolio investments(10,764,263)(2,057,564)Proceeds from principal receipts, sales, maturity of investments8,028,8982,808,102Transfer out of portfolio to assets acquired in satisfaction of loans(1,047,222)-Changes in operating assets and liabilities:Accrued interest receivable(55,480)126,973Prepaid expenses and other assets(30,903)38,841Accrued expenses and other liabilities36,707(16,097)Accrued interest payable25,76513,418Total adjustments(3,889,284)2,824,658Net cash used in operating activities(5,327,476)(870,221)Cash flows from investing activities:Purchases of furniture and equipment(18,028)(4,230)Net cash used in investing activities(18,028)(4,230)Cash flows from financing activities:Repayment of note payable, banks(370,000)-Proceeds from debentures-9,175,000Proceeds from note payable, other-2,025,000Deferred loan cost-(314,243)Dividends paid on preferred stock(84,375)-Net cash provided by (used in) financing activities(454,375)10,885,757Net increase in cash and cash equivalents(5,799,879)10,011,306Cash and cash equivalents:Beginning of period7,362,491885,434End of period$1,562,612$10,896,740Supplemental disclosure of cash flow information:Cash paid during the period for:Interest$627,267$333,995Supplemental disclosure of non cash investing and financing activities:Accrued dividends on preferred stock$168,750$-  The accompanying notes are an integral part of these consolidated financial statements.  7   AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INVESTMENTS   Portfolio Valuation as of December 31, 2010 (Unaudited)Portfolio Company (1)Investment
Investment Rate/MaturityPrincipalNet CostValueCommercial Loans Receivable (96.76%)(4)PPCP Inc. (6)Computer SoftwareBusiness Loan
8.00%, due 7/08 and 1/10$36,691$36,691$-Geronimo ATM Fund LLC (6)ATM OperatorCollateralized Business Loan
12.0%, due 5/09123,282123,282-Cleaners of North Beach, LLCDry CleanersCollateralized Business Loan
5.50%, due 5/119,1319,1319,131Crown Cleaners of Miami LakesDry CleanersCollateralized Business Loan
6.00%, due 7/11730730730Crown Cleaners of Miami LakesDry CleanersCollateralized Business Loan
6.00%, due 7/112,8622,8622,862Andy Fur Dry Cleaning, Inc. (6)Dry CleanersCollateralized Business Loan
11.50%, due 1/1012,10312,103-Vivas & Associates, Inc. (6)Nail SalonCollateralized Business Loan
9.00%, due 1/1011,98511,985-Monticello Desserts, Inc.Retail BakeryCollateralized Business Loan
10.50%, due 4/105,1535,1535,153E&Y General Construction Co. (6)Construction ServicesSenior Real Estate Mortgage
10.50%, due 10/10870,791870,791870,791Soundview Broadcasting LLCTelevision and BroadcastingSenior Real Estate Mortgage
6.00%, due 9/111,851,9871,851,9871,851,987Golden Triangle Enterprises LLCRetail Food ServiceSenior Real Estate Mortgage
4.90%, due 12/13252,740252,740252,740Conklin Services & Construction Inc. (6)Specialty Construction and MaintenanceCollateralized Business Loan
11.00%, due 10/081,648,1811,648,1811,450,000Mountain View Bar & Grill Inc. (6)Retail Food ServiceCollateralized Business Loan
12.00%, due 5/09406,067406,067406,067J. JG. Associates, Inc. (6)Consumer Receivable CollectionsSenior Loan
no stated rate, no maturity187,736187,73687,750J. JG. Associates, Inc. (6)Consumer Receivable CollectionsSenior Loan
no stated rate, no maturity36,45136,45136,451Car-Matt Real Estate LLC (6)Real Estate MortgageSenior Real Estate Mortgage
12.00%, due 11/08135,577135,577135,577   The accompanying notes are an integral part of these consolidated financial statements.  8   AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INVESTMENTS (continued)  Portfolio Valuation as of December  31, 2010
(Unaudited)Portfolio Company (1)Investment
Investment Rate/MaturityPrincipalNet CostValueCMCA, LLC (3)Consumer Receivable CollectionsCollateralized Business Loan
12,00% no stated maturity247,436247,436247,436CMCA, LLC #2 (3)Consumer Receivable CollectionsCollateralized Business Loan
12.00%, no stated maturity106,261106,261106,261Adiel Homes Inc.(6)Construction ServicesSenior Real Estate Mortgage
12.00%, due 1/09270,000270,000270,000Adiel Homes Inc.(6)Construction ServicesSenior Real Estate Mortgage
12.0%, no stated maturity89,39689,39689,396Western Pottery LLCCeramic Sanitaryware DistributorSubordinated Business Loan
4.25%, due 6/09361,609361,609361,609Greaves-Peters Laundry Systems Inc.
LaundromatCollateralized Business Loan
10.90%, due 9/1320,47120,47120,471Patroon Operating Co. LLC
Retail Food ServiceCollateralized Business Loan
10.00%, due 6/12250,000250,000250,000Other Miscellaneous Loans (5)116,868116,86895,814Total Commercial Loans$7,053,508$6,550,226Corporate Loans Receivable (274.61%)(4)Charlie Browns Acquisition Co.Retail Food ServiceTerm Loan B
10.25%, due 10/132,268,4002,268,4001,587,880Resco Products Inc.Diversified ManufacturingTerm Loan, First Lien
8.50%, due 6/131,357,4491,357,4491,357,449Alpha Media Group Inc.PublishingTerm Loan, First Lien
12.00%, due 8/142,288,4712,224,8071,315,871BP Metals LLCDiversified ManufacturingTerm Loan, First Lien
10.0%, due 6/13796,429796,429796,429Hudson Products Holdings Inc.
Diversified ManufacturingTerm Loan, First Lien
8.0%, due 8/151,272,9551,242,5611,234,766Education Affiliates Inc.
Private EducationTerm Loan, First Lien
8.0%, due 1/15857,181841,293857,182Fairway Group Holdings Corp.
Diversified SupermarketsTerm Loan, First Lien
12.0%, due 1/15990,002966,146994,952Shearers Foods Inc.
Wholesale Food SupplierTerm Loan, First Lien
12.00%, due 6/151,017,762995,8871,025,395Syncsort Incorporated
Data Protection SoftwareTerm Loan, First Lien
7.50%, due 03/15975,000957,049975,000Airvana Network Solutions Inc.
Infrastructure Software for Wireless ProvidersTerm Loan, First Lien
11.00%, due 08/141,183,3331,155,8761,189,250Wyle Services Corporation
Multi-Platform Defense SystemsTerm Loan, First Lien
7.75%, due 03/161,246,8721,229,1581,253,107Centerplate Inc.
Stadium Concessions ProviderTerm Loan, First Lien
10.75%, due 09/16997,500969,150997,500Impact Confections Inc.
Candy ManufacturerTerm Loan, First Lien
15.00%, due 07/151,500,0001,500,0001,500,000Clopay Ames True Temper Holding
Plastics ManufacturerTerm Loan, First Lien
7.75%, due 09/161,234,3751,210,4171,239,066Affinity Group Inc.
Direct marketing organization-focus RVsTerm Loan, First Lien
11.50%, due 12/161,250,0001,224,2481,250,000Miramax Film NY, LLC
Film LibraryTerm Loan, First Lien
7.75%, due 06/161,000,000980,0001,015,000Total Corporate Loans$19,918,870$18,588,847Medallion Loans Receivable (2.90%) (4)Boston Taxicab Medallion Portfolio1  Medallion Loan
8.25% Weighted Average Rate7,7347,7347,734Chicago Taxicab Medallions2 Medallion Loans
8.00% Weighted Average Rate42,55142,55142,551Florida Taxicab1 Medallion Loan
12.00% Rate146,204146,204146,204Total Medallion Loans$196,489$196,489Total loans receivable$27,168,867$25,335,562Life Insurance Settlement Contracts (29.0%) (4)Life Settlement Contracts5 life insurance policies, aggregate
face value of $17,659,809$3,153,423$1,962,800  The accompanying notes are an integral part of these consolidated financial statements.  9  AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INVESTMENTS (continued)   Portfolio Valuation as of December 31, 2010
(Unaudited)Portfolio Company (1)Investment
Investment Rate/MaturityPrincipalNet CostValueEquity Investments (15.00%)(4)MBS Serrano, Ltd.Rental Real Estate Limited PartnershipLimited Partnership Interest$$50,600$8,487MBS Colonnade, Ltd.Rental Real Estate Limited PartnershipLimited Partnership Interest50,00012,009MBS Sage Creek, Ltd.Rental Real Estate Limited PartnershipLimited Partnership Interest50,00018,800MBS Walnut Creek, Ltd.Rental Real Estate Limited PartnershipLimited Partnership Interest25,000-MBS Lodge At Stone Oak, Ltd.Rental Real Estate Limited PartnershipLimited Partnership Interest60,00030,896238 W. 108 Realty LLC (2)Residential Real Estate Development5.00% LLC Interest100,0004,761Asset Recovery & Management, LLC (3)Consumer Receivable Collections30.00% LLC Interest6,0006,000CMCA, LLC (3)Consumer Receivable Collections30.00% LLC Interest4,0004,000Soha Terrace II LLCReal Estate Development4.80% LLC Interest700,000918,295Fusion TelecommunicationsInternet Telephony69,736 Shares of Common Stock367,0276,276EraGen BiosciencesAnalytic Compounds17,000 shares of Common Stock25,5005,500Total equity investments1,438,1271,015,024Total investments$31,760,417$28,313,386  (1) Unless otherwise noted, all investments are pledged as collateral for the Notes Payable, Banks (see Note 5 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 December 31, 2010, 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 assets. (5) Other small balance loans. (6) Loan receivable is on non-accrual status and therefore is considered non-income producing.   The accompanying notes are an integral part of these consolidated financial statements.  10   AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INVESTMENTS   Portfolio Valuation as of June 30, 2010Portfolio Company(1)Investment
Investment Rate/MaturityPrincipalNet CostValueCommercial Loans  Receivable (104.13%)(4)PPCP Inc .(6)Business Loan$36,691$36,691$-Computer Software8.0%, due 7/08 and 1/10Geronimo ATM Fund LLC. (6)Collateralized Business Loan146,822146,82219,234ATM Operator12.0%, due 5/09Cleaners of North Beach, LLCCollateralized Business Loan13,80013,80013,800Dry Cleaners5.5%, due 5/11Crown Cleaners of Miami LakesCollateralized Business Loan1,8581,8581,858Dry Cleaners6.0%, due 7/11Crown Cleaners of Miami LakesCollateralized Business Loan10,23610,23610,236Dry Cleaners6.0%, due 7/11Andy Fur Dry Cleaning, Inc. (6)Collateralized Business Loan12,10312,103-Dry Cleaners11.5%, due 1/10Vivas & Associates, Inc. (6)Collateralized Business Loan11,98511,985-Nail Salon9.0%, due 1/10Monticello Desserts, Inc.Collateralized Business Loan26,03326,03326,033Retail Bakery10.50%, due 4/10Just Salad LLCCollateralized Business Loan300,000300,000300,000Retail Food Service10.0%, due 10/10   The accompanying notes are an integral part of these consolidated financial statements.  11   AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INVESTMENTS (continued)   Portfolio Valuation as of June 30, 2010Portfolio Company(1)Investment
Investment Rate/MaturityPrincipalNet CostValueE&Y General Construction Co.(6)Senior Real Estate Mortgage870,791870,791870,791Construction Services10.5%, due 10/10Sealmax, Inc. (6)Senior Real Estate Mortgage914,195914,195775,000Construction Services12.0%, due 4/11Soundview Broadcasting LLCSenior Real Estate Mortgage1,882,1891,882,1891,882,189Television and Broadcasting6.0%, due 9/11Golden Triangle Enterprises LLCSenior Real Estate Mortgage276,370276,370276,370Retail Food Service4.9%, due 12/13Goldhkin Wholesale Ent. Inc.Senior Real Estate Mortgage570,413570,413570,413Retail Gasoline11.5%, due 7/12Conklin Services & Construction Inc. (6)Collateralized Business Loan1,648,1811,648,1811,400,954Specialty Construction and Maintenance11.0%, due 10/08Mountain View Bar & Grill Inc. (6)Collateralized Business Loan406,067406,067406,067Retail Food Service12.0%, due 5/09J. JG. Associates, Inc. (6)Senior Loan190,236190,23687,750Consumer Receivable Collectionsno stated rate, no maturityJ. JG. Associates, Inc. (6)Senior Loan36,78136,78122,960Consumer Receivable Collectionsno stated rate, no maturityCar-Matt Real Estate LLC (6)Senior Real Estate Mortgage135,577135,577135,577Real Estate Mortgage12.0%, due 11/08633 Mead Street, LLC (3)(6)Senior Real Estate Mortgage215,000215,000175,000Unimproved real estate15.0%, due 8/08CMCA, LLC (3)Collateralized Business Loan254,379254,379254,379Consumer Receivable Collections12.0%, no stated maturityCMCA, LLC #2 (3)Collateralized Business Loan106,261106,261106,261Consumer Receivable Collections12.0%, no stated maturityAdiel Homes Inc. (6)Senior Real Estate Mortgage270,000270,000270,000Construction Services12.0%, due 1/09Adiel Homes Inc. (6)Senior Real Estate Mortgage89,38689,38689,386Construction Services12.0%, no stated maturityWestern Pottery LLCSubordinated Business Loan361,609361,609361,609Ceramic Sanitaryware Distributor4.25.%, due 6/09Greaves-Peters Laundry Systems Inc.Collateralized Business Loan292,562292,562292,562Laundromat10.9%, due 9/13   The accompanying notes are an integral part of these consolidated financial statements.  12   AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INVESTMENTS (continued)   Portfolio Valuation as of June 30, 2010Portfolio Company(1)Investment
Investment Rate/MaturityPrincipalNet CostValuePatroon Operating Co. LLCRetail Food ServiceCollateralized Business Loan
10.0%, due 6/12250,000250,000250,000Other Miscellaneous Loans (5)144,973144,973123,919Total Commercial Loans9,474,4988,722,348Corporate Loans Receivable (168.71%)(4)Charlie Browns Acquisition Co.Term Loan B2,146,1012,146,1012,038,796Retail Food Service10.25%, due 10/13Resco Products Inc.Term Loan, First Lien1,494,4051,494,4051,494,405Diversified Manufacturing8.5%, due 6/13Alpha Media Group Inc.Term Loan, First Lien2,155,0142,082,778937,725Publishing12.0%, due 8/14Centaur LLC (6)Term Loan, First Lien1,384,9141,365,1391,108,004Gaming11.25%, due 10/12X-Rite Inc.Term Loan, First Lien1,047,9481,043,1071,039,059Process Control Instruments7.5%, due 10/12BP Metals LLCTerm Loan, First Lien859,567859,567859,567Diversified Manufacturing10.03%, due 6/13Hudson Products Holdings Inc.Term Loan, First Lien1,272,9551,239,3471,234,766Diversified Manufacturing8.5%, due 8/15Education Affiliates Inc.Term Loan, First Lien884,538866,663884,538Private Education8.0%, due 1/15Fairway Group Holdings Corp.Term Loan, First Lien995,000968,162995,000Diversified Supermarkets12.0%, Due 1/15Shearers Foods Inc.Term Loan, First Lien1,000,000978,5421,007,500Wholesale Food Supplier12%, due 6/15Kratos Defense & Security Solutions Inc.Term Loan, First Lien1,250,0001,250,0001,268,750Multi-platform Defense Systems10%, due 10/13Roundys Supermarkets Inc.Term Loan, First Lien1,225,0001,225,4751,268,750Retail Food Supplier10%, due 6/15Total Corporate Loans15,519,28614,136,860Medallion Loans Receivable (2.61%)(4)Boston Taxicab Medallions2 Medallion Loans25,46525,46525,4658.19% Weighted Average RateChicago Taxicab Medallions2 Medallion Loans44,66044,66044,6608.0% Weighted Average RateFlorida Taxicab Medallion1 Medallion Loan148,859148,859148,85912.0% Rate218,984218,984Total loans receivable25,212,76823,078,192        The accompanying notes are an integral part of these consolidated financial statements.  13   AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INVESTMENTS (continued)   Portfolio Valuation as of June 30, 2010Portfolio Company(1)Investment
Investment Rate/MaturityPrincipalNet CostValueLife Insurance Settlement Contracts (16.20%) (4)Life insurance policies5 life insurance policies, aggregate2,568,6911,356,800face value of $17,659,809Equity Investments (12.19%)(4)MBS Serrano, Ltd.Limited Partnership Interest50,6008,487Rental Real Estate Limited PartnershipMBS Colonnade, Ltd.Limited Partnership Interest50,00012,009Rental Real Estate Limited PartnershipMBS Sage Creek, Ltd.Limited Partnership Interest50,00018,800Rental Real Estate Limited PartnershipMBS Walnut Creek, Ltd.Limited Partnership Interest25,000-Rental Real Estate Limited PartnershipMBS Lodge At Stone Oak, Ltd.Limited Partnership Interest60,00030,896Rental Real Estate Limited Partnership238 W. 108 Realty LLC (2)5.00% LLC Interest100,0004,761Residential Real Estate DevelopmentAsset Recovery & Management, LLC (3)30.00% LLC Interest6,0006,000Consumer Receivable Collections633 Mead Street, LLC   (3)57.10% LLC Interest800800Real Estate DevelopmentCMCA, LLC (3)
Consumer Receivable Collections30.00% LLC Interest4,0004,000Soha Terrace II LLC700,000918,295Real Estate Development4.80% LLC InterestFusion Telecommunications
Internet Telephony69,736 Shares of Common Stock367,02711,158EraGen Biosciences
Analytic Compounds17,000 shares of Common Stock25,5005,500Total equity investments1,438,9271,020,706Total investments$29,220,386$25,455,698  (1)Unless otherwise noted, all investments are pledged as collateral for the Notes Payable, Banks (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 June 30, 2010, 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 assets (5)Other small balance loans. (6)Loan receivable is on non-accrual status and therefore is considered non-income producing.  14   AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Information at and for the three months and six months ended December 31, 2010 and 2009 are 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  December 31, 2010, and the related consolidated statements of operations, statement of changes in net assets, and cash flows for the three-months and six-month periods ended December 31, 2010 and 2009, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC or the 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 months and six months ended December 31, 2010, 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, 2010, as filed with the Commission. Organization and Principal Business Activity Ameritrans Capital Corporation 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 its subsidiary, Elk Associates Funding Corporation (Elk), the Company makes loans to finance the acquisition and operation of small businesses as permitted by the U.S. Small Business Administration (the SBA).  Ameritrans also makes loans to and invests in opportunities that Elk may be 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. 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 makes loans for financing the purchase or continued ownership of businesses that qualify for funding as small concerns under SBA regulations. 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. The Company categorizes its investments into five security types:  1) Corporate Loans Receivable; 2) Commercial Loans Receivable; 3) Life Insurance Settlements; 4) Equity Investments; and 5) Medallion Loans Receivable.   For a more detailed description of these investment categories please see the Companys Annual Report on Form 10-K for the year ended June 30, 2010, filed with the Commission by the Company on September 28, 2010 and which is available on the Companys web site at www.ameritranscapital.com. Basis of Consolidation The consolidated financial statements include the accounts of Ameritrans, Elk Capital Corporation (Elk Capital), Elk and Elks wholly owned subsidiary, EAF Holding Corporation (EAF).  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. EAF began operations in December 1993 and owns and operates certain real estate assets acquired in satisfaction of defaulted loans by Elk debtors.  At December 31, 2010 EAF was operating the real estate of Sealmax, Inc.  15   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, the Company and 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 considered non-performing once they become ninety (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 (common stock, preferred stock and stock warrants, 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.  When no public market exists the fair value of the investment are determined by management and approved by the Board of Directors.  Fair market valuation will be based upon the assets and revenue of the underlying investee companies as well as general market trends for business in the same industry. The Company records the investment in life insurance policies 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 fair value of the investment in life settlement contracts has no ready market and is 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. Effective July 1, 2008, the Company adopted Accounting Standard Codification (ASC) 820-10 previously Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), which expands the application of fair value accounting for investments (see Note 2). 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 2010/2011, the Company intends to make the required distributions to its stockholders to the extent the Company has net taxable investment income. Therefore, no provision for federal income taxes has been provided in the accompanying consolidated financial statements. No dividends on the Companys common stock have been paid in each of the fiscal years ended June 30, 2010 and 2009 or during the six months ended December 31, 2010, 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 years presented.  The Companys tax returns for fiscal years ended 2007 through 2010 are subject to examination by federal, state and local income tax authorities. 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.  The fair values of the Companys investments are particularly susceptible to significant changes.  16   Increase (Decrease) in Net Assets Per Share Increase (decrease) in net assets per share includes no dilution and is computed by dividing current net increase (decrease) in net assets from operations available to common stockholders by the weighted average number of common shares outstanding for the period.  Diluted increase in net assets 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 to our common and preferred stockholders are recorded on the 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 December 31, 2010, 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 The Company adopted ASC 718-10 (previously SFAS No. 123R,  Accounting for Stock-Based Compensation) and related interpretations in accounting for its stock option plans effective January 1, 2006, and accordingly, the Company will expense these grants as required.  Stock-based employee compensation costs in the form of stock options will be reflected in net increase (decrease) in net assets from operations for grants made including and subsequent to January 1, 2006 only, since there were no unvested options outstanding at December 31, 2005, using the fair values established by usage of the Black-Scholes option pricing model, expensed over the vesting period of the underlying option.  Previously, no compensation cost was recognized under these plans, as the Company followed the disclosure-only provisions under guidance at that time. The Companys stock option plans expired on May 21, 2009.  The Company has chosen not to renew the plans and, as a result of the restrictions contained in the 1940 Act, the Companys ability to grant equity-based compensation in the future may be limited due to compensation terms contained in the agreement with its investment advisor. 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 carrying value of the bank debt is a reasonable estimate of their fair value as the interest rates are variable, based on prevailing market rates.  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). Presentation of Prior Quarter Data Certain reclassifications have been made to conform prior quarter data to the current presentation.  Although the reclassifications resulted in changes to certain line items in the previously filed financial statements, the overall effect of the reclassifications did not impact net assets available.  17   2.    Investments  The following table shows the Companys portfolio by security type at December 31, 2010 and June 30, 2010:  December 31, 2010June 30, 2010(Unaudited)Security TypeCostFair Value% (1)CostFair Value% (1)Commercial Loans$7,053,508$6,550,22623.1%$9,474,498$8,722,34834.3%Corporate Loans19,918,87018,588,84765.7%15,519,28614,136,86055.5%Life Settlement Contracts3,153,4231,962,8006.9%2,568,6911,356,8005.3%Equity Securities1,438,1271,015,0243.6%1,438,9271,020,7064.0%Taxi Cab Medallion Loans196,489196,4890.7%218,984218,9840.9%Total$31,760,417$28,313,386100.0%$29,220,386$25,455,698100.0% 1)  Represents percentage of total portfolio at fair value  Investments by Industry Investments by industry consist of the following as of December 31, 2010 and June 30, 2010:  Percentage of Portfolio atDecember 31, 2010June 30, 2010Broadcasting/Telecommunications6.5%7.4%Commercial Construction8.7%10.8%Computer Software7.6%-Construction and Predevelopment4.5%7.5%Direct Marketing4.4%-Debt Collection1.7%1.9%Education3.0%3.5%Film Distribution3.6%-Food12.4%-Gaming-4.4%Gasoline Distribution-2.2%Laundromat-1.1%Life Insurance Settlement Contracts6.9%5.3%Military Defense4.4%5.0%Manufacturing16.3%14.1%Printing/Publishing4.6%3.7%Processing Control Instruments-4.0%Restaurant/Food Service8.8%17.0%Sanitaryware Distributor1.3%1.4%Supermarkets3.5%8.9%Industries less than 1%1.8%1.8%TOTAL100.0%100.0%  Loans Receivable Loans are considered non-performing once they become ninety (90) days past due as to principal or interest.  The Company had loans which are considered non-performing in the amount of $5,040,503 and $$7,531,813 as of December 31, 2010 and June 30, 2010, respectively.  These loans are either fully or substantially collateralized and are in some instances personally guaranteed by the debtor.  Included in the total non-performing loans are fifteen and twenty loans at December 31, 2010 and June 30, 2010, respectively, aggregating $3,346,362  and $5,360,723  at December 31, 2010 and June 30, 2010, 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 December 31, 2010 and June 30, 2010:  18    December 31, 2010
(Unaudited)June 30, 2010Loans receivable$25,335,562$23,078,192Performing loans20,295,05915,546,379Nonperforming loans$5,040.503$7,531,813Nonperforming loans:Accrual$1,694,141$2,171,090Nonaccrual3,346,3625,360,723$5,040,503$7,531,813  The Company has pledged its loans receivable and all other assets of the Company as collateral for its lines of credit (see Note 4). As of December 31, 2010 the Company has accrued, but not yet paid, approximately $86,000 in professional fees, in connection with the Companys Investment Advisory and Management Agreement, as amended, (the Advisory Agreement) with Velocity Capital Advisors LLC related to Corporate Loans. Pursuant to the Advisory Agreement, the Company will pay a pro rated annual base fee of 1.50% per annum of the aggregate fair value of Corporate Loans outstanding at the end of each quarter.  The Advisory Agreement also provides for an Income Based and Capital Gains fee as described therein. Pursuant to the Advisory Agreement, Velocity Capital Advisors serves as the non-discretionary investment adviser to the Company with respect to the investment in below investment grade senior loans and notes, and subordinated notes, which are collectively referred to as Corporate Loans and incidental equity investments received in connection with the investment in the Debt Portfolio (Incidental Equity) (collectively, the Velocity Assets).  All investments in Corporate Loans are subject to the supervision of management and the Board. At such time as the Velocity Assets exceed $75 million, the Advisers services under the Advisory Agreement will be exclusive to the Company with respect to the Velocity Assets.  The Advisory Agreement may be terminated at any time, without payment of a penalty, upon 60 days written notice, by the vote of stockholders holding a majority of the outstanding voting securities of the Company, or by the vote of the Companys directors or by the Adviser.  The Advisory Agreement will automatically terminate in the event of its assignment by the Adviser. 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.  Under the terms of the Joint Venture, the Company was designated as nominee to maintain possession of the policies and process transactions related to such policies until the policies were subsequently sold.  The Company was entitled to receive a twelve percent (12%) annual return on the amount of funds paid by the Company and outstanding on a monthly, prorated basis.  Under the terms of the Joint Venture, proceeds from the sale of the policies were to be distributed, net of direct expenses.  As of December 31, 2010, the fair value of the policies owned by the Company was $1,962,500, which represents the estimated fair value for the five life insurance policies with an aggregate face value of $17,659,809. The Companys cost on these policies to date is $3,153,423, including insurance premiums of $584,732 and $301,365, which were paid in the six-month and three-month periods, respectively, ended December 31, 2010. Premiums on the policies must be paid until the policies are sold in order to keep the policies in full force. On April 2, 2009, the Company learned that the manager of the Joint Venture had been charged with various violations of securities laws by the SEC. The SEC obtained a court order freezing the assets of the manager of the Joint Venture and other entities with which he was involved, including the assets of the Joint Venture.  On April 14, 2009, a receiver was appointed (the Receiver) to handle the affairs of the manager of the Joint Venture.   Initially, the Company made certain contributions to the payment of the premiums in order to keep the policies in full force and effect and preserve their value.  Thereafter, utilizing a line of credit secured by certain assets of the Receivership Estate, the Receiver advanced premiums due under certain policies to keep the policies in full force and effect.  The Receiver engaged an independent specialist firm to service and market for sale all of the policies in the Receivership Estate.    Following discussions with the Receiver, the Company negotiated an agreement (the Purchase Agreement), which among other items, granted the Company the right to purchase the policies, subject to certain terms and conditions and court approval.  19   As of January 8, 2010, the Company purchased the life insurance policies pursuant to a purchase agreement (the Purchase Agreement) entered into with the Receiver:  1)  The Company acquired all of the rights to and title and interest in, ten (10) life insurance policies (7 of which had been previously included in the Joint Venture), with an aggregate death benefit of $28,159,809. 2)  The Company agreed to pay the Receiver $30,000 to cover certain expenses; 3)  The Company agreed to pay the Receivership Estate 20% of all recoveries until such time as the Company has recouped approximately $2.1 million plus the amount of any premiums paid following the date of the Purchase Agreement; 4)  The Company agreed to pay the Receivership Estate 50% of all recoveries above the amounts described in Item 3 above; 5)  The Company entered into an agreement of sale on the rescission of one of the original Joint Venture policies.  In accordance with the terms of the settlement agreement with the Receiver, the Company recorded proceeds of $109,857 and recognized a loss on the sale of the policy of $342,496; 6)  The Company agreed to the cancellation of certain claims the Company had against the Receivership Estate for premiums advanced since April 2, 2009; 7)  The Company and the Receivership Estate agreed that the Joint Venture would be cancelled, terminated and have no further effect; and 8)  Despite the retained interest of the Receiver in any recovery, the Company reserved the right, in its sole discretion, to continue to fund premium payments or let any or all of the policies lapse.  The Purchase Agreement was dated December 18, 2009, and approved by the court on January 8, 2010.  Subsequent to court approval, the Company learned that certain of the policies had lapsed due to non-payment of premiums. 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.  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:  Fiscal Year Ending
June 30Policy
Premiums2011 (six months)$423,0482012846,0962013846,0962014846,0962015846,096Thereafter1,993,441$5,800,873  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 continues to pursue alternatives that could allow for a higher recovery. Fair Value of Investments Effective July 1, 2008, the Company adopted ASC 820-10 (previously SFAS 157, Fair Value Measurements), which expands application of fair value accounting. ASC 820-10 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosure of fair value measurements. ASC 820-10 determines fair value to be 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. ASC 820-10 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,  20   knowledgeable, and willing and able to transact. In accordance with ASC 820-10, 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. ASC 820-10 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. In accordance with ASC 820-10, 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 its board of directors that is consistent with ASC 820-10 (see Note 1).  Consistent with the Companys valuation policy, it 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 is not 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. 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 its 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 the Company 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, it may realize significantly less than the value at which the Company had previously 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 UsingDecember 31, 2010Quoted Prices in Active Markets for Identical Assets
(Level 1)Significant Other Observable Inputs
(Level 2)Significant Unobservable Inputs
(Level 3)Commercial Loans$6,550,226$-$-$6,550,226Corporate Loans18,588,847--18,588,847Life Settlement Contracts1,962,800--1,962,800Equity Securities1,015,0246,276-1,008,748Taxicab Medallion Loans196,489--196,489Total Investments$28,313,386$6,276$-$28,307,110  Assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3):  Fair Value Measurements Using Significant Unobservable Inputs (Level 3)Commercial LoansCorporate LoansLife Settlement ContractsEquity SecuritiesTaxicab Medallion LoansTotalBeginning balance as of June 30, 2010$8,722,348$12,868,110$1,356,800$1,009,548$218,984$24,175,790Net realized losses on investments-(316,897)-(800)-(317,697)Net unrealized gains on investments248,86871,15321,268--341,289Purchases of investments1,71910,177,812584,732--10,764,263Repayments, sales or redemptions of investments(2,422,709)(4,211,331)--(22,495)(6,656,535)Transfers in and/or out of Level 3------Ending balance as of December 31, 2010$6,550,226$18,588,847$1,962,800$1,008,748$196,489$28,307,110  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$341,289Gains and losses (realized and unrealized) included in net decrease in net assets from operations for the period above are reported as follows:Gain (loss) on sales and dispositions(316,896)Change in unrealized gains or (losses) relating to assets still held at reporting date$24,393  21    3.     Debentures Payable to SBA At December 31, 2010 and June 30, 2010 debentures payable to the SBA consisted of subordinated debentures with interest payable semiannually, as follows:  Issue DateDue Date% Interest RateDecember 31,
2010June 30,
2010Annual Amount of Interest and User FeesJuly 2002September 20124.67 (1)$2,050,000$2,050,000$113,488December 2002March 20134.63 (1)3,000,0003,000,000164,880September 2003March 20144.12 (1)5,000,0005,000,000249,300February 2004March 20144.12 (1)1,950,0001,950,00097,227December 2009March 20204.11 (2)9,175,0009,175,000402,782$21,175,000$21,175,000$1,027,677  (1)    Elk is also required to pay an additional annual user fee of 0.866% on these debentures. (2)    Elk is also required to pay an additional annual user fee of 0.28% on these debentures. 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. Pursuant to SBAs issuance of leverage in the form of debentures in the aggregate of $9,175,000, Elk submitted an application to draw the full amount of the awarded fiscal year 2009 commitment. SBA approved the leverage request and on December 2, 2009, Elk received the disbursement of $9,175,000 from the long-term guaranteed debenture, and paid fees totaling $314,244. In accordance with SBA regulations, $91,750 of these fees was paid prior to the closing. Therefore, the net fees at closing were $222,494. The net proceeds of the draw were $8,952,506.  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.  As of December 31, 2010, Elks maximum permitted calculated impairment percentage (regulatory limit) was 40%, with an actual capital impairment percentage of approximately 44.6%. Accordingly, Elk had a condition of capital impairment as of December 31, 2010, which would require additional capital of approximately $1.6 million to cure.   In October 2010, members of management met with representatives of SBA for a portfolio review meeting.  After discussions with SBA, management has undertaken a plan to invest additional equity in Elk which, it is anticipated, will cure the condition of capital impairment. 4.     Notes Payable Banks At December 31, 2010, the Company had a  $120,000 line of credit with a bank, with no balance outstanding, as the line had been paid in full as of August 31, 2010. Although this loan was paid in full, the line remains available until its maturity date of July 6, 2011. Pursuant to the terms of the current agreement governing the line of credit, the Company is required to comply with certain covenants and conditions, as defined in the agreement. The Company has pledged its loans receivable and all other assets as collateral for the line of credit. Pursuant to the SBA agreement and an intercreditor agreement between the lending bank and the SBA, the SBA agreed to subordinate the SBA Debentures outstanding in favor of the bank. In accordance with the loan documentation with the SBA and the bank, the Company must also comply with maintaining overall debt levels within a formula based upon the performance of its loan portfolio according to an SBA formula borrowing base, which is submitted for review to the SBA and the bank for periodic review. As there are no outstanding bank balances, SBA has indicated that the Company is not required to submit the borrowing base. Another credit line of $352,000, the amount of which was paid in full as of August 31, 2010, and which was extended to December 10, 2010, expired by its terms as of that date.  22   Other  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 these related-party December Notes was $30,078 and $5,013 for the three-month periods ended December 31, 2010 and 2009, respectively, and $60,156  and $5,347 for the six-month periods ended December 31, 2010 and 2009, 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 and bore interest at a rate of 8.75%, payable quarterly, but the Company had the option to extend the March Notes until March 2013 at a rate of 5.5%, plus the then-current prime rate.  The March 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 $660,000 of the March Notes in the offering. The total amount of interest incurred on these related-party March Notes was $14,438 and $0 for the three-month periods ended December 31, 2010 and 2009, respectively, and $28,875 and $0 for the six-month periods ended December 31, 2010 and 2009, respectively.  In connection with the issuance of a Senior Secured Note on January 19, 2011(the 2011 Note) (See Note 11, Subsequent Events), in order to facilitate certain covenants under the 2011 Note relating to the 2009/2010 Notes, the Company entered into an Amendment to Promissory Note (the Amendment) with each holder of the 2009/2010 Notes. Pursuant to the Amendment, the interest rate on the 2009/2010 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. In connection with the Amendment, the Company paid a fee equal to 1% of principal, or an aggregate of $30,000, to the holders of the 2009/2010 Notes. 5.     Dividends to Stockholders The following table sets forth the dividends declared and/or accrued  by the Company on its Common Stock and Preferred Stock for the six months ended December 31, 2010, and 2009:  For the six months ended  December 31, 2010Dividend Per ShareAmountDeclaration DateRecord DatePay DatePreferred Stock:First quarter
(July 1, 2010 - September 30, 2010)$0.28125$84,375Not DeclaredSecond quarter
(October 1, 2010  December 31, 2010)0.28125$84,375Not DeclaredTotal Preferred Stock Dividends Declared$0.56250$168,750  For the six months ended December 31, 2009Dividend Per ShareAmountDeclaration DateRecord DatePay DatePreferred Stock:First quarter
(July 1, 2009 - September 30, 2009)$0.28125$84,3752/25/103/8/103/10/10Second quarter
(October 1, 2009 - December 31, 2009)$0.28125$84,3752/25/103/8/103/10/10Total Preferred Stock Dividends Declared$0.56250$168,750   23   The Company has not declared a Preferred Stock dividend for the quarters ended September 30, 2010, or December 31, 2010. Dividends on Preferred Stock accrue whether or not they have been declared. As of December 31, 2010, dividends not declared and in arrears were $168,750.   The Company did not declare or pay any dividends on its Common stock during the six months ended December 31, 2009. 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 below 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 (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 carrying value of the bank debt is a reasonable estimate of fair value as the interest rates are variable, based on prevailing market rates.  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 December 31, 2010 and June 30, 2010 were approximately $21,232,000 and $21,247,000 respectively.  However, the Company does not expect that the estimated fair value amounts determined for these debentures would be realized in an immediate settlement of such debentures with the SBA.  The carrying value of the note payable, other is a reasonable estimate of the fair value based on prevailing market rates. Other 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 7.     Related Party Transactions Total occupancy costs under existing leases and overhead cost reimbursement agreements paid to a law firm related to the Companys former Chairman of the Board and certain other officers of the Company and to another entity in which an officer of the Company has a financial interest amounted to $0 and $145,000 for the six months ended December 31, 2010 and 2009, respectively, and $0 and $70,978 for the three months ended December 31, 2010 and 2009, respectively. See Note 4 for additional related party transactions. 8.     Commitments and Contingencies  Litigation 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.  9.     Stock Option Plans The Companys stock option plans expired on May 21, 2009 Employee Incentive Stock Option Plan An employee stock option plan (the 1999 Employee Plan) was adopted by the Ameritrans Board, including a majority of the non-interested directors, and approved by a vote of the stockholders, in order to link the personal interests of key employees to the Companys long-term financial success and the growth of stockholder value.  The Plan had a ten (10) year life which expired in May, 2009.  Subsequent amendments to the 1999 Employee Plan were approved by the stockholders in January 2002 and June 2007.  The amendments increased the number of shares reserved under the plan to 300,000 shares.  24   The 1999 Employee Plan authorized the grant of incentive stock options within the meaning of the Section 422 of the Internal Revenue Code for the purchase of an aggregate of 300,000 shares (subject to adjustment for stock splits and similar capital changes) of Common Stock to the Companys employees.   Effective as of May 21, 2009, in accordance with the terms of the 1999 Employee Plan, the Board can no longer issue incentive stock options pursuant to such plan.  The Board adopted the 1999 Employee Plan to be in a better position attract, motivate, and retain as employees people upon whose judgment and special skills the Companys success in large measure depends.  As of December 31, 2010, options to purchase an aggregate of 233,000 shares of Common Stock were outstanding and fully vested. The 1999 Employee Plan is administered by the 1999 Employee Plan Committee of the Board, which is comprised solely of non-employee directors (who are outside directors within the meaning of Section 152(m) of the Internal Revenue Code and disinterested persons within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934 (the Exchange Act). The committee can make such rules and regulations and establish such procedures for the administration of the 1999 Employee Plan as it deems appropriate.  Effective May 21, 2009, the 1999 Employee Plan expired. Non-Employee Director Stock Option Plan A stock option plan for non-employee directors (the Director Plan) was adopted by the Ameritrans Board and approved by a vote of the stockholders, in order to link the personal interests of non-employee directors to the Companys long-term financial success and the growth of stockholder value.  The Director Plan is substantially identical to, and the successor to, a non-employee director stock option plan adopted by the Board of Elk and approved by its stockholders in September 1998 (the Elk Director Plan).  Ameritrans and Elk submitted an application for, and received on August 31, 1999, an exemptive order relating to these plans from the SEC.  The Director Plan was amended by the Board on November 14, 2001, and approved by the stockholders at the Annual Meeting on January 18, 2002.  The amendment is still subject to the approval of the Securities and Exchange Commission.  The amendment (i) increases the number of shares reserved under the plan from 75,000 to 125,000 and (ii) authorizes the automatic grant of an option to purchase up to 1,000 shares at the market value at the date of grant to each eligible director who is re-elected to the Board. The total number of shares for which options may be granted from time to time under the Director Plan is 75,000 shares.  As of December 31, 2010, options to purchase an aggregate of 59,000 shares of common stock were outstanding and fully vested under the Director Plan.  The Director Plan is administered by a committee of directors who are not eligible to participate in the Director Plan.  Effective May 21, 2009, the Director Plan expired. Options Granted, Expired and Canceled There were no options granted during the six-month period ended December 31, 2010. Options for 29,425 shares expired during the six-month period ended December 31, 2010. After adoption of ASC 718-10 (previously SFAS No. 123R,  Accounting for Stock-Based Compensation )  (see Note 1), the fair value of the options granted amounted to $191,040 at December 31, 2010 and June 30, 2010, which is reflected as additional paid-in capital in the accompanying consolidated statements of assets and liabilities.  Compensation expense related to options vested for the six months ended December 31, 2010 and 2009 was $0 and $26,897, respectively, and for the three months ended December 31, 2010 and 2009 was $0 and $25,548, respectively.  As of December 31, 2010, there was no deferred compensation related to unvested options.  The following tables summarize information about the transactions of both stock option plans as of December 31, 2010:  Stock OptionsNumber of OptionsWeighted
Average
Exercise Price
Per ShareOptions outstanding at June 30, 2010321,425$3.71Granted--Canceled--Expired(29,425)5.81Exercised--Options outstanding at December 31, 2010292,000$3.50   25    Options OutstandingOptions ExercisableRange of Exercise PricesNumber Outstanding at
December 31, 2010Weighted Average Years Remaining Contractual LifeWeighted Average Exercise PriceNumber Exercisable at December 31, 2010Weighted Average Exercise Price$3.6013,8882.39$3.6013,888$3.60$5.2880,0002.41$5.2880,000$5.28$5.309,433.98$5.309,433$5.30$4.5020,0001.78$4.5020,000$4.50$4.9310,1411.36$4.9310,141$4.93$2.36133,0002.78$2.36133,000$2.36$1.7825,5383.35$1.7825,538$1.78$1.78 - $5.30292,0002.24$3.50292,000$3.50  10.     Financial Highlights  Six Months Ended December 31, 2010
(Unaudited)Six Months Ended December 31, 2009
(Unaudited)Year Ended June 30, 2010Net share dataNet asset value at the beginning of the period$1.40$3.40$3.40Net investment loss(0.46)(0.54)(1.17)Net realized and unrealized gains ( losses) on investments.04(0.54)(0.71)Net decrease in net assets from operations(0.42)(1.08)(1.88)Distributions to Stockholders (4)(0.05)-(0.12)Total decrease in net asset value(0.47)(1.08)(2.00 )Net asset value at the end of the period$0.93$2.32$1.40Per share market value at beginning of period$1.32$1.63$1.63Per share market value at end of period$.97$1.30$1.32Total return (1)(27.00)%(20.25)%(11.60)%Ratios/supplemental dataAverage net assets (2) (in 000s)$3,973$9,710$8,160Total expense ratio (3)133%53.3%69.0%Net investment loss to average net assets (5)(79.0)%(38.1)%(48.8)%  (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 assets 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.   26   11.     Subsequent Events The Company has evaluated subsequent events that have occurred through February 11, 2011, the date of the financial statements issuance.  On January 19, 2011, the Company issued a Senior Secured Note (the Note) in the principal amount of $1,500,000 to an unaffiliated lender. The Note bears interest at the rate of 12% per annum (except following an event of default under the Note, in which case the interest rate applicable to the Note would be 14%) and matures on February 1, 2012. The Company may prepay the Note at any time. The Company is required to prepay the Note in certain circumstances, including in the event and to the extent (i) the Company issues any capital stock (other than upon the conversion of securities outstanding as of January 19, 2011), (ii) a subsidiary of the Company pays a dividend to the Company; (iii) the Company sells assets (other than in the ordinary course of business in an amount less than $100,000 in the aggregate and only to the extent of 50% of the proceeds from such sales); or (iv) the Company engages in a transaction that results in a change of control. The Company will incur a 15% fee for any principal prepayments other than in respect of asset sales. The Companys obligations under the Note may be accelerated by the Note holder under certain circumstances, including: (i) the Company fails to pay the principal of the Note when due or interest on the Note when due and such failure continues for three business days and/or fails to pay any other amount payable under the Note for thirty days following notice of such failure; (ii) the Company materially breaches any representation, warranty or covenant made pursuant to the Note and such breach is not cured within five business days following the Companys awareness thereof or receipt of notice with respect thereto; (iii) the Company or any of its subsidiaries commences a bankruptcy or similar proceeding (or such a proceeding is commenced against the Company or its subsidiaries); (iv) a person or group of persons acquires a majority of the voting power of the Company or Elk; (v) a judgment is entered against the Company or any of its subsidiaries in an aggregate amount exceeding $500,000 or any execution, garnishment or attachment is levied against the Companys or any of its subsidiaries assets and such execution, garnishment or attachment impairs the Companys or its subsidiaries ability to conduct its business; (vi) the Company fails to pay obligations in excess of $500,000 when due; or (vii) an event occurs which has or would reasonably be expected to have a material adverse effect on the Companys or any of its subsidiaries business. The Note also contains customary representations and warranties as well as affirmative and negative covenants. Pursuant to the Note, the Company has agreed, among other things, (i) to reimburse the lender for certain out-of-pocket expenses incurred in connection with the Note; (ii) to maintain a minimum consolidated net asset value of $4,000,000; (iii) not to sell any material assets with a fair market value in excess of $500,000; (iv) not to declare or pay any dividend with respect to any class of capital stock or make any payment on any indebtedness ranking junior to the lender under the Note; (v) not incur any indebtedness for borrowed money in excess of $250,000; and (vi) not to enter into certain related party transactions. The Note is secured by a pledge of 100% of the issued and outstanding shares of common stock of Elk owned by the Company. In order to facilitate certain covenants under the Note relating to the Companys 2009/2010 Notes, on January 19, 2011, the Company entered into an Amendment to Promissory Note with each holder of the 2009/2010 Notes (see Note 4. Notes Payable). 12.     Recent Accounting Pronouncements  In December 2010, the FASB amended the existing guidance to require a public entity, which presents comparative financial statements, to disclose revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendment also expanded the required supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination, which are included in the reported pro forma revenue and earnings. The amendments are effective for the Company beginning July 1, 2011. The Company believes the adoption of the provisions of this amendment will not have a material impact on the Companys financial condition and results of operations. In January 2010, FASB issued ASU No. 2010-06, Fair Value Measurements and Disclosures (Topic 820), that requires reporting entities to make new disclosures about recurring or nonrecurring fair-value measurements including significant transfers into and out of Level 1 and Level 2 fair-value measurements and information on purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair-value measurements.  The FASB also clarified existing fair-value measurement disclosure guidance about the level of disaggregation, inputs, and valuation techniques. The new and revised disclosures are required to be implemented for interim and annual periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements of Level 3 activity.  Those disclosures are effective for interim and annual periods beginning after December 15, 2010.  The adoption of FASB ASU 2010-06 did not have a material impact on the Companys financial condition and results of operations. In December 2009, FASB issued ASU No. 2009-17, Consolidations: Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities, that amends the FASB ASC for the issuance of FASB Statement No. 167, Amendments to FASB Interpretation No. 46(R).  The amendments in this ASU replace the quantitative-based risks and rewards calculation for determining which reporting entity, if any, has a controlling financial interest in a variable interest entity (VIE) with an approach focused on identifying which reporting entity has the power to direct the activities of a variable interest entity that most significantly impact such entitys economic performance and (1) the obligation to absorb losses of such entity or (2) the right to receive benefits from such entity. An approach that is expected to be primarily qualitative will be more effective for identifying which reporting entity has a controlling financial interest in a variable interest entity. The amendments in ASU No. 2009-17 also require additional disclosures  27   about a reporting entitys involvement in variable interest entities, which will enhance the information provided to users of financial statements.  ASU No. 2009-17 is effective for annual periods beginning after November 15, 2009.  The adoption of this standard did not have a material impact on the Companys financial condition and results of operations. In June 2009, FASB issued ASC 810 (previously SFAS No. 167, Amendments to FASB Interpretation No. 46(R),which amends the guidance in FASB Interpretation No. (FIN) 46(R), Consolidation of Variable Interest Entities). It requires reporting entities to evaluate former qualifying special-purpose entities (QSPEs) for consolidation, changes the approach to determining the primary beneficiary of a VIE from a quantitative assessment to a qualitative assessment designed to identify a controlling financial interest, and increases the frequency of required reassessments to determine whether a company is the primary beneficiary of a VIE. It also clarifies, but does not significantly change, the characteristics that identify a VIE. ASC 810 requires additional year-end and interim disclosures for public and non-public companies that are similar to the disclosures required by FSP FAS 140-4 and FIN 46(R)-8, Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities. ASC 810 is effective as of the  beginning of a companys first fiscal year that begins after November 15, 2009, and for subsequent interim and annual reporting periods. All QSPEs and entities currently subject to FIN 46(R) will need to be reevaluated under the amended consolidation requirements as of the beginning of the first annual reporting period that begins after November 15, 2009. Early adoption is prohibited. The adoption of the provisions of ASC 810 did have a material impact on the Companys financial condition and results of operations. In June 2009, the FASB issued ASC 860 (previously SFAS No. 166, Accounting for Transfer of Financial Assets, which amends the guidance in SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities).  It eliminates the QSPEs concept, creates more stringent conditions for reporting a transfer of a portion of a financial asset as a sale, clarifies the derecognition criteria, revises how retained interests are initially measured, and removes the guaranteed mortgage securitization recharacterization provisions. ASC 860 requires additional year-end and interim disclosures for public and nonpublic companies that are similar to the disclosures required by FSP FAS 140-4 and FIN 46(R)-8. ASC 860 is effective as of the beginning of a companys first fiscal year that begins after November 15, 2009, and for subsequent interim and annual reporting periods. ASC 860s disclosure requirements must be applied to transfers that occurred before and after its effective date. Early adoption is prohibited. The adoption of the provisions of ASC 860 did not have a material impact on the Companys financial condition and results of operations.  28   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, 2010, filed with the Commission by the Company on September 28, 2010 and which is available on the Companys web site at www.ameritranscapital.com. CRITICAL ACCOUNTING POLICIES Investment Valuations The Companys loans receivable, net of participations, 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, the Company and 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 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 (common stock and stock warrants, including certain controlled subsidiary portfolio investments) and investment securities are recorded at fair value. The Company records 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 secondary market conditions, policy characteristics and actuarial life expectancy, including health evaluations. 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. Effective July 1, 2008, the Company adopted ASC 820-10 (previously SFAS 157, Fair Value Measurements), which expands the application of fair value accounting for investments. Assets Acquired in Satisfaction of Loans Assets acquired in satisfaction of loans are carried at the estimated fair value adjusted for estimated 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 the Companys investments. 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.  29   Contingencies The Company is subject to legal proceedings in the course of its daily operations from enforcement of its rights in disputes pursuant to the terms of various contractual arrangements.  In this connection, the Company assesses 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 is made after careful 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 has been operating since 1980, making loans to (and, to a limited extent, investments in) small businesses, who qualify under SBA Regulations. 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 to reflect managements estimate of the fair value, as approved by the Board of Directors. Results of Operations for the Three Months Ended December 31, 2010 and 2009 Total Investment Income The Companys investment income for the three months ended December 31, 2010 increased $96,943, or 20%, to $581,531, as compared to investment income of $484,588 for the three months ended December 31, 2009.  The increase in investment income between the periods can be attributed primarily to an overall increase in the size of the Companys investment portfolio, which increased approximately 19% at December 31, 2010 as compared with December 31, 2009. Commercial Loans as of December 31, 2010 decreased by $2,652,810, or 29%, to $6,550,226, as compared with $9,203,036 at December 31, 2009. The decrease in Commercial Loans was due, primarily, to loan amortization and paid off loans of approximately $1,984,000 and foreclosure on two loans that had been carried at an aggregate of $1,047,000, partially offset by new loans aggregating $365,000. Corporate Loans outstanding as of December 31, 2010 increased by $5,936,562, or 47%, to $18,588,847, as compared with $12,652,285 outstanding at December 31, 2009. This increase was primarily attributable to new loans of approximately $15,600,000, partially offset by payoffs of approximately $9,000,000 and the reduction of the fair value of certain loans of approximately $700,000. Taxicab Medallion Loans outstanding as of December 31, 2010 decreased by $27,495, or approximately 12%, to $196,489, as compared with $223,984 at December 31, 2009 as a result of the payoff of one loan.  The average interest rate earned on medallion loans remained the same in 2010 as compared with the prior year. Because of late fees and a payoff fee in the current period, interest income on these loans of $6,000 for the three months ended December 31, 2010 approximated that of the comparable 2009 period. Life Settlement Contracts outstanding increased by $1,031,503 as of December 31, 2010, or 110%, to $1,962,800, from $931,297 at December 31, 2009.  This investment has stopped accruing interest and a fair value adjustment of $1,200,000 has been made to reflect the value of the investment.   The investment has been valued based on industry valuation.  This revaluation was partially offset by additional premiums paid. No interest income was recorded for the three months ended December 31, 2010 and 2009. Operating Expenses Interest expense for the three months ended December 31, 2010 increased $144,286, or 80%, to $325,440, as compared to $181,154 for the three months ended December 31, 2009.  This increase was primarily due to a $9,175,000 increase in SBA Debentures and a $975,000 note offering in March 2010. Salaries and employee benefits for the three months ended December 31, 2010 decreased $97,047 to $367,209, or approximately 21%, when compared with $464,256 for the three months ended December 31, 2009.  This decrease reflects the reduction in staff as well as a restructuring of the employment agreement of a key employee.  30   Occupancy costs for the three months ended December 31, 2010 decreased by $28,348 to $42,630, or approximately 40%, when compared with $70,978 for the three months ended December 31, 2009.   This was due to relocation of the Companys offices to less expensive space and the closing of a storage facility in July 2010. Professional fees for the three months ended December 31, 2010 increased $48,970 to $350,743, or approximately 16%, when compared with $301,773 for the three months ended December 31, 2009.  Included in professional fees are accounting fees relating to the Companys internal controls; consulting fees in connection with the Companys chief financial officer; legal fees to non-related parties; general legal fees to both related and non-related  parties; legal fees related to the Companys life settlement portfolio; fees for accounting services and audit fees. Accounting fees for internal controls decreased approximately $10,000 to $10,548 when compared to the three months ended December 31, 2009.  In 2009, documentation with regard to controls was being improved, therefore, more fees were spent on implementation. Consulting fees related to the Companys chief financial officer, who started in July 2010,  were $53,000 in the 2010 quarter as compared with $0 in the comparable 2009 period. Legal fees to non-related parties increased approximately $60,000 to $173,067 when compared to the three months ended December 31, 2009, primarily, as a result of increased legal activity related to potential financing issues.  Legal fees to related parties decreased approximately $6,700 to $0 when compared with the three months ended December 31, 2009 due to curtailment of assignments during the current period. Legal fees associated with the Companys life settlement portfolio decreased to $0 during the three months ended December 31, 2010 from approximately $32,000 in the comparable prior period because of the activity relating to resolution of issues during the earlier period. Accounting fees increased approximately $6,600 to $56,550 when compared with the three months ended December 31, 2009.  Audit fees decreased approximately $22,000 to $41,770 when compared with the three months ended December 31, 2009.  This decrease was due to a reduction in audit fees attributable to changes in the Companys investment portfolio and other efficiencies. Advisory Fees decreased approximately $197,258 to $71,674, or 73%, when compared with $268,932 for the three months ended December 31, 2009.  This decrease was primarily due to a one-time payment of $225,000 in the 2009 period as specified in the Advisory Agreement. Miscellaneous administrative expenses increased $26,413, or 15%, to $206,928 for the three months ended December 31, 2010 when compared with $180,515 for the three months ended December 31, 2009.  This increase was primarily due to a $54,000 increase in foreclosure expense, as partially offset by decreases in officers insurance, depreciation and computer expenses. Decrease in Net Assets from Operations and Net Unrealized/Realized Gains (Losses) Net decrease in net assets from operations was $843,645, for the three months ended December 31, 2010 as compared to $720,884 for the three months ended December 31, 2009.   The change in net assets from operations between the periods, a net decrease in net assets of $122,761, was primarily the result of a net increase in unrealized loss of  $827,296 that was significantly offset by a net increase in investment income of $204,214 and a net increase in realized gain of $500,321. Dividends for Participating Preferred Stock, accrued, but not declared, were $84,375 in the three months ended December 31, 2010. Dividends for Participating Preferred Stock were not declared, for the three months ended December 31, 2009. They were subsequently declared in February 2010 and paid in March 2010. Results of Operations for the Six Months Ended December 31, 2010 and 2009 Total Investment Income The Companys investment income for the six months ended December 31, 2010 increased $343,561, or 47%, to $1,081,909, as compared with $738,348 for the six months ended December 31, 2009.  The increase in investment income between the periods can be attributed primarily to the increase in the Companys Corporate loan portfolio stemming from the use of $9,175,000 proceeds from the SBA debentures received in December 2009. For changes in outstanding balances of Commercial Loans, Corporate Loans, Taxicab Medallion Loans and Life Settlement Contracts see the discussion, above, under Results of Operations for The Three Months Ended December 31, 2010 and December 31, 2009. Operating Expenses Interest expense for the six months ended December 31, 2010 increased $305,619, or 88%, to $653,032, as compared with $347,413 for the six months ended December 31, 2009.  This increase was primarily due to the increase of $9,125,000 in SBA debentures and a $975,000 note offering in March 2010.  31   Salaries and employee benefits for the six months ended December 31, 2010 decreased $182,685 to $731,727, or approximately 20%, when compared to $914,412 for the six months ended December 31, 2009.  This decrease reflects a  reduction in staff, as well as a restructuring of  the employment agreement of a key employee and a reduction in pension expense as the Company has not made any contributions to the SEP Plan in fiscal 2011. Occupancy costs for the six months ended December 31, 2010 decreased $59,438, or 41%, to $86,415 from $145,853 for the same period in 2009 as a result of relocation of the Companys offices to less expensive space and the closing of a storage facility in July 2010. Professional fees for the six months ended December 31, 2010 increased $106,421 to $617,032, or approximately 21%, when compared with $510,611 for the six months ended December 31, 2009. Accounting fees for internal controls decreased approximately $19,000 when compared to the six months ended December 31, 2009.  Consulting fees related to the Companys chief financial officer, who started in July 2010, was $86,000 in the 2010 six-month period and $0 in the comparable 2009 period. Legal fees to non-related parties increased approximately $118,000 to $272,000 in the 2010 period when compared with $154,000 for the six months ended December 31, 2009 and were comprised significantly of fees related to capital raises, SEC compliance, foreclosures and office lease issues.  Legal fees to related parties decreased to $0 in the 2010 six-month period from $4,500 in the prior fiscal years first-half due to curtailment of assignments during the current period. Legal fees associated with the Companys life settlement portfolio decreased to $0 during the six months ended December 31, 2010 from approximately $59,000 in the comparable prior period  because of the activity relating to resolution of issues during the earlier period. Accounting fees were relatively flat, going from $111,000 in 2009 six-month period to $112,000 in the 2010 six-month period.  Audit fees decreased approximately $19,000 to $85,000, when compared with $104,000 for the six months ended December 31, 2009.  This decrease was due to a reduction in audit fees attributable to changes in the Companys investment portfolio and other efficiencies. Advisory Fees decreased approximately $192,794 or 61%, to $121,138 in the six months ended December 31, 2010 when compared with $313,932 for the six months ended December 31, 2009.  This decrease was primarily due to a one-time payment of $225,000 in the 2009 period, as specified in the Advisory Agreement. Miscellaneous administrative expenses increased $68,028, or 22%, to $373,661 for the six months ended December 31, 2010 when compared with $305,633 for the six months ended December 31, 2009. This increase was significantly due to a $56,000 increase in foreclosure expense and increases in moving and related office expenses aggregating $29,000, as partially offset by decreases in officers insurance, depreciation and computer expenses Decrease in Net Assets from Resulting from Operations and Net Unrealized/Realized Gains (Losses) The decrease in net assets resulting from operations decreased $2,256,687, or 61% to  $1,438,192 for the six months ended December 31, 2010 from $3,694,879  for the six months ended December 31, 2009.  This change in net assets from operations between periods was attributable primarily to a net decrease in investment loss of approximately $288,000 (primarily attributable to an increase in interest income resulting from the larger investment portfolio of approximately $343,000, as partially offset by an increase in expenses of approximately $55,000), a decrease in net realized loss from investments of approximately $495,000 and a change from unrealized depreciation on investments in the 2009 period to unrealized appreciation on investments in 2010 aggregating approximately $1,474,000. Dividends on Participating Preferred Stock, accrued, but not declared, were $168,750 for the six months ended December 31, 2010.Dividends on Participating Preferred Stock were not declared for the six months ended December 31, 2009. They were subsequently declared in February 2010 and paid in March 2010. Financial Condition at December 31, 2010 and June 30, 2010 Assets and Liabilities Total assets decreased $1,830,095 to $32,079,267 at December 31, 2010 as compared with total assets of $33,909,362 at June 30, 2010. This net decrease was primarily due to a decrease in cash and equivalents of approximately $5,800,000 less a net increase in the loan portfolio of $2,860,000; an increase in assets acquired in satisfaction of loans of $1,050,000  and a net increase in other assets aggregating approximately $100,000.  Total liabilities had a small decrease of approximately $223,000 between periods with a total of $25,310,000 at December 31, 2010 as compared with $25,533,000 at June 30, 2010. This decrease was substantially attributable to a decrease of $370,000 in notes payable, banks (the banks loans were paid off in July 2010), being partially offset by increases of approximately $84,000 in preferred dividends payable and approximately $37,000 in accrued expense and other liabilities.  32   Liquidity and Capital Resources The Company has funded its operations through private and public placements of its securities, bank financing, the issuance to the SBA of its subordinated debentures and internally generated funds. At December 31, 2010, approximately 84% of the Companys indebtedness was due to debentures issued to the SBA with fixed rates of interest plus user fees resulting in rates ranging from 4.39% to 5.54%. At December 31, 2010, approximately 12% of the Companys indebtedness was represented by certain notes payable which were issued in December, 2009 and March 2010 (the 2009/2010 Notes), and, until their amendment in January 2011,  bore an interest rate of 8.5%.  At December 31, 2010, the Company had available $120,000 of credit lines from its bank, subject to the statutory and regulatory limitations imposed by the SBA, of which $0 was drawn down as of that date. In September 2006, the Company invested in life settlement contracts which require the company to continue premium payments to keep the policies in force through the insureds life expectancy, or until such time the policies are sold.  The Company may sell the policies at any time, at its sole discretion.  However, if the Company chooses to keep the policies, as of and after December 31, 2010, premium payments due through the life expectancy of the insured are approximately $3,807,000 through December 31, 2015 and approximately $1,994,000 thereafter (see Note 2 to the consolidated financial statements). Loan amortization and prepayments also provide a source of funding for the Company. Prepayments on loans are influenced significantly by general interest rates, economic conditions and competition. The Company will distribute at least 90% of its investment company taxable income, if any, and, accordingly, will continue to rely upon external sources of funds to finance growth. No dividends on the Companys common stock have been paid in each of the fiscal years ended June 30, 2010 and 2009 or during the six months ended December 31, 2010, inasmuch as the Company had no taxable investment income during such periods. Accordingly, the Company has maintained its status as a RIC. On January 19, 2011, the Company issued a Senior Secured Note in the principal amount of $1,500,000, with an interest rate of 12% per annum (except following an event of default under the Note, in which case the interest rate applicable to the Note would be 14%) to an unaffiliated lender (see Note 11 to the consolidated financial statements). In addition, in order to facilitate certain covenants under such Senior Secured Note, the Company entered into an Amendment to Promissory Note (the Amendment) with each holder of the 2009/2010 Notes. Pursuant to the Amendment, the interest rate on the 2009/2010 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. In connection with the Amendment, the Company paid a fee equal to 1% of principal, or an aggregate of $30,000, to the holders of the 2009/2010 Notes. To provide the funds necessary for expansion, management expects to raise additional capital and may incur, from time to time, additional bank indebtedness and additional SBA debentures. There can be no assurances that such additional financing will be available on acceptable terms. 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.  33   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 December 31, 2010, a hypothetical immediate 1% increase in interest rates would have resulted in an additional net increase in net assets from operations of $203,640 at December 31, 2010. 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 December 31, 2010, 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, President 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, President and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2010. 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 six months ended  December 31,, 2010 that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.  34   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 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.  35   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 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 None Item 2. Unregistered Sales of Equity Securities and Use of Proceeds None Item 3. Default upon Senior Securities None Item 4. Removed and Reserved 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)    36   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: February 11, 2011  By: /s/ Michael Feinsod Michael Feinsod Chief Executive Officer and President       37