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

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

| Delaware                                                                           |   | 52-2102424                                 |
|------------------------------------------------------------------------------------|--------|--------------------------------------------|
| (State of incorporation)                                                           |   | (I.R.S.  Employer Identification No.) |
|                                                                               |
| 50 Jericho Quadrangle, Suite 109Jericho, 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) |

|  ̈ | Large accelerated filer |  ̈ | Accelerated filer | þ | Non-accelerated filer(Do not check if a smallreporting company.) |  ̈ | Smaller reporting company |
|--------|-------------------------|--------|-------------------|--------|------------------------------------------------------------------|--------|---------------------------|

----

| PART I. FINANCIAL INFORMATION | 3             |
|------------------------------------|---------------|
|                               |          |   |   |
|                               | ITEM 1.       | FINANCIAL STATEMENTS | 3 |
|                               |          |   |   |
|                               | ITEM 2.       | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 32 |
|                               |          |   |   |
|                               | ITEM 3.       | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK | 37 |
|                               |          |   |   |
|                               | ITEM 4.       | CONTROLS AND PROCEDURES | 38 |
|                               |          |   |   |
| PART II. OTHER INFORMATION    | 40            |
|                               |          |   |   |
|                               | Item 1.       | Legal Proceedings | 40 |
|                               | Item 1A.      | Risk Factors | 41 |
|                               | Item 2.       | Unregistered Sales of Equity Securities and Use of Proceeds | 42 |
|                               | Item 3.       | Default upon Senior Securities | 42 |
|                               | Item 4.       | Mine Safety Disclosures | 42 |
|                               | Item 5.       | Other Information | 42 |
|                               | Item 6.       | Exhibits | 43 |
|                               | Exhibit Index | 43 |
|                               | (a)           | Exhibits | 43 |
|                               |          |   |   |
|                               | SIGNATURES    | 44 |

----

|                                                                                                                                                            |   | March 31,2013 |        |   | June 30,2012 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|-------------|--------|--------------|--------|
|                                                                                                                                                            |   | (Unaudited)   |        |   |         |   |
| Assets                                                                                                                                                          |   |          |        |   |         |   |
|                                                                                                                                                            |   |          |        |   |         |   |
| Investments at fair value (cost of $18,733,297 and $22,401,381, respectively):                                                                                  |   |          |        |   |         |   |
| Non-controlled/affiliated investments                                                                                                                           |   | $             | 200,000     |   |         | $      | - |   |
| Non-controlled/non-affiliated investments                                                                                                                       |   |          | 9,393,253   |   |         |   | 16,169,728 |   |
| Controlled affiliated investments                                                                                                                               |   |          | 331,487     |   |         |   | 332,878 |   |
|                                                                                                                                                            |   |          |        |   |         |   |   |   |
| Total investments at fair value                                                                                                                                 |   |          | 9,924,740   |   |         |   | 16,502,606 |   |
|                                                                                                                                                            |   |          |        |   |         |   |   |   |
| Cash                                                                                                                                                            |   |          | 694,620     |   |         |   | 184,338 |   |
| Accrued interest receivable                                                                                                                                     |   |          | 669,372     |   |         |   | 807,643 |   |
| Assets acquired in satisfaction of loans                                                                                                                        |   |          | 153,325     |   |         |   | 878,325 |   |
| Furniture and equipment, net                                                                                                                                    |   |          | 42,110      |   |         |   | 44,359 |   |
| Deferred loan costs, net                                                                                                                                        |   |          | -           |   |         |   | 260,459 |   |
| Prepaid expenses and other assets                                                                                                                               |   |          | 75,793      |   |         |   | 263,641 |   |
|                                                                                                                                                            |   |          |        |   |         |   |   |   |
| Total assets                                                                                                                                                    |   | $             | 11,559,960  |   |         | $      | 18,941,371 |   |
|                                                                                                                                                            |   |          |        |   |         |   |   |   |
| Liabilities and Net Liabilities                                                                                                                                 |   |          |        |   |         |   |   |   |
| Liabilities:                                                                                                                                                    |   |          |        |   |         |   |   |   |
| Debentures payable to SBA                                                                                                                                       |   | $             | 19,975,000  |   |         | $      | 21,175,000 |   |
| Accrued expenses and other liabilities                                                                                                                          |   |          | 304,150     |   |         |   | 312,353 |   |
| Accrued interest payable                                                                                                                                        |   |          | 1,099,492   |   |         |   | 342,506 |   |
| Dividends payable                                                                                                                                               |   |          | 928,125     |   |         |   | 675,000 |   |
|                                                                                                                                                            |   |          |        |   |         |   |   |   |
| Total liabilities                                                                                                                                               |   |          | 22,306,767  |   |         |   | 22,504,859 |   |
|                                                                                                                                                            |   |          |        |   |         |   |   |   |
| Commitments and contingencies (Notes 2, 3, 4, 5 and 8)                                                                                                          |   |          |        |   |         |   |   |   |
|                                                                                                                                                            |   |          |        |   |         |   |   |   |
| Net Liabilities:                                                                                                                                                |   |          |        |   |         |   |   |   |
| Preferred stock 9,500,000 shares authorized, none issued or outstanding                                                                                         |   |          | -           |   |         |   | - |   |
| 9-3/8% cumulative participating redeemable preferred stock; $.01 par value, $12.00 face value, 500,000 shares authorized; 300,000 shares issued and outstanding |   |          | 3,600,000   |   |         |   | 3,600,000 |   |
| Common stock, $.0001 par value; 45,000,000 shares authorized, 3,405,583 shares issued; 3,395,583 shares outstanding                                             |   |          | 341         |   |         |   | 341 |   |
| Additional paid-in capital                                                                                                                                      |   |          | 21,330,544  |   |         |   | 21,330,544 |   |
| Losses and distributions in excess of earnings                                                                                                                  |   |          | (26,868,435 | )      |         |   | (22,525,598 | ) |
| Net unrealized depreciation on investments                                                                                                                      |   |          | (8,808,557  | )      |         |   | (5,898,775 | ) |
| Total                                                                                                                                                           |   |          | (10,746,107 | )      |         |   | (3,493,488 | ) |
| Less: Treasury stock, at fair value in 2013 and at cost in 2012, 10,000 shares of common stock                                                                  |   |          | (700        | )      |         |   | (70,000 | ) |
|                                                                                                                                                            |   |          |        |   |         |   |   |   |
| Total net liabilities                                                                                                                                           |   |          | (10,746,807 | )      |         |   | (3,563,488 | ) |
| Total liabilities and net liabilities                                                                                                                           |   | $             | 11,559,960  |   |         | $      | 18,941,371 |   |
| Net liability value per common share                                                                                                                            |   | $             | (4.23       | )      |         | $      | (2.11 | ) |

----

|                                                                             |   | For the three months ended |       |   | For the nine months ended |   |
|----------------------------------------------------------------------------------|--------|----------------------------|------------|--------|---------------------------|--------|
|                                                                             |   | March 31,2013              |       |   | March 31,2012             |   |   | March 31,2013 |   |   | March 31,2012 |   |
| Investment income:                                                               |   | (unaudited)                |       |   | (unaudited)               |   |   | (unaudited) |   |   | (unaudited) |   |
| Interest on loans receivable:                                                    |   |                       |       |   |                      |   |   |   |   |   |   |   |
| Non-controlled/non-affiliated investments                                        |   | $                          | 179,998    |   |                      | $      | 399,385 |   |   | $ | 668,687 |   |   | $ | 1,333,661 |   |
| Controlled affiliated investments                                                |   |                       | 6,457      |   |                      |   | 6,716 |   |   |   | 19,596 |   |   |   | 20,593 |   |
|                                                                             |   |                       | 186,455    |   |                      |   | 406,101 |   |   |   | 688,283 |   |   |   | 1,354,254 |   |
| Fees and other income                                                            |   |                       | -          |   |                      |   | 68 |   |   |   | - |   |   |   | 8,316 |   |
| Total investment income                                                          |   |                       | 186,455    |   |                      |   | 406,169 |   |   |   | 688,283 |   |   |   | 1,362,570 |   |
| Expenses:                                                                        |   |                       |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Interest                                                                         |   |                       | 238,813    |   |                      |   | 232,146 |   |   |   | 756,985 |   |   |   | 1,025,219 |   |
| Salaries and employee benefits                                                   |   |                       | 257,233    |   |                      |   | 284,876 |   |   |   | 758,654 |   |   |   | 998,960 |   |
| Occupancy costs                                                                  |   |                       | 29,256     |   |                      |   | 43,297 |   |   |   | 117,222 |   |   |   | 129,890 |   |
| Legal fees                                                                       |   |                       | 201,904    |   |                      |   | 495,555 |   |   |   | 1,043,687 |   |   |   | 1,028,346 |   |
| Accounting and compliance fees                                                   |   |                       | 141,875    |   |                      |   | 165,291 |   |   |   | 464,060 |   |   |   | 587,663 |   |
| Directors fees and expenses                                                      |   |                       | 44,827     |   |                      |   | 51,665 |   |   |   | 183,286 |   |   |   | 139,768 |   |
| Advisory Fee                                                                     |   |                       | -          |   |                      |   | 9,289 |   |   |   | - |   |   |   | 101,984 |   |
| Other administrative expenses                                                    |   |                       | 359,275    |   |                      |   | 170,703 |   |   |   | 603,056 |   |   |   | 533,157 |   |
| Loss and impairment on assets acquired in satisfaction of loans, net             |   |                       | 69,720     |   |                      |   | - |   |   |   | 233,612 |   |   |   | - |   |
| Total expenses                                                                   |   |                       | 1,342,903  |   |                      |   | 1,452,822 |   |   |   | 4,160,562 |   |   |   | 4,544,987 |   |
| Net investment loss, before gain on extinguishment of debt                       |   |                       | (1,156,448 | )      |                      |   | (1,046,653 | ) |   |   | (3,472,279 | ) |   |   | (3,182,417 | ) |
|                                                                             |   |                       |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Gain on extinguishment of debt                                                   |   |                       | -          |   |                      |   | 353,620 |   |   |   | - |   |   |   | 353,620 |   |
|                                                                             |   |                       |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Net investment loss                                                              |   |                       | (1,156,448 | )      |                      |   | (693,033 | ) |   |   | (3,472,279 | ) |   |   | (2,828,797 | ) |
| Net realized gains (losses) on investments:                                      |   |                       |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Non-controlled/non-affiliated investments                                        |   |                       | (533,716)  |   |                      |   | (44,877 | ) |   |   | (617,433 | ) |   |   | 235,279 |   |
|                                                                             |   |                       | (533,716)  |   |                      |   | (44,877 | ) |   |   | (617,433 | ) |   |   | 235,279 |   |
| Net unrealized depreciation on investments                                       |   |                       | (2,316,075 | )      |                      |   | (160,397 | ) |   |   | (2,909,782 | ) |   |   | (1,409,863 | ) |
| Net realized/unrealized losses on investments                                    |   |                       | (2,849,791 | )      |                      |   | (205,274 | ) |   |   | (3,527,215 | ) |   |   | (1,174,584 | ) |
| Net increase in net liabilities from operations                                  |   |                       | (4,006,239 | )      |                      |   | (898,307 | ) |   |   | (6,999,494 | ) |   |   | (4,003,381 | ) |
| Distributions to preferred shareholders                                          |   |                       | (84,375    | )      |                      |   | (84,375 | ) |   |   | (253,125 | ) |   |   | (253,125 | ) |
| Net increase in net liabilities from operations available to common shareholders |   | $                          | (4,090,614 | )      |                      | $      | (982,682 | ) |   | $ | (7,252,619 | ) |   | $ | (4,256,506 | ) |
| Weighted Average Number of Common Shares Outstanding:                            |   |                       |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted                                                                |   |                       | 3,395,583  |   |                      |   | 3,395,583 |   |   |   | 3,395,583 |   |   |   | 3,395,583 |   |
| Net Increase in Net Liabilities from Operations Per Common Share:                |   |                       |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted                                                                |   | $                          | (1.20      | )      |                      | $      | (0.29 | ) |   | $ | (2.14 | ) |   | $ | (1.25 | ) |

----

|                                                                               |   | For the nine months ended |        |
|------------------------------------------------------------------------------------|--------|---------------------------|-------------|
|                                                                               |   | March 31,2013             |        |   | March 31,2012 |   |
|                                                                               |   | (unaudited)               |        |   | (unaudited) |   |
| Increase in net liabilities from operations:                                       |   |                      |        |   |   |   |
| Net investment loss                                                                |   | $                         | (3,472,279  | ) |   | $ | (2,828,797 | ) |
| Net realized gain (loss) from investments                                          |   |                      | (617,433    | ) |   |   | 235,279 |   |
| Unrealized depreciation on investments                                             |   |                      | (2,909,782  | ) |   |   | (1,409,863 | ) |
|                                                                               |   |                      |        |   |   |   |   |   |
| Net increase in net liabilitiess resulting from operations                         |   |                      | (6,999,494  | ) |   |   | (4,003,381 | ) |
|                                                                               |   |                      |        |   |   |   |   |   |
| Shareholder distributions:                                                         |   |                      |        |   |   |   |   |   |
| Distributions to preferred shareholders                                            |   |                      | (253,125    | ) |   |   | (253,125 | ) |
| Write down of treasury stock                                                       |   |                      | 69,300      |   |   |   | - |   |
|                                                                               |   |                      |        |   |   |   |   |   |
| Net increase in net liabilities resulting from shareholder distributions |   |                      | (183,825    | ) |   |   | (253,125 | ) |
|                                                                               |   |                      |        |   |   |   |   |   |
| Total increase in net liabilities                                                  |   |                      | (7,183,319  | ) |   |   | (4,256,506 | ) |
|                                                                               |   |                      |        |   |   |   |   |   |
| Net assets (liabilities):                                                          |   |                      |        |   |   |   |   |   |
| Beginning of period                                                                |   |                      | (3,563,488  | ) |   |   | 2,236,093 |   |
|                                                                               |   |                      |        |   |   |   |   |   |
| End of period                                                                      |   | $                         | (10,746,807 | ) |   | $ | (2,020,413 | ) |
|                                                                               |   |                      |        |   |   |   |   |   |
| Net assets per preferred                                                           |   | $                         | 3,600,000   |   |   | $ | 3,600,000 |   |
|                                                                               |   |                      |        |   |   |   |   |   |
| Net liabilities per common                                                         |   | $                         | (14,346,807 | ) |   | $ | (5,620,413 | ) |

----

|                                                                                                              |   | For the nine months ended |       |
|-------------------------------------------------------------------------------------------------------------------|--------|---------------------------|------------|
|                                                                                                              |   | March 31,2013             |       |   | March 31,2012 |   |
|                                                                                                              |   | (unaudited)               |       |   | (unaudited) |   |
| Cash flows from operating activities:                                                                             |   |                      |       |   |   |   |
| Net decrease in net assets from operations                                                                        |   | $                         | (6,999,494 | ) |   | $ | (4,003,381 | ) |
| Adjustments to reconcile net decrease in net assets from operations to net cash provided by operating activities: |   |                      |       |   |   |   |   |   |
| Depreciation and amortization                                                                                     |   |                      | 54,713     |   |   |   | 60,365 |   |
| Net realized gains (losses) on investments                                                                        |   |                      | 617,433    |   |   |   | (235,279 | ) |
| Net unrealized depreciation on investments                                                                        |   |                      | 2,909,782  |   |   |   | 1,409,863 |   |
| Portfolio investments                                                                                             |   |                      | (1,550,606 | ) |   |   | (3,544,205 | ) |
| Proceeds from principal receipts, sales, maturity of investments                                                  |   |                      | 4,601,257  |   |   |   | 9,563,811 |   |
| Proceeds from sale of assets acquired in satisfaction of loans                                                    |   |                      | 561,107    |   |   |   | - |   |
| Loss on sale of assets acquired                                                                                   |   |                      | 163,893    |   |   |   | - |   |
| Impairment of assets acquired in satisfaction of loan                                                             |   |                      | 69,300     |   |   |   | - |   |
| Changes in operating assets and liabilities:                                                                      |   |                      |       |   |   |   |   |   |
| Accrued interest receivable                                                                                       |   |                      | 138,271    |   |   |   | 22,784 |   |
| Deferred loan costs                                                                                               |   |                      | 212,874    |   |   |   | - |   |
| Prepaid expenses and other assets                                                                                 |   |                      | 187,848    |   |   |   | (113,042 | ) |
| Accrued expenses and other liabilities                                                                            |   |                      | (8,202     | ) |   |   | (773,061 | ) |
| Accrued interest payable                                                                                          |   |                      | 756,986    |   |   |   | 231,738 |   |
| Total adjustments                                                                                                 |   |                      | 8,714,656  |   |   |   | 6,622,974 |   |
| Net cash provided by operating activities                                                                         |   |                      | 1,715,162  |   |   |   | 2,619,593 |   |
| Cash flows from investing activities:                                                                             |   |                      |       |   |   |   |   |   |
| Purchases of furniture and equipment                                                                              |   |                      | (4,880     | ) |   |   | (1,890 | ) |
| Net cash used in investing activities                                                                             |   |                      | (4,880     | ) |   |   | (1,890 | ) |
| Cash flows from financing activities:                                                                             |   |                      |       |   |   |   |   |   |
| Repayment of notes payable, other and debentures payable to the SBA                                               |   |                      | (1,200,000 | ) |   |   | (4,500,000 | ) |
| Net cash used in financing activities                                                                             |   |                      | (1,200,000 | ) |   |   | (4,500,000 | ) |
| Net increase (decrease) in cash and cash equivalents                                                              |   |                      | 510,282    |   |   |   | (1,882,297 | ) |
| Cash and cash equivalents:                                                                                        |   |                      |       |   |   |   |   |   |
| Beginning of period                                                                                               |   |                      | 184,338    |   |   |   | 4,151,616 |   |
| End of period                                                                                                     |   | $                         | 694,620    |   |   | $ | 2,269,319 |   |
|                                                                                                              |   |                      |       |   |   |   |   |   |
| Supplemental disclosure of cash flow information:                                                                 |   |                      |       |   |   |   |   |   |
| Cash paid during the period for:                                                                                  |   |                      |       |   |   |   |   |   |
| Interest                                                                                                          |   | $                         | -          |   |   | $ | 793,481 |   |
| Supplemental disclosure of non cash investing and financing activities:                                           |   |                      |       |   |   |   |   |   |
| Accrued dividends on preferred stock                                                                              |   | $                         | 253,125    |   |   | $ | 253,125 |   |

----

|                                                                               |                                                   |   | Portfolio Valuation as of March 31, 2013 |      |
|------------------------------------------------------------------------------------|--------------------------------------------------------|--------|------------------------------------------|-----------|
| Portfolio Company (1)                                                              | InvestmentInvestment Rate/Maturity                     |   | Principal                                |      |   | Net Cost |   |   | Value |   |
| Commercial Loans Receivable (40.76%)(4)                                            |                                                   |   |                                     |      |   |   |   |   |   |   |
| PPCP Inc. (6)Computer Software                                                     | Business Loan8.00%, due 7/08 and 1/10                  |   | $                                        | 36,691    |   |   | $ | 36,691 |   |   | $ | - |   |
| Geronimo ATM Fund LLC (6)ATM Operator                                              | Collateralized Business Loan12.0%, due 5/09            |   |                                     | 123,282   |   |   |   | 123,282 |   |   |   | - |   |
| Vivas & Associates, Inc. (6)Nail Salon                                         | Collateralized Business Loan9.00%, due 1/10            |   |                                     | 11,985    |   |   |   | 11,985 |   |   |   | - |   |
| E&Y General Construction Co. (6)Construction Services                          | Senior Real Estate Mortgage10.50%, due 10/10           |   |                                     | 870,791   |   |   |   | 870,791 |   |   |   | 870,791 |   |
| Soundview Broadcasting LLCTelevision and Broadcasting                              | Senior Real Estate Mortgage6.00%, due 9/16             |   |                                     | 1,704,316 |   |   |   | 1,704,316 |   |   |   | 1,704,316 |   |
| Golden Triangle Enterprises LLCRetail Food Service                                 | Senior Real Estate Mortgage4.74%, due 12/13            |   |                                     | 163,673   |   |   |   | 163,673 |   |   |   | 163,673 |   |
| Conklin Services & Construction Inc. (6)Specialty Construction and Maintenance | Collateralized Business Loan11.00%, due 10/08          |   |                                     | 1,648,181 |   |   |   | 1,648,181 |   |   |   | 1,000,000 |   |
| Mountain View Bar & Grill Inc. (6)Retail Food Service                          | Collateralized Business Loan12.00%, due 5/09           |   |                                     | 406,067   |   |   |   | 406,067 |   |   |   | 300,000 |   |
| J. JG. Associates, Inc. (6)Consumer Receivable Collections                         | Senior Loanno stated rate, no maturity                 |   |                                     | 182,936   |   |   |   | 182,936 |   |   |   | - |   |
| J. JG. Associates, Inc. (6)Consumer Receivable Collections                         | Senior Loanno stated rate, no maturity                 |   |                                     | 35,781    |   |   |   | 35,781 |   |   |   | - |   |
| Car-Matt Real Estate LLC (6)Real Estate Mortgage                                   | Senior Real Estate Mortgage12.00%, due 11/08           |   |                                     | 135,577   |   |   |   | 135,577 |   |   |   | - |   |
| CMCA, LLC (3)Consumer Receivable Collections                                       | Collateralized Business Loan12,00% no stated maturity  |   |                                     | 215,226   |   |   |   | 215,226 |   |   |   | 215,226 |   |
| CMCA, LLC #2 (2) (3) (6)Consumer Receivable Collections                            | Collateralized Business Loan12.00%, no stated maturity |   |                                     | 106,261   |   |   |   | 106,261 |   |   |   | 106,261 |   |
| Andy Fur (6)Dry Cleaners                                                           | Collateralized Business Loan11.5%, due 1/10            |   |                                     | 12,103    |   |   |   | 12,103 |   |   |   | - |   |
| Greaves-Peters Laundry Systems Inc. (6)Laundromat                                  | Collateralized Business Loan10.90%, due 9/13           |   |                                     | 20,471    |   |   |   | 20,471 |   |   |   | 20,471 |   |
| Other Miscellaneous Loans (5) (6)                                                  |                                                   |   |                                     | 33,054    |   |   |   | 33,054 |   |   |   | - |   |
|                                                                               | Total Commercial Loans                                 |   |                                     |      |   |   |   | 5,706,395 |   |   |   | 4,380,738 |   |
| Corporate Loans Receivable (49.80%)(4)                                             |                                                   |   |                                     |      |   |   |   |   |   |   |   |   |   |
| Charlie Brown’s Acquisition Co. (6)Retail Food Service                       | Term Loan B10.25%, all PIK, due 10/13                  |   |                                     | 2,356,682 |   |   |   | 2,356,682 |   |   |   | - |   |
| Alpha Media Group Inc.Publishing                                                   | Term Loan, First Lien12.00%, all PIK , due 7/13        |   |                                     | 2,941,798 |   |   |   | 2,916,703 |   |   |   | 235,343 |   |
| Education Affiliates Inc.Private Education                                         | Term Loan, First Lien8.00%, due 1/15                   |   |                                     | 732,502   |   |   |   | 725,551 |   |   |   | 736,105 |   |
|                                                                               | Total Corporate Loans                                  |   |                                     |      |   |   |   | 5,998,936 |   |   |   | 971,448 |   |
|                                                                               | Total loans receivable                                 |   |                                     |      |   |   |   | 11,705,331 |   |   |   | 5,352,186 |   |

----

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

|   | (1) | As of July 5, 2011, all investments previously pledged as collateral for a note payable to a bank were released in connection with the expiration of the credit line. All investments, other than investments held through Elk Associates Funding Corporation, were pledged as collateral for a Senior Secured Note, but were released as such note was paid off in March 2012 (see Note 4 to the consolidated financial statements). |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | As defined in the Investment Company Act of 1940, we are an affiliate of this portfolio company because, as of March 31, 2013, we own 5% or more of the portfolio company’s outstanding voting securities. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | (4) | Percentage of net liabilities. |
|--------|-----|--------------------------------|

|   | (5) | Other small balance loans. |
|--------|-----|----------------------------|

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

----

|                                                                               |                                                         |   | Portfolio Valuation as of June 30, 2012 |      |
|------------------------------------------------------------------------------------|--------------------------------------------------------------|--------|-----------------------------------------|-----------|
| Portfolio Company (1)                                                              | InvestmentInvestment Rate/Maturity                           |   | Principal                               |      |   | Net Cost |   |   | Value |   |
| Commercial Loans Receivable (146.72%)(4)                                           |                                                         |   |                                    |      |   |   |   |   |   |   |
| PPCP Inc. (6)Computer Software                                                     | Business Loan8.00%, due 7/08 and 1/10                        |   | $                                       | 36,691    |   |   | $ | 36,691 |   |   | $ | - |   |
| Geronimo ATM Fund LLC (6)ATM Operator                                              | Collateralized Business Loan12.0%, due 5/09                  |   |                                    | 123,282   |   |   |   | 123,282 |   |   |   | - |   |
| Vivas & Associates, Inc. (6)Nail Salon                                         | Collateralized Business Loan9.00%, due 1/10                  |   |                                    | 11,985    |   |   |   | 11,985 |   |   |   | - |   |
| E&Y General Construction Co. (6)Construction Services                          | Senior Real Estate Mortgage10.50%, due 10/10                 |   |                                    | 870,791   |   |   |   | 870,791 |   |   |   | 870,791 |   |
| Soundview Broadcasting LLCTelevision and Broadcasting                              | Senior Real Estate Mortgage6.00%, due 9/16                   |   |                                    | 1,761,340 |   |   |   | 1,761,340 |   |   |   | 1,761,340 |   |
| Golden Triangle Enterprises LLCRetail Food Service                                 | Senior Real Estate Mortgage4.74%, due 12/13                  |   |                                    | 174,759   |   |   |   | 174,759 |   |   |   | 174,759 |   |
| Conklin Services & Construction Inc. (6)Specialty Construction and Maintenance | Collateralized Business Loan11.00%, due 10/08                |   |                                    | 1,648,181 |   |   |   | 1,648,181 |   |   |   | 1,450,000 |   |
| Mountain View Bar & Grill Inc. (6)Retail Food Service                          | Collateralized Business Loan12.00%, due 5/09                 |   |                                    | 406,067   |   |   |   | 406,067 |   |   |   | 406,067 |   |
| J. JG. Associates, Inc. (6)Consumer Receivable Collections                         | Senior Loanno stated rate, no maturity                       |   |                                    | 182,936   |   |   |   | 182,936 |   |   |   | 85,250 |   |
| J. JG. Associates, Inc. (6)Consumer Receivable Collections                         | Senior Loanno stated rate, no maturity                       |   |                                    | 35,781    |   |   |   | 35,781 |   |   |   | 35,781 |   |
| Car-Matt Real Estate LLC (6)Real Estate Mortgage                                   | Senior Real Estate Mortgage12.00%, due 11/08                 |   |                                    | 135,577   |   |   |   | 135,577 |   |   |   | 18,933 |   |
| CMCA, LLC (2) (3)Consumer Receivable Collections                                   | Collateralized Business Loan12,00% no stated maturity        |   |                                    | 216,617   |   |   |   | 216,617 |   |   |   | 216,617 |   |
| CMCA, LLC #2 (2) (3) (6)Consumer Receivable Collections                            | Collateralized Business Loan12.00%, no stated maturity       |   |                                    | 106,261   |   |   |   | 106,261 |   |   |   | 106,261 |   |
| Andy Fur (6)Dry Cleaners                                                           | Collateralized Business Loan11.5%, due 1/10                  |   |                                    | 12,103    |   |   |   | 12,103 |   |   |   | - |   |
| Greaves-Peters Laundry Systems Inc. (6)Laundromat                                  | Collateralized Business Loan10.90%, due 9/13                 |   |                                    | 20,471    |   |   |   | 20,471 |   |   |   | 20,471 |   |
| Other Miscellaneous Loans (5) (6)                                                  |                                                         |   |                                    | 115,031   |   |   |   | 115,031 |   |   |   | 81,977 |   |
|                                                                               | Total Commercial Loans                                       |   |                                    |      |   |   |   | 5,857,873 |   |   |   | 5,228,247 |   |
| Corporate Loans Receivable (196.20%)(4)                                            |                                                         |   |                                    |      |   |   |   |   |   |   |   |   |   |
| Charlie Brown’s Acquisition Co. (6)Retail Food Service                       | Term Loan B10.25%, all PIK, due 10/13                        |   |                                    | 2,356,682 |   |   |   | 2,356,682 |   |   |   | 471,336 |   |
| Alpha Media Group Inc.Publishing                                                   | Term Loan, First Lien12.00%, all PIK , due 7/13              |   |                                    | 2,687,778 |   |   |   | 2,649,826 |   |   |   | 940,722 |   |
| Hudson Products Holdings Inc.Diversified Manufacturing                             | Term Loan, First Lien8.5%, due 8/15                          |   |                                    | 1,259,899 |   |   |   | 1,239,147 |   |   |   | 1,165,407 |   |
| Education Affiliates Inc.Private Education                                         | Term Loan, First Lien8.0%, due 1/15                          |   |                                    | 773,449   |   |   |   | 763,519 |   |   |   | 719,308 |   |
| Shearer’s Foods Inc.Wholesale Food Supplier                                  | Term Loan, First Lien15.75%, of which 3.75% is PIK, due 6/15 |   |                                    | 1,075,400 |   |   |   | 1,059,775 |   |   |   | 1,075,400 |   |
| Impact Confections Inc.Candy Manufacturer                                          | Term Loan, First Lien17.00%, of which 5% is PIK, due 07/15   |   |                                    | 1,618,071 |   |   |   | 1,618,071 |   |   |   | 1,618,071 |   |
| Sterling Infosystems, Inc.Information Data Systems                                 | Term Loan, First Lien7.25%, due 02/18                        |   |                                    | 1,000,000 |   |   |   | 981,171 |   |   |   | 1,001,250 |   |
|                                                                               | Total Corporate Loans                                        |   |                                    |      |   |   |   | 10,668,191 |   |   |   | 6,991,494 |   |
|                                                                               | Total loans receivable                                       |   |                                    |      |   |   |   | 16,526,064 |   |   |   | 12,219,741 |   |

----

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

| (1) | As of July 5, 2011, all investments previously pledged as collateral for a note payable to a bank were released in connection with the expiration of the credit line. All investments, other than investments held through Elk Associates Funding Corporation, were pledged as collateral for a Senior Secured Note, but were released as such note was paid off in March 2012 (see Note 4 to the consolidated financial statements). |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

| (4) | Percentage of net liabilities. |
|-----|--------------------------------|

| (5) | Other small balance loans. |
|-----|----------------------------|

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

----

| 1.  | Organization and Summary of Significant Accounting Policies |
|----------|-------------------------------------------------------------|

----

----

----

| 2.  | Investments |
|----------|-------------|

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

----

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

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

----

| Year EndingJune 30  |   | PolicyPremiums |      |
|---------------------|--------|----------------|-----------|
|                |   |           |      |
| 2013 (three months) |   | $              | 218,520   |   |
| 2014                |   |           | 874,068   |   |
| 2015                |   |           | 874,068   |   |
| 2016                |   |           | 874,068   |   |
| 2017                |   |           | 823,092   |   |
| Thereafter          |   |           | 683,355   |   |
|                |   | $              | 4,347,171 |   |

----

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

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

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

----

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

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

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

|                            |   | Quantitative Information about Level 3 Fair Value Measurements |
|---------------------------------|--------|----------------------------------------------------------------|
|                            |   | Fair Value as ofMarch 31, 2013                                 |   | ValuationTechniques/Methodologies |   | UnobservableInput |   | Range(Weighted Average) |
| Real Estate Secured Loans       | $      | 4,059,251                                                      |   | Market ComparableApproach |   | ComparableMultiple |   | 4.74% – 12.00% (8.74%) |
|                            |   |                                                           |   |   |   |   |   |   |
| Subordinated Debt / Corporate   |   | 971,448                                                        |   | Market Comparable |   | Comparable |   |   |
|                            |   |                                                           |   |   |   |   |   |   |
| Notes                           |   |                                                           |   |   |   |   |   | 8.00% 12.00% (10.00%) |
|                            |   |                                                           |   |   |   |   |   |   |
| Collateralized Loan Obligations |   | 321,487                                                        |   | Market ComparableApproach |   | ComparableMultiple |   | 12.00%-12.00% (12.00%) |
|                            |   |                                                           |   |   |   |   |   |   |
| Life Settlements                |   | 3,653,690                                                      |   | DiscountedCash Flow |   | Discount Rate |   | 20.00%-20.00% (20.00%) |
|                            |   |                                                           |   |   |   |   |   |   |
| Common Equity / Interests       |   | 900,000                                                        |   | Market ComparableApproach |   | ComparableMultiple |   | N/A |
|                            |   |                                                           |   |   |   |   |   |   |
|                            |   | 12,588                                                         |   | Net Asset Value |   | UnderlyingAssets / Liabilities |   | N/A |
|                            |   |                                                           |   |   |   |   |   |   |
| Total Level 3 Investments       |   |                                                           |   |   |   |   |   |   |
|                            | $      | 9,918,464                                                      |   |   |   |   |   |   |

----

| 3.  | Debentures Payable to SBA |
|----------|---------------------------|

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

----

| 4. | Notes Payable |
|----|---------------|

----

| 5.  | Dividends to Stockholders |
|----------|---------------------------|

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

----

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

| 6. | Financial Instruments |
|----|-----------------------|

| 7. | Stock Purchase Agreement |
|----|--------------------------|

----

| 8. | Commitments and Contingencies |
|----|-------------------------------|

----

| 9. | Stock Option Plans |
|----|--------------------|

|                                  |   | Stock Options     |    |
|---------------------------------------|--------|-------------------|---------|
|                                  |   | Number of Options |    |   | WeightedAverageExercise PricePer Share |   |
| Options outstanding at June 30, 2012  |   |              | 239,426 |   |   | $ | 3.28 |   |
| Granted                               |   |              | -       |   |   |   | - |   |
| Canceled                              |   |              | -       |   |   |   | - |   |
| Expired                               |   |              | 40,000  |   |   |   | - |   |
| Exercised                             |   |              | -       |   |   |   | - |   |
| Options outstanding at March 31, 2013 |   |              | 199,426 |   |   | $ | 2.96 |   |

|                    |   | Options Outstanding and Exercisable |    |
|-------------------------|--------|-------------------------------------|---------|
| Range ofExercise Prices |   | NumberOutstandingAt March 31, 2013  |    |   | Weighted AverageRemainingContractual Life |   |   | Weighted AverageExercise Price |   |
| $3.60                   |   |                                | 13,888  |   |   |   | .14 years |   |   | $ | 3.60 |   |
| $5.28                   |   |                                | 40,000  |   |   |   | 1.16 years |   |   | $ | 5.28 |   |
| $2.36                   |   |                                | 120,000 |   |   |   | .53 years |   |   | $ | 2.36 |   |
| $1.78                   |   |                                | 25,538  |   |   |   | 1.10 years |   |   | $ | 1.78 |   |
| $ 1.78-$ 5.28           |   |                                | 199,426 |   |   |   |   |   |   | $ | 3.28 |   |

----

| 10. | Financial Highlights |
|-----|----------------------|

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

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

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

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

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

| (5) | Annualized for interim periods. |
|-----|---------------------------------|

| 11. | Other Matters |
|-----|---------------|

| 12. | Recently Issued Accounting Standards |
|-----|--------------------------------------|

| 13. | Subsequent Events |
|-----|-------------------|

| 14. | Pro Forma Financial Information |
|-----|---------------------------------|

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

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

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

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

|   | · | Notes to the Unaudited Pro Forma Consolidated Financial Statements |
|--------|--------|--------------------------------------------------------------------|

----

----

|                                                                                                                                                                                                                                     |   | AsReported (a) |        |   | Less:Deconsolidationof Elk (b) |   |        | Pro formaAdjustments |   |   |        | Pro forma |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|-------------|--------|--------------------------------|--------|-------------|----------------------|--------|--------|-------------|-----------|--------|
| Assets                                                                                                                                                                                                                                   |   |           |        |   |                           |   |        |                 |   |   |        |      |   |
|                                                                                                                                                                                                                                     |   |           |        |   |                           |   |        |                 |   |   |        |      |   |
| Investments at fair value                                                                                                                                                                                                                |   |           |        |   |                           |   |        |                 |   |   |        |      |   |
| Non Controlled/affiliated investments                                                                                                                                                                                                    |   | $              | 200,000     |   |                           | $      | -           |                 |   | $      | -           |      |   |   | $ | 200,000 |   |
| Non Controlled/non affiliated investments                                                                                                                                                                                                |   |           | 9,393,253   |   |                           |   | 4,705,491   |                 |   |   | -           |      |   |   |   | 4,687,762 |   |
| Controlled affiliated investments                                                                                                                                                                                                        |   |           | 331,487     |   |                           |   | 331,487     |                 |   |   | -           |      |   |   |   | - |   |
|                                                                                                                                                                                                                                     |   |           |        |   |                           |   |        |                 |   |   |        |      |   |   |   |   |   |
| Total investments at fair value                                                                                                                                                                                                          |   |           | 9,924,740   |   |                           |   | 5,036,978   |                 |   |   | -           |      |   |   |   | 4,887,762 |   |
|                                                                                                                                                                                                                                     |   |           |        |   |                           |   |        |                 |   |   |        |      |   |   |   |   |   |
| Cash                                                                                                                                                                                                                                     |   |           | 694,620     |   |                           |   | 184,170     |                 |   |   | -           |      |   |   |   | 510,450 |   |
| Accrued interest receivable                                                                                                                                                                                                              |   |           | 669,372     |   |                           |   | 620,320     |                 |   |   | -           |      |   |   |   | 49,052 |   |
| Assets acquired in satisfaction of loans                                                                                                                                                                                                 |   |           | 153,325     |   |                           |   | 29,025      |                 |   |   | -           |      |   |   |   | 124,300 |   |
| Furniture and equipment, net                                                                                                                                                                                                             |   |           | 42,110      |   |                           |   | 38,374      |                 |   |   | -           |      |   |   |   | 3,736 |   |
| Due from Ameritrans                                                                                                                                                                                                                      |   |           | -           |   |                           |   | 12,444,927  |                 |   |   | (12,444,927 | )         | (c)    |   |   | - |   |
| Prepaid expenses and other assets                                                                                                                                                                                                        |   |           | 75,793      |   |                           |   | 65,552      |                 |   |   | -           |      |   |   |   | 10,241 |   |
|                                                                                                                                                                                                                                     |   |           |        |   |                           |   |        |                 |   |   |        |      |   |   |   |   |   |
| Total assets                                                                                                                                                                                                                             |   | $              | 11,559,960  |   |                           | $      | 18,419,346  |                 |   | $      | (12,444,927 | )         |   |   | $ | 5,585,541 |   |
|                                                                                                                                                                                                                                     |   |           |        |   |                           |   |        |                 |   |   |        |      |   |   |   |   |   |
| Liabilities and Net Liabilities                                                                                                                                                                                                          |   |           |        |   |                           |   |        |                 |   |   |        |      |   |   |   |   |   |
|                                                                                                                                                                                                                                     |   |           |        |   |                           |   |        |                 |   |   |        |      |   |   |   |   |   |
| Liabilities:                                                                                                                                                                                                                             |   |           |        |   |                           |   |        |                 |   |   |        |      |   |   |   |   |   |
| Debentures payable to SBA                                                                                                                                                                                                                |   | $              | 19,975,000  |   |                           | $      | 19,975,000  |                 |   | $      | -           |      |   |   | $ | - |   |
| Due to Elk Associates Funding Corporation                                                                                                                                                                                                |   |           | -           |   |                           |   | -           |                 |   |   | (14,271,038 | )         | (c)    |   |   | 14,271,038 |   |
| Accrued expenses and other liabilities                                                                                                                                                                                                   |   |           | 304,151     |   |                           |   | 289,893     |                 |   |   | -           |      |   |   |   | 14,258 |   |
| Accrued interest payable                                                                                                                                                                                                                 |   |           | 1,099,492   |   |                           |   | 1,099,492   |                 |   |   | -           |      |   |   |   | - |   |
| Dividends payable                                                                                                                                                                                                                        |   |           | 928,125     |   |                           |   | -           |                 |   |   | -           |      |   |   |   | 928,125 |   |
|                                                                                                                                                                                                                                     |   |           |        |   |                           |   |        |                 |   |   |        |      |   |   |   |   |   |
| Total liabilities                                                                                                                                                                                                                        |   |           | 22,306,768  |   |                           |   | 21,364,385  |                 |   |   | (14,271,038 | )         |   |   |   | 15,213,421 |   |
|                                                                                                                                                                                                                                     |   |           |        |   |                           |   |        |                 |   |   |        |      |   |   |   |   |   |
| Net Liabilities:                                                                                                                                                                                                                         |   |           |        |   |                           |   |        |                 |   |   |        |      |   |   |   |   |   |
| Preferred Stock 9,500,000 shares authorized, none issued or outstanding; 9-3/8% cumulative participating redeemable preferred stock; $.01 par value, $12.00 face value, 500,000 shares authorized; 300,000 shares issued and outstanding |   |           | 3,600,000   |   |                           |   | -           |                 |   |   | -           |      |   |   |   | 3,600,000 |   |
| Common stock, $0001 par value; 45,000,000 shares authorized, 3,405,583 shares issued; 3,395,583 shares outstanding                                                                                                                       |   |           | 341         |   |                           |   | -           |                 |   |   | -           |      |   |   |   | 341 |   |
| Additional paid in capital                                                                                                                                                                                                               |   |           | 21,330,544  |   |                           |   | 16,129,119  |                 |   |   | -           |      |   |   |   | 5,201,425 |   |
| Losses and distributions in excess of earnings                                                                                                                                                                                           |   |           | (26,868,436 | )      |                           |   | (12,713,856 | )                    |   |   | (1,826,111  | )    | (c)    |   |   | (15,980,691 | ) |
| Net unrealized depreciation on investments                                                                                                                                                                                               |   |           | (8,808,557  | )      |                           |   | (6,359,602  | )                    |   |   | -           |      |   |   |   | (2,448,955 | ) |
| Total                                                                                                                                                                                                                                    |   |           | (10,746,108 | )      |                           |   | (2,944,339  | )                    |   |   | (1,826,111  | )         |   |   |   | (9,627,880 | ) |
| Less Treasury stock, at cost, 10,000 shares of common                                                                                                                                                                                    |   |           | (700        | )      |                           |   | (700        | )                    |   |   | -           |      |   |   |   | - |   |
| Total net liabilities                                                                                                                                                                                                                    |   |           | (10,746,808 | )      |                           |   | (2,945,039  | )                    |   |   | (1,826,111  | )         |   |   |   | (9,627,880 | ) |
|                                                                                                                                                                                                                                     |   |           |        |   |                           |   |        |                 |   |   |        |      |   |   |   |   |   |
| Total liabilities and net liabilities                                                                                                                                                                                                    |   | $              | 11,559,960  |   |                           | $      | 18,419,346  |                 |   | $      | (12,444,927 | )         |   |   | $ | 5,585,541 |   |
|                                                                                                                                                                                                                                     |   |           |        |   |                           |   |        |                 |   |   |        |      |   |   |   |   |   |
| Net liability value per common share                                                                                                                                                                                                     |   | $              | (4.23       | )      |                           |   |        |                 |   |   |        |      |   |   | $ | (3.90 | ) |

----

|                                                                        |   | AsReported (a) |       |   | Less:Deconsolidationof Elk (b) |   |       | Pro formaAdjustments |   |   |       | Pro forma |   |
|-----------------------------------------------------------------------------|--------|----------------|------------|--------|--------------------------------|--------|------------|----------------------|--------|--------|------------|-----------|--------|
| Investment Income:                                                          |   |           |       |   |                           |   |       |                 |   |   |       |      |   |
| Interest on loans receivable                                                |   |           |       |   |                           |   |       |                 |   |   |       |      |   |
| Non- controlled/ non- affiliated investments                                |   | $              | 668,687    |   |                           | $      | 668,612    |                 |   | $      | -          |      |   |   | $ | 75 |   |
| Controlled affiliated investments                                           |   |           | 19,596     |   |                           |   |       |                 |   |   |       |      |   |   |   | 19,596 |   |
|                                                                        |   |           | 688,283    |   |                           |   | 668,612    |                 |   |   | -          |      |   |   |   | 19,671 |   |
| Fees and other income                                                       |   |           | -          |   |                           |   | -          |                 |   |   | -          |      |   |   |   | - |   |
|                                                                        |   |           | 688,283    |   |                           |   | 668,612    |                 |   |   | -          |      |   |   |   | 19,671 |   |
|                                                                        |   |           |       |   |                           |   |       |                 |   |   |       |      |   |   |   |   |   |
| Expenses:                                                                   |   |           |       |   |                           |   |       |                 |   |   |       |      |   |   |   |   |   |
| Interest                                                                    |   |           | 756,985    |   |                           |   | 756,985    |                 |   |   | -          |      |   |   |   | - |   |
| Salaries and employee benefits                                              |   |           | 758,654    |   |                           |   | 758,654    |                 |   |   | 512,091    |      | (d)    |   |   | 512,091 |   |
| Occupancy                                                                   |   |           | 117,222    |   |                           |   | 117,222    |                 |   |   | 58,611     |      | (d)    |   |   | 58,611 |   |
| Legal fees                                                                  |   |           | 1,043,687  |   |                           |   | 1,085,278  |                 |   |   | 607,399    |      | (d)    |   |   | 565,808 |   |
| Accounting and compliance fees                                              |   |           | 464,060    |   |                           |   | 442,135    |                 |   |   | 252,017    |      | (d)    |   |   | 273,942 |   |
| Directors fees and expense                                                  |   |           | 183,286    |   |                           |   | 183,286    |                 |   |   | 91,643     |      | (d)    |   |   | 91,643 |   |
| Other administrative expenses                                               |   |           | 603,056    |   |                           |   | 649,109    |                 |   |   | 222,403    |      | (d)    |   |   | 176,350 |   |
| Loss and impairment on assets acquired in satisfaction of loans, net        |   |           | 233,612    |   |                           |   | 233,612    |                 |   |   | 81,947     |      | (d)    |   |   | 81,947 |   |
| Total expenses                                                              |   |           | 4,160,562  |   |                           |   | 4,226,281  |                 |   |   | 1,826,111  |      |   |   |   | 1,760,392 |   |
| Net investment loss                                                         |   |           | (3,472,279 | )      |                           |   | (3,557,669 | )                    |   |   | (1,826,111 | )         |   |   |   | (1,740,721 | ) |
|                                                                        |   |           |       |   |                           |   |       |                 |   |   |       |      |   |   |   |   |   |
| Net realized losses on investments                                          |   |           | (617,433   | )      |                           |   | (617,433   | )                    |   |   | -          |      |   |   |   | - |   |
|                                                                        |   |           | (617,433   | )      |                           |   | (617,433   | )                    |   |   | -          |      |   |   |   | - |   |
| Net unrealized depreciation on investments                                  |   |           | (2,909,782 | )      |                           |   | (1,906,858 | )                    |   |   | -          |      |   |   |   | (1,002,924 | ) |
| Net realized/ unrealized losses on investments                              |   |           | (3,527,215 | )      |                           |   | (2,524,291 | )                    |   |   | -          |      |   |   |   | (1,002,924 | ) |
| Net decrease in net assets from operations                                  |   |           | (6,999,494 | )      |                           |   | (6,081,960 | )                    |   |   | (1,826,111 | )         |   |   |   | (2,743,645 | ) |
| Distributions to preferred shareholders                                     |   |           | (253,125   | )      |                           |   |       |                 |   |   | -          |      |   |   |   | (253,125 | ) |
| Net decrease in net assets from operations available to common shareholders |   | $              | (7,252,619 | )      |                           | $      | (6,081,960 | )                    |   | $      | (1,826,111 | )         |   |   | $ | (2,996,770 | ) |

----

|                                                                                                                                                                                                                                     |   | AsReported (a) |        |   | Less:Deconsolidationof Elk (b) |   |       | Pro formaAdjustments |   |   |        | Pro forma |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|-------------|--------|--------------------------------|--------|------------|----------------------|--------|--------|-------------|-----------|--------|
| Assets                                                                                                                                                                                                                                   |   |           |        |   |                           |   |       |                 |   |   |        |      |   |
|                                                                                                                                                                                                                                     |   |           |        |   |                           |   |       |                 |   |   |        |      |   |
| Investments at fair value                                                                                                                                                                                                                |   |           |        |   |                           |   |       |                 |   |   |        |      |   |
| Non Controlled/non affiliated investments                                                                                                                                                                                                |   | $              | 16,169,728  |   |                           | $      | 11,430,300 |                 |   | $      | -           |      |   |   | $ | 4,739,428 |   |
| Controlled affiliated investments                                                                                                                                                                                                        |   |           | 332,878     |   |                           |   | 332,878    |                 |   |   | -           |      |   |   |   | - |   |
|                                                                                                                                                                                                                                     |   |           |        |   |                           |   |       |                 |   |   |        |      |   |   |   |   |   |
| Total investments at fair value                                                                                                                                                                                                          |   |           | 16,502,606  |   |                           |   | 11,763,178 |                 |   |   | -           |      |   |   |   | 4,739,428 |   |
|                                                                                                                                                                                                                                     |   |           |        |   |                           |   |       |                 |   |   |        |      |   |   |   |   |   |
| Cash                                                                                                                                                                                                                                     |   |           | 184,338     |   |                           |   | 122,225    |                 |   |   | -           |      |   |   |   | 62,113 |   |
| Accrued interest receivable                                                                                                                                                                                                              |   |           | 807,643     |   |                           |   | 763,371    |                 |   |   | -           |      |   |   |   | 44,272 |   |
| Assets acquired in satisfaction of loans                                                                                                                                                                                                 |   |           | 878,325     |   |                           |   | 753,325    |                 |   |   | -           |      |   |   |   | 125,000 |   |
| Furniture and equipment, net                                                                                                                                                                                                             |   |           | 44,359      |   |                           |   | 39,417     |                 |   |   | -           |      |   |   |   | 4,942 |   |
| Deferred loan cost, net                                                                                                                                                                                                                  |   |           | 260,459     |   |                           |   | 260,459    |                 |   |   | -           |      |   |   |   | - |   |
| Due from Ameritrans                                                                                                                                                                                                                      |   |           | -           |   |                           |   | 10,874,927 |                 |   |   | (10,874,927 | )         | (c)    |   |   | - |   |
| Prepaid expenses and other assets                                                                                                                                                                                                        |   |           | 263,641     |   |                           |   | 250,073    |                 |   |   | -           |      |   |   |   | 13,568 |   |
|                                                                                                                                                                                                                                     |   |           |        |   |                           |   |       |                 |   |   |        |      |   |   |   |   |   |
| Total assets                                                                                                                                                                                                                             |   | $              | 18,941,371  |   |                           | $      | 24,826,975 |                 |   | $      | (10,874,927 | )         |   |   | $ | 4,989,323 |   |
|                                                                                                                                                                                                                                     |   |           |        |   |                           |   |       |                 |   |   |        |      |   |   |   |   |   |
| Liabilities and Net Liabilities                                                                                                                                                                                                          |   |           |        |   |                           |   |       |                 |   |   |        |      |   |   |   |   |   |
|                                                                                                                                                                                                                                     |   |           |        |   |                           |   |       |                 |   |   |        |      |   |   |   |   |   |
| Liabilities:                                                                                                                                                                                                                             |   |           |        |   |                           |   |       |                 |   |   |        |      |   |   |   |   |   |
| Debentures payable to SBA                                                                                                                                                                                                                |   | $              | 21,175,000  |   |                           | $      | 21,175,000 |                 |   | $      | -           |      |   |   | $ | - |   |
| Due to Elk Associates Funding Corporation                                                                                                                                                                                                |   |           |        |   |                           |   |       |                 |   |   | (10,874,927 | )         | (c)    |   |   | 10,874,927 |   |
| Accrued expenses and other liabilities                                                                                                                                                                                                   |   |           | 312,353     |   |                           |   | 241,848    |                 |   |   | -           |      |   |   |   | 70,505 |   |
| Accrued interest payable                                                                                                                                                                                                                 |   |           | 342,506     |   |                           |   | 342,506    |                 |   |   | -           |      |   |   |   | - |   |
| Dividends payable                                                                                                                                                                                                                        |   |           | 675,000     |   |                           |   | -          |                 |   |   | -           |      |   |   |   | 675,000 |   |
|                                                                                                                                                                                                                                     |   |           |        |   |                           |   |       |                 |   |   |        |      |   |   |   |   |   |
| Total liabilities                                                                                                                                                                                                                        |   |           | 22,504,859  |   |                           |   | 21,759,354 |                 |   |   | (10,874,927 | )         |   |   |   | 11,620,432 |   |
|                                                                                                                                                                                                                                     |   |           |        |   |                           |   |       |                 |   |   |        |      |   |   |   |   |   |
| Net Liabilities:                                                                                                                                                                                                                         |   |           |        |   |                           |   |       |                 |   |   |        |      |   |   |   |   |   |
| Preferred Stock 9,500,000 shares authorized, none issued or outstanding; 9-3/8% cumulative participating redeemable preferred stock; $.01 par value, $12.00 face value, 500,000 shares authorized; 300,000 shares issued and outstanding |   |           | 3,600,000   |   |                           |   |       |                 |   |   |        |      |   |   |   | 3,600,000 |   |
| Common stock, $0001 par value; 45,000,000 shares authorized, 3,405,583 shares issued; 3,395,583 shares outstanding                                                                                                                       |   |           | 341         |   |                           |   |       |                 |   |   |        |      |   |   |   | 341 |   |
| Additional paid in capital                                                                                                                                                                                                               |   |           | 21,330,544  |   |                           |   | 16,129,119 |                 |   |   | -           |      |   |   |   | 5,201,425 |   |
| Losses and distributions in excess of earnings                                                                                                                                                                                           |   |           | (22,525,598 | )      |                           |   | (8,538,754 | )                    |   |   | -           |      |   |   |   | (13,986,844 | ) |
| Net unrealized depreciation on investments                                                                                                                                                                                               |   |           | (5,898,775  | )      |                           |   | (4,452,744 | )                    |   |   | -           |      |   |   |   | (1,446,031 | ) |
| Total                                                                                                                                                                                                                                    |   |           | (3,493,488  | )      |                           |   | 3,137,621  |                 |   |   | -           |      |   |   |   | (6,631,109 | ) |
| Less Treasury stock, at cost, 10,000 shares of common                                                                                                                                                                                    |   |           | (70,000     | )      |                           |   | (70,000    | )                    |   |   | -           |      |   |   |   | - |   |
| Total net liabilities                                                                                                                                                                                                                    |   |           | (3,563,488  | )      |                           |   | 3,067,621  |                 |   |   | -           |      |   |   |   | (6,631,109 | ) |
|                                                                                                                                                                                                                                     |   |           |        |   |                           |   |       |                 |   |   |        |      |   |   |   |   |   |
| Total liabilities and net liabilities                                                                                                                                                                                                    |   | $              | 18,941,371  |   |                           | $      | 24,826,975 |                 |   | $      | (10,874,927 | )         |   |   | $ | 4,989,323 |   |
|                                                                                                                                                                                                                                     |   |           |        |   |                           |   |       |                 |   |   |        |      |   |   |   |   |   |
| Net liability value per common share                                                                                                                                                                                                     |   | $              | (2.11       | )      |                           |   |       |                 |   |   |        |      |   |   | $ | (3.01 | ) |

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|                                                                        |   | AsReported (a) |       |   | Less:Deconsolidationof Elk (b) |   |       | Pro formaAdjustments |   |   | Pro forma |   |
|-----------------------------------------------------------------------------|--------|----------------|------------|--------|--------------------------------|--------|------------|----------------------|--------|--------|-----------|--------|
| Investment Income:                                                          |   |           |       |   |                           |   |       |                 |   |   |      |   |
| Interest on loans receivable                                                |   |           |       |   |                           |   |       |                 |   |   |      |   |
| Non-controlled/non-affiliated investments                                   |   | $              | 2,022,374  |   |                           | $      | 2,022,374  |                 |   | $      | -         |   |   | $ | - |   |
| Controlled affiliated investments                                           |   |           | 27,237     |   |                           |   | 4,272      |                 |   |   | -         |   |   |   | 22,965 |   |
|                                                                        |   |           | 2,049,611  |   |                           |   | 2,026,646  |                 |   |   | -         |   |   |   | 22,965 |   |
| Fees and other income                                                       |   |           | 11,466     |   |                           |   | 6,858      |                 |   |   | -         |   |   |   | 4,608 |   |
|                                                                        |   |           | 2,061,077  |   |                           |   | 2,033,504  |                 |   |   | -         |   |   |   | 27,573 |   |
|                                                                        |   |           |       |   |                           |   |       |                 |   |   |      |   |   |   |   |   |
| Expenses:                                                                   |   |           |       |   |                           |   |       |                 |   |   |      |   |   |   |   |   |
| Interest                                                                    |   |           | 1,280,954  |   |                           |   | 1,029,643  |                 |   |   | -         |   |   |   | 251,311 |   |
| Salaries and employee benefits                                              |   |           | 1,275,282  |   |                           |   | 414,478    |                 |   |   | -         |   |   |   | 860,804 |   |
| Occupancy                                                                   |   |           | 173,187    |   |                           |   | 86,593     |                 |   |   | -         |   |   |   | 86,594 |   |
| Legal fees                                                                  |   |           | 1,407,893  |   |                           |   | 971,766    |                 |   |   | -         |   |   |   | 436,127 |   |
| Accounting and compliance fees                                              |   |           | 737,036    |   |                           |   | 313,021    |                 |   |   | -         |   |   |   | 424,015 |   |
| Directors fees and expense                                                  |   |           | 150,641    |   |                           |   | 75,320     |                 |   |   | -         |   |   |   | 75,321 |   |
| Other administrative expenses                                               |   |           | 942,590    |   |                           |   | 500,634    |                 |   |   | -         |   |   |   | 441,956 |   |
| Advisory fees                                                               |   |           | 101,984    |   |                           |   | -          |                 |   |   | -         |   |   |   | 101,984 |   |
| Total expenses                                                              |   |           | 6,069,567  |   |                           |   | 3,391,455  |                 |   |   | -         |   |   |   | 2,678,112 |   |
| Net investment loss, before gain on extinguishment of debt                  |   |           | (4,008,490 | )      |                           |   | (1,357,951 | )                    |   |   | -         |   |   |   | (2,650,539 | ) |
| Gain on extinguishment of debt                                              |   |           | 353,620    |   |                           |   | -          |                 |   |   | -         |   |   |   | 353,620 |   |
| Net investment loss                                                         |   |           | (3,654,870 | )      |                           |   | (1,357,951 | )                    |   |   | -         |   |   |   | (2,296,919 | ) |
|                                                                        |   |           |       |   |                           |   |       |                 |   |   |      |   |   |   |   |   |
| Net realized gains on investments                                           |   |           | 184,679    |   |                           |   | (52,860    | )                    |   |   | -         |   |   |   | 237,539 |   |
|                                                                        |   |           | 184,679    |   |                           |   | (52,860    | )                    |   |   | -         |   |   |   | 237,539 |   |
| Net Unrealized depreciation on investments                                  |   |           | (1,991,890 | )      |                           |   | (1,922,966 | )                    |   |   | -         |   |   |   | (68,924 | ) |
| Net realized/unrealized losses on investments                               |   |           | (1,807,211 | )      |                           |   | (1,975,826 | )                    |   |   | -         |   |   |   | 168,615 |   |
| Net decrease in net assets from operations                                  |   |           | (5,462,081 | )      |                           |   | (3,333,777 | )                    |   |   | -         |   |   |   | (2,128,304 | ) |
| Distributions to preferred shareholders                                     |   |           | (337,500   | )      |                           |   | -          |                 |   |   | -         |   |   |   | (337,500 | ) |
| Net decrease in net assets from operations available to common shareholders |   | $              | (5,799,581 | )      |                           | $      | (3,333,777 | )                    |   | $      | -         |   |   | $ | (2,465,804 | ) |

----

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

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

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

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

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|   | · | our ability to continue as a going concern; |
|--------|--------|---------------------------------------------|

|   | · | our ability to operate without Elk’s SBIC license; |
|--------|--------|----------------------------------------------------------|

|   | · | our ability to operate with Elk in receivership; |
|--------|--------|--------------------------------------------------|

|   | · | our future operating results; |
|--------|--------|-------------------------------|

|   | · | our business prospects and the prospects of our existing and prospective portfolio companies; |
|--------|--------|-----------------------------------------------------------------------------------------------|

|   | · | the impact of investments that we expect to make; |
|--------|--------|---------------------------------------------------|

|   | · | our informal relationships with third parties; |
|--------|--------|------------------------------------------------|

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

|   | · | the ability of our portfolio companies to achieve their objectives; |
|--------|--------|---------------------------------------------------------------------|

|   | · | our expected financings and investments; |
|--------|--------|------------------------------------------|

|   | · | our regulatory structure and tax treatment; |
|--------|--------|---------------------------------------------|

|   | · | our ability to operate as a BDC and a RIC; and |
|--------|--------|------------------------------------------------|

|   | · | the adequacy of our cash resources and working capital. |
|--------|--------|---------------------------------------------------------|

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| 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) |
|------------|----------------------------------------------------------------------------------------------------------------------------------------|

----

|                | AMERITRANS CAPITAL CORPORATION |
|---------------------|--------------------------------|
|                |                           |   |
| Dated: May 15, 2013 |                           |   |
|                |                           |   |
|                | By:                            | /s/ Michael Feinsod |
|                |                           | Michael Feinsod |
|                |                           | Chief Executive Officer and President |