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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

T Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended March 31, 2009

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

Commission File Number 0-22153

AMERITRANS CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)


Delaware (State of incorporation)	52-2102424 (I.R.S. Employer Identification No.)
747 Third Avenue, New York, New York 10017 (Address of Registrant’s principal executive office) (Zip Code)
(212) 355-2449 (Registrant’s telephone number, including area code)
N/A (Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes T No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Act).
Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer T Smaller reporting company ¨
(Do not check if a small reporting company.)

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

The number of shares of registrant’s common stock, par value $.0001 per share issued as of May 14, 2009 was 3,405,583; with 3,395,583 outstanding. The number of shares of registrant’s 9⅜ cumulative participating redeemable preferred stock issued and outstanding as of May 14, 2009 was 300,000.

AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

ITEM 4.

CONTROLS AND PROCEDURES

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

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

Item 3. Default upon Senior Securities

Item 4. Submission of Matters to a Vote of Security Holders

Item 5. Other Information

Item 6. Exhibits

Exhibit Index

(a)

Exhibits

SIGNATURES

PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS


	March 31, 2009	June 30, 2008
	(unaudited)
Assets

Investments at fair value (cost of $29,698,126 and $60,431,182, respectively):
Non-controlled/non-affiliated investments	$ 26,775,914	$ 56,782,716
Non-controlled affiliated investments	1,167,609	1,424,264
Controlled affiliated investments	628,810	1,391,307

Total investments at fair value	28,572,333	59,598,287

Cash and cash equivalents	1,163,158	665,893
Accrued interest receivable	731,338	602,956
Assets acquired in satisfaction of loans	38,250	38,250
Furniture, equipment and leasehold improvements, net	135,024	156,125
Deferred loan costs, net	156,206	186,760
Prepaid expenses and other assets	522,808	733,197

Total assets	$ 31,319,117	$ 61,981,468

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

AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS’ EQUITY


	March 31, 2009	June 30, 2008
Liabilities and Stockholders’ Equity	(unaudited)

Liabilities:
Debentures payable to SBA	$ 12,000,000	$ 12,000,000
Notes payable, banks	700,000	28,095,697
Note payable – related party	-	100,000
Accrued expenses and other liabilities	430,618	640,576
Accrued interest payable	55,297	262,528
Dividends payable	84,375	84,375

Total liabilities	13,270,290	41,183,176

Commitments and contingencies (Notes 2,3,4 and 7)

Stockholders’ equity:
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
Deferred compensation (Note 8)	(25,293)	(40,921)
Stock options outstanding (Note 8)	185,253	141,668
Additional paid-in capital	21,139,504	21,139,504
Losses and distributions in excess of earnings	(5,351,596)	(2,895,992)
Net unrealized depreciation on investments	(1,429,382)	(1,076,308)
Total	18.118,827	20,868,292
Less: Treasury stock, at cost, 10,000 shares of common stock	(70,000)	(70,000)

Total stockholders’ equity	18,048,827	20,798,292

Total liabilities and stockholders’ equity	$ 31,319,117	$ 61,981,468

Net asset value per common share	$ 4.26	$ 5.06

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

AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS


	For the three months ended		For the nine months ended
	March 31, 2009 (unaudited)	March 31, 2008 (unaudited)	March 31, 2009 (unaudited)	March 31, 2008 (unaudited)
Investment income:
Interest on loans receivable:
Non-controlled/non-affiliated investments	$ 597,389	$ 1,438,797	$ 2,806,036	$ 4,393,274
Non-controlled affiliated investments	2,937	4,384	11,042	10,618
Controlled affiliated investments	12,284	59,044	55,833	181,926
	612,610	1,502,225	2,872,911	4,585,818
Fees and other income	42,767	80,886	212,671	236,429
Total investment income	655,377	1,583,111	3,085,582	4,822,247
Expenses:
Interest	160,895	585,469	914,269	1,869,357
Salaries and employee benefits	486,832	506,188	1,758,791	1,395,858
Occupancy costs	61,833	62,168	215,107	199,211
Professional fees	359,895	154,215	1,199,851	503,057
Other administrative expenses	204,978	272,184	672,194	700,273
Total expenses	1,274,433	1,580,224	4,760,212	4,667,756
Net investment income (loss)	(619,056)	2,887	(1,674,630)	154,491
Net realized and unrealized gains (losses) on investments: Net realized gains (losses) on investments:
Non-controlled/non-affiliated investments	(51,830)	(5,009)	(536,164)	(43,999)
Non-controlled affiliated investments	-	-	-	(150,859)
Controlled affiliated investments	-	-	8,315	134,581
	(51,830)	(5,009)	(527,849)	(60,277)
Net unrealized depreciation on investments	(98,664)	(2,093)	(353,074)	(319,910)
Net realized/unrealized losses on investments	(150,494)	(7,102)	(880,923)	(380,187)
Net decrease in net assets from operations	(769,550)	(4,215)	(2,555,553)	(225,696)
Distributions to preferred shareholders	(84,375)	(84,375)	(253,125)	(253,125)
Net decrease in net assets from operations available to common shareholders	$ (853,925)	$ (88,590)	$ (2,808,678)	$ (478,821)

Weighted Average Number of Common Shares Outstanding:
Basic and diluted	3,395,583	3,395,583	3,395,583	3,394,835
Net Decrease in Net Assets from Operations Per Common Share:
Basic and diluted	$ (0.25)	$ (0.03)	$ (0.83)	$ (0.14)

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

AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS


	For the nine months ended
	March 31, 2009	March 31, 2008
	(unaudited)	(unaudited)
Increase (decrease) in net assets from operations:
Net investment income (loss)	$ (1,674,630)	$ 154,491
Net realized losses from investments	(527,849)	(60,277)
Unrealized depreciation on investments	(353,074)	(319,910)

Net decrease in net assets from operations	(2,555,553)	(225,696)

Shareholder distributions:
Distributions to preferred shareholders	(253,125)	(253,125)
Distributions to common shareholders	-	(67,912)
Capital share transactions:
Proceeds from stock options exercised	-	19,688
Stock options compensation expense	59,213	68,974

Net decrease in net assets from shareholder distributions and capital shares transactions	(193,912)	(232,375)

Total decrease in net assets	(2,749,465)	(458,071)

Net assets:
Beginning of period	20,798,292	21,644,840

End of period	$ 18,048,827	$ 21,186,769

Net assets per common	$ 14,448,827	$ 17,586,769

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

Capital share activity:
Common shares issued upon exercise of stock options	-	4,375

Net increase in capital share activity	-	4,375

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

AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS


	For the nine months ended
	March 31, 2009	March31, 2008
	(unaudited)	(unaudited)
Cash flows from operating activities:
Net decrease in net assets from operations	$ (2,555,553)	$ (225,696)
Adjustments to reconcile net decrease in net assets from operations to net cash provided by (used in) operating activities:
Depreciation and amortization	53,343	58,429
Deferred compensation	59,213	68,974
Net realized losses on investments	527,849	60,277
Net unrealized depreciation on investments	353,074	319,910
Investments originated	(5,017,838)	(21,478,427)
Proceeds from principal receipts, sales and maturities of investments	35,162,869	21,494,009
Assets acquired in satisfaction of loans	-	17,780
Changes in operating assets and liabilities:
Accrued interest receivable	(128,382)	(3,717)
Prepaid expenses and other assets	210,389	(178,433)
Accrued expenses and other liabilities	(209,957)	22,979
Accrued interest payable	(207,231)	(121,187)
Total adjustments	30,803,329	260,594
Net cash provided by operating activities	28,247,776	34,898
Cash flows from investing activities:
Purchases of furniture and equipment	(1,689)	(7,958)
Net cash used in investing activities	(1,689)	(7,958)
Cash flows from financing activities:
Proceeds from stock options exercised	-	19,688
Proceeds from note payable, related parties	-	500,000
Repayment of note payable, related parties	(100,000)	(550,000)
Proceeds from notes payable, banks	3,130,000	18,213,197
Repayment of notes payable, banks	(30,525,697)	(17,050,000)
Dividends paid	(253,125)	(321,037)
Net cash provided by (used in) financing activities	(27,748,822)	811,848
Net increase in cash and cash equivalents	497,265	838,788
Cash and cash equivalents:
Beginning of period	665,893	251,394
End of period	$ 1,163,158	$ 1,090,182

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$ 1,121,501	$ 2,018,274

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

AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INVESTMENTS


Portfolio Company⁽¹⁾	Investment Investment Rate/Maturity	Portfolio Valuation as of March 31, 2009 (unaudited)
Portfolio Company⁽¹⁾	Investment Investment Rate/Maturity	Principal	Net Cost	Value
Medallion Loans Receivable (2.1%)⁽⁵⁾
Boston Taxicab Medallions	2 Medallion Loans 8.60% Weighted Average Rate	$ 26,301	$ 26,301	$ 26,301

Chicago Taxicab Medallions	4 Medallion Loans 9.25% Weighted Average Rate	97,573	97,573	97,573

Florida Taxicab Medallions	2 Medallion Loans 12.19% Weighted Average Rate	255,757	255,757	255,757
			379,631	379,631
Commercial Loans Receivable (65.98%)⁽⁵⁾
A Lot of Cars LLC ⁽⁷⁾Black Car Leasing	Collateralized Business Loan 7.0%, due 6/09	89.050	89,050	60,500
PPCP Inc. ⁽⁷⁾Computer Software	Business Loan 8.0%, due 7/08	16,601	16,601	-
PPCP Inc.⁽⁷⁾Computer Software	Business Loan 8.0%, due 7/08	14,272	14,272	-
Geronimo ATM Fund LLC⁽⁷⁾ATM Operator	Collateralized Business Loan 12.0%, due 5/09	146,822	146,822	-
Cleaners of North Beach, LLC Dry Cleaners	Collateralized Business Loan 5.5%, due 5/11	27,001	27,001	27,001
Crown Cleaners of Miami Lakes Dry Cleaners	Collateralized Business Loan 6.0%, due 7/11	3,386	3,386	3,386
Crown Cleaners of Miami Lakes Dry Cleaners	Collateralized Business Loan 6.0%, due 7/11	21,619	21,619	21,619
City Brite Cleaners Inc. Dry Cleaners	Collateralized Business Loan 11.0%, due 7/09	2,625	2,625	2,625
Andy Fur Dry Cleaning, Inc. Dry Cleaners	Collateralized Business Loan 14.5%, due 1/10	12,103	12,103	12,103
Vivas & Associates, Inc.⁽⁷⁾Nail Salon	Collateralized Business Loan 9.0%, due 1/10	12,185	12,185	-
PPCP, Inc.⁽⁷⁾ Computer Software	Business Loan 8.0%, due 1/10	5,965	5,965	-
Monticello Desserts, Inc. Retail Bakery	Collateralized Business Loan 14.0%, due 4/10	65,158	65,158	65,158
Chao Tenga LLC d/b/a AsianChao Retail Fast Food	Collateralized Business Loan 15.5%, due 5/10	125,446	125,446	125,446
Just Salad LLC Retail Food Service	Collateralized Business Loan 10.0%, due 10/10	320,925	320,925	320,925
Mi Tren Greenlawn, Inc. Retail Fast Food	Subordinate Real Estate Mortgage 13.75%, due 2/11	54,616	54,616	54,616
E&Y General Construction Co. Construction Services	Senior Real Estate Mortgage 10.5%, due 10/10	870,791	870,791	870,791
Lifehouse-Golden Acres Prop. Assisted Living Facility	Senior Real Estate Mortgage – Participation 11.0%, due 2/09	770,840	770,840	770,840
Sealmax, Inc. Construction Services	Senior Real Estate Mortgage 12.0%, due 4/11	911,808	911,808	911,808
Pier-Tech, Inc. Specialty Construction Services	Subordinate Real Estate Mortgage – Participation 12.0%, due 8/10	207,612	207,612	207,612
Soundview Broadcasting LLC Television and Broadcasting	Senior Real Estate Mortgage 7.75%, due 9/11	1,953,854	1,953,854	1,953,854
Golden Triangle Enterprises LLC Retail Food Service	Senior Real Estate Mortgage 7.01%, due 12/13	349,341	349,341	349,341
Goldhkin Wholesale Ent. Inc. Retail Gasoline	Senior Real Estate Mortgage 10.25%, due 7/12	643,016	643,016	643,016
Conklin Services & Construction Inc. Specialty Construction and Maintenance	Collateralized Business Loan 12%, due 10/08	1,718,219	1,718,219	1,718,219
Mountain View Bar & Grill Inc. Retail Food Service	Collateralized Business Loan 12.0%, due 5/09	412,500	412,500	412,500
J. JG. Associates, Inc.⁽⁷⁾Consumer Receivable Collections	Senior Loan no stated rate, no maturity	208,036	208,036	96,050
J. JG. Associates, Inc.⁽⁷⁾Consumer Receivable Collections	Senior Loan no stated rate, no maturity	39,071	39,071	23,600
Natural Person ⁽⁷⁾Real Estate Mortgage	Senior Real Estate Mortgage 12.0%, due 11/08	665,000	665,000	600,000
Lifehouse – Golden Acres Prop. Assisted Living Facility	Senior Real Estate Mortgage – Participation 11.0%, due 2/09	137,640	137,640	137,640
Car-Matt Real Estate LLC Real Estate Mortgage	Senior Real Estate Mortgage 12.0%, due 11/08	135,577	135,577	135,577
633 Mead Street, LLC ⁽³⁾First lien mortgage	Senior Real Estate Mortgage 12.0%, due 8/08	215,000	215,000	215,000
CMCA, LLC ⁽³⁾Consumer Receivable Collections	Collateralized Business Loan 12%, no stated maturity	295,351	295,351	295,351
CMCA, LLC #2 ⁽³⁾Consumer Receivable Collections	Collateralized Business Loan 12%, no stated maturity	107,659	107,659	107,659
Adiel Homes Inc. Construction Services	Senior Real Estate Mortgage 12%, due 1/09	250,000	250,000	250,000
Puretech Enterprises LLC Water Cooler Distributor	Collateralized Business Loan 12.5%, due 6/10	179,575	179,575	179,575
Puretech Enterprises LLC Water Cooler Distributor	Collateralized Business Loan 12.5%, due 7/10	189,840	189,840	189,840
Western Pottery LLC⁽²⁾Ceramic Sanitaryware Distributor	Subordinated Business Loan 5.0%, due 7/08	53,575	53,575	53,575
Puretech Enterprises LLC Water Cooler Distributor	Collateralized Business Loan 12.5%, due 9/10	200,000	200,000	200,000
Western Pottery LLC⁽²⁾Ceramic Sanitaryware Distributor	Subordinated Business Loan 5.0%, due 11/08	107,142	107,142	107,142
Western Pottery LLC⁽²⁾Ceramic Sanitaryware Distributor	Subordinated Business Loan 5.0%, due 3/09	107,142	107,142	107,142
Western Pottery LLC⁽²⁾Ceramic Sanitaryware Distributor	Subordinated Business Loan 5.0%, due 6/09	56,250	56,250	56,250
Conklin Services & Construction Inc. – Dem Specialty Construction and Maintenance	Collateralized Business Loan 12.0%, due 6/09	43,488	43,488	43,488
Conklin Services & Construction Inc. – Dem Note B Specialty Construction and Maintenance	Collateralized Business Loan 12.0%, due 6/09	12,424	12,424	12,424
Greaves-Peters Laundry Systems Laundromat	Collateralized Business Loan 10.9%, due 6/13	369,042	369,042	369,042
Western Pottery LLC ⁽²⁾Ceramic Sanitaryware Distributor	Subordinated Business Loan 4.50%, due 7/09	37,500	37,500	37,500
Other Miscellaneous Loans⁽⁶⁾		160,969	160,969	160,969
	Total Commercial Loans		12,326,036	11,909,184
Corporate Loans Receivable (70.12%)⁽⁵⁾
Charlie Brown’s Acquisition Co. Retail Food Service	Term Loan B 6.67%, due 10/13	2,000,444	2,000,444	2,000,444
Resco Products Inc. Diversified Manufacturing	Term Loan, First Lien 5.95%, due 6/13	1,825,000	1,825,000	1,825,000
Alpha Media Group Inc. Publishing	Term Loan, First Lien 5.75%, due 8/14	1,876,667	1,783,001	1,876,668
Centaur LLC Gaming	Term Loan, First Lien 6.7%, due 10/12	1,384,913	1,354,879	1,384,913
X-Rite Inc. Process Control Instruments	Term Loan, First Lien 7.95%, due 10/12	1,254,234	1,246,893	1,254,234
BP Metals LLC Diversified Manufacturing	Term Loan, First Lien 8.76%, due 6/13	922,704	922,704	922,704
Test Center LLC Data Collection Services	Term Loan, First Lien 5.45%, due 10/13	906,063	869,337	906,063
Learning Care Group Private Education	Term Loan, First Lien 8.4%, due 6/15	992,501	956,628	992,501
Hudson Products Holdings Inc. Diversified Manufacturing	Term Loan, First Lien 8.9%, due 8/15	1,492,501	1,450,858	1,492,501
	Total Corporate Loans		12,409,744	12,655,028

	Total loans receivable		25,115,411	24,943,843
Life Insurance Settlement Contracts (14.80%)⁽⁵⁾
Vibrant Capital Corp. (J.V. #1)⁽⁴⁾	7 life insurance policies, aggregate face value of $30,750,000		2,670,708	2,670,708
Equity Investments (5.3%)⁽⁵⁾
MBS Steeplecrest, Ltd. Rental Real Estate Limited Partnership	Limited Partnership Interest		-	-
MBS Huntwick, Ltd. Rental Real Estate Limited Partnership	Limited Partnership Interest		-	-
MBS Cranbrook Ltd. Rental Real Estate Limited Partnership	Limited Partnership Interest		-	-
MBS Serrano, Ltd. Rental Real Estate Limited Partnership	Limited Partnership Interest		50,600	34,822
MBS Colonnade, Ltd. Rental Real Estate Limited Partnership	Limited Partnership Interest		50,000	4,395
MBS Briar Meadows, Ltd. Rental Real Estate Limited Partnership	Limited Partnership Interest		-	-
MBS Indian Hollow, Ltd. Rental Real Estate Limited Partnership	Limited Partnership Interest		-	-
MBS Sage Creek, Ltd. Rental Real Estate Limited Partnership	Limited Partnership Interest		50,000	35,841
MBS Walnut Creek, Ltd. Rental Real Estate Limited Partnership	Limited Partnership Interest		25,000	12,345
MBS Lodge At Stone Oak, Ltd. Rental Real Estate Limited Partnership	Limited Partnership Interest		60,000	40,408
238 W. 108 Realty LLC ⁽²⁾Residential Real Estate Development	5% LLC Interest		106,000	106,000
Asset Recovery & Management, LLC ⁽³⁾Consumer Receivable Collections	30.0% LLC Interest		6,000	6,000
633 Mead Street, LLC ⁽³⁾Real Estate Development	57.1% LLC Interest		800	800
CMCA, LLC ⁽³⁾Consumer Receivable Collections	30% LLC Interest		4,000	4,000
Soha Terrace II LLC ⁽²⁾Real Estate Development	6% LLC Interest		700,000	700,000
Western Pottery LLC⁽²⁾Ceramic Sanitaryware Distributor	21.8% LLC Interest		467,080	-
Fusion Telecommunications Internet Telephony	69,736 shares of common stock		367,027	7,671
EraGen Biosciences Analytic Compounds	17,000 shares of common stock		25,500	5,500
	Total equity investments		1,912,007	957,782
	Total investments		$ 29,698,126	$ 28,572,333

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

AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INVESTMENTS (continued)

⁽¹⁾Unless otherwise noted, all investments are pledged as collateral for the Notes payable, banks.

⁽²⁾As defined in the Investment Company Act of 1940, we are an affiliate of this portfolio company because 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⁾The Company is entitled to receive interest at a rate of 12% per annum pursuant to an agreement with another company, but, as of March 1, 2009, the Company is not presently accruing interest on this investment.

⁽⁵⁾Percentage of net assets.

⁽⁶⁾Other small balance loans.

⁽⁷⁾ Loan receivable is on non-accrual status and therefore is considered non-income producing.

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

AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INVESTMENTS


Portfolio Company⁽¹⁾	Investment Investment Rate/Maturity	Portfolio Valuation as of June 30, 2008
Portfolio Company⁽¹⁾	Investment Investment Rate/Maturity	Principal	Net Cost	Value
Medallion Loans Receivable (143.4%)⁽⁵⁾
Boston Taxicab Medallions	26 Medallion Loans 8.19% Weighted Average Rate	$ 4,557,009	$ 4,557,009	$ 4,597,158

Chicago Taxicab Medallions	193 Medallion Loans 7.83% Weighted Average Rate	17,239,802	17,239,802	17,391,690

Florida Taxicab Medallions	75 Medallion Loans 9.34% Weighted Average Rate	7,812,514	7,812,514	7,881,494
			29,609,325	29,870,342
Commercial Loans Receivable (66.7%)⁽⁵⁾
Across the Town Chicago Taxicab Operations	Collateralized Business Loan 8.0%, due 6/15	15,038	15,038	15,038
Jade R. Inc. d/b/a Eagle Cleaner Laundromat	Collateralized Business Loan 9.5%, due 7/03	3,974	3,974	3,974
1519 Avenue J. Laundromat⁽⁷⁾Laundromat	Collateralized Business Loan 12.5%, due 9/01	63,123	63,123	63,123
A Lot of Cars LLC⁽⁷⁾Black Car Leasing	Collateralized Business Loan 7.0%, due 6/09	110,050	110,050	75,500
Hi-Tech Laundromat Inc. Laundromat	Collateralized Business Loan 11.0%, due 11/08	134,410	134,410	134,410
PPCP Inc.Computer Software	Business Loan 8.0%, due 7/08	17,569	17,569	-
PPCP Inc.Computer Software	Business Loan 8.0%, due 7/08	14,272	14,272	-
Lucky Coin Laundry Inc. Laundromat	Collateralized Business Loan 8.0%, due 9/11	99,080	99,080	99,080
AKBA International Inc. Retail Food Service	Collateralized Business Loan 11.25%, due 5/09	7,563	7,563	7,563
6717 Laundromat & Dry Cleaning Laundromat	Collateralized Business Loan 11.0%, due 4/11	249,339	249,339	249,339
Colgate Dry Cleaners Corp. Dry Cleaners	Collateralized Business Loan 10.5%, due 1/09	2,917	2,917	2,917
Geronimo ATM Fund LLC⁽⁷⁾ATM Operator	Collateralized Business Loan 12.0%, due 5/09	146,822	146,822	30,000
Cleaners of North Beach, LLC Dry Cleaners	Collateralized Business Loan 5.5%, due 5/11	34,370	34,370	34,370
Crown Cleaners of Miami Lakes Dry Cleaners	Collateralized Business Loan 6.0%, due 7/11	4,290	4,290	4,290
Crown Cleaners of Miami Lakes Dry Cleaners	Collateralized Business Loan 6.0%, due 7/11	28,426	28,426	28,426
City Brite Cleaners Inc. Dry Cleaners	Collateralized Business Loan 11.0%, due 7/09	8,191	8,191	8,191
Whiter Than Snow Laundry, Inc. Laundromat	Collateralized Business Loan 9.0%, due 12/12	64,912	64,912	-
Andy Fur Dry Cleaning, Inc. Dry Cleaners	Collateralized Business Loan 14.5%, due 1/10	19,027	19,027	19,027
Vivas & Associates, Inc.⁽⁷⁾Nail Salon	Collateralized Business Loan 9.0%, due 1/10	12,385	12,385	6,385
PPCP, Inc. Computer Software	Business Loan 8.0%, due 1/10	5,965	5,965	-
Monticello Desserts, Inc. Retail Bakery	Collateralized Business Loan 14.0%, due 4/10	79,401	79,401	79,401
Cooper Ave. Wash, Inc. Laundromat	Business Loan 10.0%, due 3/12	305,333	305,333	305,333
Best Choice Dry Cleaners Dry Cleaners	Collateralized Business Loan 11.0%, due 5/10	14,375	14,375	14,375
Chao Tenga LLC d/b/a AsianChao Retail Fast Food	Collateralized Business Loan 15.5%, due 5/10	205,382	205,382	205,382
JNJ Associates Inc. Laundromat	Collateralized Business Loan 7.5%, due 6/12	73,913	73,913	50,000
Just Salad LLC Retail Food Service	Collateralized Business Loan 10.0%, due 10/10	320,925	320,925	320,925
MGM/Clean-Rite Laundromat Laundromat	Subordinate Real Estate Mortgage 14.0%, due 10/07	44,624	44,624	44,624
Elite Limousine Plus Inc. Black Car Service	Collateralized Business Loan 11.0%, due 7/08	318,270	318,270	318,270
Scotto Pizza of Woodbridge Inc. Retail Food Service	Collateralized Business Loan 12.75%, due 3/09	5,569	5,569	5,569
Mi Tren Greenlawn, Inc. Retail Fast Food	Subordinate Real Estate Mortgage 13.75%, due 2/11	91,606	91,606	91,606
E&Y General Construction Co. Construction Services	Senior Real Estate Mortgage 10.5%, due 10/10	880,791	880,791	880,791
Lifehouse-Golden Acres Prop. Assisted Living Facility	Senior Real Estate Mortgage – Participation 11.0%, due 7/08	770,840	770,840	770,840
Sealmax, Inc. Construction Services	Senior Real Estate Mortgage 12.0%, due 4/11	435,032	435,032	435,032
Sealmax, Inc. Construction Services	Senior Real Estate Mortgage 12.0%, due 4/11	325,000	325,000	325,000
Pier-Tech, Inc. Specialty Construction Services	Subordinate Real Estate Mortgage – Participation 12.0%, due 8/10	304,682	304,682	304,682
Soundview Broadcasting LLC Television and Broadcasting	Senior Real Estate Mortgage 7.75%, due 9/11	1,989,638	1,989,638	1,989,638
Golden Triangle Enterprises LLC Retail Food Service	Senior Real Estate Mortgage 7.01%, due 12/13	381,316	381,316	381,316
Goldhkin Wholesale Ent. Inc. Retail Gasoline	Senior Real Estate Mortgage 10.25%, due 7/12	686,666	686,666	686,666
Sealmax, Inc. Construction Services	Subordinate Real Estate Mortgage 12.0%, due 4/11	155,815	155,815	155,815
Conklin Services & Construction Inc. Specialty Construction and Maintenance	Collateralized Business Loan 12%, due 10/08	1,718,219	1,718,219	1,718,219
Mountain View Bar & Grill Inc. Retail Food Service	Collateralized Business Loan 12.0%, due 5/09	412,500	412,500	412,500
J. JG. Associates, Inc. Consumer Receivable Collections	Senior Loan no stated rate, no maturity	218,986	218,986	107,000
J. JG. Associates, Inc. Consumer Receivable Collections	Senior Loan no stated rate, no maturity	39,071	39,071	23,600
Ogden Avenue CH, LLC Real Estate Development	Collateralized Business Loan 11.0%, due 12/10	387,794	387,794	387,794
Soha Terrace II LLC Real Estate Development	Senior Real Estate Mortgage 12.0%, due 4/08	62,500	62,500	62,500
Natural Person Real Estate Mortgage	Senior Real Estate Mortgage 12.0%, due 11/08	665,000	665,000	665,000
Lifehouse – Golden Acres Prop. Assisted Living Facility	Senior Real Estate Mortgage – Participation 11.0%, due 7/08	137,640	137,640	137,640
Car-Matt Real Estate LLC Real Estate Mortgage	Senior Real Estate Mortgage 12.0%, due 11/08	135,577	135,577	135,577
633 Mead Street, LLC ⁽³⁾First lien mortgage	Senior Real Estate Mortgage 12.0%, due 8/08	215,000	215,000	215,000
CMCA, LLC ⁽³⁾Consumer Receivable Collections	Collateralized Business Loan 12%, no stated maturity	388,440	388,440	388,440
CMCA, LLC #2 ⁽³⁾Consumer Receivable Collections	Collateralized Business Loan 12%, no stated maturity	143,752	143,752	143,752
Adiel Homes Inc. Construction Services	Senior Real Estate Mortgage 12%, due 1/09	250,000	250,000	250,000
Puretech Enterprises LLC⁽³⁾Water Cooler Distributor	Collateralized Business Loan 12.5%, due 6/10	200,000	200,000	200,000
Puretech Enterprises LLC⁽³⁾Water Cooler Distributor	Collateralized Business Loan 12.5%, due 7/10	200,000	200,000	200,000
Western Pottery LLC⁽²⁾Ceramic Sanitaryware Distributor	Subordinated Business Loan 5.0%, due 7/08	53,575	53,575	53,575
Puretech Enterprises LLC⁽³⁾Water Cooler Distributor	Collateralized Business Loan 12.5%, due 9/10	200,000	200,000	200,000
Western Pottery LLC⁽²⁾Ceramic Sanitaryware Distributor	Subordinated Business Loan 5.0%, due 11/08	107,142	107,142	107,142
Western Pottery LLC⁽²⁾Ceramic Sanitaryware Distributor	Subordinated Business Loan 5.0%, due 3/09	56,250	56,250	56,250
Western Pottery LLC⁽²⁾Ceramic Sanitaryware Distributor	Subordinated Business Loan 5.0%, due 6/09	37,500	37,500	37,500
Other Miscellaneous Loans⁽⁶⁾		184,698	184,698	184,698
	Total Commercial Loans		14,244,545	13,833,085
Corporate Loans Receivable (55.3%)⁽⁵⁾
Charlie Brown’s Acquisition Co. Retail Food Service	Term Loan B 6.67%, due 10/13	2,000,000	2,000,000	2,000,000
Resco Products Inc. Diversified Manufacturing	Term Loan, First Lien 5.95%, due 6/13	2,000,000	1,900,000	1,900,000
Alpha Media Group Inc. Publishing	Term Loan, First Lien 5.75%, due 8/14	1,876,667	1,775,143	1,775,143
Centaur LLC Gaming	Term Loan, First Lien 6.7%, due 10/12	2,061,224	2,025,033	1,954,157
X-Rite Inc. Process Control Instruments	Term Loan, First Lien 7.95%, due 10/12	1,985,000	1,976,159	1,976,159
BP Metals LLC Diversified Manufacturing	Term Loan, First Lien 8.76%, due 6/13	1,000,000	1,000,000	1,000,000
Test Center LLC Data Collection Services	Term Loan, First Lien 5.45%, due 10/13	944,862	902,511	902,511
	Total Corporate Loans		11,578,846	11,507,970

	Total loans receivable		55,432,716	55,211,397
Life Insurance Settlement Contracts (13.7%)⁽⁵⁾
Vibrant Capital Corp. (J.V. #1)⁽⁴⁾	8 life insurance policies, aggregate face value of $40,750,000		2,842,458	2,842,458
Equity Investments (7.4%)⁽⁵⁾
MBS Steeplecrest, Ltd. Rental Real Estate Limited Partnership	Limited Partnership Interest		-	-
MBS Huntwick, Ltd. Rental Real Estate Limited Partnership	Limited Partnership Interest		-	-
MBS Cranbrook Ltd. Rental Real Estate Limited Partnership	Limited Partnership Interest		-	-
MBS Serrano, Ltd. Rental Real Estate Limited Partnership	Limited Partnership Interest		50,600	34,822
MBS Colonnade, Ltd. Rental Real Estate Limited Partnership	Limited Partnership Interest		50,000	4,395
MBS Briar Meadows, Ltd. Rental Real Estate Limited Partnership	Limited Partnership Interest		-	-
MBS Indian Hollow, Ltd. Rental Real Estate Limited Partnership	Limited Partnership Interest		-	-
MBS Sage Creek, Ltd. Rental Real Estate Limited Partnership	Limited Partnership Interest		50,000	35,841
MBS Walnut Creek, Ltd. Rental Real Estate Limited Partnership	Limited Partnership Interest		25,000	12,345
MBS Lodge At Stone Oak, Ltd. Rental Real Estate Limited Partnership	Limited Partnership Interest		60,000	40,408
Brickman Real Estate Fund II LLP Real Estate Acquisition & Management	Limited Partnership Interest		225,001	238,896
238 W. 108 Realty LLC ⁽²⁾Residential Real Estate Development	5% LLC Interest		100,000	100,000
Asset Recovery & Management, LLC ⁽³⁾Consumer Receivable Collections	30.0% LLC Interest		6,000	6,000
633 Mead Street, LLC ⁽³⁾Real Estate Development	57.1% LLC Interest		800	800
CMCA, LLC ⁽³⁾Consumer Receivable Collections	30% LLC Interest		4,000	4,000
Soha Terrace II LLC ⁽²⁾Real Estate Development	6% LLC Interest		700,000	700,000
Western Pottery LLC⁽²⁾Ceramic Sanitaryware Distributor	21.8% LLC Interest		467,080	307,297
Fusion Telecommunications Internet Telephony	69,736 Shares of Common Stock		367,027	20,813
EraGen Biosciences Analytic Compounds	17,000 shares of common stock		25,500	5,500
Puretech Enterprises LLC⁽³⁾Water Cooler Distributor	40% Equity Interest		25,000	33,315
	Total equity investments		2,156,008	1,544,432
	Total investments		$ 60,431,182	$ 59,598,287

⁽¹⁾Unless otherwise noted, all investments are pledged as collateral for the Notes payable, banks.

⁽²⁾As defined in the Investment Company Act of 1940, we are an affiliate of this portfolio company because 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⁾The Company receives interest at a rate of 12% per annum pursuant to an agreement with another company.

⁽⁵⁾Percentage of net assets.

⁽⁶⁾Other small balance loans.

⁽⁷⁾ Loan receivable is on non-accrual status and therefore is considered non-income producing

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

AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at and for the three months and nine months ended March 31, 2009 and 2008 are unaudited)

Organization and Summary of Significant Accounting Policies

Financial Statements

The consolidated balance sheet of Ameritrans Capital Corporation (“Ameritrans”, the “Company”, “our”, “us”, or “we”) as of March 31, 2009, and the related consolidated statements of operations, changes in net assets, and cash flows for the three and nine month periods ended March 31, 2009 and 2008 have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “Commission”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. In the opinion of management and the board of directors of the Company (“Management” and “Board of Directors”), the accompanying conso lidated financial statements include all adjustments (consisting of normal, recurring adjustments) necessary to summarize fairly the Company’s financial position and results of operations. The results of operations for the three and nine month periods ended March 31, 2009 are not necessarily indicative of the results of operations for the full year or any other interim period. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2008, as filed with the Commission.

Organization and Principal Business Activity

Ameritrans Capital Corporation is a Delaware closed-end investment company formed in 1998, which, among other activities, makes loans and investments with the goal of generating both current income and capital appreciation. Through our subsidiary, Elk Associates Funding Corporation (“Elk”), we make loans to finance the acquisition and operation of small businesses as permitted by the U.S. Small Business Administration (the “SBA”). Ameritrans also makes loans to and invests in opportunities that Elk has historically been unable to make due to SBA restrictions. Ameritrans makes loans which have primarily been secured by real estate mortgages or, in the case of corporate loans, generally are senior within the capital structure. We also make equity investments which have primarily been in income producing real estate properties, or in real estate construction projects.

Elk provides long-term loans to businesses eligible for investments by small business investment companies (each an “SBIC”) under the Small Business Investment Act of 1958, as amended. Elk makes loans for financing the purchase or continued ownership of businesses that qualify for funding as small concerns under SBA Regulations.

Both Ameritrans and Elk are registered as business development companies, or “BDCs,” under the Investment Company Act of 1940, as amended (the “1940 Act”). Accordingly, Ameritrans and Elk are subject to the provisions of the 1940 Act governing the operation of BDCs. Both companies are managed by their executive officers under the supervision of their Boards of Directors.

The Company categorizes its investments into five categories: 1) Taxicab Medallion finance; 2) Corporate Loans; 3) Commercial Loans; 4) Life Settlement Contracts; and 5) Equity Investments. For a more detailed description of these investment categories please see the Company’s Annual Report on Form 10-K for the year ended June 30, 2008, filed with the Commission by the Company on September 29, 2008, which is available on the Company’s web site at www.ameritranscapital.com.

Change in Financial Statement Presentation

Effective for the year ended June 30, 2008, and the three months and nine months ended March 31, 2009, the Company has revised its financial statements to be presented in accordance with Article 6 of Regulation S-X as an investment company. Due to the revised format, the Company made certain reclassifications of amounts previously reported in its prior period statements to conform to the current presentation. Although the reclassifications resulted in changes to certain line items in the previously filed financial statements, the overall effect of the reclassifications noted below did not impact total stockholder’s equity (or net assets available). Below are the primary items affected by the reclassifications made:

Unrealized gains and losses previously reported as part of “other comprehensive income (loss), net” were reclassified to “net unrealized gains (losses) on investments” in the statement of operations. The effect of such reclassification also changed previously reported amounts available to common shareholders.

Gains and losses on sales of investments previously reported as part of “total investment income, net” in the statement of operations were reclassified to “net realized gains (losses) on investments.”

Net write-off and depreciation on interest and loans receivable, previously reported as part of “total operating expenses” in the statement of operations were reclassified to “net unrealized gains (losses) on investments” and “net realized gains (losses) on investments.”

The change in format also resulted in the statement of stockholders’ equity essentially being replaced with the statement of changes in net assets available, which is now presented. In addition, the schedule of investments has been expanded and certain other disclosures were added, such as the “financial highlights.” We believe the changes noted above conform to the filing format for the Company, as a BDC, and will provide a meaningful representation of the Company’s operations going forward.

Basis of Consolidation

The consolidated financial statements include the accounts of Ameritrans, Elk Capital Corporation (“ECC”), Elk and Elk’s wholly owned subsidiary, EAF Holding Corporation (“EAF”). All significant inter-company transactions have been eliminated in consolidation.

ECC is a wholly-owned subsidiary of Ameritrans, which may engage in lending and investment activities similar to its parent. Since its inception, ECC has had no operations provided however, in April 2009, ECC took title to a foreclosed piece of real estate.

EAF began operations in December 1993 and owns and operates certain real estate assets acquired in satisfaction of defaulted loans by Elk debtors. At March 31, 2009 EAF was not operating any assets.

Investment Valuations

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

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

Equity investments (common stock and warrants, including certain controlled subsidiary portfolio investments) and investment securities are recorded at fair value.

The Company records the investment in life insurance policies at fair value, represented as cost, plus or minus unrealized appreciation or depreciation. The fair value of the investment in life settlement contracts has no ready market and is determined in good faith by Management, and approved by the Board of Directors, based on secondary market conditions, policy characteristics and actuarial life expectancy, including health evaluations.

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

Effective July 1, 2008, the Company adopted SFAS 157, which expands the application of fair value accounting for investments (see Note 2).

Income Taxes

The Company has elected to be taxed as a Regulated Investment Company (“RIC”) under the Internal Revenue Code (the “Code”). A RIC generally is not taxed at the corporate level to the extent its income is distributed to its stockholders. In order to qualify as a RIC, a company must pay out at least 90 percent of its net taxable investment income to its stockholders as well as meet other requirements under the Code. In order to preserve this election for the fiscal year ending June 30, 2009, the Company intends to make the required distributions to its stockholders, therefore, no provision for federal income taxes has been provided.

The Company is subject to certain state and local franchise taxes, as well as related minimum filing fees assessed by state taxing authorities. Such taxes and fees are included in “Other administrative expenses” in the consolidated statements of operations in each of the fiscal years presented.

Use of Estimates

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

Earnings (Loss) Per Share

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

Dividends

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

On June 30, 2008, the Board of Directors approved and adopted a dividend reinvestment plan that provides for reinvestment of distributions in the Company’s common stock, $.0001 par value (the “Common Stock”) on behalf of common stockholders, unless a stockholder elects to receive cash. As a result, if the Board of Directors authorizes, and the Company declares, a cash dividend, then those stockholders who have not “opted out” of the dividend reinvestment plan will have their cash dividends automatically reinvested in additional shares of Common Stock, rather than receiving the cash dividends. The Company has not yet implemented this plan.

Income Recognition

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

Stock Options

The Company adopted Statement of Financial Accounting Standards No. 123R (“SFAS No. 123R”), “Accounting for Stock-Based Compensation,” and related interpretations in accounting for its stock option plans effective January 1, 2006, and accordingly, the Company will expense these grants as required. Stock-based employee compensation costs in the form of stock options will be reflected in net increase (decrease) in net assets from operations for grants made including and subsequent to January 1, 2006 only, since there were no unvested options outstanding at December 31, 2005, using the fair values established by usage of the Black-Scholes option pricing model, expensed over the vesting period of the underlying option. Previously, the Company applied APB Opinion No. 25 and related interpretations in accounting for all the plans. Accordingly, no compensation cost was recognized under these plans as the Company followed the disclosure-only provisions of SFAS No. 123 and SFAS No. 148, “Accounting for Stock-Based Compensation Transition and Disclosure.”

The Company elected the modified prospective transition method for adopting SFAS No. 123R. Under this method, the provisions of SFAS 123R apply to all new awards granted or modified after the date of adoption. The compensation cost is then recognized over the vesting period of the options.

Presentation of Prior Period Data

Certain reclassifications have been made to conform prior period data to the current presentation.

Investments

Loans Receivable

Loans are considered non-performing once they become 90 days past due as to principal or interest. The Company had loans which are considered non-performing in the amount of $4,856,738 and $2,850,939 as of March 31, 2009 and, in the case of Commercial Loans, June 30, 2008, respectively. These loans are either fully or substantially collateralized and are usually personally guaranteed by the debtor. Included in the total non-performing loans is $780,150 and $175,008 at March 31, 2009 and June 30, 2008, respectively, which is no longer accruing interest since the loan principal and accrued interest exceed the estimated collateral value. The following table sets forth certain information regarding performing and non-performing loans as of March 31, 2009 and June 30, 2008:


	March 31, 2009	June 30, 2008

Loans receivable	$ 24,943,843	$ 55,211,397
Performing loans	20,087,105	52,360,458

Non-performing loans	$ 4,856,738	$ 2,850,939

Non-performing loans: Accrual	$ 4,076,588	$ 2,675,931
Nonaccrual	780,150	175,008

	$ 4,856,738	$ 2,850,939

The Company has pledged its loans receivable and all other assets of the Company as collateral for its lines of credit. (see Note 4)

On October 29, 2008, the Company completed the sale of substantially all of the Company’s taxicab medallion portfolio to Medallion Financial Corp. and Medallion Bank, pursuant to that certain loan portfolio sale and purchase agreement dated as of July 16, 2008, as amended October 17, 2008 and October 20, 2008 (the “Loan Purchase Agreement”). Ameritrans utilized cash on hand and all of the net proceeds from this transaction in the amount of $25,883,820 to fully pay down its existing bank indebtedness. Except for costs in the amount of approximately $340,000, relating to disposal of the assets, there was no gain or loss realized on this transaction as the taxi medallion portfolio was sold at par value. The Loan Purchase Agreement was approved by the Company’s shareholders on August 26, 2008.

As of March 31, 2009, the Company’s loan portfolio had decreased by approximately $31,000,000 or 51% from June 30, 2008. This was primarily due to the sale of substantially all of the Company’s taxicab medallion portfolio, partially offset by a small increase in corporate loans. As such, the Company expects significantly lower interest income until new loans are added to the portfolio.

As of March 31, 2009, the Company has accrued approximately $100,000 in professional fees which it anticipates will be paid upon execution of an investment advisory agreement to be submitted to shareholders for approval.

Investments by Industry

Investments by industry consist of the following as of March 31, 2009 and June 30, 2008:


	Percentage of Portfolio at
	March 31, 2009	June 30, 2008

Assisted Living Facilities	3.2%	1.5%
Boston Taxicab Medallions	0.1%	7.7%
Broadcasting/Telecommunications	6.8%	3.3%
Chicago Taxicab Medallions	0.3%	29.2%
Commercial Construction	11.8%	7.6%
Construction and Predevelopment	6.3%	1.9%
Debt Collection	1.9%	1.1%
Education	3.5%	-
Gaming	4.8%	3.3%
Gasoline Distribution	2.3%	1.2%
Laundromat	1.3%	1.7%
Life Insurance Settlement	9.3%	4.8%
Manufacturing	14.8%	4.9%
Miami Taxicab Medallions	0.9%	13.2%
Office Water Systems	2.0%	1.1%
Printing/Publishing	6.6%	3.0%
Processing Control Instruments	7.6%	4.8%
Residential Mortgages	2.1%	1.1%
Restaurant/Food Service	8.8%	5.7%
Sanitaryware Distributor	4.1%	0.9%
Industries less than 1%	1.5%	2.0%
TOTAL	100.0%	100.0%

Life Settlement Contracts

In September 2006, the Company entered into an agreement with an unaffiliated entity to purchase previously issued life insurance policies owned by unrelated individuals. Under the terms of the agreement, the Company was designated as nominee to maintain possession of the policies and process transactions related to such policies until the policies are subsequently sold or paid off. The Company is entitled to receive monthly payments from the unaffiliated entity equal to a twelve percent (12%) annual return on the amount of funds paid by the Company and outstanding. Proceeds from the sale of the policies are to be distributed, net of direct expenses, as defined in the agreement.

As of March 31, 2009, the carrying value of amounts invested was $2,670,708, which represents the amount paid to cover first year and any subsequent period premiums for seven (7) life insurance policies with an aggregate face value of $30,750,000. Premiums on the policies must be paid by either the Company or the unaffiliated entity, until the policies are sold in order to keep the policies in full force. As of March 31, 2009, the unaffiliated entity had paid the premiums on the policies in the aggregate amount of $513,903, which was the unaffiliated entity’s principal carrying value. If an insured dies before the policy is resold, 50% of the death benefit proceeds of the policy will be paid to the insured party’s family, and the other 50% of the death benefit proceeds will be paid to the Company, to be distributed in accordance with the terms of the agreem ent. The terms of the agreement with the third party presently entitles the Company to sell the policies at any time, in its sole discretion, provided however, that in order to effectuate any such sales the Company may need to obtain additional documentation from the insured or the record owner(s) of each policy. Since September 11, 2008, the unaffiliated entity made certain of the life insurance premium payments voluntarily amounting to a total of $513,903, however, the Company no longer expects the unaffiliated entity to make such payments on any of the policies for the life expectancy of the insured. The approximate future minimum premiums due for each of the next five (5) years and in the aggregate thereafter, based on current life expectancy of the insurers, are as follows:


Year Ending June 30	Policy Premiums

2009 (three months)	$ 342,000
2010	1,368,000
2011	1,368,000
2012	1,368,000
2013	1,368,000
Thereafter	7,131,000

	$ 12,945,000

On December 16, 2008, the Company sold one policy for $474,860. There was no gain or loss realized on this transaction as the policy sale price was equal to the carrying value of such policy.

On April 2, 2009, the Company learned that the unaffiliated manager of its life insurance joint venture had been charged with securities fraud by the SEC. The SEC obtained a court order freezing the assets of the manager and other entities with which he was involved, including Vibrant Capital Corp. (“Vibrant”), the corporate entity acting as the Company’s partner in its life settlement venture. As of April 14, 2009, a trustee and a receiver were appointed to operate Vibrant. As of March 1, 2009, the Company has stopped accruing the twelve percent (12%) annual return on funds paid by the Company and outstanding, that the Company is entitled to receive from Vibrant. Ameritrans is presently working with the trustee and receiver to determine the impact, if any, of these SEC actions on its investment in this business venture and on its rights, interests and obligati ons in connection therewith.

Fair Value of Investments

Effective July 1, 2008, the Company adopted Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“SFAS 157”), which expands application of fair value accounting. SFAS 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosure of fair value measurements. SFAS 157 determines fair value to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date. SFAS 157 requires the Company to assume that the portfolio investment is sold in a principal market to market participants, or in the absence of a principal market, the most advantageous market, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal or most advantageous marke t that are independent, knowledgeable, and willing and able to transact. In accordance with SFAS 157, the Company has considered its principal market as the market in which the Company exits its portfolio investments with the greatest volume and level of activity. SFAS 157 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. In accordance with SFAS 157, these inputs are summarized in the three broad levels listed below:

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

Level 2 – Valuations of similar assets or liabilities based on quoted prices in markets that are active or inactive for which all significant inputs are observable, either directly or indirectly.

Level 3 – Valuations based on unobservable inputs for similar items and significant to the overall fair value measurement.

In addition to using the above inputs in investment valuations, we continue to employ the valuation policy approved by our board of directors that is consistent with SFAS 157 (see Note 1). Consistent with our valuation policy, we evaluate the source of inputs, including any markets in which our investments are trading (or any markets in which securities with similar attributes are trading), in determining fair value. Our valuation policy considers the fact that because there is not a readily available market value for most of the investments in our portfolio, the fair value of the investments must typically be determined using unobservable inputs.

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

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

The following table presents fair value measurements of investments as of March 31, 2009:


		Fair Value Measurements Using
	Total	Level 1	Level 2	Level 3
Investments	$28,572,333	$7,671	$ -	$28,564,662

The following table presents changes in investments that use Level 3 inputs for the nine months ended March 31, 2009:


	Nine months ended March 31, 2009
Balance as of June 30, 2008	$ 59,577,474
Net unrealized losses	(339,932)
Net purchases, sales or redemptions	(30,672,880)
Net transfers in and/or out of Level 3	-
Balance as of March 31, 2009	$ 28,564,662

As of March 31, 2009, the net unrealized loss on the investments that use Level 3 inputs was $766,437.

Debentures Payable to SBA

At March 31, 2009 and June 30, 2008 debentures payable to the SBA consisted of subordinated debentures with interest payable semiannually, as follows:


Issue Date	Due Date	% Interest Rate	March 31, 2009	June 30, 2008	Annual Amount of Interest and User Fees

July 2002	September 2012	4.67⁽¹⁾	$ 2,050,000	$ 2,050,000	$ 113,488
December 2002	March 2013	4.63⁽¹⁾	3,000,000	3,000,000	164,880
September 2003	March 2014	4.12⁽¹⁾	5,000,000	5,000,000	249,300
February 2004	March 2014	4.12⁽¹⁾	1,950,000	1,950,000	97,227

			$ 12,000,000	$ 12,000,000	$ 624,895

⁽¹⁾

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

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

Notes Payable

Banks

At June 30, 2008, the Company had loan agreements with three (3) banks for lines of credit aggregating $40,000,000 of which $28,095,697 was outstanding under these lines. The lines bore interest at the lower of either the reserve adjusted LIBOR rate plus 1.5% or the banks’ prime rates minus 0.50%. The bank lines were scheduled to mature on or about October 30, 2008. On October 29, 2008, following the closing of the sale of substantially all of the taxi medallion loan portfolio (see Note 2) the Company paid the banks in full all principal and accrued interest due on the three lines.

At March 31, 2009, the Company had credit lines with three (3) banks for lines of credit aggregating $1,000,000 of which $700,000 was outstanding under these lines. The weighted average interest rate on the outstanding bank debt at March 31, 2009 was approximately 4.5% which represents an interest rate of 1% above the prime rate of interest designated by each bank. Any outstanding indebtedness pursuant to these credit lines was due and payable on or before April 30, 2009.

On April 28, 2009, the Company repaid the entire principal balance in the amount of $228,000 on one of its banks lines, and extended the credit lines with the two (2) other banks. On April 30, 2009, the Company extended until October 31, 2009, one credit line with a principal balance of $352,000 with an annual interest rate floor of 4.50%. In connection with such extension, the Company purchased a Certificate of Deposit for $250,000 for thirty (30) days and pledged such Certificate of Deposit as additional collateral. The Company is required to reduce said balance to $250,000 by May 30, 2009. On April 29, 2009, the Company extended until July 1, 2009, the outstanding balance on the other credit line in the amount of $120,000, at an annual interest rate of 4.10%. In connection with such extension, the Company purchased a Certificate of Deposit for $120,000 which matures on July 1, 2009, and pledged such Certificate of Deposit as additional collateral.

It is not presently contemplated that the Company will request to continue any lines of credit thereafter with its existing banks. Pursuant to the terms of the current agreements, the Company is required to comply with certain covenants and conditions, as defined in the agreements. The Company has pledged its loans receivable and all other assets as collateral for its lines of credit. Pursuant to the SBA agreement and an “intercreditor agreement” among the Company’s banks and the SBA, the SBA agreed to subordinate the SBA Debentures outstanding in favor of the banks. In accordance with the loan documentation with the SBA and the banks, the Company must also comply with maintaining overall debt levels within a formula based upon the performance of its loan portfolio according to a “borrowing base” which is submitted periodically for review to the SBA and the banks. The Company was in compliance with the terms and conditions of the “borrowing base” at March 31, 2009.

Related Party Loans

In July 2007, the Company received three loans totaling $500,000 from three related parties also to facilitate the funding of new loans receivable. The loan principal was due and payable within 30 days of demand and bore interest at a rate of 10% per annum. Payments of interest only were due and payable on the first of each month. At March 31, 2009 there were no loans to related parties outstanding. For the nine months ended March 31, 2009 and 2008, interest paid on the loans was $2,689 and $26,419, respectively.

Dividends to Stockholders

The following table sets forth the dividends declared by the Company on its Common Stock and Preferred Stock in each of the nine months ended March 31, 2009 and 2008.

For the nine months ended March 31, 2009


	Dividend Per Share	Declaration Date	Record Date	Payment Date
Preferred Dividends:
Third Quarter (January 1, 2009 – March 31, 2009)	$ .28125	03/20/09	03/31/09	04/15/09
Second quarter (October 1, 2008-December 31, 2008)	$ .28125	12/12/08	12/31/08	01/15/09
First quarter (July 1, 2008-September 30, 2008)	$ .28125	09/29/08	10/09/08	10/15/08
Total Preferred Stock Dividends declared	$ .84375

For the nine months ended March 31, 2008


	Dividend Per Share	Declaration Date	Record Date	Payment Date
Preferred Dividends:
Third Quarter (January 1, 2008 – March 31, 2008)	$ .28125	03/18/08	03/31/08	04/15/08
Second quarter (October 1, 2007-December 31, 2007)	$ .28125	12/17/07	12/28/07	01/15/08
First quarter (July 1, 2007-September 30, 2007)	$ .28125	09/17/07	09/28/07	10/15/07
Total Preferred Stock Dividends declared	$ .84375

Common Dividends:
Second quarter (October 1, 2007-December 31, 2007)	$ 0.01	2/13/08	2/25/08	3/12/08
First quarter (July 1, 2007-September 30, 2007)	$ 0.01	11/7/07	11/19/07	12/12/07
Total Common Stock dividends declared	$ 0.02

Related Party Transactions

The Company paid $25,429 and $50,025 to a law firm related to officers and directors of the Company (the “Law Firm”) for the nine months ended March 31, 2009 and 2008, respectively, for legal services provided.

Total occupancy costs under existing leases and overhead cost reimbursement agreements paid to the Law Firm and to another entity in which an officer of the Company has a financial interest amounted to $215,107 and $199,211 for the nine months ended March 31, 2009 and 2008, respectively.

The Company entered into an at-will consulting arrangement with an individual who is considered a related person of the Company. An aggregate of $0 and $7,000 was paid to such person for the nine months ended March 31, 2009 and 2008, respectively for such consulting services. The consulting arrangement was terminated as of June 30, 2008.

The Company utilized a relative of an officer of the Company to perform part-time administrative services. This individual was paid on a per hour basis for administrative work performed for the Company. For the nine months ended March 31, 2009 and 2008, the individual was paid an aggregate of $9,085 and $12,240, respectively. Such person did not perform any services nor was he compensated since October 24, 2008.

The Company pays printing fees to a company partially owned by an officer of the Company. An aggregate of $9,255 and $5,668 for the nine months ended March 31, 2009 and 2008, respectively, was paid for these services.

Also see Note 4 for related party loan transactions.

Commitments and Contingencies

Interest Rate Swap

In October, 2005, the Company entered into two (2) interest rate swap transactions for $5,000,000 each, to hedge against an upward movement in interest rates relating to outstanding bank debt. The swap transaction which expired October 15, 2007 provided for a fixed rate of 6.20%, and the swap transaction which expired October 14, 2008 provided for a fixed rate of 6.23%. If the Company’s floating borrowing rate (the one-month LIBOR rate plus 1.5%) fell below the fixed rate, the Company was obligated to pay the bank the differences in rates. If the Company’s floating borrowing rate rose above the fixed rate, the bank was obligated to pay the Company the differences in rates. For the nine months ended March 31, 2009 and 2008, the Company incurred additional net interest expense (benefit) of $32,973 and $(15,403) respectively, due to the fluctuation of interest rates under t hese agreements. As of March 31, 2009, the Company had no interest rate swaps outstanding.

Stock Option Plans

Employee Incentive Stock Option Plan

An employee stock option plan (the “1999 Employee Plan”) was adopted by the Ameritrans Board, including a majority of the non-interested directors, and approved by a vote of the stockholders, in order to link the personal interests of key employees to the Company’s long-term financial success and the growth of stockholder value. Subsequent amendments to the 1999 Employee Plan were approved by the stockholders in January 2002 and June 2007. The amendments increased the number of shares reserved under the plan to 300,000 shares.

The 1999 Employee Plan authorizes the grant of incentive stock options within the meaning of Section 422 of the Internal Revenue Code for the purchase of up to 300,000 shares (subject to adjustment for stock splits and similar capital changes) of Common Stock to the Company’s employees. By adopting the 1999 Employee Plan, the Board believes that the Company will be better able to attract, motivate, and retain as employees people upon whose judgment and special skills the Company’s success in large measure depends. As of March 31, 2009, options to purchase an aggregate of 291,850 shares of Common Stock were outstanding, with 271,850 shares fully vested and 8,150 shares of Common Stock were available for future award under the Employee Plan.

The 1999 Employee Plan is administered by the 1999 Employee Plan Committee of the Board, which is comprised solely of non-employee directors (who are “outside directors” within the meaning of Section 152(m) of the Internal Revenue Code and “disinterested persons” within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934 (the “Exchange Act”)). The committee can make such rules and regulations and establish such procedures for the administration of the 1999 Employee Plan as it deems appropriate. Should the Company enter into an advisory agreement, which provides for incentive compensation, the Company anticipates that it will terminate the 1999 Employee Plan.

Non-Employee Director Stock Option Plan

A stock option plan for non-employee directors (the “Director Plan”) was adopted by the Ameritrans Board and approved by a vote of the stockholders, in order to link the personal interests of non-employee directors to the Company’s long-term financial success and the growth of stockholder value. The Director Plan is substantially identical to, and the successor to, a non-employee director stock option plan adopted by the Board of Elk and approved by its stockholders in September 1998. Ameritrans and Elk submitted an application for, and received on August 31, 1999, an exemptive order relating to these plans from the SEC. The Director Plan was amended by the Board on November 14, 2001, and approved by the stockholders at the Annual Meeting on January 18, 2002. The amendment is still subject to the approval of the Commission. The amendment (i) increases th e number of shares reserved under the plan from 75,000 to 125,000 and (ii) authorizes the automatic grant of an option to purchase up to 1,000 shares at the market value at the date of grant to each eligible director who is re-elected to the Board.

The total number of shares for which options may be granted from time to time under the Director Plan is 75,000 shares, which will be increased to 125,000 shares upon Commission approval of the Amended Director Plan. As of March 31, 2009, options to purchase an aggregate of 49,462 shares were issued and outstanding with 35,574 fully vested under the Director Plan. The Director Plan is administered by a committee of directors who are not eligible to participate in the Director Plan. On May 6, 2009, a member of the Board received an automatic grant of options to purchase up to 25,538 shares of Common Stock of the Company pursuant to the Director Plan. The options vest one year from the date of grant, and are exercisable for five (5) years from the grant date at an exercise price of $1.78 per share. Should the Company enter into an advisory agreement, which provides for i ncentive compensation, the Company anticipates that it will terminate the Director Plan.

Options Granted and Canceled

On October 10, 2008, the Board of Directors, upon the recommendation of the Employee Plan Committee, granted certain employees options to purchase up to an aggregate of 133,000 shares of Common Stock of the Company exercisable at $2.36 per Share which vested immediately on the date of grant.

After adoption of SFAS 123(R) (see Note 1), the fair value of the options granted amounted to $185,253 at March 31, 2009 and $141,668 at June 30, 2008, which is reflected as stock options outstanding in the accompanying consolidated balance sheets. Compensation expense related to options vested for the nine months ended March 31, 2009 and 2008 was $59,213 and $68,974, respectively. As of March 31, 2009, total deferred compensation related to unvested options was $25,293, which is expected to be recognized over a period of approximately two years.

The following tables summarize information about the transactions of both stock plans as of March 31, 2009:


	Stock Options
	Number of Options	Weighted Average Exercise Price Per Share

Options outstanding at June 30, 2008	208,312	$5.14
	-	-
Granted	133,000	2.36
Canceled	-	-
Expired	-	-
Exercised	-	-

Options outstanding at March 31, 2009	341,312	$4.06


	Options Outstanding			Options Exercisable
Range of Exercise Prices	Number Outstanding at March 31, 2009	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price	Number Exercisable at March 31, 2009	Weighted Average Exercise Price

$4.50-$4.95	29,425	.58 years	$4.70	29,425	$4.70
$5.56-$6.12	29,425	1.75 years	$5.81	29,425	$5.81
$3.60	13,888	4.14 years	$3.60	-	$3.60
$6.25	16,000	.79 years	$6.25	16,000	$6.25
$5.28	80,000	4.16 years	$5.28	60,000	$5.28
$5.30	9,433	2.73 years	$5.30	9,433	$5.30
$4.50	20,000	3.53 years	$4.50	20,000	$4.50
$4.93	10,141	3.11 years	$4.93	10,141	$4.93
$2.36	133,000	4.53 years	$2.36	133,000	$2.36

$2.36-$6.25	341,312	3.52 years	$4.06	307,424	$4.00

Financial Highlights


	Nine months Ended March 31, 2009	Nine months Ended March 31, 2008	Year Ended June 30, 2008

Net share data
Net asset value at the beginning of the period	$ 5.06	$ 5.32	$ 5.32
Net investment income (loss)	(0.50)	0.05	(0.01)
Net realized and unrealized losses on investments	(0.23)	(0.11)	(0.14)
Net decrease in net assets from operations	(0.73)	(0.06)	(0.15)
Net change in net assets from capital share transactions	-	-	0.01
Distributions to stockholders ⁽⁴⁾	(0.07)	(0.09)	(0.12)
Total decrease in net asset value	(0.80)	(0.15)	(0.26)
Net asset value at the end of the period	$ 4.26	$ 5.17	$ 5.06
Per share market value at beginning of period	$ 3.01	$ 5.21	$ 5.21
Per share market value at end of period	$ 1.96	$ 3.62	$ 3.01
Total return⁽¹⁾	(32.6%)	(28.8%)	(39.9%)
Ratios/supplemental data
Average net assets⁽²⁾(in 000’s)	$ 15,824	$ 17,816	$ 17,622
Total expense ratio⁽³⁾	40.1%	34.9%	35.8%
Net investment income (loss) to average net assets ⁽⁵⁾	(14.1%)	1.2%	(.26%)

⁽¹⁾

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

⁽²⁾

Average net assets excludes capital from preferred stock.

⁽³⁾

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

⁽⁴⁾

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

⁽⁵⁾

Annualized for interim periods.

10.

New Accounting Pronouncements

In April 2009, the Financial Accounting Standards Board (“FASB”) issued FSP No. 115-2, Recognition and Presentation of Other-Than-Temporary Impairments (“FSP No. 115-2”), which was issued to make the guidance on other-than-temporary impairment more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. FSP 115-2 requires significant additional disclosures for both annual and interim periods, including the amortized cost basis of available-for-sale and held-to-maturity debt, the methodology and key imports used to measure the credit portion of other-than-temporary impairment, and a roll forward of amounts recognized in earnings for securities by major security type. FSP No. 115-2 amends Statement of Financial Accounting Standards (“SFAS”) No. 115, Account ing for Certain Investments in Debt and Equity Securities (“SFAS No. 115”) and FSP No. 115-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments to require that entities identify major security classes consistent with how the securities are managed based on the nature and risks of the security, and also expands, for disclosure purposes, the list of major security types identified in SFAS No. 115. FSP No. 115-2 is effective for interim and annual reporting periods ending after June 15, 2009. The Company does not believe the adoption of this pronouncement will have a material impact on its financial condition or results of operations.

In April 2009, the FASB issued FSP No. 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (“FSP No. 157-4”), which provides additional guidance for estimating fair value in accordance with FASB Statement No. 157 when the volume and level of activity for an asset or liability has significantly decreased and also provides guidance on identifying circumstances that indicate a transaction is not orderly. FSP No. 157-4 amends SFAS No. 157 to require entities to disclose in interim and annual periods the inputs and valuation techniques used to measure fair value together with any changes in valuation techniques and related inputs during the period. FSP No. 157-4 also requires reporting entities to define major categories for both debt and equity securities to be majo r security types as described in paragraph 19 of SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities. This requires entities to provide disclosures on a more disaggregated basis than previously had been required under SFAS No. 157. FSP No. 157-4 is effective for interim and annual reporting periods ending after June 15, 2009, and shall be applied prospectively. The Company does not believe the adoption of this pronouncement will have a material impact on its financial condition or results of operations.

In October 2008, the FASB issued Staff Position No. 157-3 — Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active, or FSP 157-3. FSP 157-3 provides an illustrative example of how to determine the fair value of a financial asset in an inactive market. FSP 157-3 does not change the fair value measurement principles set forth in SFAS 157 (see Note 2 for a description of SFAS 157). Since adopting SFAS 157 in July 2008, our process for determining the fair value of our investments has been, and continues to be, consistent with the guidance provided in the example in FSP 157-3. As a result, the adoption of FSP 157-3 did not affect our process for determining the fair value of our investments and did not have a material effect on our financial condition or results of operations.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative and Hedging Activities—an amendment of FASB Statement No. 133.” SFAS 161 requires enhanced disclosures on derivative and hedging activities. These enhanced disclosures will discuss (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS 161 is effective for fiscal years beginning on or after November 15, 2008, with earlier adoption encouraged. The Company does not anticipate a material impact, if any, to the Company’s financial condition or results of operations.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51” (“SFAS 160”), which establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary by clarifying that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as a component of equity. It requires that changes in a parent’s ownership interest while the parent retains its controlling interest be accounted for as equity transactions and any retained noncontrolling equity investment upon the deconsolidation of a subsidiary be initially measured at fair value. SFAS 160 is effective for fiscal years beginning on or after December 15, 2008 and shall be applied prospectively, except for the pr esentation and disclosure requirements which shall be applied retrospectively. We do not believe that this pronouncement will have an impact on our financial condition or results of operations.

In December 2007, the FASB issued SFAS No. 141R (revised 2007), “Business Combinations” (“SFAS 141R”) which supersedes SFAS No. 141 and establishes principles and requirements on how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date fair value, as well as the recognition and measurement of goodwill acquired in a business combination. SFAS No. 141R also requires certain disclosures to enable users of the financial statements to evaluate the nature and financial effects of the business combination. Acquisition costs associated with the business combination will generally be expensed as incurred. SFAS No. 141R is effective prospectively to business combinations in fiscal years beginning on or after December 15, 2008. We do not believe that this pronouncement will have an impact on our financial condition or results of operations.

ITEM 1.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information contained in this section should be read in conjunction with the consolidated Financial Statements and Notes therewith appearing in this quarterly report on Form 10-Q and in the Company’s Annual Report on Form 10-K for the year ended June 30, 2008, filed with the Commission by the Company on September 29, 2008 and which is available on the Company’s web site at www.ameritranscapital.com.

CRITICAL ACCOUNTING POLICIES

Our unaudited consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America. Preparing consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assts, liabilities, revenue and expenses. These estimates and assumptions are affected by the application of our accounting policies. Our significant accounting policies are described in Note 1 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended June 30, 2008. While all accounting policies affect the financial statements, certain accounting policies may be viewed as critical to us. Critical accounting policies are those that are both most important to the portrayal of the financial statements and results of operations and that require our management’s most subjective or complex judgments or estimates, often as a result of matters that are inherently uncertain and may change in subsequent periods.

Change in Financial Statement Presentation

Effective for the year ended June 30, 2008, and the three months and nine months ended March 31, 2009, the Company has revised its financial statements to be presented in accordance with Article 6 of Regulation S-X as an investment company. Due to the revised format, the Company made certain reclassifications of amounts previously reported in its prior period statements in order to conform to the current year presentation. Although the reclassifications resulted in changes to certain line items in the previously filed financial statements, the overall effect of the reclassifications noted below did not impact total stockholder’s equity (or net assets available). Below are the primary items affected by the reclassifications made:

Investment Valuations

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

Equity investments (common stock and warrants, including certain controlled subsidiary portfolio investments) and investment securities are recorded at fair value.

The Company records the investment in life insurance policies at fair value, represented as cost, plus or minus unrealized appreciation or depreciation. The fair value of the investment in life settlement contracts have no ready market and are determined in good faith by Management, and approved by the Board of Directors, based on secondary market conditions, policy characteristics and actuarial life expectancy, including health evaluations.

Effective July 1, 2008, the Company adopted SFAS 157, which expands the application of fair value accounting for investments.

Assets Acquired in Satisfaction of Loans

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

Use of Estimates

Income Recognition

Contingencies

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

General

Ameritrans acquired Elk on December 16, 1999. Elk is an SBIC that has been operating since 1980, making loans to (and, to a limited extent, investments in) small businesses, who qualify under SBA Regulations. Most of Elk’s business historically consisted of originating and servicing loans collateralized by New York City, Boston, Chicago and Miami taxi medallions, but Elk also makes loans to and investments in other diversified businesses. Historically, Elk’s earnings derived primarily from net interest income, which is the difference between interest earned on interest-earning assets (consisting of business loans), and the interest paid on interest-bearing liabilities (consisting of indebtedness to Elk’s banks and subordinated debentures issued to the SBA). Net interest income is a function of the net interest rate spread, which is the difference between the average yield earned on i nterest-earning assets and the average interest rate paid on interest-bearing liabilities, as well as the average balance of interest-earning assets as compared to interest-bearing liabilities. Unrealized depreciation on loans and investments is recorded when Elk adjusts the value of a loan to reflect Management’s estimate of the fair value, as approved by the Board of Directors.

The principal measure of our financial performance is the net increase in stockholders’ equity resulting from operations which includes net investment income (loss) and net realized and unrealized gain (loss). Net investment income (loss) is the difference between our income from interest, dividends, fees, and other investment income and our operating expenses. Net realized gain (loss) on investments, is the difference between the proceeds received from dispositions of portfolio investments and their stated cost. Net unrealized appreciation (depreciation) on investments is the net change in the fair value of our investment portfolio.

RESULTS OF OPERATIONS

Set forth below is a discussion of our results of operations for the three and nine months ended March 31, 2009 and 2008.

Total Investment Income

Investment income for the three months ended March 31, 2009 and 2008 was approximately $655,000 and $1,583,000, respectively. This decrease was primarily due to the decrease in income producing assets due to the sale of substantially all of the Company’s taxicab medallion portfolio, partially offset by a higher net interest spread on assets outstanding.

Investment income for the nine months ended March 31, 2009 and 2008 was approximately $3,086,000 and $4,822,000, respectively. This decrease was primarily due to the decrease in income producing assets due to the sale of substantially all of the Company’s taxicab medallion portfolio, partially offset by a higher net interest spread on assets outstanding.

Investment income is primarily dependent on the size, composition and credit quality of our investment portfolio. Generally, our debt securities portfolio is expected to generate predictable, recurring interest income in accordance with the contractual terms of each loan. Corporate equity securities may or may not pay a dividend and may increase in value for which a gain may be recognized; generally such dividend payments and gains are less predictable than interest income on our loan portfolio.

Expenses

Total expenses for the three months ended March 31, 2009 and 2008 were approximately $1,274,000 and $1,580,000, respectively.

Interest expense for the three months ended March 31, 2009 and 2008, which includes SBA and bank indebtedness, was $160,895 and $585,469, respectively. This decrease was primarily due to the elimination of substantially all of the Company’s bank debt following the sale of its taxicab medallion portfolio (see Notes 2 and 4 in the accompanying consolidated financial statements).

Approximately $487,000 and $506,000, respectively, of expenses were attributable to employment compensation, for the three months ended March 31, 2009 and 2008. This decline of approximately 3.8% was due to the reduction in the number of employees offset by increases in contractual salaries and cost of employee benefits.

For the three months ended March 31, 2009, other expenses included approximately $360,000 for professional fees as compared to $154,000 for the three months ended March 31, 2008. This increase of 134% was due to increased expenses associated with the implementation of Sarbanes Oxley controls, increases in accounting fees, audit fees, consulting fees, and legal expenses. For the three months ending March 31, 2009 and March 31, 2008 Sarbanes Oxley fees were $20,861 and $0 respectively. Accounting fees were $75,400 and $19,075 respectively. This increase was mainly due to the addition of an outside consultant for accounting services in lieu of the prior comptroller position that was eliminated in October 2008. Audit and audit related fees were $85,179 and $49,050 respectively. The increase in these fees was due to a change in the scope of services provided. Legal fees were $129,148 and $86 ,089 respectively. This increase was due primarily to fees associated with compliance with SEC regulations. Consulting fees were approximately $49,000 and $0 respectively. These fees are associated with the sourcing and servicing of loans on our senior corporate loan area.

Approximately $205,000 and $272,000 respectively, of expenses were attributable to other administrative expenses, for the three months ended March 31, 2009 and 2008. This decline of 24% was due to general cost controls and the elimination of certain expenses associated with the taxicab loan portfolio.

Total expenses for the nine months ended March 31, 2009 and 2008 was approximately $4,760,000 and $4,668,000 respectively.

Interest expense for the nine months ended March 31, 2009 and 2008, which includes SBA and bank indebtedness, was $914,269 and $1,869,357, respectively. This decrease was primarily due to the elimination of substantially all of the Company’s bank debt following the sale of its taxicab medallion portfolio (see Notes 2 and 4 in the accompanying consolidated financial statement).

Approximately $1,759,000 and $1,396,000, respectively, of expenses were attributable to employment compensation, for the nine months ended March 31, 2009 and 2008. This increase of approximately 26% was due to increases in contractual salaries and cost of employee benefits and by a one-time payment to an employee during the quarter ended December 31, 2008, but also partially offset by a reduction in number of employees.

For the nine months ended March 31, 2009, other expenses included approximately $1,200,000 for professional fees as compared to $503,000 for the nine months ended March 31, 2008. This increase of 236% was due to increased expenses associated with the implementation of Sarbanes Oxley controls, increases in legal expenses, accounting fees, audit fees, and consulting fees. For the nine months ended March 31, 2009 and March 31, 2008 fees related to Sarbanes Oxley controls were $229,617 and $17,704, respectively. Accounting fees were $181,988 and $66,125, respectively. This increase was mainly due to the addition of an outside consultant for accounting services. Audit and audit related fees were $257,979 and $137,850 respectively. The increase in fees was due to a change in the scope of services provided. Legal fees were $430,976 and $280,329 respectively. This increase was due primarily to fees associated with compliance with SEC regulations.

Approximately $672,000 and $700,000, respectively, of expenses were attributable to other administrative expenses, for the nine months ended March 31, 2009 and 2008. This decrease of 4% was due to general cost controls and the elimination of certain expenses associated with the taxicab loan portfolio.

Interest and compensation expense are generally expected to be our largest expenses each period. Interest expense is dependent on the average outstanding principal balance on our revolving credit facility and the base index rate for the period. Compensation expense includes base salaries, bonuses, stock compensation, employee benefits and employer related payroll costs.

Net Unrealized Depreciation on Investments

During the three months ended March 31, 2009 and 2008, our total investments had an increase in net unrealized depreciation of $98,664 and $2,093, respectively. Of this amount, $128,576 was due to the reduction in fair value of loans outstanding and $12,000 was due to the amortization of discount on loans. Of this amount, approximately $120,000 was due to a write down in principal and interest on one loan, partially offset by unrealized gain related to amortization on certain corporate loans.

During the nine months ended March 31, 2009, our total investments had an increase in net unrealized depreciation of approximately $353,074, primarily due to adjusting equity investment to fair value.

Net Decrease in Stockholders’ Equity Resulting From Operations

The net decrease in stockholders’ equity resulting from operations for the three and nine months ended March 31, 2009 was approximately $851,981 and $2,749,465, respectively, or $0.83 per share. This decrease was due to the significantly reduced revenue that resulted from the sale of substantially all the Company’s medallion portfolio, which has not yet been fully offset by the reduction of costs or the replacement of new interest bearing assets.

Liquidity and Capital Resources

The Company has funded its operations through private and public placements of its securities, bank financing, the issuance to the SBA of its subordinated debentures and internally generated funds.

At March 31, 2009, approximately 94% of the Company’s indebtedness was due to debentures issued to the SBA with fixed rates of interest plus user fees resulting in rates ranging from 4.99% to 5.54% whereas approximately 6% of Elk’s indebtedness was represented by indebtedness to its banks and other lenders with variable rates ranging from 3.5% to 5%. At March 31, 2009, the Company had available $1,000,000 of credit lines from its banks, of which $300,000 was available to draw down as of that date, subject to limitations imposed by its borrowing base agreement with its banks and the SBA, the statutory and regulatory limitations imposed by the SBA and the availability of funds. As of April 28, 2009, the Company repaid the entire principal balance in the amount of $228,000 on one of its banks lines. On April 29, 2009 and April 30, 2009, the Company continued the outstanding balan ces with two of its banks by extending the credit lines of $352,000 and $120,000, respectively (see Note 4 in the accompanying consolidated financial statements) subject to limitations imposed by its borrowing base agreement with its banks and the SBA, the statutory and regulatory limitations imposed by the SBA and the availability of funds.

In September 2006, the Company invested in life settlement contracts which require the Company to continue premium payments to keep the policies in force through the insured’s life expectancy, or until such time the policies are sold. From and after March 31, 2009, premium payments due through the life expectancy of the insured are approximately $5,814,000 over the next five years and $7,131,000 thereafter.

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

The Company will distribute at least 90% of its investment company taxable income and, accordingly, will continue to rely upon external sources of funds to finance growth. To provide the funds necessary for expansion, Management expects to raise additional capital and has applied to the SBA to obtain additional SBA debentures. In December 2008, the Company applied to the SBA for loans in the aggregate amount of $15,000,000. There can be no assurances that such additional financing will be available on acceptable terms to the Company or at all.

Recently Issued Accounting Standards

Refer to Note 10 in the accompanying consolidated financial statements for a summary of recently issued accounting pronouncements.

Off-Balance Sheet Arrangements

The Company has no material off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, results of operation or liquidity.

ITEM 1.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

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

The Company values its portfolio at fair value as determined in good faith by the Company’s Board of Directors in accordance with the Company’s valuation policy. Unlike certain lending institutions, the Company is not permitted to establish reserves for loan losses. Instead, the Company must value each individual investment and portfolio loan on a quarterly basis. The Company records unrealized depreciation on investments and loans when it believes that an asset has been impaired and full collection is unlikely. Without a readily ascertainable market value, the estimated value of the Company’s portfolio of investments and loans may differ significantly from the values that would be placed on the portfolio if there existed a ready market for the investments. The Company adjusts the valuation of the portfolio quarterly to reflect the Board of Directors 6; estimate of the current fair value of each component of the portfolio. Any changes in estimated fair value are recorded in the Company’s statement of operations as net unrealized depreciation on investments.

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

Assuming that the balance sheet were to remain constant and no actions were taken to alter the existing interest rate sensitivity, a hypothetical immediate 1% increase in interest rates would have resulted in an additional net increase in net assets from operations of $148,949 for the nine months ended March 31, 2009. This is comprised of a 1% change in two components, loans receivable of $154,199 at variable interest rate terms, and $5,250 for bank debt subject to variable market rates. This hypothetical does not take into account interest rate floors or caps on the Company’s loan receivable portfolio. No assurances can be given however, that actual results would not differ materially from the potential outcome simulated by these estimates.

ITEM 2.

CONTROLS AND PROCEDURES

Our Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15 and 15d-15 under the Exchange Act. Our Management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting based on criteria established in the framework in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our Management concluded that our internal control over financial reporting was effective as of March 31, 2009. Further, this evaluation included enhancements to our internal control over financial reporting that have not materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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

IMPORTANT FACTORS RELATING TO FORWARD-LOOKING STATEMENTS

Cautionary Note Regarding Forward-Looking Statements

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

our future operating results;

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

the impact of investments that we expect to make;

our informal relationships with third parties;

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

the ability of our portfolio companies to achieve their objectives;

our expected financings and investments;

our regulatory structure and tax treatment;

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

the adequacy of our cash resources and working capital.

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

PART I. OTHER INFORMATION

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

Item 1. Legal Proceedings

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

Item 1A. Risk Factors

Part I, Item 1A – “Risk Factors,” of our Annual Report on Form 10-K for the year ended June 30, 2008, describes important factors that could materially affect our business, financial condition and/or future results and cause our results of operations to differ materially from those indicated, projected or implied by forward-looking statements made in this Quarterly Report or presented elsewhere by management from time to time. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company; additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operation results and cause our operating results to differ materially from those indicated, projected or implied by forward-looking statements made in this Quarterly Report or presented elsewhere by management from time to time.

There have been no material changes with respect to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended June 30, 2008.

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

None

Item 3. Default upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Security Holders

None

Item 5. Other Information

None

Item 6. Exhibits

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

Exhibit Index

(a)

Exhibits

10.1

Line letter for $352,000 line of credit dated April 30, 2009 between Elk Associates Funding Corp. and Israel Discount Bank of New York. (attached hereto)

10.2

Assignment of Time Deposit dated April 30, 2009 between Elk Associates Funding Corp. and Israel Discount Bank of New York. (attached hereto)

10.3

Demand grid promissory note dated April 30, 2009 issued to Israel Discount Bank of New York. (attached hereto)

10.4

Fixed rate promissory note dated April 29, 2009 issued to Bank Leumi USA in the amount of $120,000, and pledge and assignment of bank deposits/accounts dated April 29, 2009. (attached hereto)

31.1

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

31.2

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

32.1

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

32.2

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

(All other items of Part II are inapplicable)

AMERITRANS CAPITAL CORPORATION

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

AMERITRANS CAPITAL CORPORATION

Dated: May 15, 2009

By: /s/ Michael Feinsod

Michael Feinsod

Chief Executive Officer and President

Exhibit 31.1

CERTIFICATION UNDER SECTION 302 OF THE SARBANES OXLEY ACT OF 2002
DISCLOSURE IN THE REGISTRANT’S QUARTERLY REPORT

I, Michael Feinsod, Chief Executive Officer, and President of Ameritrans Capital Corporation, certify that:

I have reviewed this quarterly report on Form 10-Q of Ameritrans Capital Corporation (the “report”);

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operation, and cash flows of the registrant as of, and for, the periods presented in the report.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a 15(e) and 15d 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a 15(f) and 15d 15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal controls over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principle;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 15, 2009

By:

/s/ Michael Feinsod

Michael Feinsod

President and Chief Executive Officer

Exhibit 31.2

CERTIFICATION UNDER SECTION 302 OF THE SARBANES OXLEY ACT OF 2002
DISCLOSURE IN THE REGISTRANT’S QUARTERLY REPORT

I, Gary C. Granoff, Chief Financial Officer, and Chairman of Ameritrans Capital Corporation, certify that:

I have reviewed this quarterly report on Form 10-Q of Ameritrans Capital Corporation (the “report”);

(a)

(b)

(c)

(d)

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 15, 2009

By:

/s/ Gary C. Granoff

Gary C. Granoff

Chief Financial Officer and Chairman

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES OXLEY ACT OF 2002

In connection with the Quarterly Report of Ameritrans Capital Corporation (the “Company”) on Form 10-Q for the quarter ended March 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes Oxley Act of 2002, that, based on my knowledge:

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition, and results of operations of the Company as of the dates and for the periods expressed in the Report.

By: /s/ Michael Feinsod

Michael Feinsod

President and Chief Executive Officer

May 15, 2009

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES OXLEY ACT OF 2002

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

By: /s/ Gary C. Granoff

Gary C. Granoff

Chief Financial Officer and Chairman

May 15, 2009

Footnotes

¹ This Schedule of Loan Fees is applicable to the subject Line and supplements all other schedules of fees and charges, as may be amended and updated by the Bank from time to time, for financial services and products offered by Bank. The Schedule does not including additional fees that may become due and payable upon a Default or an Event of Default.

² The Late Payment Premium is a separate from and in addition to the payment of any default rate of interest due under the subject credit facility.

ISRAEL DISCOUNT BANK OF NEW YORK · MEMBER FDIC

511 FIFTH AVE. NEW YORK, NY 10017-4997 · TEL: (212) 551-8500

[P:\JKS\ELK\LINE LETTER - REDLINED]]

EX-10 8 exhibit102assignmentoftimede.htm EXHIBIT 10.2 Converted by EDGARwiz

Exhibit 10.2

ASSIGNMENT OF TIME DEPOSIT

THIS ASSIGNMENT made on April 30, 2009 by Elk Associates Funding Corp. hereinafter the “Assignor”) to Israel Discount Bank of New York (hereinafter the “Assignee”).

WHEREAS,

In consideration of letters of credit, advances, loans, extension of credit, overdrafts, renewals, acquisition of notes and other instruments for payment of money and any security documents relative thereto or security agreements, conditional contracts of sale, chattel mortgages, leases and other liens or security instruments or an interest or participation therein, due or to become due, heretofore made to or for account of Assignor and/or now or hereafter to be made directly, or indirectly, to or for the account of the Assignor and/or the granting to or for the account of the Assignor of such extensions, forbearances, releases of collateral or other relinquishments of legal rights and/or extending any other financial accommodation or benefit to the Assignor, as the Assignee may deem advisable (the “Indebtedness”); and

The Assignor has on deposit with the Assignee the principal amount of $250,000.00 currently maintained in Account No. 5045755 (hereinafter referred to as the "Time Deposit"), which term shall include all proceeds thereof, renewals or extensions of, reductions in or increases to, replacement of such account with a time deposit or time deposits, and interest earned in the Time Deposit); and

The Assignor has agreed to assign to the Assignee, its respective successors and assigns, as security for the repayment of the Indebtedness to the Assignee and any renewal, extension, or replacement thereof, the Assignor’s interest in the Time Deposit, including all control over the Time Deposit.

NOW THEREFORE, the Assignor, in consideration of ONE DOLLAR ($1.00) and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, has irrevocably assigned, transferred and set over and by this instrument does irrevocably sell, assign, transfer and set over, unto the Assignee, and unto Assignee’s successors and assigns, all of the right, title and interest of the Assignor to the Time Deposit including all control of the Assignor over the Time Deposit, including, without limitation, any extension, renewal, redesignation, renumbering or replacement thereof, as well as the proceeds of such Time Deposit, regardless of the nature of the Time Deposit or product into which such proceeds may be transferred.

The Assignor does hereby warrant and represent that (i) the Assignor is the sole owner of the Time Deposit with full authority to assign the same, and that (ii) the Assignor has not assigned nor pledged, and hereby covenants that the Assignor will not assign or pledge, so long as this Assignment shall remain in effect, any of the Assignor’s rights, title or interest in or to, or control over the Time Deposit to any party other than the Assignee, its successors or assigns and (iii) the Assignor has all requisite corporate power and/or authority to execute and deliver this instrument to the Assignee.

[P:\JKS\ELK\ASSIGNMENT OF TIME DEPOSIT]

The Assignor hereby irrevocably authorizes and directs the Assignee to block and note on Assignor’s books that the Time Deposit is the property of the Assignee and that no withdrawal of the said Time Deposit may be made except upon the prior written consent or instructions of the Assignee and furthermore, to pay to the Assignee, all monies in the Time Deposit as and when due to the Assignor, or to pay said amount upon the demand of the Assignee, whether at maturity, or prior to the maturity of the Time Deposit, and upon receipt of such notice or demand to draw to the order of the Assignee any and all checks and other instruments for the payment of the monies and claims assigned hereby, and to accept the receipts of the Assignee therefor.

The Assignor hereby irrevocably constitutes the Assignee, its successors and assigns, as the Assignor’s true and lawful attorney, with full power, in the name of the Assignor, or otherwise, to demand, receive and collect, and to give acquittance for the payment of any and all monies or claims from monies or rights assigned hereby in and to the Time Deposit, to file any claims and to commence, maintain or discontinue any actions, suits or other proceedings which the Assignee deems advisable in order to collect or enforce payment of any such monies, to settle, adjust and compromise any and all disputes or claims in respect of such monies, and to endorse any and all checks, drafts or other orders or instruments for the payment of monies payable to the Assignor which shall be issued in respect of such monies, but the Assignee is not obligated in any manner to make any inquiry as to the nature or sufficiency of any paymen t received by it or to take any of the actions hereinabove authorized, nor will the Assignee be deemed to have waived any of its rights hereunder by the failure to take any of the actions hereinabove authorized. Further, in the absence of written direction by Assignor, upon the maturity, call of the Time Deposit, or at any other time in the Assignee’s sole and absolute discretion, the Assignor irrevocably authorizes and appoints the Assignee to deposit or transfer the proceeds from such Time Deposit into such other demand deposit account, time deposit or other product offered by or available to the Assignee as the Assignee may select in its sole and absolute discretion.

The Assignor covenants and agrees that (i) the Assignor will promptly deliver to the Assignee the certificate(s) of deposit, receipt(s) or other document(s) evidencing the Time Deposit and all certificate(s) of deposit, receipt(s) or other document(s) representing renewals or extensions, if any, thereof, (ii) the Assignor will not take any action which might result in the impairment of any right, title, interest or control assigned hereby, (iii) the Assignor will clearly record on the Assignor’s books and records annotations of this Assignment, and (iv) in the event that the Assignor receives payment of any monies hereby assigned whether at maturity, or prior to maturity, of the Time Deposit, the Assignor will forthwith turn over the same to the Assignee for the benefit of the Assignee in the identical form in which received (except for such endorsements as may be required thereon) and, until so turned over, hold the same in trust for the Assignee.

The Assignor hereby irrevocably authorizes the Assignee, at the Assignor’s expense, to file such financing statements and give such notices relating to this Assignment, without the Assignor’s signature, as the Assignee at its option may deem appropriate, and irrevocably appoints the Assignee as the Assignor’s attorney-in-fact to execute any such financing statements or notices in the Assignor’s name and to perform all other acts which the Assignee deems appropriate to perfect and continue the security interest conferred hereby.

From and after May 31, 2009, the value of the Time Deposit shall at all times equal at least 100% of the Indebtedness outstanding to the Assignee at the time in question (the “Minimum Value”). If at any time from and after May 31, 2009, the Time Deposit has an aggregate value of less than the Minimum Value, then, the Assignor shall pledge and/or assign, to the Bank, and grant a security interest in such additional collateral by opening an additional Time Deposit held by Assignee for the account of Assignor to increase the aggregate value of the Time Deposits to the Minimum Value, or else the Assignor shall within three (3) days after demand by the Assignee pay cash to the Assignee to be credited to the Indebtedness in an amount equal to the difference between the Minimum Value less the then value of the Time Deposit.

The Assignor agrees that Assignor will execute and deliver such further documents and do such other acts and things as the Assignee may from time to time request in order to further effect the purpose of this Assignment.

This Assignment shall be binding upon the Assignor’s respective estate, heirs, executors, administrators, successors and assigns and shall inure to the benefit of the Assignee and its respective successors and assigns.

The Assignee undertakes that upon full payment of the Indebtedness, and upon request by the Assignor, it shall reassign to the Assignor, at the Assignor’s expense and without recourse, representation or warranty, all rights assigned to the Assignee pursuant to this Assignment.

The powers and authority granted to the Assignee herein have been given for valuable consideration and are hereby declared to be irrevocable.

This instrument shall be governed by and construed in accordance with the internal laws of the State of New York and may not be modified except by written instruments signed by the Assignee. The Assignor hereby waives the right to trial by jury in any action or proceeding with respect to or arising under this Assignment.

IN WITNESS WHEREOF, the Assignor has caused this Assignment to be executed on the day and year first above written.

ELK ASSOCIATES FUNDING CORP.

By: ____/s/ Gary Granoff___________

Name: Gary Granoff

Title:

President

PURPOSE OF ASSIGNMENT:

Collateral Security

BORROWER’S NAME:

Elk Associates Funding Corp.

AMOUNT ASSIGNED:

$250,000.00 plus interest thereon and additions thereto

[P:\JKS\ELK\ASSIGNMENT OF TIME DEPOSIT]

[To be used when the acknowledgment is made within the State of New York]

STATE OF NEW YORK

}

} ss.:

COUNTY OF___New York______}

On the _4th___ day of May in the year 2009, before me, the undersigned, a Notary Public in and for said State, personally appeared Gary Granoff personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacit(y/ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person(s) upon behalf of which the individual(s) acted, executed the instrument.

[notary public stamp]

________/s/ Silvia M. Mullens______________

Notary Public

[To be used when the acknowledgment is made outside the State of New York]

State (or District of Columbia, Territory, or Foreign Country) of _________________________ss:

On the _________ day of ______________________________ in the year _________, before me, the undersigned, personally appeared ______________________________________ personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacit(y/ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person(s) upon behalf of which the individual(s) acted, executed the instrument, and that such individual made such appearance before the undersigned in the _____________________________________ in ________________________________________.

(insert the City or other political subdivision)

(and insert the State or County or other place the acknowledgment was taken)

______________________________________

(signature and office of individual taking acknowledgment)

[P:\JKS\ELK\ASSIGNMENT OF TIME DEPOSIT]

EX-10 9 exhibit103idbgridpromissoryn.htm EXHIBIT 10.3 Converted by EDGARwiz

Exhibit 10.3

[IDB Letterhead]

DEMAND GRID PROMISSORY NOTE

PRIME RATE

$352,000.00

April 30, 2009

New York, New York

FOR VALUE RECEIVED, the undersigned, ELK ASSOCIATES FUNDING CORP. (the “Borrower”) HEREBY PROMISES TO PAY to the order of ISRAEL DISCOUNT BANK OF NEW YORK, its successors and assigns (hereinafter the “Bank”), the principal amount of Three Hundred and Fifty-Two Thousand ($352,000.00), in lawful money of the United States (the “Loan”), or the aggregate unpaid principal amount of all revolving credit advances (hereinafter each being referred to as an “Advance” and collectively, the “Advances”) made to Borrower, as set forth on Bank’s computer system on the Loan Enquiry Page(s) (the “Loan Enquiry Page(s)”) ON DEMAND or on the maturity date of each such Advance as shown on the Loan Enquiry Page(s), and in no event later than the Maturity Date, and to pay interest on the unp aid principal balance of this Demand Grid Promissory Note (this “Note”) in the manner and at the rate as hereinafter specified and such amounts due hereunder.

Borrower acknowledges that this Note is an obligation which is payable on demand and that notwithstanding anything to the contrary in any other instrument, agreement or other document to which Borrower and/or Bank is a party, the enumeration in any such document of specific events of default, conditions and/or covenants relating to the Advances evidenced by this Note or to any other Obligations, shall not be construed to qualify, define or otherwise limit in any way Bank's right, power or ability, at any time, to make demand for payment of the principal of and interest on this Note, and Borrower agrees that the occurrence of any event of default or breach of any condition or covenant in any such document is not the only basis for demand to be made on this Note.

Defined Terms. As used in this Note the following terms shall have the following meanings:

The term “Additional Costs” shall have the meaning as defined in Section 17.

The terms “Advance” or “Advances” shall have the meanings as defined in the introductory paragraph.

The term “Bank” shall have the meaning as defined in the introductory paragraph.

The term “Bankruptcy Code” shall mean Title 11 of the United States Code, as amended.

The term “Borrower” shall have the meaning as defined in the introductory paragraph.

The term “Business Day” shall mean any day other than a Saturday, Sunday, or other day on which commercial banks in New York are authorized or required to close under the laws of the State of New York.

[P:\JKS\ELK\DEMAND GRID PROM. NOTE - REDLINED - V3]

The term “Collateral” shall mean (i) any and all of Borrower’s right, title and interest in and to all properties, assets and rights of Borrower, whether now owned or hereafter created, acquired or arising and wheresoever located together with all of the proceeds and products thereof in which the Bank has been granted or otherwise obtained a security interest and (ii) that certain time deposit designated to account number ____5045755_______ maintained at Bank in the name of Borrower, and any and all extensions, additions, substitutions and renewals thereon, as well as any additional time deposits assigned by Borrower to Bank from and after the date hereof (collectively, the "Time Deposit").

The term “Default Interest Rate” shall have the meaning as defined in Section 4.

The term “Event of Default” shall mean any of the events or conditions specified in Section 12 hereof.

The term “Guarantor” means each endorser, guarantor and surety of this Note or the Obligations evidenced hereby and any person who is primarily or secondarily liable, in whole or in part, for the repayment of the Obligations or any portion thereof (including without limitation each Guarantor), any person who has granted security for the repayment of the Obligations, together with such person’s heirs, personal representatives, successors and assigns.

The term “Indebtedness” shall mean all items of indebtedness, obligation or liability, whether matured or unmatured, liquidated or unliquidated, funded or unfunded, direct or contingent, joint or several, which would properly be included in the liability section of a balance sheet or in a footnote to a financial statement in accordance with generally accepted accounting principles, and shall also include (a) all indebtedness guaranteed, directly or indirectly in any manner, or endorsed (other than for collection or deposit in the ordinary course of business) or sold with recourse, (b) all indebtedness in effect guaranteed, directly or indirectly, through agreements, contingent or otherwise, and (c) all indebtedness secured by (or for which the holder of such indebtedness has a right, contingent or otherwise, to be secured by) any mortgage, deed of trust, pledge, assignment, lien, secu rity interest or other charge or encumbrance upon property owned or acquired subject thereto, whether or not the liabilities secured thereby have been assumed or guaranteed.

The terms “Indemnified Party” or “Indemnified Parties” shall have the meanings as defined in Section 27.

The term “Interest” means the annual rate of interest payable on the outstanding Advances in accordance with Sections 3 and 4.

The term “Late Charge” shall have the meaning as defined in Section 10.

The term “Loan” shall have the meaning as defined in the introductory paragraph.

The term “Loan Documents” shall mean this Note and any other document, instrument or agreement and any amendments thereto, evidencing or securing the Obligations, or now or at any time hereafter executed, delivered or recorded in connection with the Obligations, any other note, any loan commitment, requisition, letter agreement, line of credit agreement, commercial financing agreement, security agreement, guaranty of payment, mortgage, deed of trust, pledge agreement, loan agreement, loan and security agreement, hypothecation agreement, indemnity agreement, letter of credit application and agreement, and assignment, all as amended, restated, extended, renewed, supplemented, modified or replaced from time to time.

[P:\JKS\ELK\DEMAND GRID PROM. NOTE - REDLINED - V3]

The term “Loan Enquiry Page(s)” shall have the meaning as defined in the introductory paragraph.

The term “Margin” shall mean one hundred basis points (100 bps).

The term “Maturity Date” shall mean October 31, 2009.

The term “Minimum Advance” shall have the meaning as defined in Section 2(c).

The term “Note” shall mean this Demand Grid Promissory Note.

The term “Obligations” shall mean all existing and future debts, liabilities and obligations of every kind or nature at any time owing by Borrower to Bank, whether under this Note or under any other existing or future instrument, document or agreement, between Borrower and Bank, whether joint or several, related or unrelated, primary or secondary, matured or contingent, due or to become due, including, without limitation, the debts, liabilities and obligations in respect of this Note and any extensions, modifications, substitutions, increases and renewals thereof. Without limiting the generality of the foregoing, Obligations shall include any other loan, advance or extension of credit, under any existing or future loan agreement, promissory note, or other instrument, document or agreement either arising directly between Borrower and Bank or acquired outright, conditionally or as collateral security from another person or entity by Bank.

The term “Obligor” shall mean individually and collectively Borrower, each endorser and surety of this Note, any person who is primarily or secondarily liable for the repayment of this Note or any portion thereof (including without limitation each Guarantor), any person who has granted security for the repayment of the Note, together with such person’s heirs, personal representatives, successors and assigns.

The term “Prime Rate” shall mean a fluctuating rate per annum equal to the rate of interest publicly announced by Bank at its principal office from time to time as its Prime Rate. Any change in the Prime Rate shall be effective on the date such change is announced by Bank.

The term “Prior Note” shall mean that certain grid promissory note referenced and described in paragraph 26 below.

Advances.

(a)

Each request by Borrower for an Advance shall be received by Bank not later than 12:00 noon, New York local time on the date of such request;

(b)

Each request for an Advance shall specify inter alia (i) the requested date of such Advance, and (ii) the requested amount of such Advance.

(c)

A request for an Advance shall be irrevocable upon Bank’s first receiving notification thereof and shall be in a minimum amount (“Minimum Advance”) of: (i) $100,000.00; or (ii) the remaining amount of the available undrawn balance under the Loan if such amount is less than $100,000.00.

(d)

Subject to the terms and conditions hereof and the terms and conditions set forth in the Loan Documents, Advances that are repaid or prepaid may be reborrowed on a revolving basis up to the maximum amount of this Note.

[P:\JKS\ELK\DEMAND GRID PROM. NOTE - REDLINED - V3]

Principal and Interest.

(a)

Interest shall be payable on the outstanding daily unpaid principal amount of each Advance from the date hereof until payment in full is made and shall accrue and be payable at the rates set forth or provided for herein, before and after default, before and after maturity, before and after judgment and before and after the commencement of any proceeding under the Bankruptcy Code, with interest on overdue interest to bear interest and to be compounded at the Default Interest Rate, in each case, to the fullest extent permitted by applicable laws.

(b)

Interest accrued on each Advance shall be due and payable in arrears on the first day of each calendar month commencing the first day of the first full month following the date of such Advance and at maturity (whether as stated or by acceleration). Except as otherwise provided in Section 4, the unpaid principal amount of each Advance shall bear interest at a rate per annum equal to the higher of (i) the Prime Rate plus the Margin or (ii) four and one-half percent (4.50%).

(c)

The unpaid principal amount of any Advance may, at any time and from time to time, be voluntarily paid or prepaid in whole or in part except that, with respect to any voluntary prepayment, (i) Bank shall have received written notice of any prepayment by 12:00 noon, New York local time on a Business Day on the date of prepayment, which notice shall identify the date and amount of the prepayment, and (ii) each prepayment of an Advance shall be accompanied by payment of interest accrued to the date of payment on the amount of principal paid.

(d)

Bank may act without liability upon the basis of telephonic notice believed by Bank in good faith to be from Borrower. Borrower shall immediately confirm to Bank, in writing, each telephonic notice. All Advances are made at Bank’s sole and absolute discretion and Bank may, at its option and in its sole and absolute discretion and without notice to the undersigned, decline to make any Advance requested by Borrower. Borrower hereby expressly authorizes Bank to record in its computer system the amount and date of each Advance, the applicable rate of interest, the applicable Interest Period, the maturity date, and each payment of principal and interest thereon. In the event of any discrepancy between any such notation by Bank and any records of Borrower, the records of Bank shall be controlling and conclusive.

(e)

All amounts due and owing hereunder shall be paid in full no later than the earlier of: (i) demand by Bank; (ii) Maturity Date; or (iii) the occurrence and continuation of an Event of Default.

Default Rate. At the option of the Bank, upon the occurrence and during the continuance of any Event of Default, and in any event if any installment of principal or interest or any fee or cost or other amount payable under this Note, or any other Loan Document, is not paid when due, the Obligations shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the rate otherwise applicable thereto plus five (5%) percent per annum (the “Default Interest Rate”), to the fullest extent permitted by applicable law. Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be compounded monthly, on the last day of each calendar month, to the fullest extent permitted by applicable law.

Computation of Interest and Fees.

(a)

Computation of interest on the Loan under this Note shall be calculated on the basis of a year of 360 days and the actual number of days elapsed. Borrower acknowledges that

[P:\JKS\ELK\DEMAND GRID PROM. NOTE - REDLINED - V3]

such latter calculation method will result in a higher yield to the Bank than a method based on a year of 365 or 366 days.

(b)

Under no circumstances or event whatsoever shall the aggregate of all amounts deemed interest hereunder and charged or collected pursuant to the terms of this Note exceed the highest rate permissible under any law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto. In the event that such court determines Bank has charged or received interest hereunder in excess of the highest applicable rate, Bank shall apply, in its sole discretion, and set off such excess interest received by Bank against other Obligations due or to become due and such rate shall automatically be reduced to the maximum rate permitted by such law.

Manner and Treatment of Payments.

(a)

Each payment due on this Note, or under any other Loan Document, shall be made to Bank, at Bank’s office located at 511 Fifth Avenue, New York, New York 10017-4997, for the account of Bank, in immediately available funds not later than 3:00 p.m., New York local time, on the day of payment (which must be a Business Day). All payments received after these deadlines shall be deemed received on the next succeeding Business Day. All payments shall be made in lawful money of the United States of America.

(b)

Bank shall have the unconditional right and discretion (and Borrower hereby authorizes Bank) to charge Borrower’s operating and/or deposit account(s) for all of Borrower’s Obligations as they become due from time to time under this Note, or any other Loan Document, including, without limitation, interest, principal, fees, indemnification obligations and reimbursement of expenses.

(c)

Any payment due under this Note which is paid by check or draft shall be subject to the condition that any receipt issued therefore shall be ineffective unless and until the amount due is actually received by Bank. Each payment received by Bank shall be applied as follows: first, to the payment of any and all costs, fees and expenses incurred by or payable to Bank in connection with the collection or enforcement of this Note; second, to the payment of all unpaid late charges (if any); third, to the payment of all accrued and unpaid interest hereunder; and fourth, to the payment of the unpaid principal balance of this Note, or in any other manner which Bank may, in its sole discretion, elect from time to time.

Security Interest in Collateral.

(a)

To secure payment to Bank and performance of the Obligations, Borrower hereby grants to Bank a continuing security interest in, a general lien upon and a right of set-off against the Collateral.

(b)

Borrower hereby authorizes Bank, at any time and from time to time, to file financing statements, continuation statements and amendments thereto under the Uniform Commercial Code naming Borrower as debtor and Bank as secured party and indicating therein the types or describing the items of Collateral herein specified. Borrower will not, without the prior written consent of Bank, file or authorize or permit to be filed in any jurisdiction any such financing or like statement in which Bank is not named as the sole secured party covering the Collateral set forth herein.

[P:\JKS\ELK\DEMAND GRID PROM. NOTE - REDLINED - V3]

(c)

Bank, at its discretion, whether any of the Obligations be due may, in its name or in the name of Borrower or otherwise, demand, sue for, collect or receive any money or property at any time payable or receivable on account of or in exchange for, or make any compromise or settlement deemed desirable with respect to, any of the Collateral, but shall be under no obligation so to do, or Bank may extend the time of payment, arrange for payment in installments, or otherwise modify the terms of, or release, any of the Collateral, without thereby incurring responsibility to, or discharging or otherwise affecting any liability of Borrower. Bank shall not be required to take any steps necessary to preserve any rights of prior parties to any of the Collateral. Upon default hereunder or in connection with any of the Obligations (whether such default be that of Borrower or of any other party obligat ed thereon), Bank shall have the rights and remedies provided by law and Bank may sell or cause to be sold in the Borough of Manhattan, New York City, or elsewhere, in one or more sales or parcels, at such price as Bank may deem best, and for cash or on credit or for future delivery, without assumption of any credit risk, all or any of the Collateral, at any brokers’ board or at public or private sale, without demand of performance or notice of intention to sell or of time or place of sale (except such notice as is required by applicable statute and cannot be waived), and Bank or anyone else may be the purchaser of any or all of the Collateral so sold and thereafter hold the same, absolutely free from any claim or right of whatsoever kind, including any equity of redemption, of Borrower, any such demand, notice or right and equity being hereby waived and released. Borrower will pay to Bank all reasonable out of pocket expenses (including reasonable expense for legal services of every kind) of, or incidental to, the enforcement of any of the provisions hereof or of any of the Obligations, or any actual or attempted sale, or any exchange, enforcement, collection, compromise or settlement of any of the Collateral or receipt of the proceeds thereof, and for the care of the Collateral and defending or asserting the rights and claims of Bank in respect thereof, by litigation or otherwise, including expense of insurance, and all such expenses shall be indebtedness within the terms of this Note. Bank, at any time, at its option, may apply the net cash receipts from the Collateral to the payment of principal of and/or interest on any of the Obligations, whether or not then due, making proper rebate of interest or discount. Notwithstanding that Bank, whether in its own behalf and/or in behalf of another and/or of others, may continue to hold Collateral and regardless of the value thereof, Borrower shall be and remain liable for the payment in full, principal and interest, of any balance of the Obli gations and expenses at any time unpaid.

Right of Set-Off. To secure payment of this Note and all other Obligations of Borrower to Bank, Borrower and any Obligor of this Note hereby grant Bank a continuing lien and/or right of set-off upon any and all deposit and/or operating accounts now or hereafter maintained with Bank, any and all securities and other property of Borrower and any Obligor and the proceeds thereof now or hereafter coming into the possession or control of Bank, hereby authorizing Bank, at any time, without prior notice, to appropriate and apply such deposits or the proceeds of the sale of such securities or other property to any such Obligations, although contingent and although unmatured, it being understood that Bank shall be under no obligation to effect any such appropriation and application.

Repayment Extension. If any payment of principal or interest shall be due on a Saturday, Sunday or any other day on which banking institutions in the State of New York are required or permitted to be closed, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of the payment of interest.

10.

Late Charge. Borrower shall unconditionally pay to Bank a late charge (the “Late Charge”) equal to the greater of (a) five (5%) percent of the payment then due or (b) $200.00, if any such payment in whole or in part is not received by Bank within ten (10) days after its due date.

[P:\JKS\ELK\DEMAND GRID PROM. NOTE - REDLINED - V3]

The Late Charge is in addition to the Default Interest Rate, if applicable, and shall be payable together with the next payment due hereunder or, at Bank’s option, upon demand by Bank, provided, however, that if any such late charge is not recognized as liquidated damages for such delinquency, and if deemed to be interest in excess of the amount permitted by applicable law, Bank shall be entitled to collect a late charge only at the highest rate permitted by law, and any payment actually collected by Bank in excess of such lawful amount shall be deemed a payment in reduction of the principal sum then outstanding, and shall be so applied.

11.

Representations and Warranties. Borrower represents and warrants to Bank that:

Existence and Qualification; Power - Borrower is a corporation or limited liability company duly formed, validly existing and in good standing under the laws of the state of its organization. Borrower is duly qualified or registered to transact business and is in good standing in each jurisdiction in which the conduct of its business or the ownership or leasing of its properties makes such qualification or registration necessary. Borrower has all requisite corporate power and/or other authority to conduct its business, to own and lease its properties and to execute and deliver this Note and each Loan Document to which it is a party and to perform its Obligations;

Compliance with Laws - Borrower is in compliance with all laws, regulations and other legal requirements applicable to its business, has obtained all authorizations, consents, approvals, orders, licenses and permits from, and has accomplished (or obtained exemptions from) all filings, registrations and qualifications that are necessary for the transaction of its business;

Authority; Compliance With Other Agreements and Instruments - the execution, delivery and performance by Borrower of this Note and the other Loan Documents to which it is a party has been duly authorized by all necessary corporate, partnership or membership action, as applicable, and does not and will not: (i) require any consent or approval not heretofore obtained of any manager, director, stockholder, member, partner, security holder or creditor of such party; (ii) violate or conflict with any provision of Borrower’s partnership agreement, articles of organization, operating agreement, articles of incorporation, charter, by-laws or other comparable instruments; or (iii) result in a breach by Borrower or constitute a default by Borrower under, or cause or permit the acceleration of any obligation owed under, any indenture or loan or credit agreement or any other contractual obligation to which Borrower is a party or by which Borrower or any of its property is bound or affected;

Financial Statements - the financial statements of Borrower previously furnished to Bank are complete and correct and fairly present the financial condition of Borrower through to the date for such fiscal period, and the result of Borrower’s operations as of the end of the most recent fiscal quarter reflect no material adverse change in the financial condition of Borrower;

No Default - no event has occurred and no event is continuing which with the giving of notice or the lapse of time or both would constitute an Event of Default;

Representations and Warranties - prior to the making of each Advance all representations and warranties contained herein, or the other Loan Documents, shall be true and correct and of the same force and effect as though such representations and warranties had been made as of the date of the making of such Advance.

Regulations T, U and X; Investment Company Act - no part of the proceeds of the Loan will be used to purchase or carry, or to extend credit to others for the purpose of purchasing

[P:\JKS\ELK\DEMAND GRID PROM. NOTE - REDLINED - V3]

or carrying, any margin stock within the meaning of Regulations T, U or X of the Board of Governors of the Federal Reserve System. Borrower is not or is not required to be registered as an “investment company” under the Investment Company Act of 1940; and

Patriot Act Compliance - Borrower is not involved in any activity, directly or indirectly, which would constitute a violation of applicable laws concerning money laundering, the funding of terrorism or similar activities. No part of the proceeds of the Loan will be used to fund activities which would constitute a violation of the United States Bank Secrecy Act, the United States Money Laundering Control Act of 1986, the United States International Money Laundering Abatement and Anti-terrorist Financing Act of 2001.

12.

Events of Default. The occurrence of any one or more of the following events shall constitute an “Event of Default” under this Note:

Payments – if Borrower, or any other Obligor, fails to make any payment of principal or interest under the Obligations when such payment is due and payable; or

Other Charges - if Borrower, or any other Obligor, fails to pay any other charges, fees, expenses or other monetary obligations owing to Bank arising out of or incurred in connection with this Note within five (5) Business Days after the date such payment is due and payable; or

Particular Covenant Defaults - if Borrower fails to perform, comply with or observe any covenant or undertaking contained in any Loan Document and such failure continues for five (5) Business Days after written notice from Bank to Borrower; or

Financial Information – if (i) any statement, report, financial statement, or certificate made or delivered by Borrower, or any other Obligor, to Bank is not true and correct in all material respect when made or delivered, (ii) the Borrower’s financial statements issued for the reported fiscal year materially deviate from the projected profit and loss statement provided by the Borrower to the Bank for such period; or (iii) otherwise fails to comply with such other requirement or covenants set forth in the line letter agreement executed contemporaneously herewith.

Warranties or Representations - if any warranty, representation or other statement by or on behalf of Borrower contained in or pursuant to this Note, the other Loan Documents or in any document, agreement or instrument furnished in compliance with, relating to, or in reference to this Note, is false, erroneous, or misleading in any material respect when made; or

Agreements with Others - (i) if Borrower shall default beyond any grace period in the payment of principal or interest of any Indebtedness of Borrower; or (ii) if Borrower otherwise defaults under the terms of any such Indebtedness if the effect of such default is to enable the holder of such Indebtedness to accelerate the payment of Borrower’s obligations, which are the subject thereof, prior to the maturity date or prior to the regularly scheduled date of payment; or

Other Agreements with Bank - if Borrower breaches or violates the terms of, or if a default occurs under, any other existing or future agreement (related or unrelated) (including, without limitation, the other Loan Documents) between Borrower and Bank; or

Judgments - if any final judgment exceeding $50,000 for the payment of money (i) which is not fully and unconditionally covered by insurance or (ii) for which Borrower has not established a cash or cash equivalent reserve in the full amount of such judgment, shall be rendered by a court of record against Borrower and such judgment shall continue unsatisfied and in effect for

[P:\JKS\ELK\DEMAND GRID PROM. NOTE - REDLINED - V3]

a period of thirty (30) consecutive days without being vacated, discharged, satisfied or bonded pending appeal; or

Assignment for Benefit of Creditors, etc. - if Borrower makes or proposes in writing, an assignment for the benefit of creditors generally, offers a composition or extension to creditors, or makes or sends notice of an intended bulk sale of any business or assets now or hereafter owned or conducted by Borrower; or

Bankruptcy, Dissolution, etc. - upon the commencement of any action for the dissolution or liquidation of Borrower, or the commencement of any proceeding to avoid any transaction entered into by Borrower, or the commencement of any case or proceeding for reorganization or liquidation of Borrower’s debts under the Bankruptcy Code or any other state or federal law, now or hereafter enacted for the relief of debtors, whether instituted by or against Borrower; provided however, that Borrower shall have twenty (20) Business Days to obtain the dismissal or discharge of involuntary proceedings filed against it, it being understood that during such twenty (20) Business Day period, Bank may seek adequate protection in any bankruptcy proceeding; or

Receiver - upon the appointment of a receiver, liquidator, custodian, trustee or similar official or fiduciary for Borrower or for Borrower’s property; or

Execution Process, etc. - the issuance of any execution or distraint process against any property of Borrower; or

Termination of Business - if Borrower ceases any material portion of its business operations as presently conducted; or

Investigations - any indication or evidence received by Bank that reasonably leads it to believe Borrower may have directly or indirectly been engaged in any type of activity which, would be reasonably likely to result in the forfeiture of any material property of Borrower to any governmental entity, federal, state or local; or

Liens - if any lien in favor of Bank shall cease to be valid, enforceable and perfected and prior to all other liens other than permitted liens (liens that are permitted pursuant to existing intercreditor agreements with other lenders); or

Concealment/Removal of Property - if Borrower, or any other Obligor, conceals, removes or permits to be concealed or removed any part of Borrower’s property with intent to hinder, delay, or defraud any of its creditors; or

Fraudulent Conveyance - the making or suffering by Borrower, or any other Obligor, of a transfer of any property, which is fraudulent under the law of any applicable jurisdiction; or

Security – if all or any part of any security granted by Borrower for the Obligations shall, in the sole discretion of Bank, have become unsatisfactory and Borrower fails upon demand of Bank to furnish such further security or to make payment on account of any of the Obligations as would be satisfactory to Bank; or

Material Adverse Effect – if there is any change in Borrower’s financial condition which, in Bank’s reasonable opinion, has or would be reasonably likely to have a material adverse effect with respect to (a) the assets, properties, financial condition, credit worthiness, business

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prospects, material agreements or results of business operations of Borrower, or (b) Borrower’s ability to pay the Obligations in accordance with the terms hereof, or (c) the validity or enforceability of this Note or any of the other Loan Documents or the rights and remedies of Bank hereunder or thereunder.

13.

Rights and Remedies upon Demand or Default. Upon demand or following the occurrence of an Event of Default hereunder, Bank, in Bank’s sole discretion and without notice or demand to Borrower or any other Obligor, may: (a) declare the entire outstanding principal balance of this Note, together with all accrued interest and all other sums due under this Note to be immediately due and payable, and the same shall thereupon become immediately due and payable without presentment, demand or notice, which are hereby expressly waived (b) exercise its right of set-off against any money, funds, credits or other property of any nature whatsoever of Borrower or any other Obligor now or at any time hereafter in the possession of, in transit to or from, under the control or custody of, or on deposit with, Bank or any affiliate of Bank in any capacity whatsoever, including without lim itation, any balance of any deposit account and any credits with Bank or any affiliate of Bank; (c) terminate any outstanding commitments of Bank to Borrower or any Obligor; (d) liquidate any Time Deposit and apply the same in reduction of the Obligations, whether or not said Time Deposit is matured or unmatured, and the Bank shall not be liable or in any way responsible to Borrower by reason of any early withdrawal or similar penalties or charges imposed in connection therewith and (e) exercise any or all rights, powers, and remedies provided for in the Loan Documents or now or hereafter existing at law, in equity, by statute or otherwise.

14.

Remedies Cumulative. Each right, power and remedy of Bank hereunder, under the other Loan Documents or now or hereafter existing at law, in equity, by statute or otherwise shall be cumulative and concurrent, and the exercise or the beginning of the exercise of any one or more of them shall not preclude the simultaneous or later exercise by Bank of any or all such other rights, powers or remedies. No failure or delay by Bank to insist upon the strict performance of any one or more provisions of this Note or of the Loan Documents or to exercise any right, power or remedy consequent upon a breach thereof or a default hereunder shall constitute a waiver thereof, or preclude Bank from exercising any such other rights, powers or remedy. By accepting full or partial payment after the due date of any amount of principal or interest on this Note, or other amounts payable on de mand, Bank shall not be deemed to have waived the right either to require prompt payment when due and payable of all other amounts of principal or interest on this Note or other amounts payable on demand, or to exercise any rights and remedies available to is in order to collect all such other amounts due and payable under this Note.

15.

Intentionally Omitted.

16.

Intentionally Omitted.

17.

Additional Costs. If, as a result of any change in applicable law, regulation, guideline or order, or in the interpretation or application thereof by any governmental authority charged with the administration thereof, there shall be imposed upon or made applicable to Bank any reserve requirement against this Note or any other costs or assessments (hereinafter “Additional Costs”), Borrower shall pay to Bank, on demand (which demand shall be in writing and which will set forth a calculation of such Additional Costs), an amount sufficient to compensate Bank for such Additional Cost. Bank’s calculation of the amount of such Additional Costs shall be presumed correct absent manifest error.

18.

Collection Expenses. If this Note is placed in the hands of an attorney for collection following the occurrence of an Event of Default hereunder, Borrower agrees to pay to Bank upon

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demand reasonable costs and expenses, including all reasonable attorney’s fees and court costs, paid or incurred by Bank in connection with the enforcement or collection of this Note (whether or not any action has been commenced by Bank to enforce or collect this Note) or in successfully defending any counterclaim or other legal proceeding brought by Borrower contesting Bank’s right collect the outstanding principal balance of this Note. The obligation of Borrower to pay all such costs and expenses shall not be merged into any judgment by confession against Borrower. All of such costs and expenses shall bear interest at the highest rate of Interest permitted under this Note from the date of payment by Bank until repaid in full by the Obligor.

19.

Interest Rate after Judgment. If judgment is entered against Borrower on this Note, the amount of the judgment entered (which may include principal, interest, fees and costs) shall bear interest at the higher of (i) the legal rate of interest then applicable to judgments in the jurisdiction in which judgment was entered, or (ii) if otherwise permitted by applicable law, the Default Interest Rate provided herein.

20.

Certain Waivers by Borrower. Borrower waives demand, presentment, protest and notice of demand, of non-payment, of dishonor, and of protest of this Note. Bank, without notice to or further consent of Borrower or any other Obligor and without in any respect compromising, impairing, releasing, lessening or affecting the obligations of Borrower hereunder or under of the Loan Documents, may: (a) release, surrender, waive, add, substitute, settle, exchange, compromises, modify, extend or grant indulgences with respect to (i) this Note, (ii) any of the Loan Documents, and/or (iii) all or any part of any collateral or security for this Note; and/or (iv) any Obligor; (b) complete any blank space in this Note according to the terms upon which the loan evidenced hereby is made; and (c) grant any extension or other postponements of the time of payment hereof.

21.

Choice of Law: Forum Selection: Consent to Jurisdiction. This Note shall be governed by, construed and interpreted in accordance with the laws of the State of New York (excluding the choice of law rules thereof). Borrower hereby irrevocably submits to the jurisdiction of any New York court or federal court sitting in the State of New York in any action or proceeding arising out of or relating to this Note, and hereby irrevocably waives any objection to the laying of venue of any such action or proceeding in any such court and any claim that any such action or proceeding has been brought in an inconvenient forum. A final judgment in any such action or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment or in any other manner provided by law.

22.

Subsequent Holders. In the event that any holder of this Note transfers this Note for value, Borrower agrees that except with respect to a subsequent holder with actual knowledge of a claim or defense, no subsequent holder of this Note shall be subject to any claims or defenses which Borrower may have against a prior holder (which claims or defenses are not waived as to prior holder), all of which are waived as to the subsequent holder, and that all such subsequent holders shall have all of the rights of a holder in due course with respect to Borrower even though the subsequent holder may not qualify, under applicable law, absent this paragraph, as a holder in due course.

23.

Invalidity of Any Part. If any provision or part of any provision of this Note shall for any reason be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision (or any remaining part of any provision) of this Note, and this Note shall be construed as if such invalid, illegal or unenforceable provision (or part thereof) had never been contained in this Note, but only to the extent of its invalidity, illegality, or unenforceability. In any event, if any such provision pertains to the repayment of the Obligations

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evidenced by this Note, then and in such event, at Bank’s option, the outstanding principal balance of this Note, together with all accrued and unpaid interest thereon, shall become immediately due and payable.

24.

WAIVER OF JURY TRIAL. BORROWER HEREBY (i) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY A JURY, AND (ii) WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH BANK AND BORROWER MAY BE PARTIES ARISING OUT OF, IN CONNECTION WITH OR IN ANY WAY PERTAINING TO THIS NOTE, ANY OF THE LOAN DOCUMENTS AND/OR ANY TRANSACTIONS, OCCURRENCES, COMMUNICATIONS, OR UNDERSTANDINGS (OR THE LACK OF ANY OF THE FOREGOING) RELATING IN ANY WAY TO BORROWER-BANK RELATIONSHIP BETWEEN THE PARTIES. IT IS UNDERSTOOD AND AGREED THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS NOTE. THIS WAIVER OF JURY TRIAL IS SEPARATELY GIVEN, KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY BORROWER AND BORROWER HEREBY AGREES THAT NO REPRE SENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. BANK IS HEREBY AUTHORIZED TO SUBMIT THIS NOTE TO ANY COURT HAVING JURISDICTION OVER THE SUBJECT MATTER AND BORROWER SO AS TO SERVE AS CONCLUSIVE EVIDENCE OF SUCH WAIVER OF RIGHT TO TRIAL BY JURY. BORROWER REPRESENTS AND WARRANTS THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND/OR THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.

25.

Intentionally Omitted.

26.

Prior Note(s). This Note amends, replaces, restates and relates back to the Demand Grid Promissory Note dated January 29, 2009 in the principal amount of $420,000.00 (“Prior Note”), and all sums outstanding under the Prior Note shall be deemed outstanding under this Note as of the date hereof and in the amounts set forth on the Bank’s records.

27.

Indemnification. The Borrower agrees: (i) to pay and reimburse Bank for all of its reasonable and documented out-of-pocket costs and expenses incurred in connection with the preparation and execution of, and any amendment, supplement or modification to, this Note and the other Loan Documents, and the consummation and administration of the transactions contemplated hereby and thereby, including the reasonable fees, disbursements and other charges of internal and external counsel, (ii) to pay and reimburse Bank for reasonable and documented out-of-pocket costs and expenses incurred in connection with the enforcement or preservation of any rights under this Note, Loan Documents and any such other documents, including the reasonable fees, disbursements and other charges of its counsel, whether internal or external, (iii) to pay, indemnify and hold harmless the Bank and its dire ctors, officers and agents (each, an “Indemnified Party” and collectively, “Indemnified Parties”) from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever, including reasonable and documented fees, disbursements and other charges internal or external counsel for all Indemnified Parties in connection with the execution, delivery, enforcement, performance and administration of this Note or the Loan Documents and any such other documents or the use of the proceeds thereof, including any of the foregoing relating to the violation of, noncompliance with or liability applicable to the operations of the Borrower, any of its subsidiaries; provided that the Borrower shall have no obligation hereunder to any Indemnified Party with respect to damages caused directly by the

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gross negligence or willful misconduct of such Indemnified Party as determined by a non-appealable final judgment.

28.

Miscellaneous. Time is of the essence under this Note. The paragraph headings of this Note are for convenience only, and shall not limit or otherwise affect any of the terms hereof. This Note and the other Loan Documents, if any, constitute the entire agreement between the parties with respect to their subject matter and supersede all prior letters, representations, or agreements, oral or written, with respect thereto. No modification, release, or waiver of this Note shall be deemed to be made by Bank unless in writing signed by Bank, and each such waiver, if any, shall apply only with respect to the specific instance involved. No course of dealing or conduct shall be effective to modify, release or waive any provisions of this Note or any of the other Loan Documents. Borrower acknowledges that this Note is an instrument for the payment of money only withi n the meaning of Section 3213 of the New York Civil Practice Law & Rules. This Note shall inure to the benefit of and be enforceable by Bank and Bank’s successors and assigns and any other person to whom Bank may grant an interest in the obligations evidenced by this Note and shall be binding upon and enforceable against Borrower and Borrower’s successors and assigns. Whenever used herein, the singular number shall include the plural, the plural the singular, and the use of the masculine, feminine, or neuter gender shall include all genders.

Borrower:

ELK ASSOCIATES FUNDING CORP.

By: ____________ Gary Granoff _________________

Name: Gary Granoff

Title: President

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*Description of Fee, Charge or Premium*	*Amount*
Audit Confirmation Fee (administrative costs associated with each responses to auditors, accountants and other professionals)	$50.00
Custodial Monitoring Fee (payable $5,000 quarterly)	$20,000 per annum
Field Exam Fee (Annual) (to be paid directly to field examiner)	Actual Fees
Late Payment Premium (imposed after ten days from due date)²	Greater of: (a) 5% of Late Payment Amount; or (b) $200.00
Legal Fee (actual fees for IDB’s counsel, or market rate for IDB’s in-house counsel, for services rendered to and costs incurred by IDB in connection with the review and preparation of loan documents and other banking related services)	$350.00
Overadvance Fee (administrative costs associated with each advance exceeding approved Maximum Credit Amount)	$500.00
Small Item Advances (for each advance under the credit facility that is less than $100,000)	$150.00
Small Item Paydowns (for each principal paydown under the credit facility that is less than $100,000)	$150.00