SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the Quarterly Period Ended December 31, 2001
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ____________ to
____________
Commission File Number 0-22153
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AMERITRANS CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 52-2102424
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
747 Third Avenue
Fourth Floor
New York, New York 10017
(Address of Registrant's (Zip Code)
principal executive office)
Registrant's telephone number, including area code: (800) 214-1047
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 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 [X] No [ ]
The number of shares of Common Stock, par value $.0001 per share,
outstanding as of February 13, 2002: 1,745,600
AMERITRANS CAPITAL CORPORATION
FORM 10-Q
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of December 31, 2001
(unaudited) and June 30, 2001 ................................. 1
Consolidated Statements of Operations -- For the Three Months
and Six Months Ended December 31, 2001 and 2000 (unaudited) ... 3
Consolidated Statements of Cash Flows -- For the Six
Months Ended December 31, 2001 and 2000 (unaudited) ........... 4
Notes to Consolidated Financial Statements ...................... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ............................. 10
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders ............... 11
Item 5. Other Information ................................................. 11
Item 6. Exhibits and Reports on Form 8-K .................................. 11
Signatures ........................................................ 12
-ii-
AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2001 (Unaudited) and June 30, 2001
ASSETS
December 31, 2001 June 30, 2001
------------------ -------------
Loans receivable ................................... $ 55,653,678 $ 54,559,970
Less: unrealized depreciation on loans receivable .. (318,500) (318,500)
------------ ------------
55,335,178 54,241,470
Cash and cash equivalents .......................... 398,492 575,229
Accrued interest receivable ........................ 1,225,529 985,334
Assets acquired in satisfaction of loans ........... 1,000,751 932,814
Receivables from debtors on sales of assets acquired
in satisfaction of loans ....................... 367,271 421,823
Equity securities .................................. 486,939 436,914
Furniture, fixtures and leasehold improvements, net 95,463 101,902
Prepaid expenses and other assets .................. 573,413 289,383
------------ ------------
TOTAL ASSETS ................... $ 59,483,036 $ 57,984,869
============ ============
The accompanying notes are an integral part of these financial statements.
-1-
AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2001 (Unaudited) and June 30, 2001
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, 2001 June 30, 2001
------------------ -------------
LIABILITIES
Debentures payable to SBA .......................... $ 8,880,000 $ 8,880,000
Notes payable, banks ............................... 36,970,000 35,550,000
Accrued expenses and other liabilities ............. 383,762 456,316
Accrued interest payable ........................... 268,833 291,427
----------- -----------
TOTAL LIABILITIES ............................. 46,502,595 45,177,743
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $.0001 par value: 5,000,000 shares
authorized; 1,745,600 shares issued and outstanding, 175 175
Additional paid-in-capital ......................... 13,471,474 13,471,474
Accumulated deficit ................................ (505,278) (678,593)
Accumulated other comprehensive income ............. 14,070 14,070
----------- -----------
TOTAL STOCKHOLDERS' EQUITY .................... 12,980,441 12,807,126
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .... $59,483,036 $57,984,869
=========== ===========
The accompanying notes are an integral part of these financial statements.
-2-
AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months and Six Months Ended December 31, 2001 and 2000
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
December 31, 2001 December 31, 2000 December 31, 2001 December 31, 2000
----------------- ----------------- ----------------- -----------------
INVESTMENT INCOME
Interest on loans receivable $1,420,029 $ 1,517,066 $2,899,659 $ 3,065,411
Fees and other income 53,772 81,144 92,691 157,127
Gain on sale of equity security -- 12,130 6,782 12,130
---------- ----------- ---------- -----------
TOTAL INVESTMENT INCOME 1,473,801 1,610,340 2,999,132 3,234,668
---------- ----------- ---------- -----------
OPERATING EXPENSES
Interest 631,643 824,650 1,372,578 1,744,770
Salaries and employee benefits 184,867 155,760 339,449 297,254
Legal fees 52,468 41,746 98,555 80,037
Miscellaneous administrative expenses 224,257 227,434 425,144 453,604
Loss on assets acquired in
satisfaction of loans, net 12,720 41,181 50,166 55,769
Directors' fee 8,250 (750) 12,700 (500)
Depreciation in value of loans 36,521 -- 54,843 194,298
---------- ----------- ---------- -----------
TOTAL OPERATING EXPENSES 1,150,726 1,290,021 2,353,435 2,825,232
---------- ----------- ---------- -----------
OPERATING INCOME 323,075 320,319 645,697 409,436
---------- ----------- ---------- -----------
INCOME BEFORE INCOME TAXES 323,075 320,319 645,697 409,436
---------- ----------- ---------- -----------
INCOME TAXES -- 6,074 1,070 7,440
---------- ----------- ---------- -----------
NET INCOME $ 323,075 $ 314,245 $ 644,627 $ 401,996
---------- ----------- ---------- -----------
WEIGHTED AVERAGE SHARES OUTSTANDING
- - Basic 1,745,600 1,745,600 1,745,600 1,745,600
========== =========== ========== ===========
- - Diluted 1,745,600 1,745,600 1,745,600 1,745,600
========== =========== ========== ===========
NET INCOME PER COMMON SHARE
- - Basic $ 0.1851 $ 0.1800 $ 0.3693 $ 0.2303
========== =========== ========== -----------
- - Diluted $ 0.1851 $ 0.1800 $ 0.3693 $ 0.2303
========== =========== ========== ===========
The accompanying notes are an integral part of these financial statements
-3-
AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Six Months Ended December 31, 2001 and 2000
December 31, 2001 December 31, 2000
----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 644,627 $ 401,996
----------- ---------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 16,574 18,891
Change in operating assets and liabilities
Accrued interest receivable (240,195) 24,901
Prepaid Expenses and other assets (284,030) (292,659)
Accrued expenses and other liabilities (72,557) 60,054
Accrued Interest payable (22,594) (71,559)
----------- ---------
TOTAL ADJUSTMENTS (602,802) (260,372)
----------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 41,825 141,624
----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in loans receivable, assets acquired in
satisfaction of loans and receivables from debtors on
sales of assets acquired in satisfaction of loans (1,107,090) 828,000
(Purchase) sales of equity securities (50,025) 71,802
Acquisition of furniture, fixtures and leasehold improvements (10,135) (2,947)
----------- ---------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (1,167,250) 896,855
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds (repayments) from notes payable, banks, net 1,420,000 (800,000)
Dividends paid (471,312) --
----------- ---------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES $ 948,688 $(800,000)
----------- ---------
The accompanying notes are an integral part of these financial statements
-4-
AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Six Months Ended December 31, 2001 and 2000
December 31, 2001 December 31, 2000
----------------- -----------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS $ (176,737) $ 238,479
CASH AND CASH EQUIVALENTS - Beginning 575,229 376,507
----------- ---------
CASH AND CASH EQUIVALENTS - Ending $ 398,492 $ 614,986
=========== =========
The accompanying notes are an integral part of these financial statements
-5-
AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- Organization and Summary of Significant Accounting Policies
Financial Statements
The consolidated balance sheet of Ameritrans Capital Corporation
("Ameritrans" or the "Company") as of December 31, 2001, the related statements
of operations, and cash flows for the six months ended December 31, 2001 and
December 31, 2000 included in Item 1 have been prepared by the Company, without
audit, pursuant to the rules and regulations of the Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. In the opinion of
management, the accompanying consolidated financial statements include all
adjustments (consisting of normal, recurring adjustments) necessary to summarize
fairly the Company's financial position and results of operations. The results
of operations for the six months ended December 31, 2001 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, 2001 as filed with the
Commission.
Organization and Principal Business Activity
Ameritrans, a Delaware corporation, acquired all of the outstanding shares
of Elk Associates Funding Corporation ("Elk") on December 16, 1999 in a share
for share exchange. Prior to the acquisition, Elk had been operating
independently and Ameritrans had no operations. The historical financial
statements prior to December 16, 1999 were those of Elk.
Elk, a New York corporation, is licensed by the Small Business
Administration ("SBA") to operate as a small Business Investment Company
("SBIC") under the Small Business Investment Act of 1958, as amended. Elk has
also registered as an investment company under the Investment Company Act of
1940 to make business loans.
Ameritrans is a specialty finance company that through its subsidiary, Elk,
makes loans to taxi owners to finance the acquisition and operation of the
medallion taxi businesses and related assets, and to other small businesses in
the Chicago, New York City, Miami, and Boston markets.
Basis of Consolidation
The consolidated financial statements include the accounts of Ameritrans,
Elk and EAF Holding Corporation ("EAF"), a wholly owned subsidiary of Elk,
collectively referred to as the "Company". All significant inter-company
transactions have been eliminated in consolidation.
EAF was formed in June 1992 and began operations in December 1993. The
purpose of EAF is to own and operate certain real estate assets acquired in
satisfaction of loans by Elk.
Ameritrans organized another subsidiary on June 8, 1998, Elk Capital
Corporation ("Elk Capital"). Elk Capital may engage in similar lending and
investment activities. Since inception, Elk Capital has had no operations and
activities.
Reclassifications
Certain amounts in the prior financial statements have been reclassified
for comparative purposes to conform with the presentation in the financial
statements for the three and six months ended December 31, 2001. These
reclassifications have no effect on previously reported net income.
-6-
Income Taxes
The Company has elected to be taxed as a Regulated Investment Company under
the Internal Revenue Code. A Regulated Investment Company will generally not be
taxed at the corporate level to the extent its income is distributed to its
stockholders. In order to be taxed as a Regulated Investment Company, the
Company must pay at least 90 percent of its net investment company taxable
income to its stockholders as well as meet other requirements under the Code. In
order to preserve this election for fiscal 2002, the Company intends to make the
required distributions to its stockholders in accordance with applicable tax
rules.
Net Income per Share
During the year ended June 30, 1999, the Company adopted the provision of
Statements of Financial Accounting Standards No. 128 "Earnings per Share" ("SFAS
No. 128"). SFAS No. 128 eliminates the presentation of primary and fully
dilutive earnings per share ("EPS") and requires presentation of basic and
diluted EPS. Basic EPS is computed by dividing income (loss) available to common
stockholders by the weighted-average number of common shares outstanding for the
period. Diluted EPS is based on the weighted-average number of shares of common
stock and common stock equivalents outstanding during the period. Common Stock
equivalents have been excluded from the weighted average shares for the three
and six months ended December 31, 2001 and 2000 as inclusion is anti-dilutive.
At December 31, 2001 the Company had 127,780 options outstanding.
Loans Valuations
The Company's loans are recorded at fair value. Since no ready market
exists for those loans, the fair value is determined in good faith by the Board
of Directors. In determining the fair value, the Company and Board of Directors
consider factors such as the financial condition of the borrower, the adequacy
of the collateral, individual credit risks, historical loss experience and the
relationships between current and projected market rates and portfolio rates of
interest and maturities. To date, fair value of the loans has been determined to
approximate cost less unrealized depreciation and no loans have been recorded
above cost. The unrealized depreciation has generally been caused by specific
events related to credit risk.
Use of Estimates in the Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make 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 change relate to the
determination of the fair value of financial instruments.
New Accounting Pronouncements
The Financial Accounting Standards Board ("FASB") has issued Statement No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets" in August
2001. Statement No. 144 changes the accounting for long-lived assets to be held
and used by eliminating the requirement to allocate goodwill to long-lived
assets to be tested for impairment, by providing a probability weighted cash
flow estimation approach to deal with situations in which alternative courses of
action to recover the carrying amount of possible future cash flows and by
establishing a "primary-asset" approach to determine the cash flow estimation
period for a group of assets and liabilities that represents the unit of
accounting for long-lived assets to be held and used. Statement No. 144 changes
the accounting for long-lived assets to be disposed of other than by sale by
requiring that the depreciable life of a long-lived asset to be abandoned be
revised to reflect a shortened useful life and by requiring that an impairment
loss to be recognized at the date a long-lived asset is exchanged for a similar
productive asset or distributed to owners in spin-off if the carrying amount of
the asset exceeds its fair value. Statement No. 144 changes the accounting for
long-lived assets to be disposed of by sale by requiring that discontinued
operations no longer be recognized on a net realizable value basis (but at the
lower of carrying amount or fair value less costs to sell), by eliminating the
recognition of future operating losses of discontinued components before they
occur and by broadening the presentation of discontinued operations in the
income statement to include a component of an entity rather than a segment of a
business. A component of an entity comprises operations and cash flows that can
be clearly distinguished, operationally, and for financial reporting purposes,
from the rest of the entity. The effective date for Statement No. 144 is for
fiscal years beginning after December 15, 2001.
The Company expects that the adoption of the new statement will not have a
significant impact on its financial statements. It is not possible to quantify
the impact until the newly issued statement has been studied.
-7-
NOTE 2 -- Debentures Payable to SBA
At December 31, 2001 and June 30, 2001 debentures payable to the SBA
consist of subordinated debentures with interest payable semiannually, as
follows:
Current
Effective Principal
Issue Date Due Date Interest Rate Amount
---------- -------- ------------- ------
September 1993 September 2003 6.12(1) $1,500,000
September 1993 September 2003 6.12 2,220,000
September 1994 September 2004 8.20 2,690,000
December 1995 December 2005 6.54 1,020,000
June 1996 June 2006 7.71 1,020,000
March 1997 March 2007 7.38(2) 430,000
----------
$8,880,000
==========
- ----------
(1) Interest rate was 3.12% from inception through September 1998.
(2) The Company is also required to pay an additional annual user fee of 1% on
this debenture.
Under the terms of the subordinated debentures, the Company 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.
NOTE 3 -- Notes Payable to Banks
At December 31, 2001 and June 30, 2001 the Company had loan agreements with
three (3) banks for lines of credit aggregating $40,000,000. At December 31,
2001 and June 30, 2001, the Company had $36,970,000 and $35,550,000
respectively, outstanding under these lines. The loans, which mature through
June 2002, bear interest based on the Company's choice of the lower of either
the reserve adjusted LIBOR rate plus 150 basis points or the banks' prime rates
including certain fees which make the effective rates approximately prime minus
1 1/2% as of December 31, 2001. Upon maturity, the Company anticipates extending
the lines of credit for another year, as has been the practice in previous
years. Pursuant to the terms of the agreements the Company is required to comply
with certain terms, covenants and conditions. The Company pledged its loans
receivable and other assets as collateral for the above lines of credit.
-8-
NOTE 4 -- Commitments and Contingencies
Interest Rate Swap
In October 1998, the Company entered into a $5,000,000 interest rate Swap
transaction with a bank expiring on October 8, 2001 and was not renewed. On June
11, 2001, the Company entered into an additional interest rate Swap transaction
with the same bank for $10,000,000 expiring on June 11, 2002. On June 11, 2001,
the Company entered into another interest rate Swap transaction for $15,000,000
with this bank expiring June 11, 2003. These Swap transactions were entered into
to protect the Company from an upward movement in interest rates relating to
outstanding bank debt (see Note 3 for terms and effective interest rates). These
Swap transactions call for a fixed rate of 4.95%, 4.35% and 4.95%, respectively,
for the Company and if the floating one month LIBOR rate is below the fixed rate
then the Company is obligated to pay the bank for the difference in rates. When
the one-month LIBOR rate is above the fixed rate then the bank is obligated to
pay the Company for the differences in rates. The effective fixed costs on the
outstanding bank debt that was swapped, including the 150 basis points, is
6.45%, 5.85% and 6.45%, respectively.
Loan Commitments
At December 31, 2001 and June 30, 2001 the Company had commitments to make
loans totaling approximately $1,789,924 and $547,000, respectively, at interest
rates ranging from 8.25% to 18%.
Employment Agreements
During November 2001, the Company entered into an employment agreement with
an executive effective as of July 1, 2001, whereby the Company would pay a
minimum of $240,000 plus a discretionary bonus and annual increases. This
employment agreement terminates on July 1, 2006 but will be automatically
renewed for an additional five (5) years unless either the Company or the
executive gives notice of non-renewal. During November 2001, the Company also
entered into a consulting agreement with this executive as of July 1, 2001,
whereby based on early termination of the employment agreement the Company would
pay a consulting fee for the term of the consulting agreement of a minimum of
one-half of the executive's base salary in effect at the termination date of the
employment agreement.
During November 2001 and January 2002, the Company entered into employment
agreements with five executives, whereby the Company would pay a minimum
aggregate of $380,900 per annum plus a discretionary bonus and annual increases.
These employment agreements terminate through January 1, 2007, but will be
automatically renewed for an additional five (5) years unless either the Company
or the executives gives notice of non-renewal.
NOTE 5 -- Other Matters
On December 21, 2001 the Company filed pre-effective amendment No. 2 to its
registration statement on Form N-2. The registration statement covers the
proposed sale of 325,000 units to the public, which may be increased by the
underwriters by 48,750 units to cover over-allotments. Each unit consists of (i)
one share of common stock; (ii) one share of 9 3/8% cumulative participating
preferred stock (face value $12.00); and (iii) one redeemable warrant
exercisable into one share of common stock at an exercise price of $7.00,
subject to adjustment, until 2007. The units will be offered for sale at a price
between $18.00 and $20.00 per unit. The gross proceeds from the offering should
be approximately $6,175,000. However there can be no assurance that the offering
will be completed. Prepaid offering costs as of December 31, 2001 were
approximately $465,000 which is included in prepaid expenses and other assets.
Quarterly Dividend
The Company's Board of Directors declared for the quarters ended June 30,
2001 and September 30, 2001 a total dividend of $471,312, or $0.27 per share, on
October 11, 2001 to stockholders of record on October 22, 2001, which was paid
October 30, 2001.
NOTE 6 -- Subsequent Events
Quarterly Dividend
The Company's Board of Directors declared for the quarter ended December
31, 2001 a dividend of $314,208, or $0.18 per share, on January 9, 2002 to
stockholders of record on January 22, 2002, which was paid on January 30, 2002.
SBA Commitment
During January 2002 the Company and the SBA entered into an agreement
whereby the SBA committed to reserve debentures in the amount of $12,000,000 to
be issued by the Company on or prior to September 30, 2006. A 2% leverage fee
will be deducted pro rata as the commitment proceeds are drawn down, of which a
$120,000 non-refundable fee has been paid by the Company.
-9-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information contained in this section should be used in conjunction
with the consolidated Financial Statements and Notes therewith appearing in this
report Form 10-Q and the Company's Annual Report on Form 10-K for the year ended
June 30, 2001.
General
Ameritrans acquired Elk on December 16, 1999 in a share-for share exchange.
As of December 31, 2001 Ameritrans had no separate operations. Elk is licensed
by the Small Business Administration (SBA) to operate as a Small Business
Investment Company (SBIC) under the Small Business Investment Act of 1958, as
amended. The Company has also registered as an investment company under the
Investment Company Act of 1940.
The Company primarily makes loans and investments to persons who qualify
under SBA regulation as socially or economically disadvantaged and loans and
investments to entities which are at least 50% owned by such persons. The
Company also makes loans and investments to persons who qualify under SBA
regulations as non-disadvantaged. The Company's primary lending activity is to
originate and service loans collateralized by Chicago, New York City, Boston,
Chicago and Miami Taxicab Medallions. The Company also makes loans and
investments in other diversified businesses.
Results of Operations For the Six Months Ended December 31, 2001 and 2000
Total Investment Income
The Company's investment income for the six months ended December 31, 2001
decreased to $2,999,132 from $3,234,668 or 7% as compared with the six months
ended December 31, 2000. This decrease was mainly due to leveling of the
portfolio due to the economic environment and the fact that the Company was more
than 90% drawn on its available bank credit lines. As a result, the Company
began to slowdown expansion in its Chicago medallion and diversified loan
portfolio. Investment income was also reduced because of lower interest rates.
The portfolio was $55,653,678 at December 31, 2001 vs $56,159,543 at December
31, 2000.
Operating Expenses
Interest expenses for the six month period ended December 31, 2001
decreased $372,192 to $1,372,578 when compared with the six months ended
December 31, 2000. This decrease was due to lower interest rates charged during
the period. Other operating expenses increased $39,850 mainly due to increase in
payroll costs during the current year. Depreciation in value of loans for the
six month period ended December 31, 2000 was $194,298 vs $54,843 in the current
period ended December 31, 2001.
Results of Operations
For the Three Months ended December 31, 2001 and 2000
Total investment income
The Company's investment income for the three months ended December 31,
2001 decreased to $1,473,801 from $1,610,340 or 8% for the three month period
ended December 31, 2000. This decrease was mainly due to a decrease in other
fees ($27,372) combined with a decrease in the loan portfolio during the three
month period, when compared with the prior year.
Operating Expenses
Interest expense for the three month period ended December 31, 2001
decreased $193,007 ($631,643 from $824,650) for the similar period ended
December 31, 2000. This decrease was mainly due to lower interest rates on non
SBA debt.
Other operating expenses increased $17,191 when compared with the similar
three month period ended December 31, 2000. This increase was mainly due to an
increase in payroll costs and legal fees. Depreciation in value of loans
increased $36,521 when compared with the similar period in the prior year.
Balance Sheet and Reserves
Total assets increased $1,498,167 as of December 31, 2001 when compared
with total assets as of June 30, 2001. This increase was due to management's
decision to increase its loan portfolio in anticipation of the economic recovery
and anticipated increase of SBA financing. Non SBA bank borrowings during the
period were increased by $1,420,000.
On January 31, 2001, the Company terminated the Agreement and Plan of
Merger with Medallion Financial Corp. The termination resulted in a charge of
approximately $425,000 in the quarter ended March 31, 2001.
-10-
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
On January 18, 2002, subsequent to the period covered by this report, the
Company held its Annual Meeting of Shareholders. At the meeting the following
matters were voted upon by the shareholders:
1. Gary C. Granoff, Ellen M. Walker, Lee A. Forlenza, Marvin Sabesan, Steven
Etra, Paul Creditor, Allen Kaplan, John R. Laird and Howard F. Sommer were
elected directors to serve until the next Annual Meeting and until their
successors are chosen and qualified.
The votes received by each are as follows:
Votes For Votes Withheld
--------- --------------
Gary C. Granoff 1,404,328 300
Ellen M. Walker 1,404,328 300
Lee A. Forlenza 1,404,328 300
Marvin Sabesan 1,404,328 300
Steven Etra 1,404,328 300
Paul Creditor 1,404,328 300
Allen Kaplan 1,404,328 300
John Laird 1,404,328 300
Howard Sommer 1,404,328 300
2. Marcum & Kliegman, LLP was approved as the Company's independent public
accountants for the fiscal year ended June 30, 2002.
FOR AGAINST ABSTAIN
--- ------- -------
1,401,428 3,200 0
3. The shareholders approved an amendment to the Company's 1999 Employee Stock
Option Plan, which increased the number of shares authorized under the plan.
FOR AGAINST ABSTAIN NOT VOTED
--- ------- ------- ---------
1,228,809 31,352 0 144,467
4. The shareholders approved an amendment to the Company's 1999 Non-Employee
Director Stock Option Plan, which increased the number of shares authorized
under the plan and established automatic grants of options to directors
re-elected to the board of directors. The amendment to the plan is still subject
to the approval of the Securities and Exchange Commission.
FOR AGAINST ABSTAIN NOT VOTED
--- ------- ------- ---------
1,229,809 30,352 0 144,467
5. Both a majority of the shareholders, or 1,210,444 shares, and a majority of
the non-affiliate shareholders, or 493,246 shares, approved a proposal
authorizing the Company to sell shares of its Common Stock at prices below the
stock's current net asset value.
The votes received by all shareholders were as follows:
FOR AGAINST ABSTAIN NOT VOTED
--- ------- ------- ---------
1,210,444 49,717 0 144,467
6. The shareholders approved a proposal authorizing the Company to issue
warrants convertible into shares of the Company's Common Stock.
FOR AGAINST ABSTAIN NOT VOTED
--- ------- ------- ---------
1,241,392 14,269 4,500 144,467
Item 5. Other Information
On December 21, 2001 the Company filed pre-effective amendment No. 2 to its
registration statement on Form N-2. The registration statement covers the
proposed sale of 325,000 units to the public, which may be increased by the
underwriters by 48,750 units to cover over-allotments. Each unit consists of (i)
one share of common stock; (ii) one share of 9 3/8% cumulative participating
preferred stock (face value $12.00); and (iii) one redeemable warrant
exercisable into one share of common stock at an exercise price of $7.00,
subject to adjustment, until 2007. The units will be offered for sale at a price
between $18.00 and $20.00 per unit.
ITEM 6 -- Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Employment agreement entered into between the Company, Elk Associates
Funding Corporation and Silvia Mullens dated as of January 1, 2002.
10.2 Employment agreement entered into between the Company, Elk Associates
Funding Corporation and Margaret Chance dated as of January 1, 2002.
(b) Reports on Form 8-K.
On November 20, 2001 the Company filed a current report on 8-K reporting
under Item V (Other Events) that the Company on or about October 30, 2001
distributed to its shareholders the Company's privacy policy statement.
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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
Date: February 14, 2002 By: /s/ Gary C. Granoff
-------------------
Gary C. Granoff
Chief Financial Officer
(Principal Financial Officer and
Chief Accounting Officer)
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