SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 March
31, 2002
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ____________ to
Commission File Number 0-22153
AMERITRANS CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
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 May 13, 2002: 1,745,600. The number of units, each unit consisting of one
share of Common Stock, one share of 9 3/8% participating preferred stock and one
warrant exercisable into one share of Common Stock, outstanding as of May 13,
2002: 300,000.
AMERITRANS CAPITAL CORPORATION
FORM 10-Q
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements ....................................
Consolidated Balance Sheets as of March 31, 2002
(unaudited) and June 30, 2001.......................................1
Consolidated Statements of Operations --For the Three Months
and Nine Months Ended March 31, 2002 and 2001 (unaudited) ..........3
Consolidated Statements of Cash Flows -- For the Nine
Months Ended March 31, 2002 and 2001 (unaudited) ...................4
Notes to Consolidated Financial Statements ...........................5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations .............................11
PART II. OTHER INFORMATION
Item 5. Other Information ....................................................12
Signatures ........................................................13
-i-
AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 2002 (Unaudited) and June 30, 2001
ASSETS
March 31, 2002 June 30, 2001
-------------- -------------
Loans receivable $ 53,775,908 $ 54,559,970
Less: unrealized depreciation on loans receivable (318,500) (318,500)
------------ ------------
53,457,408 54,241,470
Cash and cash equivalents 738,497 575,229
Accrued interest receivable, net of unrealized
depreciation of $175,000 and $-0-, respectively 1,337,179 985,334
Assets acquired in satisfaction of loans 1,067,367 932,814
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 97,954 101,902
Prepaid expenses and other assets 1,078,048 289,383
------------ ------------
TOTAL ASSETS $ 58,630,663 $ 57,984,869
============ ============
The accompanying notes are an integral part of these financial statements.
-1-
AMERITRANS CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 2002 (Unaudited) and June 30, 2001
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, 2002 June 30, 2001
-------------- -------------
LIABILITIES
Debentures payable to SBA $ 8,880,000 $ 8,880,000
Notes payable, banks 36,300,000 35,550,000
Accrued expenses and other liabilities 373,758 456,316
Accrued interest payable 194,998 291,427
Accrued dividend payable 209,472 --
------------ ------------
TOTAL LIABILITIES 45,958,228 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 (813,284) (678,593)
Accumulated other comprehensive income 14,070 14,070
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 12,672,435 12,807,126
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 58,630,663 $ 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 Nine Months Ended March 31, 2002 and 2001
Three Three Nine Nine
Months Ended Months Ended Months Ended Months Ended
March 31, 2002 March 31, 2001 March 31, 2002 March 31, 2001
-------------- -------------- -------------- --------------
INVESTMENT INCOME
Interest on loans receivable $1,533,452 $1,661,585 $4,433,111 $4,726,996
Fees and other income 104,855 67,983 204,328 225,110
Gain on sale of equity security -- 109,507 -- 121,637
---------- ---------- ---------- ----------
TOTAL INVESTMENT INCOME 1,638,307 1,839,075 4,637,439 5,073,743
---------- ---------- ---------- ----------
OPERATING EXPENSES
Interest 652,857 904,712 2,025,435 2,649,482
Salaries and employee benefits 215,292 236,332 554,741 533,586
Legal fees 84,708 58,985 183,263 139,022
Miscellaneous administrative expenses 281,296 176,451 706,440 630,055
Loss on assets acquired in satisfaction of loans, net 14,494 19,473 64,660 75,242
Directors' fee 6,375 10,500 19,075 10,000
Depreciation in value of loans 161,088 -- 215,931 194,298
Writeoff of Merger Costs -- 413,187 -- 413,187
---------- ---------- ---------- ----------
TOTAL OPERATING EXPENSES 1,416,110 1,819,640 3,769,545 4,644,872
---------- ---------- ---------- ----------
OPERATING INCOME 222,197 19,435 867,894 428,871
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 222,197 19,435 867,894 428,871
---------- ---------- ---------- ----------
INCOME TAXES 6,526 2,652 7,596 10,092
---------- ---------- ---------- ----------
NET INCOME $ 215,671 $ 16,783 $ 860,298 $ 418,779
---------- ---------- ---------- ----------
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 $ 0.1236 $ 0.0096 $ 0.4928 $ 0.2399
========== ========== ========== ----------
- - Diluted $ 0.1236 $ 0.0096 $ 0.4928 $ 0.2399
========== ========== ========== ==========
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 Nine Months Ended March 31, 2002 and 2001
March 31, 2002 March 31, 2001
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 860,298 $ 418,779
----------- ---------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 49,084 49,272
Gain on sale of equity securities (121,637)
Change in assets and liabilities
Accrued interest receivable (351,845) (86,788)
Prepaid expenses and other assets (812,840) 174,785
Accrued expenses and other liabilities (82,558) 44,453
Accrued interest payable (96,429) (118,775)
----------- ---------
TOTAL ADJUSTMENTS (1,294,588) (58,690)
----------- ---------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (434,290) 360,089
----------- ---------
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 704,063 545,323
(Purchase) sales of equity securities (50,025) 218,333
Acquisition of furniture, fixtures and leasehold improvements (20,960) (15,161)
----------- ---------
NET CASH PROVIDED BY INVESTING ACTIVITIES 633,078 748,495
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds (repayments) from notes payable, banks, net 750,000 (550,000)
Dividends paid (785,520) (331,664)
----------- ---------
NET CASH USED IN FINANCING ACTIVITIES $ (35,520) $(881,664)
----------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS $ 163,268 $ 226,920
CASH AND CASH EQUIVALENTS - Beginning 575,229 376,507
----------- ---------
CASH AND CASH EQUIVALENTS - Ending $ 738,497 $ 603,427
=========== =========
Supplemental noncash financing activity:
During the nine months ended March 31, 2002, the Company accrued a
dividend of $209,472.
The accompanying notes are an integral part of these financial statements.
-4-
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 ("the
Company" or "Ameritrans") as of March 31, 2002, the related statements of
operations, and cash flows for the nine months ended March 31, 2002 and March
31, 2001 included in Item 1 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 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 nine months ended March
31, 2002 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.
-5-
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 New
York City, Chicago, 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"), which may engage in similar lending and investment
activities. Since inception, Elk Capital has had no operations and activities.
-6-
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 nine months ended March 31, 2002. These
reclassifications have no effect on previously reported net income.
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 at year end. Common Stock
equivalents have been excluded from the weighted average shares for the three
and nine months ended March 31, 2002 and 2001 as inclusion is anti-dilutive. At
March 31, 2002 the Company has 127,780 options outstanding.
-7-
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 allowance for loan losses and the fair value of financial
instruments.
-8-
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 exchangeed for a similar
productive asset or distributed to owners in spin-off if the carrying amount of
the asset exceeeds 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.
NOTE 2 -- Debentures Payable to SBA
At March 31, 2002 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 March 31, 2002 and June 30, 2001, the Company had loan agreements with
three (3) banks for lines of credit aggregating $40,000,000. At March 31, 2002
and June 30, 2001, the Company had $36,300,000 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 bank's prime rates including
certain fees which make the effective rates approximately prime minus 1/2%. 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.
-9-
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 difference 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 March 31, 2002 and June 30, 2001, the Company had commitments to make
loans totaling approximately $3,231,352 and $547,000, at interest rate 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
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. The Company's Board of Directors also declared a dividend of
$314,208 or $0.18 per share for the quarter ended December 31, 2001, on January
9, 2002 to stockholders of record on January 22, 2002, which was paid January
30, 2002. The Company's Board of Directors declared for the quarter ended March
31, 2002 a dividend of $209,472 or $0.12 per share, on March 15, 2002 to
stockholders of record on March 25, 2002, which was paid on April 5, 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.
Note 6 - Subsequent Event
On April 24, 2002 the Company completed a public offering of 300,000
units, each unit consisting of one share of Common Stock, one share of 9 3/8%
cumulative participating redeemable Preferred Stock, face value $12.00, and one
redeemable Warrant exercisable into one share of Common Stock. Each Warrant
entitles the holder to purchase one share of Common Stock at an exercise price
of $6.70, subject to adjustment, until April 2007. The Warrants may be redeemed
by the Company under certain conditions. The gross proceeds from the sale was
approximately $5,700,000 less costs and commissions of approximately $1,551,000
resulting in net proceeds of approximately $4,149,000. The underwriter may
increase this offering by 45,000 units to cover over-allotments through June 2,
2002. This does not include additional underwriting compensation to be paid by
the Company to the underwriter in the form of an option to purchase up to 30,000
units, each unit consisting of one share of common stock, one share of 9 3/8%
participating preferred stock (face value $12.00) and one warrant to purchase
one share of common stock at an exercise price of $8.40. These units are
exercisable over a five year period commencing April 18, 2003 at an exercise
price of $21.45 per unit.
-10-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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 March 31, 2002 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
regulation as "non-disadvantaged". The Company's primary lending activity is to
originate and service loans collateralized by 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 Nine Months Ended March 31, 2002 and 2001
Total Investment Income
The Company's investment income for the nine months ended March 31, 2002
decreased to $4,637,439 from $5,073,743 or 9% as compared with the nine months
period ended March 31, 2001. 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 portfolio.
Investment income was also reduced because of lower interest rates. The
portfolio was $53,775,908 at March 31, 2002 as compared to $56,435,260 at March
31, 2001.
Operating Expenses
Interest expenses for the nine month period ended March 31, 2002 decreased
$624,047 to $2,025,435 when compared with the nine months ended March 31, 2001.
This decrease was due to lower interest rates charged during the period. Other
operating expenses decreased $272,913 when compared with the nine month period
ended March 31, 2001 due to the termination of a potential merger during the
nine month period ended March 31, 2001. The Company incurred a one time charge
in the amount of $413,187 during the nine month period ended March 31, 2001.
Depreciation in value of loans for the nine month period ended March 31, 2002
was $215,931 as compared to $194,298 in the period ended March 31, 2001.
-11-
Results of Operations
For the Three Months ended March 31, 2002 and 2001
Total investment income
The Company's investment income for the three months ended March 31, 2002
decreased to $1,638,307 from $1,839,075 or 11% for the three month period ended
March 31, 2001. This decrease was mainly due to a decrease in the sales of
equity securities of $109,507 combined with a leveling of the loan portfolio
during the three month period, when compared with the prior period.
Operating Expenses
Interest expense for the three month period ended March 31, 2002 decreased
$251,855 ($652,857 from $904,712) for the similar period ended March 31, 2001.
This decrease was mainly due to lower interest rates on non SBA debt.
Other operating expenses decreased $312,763 when compared with the similar
three month period ended March 31, 2001. This decrease was due to the
termination of a potential merger. The Company incurred a one time charge in the
amount of $413,187 during the three months ended March 31, 2001. Depreciation in
value of loans increased $161,088 when compared with the similar period in the
prior period.
Balance Sheet and Reserves
Total assets increased $645,794 as of March 31, 2002 when compared with
total assets as of June 30, 2001. This increase was due to prepaid costs
incurred in connection with the Company's successful offering, combined with
management's decision to reduce its loan portfolio during period of the economic
recovery and pending the Company's public offering of securities which was
completed April of 2002 and prepaid commitment fee due to an approved increase
of SBA financing. Non SBA bank borrowings during the period were increased by
$750,000.
On April 24, 2002 the Company completed a public offering of 300,000
units, each unit consisting of one share of Common Stock, one share of 9 3/8%
cumulative participating redeemable Preferred Stock, face value $12.00, and one
redeemable Warrant exercisable into one share of Common Stock. Each Warrant
entitles the holder to purchase one share of Common Stock at an exercise price
of $6.70, subject to adjustment, until April 2007. The Warrants may be redeemed
by the Company under certain conditions. The gross proceeds from the sale was
approximately $5,700,000 less costs and commissions of approximately $1,551,000
resulting in net proceeds of approximately $4,149,000. The underwriter may
increase this offering by 45,000 units to cover over-allotments through June 2,
2002. This does not include additional underwriting compensation to be paid by
the Company to the underwriter in the form of an option to purchase up to 30,000
units, each unit consisting of one share of common stock, one share of 9 3/8%
participating preferred stock (face value $12.00) and one warrant to purchase
one share of common stock at an exercise price of $8.40. These units are
exercisable over a five year period commencing April 18, 2003 at an exercise
price of $21.45 per unit.
PART II. OTHER INFORMATION
Item 5. Other Information
On April 24, 2002 the Company completed a public offering of 300,000
units, each unit consisting of one share of Common Stock, one share of 9 3/8%
cumulative participating redeemable Preferred Stock, face value $12.00, and one
redeemable Warrant exercisable into one share of Common Stock. Each Warrant
entitles the holder to purchase one share of Common Stock at an exercise price
of $6.70, subject to adjustment, until April 2007. The Warrants may be redeemed
by the Company under certain conditions. The gross proceeds from the sale was
approximately $5,700,000 less costs and commissions of approximately $1,551,000
resulting in net proceeds of approximately $4,149,000. The underwriter may
increase this offering by 45,000 units to cover over-allotments through June 2,
2002. This does not include additional underwriting compensation to be paid by
the Company to the underwriter in the form of an option to purchase up to 30,000
units, each unit consisting of one share of common stock, one share of 9 3/8%
participating preferred stock (face value $12.00) and one warrant to purchase
one share of common stock at an exercise price of $8.40. These units are
exercisable over a five year period commencing April 18, 2003 at an exercise
price of $21.45 per unit.
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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: May 15, 2002 By: /s/ Gary C. Granoff
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Gary C. Granoff
Chief Financial Officer
(Principal Financial Officer and
Chief Accounting Officer)
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