REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

      The information contained in this report shall not be deemed
"soliciting material" or to be "filed" with the Securities and
Exchange Commission, nor shall such information be incorporated by
reference into any future filings by Ameritrans Capital Corporation
(the "Company") under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent
that the Company specifically incorporates it by reference in such
filing.

      Audit Committees play a critical role in the financial
reporting system by overseeing and monitoring management's and the
independent auditors' participation in the financial reporting
process.  As such, we are providing this fiscal report to
shareholders to help inform them of this process and the activities
of the Audit Committee in the past year.  The Audit Committee of the
Board of Directors (the "Board") is composed of three (3),
non-management, independent directors selected by the Board.  The
Audit Committee's financial expert is John Laird.  On September 27,
2004, the members of the Audit Committee reviewed the existing Audit
Committee Charter (the "Charter") and adopted a revised Charter
outlining the Audit Committee's role and responsibilities.
Shareholders may obtain a copy of this Charter, without charge, by
making a written request to the Company at 747 Third Avenue, New
York, New York 10017, or by visiting our website at
www.ameritranscapital.com.

      The Audit Committee serves as the representative of the Board
of Directors for general oversight of the Company's financial
accounting and reporting process, system of internal control, audit
process, and process for monitoring compliance with laws and
regulations and the Company's standards of business conduct.  The
Company's management has primary responsibility for preparing the
Company's financial statements and the Company's financial reporting
process.  The Company's independent accountants, Rosen Seymour
Shapss Martin & Company LLP ("RSSM"), are responsible for expressing
an opinion on the conformity of the Company's audited financial
statements to generally accepted accounting principles.

      In this context, the Audit Committee hereby reports as follows:

                    1.    The Audit Committee has reviewed and
        discussed the audited financial statements with the
        Company's management, including a discussion of the
        quality and acceptability of the accounting principles,
        the reasonableness of significant judgments, and the
        clarity of the disclosures in the financial statements.
        In addressing the clarity of the disclosures in the
        financial statements, specific sections in the financials
        s including the Loans Receivable and Equity Securities
        sections were revised aesthetically, for ease and clarity
        for the reader.

                    2.    The Audit Committee has discussed with
        the independent accountants and management the matters
        required to be discussed by SAS 61, as amended or
        supplemented.

                    3.    The Audit Committee has received the
        written disclosures and the letter from the independent
        accountants required by Independence Standards Board
        Standard No. 1, as amended or supplemented, and has
        discussed the independence of the independent accountants.

                    4.    Based on the review and discussion
        referred to in paragraphs (1) through (3) above, the Audit
        Committee approved the inclusion of the audited financial
        statements in the Company's Annual Report on Form 10-K for
        the fiscal year ended June 30, 2004 for filing with the
        Securities and Exchange Commission.

                      Respectfully Submitted:

                      Paul Creditor, Chairman
                      Howard Sommer, Director
                        John Laird, Director