Ameritrans Capital Corporation is a specialty finance company engaged in making loans to and investments in small businesses. Ameritrans Capital Corp. has a market cap of $2.61 million; its shares were traded at around $0.86 with and P/S ratio of 0.42.
Highlight of Business Operations:Professional fees increased $1,022,958 or 130% when compared with the prior year. The increase was due to increases of accounting fees of $165,038 for an out sourced controller, consulting fees related to compliance with Sarbanes Oxley of $161,170, audit and audit related fees of $103,212, consulting fees of $142,758 related to portfolio investments, non related party legal fees of $465,247 largely due to the write off of certain prepaid offering expenses and prepaid fee expenses totaling $247,130 as well as additional legal fees in connection with life settlement related matters of $83,708. These increases were partially offset by decreases in related party legal fees of $28,973 and decreases in legal fees related to Chicago medallion loans of $69,559.
Miscellaneous administrative expenses decreased $138,282 or 15% when compared with the prior year. This decrease in administrative expenses was due to the following reductions: permits of $6,000, bank audit fees of $4,000, commissions of $3,000, outside help of $50,000, recruitment fees of $29,000, service fees of $88,000, filing fees of $4,000, association dues of $11,000, application fees of $25,000, messenger service of $6,000, investor relation fees of $3,000, and custodial fees of $17,000. These decreases were partially offset by increases in foreclosure expenses of $14,000., Market data fees of $22,000, advertising and promotion fees of $8,200, NASDAQ fees of $14,000, website and computer fees of $19,000, and miscellaneous fees of $31,400.
The components of realized gains and losses were as follows: A loss of approximately ($605,000) related to the sale of the Companys interest in a sanitary ware distributor, a loss of approximately ($340,000) associated with the sale of the Companys taxicab medallion portfolio, the loss of approximately ($94,000) associated with the foreclosure and sale of a commercial loan, the loss of approximately ($70,000) associated with the foreclosure and sale of the collateral associated with a commercial loan, and other miscellaneous losses of approximately ($175,000). Offsetting these amounts was approximately $45,000 associated with the reversal of certain reserves for assets acquired which were subsequently sold.
An unrealized write-down of $1,095,408 in the Companys life settlement portfolio was the largest component of unrealized depreciation. Other significant factors were a write-down of the fair value of a loan receivable of $250,000 to reflect the Companys estimate of its recoverable value in the collateral underlying the loan, a $195,000 decrease in the fair value of a loan to reflect the actual recovery achieved on that loan following the resale of the property subsequent to June 30, 2009. Also contributing to unrealized depreciation was a $95,000 reduction in the value of the Companys LLC interest in a condominium construction project, a $62,000 net reduction in the fair value of the various real estate limited partnership investments. Offsetting these items was approximately $410,000 of investment value that was reclassified as realized losses.
The Net Realized Gain on Investments of $205,000 was a reduction of $106,000 as compared to June 30, 2007. The net realized gains were comprised of a gain on the sale of an equity investment in a medallion loan for a gain of approximately $555,000, a gain on a sale of a real estate investment of approximately $25,000, offset by a loss on a real estate equity investment of $335,000 and a realized loss on interest of $40,000.
Total assets decreased by $33,695,312 as of June 30, 2009 when compared to total assets as of June 30, 2008. This decrease was primarily due to a decrease in the investments at fair value of $33,188,819, which is primarily attributable to the sale of medallion loans, and to a lesser extent, payoffs and settlements in excess of new loans, and declines in fair value of certain investments during the fiscal year. Prepaid expenses decreased $586,794, primarily due to the Company expensing costs related to prepaid stock offering costs and costs associated with the pending sale agreement of the Companys medallion loans receivable. The sale of substantially all of the medallion loans during the fiscal year resulted in proceeds of approximately $29,000,000. In addition, Elks proceeds from banks for the fiscal year were $472,000 versus approximately $28,000,000 in repayments made on notes payable from banks. This resulted in net decrease of $27,725,697 in short-term bank borrowings for the fiscal year ended June 30, 2009, which was funded from the proceeds of the medallion loan portfolio sale.
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