On January 19, 2012, Ameritrans Holdings LLC and the holder of the Senior Secured Note, dated January 19, 2011, issued by Ameritrans Capital Corp. in favor of Ameritrans Holdings, delivered written notice to the company that an event of default under the Note had occurred and was continuing. Pursuant to the Notice, Ameritrans Holdings declared all outstanding principal, interest, fees and other amounts owed by the Ameritrans Capital under the Note to be immediately due and payable. Based on the occurrence of an event of default under the Note, Ameritrans Holdings also declared an event of default under the Amended and Restated Pledge Agreement, dated May 5, 2011, by and between the Ameritrans Capital and the Ameritrans Holdings. The event of default specified in the Notice relates to the Ameritrans Capital's failure as of June 30, 2011 to maintain a minimum consolidated net asset value equal to at least $4 million, in violation of a covenant contained in the Note. As of the Notice Date, the Ameritrans Capital's outstanding indebtedness under the Note included $1,423,000 million of principal and approximately $29,000 of accrued and unpaid interest, or approximately $1,452,000 in the aggregate. In addition to payment of the Indebtedness, Ameritrans Holdings is seeking reimbursement of costs and expenses related to the execution, delivery, performance, administration and enforcement of the Note and Pledge Agreement in an unspecified amount, which Ameritrans Holdings estimated to be approximately $100,000. Default interest is currently accruing on the Indebtedness at the rate of 14% per annum and will continue to accrue until the company's obligations under the Note are discharged or released.