##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2010
 OR
 o
    
    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: 0-26906
 ASTA FUNDING, INC.
  Delaware
    
    22-3388607(State or other jurisdiction
    
    (IRS Employerof incorporation or organization)
    
    Identification No.)210 Sylvan Ave., Englewood Cliffs, New Jersey
    
    07632(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number: (201) 567-5648
  þ o
 Yes o No o
   Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company oDo not check if a smaller reporting company)
 o þ




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##### 



ASTA FUNDING, INC. AND SUBSIDIARIES INDEX TO FORM 10-Q
 Part I. Financial Information
    
    
    3Item 1. Financial Statements
    
    
    3Condensed Consolidated Balance Sheets as of June 30, 2010 (unaudited) and September 30, 2009
    
    
    3Condensed Consolidated Statements of Operations for the three and nine month periods ended June 30, 2010 and 2009 (unaudited)
    
    
    4Condensed Consolidated Statement of Stockholders Equity for the nine month period ended June 30, 2010 (unaudited)
    
    
    5Condensed Consolidated Statements of Cash Flows for the nine month periods ended June 30, 2010 and 2009 (unaudited)
    
    
    6Notes to Condensed Consolidated Financial Statements (unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    27Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    37Item 4. Controls and Procedures
    
    
    37Part II. Other Information
    
    
    38Item 1. Legal Proceedings
    
    
    38Item 1A Risk Factors
    
    
    38Item 2. Unregistered Sale of Equity Securities and Use of Proceeds
    
    
    38Item 3. Defaults Upon Senior Securities
    
    
    38Item 4. (Removed and reserved)
    
    
    38Item 5. Other Information
    
    
    38Item 6. Exhibits
    
    
    38Signatures
    
    
    39Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 ASTA FUNDING, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 June 30,
    
    
    September 30,2010
    
    
    2009(Unaudited)ASSETSCash and cash equivalents
    
    $
    77,996,000
    
    
    $
    2,385,000Restricted cash
    
    
    1,646,000
    
    
    
    2,130,000Consumer receivables acquired for liquidation (at net realizable value)
    
    
    164,953,000
    
    
    
    208,261,000Due from third party collection agencies and attorneys
    
    
    3,095,000
    
    
    
    2,573,000Prepaid and income taxes receivable
    
    
    
    
    
    
    47,727,000Investment in venture
    
    
    94,000
    
    
    
    168,000Furniture and equipment, net
    
    
    363,000
    
    
    
    538,000Deferred income taxes
    
    
    17,891,000
    
    
    
    24,072,000Other assets
    
    
    3,378,000
    
    
    
    2,902,000Total assets
    
    $
    269,416,000
    
    
    $
    290,756,000LIABILITIESDebt
    
    $
    93,506,000
    
    
    $
    122,622,000Subordinated debt  related party
    
    
    4,386,000
    
    
    
    8,246,000Other liabilities
    
    
    1,478,000
    
    
    
    2,166,000Dividends payable
    
    
    292,000
    
    
    
    286,000Income taxes payable
    
    
    2,895,000
    
    
    
    Total liabilities
    
    
    102,557,000
    
    
    
    133,320,000Commitments and contingenciesSTOCKHOLDERS EQUITYPreferred stock, $.01 par value; authorized 5,000,000 shares;
issued and outstanding  noneCommon stock, $.01 par value; authorized 30,000,000 shares; issued
and outstanding  14,600,323 at June 30, 2010 and 14,272,357 at
September 30, 2009
    
    
    146,000
    
    
    
    143,000Additional paid-in capital
    
    
    72,076,000
    
    
    
    70,189,000Retained earnings
    
    
    94,660,000
    
    
    
    87,058,000Accumulated other comprehensive (loss) income, net of tax
    
    
    (23,000
    )
    
    
    46,000Total stockholders equity
    
    
    166,859,000
    
    
    
    157,436,000Total liabilities and stockholders equity
    
    $
    269,416,000
    
    
    $
    290,756,000
   3




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ASTA FUNDING, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 Three Months
    
    
    Three Months
    
    
    Nine Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedJune 30, 2010
    
    
    June 30, 2009
    
    
    June 30, 2010
    
    
    June 30, 2009Revenues:Finance income, net
    
    $
    12,042,000
    
    
    $
    17,202,000
    
    
    $
    34,197,000
    
    
    $
    53,722,000Other income
    
    
    41,000
    
    
    
    36,000
    
    
    
    97,000
    
    
    
    90,00012,083,000
    
    
    
    17,238,000
    
    
    
    34,294,000
    
    
    
    53,812,000Expenses:General and administrative
    
    
    5,836,000
    
    
    
    6,634,000
    
    
    
    16,739,000
    
    
    
    20,006,000Interest (Related party  Period
ended June 30, 2010  Three months,
$109,000; Nine months, $407,000;
Period ended June 30, 2009  Three
months, $128,000; Nine
months, $385,000)
    
    
    1,019,000
    
    
    
    1,783,000
    
    
    
    3,365,000
    
    
    
    6,907,000Impairments of consumer receivables
acquired for liquidation
    
    
    
    
    
    
    6,364,000
    
    
    
    
    
    
    
    46,208,0006,855,000
    
    
    
    14,781,000
    
    
    
    20,104,000
    
    
    
    73,121,000Income (loss) before equity in
earnings (loss) of venture and
income tax
    
    
    5,228,000
    
    
    
    2,457,000
    
    
    
    14,190,000
    
    
    
    (19,309,000
    )Equity in earnings (loss) of venture
    
    
    14,000
    
    
    
    34,000
    
    
    
    56,000
    
    
    
    (21,000
    )Income (loss) before income tax
    
    
    5,242,000
    
    
    
    2,491,000
    
    
    
    14,246,000
    
    
    
    (19,330,000
    )Income tax expense (benefit)
    
    
    2,121,000
    
    
    
    1,013,000
    
    
    
    5,775,000
    
    
    
    (7,803,000
    )Net income (loss)
    
    $
    3,121,000
    
    
    $
    1,478,000
    
    
    $
    8,471,000
    
    
    $
    (11,527,000
    )Net income (loss) per share:Basic
    
    $
    0.21
    
    
    $
    0.10
    
    
    $
    0.59
    
    
    $
    (0.81
    )Diluted
    
    $
    0.21
    
    
    $
    0.10
    
    
    $
    0.58
    
    
    $
    (0.81
    )Weighted average number of common
shares outstanding:Basic
    
    
    14,599,162
    
    
    
    14,271,946
    
    
    
    14,455,754
    
    
    
    14,271,931Diluted
    
    
    14,806,756
    
    
    
    14,445,572
    
    
    
    14,544,757
    
    
    
    14,271,931
   4




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ASTA FUNDING, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
 (Unaudited)
 AccumulatedAdditional
    
    
    
    
    
    
    OtherPaid-in
    
    
    Retained
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    TotalBalance, September 30, 2009
    
    
    14,272,357
    
    
    $
    143,000
    
    
    $
    70,189,000
    
    
    $
    87,058,000
    
    
    $
    46,000
    
    
    $
    157,436,000Exercise of options
    
    
    327,966
    
    
    
    3,000
    
    
    
    867,000
    
    
    
    
    
    
    
    
    
    
    
    870,000Stock based compensation expense
    
    
    
    
    
    
    
    
    
    
    969,000
    
    
    
    
    
    
    
    
    
    
    
    969,000Tax benefit arising from vesting of
restricted stock awards
    
    
    
    
    
    
    
    
    
    
    51,000
    
    
    
    
    
    
    
    
    
    
    
    51,000Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (869,000
    )
    
    
    
    
    
    
    (869,000
    )Other comprehensive loss, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (69,000
    )
    
    
    (69,000
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,471,000
    
    
    
    
    
    
    
    8,471,000Balance, June 30, 2010
    
    
    14,600,323
    
    
    $
    146,000
    
    
    $
    72,076,000
    
    
    $
    94,660,000
    
    
    $
    (23,000
    )
    
    $
    166,859,000
  Nine Months
    
    
    Nine MonthsEnded
    
    
    EndedJune 30, 2010
    
    
    June 30, 2009Net income (loss)
    
    $
    8,471,000
    
    
    $
    (11,527,000
    )Other comprehensive loss,
Net of tax  Foreign
Currency translation
    
    
    (69,000
    )
    
    
    (47,000
    )Comprehensive income (loss)
    
    $
    8,402,000
    
    
    $
    (11,574,000
    )
   5




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ASTA FUNDING, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 Nine Months
    
    
    Nine MonthsEnded
    
    
    EndedJune 30, 2010
    
    
    June 30, 2009Cash flows from operating activities:Net income (loss)
    
    $
    8,471,000
    
    
    $
    (11,527,000
    )Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    785,000
    
    
    
    1,261,000Deferred income taxes
    
    
    6,181,000
    
    
    
    (7,026,000
    )Impairments of consumer receivables acquired for liquidation
    
    
    
    
    
    
    46,208,000Stock based compensation
    
    
    969,000
    
    
    
    865,000Changes in:Other assets
    
    
    (991,000
    )
    
    
    (349,000
    )Due from third party collection agencies and attorneys
    
    
    (522,000
    )
    
    
    1,554,000Income taxes payable and receivable
    
    
    50,622,000
    
    
    
    (6,765,000
    )Other liabilities
    
    
    (756,000
    )
    
    
    (2,642,000
    )Net cash provided by operating activities
    
    
    64,759,000
    
    
    
    21,579,000Cash flows from investing activities:Purchase of consumer receivables acquired for liquidation
    
    
    (3,334,000
    )
    
    
    (16,501,000
    )Principal collected on receivables acquired for liquidation
    
    
    44,613,000
    
    
    
    57,545,000Principal collected on receivable accounts represented by account sales
    
    
    2,076,000
    
    
    
    5,317,000Foreign exchange effect on receivables acquired for liquidation
    
    
    (51,000
    )
    
    
    126,000Cash distributions received from venture
    
    
    74,000
    
    
    
    436,000Capital expenditures
    
    
    (95,000
    )
    
    
    (38,000
    )Net cash provided by investing activities
    
    
    43,283,000
    
    
    
    46,885,000Cash flows from financing activities:Proceeds from exercise of options
    
    
    870,000
    
    
    
    Tax benefit arising from vesting of restricted stock awards
    
    
    51,000
    
    
    
    74,000Change in restricted cash
    
    
    484,000
    
    
    
    791,000Dividends paid
    
    
    (863,000
    )
    
    
    (1,142,000
    )Repayments of debt, net
    
    
    (32,973,000
    )
    
    
    (68,574,000
    )Net cash used in financing activities
    
    
    (32,431,000
    )
    
    
    (68,851,000
    )Net increase (decrease) in cash and cash equivalents
    
    
    75,611,000
    
    
    
    (387,000
    )Effect of foreign exchange on cash
    
    
    
    
    
    
    (13,000
    )Cash at the beginning of period
    
    
    2,385,000
    
    
    
    3,623,000Cash and cash equivalents at end of period
    
    $
    77,996,000
    
    
    $
    3,223,000Supplemental disclosure of cash flow information:Cash paid during the periodInterest (fiscal year 2010 Related Party  $457,000; 2009 Related Party
 $386,000)
    
    $
    3,522,000
    
    
    $
    7,487,000Income taxes
    
    $
    2,052,000
    
    
    $
    5,885,000
   6




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ASTA FUNDING, INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 Note 1: Business and Basis of Presentation
 Business
  Basis of Presentation
     7




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ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 1: Business and Basis of Presentation ( continued )
 Recent Accounting Pronouncements
   Note 2: Principles of Consolidation
   8




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ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 3: Consumer Receivables Acquired for Liquidation
   
    
    The interest method; or
    
    The cost recovery method.
      9




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ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 3: Consumer Receivables Acquired for Liquidation  ( continued )
  
    
    same issuer/originator;
    
    same underlying credit quality;
    
    similar geographic distribution of the accounts;
    
    similar age of the receivable; and
    
    same type of asset class (credit cards, telecommunication, etc.).
  
    
    the number of collection agencies previously attempting to collect the receivables in the portfolio;
    
    the average balance of the receivables, as higher balances might be more difficult to collect while
low balances might not be cost effective to collect;
    
    the age of the receivables, as older receivables might be more difficult to collect or might be
less cost effective. On the other hand, the passage of time, in certain circumstances, might result
in higher collections due to changing life events of some individual debtors;
    
    past history of performance of similar assets;
    
    time since charge-off;
    
    payments made since charge-off;
    
    the credit originator and its credit guidelines;
    
    our ability to analyze accounts and resell accounts that meet our criteria for resale;
    
    the locations of the debtors, as there are better states to attempt to collect in and ultimately
the Company has better predictability of the liquidations and the expected cash flows. Conversely,
there are also states where the liquidation rates are not as favorable and that is factored into
our cash flow analysis;
    
    jobs or property of the debtors found within portfolios. In our business model, this is of
particular importance. Debtors with jobs or property are more likely to repay their obligation and,
conversely, debtors without jobs or property are less likely to repay their obligation; and
    
    the ability to obtain timely customer statements from the original issuer.
   10




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ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 3: Consumer Receivables Acquired for Liquidation  ( continued )
  For the Nine Months Ended June 30, 2010Interest
    
    
    CostMethod
    
    
    RecoveryPortfolios
    
    
    Portfolios
    
    
    TotalBalance, beginning of period
    
    $
    70,650,000
    
    
    $
    137,611,000
    
    
    $
    208,261,000Acquisitions of receivable portfolios, net
    
    
    3,043,000
    
    
    
    291,000
    
    
    
    3,334,000Net cash collections from collection of consumer
receivables acquired for liquidation
    
    
    (56,801,000
    )
    
    
    (20,908,000
    )
    
    
    (77,709,000
    )Net cash collections represented by account sales
of consumer receivables acquired for liquidation
    
    
    (3,173,000
    )
    
    
    (4,000
    )
    
    
    (3,177,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    47,000
    
    
    
    47,000Finance income recognized (1)
    
    
    32,975,000
    
    
    
    1,222,000
    
    
    
    34,197,000Balance, end of period
    
    $
    46,694,000
    
    
    $
    118,259,000
    
    
    $
    164,953,000Finance income as a percentage of collections
    
    
    55.0
    %
    
    
    5.8
    %
    
    
    42.3
    %
 (1)
    
    Includes approximately $25.6 million
derived from fully amortized portfolios. For the Nine Months Ended June 30, 2009Interest
    
    
    CostMethod
    
    
    RecoveryPortfolios
    
    
    Portfolios
    
    
    TotalBalance, beginning of period
    
    $
    203,470,000
    
    
    $
    245,542,000
    
    
    $
    449,012,000Acquisitions of receivable portfolios, net
    
    
    16,221,000
    
    
    
    280,000
    
    
    
    16,501,000Net cash collections from collection of consumer
receivables acquired for liquidation
    
    
    (75,123,000
    )
    
    
    (33,619,000
    )
    
    
    (108,742,000
    )Net cash collections represented by account sales
of consumer receivables acquired for liquidation
    
    
    (4,158,000
    )
    
    
    (3,684,000
    )
    
    
    (7,842,000
    )Transfer to cost recovery (1)
    
    
    (10,128,000
    )
    
    
    10,128,000
    
    
    
    Impairments
    
    
    (46,208,000
    )
    
    
    
    
    
    
    (46,208,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    (179,000
    )
    
    
    (179,000
    )Finance income recognized (2)
    
    
    52,366,000
    
    
    
    1,356,000
    
    
    
    53,722,000Balance, end of period
    
    $
    136,440,000
    
    
    $
    219,824,000
    
    
    $
    356,264,000Finance income as a percentage of collections
    
    
    66.1
    %
    
    
    3.6
    %
    
    
    46.1
    %
 (1)
    
    During the nine months ended June 30, 2009, three
portfolios were transferred from the interest method to
the cost recovery method. Based on the nature of these
portfolios, the Companys estimates of the timing of
expected cash flows became uncertain.(2)
    
    Includes approximately $31.1 million
derived from fully amortized portfolios.  11




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ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 3: Consumer Receivables Acquired for Liquidation  ( continued )
 For the Three Months Ended June 30, 2010Interest
    
    
    CostMethod
    
    
    RecoveryPortfolios
    
    
    Portfolios
    
    
    TotalBalance, beginning of period
    
    $
    54,375,000
    
    
    $
    124,239,000
    
    
    $
    178,614,000Acquisitions of receivable portfolios, net
    
    
    
    
    
    
    63,000
    
    
    
    63,000Net cash collections from collections of consumer
receivables acquired for liquidation
    
    
    (18,825,000
    )
    
    
    (6,538,000
    )
    
    
    (25,363,000
    )Net cash collections represented by account sales
of consumer receivables acquired for liquidation
    
    
    (433,000
    )
    
    
    
    
    
    
    (433,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    30,000
    
    
    
    30,000Finance income recognized (1)
    
    
    11,577,000
    
    
    
    465,000
    
    
    
    12,042,000Balance, end of period
    
    $
    46,694,000
    
    
    $
    118,259,000
    
    
    $
    164,953,000Finance income as a percentage of collections
    
    
    60.1
    %
    
    
    7.1
    %
    
    
    46.7
    %
 (1)
    
    Includes approximately
$9.2 million derived
from fully amortized
portfolios. For the Three Months Ended June 30, 2009Interest
    
    
    CostMethod
    
    
    RecoveryPortfolios
    
    
    Portfolios
    
    
    TotalBalance, beginning of period
    
    $
    137,497,000
    
    
    $
    230,726,000
    
    
    $
    368,223,000Acquisitions of receivable portfolios, net
    
    
    13,540,000
    
    
    
    273,000
    
    
    
    13,813,000Net cash collections from collections of consumer
receivables acquired for liquidation
    
    
    (23,660,000
    )
    
    
    (12,766,000
    )
    
    
    (36,426,000
    )Net cash collections represented by account sales
of consumer receivables acquired for liquidation
    
    
    (1,083,000
    )
    
    
    (112,000
    )
    
    
    (1,195,000
    )Impairments
    
    
    (6,364,000
    )
    
    
    
    
    
    
    (6,364,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    1,011,000
    
    
    
    1,011,000Finance income recognized (1)
    
    
    16,510,000
    
    
    
    692,000
    
    
    
    17,202,000Balance, end of period
    
    $
    136,440,000
    
    
    $
    219,824,000
    
    
    $
    356,264,000Finance income as a percentage of collection
    
    
    66.7
    %
    
    
    5.4
    %
    
    
    45.7
    %
 (1)
    
    Includes approximately $10.5 million
derived from fully amortized portfolios.  12




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 3: Consumer Receivables Acquired for Liquidation  ( continued )
  September 30, 2010 (three months ending)
    
    $
    5,335,000September 30, 2011
    
    
    17,775,000September 30, 2012
    
    
    13,748,000September 30, 2013
    
    
    7,110,000September 30, 2014
    
    
    3,519,000September 30, 2015
    
    
    752,000September 30, 2016
    
    
    579,000September 30, 2017
    
    
    20,000Subtotal
    
    
    48,838,000Deferred revenue
    
    
    (2,144,000
    )Total
    
    $
    46,694,000
  Nine Months
    
    
    Nine MonthsEnded
    
    
    EndedJune 30, 2010
    
    
    June 30, 2009Balance at beginning of period
    
    $
    25,875,000
    
    
    $
    58,134,000Income recognized on finance receivables, net
    
    
    (32,975,000
    )
    
    
    (52,366,000
    )Additions representing expected revenue from
purchases
    
    
    1,080,000
    
    
    
    4,937,000Transfers to cost recovery
    
    
    
    
    
    
    (3,372,000
    )Reclassifications from nonaccretable difference
    
    
    22,948,000
    
    
    
    37,751,000Balance at end of period
    
    $
    16,928,000
    
    
    $
    45,084,000
 Three Months
    
    
    Three MonthsEnded
    
    
    EndedJune 30, 2010
    
    
    June 30, 2009Balance at beginning of period
    
    $
    20,513,000
    
    
    $
    48,071,000Income recognized on finance receivables, net
    
    
    (11,577,000
    )
    
    
    (16,510,000
    )Additions representing expected revenue from
purchases
    
    
    
    
    
    
    4,035,000Reclassifications from nonaccretable difference
    
    
    7,992,000
    
    
    
    9,488,000Balance at end of period
    
    $
    16,928,000
    
    
    $
    45,084,000
  13




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 3: Consumer Receivables Acquired for Liquidation  ( continued )
   For the Nine Months Ended June 30,2010
    
    
    2009Gross collections (1)
    
    $
    123,590,000
    
    
    $
    176,709,000Commissions and fees (2)
    
    
    42,704,000
    
    
    
    60,125,000Net collections
    
    $
    80,886,000
    
    
    $
    116,584,000
 For the Three Months Ended June 30,2010
    
    
    2009Gross collections (1)
    
    $
    39,828,000
    
    
    $
    53,484,000Commissions and fees (2)
    
    
    14,032,000
    
    
    
    15,863,000Net collections
    
    $
    25,796,000
    
    
    $
    37,621,000
 (1)
    
    Gross collections include: collections by third-party collection agencies and attorneys, collections from our internal efforts and collections
represented by account sales.(2)
    
    Commissions and fees are the contractual commission earned by third party collection agencies and attorneys, and direct costs associated with the
collection effort, generally court costs. Includes a 3% fee charged by a servicer on substantially all gross collections received by the Company in
connection with the Portfolio Purchase (see Note 5  Receivables Financing Agreement ). Note 4: Furniture and Equipment
  June 30,
    
    
    September 30,2010
    
    
    2009Furniture
    
    $
    310,000
    
    
    $
    310,000Equipment
    
    
    2,845,000
    
    
    
    2,783,000Software
    
    
    150,000
    
    
    
    117,000Leasehold improvements
    
    
    86,000
    
    
    
    86,0003,391,000
    
    
    
    3,296,000Less accumulated
depreciation
    
    
    3,028,000
    
    
    
    2,758,000Balance, end of period
    
    $
    363,000
    
    
    $
    538,000
  14




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 5: Debt and Subordinated Debt  Related Party
 Bank Leumi Credit Agreement
  Receivables Financing Agreement
        15




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 5: Debt and Subordinated Debt  Related Party  (continued)
 Receivables Financing Agreement  (continued)
     IDB Credit Facility
    16




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 5: Debt and Subordinated Debt  Related Party  (continued)
 Subordinated Debt  Related Party
     June 30, 2010Stated
    
    
    AverageJune 30,
    
    
    September 30,
    
    
    Interest
    
    
    Interest2010
    
    
    2009
    
    
    Rate
    
    
    Rate (1)Credit Facility  IDB
    
    $
    
    
    
    $
    18,301,000
    
    
    
    
    
    
    
    5.50
    %Credit Agreement 
Bank Leumi
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.50
    %Receivables
Financing Agreement
    
    
    93,506,000
    
    
    
    104,321,000
    
    
    
    3.85
    %
    
    
    3.76
    %Total debt
    
    $
    93,506,000
    
    
    $
    122,622,000
    
    
    
    n/a
    
    
    
    3.82
    %Subordinated debt 
related party
    
    $
    4,386,000
    
    
    $
    8,246,000
    
    
    
    10.00
    %
    
    
    8.39
    %
 (1)
    
    9-month average  17




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 6: Commitments and Contingencies
 Employment Agreements
  Leases
  Litigation
  Note 7: Income Recognition and Impairments
 Income Recognition
     18




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 7: Income Recognition and Impairments  ( continued )
 Impairments
   
    
    The type of receivable, the location of the debtor and the number of
collection agencies previously attempting to collect the receivables in
the portfolio. We have found that there are better states to try to
collect receivables and we factor in both better and worse states when
establishing our initial cash flow expectations;
    
    The average balance of the receivables influences our analysis in that
lower average balance portfolios tend to be more collectible in the
short-term and higher average balance portfolios are more appropriate for
our law suit strategy and thus yield better results over the longer term.
As we have significant experience with both types of balances, we are able
to factor these variables into our initial expected cash flows;
    
    The age of the receivables, the number of days since charge-off, any
payments since charge-off, and the credit guidelines of the credit
originator also represent factors taken into consideration in our
estimation process. For example, older receivables might be more difficult
and/or require more time and effort to collect;
    
    past history and performance of similar assets acquired. As we purchase
portfolios of like assets, we accumulate a significant historical data
base on the tendencies of debtor repayments and factor this into our
initial expected cash flows;
    
    Our ability to analyze accounts and resell accounts that meet our criteria;
    
    jobs or property of the debtors found within portfolios. With our business
model, this is of particular importance. Debtors with jobs or property are
more likely to repay their obligation through the suit strategy and,
conversely, debtors without jobs or property are less likely to repay
their obligation. We believe that debtors with jobs or property are more
likely to repay because courts have mandated the debtor must pay the debt.
Ultimately, the debtor will pay to clear title or release a lien. We also
believe that these debtors generally might take longer to repay and that
is factored into our initial expected cash flows; and
    
    credit standards of issuer.
  19




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 7: Income Recognition and Impairments  (continued)
 Impairments (continued)
    Commissions and fees
  Note 8: Income Taxes
     20




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 9: Net Income Per Share
   Nine Months Ended June 30,2010
    
    
    2009Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedNet
    
    
    Average
    
    
    Per Share
    
    
    Net
    
    
    Average
    
    
    Per ShareIncome
    
    
    Shares
    
    
    Amount
    
    
    (Loss)
    
    
    Shares
    
    
    AmountBasic
    
    $
    8,471,000
    
    
    
    14,455,754
    
    
    $
    0.59
    
    
    $
    (11,527,000
    )
    
    
    14,271,931
    
    
    $
    (0.81
    )Effect of Dilutive Stock
    
    
    
    
    
    
    89,003
    
    
    
    (0.01
    )
    
    
    
    
    
    
    
    
    
    
    Diluted
    
    $
    8,471,000
    
    
    
    14,544,757
    
    
    $
    0.58
    
    
    $
    (11,527,000
    )
    
    
    14,271,931
    
    
    $
    (0.81
    )
   Three Months June 30,2010
    
    
    2009Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedNet
    
    
    Average
    
    
    Per Share
    
    
    Net
    
    
    Average
    
    
    Per ShareIncome
    
    
    Shares
    
    
    Amount
    
    
    (Loss)
    
    
    Shares
    
    
    AmountBasic
    
    $
    3,121,000
    
    
    
    14,599,162
    
    
    $
    0.21
    
    
    $
    1,478,000
    
    
    
    14,271,946
    
    
    $
    0.10Effect of Dilutive Stock
    
    
    
    
    
    
    207,594
    
    
    
    
    
    
    
    
    
    
    
    173,626
    
    
    
    Diluted
    
    $
    3,121,000
    
    
    
    14,806,756
    
    
    $
    0.21
    
    
    $
    1,478,000
    
    
    
    14,445,572
    
    
    $
    0.10
    21




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 10: Stock-based Compensation
    Risk-free interest rate
    
    
    0.17
    %Expected term (years)
    
    
    10.0Expected volatility
    
    
    110.2
    %Dividend yield
    
    
    1.12
    %
  Risk-free interest rate
    
    
    0.18
    %Expected term (years)
    
    
    10.0Expected volatility
    
    
    111.7
    %Dividend yield
    
    
    1.145
    %
  22




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 11: Stock Option Plans
 Equity Compensation Plan
     2002 Stock Option Plan
   1995 Stock Option Plan
    23




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 11: Stock Option Plans  (continued)
  Nine Months Ended June 30,2010
    
    
    2009Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding options at the beginning of
period
    
    
    1,157,905
    
    
    $
    10.76
    
    
    
    1,037,438
    
    
    $
    11.69Options granted
    
    
    158,900
    
    
    
    8.07
    
    
    
    122,000
    
    
    
    2.95Options exercised
    
    
    (327,966
    )
    
    
    2.65
    
    
    
    (100
    )
    
    
    2.95Options forfeited
    
    
    (20,500
    )
    
    
    16.24
    
    
    
    (1,000
    )
    
    
    28.75Outstanding options at the end of period
    
    
    968,339
    
    
    $
    12.95
    
    
    
    1,158,338
    
    
    $
    10.76Exercisable options at the end of period
    
    
    838,677
    
    
    $
    13.89
    
    
    
    1,082,345
    
    
    $
    11.31
 Three Months Ended June 30,2010
    
    
    2009Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding options at the beginning of
period
    
    
    970,538
    
    
    $
    12.93
    
    
    
    1,036,438
    
    
    $
    11.68Options granted
    
    
    
    
    
    
    
    
    
    
    122,000
    
    
    
    2.95Options exercised
    
    
    (2,199
    )
    
    
    2.95
    
    
    
    (100
    )
    
    
    2.95Options forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding options at the end of period
    
    
    968,339
    
    
    $
    12.95
    
    
    
    1,158,338
    
    
    $
    10.76Exercisable options at the end of period
    
    
    838,677
    
    
    $
    13.89
    
    
    
    1,082,345
    
    
    $
    11.31
   24




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 11: Stock Option Plans  (continued)
  Options Outstanding
    
    
    Options ExercisableWeightedAverage
    
    
    Weighted
    
    
    
    
    
    
    WeightedRemaining
    
    
    Average
    
    
    
    
    
    AverageNumber
    
    
    Contractual
    
    
    Exercise
    
    
    Number
    
    
    ExerciseRange of Exercise Price
    
    Outstanding
    
    
    Life (in Years)
    
    
    Price
    
    
    Exercisable
    
    
    Price$2.8751  $5.7500
    
    
    199,668
    
    
    
    5.4
    
    
    $
    3.90
    
    
    
    170,002
    
    
    $
    4.06$5.7501  $8.6250
    
    
    170,900
    
    
    
    8.9
    
    
    
    7.92
    
    
    
    70,904
    
    
    
    7.71$14.3751  $17.2500
    
    
    198,611
    
    
    
    3.4
    
    
    
    14.88
    
    
    
    198,611
    
    
    
    14.88$17.2501  $20.1250
    
    
    382,160
    
    
    
    4.3
    
    
    
    18.22
    
    
    
    382,160
    
    
    
    18.22$25.8751  $28.7500
    
    
    17,000
    
    
    
    6.5
    
    
    
    28.75
    
    
    
    17,000
    
    
    
    28.75968,339
    
    
    
    5.2
    
    
    $
    12.95
    
    
    
    838,677
    
    
    $
    13.89
  Nine Months Ended June 30,2010
    
    
    2009Weighted
    
    
    
    
    
    
    WeightedAverage Grant
    
    
    
    
    
    
    Average GrantDate Fair
    
    
    
    
    
    
    Date FairShares
    
    
    Value
    
    
    Shares
    
    
    ValueUnvested at the beginning of period
    
    
    35,338
    
    
    $
    19.73
    
    
    
    80,667
    
    
    $
    22.26Awards granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Vested
    
    
    (17,669
    )
    
    
    19.73
    
    
    
    (40,995
    )
    
    
    24.50Forfeited
    
    
    
    
    
    
    
    
    
    
    (4,334
    )
    
    
    21.81Unvested at the end of period
    
    
    17,669
    
    
    $
    19.73
    
    
    
    35,338
    
    
    $
    19.73
 Three Months Ended June 30,2010
    
    
    2009Weighted
    
    
    
    
    
    
    WeightedAverage Grant
    
    
    
    
    
    
    Average GrantDate Fair
    
    
    
    
    
    
    Date FairShares
    
    
    Value
    
    
    Shares
    
    
    ValueUnvested at the beginning of
period
    
    
    17,669
    
    
    $
    19.73
    
    
    
    35,338
    
    
    $
    19.73Awards granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Vested
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unvested at the end of period
    
    
    17,669
    
    
    $
    19.73
    
    
    
    35,338
    
    
    $
    19.73
   25




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)  (Unaudited)
 Note 12: Stockholders Equity
  Note 13: Fair Value of Financial Instruments
    Note 14: Subsequent Events
   26




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
 Caution Regarding Forward Looking Statements
  www.astafunding.com. www.sec.gov
 Overview
  
    
    charged-off receivables accounts that have been written-off by the
originators and may have been previously serviced by collection
agencies;
    
    semi-performing receivables accounts where the debtor is currently
making partial or irregular monthly payments, but the accounts may
have been written-off by the originators; and
    
    performing receivables accounts where the debtor is making regular
monthly payments that may or may not have been delinquent in the past.
 ® ®
   
    
    our relationships with industry participants, collection agencies,
investors and our financing sources;
    
    Brokers who specialize in the sale of consumer receivable portfolios; and
    
    other sources.
  27




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##### Table of Contents



Critical Accounting Policies
  
    
    the interest method; or
    
    the cost recovery method.
      
    
    same issuer/originator;
    
    same underlying credit quality;
    
    similar geographic distribution of the accounts;
    
    similar age of the receivable; and
    
    same type of asset class (credit cards, telecommunications, etc.).
  28




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##### Table of Contents




    
    the number of collection agencies previously attempting to collect the receivables in the portfolio;
    
    the average balance of the receivables as higher balances might be more difficult to collect while
low balances might not be cost effective to collect;
    
    the age of the receivables, as older receivables might be more difficult to collect or might be
less cost effective. On the other hand, the passage of time, in certain instances, might result in
higher collections due to changing life events of some individual debtors;
    
    past history of performance of similar assets;
    
    time since charge-off;
    
    payments made since charge-off;
    
    the credit originator and its credit guidelines;
    
    Our ability to analyze accounts and resell accounts that meet our criteria for resale;
    
    the locations of the debtors as there are better states to attempt to collect in and ultimately we
have better predictability of the liquidations and the expected cash flows. Conversely, there are
also states where the liquidation rates are not as favorable and that is factored into our cash
flow analysis;
    
    jobs or property of the debtors found within portfolios-with our business model, this is of
particular importance. Debtors with jobs or property are more likely to repay their obligation and
conversely, debtors without jobs or property are less likely to repay their obligation ; and
    
    the ability to obtain customer statements from the original issuer.
       29




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##### Table of Contents



Results of Operations
 The nine month period ended June 30, 2010, compared to the nine month period ended June 30,
2009
 Finance income
  Other income .
 General and administrative expenses
 Interest expense.
 Impairments.
 Income tax expense (benefit).
 Net income (loss).
  30




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##### Table of Contents



The three-month period ended June 30, 2010, compared to the three-month period ended June 30,
2009
 Finance income
  Other income .
 General and administrative expenses
 Interest expense.
 Impairments.
 Income tax expense.
 Net income.
  31




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##### Table of Contents



Liquidity and Capital Resources
  Leumi Credit Agreement
  Receivables Financing Agreement
        32




---



##### Table of Contents



IDB Credit Facility
  Subordinated Debt  Related Party
          33




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##### Table of Contents



For the Nine Months Ended June 30, 2010Interest
    
    
    CostMethod
    
    
    RecoveryPortfolios
    
    
    Portfolios
    
    
    TotalBalance, beginning of period
    
    $
    70,650,000
    
    
    $
    137,611,000
    
    
    $
    208,261,000Acquisitions of receivable portfolios, net
    
    
    3,043,000
    
    
    
    291,000
    
    
    
    3,334,000Net cash collections from collection of consumer
receivables acquired for liquidation
    
    
    (56,801,000
    )
    
    
    (20,908,000
    )
    
    
    (77,709,000
    )Net cash collections represented by account sales
of consumer receivables acquired for liquidation
    
    
    (3,173,000
    )
    
    
    (4,000
    )
    
    
    (3,177,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    47,000
    
    
    
    47,000Finance income recognized (1)
    
    
    32,975,000
    
    
    
    1,222,000
    
    
    
    34,197,000Balance, end of period
    
    $
    46,694,000
    
    
    $
    118,259,000
    
    
    $
    164,953,000Finance income as a percentage of collections
    
    
    55.0
    %
    
    
    5.8
    %
    
    
    42.3
    %
 (1)
    
    Includes approximately $25.6 million
derived from fully amortized portfolios. For the Nine Months Ended June 30, 2009Interest
    
    
    CostMethod
    
    
    RecoveryPortfolios
    
    
    Portfolios
    
    
    TotalBalance, beginning of period
    
    $
    203,470,000
    
    
    $
    245,542,000
    
    
    $
    449,012,000Acquisitions of receivable portfolios, net
    
    
    16,221,000
    
    
    
    280,000
    
    
    
    16,501,000Net cash collections from collection of consumer
receivables acquired for liquidation
    
    
    (75,123,000
    )
    
    
    (33,619,000
    )
    
    
    (108,742,000
    )Net cash collections represented by account sales
of consumer receivables acquired for liquidation
    
    
    (4,158,000
    )
    
    
    (3,684,000
    )
    
    
    (7,842,000
    )Transfer to Cost Recovery (1)
    
    
    (10,128,000
    )
    
    
    10,128,000
    
    
    
    Impairments
    
    
    (46,208,000
    )
    
    
    
    
    
    
    (46,208,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    (179,000
    )
    
    
    (179,000
    )Finance income recognized (2)
    
    
    52,366,000
    
    
    
    1,356,000
    
    
    
    53,722,000Balance, end of period
    
    $
    136,440,000
    
    
    $
    219,824,000
    
    
    $
    356,264,000Finance income as a percentage of collections
    
    
    66.1
    %
    
    
    3.6
    %
    
    
    46.1
    %
 (1)
    
    During the nine months ended June 30,
2009, three portfolios were transferred
from the interest method to the cost
recovery method. Based on the nature of
these portfolios, the Companys
estimates of the timing of expected cash
flows became uncertain.(2)
    
    Includes approximately $31.1 million
derived from fully amortized portfolios.  34




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##### Table of Contents



For the Three Months Ended June 30, 2010Interest
    
    
    CostMethod
    
    
    RecoveryPortfolios
    
    
    Portfolios
    
    
    TotalBalance, beginning of period
    
    $
    54,375,000
    
    
    $
    124,239,000
    
    
    $
    178,614,000Acquisitions of receivable portfolios, net
    
    
    
    
    
    
    63,000
    
    
    
    63,000Net cash collections from collections of consumer
receivables acquired for liquidation
    
    
    (18,825,000
    )
    
    
    (6,538,000
    )
    
    
    (25,363,000
    )Net cash collections represented by account sales
of consumer receivables acquired for liquidation
    
    
    (433,000
    )
    
    
    
    
    
    
    (433,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    30,000
    
    
    
    30,000Finance income recognized (1)
    
    
    11,577,000
    
    
    
    465,000
    
    
    
    12,042,000Balance, end of period
    
    $
    46,694,000
    
    
    $
    118,259,000
    
    
    $
    164,953,000Finance income as a percentage of collections
    
    
    60.1
    %
    
    
    7.1
    %
    
    
    46.7
    %
 (1)
    
    Includes approximately
$9.2 million derived
from fully amortized
portfolios. For the Three Months Ended June 30, 2009Interest
    
    
    CostMethod
    
    
    RecoveryPortfolios
    
    
    Portfolios
    
    
    TotalBalance, beginning of period
    
    $
    137,497,000
    
    
    $
    230,726,000
    
    
    $
    368,223,000Acquisitions of receivable portfolios, net
    
    
    13,540,000
    
    
    
    273,000
    
    
    
    13,813,000Net cash collections from collections of consumer
receivables acquired for liquidation
    
    
    (23,660,000
    )
    
    
    (12,766,000
    )
    
    
    (36,426,000
    )Net cash collections represented by account sales
of consumer receivables acquired for liquidation
    
    
    (1,083,000
    )
    
    
    (112,000
    )
    
    
    (1,195,000
    )Impairments
    
    
    (6,364,000
    )
    
    
    
    
    
    
    (6,364,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    1,011,000
    
    
    
    1,011,000Finance income recognized (1)
    
    
    16,510,000
    
    
    
    692,000
    
    
    
    17,202,000Balance, end of period
    
    $
    136,440,000
    
    
    $
    219,824,000
    
    
    $
    356,264,000Finance income as a percentage of collections
    
    
    66.7
    %
    
    
    5.4
    %
    
    
    45.7
    %
 (1)
    
    Includes approximately $10.5 million
derived from fully amortized portfolios. Supplementary Information:
   35




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##### Table of Contents



Collections Represented by Account Sales
 CollectionsRepresented
    
    
    FinanceBy Account
    
    
    IncomePeriod
    
    Sales
    
    
    EarnedNine months ended June 30, 2010
    
    $
    3,177,000
    
    
    $
    1,100,000Three months ended June 30, 2010
    
    $
    433,000
    
    
    $
    152,000Nine months ended June 30, 2009
    
    $
    7,842,000
    
    
    $
    2,525,000Three months ended June, 2009
    
    $
    1,195,000
    
    
    $
    734,000
 Portfolio Performance (1)
 (Interest method portfolios only)
 Total estimatedCash Collections
    
    
    Estimated
    
    
    Total
    
    
    Collections as aPurchase
    
    
    Including Cash
    
    
    Remaining
    
    
    Estimated
    
    
    Percentage ofPurchase Period
    
    Price (2)
    
    
    Sales (3)
    
    
    Collections (4)
    
    
    Collections (5)
    
    
    Purchase Price2001
    
    $
    65,120,000
    
    
    $
    105,525,000
    
    
    
    
    
    
    $
    105,525,000
    
    
    
    162
    %2002
    
    
    36,557,000
    
    
    
    48,107,000
    
    
    
    
    
    
    
    48,107,000
    
    
    
    132
    %2003
    
    
    115,626,000
    
    
    
    214,295,000
    
    
    $
    641,000
    
    
    
    214,936,000
    
    
    
    186
    %2004
    
    
    103,743,000
    
    
    
    183,123,000
    
    
    
    348,000
    
    
    
    183,471,000
    
    
    
    177
    %2005
    
    
    126,023,000
    
    
    
    210,096,000
    
    
    
    6,640,000
    
    
    
    216,736,000
    
    
    
    172
    %2006
    
    
    163,392,000
    
    
    
    243,395,000
    
    
    
    13,977,000
    
    
    
    257,372,000
    
    
    
    158
    %2007
    
    
    109,235,000
    
    
    
    87,606,000
    
    
    
    27,939,000
    
    
    
    115,545,000
    
    
    
    106
    %2008
    
    
    26,626,000
    
    
    
    36,543,000
    
    
    
    2,165,000
    
    
    
    38,708,000
    
    
    
    145
    %2009
    
    
    19,127,000
    
    
    
    16,978,000
    
    
    
    10,735,000
    
    
    
    27,713,000
    
    
    
    145
    %2010
    
    
    3,043,000
    
    
    
    2,802,000
    
    
    
    1,177,000
    
    
    
    3,979,000
    
    
    
    131
    %
 (1)
    
    Total collections do not represent full collections of the Company with respect to this or any other year.(2)
    
    Purchase price refers to the cash paid to a seller to acquire a portfolio less the purchase price refunded by a seller due to the return of non-compliant accounts (also defined as put-backs).(3)
    
    Net cash collections include: net collections from our third-party collection agencies and attorneys, net collections from our in-house efforts and collections represented by account sales.(4)
    
    Does not include estimated collections from portfolios that are zero basis.(5)
    
    Total estimated collections refers to the actual net cash collections, including cash sales, plus estimated remaining net collections.  36




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4. Controls and Procedures
 a. Disclosure Controls and Procedures.
  b. Changes in Internal Controls Over Financial Reporting.
   37




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. (Removed and reserved)
 
 Item 5. Other Information
  
 Item 6. Exhibits
  31.1
    
    
    Certification of the Registrants Chief Executive Officer, Gary
Stern, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification of the Registrants Chief Financial Officer, Robert J.
Michel, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of the Registrants Chief Executive Officer, Gary
Stern, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of the Registrants Chief Financial Officer, Robert J.
Michel, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  38




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##### Table of Contents



ASTA FUNDING, INC.(Registrant)Date: August 12, 2010
    
    By:
    
    /s/ Gary Stern

Gary Stern, Chairman, President, Chief Executive Officer(Principal Executive Officer)Date: August 12, 2010
    
    By:
    
    /s/ Robert J. Michel

Robert J. Michel, Chief Financial Officer(Principal Financial Officer andPrincipal Accounting Officer)
  39




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##### Table of Contents



ExhibitNo.
    
    Description31.1
    
    
    Certification of the Registrants Chief Executive Officer,
Gary Stern, pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.31.2
    
    
    Certification of the Registrants Chief Financial Officer,
Robert J. Michel, pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of the Registrants Chief Executive Officer,
Gary Stern, pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.32.2
    
    
    Certification of the Registrants Chief Financial Officer,
Robert J. Michel, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
  40