<PAGE>
===============================================================================


                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 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 December 31, 2003

                                       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: 0-26906



                               ASTA FUNDING, INC.
       (Exact name of small business issuer as specified in its charter)

            Delaware                                            22-3388607
  (State or other jurisdiction                                 (IRS Employer
of incorporation or organization)                           Identification No.)






210 Sylvan Ave., Englewood Cliffs, New Jersey                      07632
   (Address of principal executive offices)                     (Zip Code)



                   Issuer's telephone number: (201) 567-5648

   Former name, former address and former fiscal year, if changed since last
report: N/A

   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 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 |_|

   Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act) Yes |_| No |X|

   As of February 10, 2004, the registrant had approximately 6,674,000 common
shares outstanding.


===============================================================================

<PAGE>
                               ASTA FUNDING, INC.

                               INDEX TO FORM 10-Q

<TABLE>
<S>                                                                                  <C>
Part I. Financial Information ...................................................     2
Item 1. Consolidated Financial Statements .......................................     20
        Consolidated Balance Sheets as of December 31, 2003 (unaudited) and
         September 30, 2003......................................................     20
        Consolidated Statements of Operations for the three month periods
         ended December 31, 2003 and 2002 (unaudited) ...........................     30
        Consolidated Statement of Stockholders' Equity for the three month
         period ending December 31, 2003 (unaudited) ............................     40
        Consolidated Statements of Cash Flows for the three month periods
         ended December 31, 2003 and 2002 (unaudited) ...........................     50
        Condensed Notes to Consolidated Financial Statements (unaudited) ........     6
Item 2. Management's Discussion and Analysis of Financial Condition and
        Results of Operations....................................................    12
Item 3. Quantitative and Qualitative Disclosures about Market Risk ..............    16
Item 4. Controls and Procedures .................................................    16

Part II. Other Information ......................................................    17
Item 1. Legal Proceedings .......................................................    17
Item 2. Changes in Securities and Use of Proceeds ...............................    17
Item 3. Defaults Upon Senior Securities .........................................    17
Item 4. Submission of Matters to a Vote of Security Holders .....................    17
Item 5. Other Information .......................................................    17
Item 6. Exhibits and Reports on Form 8-K ........................................    17
Signatures ......................................................................    18
Certificate of Principal Executive Officer ......................................    19
Certificate of Principal Financial Officer ......................................    20
</TABLE>



                                       1

<PAGE>
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements


                      ASTA FUNDING, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                    December 31,   September 30,
                                                        2003            2003
                                                    ------------   -------------
                                                    (Unaudited)
<S>                                                 <C>            <C>
                     Assets
Cash ...........................................    $  4,553,000    $  6,846,000
Restricted cash, net ...........................          54,000          54,000
Consumer receivables acquired for liquidation ..     123,571,000     105,592,000
Auto loans receivable, net .....................           5,000           5,000
Furniture and equipment, net ...................         713,000         710,000
Other assets ...................................          91,000         169,000
                                                    ------------    ------------
     Total assets ..............................    $128,987,000    $113,376,000
                                                    ============    ============
      Liabilities and Stockholders' Equity
Liabilities
 Debt ..........................................    $ 26,645,000    $ 16,381,000
 Other liabilities  ............................       1,716,000       3,741,000
 Income taxes payable  .........................       3,280,000         802,000
 Deferred income taxes .........................          81,000          85,000
                                                    ------------    ------------
     Total liabilities .........................      31,722,000      21,009,000
                                                    ============    ============
Stockholders' Equity
 Preferred stock, $.01 par value; authorized
  5,000,000; issued and outstanding -- none
 Common stock, $.01 par value; authorized
  30,000,000 shares; issued and outstanding --
  6,637,000 at December 31, 2003 and 6,590,000
  at September 30, 2003.........................          66,000          66,000
 Additional paid-in capital ....................      58,325,000      57,784,000
 Retained earnings .............................      38,874,000      34,517,000
                                                    ------------    ------------
     Total stockholders' equity ................      97,265,000      92,367,000
                                                    ------------    ------------
Total liabilities and stockholders' equity .....    $128,987,000    $113,376,000
                                                    ============    ============
</TABLE>





          See accompanying notes to consolidated financial statements

                                       2

<PAGE>
                      ASTA FUNDING, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)


<TABLE>
<CAPTION>

                                         Three Months Ended   Three Months Ended
                                            December 31,         December 31,
                                                2003                 2002
                                         ------------------   ------------------
<S>                                      <C>                  <C>
Revenues
 Finance income .....................       $11,455,000           $6,751,000
                                            -----------           ----------
Expenses
 General and administrative .........         2,543,000            1,353,000
 Third-party servicing ..............           862,000            1,531,000
 Interest ...........................           171,000                2,000
                                            -----------           ----------
                                              3,576,000            2,886,000
                                            -----------           ----------
Income before income taxes ..........         7,879,000            3,865,000
Income tax expense ..................         3,191,000            1,553,000
                                            -----------           ----------
Net income ..........................       $ 4,688,000           $2,312,000
                                            ===========           ==========
Net income per share -- Basic .......       $      0.71           $     0.57
                                            -----------           ----------
Diluted .............................       $      0.66           $     0.53
                                            -----------           ----------
Weighted average number of shares
  outstanding -- Basic...............         6,603,000            4,076,000
                                            -----------           ----------
Diluted .............................         7,079,000            4,351,000
                                            -----------           ----------
</TABLE>




          See accompanying notes to consolidated financial statements

                                       3

<PAGE>
                      ASTA FUNDING, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
                                  (Unaudited)


<TABLE>
<CAPTION>

                                                                                            Additional
                                                                        Common Stock         Paid-in       Retained
                                                                     Shares      Amount      Capital       Earnings        Total
                                                                    ---------   -------    -----------    -----------   -----------
<S>                                                                 <C>         <C>        <C>            <C>           <C>
Balance, September 30, 2003.....................................    6,590,000   $66,000    $57,784,000     34,517,000    92,367,000
Exercise of options.............................................       47,000        --        541,000             --       541,000
Dividend payable................................................           --        --             --       (331,000)     (331,000)
Net Income......................................................           --        --             --      4,688,000     4,688,000
                                                                    ---------   -------    -----------    -----------   -----------
Balance, December 31, 2003......................................    6,637,000   $66,000    $58,325,000    $38,874,000   $97,265,000
                                                                    =========   =======    ===========    ===========   ===========
</TABLE>




          See accompanying notes to consolidated financial statements

                                       4

<PAGE>
                      ASTA FUNDING, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)


<TABLE>
<CAPTION>

                                         Three Months Ended   Three Months Ended
                                            December 31,         December 31,
                                                2003                 2002
                                         ------------------   ------------------
<S>                                      <C>                  <C>
Cash flows from operating activities:
 Net income ..................................................          $  4,688,000           $  2,312,000
Adjustments to reconcile net income to net cash provided by
  operating activities:
 Depreciation and amortization ...............................                61,000                 30,000
 Deferred income taxes .......................................                (4,000)                30,000
Changes in:
 Repossessed automobiles held for sale .......................                  --                   30,000
 Other assets ................................................                78,000                503,000
 Income taxes payable ........................................             2,478,000                462,000
Other liabilities ............................................            (2,041,000)              (176,000)
                                                                        ------------           ------------
     Net cash provided by operating activities ...............             5,260,000              3,191,000
Cash flows from investing activities:
 Auto loan principal payments ................................                  --                   29,000
 Purchase of consumer receivables acquired for liquidation ...           (35,421,000)            (1,930,000)
 Principal collected on receivables acquired for liquidation..            17,442,000              7,506,000
 Finance receivables .........................................                  --                1,443,000
 Capital expenditures ........................................               (49,000)              (269,000)
                                                                        ------------           ------------
     Net cash (used in) provided by investing activities .....           (18,028,000)             6,779,000
Cash flows from financing activities:
 Proceeds from exercise of options ...........................               541,000                 30,000
 Dividends paid ..............................................              (330,000)
 Advances (payments) under line of credit, net ...............            10,264,000             (2,172,000)
                                                                        ------------           ------------
     Net cash provided by (used in) financing activities .....            10,475,000             (2,142,000)
                                                                        ------------           ------------
(Decrease) increase in cash ..................................            (2,293,000)             7,828,000
Cash at the beginning of period ..............................             6,846,000              2,213,000
                                                                        ------------           ------------
Cash at end of period ........................................          $  4,553,000           $ 10,041,000
                                                                        ============           ============
Supplemental disclosure of cash flow information:
 Cash paid during the period
   Interest ..................................................          $    143,000           $      2,000
   Income taxes ..............................................          $  1,054,000           $  1,054,000
</TABLE>



                                       5


<PAGE>
                               ASTA FUNDING, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1: Business and Basis of Presentation


 Business

   Asta Funding, Inc., together with its wholly owned subsidiaries, is engaged
in the business of purchasing, managing and servicing non-conforming and
distressed consumer receivables. Non-conforming consumer receivables are the
obligations of individuals that have incurred credit impairment either at the
time the obligation was originated or subsequent to origination. Distressed
consumer receivables are the unpaid debts of individuals to banks, finance
companies and other credit providers. A large portion of our distressed
consumer receivables are MasterCard(R), Visa(R) and other credit card accounts
which were charged-off by the issuing banks for non-payment. We acquire these
portfolios at substantial discounts from their face values that are based on
the characteristics of the underlying accounts of each portfolio.

 Basis of Presentation

   The consolidated balance sheet as of December 31, 2003, the consolidated
statements of operations for the three month periods ended December 31, 2003
and 2002, and the consolidated statements of cash flows for the three month
periods ended December 31, 2003 and 2002, have been prepared by us without an
audit. In the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to present fairly the financial
position of us at December 31, 2003 and September 30, 2003, the results of
operations for the three month periods ended December 31, 2003 and 2002 and
cash flows for the three month periods ended December 31, 2003 and 2002 have
been made. The results of operations for the three month periods ended
December 31, 2003 and 2002 are not necessarily indicative of the operating
results for any other interim period or the full fiscal year.

   The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with Rule 10-01 of Regulation S-X promulgated by
the Securities and Exchange Commission and therefore do not include all
information and footnote disclosures required under generally accepted
accounting principles. We suggest that these financial statements be read in
conjunction with the financial statements and notes thereto included in our
Annual Report on Form 10-K for the fiscal year ended September 30, 2003 filed
with the Securities and Exchange Commission on December 22, 2003.

Note 2: Principles of Consolidation

   The consolidated financial statements include the accounts of Asta Funding,
Inc. and its wholly-owned subsidiaries. All significant intercompany balances
and transactions have been eliminated in consolidation.

Note 3: Consumer Receivables Acquired for Liquidation

   Accounts acquired for liquidation are stated at their net realizable value
and consist of mainly defaulted consumer loans to individuals throughout the
country. We account for the investment in receivable portfolios on the
"accrual basis" or "cost recovery basis" of accounting in accordance with the
provisions of the AICPA's Practice Bulletin 6, "Amortization of Discounts on
Certain Acquired Loans". Static pools are established for each portfolio
acquired. Once a static pool is established, the receivables are permanently
assigned to the pool. The discount (i.e. the difference between the cost of
each static pool and the related gross aggregate receivable balance) is not
recorded because we expect to collect substantially less than the gross
receivable balance. As a result, we record these receivable portfolios at cost
at the time of acquisition.


                                       6

<PAGE>
                               ASTA FUNDING, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

Note 3: Consumer Receivables Acquired for Liquidation -- (Continued)

   The following tables summarize the changes in the balance sheet of the
investment in receivable portfolios during the following periods:

<TABLE>
<CAPTION>

                                                                                        For the Three Months Ended December 31, 2003
                                                                                                       (in thousands)
                                                                                        -------------------------------------------
                                                                                            Accrual         Cash
                                                                                             Basis          Basis
                                                                                          Portfolios     Portfolios        Total
                                                                                         ------------    -----------   ------------
<S>                                                                                      <C>             <C>           <C>
Balance, beginning of period.........................................................    $102,809,000    $ 2,783,000   $105,592,000
Acquisitions of receivable portfolios, net...........................................      34,717,000        704,000     35,421,000
Gross cash collections including sales proceeds......................................     (26,543,000)    (2,328,000)   (28,871,000)
Finance income recognized............................................................       9,954,000      1,475,000     11,429,000
                                                                                         ------------    -----------   ------------
Balance, end of period...............................................................    $120,937,000    $ 2,634,000   $123,571,000
                                                                                         ============    ===========   ============
Revenue as a percentage of collections...............................................            37.5%          63.4%          39.6%
</TABLE>


<TABLE>
<CAPTION>

                                                                                        For the Three Months Ended December 31, 2002
                                                                                                       (in thousands)
                                                                                        -------------------------------------------
                                                                                            Accrual         Cash
                                                                                             Basis          Basis
                                                                                          Portfolios     Portfolios        Total
                                                                                         ------------    -----------   ------------
<S>                                                                                      <C>             <C>           <C>
Balance, beginning of period.........................................................    $ 32,797,000    $ 3,282,000    $36,079,000
Acquisitions of receivable portfolios, net...........................................       1,661,000        269,000      1,930,000
Gross cash collections including sales proceeds......................................     (11,755,000)    (2,390,000)   (14,145,000)
Finance income recognized............................................................       4,818,000      1,821,000      6,639,000
                                                                                         ------------    -----------   ------------
Balance, end of period...............................................................    $ 27,521,000    $ 2,982,000   $ 30,503,000
                                                                                         ============    ===========   ============
Revenue as a percentage of collections...............................................            41.0%          76.2%          46.9%
</TABLE>


Note 4: Furniture and Equipment

   Furniture and equipment consist of the following as of the dates indicated:

<TABLE>
<CAPTION>

                                                    December 31,   September 30,
                                                        2003            2003
                                                    ------------   -------------
<S>                                                 <C>            <C>
Furniture ......................................     $  314,000      $  307,000
Equipment ......................................      1,220,000       1,178,000
                                                     ----------      ----------
                                                      1,534,000       1,485,000
Less accumulated depreciation ..................        821,000         775,000
                                                     ----------      ----------
Balance, end of period .........................     $  713,000      $  710,000
                                                     ==========      ==========
</TABLE>


Note 5: Debt

   In January 2001, a bank advanced $10,000,000 under a line of credit with
interest at the prime rate (4.00% at December 31, 2003) The credit line is
collateralized by portfolios of consumer receivables acquired for liquidation
and contains customary financial and other covenants (relative to tangible net
worth, interest coverage, and leverage ratio, as defined) that must be
maintained in order to borrow funds. In January 2003, the line of credit was
increased to $25,000,000. In November 2003, the line of credit was increased
to $35 million. This line was due to expire on January 31, 2004, but has been
extended by the bank until March 31, 2004. We are currently negotiating with
our bank to obtain an increase in our line of credit above $35 million and to
extend the line for periods beyond March 31, 2004. As of December 31, 2003,
$26.6 million was outstanding and we were in compliance with all of the
covenants under this line of credit.


                                       7

<PAGE>
                               ASTA FUNDING, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

Note 6: Commitments and Contingencies


 Employment Agreements

   We have employment agreements with our executive officers. Such agreements
provide for base salary payments as well as bonuses. The agreements also
contain confidentiality and non-compete provisions. Please refer to our
definitive Proxy Statement, as filed with the Securities and Exchange
Commission, under the caption "Executive Compensation" for additional
information.

 Leases

   We are a party to two operating leases with respect to our facilities.
Please refer to our consolidated financial statements and notes thereto in our
Annual Report on Form 10-K, as filed with the Securities and Exchange
Commission, for additional information.

 Litigation

   In the ordinary course of our business, we are involved in numerous legal
proceedings. We regularly initiate collection lawsuits, using our network of
third party law firms, against consumers. Also, consumers occasionally
initiate litigation against us, in which they allege that we have violated a
federal or state law in the process of collecting their account. We do not
believe that these ordinary course matters are material to our business and
financial condition. As of the date of this Form 10-Q, we were not involved in
any material litigation in which we were a defendant.

Note 7: Income Recognition

   We recognize income on non-performing and performing consumer receivable
portfolios, which are acquired for liquidation, using either the interest
method or cost recovery method. Upon acquisition of a portfolio of
receivables, management estimates the future anticipated cash flows and
determines the allocation of payments based upon this estimate. If management
can reasonably estimate the expected amount to be collected on a portfolio and
can reasonably determine the timing of such payments based on historic
experience and other factors, we use the interest method. If management cannot
reasonably estimate the future cash flows, we use the cost recovery method.

   Under the interest method, we recognize income on the effective yield method
based on the actual cash collected during a period and future estimated cash
flows and timing of such collections and the portfolio's purchase. The
estimated future cash flows are reevaluated quarterly. Under the cost recovery
method, no income is recognized until we have fully collected the cost of the
portfolio.

Note 8: Income Taxes

   The provision for income tax expense for the three month periods ending
December 30, 2003 and 2002, reflects income tax expense at an effective rate
of 40.5% and 40.2% respectively.

   Deferred federal and state taxes arise from temporary differences resulting
primarily from the provision for credit losses and depreciation timing
differences.

Note 9: Net Income Per Share

   Basic per share data is determined by dividing net income by the weighted
average shares outstanding during the period. Diluted per share data is
computed by dividing net income by the weighted average shares outstanding,
assuming all dilutive potential common shares were issued. With respect to the
assumed proceeds from the exercise of dilutive options, the treasury stock
method is calculated using the average market price for the period.


                                       8

<PAGE>
                               ASTA FUNDING, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

Note 9: Net Income Per Share -- (Continued)

   The following table presents the computation of basic and diluted per share
data for the three months ended December 31, 2003 and 2002:

<TABLE>
<CAPTION>

                                                                        2003                                   2002
                                                        -----------------------------------    ------------------------------------
                                                                      Weighted                                Weighted
                                                            Net        Average    Per Share        Net        Average     Per Share
                                                          Income       Shares       Amount       Income        Shares       Amount
                                                        ----------    ---------   ---------    ----------    ----------   ---------
<S>                                                     <C>           <C>         <C>          <C>           <C>          <C>
Basic ...............................................   $4,688,000    6,603,000     $0.71      $2,312,000    4,076,0000     $0.57
                                                                                    =====                                   =====
Effect of Dilutive Stock ............................                   476,000                                275,0000
                                                        ----------    ---------                ----------    ----------
Diluted .............................................   $4,688,000    7,079,000     $0.66      $2,312,000    4,351,0000     $0.53
                                                        ==========    =========     =====      ==========    ==========     =====
</TABLE>


Note 10: Stock based compensation

   The Company accounts for stock-based employee compensation under Accounting
Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to
Employees", and related interpretations. The Company has adopted the
disclosure-only provisions of Statement of Financial Accounting Standards
("SFAS") No. 123, "Accounting for Stock-Based Compensation" and SFAS No. 148,
"Accounting for Stock-Based Compensation -- Transition and Disclosure", which
was released in December 2002 as an amendment of SFAS No. 123. The following
table illustrates the effect on net income and earnings per share if the fair
value based method had been applied to all awards.

<TABLE>
<CAPTION>

                                                                                       Three Months Ended
                                                                                          December 31,
                                                                               ----------------------------------
                                                                                   2003                  2002
                                                                               -----------          -------------
<S>                                                                           <C>                   <C>
Net income as reported ..............................................          $ 4,688,000          $   2,312,000
Stock based compensation expense
  Determined under fair value method, net of related tax effects.....             (511,000)              (265,000)
                                                                               -----------          -------------
Pro forma net income ................................................          $ 4,177,000          $   2,047,000
                                                                               ===========          =============
Earnings per share:
 Basic -- as reported ...............................................          $      0.71          $        0.57
                                                                               ===========          =============
 Basic -- pro forma .................................................          $      0.63          $        0.50
                                                                               ===========          =============
 Diluted -- as reported .............................................          $      0.66          $        0.53
                                                                               ===========          =============
 Diluted -- pro forma ...............................................          $      0.59          $        0.47
                                                                               ===========          =============
</TABLE>


   The weighted average fair value of the options granted during 2003 and 2002
were $17.74 and $6.65 per share on the dates of grant, respectively, using the
Black-Scholes option pricing model with the following assumptions: dividend
yield 0.0093% (2003) and dividend yield 0% (2002), volatility 54% and 56%
(2003) and 78% (2002), expected life 10 years, risk free interest rate of
3.81% to 4.05% in 2003 and 5.0% in 2002.

Note 11: Stock Option Plans

 1995 Stock Option Plan

   The Company has a stock option plan under which 920,000 shares of common
stock are reserved for issuance upon exercise of either incentive or non-
incentive stock options, which may be granted from time to time by the Board
of Directors to employees and others. The Board of Directors determines the
option price (not to be less than fair market value for incentive options) at
the date of grant. The options have a maximum term of 10 years and outstanding
options expire from November 2005 through November 2013. As of December 31,
2003, 40,501 shares of common stock were available for issuance under the
stock option plan.


                                       9

<PAGE>
                               ASTA FUNDING, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

Note 11: Stock Option Plans -- (Continued)

 2002 Stock Option Plan

   During May 2002, the Company approved a new stock option plan under which
500,000 shares of common stock are reserved for issuance upon the exercise of
either incentive or non-incentive stock options, which may be granted from
time to time by the Board of Directors to employees and others. The Board of
Directors determines the option price (not to be less than fair market value
for incentive options) at the date of grant. The options have a maximum term
of 10 years. As of December 31, 2003, 430,000 shares of common stock were
available for issuance under the stock option plan.

   The following table summarizes stock option transactions under the plans:

<TABLE>
<CAPTION>

                                                                                               Three Months Ended December 31,
                                                                                           ----------------------------------------
                                                                                                  2003                  2002
                                                                                           ------------------    ------------------
                                                                                                     Weighted              Weighted
                                                                                                      Average               Average
                                                                                                     Exercise              Exercise
                                                                                           Shares      Price     Shares      Price
                                                                                          -------    --------    -------   --------
<S>                                                                                       <C>        <C>         <C>       <C>
Outstanding options at the beginning of period ........................................   612,500    $ 6.4754    554,500    $5.7314
Options granted .......................................................................   165,000     29.7400    115,000     9.4500
Options exercised .....................................................................   (46,999)    11.5303     (6,000)    5.0000
                                                                                          -------    --------    -------    -------
Outstanding options at the end of period ..............................................   730,501    $11.4050    663,500    $6.3826
                                                                                          =======                =======
Exercisable options at the end of period ..............................................   518,004    $ 7.7007    427,502    $5.1288
                                                                                          =======                =======
</TABLE>


   The following table summarizes information about the Plans outstanding
options as of December 31, 2003:

<TABLE>
<CAPTION>

                                                                           Options Outstanding                Options Exercisable
                                                                -----------------------------------------    ----------------------
                                                                                  Weighted
                                                                                  Average        Weighted                  Weighted
                                                                                 Remaining        Average                   Average
                                                                  Number        Contractual      Exercise      Number      Exercise
Range of Exercise Price                                         Outstanding   Life (in Years)      Price     Exercisable     Price
  -----------------------                                       -----------   ---------------    --------    -----------   --------
<S>                                                             <C>           <C>                <C>         <C>           <C>
$ 0.0000 - $ 2.9740.........................................      102,500           5.4          $ 1.6250      102,500     $ 1.6250
$ 2.9741 - $ 5.9480.........................................      295,500           5.3            5.1134      295,500       5.1134
$ 5.9481 - $ 8.9220.........................................       22,500           7.2            6.3750       14,165       6.3750
$ 8.9221 - $11.8960.........................................       91,668           8.8            9.4500       25,000       9.4500
$11.8961 - $14.8700.........................................       41,167           8.2           13.3256       23,667      13.3300
$14.8701 - $17.8440.........................................       12,166           9.2           15.4900        2,168      15.4900
$26.7661 - $29.7400.........................................      165,000           9.8           29.7400       55,004      29.7400
                                                                  -------           ---          --------      -------     --------
                                                                  730,501           7.1          $11.4050      518,004     $ 7.7007
                                                                  =======                                      =======
</TABLE>



                                       10

<PAGE>
                               ASTA FUNDING, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

Note 12: Stockholders Equity

   In September 2003, we issued 3,000 shares of common stock with a market
value of $26.80 per share to a former director.

   During August 2003, we declared a $0.05 per share quarterly dividend. We
paid $330,000 on November 1, 2003 and accrued $331,000 as of December 31,
2003, for record holders as of December 31, 2003 that will be paid on
February 1, 2004.

Note 13: Use of Estimates
   The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent 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 including management's estimates of future cash flows and the
allocation of collections between principal and interest resulting therefrom.


                                       11

<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations

Overview

   We are primarily engaged in the business of acquiring, managing, servicing
and recovering on portfolios of consumer receivables. These portfolios
generally consist of one or more of the following types of consumer
receivables:

   o charged-off receivables -- accounts that have been written-off by the
     originators and may have been previously serviced by collection agencies;

   o 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

   o performing receivables -- accounts where the debtor is making regular
     monthly payments that may or may not have been delinquent in the past.

   We acquire these consumer receivable portfolios at a significant discount to
the amount actually owed by the borrowers. We acquire these portfolios after a
qualitative and quantitative analysis of the underlying receivables and
calculate the purchase price so that our estimated cash flow offers us an
adequate return on our acquisition costs and servicing expenses. After
purchasing a portfolio, we actively monitor its performance and review and
adjust our collection and servicing strategies accordingly.

   We purchase receivables from credit grantors and others through privately
negotiated direct sales and auctions in which sellers of receivables seek bids
from several pre-qualified debt purchasers. We pursue new acquisitions of
consumer receivable portfolios on an ongoing basis through:

   o our relationships with industry participants, collection agencies,
     investors and our financing sources;

   o brokers who specialize in the sale of consumer receivable portfolios; and

   o other sources.

   This Form 10-Q contains forward-looking statements made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements typically are identified by use of terms such as
"may," "will," "should," "plan," "expect," "believe," "anticipate," "estimate"
and similar expressions, although some forward-looking statements are
expressed differently. Forward-looking statements represent our management's
judgment regarding future events. Although we believe that the expectations
reflected in such forward-looking statements are reasonable, we can give no
assurance that such expectations will prove to be correct. All statements
other than statements of historical fact included in this report regarding our
financial position, business strategy, products, products under development
and clinical trials, markets, budgets, plans, or objectives for future
operations are forward-looking statements. We cannot guarantee the accuracy of
the forward-looking statements, and you should be aware that our actual
results could differ materially from those contained in the forward-looking
statements due to a number of factors, including the statements under "Risk
Factors"  and "Critical Accounting Policies"  detailed in our annual report on
form 10-K for the year ended September 30, 2003, and other reports filed with
the Securities and Exchange Commission.

   Our annual report on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K and all other documents filed by the Company or with
respect to its securities with the Securities and Exchange Commission are
available free of charge through our website at www.astafunding.com.
Information on our website does not constitute a part of this report.

Critical Accounting Policies

   We account for our investments in consumer receivable portfolios, using
either:

   o the interest method; or

   o the cost recovery method.

   Generally, each purchase is considered a separate portfolio of receivables
and is considered a financial investment. Based upon the expected performance
characteristics of the receivables in the portfolio, we determine whether the
portfolio should be accounted for using the interest method or the cost
recovery

                                       12

<PAGE>
method. If we can reasonably estimate the amount to be collected on a
portfolio and can reasonably determine the timing of such payments based on
historic experience and other factors, we use the interest method. If we
cannot reasonably estimate the future cash flows, we use the cost recovery
method.

   The interest method allows us to recognize income on the effective yield of
such portfolio based on the actual cash collected during a period and future
estimated cash flows and the timing of such collections and the purchase of
such portfolios. Under this method, we periodically apply a portion of the
actual funds collected as a reduction in the principal amount invested in each
specific portfolio and the remainder is recognized as finance income.
Generally, these portfolios are expected to amortize over a three to five year
period based upon our estimated future cash flows. Historically, a majority of
the cash we ultimately collect on a portfolio is received during the first 18
months after acquiring the portfolio, although additional amounts are
collected over the remaining periods. The estimated future cash flows of the
portfolios are reevaluated quarterly.

   Under the cost recovery method of accounting, no income is recognized until
the purchase price of a portfolio has been fully recovered by us.

   We periodically review our receivable portfolios for impairment based on the
estimated future cash flows. Provisions for losses are charged to operations
when it is determined that the remaining investment in the receivable
portfolio is greater than the estimated future collections. We have not
recorded any impairment charges on our consumer receivable portfolios during
the three-month period ended December 31, 2003. We typically recognize finance
income net of collection fees paid to third-party collection agencies. With
respect to a specific consumer receivable portfolio containing a significant
amount of performing and semi-performing accounts, we recognize finance income
on accounts that are being serviced by a third-party servicer at the gross
amounts received by the servicer. The servicing cost for this portfolio is
reported as an expense on our income statement as third-party service expense.

   Based on an increase in projected portfolio collections on certain
portfolios as compared to what we estimated at September 30, 2003, we revised
our estimates. Such change in accounting estimates has resulted in
approximately a $1.3 million increase in finance income recognized during the
three months ended December 31, 2003.

   In the following discussions, most percentages and dollar amounts have been
rounded to aid presentation. As a result, all figures are approximations.

Results of Operations

   The three-month period ended December 31, 2003, compared to the three-month
period ended December 31, 2002

   Revenues. During the three-month period ended December 31, 2003, finance
income increased $4.7 million or 69.1% to $11.5 million from $6.8 million for
the three-month period ended December 31, 2002. The increase in finance income
was primarily due to an increase in finance income earned on consumer
receivables acquired for liquidation, which resulted from an increase in the
average outstanding accounts acquired for liquidation during the three-months
ended December 31, 2003, as compared to the same prior year period. During the
three months ended December 31, 2003, we acquired receivables at a cost of
$35.4 million as compared to $1.9 million during the three months ended
December 31, 2002 and for year ended September 30, 2003, we acquired
receivables at a cost of $115.6 million as compared to $36.6 million for the
year ended September 30, 2002. In addition, based on an increase in projected
portfolio collections on certain portfolios as compared to what we estimated
at September 30, 2003, we revised our estimates. Such change in accounting
estimates has resulted in approximately a $1.3 million increase in finance
income recognized during the three months ended December 31, 2003.

   General and Administrative Expenses. During the three-month period ended
December 31, 2003, general and administrative expenses increased $1.1 million
or 78.6% to $2.5 million from $1.4 million for the three-months ended
December 31, 2002, and represented 69.4% of total expenses for the three
months ended December 31, 2003. The increase in general and administrative
expenses was primarily due to an increase in receivable servicing expenses
during the three-month period ended December 31, 2003, as compared to the same
prior year period. The increase in receivable servicing expenses resulted from
the substantial increase in

                                       13

<PAGE>
our average outstanding accounts acquired for liquidation during the three
months ended December 31, 2003, as compared to the same prior year period. A
majority of the increased costs were from collection expenses including court
costs, data processing costs, salaries, payroll taxes and benefits,
professional fees, telephone charges and rent. In January 2003, we acquired a
call center in Bethlehem, PA that we use for servicing our receivables,
accordingly we have servicing expenses associated with this center during the
three months ended December 31, 2003, that we did not have during the three
months ended December 31, 2002.

   Third-Party Servicing Expenses. During the three-month period ended
December 31, 2003, third-party servicing expenses decreased $0.6 million or
40.0% to $0.9 million from $1.5 for the three months ended December 31, 2002,
and represented 25.0% of total expenses for the three months ended December 31,
2003. The decrease in third-party servicing expenses was primarily due to a
reduction in the number of accounts being serviced on a portfolio that was
purchased in August 2001 on a specific portfolio during the three months ended
December 31, 2003, as compared to the same prior year period.

   Interest Expense. During the three-month period ended December 31, 2003,
interest expense increased to $0.2 million from $0.0 million compared to the
same period in the prior year and represented 5.6% of total expenses for the
three-month period ended December 31, 2003. The increase was due to an
increase in the average outstanding borrowings by us under our line of credit
during the three-month period ended December 31, 2003, as compared to the same
period in the prior year. The increase in borrowings was due to the increase
in acquisitions of consumer receivables acquired for liquidation during the
second half of our fiscal year ended September 30, 2003 and the first quarter
of this fiscal year ended December 31, 2003, as compared to the same prior
year periods.

Liquidity and Capital Resources

   Our primary sources of cash from operations include payments on the
receivable portfolios that we have acquired. Our primary uses of cash include
our purchases of consumer receivable portfolios. We rely significantly upon
our lenders and others, including our affiliates, to provide the funds
necessary for the purchase of consumer and commercial accounts receivable
portfolios. While we maintain a $35 million line of credit, for portfolio
purchases, we also may arrange financing on a transactional basis. While we
have historically been able to finance these purchases, we do not have
committed loan facilities, other than our $35 million line of credit with a
financial institution. As of December 31, 2003, there was $26.6 million
outstanding balance under this facility. As of December 31, 2003, our cash and
cash equivalents decreased to $4.6 million from $6.8 million at September 30,
2003. The decrease in cash and cash equivalents during the three month period
ended December 31, 2003, was primarily due to an increase in consumer
receivable purchases during the three months ended December 31, 2003 as
compared to the same prior year period.

   Net cash provided by operating activities was $5.3 million during the three-
months ended December 31, 2003, compared to net cash provided by operating
activities of $3.2 million during the three-months ended December 31, 2002.
The increase in net cash provided by operating activities was primarily due to
an increase in net income and income taxes payable which was partially offset
by a decrease in other liabilities during the three-months ended December 31,
2003, as compared to the same year period. Net cash used in investing
activities was $18.0 million during the three-months ended December 31, 2003,
compared to net cash provided by investing activities of $6.8 million during
the three-months ended December 31, 2002. The decrease in net cash provided by
investing activities was primarily due to an increase in the purchase of
accounts acquired for liquidation during the three-months ended December 31,
2003, compared to the same period in the prior year. Net cash provided by
financing activities was $10.5 million during the three-months ended
December 31, 2003, compared to net cash used of $2.1 million during the three-
months December 31, 2002. The increase in net cash provided by financing
activities was primarily due to an increase in borrowings under our line of
credit which was due to an increase in accounts acquired for liquidation
during the three-months ended December 31, 2003, compared to the same prior
year period.

   We have a $35 million line of credit with a bank with interest at the prime
rate. The advances under this credit line are collateralized by portfolios of
consumer receivables acquired for liquidation, and the loan agreement contains
customary financial and operating covenants that must be maintained in order
for us to borrow funds. This line was due to expire on January 31, 2004, but
has been extended by the bank until March 31, 2004. We are currently
negotiating with our bank to obtain an increase in our line of credit above

                                       14

<PAGE>
$35 million and to extend the line for periods beyond March 31, 2004. As of
December 31, 2003, there was $26.6 million outstanding balance under this line
of credit and we were in compliance with all of the covenants under this line
of credit.

   Our cash requirements have been and will continue to be significant. We
depend on external financing to acquire consumer receivables. During the
three-months ended December 31, 2003, we acquired consumer portfolios at a
cost of approximately $35.4 million. These acquisitions were financed with our
credit facility and cash flows from operating activities.

   We anticipate the funds available under our current credit facility as well
as funds that may be made available by Asta Group, Incorporated, an affiliate
of ours, and cash from operations will be sufficient to satisfy the our
estimated cash requirements for at least the next 12 months. We are currently
negotiating with our bank to obtain an increase in our line of credit above
$35 million and to extend the line for periods beyond March 31, 2004. If we
are unable to obtain an increase and/or an additional extension in our line of
credit, this may have a negative impact in our growth. If for any reason our
available cash otherwise proves to be insufficient to fund operations (because
of future changes in the industry, general economic conditions, unanticipated
increases in expenses, or other factors), we may be required to seek
additional funding.

   From time to time, we evaluate potential acquisitions of related businesses.
However, we have not reached any agreement or arrangement with respect to any
particular acquisition and we may not be able to complete any acquisitions on
favorable terms or at all.

   The following tables summarize the changes in the balance sheet of the
investment in receivable portfolios during the following periods:

<TABLE>
<CAPTION>

                                                                                        For the Three Months Ended December 31, 2003
                                                                                        --------------------------------------------
                                                                                                       (in thousands)
                                                                                           Accrual          Cash
                                                                                            Basis           Basis
                                                                                          Portfolios     Portfolios        Total
                                                                                        -------------    -----------   ------------
<S>                                                                                     <C>              <C>           <C>
Balance, beginning of period........................................................    $ 102,809,000    $ 2,783,000   $105,592,000
Acquisitions of receivable portfolios, net..........................................       34,717,000        704,000     35,421,000
Cash collections including sales proceeds...........................................      (26,543,000)    (2,328,000)   (28,871,000)
Finance income recognized...........................................................        9,954,000      1,475,000     11,429,000
                                                                                        -------------    -----------   ------------
Balance, end of period..............................................................     $120,937,000    $ 2,634,000   $123,571,000
                                                                                        =============    ===========   ============
Revenue as a percentage of collections..............................................             37.5%          63.4%          39.6%
</TABLE>


<TABLE>
<CAPTION>

                                                                                        For the Three Months Ended December 31, 2002
                                                                                        --------------------------------------------
                                                                                                       (in thousands)
                                                                                            Accrual         Cash
                                                                                             Basis          Basis
                                                                                          Portfolios     Portfolios        Total
                                                                                         ------------    -----------   ------------
<S>                                                                                      <C>             <C>           <C>
Balance, beginning of period.........................................................    $ 32,797,000    $ 3,282,000    $36,079,000
Acquisitions of receivable portfolios, net...........................................       1,661,000        269,000      1,930,000
Cash collections including sales proceeds............................................     (11,755,000)    (2,390,000)   (14,145,000)
Finance income recognized............................................................       4,818,000      1,821,000      6,639,000
                                                                                         ------------    -----------   ------------
Balance, end of period...............................................................    $ 27,521,000    $ 2,982,000   $ 30,503,000
                                                                                         ============    ===========   ============
Revenue as a percentage of collections...............................................            41.0%          76.2%          46.9%
</TABLE>


Additional Supplementary Information on Accounts Acquired for Liquidation

<TABLE>
<CAPTION>

                                                    As of December 31, 2003
                                                --------------------------------
                                                Cost Recovery    Interest Method
                                                  Portfolios        Portfolios
                                                --------------   ---------------
<S>                                             <C>              <C>
Cumulative Original Purchase Price .........    $   49,300,000    $  206,400,000
Cumulative Aggregate Managed Portfolios ....    $2,168,400,000    $6,084,800,000
</TABLE>



                                       15

<PAGE>
   The original purchase price reflects what we paid for the receivables from
1998 through December 31, 2003. The cumulative aggregate managed portfolio
balance is the original aggregate amount owed by the borrowers from 1998
through December 31, 2003 at the time of purchase. We purchase consumer
receivables at substantial discounts from the face amount. We record interest
income on our receivables under either the interest or cost recovery method.

   We do not anticipate collecting the majority of the purchased principal
amounts. Accordingly, the difference between the carrying value of the
portfolios and the gross receivables is not indicative of future revenues from
these accounts acquired for liquidation. Since we purchased these accounts at
significant discounts, we anticipate collecting only a portion of the face
amounts.

   For the three-months ended December 31, 2003, we earned interest income of
$1.48 million under the cost recovery method because we collected $1.48 million
in excess of our purchase price on certain receivable portfolios. In addition,
we earned $9.95 million of interest income under the interest method based on
actuarial computations on certain portfolios based on actual collections
during the period based on what we project to collect in future periods.

Recent Accounting Pronouncements

   In October 2003, the American Institute of Certified Accountants issued
Statement of Position ("SOP") 03-03, "Accounting for Loans or Certain
Securities Acquired in a Transfer." This SOP proposes guidance on accounting
for differences between contractual and expected cash flows from an investor's
initial investment in loans or debt securities acquired in a transfer if those
differences are attributable, at least in part, to credit quality. This SOP is
currently under review by the Financial Accounting Standards Board. If this
SOP becomes effective, it will have an effective date for companies whose
fiscal years end on or after December 15, 2004. Management is currently
evaluating this statement's impact on the Company.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

   We are exposed to various types of market risk in the normal course of
business, including the impact of interest rate changes and changes in
corporate tax rates. A material change in these rates could adversely affect
our operating results and cash flows. A 25 basis-point increase in interest
rates could increase our annual interest expense by $25,000 for each
$10 million of variable debt outstanding for the entire fiscal year. We do not
invest in derivative financial or commodity instruments.

Item 4. Controls and Procedures

   a. Disclosure Controls and Procedures.

   As of the end of the period covered by this Quarterly Report on Form 10-Q,
we carried out an evaluation, with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of our disclosure controls and procedures pursuant to Securities
Exchange Act Rule 13a-15. Based upon that evaluation, our Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and
procedures are effective in ensuring that information required to be disclosed
by us in the reports that we file or submit under the Securities Exchange Act
is recorded, processed, summarized and reported, within the time periods
specified in the SEC's rules and forms.

   b. Changes in Internal Controls Over Financial Reporting.

   There have been no changes in our internal control over financial reporting
that occurred during our last fiscal quarter to which this Quarterly Report on
Form 10-Q relates that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.


                                       16

<PAGE>
PART II. OTHER INFORMATION

Item 1. Legal Proceedings

   In the ordinary course of our business, we are involved in numerous legal
proceedings. We regularly initiate collection lawsuits, using our network of
third party law firms, against consumers. Also, consumers occasionally
initiate litigation against us, in which they allege that we have violated a
federal or state law in the process of collecting their account. We do not
believe that these ordinary course matters are material to our business and
financial condition. As of the date of this Form 10-Q, we were not involved in
any material litigation in which we were a defendant.

Item 2. Changes in Securities and Use of Proceeds

   None.

Item 3. Defaults Upon Senior Securities

   None.

Item 4. Submission of Matters to a Vote of Security Holders

   None.

Item 5. Other Information

   None.

Item 6. Exhibits and Reports on Form 8-K

   (a) 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, Mitchell
         Herman, 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, Mitchell
          Herman, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

   (b) Reports on Form 8-K

   Furnished on November 20, 2003, issuance of an earnings press release for
the year ended September 30, 2003.


                                       17


<PAGE>
                                   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.


                             ASTA FUNDING, INC.
                             (Registrant)

Date: February 10, 2004      By: /s/ Gary Stern
                             ----------------------------------------------
                             Gary Stern, President, Chief Executive Officer
                             (Principal Executive Officer)


Date: February 10, 2004      By: /s/ Mitchell Herman
                             ----------------------------------------------
                             Mitchell Herman, Chief Financial Officer
                             (Principal Financial Officer and
                             Principal Accounting Officer)


                                       18