##### 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 March 31, 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
(State or other jurisdiction 
of incorporation or organization)
    
    22-3388607
(IRS Employer
Identification No.)210 Sylvan Ave., Englewood Cliffs, New Jersey
(Address of principal executive offices)
    
    07632
(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 March 31, 2010 (unaudited) and September 30, 2009
    
    
    3Condensed Consolidated Statements of Operations for the three and six month periods ended
March 31, 2010 and 2009 (unaudited)
    
    
    4Condensed Consolidated Statement of Stockholders Equity for the six month period ended
March 31, 2010 (unaudited)
    
    
    5Condensed Consolidated Statements of Cash Flows for the six month periods ended March 31,
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
    
    
    39Item 4. Controls and Procedures
    
    
    39Part II. Other Information
    
    
    40Item 1. Legal Proceedings
    
    
    40Item 1A Risk Factors
    
    
    40Item 2. Unregistered Sale of Equity Securities and Use of Proceeds
    
    
    40Item 3. Defaults Upon Senior Securities
    
    
    40Item 4. (Removed and reserved)
    
    
    40Item 5. Other Information
    
    
    40Item 6. Exhibits
    
    
    41Signatures
    
    
    42Exhibit 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
 March 31,
    
    
    September 30,2010
    
    
    2009(Unaudited)ASSETSCash and cash equivalents
    
    $
    12,646,000
    
    
    $
    2,385,000Restricted cash
    
    
    1,262,000
    
    
    
    2,130,000Consumer receivables acquired for liquidation (at net realizable value)
    
    
    178,614,000
    
    
    
    208,261,000Due from third party collection agencies and attorneys
    
    
    2,757,000
    
    
    
    2,573,000Prepaid and income taxes receivable
    
    
    52,893,000
    
    
    
    47,727,000Investment in venture
    
    
    80,000
    
    
    
    168,000Furniture and equipment, net
    
    
    433,000
    
    
    
    538,000Deferred income taxes
    
    
    18,302,000
    
    
    
    24,072,000Other assets
    
    
    3,064,000
    
    
    
    2,902,000Total assets
    
    $
    270,051,000
    
    
    $
    290,756,000LIABILITIESDebt
    
    $
    96,513,000
    
    
    $
    122,622,000Subordinated debt  related party
    
    
    4,386,000
    
    
    
    8,246,000Other liabilities
    
    
    1,566,000
    
    
    
    2,166,000Dividends payable
    
    
    292,000
    
    
    
    286,000Income taxes payable
    
    
    3,466,000
    
    
    
    Total liabilities
    
    
    106,223,000
    
    
    
    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 
14,598,124 at March 31, 2010 and 14,272,357 at September 30, 2009
    
    
    146,000
    
    
    
    143,000Additional paid-in capital
    
    
    71,863,000
    
    
    
    70,189,000Retained earnings
    
    
    91,831,000
    
    
    
    87,058,000Accumulated other comprehensive (loss) income, net of tax
    
    
    (12,000
    )
    
    
    46,000Total stockholders equity
    
    
    163,828,000
    
    
    
    157,436,000Total liabilities and stockholders equity
    
    $
    270,051,000
    
    
    $
    290,756,000
   3




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 Three Months
    
    
    Three Months
    
    
    Six Months
    
    
    Six MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedMarch 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2010
    
    
    March 31, 2009Revenues:Finance income, net
    
    $
    11,181,000
    
    
    $
    18,104,000
    
    
    $
    22,155,000
    
    
    $
    36,520,000Other income
    
    
    23,000
    
    
    
    22,000
    
    
    
    56,000
    
    
    
    54,00011,204,000
    
    
    
    18,126,000
    
    
    
    22,211,000
    
    
    
    36,574,000Expenses:General and administrative
    
    
    5,274,000
    
    
    
    6,345,000
    
    
    
    10,903,000
    
    
    
    13,372,000Interest (Related party  Period ended March 31, 2010  Three months,
$168,000; Six months, $298,000; Period ended March 31, 2009  Three
months, $128,000; Six months, $256,000)
    
    
    1,087,000
    
    
    
    1,954,000
    
    
    
    2,346,000
    
    
    
    5,124,000Impairments of consumer receivables acquired for liquidation
    
    
    
    
    
    
    18,429,000
    
    
    
    
    
    
    
    39,844,0006,361,000
    
    
    
    26,728,000
    
    
    
    13,249,000
    
    
    
    58,340,000Income (loss) before equity in (loss) earnings of venture and income tax
    
    
    4,843,000
    
    
    
    (8,602,000
    )
    
    
    8,962,000
    
    
    
    (21,766,000
    )Equity in (loss) earnings of venture
    
    
    (4,000
    )
    
    
    (72,000
    )
    
    
    42,000
    
    
    
    (55,000
    )Income (loss) before income tax
    
    
    4,839,000
    
    
    
    (8,674,000
    )
    
    
    9,004,000
    
    
    
    (21,821,000
    )Income tax expense (benefit)
    
    
    1,964,000
    
    
    
    (3,506,000
    )
    
    
    3,654,000
    
    
    
    (8,816,000
    )Net income (loss)
    
    $
    2,875,000
    
    
    $
    (5,168,000
    )
    
    $
    5,350,000
    
    
    $
    (13,005,000
    )Net income (loss) per share:Basic
    
    $
    0.20
    
    
    $
    (0.36
    )
    
    $
    0.37
    
    
    $
    (0.91
    )Diluted
    
    $
    0.20
    
    
    $
    (0.36
    )
    
    $
    0.37
    
    
    $
    (0.91
    )Weighted average number of common shares outstanding:Basic
    
    
    14,498,161
    
    
    
    14,271,824
    
    
    
    14,384,050
    
    
    
    14,271,824Diluted
    
    
    14,504,398
    
    
    
    14,271,824
    
    
    
    14,570,901
    
    
    
    14,271,824
   4




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
 (Unaudited)
 AccumulatedAdditional
    
    
    
    
    
    
    OtherPaid-in
    
    
    Retained
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income
    
    
    TotalBalance, September 30, 2009
    
    
    14,272,357
    
    
    $
    143,000
    
    
    $
    70,189,000
    
    
    $
    87,058,000
    
    
    $
    46,000
    
    
    $
    157,436,000Exercise of options
    
    
    325,767
    
    
    
    3,000
    
    
    
    860,000
    
    
    
    
    
    
    
    
    
    
    
    863,000Stock based compensation expense
    
    
    
    
    
    
    
    
    
    
    763,000
    
    
    
    
    
    
    
    
    
    
    
    763,000Tax benefit arising from vesting of
restricted stock awards
    
    
    
    
    
    
    
    
    
    
    51,000
    
    
    
    
    
    
    
    
    
    
    
    51,000Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (577,000
    )
    
    
    
    
    
    
    (577,000
    )Other comprehensive loss, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (58,000
    )
    
    
    (58,000
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,350,000
    
    
    
    
    
    
    
    5,350,000Balance, March 31, 2010
    
    
    14,598,124
    
    
    $
    146,000
    
    
    $
    71,863,000
    
    
    $
    91,831,000
    
    
    $
    (12,000
    )
    
    $
    163,828,000
  Six Months
    
    
    Six MonthsEnded
    
    
    EndedMarch 31, 2010
    
    
    March 31, 2009Net income (loss)
    
    $
    5,350,000
    
    
    $
    (13,005,000
    )Other comprehensive loss, Net of tax  Foreign Currency translation
    
    
    (58,000
    )
    
    
    (751,000
    )Comprehensive income (loss)
    
    $
    5,292,000
    
    
    $
    (13,756,000
    )
   5




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 Six Months Ended
    
    
    Six Months EndedMarch 31, 2010
    
    
    March 31, 2009Cash flows from operating activities:Net income (loss)
    
    $
    5,350,000
    
    
    $
    (13,005,000
    )Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    546,000
    
    
    
    803,000Deferred income taxes
    
    
    5,770,000
    
    
    
    (8,350,000
    )Impairments of consumer receivables acquired for liquidation
    
    
    
    
    
    
    39,844,000Stock based compensation
    
    
    763,000
    
    
    
    649,000Changes in:Other assets
    
    
    (528,000
    )
    
    
    (369,000
    )Due from third party collection agencies and attorneys
    
    
    (184,000
    )
    
    
    1,347,000Income taxes payable and receivable
    
    
    (1,700,000
    )
    
    
    (6,876,000
    )Other liabilities
    
    
    (657,000
    )
    
    
    (2,473,000
    )Net cash provided by operating activities
    
    
    9,360,000
    
    
    
    11,570,000Cash flows from investing activities:Purchase of consumer receivables acquired for liquidation
    
    
    (3,271,000
    )
    
    
    (2,688,000
    )Principal collected on receivables acquired for liquidation
    
    
    31,140,000
    
    
    
    37,587,000Principal collected on receivable accounts represented by account sales
    
    
    1,795,000
    
    
    
    4,856,000Foreign exchange effect on receivables acquired for liquidation
    
    
    (19,000
    )
    
    
    1,185,000Cash distributions received from venture
    
    
    88,000
    
    
    
    368,000Capital expenditures
    
    
    (75,000
    )
    
    
    (34,000
    )Net cash provided by investing activities
    
    
    29,658,000
    
    
    
    41,274,000Cash flows from financing activities:Proceeds from exercise of options
    
    
    863,000
    
    
    
    Tax benefit arising from vesting of restricted stock awards
    
    
    51,000
    
    
    
    74,000Change in restricted cash
    
    
    868,000
    
    
    
    311,000Dividends paid
    
    
    (571,000
    )
    
    
    (856,000
    )Repayments of debt, net
    
    
    (29,969,000
    )
    
    
    (53,423,000
    )Net cash used in financing activities
    
    
    (28,758,000
    )
    
    
    (53,894,000
    )Net increase (decrease) in cash and cash equivalents
    
    
    10,260,000
    
    
    
    (1,050,000
    )Effect of foreign exchange on cash
    
    
    1,000
    
    
    
    62,000Cash at the beginning of period
    
    
    2,385,000
    
    
    
    3,623,000Cash and cash equivalents at end of period
    
    $
    12,646,000
    
    
    $
    2,635,000Supplemental disclosure of cash flow information:Cash paid during the periodInterest (fiscal year 2010 Related Party  $387,000; 2009 Related Party 
$256,000)
    
    $
    2,532,000
    
    
    $
    5,601,000Income taxes
    
    $
    
    
    
    $
    5,814,000
   6




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##### Table of Contents



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




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ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 2: Principles of Consolidation
  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 Six Months Ended March 31, 2010Accrual
    
    
    CashBasis
    
    
    BasisPortfolios
    
    
    Portfolios
    
    
    TotalBalance, beginning of period
    
    $
    70,650,000
    
    
    $
    137,611,000
    
    
    $
    208,261,000Acquisitions of receivable portfolios, net
    
    
    3,043,000
    
    
    
    228,000
    
    
    
    3,271,000Net cash collections from collection of
consumer receivables acquired for liquidation
    
    
    (37,976,000
    )
    
    
    (14,370,000
    )
    
    
    (52,346,000
    )Net cash collections represented by
account sales of consumer receivables acquired for liquidation
    
    
    (2,740,000
    )
    
    
    (4,000
    )
    
    
    (2,744,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    17,000
    
    
    
    17,000Finance income recognized (1)
    
    
    21,398,000
    
    
    
    757,000
    
    
    
    22,155,000Balance, end of period
    
    $
    54,375,000
    
    
    $
    124,239,000
    
    
    $
    178,614,000Finance income as a percentage of collections
    
    
    52.6
    %
    
    
    5.3
    %
    
    
    40.2
    %
 (1)
    
    Includes approximately $16.4 million derived from fully amortized portfolios. For the Six Months Ended March 31, 2009Accrual
    
    
    CashBasis
    
    
    BasisPortfolios
    
    
    Portfolios
    
    
    TotalBalance, beginning of period
    
    $
    203,470,000
    
    
    $
    245,542,000
    
    
    $
    449,012,000Acquisitions of receivable portfolios, net
    
    
    2,681,000
    
    
    
    7,000
    
    
    
    2,688,000Net cash collections from collection of consumer receivables acquired for liquidation
    
    
    (51,463,000
    )
    
    
    (20,853,000
    )
    
    
    (72,316,000
    )Net cash collections represented by account sales of consumer receivables acquired
for liquidation
    
    
    (3,075,000
    )
    
    
    (3,572,000
    )
    
    
    (6,647,000
    )Transfer to cost recovery
    
    
    (10,128,000
    )
    
    
    10,128,000
    
    
    
    Impairments
    
    
    (39,844,000
    )
    
    
    
    
    
    
    (39,844,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    (1,190,000
    )
    
    
    (1,190,000
    )Finance income recognized (1)
    
    
    35,856,000
    
    
    
    664,000
    
    
    
    36,520,000Balance, end of period
    
    $
    137,497,000
    
    
    $
    230,726,000
    
    
    $
    368,223,000Finance income as a percentage of collections
    
    
    65.7
    %
    
    
    2.7
    %
    
    
    46.2
    %
 (1)
    
    Includes approximately $20.6 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 March 31, 2010Accrual
    
    
    CashBasis
    
    
    BasisPortfolios
    
    
    Portfolios
    
    
    TotalBalance, beginning of period
    
    $
    61,776,000
    
    
    $
    130,350,000
    
    
    $
    192,126,000Acquisitions of receivable portfolios, net
    
    
    895,000
    
    
    
    76,000
    
    
    
    971,000Net cash collections from collections of consumer receivables acquired for liquidation
    
    
    (18,929,000
    )
    
    
    (6,584,000
    )
    
    
    (25,513,000
    )Net cash collections represented by account sales of consumer receivables acquired
for liquidation
    
    
    (147,000
    )
    
    
    
    
    
    
    (147,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    (4,000
    )
    
    
    (4,000
    )Finance income recognized (1)
    
    
    10,780,000
    
    
    
    401,000
    
    
    
    11,181,000Balance, end of period
    
    $
    54,375,000
    
    
    $
    124,239,000
    
    
    $
    178,614,000Finance income as a percentage of collections
    
    
    56.5
    %
    
    
    6.1
    %
    
    
    43.6
    %
 (1)
    
    Includes approximately $8.3 million derived from fully amortized portfolios. For the Three Months Ended March 31, 2009Accrual
    
    
    CashBasis
    
    
    BasisPortfolios
    
    
    Portfolios
    
    
    TotalBalance, beginning of period
    
    $
    166,432,000
    
    
    $
    237,376,000
    
    
    $
    403,808,000Acquisitions of receivable portfolios, net
    
    
    1,603,000
    
    
    
    7,000
    
    
    
    1,610,000Net cash collections from collections of consumer receivables acquired for liquidation
    
    
    (25,090,000
    )
    
    
    (10,971,000
    )
    
    
    (36,061,000
    )Net cash collections represented by account sales of consumer receivables acquired
for liquidation
    
    
    (727,000
    )
    
    
    (147,000
    )
    
    
    (874,000
    )Transfer to cost recovery
    
    
    (3,979,000
    )
    
    
    3,979,000
    
    
    
    Impairments
    
    
    (18,429,000
    )
    
    
    
    
    
    
    (18,429,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    65,000
    
    
    
    65,000Finance income recognized (1)
    
    
    17,687,000
    
    
    
    417,000
    
    
    
    18,104,000Balance, end of period
    
    $
    137,497,000
    
    
    $
    230,726,000
    
    
    $
    368,223,000Finance income as a percentage of collections
    
    
    68.5
    %
    
    
    3.8
    %
    
    
    49.0
    %
 (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 (six months ending)
    
    $
    11,175,000September 30, 2011
    
    
    18,431,000September 30, 2012
    
    
    14,184,000September 30, 2013
    
    
    7,404,000September 30, 2014
    
    
    3,695,000September 30, 2015
    
    
    862,000September 30, 2016
    
    
    690,000September 30, 2017
    
    
    28,000Subtotal
    
    
    56,469,000Deferred revenue
    
    
    (2,094,000
    )Total
    
    $
    54,375,000
  Six Months
    
    
    Six MonthsEnded
    
    
    EndedMarch 31, 2010
    
    
    March 31, 2009Balance at beginning of period
    
    $
    25,875,000
    
    
    $
    58,134,000Income recognized on finance receivables, net
    
    
    (21,398,000
    )
    
    
    (35,856,000
    )Additions representing expected revenue from purchases
    
    
    1,080,000
    
    
    
    902,000Transfers to cost recovery
    
    
    
    
    
    
    (3,372,000)
    )Reclassifications from nonaccretable difference
    
    
    14,956,000
    
    
    
    28,263,000Balance at end of period
    
    $
    20,513,000
    
    
    $
    48,071,000
  13




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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 )
 Three Months
    
    
    Three MonthsEnded
    
    
    EndedMarch 31, 2010
    
    
    March 31, 2009Balance at beginning of period
    
    $
    23,656,000
    
    
    $
    53,952,000Income recognized on finance receivables, net
    
    
    (10,780,000
    )
    
    
    (17,687,000
    )Additions representing expected revenue from purchases
    
    
    271,000
    
    
    
    493,000Transfers to cost recovery
    
    
    
    
    
    
    (895,000
    )Reclassifications from nonaccretable difference
    
    
    7,366,000
    
    
    
    12,208,000Balance at end of period
    
    $
    20,513,000
    
    
    $
    48,071,000
   For the Six Months Ended March 31,2010
    
    
    2009Gross collections (1)
    
    $
    83,762,000
    
    
    $
    123,225,000Commissions and fees (2)
    
    
    28,672,000
    
    
    
    44,262,000Net collections
    
    $
    55,090,000
    
    
    $
    78,963,000
 For the Three Months Ended March 31,2010
    
    
    2009Gross collections (1)
    
    $
    40,035,000
    
    
    $
    57,402,000Commissions and fees (2)
    
    
    14,375,000
    
    
    
    20,467,000Net collections
    
    $
    25,660,000
    
    
    $
    36,935,000
 (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).  14




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ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 4: Furniture and Equipment
  March 31,
    
    
    September 30,2010
    
    
    2009Furniture
    
    $
    310,000
    
    
    $
    310,000Equipment
    
    
    2,831,000
    
    
    
    2,783,000Software
    
    
    144,000
    
    
    
    117,000Leasehold improvements
    
    
    86,000
    
    
    
    86,0003,371,000
    
    
    
    3,296,000Less accumulated depreciation
    
    
    2,938,000
    
    
    
    2,758,000Balance, end of period
    
    $
    433,000
    
    
    $
    538,000
 Note 5: Debt and Subordinated Debt  Related Party
 Bank Leumi Credit Agreement
   15




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##### Table of Contents



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




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Unaudited)
 Note 5: Debt and Subordinated Debt  Related Party (continued)
 Receivables Financing Agreement (continued)
    IDB Credit Facility
   Subordinated Debt  Related Party
     17




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Unaudited)
 Note 5: Debt and Subordinated Debt  Related Party (continued)
  March 31, 2010Stated
    
    
    AverageMarch 31,
    
    
    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
    
    
    96,513,000
    
    
    
    104,321,000
    
    
    
    3.73
    %
    
    
    3.75
    %Total debt
    
    $
    96,513,000
    
    
    $
    122,622,000
    
    
    
    n/a
    
    
    
    3.83
    %Subordinated debt  related party
    
    $
    4,386,000
    
    
    $
    8,246,000
    
    
    
    10.00
    %
    
    
    7.93
    %
 (1)
    
    6-month average Note 6: Commitments and Contingencies
 Employment Agreements
  Leases
  Litigation
   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
 Income Recognition
    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;
  19




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




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ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 8: Income Taxes
    Note 9: Net Income Per Share
   Six Months Ended March 31,2010
    
    
    2009Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedNet
    
    
    Average
    
    
    Per Share
    
    
    Net
    
    
    Average
    
    
    Per ShareIncome
    
    
    Shares
    
    
    Amount
    
    
    (Loss)
    
    
    Shares
    
    
    AmountBasic
    
    $
    5,350,000
    
    
    
    14,384,050
    
    
    $
    0.37
    
    
    $
    (13,005,000
    )
    
    
    14,271,824
    
    
    $
    (0.91
    )Effect of Dilutive Stock
    
    
    
    
    
    
    186,851
    
    
    
    
    
    
    
    
    
    
    
    Diluted
    
    $
    5,350,000
    
    
    
    14,570,901
    
    
    $
    0.37
    
    
    $
    (13,005,000
    )
    
    
    14,271,824
    
    
    $
    (0.91
    )
 Three Months Ended March 31,2010
    
    
    2009Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedNet
    
    
    Average
    
    
    Per Share
    
    
    Net
    
    
    Average
    
    
    Per ShareIncome
    
    
    Shares
    
    
    Amount
    
    
    (Loss)
    
    
    Shares
    
    
    AmountBasic
    
    $
    2,875,000
    
    
    
    14,498,161
    
    
    $
    0.20
    
    
    $
    (5,168,000
    )
    
    
    14,271,824
    
    
    $
    (0.36
    )Effect of Dilutive Stock
    
    
    
    
    
    
    6,237
    
    
    
    
    
    
    
    
    
    
    
    Diluted
    
    $
    2,875,000
    
    
    
    14,504,398
    
    
    $
    0.20
    
    
    $
    (5,168,000
    )
    
    
    14,271,824
    
    
    $
    (0.36
    )
    21




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
(Unaudited)
 Note 10: Stock-based Compensation
    Risk-free interest rate
    
    
    0.0017
    %Expected term (years)
    
    
    10.0Expected volatility
    
    
    110.2
    %Dividend yield
    
    
    1.12
    %
  Note 11: Stock Option Plans
 Equity Compensation Plan
      22




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ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 11: Stock Option Plans (continued)
 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)
  Six Months Ended March 31,2010
    
    
    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
    
    
    
    
    
    
    
    Options exercised
    
    
    (325,767
    )
    
    
    2.65
    
    
    
    
    
    
    
    Options forfeited
    
    
    (20,500
    )
    
    
    16.24
    
    
    
    (1,000
    )
    
    
    28.75Outstanding options at the end of period
    
    
    970,538
    
    
    $
    12.93
    
    
    
    1,036,438
    
    
    $
    11.68Exercisable options at the end of period
    
    
    811,215
    
    
    $
    14.26
    
    
    
    1,036,438
    
    
    $
    11.68
 Three Months Ended March 31,2010
    
    
    2009Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding options at the beginning of period
    
    
    1,316,705
    
    
    $
    10.44
    
    
    
    1,036,438
    
    
    $
    11.68Options granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Options exercised
    
    
    (325,667
    )
    
    
    2.65
    
    
    
    
    
    
    
    Options forfeited
    
    
    (20,500
    )
    
    
    16.24
    
    
    
    
    
    
    
    Outstanding options at the end of period
    
    
    970,538
    
    
    $
    12.93
    
    
    
    1,036,438
    
    
    $
    11.68Exercisable options at the end of period
    
    
    811,215
    
    
    $
    14.26
    
    
    
    1,036,438
    
    
    $
    11.68
   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
    
    
    201,867
    
    
    
    5.7
    
    
    $
    3.89
    
    
    
    142,540
    
    
    $
    4.28$5.7501  $8.6250
    
    
    170,900
    
    
    
    9.1
    
    
    
    7.92
    
    
    
    70,904
    
    
    
    7.71$14.3751  $17.2500
    
    
    198,611
    
    
    
    3.6
    
    
    
    14.88
    
    
    
    198,611
    
    
    
    14.88$17.2501  $20.1250
    
    
    382,160
    
    
    
    4.5
    
    
    
    18.22
    
    
    
    382,160
    
    
    
    18.22$25.8751  $28.7500
    
    
    17,000
    
    
    
    6.7
    
    
    
    28.75
    
    
    
    17,000
    
    
    
    28.75970,538
    
    
    
    5.4
    
    
    $
    12.93
    
    
    
    811,215
    
    
    $
    14.26
  Six Months Ended March 31,2010
    
    
    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 March 31,2010
    
    
    2009Weighted
    
    
    
    
    
    
    WeightedAverage Grant
    
    
    
    
    
    
    Average GrantDate Fair
    
    
    
    
    
    
    Date FairShares
    
    
    Value
    
    
    Shares
    
    
    ValueUnvested at the beginning of period
    
    
    17,669
    
    
    $
    19.73
    
    
    
    57,005
    
    
    $
    23.16Awards granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Vested
    
    
    
    
    
    
    
    
    
    
    (21,667
    )
    
    
    24.50Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    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;
  29




---



##### Table of Contents




    
    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.
       30




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##### Table of Contents



Results of Operations
 The six-month period ended March 31, 2010, compared to the six-month period ended March 31,
2009
 Finance income
  Other income .
 General and administrative expenses
 Interest expense.
 Impairments.
 Income tax expense (benefit).
 Net income (loss).
  31




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##### Table of Contents



The three-month period ended March 31, 2010, compared to the three-month period ended March 31,
2009
 Finance income
  Other income .
 General and administrative expenses
 Interest expense.
 Impairments.
 Income tax expense (benefit).
 Net income (loss).
  32




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##### Table of Contents



Liquidity and Capital Resources
  Leumi Credit Agreement
   33




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##### Table of Contents



Receivables Financing Agreement
       IDB Credit Facility
   34




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##### Table of Contents



Subordinated Debt  Related Party
         35




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##### Table of Contents



For the Six Months Ended March 31, 2010Accrual
    
    
    CashBasis
    
    
    BasisPortfolios
    
    
    Portfolios
    
    
    TotalBalance, beginning of period
    
    $
    70,650,000
    
    
    $
    137,611,000
    
    
    $
    208,261,000Acquisitions of receivable portfolios, net
    
    
    3,043,000
    
    
    
    228,000
    
    
    
    3,271,000Net cash collections from collection of consumer
receivables acquired for liquidation
    
    
    (37,976,000
    )
    
    
    (14,370,000
    )
    
    
    (52,346,000
    )Net cash collections represented by account sales
of consumer receivables acquired for liquidation
    
    
    (2,740,000
    )
    
    
    (4,000
    )
    
    
    (2,744,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    17,000
    
    
    
    17,000Finance income recognized (1)
    
    
    21,398,000
    
    
    
    757,000
    
    
    
    22,155,000Balance, end of period
    
    $
    54,375,000
    
    
    $
    124,239,000
    
    
    $
    178,614,000Finance income as a percentage of collections
    
    
    52.6
    %
    
    
    5.3
    %
    
    
    40.2
    %
 (1)
    
    Includes approximately $16.4 million derived from fully amortized portfolios. For the Six Months Ended March 31, 2009Accrual
    
    
    CashBasis
    
    
    BasisPortfolios
    
    
    Portfolios
    
    
    TotalBalance, beginning of period
    
    $
    203,470,000
    
    
    $
    245,542,000
    
    
    $
    449,012,000Acquisitions of receivable portfolios, net
    
    
    2,681,000
    
    
    
    7,000
    
    
    
    2,688,000Net cash collections from collection of consumer
receivables acquired for liquidation
    
    
    (51,463,000
    )
    
    
    (20,853,000
    )
    
    
    (72,316,000
    )Net cash collections represented by account sales of
consumer receivables acquired for liquidation
    
    
    (3,075,000
    )
    
    
    (3,572,000
    )
    
    
    (6,647,000
    )Transfer to Cost Recovery
    
    
    (10,128,000
    )
    
    
    10,128,000
    
    
    
    Impairments
    
    
    (39,844,000
    )
    
    
    
    
    
    
    (39,844,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    (1,190,000
    )
    
    
    (1,190,000
    )Finance income recognized (1)
    
    
    35,856,000
    
    
    
    664,000
    
    
    
    36,520,000Balance, end of period
    
    $
    137,497,000
    
    
    $
    230,726,000
    
    
    $
    368,223,000Finance income as a percentage of collections
    
    
    65.7
    %
    
    
    2.7
    %
    
    
    46.2
    %
 (1)
    
    Includes approximately $20.6 million derived from fully amortized portfolios.  36




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##### Table of Contents



For the Three Months Ended March 31, 2010Accrual
    
    
    CashBasis
    
    
    BasisPortfolios
    
    
    Portfolios
    
    
    TotalBalance, beginning of period
    
    $
    61,776,000
    
    
    $
    130,350,000
    
    
    $
    192,126,000Acquisitions of receivable portfolios, net
    
    
    895,000
    
    
    
    76,000
    
    
    
    971,000Net cash collections from collections of consumer
receivables acquired for liquidation
    
    
    (18,929,000
    )
    
    
    (6,584,000
    )
    
    
    (25,513,000
    )Net cash collections represented by account sales
of consumer receivables acquired for liquidation
    
    
    (147,000
    )
    
    
    
    
    
    
    (147,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    (4,000
    )
    
    
    (4,000
    )Finance income recognized (1)
    
    
    10,780,000
    
    
    
    401,000
    
    
    
    11,181,000Balance, end of period
    
    $
    54,375,000
    
    
    $
    124,239,000
    
    
    $
    178,614,000Finance income as a percentage of collections
    
    
    56.5
    %
    
    
    6.1
    %
    
    
    43.6
    %
 (1)
    
    Includes approximately $8.3 million derived from fully amortized portfolios. For the Three Months Ended March 31, 2009Accrual
    
    
    CashBasis
    
    
    BasisPortfolios
    
    
    Portfolios
    
    
    TotalBalance, beginning of period
    
    $
    166,432,000
    
    
    $
    237,376,000
    
    
    $
    403,808,000Acquisitions of receivable portfolios, net
    
    
    1,603,000
    
    
    
    7,000
    
    
    
    1,610,000Net cash collections from collections of consumer
receivables acquired for liquidation
    
    
    (25,090,000
    )
    
    
    (10,971,000
    )
    
    
    (36,061,000
    )Net cash collections represented by account sales
of consumer receivables acquired for liquidation
    
    
    (727,000
    )
    
    
    (147,000
    )
    
    
    (874,000
    )Transfer to Cost Recovery
    
    
    (3,979,000
    )
    
    
    3,979,000
    
    
    
    Impairments
    
    
    (18,429,000
    )
    
    
    
    
    
    
    (18,429,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    65,000
    
    
    
    65,000Finance income recognized (1)
    
    
    17,687,000
    
    
    
    417,000
    
    
    
    18,104,000Balance, end of period
    
    $
    137,497,000
    
    
    $
    230,726,000
    
    
    $
    368,223,000Finance income as a percentage of collections
    
    
    68.5
    %
    
    
    3.8
    %
    
    
    49.0
    %
 (1)
    
    Includes approximately $10.5 million derived from fully amortized portfolios. Supplementary Information:
   37




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##### Table of Contents



Collections Represented by Account Sales
 CollectionsRepresented
    
    
    FinanceBy Account
    
    
    IncomePeriod
    
    Sales
    
    
    EarnedSix months ended March 31, 2010
    
    $
    2,744,000
    
    
    $
    948,000Three months ended March 31, 2010
    
    $
    147,000
    
    
    $
    52,000Six months ended March 31, 2009
    
    $
    6,647,000
    
    
    $
    1,791,000Three months ended March 31, 2009
    
    $
    874,000
    
    
    $
    418,000
 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
    
    
    $
    105,498,000
    
    
    
    
    
    
    $
    105,498,000
    
    
    
    162
    %2002
    
    
    36,557,000
    
    
    
    48,078,000
    
    
    
    
    
    
    
    48,078,000
    
    
    
    132
    %2003
    
    
    115,626,000
    
    
    
    213,092,000
    
    
    $
    898,000
    
    
    
    213,990,000
    
    
    
    185
    %2004
    
    
    103,743,000
    
    
    
    181,813,000
    
    
    
    436,000
    
    
    
    182,249,000
    
    
    
    176
    %2005
    
    
    126,023,000
    
    
    
    207,662,000
    
    
    
    7,787,000
    
    
    
    215,449,000
    
    
    
    171
    %2006
    
    
    163,392,000
    
    
    
    239,351,000
    
    
    
    16,709,000
    
    
    
    256,060,000
    
    
    
    157
    %2007
    
    
    109,235,000
    
    
    
    84,226,000
    
    
    
    31,256,000
    
    
    
    115,482,000
    
    
    
    106
    %2008
    
    
    26,626,000
    
    
    
    34,026,000
    
    
    
    2,830,000
    
    
    
    36,856,000
    
    
    
    138
    %2009
    
    
    19,127,000
    
    
    
    14,180,000
    
    
    
    12,301,000
    
    
    
    26,481,000
    
    
    
    138
    %2010
    
    
    3,043,000
    
    
    
    1,502,000
    
    
    
    2,671,000
    
    
    
    4,173,000
    
    
    
    137
    %
 (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.  38




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##### Table of Contents



Recent Accounting Pronouncements
   
 Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4.
    
    Controls and Procedures
 a. Disclosure Controls and Procedures.
   39




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##### Table of Contents



b. Changes in Internal Controls Over Financial Reporting.
  
 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
   40




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##### Table of Contents



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.
  41




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##### Table of Contents



ASTA FUNDING, INC.(Registrant)Date: May 14, 2010
    
    By:
    
    /s/ Gary Stern

Gary Stern, Chairman, President,
Chief Executive Officer(Principal Executive Officer)Date: May 14, 2010
    
    By:
    
    /s/ Robert J. Michel

Robert J. Michel, Chief Financial Officer(Principal Financial Officer andPrincipal Accounting Officer)
  42




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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.
  43