<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-QSB

     [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 2003.

                                       OR

     [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

             For the transition period from ________ to ___________

                        Commissions 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

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the last 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 [ ]

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of August 1, 2003, the registrant
had approximately 6,587,000 common shares outstanding.

Transitional Small Business Disclosure Format (check one): Yes [  ] No [X]

<PAGE>

                               Asta Funding, Inc.
                            Form 10-QSB June 30, 2003

                                      INDEX

Part I. Financial Information

Item 1. Financial Statements

        Consolidated Balance Sheets as of June 30, 2003(unaudited) and
        September 30, 2002

        Consolidated Statements of Operations for the nine and three month
        periods ended June 30, 2003 and 2002 (unaudited)

        Consolidated Statements of Cash Flows for the nine and three month
        periods ended June 30, 2003 and 2002 (unaudited)

        Notes to consolidated financial statements (unaudited)

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

Item 3. Controls and Procedures



Part II. Other Information

Item 1. Legal Proceedings

Item 2. Changes in Securities and Use of Proceeds

Item 3. Defaults Upon Senior Securities

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

Item 5. Other Information

Item 6. Exhibits and Reports on Form 8-K

Signatures

<PAGE>

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Asta Funding, Inc. and Subsidiaries

Consolidated Balance Sheets
<TABLE>
<CAPTION>
                                                                                                June 30,         September 30,
                                                                                                  2003                2002
                                                                                             ------------         -----------
                                                                                              Unaudited
<S>                                                                                          <C>                  <C>
Assets
Cash                                                                                           $1,714,000          $2,213,000
Due from underwriters                                                                          47,761,000                   -
Restricted cash, net                                                                               54,000              54,000
Consumer receivables acquired for liquidation                                                  74,871,000          36,079,000
Auto loans receivable, net                                                                          8,000              29,000
Finance receivables                                                                                     -           1,443,000
Furniture and equipment, net                                                                      744,000             345,000
Repossessed automobiles, net                                                                            -              67,000
Deferred income taxes                                                                             203,000             265,000
Other assets                                                                                      227,000             740,000
                                                                                             ------------         -----------

           Total assets                                                                      $125,582,000         $41,235,000
           ============                                                                      ============         ===========

Liabilities and Stockholders' Equity
Liabilities
Debt                                                                                          $33,267,000          $2,172,000
Other liabilities                                                                               3,862,000           4,009,000
Income taxes payable                                                                                    -           1,493,000
                                                                                                                  -----------


           Total liabilities                                                                   37,129,000           7,674,000
           -----------------                                                                 ------------         -----------

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 6,587,000 at June 30, 2003 and
  4,075,000 at September 30, 2002                                                                  66,000              41,000
Additional paid-in capital                                                                     57,833,000          10,247,000
Retained earnings                                                                              30,554,000          23,273,000
                                                                                             ------------         -----------

           Total stockholders' equity                                                          88,453,000          33,561,000
           --------------------------                                                        ------------         -----------

Total liabilities and stockholders' equity                                                   $125,582,000         $41,235,000
                                                                                             ============         ===========
</TABLE>

See accompanying notes to consolidated financial statements

<PAGE>

Asta Funding, Inc. and Subsidiaries

Consolidated Statements of Operations
Unaudited

<TABLE>
<CAPTION>
                                                Three Months Ended   Three Months Ended   Nine Months Ended   Nine Months Ended
                                                     June 30,             June 30,            June 30,            June 30,
                                                        2003                2002                 2003                2002
                                                ------------------   ------------------   -----------------   -----------------
<S>                                             <C>                  <C>                  <C>                 <C>
Revenues:
Finance income                                        $9,208,000          $8,800,000          $23,679,000         $27,488,000
Other                                                          -                   -                    -              96,000
                                                                                                                   ----------

                                                       9,208,000           8,800,000           23,679,000          27,584,000
                                                      ----------          ----------           ----------          ----------

Expenses:
General and administrative                             2,067,000           1,374,000            5,429,000           4,704,000
Third-party servicing                                  1,320,000           1,539,000            4,496,000           6,261,000
Provision for losses                                           -             350,000                    -             750,000
Interest                                               1,409,000             999,000            1,422,000           3,094,000
                                                      ----------          ----------           ----------          ----------

                                                       4,796,000           4,262,000           11,347,000          14,809,000
                                                      ----------          ----------           ----------          ----------

Income before income taxes                             4,412,000           4,538,000           12,332,000          12,775,000

Income tax expense                                     1,872,000           1,822,000            5,051,000           5,129,000
                                                      ----------          ----------           ----------          ----------

Net income                                            $2,540,000          $2,716,000           $7,281,000          $7,646,000
                                                      ==========          ==========           ==========          ==========

Net income per share - Basic                               $0.61               $0.67                $1.77               $1.90
                                                      ----------          ----------           ----------          ----------

                     - Diluted                             $0.55               $0.61                $1.62               $1.72
                                                      ----------          ----------           ----------          ----------

Weighted average number of shares
outstanding          - Basic                           4,188,000           4,047,000            4,116,000           4,029,000
                                                      ----------          ----------           ----------          ----------

                     - Diluted                         4,636,000           4,456,000            4,488,000           4,453,000
                                                      ----------          ----------           ----------          ----------
</TABLE>

See accompanying notes to consolidated financial statements

<PAGE>

Asta Funding, Inc. and Subsidiaries

Consolidated Statements of Cash Flows
Unaudited
<TABLE>
<CAPTION>

                                                                                       Nine Months Ended   Nine Months Ended
                                                                                            June 30,             June 30,
                                                                                             2003                 2002
                                                                                       -----------------   -----------------
<S>                                                                                         <C>                 <C>
Cash flows from operating activities:
Net income                                                                                   $7,281,000          $7,646,000
Adjustments to reconcile net income to net
  cash provided by operating activities:
Depreciation                                                                                    108,000              90,000
Provision for losses                                                                                  -             750,000
Deferred income taxes                                                                            62,000            (253,000)
Changes in:
Restricted cash                                                                                       -              (1,000)
Repossessed automobiles held for sale                                                            45,000             117,000
Prepaid income taxes                                                                                  -             596,000
Other assets                                                                                    513,000            (583,000)
Income taxes payable                                                                         (1,493,000)          1,301,000
Other liabilities                                                                              (147,000)          1,511,000
                                                                                             ----------          ----------

           Net cash provided by operating activities                                          6,369,000          11,174,000

Cash flows from investing activities:
Auto loan principal payments                                                                     29,000             636,000
Purchase of consumer receivables acquired for liquidation                                   (61,499,000)        (31,657,000)
Principal collected on receivables acquired for liquidation                                  22,707,000          32,436,000
Finance receivables                                                                           1,443,000            (190,000)
Capital expenditures                                                                           (507,000)           (232,000)
                                                                                             ----------          ----------

            Net cash (used in) provided by investing activities                             (37,827,000)            993,000

Cash flows from financing activities:
Due from underwriters                                                                       (47,761,000)                  -
Advances from affiliate                                                                               -             (10,000)
Proceeds of common stock offering                                                            47,320,000                   -
Proceeds from exercise of options                                                               215,000             238,000
Cancellation of common shares                                                                    90,000                   -
Repayments of notes payable                                                                           -         (22,429,000)
Advances under lines of credit, net                                                          31,095,000           8,108,000
                                                                                             ----------          ----------


Net cash provided by (used in) financing activities                                          30,959,000         (14,093,000)
                                                                                             ----------          ----------

Decrease in cash                                                                               (499,000)         (1,926,000)

Cash at the beginning of period                                                               2,213,000           5,689,000
                                                                                             ----------          ----------

Cash at end of period                                                                        $1,714,000          $3,763,000
                                                                                             ----------          ----------

Supplemental disclosure of cash flow information:
Cash paid during the period
         Interest                                                                            $1,614,000            $675,000
         Income taxes                                                                        $4,694,000          $3,477,000
</TABLE>

<PAGE>

                               Asta Funding, Inc.
                   Notes to Consolidated Financial Statements

Note 1: Basis of Presentation

Asta Funding, Inc., together with its wholly owned subsidiaries, is a
diversified consumer finance company that acquires, manages, collects and
services 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 debtors. 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.

The consolidated balance sheet as of June 30, 2003, the consolidated statements
of operations for the nine and three month periods ended June 30, 2003 and 2002,
and the consolidated statements of cash flows for the nine and three month
periods ended June 30, 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 our financial position at
June 30, 2003 and September 30, 2002, the results of operations for the nine and
three month periods ended June 30, 2003 and 2002 and cash flows for the nine
month periods ended June 30, 2003 and 2002 have been made. The results of
operations for the nine and three month periods ended June 30, 2003 and 2002 are
not necessarily indicative of the operating results for any other interim period
or the full fiscal year.

Pursuant to the rules and regulations of the Securities and Exchange Commission,
certain information and footnote disclosures required under generally accepted
accounting principles have been condensed or omitted from the presented
financial statements. 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-KSB for the fiscal year ended September 30, 2002.

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: Due from Underwriters

On June 27, 2003, we issued 2,100,000 shares of common stock at price of $20.75
per share in a secondary public offering. On June 30, 2003, an additional
375,000 shares of common stock were issued at the same price as part of this
secondary offering. The proceeds due us at June 30, 2003, net of underwriters
commissions was approximately $47,761,000 which was remitted to us on July 2,
2003.

Note 4: Consumer Receivables Acquired for Liquidation:

Accounts acquired for liquidation are stated at their net realizable value and
consist of consumer loans to individuals throughout the country.

Note 5: Finance Receivables:

Finance receivables were factored accounts receivable primarily with full
recourse.

Note 6: Debt:

We have a $25 million line of credit with a bank with interest at the prime rate
which was 4.0% at June 30, 2003. The advances under the 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 expires on January
31, 2004. On June 27, 2003, we received a temporary credit line increase of $11
million which increased our credit line to $36 million subject to the terms of
the amendment. As of June 30, 2003, there was approximately $33.3 million
outstanding under this line of credit and we were in compliance with all of the
covenants under this line of credit. On July 2, 2003, we paid the bank $18.3
million on this facility from the proceeds of the common stock offering and the
facility reverted back to $25 million.

In August 2001, an investment banking firm provided approximately $29.9 million
of financing in exchange for a note with interest at LIBOR plus 2% and the right
to receive 50% of subsequent collections, net of expenses, from the portfolio
collateralizing the obligation, once the note and advances by one of our
subsidiaries have been repaid. In December 2001, we purchased one-half of this
right to receive subsequent collections for $1.5 million and a third party
purchased the other one-half for $1.5 million. The 25% participation due a third
party has been accrued and is included in other liabilities. This note was paid
in full in September 2002. During the nine months ended June 30, 2003, actual
and estimated collections have exceeded our estimates at September 30, 2002, and
therefore we have revised our third-party profit allocation. Such change in
accounting estimate has resulted in approximately a $1.2 million charge in
interest expense during the nine months ended June 30, 2003.

<PAGE>

                               Asta Funding, Inc.
                   Notes to Consolidated Financial Statements

In January 2002, we purchased a thirty-five percent interest in a consumer
receivable portfolio and financed the entire purchase price of $1.6 million
through a note to the seller. The note bears interest at 15%. This note was paid
in full in September 2002.

Note 7: Stockholders' Equity:

On June 27, 2003, we issued 2,100,000 shares of common stock at price of $20.75
per share in a secondary public offering. On June 30, 2003, an additional
375,000 shares of common stock were issued at the same price as part of this
secondary offering. The proceeds due us at June 30, 2003, net of underwriters
commissions was approximately $47,761,000, which was remitted to us on July 2,
2003.

Note 8: 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.

Based on an increase in actual cash flows for the three and nine months ended
June 30, 2003, and projected future cash flows on certain portfolios as compared
to what we estimated at September 30, 2002, we revised our estimates of future
collections. Such change in accounting estimates has resulted in approximately a
$3.9 million increase in finance income recognized for the nine months ended
June 30, 2003 for this portfolio. Part of the increase in actual collections was
due to the sale of certain receivables during the three and nine months ended
June 30, 2003.

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.

<PAGE>

                               Asta Funding, Inc.

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

This Form 10-QSB contains forward-looking statements within the meaning of the
"safe harbor" provisions under section 21E of the Securities and Exchange Act of
1934 and the Private Securities Litigation Act of 1995. We use forward-looking
statements in our description of our plans and objectives for future operations
and assumptions underlying these plans and objectives. Forward-looking
terminology includes the words "may", "expects", "believes", "anticipates",
"intends", "forecasts", "projects", or similar terms, variations of such terms
or the negative of such terms. These forward-looking statements are based on
management's current expectations and are subject to factors and uncertainties
which could cause actual results to differ materially from those described in
such forward-looking statements. We expressly disclaim any obligation or
undertaking to release publicly any updates or revisions to any forward-looking
statements contained in this Form 10-QSB to reflect any change in our
expectations or any changes in events, conditions or circumstances on which any
forward-looking statement is based. Factors which could cause such results to
differ materially from those described in the forward-looking statements include
those set forth in our prospectus on form S-1 dated June 27, 2003 under "Risk
Factors" and elsewhere in, or incorporated by reference into, this Form 10-QSB
or other reports filed by us with the Securities and Exchange Commission. These
factors include the following: we may not be able to purchase receivables at
favorable prices and are subject to competition for such receivables; we may not
be able to recover sufficient amounts on our receivables to fund our operations;
we are dependent on external sources of financing to fund our operations; debt
that we may incur from time to time may adversely affect our ability to obtain
additional funds and increase our vulnerability to economic and business
downturns; government regulations may limit our ability to recover and enforce
receivables and other risks.

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 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
nine-month period ended June 30, 2003.

         Based on an increase in actual cash flows for the three and nine months
ended June 30, 2003, and projected future cash flows on certain portfolios as
compared to what we estimated at September 30, 2002, we revised our estimates of
future collections. Such change in accounting estimates has resulted in
approximately a $3.9 million increase in finance income recognized for the nine
months ended June 30, 2003 for these portfolios. Part of the increase in actual
collections was due to the sale of certain receivables during the three and nine
months ended June 30, 2003.

         We typically recognize finance income net of collection fees paid to
third-party collection agencies. With respect to specific consumer receivable
portfolios containing a significant amount of performing and semi-performing
accounts, we recognize finance income on accounts that were being serviced by
third-party servicers at the gross amounts received by the servicers. The
servicing costs for these portfolios are reported as an expense on our income
statement. In addition, with respect to specific consumer receivable portfolios
we acquired, we agreed to a fifty percent profit sharing arrangement with our
lender. However, the entire interest in this profit sharing arrangement was sold
to us and a third-party in equal amounts in December 2001. The third-party
profit allocation was recorded as interest expense over the estimated term of
the related note payable which was paid in full in September 2002. During the
nine months ended June 30, 2003, actual and estimated collections have exceeded
our estimates at September 30, 2002, and therefore we have revised our
third-party profit allocation. Such change in accounting estimate has resulted
in approximately a $1.2 million charge in interest expense during the nine
months ended June 30, 2003.

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

<PAGE>

                               Asta Funding, Inc.

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

Results of operations

The nine-month period ended June 30, 2003, compared to the nine-month period
ended June 30, 2002

Revenues. During the nine-month period ended June 30, 2003, finance income
decreased $3.8 million or 13.8% to $23.7 million from $27.5 million for the
nine-month period ended June 30, 2002. The decrease in finance income was
primarily due to a decrease in finance income earned on consumer receivables
acquired for liquidation, which resulted from a decrease in the average
outstanding accounts acquired for liquidation during the nine-months ended June
30, 2003, as compared to the same prior year period. This decrease was partially
offset by an increase in collections due to sales of certain receivables during
the nine months ended June 30, 2003, as compared to no receivable sales in the
same prior year period. In addition, the sale of most of the factored
receivables on November 25, 2002, resulted in a decrease in finance income
earned on these receivables during the nine-months ended June 30, 2003, as
compared to the nine-months ended June 30, 2002. Based on an increase in actual
cash flows for the three and nine months ended June 30, 2003, and projected
future cash flows on certain portfolios as compared to what we estimated at
September 30, 2002, we revised our estimates of future collections. Such change
in accounting estimates has resulted in approximately a $3.9 million increase in
finance income recognized for the three and nine months ended June 30, 2003 for
these portfolios. Part of the increase in actual collections was due to the sale
of certain receivables during the nine months ended June 30, 2003. Due to what
management believed were competitive factors, we only spent $4.4 million on
receivable purchases during the first six months of the current fiscal year but
during the three month period ending June 30, 2003, we spent $57.1 million on
receivable purchases.

General and Administrative Expenses. During the nine-month period ended June 30,
2003, general and administrative expenses increased $0.7 million or 14.9% to
$5.4 million from $4.7 million for the nine-months ended June 30, 2002, and
represented 47.9 % of total expenses for the nine months ended June 30, 2003.
The increase in general and administrative expenses was primarily due to an
increase in servicing expenses which was partially offset by a decrease in
factoring expenses during the nine-month period ended June 30, 2003, as compared
to the same prior year period. The increase in servicing expenses resulted from
the operating costs of our call center that was acquired in December 2002. The
decrease in factoring expenses resulted from the sale of most of the factored
receivables on November 25, 2002 and a reduction of some factoring receivable
employees prior to the sale date.

Third-Party Servicing Expenses. During the nine-month period ended June 30,
2003, third-party servicing expenses decreased $1.8 million or 28.6% to $4.5
million from $6.3 million for the nine months ended June 30, 2002, and
represented 39.6% of total expenses for the nine months ended June 30, 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 and the elimination of recording of third-party servicing expenses
on a specific portfolio during the nine months ended June 30, 2003, as compared
to the same prior year period.

Interest Expense. During the nine-month period ended June 30, 2003, interest
expense decreased $1.7 million or 54.8% to $1.4 million from $3.1 million
compared to the same period in the prior year and represented 12.5% of total
expenses for the nine-month period ended June 30, 2003. The decrease was due a
reduction in the accrual of interest expense that was due to a profit
participation on a specific portfolio during the nine-month period ended June
30, 2003, as compared to the same period in the prior year. During the three and
nine month periods ending June 30, 2003, actual and estimated collections have
exceeded our estimates at September 30, 2002, and therefore we have revised our
third-party profit allocation. Such change in accounting estimate has resulted
in approximately a $1.2 million charge in interest expense during the nine
months ended June 30, 2003.

Provision for Credit Losses. During the nine-month period ended June 30, 2003,
the provision for credit losses decreased $0.8 million or 100.0% to $0.0 million
from $0.8 million for the nine-months ended June 30, 2002 and represented 0.0%
of total expenses. The decrease was due to a decrease in the provision for
credit losses on our financed receivables during the nine months ended June 30,
2003, as compared to the same prior year period.

The three-month period ended June 30, 2003, compared to the three-month period
ended June 30, 2002

Revenues. During the three-month period ended June 30, 2003, finance income
increased $0.4 million or 4.5% to $9.2 million from $8.8 million for the
three-month period ended June 30, 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 the sale of certain receivables
during the three-months ended June 30, 2003, as compared to no receivable sales
in the same prior year period. In addition, based on an increase in actual cash
flows for the three and nine months ended June 30, 2003, and projected future
cash flows on certain portfolios as compared to what we estimated at September
30, 2002, we revised our estimates of future collections. Such change in
accounting estimates has resulted in approximately a $3.9 million increase in
finance income recognized for the nine months ended June 30, 2003 for these
portfolios. Part of the increase in actual collections was due to the sale of
certain receivables during the three months ended June 30, 2003. The increase in
finance income was partially offset by a decrease in finance income earned from
our factored receivables because most of the factored receivables were sold on
November 25, 2002. Due to what management believed were competitive factors, we
only spent $4.4 million on receivable purchases during the first six months of
the current fiscal year but during the three month period ending June 30, 2003,
we spent $57.1 million on receivable purchases.

General and Administrative Expenses. During the three-month period ended June
30, 2003, general and administrative expenses increased $0.7 million or 50.0% to
$2.1 million from $1.4 million for the three-months ended June 30, 2002, and
represented 43.1% of total expenses for the three months ended June 30, 2003.
The increase in general and administrative expenses was primarily due to an
increase in servicing expenses which was partially offset by a decrease in
factoring expenses during the three-month period ended June 30, 2003, as
compared to the same prior year period. The increase in servicing expenses
resulted from the operating costs of our call center that was acquired in
December 2002. The decrease in factoring expenses resulted from the sale of most
of the factored receivables on November 25, 2002 and a reduction of some
factoring receivable employees prior to the sale date.

<PAGE>

                               Asta Funding, Inc.

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

Third-Party Servicing Expenses. During the three-month period ended June 30,
2003, third-party servicing expenses decreased $0.2 million or 13.3% to $1.3
million from $1.5 for the three months ended June 30, 2002, and represented
27.5% of total expenses for the three months ended June 30, 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 and
the elimination of recording of third-party servicing expenses on a specific
portfolio during the three months ended June 30, 2003, as compared to the same
prior year period.

Interest Expense. During the three-month period ended June 30, 2003, interest
expense increased $0.4 million or 40.0% to $1.4 million from $1.0 million
compared to the same period in the prior year and represented 29.4% of total
expenses for the three-month period ended June 30, 2003. The increase was
primarily due to the accrual of interest expense that was due to profit
participation on a specific portfolio during the three-month period ended June
30, 2003, as compared to the same period in the prior year. During the three and
nine month periods ending June 30, 2003, actual and estimated collections have
exceeded our estimates at September 30, 2002, and therefore we have revised our
third-party profit allocation. Such change in accounting estimate has resulted
in approximately a $1.2 million charge in interest expense during the nine
months ended June 30, 2003.

Provision for Credit Losses. During the three-month period ended June 30, 2003,
the provision for credit losses decreased $0.4 million or 100.0% to $0.0 million
from $0.4 million for the three-months ended June 30, 2002 and represented 0.0%
of total expenses. The decrease was due to a decrease in the provision for
credit losses on our financed receivables during the three months ended June 30,
2003, as compared to the same prior year period.

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 to provide the funds necessary for the purchase of consumer and
commercial accounts receivable portfolios. While we maintain a $25 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 $25 million
line of credit with a financial institution. On June 27, 2003, we received a
temporary credit line increase of $11 million which increased our credit line to
$36 million subject to the terms of the amendment. As of June 30, 2003, there
was approximately $33.3 million outstanding balance under this facility. On July
2, 2003, we paid $18.3 on this facility from the proceeds of the common stock
offering. As of June 30, 2003, our cash and cash equivalents decreased to $1.7
million from $2.2 million at September 30, 2002. The decrease in cash and cash
equivalents during the nine month period ended June 30, 2003, was primarily due
to an increase in consumer receivable purchases during the period.

On June 27, 2003, we issued 2,100,000 shares of common stock at price of $20.75
per share in a secondary public offering. On June 30, 2003, an additional
375,000 shares of common stock were issued at the same price as part of this
secondary offering. The proceeds due us at June 30, 2003, net of underwriters
commissions was approximately $47,761,000, which was remitted to us on July 2,
2003.

Net cash provided by operating activities was $6.4 million during the
nine-months ended June 30, 2003, compared to net cash provided by operating
activities of $11.2 million during the nine-months ended June 30, 2002. The
decrease in net cash provided by operating activities was primarily due to a
decrease in other liabilities and income taxes payable during the nine-months
ended June 30, 2003, as compared to the same period in the prior year. Net cash
used in investing activities was $37.8 million during the nine-months ended June
30, 2003, compared to net cash provided by investing activities of $1.0 million
during the nine-months ended June 30, 2002. The decrease in net cash provided by
investing activities was primarily due to an increase in the purchase of
accounts acquired for liquidation which was partially offset by a decrease in
collections of consumer receivables acquired for liquidation during the
nine-months ended June 30, 2003, compared to the same period in the prior year.
Net cash provided by financing activities was $31.0 million during the
nine-months ended June 30, 2003, compared to net cash used of $14.1 million
during the nine-months June 30, 2002. The increase in net cash used in financing
activities was primarily due an increase in borrowings under our credit facility
during the nine-months ended June 30, 2003, compared to the same prior year
period. The increase in borrowings was due to an increase in the purchase of
consumer receivables for liquidation during the nine-months ended June 30, 2003,
as compared to the nine-months ended June 30, 2002.

We have a $25 million line of credit with a bank with interest at the prime rate
which was 4.00% at June 30, 2003. 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 expires on January
31, 2004. On June 27, 2003, we received a temporary credit line increase of $11
million which increased our credit line to $36 million subject to the terms of
the amendment. As of June 30, 2003, there was approximately $33.3 million
outstanding under this line of credit and we were in compliance with all of the
covenants under this line of credit. On July 2, 2003, we paid the bank $18.3
million on this facility from the proceeds of the common stock offering and the
facility reverted back to $25 million.

In August 2001, an investment banking firm provided approximately $29.9 million
of financing in exchange for a note with interest at LIBOR plus 2% and the right
to receive 50% of subsequent collections, net of expenses, from the portfolio
collateralizing the obligation, once the note and advances by one of our
subsidiaries have been repaid. In December 2001, we purchased one-half of this
right to receive subsequent collections for $1.5 million and a third party
purchased the other one-half for $1.5 million. The 25% participation due a third
party has been accrued and is included in other liabilities. This note was paid
in full in September 2002. During the nine months ended June 30, 2003, actual
and estimated collections have exceeded our estimates at September 30, 2002, and
therefore we have revised our third-party profit allocation. Such change in
accounting estimate has resulted in approximately a $1.2 million charge in
interest expense during the nine months ended June 30, 2003.

In January 2002, we purchased a thirty-five percent interest in a consumer
receivable portfolio and financed the entire purchase price of $1.6 million
through a note to the seller. The note bears interest at 15%. The outstanding
balance was payable from the cash flows of a specific portfolio. This note was
paid in full in September 2002.

<PAGE>

                               Asta Funding, Inc.

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

Our cash requirements have been and will continue to be significant. We depend
on external financing to acquire consumer receivables. During the nine-months
ended June 30, 2003, we acquired consumer portfolios at a cost of approximately
$61.5 million. These acquisitions were financed with our cash on hand and our
credit facility.

We anticipate the funds available under our current credit facility as well as
funds that were received from our common stock offering and cash from operations
will be sufficient to satisfy the our estimated cash requirements for at least
the next 12 months. 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.

Although we have no present plans or intentions, we may consider possible
acquisitions of, or investments in, complementary businesses. Any such possible
acquisition or investments may be material and may require us to incur a
significant amount of debt or issue a significant amount of equity securities.
Further, any business that we may acquire or invest in will likely have its own
capital needs, which may be significant, and which we may be called upon to
satisfy.

Supplementary Information on Accounts Acquired for Liquidation

Schedule of Accounts Acquired for Liquidation by Income Recognition Category

<TABLE>
<CAPTION>
                                                                  As of June 30, 2003

                                                            Cost Recovery           Interest Method
                                                              Portfolios              Portfolios
                                                            -------------           ---------------
<S>                                                          <C>                   <C>
Cummulative Original Purchase Price                             $48,588,000          $171,637,000

Cummulative Aggregate Managed Portfolios                     $2,147,858,000        $3,616,641,000

Receivable Carrying Value at                                     $3,918,000           $70,953,000

Finance Income Earned *                                          $5,222,000           $18,260,000
(for the nine months ended 6/30/03)

Total cash flows *                                               $6,676,000           $39,513,000
(for the nine months ended 6/30/03)
</TABLE>

* The sum of total cash flows of $46,189,000 less the sum of total finance
income earned on consumer receivables acquired for liquidation of $23,482,000 is
$22,707,000 or the principal collected on receivables acquired for liquidation
as per the statement of cash flows for the nine-months ended June 30, 2003.

The original purchase price reflects what we paid for the receivables from 1998
through June 30, 2003. The cumulative aggregate managed portfolio balance is the
original aggregate amount owed by the borrowers from 1998 through June 30, 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 cost recovery or interest method. The receivable carrying value
represents the current basis in the receivables after collections and
amortization of the original price.

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 nine-months ended June 30, 2003, we earned interest income of $5.2
million under the cost recovery method because we collected $5.2 million in
excess of our purchase price on certain receivable portfolios. In addition, we
earned $18.3 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.

New Accounting Pronouncements

In April 2002, the FASB issued SFAS Statement No. 145, "Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical
Corrections". SFAS No. 145 rescinds SFAS No. 4, which required all gains and
losses from extinguishment of debt to be aggregated and, if material, classified
as an extraordinary item, net of related income tax effect. As a result, the
criteria in APB Opinion No. 30 will now be used to classify those gains and
losses. SFAS No. 64 amended SFAS No. 4 and is no longer necessary because SFAS
No. 4 has been rescinded.SFAS No. 145 amends SFAS Statement No. 13 to require
that certain lease modifications that have economic effects similar to
sale-leaseback transactions be accounted for in the same manner as
sale-leaseback transactions. SFAS No. 145 also makes technical corrections to
existing pronouncements. While those corrections are not substantive in nature,
in some instances, they may change accounting practice. SFAS No. 145 is required
to be applied for fiscal years after May 15, 2002. The adoption of this
Statement is not expected to have a material effect on our financial statements.

<PAGE>

                               Asta Funding, Inc.

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

In June 2002, the FASB issued SFAS Statement No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS No. 146 requires that a
liability for a cost associated with an exit or disposal activity be recognized
when the liability is incurred. This Statement also established that fair value
is the objective for initial measurement of the liability. The provisions of
this Statement are effective for exit or disposal activities that are initiated
after December 31, 2002. The adoption of this Statement is not expected to have
a material effect on our financial statements.

Stock-Based Compensation

We have adopted the disclosure requirements of SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure" ("SFAS 148") effective
December 2002. SFAS 148 amends FASB Statement No. 123, "Accounting for
Stock-Based Compensation" (SFAS 123"), to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based compensation and also amends the disclosure requirements of SFAS
123 to require prominent disclosures in both annual and interim financial
statements about the methods of accounting for stock-based employee compensation
and the effect of the method used on reported results. As permitted by SFAS 148
and SFAS 123, we continue to apply the accounting provisions of Accounting
Principles Board ("APB") Opinion Number 25, "Accounting for Stock Issued to
Employees", and related interpretations, with regard to the measurement of
compensation cost for options granted under our Stock Option Plans. No employee
compensation expense has been recorded as all options granted had an exercise
price equal to the market value of the underlying common stock on the date of
grant. Had expense been recognized using the fair value method described in SFAS
123, using the Black-Sholes option pricing model, we would have reported the
following results of operations:


<TABLE>
<CAPTION>
                                                              Three Months Ended                         Nine Months Ended
                                                                   June 30,                                   June 30,
                                                          2003                 2002                     2003                 2002
                                                          ----                 ----                     ----                 ----
<S>                                                   <C>                  <C>                      <C>                  <C>
Net income, as reported                               $2,540,000           $2,716,000               $7,281,000           $7,646,000

Deduct: total stock-based compensation expense
        determined under the fair value method,
        net of tax                                     ($265,000)           ($188,000)               ($795,000)           ($565,000)
                                                       ----------           ----------               ----------           ----------
Pro-forma net income                                  $2,275,000           $2,528,000               $6,486,000           $7,081,000

Earnings per share:
       Basic - as reported                                 $0.61                $0.67                    $1.77                $1.90
       Basic - pro forma                                   $0.54                $0.62                    $1.58                $1.76

       Diluted - as reported                               $0.55                $0.61                    $1.62                $1.72
       Diluted - pro forma                                 $0.49                $0.57                    $1.46                $1.59
</TABLE>

Item 3.  Controls and Procedures

Within the 90 days prior to the date of this report, we carried out an
evaluation, under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Securities Exchange Act Rule 13a-14. Based upon that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures are effective in timely alerting
them to material information relating to us (including our consolidated
subsidiaries) required to be included in our periodic SEC filings. There have
been no significant changes in our internal controls or in other factors that
could significantly affect internal controls subsequent to the date of their
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.

<PAGE>

                               Asta Funding, Inc.
                            Form 10-QSB June 30, 2003

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

As of the date of this filing, we were not involved in any material litigation
in which we are a defendant. We regularly initiate legal proceedings as a
plaintiff concerning our routine collection activities.

Item 2. Changes in Securities and Use of Proceeds

The effective date of our registration statement filed (Registration No.
333-105755) on Form S-1 relating to our secondary offering of Common Stock was
June 27, 2003, We sold 2,100,000 shares and selling shareholder's sold 400,000
shares of Common Stock at a price of $20.75. On June 30, 2003, an additional
375,000 shares of Common Stock were sold by the Company at the same price as
part of this secondary offering. The offering commenced on June 27, 2003 and
closed on July 2, 2003. Gross proceeds to us from the secondary offering totaled
approximately $51.4 million. The net proceeds due us at June 30, 2003, after
Underwriters commissions was approximately $47.8 million which was remitted to
us on July 2, 2003. Of the $47.8 million, $18.3 million was used to pay
indebtedness and the remaining proceeds was invested in short term money market
funds and will be used for the potential acquisitions of consumer receivables
for liquidation, general corporate purposes or potential acquisitions of
complementary businesses.

Item 3. Defaults Upon Senior Securities

None.

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

None.


Item 5. Other Information

         We entered into a Loan and Security Agreement Amendment dated as of
June 27, 2003, between us and Israel Discount Bank of NY. We are currently in
compliance with all of the covenants under this line of credit.


Item 6. Exhibits and Reports on Form 8-K

           (a) Exhibits

           10.14 Loan and Security Agreement Amendment dated as of June 27,
           2003, between the Company and Israel Discount Bank of NY.

           99.1 Certification of the Registrant's Chief Executive Officer, Gary
           Stern, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

           99.2 Certification of the Registrant's Chief Financial Officer,
           Mitchell Herman, pursuant to Section 302 of the Sarbanes-Oxley Act of
           2002.

           99.3 Certification of the Registrant's Chief Executive Officer, Gary
           Stern, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

           99.4 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

                  The Registrant filed a report on Form 8-K under item 9 on
                  May 13, 2003

                  The Registrant filed a report on Form 8-K under item 5 on
                  June 2, 2003.

                  The Registrant filed a report on Form 8-K under item 5 on
                  June 4, 2003.

                  The Registrant filed a report on Form 8-K under item 5 on
                  June 27, 2003.

                  The Registrant filed a report on Form 8-K under item 5 on
                  July 2, 2003.

<PAGE>

                               Asta Funding, Inc.
                            Form 10-QSB June 30, 2003

Signatures

In accordance with the requirements of the Securities Exchange Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                               ASTA FUNDING, INC.
                                  (Registrant)

Date:August 11, 2003            By: /s/ Gary Stern
                                ------------------

                                  Gary Stern, President, Chief Executive Officer
                                  (Principal Executive Officer)

Date: August 11, 2003           By: /s/ Mitchell Herman
                                -----------------------

                                 Mitchell Herman, Chief Financial Officer
                                 (Principal Financial Officer and
                                    Principal Accounting Officer)