<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 December 31, 1997

                                      OR

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

     For the transition period from ________ to ___________

     Commission file number: 0-26906

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

           Delaware                                     22-3388607
-------------------------------                      ----------------
(State or other jurisdiction of                      (I.R.S. Employer
 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 Securities Exchange Act of 1934 during the past 12 months
(or for 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 _____

               APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes _____ No _____

                     APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: As of December 31, 1997 the
registrant had 3,945,000 common shares outstanding.

Transitional Small Business Disclosure Format (check one): Yes _____ No __X__





<PAGE>

                       Asta Funding, Inc. and Subsidiary
                         Form 10-QSB December 31, 1997


                                     INDEX



Part I.  Financial Information

       Item 1. Financial Statements

               Consolidated Balance Sheets as of December 31, 1997 (Unaudited)
               and September 30, 1997

               Consolidated Statements of Operations for the three-month
               periods ended December 31, 1997 and December 31, 1996
               (Unaudited)

               Consolidated Statements of Cash Flows for the three-month
               periods ended December 31, 1997 and December 31, 1996
               (Unaudited)

               Notes to consolidated financial statements (Unaudited)

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


Part II.  Other Information


            Item 1.  Legal Proceedings

            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 Subsidiary

Consolidated Balance Sheets
<TABLE>
<CAPTION>
                                                                December 31,                      September 30,
                                                              --------------------                ---------------
                                                                    1997                               1997
                                                                    ----                               ----
                                                                  Unaudited
<S>                                                                      <C>                           <C>      
Assets
Cash                                                                 $     10,201                    $   503,715
Restricted cash and cash equivalents, net                               2,776,192                      2,546,670
Loans receivable, net                                                   7,524,113                      3,247,542
Accrued interest receivable                                               115,000                         34,141
Servicing fees receivable                                                  68,880                         70,626
Income taxes receivable                                                   403,101                        418,101
Servicing assets                                                          573,057                        897,352
Residual interest                                                         686,565                        951,857
Due from trustee                                                          213,428                        146,910
Furniture and equipment, net                                              175,181                        154,605
Repossessed automobiles, net                                              320,625                        226,248
Other assets                                                              240,665                        171,777
                                                                     ------------                    -----------
          Total assets                                               $ 13,107,008                    $ 9,369,544
                                                                     ============                    ===========



Liabilities and Stockholders' Equity
Liabilities
Bank overdraft                                                       $    211,711                    $         -
Accounts payable and accrued expenses                                     288,561                        419,080
Advances under a line of credit                                         4,150,000                              -
Deferred taxes                                                             60,000                        275,000
Due to affiliate                                                          206,360                        188,360
                                                                     ------------                    -----------
          Total liabilities                                             4,916,632                        882,440
                                                                     ------------                    -----------


Stockholders' Equity
Common stock, $.01 par value; authorized
10,000,000 shares; issued and outstanding
3,945,000                                                                  39,450                         39,450
Additional paid-in capital                                              9,602,421                      9,602,421
Accumulated deficit                                                    (1,451,495)                    (1,236,466)
Unrealized gain on residual interest (net of
   income taxes of $55,000)                                                     -                         81,699
                                                                     ------------                    -----------
          Total stockholders' equity                                    8,190,376                      8,487,104
                                                                     ------------                    -----------
Total liabilities and stockholders' equity                           $ 13,107,008                    $ 9,369,544
                                                                     ============                    ===========
</TABLE>

See accompanying notes to consolidated financial statements


<PAGE>


Asta Funding, Inc. and Subsidiary

Consolidated Statements of Operations
Unaudited

                                                       Three Months Ended
                                                          December 31,
                                            ------------------------------------
                                                  1997               1996
                                                  ----               ----

Revenues:
Interest                                        $   503,321       $   530,436
Servicing fees                                      280,374           312,830
                                                -----------       -----------
                                                    783,695           843,266
                                                -----------       -----------

Expenses:
General and administrative                          610,150           625,810
Provision for credit losses                         470,000           274,000
Interest                                             60,798            40,020
                                                -----------       -----------
                                                  1,140,948           939,830
                                                -----------       -----------
(Loss) before (benefit) for
     income taxes                                  (357,253)          (96,564)

(Benefit) for income taxes                         (142,225)          (38,600)

                                                -----------       -----------
Net (loss)                                      $  (215,028)      $   (57,964)
                                                ===========       ===========


Net (loss) per share                            $     (0.05)      $     (0.01)
                                                ===========       ===========

Weighted average number of shares
      outstanding                                 3,945,000         3,960,000
                                                ===========       ===========




See accompanying notes to consolidated financial statements

<PAGE>

Asta Funding, Inc. and Subsidiary

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



                                                                       Three Months Ended
                                                                          December 31,
                                                                  --------------------------
                                                                      1997           1996
                                                                      ----           ----
<S>                                                               <C>            <C>         
Cash flows from operating activities:
  Net (loss)                                                      $  (215,028)   $   (57,964)
  Adjustments to reconcile net (loss) to net
    cash used in operating activities:
    Depreciation and amortization                                     283,071        489,866
    Provision for losses                                              470,000        274,000
    Deferred income taxes                                            (215,000)        40,000
    Expenses advanced by affiliate                                     18,000         18,380
    Changes in operating assets and liabilities:
       Loans receivable                                            (4,662,622)    (4,606,336)
       Accrued interest receivable                                    (80,678)       (79,512)
       Servicing fees receivable                                        1,746          6,587
       Income taxes receivable                                         15,000           --
       Repossessed automobiles                                        (94,377)       228,256
       Other assets                                                   (68,889)      (260,967)
       Due from trustee                                               (66,518)     1,757,896
       Restricted cash                                               (229,522)      (613,501)
       Accounts payable and accrued expenses                         (130,519)    (1,441,433)
                                                                  -----------    -----------
           Net cash used in operating activities                   (4,975,336)    (4,244,728)

Cash flows from investing activities:
    Principal payments on residual interest                           189,608           --
    Capital expenditures                                              (35,576)       (16,911)
                                                                  -----------    -----------
            Net cash provided by (used in) investing activities       154,032        (16,911)

Cash flows from financing activities:
    Advances from (payments to) affiliate                              18,000     (1,925,258)
    Increase in bank overdraft                                        157,407         54,316
    Advances under a line of credit                                 4,150,000      2,750,000
                                                                  -----------    -----------
            Net cash provided by financing activities               4,325,407        879,058
                                                                  -----------    -----------

(Decrease) in cash                                                   (495,897)    (3,382,581)

Cash at the beginning of period                                       506,098      3,401,674
                                                                  -----------    -----------
Cash at end of period                                             $    10,201    $    19,093
                                                                  ===========    ===========

Supplemental disclosure of cash flow information:
   Cash paid during the period
         Interest                                                 $    29,508    $    10,352
         Income taxes                                             $      --      $   900,000


</TABLE>
See accompanying notes to consolidated financial statements





<PAGE>

                              Asta Funding, Inc.
                  Notes to Consolidated Financial Statements

Note 1: Basis of  Presentation

Asta Funding, Inc. (the "Company") is a consumer finance company engaged in
the business of purchasing, selling and servicing retail installment sales
contracts ("Contracts") originated by automobile dealers ("Dealers") in the
sale primarily of used automobiles. The Company was formed on July 7, 1994.
The Company's fiscal year-end is September 30.

The consolidated balance sheet as of December 31, 1997, the consolidated
statements of operations for the three-month periods ended December 31, 1997
and 1996, and the consolidated statements of cash flows for the three-month
periods ended December 31, 1997 and 1996, have been prepared by the Company
without an audit. In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the financial
position of the Company at December 31, 1997 and September 30, 1997, the
results of operations for the three-month periods ended December 31, 1997 and
1996 and the cash flows for the three-month periods ended December 31, 1997
and 1996 have been made. The results of operations for the three-month periods
ended December 31, 1997 and 1996 are not necessarily indicative of the
operating results for the full 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. It is suggested that these financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-KSB for the fiscal
year ended September 30, 1997.

Note 2:  Principles of Consolidation

The consolidated financial statements include the accounts of Asta Funding,
Inc. and its wholly-owned subsidiary, Asta Auto Receivables Company, a limited
purpose corporation formed to accommodate certain resales of Contracts by the
Company. All significant intercompany balances and transactions have been
eliminated in consolidation.

Note 3: Loans Receivable

The Contracts which the Company purchases from Dealers provide for finance
charges of between 16.95% and 29.9% per annum. Each Contract provides for full
amortization, equal monthly payments and permits prepayments by the borrower
at any time without penalty. The Company generally purchases Contracts at a
discount from the full amount financed under a Contract.

Note 4: Interest Income

Interest income on loans is recognized using the interest method. Accrual of
interest income on loans receivable is suspended when a loan is contractually
delinquent more than 60 days.

Note 5:  Servicing Fees

Servicing fees are reported as income when earned. Servicing costs are charged
to expense as incurred.

Note 6:  Initial Public Offering

On November 17, 1995, the Company, in its initial public offering, sold
1,200,000 shares of its common stock. Proceeds, net of expenses of the
offering, were approximately $4,400,000. Additionally, the underwriter
received warrants to purchase shares of common stock at $6.50 per share. An
additional 180,000 shares were sold on December 1, 1995 pursuant to the
exercise by the underwriter of the over-allotment option for approximately
$800,000 net of expenses.





<PAGE>


                              Asta Funding, Inc.
                 Item 2. Management's Discussion and Analysis
               of Financial Condition and Results of Operations

Overview

The Company is engaged in the business of purchasing, selling and servicing
retail installment sales contracts ("Contracts") originated by automobile
dealers ("Dealers") in the sale primarily of used automobiles. The Company was
formed on July 7, 1994 and purchased its first Contract in October 1994.

The Company typically purchases Contracts between Dealers and purchasers of
automobiles ("Sub-Prime Borrowers") who may have limited credit histories, low
incomes or past credit problems and, therefore, are generally unable to obtain
credit from traditional sources of automobile financing such as commercial
banks, savings and loan associations or credit unions. Sub-Prime Borrowers
typically pay a higher rate of interest than do prime borrowers utilizing
traditional financing sources.

The Company generates revenues, earnings and cash flow primarily through the
purchase and collection of principal, interest and other payments on
Contracts.

Results of operations

The three-month period ended December 31, 1997, compared to the three-month
period ended December 31, 1996

Revenues. During the three-month period ended December 31, 1997, revenues
decreased $59,571 compared to the three-month period ended December 31, 1996.
Interest income on Contracts decreased $27,115 compared to the three months
ended December 31, 1996, and represented 64.2% of total revenues for the
three-month period ended December 31, 1997. The decrease in revenues and
interest income is due to the decrease in the dollar amount of Contracts
purchased during the three-month period ended December 31, 1997, as compared
to the same period in the prior year. During the three-month period ended
December 31, 1997, the Company purchased 576 Contracts from Dealers, compared
to 546 in the three-month period ended December 31, 1996. The Company earned
servicing fees of $280,374 for the three months ended December 31, 1997, as
compared to $312,830 for the three-month period ended December 31, 1996.

Expenses. During the three-month period ended December 31, 1997, general and
administrative expenses decreased $15,660 compared to the three months ended
December 31, 1996 and represented 53.5% of total operating expenses. The
decrease is due to a decrease in collection expenses as compared to the same
period in the prior year.

Interest expense increased by $20,778 during the three-month period ended
December 31, 1997 compared to the same period in the prior year and
represented 5% of total expenses for the three-month period ended December 31,
1997. The increase is due to an increase in borrowings under the line of
credit on the Company's credit facility with BankAmerica Business Credit, Inc.
("BankAmerica").

During the three-month period ended December 31, 1997, the provision for
credit losses on Contracts purchased increased by $196,000 compared to the
three months ended December 31, 1996 and represented 41% of total operating
expenses. The increase in the provision reflects higher than expected losses
on loans previously sold and serviced by the Company.

Liquidity and Capital Needs

The Company's primary sources of cash from operating activities include
borrower payments on Contracts, proceeds on the sale of Contracts in excess of
its recorded investment in the Contracts and base servicing fees it earns on
Contracts it has sold. The Company's primary uses of cash include its
purchases of Contracts, ordinary operating expenses and the establishment and
buildup of Spread Accounts.

Net cash used in operating activities was $4.98 million during the three
months ended December 31,1997 compared to $4.24 million during the three
months ended December 31, 1996. Cash used for purchasing Contracts was $4.85
million during the three months ended December 31, 1997 as compared to $5.43
million in the three months ended December 31, 1996.


<PAGE>

                              Asta Funding, Inc.
                 Item 2. Management's Discussion and Analysis
               of Financial Condition and Results of Operations

The Company's cash requirements have been and will continue to be significant.
Pursuant to the terms of a securitization agreement between Greenwich Capital
Markets, Inc. and the Company, the Company is required to make a significant
cash deposit into Spread Accounts, for the purpose of credit enhancement. The
Spread Accounts are pledged to support the related Asset Backed Securities
("ABS"), and are invested in high quality liquid securities. Excess cash flows
from securitized Contracts are deposited into the Spread Accounts until such
time as the Spread Account balances reach a specific percent of the
outstanding balance of the related ABS.

In January 1997, the Company entered into a two-year credit facility with
BankAmerica (the "Credit Facility") under which the Company can borrow at an
advance rate of 83% of eligible loans receivable and $20 million. At December
31, 1997, advances under the Credit Facility aggregated $4,150,000. The
advances bear interest at the prime rate plus 1%.

The Company anticipates the funds available under its Credit Facility, funds
made available by Asta Group, Incorporated, an affiliate of the Company,
proceeds from the sale of Contracts, and cash from operations will be
sufficient to satisfy the Company's estimated cash requirements for at least
the next 12 months, assuming that the Company continues to have a means by
which to sell its Contracts. If for any reason the Company is unable to sell
its Contracts, or if the Company's 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), the Company may be required to seek additional funding.

The Company does not anticipate any need for significant capital expenditures
in connection with the expansion of its business for at least 12 months.

This Form 10-QSB contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Such statements include, but are not limited to, the
Company's opportunities to increase revenues through, among other things, the
purchase and sale of additional Contracts, and the anticipated need and
availability of financing.

Forward-Looking Statements

Forward-looking statements are inherently subject to risks and uncertainties,
many of which cannot be predicted with accuracy and some of which might not
even be anticipated. Future events and actual results, financial and
otherwise, could differ materially from those set forth in or contemplated by
the forward-looking statements herein. Important factors that could contribute
to such differences are: increases in unemployment or other changes in
domestic economic conditions which adversely affect the sales of new and used
automobiles and which may result in increased delinquencies, foreclosures and
losses on Contracts; adverse economic conditions in geographic areas in which
the Company's business is concentrated, mainly the Northeast and Mid-Atlantic
States; changes in interest rates; adverse changes in the market for
securitized receivables pools or a substantial lengthening of the Company's
warehousing each of which could restrict the Company's ability to obtain cash
for Contract origination and purchases; increases in the amounts required to
be set aside in spread accounts or to be expended for other forms of credit
enhancement to support future securitizations; increased competition; a
reduction in the number and amount of acceptable Contracts submitted to the
Company by its dealers; changes in government regulations effecting consumer
credit; and other risk factors identified in the Company's filings with the
Securities and Exchange Commission, including under the caption "Risk Factors"
in its most recent Registration Statement on Form S-1. Subsequent, written and
oral forward-looking statements attributable to the Company or persons acting
on its behalf are expressly qualified by the precautionary statements in this
paragraph and elsewhere in this Form 10-QSB.








<PAGE>


                       Asta Funding, Inc. and Subsidiary
                         Form 10-QSB December 31, 1997


Part II. OTHER INFORMATION


Item 1.  Legal Proceedings

         As of the date of this Filing, the Company was not involved in any
material litigation in which it is the defendant. The Company regularly
initiates legal proceedings as a plaintiff in connection with its routine
collection activities.

Item 5.  Other Information

         On February 3, 1998, the Company received notification from NASDAQ
that the Company was not in compliance with the minimum $1.00 bid price
requirement necessary for continued listing of the Company's shares of common
stock on The Nasdaq Stock Market SmallCap Market. NASDAQ subsequently notified
the Company that if it did not maintain a $1.00 minimum bid price for one day
prior to February 23, 1998, NASDAQ would issue the Company a notice requiring
it to be in full compliance with all listing requirements for a minimum of ten
consecutive days in a ninety day period or the Company's common stock would be
delisted. While the company would appeal such delisting, the outcome of such
an appeal can not be determined. Should the Company be delisted, it would
expect to be traded on the Bulletin Board.

Item 6.  Exhibits and Reports on Form 8-K

         a. The following exhibits are filing as part of this quarterly on
form 10-QSB.

              27.1    Financial Data Schedule

              b. The registrant did not file any reports on Form 8-K during
the quarter ended December 31, 1997.














<PAGE>













                       Asta Funding, Inc. and Subsidiary
                         Form 10-QSB December 31, 1997


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:  February 3, 1998             By: /s/ Gary Stern
                                        ----------------------------------
                                        Gary Stern, President, Chief 
                                        Executive Officer
                                        (Principal Executive Officer)


Date: February 3, 1998              By: /s/ Mitchell Herman
                                        ----------------------------------
                                        Mitchell Herman, Chief Financial Officer
                                        (Principal Financial Officer and 
                                        Principal Accounting Officer)