<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 March 31, 2003.

                                       OR

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

             For the transition period from ________ to ___________

                        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 April 25, 2003, the registrant
had approximately 4,088,000 common shares outstanding.

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



<PAGE>


                               Asta Funding, Inc.
                           Form 10-QSB March 31, 2003

                                      INDEX

Part I.  Financial Information

Item 1.  Financial Statements

         Consolidated Balance Sheets as of March 31, 2003(unaudited) and
         September 30, 2002

         Consolidated Statements of Operations for the six and three month
         periods ended March 31, 2003 and 2002 (unaudited)

         Consolidated Statements of Cash Flows for the six and three month
         periods ended March 31, 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>

                                                         March 31,         September 30,
                                                         ---------         -------------

                                                           2003                2002
                                                           ----                ----

                                                         Unaudited
<S>                                                      <C>                  <C>
Assets
Cash                                                     $14,927,000          $2,213,000
Restricted cash, net                                          54,000              54,000
Consumer receivables acquired for liquidation             26,668,000          36,079,000
Auto loans receivable, net                                         -              29,000
Finance receivables                                                -           1,443,000
Furniture and equipment, net                                 719,000             345,000
Repossessed automobiles, net                                   5,000              67,000
Deferred income taxes                                        218,000             265,000
Other assets                                                 385,000             740,000
                                                         -----------         -----------

           Total assets                                  $42,976,000         $41,235,000
           ============                                  ===========         ===========

Liabilities and Stockholders' Equity
Liabilities
Debt                                                     $ 1,790,000          $2,172,000
Other liabilities                                          2,798,000           4,009,000
Income taxes payable                                          25,000           1,493,000
                                                         -----------         -----------

           Total liabilities                               4,613,000           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 - 4,088,000 at March 31, 2003 and
4,075,000 at September 30, 2002                               41,000              41,000
Additional paid-in capital                                10,308,000          10,247,000
Retained earnings                                         28,014,000          23,273,000
                                                         -----------         -----------

           Total stockholders' equity                     38,363,000          33,561,000
           --------------------------                    -----------         -----------

Total liabilities and stockholders' equity               $42,976,000         $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    Six Months Ended    Six Months Ended
                                                     March 31,           March 31,            March 31,           March 31,
                                                     ---------           ---------            ---------           ---------

                                                       2003                2002                  2003                2002
                                                       ----                ----                  ----                ----

<S>                                               <C>                <C>                  <C>                 <C>
Revenues:
Finance income                                    $7,720,000         $10,287,000          $14,471,000         $18,688,000
Other                                                      -              95,000                    -              96,000
                                                                          ------                                   ------

                                                   7,720,000          10,382,000           14,471,000          18,784,000
                                                   ---------          ----------           ----------          ----------

Expenses:
General and administrative                         2,009,000           1,887,000            3,362,000           3,330,000
Third-party servicing                              1,645,000           2,371,000            3,176,000           4,722,000
Provision for losses                                      -              325,000                    -             400,000
Interest                                              11,000           1,387,000               13,000           2,095,000
                                                      ------           ---------               ------           ---------

                                                   3,665,000           5,970,000            6,551,000          10,547,000
                                                   ---------           ---------            ---------          ----------

Income before income taxes                         4,055,000           4,412,000            7,920,000           8,237,000

Income tax expense                                 1,626,000           1,778,000            3,179,000           3,307,000
                                                   ---------           ---------            ---------           ---------

Net income                                        $2,429,000          $2,634,000           $4,741,000          $4,930,000
                                                  ==========          ==========           ==========          ==========

Net income per share - Basic                           $0.59               $0.65                $1.16               $1.23
                                                       -----               -----                -----               -----

                                   - Diluted           $0.55               $0.59                $1.08               $1.12
                                   ---------           -----               -----                -----               -----

Weighted average number of shares
outstanding                        - Basic         4,083,000           4,036,000            4,080,000           4,021,000
                                                   ---------           ---------            ---------           ---------

                                  - Diluted        4,447,000           4,427,000            4,401,000           4,392,000
                                  ---------        ---------           ---------            ---------           ---------
</TABLE>

See accompanying notes to consolidated financial statements




<PAGE>


Asta Funding, Inc. and Subsidiaries
<TABLE>
<CAPTION>

Consolidated Statements of Cash Flows
Unaudited                                                            Six Months Ended    Six Months Ended
                                                                         March 31,           March 31,
                                                                         ---------           ---------

                                                                           2003                 2002
                                                                           ----                 ----
<S>                                                                    <C>                  <C>

Cash flows from operating activities:
Net income                                                             $4,741,000           4,930,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation                                                               66,000              60,000
Provision for losses                                                                          400,000
Deferred income taxes                                                      47,000            (116,000)
Changes in:
Restricted cash                                                                 -              (1,000)
Repossessed automobiles held for sale                                      62,000              87,000
Prepaid income taxes                                                            -             596,000
Other assets                                                              355,000            (865,000)
Income taxes payable                                                   (1,468,000)            220,000
Other liabilities                                                      (1,211,000)            513,000
                                                                       ----------          ---------

           Net cash provided by operating activities                    2,592,000           5,824,000

Cash flows from investing activities:
Auto loan principal payments                                               29,000             489,000
Purchase of consumer receivables acquired for liquidation              (4,428,000)        (17,032,000)
Principal collected on receivables acquired for liquidation            13,839,000          23,039,000
Finance receivables                                                     1,443,000             (38,000)
Capital expenditures                                                     (440,000)           (156,000)
                                                                         ---------           ---------

            Net cash provided by investing activities                  10,443,000           6,302,000

Cash flows from financing activities:
Advances from affiliate                                                         -             (10,000)
Proceeds from exercise of options                                          61,000             228,000
(Repayments) Advances under lines of credit, net                         (382,000)          2,682,000
Repayments of notes payable, net                                                -         (15,782,000)
                                                                                         ------------

            Net cash (used in)  financing activities                     (321,000)        (12,882,000)
                                                                      -----------         -----------

Increase (Decrease) in cash                                            12,714,000            (756,000)

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

Cash at end of period                                                 $14,927,000          $4,933,000
                                                                      -----------          ----------

Supplemental disclosure of cash flow information:
Cash paid during the period
         Interest                                                          $7,000            $576,000
         Income taxes                                                  $2,804,000          $2,607,000
</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 is engaged in the business of
purchasing, managing and servicing non-conforming and distressed consumer
receivables. Non-conforming consumer receivables are the obligations of
individuals that have incurred credit impairment either at the time the
obligation was originated or subsequent to origination. Distressed consumer
receivables are the unpaid debts of individuals to banks, finance companies and
other credit providers. A large portion of our distressed consumer receivables
are MasterCard(R), Visa(R) and other credit card accounts which were charged-off
by the issuing banks for non-payment. We also, to a lesser extent, factored
commercial invoices to small companies with unique financing needs. On November
25, 2002, we sold a majority of our factored receivables and discontinued
factoring new receivables.

The consolidated balance sheet as of March 31, 2003, the consolidated statements
of operations for the six and three month periods ended March 31, 2003 and 2002,
and the consolidated statements of cash flows for the six and three month
periods ended March 31, 2003 and 2002, have been prepared by us without an
audit. In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position of us
at March 31, 2003 and September 30, 2002, the results of operations for the six
and three month periods ended March 31, 2003 and 2002 and cash flows for the six
month periods ended March 31, 2003 and 2002 have been made. The results of
operations for the six and three month periods ended March 31, 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: 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 4: Finance Receivables:

Finance receivables were factored accounts receivable primarily with full
recourse.

Note 5: Debt:

We have a $25 million line of credit with a bank with interest at the prime rate
which was 4.25% at March 31, 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. As of March 31, 2003, there was approximately $1.8 million outstanding
under this line of credit and we were in compliance with all of the covenants
under this line of credit.

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.

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 6: 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.


<PAGE>


                               Asta Funding, Inc.
                   Notes to Consolidated Financial Statements

         Based on an increase in actual cash flows for the three and six months
ended March 31, 2003, and projected future cash flows through September 30,
2005, on one of our portfolios as compared to what we estimated at September 30,
2002, we revised our estimate of future collections. Such change in accounting
estimate has resulted in approximately a $1.4 million increase in finance income
recognized for the three and six months ended March 31, 2003 for this portfolio.


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

Overview

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

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

         o        semi-performing receivables - accounts where the debtor is
                  currently making partial or irregular monthly payments, but
                  the accounts may have been written-off by the originators; and

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

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

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

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

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

         o        other sources.

This Form 10-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 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; the Stern family controls
Asta; 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.


<PAGE>

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

         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
six-month period ended March 31, 2003.

         Based on an increases in actual cash flows for the three and six months
ended March 31, 2003, and projected future cash flows through September 30,
2005, on one of our portfolios as compared to what we estimated at September 30,
2002, we revised our estimate of future collections. Such change in accounting
estimate has resulted in approximately a $1.4 million increase in finance income
recognized for the three and six months ended March 31, 2003 for this portfolio.

         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.

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

Results of operations

The six-month period ended March 31, 2003, compared to the six-month period
ended March 31, 2002

         Revenues. During the six-month period ended March 31, 2003, finance
income decreased $4.2 million or 22.5% to $14.5 million from $18.7 million for
the six-month period ended March 31, 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 six-months ended March
31, 2003, as compared to 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 earned on these receivables income during the six-months ended March 31,
2003, as compared to the six-months ended March 31, 2002. Based on an increases
in actual cash flows for the three and six months ended March 31, 2003, and
projected future cash flows through September 30, 2005, on one of our portfolios
as compared to what we estimated at September 30, 2002, we revised our estimate
of future collections. Such change in accounting estimate has resulted in
approximately a $1.4 million increase in finance income recognized for the three
and six months ended March 31, 2003 for this portfolio.

General and Administrative Expenses. During the six-month period ended March 31,
2003, general and administrative expenses increased nominally or less than 1.0%
to $3.4 million from $3.3 million for the six-months ended March 31, 2002, and
represented 51.3 % of total expenses for the six months ended March 31, 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 six-month period ended March 31, 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 six-month period ended March 31,
2003, third-party servicing expenses decreased $1.5 million or 31.9% to $3.2
million from $4.7 for the six months ended March 31, 2002, and represented 48.5%
of total expenses for the six months ended March 31, 2003. The decrease in
third-party servicing expenses was primarily due to a reduction in the number of
accounts being serviced on a portfolio that was purchased in August 2001 and the
elimination of recording of third-party servicing expenses on a specific
portfolio during the six months ended March 31, 2003, as compared to the same
prior year period.

Interest Expense. During the six-month period ended March 31, 2003, interest
expense decreased $2.1 million or 100.0% to almost no interest expense from $2.1
million compared to the same period in the prior year and represented 0.2% of
total expenses for the six-month period ended March 31, 2003. The decrease was
due to an decrease in the outstanding borrowings by us under our lines of credit
and notes payable and the discontinued accrual of interest expense that was due
to a profit participation on a specific portfolio during the six-month period
ended March 31, 2003, as compared to the same period in the prior year. The
decrease in borrowings was due to the decrease in acquisitions of consumer
receivables


<PAGE>

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

acquired for liquidation during the fourth quarter of the fiscal year ended
September 30, 2002 and the six-month period ended March 31, 2003, as compared to
the same prior year periods.

Provision for Credit Losses. During the six-month period ended March 31, 2003,
the provision for credit losses decreased $0.4 million or 100.0% to $0.0 million
from $0.4 million for the six-months ended March 31, 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 six months ended March 31,
2003, as compared to the same prior year period.

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

         Revenues. During the three-month period ended March 31, 2003, finance
income decreased $2.6 million or 25.3% to $7.7 million from $10.3 million for
the three-month period ended March 31, 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 three-months ended
March 31, 2003, as compared to 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 three-months ended
March 31, 2003, as compared to the three-months ended March 31, 2002. Based on
an increases in actual cash flows for the three and six months ended March 31,
2003, and projected future cash flows through September 30, 2005, on one of our
portfolios as compared to what we estimated at September 30, 2002, we revised
our estimate of future collections. Such change in accounting estimate has
resulted in approximately a $1.4 million increase in finance income recognized
for the three and six months ended March31, 2003 for this portfolio.

General and Administrative Expenses. During the three-month period ended March
31, 2003, general and administrative expenses increased $100,000 or 5.3% to $2.0
million from $1.9 million for the three-months ended March 31, 2002, and
represented 54.8% of total expenses for the three months ended March 31, 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 March 31, 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 three-month period ended March 31,
2003, third-party servicing expenses decreased $0.8 million or 33.3% to $1.6
million from $2.4 for the three months ended March 31, 2002, and represented
44.9% of total expenses for the three months ended March 31, 2003. The decrease
in third-party servicing expenses was primarily due to a reduction in the number
of accounts being serviced on a portfolio that was purchased in August 2001 and
the elimination of recording of third-party servicing expenses on a specific
portfolio during the three months ended March 31, 2003, as compared to the same
prior year period.

Interest Expense. During the three-month period ended March 31, 2003, interest
expense decreased $1.4 million or 100.0% to almost no interest expense from $1.4
million compared to the same period in the prior year and represented 0.3% of
total expenses for the three-month period ended March 31, 2003. The decrease was
due to an decrease in the outstanding borrowings by us under our lines of credit
and notes payable and the discontinued accrual of interest expense that was due
to a profit participation on a specific portfolio during the three-month period
ended March 31, 2003, as compared to the same period in the prior year. The
decrease in borrowings was due to the decrease in acquisitions of consumer
receivables acquired for liquidation during the fourth quarter of the fiscal
year ended September 30, 2002 and the three-month period ended March 31, 2003,
as compared to the same prior year periods.

Provision for Credit Losses. During the three-month period ended March 31, 2003,
the provision for credit losses decreased $0.3 million or 100.0% to $0.0 million
from $0.3 million for the three-months ended March 31, 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 March
31, 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, including our affiliates, 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. As of March 31,
2003, there was approximately 1.8 million outstanding balance under this
facility. As of March 31, 2003, our cash and cash equivalents increased to $14.9
million from $2.2 million at September 30, 2002. The increase in cash and cash
equivalents during the three month period ended March 31, 2003, was primarily
due to a decrease in the repayment of debt, a reduction in consumer receivable
purchases and the sale of most of our factoring receivables during the period.

Net cash provided by operating activities was $2.6 million during the six-months
ended March 31, 2003, compared to net cash provided by operating activities of
$5.8 million during the six-months ended March 31, 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 six-months ended March 31, 2003,
as compared to the same period in the prior year. Net cash provided by investing
activities was $10.4 million during the six-months ended March 31, 2003,
compared to net cash provided by investing activities of $6.3 million during the
six-months ended March 31, 2002. The increase in net cash provided by investing
activities was primarily due to a decrease in the purchase of accounts acquired
for liquidation and the sale of most of the factoring receivables which was
offset by a decrease in collections of consumer receivables acquired for
liquidation during the six-months ended March 31, 2003, compared to the same
period in the prior year. Net cash used in financing activities was $0.3 million
during the six-months ended March 31, 2003, compared to net cash used of


<PAGE>

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

$12.9 million during the six-months March 31, 2002. The decrease in net cash
used in financing activities was primarily due to an overall decrease in debt
payments which was partially off-set by a decrease in borrowings during the
six-months ended March 31, 2003, compared to the same prior year period. The
decrease in debt payments was due to an increase in principal collections that
was used to repay debt on accounts acquired for liquidation during the
six-months ended March 31, 2003, as compared to the six-months ended March 31,
2002. The decrease in borrowings was due to a decrease in purchases of accounts
acquired for liquidation during the six months ended March 31, 2003, as compared
to the same prior year period.

We have a $25 million line of credit with a bank with interest at the prime rate
which was 4.25% at March 31, 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. As of March 31, 2003, there was approximately $1.8 million outstanding
under this line of credit and we were in compliance with all of the covenants
under this line of credit.

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.

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.

Our cash requirements have been and will continue to be significant. We depend
on external financing to acquire consumer receivables. During the six-months
ended March 31, 2003, we acquired consumer portfolios at a cost of approximately
$4.4 million. These acquisitions were financed with our cash on hand.

We anticipate the funds available under our current credit facility as well as
funds that may be made available by Asta Group, Incorporated, an affiliate of
ours, and cash from operations will be sufficient to satisfy the our estimated
cash requirements for at least the next 12 months. If for any reason our
available cash otherwise proves to be insufficient to fund operations (because
of future changes in the industry, general economic conditions, unanticipated
increases in expenses, or other factors), we may be required to seek additional
funding.

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

Supplementary Information on Accounts Acquired for Liquidation

Schedule of Accounts Acquired for Liquidation by Income Recognition Category

                                                   As of March 31, 2003

                                             Cost Recovery      Interest Method
                                               Portfolios         Portfolios
                                               ----------         ----------

Cummulative Original Purchase Price             $46,838,000       $116,317,000

Cummulative Aggregate Managed Portfolios     $1,996,995,000     $1,863,765,000

Receivable Carrying Value at                     $2,560,000        $24,108,000

Finance Income Earned *                          $3,415,000        $10,899,000
(for the six months ended 3/31/03)

Total cash flows *                               $4,420,000        $23,733,000
(for the six months ended 3/31/03)

* The sum of total cash flows of $28,153,000 less the sum of total finance
income earned on consumer receivables acquired for liquidation of $14,314,000,
is $13,839,000 or the principal collected on receivables acquired for
liquidation as per the statement of cash flows for the six months ended March
31, 2003.

The original purchase price reflects what we paid for the receivables from 1998
through December 31, 2002. The cummulative aggregate managed portfolio balance
is the original aggregate amount owed by the borrowers from 1998 through March
31, 2003 at the time of purchase. We purchase consumer receivables at
substantial discounts from the face amount. We record interest income on our
receivables under either the cost recovery or interest method. The receivable
carrying value represents the current basis in the receivables after collections
and amortization of the original price.


<PAGE>


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

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 six-months ended March 31, 2003, we earned interest income of $3.4
million under the cost recovery method because we collected $3.4 million in
excess of our purchase price on certain receivable portfolios. In addition, we
earned $10.9 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.

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                Six Months Ended
                                            March 31,                        March 31,


                                     2003            2002             2003               2002
                                     ----            ----             ----               ----

<S>                               <C>            <C>               <C>                <C>
Net income, as reported           $2,429,000     $2,634,000        $4,741,000         $4,930,000

Deduct: total stock-based
        compensation expense
        determined under the
        fair value method,
        net of tax                 ($265,000)     ($188,000)       ($530,000)         ($377,000)
                                  ----------     ----------       ----------         ----------
Pro-forma net income              $2,164,000     $2,446,000       $4,211,000         $4,553,000

Earnings per share:
       Basic - as reported             $0.59          $0.65            $1.16              $1.23
       Basic - pro forma               $0.53          $0.61            $1.03              $1.13

       Diluted - as reported           $0.55          $0.59            $1.08              $1.12
       Diluted - pro forma             $0.49          $0.55            $0.96              $1.04
</TABLE>


<PAGE>


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

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 March 31, 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

None.

Item 3.  Defaults Upon Senior Securities

None.

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

         We held our annual meeting of stockholders on March 21, 2003. At the
meeting, the following persons were elected directors, all of whom were
incumbents: Arthur Stern, Gary Stern, Mitchell Herman, Herman Badillo, Edward
Celano, David Slackman, Harvey Liebowitz and Michael Feinsod. Mr. Feinsod
resigned from our Board of Directors to pursue other interests on February 12,
2003, and did not stand for re-election at our annual meeting of stockholders.

Shares were voted for the election of directors as follows:

                                                                    Authority
         Director                   For              Against        Withheld

         (1) Gary Stern           3,931,597           3,974             0

         (2) Mitchell Herman      3,931,597           3,974             0

         (3) Arthur Stern         3,931,597           3,974             0

         (4) Michael Feinsod      3,931,597           3,974             0

         (5) Herman Badillo       3,931,597           3,974             0

         (6) Edward Celano        3,931,597           3,974             0

         (7) Harvey Leibowitz     3,931,597           3,974             0

         (8) David Slackman       3,931,597           3,974             0

Item 5. Other Information

         We entered into an Amended Loan and Security Agreement dated as of
January 28, 2003, between us and Israel Discount Bank of NY. This line of credit
expires on January 31, 2004, and bears interest at the prime rate. The advances
under this credit line are collateralized by portfolios of consumer receivables
acquired for liquidation and the loan agreement contains customary financial and
operating covenants that must be maintained in order for us to borrow funds. We
are currently in compliance with all of the covenants under this line of credit.

         We have been informed that OSI Collection Services, Inc. and certain of
its affiliates ("OSI"), which services a substantial amount of our consumer
receivables, filed for a Chapter 11 reorganization on or about May 12, 2003.
Based on information we have received to date, we believe that OSI will continue
to operate in the ordinary course in servicing receivables through its Chapter
11 proceeding, and that OSI's filing will not have a material adverse effect on
our operations.

Item 6.  Exhibits and Reports on Form 8-K

         (a) Exhibits

         10.13 Amended Loan and Security Agreement dated as of January 28, 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 906 of the Sarbanes-Oxley Act of 2002.

         99.2 Certification of the Registrant's Chief Financial Officer,
         Mitchell Herman, pursuant to Section 906 of the Sarbanes-Oxley Act of
         2002.

         (b) Reports on Form 8-K

         We did not file any Reports of Form 8-K during the three-months ended
March 31, 2003.


<PAGE>


                               Asta Funding, Inc.
                           Form 10-QSB March 31, 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: May 12, 2003   By: /s/ Gary Stern
                     ------------------

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

Date: May 12, 2003   By: /s/ Mitchell Herman
                     -----------------------

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


<PAGE>


                                 Certifications

            Pursuant to Section 302 of the Sarbanes Oxley Act of 2002


I, Gary Stern, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Asta Funding, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

         a) designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

         b) evaluated the effectiveness of the registrant's disclosure controls
         and procedures as of a date within 90 days prior to the filing date of
         this quarterly report (the "Evaluation Date"); and

         c) presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

         a) all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

         b) any fraud, whether or not material, that involves management or
         other employees who have a significant role in the registrant's
         internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date:  May 12, 2003


/s/ Gary Stern
--------------
Gary Stern
President and Chief Executive Officer


<PAGE>

                                 Certifications

            Pursuant to Section 302 of the Sarbanes Oxley Act of 2002


I, Mitchell Herman, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Asta Funding, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

         a) designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

         b) evaluated the effectiveness of the registrant's disclosure controls
         and procedures as of a date within 90 days prior to the filing date of
         this quarterly report (the "Evaluation Date"); and

         c) presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

         a) all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

         b) any fraud, whether or not material, that involves management or
         other employees who have a significant role in the registrant's
         internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date:  May 12, 2003

/s/ Mitchell Herman
-------------------
Mitchell Herman
Chief Financial Officer, Secretary and
Chief Accounting Officer