<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, 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 June 30, 1997 the registrant
had 4,460,000 common shares outstanding.

Transitional Small Business Disclosure Format (check one): Yes __ No _X_



<PAGE>

                        Asta Funding, Inc. and Subsidiary
                            Form 10-QSB June 30, 1997


                                      INDEX



Part I. Financial Information
-----------------------------

            Item 1. Financial Statements

               Consolidated Balance Sheets as of June 30, 1997 (Unaudited) and
               September 30, 1996

               Consolidated Statements of Operations for the three- and
               nine-month periods ended June 30, 1997 and June 30, 1996
               (Unaudited)

               Consolidated Statements of Cash Flows for the nine-month periods
               ended June 30, 1997 and June 30, 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
                                                June 30,      September 30,
                                              -----------    ------------
                                                  1997            1996
                                                  ----            ----
                                                               Unaudited
Assets
Cash                                         $      5,007    $  3,401,674
Restricted cash and cash equivalents, net         878,760         358,179
Loans receivable, net                          16,265,244       3,285,130
Accrued interest receivable                       204,000          36,168
Servicing fees receivable                          34,069          59,919
Excess servicing receivable, net                1,245,049       2,675,407
Due from trustee                                  106,585       2,079,679
Furniture and equipment, net                      157,886          97,894
Repossessed automobiles, net                      467,684         491,314
Deferred taxes                                    150,000         365,000
Other assets                                      254,775         259,475
                                             ------------    ------------
          Total Assets                       $ 19,769,059    $ 13,109,839
                                             ============    ============
                                             

Liabilities and Stockholders' Equity
Liabilities
Bank overdraft                               $    201,986    $     54,304
Income taxes payable                               51,123       1,705,000
Estimated future losses on loans sold                --            76,756
Accounts payable and accrued expenses             348,995         592,356
Advances under a line of credit                10,550,000            --
Due to affiliate                                  419,440       1,919,704
                                             ------------    ------------
          Total Liabilities                    11,571,544       4,348,120
                                             ------------    ------------


Stockholders' Equity
Common stock, $.01 par value; authorized
10,000,000 shares; issued and outstanding
4,460,000                                          44,600          44,600
Additional paid-in capital                      9,597,271       9,597,271
Accumulated deficit                            (1,444,356)       (880,152)
                                             ------------    ------------
          Total Liabilities                     8,197,515       8,761,719
                                             ------------    ------------
Total Liabilities and Stockholders' Equity   $ 19,769,059    $ 13,109,839
                                             ============    ============
                                             



See accompanying notes to consolidated financial statements

<PAGE>


Asta Funding, Inc. and Subsidiary

Consolidated Statements of Operations
Unaudited
<TABLE>
<CAPTION>
                                                   Three Months Ended             Nine Months Ended
                                                         June 30,                     June 30,
                                               --------------------------    --------------------------
                                                   1997           1996          1997           1996
                                                   ----           ----          ----           ----

<S>                                            <C>            <C>           <C>            <C>        
Revenues:
Interest                                       $ 1,058,056    $ 1,082,314   $ 2,411,181    $ 2,371,977
Servicing fees                                      45,122           --         402,907           --
                                               -----------    -----------   -----------    -----------
                                                 1,103,178      1,082,314     2,814,088      2,371,977
                                               -----------    -----------   -----------    -----------

Expenses:
General and administrative                         768,341        447,220     2,226,228        993,127
Provision for credit losses                        587,000        130,500     1,206,700        388,900
Interest                                           184,572        158,921       320,773        371,008
                                               -----------    -----------   -----------    -----------
                                                 1,539,913        736,641     3,753,701      1,753,035
                                               -----------    -----------   -----------    -----------
Income (loss) before provision (benefit) for
     income taxes                              $  (436,735)   $   345,673   $  (939,613)   $   618,942

Provision (benefit) for income taxes              (173,460)       138,131      (375,410)       249,133

                                               -----------    -----------   -----------    -----------
Net income (loss)                              $  (263,275)   $   207,542   $  (564,203)   $   369,809
                                               ===========    ===========   ===========    ===========


Net income (loss) per share                    $     (0.07)   $      0.06   $     (0.14)   $      0.11
                                               ===========    ===========   ===========    ===========

Weighted average number of shares
      outstanding                                3,960,000      3,629,712     3,960,000      3,371,259
                                               ===========    ===========   ===========    ===========
</TABLE>






See accompanying notes to consolidated financial statements



<PAGE>

Asta Funding, Inc. and Subsidiary

Consolidated Statements of Cash Flows
Unaudited    
<TABLE>
<CAPTION>
                                                                     Nine Months Ended
                                                                         March 31,
                                                              ----------------------------
                                                                   1997            1996
                                                                   ----            ----
<S>                                                           <C>             <C>         
Cash flows from operating activities:
  Net income (loss)                                           $   (564,205)   $    369,809
  Adjustments to reconcile net income (loss) to net
    cash provided by (used in) operating activities:
    Depreciation and amortization                                   80,327          89,066
    Amortization of excess servicing                             1,397,206            --
    Provision for losses                                         1,206,700         388,900
    Deferred income taxes                                          215,000        (128,000)
    Expenses advanced by affiliate                                  75,660          61,898
    Changes in operating assets and liabilities:
       Accrued interest receivable                                (167,831)       (205,164)
       Servicing fees receivable                                    25,850            --
       Other assets                                                 24,339        (234,982)
       Due from trustee                                          1,887,625            --
       Restricted cash                                          (1,413,345)           --
       Accounts payable and accrued expenses                    (1,897,227)        520,453
                                                              ------------    ------------
           Net cash provided by operating activities               870,099         861,980

Cash flows from investing activities:
    Loans originated                                           (16,346,349)    (18,156,889)
    Loans repaid                                                 2,999,440       3,676,826
    Capital expenditures                                           (92,243)        (35,452)
                                                              ------------    ------------
            Net cash used in investing activities              (13,439,152)    (14,515,515)

Cash flows from financing activities:
    Payments to affiliate                                       (1,525,695)        (21,664)
    Increase in bank overdraft                                     147,681         229,945
    Issuance of common stock                                          --         5,699,371
    Deferred offering costs                                           --            97,631
    Advances under a line of credit                             10,550,000       7,433,925
                                                              ------------    ------------
            Net cash provided by financing activities            9,171,986      13,439,208
                                                              ------------    ------------

(Decrease) in cash                                              (3,397,067)       (214,327)

Cash at the beginning of period                                  3,401,674         214,391
                                                              ------------    ------------
Cash at end of period                                         $      4,607    $         64
                                                              ============    ============

Supplemental disclosure of cash flow information:
   Cash paid during the period
         Interest                                             $    233,360    $    295,844
         Income taxes                                         $    900,000    $     26,250

</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 July 7, 1994. The Company's fiscal
year-end is September 30.

The consolidated balance sheet as of June 30, 1997, the consolidated statements
of operations for the three- and nine-month periods ended June 30, 1997 and
1996, and the consolidated statements of cash flows for the nine-month periods
ended June 30, 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 at
June 30, 1997 and 1996, the results of operations for the three- and nine-month
periods ended June 30, 1996 and 1997 and the cash flows for the nine-month
periods ended June 30, 1996 and 1997 have been made. The results of operations
for the three- and nine-month periods ended June 30, 1997 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,
1996.

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, net of related amortization
of excess servicing fees. 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.
                   Notes to Consolidated Financial Statements

Note 7:  Due to Affiliate

On June 10, 1997, Asta Group Incorporated, formerly the majority shareholder of
the Company, sold all of the shares of the Company's Common Stock it
beneficially owned to the shareholders of Asta Group Incorporated and Mitchell
Herman, the Chief Financial Officer of the Company. On prior financial
statements the due to affiliate was reported as due to parent.








<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 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 June 30, 1997, compared to the three-month period
ended June 30, 1996

Revenues. During the three-month period ended June 30, 1997, revenues increased
by $20,864 compared to the three-month period ended June 30, 1996. Interest
income decreased by $24,258 compared to the three-month period ended June 30,
1996. The increase in revenue is due to the increase in the volume of Contracts
serviced by the Company. The decrease in interest income is primarily due to the
decrease in the average number of Contracts outstanding compared to the
three-month period ended June 30, 1996. During the three-month period ended June
30, 1997, the Company purchased 877 Contracts from Dealers, compared to 1,026 in
the three-month period ended June 30, 1996. The Company earned Servicing fees of
$45,122 for the three months ended June 30, 1997, which consisted of base and
excess monthly servicing fees on Contracts sold and serviced by the Company. The
Company completed its first sale and securitization of a portfolio of Contracts
in September 1996 and therefore it did not have any income from servicing fees
during the three-month period ended June 30, 1996.

Expenses. During the three-month period ended June 30, 1997, general and
administrative expenses increased by $321,141 compared to the three-month period
ended June 30, 1996. The increase is due to the hiring of additional employees
and the increased overhead expenses necessary to accommodate the Company's
increased volume of servicing Contracts. In addition, the Company has incurred
an increase in marketing expenses as compared to the three-month period ended
June 30, 1996.

Interest expense increased by $25,651 during the three-month period ended June
30, 1997 compared to the same period in the prior year and represented 12% of
total expenses for the three-month period ended June 30, 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 June 30, 1997, the provision for losses on
Contracts purchased increased by $456,500 and represented 38% of total expenses
compared to the three-month period ended June 30, 1996. The increase is due to
management's evaluation of its loan loss reserves and higher than expected
losses on Contracts held and serviced by the Company.

The nine-month period ended June 30, 1997, compared to the nine-month period
ended June 30, 1996

Revenues. During the nine-month period ended June 30, 1997, revenues increased
by $442,111 compared to the nine-month period ended June 30, 1996. Interest
income increased by $39,204 compared to the nine-month period ended June 30,
1996. The increase in revenue and interest income is primarily due to the
increase in the average number of Contracts outstanding compared to the
nine-month period ended June 30, 1996 . During the nine-month period ended June
30, 1997, the Company purchased 1,736 Contracts from Dealers, compared to 1,993
in the nine-month period ended June 30, 1996. The Company earned Servicing fees
of $402,907 for the nine months ended June 30, 1997 which consisted of base and
excess monthly servicing



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


fees on Contracts sold and serviced by the Company. The Company completed its
first sale and securitization of a portfolio of Contracts in September 1996 and
therefore did not have income from servicing fees for the nine-month period
ended June 30, 1996.

Expenses. During the nine-month period ended June 30, 1997, operating expenses
increased by $2,000,666 as compared to the nine-month period ended June 30,
1996. The increase is due to the addition of employees and increased overhead
expenses necessary to accommodate the Company's increased volume of servicing
Contracts. In addition, the Company has incurred an increase in marketing
expenses as compared to the nine-month period ended June 30, 1996.

Interest expense decreased by $50,235 during the nine-month period ended June
30, 1997 compared to the same period in the prior year and represented 9% of
total expenses for the nine-month period ended June 30, 1997. The decrease is
due to a decrease in borrowings under the line of credit on the Company's credit
facility with BankAmerica.

During the nine-month period ended June 30, 1997, the provision for losses on
Contracts purchased increased by $817,800 and represented 32% of total expenses
compared to the nine-month period ended June 30, 1997. The increase is due to
management's evaluation of its loan loss reserves and higher than previously
expected losses on Contracts held and serviced by the Company.

Liquidity and Capital Resources

The funds necessary to support the Company's purchasing of Contracts have been
provided primarily from its initial public offering, bank borrowings under a
line of credit and contributed capital from Asta Group, Incorporated, an
affiliate of the Company.

In November 1995, the Company entered into a two-year credit facility with
BankAmerica (the "Credit Facility") under which the Company can borrow the
lesser of the advance rate (between 70% and 80% of eligible loans receivable)
and $15 million. At June 30, 1997, advances under the Credit Facility aggregated
$10,550,000. The advances bear interest at the prime rate plus 1%.

The Company's cash requirements have been and will continue to be significant.
Pursuant to the terms of the securitization agreement between Greenwich Capital
Markets, Inc. and Asta Funding, Inc., entered into in September 1996, the
Company was required to make a significant initial cash deposit, for purposes of
credit enhancement, to a spread account (the "Spread Account"). The Spread
Account is pledged to support the related Asset Backed Securities ("ABS"), and
is invested in high quality liquid securities. Excess cash flows from the
securitized Contracts are required to be deposited into the Spread Account until
such time as the Spread Account balance reaches a specific percent of the
outstanding balance of the related ABS.

The Company anticipates the funds available under the Credit Facility, the
proceeds from the sale of Contracts and cash from operations will be sufficient
to satisfy the Company's estimated cash requirements for the next 12 months,
assuming that the Company continues to have a means by which to sell its
warehoused 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, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. 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.


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


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 June 30, 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 June 10, 1997, Asta Group Incorporated, formerly the majority
shareholder of the Company, sold all of the shares of the Company's Common Stock
it beneficially owned to the shareholders of Asta Group Incorporated and
Mitchell Herman, the Chief Financial Officer of the Company.

         On July 30, 1997, the Company and its wholly-owned subsidiary, Asta
Auto Receivables Company ("Asta Receivables") consummated a securitization of
automobile loan receivables. The transaction involved the private placement by
Asta Receivables of pass-through certificates evidencing ownership interests in
a trust. The assets of the trust are primarily comprised of motor vehicle retail
installment sale Contracts having an aggregate principal balance of $15,839,988
as of July 1, 1997. The contracts were transferred by the Company to Asta
Receivables which subsequently transferred such assets to the trust. The Company
received net proceeds of $13,427,428 from the sale of the Contracts to Asta
Receivables.

Item 6.  Exhibits and Reports on Form 8-K

         a. Exhibits

         Exhibit
         Number


         10.1 Pooling and Servicing Agreement dated as of July 1, 1997 among
Asta Auto Receivables Company, the Company and The Chase Manhattan Bank.

         10.2 Certificate Purchase Agreement dated July 30, 1997 between
Greenwich Capital Markets, Inc. and Asta Auto Receivables Company.

         10.3 Purchase Agreement dated as of July 1, 1997 between Asta Auto
Receivables Company and the Company.

         27 Financial Data Schedule


         b. Reports on Form 8-K filed during the quarter ended June 30,
1997-None.







<PAGE>




                        Asta Funding, Inc. and Subsidiary
                            Form 10-QSB June 30, 1997


Signatures

In accordance with the requirements of the 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 4, 1997        By: /s/ Gary Stern
                                ----------------------------------------------
                                Gary Stern, President, Chief Executive Officer
                                (Principal Executive Officer)


Date: August 4, 1997        By: /s/ Mitchell Herman
                                ----------------------------------------------
                               Mitchell Herman, Chief Financial Officer
                               (Principal Financial Officer and 
                               Principal Accounting Officer)