##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2011
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 0-26906
 ASTA FUNDING, INC.
  Delaware
(State or Other Jurisdiction 
of Incorporation or Organization)
    
    22-3388607
(IRS Employer
Identification No.)210 Sylvan Ave., Englewood Cliffs, New Jersey
(Address of Principal Executive Offices)
    
    07632
(Zip Code)
 Registrants Telephone Number, Including Area Code: (201) 567-5648
  þ o
 o o
  Large accelerated
filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



ASTA FUNDING, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
 Part I. Financial Information
    
    
    3Item 1. Financial Statements
    
    
    3Condensed Consolidated Balance Sheets as of March 31, 2011 (unaudited) and September 30, 2010
    
    
    3Condensed Consolidated Statements of Operations for the three and six month periods
ended March 31, 2011 and 2010 (unaudited)
    
    
    4Condensed Consolidated Statement of Stockholders Equity for the six month period ended
March 31, 2011 (unaudited)
    
    
    5Condensed Consolidated Statements of Cash Flows for the six month periods ended March
31, 2011 and 2010 (unaudited)
    
    
    6Notes to Condensed Consolidated Financial Statements (unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    26Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    36Item 4. Controls and Procedures
    
    
    36Part II. Other Information
    
    
    37Item 6. Exhibits
    
    
    37Signatures
    
    
    38Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements
 ASTA FUNDING, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 March 31,
    
    
    September 30,2011
    
    
    2010(Unaudited)ASSETSCash and cash equivalents
    
    $
    91,787,000
    
    
    $
    84,235,000Restricted cash
    
    
    1,428,000
    
    
    
    1,304,000Consumer receivables acquired for liquidation (at net realizable value)
    
    
    130,904,000
    
    
    
    147,031,000Due from third party collection agencies and attorneys
    
    
    2,576,000
    
    
    
    3,528,000Prepaid and income taxes receivable
    
    
    
    
    
    
    196,000Furniture and equipment, net
    
    
    411,000
    
    
    
    338,000Deferred income taxes
    
    
    17,850,000
    
    
    
    18,762,000Other assets
    
    
    4,574,000
    
    
    
    3,770,000Total assets
    
    $
    249,530,000
    
    
    $
    259,164,000LIABILITIESDebt
    
    $
    76,860,000
    
    
    $
    90,483,000Subordinated debt  related party
    
    
    
    
    
    
    4,386,000Other liabilities
    
    
    1,497,000
    
    
    
    2,105,000Dividends payable
    
    
    293,000
    
    
    
    292,000Income taxes payable
    
    
    2,662,000
    
    
    
    Total liabilities
    
    
    81,312,000
    
    
    
    97,266,000Commitments and contingenciesSTOCKHOLDERS EQUITYPreferred stock, $.01 par value; authorized 5,000,000 shares;
issued and outstanding  none
    
    
    
    
    
    
    Common stock, $.01 par value; authorized 30,000,000 shares; issued
and outstanding  14,634,122 at March 31, 2011 and 14,600,423 at
September 30, 2010
    
    
    146,000
    
    
    
    146,000Additional paid-in capital
    
    
    74,025,000
    
    
    
    72,717,000Retained earnings
    
    
    93,962,000
    
    
    
    89,026,000Accumulated other comprehensive income, net of tax
    
    
    85,000
    
    
    
    9,000Total stockholders equity
    
    
    168,218,000
    
    
    
    161,898,000Total liabilities and stockholders equity
    
    $
    249,530,000
    
    
    $
    259,164,000
   3




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ASTA FUNDING, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 Three Months
    
    
    Three Months
    
    
    Six Months
    
    
    Six MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedMarch 31, 2011
    
    
    March 31, 2010
    
    
    March 31, 2011
    
    
    March 31, 2010Revenues:Finance income, net
    
    $
    11,137,000
    
    
    $
    11,181,000
    
    
    $
    21,896,000
    
    
    $
    22,155,000Other income
    
    
    97,000
    
    
    
    19,000
    
    
    
    176,000
    
    
    
    98,00011,234,000
    
    
    
    11,200,000
    
    
    
    22,072,000
    
    
    
    22,253,000Expenses:General and administrative
    
    
    5,651,000
    
    
    
    5,274,000
    
    
    
    11,132,000
    
    
    
    10,903,000Interest (Related party
 Period ended March 31,
2011  Three months, $0;
Six months, $86,000;
Period ended March 31,
2010  Three months,
$168,000; Six months,
$298,000)
    
    
    739,000
    
    
    
    1,087,000
    
    
    
    1,618,000
    
    
    
    2,346,000Impairments of consumer
receivables acquired for
liquidation
    
    
    49,000
    
    
    
    
    
    
    
    49,000
    
    
    
    6,439,000
    
    
    
    6,361,000
    
    
    
    12,799,000
    
    
    
    13,249,000Income before income tax
    
    
    4,795,000
    
    
    
    4,839,000
    
    
    
    9,273,000
    
    
    
    9,004,000Income tax expense
    
    
    1,940,000
    
    
    
    1,964,000
    
    
    
    3,752,000
    
    
    
    3,654,000Net income
    
    $
    2,855,000
    
    
    $
    2,875,000
    
    
    $
    5,521,000
    
    
    $
    5,350,000Net income per share:Basic
    
    $
    0.20
    
    
    $
    0.20
    
    
    $
    0.38
    
    
    $
    0.37Diluted
    
    $
    0.19
    
    
    $
    0.20
    
    
    $
    0.37
    
    
    $
    0.37Weighted average number
of common shares
outstanding:Basic
    
    
    14,633,655
    
    
    
    14,498,161
    
    
    
    14,619,917
    
    
    
    14,384,050Diluted
    
    
    14,876,437
    
    
    
    14,504,398
    
    
    
    14,825,060
    
    
    
    14,570,901
   4




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ASTA FUNDING, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
 (Unaudited)
 AccumulatedAdditional
    
    
    
    
    
    
    OtherPaid-in
    
    
    Retained
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income
    
    
    TotalBalance, September
30, 2010
    
    
    14,600,423
    
    
    $
    146,000
    
    
    $
    72,717,000
    
    
    $
    89,026,000
    
    
    $
    9,000
    
    
    $
    161,898,000Restricted common
stock
    
    
    32,765Exercise of options
    
    
    934
    
    
    
    
    
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    5,000Stock based
compensation
expense
    
    
    
    
    
    
    
    
    
    
    1,303,000
    
    
    
    
    
    
    
    
    
    
    
    1,303,000Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (585,000
    )
    
    
    
    
    
    
    (585,000
    )Accumulated Other
comprehensive
income, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    76,000
    
    
    
    76,000Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,521,000
    
    
    
    
    
    
    
    5,521,000Balance, March 31,
2011
    
    
    14,634,122
    
    
    $
    146,000
    
    
    $
    74,025,000
    
    
    $
    93,962,000
    
    
    $
    85,000
    
    
    $
    168,218,000
  Six Months
    
    
    Six MonthsEnded
    
    
    EndedMarch 31, 2011
    
    
    March 31, 2010Net income
    
    $
    5,521,000
    
    
    $
    5,350,000Other comprehensive income (loss), net of tax  foreign currency translation
    
    
    76,000
    
    
    
    (58,000
    )Comprehensive income
    
    $
    5,597,000
    
    
    $
    5,292,000
   5




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 Six Months
    
    
    Six MonthsEnded
    
    
    EndedMarch 31, 2011
    
    
    March 31, 2010Cash flows from operating activities:Net income
    
    $
    5,521,000
    
    
    $
    5,350,000Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    125,000
    
    
    
    546,000Deferred income taxes
    
    
    912,000
    
    
    
    5,770,000Impairments of consumer receivables acquired for liquidation
    
    
    49,000
    
    
    
    Stock based compensation
    
    
    1,303,000
    
    
    
    763,000Changes in:Other assets
    
    
    (816,000
    )
    
    
    (440,000
    )Due from third party collection agencies and attorneys
    
    
    952,000
    
    
    
    (184,000
    )Income taxes payable and receivable
    
    
    2,858,000
    
    
    
    (1,700,000
    )Other liabilities
    
    
    (532,000
    )
    
    
    (658,000
    )Net cash provided by operating activities
    
    
    10,372,000
    
    
    
    9,447,000Cash flows from investing activities:Purchase of consumer receivables acquired for liquidation
    
    
    (5,003,000
    )
    
    
    (3,271,000
    )Principal collected on receivables acquired for liquidation
    
    
    20,955,000
    
    
    
    31,140,000Principal collected on receivable accounts represented by account sales
    
    
    152,000
    
    
    
    1,795,000Foreign exchange effect on receivables acquired for liquidation
    
    
    (26,000
    )
    
    
    (17,000
    )Capital expenditures
    
    
    (186,000
    )
    
    
    (75,000
    )Net cash provided by investing activities
    
    
    15,892,000
    
    
    
    29,572,000Cash flows from financing activities:Proceeds from exercise of options
    
    
    5,000
    
    
    
    863,000Tax benefit arising from vesting of restricted stock awards
    
    
    
    
    
    
    51,000Change in restricted cash
    
    
    (124,000
    )
    
    
    868,000Dividends paid
    
    
    (584,000
    )
    
    
    (571,000
    )Repayments of debt, net
    
    
    (18,009,000
    )
    
    
    (29,969,000
    )Net cash used in financing activities
    
    
    (18,712,000
    )
    
    
    (28,758,000
    )Net increase in cash and cash equivalents
    
    
    7,552,000
    
    
    
    10,261,000Cash at the beginning of period
    
    
    84,235,000
    
    
    
    2,385,000Cash and cash equivalents at end of period
    
    $
    91,787,000
    
    
    $
    12,646,000Supplemental disclosure of cash flow information:Cash paid during the periodInterest (fiscal year 2011 Related Party  $122,000; 2010 Related Party
 $387,000)
    
    $
    1,689,000
    
    
    $
    2,532,000Income taxes
    
    $
    33,000
    
    
    $
    
   6




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Note 1: Business and Basis of Presentation
 Business
  Basis of Presentation
    Recent Accounting Pronouncements
  Subsequent Events
   7




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ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued
 Note 1: Business and Basis of Presentation (continued)
 Reclassifications
  Note 2: Principles of Consolidation
  Note 3: Consumer Receivables Acquired for Liquidation
   
    
    the interest method; or
    
    the cost recovery method.
      8




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ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 3: Consumer Receivables Acquired for Liquidation ( continued )
  
    
    same issuer/originator;
    
    same underlying credit quality;
    
    similar geographic distribution of the accounts;
    
    similar age of the receivable; and
    
    same type of asset class (credit cards, telecommunication, etc.)
  
    
    the number of collection agencies previously attempting to collect the receivables in the portfolio;
    
    the average balance of the receivables, as higher balances might be more difficult to collect while
low balances might not be cost effective to collect;
    
    the age of the receivables, as older receivables might be more difficult to collect or might be
less cost effective. On the other hand, the passage of time, in certain circumstances, might result
in higher collections due to changing life events of some individual debtors;
    
    past history of performance of similar assets;
    
    time since charge-off;
    
    payments made since charge-off;
    
    the credit originator and its credit guidelines;
    
    our ability to analyze accounts and resell accounts that meet our criteria for resale;
    
    the locations of the debtors, as there are better states to attempt to collect in and ultimately
the Company has better predictability of the liquidations and the expected cash flows. Conversely,
there are also states where the liquidation rates are not as favorable and that is factored into
our cash flow analysis;
    
    financial condition of the seller;
    
    jobs or property of the debtors found within portfolios. In our business model, this is of
particular importance. Debtors with jobs or property are more likely to repay their obligation and,
conversely, debtors without jobs or property are less likely to repay their obligation; and
    
    the ability to obtain timely customer statements from the original issuer.
   9




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ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 3: Consumer Receivables Acquired for Liquidation  ( continued )
  For the Six Months Ended March 31, 2011CostInterest
    
    
    RecoveryMethod
    
    
    Method
    
    
    TotalBalance, beginning of period
    
    $
    46,348,000
    
    
    $
    100,683,000
    
    
    $
    147,031,000Acquisitions of receivable portfolios, net
    
    
    4,530,000
    
    
    
    473,000
    
    
    
    5,003,000Net cash collections from collection of consumer
receivables acquired for liquidation
    
    
    (32,281,000
    )
    
    
    (10,479,000
    )
    
    
    (42,760,000
    )Net cash collections represented by account sales
of consumer receivables acquired for liquidation
    
    
    (243,000
    )
    
    
    
    
    
    
    (243,000
    )Impairment
    
    
    (49,000
    )
    
    
    
    
    
    
    (49,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    26,000
    
    
    
    26,000Finance income recognized (1)
    
    
    20,509,000
    
    
    
    1,387,000
    
    
    
    21,896,000Balance, end of period
    
    $
    38,814,000
    
    
    $
    92,090,000
    
    
    $
    130,904,000Finance income as a percentage of collections
    
    
    63.1
    %
    
    
    13.2
    %
    
    
    50.9
    %
 (1)
    
    Includes approximately $17.8 million derived from fully amortized portfolios. For the Six Months Ended March 31, 2010CostInterest
    
    
    RecoveryMethod
    
    
    Method
    
    
    TotalBalance, beginning of period
    
    $
    70,650,000
    
    
    $
    137,611,000
    
    
    $
    208,261,000Acquisitions of receivable portfolios, net
    
    
    3,043,000
    
    
    
    228,000
    
    
    
    3,271,000Net cash collections from collection of consumer
receivables acquired for liquidation
    
    
    (37,976,000
    )
    
    
    (14,370,000
    )
    
    
    (52,346,000
    )Net cash collections represented by account sales
of consumer receivables acquired for liquidation
    
    
    (2,740,000
    )
    
    
    (4,000
    )
    
    
    (2,744,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    17,000
    
    
    
    17,000Finance income recognized (1)
    
    
    21,398,000
    
    
    
    757,000
    
    
    
    22,155,000Balance, end of period
    
    $
    54,375,000
    
    
    $
    124,239,000
    
    
    $
    178,614,000Finance income as a percentage of collections
    
    
    52.6
    %
    
    
    5.3
    %
    
    
    40.2
    %
 (1)
    
    Includes approximately $16.4 million derived from fully amortized portfolios.  10




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 3: Consumer Receivables Acquired for Liquidation  ( continued )
 For the Three Months Ended March 31, 2011CostInterest
    
    
    RecoveryMethod
    
    
    Method
    
    
    TotalBalance, beginning of period
    
    $
    43,338,000
    
    
    $
    96,241,000
    
    
    $
    139,579,000Acquisitions of receivable portfolios, net
    
    
    1,871,000
    
    
    
    249,000
    
    
    
    2,120,000Net cash collections from collections of
consumer receivables acquired for
liquidation
    
    
    (16,702,000
    )
    
    
    (5,108,000
    )
    
    
    (21,810,000
    )Net cash collections represented by account
sales of consumer receivables acquired for
liquidation
    
    
    (88,000
    )
    
    
    
    
    
    
    (88,000
    )Impairment
    
    
    (49,000
    )
    
    
    
    
    
    
    (49,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    15,000
    
    
    
    15,000Finance income recognized (1)
    
    
    10,444,000
    
    
    
    693,000
    
    
    
    11,137,000Balance, end of period
    
    $
    38,814,000
    
    
    $
    92,090,000
    
    
    $
    130,904,000Finance income as a percentage of collections
    
    
    62.2
    %
    
    
    13.6
    %
    
    
    50.9
    %
 (1)
    
    Includes approximately $9.0 million derived from fully amortized portfolios. For the Three Months Ended March 31, 2010CostInterest
    
    
    RecoveryMethod
    
    
    Method
    
    
    TotalBalance, beginning of period
    
    $
    61,776,000
    
    
    $
    130,350,000
    
    
    $
    192,126,000Acquisitions of receivable portfolios, net
    
    
    895,000
    
    
    
    76,000
    
    
    
    971,000Net cash collections from collections of
consumer receivables acquired for
liquidation
    
    
    (18,929,000
    )
    
    
    (6,584,000
    )
    
    
    (25,513,000
    )Net cash collections represented by account
sales of consumer receivables acquired for
liquidation
    
    
    (147,000
    )
    
    
    
    
    
    
    (147,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    (4,000
    )
    
    
    (4,000
    )Finance income recognized (1)
    
    
    10,780,000
    
    
    
    401,000
    
    
    
    11,181,000Balance, end of period
    
    $
    54,375,000
    
    
    $
    124,239,000
    
    
    $
    178,614,000Finance income as a percentage of collections
    
    
    56.5
    %
    
    
    6.1
    %
    
    
    43.6
    %
 (1)
    
    Includes approximately $8.3 million derived from fully amortized portfolios.  11




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 3: Consumer Receivables Acquired for Liquidation  ( continued )
  September 30, 2011 (six months ending)
    
    $
    10,138,000September 30, 2012
    
    
    16,668,000September 30, 2013
    
    
    7,941,000September 30, 2014
    
    
    3,945,000September 30, 2015
    
    
    1,039,000September 30, 2016
    
    
    751,000September 30, 2017
    
    
    188,000Subtotal
    
    
    40,670,000Deferred revenue
    
    
    (1,856,000
    )Total
    
    $
    38,814,000
  Six Months
    
    
    Six MonthsEnded
    
    
    EndedMarch 31, 2011
    
    
    March 31, 2010Balance at beginning of period
    
    $
    15,255,000
    
    
    $
    25,875,000Income recognized on finance receivables, net
    
    
    (20,510,000
    )
    
    
    (21,398,000
    )Additions representing expected revenue from purchases
    
    
    1,238,000
    
    
    
    1,080,000Reclassifications from nonaccretable difference
    
    
    16,359,000
    
    
    
    14,956,000Balance at end of period
    
    $
    12,342,000
    
    
    $
    20,513,000
 Three Months
    
    
    Three MonthsEnded
    
    
    EndedMarch 31, 2011
    
    
    March 31, 2010Balance at beginning of period
    
    $
    13,874,000
    
    
    $
    23,656,000Income recognized on finance receivables, net
    
    
    (10,445,000
    )
    
    
    (10,780,000
    )Additions representing expected revenue from purchases
    
    
    506,000
    
    
    
    271,000Reclassifications from nonaccretable difference
    
    
    8,407,000
    
    
    
    7,366,000Balance at end of period
    
    $
    12,342,000
    
    
    $
    20,513,000
  12




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 3: Consumer Receivables Acquired for Liquidation  ( continued )
   For the Six Months Ended March 31,2011
    
    
    2010Gross collections (1)
    
    $
    67,007,000
    
    
    $
    83,762,000Commissions and fees (2)
    
    
    24,004,000
    
    
    
    28,672,000Net collections
    
    $
    43,003,000
    
    
    $
    55,090,000For the Three Months Ended March 31,2011
    
    
    2010Gross collections (1)
    
    $
    33,623,000
    
    
    $
    40,035,000Commissions and fees (2)
    
    
    11,725,000
    
    
    
    14,375,000Net collections
    
    $
    21,898,000
    
    
    $
    25,660,000
 (1)
    
    Gross collections include: collections by third-party collection agencies and attorneys, collections
from our internal efforts and collections represented by account sales.(2)
    
    Commissions and fees are the contractual commission earned by third party collection agencies and
attorneys, and direct costs associated with the collection effort, generally court costs. Includes a
3% fee charged by a servicer on substantially all gross collections received by the Company in
connection with the Portfolio Purchase (see Note 5). Note 4: Furniture and Equipment
  March 31,
    
    
    September 30,2011
    
    
    2010Furniture
    
    $
    310,000
    
    
    $
    310,000Equipment
    
    
    3,010,000
    
    
    
    2,855,000Software
    
    
    180,000
    
    
    
    153,000Leasehold improvements
    
    
    90,000
    
    
    
    86,0003,590,000
    
    
    
    3,404,000Less accumulated depreciation
    
    
    3,179,000
    
    
    
    3,066,000Balance, end of period
    
    $
    411,000
    
    
    $
    338,000
  13




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ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 5: Debt and Subordinated Debt  Related Party
  March 31, 2011
    
    
    September 30, 2010Stated
    
    
    Average
    
    
    Stated
    
    
    AverageMarch 31,
    
    
    September 30,
    
    
    Interest
    
    
    Interest
    
    
    Interest
    
    
    Interest2011
    
    
    2010
    
    
    Rate
    
    
    Rate (1)
    
    
    Rate
    
    
    RateReceivables Financing Agreement
    
    $
    76,860,000
    
    
    $
    90,483,000
    
    
    
    3.76
    %
    
    
    3.77
    %
    
    
    3.76
    %
    
    
    3.77
    %Subordinated debt  related party
    
    $
    
    
    
    $
    4,386,000
    
    
    
    
    
    
    
    10.0
    %
    
    
    10.00
    %
    
    
    8.69
    %
 (1)
    
    6-month average Receivables Financing Agreement
      14




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Note 5: Debt and Subordinated Debt  Related Party (continued)
 Receivables Financing Agreement (continued)
         15




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##### Table of Contents



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




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Note 6: Commitments and Contingencies
 Employment Agreements
   Leases
  Litigation
  Note 7: Income Recognition and Impairments
 Income Recognition
     17




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 7: Income Recognition and Impairments (continued)
 Impairments
   
    
    the type of receivable, the location of the debtor and the number of
collection agencies previously attempting to collect the receivables in
the portfolio. We have found that there are better states to try to
collect receivables and we factor in both better and worse states when
establishing our initial cash flow expectations;
    
    the average balance of the receivables influences our analysis in that
lower average balance portfolios tend to be more collectible in the
short-term and higher average balance portfolios are more appropriate for
our law suit strategy and thus yield better results over the longer term.
As we have significant experience with both types of balances, we are able
to factor these variables into our initial expected cash flows;
    
    the age of the receivables, the number of days since charge-off, any
payments since charge-off, and the credit guidelines of the credit
originator also represent factors taken into consideration in our
estimation process. For example, older receivables might be more difficult
and/or require more time and effort to collect;
    
    past history and performance of similar assets acquired. As we purchase
portfolios of like assets, we accumulate a significant historical data
base on the tendencies of debtor repayments and factor this into our
initial expected cash flows;
    
    our ability to analyze accounts and resell accounts that meet our criteria;
    
    jobs or property of the debtors found within portfolios. With our business
model, this is of particular importance. Debtors with jobs or property are
more likely to repay their obligation through the suit strategy and,
conversely, debtors without jobs or property are less likely to repay
their obligation. We believe that debtors with jobs or property are more
likely to repay because courts have mandated the debtor must pay the debt.
Ultimately, the debtor will pay to clear title or release a lien. We also
believe that these debtors generally might take longer to repay and that
is factored into our initial expected cash flows; and
    
    credit standards of issuer.
  18




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 7: Income Recognition and Impairments (continued)
 Impairments (continued)
   Commissions and fees
  Note 8: Income Taxes
     19




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 9: Net Income Per Share
   Six Months Ended March 31,2011
    
    
    2010Weighted
    
    
    Per
    
    
    
    
    
    
    Weighted
    
    
    PerNet
    
    
    Average
    
    
    Share
    
    
    Net
    
    
    Average
    
    
    ShareIncome
    
    
    Shares
    
    
    Amount
    
    
    Income
    
    
    Shares
    
    
    AmountBasic
    
    $
    5,521,000
    
    
    
    14,619,917
    
    
    $
    0.38
    
    
    $
    5,350,000
    
    
    
    14,384,050
    
    
    $
    0.37Effect of Dilutive
Stock
    
    
    
    
    
    
    205,143
    
    
    
    (0.01
    )
    
    
    
    
    
    
    186,851Diluted
    
    $
    5,521,000
    
    
    
    14,825,060
    
    
    $
    0.37
    
    
    $
    5,350,000
    
    
    
    14,570,901
    
    
    $
    0.37
   Three Months Ended March 31,2011
    
    
    2010Weighted
    
    
    Per
    
    
    
    
    
    
    Weighted
    
    
    PerNet
    
    
    Average
    
    
    Share
    
    
    Net
    
    
    Average
    
    
    ShareIncome
    
    
    Shares
    
    
    Amount
    
    
    Income
    
    
    Shares
    
    
    AmountBasic
    
    $
    2,855,000
    
    
    
    14,633,655
    
    
    $
    0.20
    
    
    $
    2,875,000
    
    
    
    14,498,161
    
    
    $
    0.20Effect of Dilutive
Stock
    
    
    
    
    
    
    242,782
    
    
    
    (0.01
    )
    
    
    
    
    
    
    6,237Diluted
    
    $
    2,855,000
    
    
    
    14,876,437
    
    
    $
    0.19
    
    
    $
    2,875,000
    
    
    
    14,504,398
    
    
    $
    0.20
    20




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 10: Stock-based Compensation
   Risk-free interest rate
    
    
    0.10
    %Expected term (years)
    
    
    10.0Expected volatility
    
    
    106.2
    %Dividend yield
    
    
    0.94
    %
  Risk-free interest rate
    
    
    0.17
    %Expected term (years)
    
    
    10.0Expected volatility
    
    
    106.9
    %Dividend yield
    
    
    0.98
    %
  Risk-free interest rate
    
    
    0.17
    %Expected term (years)
    
    
    10.0Expected volatility
    
    
    110.2
    %Dividend yield
    
    
    1.12
    %
  21




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 11: Stock Option Plans
 Equity Compensation Plan
     2002 Stock Option Plan
    1995 Stock Option Plan
     22




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 11: Stock Option Plans (continued)
  Six Months Ended March 31,2011
    
    
    2010Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding options at the beginning of period
    
    
    922,039
    
    
    $
    12.70
    
    
    
    1,157,905
    
    
    $
    10.76Options granted
    
    
    334,800
    
    
    
    6.94
    
    
    
    158,900
    
    
    
    8.07Options exercised
    
    
    (934
    )
    
    
    5.61
    
    
    
    (325,767
    )
    
    
    2.65Options forfeited
    
    
    (1,400
    )
    
    
    5.79
    
    
    
    (20,500
    )
    
    
    16.24Outstanding options at the end of period
    
    
    1,254,505
    
    
    $
    11.17
    
    
    
    970,538
    
    
    $
    12.93Exercisable options at the end of period
    
    
    953,175
    
    
    $
    12.56
    
    
    
    811,215
    
    
    $
    14.26
 Three Months Ended March 31,2011
    
    
    2010Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding options at the beginning of period
    
    
    1,245,439
    
    
    $
    11.18
    
    
    
    1,316,705
    
    
    $
    10.44Options granted
    
    
    10,000
    
    
    
    8.52
    
    
    
    
    
    
    
    Options exercised
    
    
    (934
    )
    
    
    5.61
    
    
    
    (325,667
    )
    
    
    2.65Options forfeited
    
    
    
    
    
    
    
    
    
    
    (20,500
    )
    
    
    16.24Outstanding options at the end of period
    
    
    1,254,505
    
    
    $
    11.17
    
    
    
    970,538
    
    
    $
    12.93Exercisable options at the end of period
    
    
    953,175
    
    
    $
    12.56
    
    
    
    811,215
    
    
    $
    14.26
   23




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)  (unaudited)
 Note 11: Stock Option Plans (continued)
  Options Outstanding
    
    
    Options ExercisableWeightedAverage
    
    
    Weighted
    
    
    
    
    
    
    WeightedRemaining
    
    
    Average
    
    
    
    
    
    
    AverageNumber
    
    
    Contractual
    
    
    Exercise
    
    
    Number
    
    
    ExerciseRange of Exercise Price
    
    Outstanding
    
    
    Life (in Years)
    
    
    Price
    
    
    Exercisable
    
    
    Price$2.8751  $5.7500
    
    
    197,834
    
    
    
    4.6
    
    
    $
    3.91
    
    
    
    168,168
    
    
    $
    4.08$5.7501  $8.6250
    
    
    503,400
    
    
    
    8.9
    
    
    
    7.27
    
    
    
    231,736
    
    
    
    7.39$14.3751  $17.2500
    
    
    198,611
    
    
    
    2.6
    
    
    
    14.88
    
    
    
    198,611
    
    
    
    14.88$17.2501  $20.1250
    
    
    339,660
    
    
    
    3.6
    
    
    
    18.23
    
    
    
    339,660
    
    
    
    18.23$25.8751  $28.7500
    
    
    15,000
    
    
    
    5.7
    
    
    
    28.75
    
    
    
    15,000
    
    
    
    28.751,254,505
    
    
    
    5.8
    
    
    $
    11.17
    
    
    
    953,175
    
    
    $
    12.56
  Six Months Ended March 31,2011
    
    
    2010Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageGrant
    
    
    
    
    
    
    GrantDate Fair
    
    
    
    
    
    
    Date FairShares
    
    
    Value
    
    
    Shares
    
    
    ValueUnvested at the beginning of period
    
    
    17,669
    
    
    $
    19.73
    
    
    
    35,338
    
    
    $
    19.73Awards granted
    
    
    32,765
    
    
    
    7.63
    
    
    
    
    
    
    
    Vested
    
    
    (28,591
    )
    
    
    15.11
    
    
    
    (17,669
    )
    
    
    19.73Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unvested at the end of period
    
    
    21,843
    
    
    $
    7.63
    
    
    
    17,669
    
    
    $
    19.73
 Three Months Ended March 31,2011
    
    
    2010Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageGrant
    
    
    
    
    
    
    GrantDate Fair
    
    
    
    
    
    
    Date FairShares
    
    
    Value
    
    
    Shares
    
    
    ValueUnvested at the beginning of period
    
    
    21,843
    
    
    $
    7.63
    
    
    
    17,669
    
    
    $
    19.73Awards granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Vested
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unvested at the end of period
    
    
    21,843
    
    
    $
    7.63
    
    
    
    17,669
    
    
    $
    19.73
   24




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)  (unaudited)
 Note 12: Stockholders Equity
  Note 13: Fair Value of Financial Instruments
     25




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 Caution Regarding Forward Looking Statements
      
    
    charged-off receivables  accounts that have been written-off by the originators
and may have been previously serviced by collection agencies;
    
    semi-performing receivables  accounts where the debtor is currently making
partial or irregular monthly payments, but the accounts may have been written-off by the
originators; and
    
    performing receivables  accounts where the debtor is making regular monthly
payments that may or may not have been delinquent in the past.
   
    
    our relationships with industry participants, collection agencies, investors and
our financing sources;
  26




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##### Table of Contents




    
    brokers who specialize in the sale of consumer receivable portfolios; and
    
    other sources.
   
    
    the interest method; or
    
    the cost recovery method.
   
    
    same issuer/originator
    
    same underlying credit quality
    
    similar geographic distribution of the accounts
    
    similar age of the receivable and
    
    same type of asset class (credit cards, telecommunications, etc.)
  
    
    the number of collection agencies previously attempting to collect the receivables
in the portfolio;
    
    the average balance of the receivables;
    
    the age of the receivables (as older receivables might be more
difficult to collect or might be less cost effective);
    
    past history of performance of similar assets  as we
purchase portfolios of similar assets, we believe we have built significant
history on how these receivables will liquidate and cash flow;
    
    number of months since charge-off;
    
    payments made since charge-off;
    
    the credit originator and their credit guidelines;
    
    the locations of the debtors as there are better states to
attempt to collect in and ultimately we have better predictability of the
liquidations and the expected cash flows. Conversely, there are also states
where the liquidation rates are not as good and that is factored into our
cash flow analysis;
    
    financial wherewithal of the seller;
  27




---



##### Table of Contents




    
    jobs or property of the debtors found within portfolios-with
our business model, this is of particular importance as debtors with jobs
or property are more likely to repay their obligation and conversely,
debtors without jobs or property are less likely to repay their obligation; and
    
    the ability to obtain customer statements from the original issuer.
       28




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##### Table of Contents



Results of Operations
 The six-month period ended March 31, 2011, compared to the six-month period ended
March 31, 2010
 Finance income
  Other income .
 General and administrative expenses
 Interest expense.
 Impairment.
 Income
tax expense.
 Net
income.
 The three-month period ended March 31, 2011, compared to the three-month period ended
March 31, 2010
 Finance income
  Other income .
  29




---



##### Table of Contents



General and administrative expenses
 Interest expense.
 Impairments.
 Income tax expense.
 Net income.
 Liquidity and Capital Resources
  Receivables Financing Agreement
        30




---



##### Table of Contents



Bank Leumi Credit Agreement
  Subordinated Debt  Related Party
   31




---



##### Table of Contents



For the Six Months Ended March 31, 2011CostInterest
    
    
    RecoveryMethod
    
    
    Method
    
    
    TotalBalance, beginning of period
    
    $
    46,348,000
    
    
    $
    100,683,000
    
    
    $
    147,031,000Acquisitions of receivable portfolios, net
    
    
    4,530,000
    
    
    
    473,000
    
    
    
    5,003,000Net cash collections from collection of
consumer receivables acquired for
liquidation
    
    
    (32,281,000
    )
    
    
    (10,479,000
    )
    
    
    (42,760,000
    )Net cash collections represented by account
sales of consumer receivables acquired for
liquidation
    
    
    (243,000
    )
    
    
    
    
    
    
    (243,000
    )Impairments
    
    
    (49,000
    )
    
    
    
    
    
    
    (49,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    26,000
    
    
    
    26,000Finance income recognized (1)
    
    
    20,509,000
    
    
    
    1,387,000
    
    
    
    21,896,000Balance, end of period
    
    $
    38,814,000
    
    
    $
    92,090,000
    
    
    $
    130,904,000Finance income as a percentage of collections
    
    
    63.1
    %
    
    
    13.2
    %
    
    
    50.9
    %
 (1)
    
    Includes approximately $17.8 million derived from fully amortized portfolios.  32




---



##### Table of Contents



For the Six Months Ended March 31, 2010Accrual
    
    
    CashBasis
    
    
    BasisPortfolios
    
    
    Portfolios
    
    
    TotalBalance, beginning of period
    
    $
    70,650,000
    
    
    $
    137,611,000
    
    
    $
    208,261,000Acquisitions of receivable portfolios, net
    
    
    3,043,000
    
    
    
    228,000
    
    
    
    3,271,000Net cash collections from collection of
consumer receivables acquired for
liquidation
    
    
    (37,976,000
    )
    
    
    (14,370,000
    )
    
    
    (52,346,000
    )Net cash collections represented by account
sales of consumer receivables acquired for
liquidation
    
    
    (2,740,000
    )
    
    
    (4,000
    )
    
    
    (2,744,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    17,000
    
    
    
    17,000Finance income recognized (1)
    
    
    21,398,000
    
    
    
    757,000
    
    
    
    22,155,000Balance, end of period
    
    $
    54,375,000
    
    
    $
    124,239,000
    
    
    $
    178,614,000Finance income as a percentage of collections
    
    
    52.6
    %
    
    
    5.3
    %
    
    
    40.2
    %
 (1)
    
    Includes approximately $16.4 million derived from fully amortized portfolios. For the Three Months Ended March 31, 2011CostInterest
    
    
    RecoveryMethod
    
    
    Method
    
    
    TotalBalance, beginning of period
    
    $
    43,338,000
    
    
    $
    96,241,000
    
    
    $
    139,579,000Acquisitions of receivable portfolios, net
    
    
    1,871,000
    
    
    
    249,000
    
    
    
    2,120,000Net cash collections from collections of
consumer receivables acquired for
liquidation
    
    
    (16,702,000
    )
    
    
    (5,108,000
    )
    
    
    (21,810,000
    )Net cash collections represented by account
sales of consumer receivables acquired for
liquidation
    
    
    (88,000
    )
    
    
    
    
    
    
    (88,000
    )Impairments
    
    
    (49,000
    )
    
    
    
    
    
    
    (49,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    15,000
    
    
    
    15,000Finance income recognized (1)
    
    
    10,444,000
    
    
    
    693,000
    
    
    
    11,137,000Balance, end of period
    
    $
    38,814,000
    
    
    $
    92,090,000
    
    
    $
    130,904,000Finance income as a percentage of collections
    
    
    62.2
    %
    
    
    13.6
    %
    
    
    50.9
    %
 (1)
    
    Includes approximately $9.0 million derived from fully amortized portfolios. For the Three Months Ended March 31, 2010CostInterest
    
    
    RecoveryMethod
    
    
    Method
    
    
    TotalBalance, beginning of period
    
    $
    61,776,000
    
    
    $
    130,350,000
    
    
    $
    192,126,000Acquisitions of receivable portfolios, net
    
    
    895,000
    
    
    
    76,000
    
    
    
    971,000Net cash collections from collections of
consumer receivables acquired for
liquidation
    
    
    (18,929,000
    )
    
    
    (6,584,000
    )
    
    
    (25,513,000
    )Net cash collections represented by account
sales of consumer receivables acquired for
liquidation
    
    
    (147,000
    )
    
    
    
    
    
    
    (147,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    (4,000
    )
    
    
    (4,000
    )Finance income recognized (1)
    
    
    10,780,000
    
    
    
    401,000
    
    
    
    11,181,000Balance, end of period
    
    $
    54,375,000
    
    
    $
    124,239,000
    
    
    $
    178,614,000Finance income as a percentage of collections
    
    
    56.5
    %
    
    
    6.1
    %
    
    
    43.6
    %
 (1)
    
    Includes approximately $8.3 million derived from fully amortized portfolios.  33




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##### Table of Contents



Off Balance Sheet Arrangements
  Additional Supplementary Information:
  Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations 
Critical Accounting Policies
 Collections Represented by Account Sales
 CollectionsRepresented
    
    
    FinanceBy Account
    
    
    IncomePeriod
    
    Sales
    
    
    EarnedSix months ended March 31, 2011
    
    $
    243,000
    
    
    $
    91,000Three months ended March 31, 2011
    
    $
    88,000
    
    
    $
    36,000Six months ended March 31, 2010
    
    $
    2,744,000
    
    
    $
    948,000Three months ended March 31, 2010
    
    $
    147,000
    
    
    $
    52,000
  34




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##### Table of Contents



Collections Represented by Account Sales
 Portfolio Performance (1)
 (Interest method portfolios only)
 Cash
    
    
    
    
    
    
    
    
    
    
    Total estimatedCollections
    
    
    Estimated
    
    
    Total
    
    
    Collections as aPurchase
    
    
    Including Cash
    
    
    Remaining
    
    
    Estimated
    
    
    Percentage ofPurchase Period
    
    Price (2)
    
    
    Sales (3)
    
    
    Collections (4)
    
    
    Collections (5)
    
    
    Purchase Price2001
    
    $
    65,120,000
    
    
    $
    105,591,000
    
    
    
    
    
    
    $
    105,591,000
    
    
    
    162
    %2002
    
    
    36,557,000
    
    
    
    48,197,000
    
    
    
    
    
    
    
    48,197,000
    
    
    
    132
    %2003
    
    
    115,626,000
    
    
    
    216,909,000
    
    
    $
    236,000
    
    
    
    217,145,000
    
    
    
    188
    %2004
    
    
    103,743,000
    
    
    
    186,266,000
    
    
    
    165,000
    
    
    
    186,431,000
    
    
    
    180
    %2005
    
    
    126,023,000
    
    
    
    216,031,000
    
    
    
    4,080,000
    
    
    
    220,111,000
    
    
    
    175
    %2006
    
    
    163,392,000
    
    
    
    252,834,000
    
    
    
    8,671,000
    
    
    
    261,505,000
    
    
    
    160
    %2007
    
    
    109,235,000
    
    
    
    95,165,000
    
    
    
    20,506,000
    
    
    
    115,671,000
    
    
    
    106
    %2008
    
    
    26,626,000
    
    
    
    42,399,000
    
    
    
    775,000
    
    
    
    43,174,000
    
    
    
    162
    %2009
    
    
    19,127,000
    
    
    
    24,733,000
    
    
    
    6,847,000
    
    
    
    31,580,000
    
    
    
    165
    %2010
    
    
    7,698,000
    
    
    
    7,847,000
    
    
    
    4,437,000
    
    
    
    12,284,000
    
    
    
    160
    %2011
    
    
    4,530,000
    
    
    
    451,000
    
    
    
    5,439,000
    
    
    
    5,890,000
    
    
    
    130
    %
 (1)
    
    Total collections do not represent full collections of the Company with respect to this or any other year.(2)
    
    Purchase price refers to the cash paid to a seller to acquire a portfolio less the purchase price refunded by a seller due to the
return of non-compliant accounts (also defined as put-backs).(3)
    
    Net cash collections include: net collections from our third-party collection agencies and attorneys, net collections from our
in-house efforts and collections represented by account sales.(4)
    
    Does not include estimated collections from portfolios that are zero basis.(5)
    
    Total estimated collections refers to the actual net cash collections, including cash sales, plus estimated remaining net collections. Recent Accounting Pronouncements
   35




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##### Table of Contents



Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4.
    
    Controls and Procedures
 a. Disclosure Controls and Procedures.
  b. Changes in Internal Controls Over Financial Reporting.
   36




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 6.
    
    Exhibits
  31.1
    
    
    Certification of the Registrants Chief Executive Officer, Gary
Stern, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification of the Registrants Chief Financial Officer, Robert J.
Michel, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of the Registrants Chief Executive Officer, Gary
Stern, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of the Registrants Chief Financial Officer, Robert J.
Michel, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  37




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##### Table of Contents



ASTA FUNDING, INC.
(Registrant)Date: May 10, 2011
    By:
    /s/ Gary SternGary Stern, Chairman, President,Chief Executive Officer
(Principal Executive Officer)Date: May 10, 2011
    By:
    /s/ Robert J. MichelRobert J. Michel, Chief Financial Officer(Principal Financial Officer and

Principal Accounting Officer)  38




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##### Table of Contents



ExhibitNo.
    
    Description31.1
    
    
    Certification of the Registrants Chief Executive Officer,
Gary Stern, pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.31.2
    
    
    Certification of the Registrants Chief Financial Officer,
Robert J. Michel, pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of the Registrants Chief Executive Officer,
Gary Stern, pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.32.2
    
    
    Certification of the Registrants Chief Financial Officer,
Robert J. Michel, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
  39