10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2017

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: 001-35637

ASTA FUNDING, INC.

(Exact name of registrant as specified in its charter)

Delaware	22-3388607
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
210 Sylvan Ave., Englewood Cliffs, New Jersey	07632
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number: (201) 567-5648

Former name, former address and former fiscal year, if changed since last report: N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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   ☒     No   ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   ☒     No   ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐   (Do not check if a smaller reporting company)	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes   ☐     No   ☒

As of May 22, 2017, the registrant had 6,562,215 common shares outstanding.

ASTA FUNDING, INC. AND SUBSIDIARIES

INDEX TO FORM 10-Q

Part I-FINANCIAL INFORMATION	3
Item 1. Consolidated Financial Statements	3
Consolidated Balance Sheets as of March 31, 2017 (unaudited) and September 30, 2016	3
Consolidated Statements of Operations for the three and six months ended March 31, 2017 and 2016 (unaudited)	4
Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended March 31, 2017 and 2016 (unaudited)	5
Consolidated Statements of Stockholders’ Equity for the six months ending March 31, 2017 and 2016 (unaudited)	6
Consolidated Statements of Cash Flows for the six months ended March 31, 2017 and 2016 (unaudited)	7
Notes to Consolidated Financial Statements (unaudited)	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3. Quantitative and Qualitative Disclosures about Market Risk	46
Item 4. Controls and Procedures	47
Part II-OTHER INFORMATION	48
Item 1. Legal Proceedings	48
Item 1A. Risk Factors	48
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 3. Defaults Upon Senior Securities	48
Item 4. Mine Safety Disclosures	48
Item 5. Other Information	48
Item 6. Exhibits	49
Signatures	50
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ASTA FUNDING, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

	(Unaudited)
	March 31, 2017			September 30, 2016
ASSETS
Cash and cash equivalents	$	10,521,000		$	18,526,000
Restricted cash		10,064,000			—
Available for sale investments (at fair value)		5,397,000			56,764,000
Consumer receivables acquired for liquidation (at net realizable value)		11,651,000			13,671,000
Structured settlements (at fair value)		90,370,000			85,708,000
Investment in personal injury claims		47,888,000			48,289,000
Other investments, net		—			3,590,000
Due from third party collection agencies and attorneys		1,044,000			1,005,000
Prepaid and income taxes receivable		7,609,000			880,000
Furniture and equipment, net		199,000			243,000
Deferred income taxes		17,556,000			15,530,000
Goodwill		2,770,000			2,770,000
Other assets		6,327,000			8,423,000
Total assets	$	211,396,000		$	255,399,000
LIABILITIES
Line of credit	$	9,600,000		$	—
Other debt – CBC (including non-recourse notes payable of $55.5 million at March 31, 2017 and $57.3 million at September 30, 2016)		74,183,000			67,435,000
Other liabilities		8,462,000			5,974,000
Income taxes payable		—			252,000
Total liabilities		92,245,000			73,661,000
Commitments and contingencies
STOCKHOLDERS’ EQUITY
Preferred stock, $.01 par value; authorized 5,000,000 shares; issued and outstanding — none		—			—
Common stock, $.01 par value, authorized 30,000,000 shares; issued 13,336,508 at March 31, 2017 and at September 30, 2016; and outstanding 6,562,215 at March 31, 2017 and 11,876,224 at September 30, 2016		133,000			133,000
Additional paid-in capital		67,034,000			67,026,000
Retained earnings		120,837,000			128,063,000
Accumulated other comprehensive income (loss)		(726,000	)		86,000
Treasury stock (at cost) 6,774,293 shares at March 31, 2017 and 1,460,284 shares at September 30, 2016		(67,128,000	)		(12,925,000	)
Non-controlling interest		(999,000	)		(645,000	)
Total stockholders’ equity		119,151,000			181,738,000
Total liabilities and stockholders’ equity	$	211,396,000		$	255,399,000

See Notes to Consolidated Financial Statements

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ASTA FUNDING, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(Unaudited)

(rounded to the nearest thousands, except share data)

	Three Months			Three Months			Six Months			Six Months
	Ended			Ended			Ended			Ended
	March 31, 2017			March 31, 2016			March 31, 2017			March 31, 2016
Revenues:
Finance income, net	$	4,018,000		$	4,914,000		$	8,019,000		$	10,056,000
Personal injury claims income		2,146,000			1,846,000			4,448,000			4,931,000
Unrealized (loss) gain on structured settlements		(1,338,000	)		1,637,000			(2,293,000	)		3,164,000
Interest income on structured settlements		1,941,000			1,301,000			3,842,000			2,708,000
Disability fee income		1,502,000			872,000			2,856,000			1,531,000
Total revenues		8,269,000			10,570,000			16,872,000			22,390,000
Other income (loss) - includes ($948,000) and $0 during the three month periods ended March 31, 2017 and 2016, and ($993,000) and ($31,000) during the six month periods ended March 31, 2017 and 2016, respectively, of accumulated other comprehensive loss reclassification for securities sold		(688,000	)		378,000			(129,000	)		893,000
		7,581,000			10,948,000			16,743,000			23,283,000
Expenses:
General and administrative		15,995,000			13,209,000			26,978,000			21,448,000
Interest		982,000			788,000			1,916,000			1,516,000
Impairment of consumer receivables		—			124,000			—			124,000
		16,977,000			14,121,000			28,894,000			23,088,000
(Loss) income before income tax		(9,396,000	)		(3,173,000	)		(12,151,000	)		195,000
Income tax (benefit)/expense - includes tax expense of $379,000 and $0 during the three month periods ended March 31, 2017 and 2016 and $397,000 and $11,000 during the six month periods ended March 31, 2017 and 2016, respectively, of accumulated other comprehensive income reclassifications for unrealized net gains / (losses) on available for sale securities		(3,818,000	)		(1,425,000	)		(4,937,000	)		(392,000	)
Net (loss) income		(5,578,000	)		(1,748,000	)		(7,214,000	)		587,000
Less: net (loss) income attributable to non-controlling interests		(9,000	)		83,000			12,000			612,000
Net loss attributable to Asta Funding, Inc.	$	(5,569,000	)	$	(1,831,000	)	$	(7,226,000	)	$	(25,000	)
Net loss per share attributable to Asta Funding, Inc.:
Basic	$	(0.57	)	$	(0.15	)	$	(0.67	)	$	(0.00	)
Diluted	$	(0.57	)	$	(0.15	)	$	(0.67	)	$	(0.00	)
Weighted average number of common shares outstanding:
Basic		9,691,576			12,076,120			10,795,903			12,115,987
Diluted		9,691,576			12,076,120			10,795,903			12,115,987

See Notes to Consolidated Financial Statements

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ASTA FUNDING, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

March 31, 2017 and 2016

(Unaudited)

	Three Months Ended March 31, 2017			Three Months Ended March 31, 2016			Six Months Ended March 31, 2017			Six Months Ended March 31, 2016
Comprehensive income (loss) is as follows:
Net (loss) income	$	(5,578,000	)	$	(1,748,000	)	$	(7,214,000	)	$	587,000
Net unrealized securities gain (loss), net of tax (expense)/benefit of ($680,000) and ($94,000) during the three month periods ended March 31, 2017 and 2016, respectively, and $23,000 and ($283,000) during the six month periods ended March 31, 2017 and 2016, respectively.		1,204,000			167,000			(35,000	)		503,000
Reclassification adjustments for securities sold, net of tax benefit of $379,000 and $0 during the three month periods ended March 31, 2017 and 2016, and $397,000 and $11,000 during the six month periods ended March 31, 2017 and 2016, respectively.		(569,000	)		—			(596,000	)		(20,000	)
Foreign currency translation, net of tax (expense)/benefit of ($125,000) and $148,000 during the three month periods ended March 31, 2017 and 2016, respectively, and $121,000 and $557,000 during the six month periods ended March 31, 2017 and 2016, respectively.		188,000			254,000			(181,000	)		496,000
Other comprehensive income (loss)		823,000			421,000			(812,000	)		979,000
Total comprehensive income (loss)	$	(4,755,000	)	$	(1,327,000	)	$	(8,026,000	)	$	1,566,000

See Notes to Consolidated Financial Statements

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ASTA FUNDING, INC. AND SUBSIDIARIES

Consolidated Statement of Stockholders’ Equity

(Unaudited)

	Common Stock				Additional					Accumulated Other						Non-			Total
	Issued Shares		Amount		Paid-in Capital		Retained Earnings			Comprehensive) Income (Loss)			Treasury Stock			Controlling Interests			Stockholders’ Equity
Balance, September 30, 2016		13,336,508		133,000		67,026,000		128,063,000			86,000			(12,925,000	)		(645,000	)		181,738,000
Exercise of options		—		—		—		—			—			—			—			—
Stock based compensation expense		—		—		8,000		—			—			—			—			8,000
Net (loss) income		—		—		—		(7,226,000	)		—			—			12,000			(7,214,000	)
Amount reclassified from other comprehensive (loss) income		—		—		—		—			(596,000	)		—			—			(596,000	)
Unrealized (loss) gain on marketable securities, net		—		—		—		—			(35,000	)		—			—			(35,000	)
Purchase of treasury stock		—		—		—		—			—			(54,203,000	)		—			(54,203,000	)
Foreign currency translation, net		—		—		—		—			(181,000	)		—			—			(181,000	)
Distributions to non-controlling interest		—		—		—		—			—			—			(366,000	)		(366,000	)
Balance, March 31, 2017		13,336,508	$	133,000	$	67,034,000	$	120,837,000		$	(726,000	)	$	(67,128,000	)	$	(999,000	)	$	119,151,000

	Common Stock				Additional						Accumulated Other						Non-			Total
	Issued Shares		Amount		Paid-in Capital			Retained Earnings			Comprehensive Income (Loss)			Treasury Stock			Controlling Interests			Stockholders’ Equity
Balance, September 30, 2015		13,061,673	$	131,000	$	65,011,000		$	120,611,000		$	(1,685,000	)	$	(1,751,000	)	$	(997,000	)	$	181,320,000
Exercise of options		7,499		—		47,000															47,000
Stock based compensation expense		—		—		428,000			—			—			—			—			428,000
Restricted stock		5,000		—		—			—			—			—			—			—
Net (loss) income		—		—		—			(25,000	)		—			—			612,000			587,000
Amount reclassified from other comprehensive income (loss)		—		—		—			—			(20,000	)		—			—			(20,000	)
Unrealized gain on marketable securities, net		—		—		—			—			503,000			—			—			503,000
Purchase of treasury stock		—		—		—			—			—			(8,363,000	)		—			(8,363,000	)
Foreign currency translation, net		—		—		—			—			496,000			—			—			496,000
Purchase of subsidiary shares from non-controlling interest		—		—		(873,000	)		—			—			—			(927,000	)		(1,800,000	)
Issuance of restricted stock to purchase subsidiary shares from non-controlling interest		123,304		1,000		999,000			—			—			—			—			1,000,000
Distributions to non-controlling interest		—		—		—			—			—			—			(789,000	)		(789,000	)
Balance, March 31, 2016		13,197,476	$	132,000	$	65,612,000		$	120,586,000		$	(706,000	)	$	(10,114,000	)	$	(2,101,000	)	$	173,409,000

See Notes to Consolidated Financial Statements

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ASTA FUNDING, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended March 31, 2017			Six Months Ended March 31, 2016
Cash flows from operating activities:
Net (loss) income	$	(7,214,000	)	$	587,000
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization		191,000			246,000
Deferred income taxes		(1,606,000	)		(1,202,000	)
Impairment of consumer receivables acquired for liquidation		—			124,000
Stock based compensation		8,000			428,000
Loss on sale of available-for-sale securities		993,000			31,000
Structured settlements – accrued interest		(3,165,000	)		(2,474,000	)
Structured settlements – unrealized loss (gains)		2,293,000			(3,164,000	)
Unrealized gain on other investments		—			(152,000	)
Unrealized foreign exchange loss on other investments		—			(26,000	)
Reserve for loss on other investments		—			1,000,000
Loss on other investments		3,590,000			—
Changes in:
Prepaid and income taxes receivable		(6,729,000	)		169,000
Due from third party collection agencies and attorneys		(39,000	)		372,000
Other assets		1,964,000			(392,000	)
Income taxes payable		(252,000	)		—
Other liabilities		2,307,000			2,018,000
Net cash used in operating activities		(7,659,000	)		(2,435,000	)
Cash flows from investing activities:					,
Purchase of consumer receivables acquired for liquidation		(2,213,000	)		(6,141,000	)
Principal collected on receivables acquired for liquidation		4,233,000			4,841,000
Purchase of available-for-sale securities		(7,693,000	)		(7,419,000	)
Proceeds from sale of available-for-sale securities		57,016,000			12,303,000
Purchase of non-controlling interest		—			(800,000	)
Investments in personal injury claims – advances		(9,194,000	)		(12,649,000	)
Investments in personal injury claims – receipts		9,595,000			14,173,000
Capital expenditures		(15,000	)		(69,000	)
Investments in structured settlements – advances		(7,926,000	)		(8,306,000	)
Investments in structured settlements – receipts		4,136,000			3,389,000
Net cash provided by/(used in) investing activities		47,939,000			(678,000	)
Cash flows from financing activities:
Proceeds from exercise of stock options		—			47,000
Purchase of treasury stock		(54,203,000	)		(8,363,000	)
Change in restricted cash		(10,064,000	)		—
Distribution to non-controlling interest		(366,000	)		(789,000	)
Borrowings from line of credit		9,600,000			—
Borrowings of other debt – CBC		9,072,000			9,826,000
Repayment of other debt – CBC		(2,324,000	)		(2,029,000	)
Net cash used in financing activities		(48,285,000	)		(1,308,000	)
Net decrease in cash and cash equivalents		(8,005,000	)		(4,421,000	)
Cash and cash equivalents at beginning of period		18,526,000			24,315,000
Cash and cash equivalents at end of period	$	10,521,000		$	19,894,000
Supplemental disclosure of cash flow information :
Cash paid for:
Interest	$	1,879,000		$	1,538,000
Taxes		6,200,000			—
Supplemental disclosure of non-cash flow investing activities :
Issuance of restricted stock to purchase subsidiary shares from non-controlling interest	$	—		$	1,000,000

See Notes to Consolidated Financial Statements

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ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1—Business and Basis of Presentation

Business

Asta Funding, Inc., together with its wholly owned significant operating subsidiaries Palisades Collection, LLC, Palisades Acquisition XVI, LLC (“Palisades XVI”), VATIV Recovery Solutions LLC (“VATIV”), ASFI Pegasus Holdings, LLC (“APH”), Fund Pegasus, LLC (“Fund Pegasus”), GAR Disability Advocates, LLC (“GAR Disability Advocates”), CBC Settlement Funding, LLC (“CBC”), Simia Capital, LLC (“Simia”) and other subsidiaries, not all wholly owned (the “Company,” “we” or “us”), is engaged in several business segments in the financial services industry including structured settlements through our wholly owned subsidiary CBC, funding of personal injury claim, through our 80% owned subsidiary Pegasus Funding, LLC (“Pegasus”) and our wholly owned subsidiary Simia, social security and disability advocacy through our wholly owned subsidiary GAR Disability Advocates and the business of purchasing, managing for its own account and servicing distressed consumer receivables, including charged off receivables, and semi-performing receivables.

 Consumer receivables

The Company started out in the consumer receivables business in 1994. Recently, our effort has been in the international areas (mainly South America), as we have not purchased consumer receivables in the United States since 2010. We define consumer receivables as primary charged-off, semi-performing and distressed depending on their collectability. We acquire these consumer receivables at substantial discounts to their face values, based on the characteristics of the underlying accounts of each portfolio.

Personal injury claims

Pegasus conducts its business solely in the United States. Prior to 2017, Pegasus obtained its business from external brokers and internal sales professionals soliciting individuals with personal injury claims. Business was also obtained from the Pegasus website and through attorneys.

In November 2016, the Company formed Simia, a 100% owned subsidiary. Simia commenced funding personal injury settlement claims in January 2017. Simia was formed in response to the Company’s decision not to renew its joint venture with Pegasus Legal Funding, LLC (“PLF”), which expired at the end of December 2016. Pegasus continues to remain in operation to collect its current portfolio of advances, and has not funded any new advances after December 28, 2016 (see Note 7 – Litigation Funding).

Structured settlements

CBC purchases structured settlement and annuity policies through privately negotiated direct consumer purchases and brokered transactions across the United States. CBC funds the purchases primarily from cash, its revolving line of credit, and its securitized debt, issued through its Blue Bell Receivables (“BBR”) subsidiaries.

Social security benefit advocacy

GAR Disability Advocates provides its disability advocacy services throughout the United States. It relies upon search engine optimization (“SEO”) to bring awareness to its intended market.

Basis of Presentation

The consolidated balance sheet as of March 31, 2017, the consolidated statements of operations for the three and six month periods ended March 31, 2017 and 2016, the consolidated statements of comprehensive income (loss) for the three and six month periods ended March 31, 2017 and 2016, the consolidated statements of stockholders’ equity as of and for the six months ended March 31, 2017 and 2016, and the consolidated statements of cash flows for the six month periods ended March 31, 2017 and 2016, are unaudited. The September 30, 2016 financial information included in this report was derived from our audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2016. In the opinion of management, all adjustments necessary to present fairly our financial position at March 31, 2017, the results of operations for the three and six month periods ended March 31, 2017 and 2016 and cash flows for the six month periods ended March 31, 2017 and 2016 have been made. The results of operations for the three and six month periods ended March 31, 2017 and 2016 are not necessarily indicative of the operating results for any other interim period or the full fiscal year.

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ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1—Business and Basis of Presentation (continued)

Basis of Presentation (continued)

 The accompanying unaudited consolidated financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission and therefore do not include all information and note disclosures required under generally accepted accounting principles. The Company suggests 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-K for the fiscal year ended September 30, 2016 filed with the Securities and Exchange Commission.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates including management’s estimates of future cash flows and the resulting rates of return.

Concentration of Credit Risk – Cash and Restricted Cash

The Company considers all highly liquid investments with a maturity date of three months or less at the date of purchase to be cash equivalents.

Cash balances are maintained at various depository institutions and are insured by the Federal Deposit Insurance Corporation (“FDIC”). The Company had cash balances with 9 banks at March 31, 2017 that exceeded the balance insured by the FDIC by approximately $5.2 million. Additionally, two foreign banks with an aggregate $1.6 million balances are not FDIC insured. There is a $10.1 million aggregate balance in a domestic bank that is not FDIC insured and has been reclassified to restricted cash in the balance sheet since these assets serve as collateral for the line of credit (see Note 9-Non Recourse Debt ). The Company does not believe it is exposed to any significant credit risk due to concentration of cash.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in a business combination, and is accounted for under ASC 350. Goodwill has an indefinite useful life and is evaluated for impairment at the reporting-unit level on an annual basis during the fourth quarter or more frequently if events or changes in circumstances indicate potential impairment between annual measurement dates. The Company has the option of performing a qualitative assessment of impairment to determine whether any further quantitative testing for impairment is necessary. The initial qualitative approach assesses whether the existence of events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events and circumstances, the Company determines it is more likely than not that the fair value is less than carrying value, a two step quantitative impairment test is performed. A step 1 analysis involves calculating the fair value of the associated reporting unit and comparing it to the reporting unit’s carrying value. If the fair value of the reporting unit exceeds the carrying value of the reporting unit including goodwill and the carrying value of the reporting unit is positive, goodwill is considered not to be impaired and no further analysis is required. If the fair value of the reporting unit is less than its carrying value, step 2 of the impairment test must be performed. Step 2 involves calculating and comparing the implied fair value of the reporting unit’s goodwill with its carrying value. Impairment is recognized if the estimated fair value of the reporting unit is less than its net book value. Such loss is calculated as the difference between the estimated impaired fair value of goodwill and its carrying amount. The goodwill of the Company consists of $2.8 million of which approximately $1.4 million from the purchase of CBC and the remaining $1.4 million from the purchase of VATIV.

Recent Accounting Pronouncements

In May 2014, the FASB issued an update to ASC 606, Revenue from Contracts with Customers that will supersede virtually all existing revenue guidance. Under this update, an entity is required to recognize revenue upon transfer of promised goods or services to customers, in an amount that reflects the entitled consideration received in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from the customer contracts. This update is effective for annual reporting periods beginning after December 15, 2017 including interim periods within that reporting period. Early application is permitted for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Based on the Company’s evaluation, the Company does not believe this new standard will impact the accounting for its revenues.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1—Business and Basis of Presentation (continued)

Recent Accounting Pronouncements (continued)

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The main objective in developing this update is enhancing the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The amendments in this update address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The effective date for this update is for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently evaluating the impact this update will have on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02 Leases (Topic 842) to amend lease accounting requirements and requires entities to generally recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use assets. The new standard will require significant additional disclosures about the amount, timing and uncertainty of cash flows from leases. The standard update is effective for fiscal years beginning after December 15, 2018 and interim periods within those years and early adoption is permitted. The standard is to be applied using a modified retrospective approach and includes a number of optional practical expedients that entities may elect to apply. The Company is currently evaluating the impact of adopting this update on its consolidated financial statements and expects that most of its operating leases will be subject to the accounting standard update and will recognize as operating lease liabilities and right-of-use assets upon adoption

In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share Based Payment Accounting, to simplify and improve areas of generally accepted accounting principles for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. The effective date for this update is for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently evaluating the impact this update will have on its consolidated financial statements. 

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.  The ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.  For the Company, this update will be effective for interim periods and annual periods beginning after December 15, 2019. Upon adoption, the Company will accelerate the recording of its credit losses in its financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.  This ASU will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2017. Early adoption is permitted. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case the Company would be required to apply the amendments prospectively as of the earliest date practicable. The Company is in the process of evaluating the provisions of the ASU, but does not expect it to have a material effect on the Company’s consolidated statements of cash flows.

Note 2—Principles of Consolidation

The consolidated financial statements include the accounts of Asta Funding, Inc. and its wholly owned and majority owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Certain prior period data has been restated to conform to the current period presentation, particularly with respect to Note 4 – Consumer Receivables Acquired for Liquidation.

Note 3—Available-for-Sale Investments

Investments classified as available-for-sale at March 31, 2017 and September 30, 2016, consist of the following:

	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
March 31, 2017	$	5,408,000	$	4,000	$	(15,000	)	$	5,397,000
September 30, 2016	$	55,724,000	$	1,089,000	$	(49,000	)	$	56,764,000

The available-for-sale investments do not have any contractual maturities. The Company sold six investments during the six months ended March 31, 2017, with a realized loss of $993,000. The Company received $177,000 in capital gains distributions during the six months ended March 31, 2017. For the six months ended March 31, 2016, the Company sold two investments with a realized loss of $31,000 and also received $47,000 in capital gains distributions during that period. The Company recorded an aggregate realized loss of $816,000 related to its available-for-sale securities for the first six months ended March 31, 2017 compared to an aggregate realized gain of $16,000 for the six month period ended March 31, 2016. The Company sold six investments during the three months ended March 31, 2017 with a realized loss of $948,000. There was no sale of investments during the three months ended March 31, 2016.

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(Unaudited)

Note 3—Available-for-Sale Investments (continued)

At March 31, 2017, there were three investments, two of which were in an unrealized loss position that had existed for 12 months or more. All of these securities are considered to be acceptable credit risks. Based on the evaluation of the available evidence, including recent changes in market rates and credit rating information, management believes the aggregate decline in fair value for these instruments is temporary. In addition, management has the ability to hold these investment securities for a period of time sufficient to allow for an anticipated recovery or maturity. Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period in which the other-than-temporary impairment is identified. 

Unrealized holding gains and losses on available-for-sale securities are included in other comprehensive income (loss) within stockholders’ equity. Realized gains (losses) on available-for-sale securities are included in other income (loss) and, when applicable, are reported as a reclassification adjustment in other comprehensive income (loss).

Note 4—Consumer Receivables Acquired for Liquidation

Accounts acquired for liquidation are stated at their net estimated realizable value and consist primarily of defaulted consumer loans to individuals primarily throughout the United States and South America.

The Company may account for its investments in consumer receivable portfolios, using either:

• the interest method; or

• the cost recovery method.

Prior to October 1, 2013, the Company accounted for certain of its investments in finance receivables using the interest method in accordance with the guidance of ASC 310, Receivables. Under the guidance of ASC 310-30, static pools of accounts are established. These pools are aggregated based on certain common risk criteria. Each static pool is recorded at cost and is accounted for as a single unit for the recognition of income, principal payments and loss provision. Effective October 1, 2013, due to the substantial reduction of portfolios reported under the interest method, and the ability to reasonably estimate cash collections required to account for those portfolios under the interest method, the Company concluded the cost recovery method is the appropriate accounting method in the circumstances. 

Although the Company has switched to the cost recovery method on its current inventory of portfolios, the Company must still analyze a portfolio upon acquisition to ensure which method is appropriate, and once a static pool is established for a quarter, individual receivable accounts are not added to the pool (unless replaced by the seller) or removed from the pool (unless sold or returned to the seller).

The Company uses the cost recovery method when collections on a particular pool of accounts cannot be reasonably predicted. Under the cost recovery method, no income is recognized until the cost of the portfolio has been fully recovered. A pool can become fully amortized (zero carrying balance on the balance sheet) while still generating cash collections. In this case, all cash collections are recognized as revenue when received. 

The Company has extensive liquidating experience in the field of distressed credit card receivables, telecommunication receivables, consumer loan receivables, retail installment contracts, consumer receivables, and auto deficiency receivables. 

The Company aggregates portfolios of receivables acquired sharing specific common characteristics which were acquired within a given quarter. In addition, the Company uses a variety of qualitative and quantitative factors to estimate collections and the timing thereof. The Company obtains and utilizes, as appropriate, input, including but not limited to, monthly collection projections and liquidation rates, from third party collection agencies and attorneys, as further evidentiary matter, to assist in evaluating and developing collection strategies and in evaluating and modeling the expected cash flows for a given portfolio.

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(Unaudited)

Note 4—Consumer Receivables Acquired for Liquidation (continued)

The following tables summarize the changes in the balance sheet account of consumer receivables acquired for liquidation during the following periods:

	For the Three Months Ended March 31,
	2017			2016
Balance, beginning of period	$	13,243,000		$	17,843,000
Acquisitions of receivable portfolio		—			1,722,000
Net cash collections from collection of consumer receivables acquired for liquidation		(6,009,000	)		(7,481,000	)
Impairment		—			(124,000	)
Effect of foreign currency translation		399,000			(90,000	)
Finance income recognized		4,018,000			4,914,000
Balance, end of period	$	11,651,000		$	16,784,000
Finance income as a percentage of collections		66.9	%		65.7	%

	For the Six Months Ended March 31,
	2017			2016
Balance, beginning of period	$	13,671,000		$	15,608,000
Acquisitions of receivable portfolio		2,213,000			6,141,000
Net cash collections from collection of consumer receivables acquired for liquidation		(12,188,000	)		(14,774,000	)
Net cash collections represented by account sales of consumer receivables acquired for liquidation		(190,000	)		—
Impairment		—			(124,000	)
Effect of foreign currency translation		126,000			(123,000	)
Finance income recognized		8,019,000			10,056,000
Balance, end of period	$	11,651,000		$	16,784,000
Finance income as a percentage of collections		64.8	%		68.1	%

During the three and six month periods ended March 31, 2017, the Company purchased $0.0 million and $35.0 million, respectively, of face value portfolios at a cost of $0.0 million and $2.2 million, respectively. During the three and six month periods ended March 31, 2016, the Company purchased $24.8 million and $121.0 million, respectively, of face value portfolios at a cost of $1.7 million and $6.2 million, respectively.

The following table summarizes collections received by the Company’s third-party collection agencies and attorneys, less commissions and direct costs for the three and six month periods ended March 31, 2017 and 2016, respectively.

	For the Three Months Ended March 31,				For the Six Months Ended March 31,
	2017		2016		2017		2016
Gross collections (1)	$	10,621,000	$	12,393,000		22,116,000		24,309,000
Commissions and fees (2)		4,612,000		4,912,000		9,738,000		9,535,000
Net collections	$	6,009,000	$	7,481,000	$	12,378,000	$	14,774,000

(1)

Gross collections include: collections from third-party collection agencies and attorneys, collections from in-house 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 gross collections received by the Company in connection with the Portfolio Purchase. The fee is charged for asset location, skip tracing and ultimately suing debtors in connection with this portfolio purchase.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 5—Acquisition of CBC

On December 31, 2013, the Company acquired 80% ownership of CBC and its affiliate, CBC Management Services, LLC for approximately $5.9 million.

On December 31, 2015, the Company acquired the remaining 20% ownership of CBC for $1,800,000, through the issuance of restricted stock valued at approximately $1,000,000 and $800,000 in cash. Each of the two original principals received 61,652 shares of restricted stock at a fair market value of $7.95 per share and $400,000 in cash. An aggregate of 123,304 shares of restricted stock were issued as part of the transaction. These shares are subject to a one year lock-up period in which the holders cannot sell the shares. In addition, the shares are subject to certain sales restrictions following the initial lock-up period, which expired on December 31, 2016 (see Note 15 – Stock Based Compensation).

On January 1, 2016, the Company renewed the expiring two-year employment agreements of the two CBC principals for one year terms. The employment contracts of the original two principals expired at the end of December 2016. The Company did not renew those contracts. Ryan Silverman was appointed CEO/General Counsel effective January 1, 2017 (see Note 11 – Commitments and Contingencies).

Note 6—Structured Settlements (At Fair Value)

CBC purchases periodic payments under structured settlements and annuity policies from individuals in exchange for a lump sum payment. The Company elected to carry the structured settlements at fair value. Unearned income on structured settlements is recognized as interest income using the effective interest method over the life of the related structured settlement. Changes in fair value are recorded in unrealized gain (loss) on structured settlements in the Company’s statements of operations. Unrealized gains on structured settlements is comprised of both unrealized gains resulting from fair market valuation at the date of acquisition of the structured settlements and the subsequent fair value adjustments resulting from the change in the discount rate. Of the $2.3 million of unrealized losses recognized in the six month period ended March 31, 2017, approximately $4.3 million is due to day one gains on new structured settlements financed during the period, offset by a decrease of $1.0 million in realized gains recognized as realized interest income on structured settlements during the period, and a reduction in fair value of $5.6 million on CBC’s life contingent annuities portfolio as a result of the sale on all of the life contingent assets in April 2017 (see Note 22 – Subsequent Events). There were no other changes in assumptions during the period.

We elected the fair value treatment under ASC 825-10-50-28 through 50-32 to be transparent to the user regarding the underlying fair value of the structured settlement which collateralizes the debt of CBC. The Company believes any change in fair value is driven by market risk as opposed to credit risk associated with the underlying structured settlement annuity issuer.

The purchased personal injury structured settlements result in payments over time through an annuity policy. Most of the annuities acquired involve guaranteed payments with specific defined ending dates. CBC also purchases a small number of life contingent annuity payments with specific ending dates but the actual payments to be received could be less due to the mortality risk associated with the measuring life. CBC records a provision for loss each period. The life contingent annuities are not a material portion of assets at March 31, 2017.

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(Unaudited)

Note 6—Structured Settlements (At Fair Value) (continued)

Structured settlements consist of the following as of March 31, 2017 and September 30, 2016:

	March 31, 2017			September 30, 2016
Maturity (1) (2)	$	152,548,000		$	133,059,000
Unearned income		(62,178,000	)		(47,351,000	)
Structured settlements, net	$	90,370,000		$	85,708,000

(1) The maturity value represents the aggregate unpaid principal balance at March 31, 2017 and September 30, 2016.

(2) There are no amounts of structured settlements that are past due, or in nonaccrual status at March 31, 2017 and September 30, 2016.

Encumbrances on structured settlements as of March 31, 2017 and September 30, 2016 are as follows:

	March 31, 2017		September 30, 2016
Notes payable secured by settlement receivables with principal and interest outstanding payable until June 2025 (3)	$	1,771,000	$	1,862,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until August 2026 (3)		4,056,000		4,242,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until April 2032 (3)		3,926,000		3,987,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until February 2037 (3)		18,393,000		18,978,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until March 2034 (3)		14,006,000		14,507,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until February 2043 (3)		13,322,000		13,705,000
$25,000,000 revolving line of credit (3)		18,709,000		10,154,000
Encumbered structured settlements		74,183,000		67,435,000
Structured settlements not encumbered		16,187,000		18,273,000
Total structured settlements	$	90,370,000	$	85,708,000

(3) See Note 10 – Other Debt – CBC

At March 31, 2017, the expected cash flows of structured settlements based on maturity value are as follows:

September 30, 2017 (6 months)	$	5,702,000
September 30, 2018		8,892,000
September 30, 2019		9,237,000
September 30, 2020		8,713,000
September 30, 2021		9,576,000
Thereafter		110,428,000
Total	$	152,548,000

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 7—Litigation Funding

Personal Injury Claims

On December 28, 2011, the Company entered into a joint venture with Pegasus Legal Funding, LLC (“PLF”) in the operating subsidiary of Pegasus. Pegasus purchases interests in claims from claimants who are a party to personal injury litigation. Pegasus advances, to each claimant, funds, on a non-recourse basis at an agreed upon interest rate, in anticipation of a future settlement. The interest in each claim purchased by Pegasus consists of the right to receive, from such claimant, part of the proceeds or recoveries which such claimant receives by reason of a settlement, judgment or award with respect to such claimant’s claim. The recently-formed, wholly owned subsidiary, Simia, also engages in the personal injury claims business. The Company earned $4.4 million and $2.1 million in interest and fees during the six and three month periods ending March 31, 2017, respectively, compared to $4.9 million and $1.8 million, respectively, during the six and three month periods ending March 31, 2016. The Company had a net invested balance of $47.9 million and $48.3 million on March 31, 2017 and September 30, 2016, respectively. The Company records reserves for bad debts, which, at March 31, 2017 and 2016, amounted to $10.7 million and $6.2 million, as follows:

	Three Months Ended March 31, 2017			Three Months Ended March 31, 2016			Six Months Ended March 31, 2017			Six Months Ended March 31, 2016
Balance at beginning of period	$	9,542,000		$	5,496,000		$	8,542,000		$	5,459,000
Provisions for losses		1,885,000			724,000			3,274,000			1,136,000
Write offs		(775,000	)		(45,000	)		(1,164,000	)		(420,000	)
Balance at end of period	$	10,652,000		$	6,175,000		$	10,652,000		$	6,175,000

On November 8, 2016, the Company entered into a binding Term Sheet (the “Term Sheet”) with ASFI Pegasus Holdings, LLC, Fund Pegasus, LLC, Pegasus Funding, LLC, Pegasus Legal Funding, LLC, Max Alperovich and Alexander Khanas. Pegasus is currently the Company’s personal injury claims funding business and is a joint venture that is 80% owned by the Company and 20% owned by PLF. The Company and PLF have decided not to renew the Pegasus joint venture that, by its terms, terminated on December 28, 2016. The Term Sheet amends certain provisions to Pegasus’ operating agreement dated as of December 28, 2011 (as amended, the “Operating Agreement”) and governs the terms relating to the collection of its existing Pegasus portfolio (the “Portfolio”).  

Pursuant to the Term Sheet, the parties agreed that Pegasus will continue in existence in order to collect advances on its existing Portfolio. The Company will fund overhead expenses relating to the collection of its Portfolio based on a budget agreed upon by the Company and PLF. Any cash received by Pegasus will be distributed to its members in the order provided for in the Operating Agreement. The Company will be repaid an amount equal to 20% of all principal collected on each investment paid back beginning October 1, 2016 and continuing through the collection of the Portfolio, which will be applied against the outstanding balance of overhead expenses previously advanced by the Company to Pegasus. Since January 2, 2017, additional overhead expenses advanced are being paid back monthly as incurred by the Company prior to the calculation and distribution of any profits.  

In connection with the Term Sheet, the parties also entered into a customary mutual release and non-disparagement agreement as well as a release from the non-competition obligations under the Operating Agreement.  

On November 11, 2016, the Company announced that it is continuing its personal injury claims funding business through the formation of a wholly owned subsidiary, Simia. In connection with its formation, Simia entered into an employment agreement with Patrick F. Preece to serve as its Chief Executive Officer (see Note 11 – Commitments and Contingencies). On March 24, 2017, Simia purchased a portfolio of personal injury claims from a third party for approximately $3.0 million. The Company plans to grow Simia organically, but may from time to time purchase portfolio of assets from a third party if the opportunity presented aligns with the Company’s strategic growth plans.

Matrimonial Claims (included in Other Assets)

On May 8, 2012, the Company formed EMIRIC, LLC, a wholly owned subsidiary of the Company. EMIRIC, LLC entered into a joint venture with California-based Balance Point Divorce Funding, LLC (“BP Divorce Funding”) to create the operating subsidiary BP Case Management, LLC (“BPCM”). BPCM is 60% owned by the Company and 40% owned by BP Divorce Funding. BPCM provides non-recourse funding to a spouse in a matrimonial action. The Company provided a $1.0 million revolving line of credit to partially fund BPCM’s operations, with such loan bearing interest at the prevailing prime rate, with an initial term of twenty-four months. In September 2014, the agreement was revised to extend the term of the loan to August 2016, increase the credit line to $1.5 million and include a personal guarantee of the principal of BP Divorce Funding. Effective August 14, 2016, the Company extended its revolving line of credit with BP Divorce Funding until March 31, 2017, at substantially the same terms as the September 2014 amendment. On April 1, 2017, BP Divorce Funding defaulted on this agreement, and as such, the loan balance of approximately $1.5 million was deemed uncollectible and was written off in general and administrative expenses on the consolidated statement of operations during the three months ended March 31, 2017. As of March 31, 2017, the Company’s investment in cases through BPCM was approximately $2.0 million. There was no income recognized for the six months ended March 31, 2017 and 2016.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 8—Furniture & Equipment

Furniture and equipment consist of the following as of the dates indicated:

	March 31,		September 30,
	2017		2016
Furniture	$	417,000	$	417,000
Equipment		236,000		234,000
Software		1,363,000		1,350,000
		2,016,000		2,001,000
Less accumulated depreciation and amortization		1,817,000		1,758,000
Balance, end of period	$	199,000	$	243,000

Note 9—Non Recourse Debt

Non-Recourse Debt –Bank of Montreal (“BMO”)

In March 2007, Palisades XVI borrowed approximately $227 million under the Receivables Financing Agreement, as amended in July 2007, December 2007, May 2008, February 2009, October 2010 and August 2013 (the “RFA”) from BMO, in order to finance the Portfolio Purchase which had a purchase price of $300 million. The original term of the agreement was three years. This term was extended by each of the Second, Third, Fourth and Fifth Amendments and the most recent agreement signed in August 2013. 

On August 7, 2013, Palisades XVI, a 100% owned bankruptcy remote subsidiary, entered into a Settlement Agreement and Omnibus Amendment (the “Settlement Agreement”) with BMO as an amendment to the RFA. In consideration for a $15 million prepayment funded by the Company, BMO agreed to significantly reduce minimum monthly collection requirements and the interest rate. If and when BMO receives the next $15 million of collections from the Portfolio Purchase or from voluntary prepayments by Asta Funding, Inc., less certain credits for payments made prior to the consummation of the Settlement Agreement (the “Remaining Amount”), Palisades XVI and its affiliates would be automatically released from liability in connection with the RFA (subject to customary exceptions). A condition to the release was Palisades XVI’s agreement to grant BMO, as of the time of the payment of the Remaining Amount, the right to receive 30% of net collections from the Portfolio Purchase once Palisades XVI has received from future net collections, the sum of $15 million plus voluntary prepayments included in the payment of the Remaining Amount (the “Income Interest”). On June 3, 2014, Palisades XVI paid the Remaining Amount. The final principal payment of $2,901,199 included a voluntary prepayment of $1,866,036 provided from funds of the Company. Accordingly, Palisades XVI was entitled to receive $16.9 million of future collections from the Portfolio Purchase before BMO would be entitled to receive any payments with respect to its Income Interest. 

During the month of June, 2016, the Company received the balance of the $16.9 million, and, as of March 31, 2017, the Company recorded a liability to BMO of approximately $169,000, which has been recorded in other liabilities in the Company’s consolidated balance sheet. The funds were subsequently remitted to BMO on April 10, 2017. The liability to BMO is recorded when actual collections are received.

Bank Hapoalim B.M. (“Bank Hapoalim”) Line of Credit

On May 2, 2014, the Company obtained a $20 million line of credit facility from Bank Hapoalim, pursuant to a Loan Agreement (the “Loan Agreement”) among the Company and its subsidiary, Palisades Collection, LLC, as borrowers (the “Borrowers”), and Bank Hapoalim, as agent and lender. The Loan Agreement provided for a $20.0 million committed line of credit and an accordion feature providing an increase in the line of credit of up to $30 million, at the discretion of the lenders. The facility was for a term of three years at an interest rate of either LIBOR plus 275 basis points or prime, at the Company’s option. The Loan Agreement included covenants that required the Company to maintain a minimum net worth of $150 million and pay an unused line fee. The facility was secured pursuant to a Security Agreement among the parties to the Loan Agreement, with property of the Borrowers serving as collateral. On March 30, 2016, the Company signed the First Amendment to the Loan Agreement (the “First Amendment”) with Bank Hapoalim which amended certain terms of their banking arrangement. The First Amendment includes (a) the reduction of the interest rate to LIBOR plus 225 basis points; (b) a decrease in the minimum net worth requirement by $50 million, to $100 million and (c) modifies the Net Loss requirement from a quarterly to an annual basis. All other terms of the original agreement remain in effect. The Company has borrowed $9.6 million against the facility, which was outstanding as of March 31, 2017. There is a $10.1million aggregate balance in Bank Hapoalim which has been reclassified as restricted cash in the consolidated balance sheet since these assets serve as collateral for the line of credit (see Note 1 – Business and Basis of Presentation). On April 28, 2017, the Company renewed the line of credit facility with a new maturity date of August 2, 2017 (see Note 22 – Subsequent Events).

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(Unaudited)

Note 10—Other Debt—CBC

The Company assumed $25.9 million of debt related to the CBC acquisition (see Note 5) on December 31, 2013, including a $12.5 million line of credit with an interest rate floor of 5.5%. Between March 27, 2014 and September 29, 2014, CBC entered into three amendments (Sixth Amendment through Eighth Amendment), resulting in the line of credit increasing to $22.0 million and the interest rate floor reduced to 4.75%. On March 11, 2015, CBC entered into the Ninth Amendment. This amendment, effective March 1, 2015, extended the maturity date on its credit line from February 28, 2015 to March 1, 2017. Additionally, the credit line was increased from $22.0 million to $25.0 million and the interest rate floor was decreased from 4.75% to 4.1%. Other terms and conditions were materially unchanged. In March 2017, the credit line was extended to April 28, 2017. On April 28, 2017, CBC entered into the Tenth Amendment, extending the credit line maturity date to June 30, 2017 (see Note 22 – Subsequent Events).

On November 26, 2014, CBC completed its fourth private placement, backed by structured settlement and fixed annuity payments. CBC issued, through its subsidiary, BBR IV, LLC, approximately $21.8 million of fixed rate asset-backed notes with a yield of 5.4%. On September 25, 2015, CBC completed its fifth private placement, backed by structured settlement and fixed annuity payments. CBC issued, through its subsidiary, BBR V, LLC, approximately $16.6 million of fixed rate asset-backed notes with a yield of 5.1%. On July 8, 2016, CBC issued, through its subsidiary, BBR VI, approximately $14.8 million of fixed rate asset-backed notes with a yield of 4.85%. On April 7, 2017, CBC issued approximately $18.3 million of fixed rate asset-backed notes with a yield of 5.0% (see Note 22 – Subsequent Events).

As of March 31, 2017, the remaining debt amounted to $74.2 million, which consisted of $18.7 million drawdown from a line of credit from an institutional source and $55.5 million of notes payable issued by entities 100%-owned and consolidated by CBC. These entities are bankruptcy-remote entities created to issue notes secured by structured settlements. The following table details the other debt at March 31, 2017 and September 30, 2016:

	Interest Rate			March 31, 2017		September 30, 2016
Notes payable secured by settlement receivables with principal and interest outstanding payable until June 2025		8.75	%	$	1,771,000	$	1,862,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until August 2026		7.25	%		4,056,000		4,242,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until April 2032		7.125	%		3,926,000		3,987,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until February 2037		5.39	%		18,393,000		18,978,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until March 2034		5.07	%		14,006,000		14,507,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until February 2043		4.85	%		13,322,000		13,705,000
Subtotal notes payable					55,474,000		57,281,000
$25,000,000 revolving line of credit expiring on June 30, 2017		4.1	%		18,709,000		10,154,000
Total other debt – CBC				$	74,183,000	$	67,435,000

Note 11—Commitments and Contingencies

Employment Agreement

On November 11, 2016, the Company announced that it would continue its personal injury claims funding business through the formation of a wholly owned subsidiary, Simia. In connection with its formation, Simia entered into an employment agreement (the “Employment Agreement”) with Patrick F. Preece to serve as its Chief Executive Officer. Under the Employment Agreement, Mr. Preece receives an annual base salary of $250,000, subject to annual increases at the discretion of the compensation committee (the “Compensation Committee”) of the board of directors of the Company (the “Board”). Mr. Preece is eligible to receive an annual cash or non-cash bonus in the sole and exclusive discretion of the Compensation Committee. Mr. Preece is also eligible to receive a cash or non-cash profit bonus of up to 15% of the closing consideration received by the Company. He is also entitled to participate in any other benefit plans established by the Company for management employees. The Employment Agreement has a five year term. Under the Employment Agreement, Mr. Preece may be terminated with or without “cause” (as defined in the Employment Agreement) and may resign with or without “good reason” (as defined in the Employment Agreement). If Mr. Preece is terminated without “cause” or resigns for “good reason” he will receive severance equal to two years of his base salary. He is also entitled to a pro-rata share of the profit bonus and his deferred compensation will vest immediately. Mr. Preece is also subject to a non-compete and non-solicitation provision during the term of his employment and, unless his employment is terminated without “cause” or he resigns for “good reason,” for two years thereafter.

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(Unaudited)

Note 11—Commitments and Contingencies (continued)

Employment Agreement (continued)

The employment contracts of the original two CBC principals expired at the end of December 2016. The Company did not renew those contracts. Ryan Silverman was appointed CEO/General Counsel, effective January 1, 2017. 

Leases

The Company leases its facilities in Englewood Cliffs, NJ, Houston, TX, New York, NY and Conshohocken, PA.

Legal Matters

In June 2015, a putative class action complaint was filed against the Company, and one of its third-party law firm servicers, alleging violation of the federal Fair Debt Collection Practices Act and Racketeer Influenced and Corrupt Organizations Act (“RICO”) and state law arising from debt collection activities and default judgments obtained against certain debtors.    

The Company filed a motion to strike the class action allegations and compel arbitration or, to the extent the court declines to order arbitration, to dismiss the RICO claims. On or about March 31, 2015, the court denied the Company’s motion. The Company filed an appeal with the United States Court of Appeals for the Second Circuit. A mediation session was held in July 2015, at which the Company agreed to settle the action on an individual basis for a payment of $13,000 to each named plaintiff, for a total payment of $39,000. Payment was made on or about July 24, 2015. The third-party law firm servicer has not yet settled and remains a defendant in the case.

The plaintiffs’ attorneys advised that they were contemplating the filing of another putative class action complaint against the Company alleging substantially the same claims as those that were asserted in this matter. In anticipation of such an eventuality, the Company agreed to non-binding mediation in order to reach a global settlement with other putative class members, which would avert the possibility of further individual or class actions with respect to the affected accounts. To date, the parties have attended two mediation sessions and are continuing to discuss a global settlement. In connection with such discussions, the parties agreed in principle to settle the action for a payment of $3.9 million (which would be split equally between the Company and the law firm servicer). The Company and law firm servicer have also agreed to cease collection activity on the affected accounts.

Accordingly, the Company set up a reserve for settlement costs of $2.0 million during the three months ended March 31, 2016, which was included in general and administrative expenses in the Company's consolidated statement of operations.

The Company reassessed the situation at September 30, 2016 and deemed that an additional $0.3 million was necessary to account for legal expenses, which was made during the three month period ended September 30, 2016. The Company reviewed the case as of March 31, 2017 and deemed that the $2.3 million reserve remains sufficient.

The Company is a defendant in a lawsuit filed in Montana state court alleging fraud and abuse of process arising from the Company’s business relationship with an entity that finances divorce litigation proceedings. As of March 31, 2017, and based on its assessments of current facts and circumstances, the Company believes that it has recorded adequate reserves to cover future obligations associated with this lawsuit.

The Company filed a lawsuit in Delaware state court against a third party servicer arising from the third party servicer’s failure to pay the Company certain amounts that are due the Company under a servicing agreement. The third party servicer filed a counterclaim in the Delaware action alleging that the Company owes certain amounts to the third party servicer for court costs pursuant to an alleged arrangement between the companies. The Company believes that it has meritorious defenses against this counterclaim and will continue to vigorously defend itself against any such action.

In the ordinary course of our business, we are involved in numerous legal proceedings. We regularly initiate collection lawsuits, using our network of third party law firms, against consumers. Also, consumers occasionally initiate litigation against us, in which they allege that we have violated a federal or state law in the process of collecting their account. We do not believe that these ordinary course matters are material to our business and financial condition. As of the date of this Form 10-Q, we are not involved in any other material litigation in which we are a defendant.

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(Unaudited)

Note 12—Income Recognition, Impairments, and Commissions and Fees

Income Recognition

The Company accounts for certain of its investments in finance receivables using the guidance of FASB Accounting Standards Codification (“ASC”), Receivables — Loans and Debt Securities Acquired with Deteriorated Credit Quality (“ASC 310”). Under the guidance of ASC 310, static pools of accounts are established. These pools are aggregated based on certain common risk criteria. Each static pool is recorded at cost and is accounted for as a single unit for the recognition of income, principal payments and loss provision. Due to the substantial reduction of portfolios reported under the interest method, and the inability to reasonably estimate cash collections required to account for those portfolios under the interest method the Company concluded the cost recovery method is the appropriate accounting method under the circumstances.  

Under the guidance of ASC 310-30, the Company must analyze a portfolio upon acquisition to ensure which method is appropriate, and once a static pool is established for a quarter, individual receivable accounts are not added to the pool (unless replaced by the seller) or removed from the pool (unless sold or returned to the seller). 

The Company uses the cost recovery method when collections on a particular pool of accounts cannot be reasonably predicted. Under the cost recovery method, no income is recognized until the cost of the portfolio has been fully recovered. A pool can become fully amortized (zero carrying balance on the balance sheet) while still generating cash collections. In this case, all cash collections are recognized as revenue when received. 

 The Company accounts for its investments in personal injury claims at an agreed upon interest rate, in anticipation of a future settlement. The interest purchased by Pegasus in each claim consists of the right to receive from such claimant part of the proceeds or recoveries which such claimant receives by reason of a settlement, judgment or award with respect to such claimant’s claim. Open case revenue is estimated, recognized and accrued at a rate based on the expected realization and underwriting guidelines and facts and circumstances for each individual case. These personal injury claims are non-recourse. When a case is closed and the cash is received for the advance provided to a claimant, revenue is recognized based upon the contractually agreed upon interest rate, and, if applicable, adjusted for any changes due to a settled amount and fees charged to the claimant. 

The funding of matrimonial actions is on a non-recourse basis. Revenue from matrimonial actions is recognized under the cost recovery method.

CBC purchases periodic payments under structured settlements and annuity policies from individuals in exchange for a lump sum payment. The Company elected to carry structured settlements at fair value. Unearned income on structured settlements is recognized as interest income using the effective interest method over the life of the related settlement. Changes in fair value are recorded in unrealized gain (loss) in structured settlements in our statements of operations. 

The Company recognizes revenue for GAR Disability Advocates when cases close and fees are collected.

Impairments

The Company accounts for its impairments in accordance with ASC 310, which provides guidance on how to account for differences between contractual and expected cash flows from an investor’s initial investment in loans or debt securities acquired in a transfer if those differences are attributable, at least in part, to credit quality. The recognition of income under ASC 310 is dependent on the Company having the ability to develop reasonable expectations of both the timing and amount of cash flows to be collected. In the event the Company cannot develop a reasonable expectation as to both the timing and amount of cash flows expected to be collected, ASC 310 permits the change to the cost recovery method. The Company will recognize income only after it has recovered its carrying value. If collection projections indicate the carrying value will not be recovered, an impairment is required. The impairment will be equal to the difference between the carrying value at the time of the forecast and the corresponding estimated remaining future collections. 

In October 2014, the Company invested $5.0 million in Class A shares of the Topaz MP Fixed Income Fund (“Topaz Fund”), a closed end fund. The Topaz Fund invests indirectly in various portfolios of Non-Performing Small Consumer Loans. The objective of the fund is to obtain a fixed return cash flow representing interest on the invested capital. According to the investment memorandum of the fund, the Topaz Fund proposed to make semi-annual distributions of 14% annual compounded interest on June and December of each year. Since December 2015, no distribution has been received by the Company. The Company received letters from the fund’s General Partner explaining that the distributions were not made due to the negative performance of the fund for the periods.

 During the fiscal year 2016, the Company recorded an impairment loss on this investment of $1.0 million, which was included in general and administrative expenses in the consolidated statements of operations. In fiscal year 2017, the Company received an announcement that the investment was being liquidated. After careful consideration, the $3,425,000 carrying value of this investment was written off as of March 31, 2017.

Commissions and fees

Commissions and fees are the contractual commissions earned by third party collection agencies and attorneys, and direct costs associated with the collection effort, generally court costs. The Company utilizes third party collection agencies and attorney networks.

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(Unaudited)

Note 13—Income Taxes

At the end of each interim reporting period, the Company estimates its effective income tax rate expected to be applicable for the full year. The estimate is used in providing for income taxes on a year-to-date basis and may change in subsequent interim periods. The Company’s effective tax rate from operations for the three months ended December 31, 2016 and six months ended March 31, 2017 was 41% for both periods, compared to 45% and 49% in the same periods of the prior year. The effective rate for fiscal 2017 differed from the U.S. federal statutory rate of 34% due to state income taxes, and other permanent differences. The effective rate for fiscal 2016 differed from the U.S. federal statutory rate of 35% primarily due to state income taxes and other permanent differences.

 The Company files income tax returns in the U.S federal jurisdiction, various state jurisdictions, and various foreign countries. The tax returns for the 2014 through 2015 fiscal years are currently under examination by the Internal Revenue Service. The Company does not have any uncertain tax positions.

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(Unaudited)

Note 14—Net (Loss) Income per Share

Basic per share data is calculated by dividing net income (loss) by the weighted average shares outstanding during the period. Diluted earnings per share is calculated similarly, except that it includes the dilutive effect of the assumed exercise of securities, including the effect of shares issuable under the Company’s stock based compensation plans. With respect to the assumed proceeds from the exercise of dilutive options, the treasury stock method is calculated using the average market price for the period.

The following table presents the computation of basic and diluted per share data for the three months ended March 31, 2017 and 2016:

	Three Months Ended March 31, 2017								Three Months Ended March 31, 2016
	Net Loss			Weighted Average Shares		Per Share Amount			Net Loss			Weighted Average Shares		Per Share Amount
Basic	$	(5,569,000	)		9,691,576	$	(0.57	)	$	(1,831,000	)		12,076,120	$	(0.15	)
Effect of Dilutive Stock					—								—
Diluted	$	(5,569,000	)		9,691,576	$	(0.57	)	$	(1,831,000	)		12,076,120	$	(0.15	)

The following table presents the computation of basic and diluted per share data for the six months ended March 31, 2017 and 2016:

	Six Months Ended March 31, 2017								Six Months Ended March 31, 2016
	Net Loss			Weighted Average Shares		Per Share Amount			Net Loss			Weighted Average Shares		Per Share Amount
Basic	$	(7,226,000	)		10,795,903	$	(0.67	)	$	(25,000	)		12,115,987	$	0.00
Effect of Dilutive Stock					—								—
Diluted	$	(7,226,000	)		10,795,903	$	(0.67	)	$	(25,000	)		12,115,987	$	0.00

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(Unaudited)

Note 15—Stock Based Compensation

The Company accounts for stock-based employee compensation under ASC 718, Compensation — Stock Compensation (“ASC 718”). ASC 718 requires that compensation expense associated with stock options and other stock based awards be recognized in the statement of operations, rather than a disclosure in the notes to the Company’s consolidated financial statements.

On December 16, 2015, the Compensation Committee of the Board (“Compensation Committee”) granted 67,100 stock options to non-officer employees of the Company, of which 9,100 options vested immediately and the remaining 58,000 stock options vest in three equal annual installments and accounted for as one graded vesting award. The exercise price of these options was at the market price on that date. The weighted average assumptions used in the option pricing model were as follows:

Risk-free interest rate	0.24	%
Expected term (years)	6.25
Expected volatility	23.4	%
Dividend yield	0.00	%

On December 16, 2015, the Compensation Committee granted 5,000 restricted shares to a non-officer employee of the Company. These shares vested fully in March 2016. On December 31, 2015, the Company issued an aggregate of 123,304 shares to the two former CBC principals (see Note 5 – Acquisition of CBC). These shares are subject to a one year lock up period in which the holders cannot sell the shares. In addition, the shares are subject to certain sales restrictions following the initial lock-up period which expired on December 31, 2016 (see Note 5 – Acquisition of CBC).

Note 16—Stock Option Plans

2012 Stock Option and Performance Award Plan

On February 7, 2012, the Board adopted the Company’s 2012 Stock Option and Performance Award Plan (the “2012 Plan”), which was approved by the stockholders of the Company on March 21, 2012. The 2012 Plan replaces the Equity Compensation Plan (as defined below).

The 2012 Plan provides the Company with flexibility with respect to equity awards by providing for grants of stock awards (i.e. restricted or unrestricted), stock purchase rights and stock appreciation rights, in addition to the granting of stock options.

The Company authorized 2,000,000 shares of Common Stock for issuance under the 2012 Plan. Under the 2012 Plan, the Company has granted options to purchase an aggregate of 484,200 shares, an award of 245,625 shares of restricted stock, and has cancelled 66,868 options, leaving 1,337,043 shares available as of March 31, 2017. As of March 31, 2017, approximately 95 of the Company’s employees were able to participate in the 2012 Plan.

Equity Compensation Plan On December 1, 2005, the Board adopted the Company’s Equity Compensation Plan (the “Equity Compensation Plan”), which was approved by the stockholders of the Company on March 1, 2006. The Equity Compensation Plan was adopted to supplement the Company’s 2002 Stock Option Plan (as defined below).

In addition to permitting the grant of stock options as are permitted under the 2002 Stock Option Plan, the Equity Compensation Plan allows the Company flexibility with respect to equity awards by also providing for grants of stock awards (i.e. restricted or unrestricted), stock purchase rights and stock appreciation rights.

The Company authorized 1,000,000 shares of Common Stock for issuance under the Equity Compensation Plan. As of March 21, 2012, no more awards could be issued under this plan.

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Note 16—Stock Option Plans

2002 Stock Option Plan

On March 5, 2002, the Board adopted the Company’s 2002 Stock Option Plan (the “2002 Plan”), which was approved by the stockholders of the Company on May 1, 2002. The 2002 Plan was adopted in order to attract and retain qualified directors, officers and employees of, and consultants to, the Company.

The 2002 Plan authorizes the granting of incentive stock options (as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”)) and non-qualified stock options to eligible employees of the Company, including officers and directors of the Company (whether or not employees) and consultants of the Company.

The Company authorized 1,000,000 shares of Common Stock authorized for issuance under the 2002 Plan. As of March 5, 2012, no more awards could be issued under this plan.

Summary of the Plans

Compensation expense for stock options and restricted stock is recognized over the vesting period. Compensation expense for restricted stock is based upon the market price of the shares underlying the awards on the grant date.

The following table summarizes stock option transactions under the 2012 Plan, the 2002 Plan, and the Equity Compensation Plan:

	Six Months Ended March 31,
	2017					2016
	Number Of Shares			Weighted Average Exercise Price		Number of Shares			Weighted Average Exercise Price
Outstanding options at the beginning of period		949,667		$	8.47		1,043,566		$	8.47
Options granted		—			—		67,100			7.93
Options exercised		—			—		(7,499	)		6.32
Options forfeited/cancelled		(52,800	)		14.13		(8,300	)		8.14
Outstanding options at the end of period		896,867		$	8.14		1,094,867		$	8.45
Exercisable options at the end of period		858,195		$	8.15		963,522		$	8.48

	Three Months Ended March 31,
	2017					2016
	Number Of Shares			Weighted Average Exercise Price		Number of Shares			Weighted Average Exercise Price
Outstanding options at the beginning of period		897,167		$	8.14		1,110,666		$	8.43
Options granted		—			—		—			—
Options exercised		—			—		(7,499	)		6.32
Options forfeited/cancelled		(300	)		8.08		(8,300	)		8.14
Outstanding options at the end of period		896,867		$	8.14		1,094,867		$	8.45
Exercisable options at the end of period		858,195		$	8.15		963,522		$	8.48

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Note 16—Stock Option Plans (continued)

The following table summarizes information about the 2012 Plan, 2002 Plan, and the Equity Compensation Plan outstanding options as of March 31, 2017:

				Options Outstanding						Options Exercisable
Range of Exercise Price				Number of Shares Outstanding		Weighted Remaining Contractual Life (in Years)		Weighted Average Exercise Price		Number of Shares Exercisable		Weighted Average Exercise Price
	$2.8751	–	$5.7500		3,800		2.1	$	2.95		3,800	$	2.95
	$5.7501	–	$8.6250		768,567		5.0		7.96		729,895		7.96
	$8.6251	–	$11.5000		124,500		5.8		9.40		124,500		9.40
					896,867		5.1	$	8.14		858,195	$	8.15

The Company recognized $8,000 and $14,000 of compensation expense related to the stock option grants during the six and three month periods ended March 31, 2017, respectively. The Company recognized $327,000 and $131,000 of compensation expense related to the stock option grants during the six and three month periods ended March 31, 2016, respectively. As of March 31, 2017, there was $62,000 of unrecognized compensation cost related to stock option awards. The weighted average period over which such costs are expected to be recognized is 1.7 years.

The intrinsic value of the outstanding and exercisable options as of March 31, 2017 was approximately $228,000 and $219,000, respectively. The weighted average remaining contractual life of exercisable options is 4.9 years. There were no options exercised during the six and three month periods ended March 31, 2017. The fair value of the stock options that vested during the six and three month periods ended March 31, 2017 was approximately $657,000 and $111,000, respectively. The fair value of the stock options that vested during the six and three month periods ended March 31, 2016 was approximately $1,052,000 and $122,000, respectively. There were no options granted during the six and three month periods ended March 31, 2017. The fair value of the options granted during the six and three month periods ended March 31, 2016 was approximately $532,000 and $0, respectively.

The following table summarizes information about restricted stock transactions:

	Six Months Ended March 31,
	2017				2016
	Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Unvested at the beginning of period		—	$	—		44,107		$	9.28
Awards granted		—		—		5,000			7.89
Vested		—		—		(34,107	)		9.57
Forfeited		—		—		—			—
Unvested at the end of period		—	$	—		15,000		$	7.92

	Three Months Ended March 31,
	2017				2016
	Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
Unvested at the beginning of period		—	$	—		15,000	$	7.92
Awards granted		—		—		—		—
Vested		—		—		—		—
Forfeited		—		—		—
Unvested at the end of period		—	$	—		15,000	$	7.92

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Note 16—Stock Option Plans (continued)

The Company recognized no compensation expense related to the restricted stock awards during both the six and three month periods ended March 31, 2017, respectively. The Company recognized $101,000 and $14,000 of compensation expense related to the restricted stock awards during the six and three month periods ended March 31, 2016, respectively. As of March 31, 2017, there was no unrecognized compensation cost related to restricted stock awards. An aggregate of 5,000 shares of restricted stock was granted during the first six months of fiscal year 2016, all of which were granted to a non-officer employee. The fair value of the awards vested during the six month periods ended March 31, 2017 and 2016 was $0 and $40,000, respectively.

The Company recognized an aggregate total of $8,000 and $14,000 in compensation expense for the six and three month periods ended March 31, 2017, respectively, for the stock options and restricted stock grants. The Company recognized an aggregate total of $428,000 and $145,000 in compensation expense for the six and three month periods ended March 31, 2016, respectively, for the stock options and restricted stock grants. As of March 31, 2017, there was a total of $62,000 of unrecognized compensation cost related to unvested stock options and restricted stock grants. The method used to calculate stock based compensation is the straight line pro-rated method.

Note 17—Stockholders’ Equity

Dividends are declared at the discretion of the Board and depend upon the Company’s financial condition, operating results, capital requirements and other factors that the Board deems relevant. In addition, agreements with the Company’s lenders may, from time to time, restrict the ability to pay dividends. As of March 31, 2017, there were no such restrictions. No dividends were declared during the three and six month periods ended March 31, 2017 and 2016. 

 On August 11, 2015, the Board approved the repurchase of up to $15,000,000 of the Company’s common stock and authorized management of the Company to enter into the Shares Repurchase Plan under Sections 10b-18 and 10b5-1 of the Securities Exchange Act (the “Shares Repurchase Plan”). The Shares Repurchase Plan was to have been effective to December 31, 2015. On December 17, 2015 the Board approved the extension of the Plan to March 31, 2016 and reset the maximum to an additional $15 million in repurchases. On March 17, 2016, having repurchased approximately $9.9 million of the Company’s common stock, the Board approved further extension of the Plan to December 31, 2016 and reset the maximum to $15 million in repurchases. On March 22, 2016, a Company shareholder commenced a tender offer on the Company’s common stock. Per the provisions of the Shares Repurchase Plan, it terminated immediately, and no further purchases were permitted under the Shares Repurchase Plan. Through September 30, 2016, the Company purchased approximately 1,186,000 shares at an aggregate cost of approximately $10.1 million under the Shares Repurchase Plan.  

On May 25, 2016, the Company entered into a Mutual Confidentiality Agreement (the “Agreement”) with MPF InvestCo 4, LLC, a wholly owned subsidiary of The Mangrove Partners Master Fund, Ltd. (“Mangrove”), pursuant to which Mangrove and the Company agreed to (1) provide certain Confidential Information (as defined below) to the other party to the Agreement and the other party’s representatives, (2) the confidentiality of the Confidential Information, and (3) certain restrictions on the activities of the parties to the Agreement.  

 As of December 31, 2016, and for the three month periods ended December 31, 2015 and 2016, Mangrove, due to their ownership in the Company's common stock, which was acquired in a series of OTC transactions, was deemed to be a related party. 

 Pursuant to the Agreement, the Company made available to Mangrove and its representatives certain confidential information relating to the Company or its subsidiaries, and Mangrove agreed to make available to the Company and its representatives certain confidential information relating to Mangrove and its affiliates (collectively, the “Confidential Information”). The Company and Mangrove agreed not to disclose the Confidential Information, and to cause each of their representatives, respectively, not to disclose the Confidential Information, except as required by law. Pursuant to the Agreement, the Company provided information requested by Mangrove to one or more of Mangrove’s representatives and such representatives prepared summaries of such information (the “Summaries”). The Company approved the Summaries, and the approved Summaries were provided to Mangrove. The Company agreed to release the approved Summaries publicly on or prior to the end of the Extended Period (as defined in the Agreement), to the extent that the information contained in the Summaries has not already been disclosed.  

 Further, under the terms of the Agreement, Mangrove and the Company have agreed to certain restrictions during the Discussion Period, which began on May 25, 2016 and the Extended Period, including that, unless consented to by the other party to the Agreement or required by applicable law, neither party will, and shall cause its affiliates and representatives not to, (i) commence any litigation against the other party, (ii) make any filing with the Securities and Exchange Commission of proxy solicitation materials, preliminary proxy statement, definitive proxy statement or otherwise or call any annual or special meeting of stockholders of the Company, (iii) publicly refer to: (a) the Confidential Information or Discussion Information (as defined in the Agreement), (b) any annual or special meetings of stockholders of the Company or (c) any prior discussions between the parties, including in any filing with the Securities and Exchange Commission (including any proxy solicitation materials, preliminary proxy statement, definitive proxy statement or otherwise), in any press release or in any other written or oral disclosure to a third party, (iv) make any purchases of the Company’s securities, including, but not limited to, pursuant to any stock buyback plans, tender offers, open-market purchases, privately negotiated transactions or otherwise, (v) make any demand under Section 220 of the Delaware General Corporation Law, (vi) make or propose to make any amendments to the Company’s Certificate of Incorporation, as amended, or By-laws, as amended, (vii) adopt, renew, propose or otherwise enter into a Shareholder Rights Plan with respect to the Company’s securities, (viii) adopt or propose any changes to the Company’s capital structure or (ix) negotiate, discuss, enter into, propose or otherwise transact in any extraordinary transactions with respect to the Company, outside the ordinary course of business, including, but not limited to, any mergers, asset sales or asset purchases.

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Note 17—Stockholders’ Equity (continued)

On November 21, 2016, Mangrove notified the Company that Mangrove was terminating the Agreement with the Company. Under the Agreement, the Company and Mangrove agreed to (1) provide certain Confidential Information (as defined below) to the other party to the Agreement and the other party’s representatives, (2) maintain the confidentiality of the Confidential Information, and (3) certain restrictions on the activities of the parties to the Agreement. Upon termination of the Discussion Period, the agreement provides for a period of 30 days thereafter (the “Extended Period”). Throughout the Extended Period of the Agreement, the parties are subject to the standstill provisions of the Agreement. Following the Discussion Period and the Extended Period, nothing in the Agreement shall prohibit any party from taking any of the activities referred to as the Restricted Activities, and specifically nothing shall restrict Mangrove or its representatives from calling a special meeting, nominating one or more candidates to serve as directors of the Company or commencing, or announcing its intention to commence, a “solicitation” of “proxies” (as such terms are used in Regulation 14A of the Securities Exchange Act of 1934, as amended) to vote with respect to any meeting of stockholders of the Company. The effective termination date of this Agreement was January 6, 2017.

On January 6, 2017, the Company entered into a settlement agreement (the “ Settlement Agreement ”) with Mangrove and, for limited purposes stated therein, Gary Stern, Ricky Stern, Emily Stern, Arthur Stern, Asta Group, Incorporated and GMS Family Investors LLC (collectively, the “ Stern Family ”).

The Settlement Agreement provided that, within ten business days following the date of the Settlement Agreement, the Company will commence a self-tender offer (“ Tender Offer ”) to repurchase for cash 5,314,009 shares of its common stock at a purchase price of $10.35 per share. The Tender Offer will expire no later than February 28, 2017. Pursuant to the Settlement Agreement, Mangrove will tender its 4,005,701 shares for purchase by the Company. The Stern Family has agreed not to tender any of their shares in the Tender Offer. In addition, pursuant to a securities purchase agreement dated January 6, 2017 between Mangrove and Gary Stern (the “Purchase Agreement”), Gary Stern will purchase any remaining shares owned by Mangrove eleven business days following the closing of the Tender Offer for $10.35 per share.  

The Settlement Agreement includes customary standstill and related provisions. Mangrove and the Company also agreed on a mutual release of claims. Additionally, the Company indemnified Mangrove from and against any excise tax imposed as a result of this Settlement Agreement.  

The Settlement Agreement was terminable by either the Company or Mangrove by written notice at any time after the close of business on the second anniversary of the Settlement Agreement. The Settlement Agreement will also terminate if the Tender Offer does not close on or before February 28, 2017 or the Company amends the terms of the Tender Offer in a manner adverse to Mangrove.    

In connection with the Settlement Agreement, the Company also entered into a Voting Agreement dated January 6, 2017 (the “ Voting Agreement ”) with Gary Stern, Ricky Stern, Emily Stern, Asta Group, Incorporated and GMS Family Investors LLC (collectively, the “ Stern Stockholders ”). The Voting Agreement provides that the Stern Stockholders will not have the right to vote more than 49% of the Company’s total outstanding shares, and any additional shares held by the Stern Stockholders will be voted in a manner proportionate to the votes of the outstanding shares not held by the Stern Stockholders.

On January 19, 2017, the Company commenced a self-tender offer to purchase for cash up to 5,314,009 shares of its common stock at a purchase price of $10.35 per share, less applicable withholding taxes and without interest. The Company made the tender offer pursuant to the Settlement Agreement dated as of January 6, 2017, by and among the Company, Mangrove and certain of their respective affiliates, pursuant to which Mangrove and its affiliates would tender their 4,005,701 shares. The tender offer would reduce the number of shares in the public market.  

If more than 5,314,009 shares had been tendered, the Company would have purchased all tendered shares on a pro rata basis, subject to the conditional tender provisions described in the Offer to Purchase. Pursuant to the Settlement Agreement, Gary Stern (or his permitted assignees) had unconditionally agreed to purchase from Mangrove and its affiliates any shares owned by Mangrove and its affiliates that the Company did not purchase in the tender offer.

The tender offer expired on February 15, 2017, at 11:59 p.m., New York City time. Based on the final count by American Stock Transfer & Trust Company, LLC ("AMSTOCK"), the depositary for the tender offer, a total of approximately 6,022,253 shares of the Company’s common stock were validly tendered and not validly withdrawn. Because the tender offer was oversubscribed by 708,244 shares, the Company purchased only a prorated portion of the shares properly tendered by each tendering stockholder. The depositary had informed the Company that the final proration factor for the tender offer was approximately 88.24% of the shares validly tendered and not validly withdrawn. AMSTOCK promptly issued payment for the 5,314,009 shares accepted pursuant to the tender offer and returned all other shares tendered and not purchased. The shares acquired represented approximately 44.7% of the total number of shares of the Company’s common stock issued and outstanding as of February 6, 2017. As a result of this tender offer, the Company recorded during the second quarter an additional $54.2 million in treasury stock, and $797,000 was charged to general and administrative expenses in the consolidated statements of operations which represents the excess of the current market price of the Company’s common stock on January 18, 2017 of $10.20 per share. Additionally, the Ricky Stern Family 2012 Trust (as Gary Stern's permitted assignee), acquired 471,086 Shares under the Purchase Agreement on March 10, 2017 for $4.9 million.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 18—Fair Value of Financial Measurements and Disclosures

Disclosures about Fair Value of Financial Instruments

FASB ASC 825, Financial Instruments, (“ASC 825”), requires disclosure of fair value information about financial instruments, whether or not recognized on the balance sheet, for which it is practicable to estimate that value. Because there are a limited number of market participants for certain of the Company’s assets and liabilities, fair value estimates are based upon judgments regarding credit risk, investor expectation of economic conditions, normal cost of administration and other risk characteristics, including interest rate and prepayment risk. These estimates are subjective in nature and involve uncertainties and matters of judgment, which significantly affect the estimates.

The estimated fair value of the Company’s financial instruments is summarized as follows:

	March 31, 2017				September 30, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets
Cash and cash equivalents (Level 1)	$	10,521,000	$	10,521,000	$	18,526,000	$	18,526,000
Restricted cash (Level 1)		10,064,000		10,064,000		—		—
Available-for-sale investments (Level 1)		5,397,000		5,397,000		56,764,000		56,764,000
Consumer receivables acquired for liquidation (Level 3)		11,651,000		44,014,000		14,320,000		47,233,000
Structured settlements (Level 3)		90,370,000		90,370,000		85,708,000		85,708,000
Other investments, net (1)		—		—		3,590,000		3,590,000
Financial liabilities
Other debt – CBC, revolving line of credit (Level 3)		18,709,000		18,709,000		10,154,000		10,154,000
Other debt – CBC, non-recourse notes payable with varying installments (Level 3)		55,474,000		55,474,000		57,281,000		57,281,000

(1) The Company has elected to early adopt ASU 2015-07 and in accordance with ASU 2015-07, certain investments that are measured at fair value using the net asset value per share (or its equivalent) have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheet. As of March 31, 2017, after receiving notification that the investment was being liquidated, the Company wrote it off.

Disclosure of the estimated fair values of financial instruments often requires the use of estimates. The Company uses the following methods and assumptions to estimate the fair value of financial instruments:

Cash and cash equivalents – The carrying amount of cash and cash equivalents approximates fair value.

Restricted cash – The carrying amount of restricted cash approximates fair value.

Available-for-sale investments – The available-for-sale securities consist of mutual funds that are valued based on quoted prices in active markets.

Consumer receivables acquired for liquidation – The Company computed the fair value of the consumer receivables acquired for liquidation using its proprietary forecasting model. The Company’s forecasting model utilizes a discounted cash flow analysis. The Company’s cash flows are an estimate of collections for consumer receivables based on variables fully described in Note 4 - Consumer Receivables Acquired for Liquidation. These cash flows are discounted to determine the fair value.

Structured settlements – The Company determined the fair value based on the discounted forecasted future collections of the structured settlements. Unrealized gains (losses) on structured settlements is comprised of both unrealized gains resulting from fair market valuation at the date of acquisition of the structured settlements and the subsequent fair value adjustments resulting from the change in the discount rate.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 18—Fair Value of Financial Measurements and Disclosures (continued)

Disclosures about Fair Value of Financial Instruments (continued)

Other investments – The Company estimated the fair value using the net asset value per share of the investment. There are no unfunded commitments and the investment cannot be redeemed for 5 years from the date of the initial investment (October 2014).

Other debt CBC, revolving line of credit – The Company determined the fair value based on similar instruments in the market.

Other debt CBC, non-recourse notes payable with varying installments – The fair value at March 31, 2017 was based on the discounted forecasted future collections of the structured settlements.

Fair Value Hierarchy

The Company recorded its available-for-sale investments at estimated fair value on a recurring basis. The accompanying consolidated financial statements include estimated fair value information regarding its available-for-sale investments as of March 31, 2017, as required by FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s level within the fair value hierarchy is based on the lowest level of input significant to the fair value measurement.

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to assess at the measurement date.

Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities in active markets; quoted prices in markets that are not active for identical or similar assets or liabilities; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

Level 3 – Unobservable inputs that are supported by little or no market activity and significant to the fair value of the liabilities that are developed using the reporting entities’ estimates and assumptions, which reflect those that market participants would use.

A significant unobservable input used in the fair value measurement of structured settlements is the discount rate. Significant increases and decreases in the discount rate used to estimate the fair value of structured settlements could decrease or increase the fair value measurement of the structured settlements. The discount rate could be affected by factors which include, but are not limited to, creditworthiness of insurance companies, market conditions, specifically competitive factors, credit quality of receivables purchased, the diversity of the payers of the receivables purchased, the weighted average life of receivables, current benchmark rates (i.e. 10 year treasury or swap rate) and the historical portfolio performance of the originator and/or servicer.

The Company’s available-for-sale investments are classified as Level 1 financial instruments based on the classifications described above. The Company did not have transfers into or (out of) Level 1 investments during the six month period ended March 31, 2017. The Company had no Level 2 or Level 3 available-for-sale investments during the first six months of fiscal year 2017.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 18—Fair Value of Financial Measurements and Disclosures (continued)

Fair Value Hierarchy (continued)

The following table sets forth the Company’s quantitative information about its Level 3 fair value measurements as of March 31, 2017:

	Fair Value		Valuation Technique	Significant Unobservable Input	Weighted Average Rate
Structured settlements at fair value	$	90,370,000	Discounted cash flow	Discount rate		4.80%	–	10.5%

A significant unobservable input used in the fair value measurement of the Company's structured settlements measured at fair value using unobservable inputs (Level 3) is the discount rate. The inputs comprising the discount rate include A-rated U.S. Financial yield curve, plus illiquidity spread, and cash flows of the portfolio are adjusted to take into consideration survival probabilities, if applicable.

The changes in structured settlements at fair value using significant unobservable inputs (Level 3) during the six months ended March 31, 2017 were as follows:

Balance at September 30, 2016	$	85,708,000
Total losses included in earnings		(2,293,000	)
Purchases		7,926,000
Sales		—
Interest accreted		3,165,000
Payments received		(4,136,000	)
Total	$	90,370,000
The amount of total losses for the six months period included in earnings attributable to the change in unrealized losses relating to assets held at March 31, 2017	$	(2,293,000	)

Realized and unrealized gains and losses included in earnings in the accompanying consolidated statements of operations for the six months ended March 31, 2017 are reported in the following revenue categories:

Total losses included in the six months ended March 31, 2017	$	(2,293,000	)
Change in unrealized losses relating to assets still held at March 31, 2017	$	(2,293,000	)

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ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 19—Segment Reporting

The Company operates through strategic business units that are aggregated into four reportable segments: Consumer receivables, personal injury claims, structured settlements, and GAR Disability Advocates. The four reportable segments consist of the following:

• Consumer receivables - This segment is engaged in the business of purchasing, managing for its own account and servicing distressed consumer receivables, including judgment receivables, charged off receivables and semi-performing receivables.  Judgment receivables are accounts where outside attorneys have secured judgments directly against the consumer. Primary charged-off receivables are accounts that have been written-off by the originators and may have been previously serviced by collection agencies. Semi-performing receivables are accounts where the debtor is currently making partial or irregular monthly payments, but the accounts may have been written-off by the originators. 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 ® , Visa ® and other credit card accounts which were charged-off by the issuers or providers for non-payment. We acquire these and other consumer receivable portfolios at substantial discounts to their face values. The discounts are based on the characteristics (issuer, account size, debtor location and age of debt) of the underlying accounts of each portfolio.  The business conducts its activities primarily under the name Palisades Collection, LLC.

• Personal injury claims – Pegasus Funding, LLC, an 80% owned subsidiary, and Simia, a wholly owned subsidiary, purchase interests in personal injury claims from claimants who are a party to personal injury litigation. Advances to each claimant funds on a non-recourse basis at an agreed upon interest rate, in anticipation of a future settlement. The interest in each claim purchased consists of the right to receive, from such claimant, part of the proceeds or recoveries which such claimant receives by reason of a settlement, judgment or award with respect to such claimant’s claim.

• Structured settlements - CBC purchases periodic structured settlements and annuity policies from individuals in exchange for a lump sum payment.

• GAR Disability Advocates is an advocacy group which represents individuals nationwide in their claims for social security disability and supplemental security income benefits from the Social Security Administration.

Certain non-allocated administrative costs, interest income, interest expense and various other non-operating income and expenses are reflected in Corporate. Corporate assets include cash and cash equivalents, restricted cash, available-for-sale securities, property and equipment, goodwill, deferred taxes and other assets.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 19—Segment Reporting (continued)

The following table shows results by reporting segment for the three and six month period ended March 31, 2017 and 2016.

The Company eliminates revenue between segments.

			Personal						GAR
(Dollars in millions)	Consumer Receivables		Injury Claims			Structured Settlements			Disability Advocates			Corporate			Total Company
Three Months Ended March 31,
2017:
Total Revenues	$	4.0	$	2.2		$	0.6		$	1.5		$	—		$	8.3
Other income (loss)		—		—			—			—			(0.7	)		(0.7	)
Income (loss) before income tax		3.5		(0.3	)		(1.9	)		(0.5	)		(10.2	)		(9.4	)
2016:
Total Revenues		4.9		1.8			3.0			0.9			—			10.6
Other income		—		—			—			—			0.4			0.4
Income (loss) before income tax		0.9		0.4			0.7			(2.7	)		(2.5	)		(3.2	)
Six Months Ended March 31,
2017:
Total Revenues		8.0		4.4			1.6			2.9			—			16.9
Other income (loss)		—		—			—			—			(0.1	)		(0.1	)
Income (loss) before income tax		6.9		(0.3	)		(3.5	)		(1.4	)		(13.9	)		(12.2	)
Total Assets		18.8		49.0			87.4			2.3			53.9			211.4
2016:
Total Revenues		10.1		4.9			5.9			1.5			—			22.4
Other income		—		—			—			—			0.9			0.9
Income (loss) before income tax		4.8		2.3			1.4			(4.5	)		(3.8	)		0.2
Total Assets		16.8		36.2			71.6			3.7			110.5			238.8

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 20 - Accumulated Other Comprehensive (Loss) Income

Accumulated other comprehensive (loss) income consists of:

	March 31, 2017									September 30, 2016
	Unrealized Gain (loss) on marketable securities			Foreign currency translation, net			Total			Unrealized Gain (loss) on marketable securities			Foreign currency translation, net			Total
Beginning Balance	$	624,000		$	(538,000	)	$	86,000		$	(205,000	)	$	(1,480,000	)	$	(1,685,000	)
Change in unrealized (losses) gains on foreign currency translation, net of tax benefit/(expense) of $121,000 and ($628,000) at March 31, 2017, and September 30, 2016, respectively.		-			(181,000	)		(181,000	)		-			942,000			942,000
Change in unrealized (losses) gains on marketable securities, net of tax benefit/ (expense) of $23,000 and ($529,000) at March 31, 2017, and September 30, 2016, respectively.		(35,000	)		-			(35,000	)		868,000			-			868,000
Amount reclassified from accumulated other comprehensive loss, net of tax benefit of $397,000 and $24,000 at March 31, 2017, and September 30, 2016, respectively.		(596,000	)		-			(596,000	)		(39,000	)		-			(39,000	)
Net current-period other comprehensive (loss) income		(631,000	)		(181,000	)		(812,000	)		829,000			942,000		$	1,771,000
Ending balance	$	(7,000	)	$	(719,000	)	$	(726,000	)	$	624,000		$	(538,000	)	$	86,000

	March 31, 2016
	Unrealized Gain (loss) on marketable securities			Foreign currency translation, net			Total
Beginning Balance	$	(205,000	)	$	(1,480,000	)	$	(1,685,000	)
Change in unrealized (losses) gains on foreign currency translation, net of tax benefit/(expense) of $557,000 during the six month period ended March 31, 2016.		-			496,000			496,000
Change in unrealized (losses) gains on marketable securities, net of tax benefit/ (expense) of ($294,000) during the six month period ended March 31, 2016.		503,000			-			503,000
Amount reclassified from accumulated other comprehensive loss, net of tax benefit of $11,000 during the six month period ended March 31, 2016.		(20,000	)		-			(20,000	)
Net current-period other comprehensive (loss) income		483,000			496,000			979,000
Ending balance	$	278,000		$	(984,000	)	$	(706,000	)

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ASTA FUNDING, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 21—Related Party Transactions

On September 17, 2015, the Company and Piccolo Business Advisory (“Piccolo”), which is owned by Louis Piccolo, a director of the Company, entered into a Consulting Agreement, pursuant to which Piccolo provides consulting services which included, but is not limited to, analysis of proposed debt and equity transactions, due diligence and financial analysis and management consulting services (“services”). The Consulting Agreement is for a period of two years, which ends on September 17, 2017. For the six months ended March 31, 2017, the Company paid $40,000 to Piccolo for such services.

In addition, A. L. Piccolo & Co., Inc. (“ALP”), which is also owned by Louis Piccolo, received a fee from Pegasus which was calculated based on amounts loaned to Pegasus by Fund Pegasus up to maximum of $700,000. The fee is payable over six years including interest at 4% per annum from Pegasus during the term of the Pegasus Operating Agreement that expired on December 28, 2016. Thereafter, it is payable by PLF and its affiliates.  Pegasus paid ALP $67,000 for the six months ended March 31, 2017 and 2016.

Note 22—Subsequent Events

On April 7, 2017, CBC, through its subsidiary BBRVII, LLC, issued approximately $18,340,000 of fixed rate asset backed notes with a yield of 5.0% and a stated maturity date of January 15, 2069 (see Note 10 – Other Debt – CBC).

On April 28, 2017, CBC entered into an Assignment Agreement (the “Assignment Agreement”) by and among CBC and an unrelated third party (Assignee”). The Assignment Agreement provided for the sale of the Company’s entire life contingent asset portfolio included in the Company’s structured settlements to the Assignee for a purchase price of $7.7 million. The Company will realize a loss from the sale of approximately $5.5 million. Accordingly, the Company reflected a $5.5 million reduction in the fair market value of these assets, resulting in a corresponding revenue loss for the three months ended March 31, 2017 in the consolidated statements of operations (see Note 6 – Structured Settlements).

On April 28, 2017, the Company renewed the line of credit facility from Bank Hapoalim with the new maturity date of August 2, 2017(see Note 9 – Non Recourse Debt). Other terms and conditions remained unchanged.

On April 28, 2017, CBC entered into the Tenth Amendment, extending the line of credit to June 30, 2017. Other terms and conditions of the Ninth Amendment, in effect as of March 31, 2017, remained unchanged (see Note 10 – Other Debt – CBC).

Stockholder Rights Agreement

On May 5, 2017, the Board of the Company adopted a stockholder rights plan (the “Rights Agreement”), pursuant to which the Company declared a dividend of one right (a “Right”) for each of the Company’s issued and outstanding shares of common stock. The dividend was paid to the stockholders of record at the close of business on May 15, 2017. Each Right entitles the holder, subject to the terms of the Rights Agreement, to purchase from the Company one one-thousandth of a share of the Company’s Series A Junior Participating Preferred Stock (the “Preferred Stock”) at a price of $28.60, subject to certain adjustments.

The Rights generally become exercisable on the earlier of (i) ten business days after any person or group obtains beneficial ownership of 10% or more of the Company’s outstanding common stock (an “Acquiring Person”), or (ii) ten business days after commencement of a tender or exchange offer resulting in any person or group becoming an Acquiring Person.

The exercise price payable, and the number of shares of Preferred Stock or other securities or property issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution. In the event that, after a person or a group has become an Acquiring Person, the Company is acquired in a merger or other business combination transaction (or 50% or more of the Company’s assets or earning power are sold), proper provision will be made so that each holder of a Right will thereafter have the right to receive, upon the exercise thereof at the then-current exercise price of the Right, that number of shares of common stock of the acquiring company having a market value at the time of that transaction equal to two times the exercise price. The Company may redeem the Rights at any time before a person or group becomes an Acquiring Person at a price of $0.01 per Right, subject to adjustment. At any time after any person or group becomes an Acquiring Person, the Company may generally exchange each Right in whole or in part at an exchange ratio of one shares of common stock per outstanding Right, subject to adjustment.

Unless terminated on an earlier date pursuant to the terms of the Rights Agreement, the Rights will expire on June 1, 2018, or such later date as may be established by the Board as long as any such extension is approved by a vote of the stockholders of the Company by June 1, 2018.

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

Caution Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21 E of the Securities Exchange Act of 1934. All statements other than statements of historical facts included or incorporated by reference in this Quarterly Report on Form 10-Q, including without limitation, statements regarding our future financial position, business strategy, budgets, projected revenues, projected costs and plans and objective of management for future operations, are forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expects,” “intends,” “plans,” “projects,” “estimates,” “anticipates,” or “believes” or the negative thereof or any variation there on or similar terminology or expressions.

We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are not guarantees and are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Important factors which could materially affect our results and our future performance include, without limitation, our ability to purchase defaulted consumer receivables at appropriate prices, changes in government regulations that affect our ability to collect sufficient amounts on our defaulted consumer receivables, our ability to employ and retain qualified employees, changes in the credit or capital markets, changes in interest rates, deterioration in economic conditions, negative press regarding the debt collection industry which may have a negative impact on a debtor’s willingness to pay the debt we acquire, and statements of assumption underlying any of the foregoing, as well as other factors set forth under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2016 and Item 1A of this Quarterly Report on Form 10-Q.

All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the foregoing. Except as required by law, we assume no duty to update or revise any forward-looking statements.

Overview

Asta Funding, Inc., together with its wholly owned significant operating subsidiaries Palisades Collection, LLC, Palisades Acquisition XVI, LLC (“Palisades XVI”), VATIV Recovery Solutions LLC (“VATIV”), ASFI Pegasus Holdings, LLC (“APH”), Fund Pegasus, LLC (“Fund Pegasus”), GAR Disability Advocates, LLC (“GAR Disability Advocates”), CBC Settlement Funding, LLC (“CBC”), Simia Capital, LLC (“Simia”) and other subsidiaries, not all wholly owned (the “Company”, “we” or “us”), is engaged in several business segments in the financial services industry, including structured settlements, through our wholly owned subsidiary, CBC, funding of personal injury claims through our 80% owned subsidiary, Pegasus Funding, LLC (“Pegasus”) and our wholly owned subsidiary, Simia, social security and disability advocacy, through our wholly owned subsidiary, GAR Disability Advocates and the business of purchasing, managing for its own account and servicing distressed consumer receivables, including charged off receivables, and semi-performing receivables. The Company started out in the consumer receivable business in 1995 as a subprime auto lender. The primary charged-off receivables are accounts that have been written-off by the originators and may have been previously serviced by collection agencies. Semi-performing receivables are accounts where the debtor is currently making partial or irregular monthly payments, but the accounts may have been written-off by the originators. Our efforts in this area have been in the international arena as we have discontinued our active purchasing of consumer receivables in the United States since 2010. We acquire these and other consumer receivable portfolios at substantial discounts to their face values. The discounts are based on the characteristics (issuer, account size, debtor location and age of debt) of the underlying accounts of each portfolio. 

GAR Disability Advocates is a social security disability advocacy firm. GAR Disability Advocates assists claimants in obtaining long term disability and supplemental security benefits from the Social Security Administration.  

Pegasus provides funding for individuals in need of short term funds pending insurance settlements of their personal injury claims. The funds are recouped when the underlying insurance settlements are paid. The long periods of time taken by insurance companies to settle and pay such claims resulting from lengthy litigation and the court process is fueling the demand for such funding.  

In November 2016, the Company formed Simia, a 100% owned subsidiary. Simia commenced funding personal injury settlement claims in January 2017. Simia was formed in response to the Company’s decision not to renew its joint venture with Pegasus Legal Funding, LLC (“PLF”), which expired at the end of December 2016. Pegasus continues to remain in operation to collect its current portfolio of advances, but has not funded any new advances after December 28, 2016. Simia is being operated by a management team, with significant experience in the personal injury funding business.

CBC invests in structured settlements and provides liquidity to consumers by purchasing certain deferred payment streams including, but not limited to, structured settlements and annuities. CBC generates business from direct marketing as well as through wholesale purchases from brokers or other third parties. CBC has its principal office in Conshohocken, Pennsylvania. CBC primarily warehouses the receivables it originates and periodically resells or securitizes those assets on a pooled basis. The structured settlement marketplace is regulated by federal and state law, requiring that each transaction is reviewed and approved by court order. 

The Company operates principally in the United States in four reportable business segments.

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Financial Information About Operating Segments

The Company operates through strategic business units that are aggregated into four reportable segments consisting of the following:

• Consumer receivables segment is engaged in the business of purchasing, managing for its own account and servicing distressed consumer receivables, including charged off and semi-performing receivables, primarily in the international sector. The charged-off receivables are accounts that have been written-off by the originators and may have been previously serviced by collection agencies. Semi-performing receivables are accounts where the debtor is currently making partial or irregular monthly payments, but the accounts may have been written-off by the originators. Distressed consumer receivables are the unpaid debts of individuals to banks, finance companies and other credit providers. These receivables were acquired at substantial discounts to their face values. The discounts are based on the characteristics (issuer, account size, debtor location and age of debt) of the underlying accounts of each portfolio. Litigation related receivables are semi-performing investments whereby the Company is assigned the revenue stream from the proceeds received. The business conducts its activities primarily under the name Palisades Collection, LLC.

• Personal injury claims – Pegasus purchased interests in personal injury claims from claimants who are a party to personal injury litigation through December 28, 2016. Pegasus advanced to each claimant funds on a non-recourse basis at an agreed upon interest rate, in anticipation of a future settlement. The interest in each claim purchased by Pegasus consists of the right to receive, from such claimant, part of the proceeds or recoveries which such claimant receives by reason of settlement, judgment or award with respect to such claimant’s claim. Effective January 2017, Simia has commenced funding personal injury settlement claims while Pegasus will not fund any new advances, and will remain in operation to liquidate its current portfolio of advances.

• Structured settlements . CBC purchases periodic structured settlements and annuity policies from individuals in exchange for a lump sum payment.

• Social Security benefit advocacy – GAR Disability Advocates is a social security disability advocacy group, which obtains and represents individuals in their claims for social security disability and supplemental security income benefits from the Social Security Administration.

Three of the Company’s business segments accounted for 10% or more of consolidated net revenue for the three and six month periods ended March 31, 2017. Three of the Company’s business segments accounted for 10% or more of consolidated net revenue for the three and six month periods ended March 31, 2016. The following table summarizes total revenues by percentage from the four lines of business for the three and six month periods ended March 31, 2017 and 2016:

	Three Month Ended						Six Month Ended
	March 31,						March 31,
	2017			2016			2017			2016
Finance income (consumer receivables)		48.6	%		46.5	%		47.5	%		44.9	%
Personal injury claims		26.0	%		17.5	%		26.4	%		22.0	%
Structured settlements		7.2	%		27.8	%		9.2	%		26.2	%
GAR Disability Advocates		18.2	%		8.2	%		16.9	%		6.9	%
Total revenues		100.0	%		100.0	%		100.0	%		100.0	%

International operations are included in the consumer receivables segment and are not significant to the overall operations of that segment.

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Information about the results of each of the Company’s reportable segments for the three and six month periods ended March 31, 2017 and 2016, reconciled to the Company’s consolidated results, are set forth below:

			Personal						GAR
(Dollars in millions)	Consumer Receivables		Injury Claims			Structured Settlements			Disability Advocates			Corporate			Total Company
Three Months Ended March 31,
2017:
Total Revenues	$	4.0	$	2.2		$	0.6		$	1.5		$	—		$	8.3
Other income		—		—			—			—			(0.7	)		(0.7	)
Income (loss) before income tax		3.5		(0.3	)		(1.9	)		(0.5	)		(10.2	)		(9.4	)
2016:
Total Revenues		4.9		1.8			3.0			0.9			—			10.6
Other income		—		—			—			—			0.4			0.4
Income (loss) before income tax		0.9		0.4			0.7			(2.7	)		(2.5	)		(3.2	)
Six Months Ended March 31,
2017:
Total Revenues		8.0		4.4			1.6			2.9			—			16.9
Other income		—		—			—			—			(0.1	)		(0.1	)
Income (loss) before income tax		6.9		(0.3	)		(3.5	)		(1.4	)		(13.9	)		(12.2	)
Total Assets		18.8		49.0			87.4			2.3			53.9			211.4
2016:
Total Revenues		10.1		4.9			5.9			1.5			—			22.4
Other income		—		—			—			—			0.9			0.9
Income (loss) before income tax		4.8		2.3			1.4			(4.5	)		(3.8	)		0.2
Total Assets		16.8		36.2			71.6			3.7			110.5			238.8

The Company does not record revenue between segments.

Consumer Receivables

The consumer receivable portfolios generally consist of one or more of the following types of consumer receivables:

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

• semi-performing receivables — accounts where the debtor is making partial or irregular monthly payments, but the accounts may have been written-off by the originators.

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 investment after 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, brokered transactions 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:

• our relationships with industry participants, financial institutions, collection agencies, investors and our financing sources;

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

• other sources.

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Litigation Funding Business

In 2011, the Company purchased an 80% interest in Pegasus. “PLF”, an unrelated third party, holds the other 20% interest. The Company is committed to loan up to $22.4 million per year to Pegasus for a term of five years, all of which is secured by the assets of Pegasus. These loans has provided financing for the personal injury litigation claims and operating expenses of Pegasus. 

The Pegasus business model entails the outlay of non-recourse advances to a plaintiff with an agreed-upon fee structure to be repaid from the plaintiff’s recovery. Typically, such advances to a plaintiff approximate 10-20% of the anticipated recovery. These funds are generally used by the plaintiff for a variety of urgent necessities, ranging from surgical procedures to everyday living expenses.

Pegasus’s profits and losses will be distributed at 80% to the Company and 20% to PLF. These distributions are made only after the repayment of Fund Pegasus’ principal amount loaned, plus an amount equal to advances for overhead expenses. 

On November 8, 2016, the Company entered into a binding Term Sheet (the “Term Sheet”) with ASFI Pegasus Holdings, LLC, Fund Pegasus, LLC, Pegasus Funding, LLC, Pegasus Legal Funding, LLC, Max Alperovich and Alexander Khanas. The Company and PLF decided not to renew the Pegasus joint venture that, by its terms, terminated on December 28, 2016. The Term Sheet amended certain provisions to Pegasus’ Operating Agreement dated as of December 28, 2011 and governs the terms relating to the liquidation of the existing Pegasus portfolio.  

Pursuant to the Term Sheet, the parties have agreed that Pegasus will continue in existence to collect advances on its Portfolio. The Company will fund overhead expenses relating to its Portfolio based on a budget agreed upon by the Company and PLF. Any cash received by Pegasus will be distributed to its members in the order provided for in the Operating Agreement. The Company will be allocated an amount equal to 20% of all principal collected on each investment paid back beginning October 1, 2016 and continuing through the collection of the Portfolio, which will be applied against the outstanding balance of overhead expenses previously advanced by the Company to Pegasus. After January 2, 2017, additional overhead expenses advanced will be paid back monthly as incurred by the Company prior to the calculation and distribution of any profits. 

In connection with the Term Sheet, the parties also entered into a customary mutual release and non-disparagement agreement as well as a release from the non-competition obligations under the Operating Agreement. 

On November 11, 2016, the Company formed Simia, a wholly owned subsidiary, in response to the Company’s decision not to renew its joint venture with PLF. Simia commenced funding personal injury settlement claims in January 2017. As of March 31, 2017, the Company’s net investment in personal injury cases was approximately $47.9 million.

In 2012, the Company announced the formation of EMIRIC, LLC , a wholly owned subsidiary of the Company. EMIRIC, LLC entered into a joint venture (the “Venture”) with California-based Balance Point Divorce Funding, LLC (“BP Divorce Funding”) to create the operating subsidiary BP Case Management, LLC (“BPCM”). BPCM is 60% owned by the Company and 40% owned by BP Divorce Funding. The Venture provides non-recourse funding to a spouse in a matrimonial action where the marital assets exceed $2,000,000. Such funds can be used for legal fees, expert costs and necessary living expenses. The Venture receives an agreed percentage of the proceeds received by such spouse upon final resolution of the case. BP Divorce Funding's profits and losses will be distributed 60% to BPCM and 40% to BP Divorce Funding, after the return of the Company’s investment on a case by case basis and after a 15% preferred return to the Company. BPCM’s initial investment in the Venture consisted of up to $15 million to fund divorce claims to be fulfilled in three tranches of $5 million each. Each investment tranche is contingent upon a minimum 15% cash-on-cash return to the Company. At the Company’s option, there could be an additional $35 million investment in divorce claims in tranches of $10 million, $10 million, and $15 million, also with a 15% preferred return and such investments may even exceed a total of $50 million, at BPCM’s sole option. Should the preferred return be less than 15% on any $5 million tranche, the 60%/40% profit and loss split would be adjusted to reflect BPCM’s priority to a 15% preferred return. As of March 31, 2017, BPCM has invested $2.0 million, net of reserve charges, in cases managed by this Venture.  

In 2012, the Company provided a $1.0 million revolving line of credit to partially fund BP Divorce Funding’s operations with such loan bearing interest at the prevailing prime rate with an initial term of twenty four months. In September 2014, the agreement was revised to extend the term of the loan to August 2016, increase the credit line to $1.5 million and include a personal guarantee of the principal of BP Divorce Funding. The revolving line of credit is collateralized by BP Divorce Funding’s profits share in the venture and other assets. Effective August 14, 2016, BPCM extended its revolving line of credit with BP Divorce Funding until March 31, 2017, at substantially the same terms as the September 2014 amendment. On April 1, 2017, BP Divorce Funding defaulted on this agreement, and as such, the loan balance of approximately $1.5 million was deemed uncollectible and was written off in general and administrative expenses on the consolidated statement of operations during the three months ended March 31, 2017.  

Structured Settlement Business

On December 31, 2013, the Company acquired 80% ownership of CBC and its affiliate, CBC Management Services, LLC, for approximately $5.9 million. In addition, the Company agreed to provide financing to CBC of up to $5.0 million, amended to $7.5 million in March 2015. On December 31, 2015, the Company acquired the remaining 20% ownership of CBC for $1.8 million, through the issuance of restricted stock valued at $1.0 million and $800,000 in cash. Each of the two original principals received 61,652 shares of restricted stock at an agreed upon market price of $8.11 per share and $400,000 in cash. An aggregate of 123,304 shares of restricted stock were issued, and $800,000 was paid.  CBC purchases periodic payments under structured settlements and annuity policies from individuals in exchange for a lump sum payment.  

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CBC has a portfolio of structured settlements which is financed by approximately $74.2 million of debt, consisting of an $18.7 million line of credit with an institutional source and $55.5 million in notes issued by CBC to third party investors. The employment contracts of the original two principals expired at the end of December 2016. The Company did not renew those contracts. Ryan Silverman was appointed CEO/General Counsel, effective January 1, 2017.

Social Security Benefit Advocacy Business

GAR Disability Advocates is a social security disability advocacy group, which represents individuals in their claims for social security disability and supplemental security income benefits from the Social Security Administration.

Critical Accounting Policies

We may account for our investments in consumer receivable portfolios, using either:

• the interest method; or

• the cost recovery method.

Our extensive liquidating experience in certain asset classes such as distressed credit card receivables, consumer loan receivables and mixed consumer receivables has matured, we use the interest method when we believe we can reasonably estimate the timing of the cash flows. In those situations where we diversify our acquisitions into other asset classes in which we do not possess the same expertise or history, or we cannot reasonably estimate the timing of the cash flows, we utilize the cost recovery method of accounting for those portfolios of receivables. 

The Company accounts for certain of its investments in finance receivables using the interest method under the guidance of FASB Accounting Standards Codification (“ASC”) Topic 310, Receivables — Loans and Debt Securities Acquired with Deteriorated Credit Quality, (“ASC 310”). Under the guidance of ASC 310, static pools of accounts are established. These pools are aggregated based on certain common risk criteria. Each static pool is recorded at cost and is accounted for as a single unit for the recognition of income, principal payments and loss provision. Due to the substantial reduction of portfolios reported under the interest method, and the inability to reasonably estimate cash collections required to account for those portfolios under the interest method, the Company concluded the cost recovery method is the appropriate accounting method under the circumstances. 

Under the guidance of ASC 310, the Company must analyze a portfolio upon acquisition to ensure which method is appropriate, and once a static pool is established for a quarter, individual receivable accounts are not added to the pool (unless replaced by the seller) or removed from the pool (unless sold or returned to the seller). 

The Company uses the cost recovery method when collections on a particular pool of accounts cannot be reasonably predicted. Under the cost recovery method, no income is recognized until the cost of the portfolio has been fully recovered. A pool can become fully amortized (zero carrying balance on the balance sheet) while still generating cash collections. In this case, all cash collections are recognized as revenue when received. 

The Company accounts for its investments in personal injury claims at an agreed upon interest rate, in anticipation of a future settlement. The interest purchased by Pegasus in each claim will consist of the right to receive from such claimant part of the proceeds or recoveries which such claimant receives by reason of a settlement, judgment or award with respect to such claimant’s claim. Open case revenue is estimated, recognized and accrued at a rate based on the expected realization and underwriting guidelines and facts and circumstances for each individual case. These personal injury claims are non-recourse. When a case is closed and the cash is received for the advance provided to a claimant, revenue is recognized based upon the contractually agreed upon interest rate, and, if applicable, adjusted for any changes due to a settled amount and fees charged to the claimant. 

CBC purchases periodic payments under structured settlements and annuity policies from individuals in exchange for a lump sum payment. The Company elected to carry structured settlements at fair value. Unearned income on structured settlements is recognized as interest income using the effective interest method over the life of the related settlement. Changes in fair value are recorded in unrealized gain (loss) in structured settlements in our statements of income. 

The Company recognizes revenue for GAR Disability Advocates when cases close and fees are collected.

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

Results of Operations

Six Months Ended March 31, 2017, Compared to the Six Months Ended March 31, 2016

Finance income. For the six months ended March 31, 2017, finance income decreased $2.1 million or 20.3% to $8.0 million from $10.1 million for the six months ended March 31, 2016. During the six months ended March 31, 2017, the Company purchased $35.0 million of face value portfolios at a cost of $2.2 million. During the first six months of fiscal year 2016, the Company purchased $121.0 million of face value portfolios at a cost of $6.2 million. Net collections for the six months ended March 31, 2017 decreased 16.2% to $12.4 million from $14.8 million for the same prior year period. During the first six months of fiscal year 2017, gross collections decreased 9.0% or $2.2 million to $22.1 million from $24.3 million for the six months ended March 31, 2016. Commissions and fees associated with gross collections from our third party collection agencies and attorneys increased $0.2 million, or 2.1%, to $9.7 million for the current fiscal six month period from $9.5 million for the six months ended March 31, 2016. Commissions and fees amounted to 44.0% of gross collections for the six month period ended March 31, 2017, compared to 39.2% in the same period of the prior year, resulting from higher percentage of commissionable collections in the current year period.

Personal injury claims income. For the six months ended March 31, 2017, personal injury claims income decreased $0.5 million or 9.8% from $4.9 million in the prior year to $4.4 million in the current year, as a result of the termination of the Pegasus joint venture, effective December 28, 2016, partially offset by income earned by Simia.

Structured settlement income. For the six months ended March 31, 2017, structured settlement income of $1.5 million includes $2.3 million of unrealized loss and $3.8 million of interest income. For the six months ended March 31, 2016, structured settlement income of $5.9 million included $3.2 million of unrealized gains and $2.7 million of interest income. This decrease in income primarily results from the reduction in fair value of $5.6 million in CBC’s life contingent annuities portfolio. Unrealized gains on structured settlements is comprised of both unrealized gains resulting from fair market valuation at the date of acquisition of the structured settlements and the subsequent fair value adjustments resulting from the change in the discount rate. Of the $2.3 million of unrealized loss recognized in the six month period ended March 31, 2017, approximately $4.3 million is due to day one gains on new structured settlements financed during the period, offset by a decrease of $1.0 million in realized gains recognized as realized interest income on structured settlements during the period and a reduction in fair value of $5.6 million in the life contingent annuities portfolio. There were no other changes in assumptions during the period.

Social security benefit advocacy fee income. For the six months ended March 31, 2017, disability fee income increased $1.4 million, or 86.5%, to $2.9 million as compared to $1.5 million for the six months ended March 31, 2016, due to the increase in the number of closed cases with the Social Security Administration. 

Other income (loss). The following table summarizes other income (loss) for the six months ended March 31, 2017 and 2016:

	March 31,
	2017			2016
Interest and dividend income	$	683,000		$	667,000
Realized (loss)/gain		(815,000	)		16,000
Other		3,000			210,000
	$	(129,000	)	$	893,000

General and administrative expenses. For the six months ended March 31, 2017, general and administrative expense increased $5.6 million, or 25.8 %, to $27.0 million from $21.4 million for the six months ended March 31, 2016, primarily due to an increase in professional fees of $2.4million, primarily related to the Mangrove matter, increase in bad debt expense of $2.1 million, and a loss on investment of $3.4 million, partially offset by the reduction in litigation settlement costs of $2.0 million.

Interest expense. For the six months ended March 31, 2017, interest expense increased $0.4 million to $1.9 million as compared to $1.5 million for the six months ended March 31, 2016. The increased interest expense is a result of the additional CBC debt incurred during the period to expand the investment in structured settlements. 

Segment profit – Consumer Receivables. For the six months ended March 31, 2017, segment profit increased $2.1 million to $6.9 million from $4.8 million for the six months ended March 31, 2016, primarily due to the reduction in litigation settlement costs of $2.0 million.

Segment loss – Personal Injury Claims. For the six months ended March 31, 2017, segment loss was $0.3 million as compared to segment profit of $2.3 million for the six months ended March 31, 2016. The decrease is primarily attributable to increased bad debt expense of $2.1 million and the termination of the Pegasus joint venture that was effective December 28, 2016.

Segment loss – Structured Settlements. For the six months ended March 31, 2017, segment loss was $3.5 million as compared to segment profit of $1.4 million for the six months ended March 31, 2016. The $4.9 million decrease in profitability was primarily in the reduction in fair value of $5.6 million on CBC’s life contingent annuities portfolio, partially offset by increased revenues derived from the investment in structured settlements of $1.1 million.

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Segment loss – GAR Disability Advocates. For the six months ended March 31, 2017, segment loss was $1.4 million as compared to a $4.5 million loss for the same period in the prior year. This reduced loss in the current period is primarily the result of increased revenues of $1.4 million and the reduction in overhead expenses.

Income tax (benefit) expense. For the six months ended March 31, 2017, income tax benefit, consisting of federal and state income taxes, was $4.9 million as compared to an income tax benefit of $0.4 million for the six months ended March 31, 2016, resulting from an increase in the taxable loss in the current period.

Net loss. As a result of the above, the Company had a net loss for the six months ended March 31, 2017 of $7.2 million compared to $0.6 million net income for the six months ended March 31, 2016.

Income attributable to non-controlling interest. The income attributable to non-controlling interest of $12,000 is the portion attributable to Pegasus for the six months ended March 31, 2017 as compared to $612,000 attributable to Pegasus and CBC for the six months ended March 31, 2016. 

Net loss attributable to Asta Funding, Inc. Net loss attributable to Asta Funding, Inc. was $7,226,000 for the six months ended March 31, 2017 as compared to a net loss of $25,000 for the six month period ended March 31, 2016.

The following table details non-controlling interest for the six months ended March 31, 2017 and 2016:

	For the Six Months Ended March 31, 2017								For the Six Months Ended March 31, 2016
				CBC		Total Non-						CBC			Total Non-
	Pegasus			Settlement		Controlling			Pegasus			Settlement			Controlling
	Funding, LLC			Funding, LLC		Interests			Funding, LLC			Funding, LLC			Interests
Balance, beginning of period	$	(645,000	)	$	—	$	(645,000	)	$	(1,768,000	)	$	771,000		$	(997,000	)
Purchase of subsidiary shares from non-controlling interest		—			—		—			—			(927,000	)		(927,000	)
Income from non-controlling interest		12,000			—		12,000			456,000			156,000			612,000
Distributions to non-controlling interest		(366,000	)		—		(366,000	)		(789,000	)		—			(789,000	)
Balance, end of period	$	(999,000	)	$	—	$	(999,000	)	$	(2,101,000	)	$	—		$	(2,101,000	)

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Three Months Ended March 31, 2017, Compared to the Three Months Ended March 31, 2016

Finance income. For the three months ended March 31, 2017, finance income decreased $0.9 million or 18.2% to $4.0 million from $4.9 million for the three months ended March 31, 2016. During the three months ended March 31, 2017, the Company did not purchase any portfolios. During the three months ended March 31, 2016, the Company purchased $24.8 million in face value of new portfolios at a cost of $1.7 million. Net collections for the three months ended March 31, 2017, decreased 19.7% to $6.0 million from $7.5 million for the three months ended March 31, 2016. During the second quarter of fiscal year 2017, gross collections decreased 14.3% or $1.8 million to $10.6 million from $12.4 million for the three months ended March 31, 2016. Commissions and fees associated with gross collections from third party collection agencies and attorneys decreased to $4.6 million for the three months ended March 31, 2017 from $4.9 million for the three months ended March 31, 2016. Commissions and fees amounted to 43.4% of gross collections for the three months ended March 31, 2017, compared to 39.6% for the three months ended March 31, 2016, resulting from higher percentage of commissionable collections in the current period.

Personal injury claims income. For the three months ended March 31, 2017, personal injury claims income increased $0.4 million to $2.2 million as compared to $1.8 million for the three months ended March 31, 2016, reflecting an increase in the investment in the personal injury claims portfolio.

Structured settlement income. For the three months ended March 31, 2017, structured settlement income of $0.6 and included $1.7 million of unrealized gains and $1.9 million of interest income offset by a reduction in fair value of $3.0 million on CBC’s life contingent annuities portfolio. For the three months ended March 31, 2016, structured settlement income of $2.9 million included $1.6 million of unrealized gains and $1.3 million of interest income. Unrealized gains on structured settlements is comprised of both unrealized gains resulting from fair market valuation at the date of acquisition of the structured settlements and the subsequent fair value adjustments resulting from the change in the discount rate. Of the $1.3 million of unrealized losses recognized in the three months ended March 31, 2017, approximately $2.2 million is due to day one gains on new structured settlements financed during the period, partially offset by a decrease of $0.5 million in realized gains recognized as interest income on structured settlements and a reduction in fair value of $3.0 million in the life contingent annuities portfolio during the period. There were no other changes in assumptions during the period.

Social security benefit advocacy fee income. For the three months ended March 31, 2017, disability fee income increased $0.6 million to $1.5 million as compared to $0.9 million for the three months ended March 31, 2016, due to an increase in cases closed with the Social Security Administration.

Other income (loss). The following table summarizes other income (loss) for the three months ended March 31, 2017 and 2016:

	March 31,
	2017			2016
Interest and dividend income	$	278,000		$	172,000
Realized loss		(948,000	)		—
Other		(18,000	)		206,000
	$	(688,000	)	$	378,000

General and administrative expenses. For the three months ended March 31, 2017, general and administrative expense increased $2.8 million, or 21.1 %, to $16.0 million from $13.2 million for the three months ended March 31, 2016, primarily attributable to loss on investments of $3.4 million, increase in professional fees of $1.0 million related to the Mangrove matter, increased bad debt expense of $1.7 million, partially offset by the reduction in litigation settlement costs of $2.0 million, and $1.5 million reduction in GAR Disability overhead costs .

Interest expense. For the three months ended March 31, 2017, interest expense increased $0.1 million to $0.9 million as compared to $0.8 million for the three months ended March 31, 2016. The increased interest expense in the current period is the result of the additional CBC debt incurred to expand the investment in structured settlements.

Segment profit – Consumer Receivables. For the three months ended March 31, 2017, segment profit increased $2.6 million to $3.5 million as compared to $0.9 million for the three months ended March 31, 2016, primarily due to the reduction in litigation settlement costs of $2.0 million.

Segment loss– Personal Injury Claims. For the three months ended March 31, 2017, segment loss was $0.3 million as compared to $0.4 million profit for the three months ended March 31, 2016. The decrease is primarily attributable to the increase in bad debt expense of $1.2 and the termination of the Pegasus joint venture that was effective December 28, 2016.

Segment loss– Structured Settlement . For the three months ended March 31, 2017, segment loss was $1.9 million as compared to $0.7 million profit for the three months ended March 31, 2016. The $2.6 million decrease is a result of a reduction in fair value of $3.0 million on CBC’s life contingent annuities portfolio and increased interest expense partially offset by higher revenues derived from the increased investment in structured settlements.

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Segment loss – GAR Disability Advocates. For the three months ended March 31, 2017, segment loss was $0.5 million as compared to a $2.7 million loss for the same period in the prior year. This reduced loss in the current fiscal year is primarily the result of increased revenues of $0.6 million and the reduction in overhead costs.

Income tax (benefit) expense. For the three months ended March 31, 2017, income tax benefit, consisting of federal and state components, was $3.8 million as compared to income tax benefit of $1.4 million for the three months ended March 31, 2016, resulting from an increase in the taxable loss for the current period.

Net (loss) income. As a result of the above, for the three months ended March 31, 2017, the Company had a net loss of $5.6 million as compared to a net loss of $1.7 million for the three months ended March 31, 2016.

Income attributable to non-controlling interest. The loss attributable to non-controlling interest of $9,000 is the portion of results attributable to Pegasus for the three months ended March 31, 2017, as compared to income attributable to non-controlling interest of $83,000 income for the three months ended March 31, 2016.

Net (loss) income attributable to Asta Funding, Inc. Net loss attributable to Asta Funding, Inc. was $5.6 million for the three months ended March 31, 2017 as compared to a net loss of $1.8 million for the three month period ended March 31, 2016.

The following table details non-controlling interest for the three months ended March 31, 2017 and 2016:

	For the Three Months Ended March 31, 2017						For the Three Months Ended March 31, 2016
				Total						Total
	Pegasus			Non-Controlling			Pegasus			Non-Controlling
	Funding, LLC			Interests			Funding, LLC			Interests
Balance, beginning of period	$	(804,000	)	$	(804,000	)	$	(1,833,000	)	$	(1,833,000	)
Income from non-controlling interest		(9,000	)		(9,000	)		83,000			83,000
Distributions to non-controlling interest		(186,000	)		(186,000	)		(351,000	)		(351,000	)
Balance, end of period	$	(999,000	)	$	(999,000	)	$	(2,101,000	)	$	(2,101,000	)

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Liquidity and Capital Resources

Our primary source of cash from operations is collections on the receivable portfolios we have acquired and the funds generated from the personal injury claims and structured settlement business segments. Our primary uses of cash include repayments of debt and associated interest payment, purchases of structured settlements and advances of personal injury claims, costs involved in the collection of consumer receivables, taxes and to support the day-to-day operations of the Company.

Receivables Financing Agreement (“RFA”)

In March 2007, Palisades XVI borrowed approximately $227 million under the RFA, as amended in July 2007, December 2007, May 2008, February 2009, October 2010 and August 2013 from BMO, in order to finance the Portfolio Purchase which had a purchase price of $300 million. The original term of the agreement was three years. This term was extended by each of the Second, Third, Fourth, and Fifth Amendments and the most recent agreement signed in August 2013, discussed below.

Financing Agreement. The Settlement Agreement and Omnibus Amendment (“Settlement Agreement”) was in effect on August 7, 2013, Palisades XVI, a 100% owned bankruptcy remote subsidiary, entered into a Settlement Agreement with BMO as an amendment to the RFA. In consideration for a $15 million prepayment funded by the Company, BMO has agreed to significantly reduce minimum monthly collection requirements and the interest rate. If and when BMO were to receive the next $15 million of collections from the Portfolio Purchase, (the “Remaining Amount”) less certain credits for payments made prior to the consummation of the Settlement Agreement, the Company would be entitled to recover from future net collections the $15 million prepayment that it funded. Thereafter, BMO would have the right to receive 30% of future net collections. Upon repayment of the Remaining Amount to BMO, the Company would be released from the remaining contractual obligation of the RFA and the Settlement Agreement.

On June 3, 2014, Palisades XVI finished paying the Remaining Amount. The final principal payment of $2.9 million included a voluntary prepayment of $1.9 million provided from funds of the Company. Accordingly, Palisades XVI was entitled to receive $16.9 million of future collections from the Portfolio Purchase before BMO is entitled to receive any payments with respect to its Income Interest. During the month of June 2016, the Company received the balance of the $16.9 million, and, as of March 31, 2017, the Company recorded a liability to BMO of approximately $0.2 million. The liability to BMO is recorded when actual collections are received. 

Bank Hapoalim B.M. (“Bank Hapoalim”) Line of Credit

On May 2, 2014, the Company obtained a $20 million line of credit facility from Bank Hapoalim, pursuant to a Loan Agreement (the “Loan Agreement”) among the Company and its subsidiary, Palisades Collection, LLC, as borrowers, and Bank Hapoalim, as agent and lender. The Loan Agreement provides for a $20.0 million committed line of credit and an accordion feature providing an increase in the line of credit of up to $30 million, at the discretion of the lenders. The facility is for a term of three years at an interest rate of either LIBOR plus 275 basis points or prime, at the Company’s option. The Loan Agreement includes covenants that require the Company to maintain a minimum net worth of $150 million and pay an unused line fee. The facility is secured pursuant to a Security Agreement among the parties to the Loan Agreement. On March 30, 2016, the Company signed the First Amendment to the Loan Agreement (the “First Amendment”) with Bank Hapoalim which amended certain terms of their banking arrangement. The First Amendment includes (a) the reduction of the interest rate to LIBOR plus 225 basis points; (b) a decrease in the minimum net worth requirement by $50 million, to $100 million and (c) modifies the No Net Loss requirement from a quarterly to an annual basis. All other terms of the original agreement remain in effect. The Company has $9.6 million as outstanding balance against the facility as of March 31, 2017. There is a $10.1million aggregate balance on deposit at Bank Hapoalim which has been reclassified to restricted cash in the consolidated balance sheet since these assets serve as collateral for the line of credit. On April 28, 2017, the Company renewed the line of credit facility with the new maturity date of August 2, 2017, under the existing terms and conditions as of March 31, 2017

Tender Offer of Company Common Shares

On March 22, 2016, MPF InvestCo 4, LLC, a wholly owned subsidiary of The Mangrove Partners Master Fund, Ltd. ("Mangrove"), filed a Tender Offer Statement with the SEC, announcing the commencement of an unsolicited tender offer to acquire up to 3,000,000 shares of Asta common stock at price of $9.00 per share (“the Mangrove Offer”). The Mangrove Offer was sent to the holders of common stock of the Issuer. If the Offer is fully subscribed, the Mangrove Offer would represent approximately 25.0% of the issued and outstanding Shares and would result in Mangrove owning an aggregate of approximately 5,102,427 Shares, which would represent approximately 42.5% of issued and outstanding Shares, based on the 12,011,476 Shares, issued and outstanding as of March 31, 2016.

On March 31, 2016, the Company announced that its Board of Directors, after careful consideration and in consultation with a special committee of the Board and its financial and legal advisors, has unanimously determined to recommend that shareholders reject the Mangrove Offer. Furthermore, the Company has announced its intention to commence an issuer tender offer for 3,000,000 shares of Asta common stock pursuant to a "Dutch Auction" format at a price range of $9.50 to $10.25 per share.

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On April 15, 2016, Mangrove amended its previously announced unsolicited tender offer to acquire up to 3,000,000 shares of Asta’s common stock, increasing the price per share from $9.00 to $9.50, and extending the expiration date to May 9, 2016. In addition, the amendment added certain additional conditions to Mangrove’s obligation to consummate its offer. On April 21, 2016, The Company’s Board of Directors unanimously reaffirmed its recommendation to shareholders that they reject the unsolicited offer, citing the fact that the increased offer is still at the bottom of the range in the Company’s self-tender, as described above.

On April15, 2016, MPF InvestCo 4, LLC and Mangrove Master Fund (“Mangrove”) amended its previously announced unsolicited tender offer to acquire up to 3,000,000 shares of Asta’s common stock, increasing the price per share from $9.00 to $9.50, and extending the expiration date to May 9, 2016. In addition, the amendment added certain additional conditions to Mangrove’s obligation to consummate its offer. On April 21, 2016, The Company’s Board of Directors unanimously reaffirmed its recommendation to shareholders that they reject the unsolicited offer, citing the fact that the increased offer is still at the bottom of the range in the Company’s self-tender, as described above. On April 26, 2016, Mangrove announced the termination of its Tender Offer, previously due to expire on May 9, 2016. Mangrove terminated its offer because it determined that a condition of the offer would not be satisfied. None of the shares of the Company’s common stock were purchased under the Mangrove offer.

The Company’s Tender offer expired on May 12, 2016.

On January 19, 2017, the Company commenced a self-tender offer to purchase for cash up to 5,314,009 shares of its common stock at a purchase price of $10.35 per share, less applicable withholding taxes and without interest. The Company made the tender offer pursuant to the Settlement Agreement dated as of January 6, 2017, by and among the Company, Mangrove and certain of their respective affiliates, pursuant to which Mangrove and its affiliates will tender their 4,005,701 shares. The tender offer will reduce the number of shares in the public market.  

If more than 5,314,009 shares had been tendered, the Company would have purchased all tendered shares on a pro rata basis, subject to the conditional tender provisions described in the Offer to Purchase. Pursuant to the Settlement Agreement, Gary Stern (or his permitted assignees) had unconditionally agreed to purchase from Mangrove and its affiliates any shares owned by Mangrove and its affiliates that the Company did not purchase in the tender offer.

The tender offer expired on February 15, 2017, at 11:59 p.m., New York City time. Based on the final count by American Stock Transfer & Trust Company, LLC ("AMSTOCK"), the depositary for the tender offer, a total of approximately 6,022,253 shares of the Company’s common stock were validly tendered and not validly withdrawn. Because the tender offer was oversubscribed by 708,244 shares, the Company purchased only a prorated portion of the shares properly tendered by each tendering stockholder. The depositary had informed the Company that the final proration factor for the tender offer is approximately 88.24% of the shares validly tendered and not validly withdrawn. AMSTOCK promptly issued payment for the 5,314,009 shares accepted pursuant to the tender offer and returned all other shares tendered and not purchased. The shares acquired represented approximately 44.7% of the total number of shares of the Company’s common stock issued and outstanding as of February 6, 2017. As a result of this tender offer the Company recorded an additional $54.2 million in treasury stock and an $0.8 million charge to general and administrative expense for the three months ended March 31, 2017. Additionally, the Ricky Stern Family 2012 Trust (Gary Stern's permitted assignee) acquired 471,086 Shares under the Purchase Agreement with Mangrove and its affiliates on March 10, 2017 for $4.9 million.

 Personal Injury Claims

On December 28, 2011, we formed a joint venture Pegasus Funding, LLC (“Pegasus”) with Pegasus Legal Funding, LLC (“PLF”). Pegasus purchases interests in personal injury claims from claimants who are a party to personal injury litigation with the expectation of a settlement in the future. Pegasus advances to each claimant funds on a non-recourse basis at an agreed upon interest rate in anticipation of a future settlement. The interest purchased by Pegasus in each claim will consist of the right to receive from such claimant part of the proceeds or recoveries which such claimant receives by reason of a settlement, judgment or award with respect to such claimant’s claim. The profits from the joint venture are distributed based on the ownership percentage of the parties — Asta Funding, Inc. 80% and PLF, 20%. 

On November 8, 2016, the Company entered into a binding Term Sheet (the “Term Sheet”) with Pegasus and PLF. The Company and PLF have decided not to renew the Pegasus joint venture that by its terms terminates on December 28, 2016. The Term Sheet amends certain provisions to Pegasus’ operating agreement dated as of December 28, 2011 (as amended, the “Operating Agreement”) and governs the terms relating to the collection of its existing Pegasus portfolio (the “Portfolio”).

Pursuant to the Term Sheet, the parties thereto have agreed that Pegasus will continue in existence in order to collect advances on its existing Portfolio. The Company will fund overhead expenses relating to the collection of the Portfolio based on a budget agreed upon by the Company and PLF. Any cash received by Pegasus will be distributed to its members in the order provided for in the Operating Agreement. The Company will be allocated an amount equal to 20% of all principal collected on each investment paid back beginning October 1, 2016 and continuing through the collection of the Portfolio, which will be applied against the outstanding balance of overhead expenses previously advanced by the Company to Pegasus. After January 2, 2017, additional overhead expenses advanced will be paid back monthly as incurred by the Company prior to the calculation and distribution of any profits.  

In connection with the Term Sheet, the parties thereto have also entered into a customary mutual release and non-disparagement agreement as well as a release from the non-competition obligations under the Operating Agreement. 

On May 9, 2017, Pegasus collected approximately $18 million from a group of claimants on a class action lawsuit that recently settled.

On November 11, 2016, the Company announced that it will continue its personal injury claims funding business through the formation of a wholly owned subsidiary, Simia. In connection with its formation, Simia entered into an employment agreement with Patrick F. Preece to serve as its Chief Executive Officer.

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On March 24, 2017, Simia purchases a portfolio of personal injury claims from a third party for approximately $3.0 million, The Company plans to grow the business organically, but may from time to time purchase portfolios of personal injury claims from third parties if the opportunity presented aligns with the Company's strategic growth plans.

Divorce Funding

On May 8, 2012, the Company formed EMIRIC, LLC, a wholly owned subsidiary of the Company. EMIRIC, LLC entered into a joint venture with California-based Balance Point Divorce Funding, LLC (“BP Divorce Funding”) to create BP Case Management, LLC (“BPCM”). BPCM is 60% owned by the Company and 40% owned by BP Divorce Funding. BPCM provides non-recourse funding to a spouse in a matrimonial action. The Company provides a $1.5 million revolving line of credit to partially fund BP Divorce Funding’s operations, with such loan bearing interest at the prevailing prime rate, with an initial term of twenty-four months. The term of the loan was to end in May 2014, but had been extended to August 2016. Effective August 14, 2016, the Company extended its revolving line of credit with Balance Point until March 31, 2017, at substantially the same terms as the September 14, 2014 amendment. The revolving line of credit is collateralized by BP Divorce Funding’s profit share in BPCM and other assets. On April 1, 2017, this loan was in default as BPCM failed to make the required payments due under the loan agreement. Accordingly, the loan balance of $1.5 million was deemed uncollectible and written off during the second quarter with a charge to general and administrative expenses for the three months ended March 31, 2017.

Structured Settlements

On December 31, 2013, the Company acquired 80% ownership of CBC and its affiliate, CBC Management Services, LLC for approximately $5.9 million. At the closing, the operating principals of CBC, namely William J. Skyrm, Esq. and James Goodman, were each issued a 10% interest in CBC. In addition, the Company agreed to provide financing to CBC of up to $5 million, amended to $7.5 million in March 2015. Through the transaction we acquired structured settlements valued at $30.4 million and debt that totaled $23.4 million, consisting of $9.6 million of a revolving line of credit with a financial institution and $13.8 million of non-recourse notes issued by CBC’s subsidiaries. On December 31, 2015, the Company acquired the remaining 20% ownership of CBC for $1,800,000, through the issuance of restricted stock valued at approximately $1,000,000 and $800,000 in cash. Each of the two original principals received 61,652 shares of restricted stock at fair market value of $7.95 per share and $400,000 in cash. An aggregate of 123,304 shares of restricted stock was issued. As of March 31, 2017, CBC had structured settlements valued at $90.4 million and debt of $74.2 million, consisting of an $18.7 million line of credit and an aggregate of $55.5 million of non-recourse notes.

In April 2017, CBC sold off substantially all of its life contingent assets to a third party for $5.0 million, resulting in a realized loss of approximately $5.6 million. The life contingent assets sold in April 2017 have been adjusted in the Company's consolidated balance sheet to their net realized value of this transaction as of March 31, 2017.

Cash Flow

As of March 31, 2017, our cash and cash equivalents decreased $8.0 million to $10.5 million from $18.5 million at September 30, 2016 which includes an $10.1 million reclassification from cash and cash equivalents to restricted cash. 

Net cash used in operating activities was $7.7 million during the six months ended March 31, 2017 compared to $2.4 million used in operating activities during the six months ended March 31, 2016. Net cash provided by investing activities was $47.9 million during the six month period ended March 31, 2017 compared to $0.7 million used in investing activities during the six months ended March 31, 2016, primarily from the proceeds from the sale of available for sale securities, $44.7 million, and a decrease in the purchase of assets acquired for liquidation, $3.9 million, in the current year. Net cash used in financing activities was $48.3 million in the six month period ended March 31, 2017, as compared to cash used in financing activities of $1.3 million in the six months ended March 31, 2016. The increase of financing activities in the current period is primarily the result of the purchase of treasury stock in conjunction with the Company’s self-tender, $46.6 million, and the reclassification of $10.1 million of cash collateralization for the Company’s line of credit with Bank Hapoalim to restricted cash in the consolidated balance sheet, substantially offsets the $9.6 million borrowed from the same financial institution.

Our cash requirements have been and will continue to be significant and include external financing to operate various lines of business. Significant requirements include investment in personal injury claims, investment in structured settlements, costs involved in the collections of consumer receivables, repayment of CBC debt and investment in consumer receivable portfolios. We believe we may secure credit facilities with financial institutions as we look to grow the Company, support current operations, and execute on our short and long term business initiatives. In the short-term, as our cash balances will be sufficient to invest in personal injury claims, purchase portfolios and finance the disability advocacy business. Structured settlements are financed through the use of a credit line, warehouse facility, and private placement financing.

We believe our available cash resources and expected cash flows from operations will be sufficient to fund operations for the next twelve months. We do not expect to incur any material capital expenditures during the next twelve months. The Company used a portion of its cash and cash equivalents on hand to fund the purchase of shares in the tender offer. Further, the Company has an available line of credit from Bank of Hapoalim of up to $30 million that can be used for working capital purposes, if needed. Currently, the Company has $9.6 million outstanding on this line of credit.

We are cognizant of the current market fundamentals in the debt purchase and company acquisition markets which, because of significant supply and tight capital availability, could result in increased buying opportunities. The outcome of any future transaction(s) is subject to market conditions. In addition, due to these opportunities, we continue to seek opportunities with banking organizations and others on a possible financing loan facility.

Off Balance Sheet Arrangements

As of March 31, 2017, we did not have any relationships with unconsolidated entities or financial partners, established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

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Additional Supplementary Information:

We do not anticipate collecting the majority of the purchased principal amounts of our various portfolios. 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 additional information regarding our methods of accounting for our investment in finance receivables, the qualitative and quantitative factors we use to determine estimated cash flows, and our performance expectations of our portfolios, see “ Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies ” above.

Recent Accounting Pronouncements

In May 2014, the FASB issued an update to ASC 606, Revenue from Contracts with Customers, that will supersede virtually all existing revenue guidance. Under this update, an entity is required to recognize revenue upon transfer of promised goods or services to customers, in an amount that reflects the entitled consideration received in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from the customer contracts. This update is effective for annual reporting periods beginning after December 15, 2017 including interim periods within that reporting period. Early application is permitted for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Based on the Company’s evaluation, the Company does not believe this new standard will impact the accounting for its revenues.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10) Recognition and Measurement of Financial Assets and Financial Liabilities. The main objective in developing this update is enhancing the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The amendments in this update address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The effective date for this update is for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently evaluating the impact this update will have on its consolidated financial statements. 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) to amend lease accounting requirements and requires entities to generally recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use assets. The new standard will require significant additional disclosures about the amount, timing and uncertainty of cash flows from leases. The standard update is effective for fiscal years beginning after December 15, 2018 and interim periods within those years and early adoption is permitted. The standard is to be applied using a modified retrospective approach and includes a number of optional practical expedients that entities may elect to apply. The Company is currently evaluating the impact of adopting this update on its consolidated financial statements and expects that most of its operating leases will be recognized as operating lease liabilities and right-of-use assets upon adoption. 

In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718) Improvements to Employee Share Based Payment Accounting, to simplify and improve areas of generally accepted accounting principles for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. The effective date for this update is for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently evaluating the impact this update will have on its consolidated financial statements. 

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.  The ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.  For the Company, this update will be effective for interim periods and annual periods beginning after December 15, 2019. Upon adoption, the Company will accelerate the recording of its credit losses in its financial statements. 

 In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.  This ASU will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2017. Early adoption is permitted. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case the Company would be required to apply the amendments prospectively as of the earliest date practicable. The Company is in the process of evaluating the provisions of the ASU, but does not expect it to have a material effect on the Company’s consolidated statements of cash flows.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to various types of market risk in the normal course of business, including the impact of interest rate changes and foreign exchange rates and changes in corporate tax rates. At March 31, 2017, the debt associated with our acquisition of CBC, had a balance of approximately $74.2 million, consisting of $18.7 million through a line of credit, at a rate of LIBOR plus 3%, with a floor of 4.1%, from a financial institution, and $55.5 million of notes at varying rates, from 4.85% to 8.75%, issued by CBC’s subsidiaries. At March 31, 2017, the LIBOR rate was 0.98278%. A 25 basis point change in the LIBOR rate would have had an immaterial impact on the CBC line of credit interest expense, while above the floor rate (4.23278 %) would have an effect less than a month. The same 25 basis point change in the LIBOR rate would have had approximately $2,000 impact on the Bank Hapoalim line of credit interest expense . We do not currently invest in derivative financial or commodity instruments.

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Item 4. Controls and Procedures

a. Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Under the supervision and with the participation of our management, including its principal executive officer and principal financial officer, we conducted an assessment of the effectiveness of its internal control over financial reporting. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO 2013”) in Internal Control — Integrated Framework, issued in 2013. Based on management’s assessment, and based on the criteria in COSO 2013, we concluded that our disclosure controls and procedures were not effective as ofMarch 31, 2017. The Company restated its results of operations for the quarter ended December 31, 2016 to reflect the quarterly increase in certain underlying benchmark interest rates used in determining fair value of the Company’s structured settlements. As a result of this misstatement, the Company concluded there was a previously undetected material weakness in the Company’s internal control over financial reporting.

b. Changes in Internal Controls over Financial Reporting.

There have been certain improvements in our internal control over financial reporting during the six months ended March 31, 2017. Since the determination regarding the above material weakness, we have devoted significant effort and resources to remediation and improvement of our internal control over financial reporting. Management will continue to review and make necessary changes to the overall design of our internal control.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

In the ordinary course of our business, we are involved in numerous legal proceedings. We regularly initiate collection lawsuits, using third party law firms, against consumers. Also, consumers occasionally initiate litigation against us, in which they allege that we have violated a federal or state law in the process of collecting on their account. We do not believe that these ordinary course matters are material to our business and financial condition. As of the date of this report, we were not involved in any material litigation in which we were a defendant.

Originators, debt purchasers and third-party collection agencies and attorneys in the consumer credit industry are frequently subject to putative class action lawsuits and other litigation. Claims include failure to comply with applicable laws and regulations and improper or deceptive origination and servicing practices. Being a defendant in such class action lawsuits or other litigation could materially adversely affect our results of operations and financial condition. Currently, the Company has set up a reserve for settlement costs of $2.3 million to cover a class action lawsuit.

Legal proceedings are subject to substantial uncertainties concerning the outcome of material factual and legal issues relating to the litigation. Accordingly, we cannot currently predict the manner and timing of the resolution of some of these matters and may be unable to estimate a range of possible losses or any minimum loss from such matters.

Item 1A. Risk factors

For a discussion of our potential risks and uncertainties, see the information previously disclosed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K, for the year ended September 30, 2016 filed with the SEC on December 14, 2016. There have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K. 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Default Upon Senior Securities

None

Item 4. Mine Safety Disclosures

None

Item 5. Other Information

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Item 6. Exhibits

(a) Exhibits.

3.1	Certificate of Incorporation. (1)
3.2	Amendment to Certificate of Incorporation. (2)
3.3	Amended and Restated Bylaws. (3)
3.4	Certificate of Designations of Series A Junior Participating Preferred Stock (7)
10.1	Term Sheet (4)
10.2	Employment Agreement (5)
10.3	Rights Agreement (6)
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, Bruce R. Foster, 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, Bruce R. Foster, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation
101.DEF	XBRL Taxonomy Extension Definition
101.LAB	XBRL Taxonomy Extension Labels
101.PRE	XBRL Taxonomy Extension Presentation

(1) The certificate of Incorporation of Asta Funding, Inc. was previously filed as Exhibit 3.1 to Asta Funding’s Registration Statement on Form SB-2 (File No. 33-97212), but is being re-filed as an Exhibit to this Quarterly Report on Form 10-Q to make it available on the Electronic Data Gathering, Analysis and Retrieval website.

(2) Incorporated by reference to Exhibit 3.1(a) to Asta Funding’s Quarterly Report on Form 10-Q filed on May 15, 2002.

(3) Incorporated by reference to Exhibit 3.3 to Asta Funding’s Quarterly Report on Form 10-Q filed on August 9, 2016.

(4) Incorporated by reference to Exhibit 10.1 to Asta Funding’s Current Report on Form 8-K filed on November 11, 2016.

(5) Incorporated by reference to Exhibit 10.2 to Asta Funding’s Current Report on Form 8-K filed on November 11, 2016.

(6)	Incorporated by reference to Exhibit 10.3 to Asta Funding’s Current Report on Form 8-K filed on May 5, 2017.
(7)	Incorporated by reference to Exhibit 3.2 to Asta Funding's Current Report on Form 8-K filed on May 5, 2017.

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SIGNATURES

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

	ASTA FUNDING, INC. (Registrant)
Date: May 26, 2017	By:	/s/ Gary Stern
		Gary Stern, President, Chief Executive Officer
		(Principal Executive Officer)
Date: May 26, 2017	By:	/s/ Bruce R. Foster
		Bruce R. Foster , Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

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EXHIBIT INDEX 

Exhibit Number	Description
3.1	Amended and Restated Certificate of Incorporation. (1)
3.2	Amendment to Certificate of Incorporation. (2)
3.3	Amended and Restated Bylaws. (3)
3.4	Certificate of Designations of Series A Junior Participating Preferred Stock (7)
10.1	Term Sheet (4)
10.2	Employment Agreement (5)
10.3	Rights Agreement (6)
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, Bruce R. Foster, 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, Bruce R. Foster, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation
101.DEF	XBRL Taxonomy Extension Definition
101.LAB	XBRL Taxonomy Extension Labels
101.PRE	XBRL Taxonomy Extension Presentation

(1) The certificate of Incorporation of Asta Funding, Inc. was previously filed as Exhibit 3.1 to Asta Funding’s Registration Statement on Form SB-2 (File No. 33-97212), but is being re-filed as an Exhibit to this Quarterly Report on Form 10-Q to make it available on the Electronic Data Gathering, Analysis and Retrieval website.

(2) Incorporated by reference to Exhibit 3.1(a) to Asta Funding’s Quarterly Report on Form 10-Q filed on May 15, 2002.

(3) Incorporated by reference to Exhibit 3.3 to Asta Funding’s Quarterly Report on Form 10-Q filed on August 9, 2016.

(4) Incorporated by reference to Exhibit 10.1 to Asta Funding’s Current Report on Form 8-K filed on November 11, 2016.

(5) Incorporated by reference to Exhibit 10.2 to Asta Funding’s Current Report on Form 8-K filed on November 11, 2016.

(6)	Incorporated by reference to Exhibit 10.3 to Asta Funding’s Current Report on Form 8-K filed on May 5, 2017.
(7)	Incorporated by reference to Exhibit 3.2 to Asta Funding's Current Report on Form 8-K filed on May 5, 2017.

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EX-3.1

                                         Exhibit 3.1

CERTIFICATE OF INCORPORATION
OF
ASTA FUNDING, INC.

FIRST :          The name of the Corporation is ASTA FUNDING, INC (hereinafter the “Corporation”).

SECOND :    The address of the registered office of the Corporation in the State of Delaware is 32 Loockerman Square, Suite L-100 City of Dover, County of Kent. The name of its registered agent at that address is The Prentice-Hall Corporation System, Inc.

THIRD :        The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware Code (the “GCL”).

FOURTH :    The total number of shares of stock which the Corporation shall have authority to issue is 10,000,000 shares of Common Stock, par value one cent ($.01) per share.

FIFTH :         The name and mailing address of the Sole Incorporator is as follows:

Name	Mailing Address
Madeline A. Stirber	250 Park Avenue New York, NY 10177

SIXTH :        The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:

(1)      The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.

(2)      The directors shall have concurrent power with the stockholders to make, alter, amend, change, add to or repeal the By-Laws of the Corporation.

(3)      The number of directors of the Corporation shall be as from time to time fixed by, or in the manner provided in, the By-Laws of the Corporation. Election of directors need not be by written ballot unless the By-Laws so provide.

(4)      No director shall be personally liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the GCL, or (iv) for any transaction from which the director derived an improper personal benefit. If the GCL shall hereafter be amended so as to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the Corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the GCL, as then amended. Any repeal or modification of this Article SIXTH (4) by the stockholders of the Corporation shall not adversely affect any right of protection of a director of the Corporation existing at the time of such repeal or modification with respect to acts or omissions occurring prior to such repeal or modification.

(5)      The directors of the Corporation in their discretion may submit any contract or act for approval or ratification at any annual meeting of the stockholders or at any meeting of the stockholders called for the purpose of considering any such act or contract, and any contract or act that shall be approved or ratified by the vote of the holders of a majority of the voting power of the stock of the Corporation which is represented in person or by proxy at such meeting and entitled to vote thereat (provided that a lawful quorum of stockholders be there represented in person or by proxy) shall be as valid and as binding upon the Corporation and upon all the stockholders as though it had been approved or ratified by every stockholder of the Corporation, whether or not the contract or act would otherwise be open to legal attack because of directors’ interest, or for any other reason.

(6)      In addition to the powers and authority hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the GCL, this Certificate of Incorporation, and any By-Laws adopted by the stockholders; provided, however, that no By-Laws hereafter adopted by the stockholders shall invalidate any prior act of the directors which would have been valid if such By-Laws had not been adopted.

SEVENTH :     (a) The Corporation shall indemnify and hold harmless each director and officer of the Corporation and all of such directors and officers to the fullest extent permitted by the GCL as the same currently exists or may hereafter be amended.

(b)      Expenses incurred by an officer or director in defending a civil or criminal action, suit or proceeding brought by any party other than the Corporation against any such officer, director or any person who has ceased to serve as such, in respect of any such person’s acts or actions in his official capacity with the Corporation, shall be advanced by the Corporation poor to final disposition of the action.

(c)      The indemnification and advancement of expenses provided by this Article SEVENTH shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any By-Law, agreement, vote of stockholders or disinterested directors, or otherwise, and shall inure to the benefit of the heirs, executors and administrators of any person entitled to indemnification to the fullest extent permitted by the GCL as the same currently exists or may hereafter be amended.

EIGHTH :     Meetings of stockholders may be held within or without the State of Delaware, as the By-Laws may provide. The books of the Corporation may be kept (subject to any provision contained in the GCL) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the By-Laws of the Corporation.

NINTH :       The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon the stockholders herein are granted subject to this reservation.

I, THE UNDERSIGNED, being the Sole Incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the GCL, do make this Certificate, hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 2 day of August, 1995.

/s/ Madeline A. Stirber                                          

Madeline A. Stirber, Sole Incorporator

- 2 -

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER 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-Q of Asta Funding, Inc.;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d — 15(f) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 26, 2017

/s/ Gary Stern

Gary Stern

Chairman, President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Bruce R. Foster, certify that:

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

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 26, 2017

/s/ Bruce R. Foster

Bruce R. Foster

Chief Financial Officer and Chief Accounting Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Asta Funding, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2017, filed with the Securities and Exchange Commission (the “Report”), I, Gary Stern, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the consolidated financial condition of the Company as of the dates presented and the consolidated result of operations of the Company for the periods presented.

Dated: May 26, 2017

/s/ Gary Stern

Gary Stern

Chairman, President and Chief Executive Officer

(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Asta Funding, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2017, filed with the Securities and Exchange Commission (the “Report”), I, Bruce R. Foster, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the consolidated financial condition of the Company as of the dates presented and the consolidated result of operations of the Company for the periods presented.

Dated: May 26, 2017

/s/ Bruce R. Foster

Bruce R. Foster

Chief Financial Officer and Chief Accounting Officer

XML

Document And Entity Information - shares	6 Months Ended
	Mar. 31, 2017	May 22, 2017
Document Information [Line Items]
Entity Registrant Name	ASTA FUNDING INC
Entity Central Index Key	0001001258
Trading Symbol	asfi
Current Fiscal Year End Date	--09-30
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		6,562,215
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Mar. 31, 2017	Sep. 30, 2016
ASSETS
Cash and cash equivalents	$ 10,521,000	$ 18,526,000
Restricted cash	10,064,000
Available for sale investments (at fair value)	5,397,000	56,764,000
Consumer receivables acquired for liquidation (at net realizable value)	11,651,000	13,671,000
Structured settlements (at fair value)	90,370,000	85,708,000
Investment in personal injury claims	47,888,000	48,289,000
Other investments, net		3,590,000
Due from third party collection agencies and attorneys	1,044,000	1,005,000
Prepaid and income taxes receivable	7,609,000	880,000
Furniture and equipment, net	199,000	243,000
Deferred income taxes	17,556,000	15,530,000
Goodwill	2,770,000	2,770,000
Other assets	6,327,000	8,423,000
Total assets	211,396,000	255,399,000
LIABILITIES
Line of credit	9,600,000
Other debt – CBC (including non-recourse notes payable of $55.5 million at March 31, 2017 and $57.3 million at September 30, 2016)	74,183,000	67,435,000
Other liabilities	8,462,000	5,974,000
Income taxes payable		252,000
Total liabilities	92,245,000	73,661,000
Commitments and contingencies
STOCKHOLDERS’ EQUITY
Preferred stock, $.01 par value; authorized 5,000,000 shares; issued and outstanding — none
Common stock, $.01 par value, authorized 30,000,000 shares; issued 13,336,508 at March 31, 2017 and at September 30, 2016; and outstanding 6,562,215 at March 31, 2017 and 11,876,224 at September 30, 2016	133,000	133,000
Additional paid-in capital	67,034,000	67,026,000
Retained earnings	120,837,000	128,063,000
Accumulated other comprehensive income (loss)	(726,000)	86,000
Treasury stock (at cost) 6,774,293 shares at March 31, 2017 and 1,460,284 shares at September 30, 2016	(67,128,000)	(12,925,000)
Non-controlling interest	(999,000)	(645,000)
Total stockholders’ equity	119,151,000	181,738,000
Total liabilities and stockholders’ equity	$ 211,396,000	$ 255,399,000

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)	Mar. 31, 2017	Sep. 30, 2016
Notes Payable, Noncurrent	$ 55,500,000	$ 57,300,000
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	5,000,000	5,000,000
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	30,000,000	30,000,000
Common stock, issued (in shares)	13,336,508	13,336,508
Common stock, outstanding (in shares)	6,562,215	11,876,224
Treasury stock, shares (in shares)	6,774,293	1,460,284

XML

Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Revenues:
Finance income, net	$ 4,018,000	$ 4,914,000	$ 8,019,000	$ 10,056,000
Personal injury claims income	2,146,000	1,846,000	4,448,000	4,931,000
Unrealized (loss) gain on structured settlements	(1,338,000)	1,637,000	(2,293,000)	3,164,000
Interest income on structured settlements	1,941,000	1,301,000	3,842,000	2,708,000
Disability fee income	1,502,000	872,000	2,856,000	1,531,000
Total revenues	8,269,000	10,570,000	16,872,000	22,390,000
Other income (loss) - includes ($948,000) and $0 during the three month periods ended March 31, 2017 and 2016, and ($993,000) and ($31,000) during the six month periods ended March 31, 2017 and 2016, respectively, of accumulated other comprehensive loss reclassification for securities sold	(688,000)	378,000	(129,000)	893,000
	7,581,000	10,948,000	16,743,000	23,283,000
Expenses:
General and administrative	15,995,000	13,209,000	26,978,000	21,448,000
Interest	982,000	788,000	1,916,000	1,516,000
Impairment of consumer receivables acquired for liquidation		124,000		124,000
	16,977,000	14,121,000	28,894,000	23,088,000
(Loss) income before income tax	(9,396,000)	(3,173,000)	(12,151,000)	195,000
Income tax (benefit)/expense - includes tax expense of $379,000 and $0 during the three month periods ended March 31, 2017 and 2016 and $397,000 and $11,000 during the six month periods ended March 31, 2017 and 2016, respectively, of accumulated other comprehensive income reclassifications for unrealized net gains / (losses) on available for sale securities	(3,818,000)	(1,425,000)	(4,937,000)	(392,000)
Net (loss) income	(5,578,000)	(1,748,000)	(7,214,000)	587,000
Less: net (loss) income attributable to non-controlling interests	(9,000)	83,000	12,000	612,000
Net loss attributable to Asta Funding, Inc.	$ (5,569,000)	$ (1,831,000)	$ (7,226,000)	$ (25,000)
Net loss per share attributable to Asta Funding, Inc.:
Basic (in dollars per share)	$ (0.57)	$ (0.15)	$ (0.67)	$ 0
Diluted (in dollars per share)	$ (0.57)	$ (0.15)	$ (0.67)	$ 0
Weighted average number of common shares outstanding:
Basic (in shares)	9,691,576	12,076,120	10,795,903	12,115,987
Diluted (in shares)	9,691,576	12,076,120	10,795,903	12,115,987

XML

Consolidated Statements of Operations (Unaudited) (Parentheticals) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Reclassification for unrealized net gain (loss) on available for sale securities	$ (948,000)	$ 0	$ (993,000)	$ (31,000)
Income tax (benefit) expense	$ 379,000	$ 0	$ 397,000	$ 11,000

XML

Consolidated Statements of Comprehensive (Loss) Income (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Comprehensive income (loss) is as follows:
Net (loss) income	$ (5,578,000)	$ (1,748,000)	$ (7,214,000)	$ 587,000
Net unrealized securities gain (loss), net of tax (expense)/benefit of ($680,000) and ($94,000) during the three month periods ended March 31, 2017 and 2016, respectively, and $23,000 and ($283,000) during the six month periods ended March 31, 2017 and 2016, respectively.	1,204,000	167,000	(35,000)	503,000
Reclassification adjustments for securities sold, net of tax benefit of $379,000 and $0 during the three month periods ended March 31, 2017 and 2016, and $397,000 and $11,000 during the six month periods ended March 31, 2017 and 2016, respectively.	(569,000)		(596,000)	(20,000)
Foreign currency translation, net of tax (expense)/benefit of ($125,000) and $148,000 during the three month periods ended March 31, 2017 and 2016, respectively, and $121,000 and $557,000 during the six month periods ended March 31, 2017 and 2016, respectively.	188,000	254,000	(181,000)	496,000
Other comprehensive income (loss)	823,000	421,000	(812,000)	979,000
Total comprehensive income (loss)	$ (4,755,000)	$ (1,327,000)	$ (8,026,000)	$ 1,566,000

XML

Consolidated Statements of Comprehensive (Loss) Income (Unaudited) (Parentheticals) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Unrealized gain (loss) on marketable securities, tax	$ (680,000)	$ (94,000)	$ 23,000	$ 283,000
Reclassification adjustments for securities, tax (expense) benefit	379,000	0	397,000	11,000
Foreign currency translation, tax benefit\	$ (125,000)	$ 148,000	$ 121,000	$ 557,000

XML

Consolidated Statement of Stockholders' Equity (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Treasury Stock [Member]	Noncontrolling Interest [Member]	Total
Balance at Mar. 31, 2016	$ 132,000	$ 65,612,000	$ 120,586,000	$ (706,000)	$ (10,114,000)	$ (2,101,000)	$ 173,409,000
Balance (in shares) at Sep. 30, 2015	13,061,673
Balance at Sep. 30, 2015	$ 131,000	65,011,000	120,611,000	(1,685,000)	(1,751,000)	(997,000)	$ 181,320,000
Exercise of options (in shares)	7,499						7,499
Exercise of options		47,000					$ 47,000
Stock based compensation expense		428,000					428,000
Restricted stock (in shares)	5,000
Net (loss) income			(25,000)			612,000	587,000
Amount reclassified from other comprehensive (loss) income				(20,000)			(20,000)
Reclassification adjustments for securities sold, net of tax benefit of $379,000 and $0 during the three month periods ended March 31, 2017 and 2016, and $397,000 and $11,000 during the six month periods ended March 31, 2017 and 2016, respectively.				(20,000)			(20,000)
Unrealized (loss) gain on marketable securities, net				503,000			503,000
Purchase of treasury stock					(8,363,000)		(8,363,000)
Foreign currency translation, net				496,000			496,000
Purchase of subsidiary shares from non-controlling interest		(873,000)				(927,000)	(1,800,000)
Issuance of restricted stock to purchase subsidiary shares from non-controlling interest (in shares)	123,304
Issuance of restricted stock to purchase subsidiary shares from non-controlling interest	$ 1,000	999,000					1,000,000
Distributions to non-controlling interest						(789,000)	(789,000)
Balance (in shares) at Mar. 31, 2016	13,197,476
Balance at Mar. 31, 2017	$ 133,000	67,034,000	120,837,000	(726,000)	(67,128,000)	(999,000)	119,151,000
Balance (in shares) at Sep. 30, 2016	13,336,508
Balance at Sep. 30, 2016	$ 133,000	67,026,000	128,063,000	86,000	(12,925,000)	(645,000)	$ 181,738,000
Exercise of options (in shares)							0
Exercise of options
Stock based compensation expense		8,000					8,000
Net (loss) income			(7,226,000)			12,000	(7,214,000)
Amount reclassified from other comprehensive (loss) income				(596,000)			(596,000)
Reclassification adjustments for securities sold, net of tax benefit of $379,000 and $0 during the three month periods ended March 31, 2017 and 2016, and $397,000 and $11,000 during the six month periods ended March 31, 2017 and 2016, respectively.				(596,000)			(596,000)
Unrealized (loss) gain on marketable securities, net				(35,000)			(35,000)
Purchase of treasury stock					(54,203,000)		(54,203,000)
Foreign currency translation, net				(181,000)			(181,000)
Distributions to non-controlling interest						$ (366,000)	$ (366,000)
Balance (in shares) at Mar. 31, 2017	13,336,508

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash flows from operating activities:
Net (loss) income	$ (7,214,000)	$ 587,000
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization	191,000	246,000
Deferred income taxes	(1,606,000)	(1,202,000)
Impairment of consumer receivables acquired for liquidation		124,000
Stock based compensation	8,000	428,000
Loss on sale of available-for-sale securities	993,000	31,000
Structured settlements – accrued interest	(3,165,000)	(2,474,000)
Structured settlements – unrealized loss (gains)	2,293,000	(3,164,000)
Unrealized gain on other investments		(152,000)
Unrealized foreign exchange loss on other investments		(26,000)
Reserve for loss on other investments		1,000,000
Loss on other investments	3,590,000
Changes in:
Prepaid and income taxes receivable	(6,729,000)	169,000
Due from third party collection agencies and attorneys	(39,000)	372,000
Other assets	1,964,000	(392,000)
Income taxes payable	(252,000)
Other liabilities	2,307,000	2,018,000
Net cash used in operating activities	(7,659,000)	(2,435,000)
Cash flows from investing activities:
Purchase of consumer receivables acquired for liquidation	(2,213,000)	(6,141,000)
Principal collected on receivables acquired for liquidation	4,233,000	4,841,000
Purchase of available-for-sale securities	(7,693,000)	(7,419,000)
Proceeds from sale of available-for-sale securities	57,016,000	12,303,000
Purchase of non-controlling interest		(800,000)
Investments in personal injury claims – advances	(9,194,000)	(12,649,000)
Investments in personal injury claims – receipts	9,595,000	14,173,000
Capital expenditures	(15,000)	(69,000)
Investments in structured settlements – advances	(7,926,000)	(8,306,000)
Investments in structured settlements – receipts	4,136,000	3,389,000
Net cash provided by/(used in) investing activities	47,939,000	(678,000)
Cash flows from financing activities:
Proceeds from exercise of stock options		47,000
Purchase of treasury stock	(54,203,000)	(8,363,000)
Change in restricted cash	(10,064,000)
Distribution to non-controlling interest	(366,000)	(789,000)
Borrowings from line of credit	9,600,000
Borrowings of other debt – CBC	9,072,000	9,826,000
Repayment of other debt – CBC	(2,324,000)	(2,029,000)
Net cash used in financing activities	(48,285,000)	(1,308,000)
Net decrease in cash and cash equivalents	(8,005,000)	(4,421,000)
Cash and cash equivalents at beginning of period	18,526,000	24,315,000
Cash and cash equivalents at end of period	10,521,000	19,894,000
Supplemental disclosure of cash flow information:
Interest	1,879,000	1,538,000
Taxes	6,200,000
Supplemental disclosure of non-cash flow investing activities :
Issuance of restricted stock to purchase subsidiary shares from non-controlling interest		$ 1,000,000

XML

Note 1 - Business and Basis of Presentation

6 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block]

Note

1—Business

and Basis of Presentation

Business

Asta Funding, Inc., together with its wholly owned significant operating subsidiaries Palisades Collection, LLC, Palisades Acquisition XVI, LLC (“Palisades XVI”), VATIV Recovery Solutions LLC (“VATIV”), ASFI Pegasus Holdings, LLC (“APH”), Fund Pegasus, LLC (“Fund Pegasus”), GAR Disability Advocates, LLC (“GAR Disability Advocates”), CBC Settlement Funding, LLC (“CBC”), Simia Capital, LLC (“Simia”) and other subsidiaries,

not

all wholly owned (the “Company,” “we” or “us”), is engaged in several business segments in the financial services industry including structured settlements through our wholly owned subsidiary CBC, funding of personal injury claim, through our

80%

owned subsidiary Pegasus Funding, LLC (“Pegasus”) and our wholly owned subsidiary Simia, social security and disability advocacy through our wholly owned subsidiary GAR Disability Advocates and the business of purchasing, managing for its own account and servicing distressed consumer receivables, including charged off receivables, and semi-performing receivables.

 

Consumer receivables

The Company started out in the consumer receivables business in

1994.

Recently, our effort has been in the international areas (mainly South America), as we have

not

purchased consumer receivables in the United States since

2010.

We define consumer receivables as primary charged-off, semi-performing and distressed depending on their collectability. We acquire these consumer receivables at substantial discounts to their face values, based on the characteristics of the underlying accounts of each portfolio.

Personal injury claims

Pegasus conducts its business solely in the United States. Prior to

2017,

Pegasus obtained its business from external brokers and internal sales professionals soliciting individuals with personal injury claims. Business was also obtained from the Pegasus website and through attorneys.

In

November 2016,

the Company formed Simia, a

100%

owned subsidiary. Simia commenced funding personal injury settlement claims in

January 2017.

Simia was formed in response to the Company’s decision

not

to renew its joint venture with Pegasus Legal Funding, LLC (“PLF”), which expired at the end of

December 2016.

Pegasus continues to remain in operation to collect its current portfolio of advances, and has

not

funded any new advances after

December 28, 2016 (

see Note

7

– Litigation Funding).

Structured settlements

CBC purchases structured settlement and annuity policies through privately negotiated direct consumer purchases and brokered transactions across the United States. CBC funds the purchases primarily from cash, its revolving line of credit, and its securitized debt, issued through its Blue Bell Receivables (“BBR”) subsidiaries.

Social security benefit advocacy

GAR Disability Advocates provides its disability advocacy services throughout the United States. It relies upon search engine optimization (“SEO”) to bring awareness to its intended market.

Basis of Presentation

The consolidated balance sheet as of

March 31, 2017,

the consolidated statements of operations for the

three

and

six

month periods ended

March 31, 2017

and

2016,

the consolidated statements of comprehensive income (loss) for the

three

and

six

month periods ended

March 31, 2017

and

2016,

the consolidated statements of stockholders’ equity as of and for the

six months ended

March 31, 2017

and

2016,

and the consolidated statements of cash flows for the

six

month periods ended

March 31, 2017

and

2016,

are unaudited. The

September 

30,

2016

financial information included in this report was derived from our audited financial statements included in our Annual Report on Form

10

-K for the fiscal year ended

September 

30,

2016.

In the opinion of management, all adjustments necessary to present fairly our financial position at

March 31, 2017,

the results of operations for the

three

and

six

month periods ended

March 31, 2017

and

2016

and cash flows for the

six

month periods ended

March 31, 2017

and

2016

have been made. The results of operations for the

three

and

six

month periods ended

March 31, 2017

and

2016

are

not

necessarily indicative of the operating results for any other interim period or the full fiscal year.

 The accompanying unaudited consolidated financial statements have been prepared in accordance with Rule 

10

-

01

of Regulation S-

X

promulgated by the Securities and Exchange Commission and therefore do

not

include all information and note disclosures required under generally accepted accounting principles. The Company suggests 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

-K for the fiscal year ended

September 

30,

2016

filed with the Securities and Exchange Commission.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates including management’s estimates of future cash flows and the resulting rates of return.

Concentration of Credit Risk – Cash and Restricted Cash

The Company considers all highly liquid investments with a maturity date of

three

months or less at the date of purchase to be cash equivalents.

Cash balances are maintained at various depository institutions and are insured by the Federal Deposit Insurance Corporation (“FDIC”). The Company had cash balances with

9

banks at

March 

31,

2017

that exceeded the balance insured by the FDIC by approximately

$5.2

million. Additionally,

two

foreign banks with an aggregate

$1.6

million balances are

not

FDIC insured. There is a

$10.1

million aggregate balance in a domestic bank that is

not

FDIC insured and has been reclassified to restricted cash in the balance sheet since these assets serve as collateral for the line of credit (see Note

9

-Non Recourse Debt ). The Company does

not

believe it is exposed to any significant credit risk due to concentration of cash.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in a business combination, and is accounted for under ASC

350.

Goodwill has an indefinite useful life and is evaluated for impairment at the reporting-unit level on an annual basis during the

fourth

quarter or more frequently if events or changes in circumstances indicate potential impairment between annual measurement dates. The Company has the option of performing a qualitative assessment of impairment to determine whether any further quantitative testing for impairment is necessary. The initial qualitative approach assesses whether the existence of events or circumstances lead to a determination that it is more likely than

not

that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events and circumstances, the Company determines it is more likely than

not

that the fair value is less than carrying value, a

two

step quantitative impairment test is performed. A step

1

analysis involves calculating the fair value of the associated reporting unit and comparing it to the reporting unit’s carrying value. If the fair value of the reporting unit exceeds the carrying value of the reporting unit including goodwill and the carrying value of the reporting unit is positive, goodwill is considered

not

to be impaired and

no

further analysis is required. If the fair value of the reporting unit is less than its carrying value, step

2

of the impairment test must be performed. Step

2

involves calculating and comparing the implied fair value of the reporting unit’s goodwill with its carrying value. Impairment is recognized if the estimated fair value of the reporting unit is less than its net book value. Such loss is calculated as the difference between the estimated impaired fair value of goodwill and its carrying amount. The goodwill of the Company consists of

$2.8

million of which approximately

$1.4

million from the purchase of CBC and the remaining

$1.4

million from the purchase of VATIV.

Recent Accounting Pronouncements

In

May 2014,

the FASB issued an update to ASC

606,

Revenue from Contracts with Customers that will supersede virtually all existing revenue guidance. Under this update, an entity is required to recognize revenue upon transfer of promised goods or services to customers, in an amount that reflects the entitled consideration received in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from the customer contracts. This update is effective for annual reporting periods beginning after

December 

15,

2017

including interim periods within that reporting period. Early application is permitted for annual reporting periods beginning after

December 

15,

2016,

including interim periods within that reporting period. Based on the Company’s evaluation, the Company does

not

believe this new standard will impact the accounting for its revenues.

In

January 2016,

the FASB issued ASU

No.

 

2016

-

01,

Financial Instruments-Overall (Subtopic

825

-

10

): Recognition and Measurement of Financial Assets and Financial Liabilities. The main objective in developing this update is enhancing the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The amendments in this update address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The effective date for this update is for annual reporting periods beginning after

December 

15,

2017,

including interim periods within that reporting period. The Company is currently evaluating the impact this update will have on its consolidated financial statements.

In

February 2016,

the FASB issued ASU

No.

2016

-

02

Leases (Topic

842

) to amend lease accounting requirements and requires entities to generally recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use assets. The new standard will require significant additional disclosures about the amount, timing and uncertainty of cash flows from leases. The standard update is effective for fiscal years beginning after

December 

15,

2018

and interim periods within those years and early adoption is permitted. The standard is to be applied using a modified retrospective approach and includes a number of optional practical expedients that entities

may

elect to apply. The Company is currently evaluating the impact of adopting this update on its consolidated financial statements and expects that most of its operating leases will be subject to the accounting standard update and will recognize as operating lease liabilities and right-of-use assets upon adoption

In

March 2016,

the FASB issued ASU

No.

 

2016

-

09,

Compensation-Stock Compensation (Topic

718

): Improvements to Employee Share Based Payment Accounting, to simplify and improve areas of generally accepted accounting principles for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. The effective date for this update is for annual reporting periods beginning after

December 

15,

2016,

including interim periods within that reporting period. The Company is currently evaluating the impact this update will have on its consolidated financial statements. 

In

June 2016,

the FASB issued ASU

2016

-

13,

Financial Instruments-Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments.  The ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.  For the Company, this update will be effective for interim periods and annual periods beginning after

December 15, 2019.

Upon adoption, the Company will accelerate the recording of its credit losses in its financial statements.

In

August 2016,

the FASB issued ASU 

2016

-

15,

Statement of Cash Flows (Topic

230

): Classification of Certain Cash Receipts and Cash Payments.  This ASU will make

eight

targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The new standard is effective for fiscal years beginning after

December 15, 2017.

Early adoption is permitted. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case the Company would be required to apply the amendments prospectively as of the earliest date practicable. The Company is in the process of evaluating the provisions of the ASU, but does

not

expect it to have a material effect on the Company’s consolidated statements of cash flows.

XML

Note 2 - Principles of Consolidation

6 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Note

2—Principles

of Consolidation

The consolidated financial statements include the accounts of Asta Funding, Inc. and its wholly owned and majority owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Certain prior period data has been restated to conform to the current period presentation, particularly with respect to Note

4

– Consumer Receivables Acquired for Liquidation.

XML

Note 3 - Available-for-sale Investments

6 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Available-for-sale Investments [Text Block]

Note

3—Available

-for-Sale Investments

Investments classified as available-for-sale at

March 

31,

2017

and

September 

30,

2016,

consist of the following:

	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
March 31, 2017	$	5,408,000	$	4,000	$	(15,000	)	$	5,397,000
September 30, 2016	$	55,724,000	$	1,089,000	$	(49,000	)	$	56,764,000

The available-for-sale investments do

not

have any contractual maturities. The Company sold

six

investments during the

six months ended

March 31, 2017,

with a realized loss of

$993,000.

The Company received

$177,000

in capital gains distributions during the

six months ended

March 31, 2017.

For the

six months ended

March 31, 2016,

the Company sold

two

investments with a realized loss of

$31,000

and also received

$47,000

in capital gains distributions during that period. The Company recorded an aggregate realized loss of

$816,000

related to its available-for-sale securities for the

first

six months ended

March 31, 2017

compared to an aggregate realized gain of

$16,000

for the

six

month

period ended

March 31, 2016.

The Company sold

six

investments during the

three months ended

March 31, 2017

with a realized loss of

$948,000.

There was

no

sale of investments during the

three months ended

March 31, 2016.

At

March 

31,

2017,

there were

three

investments,

two

of which were in an unrealized loss position that had existed for

12

months or more. All of these securities are considered to be acceptable credit risks. Based on the evaluation of the available evidence, including recent changes in market rates and credit rating information, management believes the aggregate decline in fair value for these instruments is temporary. In addition, management has the ability to hold these investment securities for a period of time sufficient to allow for an anticipated recovery or maturity. Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period in which the other-than-temporary impairment is identified. 

Unrealized holding gains and losses on available-for-sale securities are included in other comprehensive income (loss) within stockholders’ equity. Realized gains (losses) on available-for-sale securities are included in other income (loss) and, when applicable, are reported as a reclassification adjustment in other comprehensive income (loss).

XML

Note 4 - Consumer Receivables Acquired for Liquidation

6 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Note

4—Consumer

Receivables Acquired for Liquidation

Accounts acquired for liquidation are stated at their net estimated realizable value and consist primarily of defaulted consumer loans to individuals primarily throughout the United States and South America.

The Company

may

account for its investments in consumer receivable portfolios, using either:

• the interest method; or

• the cost recovery method.

Prior to

October 

1,

2013,

the Company accounted for certain of its investments in finance receivables using the interest method in accordance with the guidance of ASC

310,

Receivables. Under the guidance of ASC

310

-

30,

static pools of accounts are established. These pools are aggregated based on certain common risk criteria. Each static pool is recorded at cost and is accounted for as a single unit for the recognition of income, principal payments and loss provision. Effective

October 

1,

2013,

due to the substantial reduction of portfolios reported under the interest method, and the ability to reasonably estimate cash collections required to account for those portfolios under the interest method, the Company concluded the cost recovery method is the appropriate accounting method in the circumstances. 

Although the Company has switched to the cost recovery method on its current inventory of portfolios, the Company must still analyze a portfolio upon acquisition to ensure which method is appropriate, and once a static pool is established for a quarter, individual receivable accounts are

not

added to the pool (unless replaced by the seller) or removed from the pool (unless sold or returned to the seller).

The Company uses the cost recovery method when collections on a particular pool of accounts cannot be reasonably predicted. Under the cost recovery method,

no

income is recognized until the cost of the portfolio has been fully recovered. A pool can become fully amortized (

zero

carrying balance on the balance sheet) while still generating cash collections. In this case, all cash collections are recognized as revenue when received. 

The Company has extensive liquidating experience in the field of distressed credit card receivables, telecommunication receivables, consumer loan receivables, retail installment contracts, consumer receivables, and auto deficiency receivables. 

The Company aggregates portfolios of receivables acquired sharing specific common characteristics which were acquired within a given quarter. In addition, the Company uses a variety of qualitative and quantitative factors to estimate collections and the timing thereof. The Company obtains and utilizes, as appropriate, input, including but

not

limited to, monthly collection projections and liquidation rates, from

third

party collection agencies and attorneys, as further evidentiary matter, to assist in evaluating and developing collection strategies and in evaluating and modeling the expected cash flows for a given portfolio.

The following tables summarize the changes in the balance sheet account of consumer receivables acquired for liquidation during the following periods:

	For the Three Months Ended March 31,
	2017			2016
Balance, beginning of period	$	13,243,000		$	17,843,000
Acquisitions of receivable portfolio		—			1,722,000
Net cash collections from collection of consumer receivables acquired for liquidation		(6,009,000	)		(7,481,000	)
Impairment		—			(124,000	)
Effect of foreign currency translation		399,000			(90,000	)
Finance income recognized		4,018,000			4,914,000
Balance, end of period	$	11,651,000		$	16,784,000
Finance income as a percentage of collections		66.9	%		65.7	%

	For the Six Months Ended March 31,
	2017			2016
Balance, beginning of period	$	13,671,000		$	15,608,000
Acquisitions of receivable portfolio		2,213,000			6,141,000
Net cash collections from collection of consumer receivables acquired for liquidation		(12,188,000	)		(14,774,000	)
Net cash collections represented by account sales of consumer receivables acquired for liquidation		(190,000	)		—
Impairment		—			(124,000	)
Effect of foreign currency translation		126,000			(123,000	)
Finance income recognized		8,019,000			10,056,000
Balance, end of period	$	11,651,000		$	16,784,000
Finance income as a percentage of collections		64.8	%		68.1	%

During the

three

and

six

month periods ended

March 

31,

2017,

the Company purchased

$0.0

million and

$35.0

million, respectively, of face value portfolios at a cost of

$0.0

 million and

$2.2

million, respectively. During the

three

and

six

month periods ended

March 

31,

2016,

the Company purchased

$24.8

million and

$121.0

million, respectively, of face value portfolios at a cost of

$1.7

million and

$6.2

million, respectively.

The following table summarizes collections received by the Company’s third-party collection agencies and attorneys, less commissions and direct costs for the

three

and

six

month periods ended

March 

31,

2017

and

2016,

respectively.

	For the Three Months Ended March 31,				For the Six Months Ended March 31,
	2017		2016		2017		2016
Gross collections (1)	$	10,621,000	$	12,393,000		22,116,000		24,309,000
Commissions and fees (2)		4,612,000		4,912,000		9,738,000		9,535,000
Net collections	$	6,009,000	$	7,481,000	$	12,378,000	$	14,774,000

( 1 )

Gross collections include: collections from third-party collection agencies and attorneys, collections from in-house 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 gross collections received by the Company in connection with the Portfolio Purchase. The fee is charged for asset location, skip tracing and ultimately suing debtors in connection with this portfolio purchase.

XML

Note 5 - Acquisition of CBC

6 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Business Combination Disclosure [Text Block]

Note

5—Acquisition

of CBC

On

December 

31,

2013,

the Company acquired

80%

ownership of CBC and its affiliate, CBC Management Services, LLC for approximately

$5.9

million.

On

December 

31,

2015,

the Company acquired the remaining

20%

ownership of CBC for

$1,800,000,

through the issuance of restricted stock valued at approximately 

$1,000,000

and

$800,000

in cash. Each of the

two

original principals received

61,652

shares of restricted stock at a fair market value of

$7.95

per share and

$400,000

in cash. An aggregate of

123,304

shares of restricted stock were issued as part of the transaction. These shares are subject to a

one

year lock-up period in which the holders cannot sell the shares. In addition, the shares are subject to certain sales restrictions following the initial lock-up period, which expired on

December 31, 2016 (

see Note 

15

– Stock Based Compensation).

On

January 

1,

2016,

the Company renewed the expiring two-year employment agreements of the

two

CBC principals for

one

year terms. The employment contracts of the original

two

principals expired at the end of

December 2016.

The Company did

not

renew those contracts. Ryan Silverman was appointed CEO/General Counsel effective

January 1, 2017 (

see Note

11

– Commitments and Contingencies).

XML

Note 6 - Structured Settlements (At Fair Value)

6 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Structured Settlements Disclosure [Text Block]

Note

6—Structured

Settlements (At Fair Value)

CBC purchases periodic payments under structured settlements and annuity policies from individuals in exchange for a lump sum payment. The Company elected to carry the structured settlements at fair value. Unearned income on structured settlements is recognized as interest income using the effective interest method over the life of the related structured settlement. Changes in fair value are recorded in unrealized gain (loss) on structured settlements in the Company’s statements of operations. Unrealized gains on structured settlements is comprised of both unrealized gains resulting from fair market valuation at the date of acquisition of the structured settlements and the subsequent fair value adjustments resulting from the change in the discount rate. Of the

$2.3

million of unrealized losses recognized in the

six

month period ended

March 

31,

2017,

approximately

$4.3

million is due to day

one

gains on new structured settlements financed during the period, offset by a decrease of

$1.0

million in realized gains recognized as realized interest income on structured settlements during the period, and a reduction in fair value of

$5.6

million on CBC’s life contingent annuities portfolio as a result of the sale on all of the life contingent assets in

April 2017 (

see Note

22

– Subsequent Events). There were

no

other changes in assumptions during the period.

We elected the fair value treatment under ASC

825

-

10

-

50

-

28

through

50

-

32

to be transparent to the user regarding the underlying fair value of the structured settlement which collateralizes the debt of CBC. The Company believes any change in fair value is driven by market risk as opposed to credit risk associated with the underlying structured settlement annuity issuer.

The purchased personal injury structured settlements result in payments over time through an annuity policy. Most of the annuities acquired involve guaranteed payments with specific defined ending dates. CBC also purchases a small number of life contingent annuity payments with specific ending dates but the actual payments to be received could be less due to the mortality risk associated with the measuring life. CBC records a provision for loss each period. The life contingent annuities are

not

a material portion of assets at

March 

31,

2017.

Structured settlements consist of the following as of

March 

31,

2017

and

September 

30,

2016:

	March 31, 2017			September 30, 2016
Maturity (1) (2)	$	152,548,000		$	133,059,000
Unearned income		(62,178,000	)		(47,351,000	)
Structured settlements, net	$	90,370,000		$	85,708,000

( 1 ) The maturity value represents the aggregate unpaid principal balance at March  31, 2017 and September  30, 2016.

( 2 ) There are no amounts of structured settlements that are past due, or in nonaccrual status at March  31, 2017 and September  30, 2016.

Encumbrances on structured settlements as of

March 

31,

2017

and

September 

30,

2016

are as follows:

	March 31, 2017		September 30, 2016
Notes payable secured by settlement receivables with principal and interest outstanding payable until June 2025 (3)	$	1,771,000	$	1,862,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until August 2026 (3)		4,056,000		4,242,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until April 2032 (3)		3,926,000		3,987,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until February 2037 (3)		18,393,000		18,978,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until March 2034 (3)		14,006,000		14,507,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until February 2043 (3)		13,322,000		13,705,000
$25,000,000 revolving line of credit (3)		18,709,000		10,154,000
Encumbered structured settlements		74,183,000		67,435,000
Structured settlements not encumbered		16,187,000		18,273,000
Total structured settlements	$	90,370,000	$	85,708,000

( 3 ) See Note 10 – Other Debt – CBC

At

March 

31,

2017,

the expected cash flows of structured settlements based on maturity value are as follows:

September 30, 2017 (6 months)	$	5,702,000
September 30, 2018		8,892,000
September 30, 2019		9,237,000
September 30, 2020		8,713,000
September 30, 2021		9,576,000
Thereafter		110,428,000
Total	$	152,548,000

XML

Note 7 - Litigation Funding

6 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Other Investments Disclosure [Text Block]

Note

7—Litigation

Funding

Personal Injury Claims

On

December 

28,

2011,

the Company entered into a joint venture with Pegasus Legal Funding, LLC (“PLF”) in the operating subsidiary of Pegasus. Pegasus purchases interests in claims from claimants who are a party to personal injury litigation. Pegasus advances, to each claimant, funds, on a non-recourse basis at an agreed upon interest rate, in anticipation of a future settlement. The interest in each claim purchased by Pegasus consists of the right to receive, from such claimant, part of the proceeds or recoveries which such claimant receives by reason of a settlement, judgment or award with respect to such claimant’s claim. The recently-formed, wholly owned subsidiary, Simia, also engages in the personal injury claims business. The Company earned

$4.4

million and

$2.1

million in interest and fees during the

six

and

three

month periods ending

March 31, 2017,

respectively, compared to

$4.9

million and

$1.8

million, respectively, during the

six

and

three

month periods ending

March 31, 2016.

The Company had a net invested balance of

$47.9

million and

$48.3

million on

March 

31,

2017

and

September 

30,

2016,

respectively. The Company records reserves for bad debts, which, at

March 

31,

2017

and

2016,

amounted to

$10.7

million and

$6.2

million, as follows:

	Three Months Ended March 31, 2017			Three Months Ended March 31, 2016			Six Months Ended March 31, 2017			Six Months Ended March 31, 2016
Balance at beginning of period	$	9,542,000		$	5,496,000		$	8,542,000		$	5,459,000
Provisions for losses		1,885,000			724,000			3,274,000			1,136,000
Write offs		(775,000	)		(45,000	)		(1,164,000	)		(420,000	)
Balance at end of period	$	10,652,000		$	6,175,000		$	10,652,000		$	6,175,000

On

November 8, 2016,

the Company entered into a binding Term Sheet (the “Term Sheet”) with ASFI Pegasus Holdings, LLC, Fund Pegasus, LLC, Pegasus Funding, LLC, Pegasus Legal Funding, LLC, Max Alperovich and Alexander Khanas. Pegasus is currently the Company’s personal injury claims funding business and is a joint venture that is

80%

owned by the Company and

20%

owned by PLF. The Company and PLF have decided

not

to renew the Pegasus joint venture that, by its terms, terminated on

December 28, 2016.

The Term Sheet amends certain provisions to Pegasus’ operating agreement dated as of

December 28, 2011 (

as amended, the “Operating Agreement”) and governs the terms relating to the collection of its existing Pegasus portfolio (the “Portfolio”).  

Pursuant to the Term Sheet, the parties agreed that Pegasus will continue in existence in order to collect advances on its existing Portfolio. The Company will fund overhead expenses relating to the collection of its Portfolio based on a budget agreed upon by the Company and PLF. Any cash received by Pegasus will be distributed to its members in the order provided for in the Operating Agreement. The Company will be repaid an amount equal to

20%

of all principal collected on each investment paid back beginning

October 1, 2016

and continuing through the collection of the Portfolio, which will be applied against the outstanding balance of overhead expenses previously advanced by the Company to Pegasus. Since

January 2, 2017,

additional overhead expenses advanced are being paid back monthly as incurred by the Company prior to the calculation and distribution of any profits.  

In connection with the Term Sheet, the parties also entered into a customary mutual release and non-disparagement agreement as well as a release from the non-competition obligations under the Operating Agreement.  

On

November 11, 2016,

the Company announced that it is continuing its personal injury claims funding business through the formation of a wholly owned subsidiary, Simia. In connection with its formation, Simia entered into an employment agreement with Patrick F. Preece to serve as its Chief Executive Officer (see Note

11

– Commitments and Contingencies). On

March 24, 2017,

Simia purchased a portfolio of personal injury claims from a

third

party for approximately

$3.0

million. The Company plans to grow Simia organically, but

may

from time to time purchase portfolio of assets from a

third

party if the opportunity presented aligns with the Company’s strategic growth plans.

Matrimonial Claims (included in Other Assets)

On

May 

8,

2012,

the Company formed EMIRIC, LLC, a wholly owned subsidiary of the Company. EMIRIC, LLC entered into a joint venture with California-based Balance Point Divorce Funding, LLC (“BP Divorce Funding”) to create the operating subsidiary BP Case Management, LLC (“BPCM”). BPCM is

60%

owned by the Company and

40%

owned by BP Divorce Funding. BPCM provides non-recourse funding to a spouse in a matrimonial action. The Company provided a

$1.0

million revolving line of credit to partially fund BPCM’s operations, with such loan bearing interest at the prevailing prime rate, with an initial term of

twenty-four

months. In

September 2014,

the agreement was revised to extend the term of the loan to

August 2016,

increase the credit line to

$1.5

million and include a personal guarantee of the principal of BP Divorce Funding. Effective

August 14, 2016,

the Company extended its revolving line of credit with BP Divorce Funding until

March 31, 2017,

at substantially the same terms as the

September 2014

amendment. On

April 1, 2017,

BP Divorce Funding defaulted on this agreement, and as such, the loan balance of approximately

$1.5

million was deemed uncollectible and was written off in general and administrative expenses on the consolidated statement of operations during the

three months ended

March 31, 2017.

As of

March 

31,

2017,

the Company’s investment in cases through BPCM was approximately

$2.0

million. There was

no

income recognized for the

six months ended

March 31, 2017

and

2016.

XML

Note 8 - Furniture & Equipment

6 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

Note

8—Furniture

 & Equipment

Furniture and equipment consist of the following as of the dates indicated:

	March 31,		September 30,
	2017		2016
Furniture	$	417,000	$	417,000
Equipment		236,000		234,000
Software		1,363,000		1,350,000
		2,016,000		2,001,000
Less accumulated depreciation and amortization		1,817,000		1,758,000
Balance, end of period	$	199,000	$	243,000

XML

Note 9 - Non Recourse Debt

6 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Debt Disclosure [Text Block]

Note

9—Non

Recourse Debt

Non-Recourse Debt –Bank of Montreal (“BMO”)

In

March 2007,

Palisades XVI borrowed approximately

$227

 million under the Receivables Financing Agreement, as amended in

July 2007, 

December 2007, 

May 2008, 

February 2009, 

October 2010

and

August 2013 (

the “RFA”) from BMO, in order to finance the Portfolio Purchase which had a purchase price of

$300

million. The original term of the agreement was

three

years. This term was extended by each of the Second, Third, Fourth and Fifth Amendments and the most recent agreement signed in

August 2013. 

On

August 

7,

2013,

Palisades XVI, a

100%

owned bankruptcy remote subsidiary, entered into a Settlement Agreement and Omnibus Amendment (the “Settlement Agreement”) with BMO as an amendment to the RFA. In consideration for a

$15

million prepayment funded by the Company, BMO agreed to significantly reduce minimum monthly collection requirements and the interest rate. If and when BMO receives the next

$15

million of collections from the Portfolio Purchase or from voluntary prepayments by Asta Funding, Inc., less certain credits for payments made prior to the consummation of the Settlement Agreement (the “Remaining Amount”), Palisades XVI and its affiliates would be automatically released from liability in connection with the RFA (subject to customary exceptions). A condition to the release was Palisades XVI’s agreement to grant BMO, as of the time of the payment of the Remaining Amount, the right to receive

30%

of net collections from the Portfolio Purchase once Palisades XVI has received from future net collections, the sum of

$15

million plus voluntary prepayments included in the payment of the Remaining Amount (the “Income Interest”). On

June 

3,

2014,

Palisades XVI paid the Remaining Amount. The final principal payment of

$2,901,199

included a voluntary prepayment of

$1,866,036

provided from funds of the Company. Accordingly, Palisades XVI was entitled to receive

$16.9

million of future collections from the Portfolio Purchase before BMO would be entitled to receive any payments with respect to its Income Interest. 

During the month of

June, 2016,

the Company received the balance of the

$16.9

million, and, as of

March 31, 2017,

the Company recorded a liability to BMO of approximately

$169,000,

which has been recorded in other liabilities in the Company’s consolidated balance sheet. The funds were subsequently remitted to BMO on

April 10, 2017.

The liability to BMO is recorded when actual collections are received.

Bank Hapoalim B.M. (“Bank Hapoalim”) Line of Credit

On

May 

2,

2014,

the Company obtained a

$20

million line of credit facility from Bank Hapoalim, pursuant to a Loan Agreement (the “Loan Agreement”) among the Company and its subsidiary, Palisades Collection, LLC, as borrowers (the “Borrowers”), and Bank Hapoalim, as agent and lender. The Loan Agreement provided for a

$20.0

million committed line of credit and an accordion feature providing an increase in the line of credit of up to

$30

million, at the discretion of the lenders. The facility was for a term of

three

years at an interest rate of either LIBOR plus

275

basis points or prime, at the Company’s option. The Loan Agreement included covenants that required the Company to maintain a minimum net worth of

$150

million and pay an unused line fee. The facility was secured pursuant to a Security Agreement among the parties to the Loan Agreement, with property of the Borrowers serving as collateral. On

March 30, 2016,

the Company signed the First Amendment to the Loan Agreement (the “First Amendment”) with Bank Hapoalim which amended certain terms of their banking arrangement. The First Amendment includes (a) the reduction of the interest rate to LIBOR plus

225

basis points; (b) a decrease in the minimum net worth requirement by

$50

million, to

$100

million and (c) modifies the Net Loss requirement from a quarterly to an annual basis. All other terms of the original agreement remain in effect. The Company has borrowed

$9.6

million against the facility, which was outstanding as of

March 31, 2017.

There is a

$10.1million

aggregate balance in Bank Hapoalim which has been reclassified as restricted cash in the consolidated balance sheet since these assets serve as collateral for the line of credit (see Note

1

– Business and Basis of Presentation). On

April 28, 2017,

the Company renewed the line of credit facility with a new maturity date of

August 2, 2017 (

see Note

22

– Subsequent Events).

XML

Note 10 - Other Debt - CBC

6 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Other Debt Disclosure [Text Block]

Note

10—Other

Debt—CBC

The Company assumed

$25.9

million of debt related to the CBC acquisition (see Note

5

) on

December 

31,

2013,

including a

$12.5

million line of credit with an interest rate floor of

5.5%.

Between

March 

27,

2014

and

September 

29,

2014,

CBC entered into

three

amendments (Sixth Amendment through Eighth Amendment), resulting in the line of credit increasing to

$22.0

million and the interest rate floor reduced to

4.75%.

On

March 

11,

2015,

CBC entered into the Ninth Amendment. This amendment, effective

March 

1,

2015,

extended the maturity date on its credit line from

February 

28,

2015

to

March 

1,

2017

.

Additionally, the credit line was increased from

$22.0

million to

$25.0

 million and the interest rate floor was decreased from

4.75%

to

4.1%.

Other terms and conditions were materially unchanged. In

March 2017,

the credit line was extended to

April 28, 2017.

On

April 28, 2017,

CBC entered into the Tenth Amendment, extending the credit line maturity date to

June 30, 2017 (

see Note

22

– Subsequent Events).

On

November 

26,

2014,

CBC completed its

fourth

private placement, backed by structured settlement and fixed annuity payments. CBC issued, through its subsidiary, BBR IV, LLC, approximately

$21.8

million of fixed rate asset-backed notes with a yield of

5.4%.

On

September 

25,

2015,

CBC completed its

fifth

private placement, backed by structured settlement and fixed annuity payments. CBC issued, through its subsidiary, BBR V, LLC, approximately

$16.6

million of fixed rate asset-backed notes with a yield of

5.1%.

On

July 8, 2016,

CBC issued, through its subsidiary, BBR VI, approximately

$14.8

million of fixed rate asset-backed notes with a yield of

4.85%.

On

April 7, 2017,

CBC issued approximately

$18.3

million of fixed rate asset-backed notes with a yield of

5.0%

(see Note

22

– Subsequent Events).

As of

March 

31,

2017,

the remaining debt amounted to

$74.2

million, which consisted of

$18.7

million drawdown from a line of credit from an institutional source and

$55.5

million of notes payable issued by entities

100%

-owned and consolidated by CBC. These entities are bankruptcy-remote entities created to issue notes secured by structured settlements. The following table details the other debt at

March 

31,

2017

and

September 

30,

2016:

	Interest Rate			March 31, 2017		September 30, 2016
Notes payable secured by settlement receivables with principal and interest outstanding payable until June 2025		8.75	%	$	1,771,000	$	1,862,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until August 2026		7.25	%		4,056,000		4,242,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until April 2032		7.125	%		3,926,000		3,987,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until February 2037		5.39	%		18,393,000		18,978,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until March 2034		5.07	%		14,006,000		14,507,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until February 2043		4.85	%		13,322,000		13,705,000
Subtotal notes payable					55,474,000		57,281,000
$25,000,000 revolving line of credit expiring on June 30, 2017		4.1	%		18,709,000		10,154,000
Total other debt – CBC				$	74,183,000	$	67,435,000

XML

Note 11 - Commitments and Contingencies

6 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

Note

11—Commitments

and Contingencies

Employment Agreement

On

November 11, 2016,

the Company announced that it would continue its personal injury claims funding business through the formation of a wholly owned subsidiary, Simia. In connection with its formation, Simia entered into an employment agreement (the “Employment Agreement”) with Patrick F. Preece to serve as its Chief Executive Officer. Under the Employment Agreement, Mr. Preece receives an annual base salary of

$250,000,

subject to annual increases at the discretion of the compensation committee (the “Compensation Committee”) of the board of directors of the Company (the “Board”). Mr. Preece is eligible to receive an annual cash or non-cash bonus in the sole and exclusive discretion of the Compensation Committee. Mr. Preece is also eligible to receive a cash or non-cash profit bonus

of up to

15%

of the closing consideration received by the Company. He is also entitled to participate in any other benefit plans established by the Company for management employees. The Employment Agreement has a

five

year term. Under the Employment Agreement, Mr. Preece

may

be terminated with or without “cause” (as defined in the Employment Agreement) and

may

resign with or without “good reason” (as defined in the Employment Agreement). If Mr. Preece is terminated without “cause” or resigns for “good reason” he will receive severance equal to

two

years of his base salary. He is also entitled to a pro-rata share of the profit bonus and his deferred compensation will vest immediately. Mr. Preece is also subject to a non-compete and non-solicitation provision during the term of his employment and, unless his employment is terminated without “cause” or he resigns for “good reason,” for

two

years thereafter.

The employment contracts of the original

two

CBC principals expired at the end of

December 2016.

The Company did

not

renew those contracts. Ryan Silverman was appointed CEO/General Counsel, effective

January 1, 2017. 

Leases

The Company leases its facilities in Englewood Cliffs, NJ, Houston, TX, New York, NY and Conshohocken, PA.

Legal Matters

In

June 2015,

a putative class action complaint was filed against the Company, and

one

of its third-party law firm servicers, alleging violation of the federal Fair Debt Collection Practices Act and Racketeer Influenced and Corrupt Organizations Act (“RICO”) and state law arising from debt collection activities and default judgments obtained against certain debtors.   

The Company filed a motion to strike the class action allegations and compel arbitration or, to the extent the court declines to order arbitration, to dismiss the RICO claims. On or about

March 31, 2015,

the court denied the Company’s motion. The Company filed an appeal with the United States Court of Appeals for the Second Circuit. A mediation session was held in

July 2015,

at which the Company agreed to settle the action on an individual basis for a payment of

$13,000

to each named plaintiff, for a total payment of

$39,000.

Payment was made on or about

July 24, 2015.

The third-party law firm servicer has

not

yet settled and remains a defendant in the case.

The plaintiffs’ attorneys advised that they were contemplating the filing of another putative class action complaint against the Company alleging substantially the same claims as those that were asserted in this matter. In anticipation of such an eventuality, the Company agreed to non-binding mediation in order to reach a global settlement with other putative class members, which would avert the possibility of further individual or class actions with respect to the affected accounts. To date, the parties have attended

two

mediation sessions and are continuing to discuss a global settlement. In connection with such discussions, the parties agreed in principle to settle the action for a payment of

$3.9

million (which would be split equally between the Company and the law firm servicer). The Company and law firm servicer have also agreed to cease collection activity on the affected accounts.

Accordingly, the Company set up a reserve for settlement costs of

$2.0

million during the

three months ended

March 31, 2016,

which was included in general and administrative expenses in the Company's consolidated statement of operations.

The Company reassessed the situation at

September 30, 2016

and deemed that an additional

$0.3

million was necessary to account for legal expenses, which was made during the

three

month period ended

September 30, 2016.

The Company reviewed the case as of

March 31, 2017

and deemed that the

$2.3

million reserve remains sufficient.

The Company is a defendant in a lawsuit filed in Montana state court alleging fraud and abuse of process arising from the Company’s business relationship with an entity that finances divorce litigation proceedings. As of

March 31, 2017,

and based on its assessments of current facts and circumstances, the Company believes that it has recorded adequate reserves to cover future obligations associated with this lawsuit.

The Company filed a lawsuit in Delaware state court against a

third

party servicer arising from the

third

party servicer’s failure to pay the Company certain amounts that are due the Company under a servicing agreement. The

third

party servicer filed a counterclaim in the Delaware action alleging that the Company owes certain amounts to the

third

party servicer for court costs pursuant to an alleged arrangement between the companies. The Company believes that it has meritorious defenses against this counterclaim and will continue to vigorously defend itself against any such action.

In the ordinary course of our business, we are involved in numerous legal proceedings. We regularly initiate collection lawsuits, using our network of

third

party law firms, against consumers. Also, consumers occasionally initiate litigation against us, in which they allege that we have violated a federal or state law in the process of collecting their account. We do

not

believe that these ordinary course matters are material to our business and financial condition. As of the date of this Form

10

-Q, we are

not

involved in any other material litigation in which we are a defendant.

XML

Note 12 - Income Recognition, Impairments, and Commissions and Fees

6 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Income Recognition, Impairments, and Commissions and Fees [Text Block]

Note

12—Income

Recognition, Impairments, and Commissions and Fees

Income Recognition

The Company accounts for certain of its investments in finance receivables using the guidance of FASB Accounting Standards Codification (“ASC”), Receivables — Loans and Debt Securities Acquired with Deteriorated Credit Quality (“ASC

310”

). Under the guidance of ASC

310,

static pools of accounts are established. These pools are aggregated based on certain common risk criteria. Each static pool is recorded at cost and is accounted for as a single unit for the recognition of income, principal payments and loss provision. Due to the substantial reduction of portfolios reported under the interest method, and the inability to reasonably estimate cash collections required to account for those portfolios under the interest method the Company concluded the cost recovery method is the appropriate accounting method under the circumstances.  

Under the guidance of ASC

310

-

30,

the Company must analyze a portfolio upon acquisition to ensure which method is appropriate, and once a static pool is established for a quarter, individual receivable accounts are

not

added to the pool (unless replaced by the seller) or removed from the pool (unless sold or returned to the seller). 

The Company uses the cost recovery method when collections on a particular pool of accounts cannot be reasonably predicted. Under the cost recovery method,

no

income is recognized until the cost of the portfolio has been fully recovered. A pool can become fully amortized (

zero

carrying balance on the balance sheet) while still generating cash collections. In this case, all cash collections are recognized as revenue when received. 

 The Company accounts for its investments in personal injury claims at an agreed upon interest rate, in anticipation of a future settlement. The interest purchased by Pegasus in each claim consists of the right to receive from such claimant part of the proceeds or recoveries which such claimant receives by reason of a settlement, judgment or award with respect to such claimant’s claim. Open case revenue is estimated, recognized and accrued at a rate based on the expected realization and underwriting guidelines and facts and circumstances for each individual case. These personal injury claims are non-recourse. When a case is closed and the cash is received for the advance provided to a claimant, revenue is recognized based upon the contractually agreed upon interest rate, and, if applicable, adjusted for any changes due to a settled amount and fees charged to the claimant. 

The funding of matrimonial actions is on a non-recourse basis. Revenue from matrimonial actions is recognized under the cost recovery method.

CBC purchases periodic payments under structured settlements and annuity policies from individuals in exchange for a lump sum payment. The Company elected to carry structured settlements at fair value. Unearned income on structured settlements is recognized as interest income using the effective interest method over the life of the related settlement. Changes in fair value are recorded in unrealized gain (loss) in structured settlements in our statements of operations. 

The Company recognizes revenue for GAR Disability Advocates when cases close and fees are collected.

Impairments

The Company accounts for its impairments in accordance with ASC

310,

which provides guidance on how to account for differences between contractual and expected cash flows from an investor’s initial investment in loans or debt securities acquired in a transfer if those differences are attributable, at least in part, to credit quality. The recognition of income under ASC

310

is dependent on the Company having the ability to develop reasonable expectations of both the timing and amount of cash flows to be collected. In the event the Company cannot develop a reasonable expectation as to both the timing and amount of cash flows expected to be collected, ASC

310

permits the change to the cost recovery method. The Company will recognize income only after it has recovered its carrying value. If collection projections indicate the carrying value will

not

be recovered, an impairment is required. The impairment will be equal to the difference between the carrying value at the time of the forecast and the corresponding estimated remaining future collections. 

In

October 2014,

the Company invested

$5.0

million in Class A shares of the Topaz MP Fixed Income Fund (“Topaz Fund”), a closed end fund. The Topaz Fund invests indirectly in various portfolios of Non-Performing Small Consumer Loans. The objective of the fund is to obtain a fixed return cash flow representing interest on the invested capital. According to the investment memorandum of the fund, the Topaz Fund proposed to make semi-annual distributions of

14%

annual compounded interest on

June

and

December

of each year. Since

December 2015,

no

distribution has been received by the Company. The Company received letters from the fund’s General Partner explaining that the distributions were

not

made due to the negative performance of the fund for the periods.

 During the fiscal year

2016,

the Company recorded an impairment loss on this investment of

$1.0

million, which was included in general and administrative expenses in the consolidated statements of operations. In fiscal year

2017,

the Company received an announcement that the investment was being liquidated. After careful consideration, the

$3,425,000

carrying value of this investment was written off as of

March 31, 2017.

Commissions and fees

Commissions and fees are the contractual commissions earned by

third

party collection agencies and attorneys, and direct costs associated with the collection effort, generally court costs. The Company utilizes

third

party collection agencies and attorney networks.

XML

Note 13 - Income Taxes

6 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note

13—Income

Taxes

At the end of each interim reporting period, the Company estimates its effective income tax rate expected to be applicable for the full year. The estimate is used in providing for income taxes on a year-to-date basis and

may

change in subsequent interim periods. The Company’s effective tax rate from operations for the

three months ended

December 31, 2016

and

six months ended

March 31, 2017

was

41%

for both periods, compared to

45%

and

49%

in the same periods of the prior year. The effective rate for fiscal

2017

differed from the U.S. federal statutory rate of

34%

due to state income taxes, and other permanent differences. The effective rate for fiscal

2016

differed from the U.S. federal statutory rate of

35%

primarily due to state income taxes and other permanent differences.

 The Company files income tax returns in the U.S federal jurisdiction, various state jurisdictions, and various foreign countries. The tax returns for the

2014

through

2015

fiscal years are currently under examination by the Internal Revenue Service. The Company does

not

have any uncertain tax positions.

XML

Note 14 - Net (Loss) Income Per Share

6 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Earnings Per Share [Text Block]

Note

14—Net

(Loss) Income per Share

Basic per share data is calculated by dividing net income (loss) by the weighted average shares outstanding during the period. Diluted earnings per share is calculated similarly, except that it includes the dilutive effect of the assumed exercise of securities, including the effect of shares issuable under the Company’s stock based compensation plans. With respect to the assumed proceeds from the exercise of dilutive options, the treasury stock method is calculated using the average market price for the period.

The following table presents the computation of basic and diluted per share data for the

three months ended

March 

31,

2017

and

2016:

	Three Months Ended March 31, 2017								Three Months Ended March 31, 2016
	Net Loss			Weighted Average Shares		Per Share Amount			Net Loss			Weighted Average Shares		Per Share Amount
Basic	$	(5,569,000	)		9,691,576	$	(0.57	)	$	(1,831,000	)		12,076,120	$	(0.15	)
Effect of Dilutive Stock					—								—
Diluted	$	(5,569,000	)		9,691,576	$	(0.57	)	$	(1,831,000	)		12,076,120	$	(0.15	)

The following table presents the computation of basic and diluted per share data for the

six months ended

March 31, 2017

and

2016:

	Six Months Ended March 31, 2017								Six Months Ended March 31, 2016
	Net Loss			Weighted Average Shares		Per Share Amount			Net Loss			Weighted Average Shares		Per Share Amount
Basic	$	(7,226,000	)		10,795,903	$	(0.67	)	$	(25,000	)		12,115,987	$	0.00
Effect of Dilutive Stock					—								—
Diluted	$	(7,226,000	)		10,795,903	$	(0.67	)	$	(25,000	)		12,115,987	$	0.00

XML

Note 15 - Stock Based Compensation

6 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note

15—Stock

Based Compensation

The Company accounts for stock-based employee compensation under ASC

718,

Compensation — Stock Compensation (“ASC

718”

). ASC

718

requires that compensation expense associated with stock options and other stock based awards be recognized in the statement of operations, rather than a disclosure in the notes to the Company’s consolidated financial statements.

On

December 

16,

2015,

the Compensation Committee of the Board (“Compensation Committee”) granted

67,100

stock options to non-officer employees of the Company, of which

9,100

options vested immediately and the remaining

58,000

stock options vest in

three

equal annual installments and accounted for as

one

graded vesting award. The exercise price of these options was at the market price on that date. The weighted average assumptions used in the option pricing model were as follows:

Risk-free interest rate	0.24	%
Expected term (years)	6.25
Expected volatility	23.4	%
Dividend yield	0.00	%

On

December 

16,

 

2015,

the Compensation Committee granted

5,000

restricted shares to a non-officer employee of the Company. These shares vested fully in

March 2016.

On

December 

31,

2015,

the Company issued an aggregate of

123,304

shares to the

two

former CBC principals (see Note

5

– Acquisition of CBC). These shares are subject to a

one

year lock up period in which the holders cannot sell the shares. In addition, the shares are subject to certain sales restrictions following the initial lock-up period which expired on

December 31, 2016 (

see Note

5

– Acquisition of CBC).

XML

Note 16 - Stock Option Plans

6 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Stock Option Plans [Text Block]

Note

16—Stock

Option Plans

2012

Stock Option and Performance Award Plan

On

February 

7,

2012,

the Board adopted the Company’s

2012

Stock Option and Performance Award Plan (the

“2012

Plan”), which was approved by the stockholders of the Company on

March 

21,

2012.

The

2012

Plan replaces the Equity Compensation Plan (as defined below).

The

2012

Plan provides the Company with flexibility with respect to equity awards by providing for grants of stock awards (i.e. restricted or unrestricted), stock purchase rights and stock appreciation rights, in addition to the granting of stock options.

The Company authorized

2,000,000

shares of Common Stock for issuance under the

2012

Plan. Under the

2012

Plan, the Company has granted options to purchase an aggregate of

484,200

shares, an award of

245,625

shares of restricted stock, and has cancelled

66,868

options, leaving

1,337,043

shares available as of

March 

31,

2017.

As of

March 

31,

2017,

approximately

95

of the Company’s employees were able to participate in the

2012

Plan.

Equity Compensation Plan

On

December 

1,

2005,

the Board adopted the Company’s Equity Compensation Plan (the “Equity Compensation Plan”), which was approved by the stockholders of the Company on

March 

1,

2006.

The Equity Compensation Plan was adopted to supplement the Company’s

2002

Stock Option Plan (as defined below).

In addition to permitting the grant of stock options as are permitted under the

2002

Stock Option Plan, the Equity Compensation Plan allows the Company flexibility with respect to equity awards by also providing for grants of stock awards (i.e. restricted or unrestricted), stock purchase rights and stock appreciation rights.

The Company authorized

1,000,000

shares of Common Stock for issuance under the Equity Compensation Plan. As of

March 

21,

2012,

no

more awards could be issued under this plan.

2002

Stock Option Plan

On

March 

5,

2002,

the Board adopted the Company’s

2002

Stock Option Plan (the

“2002

Plan”), which was approved by the stockholders of the Company on

May 

1,

2002.

The

2002

Plan was adopted in order to attract and retain qualified directors, officers and employees of, and consultants to, the Company.

The

2002

Plan authorizes the granting of incentive stock options (as defined in Section 

422

of the Internal Revenue Code of

1986,

as amended (the “Code”)) and non-qualified stock options to eligible employees of the Company, including officers and directors of the Company (whether or

not

employees) and consultants of the Company.

The Company authorized

1,000,000

shares of Common Stock authorized for issuance under the

2002

Plan. As of

March 

5,

2012,

no

more awards could be issued under this plan.

Summary of the Plans

Compensation expense for stock options and restricted stock is recognized over the vesting period. Compensation expense for restricted stock is based upon the market price of the shares underlying the awards on the grant date.

The following table summarizes stock option transactions under the

2012

Plan, the

2002

Plan, and the Equity Compensation Plan:

	Six Months Ended March 31,
	2017					2016
	Number Of Shares			Weighted Average Exercise Price		Number of Shares			Weighted Average Exercise Price
Outstanding options at the beginning of period		949,667		$	8.47		1,043,566		$	8.47
Options granted		—			—		67,100			7.93
Options exercised		—			—		(7,499	)		6.32
Options forfeited/cancelled		(52,800	)		14.13		(8,300	)		8.14
Outstanding options at the end of period		896,867		$	8.14		1,094,867		$	8.45
Exercisable options at the end of period		858,195		$	8.15		963,522		$	8.48

	Three Months Ended March 31,
	2017					2016
	Number Of Shares			Weighted Average Exercise Price		Number of Shares			Weighted Average Exercise Price
Outstanding options at the beginning of period		897,167		$	8.14		1,110,666		$	8.43
Options granted		—			—		—			—
Options exercised		—			—		(7,499	)		6.32
Options forfeited/cancelled		(300	)		8.08		(8,300	)		8.14
Outstanding options at the end of period		896,867		$	8.14		1,094,867		$	8.45
Exercisable options at the end of period		858,195		$	8.15		963,522		$	8.48

The following table summarizes information about the

2012

Plan,

2002

Plan, and the Equity Compensation Plan outstanding options as of

March 

31,

2017:

				Options Outstanding						Options Exercisable
Range of Exercise Price				Number of Shares Outstanding		Weighted Remaining Contractual Life (in Years)		Weighted Average Exercise Price		Number of Shares Exercisable		Weighted Average Exercise Price
	$2.8751	–	$5.7500		3,800		2.1	$	2.95		3,800	$	2.95
	$5.7501	–	$8.6250		768,567		5.0		7.96		729,895		7.96
	$8.6251	–	$11.5000		124,500		5.8		9.40		124,500		9.40
					896,867		5.1	$	8.14		858,195	$	8.15

The Company recognized

$8,000

and

$14,000

of compensation expense related to the stock option grants during the

six

and

three

month periods ended

March 

31,

2017,

respectively. The Company recognized

$327,000

and

$131,000

of compensation expense related to the stock option grants during the

six

and

three

month periods ended

March 

31,

2016,

respectively. As of

March 

31,

2017,

there was

$62,000

of unrecognized compensation cost related to stock option awards. The weighted average period over which such costs are expected to be recognized is

1.7

years.

The intrinsic value of the outstanding and exercisable options as of

March 

31,

2017

was approximately

$228,000

and

$219,000,

respectively. The weighted average remaining contractual life of exercisable options is

4.9

years. There were

no

options exercised during the

six

and

three

month periods ended

March 31, 2017.

The fair value of the stock options that vested during the

six

and

three

month periods ended

March 

31,

2017

was approximately

$657,000

and

$111,000,

respectively. The fair value of the stock options that vested during the

six

and

three

month periods ended

March 

31,

2016

was approximately

$1,052,000

and

$122,000,

respectively. There were

no

options granted during the

six

and

three

month periods ended

March 31, 2017.

The fair value of the options granted during the

six

and

three

month periods ended

March 

31,

2016

was approximately

$532,000

and

$0,

respectively.

The following table summarizes information about restricted stock transactions:

	Six Months Ended March 31,
	2017				2016
	Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Unvested at the beginning of period		—	$	—		44,107		$	9.28
Awards granted		—		—		5,000			7.89
Vested		—		—		(34,107	)		9.57
Forfeited		—		—		—			—
Unvested at the end of period		—	$	—		15,000		$	7.92

	Three Months Ended March 31,
	2017				2016
	Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
Unvested at the beginning of period		—	$	—		15,000	$	7.92
Awards granted		—		—		—		—
Vested		—		—		—		—
Forfeited		—		—		—
Unvested at the end of period		—	$	—		15,000	$	7.92

The Company recognized

no

compensation expense related to the restricted stock awards during both the

six

and

three

month periods ended

March 

31,

2017,

respectively. The Company recognized

$101,000

and

$14,000

of compensation expense related to the restricted stock awards during the

six

and

three

month periods ended

March 

31,

2016,

respectively. As of

March 

31,

2017,

there was

no

unrecognized compensation cost related to restricted stock awards. An aggregate of

5,000

shares of restricted stock was granted during the

first

six

months of fiscal year

2016,

all of which were granted to a non-officer employee. The fair value of the awards vested during the

six

month periods ended

March 31, 2017

and

2016

was

$0

and

$40,000,

respectively.

The Company recognized an aggregate total of

$8,000

and

$14,000

in compensation expense for the

six

and

three

month periods ended

March 31, 2017,

respectively, for the stock options and restricted stock grants. The Company recognized an aggregate total of

$428,000

and

$145,000

in compensation expense for the

six

and

three

month periods ended

March 31, 2016,

respectively, for the stock options and restricted stock grants. As of

March 

31,

2017,

there was a total of

$62,000

of unrecognized compensation cost related to unvested stock options and restricted stock grants. The method used to calculate stock based compensation is the straight line pro-rated method.

XML

Note 17 - Stockholders' Equity

6 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

Note

17—Stockholders’

Equity

Dividends are declared at the discretion of the Board and depend upon the Company’s financial condition, operating results, capital requirements and other factors that the Board deems relevant. In addition, agreements with the Company’s lenders

may,

from time to time, restrict the ability to pay dividends. As of

March 31, 2017,

there were

no

such restrictions.

No

dividends were declared during the

three

and

six

month periods ended

March 31, 2017

and

2016.

 

 On

August 

11,

2015,

the Board approved the repurchase of up to

$15,000,000

of the Company’s common stock and authorized management of the Company to enter into the Shares Repurchase Plan under Sections

10b

-

18

and

10b5

-

1

of the Securities Exchange Act (the “Shares Repurchase Plan”). The Shares Repurchase Plan was to have been effective to

December 

31,

2015.

On

December 

17,

2015

the Board approved the extension of the Plan to

March 

31,

2016

and reset the maximum to an additional

$15

million in repurchases. On

March 

17,

2016,

having repurchased approximately

$9.9

million of the Company’s common stock, the Board approved further extension of the Plan to

December 

31,

2016

and reset the maximum to 

$15

million in repurchases. On

March 

22,

2016,

a Company shareholder commenced a tender offer on the Company’s common stock. Per the provisions of the Shares Repurchase Plan, it terminated immediately, and

no

further purchases were permitted under the Shares Repurchase Plan. Through

September 30, 2016,

the Company purchased approximately

1,186,000

shares at an aggregate cost of approximately

$10.1

million under the Shares Repurchase Plan.  

On

May 

25,

2016,

the Company entered into a Mutual Confidentiality Agreement (the “Agreement”) with MPF InvestCo

4,

LLC, a wholly owned subsidiary of The Mangrove Partners Master Fund, Ltd. (“Mangrove”), pursuant to which Mangrove and the Company agreed to (

1

) provide certain Confidential Information (as defined below) to the other party to the Agreement and the other party’s representatives, (

2

) the confidentiality of the Confidential Information, and (

3

) certain restrictions on the activities of the parties to the Agreement.  

 As of

December 31, 2016,

and for the

three

month periods ended

December 31, 2015

and

2016,

Mangrove, due to their ownership in the Company's common stock, which was acquired in a series of OTC transactions, was deemed to be a related party. 

 Pursuant to the Agreement, the Company made available to Mangrove and its representatives certain confidential information relating to the Company or its subsidiaries, and Mangrove agreed to make available to the Company and its representatives certain confidential information relating to Mangrove and its affiliates (collectively, the “Confidential Information”). The Company and Mangrove agreed

not

to disclose the Confidential Information, and to cause each of their representatives, respectively,

not

to disclose the Confidential Information, except as required by law. Pursuant to the Agreement, the Company provided information requested by Mangrove to

one

or more of Mangrove’s representatives and such representatives prepared summaries of such information (the “Summaries”). The Company approved the Summaries, and the approved Summaries were provided to Mangrove. The Company agreed to release the approved Summaries publicly on or prior to the end of the Extended Period (as defined in the Agreement), to the extent that the information contained in the Summaries has

not

already been disclosed.  

 Further, under the terms of the Agreement, Mangrove and the Company have agreed to certain restrictions during the Discussion Period, which began on

May 25, 2016 

and the Extended Period, including that, unless consented to by the other party to the Agreement or required by applicable law, neither party will, and shall cause its affiliates and representatives

not

to, (i) commence any litigation against the other party, (ii) make any filing with the Securities and Exchange Commission of proxy solicitation materials, preliminary proxy statement, definitive proxy statement or otherwise or call any annual or special meeting of stockholders of the Company, (iii) publicly refer to: (a) the Confidential Information or Discussion Information (as defined in the Agreement), (b) any annual or special meetings of stockholders of the Company or (c) any prior discussions between the parties, including in any filing with the Securities and Exchange Commission (including any proxy solicitation materials, preliminary proxy statement, definitive proxy statement or otherwise), in any press release or in any other written or oral disclosure to a

third

party, (iv) make any purchases of the Company’s securities, including, but

not

limited to, pursuant to any stock buyback plans, tender offers, open-market purchases, privately negotiated transactions or otherwise, (v) make any demand under Section 

220

of the Delaware General Corporation Law, (vi) make or propose to make any amendments to the Company’s Certificate of Incorporation, as amended,

or By-laws, as amended, (vii) adopt, renew, propose or otherwise enter into a Shareholder Rights Plan with respect to the Company’s securities, (viii) adopt or propose any changes to the Company’s capital structure or (ix) negotiate, discuss, enter into, propose or otherwise transact in any extraordinary transactions with respect to the Company, outside the ordinary course of business, including, but

not

limited to, any mergers, asset sales or asset purchases.

On

November 21, 2016,

Mangrove notified the Company that Mangrove was terminating the Agreement with the Company. Under the Agreement, the Company and Mangrove agreed to (

1

) provide certain Confidential Information (as defined below) to the other party to the Agreement and the other party’s representatives, (

2

) maintain the confidentiality of the Confidential Information, and (

3

) certain restrictions on the activities of the parties to the Agreement. Upon termination of the Discussion Period, the agreement provides for a period of

30

days thereafter (the “Extended Period”). Throughout the Extended Period of the Agreement, the parties are subject to the standstill provisions of the Agreement. Following the Discussion Period and the Extended Period, nothing in the Agreement shall prohibit any party from taking any of the activities referred to as the Restricted Activities, and specifically nothing shall restrict Mangrove or its representatives from calling a special meeting, nominating

one

or more candidates to serve as directors of the Company or commencing, or announcing its intention to commence, a “solicitation” of “proxies” (as such terms are used in Regulation

14A

of the Securities Exchange Act of

1934,

as amended) to vote with respect to any meeting of stockholders of the Company. The effective termination date of this Agreement was

January 6, 2017.

On

January 6, 2017,

the Company entered into a settlement agreement (the “ Settlement Agreement”) with Mangrove and, for limited purposes stated therein, Gary Stern, Ricky Stern, Emily Stern, Arthur Stern, Asta Group, Incorporated and GMS Family Investors LLC (collectively, the “ Stern Family”).

The Settlement Agreement provided that, within

ten

business days following the date of the Settlement Agreement, the Company will commence a self-tender offer (“ Tender Offer”) to repurchase for cash

5,314,009

shares of its common stock at a purchase price of

$10.35

per share. The Tender Offer will expire

no

later than

February 28, 2017.

Pursuant to the Settlement Agreement, Mangrove will tender its

4,005,701

shares for purchase by the Company. The Stern Family has agreed

not

to tender any of their shares in the Tender Offer. In addition, pursuant to a securities purchase agreement dated

January 6, 2017

between Mangrove and Gary Stern (the “Purchase Agreement”), Gary Stern will purchase any remaining shares owned by Mangrove

eleven

business days following the closing of the Tender Offer for

$10.35

per share.  

The Settlement Agreement includes customary standstill and related provisions. Mangrove and the Company also agreed on a mutual release of claims.

Additionally, the Company indemnified Mangrove from and against any excise tax imposed as a result of this Settlement Agreement.  

The Settlement Agreement was terminable by either the Company or Mangrove by written notice at any time after the close of business on the

second

anniversary of the Settlement Agreement. The Settlement Agreement will also terminate if the Tender Offer does

not

close on or before

February 28, 2017

or the Company amends the terms of the Tender Offer in a manner adverse to Mangrove.    

In connection with the Settlement Agreement, the Company also entered into a Voting Agreement dated

January 6, 2017 (

the “ Voting Agreement ”) with Gary Stern, Ricky Stern, Emily Stern, Asta Group, Incorporated and GMS Family Investors LLC (collectively, the “ Stern Stockholders”). The Voting Agreement provides that the Stern Stockholders will

not

have the right to vote more than

49%

of the Company’s total outstanding shares, and any additional shares held by the Stern Stockholders will be voted in a manner proportionate to the votes of the outstanding shares

not

held by the Stern Stockholders.

On

January 19, 2017,

the Company commenced a self-tender offer to purchase for cash up to

5,314,009

shares of its common stock at a purchase price of

$10.35

per share, less applicable withholding taxes and without interest. The Company made the tender offer pursuant to the Settlement Agreement dated as of

January 6, 2017,

by and among the Company, Mangrove and certain of their respective affiliates, pursuant to which Mangrove and its affiliates would tender their

4,005,701

shares. The tender offer would reduce the number of shares in the public market.  

If more than

5,314,009

shares had been tendered, the Company would have purchased all tendered shares on a pro rata basis, subject to the conditional tender provisions described in the Offer to Purchase. Pursuant to the Settlement Agreement, Gary Stern (or his permitted assignees) had unconditionally agreed to purchase from Mangrove and its affiliates any shares owned by Mangrove and its affiliates that the Company did

not

purchase in the tender offer.

The tender offer expired on

February 15, 2017,

at

11:59

p.m., New York City time. Based on the final count by American Stock Transfer & Trust Company, LLC ("AMSTOCK"), the depositary for the tender offer, a total of approximately

6,022,253

shares of the Company’s common stock were validly tendered and

not

validly withdrawn. Because the tender offer was oversubscribed by

708,244

shares, the Company purchased only a prorated portion of the shares properly tendered by each tendering stockholder. The depositary had informed the Company that the final proration factor for the tender offer was approximately

88.24%

of the shares validly tendered and

not

validly withdrawn. AMSTOCK promptly issued payment for the

5,314,009

shares accepted pursuant to the tender offer and returned all other shares tendered and

not

purchased. The shares acquired represented approximately

44.7%

of the total number of shares of the Company’s common stock issued and outstanding as of

February 6, 2017.

As a result of this tender offer, the Company recorded during the

second

quarter an additional

$54.2

million in treasury stock, and

$797,000

was charged to general and administrative expenses in the consolidated statements of operations which represents the excess of the current market price of the Company’s common stock on

January 18, 2017

of

$10.20

per share. Additionally, the Ricky Stern Family

2012

Trust (as Gary Stern's permitted assignee), acquired

471,086

Shares under the Purchase Agreement on

March 10, 2017

for

$4.9

million.

XML

Note 18 - Fair Value of Financial Measurements and Disclosures

6 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Fair Value Disclosures [Text Block]

Note

18—Fair

Value of Financial Measurements and Disclosures

Disclosures about Fair Value of Financial Instruments

FASB ASC

825,

Financial Instruments, (“ASC

825”

), requires disclosure of fair value information about financial instruments, whether or

not

recognized on the balance sheet, for which it is practicable to estimate that value. Because there are a limited number of market participants for certain of the Company’s assets and liabilities, fair value estimates are based upon judgments regarding credit risk, investor expectation of economic conditions, normal cost of administration and other risk characteristics, including interest rate and prepayment risk. These estimates are subjective in nature and involve uncertainties and matters of judgment, which significantly affect the estimates.

The estimated fair value of the Company’s financial instruments is summarized as follows:

	March 31, 2017				September 30, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets
Cash and cash equivalents (Level 1)	$	10,521,000	$	10,521,000	$	18,526,000	$	18,526,000
Restricted cash (Level 1)		10,064,000		10,064,000		—		—
Available-for-sale investments (Level 1)		5,397,000		5,397,000		56,764,000		56,764,000
Consumer receivables acquired for liquidation (Level 3)		11,651,000		44,014,000		14,320,000		47,233,000
Structured settlements (Level 3)		90,370,000		90,370,000		85,708,000		85,708,000
Other investments, net (1)		—		—		3,590,000		3,590,000
Financial liabilities
Other debt – CBC, revolving line of credit (Level 3)		18,709,000		18,709,000		10,154,000		10,154,000
Other debt – CBC, non-recourse notes payable with varying installments (Level 3)		55,474,000		55,474,000		57,281,000		57,281,000

( 1 ) The Company has elected to early adopt ASU 2015 - 07 and in accordance with ASU 2015 - 07, certain investments that are measured at fair value using the net asset value per share (or its equivalent) have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheet. As of March 31, 2017, after receiving notification that the investment was being liquidated, the Company wrote it off.

Disclosure of the estimated fair values of financial instruments often requires the use of estimates. The Company uses the following methods and assumptions to estimate the fair value of financial instruments:

Cash and cash equivalents – The carrying amount of cash and cash equivalents approximates fair value.

Restricted cash – The carrying amount of restricted cash approximates fair value.

Available-for-sale investments – The available-for-sale securities consist of mutual funds that are valued based on quoted prices in active markets.

Consumer receivables acquired for liquidation – The Company computed the fair value of the consumer receivables acquired for liquidation using its proprietary forecasting model. The Company’s forecasting model utilizes a discounted cash flow analysis. The Company’s cash flows are an estimate of collections for consumer receivables based on variables fully described in Note

4

- Consumer Receivables Acquired for Liquidation. These cash flows are discounted to determine the fair value.

Structured settlements – The Company determined the fair value based on the discounted forecasted future collections of the structured settlements. Unrealized gains (losses) on structured settlements is comprised of both unrealized gains resulting from fair market valuation at the date of acquisition of the structured settlements and the subsequent fair value adjustments resulting from the change in the discount rate.

Other investments – The Company estimated the fair value using the net asset value per share of the investment. There are

no

unfunded commitments and the investment cannot be redeemed for

5

years from the date of the initial investment (

October 2014).

Other debt CBC, revolving line of credit – The Company determined the fair value based on similar instruments in the market.

Other debt CBC, non-recourse notes payable with varying installments – The fair value at

March 31, 2017

was based on the discounted forecasted future collections of the structured settlements.

Fair Value Hierarchy

The Company recorded its available-for-sale investments at estimated fair value on a recurring basis. The accompanying consolidated financial statements include estimated fair value information regarding its available-for-sale investments as of

March 

31,

2017,

as required by FASB ASC

820,

Fair Value Measurements and Disclosures (“ASC

820”

). ASC

820

defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. ASC

820

also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s level within the fair value hierarchy is based on the lowest level of input significant to the fair value measurement.

Level

1

– Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to assess at the measurement date.

Level

2

– Observable inputs other than Level

1

prices, such as quoted prices for similar assets or liabilities in active markets; quoted prices in markets that are

not

active for identical or similar assets or liabilities; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

Level

3

– Unobservable inputs that are supported by little or

no

market activity and significant to the fair value of the liabilities that are developed using the reporting entities’ estimates and assumptions, which reflect those that market participants would use.

A significant unobservable input used in the fair value measurement of structured settlements is the discount rate. Significant increases and decreases in the discount rate used to estimate the fair value of structured settlements could decrease or increase the fair value measurement of the structured settlements. The discount rate could be affected by factors which include, but are

not

limited to, creditworthiness of insurance companies, market conditions, specifically competitive factors, credit quality of receivables purchased, the diversity of the payers of the receivables purchased, the weighted average life of receivables, current benchmark rates (i.e.

10

year treasury or swap rate) and the historical portfolio performance of the originator and/or servicer.

The Company’s available-for-sale investments are classified as Level

1

financial instruments based on the classifications described above. The Company did

not

have transfers into or (out of) Level

1

investments during the

six

month period ended

March 

31,

2017.

The Company had

no

Level

2

or Level

3

available-for-sale investments during the

first

six

months of fiscal year

2017.

The following table sets forth the Company’s quantitative information about its Level

3

fair value measurements as of

March 

31,

2017:

	Fair Value		Valuation Technique	Significant Unobservable Input	Weighted Average Rate
Structured settlements at fair value	$	90,370,000	Discounted cash flow	Discount rate		4.80%	–	10.5%

A significant unobservable input used in the fair value measurement of the Company's structured settlements measured at fair value using unobservable inputs (Level

3

) is the discount rate. The inputs comprising the discount rate include A-rated U.S. Financial yield curve, plus illiquidity spread, and cash flows of the portfolio are adjusted to take into consideration survival probabilities, if applicable.

The changes in structured settlements at fair value using significant unobservable inputs (Level

3

) during the

six months ended

March 

31,

2017

were as follows:

Balance at September 30, 2016	$	85,708,000
Total losses included in earnings		(2,293,000	)
Purchases		7,926,000
Sales		—
Interest accreted		3,165,000
Payments received		(4,136,000	)
Total	$	90,370,000
The amount of total losses for the six months period included in earnings attributable to the change in unrealized losses relating to assets held at March 31, 2017	$	(2,293,000	)

Realized and unrealized gains and losses included in earnings in the accompanying consolidated statements of operations for the

six months ended

March 

31,

2017

are reported in the following revenue categories:

Total losses included in the six months ended March 31, 2017	$	(2,293,000	)
Change in unrealized losses relating to assets still held at March 31, 2017	$	(2,293,000	)

XML

Note 19 - Segment Reporting

6 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

Note

19—Segment

Reporting

The Company operates through strategic business units that are aggregated into

four

reportable segments: Consumer receivables, personal injury claims, structured settlements, and GAR Disability Advocates. The

four

reportable segments consist of the following:

• Consumer receivables -  This segment is engaged in the business of purchasing, managing for its own account and servicing distressed consumer receivables, including judgment receivables, charged off receivables and semi-performing receivables.  Judgment receivables are accounts where outside attorneys have secured judgments directly against the consumer. Primary charged-off receivables are accounts that have been written-off by the originators and may have been previously serviced by collection agencies. Semi-performing receivables are accounts where the debtor is currently making partial or irregular monthly payments, but the accounts may have been written-off by the originators. 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 ® , Visa ® and other credit card accounts which were charged-off by the issuers or providers for non-payment. We acquire these and other consumer receivable portfolios at substantial discounts to their face values. The discounts are based on the characteristics (issuer, account size, debtor location and age of debt) of the underlying accounts of each portfolio.  The business conducts its activities primarily under the name Palisades Collection, LLC.

• Personal injury claims  – Pegasus Funding, LLC, an 80% owned subsidiary, and Simia, a wholly owned subsidiary, purchase interests in personal injury claims from claimants who are a party to personal injury litigation. Advances to each claimant funds on a non-recourse basis at an agreed upon interest rate, in anticipation of a future settlement. The interest in each claim purchased consists of the right to receive, from such claimant, part of the proceeds or recoveries which such claimant receives by reason of a settlement, judgment or award with respect to such claimant’s claim.

• Structured settlements   - CBC purchases periodic structured settlements and annuity policies from individuals in exchange for a lump sum payment.

• GAR Disability Advocates is an advocacy group which represents individuals nationwide in their claims for social security disability and supplemental security income benefits from the Social Security Administration.

Certain non-allocated administrative costs, interest income, interest expense and various other non-operating income and expenses are reflected in Corporate. Corporate assets include cash and cash equivalents, restricted cash, available-for-sale securities, property and equipment, goodwill, deferred taxes and other assets.

The following table shows results by reporting segment for the

three

and

six

month period ended

March 

31,

2017

and

2016.

The Company eliminates revenue between segments.

			Personal						GAR
(Dollars in millions)	Consumer Receivables		Injury Claims			Structured Settlements			Disability Advocates			Corporate			Total Company
Three Months Ended March 31,
2017:
Total Revenues	$	4.0	$	2.2		$	0.6		$	1.5		$	—		$	8.3
Other income (loss)		—		—			—			—			(0.7	)		(0.7	)
Income (loss) before income tax		3.5		(0.3	)		(1.9	)		(0.5	)		(10.2	)		(9.4	)
2016:
Total Revenues		4.9		1.8			3.0			0.9			—			10.6
Other income		—		—			—			—			0.4			0.4
Income (loss) before income tax		0.9		0.4			0.7			(2.7	)		(2.5	)		(3.2	)
Six Months Ended March 31,
2017:
Total Revenues		8.0		4.4			1.6			2.9			—			16.9
Other income (loss)		—		—			—			—			(0.1	)		(0.1	)
Income (loss) before income tax		6.9		(0.3	)		(3.5	)		(1.4	)		(13.9	)		(12.2	)
Total Assets		18.8		49.0			87.4			2.3			53.9			211.4
2016:
Total Revenues		10.1		4.9			5.9			1.5			—			22.4
Other income		—		—			—			—			0.9			0.9
Income (loss) before income tax		4.8		2.3			1.4			(4.5	)		(3.8	)		0.2
Total Assets		16.8		36.2			71.6			3.7			110.5			238.8

XML

Note 20 - Accumulated Other Comprehensive (Loss) Income

6 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Comprehensive Income (Loss) Note [Text Block]

Note

20

- Accumulated Other Comprehensive (Loss) Income

Accumulated other comprehensive (loss) income consists of:

	March 31, 2017									September 30, 2016
	Unrealized Gain (loss) on marketable securities			Foreign currency translation, net			Total			Unrealized Gain (loss) on marketable securities			Foreign currency translation, net			Total
Beginning Balance	$	624,000		$	(538,000	)	$	86,000		$	(205,000	)	$	(1,480,000	)	$	(1,685,000	)
Change in unrealized (losses) gains on foreign currency translation, net of tax benefit/(expense) of $121,000 and ($628,000) at March 31, 2017, and September 30, 2016, respectively.		-			(181,000	)		(181,000	)		-			942,000			942,000
Change in unrealized (losses) gains on marketable securities, net of tax benefit/ (expense) of $23,000 and ($529,000) at March 31, 2017, and September 30, 2016, respectively.		(35,000	)		-			(35,000	)		868,000			-			868,000
Amount reclassified from accumulated other comprehensive loss, net of tax benefit of $397,000 and $24,000 at March 31, 2017, and September 30, 2016, respectively.		(596,000	)		-			(596,000	)		(39,000	)		-			(39,000	)
Net current-period other comprehensive (loss) income		(631,000	)		(181,000	)		(812,000	)		829,000			942,000		$	1,771,000
Ending balance	$	(7,000	)	$	(719,000	)	$	(726,000	)	$	624,000		$	(538,000	)	$	86,000

	March 31, 201 6
	Unrealized Gain (loss) on marketable securities			Foreign currency translation, net			Total
Beginning Balance	$	(205,000	)	$	(1,480,000	)	$	(1,685,000	)
Change in unrealized (losses) gains on foreign currency translation, net of tax benefit/(expense) of $557,000 during the six month period ended March 31, 2016.		-			496,000			496,000
Change in unrealized (losses) gains on marketable securities, net of tax benefit/ (expense) of ($294,000) during the six month period ended March 31, 2016.		503,000			-			503,000
Amount reclassified from accumulated other comprehensive loss, net of tax benefit of $11,000 during the six month period ended March 31, 2016.		(20,000	)		-			(20,000	)
Net current-period other comprehensive (loss) income		483,000			496,000			979,000
Ending balance	$	278,000		$	(984,000	)	$	(706,000	)

XML

Note 21 - Related Party Transactions

6 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

Note

21—Related

Party Transactions

On

September 

17,

2015,

the Company and Piccolo Business Advisory (“Piccolo”), which is owned by Louis Piccolo, a director of the Company, entered into a Consulting Agreement, pursuant to which Piccolo provides consulting services which included, but is

not

limited to, analysis of proposed debt and equity transactions, due diligence and financial analysis and management consulting services (“services”). The Consulting Agreement is for a period of

two

years, which ends on

September 17, 2017.

For the

six months ended

March 

31,

2017,

the Company paid

$40,000

to Piccolo for such services.

In addition, A. L. Piccolo & Co., Inc. (“ALP”), which is also owned by Louis Piccolo, received a fee from Pegasus which was calculated based on amounts loaned to Pegasus by Fund Pegasus up to maximum of

$700,000.

The fee is payable over

six

years including interest at

4%

per annum from Pegasus during the term of the Pegasus Operating Agreement that expired on

December 28, 2016.

Thereafter, it is payable by PLF and its affiliates.  Pegasus paid ALP

$67,000

for the

six months ended

March 31, 2017

and

2016.

XML

Note 22 - Subsequent Events

6 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Subsequent Events [Text Block]

Note

22—Subsequent

Events

On

April 7, 2017,

CBC, through its subsidiary BBRVII, LLC, issued approximately

$18,340,000

of fixed rate asset backed notes with a yield of

5.0%

and a stated maturity date of

January 15, 2069 (

see Note

10

– Other Debt – CBC).

On

April 28, 2017,

CBC entered into an Assignment Agreement (the “Assignment Agreement”) by and among CBC and an unrelated

third

party (Assignee”). The Assignment Agreement provided for the sale of the Company’s entire life contingent asset portfolio included in the Company’s structured settlements to the Assignee for a purchase price of

$7.7

million. The Company will realize a loss from the sale of approximately

$5.5

million. Accordingly, the Company reflected a

$5.5

million reduction in the fair market value of these assets, resulting in a corresponding revenue loss for the

three months ended

March 31, 2017

in the consolidated statements of operations (see Note

6

– Structured Settlements).

On

April 28, 2017,

the Company renewed the line of credit facility from Bank Hapoalim with the new maturity date of

August 2, 2017(

see Note

9

– Non Recourse Debt). Other terms and conditions remained unchanged.

On

April 28, 2017,

CBC entered into the Tenth Amendment, extending the line of credit to

June 30, 2017.

Other terms and conditions of the Ninth Amendment, in effect as of

March 31, 2017,

remained unchanged (see Note

10

– Other Debt – CBC).

Stockholder Rights Agreement

On

May 5, 2017,

the Board of the Company adopted a stockholder rights plan (the “Rights Agreement”), pursuant to which the Company declared a dividend of

one

right (a “Right”) for each of the Company’s issued and outstanding shares of common stock. The dividend was paid to the stockholders of record at the close of business on

May 15, 2017.

Each Right entitles the holder, subject to the terms of the Rights Agreement, to purchase from the Company

one

one-thousandth of a share of the Company’s Series A Junior Participating Preferred Stock (the “Preferred Stock”) at a price of

$28.60,

subject to certain adjustments.

The Rights generally become exercisable on the earlier of (i) 

ten

business days after any person or group obtains beneficial ownership of

10%

or more of the Company’s outstanding common stock (an “Acquiring Person”), or (ii) 

ten

business days after commencement of a tender or exchange offer resulting in any person or group becoming an Acquiring Person.

The exercise price payable, and the number of shares of Preferred Stock or other securities or property issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution. In the event that, after a person or a group has become an Acquiring Person, the Company is acquired in a merger or other business combination transaction (or

50%

or more of the Company’s assets or earning power are sold), proper provision will be made so that each holder of a Right will thereafter have the right to receive, upon the exercise thereof at the then-current exercise price of the Right, that number of shares of common stock of the acquiring company having a market value at the time of that transaction equal to

two

times the exercise price. The Company

may

redeem the Rights at any time before a person or group becomes an Acquiring Person at a price of

$0.01

per Right, subject to adjustment. At any time after any person or group becomes an Acquiring Person, the Company

may

generally exchange each Right in whole or in part at an exchange ratio of

one

shares of common stock per outstanding Right, subject to adjustment.

Unless terminated on an earlier date pursuant to the terms of the Rights Agreement, the Rights will expire on 

June 1, 2018,

or such later date as

may

be established by the Board as long as any such extension is approved by a vote of the stockholders of the Company by

June 1, 2018.

XML

Significant Accounting Policies (Policies)

6 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The consolidated balance sheet as of

March 31, 2017,

the consolidated statements of operations for the

three

and

six

month periods ended

March 31, 2017

and

2016,

the consolidated statements of comprehensive income (loss) for the

three

and

six

month periods ended

March 31, 2017

and

2016,

the consolidated statements of stockholders’ equity as of and for the

six months ended

March 31, 2017

and

2016,

and the consolidated statements of cash flows for the

six

month periods ended

March 31, 2017

and

2016,

are unaudited. The

September 

30,

2016

financial information included in this report was derived from our audited financial statements included in our Annual Report on Form

10

-K for the fiscal year ended

September 

30,

2016.

In the opinion of management, all adjustments necessary to present fairly our financial position at

March 31, 2017,

the results of operations for the

three

and

six

month periods ended

March 31, 2017

and

2016

and cash flows for the

six

month periods ended

March 31, 2017

and

2016

have been made. The results of operations for the

three

and

six

month periods ended

March 31, 2017

and

2016

are

not

necessarily indicative of the operating results for any other interim period or the full fiscal year.

 The accompanying unaudited consolidated financial statements have been prepared in accordance with Rule 

10

-

01

of Regulation S-

X

promulgated by the Securities and Exchange Commission and therefore do

not

include all information and note disclosures required under generally accepted accounting principles. The Company suggests 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

-K for the fiscal year ended

September 

30,

2016

filed with the Securities and Exchange Commission.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates including management’s estimates of future cash flows and the resulting rates of return.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentration of Credit Risk – Cash and Restricted Cash

The Company considers all highly liquid investments with a maturity date of

three

months or less at the date of purchase to be cash equivalents.

Cash balances are maintained at various depository institutions and are insured by the Federal Deposit Insurance Corporation (“FDIC”). The Company had cash balances with

9

banks at

March 

31,

2017

that exceeded the balance insured by the FDIC by approximately

$5.2

million. Additionally,

two

foreign banks with an aggregate

$1.6

million balances are

not

FDIC insured. There is a

$10.1

million aggregate balance in a domestic bank that is

not

FDIC insured and has been reclassified to restricted cash in the balance sheet since these assets serve as collateral for the line of credit (see Note

9

-Non Recourse Debt ). The Company does

not

believe it is exposed to any significant credit risk due to concentration of cash.

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in a business combination, and is accounted for under ASC

350.

Goodwill has an indefinite useful life and is evaluated for impairment at the reporting-unit level on an annual basis during the

fourth

quarter or more frequently if events or changes in circumstances indicate potential impairment between annual measurement dates. The Company has the option of performing a qualitative assessment of impairment to determine whether any further quantitative testing for impairment is necessary. The initial qualitative approach assesses whether the existence of events or circumstances lead to a determination that it is more likely than

not

that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events and circumstances, the Company determines it is more likely than

not

that the fair value is less than carrying value, a

two

step quantitative impairment test is performed. A step

1

analysis involves calculating the fair value of the associated reporting unit and comparing it to the reporting unit’s carrying value. If the fair value of the reporting unit exceeds the carrying value of the reporting unit including goodwill and the carrying value of the reporting unit is positive, goodwill is considered

not

to be impaired and

no

further analysis is required. If the fair value of the reporting unit is less than its carrying value, step

2

of the impairment test must be performed. Step

2

involves calculating and comparing the implied fair value of the reporting unit’s goodwill with its carrying value. Impairment is recognized if the estimated fair value of the reporting unit is less than its net book value. Such loss is calculated as the difference between the estimated impaired fair value of goodwill and its carrying amount. The goodwill of the Company consists of

$2.8

million of which approximately

$1.4

million from the purchase of CBC and the remaining

$1.4

million from the purchase of VATIV.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In

May 2014,

the FASB issued an update to ASC

606,

Revenue from Contracts with Customers that will supersede virtually all existing revenue guidance. Under this update, an entity is required to recognize revenue upon transfer of promised goods or services to customers, in an amount that reflects the entitled consideration received in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from the customer contracts. This update is effective for annual reporting periods beginning after

December 

15,

2017

including interim periods within that reporting period. Early application is permitted for annual reporting periods beginning after

December 

15,

2016,

including interim periods within that reporting period. Based on the Company’s evaluation, the Company does

not

believe this new standard will impact the accounting for its revenues.

In

January 2016,

the FASB issued ASU

No.

 

2016

-

01,

Financial Instruments-Overall (Subtopic

825

-

10

): Recognition and Measurement of Financial Assets and Financial Liabilities. The main objective in developing this update is enhancing the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The amendments in this update address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The effective date for this update is for annual reporting periods beginning after

December 

15,

2017,

including interim periods within that reporting period. The Company is currently evaluating the impact this update will have on its consolidated financial statements.

In

February 2016,

the FASB issued ASU

No.

2016

-

02

Leases (Topic

842

) to amend lease accounting requirements and requires entities to generally recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use assets. The new standard will require significant additional disclosures about the amount, timing and uncertainty of cash flows from leases. The standard update is effective for fiscal years beginning after

December 

15,

2018

and interim periods within those years and early adoption is permitted. The standard is to be applied using a modified retrospective approach and includes a number of optional practical expedients that entities

may

elect to apply. The Company is currently evaluating the impact of adopting this update on its consolidated financial statements and expects that most of its operating leases will be subject to the accounting standard update and will recognize as operating lease liabilities and right-of-use assets upon adoption

In

March 2016,

the FASB issued ASU

No.

 

2016

-

09,

Compensation-Stock Compensation (Topic

718

): Improvements to Employee Share Based Payment Accounting, to simplify and improve areas of generally accepted accounting principles for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. The effective date for this update is for annual reporting periods beginning after

December 

15,

2016,

including interim periods within that reporting period. The Company is currently evaluating the impact this update will have on its consolidated financial statements. 

In

June 2016,

the FASB issued ASU

2016

-

13,

Financial Instruments-Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments.  The ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.  For the Company, this update will be effective for interim periods and annual periods beginning after

December 15, 2019.

Upon adoption, the Company will accelerate the recording of its credit losses in its financial statements.

In

August 2016,

the FASB issued ASU 

2016

-

15,

Statement of Cash Flows (Topic

230

): Classification of Certain Cash Receipts and Cash Payments.  This ASU will make

eight

targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The new standard is effective for fiscal years beginning after

December 15, 2017.

Early adoption is permitted. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case the Company would be required to apply the amendments prospectively as of the earliest date practicable. The Company is in the process of evaluating the provisions of the ASU, but does

not

expect it to have a material effect on the Company’s consolidated statements of cash flows.

XML

Note 3 - Available-for-sale Investments (Tables)

6 Months Ended

Mar. 31, 2017

Notes Tables

Available-for-sale Securities [Table Text Block]

	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
March 31, 2017	$	5,408,000	$	4,000	$	(15,000	)	$	5,397,000
September 30, 2016	$	55,724,000	$	1,089,000	$	(49,000	)	$	56,764,000

XML

Note 4 - Consumer Receivables Acquired for Liquidation (Tables)

6 Months Ended

Mar. 31, 2017

Notes Tables

Schedule of Consumer Receivables after Liquidation [Table Text Block]

	For the Three Months Ended March 31,
	2017			2016
Balance, beginning of period	$	13,243,000		$	17,843,000
Acquisitions of receivable portfolio		—			1,722,000
Net cash collections from collection of consumer receivables acquired for liquidation		(6,009,000	)		(7,481,000	)
Impairment		—			(124,000	)
Effect of foreign currency translation		399,000			(90,000	)
Finance income recognized		4,018,000			4,914,000
Balance, end of period	$	11,651,000		$	16,784,000
Finance income as a percentage of collections		66.9	%		65.7	%

	For the Six Months Ended March 31,
	2017			2016
Balance, beginning of period	$	13,671,000		$	15,608,000
Acquisitions of receivable portfolio		2,213,000			6,141,000
Net cash collections from collection of consumer receivables acquired for liquidation		(12,188,000	)		(14,774,000	)
Net cash collections represented by account sales of consumer receivables acquired for liquidation		(190,000	)		—
Impairment		—			(124,000	)
Effect of foreign currency translation		126,000			(123,000	)
Finance income recognized		8,019,000			10,056,000
Balance, end of period	$	11,651,000		$	16,784,000
Finance income as a percentage of collections		64.8	%		68.1	%

Schedule of Collections on Gross Basis [Table Text Block]

	For the Three Months Ended March 31,				For the Six Months Ended March 31,
	2017		2016		2017		2016
Gross collections (1)	$	10,621,000	$	12,393,000		22,116,000		24,309,000
Commissions and fees (2)		4,612,000		4,912,000		9,738,000		9,535,000
Net collections	$	6,009,000	$	7,481,000	$	12,378,000	$	14,774,000

XML

Note 6 - Structured Settlements (At Fair Value) (Tables)

6 Months Ended

Mar. 31, 2017

Notes Tables

Structured Settlements [Table Text Block]

	March 31, 2017			September 30, 2016
Maturity (1) (2)	$	152,548,000		$	133,059,000
Unearned income		(62,178,000	)		(47,351,000	)
Structured settlements, net	$	90,370,000		$	85,708,000

Schedule of Fair Value of Debt [Table Text Block]

	March 31, 2017		September 30, 2016
Notes payable secured by settlement receivables with principal and interest outstanding payable until June 2025 (3)	$	1,771,000	$	1,862,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until August 2026 (3)		4,056,000		4,242,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until April 2032 (3)		3,926,000		3,987,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until February 2037 (3)		18,393,000		18,978,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until March 2034 (3)		14,006,000		14,507,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until February 2043 (3)		13,322,000		13,705,000
$25,000,000 revolving line of credit (3)		18,709,000		10,154,000
Encumbered structured settlements		74,183,000		67,435,000
Structured settlements not encumbered		16,187,000		18,273,000
Total structured settlements	$	90,370,000	$	85,708,000

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

September 30, 2017 (6 months)	$	5,702,000
September 30, 2018		8,892,000
September 30, 2019		9,237,000
September 30, 2020		8,713,000
September 30, 2021		9,576,000
Thereafter		110,428,000
Total	$	152,548,000

XML

Note 7 - Litigation Funding (Tables)

6 Months Ended

Mar. 31, 2017

Notes Tables

Allowance for Credit Losses on Financing Receivables [Table Text Block]

	Three Months Ended March 31, 2017			Three Months Ended March 31, 2016			Six Months Ended March 31, 2017			Six Months Ended March 31, 2016
Balance at beginning of period	$	9,542,000		$	5,496,000		$	8,542,000		$	5,459,000
Provisions for losses		1,885,000			724,000			3,274,000			1,136,000
Write offs		(775,000	)		(45,000	)		(1,164,000	)		(420,000	)
Balance at end of period	$	10,652,000		$	6,175,000		$	10,652,000		$	6,175,000

XML

Note 8 - Furniture & Equipment (Tables)

6 Months Ended

Mar. 31, 2017

Notes Tables

Property, Plant and Equipment [Table Text Block]

	March 31,		September 30,
	2017		2016
Furniture	$	417,000	$	417,000
Equipment		236,000		234,000
Software		1,363,000		1,350,000
		2,016,000		2,001,000
Less accumulated depreciation and amortization		1,817,000		1,758,000
Balance, end of period	$	199,000	$	243,000

XML

Note 10 - Other Debt - CBC (Tables)

6 Months Ended

Mar. 31, 2017

CBC [Member]

Notes Tables

Other Liabilities [Table Text Block]

	Interest Rate			March 31, 2017		September 30, 2016
Notes payable secured by settlement receivables with principal and interest outstanding payable until June 2025		8.75	%	$	1,771,000	$	1,862,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until August 2026		7.25	%		4,056,000		4,242,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until April 2032		7.125	%		3,926,000		3,987,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until February 2037		5.39	%		18,393,000		18,978,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until March 2034		5.07	%		14,006,000		14,507,000
Notes payable secured by settlement receivables with principal and interest outstanding payable until February 2043		4.85	%		13,322,000		13,705,000
Subtotal notes payable					55,474,000		57,281,000
$25,000,000 revolving line of credit expiring on June 30, 2017		4.1	%		18,709,000		10,154,000
Total other debt – CBC				$	74,183,000	$	67,435,000

XML

Note 14 - Net (Loss) Income Per Share (Tables)

6 Months Ended

Mar. 31, 2017

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended March 31, 2017								Three Months Ended March 31, 2016
	Net Loss			Weighted Average Shares		Per Share Amount			Net Loss			Weighted Average Shares		Per Share Amount
Basic	$	(5,569,000	)		9,691,576	$	(0.57	)	$	(1,831,000	)		12,076,120	$	(0.15	)
Effect of Dilutive Stock					—								—
Diluted	$	(5,569,000	)		9,691,576	$	(0.57	)	$	(1,831,000	)		12,076,120	$	(0.15	)

	Six Months Ended March 31, 2017								Six Months Ended March 31, 2016
	Net Loss			Weighted Average Shares		Per Share Amount			Net Loss			Weighted Average Shares		Per Share Amount
Basic	$	(7,226,000	)		10,795,903	$	(0.67	)	$	(25,000	)		12,115,987	$	0.00
Effect of Dilutive Stock					—								—
Diluted	$	(7,226,000	)		10,795,903	$	(0.67	)	$	(25,000	)		12,115,987	$	0.00

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Note 15 - Stock Based Compensation (Tables)

6 Months Ended

Mar. 31, 2017

Notes Tables

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

Risk-free interest rate	0.24	%
Expected term (years)	6.25
Expected volatility	23.4	%
Dividend yield	0.00	%

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Note 16 - Stock Option Plans (Tables)

6 Months Ended

Mar. 31, 2017

Notes Tables

Share-based Compensation, Stock Options, Activity [Table Text Block]

	Six Months Ended March 31,
	2017					2016
	Number Of Shares			Weighted Average Exercise Price		Number of Shares			Weighted Average Exercise Price
Outstanding options at the beginning of period		949,667		$	8.47		1,043,566		$	8.47
Options granted		—			—		67,100			7.93
Options exercised		—			—		(7,499	)		6.32
Options forfeited/cancelled		(52,800	)		14.13		(8,300	)		8.14
Outstanding options at the end of period		896,867		$	8.14		1,094,867		$	8.45
Exercisable options at the end of period		858,195		$	8.15		963,522		$	8.48

	Three Months Ended March 31,
	2017					2016
	Number Of Shares			Weighted Average Exercise Price		Number of Shares			Weighted Average Exercise Price
Outstanding options at the beginning of period		897,167		$	8.14		1,110,666		$	8.43
Options granted		—			—		—			—
Options exercised		—			—		(7,499	)		6.32
Options forfeited/cancelled		(300	)		8.08		(8,300	)		8.14
Outstanding options at the end of period		896,867		$	8.14		1,094,867		$	8.45
Exercisable options at the end of period		858,195		$	8.15		963,522		$	8.48

Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range [Table Text Block]

				Options Outstanding						Options Exercisable
Range of Exercise Price				Number of Shares Outstanding		Weighted Remaining Contractual Life (in Years)		Weighted Average Exercise Price		Number of Shares Exercisable		Weighted Average Exercise Price
	$2.8751	–	$5.7500		3,800		2.1	$	2.95		3,800	$	2.95
	$5.7501	–	$8.6250		768,567		5.0		7.96		729,895		7.96
	$8.6251	–	$11.5000		124,500		5.8		9.40		124,500		9.40
					896,867		5.1	$	8.14		858,195	$	8.15

Schedule of Share-based Compensation, Restricted Stock Units Award Activity [Table Text Block]

	Six Months Ended March 31,
	2017				2016
	Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Unvested at the beginning of period		—	$	—		44,107		$	9.28
Awards granted		—		—		5,000			7.89
Vested		—		—		(34,107	)		9.57
Forfeited		—		—		—			—
Unvested at the end of period		—	$	—		15,000		$	7.92

	Three Months Ended March 31,
	2017				2016
	Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
Unvested at the beginning of period		—	$	—		15,000	$	7.92
Awards granted		—		—		—		—
Vested		—		—		—		—
Forfeited		—		—		—
Unvested at the end of period		—	$	—		15,000	$	7.92

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Note 18 - Fair Value of Financial Measurements and Disclosures (Tables)

6 Months Ended

Mar. 31, 2017

Notes Tables

Fair Value Measurements, Recurring and Nonrecurring [Table Text Block]

	March 31, 2017				September 30, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets
Cash and cash equivalents (Level 1)	$	10,521,000	$	10,521,000	$	18,526,000	$	18,526,000
Restricted cash (Level 1)		10,064,000		10,064,000		—		—
Available-for-sale investments (Level 1)		5,397,000		5,397,000		56,764,000		56,764,000
Consumer receivables acquired for liquidation (Level 3)		11,651,000		44,014,000		14,320,000		47,233,000
Structured settlements (Level 3)		90,370,000		90,370,000		85,708,000		85,708,000
Other investments, net (1)		—		—		3,590,000		3,590,000
Financial liabilities
Other debt – CBC, revolving line of credit (Level 3)		18,709,000		18,709,000		10,154,000		10,154,000
Other debt – CBC, non-recourse notes payable with varying installments (Level 3)		55,474,000		55,474,000		57,281,000		57,281,000

Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Table Text Block]

	Fair Value		Valuation Technique	Significant Unobservable Input	Weighted Average Rate
Structured settlements at fair value	$	90,370,000	Discounted cash flow	Discount rate		4.80%	–	10.5%

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

Balance at September 30, 2016	$	85,708,000
Total losses included in earnings		(2,293,000	)
Purchases		7,926,000
Sales		—
Interest accreted		3,165,000
Payments received		(4,136,000	)
Total	$	90,370,000
The amount of total losses for the six months period included in earnings attributable to the change in unrealized losses relating to assets held at March 31, 2017	$	(2,293,000	)

Fair Value, Measured on Recurring Basis, Gain (Loss) Included in Earnings [Table Text Block]

Total losses included in the six months ended March 31, 2017	$	(2,293,000	)
Change in unrealized losses relating to assets still held at March 31, 2017	$	(2,293,000	)

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Note 19 - Segment Reporting (Tables)

6 Months Ended

Mar. 31, 2017

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

			Personal						GAR
(Dollars in millions)	Consumer Receivables		Injury Claims			Structured Settlements			Disability Advocates			Corporate			Total Company
Three Months Ended March 31,
2017:
Total Revenues	$	4.0	$	2.2		$	0.6		$	1.5		$	—		$	8.3
Other income (loss)		—		—			—			—			(0.7	)		(0.7	)
Income (loss) before income tax		3.5		(0.3	)		(1.9	)		(0.5	)		(10.2	)		(9.4	)
2016:
Total Revenues		4.9		1.8			3.0			0.9			—			10.6
Other income		—		—			—			—			0.4			0.4
Income (loss) before income tax		0.9		0.4			0.7			(2.7	)		(2.5	)		(3.2	)
Six Months Ended March 31,
2017:
Total Revenues		8.0		4.4			1.6			2.9			—			16.9
Other income (loss)		—		—			—			—			(0.1	)		(0.1	)
Income (loss) before income tax		6.9		(0.3	)		(3.5	)		(1.4	)		(13.9	)		(12.2	)
Total Assets		18.8		49.0			87.4			2.3			53.9			211.4
2016:
Total Revenues		10.1		4.9			5.9			1.5			—			22.4
Other income		—		—			—			—			0.9			0.9
Income (loss) before income tax		4.8		2.3			1.4			(4.5	)		(3.8	)		0.2
Total Assets		16.8		36.2			71.6			3.7			110.5			238.8

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Note 20 - Accumulated Other Comprehensive (Loss) Income (Tables)

6 Months Ended

Mar. 31, 2017

Notes Tables

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

	March 31, 2017									September 30, 2016
	Unrealized Gain (loss) on marketable securities			Foreign currency translation, net			Total			Unrealized Gain (loss) on marketable securities			Foreign currency translation, net			Total
Beginning Balance	$	624,000		$	(538,000	)	$	86,000		$	(205,000	)	$	(1,480,000	)	$	(1,685,000	)
Change in unrealized (losses) gains on foreign currency translation, net of tax benefit/(expense) of $121,000 and ($628,000) at March 31, 2017, and September 30, 2016, respectively.		-			(181,000	)		(181,000	)		-			942,000			942,000
Change in unrealized (losses) gains on marketable securities, net of tax benefit/ (expense) of $23,000 and ($529,000) at March 31, 2017, and September 30, 2016, respectively.		(35,000	)		-			(35,000	)		868,000			-			868,000
Amount reclassified from accumulated other comprehensive loss, net of tax benefit of $397,000 and $24,000 at March 31, 2017, and September 30, 2016, respectively.		(596,000	)		-			(596,000	)		(39,000	)		-			(39,000	)
Net current-period other comprehensive (loss) income		(631,000	)		(181,000	)		(812,000	)		829,000			942,000		$	1,771,000
Ending balance	$	(7,000	)	$	(719,000	)	$	(726,000	)	$	624,000		$	(538,000	)	$	86,000

	March 31, 201 6
	Unrealized Gain (loss) on marketable securities			Foreign currency translation, net			Total
Beginning Balance	$	(205,000	)	$	(1,480,000	)	$	(1,685,000	)
Change in unrealized (losses) gains on foreign currency translation, net of tax benefit/(expense) of $557,000 during the six month period ended March 31, 2016.		-			496,000			496,000
Change in unrealized (losses) gains on marketable securities, net of tax benefit/ (expense) of ($294,000) during the six month period ended March 31, 2016.		503,000			-			503,000
Amount reclassified from accumulated other comprehensive loss, net of tax benefit of $11,000 during the six month period ended March 31, 2016.		(20,000	)		-			(20,000	)
Net current-period other comprehensive (loss) income		483,000			496,000			979,000
Ending balance	$	278,000		$	(984,000	)	$	(706,000	)

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Note 1 - Business and Basis of Presentation (Details Textual) - USD ($)				1 Months Ended	6 Months Ended
	Nov. 08, 2016	Aug. 07, 2013	May 08, 2012	Nov. 30, 2016	Mar. 31, 2017	Sep. 30, 2016
Subsidiary of Limited Liability Company or Limited Partnership, Ownership Interest			60.00%
Percentage of Ownership in Subsidiaries		100.00%
Cash, Uninsured Amount					$ 5,200,000
Cash, Uninsured Amount, Foreign					1,600,000
Restricted Cash					10,064,000
Goodwill					2,770,000	$ 2,770,000
CBC [Member]
Goodwill					1,400,000
VATIV [Member]
Goodwill					$ 1,400,000
Simia Capital LLC [Member]
Percentage of Ownership in Subsidiaries				100.00%
Pegasus Legal Funding LLC [Member]
Subsidiary of Limited Liability Company or Limited Partnership, Ownership Interest	80.00%				80.00%

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Note 3 - Available-for-sale Investments (Details Textual)	3 Months Ended		6 Months Ended
	Mar. 31, 2017 USD ($)	Mar. 31, 2016	Mar. 31, 2017 USD ($)	Mar. 31, 2016 USD ($)
Available-for-sale Securities, Gross Realized Gain (Loss), Excluding Other than Temporary Impairments	$ (948,000)		$ (993,000)	$ (31,000)
Realized Investment Gains (Losses)			177,000	47,000
Available-for-sale Securities, Gross Realized Gain (Loss)			$ (816,000)	$ 16,000
Number of Investments Sold	6	0	6	2
Number of Investments	3		3
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year	2		2

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Note 3 - Available-for-sale Investments - Investments Classified as Available-for-sale (Details) - USD ($)	Mar. 31, 2017	Sep. 30, 2016
Unrealized Losses	$ (15,000)	$ (49,000)
Fair Value	5,397,000	56,764,000
Amortized Cost	5,408,000	55,724,000
Unrealized Gains	$ 4,000	$ 1,089,000

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Note 4 - Consumer Receivables Acquired for Liquidation (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Face Value of Charged-off Consumer Receivables	$ 0	$ 24,800,000	$ 35,000,000	$ 121,000,000
Purchased Cost of Charged-off Consumer Receivables	$ 0	$ 1,700,000	$ 2,200,000	$ 6,200,000
Fee Charged on Portfolio Purchase			3.00%

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Note 4 - Consumer Receivables Acquired for Liquidation - Changes In Balance Sheet Account of Consumer Receivables Acquired for Liquidation (Details) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Finance income as a percentage of collections	66.90%	65.70%	64.80%	68.10%
Balance	$ 13,243,000	$ 17,843,000	$ 13,671,000	$ 15,608,000
Acquisitions of receivable portfolio		1,722,000	2,213,000	6,141,000
Net cash collections from collection of consumer receivables acquired for liquidation	(6,009,000)	(7,481,000)	(12,188,000)	(14,774,000)
Net cash collections represented by account sales of consumer receivables acquired for liquidation			(190,000)
Impairment		(124,000)		(124,000)
Effect of foreign currency translation	399,000	(90,000)	126,000	(123,000)
Finance income recognized	4,018,000	4,914,000	8,019,000	10,056,000
Balance	$ 11,651,000	$ 16,784,000	$ 11,651,000	$ 16,784,000

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Note 4 - Consumer Receivables Acquired for Liquidation - Collections Received Less Commissions and Direct Costs (Details) - USD ($)		3 Months Ended		6 Months Ended
		Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Gross collections (1)	[1]	$ 10,621,000	$ 12,393,000	$ 22,116,000	$ 24,309,000
Commissions and fees (2)	[2]	4,612,000	4,912,000	9,738,000	9,535,000
Net collections		$ 6,009,000	$ 7,481,000	$ 12,378,000	$ 14,774,000

[1] Gross collections include: collections from third-party collection agencies and attorneys, collections from in-house 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 gross collections received by the Company in connection with the Portfolio Purchase. The fee is charged for asset location, skip tracing and ultimately suing debtors in connection with this portfolio purchase.

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Note 5 - Acquisition of CBC (Details Textual) - USD ($)	Jan. 01, 2016	Dec. 31, 2015	Dec. 31, 2013
Restricted Stock [Member]
Shares Lock-up Period		1 year
CBC [Member]
Equity Method Investment, Ownership Percentage			80.00%
Business Acquisition, Percentage of Voting Interests Acquired		20.00%
Business Combination, Consideration Transferred		$ 1,800,000	$ 5,900,000
Payments to Acquire Businesses, Gross		800,000
Employment Agreement Term	2 years
CBC [Member] | Principal One [Member]
Payments to Acquire Businesses, Gross		400,000
CBC [Member] | Principal Two [Member]
Payments to Acquire Businesses, Gross		400,000
CBC [Member] | Restricted Stock [Member]
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable		$ 1,000,000
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares		123,304
Shares Lock-up Period		1 year
CBC [Member] | Restricted Stock [Member] | Principal One [Member]
Shares Issued, Price Per Share		$ 7.95
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares		61,652
CBC [Member] | Restricted Stock [Member] | Principal Two [Member]
Shares Issued, Price Per Share		$ 7.95
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares		61,652

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Note 6 - Structured Settlements (At Fair Value) (Details Textual) - USD ($)		3 Months Ended		6 Months Ended
	Apr. 28, 2017	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016	Sep. 30, 2016
Unrealized Gain (Loss) on Structured Settlements		$ (1,338,000)	$ 1,637,000	$ (2,293,000)	$ 3,164,000
Unrealized Gain (Loss) on Structured Settlements Due to Day One Gains on New Structured Settlements Financed				4,300,000
Unrealized Gain (Loss) on Structured Settlements Due to Change in Realized Gains				(1,000,000)
Financing Receivable, Recorded Investment, Past Due		0		0		$ 0
Financing Receivable, Recorded Investment, Nonaccrual Status		$ 0		$ 0		$ 0
Assignee [Member] | Life Contingent Annuities Portfolio [Member] | Subsequent Event [Member]
Assets, Fair Value Adjustment	$ (5,600,000)

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Note 6 - Structured Settlements (At Fair Value) - Components of Structured Settlements (Details) - USD ($)		Mar. 31, 2017	Sep. 30, 2016
Maturity (1) (2)	[1],[2]	$ 152,548,000	$ 133,059,000
Unearned income		(62,178,000)	(47,351,000)
Structured settlements, net		$ 90,370,000	$ 85,708,000

[1] The maturity value represents the aggregate unpaid principal balance at March 31, 2017 and September 30, 2016.

[2] There are no amounts of structured settlements that are past due, or in nonaccrual status at March 31, 2017 and September 30, 2016.

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Note 6 - Structured Settlements (At Fair Value) - Structured Settlements (Details) - Structured Settlement [Member] - USD ($)		Mar. 31, 2017	Sep. 30, 2016
$25,000,000 revolving line of credit (3)	[1]	$ 18,709,000	$ 10,154,000
Total structured settlements		90,370,000	85,708,000
Structured Settlements Encumbered [Member]
Total structured settlements		74,183,000	67,435,000
Structured Settlements Not Encumbered [Member]
Total structured settlements		16,187,000	18,273,000
Notes Payable Secured by Settlement Receivables with Principal and Interest Outstanding Payable until June 2025 [Member]
Notes payable secured by settlement receivables with principal and interest outstanding payable	[1]	1,771,000	1,862,000
Notes Payable Secured by Settlement Receivables with Principal and Interest Outstanding Payable until August 2026 [Member]
Notes payable secured by settlement receivables with principal and interest outstanding payable	[1]	4,056,000	4,242,000
Notes Payable Secured by Settlement Receivables with Principal and Interest Outstanding Payable until April 2032 [Member]
Notes payable secured by settlement receivables with principal and interest outstanding payable	[1]	3,926,000	3,987,000
Notes Payable Secured by Settlement Receivables with Principal and Interest Outstanding Payable until February 2037 [Member]
Notes payable secured by settlement receivables with principal and interest outstanding payable	[1]	18,393,000	18,978,000
Notes Payable Secured by Settlement Receivables with Principal and Interest Outstanding Payable until March 2034 [Member]
Notes payable secured by settlement receivables with principal and interest outstanding payable	[1]	14,006,000	14,507,000
Notes Payable Secured by Settlement Receivables with Principal and Interest Outstanding Payable Until February 2043 [Member]
Notes payable secured by settlement receivables with principal and interest outstanding payable	[1]	$ 13,322,000	$ 13,705,000

[1] See Note 10 - Other Debt - CBC

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Note 6 - Structured Settlements (At Fair Value) - Structured Settlements (Details) (Parentheticals) - USD ($)		6 Months Ended	12 Months Ended
		Mar. 31, 2017	Sep. 30, 2016	May 02, 2014
Line of credit, current borrowing capacity				$ 20,000,000
Structured Settlement [Member]
Line of credit, current borrowing capacity	[1]	$ 25,000,000	$ 25,000,000
Notes Payable Secured by Settlement Receivables with Principal and Interest Outstanding Payable until June 2025 [Member] | Structured Settlement [Member]
Notes payable secured by settlement receivables with principal and interest outstanding payable, maturity date	[1]	2025-06	2025-06
Notes Payable Secured by Settlement Receivables with Principal and Interest Outstanding Payable until August 2026 [Member] | Structured Settlement [Member]
Notes payable secured by settlement receivables with principal and interest outstanding payable, maturity date	[1]	2026-08	2026-08
Notes Payable Secured by Settlement Receivables with Principal and Interest Outstanding Payable until April 2032 [Member] | Structured Settlement [Member]
Notes payable secured by settlement receivables with principal and interest outstanding payable, maturity date	[1]	2032-04	2032-04
Notes Payable Secured by Settlement Receivables with Principal and Interest Outstanding Payable until February 2037 [Member] | Structured Settlement [Member]
Notes payable secured by settlement receivables with principal and interest outstanding payable, maturity date	[1]	2037-02	2037-02
Notes Payable Secured by Settlement Receivables with Principal and Interest Outstanding Payable until March 2034 [Member] | Structured Settlement [Member]
Notes payable secured by settlement receivables with principal and interest outstanding payable, maturity date	[1]	2034-03	2034-03
Notes Payable Secured by Settlement Receivables with Principal and Interest Outstanding Payable Until February 2043 [Member] | Structured Settlement [Member]
Notes payable secured by settlement receivables with principal and interest outstanding payable, maturity date	[1]	2043-02	2043-02

[1] See Note 10 - Other Debt - CBC

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Note 6 - Structured Settlements (At Fair Value) - Expected Cash Flows of Structured Settlements Based on Maturity Value (Details) - USD ($)		Mar. 31, 2017	Sep. 30, 2016
September 30, 2017 (6 months)		$ 5,702,000
September 30, 2018		8,892,000
September 30, 2019		9,237,000
September 30, 2020		8,713,000
September 30, 2021		9,576,000
Thereafter		110,428,000
Total	[1],[2]	$ 152,548,000	$ 133,059,000

[1] The maturity value represents the aggregate unpaid principal balance at March 31, 2017 and September 30, 2016.

[2] There are no amounts of structured settlements that are past due, or in nonaccrual status at March 31, 2017 and September 30, 2016.

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Note 7 - Litigation Funding (Details Textual) - USD ($)					3 Months Ended		6 Months Ended		12 Months Ended
	Mar. 24, 2017	Nov. 08, 2016	May 18, 2012	May 08, 2012	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016	Sep. 30, 2016	Dec. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Sep. 30, 2014	May 02, 2014
Company Investment in Personal Injury							$ 47,900,000		$ 48,300,000
Allowance for Doubtful Accounts Receivable					$ 10,700,000	$ 6,200,000	10,700,000	$ 6,200,000
Subsidiary of Limited Liability Company or Limited Partnership, Ownership Interest				60.00%
Line of Credit Facility, Maximum Borrowing Capacity														$ 30,000,000
Valuation Allowances and Reserves, Other							2,000,000
Net Investment Income							0	0
Revolving Credit Facility [Member]
Debt Instrument, Term			2 years
Line of Credit Facility, Maximum Borrowing Capacity			$ 1,000,000										$ 1,500,000
Line of Credit Facility, Write-off							1,500,000
Pegasus Legal Funding LLC [Member]
Earnings in Interest and Fees from Invested Venture					2,100,000	1,800,000	4,400,000	4,900,000
Allowance for Doubtful Accounts Receivable					$ 10,652,000	$ 6,175,000	$ 10,652,000	$ 6,175,000	$ 8,542,000	$ 9,542,000	$ 5,496,000	$ 5,459,000
Subsidiary of Limited Liability Company or Limited Partnership, Ownership Interest		80.00%					80.00%
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners		20.00%
Simia Capital LLC [Member]
Payments to Acquire Portfolio of Personal Injury Claims	$ 3,000,000
Balance Point Divorce Funding, LLC [Member]
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners				40.00%

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Note 7 - Litigation Funding - Reserves for Bad Debts (Details) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Balance at end of period	$ 10,700,000	$ 6,200,000	$ 10,700,000	$ 6,200,000
Pegasus Legal Funding LLC [Member]
Balance at beginning of period	9,542,000	5,496,000	8,542,000	5,459,000
Provisions for losses	1,885,000	724,000	3,274,000	1,136,000
Write offs	(775,000)	(45,000)	(1,164,000)	(420,000)
Balance at end of period	$ 10,652,000	$ 6,175,000	$ 10,652,000	$ 6,175,000

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Note 8 - Furniture & Equipment - Summary of Furniture and Equipment (Details) - USD ($)	Mar. 31, 2017	Sep. 30, 2016
Total	$ 2,016,000	$ 2,001,000
Less accumulated depreciation and amortization	1,817,000	1,758,000
Balance, end of period	199,000	243,000
Furniture and Fixtures [Member]
Total	417,000	417,000
Equipment [Member]
Total	236,000	234,000
Software Development [Member]
Total	$ 1,363,000	$ 1,350,000

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Note 9 - Non Recourse Debt (Details Textual) - USD ($)					1 Months Ended
	Mar. 30, 2016	Jun. 03, 2014	May 02, 2014	Aug. 07, 2013	Jun. 30, 2016	Mar. 31, 2007	Mar. 31, 2017	Sep. 30, 2016
Line of Credit Facility, Covenant Consolidated Tangible Net Worth			$ 150,000,000
Portfolio Purchase						$ 300,000,000
Receivables Financing Agreement Term						3 years
Percentage of Ownership in Subsidiaries				100.00%
Prepayment Fees				$ 15,000,000
Receivable Finance Agreement, Portfolio Purchase Collections, Percentage				30.00%
Debt Instrument, Final Principal Payment		$ 2,901,199
Voluntary Debt Prepayment		1,866,036
Receivable Finance Agreement, Collections from Portfolio Purchase		$ 16,900,000			$ 16,900,000
Line of Credit Facility, Current Borrowing Capacity			20,000,000
Line of Credit Facility, Maximum Borrowing Capacity			$ 30,000,000
Line of Credit Facility, Expiration Period			3 years
Debt Instrument, Basis Spread on Variable Rate			2.75%
Long-term Line of Credit							$ 9,600,000
Restricted Cash							10,064,000
Amended Loan Agreement [Member]
Line of Credit Facility, Covenant Decrease Consolidated Tangible Net Worth	$ 50,000,000
Line of Credit Facility, Covenant Consolidated Tangible Net Worth	$ 100,000,000
Debt Instrument, Basis Spread on Variable Rate	2.25%
Long-term Line of Credit							9,600,000
Bank of Montreal [Member]
Non-Recourse Debt							$ 169,000
Receivables Financing Agreement [Member]
Non-Recourse Debt						$ 227,000,000

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Note 10 - Other Debt - CBC (Details Textual) - USD ($)				6 Months Ended
	Mar. 01, 2015	Sep. 29, 2014	Dec. 31, 2013	Sep. 29, 2014	Apr. 07, 2017	Mar. 31, 2017	Sep. 30, 2016	Jul. 08, 2016	Sep. 25, 2015	Nov. 26, 2014	Sep. 30, 2014	May 02, 2014	May 18, 2012
Line of Credit Facility, Maximum Borrowing Capacity												$ 30,000,000
Line of Credit Facility, Current Borrowing Capacity												$ 20,000,000
Other Long-term Debt						$ 74,183,000	$ 67,435,000
Long-term Line of Credit						9,600,000
Notes Payable, Noncurrent						55,500,000	57,300,000
Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity											$ 1,500,000		$ 1,000,000
Long-term Line of Credit						$ 18,700,000
CBC [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 25,000,000	$ 22,000,000		$ 22,000,000
Debt Instrument, Floor Interest Rate	4.10%			4.75%
Noncontrolling Interest, Ownership Percentage by Parent						100.00%
Line of Credit Facility, Expiration Date	Mar. 01, 2017	Feb. 28, 2015
CBC [Member] | Secured Debt [Member]
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate								4.85%	5.10%	5.40%
Debt Instrument, Face Amount								$ 14,800,000	$ 16,600,000	$ 21,800,000
CBC [Member] | Secured Debt [Member] | Subsequent Event [Member]
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate					5.00%
Debt Instrument, Face Amount					$ 18,340,000
CBC [Member]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities			$ 25,900,000
Line of Credit Facility, Current Borrowing Capacity			$ 12,500,000			$ 25,000,000	25,000,000
Debt Instrument, Floor Interest Rate			5.50%
Long-term Line of Credit						18,709,000	10,154,000
Notes Payable, Noncurrent						$ 55,474,000	$ 57,281,000

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Note 10 - Other Debt - CBC - Component of Other Debt From Acquisition (Details) - USD ($)	Mar. 31, 2017	Sep. 30, 2016
Notes Payable, Noncurrent	$ 55,500,000	$ 57,300,000
Long-term Line of Credit	9,600,000
Other Long-term Debt	74,183,000	67,435,000
CBC [Member]
Notes Payable, Noncurrent	$ 55,474,000	57,281,000
Interest Rate	4.10%
Long-term Line of Credit	$ 18,709,000	10,154,000
CBC [Member] | Notes Payable Secured by Settlement Receivables with Principal and Interest Outstanding Payable until June 2025 [Member]
Notes Payable, Noncurrent	$ 1,771,000	1,862,000
Interest Rate	8.75%
CBC [Member] | Notes Payable Secured by Settlement Receivables with Principal and Interest Outstanding Payable until August 2026 [Member]
Notes Payable, Noncurrent	$ 4,056,000	4,242,000
Interest Rate	7.25%
CBC [Member] | Notes Payable Secured by Settlement Receivables with Principal and Interest Outstanding Payable until April 2032 [Member]
Notes Payable, Noncurrent	$ 3,926,000	3,987,000
Interest Rate	7.125%
CBC [Member] | Notes Payable Secured by Settlement Receivables with Principal and Interest Outstanding Payable until February 2037 [Member]
Notes Payable, Noncurrent	$ 18,393,000	18,978,000
Interest Rate	5.39%
CBC [Member] | Notes Payable Secured by Settlement Receivables with Principal and Interest Outstanding Payable until March 2034 [Member]
Notes Payable, Noncurrent	$ 14,006,000	14,507,000
Interest Rate	5.07%
CBC [Member] | Notes Payable Secured by Settlement Receivables with Principal and Interest Outstanding Payable Until February 2043 [Member]
Notes Payable, Noncurrent	$ 13,322,000	$ 13,705,000
Interest Rate	4.85%

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Note 10 - Other Debt - CBC - Component of Other Debt From Acquisition (Details) (Parentheticals) - USD ($)	6 Months Ended	12 Months Ended
	Mar. 31, 2017	Sep. 30, 2016	May 02, 2014	Dec. 31, 2013
Line of credit, current borrowing capacity			$ 20,000,000
CBC [Member]
Line of credit, current borrowing capacity	$ 25,000,000	$ 25,000,000		$ 12,500,000
CBC [Member] | Notes Payable Secured by Settlement Receivables with Principal and Interest Outstanding Payable until June 2025 [Member]
Notes payable secured by settlement receivables with principal and interest outstanding payable, maturity date	2025-06	2025-06
CBC [Member] | Notes Payable Secured by Settlement Receivables with Principal and Interest Outstanding Payable until August 2026 [Member]
Notes payable secured by settlement receivables with principal and interest outstanding payable, maturity date	2026-08	2026-08
CBC [Member] | Notes Payable Secured by Settlement Receivables with Principal and Interest Outstanding Payable until April 2032 [Member]
Notes payable secured by settlement receivables with principal and interest outstanding payable, maturity date	2032-04	2032-04
CBC [Member] | Notes Payable Secured by Settlement Receivables with Principal and Interest Outstanding Payable until February 2037 [Member]
Notes payable secured by settlement receivables with principal and interest outstanding payable, maturity date	2037-02	2037-02
CBC [Member] | Notes Payable Secured by Settlement Receivables with Principal and Interest Outstanding Payable until March 2034 [Member]
Notes payable secured by settlement receivables with principal and interest outstanding payable, maturity date	2034-03	2034-03
CBC [Member] | Notes Payable Secured by Settlement Receivables with Principal and Interest Outstanding Payable Until February 2043 [Member]
Notes payable secured by settlement receivables with principal and interest outstanding payable, maturity date	2043-02	2043-02

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Note 11 - Commitments and Contingencies (Details Textual) - USD ($)			3 Months Ended
	Nov. 11, 2016	Jul. 24, 2015	Sep. 30, 2016	Mar. 31, 2016	Mar. 31, 2017
Violation of Federal Fair Debt Collection Practice Act and Racketeer Influenced and Corrupt Organization Act [Member]
Litigation Settlement, Amount Awarded to Other Party		$ 39,000
Estimated Litigation Liability					$ 2,300,000
Violation of Federal Fair Debt Collection Practice Act and Racketeer Influenced and Corrupt Organization Act [Member] | General and Administrative Expense [Member]
Litigation Settlement, Expense			$ 300,000	$ 2,000,000
Violation of Federal Fair Debt Collection Practice Act and Racketeer Influenced and Corrupt Organization Act [Member] | Individual Basis for a Payment to each Plaintiff [Member]
Litigation Settlement, Amount Awarded to Other Party		$ 13,000
Chief Executive Officer [Member] | Simia Capital LLC [Member]
Employment Agreement, Annual Base Salary	$ 250,000
Employment Agreement, Profit Bonus, Percentage of Profit	15.00%
Employment Agreement Term	5 years
Employment Agreement, Severance, Years of Base Salary	2 years
Term of Non-compete and Non-solicitation Provision	2 years

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Note 12 - Income Recognition, Impairments, and Commissions and Fees (Details Textual) - Fixed Income Funds [Member] - USD ($)	1 Months Ended	3 Months Ended	12 Months Ended
	Oct. 31, 2014	Mar. 31, 2017	Sep. 30, 2016
Available-for-sale Securities, Equity Securities	$ 5,000,000
Related Party Transaction, Rate	14.00%
Other than Temporary Impairment Losses, Investments		$ 3,425,000	$ 1,000,000

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Note 13 - Income Taxes (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Mar. 31, 2017	Mar. 31, 2016
Effective Income Tax Rate Reconciliation, Percent	41.00%	45.00%	41.00%	49.00%
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent			34.00%	35.00%
Unrecognized Tax Benefits			$ 0
Domestic Tax Authority [Member] | Internal Revenue Service (IRS) [Member]
Operating Loss Carryforwards			$ 0

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Note 14 - Net (Loss) Income Per Share - Computation of Basic and Diluted Per Share Data (Details) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Weighted Average Shares, Basic (in shares)	9,691,576	12,076,120	10,795,903	12,115,987
Per Share Amount, Basic (in dollars per share)	$ (0.57)	$ (0.15)	$ (0.67)	$ 0
Weighted Average Shares (in shares)
Net Income	$ (5,569,000)	$ (1,831,000)	$ (7,226,000)	$ (25,000)
Weighted Average Shares, Diluted (in shares)	9,691,576	12,076,120	10,795,903	12,115,987
Per Share Amount, Diluted (in dollars per share)	$ (0.57)	$ (0.15)	$ (0.67)	$ 0

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Note 15 - Stock Based Compensation (Details Textual) - shares			3 Months Ended		6 Months Ended
	Dec. 31, 2015	Dec. 16, 2015	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross		67,100	0		0	67,100
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	123,304	5,000				5,000
Shares Lock-up Period	1 year
Share-based Compensation Award, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares		9,100
Share-based Compensation Award, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number		58,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		3 years

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Note 15 - Stock Based Compensation - Weighted Average Assumptions Used in Option Pricing Model (Details)	Dec. 16, 2015
Risk-free interest rate	0.24%
Expected term (years) (Year)	6 years 91 days
Expected volatility	23.40%
Dividend yield	0.00%

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Note 16 - Stock Option Plans (Details Textual)			3 Months Ended		6 Months Ended		60 Months Ended
	Dec. 31, 2015 shares	Dec. 16, 2015 shares	Mar. 31, 2017 USD ($) shares	Mar. 31, 2016 USD ($) shares	Mar. 31, 2017 USD ($) shares	Mar. 31, 2016 USD ($) shares	Mar. 31, 2017 USD ($) shares	Mar. 21, 2012 shares	Mar. 05, 2012 shares	Mar. 01, 2006 shares	May 01, 2002 shares
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Total Fair Value | $				$ 0		$ 532,000
Allocated Share-based Compensation Expense | $			$ 14,000	145,000	$ 8,000	428,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $			62,000		62,000		$ 62,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | $			228,000		228,000		228,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value | $			219,000		$ 219,000		219,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term					4 years 328 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value | $			$ 111,000	$ 122,000	$ 657,000	$ 1,052,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period			0	7,499	0	7,499
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross		67,100	0		0	67,100
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Fair Value | $					$ 0	$ 40,000
Allocated Share-based Compensation Expense | $			$ 0	$ 14,000	0	$ 101,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $			$ 0		$ 0		0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	123,304	5,000				5,000
Employee Stock Option [Member]
Allocated Share-based Compensation Expense | $			$ 14,000	$ 131,000	$ 8,000	$ 327,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $			$ 62,000		$ 62,000		$ 62,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition					1 year 255 days
The 2012 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period							66,868
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant			1,337,043		1,337,043		1,337,043
Share-based Compensation Arrangement by Share-based Payment Award, Number of Eligible Employees							95
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized								2,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross							484,200
The 2012 Plan [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period							245,625
Equity Compensation Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant								0
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized										1,000,000
The 2002 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant									0
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized											1,000,000

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Note 16 - Stock Option Plans - Summary of Stock Option Plans (Details) - $ / shares		3 Months Ended		6 Months Ended
	Dec. 16, 2015	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Options Exercisable, Number of Shares Exercisable (in shares)		858,195	963,522	858,195	963,522
Options Exercisable, Weighted Average Exercise Price (in dollars per share)		$ 8.15	$ 8.48	$ 8.15	$ 8.48
Outstanding options at the beginning of period (in shares)		897,167	1,110,666	949,667	1,043,566
Outstanding options at the beginning of period (in dollars per share)		$ 8.14	$ 8.43	$ 8.47	$ 8.47
Options granted (in shares)	67,100	0		0	67,100
Options granted (in dollars per share)					$ 7.93
Options exercised (in shares)		0	(7,499)	0	(7,499)
Options exercised (in dollars per share)			$ 6.32		$ 6.32
Options forfeited/cancelled (in shares)		(300)	(8,300)	(52,800)	(8,300)
Options forfeited/cancelled (in dollars per share)		$ 8.08	$ 8.14	$ 14.13	$ 8.14
Outstanding options at the end of period (in shares)		896,867	1,094,867	896,867	1,094,867
Outstanding options at the end of period (in dollars per share)		$ 8.14	$ 8.45	$ 8.14	$ 8.45

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Note 16 - Stock Option Plans - Summary of Outstanding Options (Details) - $ / shares	6 Months Ended
	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015
Options Outstanding, Number of Shares Outstanding (in shares)	896,867	897,167	949,667	1,094,867	1,110,666	1,043,566
Options Outstanding, Weighted Remaining Contractual Life (Year)	5 years 36 days
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 8.14	$ 8.14	$ 8.47	$ 8.45	$ 8.43	$ 8.47
Options Exercisable, Number of Shares Exercisable (in shares)	858,195			963,522
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 8.15			$ 8.48
Range of Exercise Price, Lower (in dollars per share)
Range of Exercise Price, Upper (in dollars per share)
Range One [Member]
Options Outstanding, Number of Shares Outstanding (in shares)	3,800
Options Outstanding, Weighted Remaining Contractual Life (Year)	2 years 36 days
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 2.95
Options Exercisable, Number of Shares Exercisable (in shares)	3,800
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 2.95
Range of Exercise Price, Lower (in dollars per share)	2.8751
Range of Exercise Price, Upper (in dollars per share)	$ 5.75
Range Two [Member]
Options Outstanding, Number of Shares Outstanding (in shares)	768,567
Options Outstanding, Weighted Remaining Contractual Life (Year)	5 years
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 7.96
Options Exercisable, Number of Shares Exercisable (in shares)	729,895
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 7.96
Range of Exercise Price, Lower (in dollars per share)	5.7501
Range of Exercise Price, Upper (in dollars per share)	$ 8.625
Range Three [Member]
Options Outstanding, Number of Shares Outstanding (in shares)	124,500
Options Outstanding, Weighted Remaining Contractual Life (Year)	5 years 292 days
Options Outstanding, Weighted Average Exercise Price (in dollars per share)	$ 9.40
Options Exercisable, Number of Shares Exercisable (in shares)	124,500
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 9.40
Range of Exercise Price, Lower (in dollars per share)	8.6251
Range of Exercise Price, Upper (in dollars per share)	$ 11.50

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Note 16 - Stock Option Plans - Summary of Restricted Stock Transactions (Details) - Restricted Stock [Member] - $ / shares			3 Months Ended		6 Months Ended
	Dec. 31, 2015	Dec. 16, 2015	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Unvested at the end of period (in dollars per share)	$ 7.92			$ 7.92		$ 7.92
Unvested at the beginning of period (in shares)				15,000		44,107
Unvested at the beginning of period (in dollars per share)				$ 7.92		$ 9.28
Awards granted (in shares)	123,304	5,000				5,000
Awards granted (in dollars per share)						$ 7.89
Vested (in shares)						(34,107)
Vested (in dollars per share)						$ 9.57
Forfeited (in shares)
Forfeited (in dollars per share)
Unvested at the end of period (in shares)	15,000			15,000		15,000

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Note 17 - Stockholders' Equity (Details Textual) - USD ($)							3 Months Ended		6 Months Ended		14 Months Ended
	Mar. 10, 2017	Feb. 15, 2017	Feb. 06, 2017	Jan. 06, 2017	Nov. 21, 2016	Mar. 17, 2016	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016	Sep. 30, 2016	Jan. 18, 2017	Dec. 17, 2015	Aug. 11, 2015
Dividends							$ 0	$ 0	$ 0	$ 0
Share Price												$ 10.20
Treasury Stock, Value, Acquired, Cost Method									$ 54,203,000	$ 8,363,000
Mangrove [Member]
Mutual Confidentiality Agreement, Extended Period					30 days
Mangrove [Member] | Ricky Stern Family [Member]
Treasury Stock, Shares, Acquired	471,086
Treasury Stock, Value, Acquired, Cost Method	$ 4,900,000
Stern Stockholders [Member]
Voting Agreement, Related Party Maximum Percentage of Voting Right				49.00%
Shares Repurchase Plan [Member]
Stock Repurchase Program, Authorized Amount						$ 15,000,000								$ 15,000,000
Treasury Stock, Shares, Acquired											1,186,000
Stock Repurchase Program, Additional Authorized Repurchase Amount													$ 15,000,000
Treasury Stock, Value, Acquired, Cost Method						$ 9,900,000					$ 10,100,000
Settlement Agreement [Member]
Stock Repurchase Program, Purchase Price Per Share				$ 10.35
Treasury Stock, Value, Acquired, Cost Method							54,200,000
Stock Repurchase Program, Number of Shares Authorized to be Repurchased				5,314,009
Stock Repurchase Program, Number of Share Tendered		6,022,253
Stock Repurchase Program, Number of Shares Oversubscribed		708,244
Stock Repurchase Program, Percent of Share Tendered		88.24%
Treasury Stock, Percent, Acquired			44.70%
Settlement Agreement [Member] | General and Administrative Expense [Member]
Treasury Stock, Value, Acquired, Cost Method							$ 797,000
Settlement Agreement [Member] | Mangrove [Member]
Stock Repurchase Program, Number of Shares Authorized to be Repurchased				4,005,701

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Note 18 - Fair Value of Financial Measurements and Disclosures (Details Textual) - USD ($)	6 Months Ended
	Mar. 31, 2017	Sep. 30, 2016
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share, Redemption Restriction Period	5 years
Available-for-sale Securities	$ 5,397,000	$ 56,764,000
Fair Value, Inputs, Level 2 [Member]
Available-for-sale Securities	0
Fair Value, Inputs, Level 3 [Member]
Available-for-sale Securities	$ 0

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Note 18 - Fair Value of Financial Measurements and Disclosures - Fair Value of Financial Measurements (Details) - USD ($)		Mar. 31, 2017	Sep. 30, 2016
Fair Value		$ 5,397,000	$ 56,764,000
Reported Value Measurement [Member]
Other investments, net	[1]		3,590,000
Estimate of Fair Value Measurement [Member]
Other investments, net	[1]		3,590,000
Fair Value, Inputs, Level 1 [Member] | Reported Value Measurement [Member]
Cash and cash equivalents (Level 1)		10,521,000	18,526,000
Restricted cash (Level 1)		10,064,000
Fair Value		5,397,000	56,764,000
Fair Value, Inputs, Level 1 [Member] | Estimate of Fair Value Measurement [Member]
Cash and cash equivalents (Level 1)		10,521,000	18,526,000
Restricted cash (Level 1)		10,064,000
Fair Value		5,397,000	56,764,000
Fair Value, Inputs, Level 3 [Member]
Fair Value		0
Fair Value, Inputs, Level 3 [Member] | Reported Value Measurement [Member]
Consumer receivables acquired for liquidation (Level 3)		11,651,000	14,320,000
Structured settlements (Level 3)		90,370,000	85,708,000
Other debt – CBC, revolving line of credit (Level 3)		18,709,000	10,154,000
Other debt – CBC, non-recourse notes payable with varying installments (Level 3)		55,474,000	57,281,000
Fair Value, Inputs, Level 3 [Member] | Estimate of Fair Value Measurement [Member]
Consumer receivables acquired for liquidation (Level 3)		44,014,000	47,233,000
Structured settlements (Level 3)		90,370,000	85,708,000
Other debt – CBC, revolving line of credit (Level 3)		18,709,000	10,154,000
Other debt – CBC, non-recourse notes payable with varying installments (Level 3)		$ 55,474,000	$ 57,281,000

[1] The Company has elected to early adopt ASU 2015-07 and in accordance with ASU 2015-07, certain investments that are measured at fair value using the net asset value per share (or its equivalent) have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheet. As of March 31, 2017, after receiving notification that the investment was being liquidated, the Company wrote it off.

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Note 18 - Fair Value of Financial Measurements and Disclosures - Quantitative Information about Level 3 Fair Value Measurements (Details)	6 Months Ended
	Mar. 31, 2017 USD ($)
Structured Settlements at Fair Value	$ 90,370,000
Income Approach Valuation Technique [Member]
Structured Settlements at Fair Value	$ 90,370,000
Rate	4.80%

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Note 18 - Fair Value of Financial Measurements and Disclosures - Changes in Structured Settlements at Fair Value Using Significant Unobservable Inputs (Details)	6 Months Ended
	Mar. 31, 2017 USD ($)
Balance at September 30, 2016	$ 85,708,000
Total losses included in earnings	(2,293,000)
Purchases	7,926,000
Sales
Interest accreted	3,165,000
Payments received	(4,136,000)
Total	90,370,000
The amount of total losses for the six months period included in earnings attributable to the change in unrealized losses relating to assets held at March 31, 2017	$ (2,293,000)

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Note 18 - Fair Value of Financial Measurements and Disclosures - Schedule of Realized and Unrealized Gains and Losses (Details)	6 Months Ended
	Mar. 31, 2017 USD ($)
Total losses included in the six months ended March 31, 2017	$ (2,293,000)
Change in unrealized losses relating to assets still held at March 31, 2017	$ (2,293,000)

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Note 19 - Segment Reporting (Details Textual)			3 Months Ended	6 Months Ended
	Nov. 08, 2016	May 08, 2012	Dec. 31, 2016	Mar. 31, 2017
Number of Reportable Segments			4
Subsidiary of Limited Liability Company or Limited Partnership, Ownership Interest		60.00%
Pegasus Legal Funding LLC [Member]
Subsidiary of Limited Liability Company or Limited Partnership, Ownership Interest	80.00%			80.00%

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Note 19 - Segment Reporting - Schedule of Segment Reporting (Details) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016	Sep. 30, 2016
Income (loss) before income tax	$ (9,396,000)	$ (3,173,000)	$ (12,151,000)	$ 195,000
Total Assets	211,396,000	238,800,000	211,396,000	238,800,000	$ 255,399,000
Total Revenues	8,269,000	10,570,000	16,872,000	22,390,000
Other income (loss)	(700,000)	400,000	(100,000)	900,000
Operating Segments [Member] | Consumer Receivables [Member]
Income (loss) before income tax	3,500,000	900,000	6,900,000	4,800,000
Total Assets	18,800,000	16,800,000	18,800,000	16,800,000
Total Revenues	4,000,000	4,900,000	8,000,000	10,100,000
Other income (loss)
Operating Segments [Member] | Personal Injury Claims [Member]
Income (loss) before income tax	(300,000)	400,000	(300,000)	2,300,000
Total Assets	49,000,000	36,200,000	49,000,000	36,200,000
Total Revenues	2,200,000	1,800,000	4,400,000	4,900,000
Other income (loss)
Operating Segments [Member] | Structured Settlement [Member]
Income (loss) before income tax	(1,900,000)	700,000	(3,500,000)	1,400,000
Total Assets	87,400,000	71,600,000	87,400,000	71,600,000
Total Revenues	600,000	3,000,000	1,600,000	5,900,000
Other income (loss)
Operating Segments [Member] | GAR Disability Advocates [Member]
Income (loss) before income tax	(500,000)	(2,700,000)	(1,400,000)	(4,500,000)
Total Assets	2,300,000	3,700,000	2,300,000	3,700,000
Total Revenues	1,500,000	900,000	2,900,000	1,500,000
Other income (loss)
Corporate, Non-Segment [Member]
Income (loss) before income tax	(10,200,000)	(2,500,000)	(13,900,000)	(3,800,000)
Total Assets	53,900,000	110,500,000	53,900,000	110,500,000
Total Revenues
Other income (loss)	$ (700,000)	$ 400,000	$ (100,000)	$ 900,000

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Note 20 - Accumulated Other Comprehensive (Loss) Income - Accumulated Other Comprehensive Income (Loss) (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016	Sep. 30, 2016
Other comprehensive income (loss)	$ 823,000	$ 421,000	$ (812,000)	$ 979,000
Balance	119,151,000	173,409,000	119,151,000	173,409,000	$ 181,738,000
Balance			181,738,000	181,320,000	181,320,000
Change in unrealized (losses) gains on marketable securities, net of tax benefit/ (expense) of $23,000 and ($529,000) at March 31, 2017, and September 30, 2016, respectively.	1,204,000	167,000	(35,000)	503,000
Accumulated Net Investment Gain (Loss) Attributable to Parent [Member]
Other comprehensive income (loss)			(631,000)	483,000	829,000
Balance	(7,000)	278,000	(7,000)	278,000	624,000
Balance			624,000	(205,000)	(205,000)
Change in unrealized (losses) gains on foreign currency translation, net of tax benefit/(expense) of $121,000 and ($628,000) at March 31, 2017, and September 30, 2016, respectively.
Change in unrealized (losses) gains on marketable securities, net of tax benefit/ (expense) of $23,000 and ($529,000) at March 31, 2017, and September 30, 2016, respectively.			(35,000)	503,000	868,000
Amount reclassified from accumulated other comprehensive loss, net of tax benefit of $397,000 and $24,000 at March 31, 2017, and September 30, 2016, respectively.			(596,000)	(20,000)	(39,000)
Accumulated Foreign Currency Adjustment Attributable to Parent [Member]
Other comprehensive income (loss)			(181,000)	496,000	942,000
Balance	(719,000)	(984,000)	(719,000)	(984,000)	(538,000)
Balance			(538,000)	(1,480,000)	(1,480,000)
Change in unrealized (losses) gains on foreign currency translation, net of tax benefit/(expense) of $121,000 and ($628,000) at March 31, 2017, and September 30, 2016, respectively.			(181,000)	496,000	942,000
Change in unrealized (losses) gains on marketable securities, net of tax benefit/ (expense) of $23,000 and ($529,000) at March 31, 2017, and September 30, 2016, respectively.
Amount reclassified from accumulated other comprehensive loss, net of tax benefit of $397,000 and $24,000 at March 31, 2017, and September 30, 2016, respectively.
AOCI Attributable to Parent [Member]
Other comprehensive income (loss)			(812,000)	979,000	1,771,000
Balance	$ (726,000)	$ (706,000)	(726,000)	(706,000)	86,000
Balance			86,000	(1,685,000)	(1,685,000)
Change in unrealized (losses) gains on foreign currency translation, net of tax benefit/(expense) of $121,000 and ($628,000) at March 31, 2017, and September 30, 2016, respectively.			(181,000)	496,000	942,000
Change in unrealized (losses) gains on marketable securities, net of tax benefit/ (expense) of $23,000 and ($529,000) at March 31, 2017, and September 30, 2016, respectively.			(35,000)	503,000	868,000
Amount reclassified from accumulated other comprehensive loss, net of tax benefit of $397,000 and $24,000 at March 31, 2017, and September 30, 2016, respectively.			$ (596,000)	$ (20,000)	$ (39,000)

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Note 20 - Accumulated Other Comprehensive (Loss) Income - Accumulated Other Comprehensive Income (Loss) (Details) (Parentheticals) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Unrealized gain (loss) on marketable securities, tax	$ (680,000)	$ (94,000)	$ 23,000	$ 283,000
AOCI Attributable to Parent [Member]
Unrealized gain (loss) on foreign currency translation, tax				557,000
Unrealized gain (loss) on marketable securities, tax				(294,000)
Reclassified from accumulated other comprehensive loss, tax				$ 11,000

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Note 21 - Related Party Transactions (Details Textual) - Louis Piccolo [Member] - USD ($)		6 Months Ended
	Sep. 17, 2015	Mar. 31, 2017	Mar. 31, 2016
Consulting Agreement Period	0 years
Professional Fees		$ 40,000
Pegasus Funding LLC [Member]
Related Party Transaction, Amounts of Transaction		$ 67,000	$ 67,000
Pegasus Funding LLC [Member] | Professional Fees Incurred by a Related Party [Member]
Due to Related Parties, Term		6 years
Pegasus Funding LLC [Member] | Interest Based on Professional Fees [Member]
Related Party Transaction, Rate		4.00%
Maximum [Member] | Pegasus Funding LLC [Member]
Professional Fees		$ 700,000

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Note 22 - Subsequent Events (Details Textual) - USD ($)	May 05, 2017	Apr. 28, 2017	Apr. 07, 2017	Jul. 08, 2016	Sep. 25, 2015	Nov. 26, 2014
Subsequent Event [Member]
Dividends, Rights Offered for Each Issued and Outstanding Share of Stock	1
Minimum Number of Days After Obtaining Beneficial Ownership Percentage for Rights to Become Exercisable	10 days
Minimum Beneficial Ownership Percentage of Common Stock Required for Rights to Become Exercisable	10.00%
Number of Days After Tender or Exchange Offer Resulting in New Ownership for Rights to Become Exercisable	10 days
Multiple Used to Determine Market Value	2
Rights, Redemption Price Per Share	$ 0.01
Number of Shares Common Stock Given in Exchange for One Right if Under New Ownership	1
Subsequent Event [Member] | Right [Member]
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right	0.001
Subsequent Event [Member] | Right [Member] | Series A Junior Participating Preferred Stock [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 28.60
Subsequent Event [Member] | Assignee [Member] | Life Contingent Annuities Portfolio [Member]
Proceeds from Disposition of Assets		$ 7,700,000
Gain (Loss) on Disposition of Assets		5,500,000
Assets, Fair Value Adjustment		$ (5,600,000)
CBC [Member] | Secured Debt [Member]
Debt Instrument, Face Amount				$ 14,800,000	$ 16,600,000	$ 21,800,000
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate				4.85%	5.10%	5.40%
CBC [Member] | Secured Debt [Member] | Subsequent Event [Member]
Debt Instrument, Face Amount			$ 18,340,000
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate			5.00%